01—Abstract
Summary
Summary of the 10-Q filed July 23, 2026. Cited figures are marked; the original filing is the authoritative source.
Lockheed Martin Corporation reported strong financial performance for the quarter and six months ended June 28, 2026.
Total sales increased by 10.5% to $20.1 billiona for the quarter and 5.4% to $38.1 billion for the six-month period, driven primarily by growth in product sales across all segments, particularly in Aeronautics and Missiles and Fire Control. Net earnings saw a significant surge, reaching $1.8 billion ($7.94 per diluted share) for the quarter and $3.3 billion ($14.38 per diluted share) for the six months, a substantial improvement from the prior year. The company's operational efficiency improved, with operating costs and expenses growing at a slower pace than sales.
This resulted in a gross profit of $2.4 billionb for the quarter, a significant increase from $0.7 billion in the prior year. The company also benefited from a substantial increase in operating profit to $2.5 billion for the quarter, up from $0.7 billion year-over-year, and a healthy free cash flow of $2.6 billion for the six-month period. The company announced a significant acquisition of Ultra Maritime Solutions for $3.45 billion, signaling strategic growth initiatives.
Despite strong results, investors should note ongoing challenges with certain classified programs and ongoing discussions regarding contract restructurings. The company's substantial backlog of $230.4 billionc provides a strong outlook for future revenue. Management is focused on navigating supply chain challenges, inflationary pressures, and geopolitical uncertainties while continuing to invest in technology and strategic acquisitions.
02—Key points
Key Highlights
- Total sales increased by 10.5% to $20.1 billion for the quarter and 5.4% to $38.1 billion for the six months ended June 28, 2026.
- Net earnings significantly improved to $1.8 billion ($7.94 per diluted share) for the quarter and $3.3 billion ($14.38 per diluted share) for the six months.
- Operating profit surged to $2.5 billion for the quarter, up from $0.7 billion in the prior year, reflecting improved operational efficiency.
- Free cash flow for the six months ended June 28, 2026, was robust at $2.6 billion.
- The company announced a definitive agreement to acquire Ultra Maritime Solutions for $3.45 billion.
- Backlog remains strong at $230.4 billion, providing visibility for future revenue.
- Despite overall positive performance, certain classified programs and contract restructurings present ongoing risks.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Lockheed Martin kept $0.09.
- Revenue$20.06B100.0%
- Cost of revenue−$17.62B87.8%
- Gross profit$2.45B12.2%
- Operating costs$33.0M0.2%
- Operating income$2.48B12.4%
- Interest, other & tax−$643.0M3.2%
- Net income$1.84B9.2%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed July 23, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $20.06B$18.16B | +10.5% |
| Cost of Revenue | $17.62B$17.42B | +1.1% |
| Gross Profit | $2.45B$734.00M | +233.2% |
| Operating Income | $2.48B$748.00M | +231.4% |
| Net Income | $1.84B$342.00M | +436.8% |
| EPS (Basic) | $7.98$1.46 | +446.6% |
| EPS (Diluted) | $7.94$1.46 | +443.8% |
| Shares Outstanding (Basic) | 230.20M233.50M | −1.4% |
| Shares Outstanding (Diluted) | 231.10M234.30M | −1.4% |
05—Questions
Frequently Asked Questions
What were the primary drivers of the significant increase in net earnings and operating profit?
The significant increase in net earnings and operating profit was driven by strong sales growth across all business segments, particularly Aeronautics and Missiles and Fire Control, coupled with improved operational efficiency. The prior year also contained significant charges related to reach-forward losses on certain programs (e.g., a classified program at Aeronautics and the Canadian Maritime Helicopter Program at RMS), the absence of which in the current period contributed to the year-over-year improvement.
What is the strategic rationale behind the acquisition of Ultra Maritime Solutions?
The acquisition of Ultra Maritime Solutions, a defense company specializing in undersea warfare and anti-submarine capabilities, is a strategic move to expand Lockheed Martin's offerings in advanced undersea warfare for allied naval forces. This acquisition is expected to enhance the company's portfolio and market position in a critical defense domain.
What are the key risks or challenges highlighted in the report?
Key risks include ongoing performance issues and potential future losses on certain classified programs, contract restructuring complexities, supply chain disruptions, inflationary pressures, geopolitical uncertainties, and dependence on U.S. government funding. The company also noted potential risks related to the ongoing United Launch Alliance (ULA) investment and the need for potential additional financial support.
How is the company managing supply chain and inflationary pressures?
Lockheed Martin is actively working with its suppliers to mitigate supply chain challenges, securing materials through long-term contracts, identifying alternative sources, and collaborating with customers. To combat inflation, the company is focusing on optimizing operations, improving cost competitiveness, and affordability, and working to offset cost increases through efficiency improvements.
06—Continue