Lockheed Martin Raises 2026 Outlook as Backlog Hits Record $292 Billion

Lockheed Martin’s third-quarter 2026 results point to stronger near-term demand for U.S. defense production, particularly missile defense and military aircraft. The company reported sales of $20.711 billion for the quarter ended September 27, up 11% from $18.609 billion a year earlier. Net earnings rose to $1.845 billion, or $7.97 per diluted share, compared with $1.619 billion, or $6.95 per share, in the prior-year quarter. Backlog grew 27% from the second quarter to a record $292 billion, with $52.5 billion associated with a multiyear award to produce PAC-3 Missile Segment Enhancement (MSE) interceptors. For contractors, this scale of demand is a signal to examine production capacity, component availability, delivery commitments and the durability of customer-funded requirements—not a guarantee that all backlog will translate immediately into new supplier awards.

The company raised its full-year outlook for the second consecutive quarter. Lockheed now expects 2026 sales of approximately $80 billion to $82 billion, compared with its previous range of $79.75 billion to $81.75 billion. Its earnings-per-share forecast increased to $30.35–$30.75, from $29.95–$30.65, and its free-cash-flow outlook rose to approximately $7.8 billion–$8.0 billion, versus $7.0 billion–$7.2 billion previously. Segment growth provides a useful indication of where production activity is rising: missiles sales increased 24%, driven by higher PAC-3 and THAAD production, while aeronautics revenue grew 13% on F-35 and C-130 programs. Lockheed also reported quarterly cash from operations of $3.4 billion and free cash flow of $3.0 billion, though both figures were below the comparable prior-year amounts of $3.7 billion and $3.3 billion, respectively.

A separate development for the industrial base is the finalized 10-year framework between Lockheed Martin and the U.S. Department of Defense for at least 850 U.S. F-35 aircraft, alongside $7 billion in industrial-base investments. The framework’s total value was not stated in the available reporting, and it should not be conflated with finalized production contracts for every future lot. Lockheed said it remains in negotiations with the U.S. government over production contracts for F-35 Lot 20 and later aircraft. It also warned that costs incurred under the F-35 Lot 20 advance-acquisition contract have exceeded current authorization and funding. Without additional government authorization and funding, future F-35 production, operations and cash flow could be affected. Suppliers exposed to these lots should therefore track contract authority, funding releases and schedule decisions before treating anticipated demand as funded work.

The procurement picture is consequently strong but not uniform across programs. The PAC-3 MSE backlog and reported production ramp create opportunities for suppliers able to support interceptor throughput and delivery schedules, while the F-35 framework offers a longer-term industrial-base signal but leaves important execution and funding questions open. Lockheed’s CFO said a fourth-quarter increase in capital spending would be driven primarily by investments to expand munitions production capacity, reinforcing the importance of capacity planning across the supply chain. The company also announced PAC-3 Edge development separately, with testing planned to begin in 2027 and deployment preparation targeted for 2031; that announcement is not an operational deployment or production award and should not be counted as part of the existing PAC-3 MSE backlog. GovCon businesses should distinguish funded awards and authorized work from planning frameworks, negotiations and longer-range development plans.

• Lockheed Martin reported third-quarter sales of $20.711 billion, up 11% year over year, and net earnings of $1.845 billion, or $7.97 per diluted share.
• Backlog reached a record $292 billion, up 27% sequentially; $52.5 billion is associated with the multiyear PAC-3 MSE interceptor award.
• Revised 2026 guidance is $80 billion–$82 billion in sales, $30.35–$30.75 earnings per share, and $7.8 billion–$8.0 billion in free cash flow.
• Missiles sales grew 24%, supported by increased PAC-3 and THAAD production; aeronautics revenue grew 13%, reflecting F-35 and C-130 activity.
• The finalized 10-year F-35 framework covers at least 850 U.S. aircraft and $7 billion in industrial-base investments; its total value was not stated.
• F-35 Lots 20 and higher remain subject to production-contract negotiations. Lot 20 advance-acquisition costs exceed current authorization and funding, creating potential schedule and cash-flow exposure.
• Lockheed expects higher fourth-quarter capital spending, primarily to expand munitions production capacity; suppliers should assess capacity, lead times and delivery obligations.
• PAC-3 Edge testing is planned for 2027, with deployment preparation targeted for 2031; this is a development timeline, not a production award or operational deployment.