LMT · Q2 2026 Earnings

Bullish

Lockheed Martin

Reported July 23, 2026

30-second summary

Lockheed printed Q2 FY2026 revenue of $20.06B (+11% YoY), beating consensus by 3.6% and reversing the Q1 stall (+0.3% YoY) — with all four segments growing, MFC accelerating to +19%, and GAAP EPS of $7.94 beating the $7.23 consensus by 9.8%. Management raised FY26 guidance across revenue ($79.75–81.75B, midpoint +$2.0B), EPS ($29.95–30.65, midpoint +$0.50), FCF (now "over $7B" vs prior $6.5–6.8B), and segment profit growth (25% → 28%), while quietly cutting capex guidance by $400–500M to $2.0–2.4B — a notable retreat from Q4-2025's "step-function internal investment" framing. Backlog set a record $230.4B (+$44.0B QoQ), resolving last quarter's cycle-peak question decisively.

Headline numbers

EPS

Q2 FY2026

$7.94

+9.8% vs est.

Revenue

Q2 FY2026

$20.06B

+11.0% YoY

+3.6% vs est.

Gross margin

Q2 FY2026

12.2%

Free cash flow

Q2 FY2026

$2.92B

Operating margin

Q2 FY2026

12.4%

Key financials

Q2 FY2026

Metric	Q2 FY2026	Q2 FY2025	YoY	Q1 FY2026	QoQ
Revenue	$20.06B	$18.16B	+10.5%	$18.02B	+11.3%
EPS	$7.94	$1.46	+443.8%	$6.44	+23.3%
Gross margin	12.2%	4.0%	+820bps	11.5%	+70bps
Operating margin	12.4%	4.1%	+830bps	11.4%	+100bps
Free cash flow	$2.92B	$-0.15B	+2044.7%	$-0.29B	+1102.4%

Guidance

Lockheed Martin raised full-year FY2026 guidance across revenue, EPS, free cash flow, and profit growth, driven by Q2 outperformance and accelerated demand; notably reduced capital expenditure expectations.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Revenue	Q2 FY 2026	—	$20.063 billion	+11% YoY; beat consensus estimate of $19.36B by +3.6%	Beat
Diluted EPS (GAAP)	Q2 FY 2026	—	$7.94	+9.8% above consensus estimate of $7.23	Beat

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Revenue	FY 2026	$77.5 - $80.0 billion	$79.75 - $81.75 billion	+$2.25B - $1.75B at low/high end (midpoint +$2.0B)	Raised
Diluted EPS (GAAP)	FY 2026	$29.35 - $30.25	$29.95 - $30.65	+$0.60 - $0.40 at low/high end (midpoint +$0.50)	Raised
Free Cash Flow	FY 2026	$6.5 - $6.8 billion	over $7 billion	+$0.2B - $0.5B minimum (low end raised from $6.5B to >$7.0B)	Raised
Business Segment Operating Profit	FY 2026	$8,425 - $8,675 million	$8,500 - $8,700 million	+$75M - $25M at low/high end (range slightly tightened and raised)	Raised
Sales Growth Rate	FY 2026	approximately 5% year-over-year	approximately 8% year-over-year	+3 percentage points (5% → 8% YoY)	Raised
Segment Operating Profit Growth	FY 2026	approximately 25% year-over-year	28% higher	+3 percentage points (25% → 28% YoY)	Raised
Cash from Operations	FY 2026	$9,150 - $9,450 million	$9,200 - $9,400 million	+$50M - ($50M) at low/high end (range tightened and slightly raised at low end)	Raised
Capital Expenditures	FY 2026	$2,500 - $2,800 million	$2,000 - $2,400 million	−$500M - $400M at low/high end (range reduced across board)	Lowered

Segment KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Aeronautics	$8.112B	$7.42B	+9.3%
Missiles and Fire Control	$4.101B	$3.433B	+19.5%
Rotary and Mission Systems	$4.354B	$3.995B	+9.0%
Space	$3.496B	$3.307B	+5.7%

Other KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Total Backlog	$230.4 billion	$166.5 billion	—
Business Segment Operating Margin	10.8%	—	—
Cash from Operations	$3.2 billion	$201 million	—
F-35 Aircraft Deliveries	19 units	—	—
Total Aircraft Deliveries (Q2)	44 units	—	—

Management tone

Q3-2025 offensive scaling → Q4-2025 step-function capex expansion → Q1-2026 reaffirming discipline → Q2-2026 execution validated, capex retreat.

The most important tone shift is on capital investment. Q4-2025 was the peak of expansionary rhetoric — "capital and independent research and development approaching $5 billion in 2026, which is a step-function increase in internal investment... with a year-over-year increase in investment of about 35%." Q1-2026 reaffirmed the $2.5–2.8B capex range verbatim. This quarter, management cut the range by $400–500M without narrative accompaniment in the press release. The signal cuts against the "20+ facility construction/modernization" framing — either the capacity build is coming in cheaper than modeled, or select projects are being deferred. Without transcript commentary this quarter, the interpretation is unresolved, but the number itself is the most consequential piece of the print for anyone underwriting the multi-year capacity ramp thesis.

The 21st Century Security strategy is being framed as validated operating model rather than aspirational positioning. The press release language — "achieving a higher trajectory for our business" and "evidence that our 21st Century Security strategy is working" — hardens the acquisition-transformation narrative that emerged in Q1's Q&A around framework agreements and combat validation. Three quarters ago this was a slogan; this quarter it is being cited as the causal explanation for the +11% revenue print and +300bps sales-growth upgrade.

The framing of FY26 guidance has moved from "reaffirm" (Q1) to explicit acceleration language: "giving us confidence to raise our full year financial guidance." This is the first FY26 guidance raise in the coverage period and represents a directional shift from cautious reaffirmation to open-throttle upgrading.

The absence of transcript commentary this quarter is itself worth noting. Q&A in prior quarters has been where the most consequential disclosures happened (framework agreement clawback provisions, Patriot ramp bottlenecks, classified program credibility). Without that layer, the capex cut and the backlog build both lack the color that would resolve the analytical questions they raise.

Answers to last quarter's watch list

Q2 FY2026 revenue growth trajectory vs. the +5% FY pace. Revenue printed $20.06B (+11% YoY), well above the FY pace, and management raised the FY sales-growth guide from ~5% to ~8%. The soft-Q2 downside case did not materialize. Status: Resolved positively.

Segment operating margin walk to the FY implied 10.9%. Business segment operating margin printed 10.8% in Q2, a 70bps snapback from Q1's 10.1% and consistent with the FY implied ~10.6–10.8% at the raised guide midpoint. The mechanical unreachability concern from Q1 is now off the table. Status: Resolved positively.

PAC-3 and THAAD framework agreement definitization with disclosed dollar values. No specific framework agreement definitization was called out in the press release. MFC's +19% YoY revenue growth is consistent with ramp execution, but full definitization with disclosed dollar values was not confirmed on this print. Status: Continue monitoring.

Capex run-rate trajectory. Rather than accelerating to the $625–700M/quarter pace needed to hit the prior range, management cut FY26 capex by $400–500M to $2.0–2.4B. This resolves the run-rate math by lowering the target, but reopens the underlying question on whether the "step-function internal investment" narrative from Q4-2025 is being deferred. Status: Resolved negatively — the answer came in the form of a target cut, not a run-rate catchup.

Backlog re-acceleration after the $7.2B QoQ decline. Backlog printed $230.4B (+$44.0B QoQ) — a record and by far the largest sequential build in the coverage period. $186.4B did not mark the cycle peak. Status: Resolved positively.

Aeronautics segment revenue recovery. Aeronautics printed $8.11B (+9% YoY), a clean snapback from Q1's -1.5%. The F-16/C-130 execution concerns were timing-driven, not structural. Status: Resolved positively.

What to watch into next quarter

Capex Q3 run-rate against the reduced $2.0–2.4B FY range. H1 capex is running well below the new low end annualized. Watch Q3 capex disclosure — a print below $500M would confirm capex is slipping into FY27 rather than the projects coming in cheaper. This is the single most important operational disclosure into Q3.

FCF Q3 print against the "over $7B" FY frame. Q2 delivered $2.92B FCF; H1 tracking implies Q3–Q4 needs to deliver ~$4B combined to hit "over $7B." Watch whether the "over" wording tightens into a formal range or stays qualitative.

Segment margin stability at 10.8%. The FY implied margin sits at ~10.6–10.8%; another quarter at 10.8% locks in the FY midpoint mechanically. Watch Aeronautics margin specifically — the +9% Q2 revenue recovery needs to sustain into Q3 for the FY frame to hold.

Framework agreement definitization events. No dollar-value framework definitization was disclosed this quarter. A PAC-3 or THAAD full definitization in Q3 with contract value would validate the multi-year MFC growth trajectory that anchors the FY26 +28% segment profit growth thesis.

Classified Aeronautics program — fourth consecutive clean quarter. No incremental charge referenced in the press release. Continued clean quarters institutionalize credibility on the Q2-2025 reset framework.

Backlog composition disclosure. A $44B single-quarter build is unusually large; watch whether Q3 disclosure attributes the step-change to a specific award (F-35 multi-year, classified, framework agreement) or diffuse book-to-bill.

Sources

Lockheed Martin Q2 2026 press release (Form 8-K Exhibit 99.1), filed July 23, 2026 — https://www.sec.gov/Archives/edgar/data/936468/000162828026049277/ex991q22026.htm

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