Lockheed Martin Q1 2026 Earnings Slip on Costs
Lockheed Martin Q1 2026 earnings showed steady sales while EPS and cash flow fell and the firm reaffirmed guidance, refocusing traders on execution risk.
KEY TAKEAWAYS
- Sales held at $18.0 billion while EPS fell to $6.44 per diluted share.
- Cash from operations dropped to $220 million and free cash flow was negative $291 million.
- Company reaffirmed 2026 guidance while fixed-price costs and production slowdowns pressured margins.
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Lockheed Martin (LMT) reported Q1 2026 earnings on April 23, 2026, saying sales remained steady while per-share profit declined as fixed-price contract costs and production slowdowns reduced cash flow. The company reaffirmed its full-year guidance.
Quarterly Results and Cash Flow
Lockheed Martin’s Q1 sales held steady at $18.0 billion, matching the year-earlier quarter. Net earnings fell to $1.5 billion, or $6.44 per diluted share, down from $1.7 billion ($7.28) in Q1 2025.
Cash from operations dropped sharply to $220 million, and free cash flow turned negative $291 million, compared with $1.4 billion and $955 million a year earlier. Consolidated operating profit declined 13% year over year to $2.1 billion. On a non-GAAP basis, business segment operating profit totaled $1.8 billion.
Profit Drivers, Guidance and Contracts
Management attributed the profit decline to fixed-price contract costs, production slowdowns, and lower booking-rate adjustments in programs including civil space, CH-53K, and Seahawk.
Missiles and Fire Control sales rose about 8%, driven by production ramp-ups in PAC-3, JASSM, LRASM, and PrSM. Space sales increased roughly 7%, led by FBM and NGI, while Aeronautics and Rotary/Mission Systems sales declined. The company also noted that an Orion capsule completed the Artemis II mission.
Lockheed Martin signed multiyear framework agreements with the Department of War to expand munitions production for Patriot, THAAD, and the Precision Strike Missile by three to four times current rates. This supports the company’s backlog and production plans.
The company reaffirmed its 2026 full-year guidance in the Q1 release and an 8-K filing: sales of $77.5 billion to $80.0 billion; business segment operating profit of $8.4 billion to $8.7 billion; diluted EPS of $29.35 to $30.25; and free cash flow of $6.5 billion to $6.8 billion. By maintaining its outlook despite weaker cash generation, Lockheed Martin emphasized execution on fixed-price programs and restoring cash flow as key near-term priorities.
