Lockheed Martin (NYSE:LMT) shares surged more than 7% in premarket trading on Thursday after the defence contractor reported second-quarter earnings and revenue above market expectations while raising its full-year financial guidance.
The improved outlook was driven by stronger production across the company’s business segments, particularly within its missile programmes, alongside robust cash generation and a record order backlog.
Quarterly earnings exceed forecasts
Lockheed Martin reported adjusted earnings of $7.94 per share for the second quarter, comfortably ahead of analysts’ consensus estimate of $7.23.
Revenue increased 11% year over year to $20.1 billion, exceeding expectations of $19.37 billion as all four operating divisions contributed to growth.
Higher production volumes, including increased output within the Missiles and Fire Control business, helped support the stronger performance.
Full-year guidance moves higher
The company increased its fiscal 2026 earnings forecast to a range of $29.95 to $30.65 per share, with the midpoint of $30.30 above Wall Street’s consensus estimate of $29.85.
Revenue guidance was also lifted to between $79.75 billion and $81.75 billion, implying a midpoint of $80.75 billion compared with analysts’ expectations of $79.1 billion.
Lockheed Martin also raised its free cash flow forecast to between $7.0 billion and $7.2 billion, up from its previous guidance of $6.5 billion to $6.8 billion.
Record backlog strengthens long-term outlook
Chairman, President and Chief Executive Officer Jim Taiclet said, “We delivered strong second-quarter performance, with over $20 billion in sales – a YoY increase of 11% – free cash flow of $2.9 billion, and $65 billion of new orders, which takes our backlog to a record $230 billion.”
The company ended the quarter with a record backlog of $230 billion, supported by new contract awards including a multi-year $35 billion agreement with the Missile Defense Agency for THAAD interceptors.
Cash generation improves significantly
Lockheed Martin generated operating cash flow of $3.2 billion during the quarter, while free cash flow reached $2.9 billion.
The results marked a substantial improvement from the same period last year, when operating cash flow totalled $201 million and free cash flow was negative $150 million.
Adjusted operating profit increased to $2.2 billion from $571 million a year earlier, benefiting in part from easier year-on-year comparisons after the prior-year period included $1.6 billion in programme losses linked to a classified programme and helicopter contracts.
The company also raised its forecast for full-year business segment operating profit to between $8.5 billion and $8.7 billion, reflecting continued confidence in production growth and programme execution.
