# Lockheed Martin (LMT): Q3 sales up 11%, record $292bn order backlog and a higher cash forecast

> Lockheed Martin, the US defence group that builds the F-35 fighter jet and the PAC-3 missile interceptor, reported third-quarter sales of $20.7bn, up…

- URL: https://centiview.com/post/lmt-lockheed-martin-q3-sales-up-11-record-292bn-backlog-and-a-higher-cash-forecast
- Published: 2026-10-23T08:30:00.000Z
- Sectors: Industrials
- Region: US
- Ticker: LMT
- Sentiment (opinion, not a recommendation): bullish
- Publisher: Centiview (Persie Ltd, London)
- General information only, not financial advice

Lockheed Martin, the US defence group that builds the F-35 fighter jet and the PAC-3 missile interceptor, reported third-quarter sales of $20.7bn, up 11% on a year ago, and profit per share of $7.97, up from $6.95. Its backlog of signed future work reached a record $292.0bn, and it raised its 2026 forecasts for sales, profit and cash.

## What happened

On 22 October 2026 Lockheed Martin published results for the three months to 27 September 2026 and filed them with the US Securities and Exchange Commission (SEC) on Form 8-K, the form used to report major events. Sales were $20,711m against $18,609m a year earlier, and net earnings (profit after all costs and tax) were $1,845m against $1,619m. All four of its business segments grew sales, and Missiles and Fire Control, which makes weapons such as the PAC-3 MSE interceptor, grew fastest. The company also reported a record backlog, meaning the value of signed orders it has not yet delivered, of $291,984m. That includes $52.5bn tied to a multi-year award to produce PAC-3 MSE interceptors. All figures are in US dollars and are reported under US accounting rules (GAAP) unless stated.

The release also carried a warning. Costs on the advance contract for the F-35 "Lot 20" batch of aircraft began to exceed the amount the US government has authorised and funded, and Lockheed says it is still negotiating the production contracts for Lots 20 to 22. Without additional government funding, it says, future results and cash flow will be negatively affected. On the earnings call, as summarised by The Motley Fool's transcript, management described a multi-year F-35 agreement covering 850 US aircraft over ten years at a planned rate of 156 a year, and said a Lot 20 contract is not in its forecast and would be upside if signed this year. We read those call details in the transcript only, not in the release.

## The numbers, explained

Sales rose $2,102m (20,711 minus 18,609), or 11.3% (2,102 / 18,609). Net earnings rose $226m, or 14.0% (226 / 1,619). Profit per diluted share, the profit attributable to each share after counting every share that could be created from options and similar awards, rose from $6.95 to $7.97, a gain of $1.02 or 14.7% (1.02 / 6.95). Segment operating profit, which is profit from the four businesses before some company-wide items, rose 9.9% to $2,229m from $2,029m. Divided by sales, that is a margin of 10.8% (2,229 / 20,711) against 10.9% a year ago (2,029 / 18,609): Lockheed kept about 10.8 cents of operating profit from each dollar of sales, almost unchanged. Profit grew mainly because sales grew, not because it became more profitable per sale.

By segment, Aeronautics, the F-35 and other aircraft business, had sales of $8,214m against $7,256m (+13.2%) and operating profit of $743m against $682m. Missiles and Fire Control sales were $4,501m against $3,624m (+24.2%) and operating profit $631m against $510m (+23.7%). Rotary and Mission Systems, which includes helicopters, rose 3.2% to $4,511m with profit of $524m against $506m. Space sales rose 3.8% to $3,485m with profit flat at $331m. The company flagged unfavourable profit adjustments of $40m on the F-16 and $40m on the C-130 in Aeronautics, and $45m on the Heavy Lift and Seahawk helicopter programmes, offset by a $40m favourable adjustment from resolving a contracting matter in the same segment.

Cash was weaker than profit this quarter. Cash from operations was $3,438m against $3,728m, down 7.8%. Capital expenditure, spending on equipment and buildings, was $439m against $381m. Free cash flow, the cash left after that spending, was $2,999m against $3,347m, down $348m or 10.4%. Over nine months it is up: $5,625m against $4,152m, a gain of $1,473m or 35.5%. The nine-month profit comparison is also flattered because the first nine months of 2025 included $1,615m of reach-forward losses (charges booked when a contract is expected to lose money) and a $66m impairment charge; nine-month profit per share was $22.36 against $15.69. F-35 deliveries were 43 in the quarter against 46, and 94 over nine months against 143.

## Why it matters

Lockheed Martin makes its money by selling aircraft, missiles, helicopters, satellites and related services, mostly to the US government and its allies, usually under long contracts. That makes the backlog the figure to understand: it is a record $292.0bn, up 27% since the second quarter according to the release, and up from $193.6bn at 31 December 2025, an increase of $98.4bn or 50.8%. The PAC-3 award alone accounts for $52.5bn, about 18% of the total (52.5 / 292.0). Excluding it, backlog would be roughly $239.5bn on our subtraction. A backlog is not cash or profit, since orders can change and take years to deliver, but it shows how much work is already contracted.

For customers, the PAC-3 award reflects demand for air-defence missiles; per the call transcript it is a seven-year contract worth up to $58.6bn in total, with a similar seven-year contract for the THAAD interceptor. For rivals and suppliers, a larger and longer production commitment can support hiring and factory spending across the sector. The F-35 remains Lockheed's largest programme, so the funding question for Lot 20 matters: the company is spending ahead of the contract that will pay for it. Deliveries have also been lower this year than last, which the release records but does not explain. The release also shows no share repurchases in the first nine months of 2026, against $2,250m in the same period of 2025; it does not say why.

## What to watch next

Lockheed raised its 2026 forecast for the second time this year. These are the company's own expectations, not facts: sales of about $80,000m to $82,000m (previously $79,750m to $81,750m), segment operating profit of about $8,575m to $8,675m, profit per share of $30.35 to $30.75 (previously $29.95 to $30.65), and free cash flow of $7,800m to $8,000m (previously $7,000m to $7,200m). The midpoint of the cash forecast rose $800m, or 11.3% (7,900 vs 7,100). The profit-per-share midpoint rose $0.25. Capital spending is guided to $2,100m to $2,300m.

Dated or datable items to follow are the F-35 Lot 20 to 22 contract negotiations and any US government funding decision; the fourth-quarter results, for which we have not confirmed a date; and the closing of the Ultra Maritime acquisition, which per the call transcript is expected in the fourth quarter of 2026 and funded from cash on hand. The same transcript says management raised the dividend to $3.60 a share, its 24th consecutive annual rise, and expects a pension contribution above $1bn in 2027; the release itself does not give the dividend amount. Management gave no formal 2027 guidance.

- Backlog: the value of signed orders not yet delivered or paid for
- Free cash flow: cash from operations minus spending on equipment and buildings
- Reach-forward loss: a charge booked when a contract is expected to lose money over its life
- Segment operating profit: profit from the four businesses before some company-wide items

> **Why it matters** Lockheed Martin's sales and profit per share both grew by double digits, its order backlog hit a record $292bn and it raised its 2026 forecasts, but quarterly cash flow fell and the F-35 Lot 20 contract is still unfunded.

> **What we verified** Sales $20,711m (vs $18,609m), net earnings $1,845m (vs $1,619m), profit per share $7.97 (vs $6.95), segment profit $2,229m, cash flow, free cash flow $2,999m (vs $3,347m), backlog $291,984m including $52.5bn PAC-3, F-35 deliveries and the raised 2026 forecast: Lockheed's Q3 2026 release (SEC Form 8-K, primary), with the sales, segment, earnings, free cash flow, backlog and forecast figures matched in the StockTitan copy of the release and the headline figures in The Motley Fool call transcript. The 850-aircraft F-35 agreement, the PAC-3 contract value of up to $58.6bn, the $3.60 dividend, Ultra Maritime timing and the Lot 20 forecast comment come from the transcript only. Percentages, margins and subtractions are our own working. Forecasts are the company's own.

### Sources
- [Lockheed Martin Q3 2026 results, Form 8-K Exhibit 99.1 (SEC, primary)](https://www.sec.gov/Archives/edgar/data/0000936468/000162828026066780/ex991q32026.htm)
- [Lockheed Martin Reports Third Quarter 2026 Financial Results (StockTitan copy of release)](https://www.stocktitan.net/news/LMT/lockheed-martin-reports-third-quarter-2026-financial-t3y0etu9vh1a.html)
- [Lockheed Martin Q3 2026 earnings call transcript (The Motley Fool)](https://www.fool.com/earnings/call-transcripts/2026/10/22/lockheed-martin-lmt-q3-2026-earnings-call-transcript/)