Lockheed Martin (LMT) is down about 3% as the market reacts to its first-quarter 2026 results and the cash-flow profile behind them. While the company reaffirmed full-year guidance, the quarter featured weaker-than-expected earnings and a notable deterioration in free cash flow that has become the focal point for traders.

Lockheed reported Q1 2026 sales of about $18.0 billion and free cash flow of -$291 million, compared with $955 million of free cash flow in the year-ago quarter. The company attributed the cash-flow swing largely to working-capital timing tied to production ramp activity—highlighting increases related to integrated air and missile defense programs (including PAC-3) and tactical/strike missile programs such as JASSM, LRASM, and PrSM—along with impacts from implementing a new ERP system in one business area.

Even with guidance reiterated, the market is treating the quarter as a reminder that accelerating production can create near-term cash and margin friction. The stock’s move suggests investors want clearer evidence that the working-capital draw is temporary and that cash generation rebounds as deliveries and billings catch up to inventory and production spending.

Near-term trading will likely track any follow-through from analyst note flow and whether management provides additional detail on the cadence of working-capital normalization over the next few quarters. Investors will also be sensitive to incremental defense-procurement headlines, including contract recompete signals that can affect program visibility and sentiment even if financial impact is ultimately limited.