Lockheed Martin Q4 Sales Climb 9.1% to $20.3B with $194B Backlog
Lockheed Martin's Q4 2025 sales rose 9.1% year-over-year to $20.3B, generating net earnings of $1.3B and EPS of $5.80 on record $194B backlog. Free cash flow reached $2.8B in the quarter, and 2026 outlook targets ~5% sales growth, 25% segment profit increase and $6.5-$6.8B of free cash flow.
1. Q4 Earnings and Revenue Performance
Lockheed Martin reported fourth-quarter sales of $20.3 billion, up 9.1% from $18.6 billion a year earlier, driven by record F-35 deliveries and higher missile shipments. Net earnings were $1.3 billion, or $5.80 per share, below the consensus estimate of $6.24, as classified program adjustments and pension settlement charges weighed on results. Operational cash flow for the quarter jumped to $3.2 billion from $1.0 billion in Q4 2024, contributing to free cash flow of $2.8 billion after an $860 million pension contribution.
2. Backlog Growth and Production Capacity Expansion
At year-end 2025, Lockheed Martin’s backlog reached a record $194 billion, up from $184 billion at the end of 2024. The company plans to quadruple THAAD interceptor output to 400 units annually under a seven-year Department of War framework agreement, complementing a similar pact for PAC-3 missiles. Capital investments of over $3.5 billion in 2025 targeted production capacity and digital technologies, while an additional multibillion-dollar investment is planned through 2028 to modernize more than 20 U.S. facilities.
3. Segment Contributions and Program Highlights
All four business segments delivered year-over-year growth. Aeronautics posted higher F-35 and F-22 revenue despite a $950 million classified program loss recognized in Q2. Missiles and Fire Control benefited from expanded PAC-3 orders, offsetting a $665 million charge on ground-based air defense upgrades. Rotary and Mission Systems saw increased Sikorsky Black Hawk and RQ-170 drone shipments, while Space Systems booked multiple GPS III launches and advanced satellite contracts, supporting record segment operating profit of $2.1 billion in the quarter.
4. 2026 Financial Outlook and Investor Impact
For 2026, management forecasts approximately 5% sales growth to roughly $78 billion and a 25% increase in reported segment operating profit, underpinned by higher missile and fighter jet deliveries. Free cash flow is expected between $6.5 billion and $6.8 billion, up from $6.9 billion in 2025. Continued debt repayments, disciplined capital allocation, and a focus on next-generation technologies are projected to support dividend increases and share-repurchase capacity, reinforcing shareholder returns.