Lockheed Martin (LMT) Q4 2025 earnings summary

Executive summary

• Achieved record-high backlog of $194 billion, 2.5x annual sales, with 6% year-over-year sales growth in 2025 and strong demand for defense programs.

• Generated $6.9 billion in free cash flow, exceeding expectations, after pre-funding nearly $900 million in pension obligations and distributing $3.1 billion in dividends.

• Invested $3.5 billion in capital and R&D to drive innovation and expand production capacity, with $3.0 billion in share repurchases.

• Delivered record numbers of F-35 jets (191) and PAC-3 MSE interceptors (620) in 2025, and landmark multi-year agreements for PAC-3 MSE and THAAD interceptors.

• Major classified program losses recognized in Aeronautics and RMS segments during 2025, with a $479 million pension settlement charge.

Financial highlights

• Fourth quarter sales reached $20.3 billion, up 9% year-over-year, with growth across all business areas.

• Full-year 2025 sales were $75 billion, up 6% year-over-year; segment operating profit grew 11% to $6.7 billion, and EPS was $21.49.

• Book-to-bill ratio was 1.2 for the year and 1.7 for Q4, reflecting strong order intake.

• Segment operating margin for 2025 was 9.0%, with consolidated operating margin at 10.3%.

• Free cash flow for 2025: $6.9 billion.

Outlook and guidance

• 2026 sales expected at $77.5–$80 billion, representing 5% organic growth at midpoint.

• Segment operating profit forecasted at $8.425–$8.675 billion, with a midpoint margin of 10.9%.

• EPS guidance for 2026 is $29.35–$30.25, up over $8 from 2025, mainly due to absence of prior charges.

• Free cash flow projected at $6.5–$6.8 billion, with $2.5–$2.8 billion in capital expenditures.

• Cash from operations forecasted at $9.15–$9.45 billion for 2026.