Lockheed Martin shares surged Thursday after the defense contractor delivered a second-quarter earnings beat that was hard to miss — and raised its outlook for the year. The stock was up more than 11% in afternoon trading, as investors cheered a record backlog and broad-based growth across every part of the business.
The company reported GAAP earnings of $7.94 per share, easily topping the analyst consensus of $7.09. Revenue came in at $20.06 billion, up 11% from a year ago and above the $19.34 billion Wall Street was expecting. Net income jumped to $1.84 billion from $342 million in the same quarter last year, when the company took a $1.6 billion hit from program losses.
Those charges are now in the rearview mirror, and Lockheed's operating profit tells the story: consolidated operating profit rose to $2.48 billion from $748 million, while segment operating profit hit $2.16 billion.
All Four Engines Firing
Lockheed's aeronautics business, home to the F-35 fighter jet, saw revenue rise 9% to $8.11 billion. Operating profit swung from a loss of $98 million last year to a profit of $760 million — a reminder of how much those prior-year charges distorted the picture.
Missiles and Fire Control was the standout, with revenue up 19% to $4.1 billion as production ramped up for systems like PAC-3, THAAD, and the Precision Strike Missile. Operating profit rose 24% to $594 million, and the operating margin expanded to 14.5%.
Rotary and Mission Systems, which includes helicopters and naval systems, posted revenue of $4.35 billion, up 9%. Operating profit reached $437 million, compared with a loss of $172 million a year earlier. Space revenue grew 6% to $3.5 billion, with operating profit edging up 2% to $371 million.
The Backlog That Keeps Growing
Perhaps the most striking number in the report was the order book. Lockheed booked $65 billion in new orders during the quarter, pushing its backlog to a record $230.4 billion. That's a book-to-bill ratio of 3.2 — meaning for every dollar of revenue, the company took in $3.20 in new orders. A big chunk of that came from a $35 billion multiyear contract for THAAD interceptors.
Lockheed delivered 19 F-35s, two F-16s, seven C-130J transports, and 16 government helicopters during the quarter. The company is also investing in manufacturing capacity through partnerships with General Motors Defense in the U.S. and Rheinmetall in Europe.
Cash Flow and Guidance
Operating cash flow came in at $3.24 billion, and free cash flow reached $2.92 billion. Capital expenditures were $318 million, R&D spending totaled $558 million, and the company paid about $800 million in dividends. Lockheed ended the quarter with $3.79 billion in cash and $20.54 billion in long-term debt.
Looking ahead, Lockheed raised its full-year GAAP earnings guidance to a range of $29.95 to $30.65 per share, up from $29.35 to $30.25, and above the consensus estimate of $29.86. The company also boosted its sales forecast to between $79.75 billion and $81.75 billion, up from $77.5 billion to $80 billion, and above the Street's $79.14 billion estimate. Free cash flow guidance was raised to between $7 billion and $7.2 billion.
The message is clear: global defense spending shows no signs of slowing, and Lockheed is cashing in. With a record backlog and raised guidance, the company is positioning itself for a strong second half of the year.
LMT Price Action: Lockheed Martin shares were up 11.62% at $574.10 at the time of publication Thursday.
