April 23 - Lockheed Martin reported a decline in first-quarter profit on Thursday, as elevated costs on legacy fixed-price contracts and production disruptions on select programs reduced the defense contractor's earnings power amid strong demand for its platforms.
Shares fell 4.3% in premarket trading after the company disclosed the results.
Summary of results
The company recorded first-quarter earnings of $6.44 per share, down from $7.28 in the year-ago quarter. Total revenue for the three months ended March 29 was $18 billion, broadly flat compared with the prior year. Lockheed Martin affirmed its 2026 sales outlook, maintaining guidance of $77.5 billion to $80 billion.
What weighed on profit
Lockheed cited several headwinds that reduced profitability in its largest business, Aeronautics. High costs tied to inflation, tariffs and increased expenses on fixed-price contracts negotiated in prior years have pressed margins. Production performance issues and development delays on the F-16 fighter jet negatively affected results, and the company also reported delays in its C-130 transport aircraft program linked to a shrinking supplier base for required parts.
Those program challenges prompted Lockheed to implement what it described as "profit book rate adjustments," which reflect revised estimates for costs and margins over the life of affected programs. The Aeronautics segment also saw sales decline by $325 million because of lower volumes on classified programs, the company said.
Partially offsetting those declines were higher sales of the flagship F-35 fighter jet, which Lockheed supplies to the United States and 19 allied nations.
Rotary and mission systems
The company's rotary and mission systems business recorded an 8% drop in quarterly sales. Lockheed attributed that fall to lower volume in radar programs and reduced activity in its Sikorsky helicopter programs.
Prior supply-chain impact
Lockheed said it faced comparable supply-chain challenges last year and in July 2025 recorded a $1.6 billion charge tied to a classified Aeronautics program and international helicopter programs within the Sikorsky unit.
Conclusion
Despite continued demand for its core military aircraft, Lockheed Martin's near-term profitability was dulled by cost pressures on legacy fixed-price work and program-specific production slowdowns. The firm retained its full-year sales range, signaling management expects top-line stability even as margins face program-level headwinds.
Key points
- Lockheed reported Q1 earnings of $6.44 per share versus $7.28 a year earlier, with revenue of $18 billion for the quarter ended March 29.
- Aeronautics profit was reduced by production and development delays on the F-16 and C-130 programs, and sales fell $325 million due to lower classified-program volumes; F-35 sales increased.
- Rotary and mission systems sales declined 8%, reflecting lower radar program volume and weaker Sikorsky helicopter activity; the company took a $1.6 billion charge in July 2025 related to similar issues.
Risks and uncertainties
- Persistent cost pressures on fixed-price contracts could continue to compress margins - impacting the defense manufacturing and aerospace supply chain sectors.
- Ongoing production slowdowns tied to supplier availability pose execution risk for aircraft and rotorcraft programs - affecting aerospace and defense program delivery timelines.
- Volatility in classified program volumes and program-level charges could produce quarterly swings in revenue and profitability - with consequences for defense contractors and related markets.