Lockheed Martin reported solid Q1 2026 results with $18B revenue, maintained full-year guidance, and highlighted massive production ramp-ups in missiles (PAC-3) funded by multi-year government agreements. Key cross-company signals include supplier commitments from Boeing (seekers), L3Harris (rocket motors), Northrop (potential new source), and a joint venture with General Dynamics on solid rocket motors. F-35 demand remains strong with increased budget quantities. The call focused on execution, scaling capacity, and supply chain resilience. PAC-3 production to triple from 650 to 2,000 units per year over 3-4 years, underpinned by multi-year commercial-style contracts with government clawback protection.
Lockheed Martin reported solid Q1 2026 results with $18B revenue, maintained full-year guidance, and highlighted massive production ramp-ups in missiles (PAC-3) funded by multi-year government agreements. Key cross-company signals include supplier commitments from Boeing (seekers), L3Harris (rocket motors), Northrop (potential new source), and a joint venture with General Dynamics on solid rocket motors. F-35 demand remains strong with increased budget quantities. The call focused on execution, scaling capacity, and supply chain resilience. PAC-3 production to triple from 650 to 2,000 units per year over 3-4 years, underpinned by multi-year commercial-style contracts with government clawback protection.
Management expressed confidence in demand, execution, and risk mitigation, citing strong operational performance and supportive government partnerships.
Management is significantly expanding production capacity and investing heavily in facilities for munitions ramps, with a $4.8 billion PAC-3 contract and construction/modernization of over 20 facilities, and full-year 2026 capex guidance of $2.5-2.8 billion.
L3Harris spinning out SRM business with government support; Boeing investing in seeker capacity; Northrop exploring Patriot SRM entry; Lockheed/GD joint venture on solid rocket motors.
Peru orders 12 F-16s, first direct commercial sale in decades. Management expressed confidence in demand, execution, and risk mitigation, citing strong operational performance and supportive government partnerships.
Management discussed deploying AI both internally for business processes and into products like target recognition and battle management, using a centralized AI center with external models on secured infrastructure, and highlighted AI-assisted targeting for F-35.
Peru orders 12 F-16s, first direct commercial sale in decades. Management expressed confidence in demand, execution, and risk mitigation, citing strong operational performance and supportive government partnerships.
Management is significantly expanding production capacity and investing heavily in facilities for munitions ramps, with a $4.8 billion PAC-3 contract and construction/modernization of over 20 facilities, and full-year 2026 capex guidance of $2.5-2.8 billion.
Management expressed confidence in demand, execution, and risk mitigation, citing strong operational performance and supportive government partnerships.
“General Dynamics, Lockheed Martin teaming on solid rocket motors. L3Harris is spinning out its SRM business and also has support from the U.S. government.”
“Boeing has similarly made a public commitment and one to the government that says, hey, we're going to invest in that seeker business.”
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| Capex | FY2026 | $2.5B–$2.8B | $2.65B | MAINTAINED |
| Free cash flow | FY2026 | $6.5B–$6.8B | $6.65B | MAINTAINED |
| Op margin | FY2026 | $8.4B–$8.7B | $8.55B | MAINTAINED |
| Issued | Metric | Target | Guide | Actual | Outcome |
|---|---|---|---|---|---|
| FY2025 Q3 | EPS | FY2025 | $22.15–$22.35 | $21.49 | Missed |
| FY2025 Q3 | Free cash flow | FY2025 | $6.6B | $6.9B | Met / beat |
| FY2025 Q3 | Revenue | FY2025 | $74.25B–$74.75B | $75B | Met / beat |
Lockheed acts as a subcontractor to Palantir, indicating a cooperative rather than purely competitive dynamic in certain defense programs.
“We're a subcontractor to Palantir and Anduril in some cases, frankly.”
Hey, guys. Thank you for taking my question. Jim, I wanted to just ask about the evolving landscape. A tremendous amount of new issues, new entrants, What's that impacting the competition for talent? How's that impacting, you know, contracting? And maybe offensively, you had some comments in your prepared remarks about how it might be impacting the opportunity to make investments or strategic partnerships. I'd love to just kind of get your take broadly.
… can be an investor through our venture group, have a board seat or two, get access to the technology, and figure out how to incorporate it again into our products and systems. in ways that will benefit our investment that we have, the company we invest in, and will accelerate our capability. And again, using other people's money and other people's talent with these businesses, things maybe that we don't have the bandwidth or the personnel to do. So I think it's a positive development, both for the national defense enterprise, so the government and our industry together, and for our company. And we're embracing this. We have another... entity called Lockheed Martin Evolve, where we can do medium-sized joint ventures or co-investments. We're doing that in the wildfire fighting space that we've announced before, for example, through kind of an Evolve entity, if you will. So we are eager to get access to and collaborate with small, medium, new entrant companies, etc. We're a subcontractor to Palantir and Anduril in some cases, frankly. So we view these companies across the board as just other suppliers and the term of art in this industry is competimates, right? So same thing with Northrop, same thing with Boeing Defense. We partner with them sometimes. We compete against them sometimes. This industry is used to that and is comfortable with that, and so are we. Our goal is to get the best technology and get access to it through whatever vehicle we need to deliver on a mission technology roadmap for our customer, right? So if our goal is how do we have the best air-to-air combat capability in the U.S. Air Force, for example, we want to take the platforms we have. We want to introduce AI from the best available source. We actually are working with the Air Force right now at the Edwards Air Force Base, which is a test pilot school, with an autonomous F-16 that's working tactics that will be more survivable where even a piloted aircraft, when it's in a dogfight or has to do a really hard turn on a missile, can take over and optimize that response in the fight, so to speak. So we want to advance these mission capabilities with our platforms or networking with others, frankly. And we want to get these these resources into those mission sets. And we're not very proprietary about where they come from, frankly. So how does that affect our talent management? I would say …
Lockheed and GD are jointly developing solid rocket motor capacity, a strategic partnership to de-risk the most critical supply chain element for PAC-3.
“General Dynamics, Lockheed Martin teaming on solid rocket motors.”
Yeah, thanks. Good morning, guys. Good morning. Was wondering if you could comment on the pinch points in ramping MFC capacity. I know you guys have the JV you're building with the GD on solid rocket motors. And just wanted to see, like, how quickly can missile capacity actually be raised? And, you know, if you're throwing even more money at it, can it be pulled forward more substantially than maybe what people are thinking? Thanks.
So the goal is to sort of have a rateable increase from our current levels of production, which is last year 650 Patriot missiles per year, up to 2,000. And that's going to take three to four years, depending on supply chain and other considerations. But we really do think we can get it done in three to four years. The supply chain improvements that we're pursuing, the General Dynamics, Lockheed Martin teaming on solid rocket motors. Also, Northrop Grumman is looking at expanding its solid rocket motor business potentially into Patriot. And there's some commitments there that we think will bear some fruit. The other pinch point, so I think we've got solid rocket motors, I don't want to say covered, but we've got a lot of interest in it. You may have heard that L3 Harris is spinning out its SRM business. and also has support from the U.S. government to finance and fund their expansion, which they've already announced where it's going to be and how it's going to happen. So that's a good sign. Secondly, Northrop's commitment is a good sign. Thirdly, General Dynamics' partnership with us is another good sign as far as SRM pinch point risk, I guess I'd call it. The second area is the seeker for the Patriot. And Boeing has similarly made a public commitment and one to the government that says, hey, we're going to invest in that seeker business. We're going to get to the volumes that you're asking us for. And they've actually been improving as well over the last year or two in their ability to deliver on this very complex component. So those are the two biggest, I guess, risk areas. There'll be a handful of others in the mid to late small business supply chain, we will have, and the government, as Evan just said, will have assistance provided to those companies. And we're looking for capital markets providers in addition to the government Office of Strategic Capital to provide ready and efficient financing for these medium and small companies, given that they're going to have a seven-year subcontract to Lockheed Martin, who has a seven-year contract with the U S government, pretty good credit line there. So I think that we're going to be able to manage those pinch points, but those are, those are the main ones.
Northrop Grumman may become a second source for Patriot solid rocket motors, reducing single-supplier risk for Lockheed's missile ramp.
“Northrop Grumman is looking at expanding its solid rocket motor business potentially into Patriot.”
Yeah, thanks. Good morning, guys. Good morning. Was wondering if you could comment on the pinch points in ramping MFC capacity. I know you guys have the JV you're building with the GD on solid rocket motors. And just wanted to see, like, how quickly can missile capacity actually be raised? And, you know, if you're throwing even more money at it, can it be pulled forward more substantially than maybe what people are thinking? Thanks.
So the goal is to sort of have a rateable increase from our current levels of production, which is last year 650 Patriot missiles per year, up to 2,000. And that's going to take three to four years, depending on supply chain and other considerations. But we really do think we can get it done in three to four years. The supply chain improvements that we're pursuing, the General Dynamics, Lockheed Martin teaming on solid rocket motors. Also, Northrop Grumman is looking at expanding its solid rocket motor business potentially into Patriot. And there's some commitments there that we think will bear some fruit. The other pinch point, so I think we've got solid rocket motors, I don't want to say covered, but we've got a lot of interest in it. You may have heard that L3 Harris is spinning out its SRM business. and also has support from the U.S. government to finance and fund their expansion, which they've already announced where it's going to be and how it's going to happen. So that's a good sign. Secondly, Northrop's commitment is a good sign. Thirdly, General Dynamics' partnership with us is another good sign as far as SRM pinch point risk, I guess I'd call it. The second area is the seeker for the Patriot. And Boeing has similarly made a public commitment and one to the government that says, hey, we're going to invest in that seeker business. We're going to get to the volumes that you're asking us for. And they've actually been improving as well over the last year or two in their ability to deliver on this very complex component. So those are the two biggest, I guess, risk areas. There'll be a handful of others in the mid to late small business supply chain, we will have, and the government, as Evan just said, will have assistance provided to those companies. And we're looking for capital markets providers in addition to the government Office of Strategic Capital to provide ready and efficient financing for these medium and small companies, given that they're going to have a seven-year subcontract to Lockheed Martin, who has a seven-year contract with the U S government, pretty good credit line there. So I think that we're going to be able to manage those pinch points, but those are, those are the main ones.
L3Harris is restructuring its solid rocket motor business with government backing, directly enabling Lockheed's PAC-3 production acceleration.
“L3Harris is spinning out its SRM business and also has support from the U.S. government to finance and fund their expansion.”
Boeing is making a public commitment to invest in PAC-3 seeker capacity, a critical component for Lockheed's plan to triple PAC-3 production from 650 to 2,000 units per year. — Boeing's seeker ramp is a direct enabler of Lockheed's production surge; failure or delay would ripple through the entire missile supply chain.
Yeah, thanks. Good morning, guys. Good morning. Was wondering if you could comment on the pinch points in ramping MFC capacity. I know you guys have the JV you're building with the GD on solid rocket motors. And just wanted to see, like, how quickly can missile capacity actually be raised? And, you know, if you're throwing even more money at it, can it be pulled forward more substantially than maybe what people are thinking? Thanks.
So the goal is to sort of have a rateable increase from our current levels of production, which is last year 650 Patriot missiles per year, up to 2,000. And that's going to take three to four years, depending on supply chain and other considerations. But we really do think we can get it done in three to four years. The supply chain improvements that we're pursuing, the General Dynamics, Lockheed Martin teaming on solid rocket motors. Also, Northrop Grumman is looking at expanding its solid rocket motor business potentially into Patriot. And there's some commitments there that we think will bear some fruit. The other pinch point, so I think we've got solid rocket motors, I don't want to say covered, but we've got a lot of interest in it. You may have heard that L3 Harris is spinning out its SRM business. and also has support from the U.S. government to finance and fund their expansion, which they've already announced where it's going to be and how it's going to happen. So that's a good sign. Secondly, Northrop's commitment is a good sign. Thirdly, General Dynamics' partnership with us is another good sign as far as SRM pinch point risk, I guess I'd call it. The second area is the seeker for the Patriot. And Boeing has similarly made a public commitment and one to the government that says, hey, we're going to invest in that seeker business. We're going to get to the volumes that you're asking us for. And they've actually been improving as well over the last year or two in their ability to deliver on this very complex component. So those are the two biggest, I guess, risk areas. There'll be a handful of others in the mid to late small business supply chain, we will have, and the government, as Evan just said, will have assistance provided to those companies. And we're looking for capital markets providers in addition to the government Office of Strategic Capital to provide ready and efficient financing for these medium and small companies, given that they're going to have a seven-year subcontract to Lockheed Martin, who has a seven-year contract with the U S government, pretty good credit line there. So I think that we're going to be able to manage those pinch points, but those are, those are the main ones.
Solid rocket motor capacity is the key bottleneck for PAC-3 ramp; L3Harris is spinning out its SRM business with government support, Northrop is evaluating entry, and Lockheed/GD are joint-venturing to add capacity. This is a multi-year supply chain build-out.