Lockheed Martin $LMT reported first-quarter net earnings of $1.5 billion, or $6.44 per share, down from $1.7 billion, or $7.28 per share, in the same period a year earlier. Business segment operating profit fell 13% to $1.8 billion.
Production performance and development delays on the F-16 fighter jet program, combined with delivery delays on the C-130 transport aircraft program, drove $125 million and $55 million in unfavorable profit adjustments, respectively, within the Aeronautics segment. The C-130 delays stemmed from challenges integrating parts from diminishing manufacturing sources, the company said. Aeronautics operating profit dropped 14% to $619 million.
Total revenue was roughly flat at $18.0 billion, compared to $18.0 billion in the first quarter of 2025. Higher sales in the Missiles and Fire Control and Space segments were offset by declines in Rotary and Mission Systems, down 8%, and Aeronautics, down 1%.
Free cash flow swung to negative $291 million from positive $955 million in the year-earlier period. Cash from operations fell to $220 million from $1.4 billion, a decrease the company attributed to higher working capital driven by the timing of billing activities. Capital expenditures rose to $511 million from $454 million.
Beyond Aeronautics, profit declines were broad. Rotary and Mission Systems operating profit fell 19% to $423 million, hurt by unfavorable adjustments on the CH-53K and Seahawk helicopter programs. Space segment operating profit dropped 26% to $281 million, reflecting the absence of favorable performance recorded in the year-earlier quarter on certain commercial civil space programs.
Missiles and Fire Control was the lone bright spot, with operating profit rising 8% to $500 million on higher sales of Patriot missile defense systems and tactical weapons including the Joint Air-to-Surface Standoff Missile and Precision Strike Missile.
Lockheed's total backlog stood at $186.4 billion as of March 29, down from $193.6 billion at the end of 2025. F-35 deliveries fell to 32 aircraft from 47 a year earlier, while the company delivered no F-16s in the quarter compared to four in the first quarter of 2025.
Inflation and tariffs have compounded the problem, with Reuters noting that Lockheed faces rising expenses tied to agreements struck before current cost pressures materialized.
Lockheed CEO Jim Taiclet said in a statement that the company signed framework agreements with the U.S. government during the quarter to accelerate production of Patriot missiles, THAAD interceptors, and Precision Strike Missiles, with the goal of increasing output three to four times current rates. The company reaffirmed its full-year 2026 outlook, projecting sales of $77.5 billion to $80.0 billion and free cash flow of $6.5 billion to $6.8 billion.