Lockheed Martin’s Backlog Hits $292 Billion, Up 27% in Third Quarter
Key Facts
Lockheed Martin reported a record backlog of $292 billion in the third quarter of 2026, up 27% from the second quarter, according to the company’s results statement. The total includes $52.5 billion tied to a multiyear agreement to produce PAC-3 MSE interceptors. The figure reflects the volume of contracted work awaiting execution, but does not represent revenue already recognized during the quarter. The backlog announcement came as the company raised its annual forecasts for sales, earnings per share and free cash flow. Reuters linked demand for the company’s systems to geopolitical conflicts, noting the heavy use of PAC-3 inventories in the Iran war.
The company raised its 2026 sales forecast range to $80–82 billion, from $79.75–81.75 billion in its previous estimates. It also raised its forecast for diluted earnings per share to $30.35–30.75, compared with a previous range of $29.95 to $30.65. Chief Executive Jim Taiclet said all four of the company’s business segments posted year-over-year growth in the third quarter. He added that this was the second consecutive quarter in which the company had raised its financial forecasts. That puts the backlog in the context of expected business growth, while conversion of contracts into sales remains contingent on execution.
Lockheed Martin also raised its 2026 free cash flow forecast to $7.8–8 billion, from $7–7.2 billion previously. But free cash flow was $3 billion in the third quarter, compared with $3.3 billion in the same period of 2025, according to the company’s statement. The divergence between the quarterly figure and the annual forecast shows that the higher full-year estimate does not mean cash flow improved year over year during the quarter. The updated forecast accompanies higher expected sales and profitability. The outlook remains tied to execution and collections through the rest of the year.
The backlog increase includes a multiyear agreement to produce PAC-3 MSE interceptors, while the company said in a media briefing that a framework agreement announced in January 2026 runs for seven years. Under the agreement, Lockheed is targeting an increase in annual capacity from about 600 interceptors to 2,000 by the end of 2030. The company said it delivered 620 missiles of this type in 2025 and increased production by more than 60% over the previous two years. These figures link the record backlog to a production expansion program with a defined timeline, while reaching the targeted rate remains scheduled for the end of the decade. Reuters had noted that U.S. and allied forces were using PAC-3 inventories heavily in the Iran war.
By contrast, the company warned of a funding issue involving F-35 aircraft. It said it is still negotiating with the U.S. government over production contracts for Lot 20 and beyond, and that costs it incurred began during the third quarter to exceed the authorization and funding currently available under the Lot 20 advance procurement contract. It added that results, cash flows and financial position in future periods could be affected if it does not receive additional authorization and funding. The warning places an element of execution risk alongside the expansion of interceptor programs and the backlog. The company did not specify in its statement when the negotiations would be resolved.
After the results, agreement and higher annual forecasts were announced, Lockheed Martin shares rose as much as 10% in trading cited on October 22, 2026, according to Reuters. The share move came as the company raised its estimates for sales, earnings per share and free cash flow. The reported backlog remains separate from revenue that will be recognized as the work is executed, while the impact of production expansion depends on reaching the targeted levels. The furthest production milestone cited in the company’s briefing is annual capacity of 2,000 interceptors by the end of 2030. In the near term, the company said F-35 contract negotiations are still ongoing.