Lockheed Martin (LMT) reported Q2 2025 sales of $18.2 billion, effectively flat compared to the $18.1 billion posted in the same quarter last year. Sequentially, revenue improved modestly by 1.1%, up from $18.0 billion in Q1 2025. However, beneath the topline stability, segment performance varied widely and profitability took a substantial hit due to significant program losses.

Missiles & Fire Control (MFC) led the growth with an 11% year-over-year increase to $3.43 billion, fueled by strong demand across missile programs like JASSM, LRASM, and precision fires. Aeronautics edged up 2% to $7.42 billion, thanks to higher F-35 production volumes, though this was undercut by a $950 million loss on a classified program, dragging segment operating profit into the red at - $98 million. Space grew 4% to $3.31 billion, supported by increased activity on the Orion and Next Generation Interceptor programs. Conversely, Rotary & Mission Systems (RMS) saw sales decline 12% to $4.0 billion, largely due to reduced volume on radar and CSC programs and steep losses on the CMHP ($570 million) and TUHP ($95 million) programs.

Overall, these program charges took a heavy toll on profitability. Operating profit plunged 65% year-over-year to $748 million, while operating margin compressed sharply to 4.1%, down from 11.9% a year earlier. Net earnings dropped 79% to $342 million, and diluted EPS fell to $1.46, from $6.85 in Q2 2024.

In terms of revenue composition, product sales accounted for 83.5% of total sales, while services made up the remaining 16.5%, both roughly flat from a year ago. The F-35 program remained a cornerstone, representing 28% of total sales, and the U.S. government comprised 73% of revenue, underscoring the company’s strong domestic defense alignment.

Lockheed Martin ended the quarter with a backlog of $166.5 billion, down from $176.0 billion at year-end 2024, though 38% of that total is expected to convert into revenue over the next 12 months. Key contract wins during the quarter included new F-35 orders from allied nations, over $1 billion in missile contracts from the U.S. Army, and additional GPS IIIF satellites from the U.S. Space Force.

Despite the near-term challenges, CEO Jim Taiclet reaffirmed full-year 2025 sales guidance of $73.75–$74.75 billion, pointing to sustained global demand for advanced defense platforms and continued investment in innovation. Management emphasized readiness for a “growth inflection,” although risks such as budget uncertainty, supply chain pressures, and program execution hurdles remain closely monitored.