Lockheed Martin Is Spending On F-35 Lot 20 Beyond What Washington Has Funded
Lockheed Martin warns its results and cash flow will suffer without added funding, as unbilled contract assets reach $16.9 billion.
Lockheed Martin's costs on the F-35 Lot 20 advance contract began to exceed the U.S. government's authorization and funding during the third quarter, the company said in its quarterly filing Thursday. Without more money from Washington, it warns, its results, cash flows and financial condition "will be negatively impacted in future periods."
A funding gap on the F-35
Negotiations with the U.S. government are still under way over contracts covering F-35 lots 20 and higher. The Lot 20 funding sentence did not appear in the prior quarter's 10-Q.
Lockheed Martin, which builds military aircraft, missiles, air defense systems, helicopters and satellites, gets 27% of its sales from the F-35, its largest program. The company says it sometimes funds customer programs itself pending appropriations or contract award, and that costs above obligated funds hurt cash flow and could leave it at risk for reimbursement.
F-35 deliveries were 43 in the third quarter, against 19 in the second quarter. For the first nine months, deliveries were 94, versus 143 a year earlier, according to the earnings release.
Unbilled assets climb to $16.9 billion
Contract assets, revenue the company has booked but not yet billed, rose $3.9 billion in nine months to $16,899 million. The filing ties the increase mainly to the F-35 and to tactical and strike missiles. Pre-contract costs held in inventory reached $1.9 billion, up from $1.5 billion at year-end, and cover the F-35, F-16 and classified programs among others.
The quarter itself was strong: sales rose to $20.7 billion from $18.6 billion, and net earnings were $1.8 billion, or $7.97 per share. Backlog hit $292.0 billion, including $52.5 billion for PAC-3 MSE interceptors. Aeronautics product sales rose $845 million from a year earlier on higher F-35 and C-130 volume. The company raised its 2026 free cash flow outlook to about $7,800 million to $8,000 million.
Cash, dividend and the Ultra Maritime deal
Lockheed Martin reported cash of $5,960 million. It had no net debt issuance and no share repurchases in the nine months, and it authorized a fourth-quarter dividend of $3.60 per share in October, up $0.15.
It expects to fund its pending $3.45 billion purchase of Ultra Maritime from cash on hand. The deal is expected to close in the fourth quarter of 2026. Market value was $127.3 billion.
The next marker is the fourth quarter, when the Ultra Maritime deal is expected to close and the F-35 Lot 20 negotiations continue.
Sources
- 10-Q Filing — Lockheed Martin (LMT) — SEC EDGAR
- 10-Q Filing — Lockheed Martin (LMT), Q2 FY2026 filed 2026-07-23 (comparison basis) — SEC EDGAR
- Earnings release (8-K Item 2.02, ex991q32026.htm) — Lockheed Martin, filed 2026-10-22 — SEC EDGAR
- Lockheed Martin’s (NYSE:LMT) Q3 2026 sales beat estimates — Yahoo Finance
- Lockheed Martin Reports Third Quarter 2026 Financial Results — Yahoo Finance
- Lockheed Martin beats on top and bottom lines in Q3 — CNBC
- Lockheed Q3 Earnings Beat Estimates, Sales Increase Year Over Year — Yahoo Finance
- Lockheed Martin beats estimates as defense sales surge — Yahoo Finance
