Lockheed Martin Faces Share Price Drop Amid Q2 Earnings Slash Due to Program Losses
Lockheed Martin Corp. shares fell sharply after reporting unexpected program losses leading to a significant reduction in second-quarter earnings, highlighting challenges in defense contracting.
Lockheed Martin Corp. (NYSE: LMT) saw its share price decline by 7.2% in premarket trading following the announcement of a substantial reduction in second-quarter earnings, attributed to over $1.6 billion in program-related charges. The defense contractor reported revenue of $18.2 billion for the quarter, missing analysts' expectations and showing a slight increase from the previous year. Net earnings dropped to $342 million, or $1.46 per share, from $1.6 billion, or $6.85 per share, a year ago, with significant write-downs affecting various programs.
The company faced a $950 million pretax charge on a classified Aeronautics program due to cost overruns and performance issues, alongside $570 million in losses from the Canadian Maritime Helicopter Program and $95 million related to Turkey's utility helicopter program. Additional charges further impacted earnings, totaling a reduction of $5.83 per share. Despite these setbacks, CEO Jim Taiclet reassured investors of the company's long-term growth prospects and its critical role in global operations.
Cash generation also suffered, with cash from operations falling to $201 million from $1.9 billion the previous year, and free cash flow turning negative. Lockheed Martin maintained its full-year 2025 sales guidance but sharply reduced its earnings per share forecast. Segment performance varied, with Aeronautics revenue up but operating loss due to write-downs, while Missiles and Fire Control saw sales and profit increases. The company emphasized its strong backlog and investment in next-generation technologies, despite market concerns over execution risks and margin pressures.