Lockheed Martin Corporation [NYSE: LMT], the world’s largest defense contractor, reported second-quarter 2025 earnings that fell well below analyst expectations, driven largely by significant charges on multiple programs.
The company posted an operating profit of $748 million, marking a steep 65% decline from the prior year and falling short of the $2.15 billion estimate from a Bloomberg survey.
Net sales came in at $18.2 billion, slightly higher than the $18.1 billion in the same quarter a year ago but still underwhelming compared to analyst expectations.
Net earnings for the quarter were $342 million, or $1.46 per share, compared to $1.6 billion, or $6.85 per share, in the second quarter of 2024.
The company incurred $1.6 billion in pre-tax losses related to program charges and $169 million in other charges, which together impacted earnings per share by $5.83.
These charges stemmed from issues across several major programs, including classified projects in the Aeronautics segment and helicopter programs under the Rotary and Mission Systems (RMS) segment.
Following the report, Lockheed Martin’s stock price fell as much as 8.5% in premarket trading, reflecting investor concern over the company’s earnings miss and lowered outlook.
Program-specific challenges identified
One of the most significant setbacks came from a classified program in the Aeronautics segment.
Lockheed cited ongoing design, integration, and testing issues that worsened in 2025, prompting a comprehensive internal review.
The resulting process and schedule changes led to an additional $950 million in pre-tax losses.
In the RMS segment, two helicopter programs also contributed to the financial drag.
The Canadian Maritime Helicopter Program (CMHP) accounted for $570 million in pre-tax losses after revised cost and sales estimates were made based on updated customer communications and evolving mission requirements.
Similarly, the Turkish Utility Helicopter Program (TUHP) saw an additional $95 million in reach-forward losses as discussions to restructure the program continued.
Beyond program-specific losses, Lockheed Martin also absorbed $66 million in asset write-offs linked to the US Air Force’s Next Generation Air Dominance (NGAD) down-select decision, and a $103 million charge stemming from tax-related adjustments proposed by the Internal Revenue Service.
Outlook and Shareholder Returns
In light of these developments, Lockheed Martin revised its full-year 2025 earnings per share guidance to a range of $21.70 to $22.00, down from a previous high-end forecast of $27.30.
Despite the challenging quarter, the company reaffirmed its guidance for full-year sales, cash from operations, capital expenditures, free cash flow, and share repurchases.
Cash from operations in the quarter was $201 million, compared to $1.9 billion a year earlier.
Free cash flow turned negative at $150 million, versus $1.5 billion in Q2 2024.
Still, Lockheed Martin returned $1.3 billion to shareholders through dividends and share repurchases, and invested $800 million in infrastructure and innovation aimed at supporting future growth.
Chairman and CEO Jim Taiclet remained optimistic, citing increased global demand for defense systems such as the F-35, PAC-3, and THAAD.
While acknowledging the impact of newly identified risks and execution challenges, Taiclet emphasized the company’s commitment to delivering critical defense capabilities and its readiness to support both US and allied military needs.
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