LMT · Lockheed Martin Corporation

Management Discussion and Analysis

Operating income decreased 13.0% to $2.1 billion, yielding an operating margin of 11.4%. This decline aligns with gross profit trends and reflects the same underlying drivers: absence of prior-year favorable civil space completions and F-16-related profit adjustments. Operating performance continues to be assessed excluding non-operational items not considered part of management’s evaluation of segment results.

Net income declined 13.1% to $1.5 billion, and diluted earnings per share were $6.44, down 11.5% year-over-year. These results reflect the flow-through of lower operating income, consistent with the company’s ongoing focus on operational efficiency and cost competitiveness amid inflationary pressures.

Consistent with long-term strategy, Lockheed Martin continues to invest in its business through capital expenditures, independent research and development, and selective acquisitions. Management remains committed to scaling operations to meet demand, enhance affordability, and replenish U.S. defense capabilities — all while monitoring the FY2027 budget cycle for evolving funding signals.