Israel’s defense ministry confirmed that it has approved the procurement of two new combat squadrons—one fourth F‑35 squadron and one second F‑15IA squadron—bringing the total Israeli F‑35 fleet to 100 aircraft and the F‑15IA fleet to 50. The order, valued at tens of billions of shekels, will be delivered in stages beginning in 2028 for the F‑35s and 2031 for the F‑15IAs, aligning with Israel’s broader 350 billion‑shekel modernization plan aimed at countering regional threats such as Iran.
Lockheed Martin’s Q1 2026 financial results showed revenue of $18.02 billion, flat against the $18.38 billion consensus estimate and the prior year’s $18.02 billion. Net earnings fell to $1.5 billion from $1.7 billion, and earnings per share dropped to $6.44 from $7.28, missing the $6.79 consensus. Cash from operations plunged to $220 million from $1.4 billion, and free cash flow turned negative at $(291) million versus $955 million in Q1 2025.
The earnings miss was driven by a combination of operational headwinds: a $1.4 billion drop in cash flow was largely due to working‑capital timing and an enterprise‑resource‑planning upgrade, while a $1.4 billion decline in net earnings reflected unfavorable performance adjustments in the Aeronautics and Rotary & Mission Systems segments. The Aeronautics segment saw a 1% decline, and RMS fell 8%, offsetting modest gains in Missiles & Fire Control (+8%) and Space (+7%).
Despite the short‑term execution challenges, Lockheed Martin reaffirmed its full‑year 2026 guidance, projecting sales growth of about 5% and operating‑profit growth of roughly 25% YoY, with free cash flow expected between $6.5 billion and $6.8 billion. Management highlighted that the backlog, now bolstered by the Israeli order, provides strong revenue visibility and supports the company’s long‑term growth trajectory.
Market reaction to the earnings miss was negative, as investors focused on the EPS and revenue shortfalls and the sharp decline in cash flow. However, the announcement of the Israeli procurement was viewed positively by analysts, who noted that the order adds a substantial, long‑term revenue stream and reinforces Lockheed Martin’s strategic partnership with a key U.S. ally.
James Taiclet, Lockheed Martin’s CEO, said the company’s first‑quarter revenue and operating profit were driven by strong customer demand and a focus on operational performance and risk management. CFO Evan Scott added that margins are expected to improve in the second half of 2026 as production milestones are achieved and risks are retired, and that the negative free cash flow in Q1 is temporary.
The combination of a robust backlog, reaffirmed guidance, and a high‑profile defense contract positions Lockheed Martin to navigate short‑term cash‑flow pressures while maintaining its long‑term growth prospects.
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