The factories that build missiles and the yards that build Navy ships are booked out for years. That is not a one-quarter story. It is a multi-year restocking cycle, visible in record contractor backlogs and in a Pentagon budget that is trying to refill magazines and grow the fleet at the same time.
For investors, the big defense primes have turned into long-duration cash machines: orders sit on the books for years, and free cash flow often arrives before every missile or hull is finished. For households, the same trend shows up as a larger national security bill, more skilled manufacturing jobs in a handful of industrial regions, and a reminder that geopolitics has a price tag that does not show up on a grocery receipt.
- Lockheed Martin filings: second-quarter sales rose 11% to $20.1 billion, free cash flow reached $2.9 billion, and backlog hit a record $230 billion after $65 billion of new orders, helped by a $35 billion multi-year THAAD interceptor contract.
- RTX filings: second-quarter sales rose 14% to $24.7 billion, company backlog reached $289 billion including $119 billion of defense work, and Raytheon sales rose 18% on Patriot, Standard Missile and AMRAAM volume.
- HII filings: second-quarter revenue rose 10.9% to $3.42 billion, new awards were $6.7 billion, and total backlog reached $57.3 billion as of June 30, with shipbuilding guidance raised to $10.2 billion to $10.4 billion for 2026.
- U.S. Navy budget materials: the fiscal 2027 request seeks $65.8 billion for shipbuilding to buy 18 battle force ships and 16 auxiliary ships, plus $22.6 billion for weapons procurement including Standard Missiles, Tomahawks and Patriot PAC-3s.
Missiles first: the restock that shows up in the backlog
Conflicts overseas and allied air-defense demand have pulled U.S. missile inventories down. The contractors that make those systems are answering with higher production rates and multi-year buys.
Lockheed Martin's Missiles and Fire Control segment is the clearest example. Segment sales rose 19% in the second quarter to $4.10 billion, led by production ramps on PAC-3 and THAAD air and missile defense programs and on the Precision Strike Missile. Segment backlog jumped to $87.9 billion at midyear from $46.7 billion at year-end 2025, and the company signed a $35 billion multi-year contract with the Missile Defense Agency for THAAD interceptors. That single award is a big reason total company backlog climbed to a record $230.4 billion from $193.6 billion six months earlier.
At RTX, Raytheon posted $8.27 billion of sales in the same quarter, up 18%, on higher volume across land and air defense, naval programs, and air and space defense systems, including Patriot, Standard Missile and AMRAAM. RTX as a whole reported a $289 billion backlog, with $119 billion on the defense side and $170 billion commercial. Management said the company backlog was up 22% from a year earlier.
The Navy's fiscal 2027 budget request puts official numbers under that demand. Weapons procurement is lined up at $22.6 billion, with explicit investment in Standard Missiles, Tactical Tomahawks and Patriot PAC-3s. That is the customer signal behind the factory ramps: the government is trying to refill magazines, not just talk about readiness.
Shipbuilding: a slower, longer cash cycle
Ships take years to design, fund and deliver, so the shipbuilding story is about throughput and industrial capacity as much as any one quarter's sales.
HII, the largest U.S. naval shipbuilder, grew second-quarter revenue 10.9% to $3.42 billion. Newport News Shipbuilding, which builds carriers and submarines, rose 15.3% to $1.85 billion on higher carrier and submarine volume. Ingalls Shipbuilding rose 16.7% to $845 million, helped by amphibious assault ships, and during the quarter won lead-yard support work for the Navy's new FF(X) frigate class. New awards of $6.7 billion lifted total backlog to $57.3 billion as of June 30. Management raised full-year shipbuilding revenue guidance to $10.2 billion to $10.4 billion and lifted the low end of its shipbuilding margin outlook.
The Navy's own request matches that industrial push. The fiscal 2027 shipbuilding ask is $65.8 billion for 18 battle force ships and 16 auxiliary ships, including a Columbia-class ballistic-missile submarine, two Virginia-class attack submarines, an Arleigh Burke destroyer, a new FF(X) frigate, amphibious ships and six medium landing ships, plus continued funding for Ford-class carriers. Acting Navy leadership has framed the plan as a generational industrial-base rebuild, not a one-year shopping list.
That is why shipyard backlog matters to patient investors. A large share of HII's remaining performance obligations is expected to convert over several years, which means revenue visibility stretches well past the next earnings print even when free cash flow is lumpy from working-capital timing.
What the primes are guiding to
Lockheed raised its 2026 outlook after the second quarter. Sales guidance moved to about $79.75 billion to $81.75 billion, with free cash flow now projected at about $7.0 billion to $7.2 billion. The company said it now expects roughly 8% year-over-year sales growth and about 28% higher segment operating profit.
RTX also raised its full-year view: adjusted sales to $95.0 billion to $96.0 billion, organic sales growth to 8% to 9%, adjusted earnings per share to $7.10 to $7.25, and free cash flow to $8.50 billion to $8.75 billion. Defense growth and commercial aerospace aftermarket are both carrying the raise, which means RTX is not a pure-play munitions story, but Raytheon's 18% sales jump shows how quickly the defense side can move when production lines are filled.
HII's raise was more surgical: higher shipbuilding revenue and a firmer floor under shipbuilding margins, while free cash flow guidance stayed at $500 million to $600 million for the year. The company has been clear that throughput and labor productivity at the yards are the swing factors.
Why the shares can look boring while the backlogs do not
Defense contractors often trade like slow compounders. Margins on cost-plus and fixed-price government work are capped relative to software or consumer platforms, and political risk never fully goes away. Budget fights, continuing resolutions and export-license delays can all slow award timing.
What has changed is the duration of the order book. When Missiles and Fire Control backlog nearly doubles in six months, or when a shipyard carries more than $50 billion of work, the debate shifts from \"will next quarter beat\" to \"can the industrial base hire, train and deliver.\" Investors who own these names for dividends and multi-year cash flow care more about execution, pension assumptions and working-capital swings than about any single day's tape.
Lockheed and RTX also return a lot of cash through dividends. That income stream is part of why long-horizon portfolios keep a defense sleeve even when growth stocks are louder. HII is smaller and more concentrated in Navy programs, so it behaves more like a pure shipyard bet tied to submarine and carrier schedules.
What investors should watch
The third-quarter calendar is the near-term catalyst list. RTX is scheduled to report on Oct. 20. Lockheed Martin follows on Oct. 22. HII reports on Oct. 29.
Three questions matter more than the headline earnings number. First, are missile production rates still rising, and do book-to-bill ratios stay above 1.0 on air and missile defense? Second, are shipyards converting backlog into revenue without another big working-capital drain? Third, what do management teams say about 2027 funding after Congress works through the fiscal 2027 request, especially the $65.8 billion shipbuilding line and the $22.6 billion weapons ask.
Watch also for supplier and labor commentary. Missiles and ships both depend on specialized components, skilled welders and long-lead materials. Capacity adds that look good in a press release can take years to show up as delivered units.
What it means for your household
Most households do not buy a Patriot interceptor. They do fund the federal budget that buys them. A larger munitions and shipbuilding bill is one reason defense outlays remain a heavy share of discretionary spending, and it competes with other priorities at the margin.
The local upside is industrial. Shipyards in Virginia, Mississippi and related supply chains, plus missile plants across several states, are hiring for multi-year work. For workers and small suppliers in those regions, backlog is a jobs story. For investors with taxable brokerage accounts or IRAs, the same companies can be a way to own that cash flow without trying to time geopolitics week by week.
A practical approach for retirement-age households is to treat defense primes as dividend and cash-flow holdings, sized so that a budget delay or a fixed-price program stumble does not force a sale. Revisit the thesis when Q3 reports land: if orders keep coming in faster than deliveries, the multi-year restock thesis is intact. If awards slow while cash conversion worsens, the story is shifting from demand to execution risk.
The bottom line: America is trying to refill missile magazines and rebuild naval capacity at the same time, and the order books at Lockheed, RTX and HII already show it. That can support years of contractor cash flow for patient shareholders, even as households keep paying for the security bill through taxes. This article is general information, not personalized financial advice.
