Well, we all saw this one coming.
Right on the heels of a deal with the Pentagon to triple Patriot missile interceptor output, Lockheed Martin ($LMT) took things up a notch yesterday, announcing an agreement to quadruple production of Terminal High Altitude Area Defense (THAAD) interceptors over the next seven years.
For all the prime-bashing, things keep getting better in Lockheed Land, especially after raking in $75B in sales with a record $194B backlog last year, according to their Q4 report released yesterday.
Big bad THAAD: The Lockheed-made THAAD interceptors are the crème de la crème of the DoD’s ballistic missile interceptor arsenal, but soaring demand—particularly in the Middle East, where the US expended a quarter of its entire supply during Israel’s 12-day war with Iran last June—and some serious supply chain bottlenecks have cut into the Pentagon’s inventory.
But there’s a good reason THAADs have been such a hot commodity since they first entered service in 2008.
- They’re capable of engaging short, medium, and intermediate-range ballistic missile threats up to 200 km away, including exo-atmospheric targets.
- They’re powered by THAAD batteries that are each operated by roughly 90 soldiers and made up of six truck-mounted launchers, 48 interceptors, a radar, and a fire control unit.
- Critically, the US has only eight batteries and currently produces just 96 interceptors per year (the US Army reportedly fired over 150 during the 12-Day War), and each battery and interceptor costs a whopping $2.73B and $12.7M, respectively, compared to the less fancy Patriot’s $1.1B per-battery and $4M per-missile price tag.
Wheeling and dealing: Under Lockheed’s new framework agreement with the Pentagon, the world’s largest defense contractor by revenue will ramp up annual THAAD production to 400 over the next seven years, the same time frame under their PAC-3 MSE deal.
To support that big boost, Lockheed’s planning to make a “multibillion-dollar investment” to expand production capacity, including at a new facility in Arkansas. Sounds like someone was reading the president’s social media posts dragging the primes for not “investing in more upfront Investment like Plants and Equipment” (sorry, RTX).
Missile moolah: While details for the “deal framework” haven’t been hammered out, Lockheed certainly has a big Brinks truck headed their way.
In a statement, the company added that they’re working with the government on an “initial contract award on the THAAD framework agreement, expected in the final fiscal year 2026 Congressional appropriations and other sources of funding.” We’ll find out what that means.
Predictably, Lockheed CEO Jim Taiclet was pretty fired up about the deal.
“We are committed to further building on the Department of War’s vision for advancing acquisition reform with additional framework agreements for the critical munitions needed by the U.S. military and our allies,” he said. “Today’s agreement to quadruple THAAD production means we will have more interceptors available than ever before to deter our adversaries.”
Lockheed shares jumped this morning at the news. We’ve said it before, and we’ll say it again: the three certainties in life are death, taxes, and champagne popping at Lockheed Martin HQ.