Lockheed Martin enters Q2 2026 reporting with total backlog at $186.4 billion as of March 29, down from the record $193.6 billion at year-end 2025, primarily due to F-35 and F-16 deliveries exceeding new bookings in the Aeronautics segment. Strong underlying demand for missiles, rotary systems, and space programs, supported by elevated U.S. and allied defense budgets, has kept segment operating margins resilient and full-year sales guidance reaffirmed at roughly 5% growth. Traders will focus on July 21 earnings for evidence of order momentum that could reverse the sequential decline, with conversion of the existing book (34% expected in the next 12 months) providing a key floor. Macro factors such as Treasury yields and federal spending trajectories add further context to near-term backlog trajectory.