By Drew FitzGerald
U.S. weapons makers are fighting a battle on two fronts: ensuring strong returns for investors and trying to satisfy their biggest customer -- the Pentagon.
RTX, Lockheed Martin, Northrop Grumman and L3Harris Technologies said they were working to step up production of missiles, rocket parts and other weapons systems, following pressure from the Trump administration to beef up U.S. arsenals.
At the same time, executives said, they aim to keep setting aside enough cash to reward shareholders who count on the big contractors to deliver steady payouts.
"We absolutely feel the responsibility and urgency to deliver more and to deliver it faster," said Chris Calio, chief executive of RTX, after the company last week reported its annual profit had surged 41%. "And candidly, we understand the frustration."
Trump administration officials have been hounding major defense contractors for months to deliver weapons at a brisker pace, as conflicts from Ukraine to the Middle East eat into U.S. missile stockpiles. Defense Secretary Pete Hegseth in November said that the Pentagon needed an industrial base on a "wartime footing" to address new threats.
In early January, President Trump issued an executive order that threatened to limit defense contractors' spending on CEO pay, dividends and stock buybacks. Trump singled out RTX's Raytheon division for special criticism, saying that military leaders had complained about delayed deliveries and slow investment in new manufacturing capacity.
"Either Raytheon steps up, and starts investing in more upfront Investment like Plants and Equipment, or they will no longer the doing business with Department of War," Trump wrote on his Truth Social platform, using an alternate name that the Defense Department has adopted.
Executives at RTX, which also supplies jet engines and other airplane components, said the company planned to devote more than $3 billion this year to capital expenditures, including investments in missile production. They also defended RTX's dividend payouts for investors, which totaled $3.6 billion last year.
"We recognize our shareholders rely on our dividends, and they've come to expect our dividends," Calio said.
Taking aim
The administration's threats followed a strong year for many of the companies that arm the military. The S&P Aerospace & Defense Select Industry Index, which includes major U.S. contractors, has gained 56% over the past 12 months. The S&P 500 has gained 15% over the same time frame.
Lockheed Martin ended the year with a record $194 billion order backlog and enough cash to help shore up its pension fund. Other companies have also reported orders at record highs.
Companies have reaped gains from a U.S. government-spending pipeline that stretches back years. Under the Trump administration, the Pentagon has said it wants to spend tens of billions of dollars more on priority areas like missiles, next-generation jets and military satellites.
Pentagon officials have spent months urging companies to start expanding now, rather than waiting for contracts to be finalized.
Lockheed Martin responded in January with a commitment to more than triple its output of PAC-3 interceptors, the missiles that fill Patriot air-defense batteries. The company last week pledged to quadruple production of powerful Thaad interceptors.
Contractor L3Harris went further with a plan to spin off its missile unit into a new public company backed by a $1 billion Pentagon investment. The plan would give the U.S. government a minority stake in the business after an initial public offering later this year.
"There is no waiting for contracts or acquisition funding," L3Harris CEO Chris Kubasik said in an investor call. "The investment gives us the confidence to build today."
'Difficult to predict'
Northrop Grumman said it invested early to triple production of certain missile parts. It has also spent money on projects to serve Trump's proposed " Golden Dome" antimissile shield, the new F/A-XX Navy fighter and uncrewed combat jets. But the Pentagon hasn't yet rewarded the company with orders from those marquee programs.
"As we sit here in January, we have not yet seen those opportunities progress toward contract," CEO Kathy Warden said last week on a conference call. "We believe that will happen over the next 24 months. The timing of that is what is much more difficult to predict."
Northrop Grumman finance chief John Greene said the company would pause stock buybacks after January to focus on its industrial base.
General Dynamics, which makes nuclear submarines and Gulfstream business jets, is "committed to the dividend," CEO Phebe Novakovic said during its late January earnings call. While the company doesn't comment on stock buybacks, she acknowledged that they are "not particularly popular right now."
Lockheed Martin executives didn't detail prospective changes in the company's capital-allocation plans.
"We will be continuing to operate in a dynamic way," Lockheed CEO James Taiclet said. "It's actually more dynamic than ever these days."
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com
(END) Dow Jones Newswires
February 02, 2026 08:00 ET (13:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments