WASHINGTON — Lockheed Martin has signed an agreement with the Pentagon to quadruple production of Terminal High Altitude Area Defense (THAAD) interceptors over the next seven years, marking the company’s second such deal aimed at ramping up munitions manufacturing since the start of 2026.
Once finalized, the agreement will allow THAAD interceptor production to grow from its current rate of 96 missiles a year to an annual rate of 400 interceptors, the company said today in a news release.
During an earnings call this morning, Lockheed CEO Jim Taiclet told investors that the deal will need Congress to approve fiscal 2026 funding before a final contract is definitized, with the expectation that the THAAD program is “up and running under the framework agreement” this year.
The THAAD announcement comes weeks after a previous deal to increase PAC-3 production and hours before the company is slated to break ground on a new “munitions acceleration center” in Camden, Ark.
“We intend to make a multi-billion dollar investment to accelerate munition production over the next three years, including building facilities across five states,” Taiclet said.
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The new facility in Camden will “ will prepare the workforce of the future to build THAAD, PAC-3 and other capabilities using advanced manufacturing, robotics and digital technologies,” Lockheed said in a news release.
In addition to the Camden factory, Lockheed said it would make investments to improve tooling and modernize more 20 manufacturing sites in Alabama, Florida, Massachusetts and Texas.
The announcement comes against the backdrop of pressure from President Donald Trump on defense companies to invest more in production.
During the earnings call, Lockheed executives stressed that the THAAD agreement — like the PAC-3 deal before it — is not meant to be punitive to the company. For instance, should Congress or the Defense Department decide to walk away from the multiyear agreements in future years, there are provisions in the agreement that would reimburse Lockheed for any investments made to support a multiyear buy.
“I think we’re going to see some partnership with cash flow terms to make sure that we’re well supported as we make these investments,” Chief Financial Officer Evan Scott said. “I think you are going to see an elevated working capital benefit or operational benefit to offset some of these capex expenditures.”
Taiclet added that the THAAD and PAC-3 deals also contains a profit-sharing framework where, “above a certain robust level,” Lockheed will share some of its profits back with the government by reinvesting those funds into its factories or in spare parts.
More broadly, Taiclet said Lockheed would increase its capital expenditures from $1.6 billion in 2025 to at least $2.5 billion in 2026 in accordance with the Trump administration’s push for defense contractors to increase investments in modernizing production facilities. Together with internal research and development spending, Lockheed plans to invest about $5 billion in 2026.
However, Taiclet demurred when asked whether the company would abide by Trump’s stated directive for defense contractors to forgo stock buybacks and dividends.
“We will be evaluating all of our capital deployment options as time progresses,” he said. “We’ll announce those decisions as they occur, publicly, as required and as has been our practice.”