L3Harris Technologies Reports Robust Second Quarter 2026 Results

L3Harris Technologies (NYSE: LHX) reports second quarter 2026 results.

Highlights

• Orders of $7.3 billion; book-to-bill of 1.2x increases backlog to record $42 billion

• Revenue of $5.9 billion, up 8%

• Operating margin of 11.1%, up 60 bps; Segment operating margin of 16.0%

• Diluted EPS of $3.13, up 28%

• Operating cash flow of $879 million; Free cash flow of $771 million, both up 37%

• Increased 2026 guidance for consolidated revenue and EPS

“Our Trusted Disruptor culture, underpinned by early and strategic investments and leveraging our commercial business model, continues to deliver results. We deploy capabilities to support the warfighter’s need to sense, connect and respond, addressing today’s complex threat environment quickly and at scale,” said Christopher Kubasik, Chairman and CEO.

Kubasik added, “Our purpose-built portfolio and focus on execution drove outstanding second quarter results. Strong orders, record backlog and double-digit first half growth reinforce our multi-year track record of delivering on our financial commitments.”

SUMMARY FINANCIAL RESULTS

		Second Quarter								Year to Date								2026 Guidance
	($ millions, except per share data)		2026				2025				2026				2025
	Revenue
	Space & Mission Systems	$	2,966			$	2,770			$	5,956			$	5,181
	Communications & Spectrum Dominance		1,943				1,861				3,798				3,670
	Missile Solutions		1,054				925				2,044				1,765
	Intersegment		(82	)			(130	)			(173	)			(204	)
	Segment revenue1		5,881				5,426				11,625				10,412
	Other2		—				—				—				146
	Revenue	$	5,881			$	5,426			$	11,625			$	10,558			$23.2B – $23.7B (Prior: $23B – $23.5B)
	Operating income
	Space & Mission Systems	$	290			$	289			$	603			$	527
	Communications & Spectrum Dominance		522				458				987				901
	Missile Solutions		130				116				254				212
	Segment operating income1		942				863				1,844				1,640
	Unallocated corporate items and other, net2 (see Table 4)		(288	)			(292	)			(538	)			(544	)
	Operating income	$	654			$	571			$	1,306			$	1,096
	Operating margin		11.1	%			10.5	%			11.2	%			10.4	%
	Segment operating margin1		16.0	%			15.9	%			15.9	%			15.8	%		low 16%
	Tax rate
	Effective tax rate		15.5	%			12.6	%			14.4	%			14.1	%
	GAAP EPS
	Diluted EPS	$	3.13			$	2.44			$	5.85			$	4.48			$11.80 – $12.00 (Prior: $11.40 – $11.60)
	Diluted weighted-average common shares outstanding		187.3				187.8				187.7				188.5
	Cash flow
	Cash from operations	$	879			$	640			$	784			$	598			$3.6B
	Free cash flow3	$	771			$	561			$	584			$	460			$3.0B
	Repurchases of common stock	$	229			$	253			$	525			$	822
	Dividends paid	$	232			$	225			$	470			$	453
1 Segment revenue, operating income, and margin are non-GAAP Financial Measures as defined by Regulation G and reconciled to GAAP in Table 5. A reconciliation of segment operating margin on a forward-looking basis to GAAP is not available without unreasonable effort due to the unavailability of items for exclusion from the GAAP measure. We are unable to address the probable significance of this information, the variability of which may have a significant impact on future GAAP results.   2 Includes other non-reportable businesses, which is the divested Commercial Aviation Solutions business (“CAS disposal group”).   3 Free cash flow is a non-GAAP Financial Measure defined and reconciled to GAAP in Table 6. Net cash provided by operating activities is anticipated to be approximately $3.6 billion and capital expenditures are anticipated to be approximately $600 million.

Revenue: Second quarter revenue increased $455 million, up 8%, driven by growth across all segments resulting from new program starts and strong execution against our record backlog.

Operating Income: Second quarter operating income increased $83 million, up 15%. Operating margin was 11.1%, up 60 bps. The improvement in operating income was driven by an increase in segment operating income primarily at Communications & Spectrum Dominance and lower corporate and other expense.

Segment Operating Income: Second quarter segment operating income increased $79 million, up 9%. Segment operating margin was 16.0%, up 10 bps. Segment operating income grew across all segments due to increased volume and improved program performance, partially offset by the absence of $92 million in gains recognized in connection with the sale of assets in second quarter 2025 as well as increased research and development costs.

GAAP EPS: Second quarter GAAP EPS increased 28% to $3.13 driven by higher volume, improved program performance, lower corporate and other expense, including the non-cash preferred stock deemed dividend, partially offset by lower net asset and investment gains.

Cash Flow: Cash from operations was $879 million, driven by higher net income and working capital timing. Capital expenditures were $108 million, contributing to free cash flow of $771 million, up 37%.

SEGMENT RESULTS

Space & Mission Systems

		Second Quarter											Year to Date											2026 Guidance
	($ millions)		2026				2025			Change				2026				2025			Change
	Revenue	$	2,966			$	2,770			7%			$	5,956			$	5,181			15%			~$11,700 (Prior: ~$11,500)
	Operating margin		9.8	%			10.4	%		(60) bps				10.1	%			10.2	%		(10) bps			mid 10%

Revenue: Second quarter revenue increased 7%, primarily due to higher revenues of $81 million in ISR from higher volumes on missionized aircraft programs, $76 million in Space Systems from higher volumes on classified space programs, $40 million in Mission Networks from higher FAA volume and $34 million in Airborne Solutions from higher F-35 volumes, partially offset by lower revenue in Intel and Cyber from lower classified program volume.

Operating Margin: Second quarter operating margin decreased 60 bps to 9.8% driven by the absence of a $75 million gain recognized in connection with the sale of assets from a product line in second quarter 2025, partially offset by improved program performance and a $23 million net gain in segment investment income.

Communications & Spectrum Dominance

		Second Quarter										Year to Date										2026 Guidance
	($ millions)		2026				2025			Change			2026				2025			Change
	Revenue	$	1,943			$	1,861			4%		$	3,798			$	3,670			3%		~$8,000
	Operating margin		26.9	%			24.6	%		230 bps			26.0	%			24.6	%		140 bps		mid 25% (Prior: ~25%)

Revenue: Second quarter revenue increased 4%, primarily driven by higher revenue of $70 million in Mission Critical Communications associated with increased international deliveries for our software-defined resilient communications equipment and higher revenue in Spectrum Superiority from program ramps, partially offset by lower volume in Targeting and Sensor Systems.

Operating Margin: Second quarter operating margin increased 230 bps to 26.9% primarily driven by higher international volume and a $16 million net gain in segment investment income, partially offset by increased investments in research and development as well as higher selling and marketing expenses and the absence of a $17 million gain recognized in connection with the sale of assets from a product line in second quarter 2025.

Missile Solutions

		Second Quarter										Year to Date										2026 Guidance
	($ millions)		2026				2025			Change			2026				2025			Change
	Revenue	$	1,054			$	925			14%		$	2,044			$	1,765			16%		~$4,100
	Operating margin		12.3	%			12.5	%		(20) bps			12.4	%			12.0	%		40 bps		low 12%

Revenue: Second quarter revenue increased 14%, primarily driven by higher revenue of $85 million in Propulsion Systems as growth from increased production and development volumes on key missile and munitions programs was partially offset by lower growth in our space propulsion business. Revenue also increased by $44 million in Advanced Effects from higher volumes and program ramps.

Operating Margin: Second quarter operating margin decreased 20 bps to 12.3%, driven by the absence of a favorable contract resolution during second quarter 2025.

Forward-Looking Statements

This earnings release contains forward-looking statements within the meaning of federal securities laws made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Examples include, but are not limited to: planned investments and capacity expansion; our pipeline and backlog expansion; 2026 guidance; the impact of recent and expected contract awards; the 2028 financial framework; divestiture and subsidiary offering timing; the impact of the global security environment; projections of other financial items; and assumptions underlying any of the foregoing. Investors should not place undue reliance on forward-looking statements, which reflect management’s current expectations, estimates, projections, assumptions and information currently available to management, and are not guarantees of future performance or actual results. Important risks that could cause our results to differ materially from those expressed in or implied by these forward-looking statements or from our historical results include, but are not limited to, risks arising from: competitive markets; U.S. Government spending priorities; changes in contract mix; unilateral contract action by the U.S. Government or unexpected issues related to the DoW’s investment in our subsidiary; uncertain economic conditions; future geo-political events; supply chain disruptions; indebtedness; interest rates and other market factors; and changes in effective tax rate or additional tax exposures. These and other important risks that could impact forward-looking statements are described more fully in the “Risk Factors” in our Form 10-K for fiscal 2025. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are qualified by the cautionary statements in this section, and we have no duty to and disclaim any intention or obligation, other than imposed by law, to update or revise any forward-looking statements, whether as a result of new information, future events or developments or otherwise.

Table 1 – Condensed Consolidated Statement of Operations (Unaudited)
	Second Quarter								Year to Date
($ millions, except per share amounts)		2026				2025				2026				2025
Revenue	$	5,881			$	5,426			$	11,625			$	10,558
Cost of revenue		(4,379	)			(4,091	)			(8,721	)			(7,873	)
General and administrative expenses		(848	)			(764	)			(1,598	)			(1,589	)
Operating income		654				571				1,306				1,096
Non-service FAS pension income and other, net1		185				105				258				189
Interest expense, net		(129	)			(152	)			(265	)			(302	)
Income before income taxes		710				524				1,299				983
Income tax expense		(110	)			(66	)			(187	)			(139	)
Net income	$	600			$	458			$	1,112			$	844
Subsidiary preferred stock deemed dividend		(14	)			—				(14	)			—
Net income available to common shareholders	$	586			$	458			$	1,098			$	844
Earnings per share available to common shareholders
Basic	$	3.15			$	2.45			$	5.89			$	4.50
Diluted	$	3.13			$	2.44			$	5.85			$	4.48
Weighted-average common shares outstanding
Basic		186.2				187.0				186.5				187.7
Diluted		187.3				187.8				187.7				188.5
1“FAS” is defined as Financial Accounting Standards.

Table 2 – Condensed Consolidated Balance Sheet (Unaudited)
($ millions)	July 3, 2026			January 2, 2026
Assets
Current assets
Cash and cash equivalents	$	1,521		$	1,069
Receivables, net		1,950			1,371
Contract assets		3,674			3,566
Inventories, net		1,272			1,219
Other current assets		656			484
Assets of business held for sale		1,010			884
Total current assets		10,083			8,593
Non-current assets
Property, plant and equipment, net		2,686			2,665
Goodwill		19,996			20,010
Intangible assets, net		6,540			6,509
Deferred income taxes		65			76
Other non-current assets		3,568			3,342
Total assets	$	42,938		$	41,195
Liabilities, mezzanine equity, and equity
Current liabilities
Current portion of long-term debt	$	1,815		$	673
Accounts payable		2,085			2,461
Contract liabilities		2,936			2,262
Compensation and benefits		376			482
Other current liabilities		1,192			1,235
Liabilities of business held for sale		113			113
Total current liabilities		8,517			7,226
Non-current liabilities
Long-term debt, net		9,184			10,443
Deferred income taxes		1,369			1,114
Subsidiary Series A preferred stock conversion feature		130			—
Subsidiary warrants		186			—
Other non-current liabilities		2,702			2,777
Total liabilities		22,088			21,560
Mezzanine equity
Redeemable subsidiary Series A convertible preferred stock		968			—
Total equity		19,882			19,635
Total liabilities, mezzanine equity, and equity	$	42,938		$	41,195

Table 3 – Condensed Consolidated Statement of Cash Flows (Unaudited)
	Second Quarter								Year to Date
($ millions)		2026				2025				2026				2025
Operating Activities
Net income	$	600			$	458			$	1,112			$	844
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization		288				303				570				604
Share-based compensation		28				29				49				48
Net periodic benefit income		(69	)			(66	)			(139	)			(150	)
Share-based matching contributions under defined contribution plans		45				68				107				136
Net investment gains		(73	)			(6	)			(77	)			(4	)
Deferred income taxes		63				(5	)			182				(94	)
(Increase) decrease in:
Receivables, net		(52	)			64				(675	)			(383	)
Contract assets		(210	)			(214	)			(138	)			(634	)
Inventories, net		(38	)			(6	)			(55	)			86
Other current assets		39				(3	)			(179	)			(22	)
Increase (decrease) in:
Accounts payable		158				(14	)			(369	)			38
Contract liabilities		195				193				656				177
Compensation and benefits		(18	)			130				(105	)			25
Other current liabilities		(73	)			(279	)			(88	)			(268	)
Income taxes		2				48				(5	)			321
Other operating activities		(6	)			(60	)			(62	)			(126	)
Net cash provided by operating activities		879				640				784				598
Investing Activities
Capital expenditures		(108	)			(88	)			(207	)			(147	)
Proceeds from disposal of property, plant and equipment, net		—				9				7				9
Proceeds from sales of businesses, net of cash divested		—				—				—				831
Other investing activities		(6	)			1				(11	)			(27	)
Net cash (used in) provided by investing activities		(114	)			(78	)			(211	)			666
Financing Activities
Proceeds from issuance of subsidiary Series A preferred stock, net		973				—				973				—
Proceeds from issuances of long-term debt, net		—				—				—				—
Repayments of long-term debt		(6	)			(606	)			(112	)			(611	)
Change in commercial paper, net		(350	)			450				—				470
Repurchases of common stock		(229	)			(253	)			(525	)			(822	)
Dividends paid		(232	)			(225	)			(470	)			(453	)
Other financing activities		11				24				17				1
Net cash provided by (used in) financing activities		167				(610	)			(117	)			(1,415	)
Effect of exchange rate changes on cash and cash equivalents		(1	)			13				(4	)			18
Net increase (decrease) in cash and cash equivalents		931				(35	)			452				(133	)
Cash and cash equivalents, beginning of period		590				517				1,069				615
Cash and cash equivalents, end of period	$	1,521			$	482			$	1,521			$	482

Table 4 – Unallocated Corporate Items and Other, Net (Unaudited)
	Second Quarter						Year to Date
($ millions)	2026			2025			2026			2025
Amortization of acquisition-related intangibles	$	177		$	193		$	350		$	387
LHX NeXt implementation costs1		—			39			—			74
Business divestiture-related losses1		—			—			10			17
Acquisition, divestiture and transaction-related expenses1		10			13			40			30
Segment investment income1		39			—			39			—
Change in fair value of deferred compensation plan liabilities		43			29			38			23
Other items2		19			18			61			13
Unallocated corporate items and other, net	$	288		$	292		$	538		$	544
1 Refer to Key Terms on page 11.   2 Includes a portion of management and administration, legal, environmental, compensation, retiree benefits, corporate eliminations and other. Year to date 2025 also includes the divested CAS disposal group.

Table 5 – Reconciliation of Revenue, Operating Income and Margin to Segment Revenue, Operating Income and Margin – Non-GAAP Financial Measures Reconciliation (Unaudited)
	Second Quarter								Year to Date
($ millions)		2026				2025				2026				2025
Revenue (B)	$	5,881			$	5,426			$	11,625			$	10,558
Revenue attributable to our divested CAS disposal group		—				—				—				(146	)
Segment revenue1 (D)	$	5,881			$	5,426			$	11,625			$	10,412
Operating income (A)	$	654			$	571			$	1,306			$	1,096
Unallocated corporate items and other, net		288				292				538				544
Segment operating income1 (C)	$	942			$	863			$	1,844			$	1,640
Operating margin (A) / (B)		11.1	%			10.5	%			11.2	%			10.4	%
Segment operating margin1 (C) / (D)		16.0	%			15.9	%			15.9	%			15.8	%
1 Segment revenue, operating income, and margin are non-GAAP Financial Measures as defined by Regulation G. We use segment revenue, operating income, and margin to evaluate our core operating performance because it reflects the aggregate performance results of our segments without the impact of divestitures and unallocated corporate items, as reconciled in Table 4, and it includes income from investments that are operationally aligned with our business segments. We believe these metrics provide investors a more complete understanding of factors and trends affecting our business.

Table 6 – Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow – Non-GAAP Financial Measures Reconciliation (Unaudited)
	Second Quarter								Year to Date
($ millions)		2026				2025				2026				2025
Net cash provided by operating activities	$	879			$	640			$	784			$	598
Capital expenditures		(108	)			(88	)			(207	)			(147	)
Proceeds from disposal of property, plant and equipment, net		—				9				7				9
Free cash flow1	$	771			$	561			$	584			$	460
1 Free cash flow is a non-GAAP Financial Measure as defined by Regulation G. We use free cash flow to evaluate business performance and overall liquidity, and it is a performance metric in our annual incentive plan. We believe free cash flow is useful because it represents the cash generated from operations after reinvesting in our business that may be available to return to stockholders and creditors through dividends, share repurchases, and debt repayments, or to fund acquisitions or other investments. However, the entire amount of the free cash flow is not available for discretionary expenditures because of certain mandatory expenditures, such as debt repayments.

Key Terms

Description		Definition
Acquisition, divestiture and transaction-related expenses		Transaction and integration expenses associated with the Aerojet Rocketdyne acquisition in 2025; external costs related to pursuing acquisition and divestiture portfolio optimization; non-transaction costs related to divestitures; costs related to the carve-out and planned MSL public offering; salaries of employees in roles dedicated to planned strategic transaction activity; and resolution of a procurement contract matter.
Business divestiture-related losses		In 2026, includes a loss recognized in connection with the Space Technology disposal group, which consists of certain product lines of our Space Propulsion and Power Systems business and the space portion of our Space & Sensors division reported in our Mission Solutions segment. In 2025, includes a loss recognized in connection with the CAS disposal group divestiture.
LHX NeXt implementation costs		Includes costs related to workforce optimization costs, incremental IT expenses for implementation of new systems, third-party consulting expenses and other related costs, including costs related to personnel dedicated to this project. The implementation phase of LHX NeXt was completed in fiscal 2025.
Orders		Total value of funded and unfunded contract awards received from the U.S. Government and other customers, including incremental funding and adjustments to previous awards, excluding unexercised contract options and potential orders under ordering-type contracts, such as indefinite delivery, indefinite quantity (IDIQ) contracts.
Segment investment income		In 2026, includes a net gain on investment income associated with companies developing dual-use technologies that accelerate our capabilities, improve go-to-market efforts and are operationally aligned with our business segments.

 

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