L3Harris Technologies Reports Strong First Quarter 2026 Results

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

Highlights

• Orders of $7.8 billion; book-to-bill of 1.4x increases backlog to new record $40.7 billion

• Revenue of $5.7 billion, up 12%, and 15% organically*

• Operating margin of 11.4% up 120 bps; Segment operating margin of 15.7% up 10 bps

• GAAP diluted EPS of $2.72, up 33%

• Updates 2026 EPS guidance

“We continue to execute against our Trusted Disruptor strategy with both urgency and discipline, leveraging speed and scale to meet the evolving needs of our customers. Our results reflect the strength of our portfolio and its alignment with the nation’s most critical defense missions. We operate in a dynamic global environment, where demand is accelerating and the future of warfare is driving near-term operational priorities. Across the portfolio, we quickly adapt to mission needs and scale our operations to meet increasing demand, accelerating growth across our enterprise,” said Christopher Kubasik, Chairman and CEO.

Kubasik added, “We delivered a strong start to the year with robust orders and revenue growth coupled with progress across our strategic priorities. We are well positioned for the next phase of growth and value creation, remain on track to deliver on our 2026 commitments and continue to advance toward the 2028 Financial Framework we outlined earlier this year.”

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*Organic revenue is a non-GAAP Financial Measure defined and reconciled to GAAP in Table 5.

SUMMARY FINANCIAL RESULTS*

		First Quarter								2026 Guidance
	($ millions, except per share data)		2026				2025
	Revenue
	Space & Mission Systems	$	2,990			$	2,411
	Communication & Spectrum Dominance		1,855				1,809
	Missile Solutions		990				840
	Intersegment		(91	)			(74	)
	Segment revenue		5,744				4,986
	Other1		—				146
	Revenue	$	5,744			$	5,132			$23B – $23.5B
	Operating income
	Space & Mission Systems	$	313			$	238
	Communication & Spectrum Dominance		465				443
	Missile Solutions		124				96
	Segment operating income		902				777
	Unallocated corporate items and other, net1 (see Table 4)		(250	)			(252	)
	Operating income	$	652			$	525
	Operating margin		11.4	%			10.2	%
	Segment operating margin		15.7	%			15.6	%		low 16%
	Tax rate
	Effective tax rate		13.1	%			15.9	%
	GAAP EPS
	Diluted EPS	$	2.72			$	2.04			$11.40 – $11.60 (Prior: $11.30 – $11.50)
	Diluted weighted-average common shares outstanding		188.1				189.1
	Cash flow
	Cash used in operations	$	(95	)		$	(42	)
	Free cash flow2	$	(187	)		$	(101	)		$3.0B
1 Includes other non-reportable businesses, which is the divested Commercial Aviation Solutions business (“CAS disposal group”).
2 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 $600M.
* Organic revenue is a non-GAAP Financial Measure defined and reconciled to GAAP in Table 5.

Revenue: Increased $612 million, up 12%, and 15% organically, driven by growth across all segments reflecting new program ramps and increased international volume.

Operating Income: Increased $127 million, up 24%. Operating margin was 11.4%, up 120 bps. The improvement in operating income was primarily driven by a $125 million increase in segment operating income due to strong growth in the quarter and a decline in unallocated corporate items and other, net costs.

Segment Operating Income: Increased $125 million, up 16%. Segment operating margin was 15.7%, up 10 bps. Segment operating income grew across all segments due to increased volume, improved program performance and higher monetization of legacy assets aligned with our transformation and value creation priorities, partially offset by higher growth in businesses with lower average margin and increased investments in go-to-market activities and research and development.

Diluted EPS: Increased 33% to $2.72 driven by higher operating income, lower interest expense due to lower total outstanding debt, including both short-term and long-term debt, and a lower effective tax rate, partially offset by lower FAS pension income.

Cash Flow: Cash used in operations was ($95) million, impacted by timing of cash receipts coupled with higher cash disbursements. Capital expenditures were ($99) million, contributing to free cash flow of ($187) million.

SEGMENT RESULTS

Space & Mission Systems

		First Quarter
	($ millions)		2026				2025			Increase
	Revenue	$	2,990			$	2,411			24%
	Operating margin		10.5	%			9.9	%		60 bps

Revenue: Increased 24%, primarily from the ramp in activity in our ISR business on classified and international missionized aircraft programs, including a milestone related to material procurement in support of classified contracts, as well as higher volume in Space, Mission Networks and Maritime programs partially offset by lower classified volume in our intel products and solutions business.

Operating Margin: Increased 60 bps to 10.5% driven by improved program performance, partially offset by increased material procurement in programs with lower average margins and increased investments in research and development.

Communication & Spectrum Dominance

		First Quarter
	($ millions)		2026				2025			Increase
	Revenue	$	1,855			$	1,809			3%
	Operating margin		25.1	%			24.5	%		60 bps

Revenue: Increased 3%, primarily driven by increased volume for night vision devices, international software-defined resilient communications and the ramp in activity on the Next Generation Jammer Electronic Warfare program.

Operating Margin: Increased 60 bps to 25.1% primarily driven by increased sales associated with higher margin products in night vision devices and software-defined resilient communications as well as the favorable settlement of a legal matter, partially offset by increased investments in customer demonstrations, prototypes, and research and development.

Missile Solutions

		First Quarter
	($ millions)		2026				2025			Increase
	Revenue	$	990			$	840			18%
	Operating margin		12.5	%			11.4	%		110 bps

Revenue: Increased 18% from higher production volumes across key missile and munition programs, including those prioritized by the Department of War’s (“DoW”) Munitions Acceleration Council, and space propulsion programs as well as new program ramps.

Operating Margin: Increased 110 bps to 12.5%, primarily due to the monetization of legacy assets aligned with our transformation and value creation priorities, partially offset by net unfavorable EAC adjustments.

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; 2026 guidance; the impact of recent and expected contract awards; the 2028 financial framework; divestiture timing; planned public offering by Missile Solutions; 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)
	First Quarter
($ millions, except per share amounts)		2026				2025
Revenue	$	5,744			$	5,132
Cost of revenue		(4,342	)			(3,782	)
General and administrative expenses		(750	)			(825	)
Operating income		652				525
Non-service FAS pension income and other, net1		73				84
Interest expense, net		(136	)			(150	)
Income before income taxes		589				459
Income taxes		(77	)			(73	)
Net income	$	512			$	386
Earnings per share attributable to common shareholders
Basic	$	2.74			$	2.05
Diluted	$	2.72			$	2.04
Weighted-average common shares outstanding
Basic		186.8				188.5
Diluted		188.1				189.1
1“FAS” is defined as Financial Accounting Standards.

Table 2 – Condensed Consolidated Balance Sheet (Unaudited)
($ millions)	April 3, 2026			January 2, 2026
Assets
Current assets
Cash and cash equivalents	$	590		$	1,069
Receivables, net		1,912			1,371
Contract assets		3,530			3,566
Inventories, net		1,234			1,219
Other current assets		702			484
Assets of business held for sale		926			884
Total current assets		8,894			8,593
Non-current assets
Property, plant and equipment, net		2,658			2,665
Goodwill		19,999			20,010
Intangible assets, net		6,331			6,509
Deferred income taxes		71			76
Other non-current assets		3,427			3,342
Total assets	$	41,380		$	41,195
Liabilities and equity
Current liabilities
Short-term debt	$	350		$	—
Current portion of long-term debt		1,816			673
Accounts payable		1,930			2,461
Contract liabilities		2,736			2,262
Compensation and benefits		391			482
Other current liabilities		1,267			1,235
Liabilities of business held for sale		111			113
Total current liabilities		8,601			7,226
Non-current liabilities
Long-term debt, net		9,191			10,443
Deferred income taxes		1,225			1,114
Other non-current liabilities		2,683			2,777
Total liabilities		21,700			21,560
Total equity		19,680			19,635
Total liabilities and equity	$	41,380		$	41,195

Table 3 – Condensed Consolidated Statement of Cash Flows (Unaudited)
	First Quarter
($ millions)		2026				2025
Operating Activities
Net income	$	512			$	386
Adjustments to reconcile to net cash used in operating activities:
Depreciation and amortization		282				301
Share-based compensation		21				19
Net periodic benefit income		(70	)			(84	)
Share-based matching contributions under defined contribution plans		62				68
Deferred income taxes		119				(89	)
(Increase) decrease in:
Receivables, net		(623	)			(447	)
Contract assets		72				(420	)
Inventories, net		(17	)			92
Other current assets		(218	)			(19	)
Increase (decrease) in:
Accounts payable		(527	)			52
Contract liabilities		461				(16	)
Compensation and benefits		(87	)			(105	)
Other current liabilities		(15	)			11
Income taxes		(7	)			273
Other operating activities		(60	)			(64	)
Net cash used in operating activities		(95	)			(42	)
Investing Activities
Capital expenditures		(99	)			(59	)
Proceeds from disposal of property, plant and equipment, net		7				—
Proceeds from sales of businesses, net of cash divested		—				831
Other investing activities		(5	)			(28	)
Net cash (used in) provided by investing activities		(97	)			744
Financing Activities
Repayments of long-term debt		(106	)			(5	)
Change in commercial paper, net		350				20
Repurchases of common stock		(296	)			(569	)
Dividends paid		(238	)			(228	)
Other financing activities		6				(23	)
Net cash used in financing activities		(284	)			(805	)
Effect of exchange rate changes on cash and cash equivalents		(3	)			5
Net decrease in cash and cash equivalents		(479	)			(98	)
Cash and cash equivalents, beginning of period		1,069				615
Cash and cash equivalents, end of period	$	590			$	517

Table 4 – Unallocated Corporate Items (Unaudited)
	First Quarter
($ millions)	2026			2025
Unallocated corporate items:
Amortization of acquisition-related intangibles	$	173		$	194
LHX NeXt implementation costs1		—			35
Business divestiture-related losses1		10			17
Acquisition, divestiture and transaction-related expenses1		30			17
Other unallocated corporate items		37			12
Unallocated corporate items		250			275
Other non-reportable businesses2		—			(23	)
Unallocated corporate items and other, net	$	250		$	252
1 Refer to Key Terms on page 10.
2 Includes the divested CAS disposal group.

Table 5 – Organic Revenue Non-GAAP Financial Measure Reconciliation (Unaudited)
	First Quarter
	2025
($ millions)	GAAP			Adjustments				Organic1
Revenue	$	5,132		$	(146	)		$	4,986
1 Organic revenue is a non-GAAP Financial Measure as defined by Regulation G. We use organic revenue to exclude revenue attributable to our divested CAS disposal group in prior periods.

 

Table 6 – Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow – Non-GAAP Financial Measures Reconciliation (Unaudited)
	First Quarter
($ millions)		2026				2025
Net cash used in operating activities	$	(95	)		$	(42	)
Capital expenditures		(99	)			(59	)
Proceeds from disposal of property, plant and equipment, net		7				—
Free cash flow1	$	(187	)		$	(101	)
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, stock repurchases and debt repayments) or available to fund acquisitions or other investments. The entirety of free cash flow amount is not available for discretionary expenditures, however, because of certain mandatory expenditures, such repayment of debt.

 

Key Terms

Description		Definition
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 sector 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.
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.
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.

 

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