L3Harris Technologies, Inc.
LHX · NYSE
Next quarter
Reports Oct 29, 2026.
Consensus is $3.01 EPS for Sep 2026 across 4 estimates, ranging $2.96 to $3.06.
LHX Jun 2026
- 11.79%
- -8.61%
- $2.80
- $3.13
- —
- $5.88B
Reported results
- $5.88B
- $654.00M
- $600.00M
- $3.13
Highlights
- Earnings beat: Diluted EPS was $3.13 versus consensus of $2.80, an 11.79% surprise, up 28% from $2.44 a year ago and 15% from $2.72 in the prior quarter.
- Revenue growth: Second-quarter revenue rose 8% year over year to $5.88 billion, up from $5.43 billion a year ago and $5.74 billion in the prior quarter, driven by program starts, higher volumes and backlog execution.
- Demand and backlog: Orders were $7.3 billion, producing a 1.2x book-to-bill and lifting contractual backlog to a record $42.0 billion; approximately 40% is expected to convert to revenue within twelve months.
- Margin expansion: Operating income increased 15% year over year to $654 million, while operating margin expanded 60 basis points to 11.1%; segment operating margin reached 16.0%.
- Segment mix: Missile Solutions led revenue growth at 14% to $1.05 billion, followed by Space & Mission Systems at 7% to $2.97 billion and Communications & Spectrum Dominance at 4% to $1.94 billion.
- Communications profitability: Communications & Spectrum Dominance operating income rose 14% to $522 million and margin expanded 230 basis points to 26.9%, helped by international volume, product mix and investment gains.
- Cash generation: Operating cash flow increased 37% year over year to $879 million and free cash flow rose 37% to $771 million, after $108 million of capital expenditures.
- Raised outlook: 2026 revenue guidance increased to $23.2-$23.7 billion from $23.0-$23.5 billion, while diluted EPS guidance increased to $11.80-$12.00 from $11.40-$11.60.
- Missile capacity investment: L3Harris received $1.0 billion of strategic investment in Missile Solutions from the Department of War, with $973 million of net proceeds earmarked primarily for expanding and modernizing missile manufacturing capacity.
Analysis
L3Harris delivered a strong second quarter 2026 print, with diluted EPS of $3.13 beating the $2.80 consensus by 11.79%. Revenue of $5.88 billion rose 8% year over year from $5.43 billion and increased roughly 2.5% sequentially from $5.74 billion. Operating income reached $654 million versus $571 million a year ago and $652 million in the prior quarter, while EPS increased from $2.44 and $2.72, respectively. The result was supported by higher program volumes, improved execution and lower corporate expense, although the comparison included the absence of $92 million of prior-year asset-sale gains and a higher effective tax rate of 15.5% versus 12.6% a year ago.
The defining feature was demand visibility: $7.3 billion of orders and a 1.2x book-to-bill pushed backlog to a record $42.0 billion. Growth was broad-based, led by Missile Solutions, while Communications & Spectrum Dominance produced the clearest margin improvement. Cash conversion was also notably strong, with $771 million of free cash flow. L3Harris raised its full-year revenue and EPS ranges, reflecting confidence in continued execution. Separately, the $1.0 billion Department of War investment provides funding for Missile Solutions capacity expansion but introduces a new preferred-stock and potential subsidiary IPO structure.
Orders and backlog
Bookings were the central strategic signal in the quarter. Orders of $7.3 billion represented a 1.2x book-to-bill and increased contractual backlog to a record $42.0 billion. The backlog was equivalent to roughly 1.8 times annualized second-quarter revenue, with approximately 40% expected to be recognized over the next twelve months and 65% over the next twenty-four months.
- Space and Mission Systems: Backlog reached $22.4 billion versus $16.3 billion a year earlier, while second-quarter revenue grew 7% to $2.97 billion.
- Communications and Spectrum Dominance: Backlog was $9.0 billion versus $9.4 billion a year earlier, with revenue up 4% to $1.94 billion.
- Missile Solutions: Backlog increased to $10.5 billion from $9.7 billion, as revenue rose 14% to $1.05 billion.
Segment performance
All three segments grew, but the quality of growth differed. Missile Solutions supplied the strongest top-line momentum, while Communications & Spectrum Dominance delivered the largest margin contribution. Space & Mission Systems grew revenue but held operating income broadly flat because the prior-year period included a $75 million asset-sale gain.
- Space and Mission Systems: Revenue rose 7% to $2.97 billion and operating income was $290 million versus $289 million. Margin declined to 9.8% from 10.4% as the prior-year $75 million gain was absent, partly offset by improved program performance and a $23 million investment gain.
- Communications and Spectrum Dominance: Revenue increased 4% to $1.94 billion, while operating income grew 14% to $522 million. The 26.9% margin was 230 basis points higher, helped by international deliveries and product mix, despite $27 million of additional R&D and selling expenses.
- Missile Solutions: Revenue climbed 14% to $1.05 billion and operating income rose 12% to $130 million. Propulsion Systems contributed $85 million of incremental revenue and Advanced Effects added $44 million, although margin eased 20 basis points to 12.3% because of the absence of a favorable prior-year contract resolution.
Guidance and execution
Management raised the 2026 outlook after the first half's growth and execution. Revenue guidance moved to $23.2-$23.7 billion from $23.0-$23.5 billion, and diluted EPS guidance increased to $11.80-$12.00 from $11.40-$11.60. The company maintained its expectation for approximately $3.6 billion of operating cash flow and $3.0 billion of free cash flow.
- First-half trajectory: Year-to-date revenue was $11.63 billion versus $10.56 billion a year earlier, while operating income was $1.31 billion versus $1.10 billion and diluted EPS was $5.85 versus $4.48.
- Margin framework: Full-year segment operating margin guidance remained at the low end of 16%, with Space & Mission Systems at roughly 10% and Communications & Spectrum Dominance at the mid-25% range.
- Contract execution: Second-quarter net estimate-at-completion adjustments added $23 million to operating income, versus a $20 million unfavorable adjustment a year earlier.
Missile capacity investment
L3Harris completed a strategic investment transaction tied to Aerojet Rocketdyne, its Missile Solutions subsidiary. The Department of War invested $1.0 billion in redeemable convertible preferred stock and warrants; L3Harris received $973 million of net proceeds, which are intended primarily to fund expanded and modernized missile manufacturing capacity, facilities and research and development.
- Potential separation: The preferred stock can convert into a newly formed subsidiary's common stock upon a qualified IPO by December 31, 2027; the investor would be expected to own approximately 10% at conversion, alongside warrants representing 3% on a fully diluted basis.
- Accounting effect: The transaction created $386 million of program investment intangible assets, $130 million of conversion-feature liabilities and $186 million of warrant liabilities.
- Per-share impact: A $14 million preferred-stock deemed dividend reduced net income available to common shareholders in the quarter; the preferred stock and warrants were anti-dilutive at quarter end.
Cash and capital allocation
Cash generation improved materially and supported ongoing shareholder returns. Second-quarter operating cash flow of $879 million and free cash flow of $771 million each increased 37% year over year, with capital expenditures of $108 million. Cash and equivalents ended the period at $1.52 billion, up from $1.07 billion at the start of the fiscal year.
- Share repurchases: L3Harris repurchased $229 million of common stock in the quarter and $525 million year to date, leaving $1.7 billion of authorization remaining.
- Dividends: The company paid $232 million in quarterly dividends, or $1.25 per share, following its 25th consecutive annual dividend increase.
- Balance sheet: Total long-term debt was $11.0 billion, including $1.82 billion classified as current, while the company had no outstanding commercial paper and $2.5 billion of available revolving credit capacity.
