L3harris Technologies, Inc. Overview
L3Harris Technologies, Inc. is the sixth-largest Western defence prime by revenue and the product of the June 2019 merger-of-equals between Harris Corporation and L3 Technologies, Inc. The legal entity is the continuation of Harris Corporation, which explains the anomalous corporate history: the registrant's SEC Commission File Number (1-3863), CIK (0000202058) and IRS Employer Identification Number (34-0276860) all pre-date the merger, and the company's XBRL tag prefix remains "hrs". The company was renamed L3Harris Technologies, Inc. at the merger's closing. Former names of the surviving registrant include Harris Corporation and, historically, Harris-Intertype Corporation.
Employee trend (three-year)
The headcount decline of roughly 10% over two fiscal years is not a demand signal. It reflects three separate forces: the LHX NeXt cost transformation, which explicitly included "workforce optimization costs"; the divestiture of the Commercial Aviation Solutions business in March 2025; and the divestiture of the antenna and Aerojet Ordnance Tennessee businesses. Revenue per employee rose from approximately $0.39 million in FY2023 to approximately $0.49 million in FY2025, which is the more meaningful reading.
Positioning statement (150 words). L3Harris occupies a deliberately awkward position in the defence industrial base: too large to be a merchant supplier, too narrow in platform ownership to be a full prime. Management has converted that into a strategy branded "Trusted Disruptor" — supplying the sensing, connecting and effecting layers that sit across other companies' platforms, with a commercial-style business model, faster cycle times and lower unit costs than traditional cost-plus development. Post-Aerojet Rocketdyne, the company is also the largest independent Western supplier of solid rocket motors, a bottleneck asset in an era of munitions rearmament. FY2025 revenue was $21.9 billion with a record $38.7 billion contractual backlog; 75% of revenue came from U.S. Government customers and 22% from international end-users across more than 100 countries. The 2026 reorganisation into three segments, the $1 billion Department of War anchor investment in Missile Solutions, and a planned IPO of that unit represent the most consequential structural repositioning since the 2019 merger.
2.1 The company's own characterisation
The fiscal 2025 Form 10-K opens with language the company has used consistently since 2022: L3Harris describes itself as "the Trusted Disruptor in the defense industry," stating that "with customers' mission-critical needs in mind, we deliver end-to-end technology solutions connecting the space, air, land, sea and cyber domains in the interest of national security." It supports "customers in more than 100 countries, with our largest customers being various departments and agencies of the U.S. Government, their prime contractors and international allies," and notes that its capabilities "have defense and civil government applications, as well as commercial applications."
The 10-K also states that the company structures its operations "primarily around the capabilities we provide" rather than around platforms or customers — a formulation that matters, because it is the organising logic behind both the 2019 merger integration and the January 2026 three-segment reorganisation.
2.2 Independent characterisation
L3Harris is best understood as a subsystems and effects supplier at scale, not as a platform prime. With the important exceptions of missionised special-mission aircraft, autonomous maritime vessels and a small number of satellite buses, L3Harris does not own the platforms into which its content flows. It sells:
- The sensing layer — electro-optical/infrared sensors, infrared missile-tracking payloads, signals intelligence, passive detection.
- The connecting layer — tactical radios, waveforms, satellite terminals, tactical data links, air traffic networks, broadband and resilient communications.
- The contesting layer — electronic warfare, jamming, spectrum superiority, counter-UAS.
- The effecting layer — solid rocket motors, liquid divert and attitude control systems, launched-effects vehicles, weapons release systems, fuzing and ordnance.
This position has a specific economic consequence that runs through the whole financial profile. Because L3Harris rarely owns the platform, it is frequently a subcontractor to competitors — supplying THAAD and PAC-3 propulsion to Lockheed Martin, electronic warfare and avionics content to F-35 and F-16 programmes, tactical operations centre content to Booz Allen Hamilton. The 10-K acknowledges this explicitly: the company "frequently 'partner[s]' or [is] involved in subcontracting and teaming relationships with companies that are, from time to time, competitors on other programs." The upside is very high content penetration across a wide programme set with limited exposure to any single platform's cancellation. The downside is limited pricing power against primes and, on the propulsion side, a customer concentration in Lockheed Martin that is now being partly re-mediated through direct Department of War framework agreements.
2.3 Revenue model
L3Harris reports revenue split between products and services. Products dominate: for fiscal 2024 products revenue was approximately $13.7 billion against total revenue of $21.3 billion, with the balance in services. The company does not report subscription or licensing revenue as a distinct line; there is no material recurring-software revenue stream disclosed. The economically meaningful split is contract type, not deliverable type.
The 75% fixed-price share is the single most important structural fact about the P&L. It means L3Harris keeps cost savings — which is why the LHX NeXt programme translated so directly into margin — and it means the company absorbs overruns. The 10-K warns that fixed-price development programmes in particular "can expose us to potentially large losses." The company has taken exactly such losses: the fiscal 2025 Integrated Mission Systems margin decline was attributed in part to "unfavorable Maritime program performance," and fiscal 2023–2024 classified space programme performance required stabilisation before margins recovered in fiscal 2025.
Cash collection under fixed-price U.S. Government contracts is structured as either milestone payments totalling 100% of contract price, or monthly progress payments equal to 80% of costs incurred, with the remainder including profit billed on delivery and acceptance. This is why contract assets (unbilled receivables) run at roughly $3.6 billion, or a sixth of annual revenue, and why working capital swings dominate intra-year free cash flow.
2.4 Value chain position and customer types
2.5 End-markets served
Management's stated growth vectors, articulated repeatedly through 2025 and 2026, are: Golden Dome / missile defence, space, missiles and munitions, shipbuilding, autonomy, and resilient communications. Each of these is a market where either budget growth or industrial-base capacity constraint (or both) is the binding factor, which is the deliberate design of the portfolio.
Strategy
10.1 Stated strategy
The "Trusted Disruptor" formulation is the organising idea and appears verbatim in the opening sentence of the fiscal 2025 Form 10-K's business description. In Kubasik's own framing from the fiscal 2024 results, the company is "the agile defense player that is able to rapidly adapt to changing industry dynamics to deliver mission-critical capabilities for our customers."
The fiscal 2025 10-K adds an explicit policy dimension under the heading "Acquisition Reform": "We are pursuing our Trusted Disruptor strategy against the backdrop of acquisition reform, prioritizing engaging with our customers and delivering the innovation, agility and affordability our customers demand from the defense industrial base." The filing goes on to describe the transformation of the Defense Acquisition System into the Warfighting Acquisition System as "fundamentally shifting procurement priorities toward speed, flexibility, and mission outcomes," with the Department "streamlining contracting processes, delegating greater authority to empowered portfolio acquisition executives, and increasing the use of commercial solutions and alternative contracting methods."
This is a strategy statement disguised as a regulatory disclosure. L3Harris is betting that acquisition reform — other transaction authorities, commercial solutions openings, portfolio acquisition executives — favours a company with commercial business models and internally funded product development over one built for cost-plus development. The same 10-K acknowledges the risk in the same breath: OTAs "could reduce barriers to entry and result in even greater competition and increased pricing pressure," and non-traditional entrants "may possess innovative or low-cost technologies and the ability to rapidly deploy new solutions."
Kubasik's Investor Day formulation of the operating thesis was blunter: "capacity is going to be the new capability for the defense industry."
10.2 Strategic initiatives announced in the last 24 months
10.3 Partnerships as strategy
The fiscal 2025 10-K names four collaborations explicitly as strategic: "our strategic partnerships with Palantir Technologies, Shield Capital, Anduril and Amazon Kuiper to develop new capabilities to meet the demands of our customers." The stated rationale is that "competing in our markets requires the ability to fuse hardware, software and artificial intelligence." Anduril appears in the same filing as a named competitor — a candid acknowledgement of the coopetition dynamic now structural to the sector.
The Shield Capital relationship, alongside "segment investment income" newly disclosed in 2026 ("companies developing dual-use technologies that accelerate our capabilities, improve go-to-market efforts and are operationally aligned with our business segments"), signals a venture-investment arm being run as an operational rather than financial activity. It contributed $39 million to segment results in 2Q26.
10.4 Medium-term financial targets
Two features of the 2026 guidance deserve attention. The EPS raise of $0.40 absorbed a roughly $0.20 headwind from the Space Propulsion divestiture closing in August 2026 and a $55 million non-cash deemed dividend associated with the DoW preferred investment — meaning the underlying operational raise was larger than the headline. And the Missile Solutions revenue guide was reduced from approximately $4.4 billion at the January 2026 initiation to approximately $4.1 billion at 2Q26, entirely reflecting the removal of divested Space Propulsion revenue rather than any deterioration; the segment grew 16% organically in the first half.
Achieving approximately $27 billion of revenue in 2028 from approximately $23.5 billion in 2026 requires a compound rate of roughly 7.2% over two years — above the FY2021–FY2025 realised rate of 5.3% but below the 1H26 run-rate of 10%.
Products & Services
The following catalogue is assembled from the fiscal 2025 Form 10-K sector descriptions, company press releases and programme announcements. Pricing models are almost never disclosed at product level for defence electronics; where no pricing information exists in public filings, this is stated rather than inferred. Contract values cited are award ceilings, not recognised revenue.
5.1 Communications & Spectrum Dominance
Mission Critical Communications — Tactical Communications
Mission Critical Communications — Public Safety and Professional Communications
The 10-K notes that civil communications product volumes declined in fiscal 2025, partly offsetting international tactical growth — the one soft spot in an otherwise strong segment.
Spectrum Superiority — Electronic Warfare
Integrated Vision Solutions
Targeting and Sensor Systems
5.2 Space & Mission Systems
Space Systems
Intelligence, Surveillance and Reconnaissance
The Republic of Korea AEW&C award, announced 19 October 2025 and valued at more than $2.26 billion, is the largest international programme win in the company's history and was cited as a driver of Integrated Mission Systems organic growth in fiscal 2025.
Maritime
Maritime was the source of unfavourable programme performance in both 4Q25 and full-year 2025 — the clearest current execution weak point in the portfolio.
Mission Networks
Higher FAA volume was a specific named driver of both fiscal 2025 Space & Airborne Systems organic growth and 2Q26 Space & Mission Systems revenue growth ($40 million contribution in the quarter).
Airborne Solutions
F-35 volume contributed $34 million of the 2Q26 SMS revenue increase.
Intel & Cyber
Intel & Cyber was the one SMS sector to decline in 2Q26, on lower classified programme volume, and also weighed on fiscal 2025 Space & Airborne Systems organic growth.
5.3 Missile Solutions
Missile Propulsion
Management stated at the February 2026 Investor Day that L3Harris holds sole-source positions on roughly 80% of more than 30 missile programmes and produces more than 100,000 propulsion components annually; a separate February 2026 company statement cited more than 115,000 solid rocket motors per year from the Camden campus. Missile deliveries are up approximately 60% since the Aerojet Rocketdyne acquisition.
Advanced Effects
Space Propulsion and Power Systems (divested 4 August 2026, excluding RS-25)
L3Harris retains approximately 40% of the new Rocketdyne entity and remains a strategic partner.
Product Portfolio
| Offering | Description | Target customer | Status / recent activity |
|---|---|---|---|
Falcon IV AN/PRC-163 handheld radio | Two-channel, multi-waveform handheld software-defined radio with simultaneous SATCOM and line-of-sight networking | U.S. Army, SOF, allied ground forces | In sustained production; a mainstay of Army modernisation |
Falcon IV AN/PRC-158 manpack radio | Two-channel wideband manpack; MUOS, SATCOM and MANET capable | U.S. Army, Marine Corps, international | In production |
AN/PRC-158C manpack | Next Generation Command and Control variant adding MANET, resilient waveforms, air-to-ground networking, routing, in-line encryption and Sensitive But Unclassified–Encrypted capability | U.S. Army NGC2 programme | $84 million of new delivery orders announced 9 July 2026, following $24 million ordered in October 2025 |
AN/PRC-167 multi-channel manpack | Higher-channel-count manpack for complex networked operations | U.S. and allied forces | In production |
Software-defined resilient communications equipment (international configurations) | Export-configured tactical radio families | NATO and allied ministries of defence | Principal driver of the FY2025 and 1H26 international revenue increase |
Waveforms and network software | ANW2, TSM, SINCGARS, Link-family and proprietary resilient waveforms | Government customers | Licensed with hardware; separate pricing not disclosed |
Satellite terminals and end-to-end battlefield systems | Ground and manpack SATCOM terminals; integrated battlefield communication architectures | DoW and international | In production |
T-HAWC | Tactical communications gateway demonstrated in December 2025 linking tactical radios, counter-UAS, imaging and mobile operations centres to command and control | DoW, federal agencies, disaster response | Demonstrated 11 December 2025 as part of an interoperable network showcase |
5G gateway solutions | Bridging commercial 5G to tactical networks | DoW and federal agencies | Demonstrated December 2025 |
| Offering | Description | Target customer |
|---|---|---|
P25 land mobile radio systems and subscriber units | Project 25 standards-compliant portable and mobile radios, dispatch consoles and network infrastructure | State and local first responders, federal agencies, utilities, transit agencies |
Public safety network systems integration and sustainment | Design, build and long-term support of statewide and metropolitan interoperable radio networks | State and municipal governments |
| Offering | Description | Target customer | Status |
|---|---|---|---|
AN/ALQ-254 Viper Shield | Internally mounted electronic warfare suite for F-16 Block 70/72 and upgraded Block 52+ fleets; software-defined architecture designed for rapid threat-library updates | F-16 operators worldwide | In production; supplied to F-16 fleets in seven countries. Poland selected Viper Shield for its F-16 Viper upgrade programme on 28 August 2025, purchased through the U.S. Government |
Next Generation Jammer (Mid-Band / Low-Band content) | Airborne electronic attack pods for the EA-18G Growler | U.S. Navy | Programme ramp cited as a driver of FY2025 Communication Systems revenue growth |
Threat warning and countermeasures | Radar and missile warning, countermeasures dispensers for airborne, ground and maritime platforms | DoW and international | In production |
Broadband and tactical data links | Link 16 and multifunction data link terminals and waveforms acquired with the 2023 Viasat TDL transaction | DoW, allied forces | Integrated; a fiscal 2024 non-cash impairment of other assets related to this acquisition was recorded and did not recur in fiscal 2025 |
Telemetry & Radio Frequency products | RF components, telemetry systems | Test ranges, platform primes | Moved into Spectrum Superiority in the 2026 reorganisation |
| Offering | Description | Target customer |
|---|---|---|
Helmet-mounted night vision goggles | Full suite of binocular and monocular helmet-mounted night vision systems incorporating leading-edge image intensifier tubes | U.S. Army and Marine Corps, allied ground forces |
Image intensifier tubes | In-house production of high-performance tubes — a vertically integrated and supply-constrained component | Internal and external |
Weapon-mounted sights, aiming lasers, range finders | Clip-on thermal and image-intensified weapon sights; visible and IR aiming lasers; handheld and weapon-mounted laser range finders | Ground forces, special operations |
| Offering | Description | Target customer |
|---|---|---|
WESCAM MX-series electro-optical/infrared turrets | Multi-spectral gimballed imaging and targeting systems in multiple aperture sizes for airborne, maritime and land platforms | Rotary and fixed-wing platform operators, maritime patrol, ISR aircraft |
Laser range finders, target designators and transmitters | Precision targeting devices for ground and airborne use | Ground forces, forward air controllers |
Specialty laser and filter glass materials | Vertically integrated optical materials manufacturing | Internal and merchant |
Counter-UAS systems | Systems delivered to the U.S. Army announced 10 June 2026 | U.S. Army |
VAMPIRE (Vehicle-Agnostic Modular Palletized ISR Rocket Equipment) | Self-contained palletised reconnaissance and precision strike platform against small unmanned systems; supported European combat operations since 2023; expanded into a family with land, maritime, air and electronic warfare variants adding sensors, precision weapons, jammers and non-kinetic effects, with AI and machine learning integration | DoW and allied partners |
| Offering | Description | Customer | Status |
|---|---|---|---|
Hypersonic and Ballistic Tracking Space Sensor (HBTSS) | Wide- and medium-field-of-view infrared missile tracking satellite and payload capable of producing fire-control-quality data | Missile Defense Agency | Demonstration satellite launched 14 February 2024; L3Harris reported in April 2026 that it had tracked a live hypersonic target with the latency and track fidelity required for an end-to-end missile defence sequence |
SDA Tranche 0/1/2 Tracking Layer satellites | Infrared missile warning and tracking satellites for the Proliferated Warfighter Space Architecture | Space Development Agency | 4 satellites on orbit from Tranche 0; 34 in development across Tranches 1 and 2 as of December 2025; Tranche 2 award of up to $919 million received January 2024 |
SDA Tranche 3 Tracking Layer satellites | 18 infrared satellites plus ground software, operations and sustainment, adding higher-resolution sensing, on-orbit data processing and real-time detection algorithms | Space Development Agency | Contract valued up to $843 million awarded 19 December 2025; part of a 72-satellite, approximately $3.5 billion Tranche 3 tranche also involving Lockheed Martin, Rocket Lab and Northrop Grumman |
Accelerated Missile Defense Tranche 3 (AMDT3) satellites | 18 HBTSS-like missile-defence-variant space vehicles with medium-field-of-view payloads across two orbital planes, to be launch-ready in 2028 | Space Development Agency / Golden Dome | Award of up to $955 million announced 13 July 2026; Intuitive Machines selected in August 2026 to supply 18 IM-300 spacecraft platforms |
FOO Fighter | Eight-satellite fire-control experiment | Space Development Agency | In development |
Navigation Technology Satellite-3 (NTS-3) | First fully reprogrammable positioning, navigation and timing satellite; first U.S. experimental navigation satellite in nearly 50 years; delivered, per the company, three times faster and at lower cost than comparable programmes | U.S. Space Force / AFRL | Launched 13 August 2025 on a ULA Vulcan from Cape Canaveral |
Weather and climate monitoring payloads | Environmental sensing instruments | NOAA, NASA | In production |
Ground-based space surveillance networks | Space domain awareness sensors and networks | U.S. Space Force | In service |
Xoople constellation co-development | Co-development of a space-borne measurement system optimised for AI-era Earth observation, positioned as a real-time high-precision ground-truth data layer | Commercial (Xoople) | Announced 7–8 April 2026 following seven years of design and R&D |
| Offering | Description | Customer |
|---|---|---|
Aircraft missionization | Conversion and integration of business and transport aircraft into special-mission platforms — mission systems design, development, integration and life-cycle management | U.S. Government, classified customers, international |
Airborne Early Warning and Control (Bombardier Global 6500) | Modified Global 6500 aircraft with ELTA Systems radar and a communications suite interoperable with U.S., NATO and coalition forces; partners Bombardier, IAI ELTA and Korean Air, with Korean industry leading operation, maintenance and any future manufacturing | Republic of Korea Air Force |
Strategic reconnaissance and air superiority mission systems | Passive sensing and targeting, national command and control, tactical surveillance, electronic attack, agile strike, mobility and classified platforms | U.S. Government |
| Offering | Description | Customer |
|---|---|---|
Naval power and electrical systems | Shipboard power generation, conversion and distribution | U.S. Navy, allied navies |
Naval imaging, communication and sensor systems | Periscope and mast systems, shipboard sensors and communications | U.S. Navy |
Integrated autonomous vessels | Uncrewed surface and undersea vessels and autonomy software for surface and undersea operations | U.S. Navy, allied navies |
Fleet management and in-service support | Sustainment, missionization prototyping and naval integration | U.S. Navy, international navies |
Rhode Island production facility | New naval production facility opened 12 August 2026 to support U.S. and allied naval readiness | U.S. Navy and allies |
| Offering | Description | Customer |
|---|---|---|
Air traffic management communications and networking | Design, operation and sustainment of the national airspace communications infrastructure | U.S. Federal Aviation Administration |
| Offering | Description | Customer |
|---|---|---|
F-35 mission systems content | Sensors, processors and hardened electronics | Lockheed Martin / F-35 programme |
Infrared search and track systems | Passive long-range airborne target detection | U.S. and allied air forces |
Distributed aperture systems | 360-degree situational awareness sensor suites | Combat aircraft programmes |
Precision pointing systems | High-accuracy pointing and stabilisation | Airborne platforms |
Unmanned aircraft systems | Fixed-wing UAS and mission integration | DoW |
| Offering | Description | Customer |
|---|---|---|
Situational awareness systems | Classified sensing and analysis | Intelligence community |
Optical networks | High-capacity optical communications | Classified customers |
Advanced wireless solutions | RF and wireless systems for intelligence customers | Classified customers |
| Offering | Description | Customer / prime | Status and recent awards |
|---|---|---|---|
THAAD Solid Rocket Boost Motor | Boost propulsion for the Terminal High Altitude Area Defense interceptor; THAAD holds a 17-for-17 intercept record; the 1,000th boost motor was delivered in 2024 | Missile Defense Agency via Lockheed Martin | Contract valued at nearly $400 million awarded 16 February 2026; seven-year framework agreement signed 27 July 2026 with the Department of War and Lockheed Martin expected to quadruple production, described as the largest THAAD propulsion award L3Harris has received, with definitization expected later in 2026 |
THAAD Liquid Divert and Attitude Control System (LDACS) | Terminal manoeuvring propulsion for the THAAD kill vehicle; 1,000th LDACS delivered in 2024 | Lockheed Martin | Included in the February 2026 and July 2026 awards; manufactured in Huntsville, Camden and Los Angeles |
PAC-3 MSE two-pulse solid rocket motor | Dual-pulse propulsion for the Patriot Advanced Capability-3 Missile Segment Enhancement interceptor | Lockheed Martin / U.S. Army | Seven-year framework agreement signed 27 July 2026 expected to nearly triple output |
PAC-3 MSE Attitude Control Motor | Terminal attitude control | Lockheed Martin | Included in the July 2026 framework |
PAC-3 MSE Lethality Enhancer | Terminal lethality augmentation device | Lockheed Martin | Included in the July 2026 framework |
GMLRS Insensitive Munition propulsion | Rocket motors for the Guided Multiple Launch Rocket System | Lockheed Martin / U.S. Army | Follow-on production contract valued up to $200 million awarded 10 December 2025 — described as the largest 12-month GMLRS IM award from Lockheed Martin. First order through the new 60,000 square foot Camden facility funded by a Defense Production Act Title III cooperative agreement, adding more than 30% annual capacity; output already increased by nearly 80% through advanced manufacturing |
Standard Missile propulsion | Rocket motors for the SM family of naval interceptors | RTX / U.S. Navy | In production; supported by the Huntsville AMF-South facility |
Tomahawk propulsion | Propulsion content for the Tomahawk cruise missile | RTX / U.S. Navy | Named as a priority programme for the DoW investment |
Javelin propulsion | Motor components for the Javelin anti-armour missile | Javelin Joint Venture | Supported by AMF-South |
Next Generation Interceptor stage-two large solid rocket motor | Advanced large SRM for the MDA's homeland missile defence interceptor | Missile Defense Agency via the Lockheed Martin team | Successful hot-fire test announced 10 August 2026 |
Hypersonic propulsion | Boost and sustainer propulsion for hypersonic strike and defence programmes | DoW | In development |
Strategic missile propulsion | Propulsion for strategic deterrent applications | DoW | In production |
Fuzing and ordnance systems | Fuzes and armament products; realigned from Integrated Mission Systems in 2025 | DoW | In production |
| Offering | Description | Customer | Status |
|---|---|---|---|
Red Wolf launched effects vehicle | Kinetic launched-effects vehicle for long-range precision strike; modular design, in-flight collaboration software, autonomous swarming | U.S. Marine Corps / NAVAIR | Introduced 17 July 2025 after five years of development and 40-plus test flights; selected 30 January 2026 by Naval Air Systems Command for the Marine Corps Precision Attack Strike Munition programme, extending VTOL-launched weapon range to 200 nautical miles with beyond-line-of-sight autonomous engagement; 52 launched effects vehicle flights cited, including low-altitude testing from an AH-1Z |
Green Wolf launched effects vehicle | Electronic warfare variant with advanced detection and attack payloads | DoW | Introduced 17 July 2025; low-rate initial production targeted from end-2025 |
Weapons release systems | Bomb racks, ejector units and stores management from the legacy Release Systems Antennas & Telemetry business | Combat aircraft primes | In production |
Precision navigation and timing solutions | Protected GPS, alternative navigation and timing electronics | DoW | In production |
Space and Sensors electronics | Precision electronic components and sensing electronics | DoW and primes | In production; the space portion formed part of the divested Space Technology disposal group |
Joby hybrid VTOL missionization | Collaboration with Joby Aviation on a defence-focused autonomous hybrid gas-turbine VTOL aircraft combining Joby airframe and SuperPilot autonomy with L3Harris missionization | DoW | Announced 1 August 2025; demonstrator first flight 7 November 2025; government mission demonstrations planned for 2026 |
| Offering | Description | Status |
|---|---|---|
RS-25 engine | Space Launch System core stage engine | Retained by L3Harris — explicitly excluded from the AE Industrial transaction |
RL10 upper-stage engine | Cryogenic upper-stage engine flown on Vulcan and other launchers | Transferred to the new Rocketdyne entity; AE Industrial has stated it will modernise RL10 production |
Orion Main Engine | Service module main propulsion for the Orion crew vehicle | Powered Artemis II, launched 2 April 2026 — the first crewed lunar mission in more than 50 years; L3Harris supplied more than 100 elements including RS-25 and RL10 engines, the Orion main engine, 40 avionics units and the Orion audio system |
MR-107 and in-space thrusters | Monopropellant and bipropellant in-space propulsion; being transitioned from conventional machining to additive manufacturing to shorten lead times for national security space | Transferred to Rocketdyne entity |
Space flight avionics | Flight computers and control electronics | Transferred |
Nuclear power and propulsion assets | Space nuclear power systems and nuclear propulsion development for cislunar and deep-space missions | Transferred; AE Industrial has stated an intent to accelerate nuclear propulsion development |
Financial Narrative
6.1 Income statement
Discrepancies flagged. For FY2023, L3Harris's own earnings release reported diluted EPS of $6.42 and net income of $1,229 million; the Fiscal.ai/StockAnalysis aggregation shows $6.44 and $1,169 million (with $1,198 million on the cash flow statement). Both are shown above with the company figure preferred. For FY2024, the earnings release reports net income of $1,512 million and net income attributable to L3Harris of $1,502 million; the aggregator shows $1,522 million. For FY2021 and FY2022, non-GAAP diluted EPS as originally reported included an add-back for amortisation of acquisition-related intangibles that the company removed from its non-GAAP definition in 2024; the FY2021–FY2022 figures above are therefore not comparable to FY2024–FY2025 non-GAAP EPS, and the FY2024 restated figure of $9.70 excludes $4.47 per share of intangible amortisation and $1.07 per share of related tax that the prior definition would have added back. FY2021–FY2023 income before income taxes is derived from reported pre-tax margin and revenue rather than lifted directly from a filing.
Margins (%)
Revenue CAGR from FY2021 to FY2025 was 5.3%. On an organic basis excluding acquisitions and divestitures the underlying rate is materially lower for the first half of the period and materially higher for the second: FY2022 revenue fell 4.2% and FY2025 organic growth was 5%, accelerating to 15% organic in 1Q26 and 8% reported in 2Q26.
Commentary on trends, inflections and drivers.
The FY2021–FY2022 trough. Revenue fell in both years. Two forces were at work. First, an aggressive divestiture programme — approximately $1.7 billion of divestiture proceeds in fiscal 2021 alone — deliberately shrank the top line. Second, the U.S. procurement environment between the Afghanistan withdrawal and the post-Ukraine rearmament surge was genuinely weak. The severity of the FY2022 margin collapse (operating margin of 6.6% against 11.8% in FY2021) is overstated by impairments; the fiscal 2023 earnings release notes that "2022 had a higher level of impairments," including an asset impairment at Communication Systems tied to a lower outlook on legacy platforms and higher interest rates.
The FY2023 acquisition inflection. Fiscal 2023 revenue growth of 13.8% is almost entirely inorganic — Tactical Data Links from July 2023 and five months of Aerojet Rocketdyne from late July 2023. The balance sheet consequence was severe: total debt rose from $7.0 billion to $13.1 billion, net debt to $12.6 billion, and net debt to EBITDA to 4.85 times. The effective tax rate turned slightly negative on acquisition-related deferred tax effects. This is the year the equity de-rated on leverage concerns and the year that set the 2024–2026 capital allocation priorities of deleveraging and cash return.
The gross margin compression puzzle. Gross margin fell 450 basis points across the five years, from 30.2% to 25.7%, while operating margin fell only 210 basis points and has been rising since. This is mix, not deterioration. Aerojet Rocketdyne is a lower-gross-margin, higher-asset-intensity production business than the legacy communications portfolio, and the divestiture of the higher-margin Commercial Aviation Solutions business in March 2025 removed gross margin without removing much operating leverage. The company itself flagged CAS as a margin headwind to adjusted segment margin in fiscal 2025.
LHX NeXt and the operating margin recovery. Operating margin has expanded in each of the last three fiscal years — 7.3%, 9.0%, 9.7% — and reached 11.2% in 1H26. LHX NeXt, launched in 2023 with a target of approximately $1 billion of annualised gross savings by 2026, completed its implementation phase in fiscal 2025. The cost of getting there is visible: LHX NeXt implementation costs ran at $267 million in FY2024 and $167 million in FY2025, falling to zero in 1H26. The savings, in a 75% fixed-price contract book, largely accrue to L3Harris rather than being competed away in the near term. Unallocated corporate items fell from $1,351 million in FY2024 to $1,256 million in FY2025 and are running below prior-year levels in 1H26 at $538 million.
The FY2025 optical distortions. Two items make fiscal 2025 look worse than it was and one makes it look better. Worse: the $85 million non-cash goodwill impairment on the Space Technology disposal group, which cut 4Q25 GAAP operating margin to 7.0% and Aerojet Rocketdyne's GAAP margin to 0.7% in the quarter; and the federal government shutdown, which delayed awards and depressed 4Q25 revenue, principally at Space & Airborne Systems. Better: "higher monetization of legacy end-of-life assets aligned with our transformation and value creation priorities" — asset sales recognised inside segment results, including a $75 million gain in Space & Airborne Systems and a $17 million gain in Communication Systems in 2Q25 alone. These gains do not recur, which is why 2Q26 SMS margin fell 60 basis points despite improved underlying programme performance. Analysts modelling FY2026 segment margin should strip approximately $92 million of 2Q25 asset gains from the comparison base.
The effective tax rate normalisation. The tax rate ran at 5.3% in FY2024 and -0.6% in FY2023 on acquisition-related and other discrete benefits, then normalised to 16.9% in FY2025 and 14.4% in 1H26. Roughly $0.90 of the FY2025 GAAP EPS growth that would otherwise have flowed through was absorbed by this normalisation. Anyone extrapolating FY2024 net income growth without adjusting for tax will overstate the underlying trend materially.
6.2 Balance sheet
The balance sheet tells the deleveraging story cleanly. Net debt peaked at $12.6 billion at the end of fiscal 2023 and has been reduced by $3.2 billion over two years, funded by operating cash flow and $1.1 billion of divestiture proceeds (principally CAS). Short-term debt was eliminated entirely by the end of fiscal 2025 and commercial paper outstanding was reduced to zero.
Tangible book value remains deeply negative at -$6.9 billion, a direct consequence of $26.5 billion of goodwill and intangibles against $19.6 billion of equity. This is not unusual for a serial acquirer in this sector but it does mean that any further goodwill impairment falls straight through to book equity, and it constrains the usefulness of price-to-book as a valuation metric.
At the 2Q26 balance sheet date (3 July 2026), the picture had shifted again: cash rose to $1,521 million, total debt to $10,999 million (with $1,815 million now classified as current portion of long-term debt), total assets to $42,938 million, and — new to the structure — $968 million of redeemable subsidiary Series A convertible preferred stock in mezzanine equity, plus $130 million for the conversion feature and $186 million for warrants recorded as non-current liabilities. This is the Department of War investment. It sits outside common equity, does not dilute LHX shareholders directly, and generated a $14 million non-cash deemed dividend in 2Q26 which reduced net income available to common shareholders.
6.3 Cash flow
Free cash flow conversion is strong and improving: operating cash flow reached 193% of net income in fiscal 2025, helped by "the favorable impact of tax planning strategies and tax reform," lower interest paid on reduced short-term debt, and lower cash used for merger, acquisition and severance activity ($78 million in FY2025 against $167 million in FY2024).
The buyback pattern is instructive. The $3.7 billion repurchase in fiscal 2021 preceded the leveraging acquisitions; buybacks were then throttled to roughly $500 million annually through the deleveraging years of 2023–2024, and re-accelerated to $1,154 million in fiscal 2025 as leverage normalised. In 1H26 repurchases were $525 million, down from $822 million in 1H25 — a deliberate reallocation toward the capital programme.
The 2026 capital intensity step-change. Guidance for fiscal 2026 is approximately $600 million of capital expenditure against $424 million in fiscal 2025, a 42% increase, with operating cash flow of approximately $3.6 billion producing approximately $3.0 billion of free cash flow. This is the visible edge of a much larger commitment: management has stated it is investing "billions" across roughly 60 new or upgraded facilities adding nearly one million square feet across Alabama, Arkansas and Virginia, with the Virginia Advanced Propulsion Facilities alone cited at $1.265 billion. Some of that is funded by the $1 billion Department of War investment and Defense Production Act Title III cooperative agreements rather than by L3Harris cash — a critical distinction that de-risks the free cash flow bridge to the 2028 target of $3.5 billion.
1H26 free cash flow was $584 million against a full-year target of $3.0 billion. This 19% first-half weighting is normal for L3Harris — 1H25 free cash flow was $460 million against a full-year $2,736 million, or 17% — but it means the annual outcome is decided almost entirely in the fourth quarter and is highly sensitive to award and milestone timing.
6.4 Returns and ratios
FY2021–FY2023 interest expense is derived as operating income plus non-service FAS pension income less pre-tax income and should be treated as an estimate; FY2024 and FY2025 are as reported. Return on invested capital is derived as operating income after tax at the effective rate, divided by total debt plus equity at period end.
The cash conversion cycle is not meaningfully computable for L3Harris in a conventional sense because contract assets and contract liabilities, not trade receivables and payables, dominate working capital under percentage-of-completion accounting. The economically relevant measure is the contract asset balance ($3,566 million at FY2025 year-end, $3,674 million at 2Q26) against contract liabilities ($2,262 million and $2,936 million respectively). The 2Q26 build in contract liabilities of $656 million year-to-date — customer advances, in substance — is a meaningful positive, reflecting the shift toward large multi-year production framework agreements with advance funding.
ROIC of 5.8% remains below any plausible weighted average cost of capital. This is the central financial criticism of the Aerojet Rocketdyne and Tactical Data Links transactions: they added $26.5 billion of goodwill and intangibles to a company generating $2.1 billion of operating income. The bull case requires ROIC to climb materially as the missile capacity investment converts to revenue at scale; the bear case is that a capital-intensive production business permanently caps returns below where a communications-weighted L3Harris would have sat.
Financial Detail
Segment Revenue
| New segment | Constituent sectors | Prior segment home |
|---|---|---|
Space & Mission Systems (SMS) | Intelligence, Surveillance and Reconnaissance | Integrated Mission Systems |
Space & Mission Systems (SMS) | Space Systems (excluding Telemetry & Radio Frequency) | Space & Airborne Systems |
Space & Mission Systems (SMS) | Maritime | Integrated Mission Systems |
Space & Mission Systems (SMS) | Mission Networks | Space & Airborne Systems |
Space & Mission Systems (SMS) | Airborne Solutions (ex-Airborne Combat Systems, excluding EW, Agile Development Group, RSAT) | Space & Airborne Systems |
Space & Mission Systems (SMS) | Intel & Cyber (excluding some international businesses) | Space & Airborne Systems |
Communications & Spectrum Dominance (CSD) | Mission Critical Communications (Tactical Communications + Public Safety and Professional Communications) | Communication Systems |
Communications & Spectrum Dominance (CSD) | Spectrum Superiority (Broadband Communications + Electronic Warfare + Telemetry & Radio Frequency) | Communication Systems and Space & Airborne Systems |
Communications & Spectrum Dominance (CSD) | Targeting and Sensor Systems | Integrated Mission Systems |
Communications & Spectrum Dominance (CSD) | Integrated Vision Solutions | Communication Systems |
Missile Solutions (MSL) | Missile Propulsion | Aerojet Rocketdyne |
Missile Solutions (MSL) | Advanced Effects (Agile Development Group launched effects + RSAT weapons release + Space and Sensors + precision navigation and timing) | Space & Airborne Systems and Integrated Mission Systems |
Missile Solutions (MSL) | Space Propulsion and Power Systems | Aerojet Rocketdyne |
Segment Revenue
| Segment | FY2024 | FY2025 | 1H2025 | 1H2026 |
|---|---|---|---|---|
Space & Mission Systems | 10186 | 10711 | 5181 | 5956 |
Communications & Spectrum Dominance | 7272 | 7566 | 3670 | 3798 |
Missile Solutions | 3525 | 3797 | 1765 | 2044 |
Other non-reportable businesses | 711 | 146 | 146 | 0 |
Corporate and intersegment eliminations | -369 | -355 | -204 | -173 |
Total revenue | 21325 | 21865 | 10558 | 11625 |
Segment Revenue
| Segment | FY2024 | FY2025 | 1H2025 | 1H2026 |
|---|---|---|---|---|
Space & Mission Systems | 1046 | 1055 | 527 | 603 |
Communications & Spectrum Dominance | 1670 | 1924 | 901 | 987 |
Missile Solutions | 405 | 364 | 212 | 254 |
Other non-reportable businesses | 148 | 23 | 23 | 0 |
Segment operating income | 3269 | 3366 | 1640 | 1844 |
Unallocated corporate items and other, net | -1351 | -1256 | -544 | -538 |
Total operating income | 1918 | 2110 | 1096 | 1306 |
Segment Revenue
| Segment | FY2024 | FY2025 | 1H2025 | 1H2026 |
|---|---|---|---|---|
Space & Mission Systems | 10.3 | 9.8 | 10.2 | 10.1 |
Communications & Spectrum Dominance | 23.0 | 25.4 | 24.6 | 26.0 |
Missile Solutions | 11.5 | 9.6 | 12.0 | 12.4 |
Segment operating margin (total) | 15.3 | 15.4 | 15.8 | 15.9 |
Adjusted segment operating margin | 15.4 | 15.8 | — | — |
Consolidated GAAP operating margin | 9.0 | 9.7 | 10.4 | 11.2 |
Segment Revenue
| Segment | Share of segment revenue | Share of segment operating income |
|---|---|---|
Space & Mission Systems | 48.4 | 31.3 |
Communications & Spectrum Dominance | 34.2 | 57.2 |
Missile Solutions | 17.2 | 10.8 |
Segment Revenue
| Segment | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Space & Airborne Systems | 6315 | 6384 | 6856 | 6869 | 6946 |
Integrated Mission Systems | 6733 | 6626 | 6630 | 6618 | 6630 |
Communication Systems | 4287 | 4217 | 5070 | 5459 | 5673 |
Aerojet Rocketdyne | 0 | 0 | 1243 | 2580 | 2845 |
Corporate eliminations | -1521 | -165 | -380 | -201 | -229 |
Total revenue | 17814 | 17062 | 19419 | 21325 | 21865 |
Segment Revenue
| Segment | FY2024 | FY2025 |
|---|---|---|
Communication Systems | 24.3 | 25.2 |
Integrated Mission Systems | 12.5 | 12.2 |
Space & Airborne Systems | 11.8 | 12.3 |
Aerojet Rocketdyne | 11.9 | 9.5 |
Aerojet Rocketdyne (adjusted for goodwill impairment) | 11.9 | 12.5 |
Financial Analysis
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Revenue (USD M) | 17814 | 17062 | 19419 | 21325 | 21865 |
Revenue growth (%) | -2.1 | -4.2 | 13.8 | 9.8 | 2.5 |
Gross profit (USD M) | 5376 | 4927 | 5113 | 5524 | 5625 |
Operating income (USD M) | 2109 | 1127 | 1426 | 1918 | 2110 |
Depreciation and amortisation (USD M) | 967 | 938 | 1166 | 1289 | 1224 |
EBITDA (USD M, derived) | 3076 | 2065 | 2592 | 3207 | 3334 |
Income before income taxes (USD M) | 2284 | 1273 | 1222 | 1597 | 1932 |
Net income (USD M) | 1846 | 1062 | 1229 | 1512 | 1606 |
Diluted EPS (USD) | 9.09 | 5.49 | 6.42 | 7.87 | 8.53 |
Basic EPS (USD) | 9.15 | 5.54 | 6.45 | 7.91 | 8.57 |
Non-GAAP diluted EPS (USD) | 13.20 | 12.93 | 12.36 | 9.70 | 10.73 |
Dividends declared per share (USD) | 4.08 | 4.48 | 4.56 | 4.64 | 4.80 |
Diluted weighted-average shares (M) | 203.2 | 193.5 | 190.6 | 190.7 | 188.4 |
Financial Analysis
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Gross margin | 30.2 | 28.9 | 26.3 | 25.9 | 25.7 |
Operating margin | 11.8 | 6.6 | 7.3 | 9.0 | 9.7 |
EBITDA margin (derived) | 17.3 | 12.1 | 13.3 | 15.0 | 15.3 |
Pre-tax margin | 12.8 | 7.5 | 6.3 | 7.5 | 8.8 |
Net margin | 10.4 | 6.2 | 6.3 | 7.1 | 7.3 |
Adjusted segment operating margin | — | — | — | 15.4 | 15.8 |
Effective tax rate | 19.2 | 16.6 | -0.6 | 5.3 | 16.9 |
Financial Analysis
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Cash and cash equivalents (USD M) | 941 | 880 | 560 | 615 | 1069 |
Receivables and contract assets (USD M) | 4066 | 4238 | 4426 | 4302 | 4937 |
Inventories, net (USD M) | 982 | 1291 | 1472 | 1330 | 1219 |
Total current assets (USD M) | 6359 | 6754 | 8055 | 8218 | 8593 |
Property, plant and equipment, net (USD M) | 2870 | 2104 | 2862 | 2806 | 2665 |
Goodwill (USD M) | 18189 | 17283 | 19979 | 20325 | 20010 |
Intangible assets, net (USD M) | 6640 | 6001 | 8540 | 7639 | 6509 |
Goodwill and intangibles combined (USD M) | 24829 | 23284 | 28519 | 27964 | 26519 |
Total assets (USD M) | 34709 | 33524 | 41687 | 42001 | 41195 |
Short-term debt and current portion (USD M) | 13 | 820 | 1965 | 515 | 0 |
Long-term debt (USD M) | 7816 | 6225 | 11160 | 11081 | 10443 |
Total debt (USD M) | 7829 | 7045 | 13125 | 11596 | 10443 |
Net debt (USD M) | 6888 | 6165 | 12565 | 10981 | 9374 |
Total current liabilities (USD M) | 4551 | 5776 | 8004 | 7633 | 7226 |
Total liabilities (USD M) | 15390 | 14900 | 22858 | 22422 | 21560 |
Total equity (USD M) | 19319 | 18624 | 18829 | 19579 | 19635 |
Working capital (USD M) | 1808 | 978 | 51 | 585 | 1367 |
Book value per share (USD) | 94.55 | 95.73 | 98.45 | 102.33 | 105.09 |
Tangible book value (USD M) | -5616 | -4761 | -9754 | -8450 | -6884 |
Financial Analysis
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Net cash provided by operating activities (USD M) | 2687 | 2158 | 2096 | 2559 | 3106 |
Capital expenditures (USD M) | 342 | 252 | 449 | 408 | 424 |
Free cash flow (USD M) | 2345 | 1906 | 1647 | 2151 | 2736 |
Adjusted free cash flow (USD M) | — | — | — | 2319 | 2814 |
Dividends paid (USD M) | 817 | 864 | 868 | 886 | 903 |
Share repurchases (USD M) | 3675 | 1083 | 518 | 554 | 1154 |
Proceeds from business divestitures (USD M) | 1729 | 23 | 71 | 273 | 820 |
Cash used for acquisitions (USD M) | 0 | 0 | 6688 | 0 | 0 |
Capex as % of revenue | 1.9 | 1.5 | 2.3 | 1.9 | 1.9 |
Financial Analysis
| Ratio | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Return on equity (%, net income / ending equity) | 9.6 | 5.7 | 6.5 | 7.7 | 8.2 |
Return on assets (%, net income / ending assets) | 5.3 | 3.2 | 2.9 | 3.6 | 3.9 |
Return on invested capital (%, derived) | 6.3 | 3.7 | 4.5 | 5.8 | 5.8 |
Current ratio (x) | 1.40 | 1.17 | 1.01 | 1.08 | 1.19 |
Debt to equity (x) | 0.41 | 0.38 | 0.70 | 0.59 | 0.53 |
Net debt to EBITDA (x) | 2.24 | 2.99 | 4.85 | 3.42 | 2.81 |
Interest expense, net (USD M) | 252 | 225 | 497 | 675 | 597 |
Interest coverage (x, operating income / net interest) | 8.4 | 5.0 | 2.9 | 2.8 | 3.5 |
Asset turnover (x) | 0.51 | 0.51 | 0.47 | 0.51 | 0.53 |
Free cash flow conversion (% of net income) | 127 | 179 | 134 | 142 | 170 |
Days sales outstanding (days, derived) | 83 | 91 | 83 | 74 | 82 |
Geographic Revenue
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
International end-customer revenue (USD M) | 3500 | 4200 | 4800 |
International share of revenue (%) | 18.0 | 19.7 | 22.0 |
U.S. Government revenue share (%) | 76.0 | 76.0 | 75.0 |
Countries with customers | 100 | 100 | 100 |
Geographic Revenue
| Metric | 2Q2025 | 2Q2026 |
|---|---|---|
International revenue (USD M) | 1130 | 1360 |
International share of quarterly revenue (%) | 20.5 | 23.0 |
Capital Markets
| Metric | Value |
|---|---|
Closing price, 13 August 2026 | $288.46 |
Change on the day | -$2.28, or -0.78% |
Market capitalisation | Approximately $54.1 billion |
Shares outstanding | 186,776,263 (6 February 2026) |
Free float | Approximately 185.4 million shares |
Recent range (2026) | Approximately $277.86 (3 August 2026) to approximately $370.50 (2 March 2026, pre-market) |
Market cap rank | Approximately 319th among U.S.-listed companies |
Capital Markets
| Metric | FY2024 | FY2025 |
|---|---|---|
L3Harris indexed TSR | 110.28 | 178.36 |
Peer group indexed TSR | 131.38 | 237.57 |
Capital Markets
| Multiple | Current | FY2025 | FY2024 | FY2023 | FY2022 | FY2021 |
|---|---|---|---|---|---|---|
Price to earnings (x) | 29.15 | 35.42 | 26.65 | 32.71 | 37.93 | 23.46 |
Forward price to earnings (x) | 23.30 | 26.03 | 15.09 | 16.27 | 16.56 | 16.05 |
Price to free cash flow (x) | 19.13 | 21.21 | 18.51 | 24.27 | 20.82 | 17.60 |
Price to sales (x) | 2.34 | 2.60 | 1.87 | 2.06 | 2.33 | 2.32 |
Dividend yield (%) | 1.73 | 1.59 | 2.23 | 2.17 | 2.16 | 1.90 |
Book value per share (USD) | 106.80 | 105.09 | 102.33 | 98.45 | 95.73 | 94.55 |
Price to book (x) | 2.70 | — | — | — | — | — |
Capital Markets
| Source | Analysts | Consensus rating | Average or median target (USD) | Low (USD) | High (USD) |
|---|---|---|---|---|---|
Investing.com | 19 | Buy (16 buy, 5 hold, 0 sell) | 381.95 | 300 | 443 |
Financhill | 21 | Buy | 343.27 | — | — |
Ticker Nerd | 17 | Buy-weighted (12 buy, 5 hold, 0 sell) | 350.00 (median) | 285 | 393 |
TipRanks | 6 recent | Moderate Buy (4 buy, 2 hold, 0 sell) | 349.40 | — | — |
StockAnalysis | 13 | Strong Buy | 330.23 | 242 | 418 |
Capital Markets
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | FY2026E |
|---|---|---|---|---|---|---|
Dividend per share (USD) | 4.08 | 4.48 | 4.56 | 4.64 | 4.80 | 5.00 |
Dividend growth (%) | 20.0 | 9.8 | 1.8 | 1.8 | 3.4 | 4.2 |
Dividends paid (USD M) | 817 | 864 | 868 | 886 | 903 | 940 |
Payout ratio on GAAP EPS (%) | 44.9 | 81.6 | 71.0 | 59.0 | 56.3 | 42.0 |
Payout ratio on free cash flow (%) | 34.8 | 45.3 | 52.7 | 41.2 | 33.0 | 31.3 |
Capital Markets
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | 1H2026 |
|---|---|---|---|---|---|---|
Share repurchases (USD M) | 3675 | 1083 | 518 | 554 | 1154 | 525 |
Diluted shares outstanding (M) | 203.2 | 193.5 | 190.6 | 190.7 | 188.4 | 187.7 |
Capital Markets
| Agency | Long-term rating | Outlook | Last action |
|---|---|---|---|
Moody's Ratings | Baa2 | Stable | Affirmed 28 August 2024, with outlook revised to stable from negative |
S&P Global Ratings | BBB (indicative) | Not verified | Not verified in this research pass |
Fitch Ratings | BBB (indicative) | Not verified | Not verified in this research pass |
Capital Markets
| Maturity | Instrument |
|---|---|
15 December 2026 | 3.850% senior notes |
15 January 2027 | 5.40% notes |
1 February 2028 | 6.35% debentures |
15 June 2028 | 4.400% senior notes |
1 June 2029 | 5.05% notes |
15 December 2029 | 2.900% notes |
15 January 2031 | 1.80% notes |
1 June 2031 | 5.25% notes |
31 July 2033 | 5.40% notes |
1 June 2034 | 5.350% notes |
27 April 2035 | 4.854% notes |
15 December 2040 | 6.15% notes |
27 April 2045 | 5.054% notes |
31 July 2053 | 5.60% notes |
Undated debenture | Legacy debenture (second series) |
Analyst Conclusions
22.1 Management guidance
The 2026 guidance implies second-half revenue of approximately $11.6–12.1 billion against $11.6 billion delivered in the first half, and second-half EPS of approximately $5.95–$6.15 against $5.85 in the first half — a modest sequential acceleration that already absorbs the Space Propulsion divestiture headwind.
22.2 Consensus expectations
Sell-side consensus expects EPS growth of approximately $1.34 in the current year and approximately $1.43 in the following year, consistent with mid-teens EPS growth off a $11.90 midpoint. Consensus price targets cluster between $330 and $382 across panels, with no sell ratings among 13 to 21 covering analysts depending on the source.
22.3 Bull case
1. Missile Solutions is being valued as a defence segment and is about to be repriced as a growth industrial. The segment will generate approximately $4.1 billion of 2026 revenue growing at high-teens rates, with sole-source positions on roughly 80% of more than 30 programmes, a government anchor investor holding convertible preferred, and seven-year framework agreements from the Department of War and Lockheed Martin reported at approximately $12 billion aggregate that quadruple THAAD and nearly triple PAC-3 propulsion output. A standalone listing would establish a market clearing price for an asset the market currently discounts inside a 24x-forward-earnings conglomerate. Morgan Stanley's projection that the segment nearly doubles by 2028 on $3 billion of capital investment implies that Missile Solutions alone could approach $8 billion of revenue — roughly a third of consolidated revenue — within two years.
2. The order book has already de-risked the 2028 framework. Backlog reached a record $42.0 billion at 2Q26 on a trailing book-to-bill of 1.3x, with 45% of the fiscal 2025 backlog converting by end-2026 and approximately 70% by end-2027. Orders of $27.5 billion in fiscal 2025 and $15.1 billion in the first half of 2026 alone mean the revenue path to approximately $27 billion in 2028 is substantially contracted rather than hoped for. This is not a bookings-dependent story; it is a conversion story.
3. Margin has structural room and the mix is moving the right way. Adjusted segment margin of 15.8% (FY2025) and 16.0% (2Q26) already leads U.S. peers, and the drivers are additive rather than exhausted: LHX NeXt savings now flow with zero implementation cost; international revenue, which carries superior margin, grew above 20% to 23% of the total; Communications & Spectrum Dominance margin expanded 230 basis points in 2Q26 to 26.9%; and the divestitures of Commercial Aviation Solutions and Space Propulsion removed dilutive or capital-hungry revenue. If Space & Mission Systems can move from 10% to the low teens as classified space stabilises and Maritime is remediated, consolidated margin has 150–200 basis points of upside on the largest revenue base.
22.4 Bear case
1. Returns do not yet justify the capital. ROIC has not exceeded 6.3% in five years and stood at 5.8% in fiscal 2025, against $26.5 billion of goodwill and intangibles and tangible book value of -$6.9 billion. The company is now embarking on the largest capital programme in its history — approximately $3 billion, 60 buildings, three states — in a business (energetics production) that is structurally more asset-intensive and lower-margin than the communications franchise it is diluting. There is a coherent argument that L3Harris is converting a high-return, asset-light electronics company into a moderate-return industrial one, and that the market's refusal to re-rate the stock despite two consecutive beat-and-raise quarters reflects exactly this.
2. Execution risk is elevated and has already materialised. Seventy-five percent of revenue is fixed-price. The company disclosed unfavourable Maritime programme performance and a legacy contract matter as fiscal 2025 margin drags, and disclosed that fiscal 2025 space margins improved because prior classified programme performance was "stabilized" — implying it had not been. The 10-K separately concedes enterprise technical debt and continued reliance on "significant manual processes and procedures that subject us to increased risk of error and internal control failure." Layering 60 simultaneous construction projects, a workforce that has shrunk 10% in two years, and a hiring requirement in skilled trades onto that base makes a further estimate-at-completion charge over the next eight quarters a reasonable base case rather than a tail risk.
3. The demand thesis rests on politically contingent funding. Golden Dome, the anchor of the space and interceptor growth, is a programme with a presidentially mandated 2028 demonstration date, contested cost estimates and awards flowing largely through pre-existing architectures. Independent analysis has already noted that the L3Harris and Sierra Space AMDT3 awards represent expansion of a constellation whose development began before Golden Dome, and that public award values "should not be treated as wholly new program spending." Meanwhile the Q4 2025 shutdown demonstrated that appropriations dysfunction converts directly into lost revenue, and the CEO's own framing — the Department wants speed while Congress cannot fund it — describes the bind precisely. A change of administration, a budget sequester, or a Golden Dome descope would strand a meaningful share of the capacity now being built.
22.5 Catalysts and monitorables for the next twelve months
22.6 Analyst verdict
L3Harris in August 2026 presents an unusual pattern: a company executing well operationally whose shares have gone nowhere. Two consecutive quarters of beat-and-raise, a record $42 billion backlog, 1.3x trailing book-to-bill, 16.0% segment margins that lead every large U.S. peer, free cash flow up 37% in the most recent quarter, and net leverage cut from 4.85x to 2.81x in two years — and the stock trades at roughly $288 against roughly $370 in early March, with the company's own proxy conceding that shareholder returns have lagged its selected peer group by nearly sixty percentage points.
The disconnect is not irrational. It is a judgement about capital, not about demand. Management is redirecting a formerly asset-light electronics business into the most capital-intensive industrial expansion in its history — roughly $3 billion, 60 buildings, nearly a million square feet across Alabama, Arkansas and Virginia — into a market (solid rocket motors) where returns are constrained by a single dominant prime customer and where venture-backed entrants named in the company's own 10-K are attempting to change the cost structure. ROIC of 5.8% against $26.5 billion of goodwill does not yet vindicate the Aerojet Rocketdyne price, and negative tangible book value means there is no margin of safety in the asset base. The stock's refusal to respond to good news says the market is waiting to see the return before paying for the growth.
There are two persuasive reasons to think the market is being too cautious. First, the state itself has underwritten a material share of the capital risk: the $1 billion Department of War convertible preferred, plus Defense Production Act Title III cooperative agreements at Camden and Huntsville, mean L3Harris is not funding this alone — an alignment structure with no recent precedent in the sector. Second, the seven-year THAAD and PAC-3 frameworks convert exactly the volume commitment that capacity investment requires. Capacity built against a signed seven-year framework is a different asset from capacity built on hope.
Against that, the honest concerns are three: the 75% fixed-price book combined with acknowledged process immaturity and a demonstrated recent Maritime failure makes another programme charge more likely than not; Space & Mission Systems, at half of revenue, remains stuck near a 10% margin with no guided improvement; and Golden Dome, on which a great deal of the space and interceptor thesis rests, is politically contingent in a way that management cannot hedge.
Verdict. L3Harris is a well-run business at an inflection whose outcome is genuinely uncertain — which is what a 15–30% consensus upside with a $242-to-$443 target dispersion is telling you. The Missile Solutions IPO is the fulcrum: priced well, it re-rates the sum of the parts and validates the strategy; priced poorly or delayed, it confirms the bear view that a capital-intensive propulsion business is worth less inside or outside than management believes. Investors comfortable with that binary and with the execution risk in a 75% fixed-price book are being offered a sector-leading margin profile, a genuinely scarce industrial asset, a fortress-grade balance sheet by prime standards, and government capital sharing the downside — at roughly 24x forward earnings and 19x free cash flow. That is not obviously cheap and not obviously expensive. It is a position on whether capacity really does become the new capability, and on whether L3Harris can build it without breaking anything.
Prepared from publicly available information as of 14 August 2026. All figures are as reported by L3Harris Technologies, Inc. unless otherwise attributed. Items marked "not verified in sources reviewed" require confirmation against primary filings before use in a transaction or investment decision. This dossier is an analytical compilation and is not investment advice.
Executive Leadership
| Name | Age | Title | In role since | Selected prior roles |
|---|---|---|---|---|
Christopher E. Kubasik | 64 | Chairman and Chief Executive Officer | CEO June 2021; Chairman June 2022 | Vice Chair and CEO, L3Harris (2021); Vice Chair, President and COO, L3Harris (2019–2021); Chairman, CEO and President, L3 Technologies (2018–2019); previously President and COO and CFO of Lockheed Martin |
Kenneth (Ken) Sharp | 55 | Senior Vice President and Chief Financial Officer | 16 March 2026 | EVP and CFO, Peraton (2023–2026); EVP and CFO, DXC Technology (2020–2023); VP and CFO Defense Systems, Northrop Grumman (2016–2020); began career as an auditor at Ernst & Young; U.S. Marine Corps veteran of Operations Desert Shield and Desert Storm |
Samir (Sam) Mehta | 53 | President, Space & Mission Systems and Communications & Spectrum Dominance | SMS from January 2026; both segments from 16 March 2026 | President, Communication Systems, L3Harris (2023–2025); President, Advanced Structures, Collins Aerospace (2018–2022); President, Aftermarket Services, UTC Aerospace Systems (2017–2018) |
Kenneth (Ken) Bedingfield | Not disclosed | President, Missile Solutions | January 2026 as segment president; exclusively from March 2026 | SVP and CFO, L3Harris (December 2023 – March 2026); previously CFO of Northrop Grumman |
Edward J. Zoiss | Not disclosed | Vice President, Engineering and Innovation | January 2026 | President, Space & Airborne Systems, L3Harris |
Christoph Feddersen | 54 | Senior Vice President, General Counsel and Secretary | December 2025 | VP, General Counsel and Secretary, L3Harris (2024–2025); VP and General Counsel, L3Harris SAS (2024); VP and General Counsel, Collins Aerospace Systems (2018–2023) |
Melanie Rakita | 48 | Vice President and Chief Human Resources Officer | April 2023 | VP HR for L3Harris IMS (2023), SAS (2019–2023) and legacy Harris Electronic Systems (2018–2019) |
| Executive | Total cash (USD) | Equity (USD) | Other (USD) | Total compensation (USD) |
|---|---|---|---|---|
Christopher E. Kubasik | 7750000 | 14572479 | 3295111 | 25617590 |
Kenneth L. Bedingfield | 2537163 | 4626410 | 157211 | 7320784 |
Samir B. Mehta | 2062163 | 3598359 | 268340 | 5928862 |
Jonathan P. Rambeau | 2202721 | 2878772 | 264797 | 5346290 |
Edward J. Zoiss | 1801521 | 2878772 | 253036 | 4933329 |
| Metric | FY2024 | FY2025 |
|---|---|---|
CEO total compensation (USD) | 20839223 | 25617590 |
CEO compensation actually paid (USD) | 17503180 | 59464701 |
Average non-CEO NEO total compensation (USD) | 5440525 | 5882317 |
Average non-CEO NEO compensation actually paid (USD) | 4997641 | 14093419 |
Company total shareholder return (indexed) | 110.28 | 178.36 |
Peer group total shareholder return (indexed) | 131.38 | 237.57 |
Net income (USD M) | 1512 | 1606 |
Company-selected measure — adjusted free cash flow (USD M) | 2319 | 2814 |
| Metric | Value |
|---|---|
CEO compensation (USD) | 25617590 |
Median employee compensation (USD) | 111832 |
Ratio | 229:1 |
| Director | Fiscal 2025 total compensation (USD) | Notes |
|---|---|---|
Christopher E. Kubasik | Not applicable — compensated as an executive | Chairman and CEO; the sole non-independent director |
Lewis Hay III | 387563 | Highest-paid director, consistent with a lead independent director or committee chair role |
Sallie B. Bailey | 379924 | |
Thomas A. Dattilo | 369924 | |
Joanna Geraghty | 367493 | CEO of JetBlue Airways |
Robert B. Millard | 364924 | Retired following the 2026 annual meeting; legacy L3 chairman |
Roger B. Fradin | 355924 | |
Admiral Harry B. Harris Jr. (Ret.) | 349924 | Former Commander, U.S. Indo-Pacific Command; former U.S. Ambassador to the Republic of Korea |
Rita S. Lane | 349924 | Retired following the 2026 annual meeting |
Christina Zamarro | 339924 | |
David S. Regnery | 339924 | Chairman and CEO of Trane Technologies |
Edward A. Rice Jr. | 339924 | Retired U.S. Air Force General |
Kirk S. Hachigian | 339924 | |
William H. Swanson | 51000 | Partial-year figure; former Chairman and CEO of Raytheon Company |
| Holder | Shares held | Ownership (%) |
|---|---|---|
The Vanguard Group, Inc. | 23219851 | 12.4 |
BlackRock, Inc. | 16576041 | 8.9 |
Capital Research and Management Company | 13168978 | 7.0 |
State Street Global Advisors, Inc. | 8777926 | 4.7 |
T. Rowe Price Group, Inc. | 5979289 | 3.2 |
Geode Capital Management, LLC | 5040283 | 2.7 |
Wells Fargo & Company | 4939144 | 2.6 |
Wellington Management Group LLP | 4727961 | 2.5 |
BNY Asset Management | 3704369 | 2.0 |
ClearBridge Investments, LLC | 3204642 | 1.7 |
Competitive Landscape
| Competitor | Competes against | Relative position |
|---|---|---|
Lockheed Martin | Space Systems, missile defence satellites, Missile Solutions (as both customer and competitor), NGI | Far larger ($75.0 billion FY2025 revenue). Simultaneously L3Harris's largest propulsion customer and its competitor for SDA satellite tranches. The July 2026 frameworks deepen the customer relationship materially |
Northrop Grumman | Space systems, SDA Tracking Layer, HBTSS, solid rocket motors (via Northrop's Innovation Systems), electronic warfare | Roughly twice the size ($42.0 billion FY2025 revenue). Northrop is the only other large Western SRM supplier and thus the direct competitive constraint on Missile Solutions pricing. Northrop's CEO has publicly declined to separate its propulsion business, citing "strategic synergy" — a contrast to L3Harris's IPO strategy |
RTX | Missile propulsion customer and competitor (Standard Missile, Tomahawk), sensors, effectors, EW | Substantially larger, with a materially different mix given commercial aerospace exposure. Backlog of $268 billion at end-2025 with $107 billion defence and $161 billion commercial; FY2025 free cash flow of $7.9 billion |
General Dynamics | Maritime and naval systems, tactical communications (GD Mission Systems), munitions | $52.6 billion FY2025 revenue, up 10.1%; $118 billion backlog, up 30%; book-to-bill 1.5x for the year. GD Mission Systems is a direct competitor in tactical radios |
BAE Systems | Electronic warfare, combat systems, precision munitions, international tactical communications | Large European prime with substantial U.S. operations; principal competitor for allied and NATO business |
Boeing | Space systems, ISR platforms, weapons | Competes selectively; also a customer for L3Harris content |
Thales | International tactical communications, avionics, optronics, EW | Principal European competitor for allied radio and optronics tenders — the direct rival for the international growth L3Harris is capturing |
Leidos | Mission networks, intelligence and cyber services, FAA-adjacent work | Services-led; competes principally in SMS Intel & Cyber and Mission Networks |
Elbit Systems | Night vision, EO/IR, tactical radios, launched effects | Aggressive international competitor with strong Gulf and Asian positions |
Anduril Industries | Autonomy, counter-UAS, launched effects, software-defined command and control | Named in the 10-K as both a strategic partner and a competitor. Vertically integrated, software-first, privately funded — the archetypal non-traditional threat |
Ursa Major Technologies | Solid and liquid rocket propulsion | Small but strategically significant: a venture-backed additive-manufacturing-first SRM producer explicitly named in the 10-K. Its existence is the counter-argument to the "SRM duopoly" thesis underpinning Missile Solutions valuation |
Silvus Technologies | Tactical MANET radios | Named in the 10-K. Its inclusion signals that low-cost MANET entrants are pressuring the tactical communications franchise from below |
Rocket Lab USA | Small satellite buses and constellation production | Won up to $805 million for 18 Tranche 3 satellites in the same competition L3Harris won $843 million |
Sierra Space | Missile-warning and missile-tracking satellites | Won up to $798 million for 18 AMDT3 satellites alongside L3Harris's $955 million, splitting the award |
| Metric | L3Harris FY2025 | Lockheed Martin FY2025 | Northrop Grumman FY2025 | General Dynamics FY2025 |
|---|---|---|---|---|
Revenue (USD M) | 21865 | 75048 | 41954 | 52550 |
Revenue growth (%) | 2.5 | 5.6 | 2.2 | 10.1 |
Operating income (USD M) | 2110 | 7731 | 4288 | 5106 |
Operating margin (%) | 9.7 | 10.3 | 10.2 | 9.7 |
Segment operating margin (%) | 15.8 | 9.0 | 11.5 | 10.5 |
Net income (USD M) | 1606 | 5017 | 4103 | 4200 |
Net margin (%) | 7.3 | 6.7 | 9.8 | 8.0 |
Diluted EPS (USD) | 8.53 | 21.49 | 28.13 | 15.45 |
Operating cash flow (USD M) | 3106 | 8557 | 4300 | 5200 |
Free cash flow (USD M) | 2736 | 6908 | 2700 | 4000 |
Capital expenditure (USD M) | 424 | 1649 | 1600 | 1200 |
Capex as % of revenue | 1.9 | 2.2 | 3.8 | 2.3 |
Total debt (USD M) | 10443 | 21700 | 15000 | 8600 |
Total equity (USD M) | 19635 | 6721 | 13000 | 24500 |
Debt to equity (x) | 0.53 | 3.23 | 1.15 | 0.35 |
Backlog (USD B) | 38.7 | 179.0 | 92.8 | 118.0 |
Book-to-bill (x) | 1.3 | 1.2 | 1.2 | 1.5 |
Company-funded R&D intensity (%) | 2.7 | 1.5 | 2.0 | 1.0 |



