L3Harris Delivers Record Backlog and Strong Third-Quarter Results
MELBOURNE, Fla.--( BUSINESS WIRE)--L3Harris Technologies (NYSE: LHX) reported its third quarter 2026 results.
“Our team’s exceptional execution delivered solid financial performance in the third quarter. We grew backlog to record levels, underscoring the consistently strong demand for our mission-critical capabilities. Our priority now is to convert that demand into results. We will continue to invest in production capacity and differentiated capabilities across missiles and missile solutions, space, resilient communications and multi-domain sensing, which will enable us to deliver for the warfighter, our customers and our shareholders,” said Sam Mehta, President and CEO, L3Harris.
Third-Quarter Summary
Revenue of $6.1 billion increased $401 million compared to prior year, up 7%, and up 9% on an organic 1 basis, driven by double-digit growth in the Space & Mission Systems and Missile Solutions segments. Operating income margin was 13.0%, up 200 bps compared to prior year, driven by higher revenues and continued management of corporate expenses. Segment operating margin 2 was 15.9%, flat to prior year. Third quarter GAAP EPS increased 33% to $3.28 driven by higher volumes, a lower level of corporate expense, lower interest expense and a lower effective tax rate.
Third-Quarter Cash Generation
Net cash provided by operating activities in the quarter totaled $1.4 billion. Capital expenditures were $179 million. Free cash flow 3 was $1.3 billion, up 195% over prior year. The Company ended the quarter with $11.0 billion in total debt, $2.5 billion in cash and equivalents and $550 million in short-term investments.
Backlog and Orders
Orders received in the quarter totaled $19.3 billion, resulting in backlog of $53.2 billion. Book-to-bill ratio was 3.2x for the quarter. By segment, Space & Mission Systems book-to-bill was 1.0x, Communications & Spectrum Dominance was 1.9x and Missile Solutions was 11.8x.
FY26 Guidance
Management increases the bottom end of the revenue guidance range to $23.5 billion to $23.7 billion (prev. $23.2 billion to $23.7 billion), increases GAAP EPS range to $12.25 to $12.35 (prev. $11.80 to $12.00) and maintains FY26 Free Cash Flow guidance of $3 billion 3.
Third Quarter & Recent Business Highlights
1 Organic revenue is a non-GAAP Financial Measure as defined by Regulation G and reconciled to GAAP in Table 5.
2 Segment operating margin is a non-GAAP Financial Measure as defined by Regulation G and reconciled to GAAP in Table 4.
3 Free cash flow is a non-GAAP Financial Measure as defined by Regulation G and reconciled to GAAP in Table 6.
SUMMARY FINANCIAL RESULTS
Third Quarter
Year to Date
2026 Guidance
($ millions, except per share data)
2026
2025
2026
2025
Revenue
Space & Mission Systems
$
3,093
$
2,803
$
9,049
$
7,984
~$11.9B
(Prior: ~$11.7B)
Communications & Spectrum Dominance
1,995
1,935
5,793
5,605
~$7.9B
(Prior: ~$8B)
Missile Solutions
1,057
1,008
3,101
2,773
~$4.1B
(unchanged)
Intersegment
(80
)
(88
)
(253
)
(292
)
Segment revenue 1
6,065
5,658
17,690
16,070
Other 2
(5
)
1
(5
)
147
Revenue
$
6,060
$
5,659
$
17,685
$
16,217
$23.5B - $23.7B
(Prior: $23.2B - $23.7B)
Operating income
Space & Mission Systems
$
338
$
299
$
941
$
826
mid 10%
(unchanged)
Communications & Spectrum Dominance
502
477
1,489
1,378
mid 25%
(unchanged)
Missile Solutions
127
124
381
336
low 12%
(unchanged)
Segment operating income 1
967
900
2,811
2,540
Unallocated corporate items and other, net (see Table 4)
(181
)
(279
)
(719
)
(823
)
Operating income
$
786
$
621
$
2,092
$
1,717
Operating margin
13.0
%
11.0
%
11.8
%
10.6
%
Segment operating margin 1
15.9
%
15.9
%
15.9
%
15.8
%
Low 16%
(unchanged)
Tax rate
Effective tax rate
14.9
%
18.5
%
14.6
%
15.7
%
GAAP EPS
Diluted EPS
$
3.28
$
2.46
$
9.13
$
6.92
$12.25 - $12.35
(Prior: $11.80 - $12.00)
Diluted weighted-average common shares outstanding
186.9
188.1
187.5
188.6
Cash flow
Cash from operations
$
1,439
$
546
$
2,223
$
1,144
$3.6B
(unchanged)
Free cash flow 3
$
1,260
$
427
$
1,837
$
878
$3.0B
(unchanged)
Repurchases of common stock
$
73
$
176
$
598
$
998
Dividends paid
$
234
$
225
$
704
$
678
1 Segment revenue, segment operating income and segment operating margin are non-GAAP Financial Measures as defined by Regulation G and reconciled to GAAP in Table 4. A reconciliation of segment operating margin on a forward-looking basis to GAAP is not available without unreasonable effort due to the unavailability of items for exclusion from the GAAP measure. We are unable to address the probable significance of this information, the variability of which may have a significant impact on future GAAP results.
2 Revenue attributable to our corporate headquarters, which includes amortization of program investment asset recognized in connection with DoW strategic investment in 2026. Year to date 2025 includes our divested Commercial Aviation Solutions business CAS disposal group.
3 Free cash flow is a non-GAAP Financial Measure defined and reconciled to GAAP in Table 6. Net cash provided by operating activities is anticipated to be approximately $3.6 billion and capital expenditures are anticipated to be approximately $600 million. As of third quarter 2026, we no longer include proceeds from disposal of property, plant and equipment, net. Prior periods have been recast for comparability.
Forward-Looking Statements
This earnings release contains forward-looking statements within the meaning of federal securities laws made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Examples include, but are not limited to: planned investments and capacity expansion; our pipeline and backlog expansion; 2026 guidance; the impact of recent and expected contract awards; the 2028 financial framework; 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 and subsequent Form 10-Q filings. 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)
Third Quarter
Year to Date
($ millions, except per share amounts)
2026
2025
2026
2025
Revenue
$
6,060
$
5,659
$
17,685
$
16,217
Cost of revenue
(4,448
)
(4,165
)
(13,169
)
(12,038
)
General and administrative expenses
(826
)
(873
)
(2,424
)
(2,462
)
Operating income
786
621
2,092
1,717
Non-service FAS pension income 1
74
73
224
236
Other non-operating (expense) income, net
(1
)
25
107
51
Interest expense, net
(116
)
(152
)
(381
)
(454
)
Income before income taxes
743
567
2,042
1,550
Income tax expense
(111
)
(105
)
(298
)
(244
)
Net income
$
632
$
462
$
1,744
$
1,306
Subsidiary preferred stock deemed dividends
(19
)
—
(33
)
—
Net income available to common shareholders
$
613
$
462
$
1,711
$
1,306
Earnings per share available to common shareholders
Basic
$
3.29
$
2.47
$
9.18
$
6.96
Diluted
$
3.28
$
2.46
$
9.13
$
6.92
Weighted-average common shares outstanding
Basic
186.1
187.1
186.4
187.6
Diluted
186.9
188.1
187.5
188.6
1“FAS” is defined as Financial Accounting Standards.
Table 2 - Condensed Consolidated Balance Sheet (Unaudited)
($ millions)
October 2, 2026
January 2, 2026
Assets
Current assets
Cash and cash equivalents
$
2,471
$
1,069
Receivables, net
1,640
1,371
Contract assets
3,999
3,566
Inventories, net
1,278
1,219
Short-term investments
550
—
Other current assets
635
484
Assets of business held for sale
—
884
Total current assets
10,573
8,593
Non-current assets
Property, plant and equipment, net
2,833
2,665
Goodwill
19,999
20,010
Intangible assets, net
6,389
6,509
Deferred income taxes
72
76
Other non-current assets
3,940
3,342
Total assets
$
43,806
$
41,195
Liabilities, mezzanine equity, and equity
Current liabilities
Current portion of long-term debt
$
1,815
$
673
Accounts payable
2,182
2,461
Contract liabilities
3,107
2,262
Compensation and benefits
500
482
Other current liabilities
1,237
1,235
Liabilities of business held for sale
—
113
Total current liabilities
8,841
7,226
Non-current liabilities
Long-term debt, net
9,181
10,443
Deferred income taxes
1,436
1,114
Subsidiary Series A preferred stock conversion feature
203
—
Subsidiary warrants
163
—
Other non-current liabilities
2,755
2,777
Total liabilities
22,579
21,560
Mezzanine equity
Redeemable subsidiary Series A convertible preferred stock
987
—
Total equity
20,240
19,635
Total liabilities, mezzanine equity, and equity
$
43,806
$
41,195
Table 3 - Condensed Consolidated Statement of Cash Flows (Unaudited)
Third Quarter
Year to Date
($ millions)
2026
2025
2026
2025
Operating Activities
Net income
$
632
$
462
$
1,744
$
1,306
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization
267
309
837
913
Share-based compensation
(1
)
35
48
83
Net periodic benefit income
(70
)
(66
)
(209
)
(216
)
Share-based matching contributions under defined contribution plans
51
64
158
200
Net investment gains
(37
)
(7
)
(114
)
(11
)
Change in fair value of subsidiary preferred stock conversion feature and warrants
50
—
50
—
Deferred income taxes
63
245
245
151
(Increase) decrease in:
Receivables, net
369
(91
)
(306
)
(474
)
Contract assets
(299
)
180
(437
)
(454
)
Inventories, net
(6
)
(33
)
(61
)
53
Other current assets
26
4
(153
)
(18
)
Increase (decrease) in:
Accounts payable
106
(131
)
(263
)
(93
)
Contract liabilities
169
(86
)
825
91
Compensation and benefits
121
42
16
67
Other current liabilities
14
(227
)
(74
)
(495
)
Income taxes
23
(177
)
18
144
Other operating activities
(39
)
23
(101
)
(103
)
Net cash provided by operating activities
1,439
546
2,223
1,144
Investing Activities
Capital expenditures
(179
)
(119
)
(386
)
(266
)
Proceeds from disposal of property, plant and equipment, net
13
—
20
9
Proceeds from sales of businesses, net of cash divested
539
—
539
831
Cash used for short-term investments
(550
)
—
(550
)
—
Other investing activities
(4
)
(10
)
(15
)
(37
)
Net cash (used in) provided by investing activities
(181
)
(129
)
(392
)
537
Financing Activities
Proceeds from issuance of subsidiary Series A preferred stock, net
—
—
973
—
Repayments of long-term debt
(3
)
(3
)
(115
)
(614
)
Change in commercial paper, net
—
(260
)
—
210
Repurchases of common stock
(73
)
(176
)
(598
)
(998
)
Dividends paid
(234
)
(225
)
(704
)
(678
)
Other financing activities
1
104
18
105
Net cash used in financing activities
(309
)
(560
)
(426
)
(1,975
)
Effect of exchange rate changes on cash and cash equivalents
1
—
(3
)
18
Net increase (decrease) in cash and cash equivalents
950
(143
)
1,402
(276
)
Cash and cash equivalents, beginning of period
1,521
482
1,069
615
Cash and cash equivalents, end of period
$
2,471
$
339
$
2,471
$
339
Table 4 - Reconciliation of Revenue, Operating Income and Margin to Segment Revenue, Operating Income and Margin - Non-GAAP Financial Measures Reconciliation (Unaudited)
Third Quarter
Year to Date
($ millions)
2026
2025
2026
2025
Revenue (B)
$
6,060
$
5,659
$
17,685
$
16,217
Other 1
5
(1
)
5
(147
)
Segment revenue 2 (D)
$
6,065
$
5,658
$
17,690
$
16,070
Operating income (A)
$
786
$
621
$
2,092
$
1,717
Unallocated corporate items:
Amortization of acquisition-related intangibles
147
192
497
579
LHX NeXt implementation costs 3
—
25
—
99
Business divestiture-related losses 3
17
—
27
17
Acquisition, divestiture and transaction-related expenses 3
9
10
49
40
Change in fair value of deferred compensation plan liabilities
(3
)
25
35
48
Segment investment offset 3
—
—
39
—
Other items 4
11
27
72
40
Unallocated corporate items and other, net
181
279
719
823
Segment operating income 5 (C)
$
967
$
900
$
2,811
$
2,540
Operating margin (A) / (B)
13.0
%
11.0
%
11.8
%
10.6
%
Segment operating margin 5 (C) / (D)
15.9
%
15.9
%
15.9
%
15.8
%
1 Revenue attributable to our corporate headquarters, which includes amortization of program investment asset recognized in connection with DoW strategic investment in 2026. Year to date 2025 includes our divested CAS disposal group.
2 Segment revenue is a non-GAAP Financial Measure as defined by Regulation G. We use segment revenue because it reflects the aggregate results of our segments without the impact of corporate headquarters or divestitures. We believe this metric provide investors a more complete understanding of factors and trends affecting our business.
3 Refer to Key Terms on page 11.
4 Includes a portion of management and administration, legal, environmental, compensation, retiree benefits, corporate eliminations and other. Year to date 2025 also includes the divested CAS disposal group.
5 Segment operating income and margin are non-GAAP Financial Measures as defined by Regulation G. We use segment operating income and margin to evaluate our core operating performance because it reflects the aggregate performance results of our segments without the impact of unallocated corporate items and it includes income from investments that are operationally aligned with our business segments. We believe these metrics provide investors a more complete understanding of factors and trends affecting our business.
Table 5 - Organic Revenue - Non-GAAP Financial Measures Reconciliation (Unaudited)
2025
Third Quarter
Year to Date
($ millions)
GAAP
Adjustments
Organic
GAAP
Adjustments
Organic
Space & Mission Systems
$
2,803
$
—
$
2,803
$
7,984
$
—
$
7,984
Communications & Spectrum Dominance
1,935
—
1,935
5,605
—
5,605
Missile Solutions 1
1,008
(103
)
905
2,773
(103
)
2,670
Intersegment
(88
)
—
(88
)
(292
)
—
(292
)
Segment revenue
5,658
(103
)
5,555
16,070
(103
)
15,967
Other 2
1
—
1
147
(146
)
1
Total revenue
$
5,659
$
(103
)
$
5,556
$
16,217
$
(249
)
$
15,968
1 Includes our divested Space Technology disposal group in prior periods.
2 Includes corporate headquarters and 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)
Third Quarter
Year to Date
($ millions)
2026
2025
2026
2025
Net cash provided by operating activities
$
1,439
$
546
$
2,223
$
1,144
Capital expenditures
(179
)
(119
)
(386
)
(266
)
Free cash flow 1
$
1,260
$
427
$
1,837
$
878
1 Free cash flow is a non-GAAP Financial Measure as defined by Regulation G. As of third quarter 2026, we no longer include proceeds from disposal of property, plant and equipment, net. Prior periods have been recast for comparability. We use free cash flow to evaluate business performance and overall liquidity, and it is a performance metric in our annual incentive plan. We believe free cash flow is useful because it represents the cash generated from operations after reinvesting in our business that may be available to return to stockholders and creditors through dividends, share repurchases, and debt repayments, or to fund acquisitions or other investments. However, the entire amount of the free cash flow is not available for discretionary expenditures because of certain mandatory expenditures, such as debt repayments.
Key Terms
Description
Definition
Acquisition, divestiture and transaction-related expenses
Transaction and integration expenses associated with the Aerojet Rocketdyne acquisition in 2025; external costs related to pursuing acquisition and divestiture portfolio optimization; non-transaction costs related to divestitures; costs related to the carve-out and planned MSL public offering; salaries of employees in roles dedicated to planned strategic transaction activity; and resolution of a procurement contract matter.
Business divestiture-related losses
In 2026, includes a loss recognized in connection with the Space Technology disposal group divestiture, which consists of certain product lines of our Space Propulsion and Power Systems business and the space portion of our Space & Sensors division reported in our Mission Solutions segment through the date of divestiture. In 2025, includes a loss recognized in connection with the CAS disposal group divestiture.
LHX NeXt implementation costs
Includes costs related to workforce optimization costs, incremental IT expenses for implementation of new systems, third-party consulting expenses and other related costs, including costs related to personnel dedicated to this project. The implementation phase of LHX NeXt was completed in fiscal 2025.
Orders
Total value of funded and unfunded contract awards received from the U.S. Government and other customers excluding unexercised contract options and potential orders under ordering-type contracts, such as indefinite delivery, indefinite quantity (IDIQ) contracts.
Segment investment offset
Adjustment to eliminate the effect of net investment gains or losses on segment aligned investments included in segment operating income.