L3Harris Technologies, Inc.

LHX · NYSE · USD

Analysis

Last 4 earnings calls · through Q2 FY2026

L3Harris has stopped being a company that executes programs and become one that builds factories for demand it has not signed yet. Growth guidance has been raised twice and orders are at record levels, but the spending lands years before the sales that pay for it. When does the missile capacity start producing revenue, and how much?

  • The missile business became the whole investment case.

    A seven-year framework with Lockheed for THAAD and PAC-3 is signed, and another $20 billion of missile deals are in negotiation, enough to triple that backlog. It is adding a million square feet of capacity before the deals are firm. How does missile segment growth compare with the rest of the company?

  • Growth accelerated and guidance went up twice.

    Full-year organic growth guidance now sits at 8% to 10%, raised twice since January, and margins have expanded for ten straight quarters. International is doing the heavy lifting, with orders running at 2.2 times revenue in Q1. Which part of the company produced most of the international growth?

  • The bill for the build arrives before the revenue does.

    Capital spending is up about 40% so far this year and investment in research and capacity rose 44% in Q1, which left free cash flow negative that quarter. The missile listing meant to fund the expansion slipped to mid-2027.

Bullish
  • The record backlog converts on the timeline management gave. Nearly two years of sales are already booked, so one slow quarter of awards no longer becomes a slow quarter of revenue.
  • The THAAD and PAC-3 framework becomes firm orders this year. They fill the new factories, and management expects them to earn more per unit than the missile business does today.
  • The missile build is running a year to 18 months ahead. Getting to more capacity first is what wins orders rivals cannot fill, which is how the spending pays for itself.
Bearish
  • The $20 billion of missile deals stay unsigned past year-end. The new factories sit mostly empty while the money spent building them is already gone.
  • Capital spending keeps climbing faster than cash comes in. With the listing delayed, the build is paid for from the company's own cash, leaving less room to absorb a slip.
  • The fastest-growing parts of the company earn the thinnest margins. Missiles and space earn less per dollar of sales than radios, so faster growth there can pull overall margins down.
PoliticiansInstitutionsInsiders
PoliticianTransactionAmountTradedFiled
Donald Trump
Republican · Executive
Sale≥$1KAug 28Oct 8
Donald Trump
Republican · Executive
Sale≥$1KAug 24Oct 8
Donald Trump
Republican · Executive
Sale≥$100KAug 21Oct 8
Donald Trump
Republican · Executive
Purchase≥$15KAug 17Oct 8
Donald Trump
Republican · Executive
Sale≥$15KJul 17Sep 22

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Product segmentsGeography
FY2025 · USD

How L3Harris Technologies turned $21.9B of revenue into $2.1B of operating income.

Revenue
Space and Airborne Systems$6.9B▲ 1.12% YoY
Integrated Mission Systems$6.6B▼ 3.10% YoY
Communication Systems$5.7B▲ 3.92% YoY
Aerojet Rocketdyne Segment$2.8B▲ 21.22% YoY
Total revenue$21.9B
Gross profit$5.6B25.7%
Operating income$2.1B9.7%
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