L3Harris — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue was $6.1 billion, an increase of 7% year-over-year (up 9% on an organic basis), driven by double-digit growth in Space & Mission Systems and Missile Solutions segments.
• Operating income margin was 13.0%, up 200 basis points compared to the prior year; segment operating margin was 15.9%, flat to the prior year.
• Diluted EPS was $3.28, a 33% increase year-over-year, driven by higher volumes, lower corporate expenses, lower interest expense, and a lower effective tax rate.
• Operating cash flow was $1.4 billion; free cash flow was $1.3 billion, up 195% compared to the prior year.
• Net cash provided by operating activities totaled $1.4 billion for the quarter and $2.2 billion year-to-date.
• Capital expenditures were $179 million for the quarter and $386 million year-to-date.
• 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.
• Effective tax rate was 14.9% for the quarter, down from 18.5% in the prior year period.

Guidance and Future Outlook:

• Increased full-year 2026 revenue guidance range bottom end to $23.5 billion to $23.7 billion (previously $23.2 billion to $23.7 billion).
• Increased full-year 2026 GAAP EPS guidance range to $12.25 to $12.35 (previously $11.80 to $12.00).
• Maintained full-year 2026 Free Cash Flow guidance of $3.0 billion.
• Management indicated a priority to convert record backlog demand into results and continue investing in production capacity and capabilities across missiles, space, resilient communications, and multi-domain sensing.

Business Segments and Product Lines:

• Space & Mission Systems: Revenue of $3.093 billion for the quarter (up from $2.803 billion); book-to-bill ratio of 1.0x.
• Communications & Spectrum Dominance: Revenue of $1.995 billion for the quarter (up from $1.935 billion); book-to-bill ratio of 1.9x.
• Missile Solutions: Revenue of $1.057 billion for the quarter (up from $1.008 billion); book-to-bill ratio of 11.8x.
• Total Orders: Orders received totaled $19.3 billion, resulting in a record backlog of $53.2 billion and a book-to-bill ratio of 3.2x for the quarter.
• New Contracts and Awards:
  • Secured a $6.3 billion seven-year undefinitized contract to scale propulsion production for the THAAD system.
  • Secured a $4.7 billion seven-year undefinitized contract to scale propulsion production for the PAC-3 MSE interceptor.
  • Announced a $250 million follow-on contract to manufacture standard-range GMLRS propulsion units.
  • Secured over $500 million in VAMPIRE C-UAS orders from the U.S. and allies; delivered first units to the U.S. Army two months after order receipt.
  • Awarded an $876 million contract modification to advance development and production preparation for the U.S. Navy Next Generation Jammer Low Band (NGJ-LB).
  • Completed the launch of NASA's Nancy Grace Roman Space Telescope with L3Harris' 2.4-meter Optical Telescope Assembly and radiation-hardened electronics.
• Facility Expansion: Opened the 'Arsenal of Freedom' solid rocket motor production facility in Camden, Arkansas.

Market and Competitive Landscape:

• The company reported consistently strong demand for mission-critical capabilities, evidenced by record backlog levels.
• The Missile Solutions segment demonstrated exceptional demand with a book-to-bill ratio of 11.8x.
• The global security environment and rising demand for munitions are driving the need for new production facilities.

Risks and Challenges:

• Forward-looking statements are subject to risks including competitive markets, U.S. Government spending priorities, changes in contract mix, and unilateral government actions.
• Risks include uncertain economic conditions, future geo-political events, supply chain disruptions, indebtedness, interest rates, and changes in the effective tax rate.
• Specific risks include unexpected issues related to the Department of War's (DoW) strategic investment in the company's subsidiary.

Management Commentary and Tone:

• Sam Mehta, President and CEO, stated the team's "exceptional execution delivered solid financial performance" and noted the priority is converting demand into results.
• Management expressed confidence in the company's differentiated capabilities and commitment to delivering for the warfighter, customers, and shareholders.
• The tone was positive, highlighting record backlog and robust earnings growth.

Other Key Points:

• Share Repurchases: Repurchased common stock for $73 million in the quarter and $598 million year-to-date.
• Dividends: Paid dividends of $234 million in the quarter and $704 million year-to-date.
• Non-GAAP Measures: The report includes reconciliations for organic revenue, segment operating margin, and free cash flow, defined as non-GAAP financial measures under Regulation G.
• Balance Sheet: Total assets were $43.8 billion as of October 2, 2026, compared to $41.2 billion at the beginning of the fiscal year.
• Investing Activities: Proceeds from sales of businesses totaled $539 million year-to-date; capital expenditures were $386 million year-to-date.