L3Harris Technologies, Inc.: Q4 FY2025 earnings call

What management said about Q4 FY2025, from the documents filed with the SEC on 29 January 2026: press release. Guidance figures: 12 new. The quarter’s numbers.

Read the filing

Key takeaways

• Full-year revenue grew 3%, 5% organic: Full-year revenue reached $21.9 billion, up 3% and 5% organically. Management said organic growth came across all segments, from new program ramps and higher international deliveries. Source
• Adjusted segment margin rose 40 bps: GAAP operating margin rose 70 bps to 9.7%, and adjusted segment operating margin rose 40 bps to 15.8%. Management cited monetization of legacy end-of-life assets and LHX NeXt cost savings across segments. Source
• Unallocated corporate costs declined: Unallocated corporate items totaled $1,256 million for the year against $1,351 million, as LHX NeXt implementation costs, acquisition intangible amortization and merger costs fell. Source
• Fourth quarter margin fell to 7.0%: Fourth quarter GAAP operating margin was 7.0% against 10.3%. Unallocated corporate items reached $410 million, including a $30 million accrued corporate charge tied to a non-recurring matter. Source
• Cash from operations up 21%: Cash from operations rose 21% to $3.1 billion and adjusted free cash flow rose 21% to $2.8 billion. Net income growth also contributed, management said. Source
• Space Technology goodwill charge: A non-cash goodwill impairment on the Space Technology disposal group lowered Aerojet Rocketdyne's fourth quarter GAAP operating margin to 0.7%, against 11.8% adjusted. Source
• Total 2026 revenue guided $23B to $23.5B: Total 2026 revenue guidance is $23 billion to $23.5 billion, net of intersegment eliminations, built from segments of roughly $11.5 billion, $8.0 billion and $4.4 billion. Source
• Segment margins and EPS guided: Segment operating margin guidance: mid 10% for Space & Mission Systems, about 25% for Communication & Spectrum Dominance, mid 12% for Missiles Solutions and low 16% total. Diluted EPS $11.30 to $11.50. Source

“2025 was a clear inflection point for L3Harris.”

Christopher Kubasik, Chairman and CEO, L3Harris

Guidance

What changed from last quarter

• New guidance: 2026 guidance given for the first time, covering revenue by segment, segment operating margins, diluted EPS and cash flow. Source
• New: Three reportable segments from fiscal 2026: Space & Mission Systems, Communication & Spectrum Dominance and Missile Solutions, with prior segments realigned. Source
• New: Sale of a majority stake in the Space Technology disposal group announced January 5, 2026, with closing expected in the second half of 2026. Source
• Ended: Diluted EPS presentation moves from the non-GAAP basis used in prior reporting to GAAP diluted EPS. Source

Full-year results and growth

• Full-year revenue grew 3%, 5% organic: Full-year revenue reached $21.9 billion, up 3% and 5% organically. Management said organic growth came across all segments, from new program ramps and higher international deliveries. Source
• Fourth quarter revenue rose 2%: Fourth quarter revenue was $5.6 billion, up 2% from the prior year and 6% organically. Source
• Operating income rose to $2.1 billion: Full-year GAAP operating income was $2.1 billion against $1.9 billion a year earlier. Fourth quarter operating income was $393 million against $569 million. Source

Segment results

• Communication Systems margin reached 25.2%: Communication Systems revenue rose 4% to $5.7 billion. Full-year operating margin was 25.2%, up 90 bps, helped by LHX NeXt cost savings and partly offset by domestic development mix. Source
• Mission Systems organic revenue up 8%: Integrated Mission Systems revenue was flat at $6.6 billion. Excluding the CAS divestiture, organic revenue rose 8%. Full-year operating margin was 12.2%, down 30 bps. Source
• Space and Airborne revenue up 1%: Space and Airborne Systems revenue rose 1% to $6.9 billion. Organic revenue rose 2% on FAA volume, partly offset by Space Systems program timing. Full-year operating margin was 12.3%, up 50 bps. Source
• Aerojet Rocketdyne revenue up 10%: Aerojet Rocketdyne revenue rose 10% to $2.8 billion. Organic growth was 12%, from higher missile, munitions and space production and new development ramps. Source

“Throughout the year, we saw customers move with greater urgency, and our investments and agility allowed us to deliver on their missions with speed and scale,”

Christopher Kubasik, Chairman and CEO, L3Harris

Margins and operating costs

• Adjusted segment margin rose 40 bps: GAAP operating margin rose 70 bps to 9.7%, and adjusted segment operating margin rose 40 bps to 15.8%. Management cited monetization of legacy end-of-life assets and LHX NeXt cost savings across segments. Source
• Unallocated corporate costs declined: Unallocated corporate items totaled $1,256 million for the year against $1,351 million, as LHX NeXt implementation costs, acquisition intangible amortization and merger costs fell. Source
• Fourth quarter margin fell to 7.0%: Fourth quarter GAAP operating margin was 7.0% against 10.3%. Unallocated corporate items reached $410 million, including a $30 million accrued corporate charge tied to a non-recurring matter. Source

Cash flow and capital returns

• Cash from operations up 21%: Cash from operations rose 21% to $3.1 billion and adjusted free cash flow rose 21% to $2.8 billion. Net income growth also contributed, management said. Source
• Share repurchases more than doubled: Repurchases of common stock totaled $1,154 million for the year, against $554 million a year earlier. Dividends paid were $903 million. Source
• Capex and business sale proceeds: Capital expenditures were $424 million for the year. Proceeds from sales of businesses, net of cash divested, were $820 million. Interest expense, net, was $597 million against $675 million. Source

“We remain disciplined in creating value for shareholders while continuing to invest in the business via capex and R&D.”

Christopher Kubasik, Chairman and CEO, L3Harris

Divestitures and goodwill charges

• Space Technology goodwill charge: A non-cash goodwill impairment on the Space Technology disposal group lowered Aerojet Rocketdyne's fourth quarter GAAP operating margin to 0.7%, against 11.8% adjusted. Source
• CAS divestiture offset margin gain: The Commercial Aviation Solutions divestiture took place at the end of March 2025. Management said the business carried a higher margin, which partly offset the adjusted segment margin gain. Source
• Divestiture losses cut fourth quarter EPS: Business divestiture-related losses and goodwill impairment reduced fourth quarter diluted EPS by $0.80 per share, against a $0.05 gain a year earlier. Source

2026 guidance basis

• Space Technology financials included: Management said the Space Technology business financials are included in 2026 guidance, despite the majority stake sale announced in early January. Source
• Total 2026 revenue guided $23B to $23.5B: Total 2026 revenue guidance is $23 billion to $23.5 billion, net of intersegment eliminations, built from segments of roughly $11.5 billion, $8.0 billion and $4.4 billion. Source
• Segment margins and EPS guided: Segment operating margin guidance: mid 10% for Space & Mission Systems, about 25% for Communication & Spectrum Dominance, mid 12% for Missiles Solutions and low 16% total. Diluted EPS $11.30 to $11.50. Source
• Operating cash flow and capex guided: Net cash from operations is anticipated at about $3.6 billion and capital expenditures at about $600 million for 2026. Source

Coming up, as management said on 29 January 2026

• Space Technology sale closing and guidance update: Management expects the Space Technology majority stake sale to close in the second half of 2026, at which point guidance will be updated. Source

Figures management reported

Risks management discussed

• External: Government shutdown delayed awards in the fourth quarter, reducing fourth quarter and 2025 revenue, mainly in Space and Airborne Systems. Source
• Operational: Unfavorable Maritime program performance cut Integrated Mission Systems margin in the fourth quarter. A legacy contract matter resolution also weighed on the full-year margin. Source
• Financial: The full-year effective tax rate rose to 16.9% from 5.3%, partly offsetting the higher operating income in EPS growth. Source

Earlier plans management reported on

• On track: In the prior quarter, management said the company was on track to achieve its 2026 Financial Framework.
• Not stated: The prior quarter expressed confidence in 2025 cash flow guidance, assuming the government shutdown was resolved. This release does not state whether that guidance was achieved.

Other quarters

• Q2 FY2026 earnings call
• Q1 FY2026 earnings call
• Q3 FY2025 earnings call
• Q2 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.