L3Harris Technologies, Inc.: Q2 FY2026 earnings call

What management said about Q2 FY2026, from the documents filed with the SEC on 29 July 2026: press release. Guidance figures: 3 raised, 4 kept. The quarter’s numbers.

Read the filing

Key takeaways

• Revenue rose 8% on new starts: Revenue of $5,881 million rose $455 million, or 8%, from growth in all segments on new program starts and execution against record backlog. Year-to-date revenue was $11,625 million. Source
• Full-year revenue and EPS guidance raised: Management increased 2026 guidance for consolidated revenue and diluted EPS. The new ranges appear in the summary financial results table. Source
• Diluted EPS up 28% to $3.13: Diluted EPS was $3.13 against $2.44. The company cites higher volume, program performance and lower corporate and other expense, partly offset by lower net asset and investment gains. Source
• Communications margin up 230 bps: Operating margin rose to 26.9% from 24.6% on higher international volume and a $16 million net investment gain, partly offset by R&D, selling and marketing spending. Source
• Orders of $7.3B, book-to-bill 1.2x: Orders were $7.3 billion, a book-to-bill of 1.2x. The company says this increased backlog to a record $42 billion. Source
• Free cash flow up 37% to $771M: Capital expenditures were $108 million. Free cash flow of $771 million was up 37% from $561 million. Source

“Our Trusted Disruptor culture, underpinned by early and strategic investments and leveraging our commercial business model, continues to deliver results.”

Christopher Kubasik, Chairman and CEO

Guidance

What changed from last quarter

• Guidance raised: Consolidated revenue guidance raised to $23.2B-$23.7B from $23B-$23.5B. Source
• Guidance raised: Diluted EPS guidance raised to $11.80-$12.00 from $11.40-$11.60. Source
• Guidance raised: Space & Mission Systems revenue guidance raised to about $11,700 million from about $11,500 million. Source
• Guidance kept: Segment operating margin guidance kept at low 16%. Source
• New: Segment investment income now reported as a 2026 net gain from companies developing dual-use technologies, $39 million in the quarter. Source
• New: Subsidiary Series A preferred stock issued in the quarter, with net proceeds of $973 million shown in financing cash flow. Source

Results and growth drivers

• Revenue rose 8% on new starts: Revenue of $5,881 million rose $455 million, or 8%, from growth in all segments on new program starts and execution against record backlog. Year-to-date revenue was $11,625 million. Source
• Full-year revenue and EPS guidance raised: Management increased 2026 guidance for consolidated revenue and diluted EPS. The new ranges appear in the summary financial results table. Source
• Operating income up 15%, margin 11.1%: Operating income of $654 million rose $83 million, and operating margin was 11.1%, up 60 bps. The company attributes this to higher segment operating income and lower corporate and other expense. Source
• Diluted EPS up 28% to $3.13: Diluted EPS was $3.13 against $2.44. The company cites higher volume, program performance and lower corporate and other expense, partly offset by lower net asset and investment gains. Source

Segments and regions

• Space & Mission Systems revenue up 7%: Segment revenue of $2,966 million rose from $2,770 million, mainly on higher ISR volumes on missionized aircraft programs. Source
• Space & Mission margin down 60 bps: Operating margin was 9.8% against 10.4%, due to the absence of a $75 million prior-year product-line sale gain, partly offset by improved program performance and a $23 million investment gain. Source
• Communications & Spectrum revenue up 4%: Segment revenue of $1,943 million rose from $1,861 million, with international deliveries of resilient communications equipment a main driver. Source
• Communications margin up 230 bps: Operating margin rose to 26.9% from 24.6% on higher international volume and a $16 million net investment gain, partly offset by R&D, selling and marketing spending. Source
• Missile Solutions revenue up 14%: Segment revenue of $1,054 million rose from $925 million, with Propulsion Systems up $85 million on missile and munitions production and development volumes. Source
• Missile margin down 20 bps: Operating margin was 12.3% against 12.5%, reflecting the absence of a favorable contract resolution recorded in second quarter 2025. Source

“Strong orders, record backlog and double-digit first half growth reinforce our multi-year track record of delivering on our financial commitments.”

Christopher Kubasik, Chairman and CEO

Programs and product lines

• Classified space volumes added $76 million: Space Systems revenue rose on higher volumes on classified space programs, one of the drivers of the segment's revenue increase. Source
• FAA and F-35 volumes added revenue: Mission Networks gained $40 million from higher FAA volume and Airborne Solutions gained $34 million from higher F-35 volumes. Intel and Cyber revenue fell on lower classified volume. Source
• Advanced Effects rose $44 million: Advanced Effects revenue increased $44 million from higher volumes and program ramps. Source
• Space propulsion growth slowed: Missile growth came from production and development volumes on key missile and munitions programs. Growth in the space propulsion business was lower. Source

Costs and margins

• Segment operating income up 9%: Segment operating income rose $79 million to $942 million. Segment operating margin was 16.0%, up 10 bps. Source
• Prior-year gains and R&D weighed: Segment income growth was partly offset by the absence of $92 million of 2025 asset-sale gains and higher research and development costs. Source
• Unallocated corporate costs slightly lower: Unallocated corporate items and other, net were $288 million against $292 million a year earlier. Amortization of acquisition-related intangibles is the largest item in Table 4. Source
• Pension income rose, interest expense fell: Non-service FAS pension income and other rose to $185 million from $105 million. Net interest expense fell to $129 million from $152 million. Source
• Effective tax rate rose to 15.5%: Effective tax rate was 15.5% for the quarter against 12.6% a year earlier. Source

Demand and the order book

• Orders of $7.3B, book-to-bill 1.2x: Orders were $7.3 billion, a book-to-bill of 1.2x. The company says this increased backlog to a record $42 billion. Source
• First-quarter orders were $7.8B: First-quarter orders were $7.8 billion at a 1.4x book-to-bill, lifting backlog to a new record of $40.7 billion.
• Orders cover government and other customers: Orders include funded and unfunded awards from the U.S. Government and other customers, including incremental funding. Options and IDIQ potential orders are excluded. Source

Capital, cash and shareholder returns

• Operating cash flow $879 million: Cash from operations was $879 million against $640 million a year earlier. Year-to-date operating cash flow was $784 million. Source
• Free cash flow up 37% to $771M: Capital expenditures were $108 million. Free cash flow of $771 million was up 37% from $561 million. Source
• Subsidiary preferred stock raised $973M: Net proceeds of $973 million from subsidiary Series A preferred stock were recorded in financing cash flow. Redeemable subsidiary preferred of $968 million sits in mezzanine equity. Source
• Buybacks and dividends in quarter: Share repurchases were $229 million and dividends paid were $232 million in the quarter. Year-to-date repurchases were $525 million against $822 million. Source
• Cash balance rose to $1.5B: Cash and cash equivalents were $1,521 million at July 3, 2026, up from $1,069 million at January 2, 2026. Source

Strategy, portfolio and investment

• Space Technology divestiture loss recorded: A 2026 loss was recognized on the Space Technology disposal group, year-to-date divestiture-related losses were $10 million, and $1,010 million of assets were held for sale at July 3. Source
• Dual-use investment gain of $39M: Segment investment income was a $39 million net gain in the quarter, from companies developing dual-use technologies aligned with the segments. Source
• LHX NeXt implementation completed: LHX NeXt implementation costs were nil in the 2026 periods, against $39 million in second quarter 2025. The implementation phase finished in fiscal 2025. Source

Coming up, as management said on 29 July 2026

• Planned MSL public offering: The release lists costs for the carve-out and a planned MSL public offering. No date for the offering is given. Source

Figures management reported

Risks management discussed

• Operational: Research and development costs rose and partly offset the segment operating income growth in the quarter. Source
• Financial: Lower net asset and investment gains partly offset the quarter's EPS growth. Source
• Financial: Operating cash flow was partly driven by working capital timing, which the release does not quantify. Source

Earlier plans management reported on

• Not stated: Management describes a multi-year track record of delivering on its financial commitments, without stating a status against a specific target. Source

Other quarters

• Q1 FY2026 earnings call
• Q4 FY2025 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.