L3Harris Technologies (NYSE: LHX) reports full year and fourth quarter 2025 results.

Highlights*

Full Year

• Orders of $27.5 billion; book-to-bill of 1.3x
• Cash from operations of $3.1 billion, up 21%; Adjusted free cash flow of $2.8 billion, up 21%
• Revenue of $21.9 billion, up 3%, 5% organically
• Operating margin of 9.7%; Adjusted segment operating margin of 15.8%
• Diluted EPS of $8.53; Non-GAAP diluted EPS of $10.73

Fourth Quarter

• Revenue of $5.6 billion, up 2% versus prior year, 6% organically
• Operating margin of 7.0%; Adjusted segment operating margin of 15.7%
• Diluted EPS of $1.59; Non-GAAP diluted EPS of $2.86

“2025 was a clear inflection point for L3Harris. Our portfolio is directly aligned with the most critical national and global defense priorities, which drove record orders and strong organic growth, margins and cash flow. 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,” said Christopher Kubasik, Chairman and CEO, L3Harris.

Kubasik added, "As we look to 2026, our investments in technology and capacity along with a record backlog and strong demand signals give us confidence to deliver strong results. We remain disciplined in creating value for shareholders while continuing to invest in the business via capex and R&D."

SUMMARY FINANCIAL RESULTS

PRESENTATION OF FINANCIAL RESULTS*

Financial results are described on a full-year basis, with additional detail provided for notable fourth quarter activity.

Revenue: 2025 revenue increased 3%, 5% organically, reflecting organic growth across all segments, including new program ramps and increased international deliveries. The government shutdown resulted in delayed awards within the fourth quarter, impacting fourth quarter and 2025 revenue, primarily in SAS.

Operating Margin:

GAAP Operating Margin: 2025 increased 70 bps to 9.7%.

Adjusted Segment Operating Margin: 2025 increased 40 bps to 15.8%.

2025 GAAP operating margin increased driven primarily by higher monetization of legacy end-of-life assets aligned with our transformation and value creation priorities and lower unallocated corporate items, including lower LHX NeXt implementation costs, lower amortization of acquisition-related intangibles, and lower merger, acquisition, and divestiture-related expenses, partially offset by higher business divestiture-related losses in 2025.

Adjusted Segment Operating Margin for 2025 increased primarily due to higher monetization of legacy end-of-life assets aligned with our transformation and value creation priorities and LHX NeXt driven cost savings across all segments, partially offset by impacts from the higher margin Commercial Aviation Solutions (CAS) divestiture at the end of March 2025.

Diluted EPS:

GAAP Diluted EPS: 2025 increased 8% to $8.53.

Non-GAAP Diluted EPS: 2025 increased 11% to $10.73.

GAAP Diluted EPS and Non-GAAP Diluted EPS for 2025 increased from higher operating income and adjusted segment operating income, respectively, lower interest expense from decreased average outstanding short-term debt balances during 2025 and higher FAS pension income, partially offset by a higher effective tax rate.

Cash Flow:

Cash From Operations: 2025 increased 21% to $3,106 million.

Adjusted Free Cash Flow: 2025 increased 21% to $2,814 million.

Cash from Operations and Adjusted Free Cash Flow for 2025 increased primarily due to the favorable impact of tax planning strategies and tax reform, less interest paid primarily due to lower average outstanding short-term debt balances and an increase in net income. Cash from operations was additionally impacted by less cash used for merger, acquisition and severance.

SEGMENT RESULTS*

Communication Systems

Revenue: 2025 revenue increased 4%, primarily driven by increased international deliveries for software-defined resilient communications products, as well as the Next Generation Jammer Electronic Warfare program ramp, partially offset by lower volumes related to our civil communication products.

Operating Margin:

GAAP Operating Margin: Fourth quarter increased 220 bps to 24.9% and 2025 increased 90 bps to 25.2%.

Adjusted Segment Operating Margin: Fourth quarter increased 50 bps to 24.9% and 2025 increased 50 bps to 25.2%.

Fourth quarter and 2025 operating margin increased due to LHX NeXt driven cost savings and the absence of a prior year non-cash impairment of other assets related to the Tactical Data Links acquisition, partially offset by unfavorable mix associated with a higher proportion of domestic development volume. Adjusted segment operating margin increase excludes the impact of the prior year non-cash impairment of other assets.

Integrated Mission Systems

Revenue: 2025 revenue remained flat. Excluding the impact of the divestiture of our CAS business, organic revenue increased 8%, primarily due to ramping activity in our ISR business on multiple classified programs and our Airborne Early Warning and Control aircrafts for the Republic of Korea Air Force.

Operating Margin: Fourth quarter operating margin decreased 270 bps to 11.1%, driven by the CAS divestiture and unfavorable Maritime program performance. 2025 operating margin decreased 30 bps to 12.2%, primarily due to the divestiture of our CAS business, unfavorable program performance in Maritime and the resolution of a legacy contract matter, partially offset by the monetization of legacy end-of-life assets aligned with our transformation and value creation priorities, favorable mix impact from higher airborne electro-optical sensors volume and LHX NeXt driven cost savings.

Space and Airborne Systems

Revenue: 2025 revenue increased 1%. Excluding the impact of the divestiture of our antenna business, organic revenue increased 2%, primarily from increased FAA volume in our Mission Networks business, partially offset by lower volume from program timing in our Space Systems business and lower classified volume in our Intel and Cyber business. The government shutdown resulted in later award timing that delayed expected fourth quarter and 2025 revenue.

Operating Margin: Fourth quarter operating margin increased 290 bps to 13.7% driven by stabilized program performance on classified space programs. 2025 operating margin increased 50 bps to 12.3%, primarily due to stabilized program performance, monetization of legacy end-of-life assets aligned with our transformation and value creation priorities and LHX NeXt driven cost savings, partially offset by unfavorable mix.

Aerojet Rocketdyne

Revenue: 2025 revenue increased 10%. Excluding the impact of the divestiture of our AOT business, organic revenue increased 12% from increased production volumes across key missile, munitions, and space programs, as well as development program ramps.

Operating Margin:

GAAP Operating Margin: Fourth quarter decreased 980 bps to 0.7% and 2025 decreased 240 bps to 9.5%.

Adjusted Segment Operating Margin: Fourth quarter increased 130 bps to 11.8% and 2025 increased 60 bps to 12.5%.

Fourth quarter and 2025 operating margin decreased due to a non-cash impairment of goodwill related to the Space Technology disposal group¹, partially offset by favorable mix and LHX NeXt driven cost savings. Adjusted segment operating margin benefits from higher volume and LHX NeXt driven cost savings.

2026 GUIDANCE¹

Beginning in 1Q26 and reflected in our 2026 guidance, we reorganized our business structure to three business segments.

On January 5, 2026, we announced the sale of a majority stake in our Space Technology disposal group²; the financials of this business are included in our 2026 guidance. We expect the transaction to close in the second half of 2026 at which time our guidance will be updated.

We are also transitioning our diluted EPS presentation from a Non-GAAP basis to GAAP diluted EPS.

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: share repurchases; divestiture and realignment impacts; 2026 guidance; divestiture or investment transaction timing; an investment from the Department of War (the “Investment”); projection 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; inflation; tariffs and potential trade disputes; unilateral contract action by the U.S. Government or unexpected issues related to the Investment; 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. 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.

Non-GAAP Financial Measures

Management believes the adjustments to non-GAAP Financial Measures (NGFMs) in the tables beginning on page 12 are useful to investors because the excluded costs do not reflect our ongoing operating performance. Such adjustments, considered together with the unadjusted GAAP financial measures, provide information that management believes is useful to investors to understand period-over-period operating results separate from items that management believes may disproportionately impact operating results in any particular period; however there is no guarantee that items excluded from NGFMs will not reoccur in future periods. Management also believes that NGFMs enhance the ability of investors to analyze business trends, understand performance and evaluate our initiatives to drive improved financial performance. Management utilizes NGFMs to guide forecasting and long-term planning and for compensation purposes. NGFMs should be considered in addition to, and not as a substitute for, financial measures presented in accordance with GAAP.