L3Harris (LHX) Q3 2026 Earnings: $11B Missile Contracts Double Backlog

L3Harris (LHX) Q3 2026 earnings, reported on October 29, 2026 for the quarter ended October 2, show missile backlog roughly doubling on new long-term contracts, while Space & Mission Systems revenue and cash collection came in above the levels implied by earlier guidance [1][2]. The open questions were missile growth, space backlog conversion, order support for communications margins and second-half cash. Missile backlog doubled, space revenue beat, communications orders recovered while its revenue outlook fell, and cash came in early. The constraint on growth has moved from winning orders to capacity, funding and pricing.

L3Harris is a US defense technology company. The US Government, including foreign military sales, was 75% of FY2025 revenue [3]; international revenue reached 24% this quarter [4]. Its three segments are Space & Mission Systems (SMS, long-cycle satellite and ISR aircraft contracts), Communications & Spectrum Dominance (CSD, tactical radios and electronic warfare) and Missile Solutions (MSL, solid rocket motors).

Missile Solutions backlog doubles to $20 billion

Missile Solutions turned negotiations into seven-year contracts. L3Harris captured a $6.3 billion THAAD propulsion contract and a $4.7 billion PAC-3 MSE propulsion contract, both undefinitized, or not yet finally priced [5]. MSL book-to-bill was 11.8, and segment backlog rose from $10.5 billion to $20.0 billion.

Most of the new backlog is unfunded, and margin has not improved yet. Unfunded MSL backlog rose from $3.2 billion to $12.3 billion [6]. Management cited advance payments and protective provisions [7] and said most of about $2 billion in pre-contract costs is now on contract [8]. Organic revenue grew 17% [9] on higher volumes on key programs, per management [10]. Segment margin was 12.0%, down 0.3 percentage points year over year [11].

Delivery growth will be tested in 2027. The Camden solid rocket motor facility opened in October, and management plans to triple THAAD motor deliveries in 2027 [12]. Capital expenditures were $179 million, mainly for missile capacity [13]. Management called missiles a budget priority [14]; funding timing was not disclosed.

Space & Mission Systems revenue beats implied guidance

SMS grew without a large material milestone. Revenue was $3.093 billion, up 10% despite one fewer week than a year earlier, and above the roughly $2.87 billion per quarter implied by prior guidance [15]. Management credited satellite, ISR aircraft and air traffic control programs [16] and raised full-year SMS guidance to about $11.9 billion [17].

Execution drove margin, but orders slowed. Excluding asset-sale gains, SMS margin was about 10.7%, with favorable net estimate-at-completion adjustments of $23 million [18]. Book-to-bill fell to 1.0, and backlog of $22.3 billion was slightly below early July [19]. Missionized business jets won $323 million of awards [20].

Communications orders recover as revenue guidance falls

CSD backlog rose from $9.0 billion to $10.9 billion [21], but the new orders carry lower margins. They include an $876 million NGJ-LB electronic warfare contract, cost-type development work that typically earns single-digit returns [22]. International radio orders were not disclosed; management said more radios will go to international customers than to the Department of War this year [23], and international revenue was 42% of the segment [24].

Component shortages held back revenue. CSD revenue grew only 3%, which management tied to printed circuit board constraints [25], and full-year guidance fell $100 million to about $7.9 billion. Margin was 25.2%, below the second quarter's 26.9%, which included investment gains.

Free cash flow arrives earlier

Free cash flow was $1.260 billion in the quarter and $1.837 billion year to date, about 60% of $3 billion full-year guidance. The new definition excludes property, plant and equipment disposal proceeds [26].

Collections and advances drove it: receivables fell $369 million [27] and contract liabilities rose to $3.107 billion [28]. Management said this was not a fourth-quarter pull-forward [29]. The CFO expects about $1 billion in the fourth quarter, slightly below what guidance requires. L3Harris cut its 2028 free cash flow framework from $3.5 billion to $3 billion, citing cash-funded 401(k) contributions, a lower margin assumption and earlier missile capex [30].

Conclusion

The quarter strengthens the growth case and shifts the main risk to execution. Operating margin rose to 13.0% on lower corporate costs [1], but segment margin was flat year over year, and missile margin remains far from the 15% to 18% that management targets as volumes ramp [31]. Risk to the 2026 cash target has fallen, while the 2028 cash base is lower. Next come SMS orders, CSD revenue after the supply recovery, missile contract pricing and funding, and whether full-year free cash flow reaches $3 billion.

Sources

[1] LHX 8-K filed 2026-10-29 Exhibit 99.1 (Q3 2026 earnings release) · summary financial results [2] LHX 8-K filed 2026-10-29 Exhibit 99.2 (Q3 2026 earnings appendix) · MSL contractual backlog rollforward [3] LHX 10-K filed 2026-02-12 · U.S. Government share of revenue [4] LHX Q3 2026 earnings call 2026-10-29 · CFO prepared remarks · consolidated [5] LHX 8-K filed 2026-10-29 Exhibit 99.1 (Q3 2026 earnings release) · third quarter & recent business highlights [6] LHX 8-K filed 2026-10-29 Exhibit 99.2 (Q3 2026 earnings appendix) · contractual backlog by segment [7] LHX Q3 2026 earnings call 2026-10-29 · Q&A · missile framework contracts (RBC) [8] LHX Q3 2026 earnings call 2026-10-29 · Q&A · supply chain (Baird) [9] LHX 8-K filed 2026-10-29 Exhibit 99.2 (Q3 2026 earnings appendix) · Non-GAAP reconciliation · 2026 organic revenue growth [10] LHX Q3 2026 earnings call 2026-10-29 · CFO prepared remarks · Missile Solutions [11] LHX 8-K filed 2026-10-29 Exhibit 99.2 (Q3 2026 earnings appendix) · Missile Solutions segment information [12] LHX Q3 2026 earnings call 2026-10-29 · CEO prepared remarks · missiles [13] LHX Q3 2026 earnings call 2026-10-29 · CFO prepared remarks · cash [14] LHX Q3 2026 earnings call 2026-10-29 · Q&A · budget and continuing resolution (Wolfe) [15] LHX Q2 2026 8-K filed 2026-07-29 · summary results and 2026 guidance [16] LHX Q3 2026 earnings call 2026-10-29 · CFO prepared remarks · Space & Mission Systems [17] LHX Q3 2026 earnings call 2026-10-29 · CFO prepared remarks · 2026 guidance [18] LHX 8-K filed 2026-10-29 Exhibit 99.2 (Q3 2026 earnings appendix) · Space & Mission Systems segment information [19] LHX 8-K filed 2026-10-29 Exhibit 99.2 (Q3 2026 earnings appendix) · SMS contractual backlog rollforward [20] LHX Q3 2026 earnings call 2026-10-29 · CEO prepared remarks · space and multi-domain sensing [21] LHX 8-K filed 2026-10-29 Exhibit 99.2 (Q3 2026 earnings appendix) · CSD contractual backlog rollforward [22] LHX Q3 2026 earnings call 2026-10-29 · CEO prepared remarks · resilient communications and EW [23] LHX Q3 2026 earnings call 2026-10-29 · CEO prepared remarks · tactical radios [24] LHX 8-K filed 2026-10-29 Exhibit 99.2 (Q3 2026 earnings appendix) · Communications & Spectrum Dominance segment information [25] LHX Q3 2026 earnings call 2026-10-29 · CFO prepared remarks · Communications & Spectrum Dominance [26] LHX 8-K filed 2026-10-29 Exhibit 99.1 (Q3 2026 earnings release) · summary financial results footnote 3 [27] LHX 8-K filed 2026-10-29 Exhibit 99.1 (Q3 2026 earnings release) · condensed consolidated statement of cash flows [28] LHX 8-K filed 2026-10-29 Exhibit 99.1 (Q3 2026 earnings release) · condensed consolidated balance sheet [29] LHX Q3 2026 earnings call 2026-10-29 · Q&A · free cash flow (Bank of America) [30] LHX Q3 2026 earnings call 2026-10-29 · CFO prepared remarks · 2028 framework [31] LHX Q2 2026 earnings call 2026-07-29 · Q&A