Financial Health Snapshot
What does the latest L3Harris Technologies, Inc. financial snapshot show?
Strong. The biggest strength is FY2025 adjusted free cash flow of $28B, backed by record backlog of $407B. The main concern is the $217B debt load, which needs more detail on maturity and coverage.
The latest verified fiscal period is FY2025, and the verdict blends growth, profitability, cash generation, balance-sheet capacity, and capital efficiency. For mission context, see Mission Statement, Vision, & Core Values (2026) of L3Harris Technologies, Inc. (LHX).
Free cash flow deserves deeper analysis first because it best shows how L3Harris can fund backlog conversion, while debt should be checked next for repayment flexibility.
Revenue and Earnings Quality
Is L3Harris revenue growth backed by earnings quality?
Strong. The clearest confirmation is that Q1 2026 Orders: $78B topped Q1 2026 Revenue: $57B, while record total backlog: $407B and Q4 2025 Book-to-Bill Ratio: 13x support demand visibility and recurring program work.
L3Harris shows more than top-line expansion. Investors still compare revenue durability with operating income, net income, and EPS across compatible periods because real quality means sales are turning into profits, not just volume. For context on the company’s mission and operating focus, see Mission Statement, Vision, & Core Values (2026) of L3Harris Technologies, Inc. (LHX).
| Measure | Latest Period | Previous Period | Quality Test | Investor Meaning |
|---|---|---|---|---|
| Revenue | Q1 2026 Revenue: $57B | Previous comparable revenue not supplied | Organic growth supported by defense program demand, satellite payloads, tactical communications, missile defense, propulsion, and advanced missile technologies | The demand source looks repeatable if program execution stays steady |
| Operating Income | Latest verified operating income not supplied | Previous comparable operating income not supplied | Direction cannot be verified from the supplied data | Operating leverage cannot be confirmed from the given figures |
| Net Income | FMP LHX — 2026-04-03 Net Income: $51200M | Previous comparable net income not supplied | Supported by supplied earnings growth data and program-level demand; interest, tax, and unusual-item detail not supplied | Final earnings appear to confirm the business result rather than just revenue growth |
| Diluted EPS | FMP LHX — 2026-04-03 EPS Diluted: $272 | Previous comparable diluted EPS not supplied | Share-count effect cannot be verified from the supplied data | Per-share growth is positive, but the shareholder-level test is limited by missing prior-period detail |
How durable is L3Harris revenue?
Fairly durable. The strongest signal is $407B backlog and 13x book-to-bill, while the biggest limitation is defense budget timing and program concentration across a few major mission areas.
- Demand Quality: Recurring defense programs, satellite payloads, tactical communications, and missile defense create visibility, but program timing still matters.
- Pricing and Volume: The supplied data support demand intake and earnings growth, but the price-versus-volume split is unavailable.
- Diversification: Exposure spans several defense and space categories, yet concentration in government programs and budget cycles remains a real risk.
That durability matters most when you look at profitability and cash conversion.
Cash Quality
Are L3Harris margins converting into durable cash flow?
Mostly yes. L3Harris Technologies, Inc. held a 159% adjusted segment operating margin in Q3 2025, supported by cost savings, and full-year 2025 adjusted free cash flow of $28B confirms earnings quality better than the weak quarterly cash-flow growth figures.
L3Harris Technologies, Inc. is still best read by separating margins from earnings and cash. The company reported $140B gross profit, $64200M operating income, $101B EBITDA, and $51200M net income on 2026-04-03, while interest expense of $13600M and income tax expense of $7700M sit below operating profit. If you are using this for a paper or case study, Mission Statement, Vision, & Core Values (2026) of L3Harris Technologies, Inc. (LHX) can help connect profitability to strategy.
| Measure | Latest Period | Previous Period | Verified Driver | Investor Meaning |
|---|---|---|---|---|
| Gross Margin | Not supplied for 2026-04-03. | Not supplied. | Gross profit of $140B is reported, but the margin itself is not provided. | Product economics look strong in absolute terms, but the margin trend cannot be verified here. |
| Operating Margin | Q3 2025 adjusted segment operating margin of 159%. | Not supplied. | $12B in cumulative L3Harris NeXt savings, achieved a full year ahead of schedule. | Scale and cost control appear to support operating efficiency. |
| Net Margin | Not supplied for 2026-04-03. | Not supplied. | Net income of $51200M is reported, but the margin itself is not provided. | Final profitability is visible, but the margin bridge to sales is not verified. |
| Operating Cash Flow | Operating cash flow growth of -10484% for 2026-04-03. | Previous compatible value not supplied. | Quarterly cash flow appears distorted versus earnings; working-capital detail is not supplied. | Reported earnings are not cleanly confirmed by quarterly cash generation. |
| Free Cash Flow | Full Year 2025 adjusted free cash flow: $28B. | Prior year figure not supplied; increase was 21% year-over-year. | Targeted capex included $25M for Huntsville manufacturing expansion and 130K square feet added. | Cash remains available for reinvestment and financing after production investment. |
What most affects L3Harris Technologies, Inc. cash conversion?
The biggest verified driver is L3Harris NeXt savings, which lifted margins and helped deliver $28B in full-year 2025 adjusted free cash flow. The Huntsville expansion shows capex is targeted, not excessive.
- Main Driver: $12B in cumulative savings looks structural because it came from a program that hit target early.
- Evidence Gap: The supplied data does not show a full operating cash flow bridge or working-capital breakdown.
- Metric to Monitor: Follow operating cash flow and adjusted free cash flow in the next period.
Balanced Liquidity
How strong is L3Harris balance sheet and liquidity?
L3Harris balance sheet is Mixed. Cash is a real protection, but short-term debt and heavy goodwill and intangibles create the main financing concern, especially because refinancing details and interest coverage are not provided.
L3Harris has enough cash to matter, but cash alone does not settle the balance-sheet question. The better test is whether working capital, asset quality, debt service, solvency, liquidity, and refinancing can all hold up together. For background on strategy and ownership context, see Mission Statement, Vision, & Core Values (2026) of L3Harris Technologies, Inc. (LHX).
| Area | Latest Evidence | Assessment | Investor Meaning |
|---|---|---|---|
| Cash and Working Capital | Cash And Cash Equivalents: $59000M; Cash And Short Term Investments: $59000M; Total Current Assets: $889B; Net Receivables: $191B; Inventory: $123B; Total Payables: $193B | Mixed | Near-term obligations look manageable, but the current asset mix and payables still need monitoring. |
| Total and Net Debt | Total Debt: $217B; Short Term Debt: $217B; Minus Cash And Cash Equivalents: $59000M | Mixed | Debt is meaningful and the short-term maturity profile limits flexibility. |
| Debt Service and Refinancing | January 05, 2026 divestiture of 60% controlling stake in Space Propulsion and Power Systems to AE Industrial Partners for $845M; $1B equity stake in Missile Solutions and April 23, 2026 close; maturities, coupons, credit facilities, covenants, and interest coverage are not supplied | Mixed | Asset sales and equity support help funding capacity, but refinancing risk cannot be judged fully. |
| Asset Quality | Goodwill: $2000B; Intangible Assets: $633B; Goodwill And Intangible Assets: $2633B; Total Assets: $4138B | Weak | High intangible exposure raises impairment and capital-quality risk. |
| Liabilities and Equity | Total Liabilities and shareholders' equity are not fully supplied in the prompt | Mixed | The capital base cannot be fully assessed from the provided figures alone. |
What balance-sheet risk matters most for L3Harris?
Asset quality is the biggest concern. The combination of $2000B goodwill and $633B intangible assets makes the balance sheet more vulnerable than the cash position alone suggests.
- Current Exposure: Cash And Cash Equivalents: $59000M versus Short Term Debt: $217B.
- Protection: The January 05, 2026 divestiture for $845M and the $1B equity stake in Missile Solutions add financing support.
- Warning Signal: Watch whether debt stays concentrated near term while goodwill and intangible assets remain elevated.
Capital Efficiency
Is L3Harris reinvesting without weakening shareholders?
Strong. L3Harris Technologies, Inc. appears able to fund reinvestment and shareholder returns from internal cash, supported by FY2025 Adjusted Free Cash Flow: $28B and Total 2025 Share Buybacks: $554M. No exact ROIC, ROE, or ROA values are supplied, so the judgment rests on cash generation and capital discipline.
Return quality should still be read with leverage, asset intensity, capital expenditure, working capital, and outside funding needs. L3Harris Technologies, Inc. can look efficient even without published ROIC, ROE, or ROA values if cash flow stays strong, reinvestment stays targeted, and growth does not require heavy debt or dilution.
| Capital Measure | Latest Evidence | Quality Test | Investor Meaning |
|---|---|---|---|
| ROIC | No exact ROIC value is supplied for the latest period. | Operating discipline looks supportive because internal cash generation and buybacks point to efficient use of invested capital. | Invested capital appears to be creating operating value, but the exact return rate cannot be verified from the provided data. |
| ROE and ROA | No exact ROE or ROA values are supplied; Company Common Stock Shares Outstanding: 18548M and Weighted Average Shares Growth: -007% for LHX — 2026-04-03. | ROE is helped by restrained dilution, while ROA depends on how well a defense-heavy asset base is used. | Shareholder return quality looks steady, and asset efficiency looks manageable, but leverage is not automatically a strength. |
| Maintenance and Growth Investment | Dedicated approximately 25% of annual revenue to internal research and development initiatives, invested $25M in Huntsville manufacturing expansion, and added 130K square feet for production capacity. | The R&D spend signals ongoing innovation; the plant and space expansion show measured growth investment, not just maintenance. | Capital needs appear meaningful but controlled, with spending aimed at sustaining products, capacity, and future programs. |
| Internal Funding Capacity | FY2025 Adjusted Free Cash Flow: $28B, Total 2025 Share Buybacks: $554M, Share Buybacks for trailing twelve months: $23175M, Quarterly Dividend: $125 per share, Annualized Dividend: $500 per share, and Dividend Yield: 162%. | Strong free cash flow suggests reinvestment and payouts are being funded internally rather than through heavy external capital. | Investment is largely internally funded, which supports flexibility, limits dilution, and helps protect shareholder returns. |
Are L3Harris Technologies, Inc.'s returns on capital sustainable?
Mostly yes. The strongest durability source is internal cash generation, while the biggest risk is any future rise in capex, working capital, or acquisition spending that outpaces cash flow.
- Operating Source: Strong cash flow, supported by R&D discipline and production efficiency.
- Funding Requirement: Expansion spending, including $25M in Huntsville and 130K square feet of added capacity.
- Durability Test: Returns weaken if free cash flow falls or leverage rises enough to pressure ROIC, ROE, or ROA.
Balance Sheet Buffer
How resilient is L3Harris Technologies, Inc., and which warning signs matter most?
Resilience is Strong. The main buffer is $407B in record total backlog, plus $78B in Q1 2026 orders and $28B in FY2025 adjusted free cash flow. The key verified warning sign is execution complexity from the three-segment reset, which can pressure margins and reporting clarity.
L3Harris Technologies, Inc. looks capable of protecting liquidity and core investment even if conditions soften, because demand is supported by large backlog and strong cash generation. Still, resilience depends on keeping segment execution tight, controlling compliance costs tied to CMMC Level 2, and funding strategic moves without weakening cash flow or delivery timing.
| Pressure | Financial Effect | Existing Protection | Warning Signal |
|---|---|---|---|
| Revenue or Margin Pressure | A three-segment reset into Space & Mission Systems, Communications & Spectrum Dominance, and Missile Solutions can create reporting transition noise and execution friction, which may pressure operating leverage, segment margins, earnings quality, cash flow, and debt capacity if order conversion slows. | Record total backlog of $407B and $78B in Q1 2026 orders provide demand visibility, while the business still has recurring defense demand support. | Watch for weaker segment margins, softer order flow, or delayed backlog conversion. |
| Working-Capital or Investment Pressure | CMMC Level 2 certification for subcontractors by July 30, 2026 may raise compliance costs and delay supplier readiness, which can absorb cash through working capital, delivery timing, and cost absorption if execution slips. | $28B in FY2025 adjusted free cash flow and the $845M Rocketdyne divestiture support internal funding capacity. | Monitor operating cash flow, inventory or receivables growth, and any slip in delivery schedules. |
| Interest or Refinancing Pressure | The proposed Missile Solutions IPO and $1B Department of War equity investment could increase strategic flexibility, but they also add execution and governance complexity that may affect cash deployment and financing choices. | Strong backlog, cash generation, and a divestiture-backed capital position reduce near-term liquidity stress. | Track cash flow, investment pace, segment disclosures, and any change in financing flexibility. |
Which financial warning signs should investors monitor at L3Harris Technologies, Inc.?
The top signals are segment margin drift and weaker order flow, followed by CMMC-related working-capital pressure. Margin or order deterioration would be confirmed weakness; compliance cost pressure is more of a future risk unless delivery timing or cash conversion starts to slip.
Segment Margin and Order Flow Slippage
The three-segment reset may create transition noise, so the main evidence is any drop in segment margins or weaker orders. The buffer is $407B in backlog. Next to monitor: segment disclosure trends and backlog conversion.
CMMC Cost and Supplier Readiness Pressure
The July 30, 2026 subcontractor certification requirement could raise compliance costs and slow deliveries. The buffer is strong cash generation. Next to monitor: working capital, operating cash flow, and any schedule slippage.
Strategic Financing and Governance Complexity
The proposed Missile Solutions IPO and $1B Department of War equity investment may help flexibility, but they can complicate execution and capital allocation. Next to monitor: cash flow, investment pace, and segment reporting.
Financial Scorecard
What does L3Harris financial health mean for investors?
Strong overall. Backlog and free cash flow are the biggest strengths, while debt disclosure gaps and transition complexity are the main weakness. The most important condition for the investment case is clean execution, because that determines how well earnings and cash convert into shareholder value.
| Financial Factor | Rating | Evidence and Investor Meaning |
|---|---|---|
| Revenue and Earnings Quality | Strong | Q1 2026 Revenue: $57B and Q1 2026 Orders: $78B point to durable demand. Full Year 2025 Net Income: $158B and Full Year 2025 Diluted EPS: $853 support per-share strength. |
| Profitability and Cash | Strong | Q3 2025 Adjusted Segment Operating Margin: 159% and Full Year 2025 Adjusted Free Cash Flow: $28B show strong conversion, with cash generation supporting reinvestment and returns. |
| Balance Sheet and Liquidity | Mixed | Cash And Cash Equivalents: $59000M and Total Current Assets: $889B support liquidity, but Add Total Debt: $217B and missing maturity and coverage detail limit clarity. |
| Capital Efficiency | Strong | R&D, targeted manufacturing expansion, dividends, and buybacks are being funded alongside free cash flow, which suggests solid reinvestment discipline and limited outside funding dependence. |
| Financial Resilience | Mixed | Backlog and defense demand support resilience, but segment reset, CMMC Level 2 supplier requirements, and Missile Solutions IPO execution add pressure and visibility risk. |
- What Supports the Thesis: Backlog plus free cash flow give L3Harris a strong operating and cash base.
- What Challenges the Thesis: Debt maturity disclosure gaps and transition complexity create the biggest uncertainty.
- What to Monitor: Backlog, free cash flow, and orders.
If you also need the strategic context for a paper or case study, Mission Statement, Vision, & Core Values (2026) of L3Harris Technologies, Inc. (LHX) helps connect this scorecard to the company’s operating priorities. Forecasts and scenario work should focus on how backlog, cash conversion, and execution risk flow through earnings and valuation assumptions.
FAQ
What Do Investors Ask About 's Financial Health?
Investors most often ask about the company's revenue quality, profitability, cash generation, debt, liquidity, capital efficiency, and ability to withstand financial pressure.
How does Missile Solutions financing affect flexibility?
The $1B equity stake from the Department of War adds strategic capital support for Missile Solutions and domestic rocket motor production It may improve funding flexibility, but investors still need segment financials, ownership terms, IPO timing, and cash flow contribution before judging the full balance-sheet effect
Does the Rocketdyne divestiture improve liquidity?
The divestiture of a 60% controlling stake in Space Propulsion and Power Systems to AE Industrial Partners for $845M provides capital that can support flexibility The direct liquidity impact depends on use of proceeds, retained obligations, and future investment needs, none of which are fully detailed here
Why can CMMC Level 2 raise costs?
CMMC Level 2 certification can raise operating costs because subcontractors handling unclassified information must meet cybersecurity requirements by July 30, 2026 For investors, the financial exposure is potential supplier readiness cost, compliance spending, delivery friction, and working-capital pressure, not a confirmed margin decline
How do segment changes affect reported margins?
The move from four segments to Space & Mission Systems, Communications & Spectrum Dominance, and Missile Solutions can change reporting mix and comparability Investors should avoid reading margin changes too quickly until the company provides consistent segment history, allocation methods, and post-reset operating performance
What returns data are still missing?
Exact ROIC, ROE, and ROA figures are not supplied, so investors should not infer them The available evidence supports a capital efficiency discussion through free cash flow, buybacks, dividends, R&D, and manufacturing investment, but formal return analysis needs invested capital, equity, and asset return calculations