L3Harris Q1 2026: Record $40B Backlog and Imminent Missile Spin-Off (LHX Q1 2026 Earnings Call)

Unprecedented Organic Growth and Record Backlog

L3Harris Technologies started 2026 with outstanding financial momentum, reporting first-quarter revenue of $5.7 billion, which represents a massive 15% organic increase over the prior year. This top-line surge translated into solid profitability, with segment operating income climbing $125 million to $902 million (a 15.7% margin) and GAAP earnings per share surging 33% to $2.72. The company’s "Trusted Disruptor" strategy is clearly resonating with defense customers who demand agility at scale. Backlog has now nearly doubled to a record $40 billion, providing L3Harris with two times revenue coverage. Staggeringly, this backlog figure does not yet include an anticipated $25 billion in orders related to the Department of Defense's Munitions Acceleration Council programs, which are currently being finalized. Driven by this first-quarter outperformance, management raised its full-year GAAP EPS guidance by $0.10 to a new range of $11.40 to $11.60, while reaffirming its expectation for 7% organic revenue growth and $3.0 billion in free cash flow.

Space & Mission Systems Soars on Major Wins

The Space & Mission Systems (SMS) segment was the standout performer, generating $3.0 billion in revenue—a 24% year-over-year increase—and expanding margins by 60 basis points. The segment is capitalizing on urgent demands for missile warning, classified space systems, and airborne ISR (Intelligence, Surveillance, and Reconnaissance). Following a marquee win in South Korea last quarter, L3Harris secured another massive international multi-aircraft missionized business jet program with a NATO ally, valued at more than $2.2 billion (with an initial $726 million booked in Q1). Additionally, the company won a $700 million contract to support the Royal Canadian Air Force’s strategic tanker and transport capabilities. In the highly classified space domain, management noted they secured a $600 million sole-source contract with the potential to scale into the billions, rewarding the company's past performance and innovative approach to low-earth orbit (LEO) satellite architectures.

Resilient Communications Drives NATO Modernization

The Communication & Spectrum Dominance (CSD) segment posted $1.9 billion in revenue (up 3%) and expanded its operating margin by 60 basis points, driven by strong international demand for its software-defined tactical radios. L3Harris booked $460 million in international resilient communications orders from three NATO allies (the Czech Republic, Germany, and Poland) as part of broad, decade-long modernization cycles. Domestically, management highlighted extremely favorable budget requests for 2027, including $515 million allocated for the Army's HMS program and a significant jump in U.S. Marine Corps radio funding to $750 million. The company is actively investing in next-generation high-data-rate radios (the upcoming "Falcon 5") to ensure it remains the dominant player as the U.S. military builds out its open-systems architecture for the Next Generation Command and Control (NGC2) network.

Spinning Off Missile Solutions as "AXYV"

A major strategic focal point was the continued evolution of the Missile Solutions segment, which grew revenue by 18% to $1.0 billion and expanded margins by 110 basis points in the quarter. To unlock incremental shareholder value and move at the speed required by the DoD, L3Harris filed an S-1 to spin off the segment via an Initial Public Offering. The new publicly traded missile company will be named "AXYV" (inspired by the axes of a missile's trajectory and velocity). AXYV is uniquely positioned to benefit from the DoD's urgent push to rebuild the munitions industrial base. Bolstered by a novel $1 billion investment from the Department of Defense in April to accelerate solid rocket motor capacity, the standalone entity will focus aggressively on eliminating supply chain bottlenecks for critical weapons like the PAC-3 and THAAD systems. Management expects definitized, multi-year procurement framework contracts with major primes to be signed later this year.