L3Harris Technologies (LHX) Financials

L3Harris Technologies (NYSE:LHX) has shown a clear improvement in operating performance through the first half of 2026. Second-quarter revenue increased 8.4% year over year to $5.88 billion, while gross profit rose 12.5% to $1.50 billion. Gross margin improved to approximately 25.5% from 24.6% in the restated second quarter of 2025.

Operating income increased to $654 million from $571 million, lifting the operating margin to roughly 11.1%. Net income attributable to common shareholders rose 28% to $586 million, and diluted earnings per share increased to $3.13 from $2.44. This follows a similar trend in the first quarter, when revenue grew nearly 12% and net income increased approximately 33% year over year.

The longer-term trend is also favorable. Quarterly revenue increased from $4.47 billion in the first quarter of 2023 to $5.88 billion in the second quarter of 2026. Profitability has recovered substantially from the third quarter of 2022, when L3Harris reported a $301 million loss largely due to an impairment charge. Recent earnings growth, however, has not been perfectly consistent; fourth-quarter 2025 net income fell to $300 million from $456 million in the comparable 2024 quarter.

Cash flow has improved but remains uneven. Operating cash flow was $879 million in the second quarter of 2026, up from $640 million in the comparable 2025 quarter. The company also generated $1.96 billion of operating cash flow in the fourth quarter of 2025. However, first-quarter 2026 operating cash flow was negative $95 million, reflecting the working-capital volatility common in large defense programs.

L3Harris ended the second quarter with $1.52 billion in cash, up sharply from $482 million a year earlier. Total debt of approximately $11.0 billion was down from roughly $12.3 billion in the second quarter of 2025, and the current ratio improved to about 1.18 from 1.04. The balance sheet remains highly acquisition-oriented, though, with goodwill and intangible assets totaling approximately $26.5 billion, or nearly 62% of total assets.

• Accelerating revenue growth: Second-quarter 2026 revenue increased 8.4% year over year, while first-quarter revenue grew nearly 12%, indicating stronger recent momentum than the company experienced in much of 2024.
• Expanding margins: Second-quarter gross margin improved to approximately 25.5% and operating margin rose to about 11.1%, suggesting that revenue growth is translating into better operating leverage.
• Strong earnings growth: Second-quarter net income attributable to common shareholders increased 28%, while diluted EPS rose from $2.44 to $3.13. EPS has also benefited from a gradual reduction in the share count.
• Improving liquidity and leverage: Cash increased by more than $1 billion year over year, while total debt declined by approximately $1.25 billion. This provides greater flexibility for debt repayment, dividends and share repurchases.
• Shareholder returns remain a priority: L3Harris continues to pay dividends and repurchase shares. The quarterly common dividend increased from $1.12 in the third quarter of 2022 to $1.25 in the first quarter of 2026, while weighted-average shares declined from approximately 190.1 million in late 2022 to 186.2 million in the second quarter of 2026.
• Balance-sheet equity has grown: Total equity increased to approximately $19.9 billion in the second quarter of 2026 from $18.6 billion at the end of 2022, supported by retained earnings and continuing profitability.
• Operating cash flow is volatile: Cash generation improved significantly in the second quarter of 2026, but operating cash flow was negative in the first quarter. Investors should monitor contract billing, receivables, inventory and other working-capital movements.
• Reported figures include restatements: Several 2023–2025 figures have been restated in the supplied data, so historical comparisons should be interpreted cautiously and may differ from previously reported results.
• Intangible-heavy balance sheet: Goodwill and intangible assets account for approximately $26.5 billion of assets. Future impairments could reduce reported earnings and shareholders’ equity, as demonstrated by the large impairment charge recorded in the third quarter of 2022.
• Debt remains substantial: Although leverage has declined, L3Harris still carries about $11 billion of total debt and approximately $9.5 billion of net debt based on second-quarter cash. Interest expense therefore remains a meaningful consideration, particularly if borrowing costs stay elevated.

Overall, the statements point to improving revenue, margins, earnings, cash balances and leverage in the latest quarters. The main risks for investors are uneven quarterly cash conversion, the company’s sizable debt load and the large amount of goodwill and intangible assets on the balance sheet.