L3Harris Delivers Record Orders and Robust Cash Flow in 2025, Sets Confident 2026 Guidance
Margin Expansion and Cash Flow Highlight Strength Amid Industry Shifts
L3Harris Technologies (NYSE:LHX) closed 2025 on a high note, achieving record full-year orders and robust improvements in both cash flow and profitability, even as defense sector challenges persisted. The company’s latest results show a portfolio closely aligned with advancing national and global defense priorities, enabling strong organic growth and operational leverage across its divisions.
Record Orders and Improved Cash Flow Signal Positive Momentum
With full-year orders surging to $27.5 billion and a book-to-bill ratio of 1.3x, L3Harris is building a formidable backlog. Revenue increased to $21.87 billion, up 3% year-over-year (5% after adjusting for divestitures). Operating margin grew to 9.7%, with adjusted segment operating margin climbing 40 basis points to 15.8%. Diluted earnings per share on a GAAP basis increased by 8% to $8.53, while non-GAAP diluted EPS jumped 11% to $10.73.
Cash generation was a particular standout in 2025. Cash from operations hit $3.11 billion—a 21% gain from 2024—while adjusted free cash flow also rose 21% to $2.81 billion, thanks to efficient tax strategies and cost controls.
| Key FY25 Metrics | 2025 | 2024 | Change |
|---|---|---|---|
| Orders | $27.5B | - | - |
| Revenue | $21.87B | $21.33B | +3% |
| Operating Margin | 9.7% | 9.0% | +70 bps |
| Adjusted Segment Op. Margin | 15.8% | 15.4% | +40 bps |
| GAAP Diluted EPS | $8.53 | $7.87 | +8% |
| Non-GAAP Diluted EPS | $10.73 | $9.70 | +11% |
| Cash from Operations | $3.11B | $2.56B | +21% |
| Adj. Free Cash Flow | $2.81B | $2.32B | +21% |
Communication Systems and Aerojet Rocketdyne Drive Segment Growth
The Communication Systems division delivered a 4% revenue increase and saw operating margin climb to 25.2%. Investments in resilient communications technology and cost optimizations drove these gains, offsetting some softness in civil communications. Aerojet Rocketdyne posted a 10% revenue boost but faced lower GAAP margins due to a goodwill impairment; on an adjusted basis, margins improved by 60 basis points to 12.5% on volume and cost savings.
| Segment | Revenue | Adj. Op. Margin |
|---|---|---|
| Communication Systems | $5.67B (+4%) | 25.2% (+50 bps) |
| Integrated Mission Systems | $6.63B (flat) | 12.2% (-30 bps) |
| Space & Airborne Systems | $6.95B (+1%) | 12.3% (+50 bps) |
| Aerojet Rocketdyne | $2.85B (+10%) | 12.5% (+60 bps) |
2026 Guidance: Revenue, Margins, and EPS Expected to Rise
Looking ahead, L3Harris projects 2026 revenue between $23.0 and $23.5 billion, with a total segment operating margin in the low 16% range and diluted EPS of $11.30-$11.50. Free cash flow is expected at $3.0 billion. The company is also completing a business realignment to three core segments, reflecting the evolving defense and space environment.
| 2026 Guidance | Target |
|---|---|
| Revenue | $23.0B–$23.5B |
| Segment Op. Margin | Low 16% |
| Diluted EPS | $11.30–$11.50 |
| Free Cash Flow | $3.0B |
Takeaway: Investments, Backlog, and Streamlining Support L3Harris’ Outlook
L3Harris’ strong cash flows, margin improvements, and record orders position the company for continued growth. With a strategy centered on technology investment and regular portfolio reviews, L3Harris is signaling confidence to investors as defense demand remains resilient. Investors might watch the upcoming segment realignment, government award cycles, and any impacts from ongoing divestitures as key variables for the next stage of growth.
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