L3Harris Technologies Inc. (LHX) reported a mixed bag of fourth-quarter results Thursday morning that left investors focused on the disappointment rather than the wins. The defense contractor beat earnings expectations but missed on revenue, and more importantly, issued a profit outlook for 2026 that fell short of what Wall Street was hoping for.
The company brought in $5.64 billion in revenue for the quarter, up 2% from last year but below the $5.77 billion analysts were expecting. On the earnings side, things looked better—non-GAAP diluted earnings per share came in at $2.86, topping the consensus estimate of $2.76.
The real standout was cash generation. L3Harris produced $1.96 billion in operating cash flow during the fourth quarter, compared to $1.13 billion in the same period last year. Adjusted free cash flow hit $1.86 billion, nearly double the $1.03 billion generated a year earlier.
Operating margins told a mixed story. GAAP operating margin came in at 7.0%, down from 10.3% in the fourth quarter of 2024. The adjusted segment operating margin fared better at 15.7%, ticking up from 15.3% in the prior-year quarter. The company closed the period with roughly $1.06 billion in cash and equivalents on hand.
Chairman and CEO Christopher Kubasik struck an optimistic tone about the company's positioning. "2025 was a clear inflection point for L3Harris. Our portfolio is directly aligned with the most critical national and global defense priorities, which drove record orders and strong organic growth, margins and cash flow. Throughout the year, we saw customers move with greater urgency, and our investments and agility allowed us to deliver on their missions with speed and scale," he said.
Looking ahead, Kubasik added: "As we look to 2026, our investments in technology and capacity along with a record backlog and strong demand signals give us confidence to deliver strong results. We remain disciplined in creating value for shareholders while continuing to invest in the business via capex and R&D."
