L3Harris lifts 2026 profit forecast as defense demand surges

L3Harris is riding a defense boom that now looks less like a one-quarter spike than a structural shift. The company said first-quarter orders reached $7.8 billion, lifting its book-to-bill ratio to 1.4 times and pushing backlog to a record $40.7 billion. Revenue rose to $5.7 billion, up 12% from a year earlier and 15% organically, while GAAP diluted earnings per share climbed 33% to $2.72. Operating margin improved to 11.4%, up 120 basis points, and the company raised its 2026 profit forecast.

The numbers show how heavily weapons makers are benefiting from the combination of active conflict and restocking at the Pentagon. Reuters said the demand was driven by military intelligence and weapons orders tied to a series of conflicts, including the U.S.-Israel war on Iran, which depleted U.S. stockpiles and set off fresh missile and munition buying. For L3Harris, the clearest pressure point is in missile systems: its Missile Solutions unit, which makes propulsion and hypersonic weapons, posted an 18% increase in revenue.

That business is also becoming a test case for a new kind of public-private defense financing. On Jan. 13, L3Harris and the Department of War said they had agreed to a $1 billion convertible preferred security investment in Missile Solutions, calling it the first direct-to-supplier partnership of its kind. The investment is meant to expand U.S. solid rocket motor production capacity and support programs including PAC-3, THAAD, Tomahawk and Standard Missile. L3Harris closed the $1 billion investment on April 23 and said the money, along with future IPO proceeds, will go toward expanding and modernizing facilities in Camden, Arkansas; Huntsville, Alabama; and Orange, Virginia.

L3Harris also said it plans to pursue an IPO of Missile Solutions in the second half of 2026, pending market conditions, while remaining the majority shareholder with more than 80% ownership. The company’s investor materials show backlog rising from about $21 billion in fiscal 2021 to $39 billion in fiscal 2025 and about $41 billion in the first quarter of 2026, with another roughly $25 billion in missile production framework agreements under negotiation. First-quarter awards included about $725 million in international AEW&C, about $750 million in missile propulsion programs and about $450 million in international software-defined resilient communications.

Chief executive Christopher Kubasik said L3Harris was executing its “Trusted Disruptor” strategy and that the quarter reflected the strength of its portfolio and its fit with the nation’s most critical defense missions. He said demand was accelerating and that the company was positioned for the next phase of growth. For investors, the question is whether this surge marks temporary crisis spending or a longer upgrade cycle for missiles, communications and space systems. For Washington, it is a sign that replenishment after recent fighting is already shaping industrial policy and taxpayer exposure for years to come.