LHX · 10-Q · 2026Q4 · Full report

Operating Margin Drivers

L3HARRIS TECHNOLOGIES, INC. /DE/ · 2026-10-29 · Importance 18 · Surprise 14

Space & Mission Systems third-quarter operating margin increased to 10.9% from 10.7%, while year-to-date margin increased to 10.4% from 10.3%; improved program performance and volume contributed, including a $139 million favorable year-to-date EAC change. Communications & Spectrum Dominance margin rose to 25.2% from 24.7% in the quarter and to 25.7% from 24.6% year to date, supported by higher volume, favorable international and software mix, and favorable EAC adjustments of $27 million and $34 million, respectively. Missile Solutions margin was 12.0% versus 12.3% for the quarter and 12.3% versus 12.1% year to date; the quarter reflected higher volume partly offset by a $10 million divestiture-related decrease, while year-to-date results included a $39 million product-line sale gain and were offset by a $31 million unfavorable EAC adjustment.

Key facts

• L3Harris’s year-to-date 2026 Missile Solutions operating income increased due to higher volume and a $39 million first-quarter product-line sale gain, partly offset by a $10 million Space Technology divestiture decrease and a $31 million unfavorable EAC adjustment on a legacy domestic naval sensor program. source
• L3Harris’s third-quarter 2026 G&A expenses decreased $47 million, or 5%, primarily from lower acquisition-intangible amortization, no LHX NeXt implementation costs, and deferred-compensation fair-value changes, partly offset by the absence of a $19 million prior-year product-line asset-sale gain and higher business divestiture-related losses. source
• L3Harris’s year-to-date 2026 G&A expenses decreased $38 million, or 2%, primarily due to no LHX NeXt implementation costs and lower acquisition-intangible amortization, partly offset by higher company-funded R&D costs and lower product-line sale gains. source
• L3Harris’s year-to-date 2026 Communications & Spectrum Dominance operating income increased due to higher volume, favorable margin mix including significantly higher international mix in Mission Critical Communications, and a $34 million favorable change in net EAC adjustments, partly offset by a $79 million increase in R&D and selling and marketing expenses and the absence of a $17 million prior-year product-line sale gain. source
• L3Harris’s third-quarter 2026 Space & Mission Systems operating income increased primarily due to a $38 million favorable change in net EAC adjustments and higher segment volume, partly offset by the absence of a $19 million product-line asset-sale gain recognized in third-quarter 2025. source
• L3Harris’s year-to-date 2026 Space & Mission Systems operating income increased primarily due to a $139 million favorable change in net EAC adjustments and higher volume, partly offset by the absence of $94 million in product-line asset-sale gains recognized in second-quarter 2025. source
• L3Harris’s third-quarter 2026 Communications & Spectrum Dominance operating income increased primarily due to higher volume, favorable margin mix, and a $27 million favorable change in net EAC adjustments, partly offset by a $20 million increase in R&D and selling and marketing expenses. source
• L3Harris’s third-quarter 2026 Missile Solutions operating income increased primarily due to higher volume, partly offset by a $10 million decrease from the Space Technology divestiture. source