Core Viewpoint - Joby Aviation is expanding its focus beyond commercial electric air taxis to include defense applications through a partnership with L3Harris Technologies to develop a gas-turbine hybrid vertical take-off and landing aircraft for military use [1][2]. Group 1: Partnership and Development - Joby Aviation has signed an agreement with L3Harris Technologies to explore the development of a new aircraft class, specifically a gas-turbine hybrid VTOL that can operate autonomously for defense applications [2]. - The new VTOL will be based on Joby's existing S4 aircraft platform, which has primarily been developed with an all-electric powertrain [3]. - Joby previously demonstrated a hydrogen-electric hybrid version of the S4 that achieved a flight range of 521 miles, significantly exceeding the range of its battery electric prototype [3]. Group 2: Testing and Certification - The agreement with L3Harris is currently exploratory, with hopes that upcoming flight tests and operational demonstrations will lead to a military contract with the U.S. Department of Defense (DoD) [4]. - Flight testing is scheduled to begin this fall, with operational demonstrations expected in 2026 [4]. - Joby has been working towards obtaining Type 1 certification from the Federal Aviation Administration for its all-electric VTOL aircraft, aimed at urban passenger transport [4]. Group 3: Strategic Insights - Joby has collaborated with the DoD for nearly a decade, focusing on understanding the requirements necessary to meet military needs, particularly emphasizing the importance of range [5]. - The company aims to demonstrate the "missionization of its platform," integrating sensors, autonomy, communications, and payload capabilities to provide clear use cases for the DoD [7]. - L3Harris is expected to contribute its expertise in long-range, crewed-uncrewed teaming for various missions, including low-altitude support operations [8][9].

Group 1 - The article emphasizes the importance of not only predicting economic scenarios but also identifying the right investments for progress [1] - It highlights the significance of in-depth research on various investment vehicles such as REITs, mREITs, Preferreds, BDCs, MLPs, and ETFs [1] Group 2 - The article mentions a beneficial long position in shares of LHX, CNQ, and LB, indicating a vested interest in these companies [1]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 27, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to ______________ Commission File Number 1-3863 L3HARRIS TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) (State or ot ...

Financial Data and Key Metrics Changes - The company reported a record $8.3 billion in orders for the quarter, resulting in a book-to-bill ratio of 1.5 [16][80] - Revenue for the quarter was $5.4 billion, reflecting strong organic growth of 6% [16][17] - Non-GAAP EPS was $2.78, up 16% year-over-year, while pension-adjusted EPS was $2.42, up 22% year-over-year [17] - Free cash flow was $574 million, driven by increased operating income and improved working capital performance [17] Business Line Data and Key Metrics Changes - Communication Systems (CS) revenue was $1.4 billion, up 2%, with an operating margin of 24.4% [18] - Integrated Mission Systems (IMS) revenue was $1.6 billion, up 6% organically, with an operating margin of 13.2%, up 120 basis points [18][19] - Space and Airborne Systems (SAS) revenue was $1.8 billion, up 7% organically, with an operating margin of 12.3%, down 30 basis points [20] - Aerojet Rocketdyne (AR) achieved 12% organic growth with a book-to-bill ratio of 2.0, marking the highest revenue quarter on record for AR [20] Market Data and Key Metrics Changes - NATO members are increasing defense spending to 5% of GDP, translating into meaningful orders for the company [13] - The U.S. administration's fiscal year 2026 budget request includes approximately $1 trillion in national defense funding, with a focus on areas where the company is well-positioned [10] Company Strategy and Development Direction - The company aims to take out $1 billion in costs over three years and is currently tracking 40% ahead of that target [8] - The LHX NEXT program focuses on enterprise transformation, deploying an operating system, and embedding AI tools across the business [29] - The company is investing in manufacturing capacity and workforce to meet urgent demand for solid rocket motors and missile solutions [12][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the 2026 financial framework of $23 billion in revenue and 16% segment operating margin [32][36] - The company anticipates strong demand for missile solutions and space propulsion, with growth expected to continue for decades [24][100] - Management highlighted the importance of delivering on schedule to secure new opportunities, particularly in defense contracts [7][10] Other Important Information - The company is preparing to deploy a constellation of 40 to 45 hypersonic threat detection satellites [11] - The integration of Aerojet Rocketdyne has been completed, doubling production rates and reducing costs [8] Q&A Session Summary Question: Can you explain the comment about monetizing legacy end-of-life assets? - Management clarified that monetizing legacy assets is part of the LHX NEXT strategy, focusing on areas of strategic growth [41][42] Question: What impact do you think increased defense spending in Europe will have? - Management noted solid growth internationally, particularly in telecommunications and software-defined radios, with a focus on interoperability and resilience [51] Question: Can you rank the segments by expected growth and margin improvement for 2026? - Management indicated that Aerojet Rocketdyne is expected to be the fastest grower, followed by SAS, CS, and IMS, with all segments showing solid growth opportunities [58][59] Question: How quickly can you get the HPTSS constellation contract under contract? - Management expressed hope to secure the contract by the end of the year, contributing to revenue in 2025 and significantly in 2026 [65] Question: Are you signing contracts that are riskier due to the desire to move faster? - Management assured that they are not taking on riskier contracts, focusing on reasonable agreements that align with their strategy [86][89]

Financial Data and Key Metrics Changes - The company reported a record $8.3 billion in orders for the quarter, resulting in a book-to-bill ratio of 1.5, indicating strong demand and execution [13][14] - Revenue for the quarter was $5.4 billion, reflecting a 6% organic growth year-over-year, marking the highest organic growth in six quarters [14][15] - Non-GAAP EPS was $2.78, up 16% year-over-year, while pension-adjusted EPS was $2.42, up 22% year-over-year [14][15] - Free cash flow was $574 million, driven by increased operating income and improved working capital performance [14] Business Line Data and Key Metrics Changes - Communication Systems (CS) revenue was $1.4 billion, up 2%, with an operating margin of 24.4% [15] - Integrated Mission Systems (IMS) revenue was $1.6 billion, up 6% organically, with an operating margin of 13.2%, up 120 basis points [15][16] - Space and Airborne Systems (SAS) revenue was $1.8 billion, up 7% organically, with an operating margin of 12.3%, down 30 basis points [16] - Aerojet Rocketdyne achieved 12% organic growth with a book-to-bill ratio of 2.0, driven by increased production volume across key missile programs [17] Market Data and Key Metrics Changes - NATO members are increasing defense spending to 5% of GDP, translating into meaningful orders for the company and supporting sustained international growth [10][11] - The U.S. administration's fiscal year 2026 budget request includes approximately $1 trillion in national defense funding, with significant allocations for areas where the company is well-positioned [7][8] Company Strategy and Development Direction - The company is focused on aligning its portfolio with national security priorities, emphasizing resilient communications, space superiority, and missile modernization [31][32] - The LHX NEXT program aims to drive enterprise transformation and operational improvements, with expectations for sustained revenue growth and cash generation [25][26] - The company is investing in manufacturing capacity and expanding its workforce to meet increasing demand for solid rocket motors and missile solutions [21][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the 2026 financial framework of $23 billion in revenue and a 16% segment operating margin, driven by alignment with long-term defense priorities [29][30] - The company anticipates continued strong demand across all segments, with a focus on delivering timely solutions to address current and future threats [24][32] Other Important Information - The company is on track to achieve $1 billion in cost savings over three years, currently tracking 40% ahead of target [6] - The integration of Aerojet Rocketdyne has been completed, resulting in doubled production rates and reduced costs [6][17] Q&A Session Summary Question: Can you explain the comment about monetizing legacy end-of-life assets? - Management clarified that monetizing legacy assets is part of the LHX NEXT strategy, focusing on aligning investments with growth areas [36][39] Question: What impact do you see from increased defense spending in Europe? - Management noted solid international growth opportunities, particularly in telecommunications and software-defined radios, as European countries seek interoperability and resilience [48][49] Question: How do you expect bookings to trend through the rest of the year? - Management expressed optimism for a solid second half, with expectations for a growing backlog and potential for outsized growth driven by large awards [71][73] Question: Can you provide a breakdown of the $8.3 billion in bookings by segment? - Management indicated strong book-to-bill ratios across all segments, with Aerojet Rocketdyne showing nearly a 2.0 book-to-bill ratio [76][79] Question: Are you signing contracts that are riskier due to the desire to move fast? - Management assured that they are not taking on riskier contracts, emphasizing that many awards are follow-on contracts with reasonable terms [84][86]

Financial Performance Highlights - Orders reached $8 billion, resulting in a record backlog and a book-to-bill ratio of 1.5x, the highest since the merger[4,6] - Organic growth increased by 6%, driving progress towards the 2026 Financial Framework, with AR Missile Solutions up 15% organically[4] - Adjusted Segment Operating Margin was 15.9%, marking the seventh consecutive quarter of margin expansion[4,8] - Non-GAAP EPS grew by 16%, or 22% on a pension-adjusted basis[4,45] - Adjusted Free Cash Flow was $574 million[8] Guidance and Outlook - Revenue guidance for 2025 is approximately $21.75 billion (previously $21.4 billion - $21.7 billion)[5,40] - Adjusted Free Cash Flow for 2025 is projected to be around $2.65 billion (previously $2.4 billion - $2.5 billion)[5,40] - Non-GAAP Diluted EPS guidance for 2025 is $10.40 - $10.60 (previously $10.30 - $10.50)[40,42] Segment Performance - Communication Systems (CS) revenue increased by 2% to $1.376 billion, with an adjusted operating margin of 24.4%[19,20,21] - Integrated Mission Systems (IMS) revenue decreased by 3% but increased 6% organically, with an adjusted operating margin of 13.2%[25,28] - Space & Airborne Systems (SAS) revenue increased by 5% but increased 7% organically, with an adjusted operating margin of 12.3%[32,33] - Aerojet Rocketdyne (AR) revenue increased by 10% but increased 12% organically, with an adjusted operating margin of 13.3%[37,38]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) [Second Quarter 2025 Performance Overview](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Overview) L3Harris Technologies reported strong Q2 2025 results, marking an inflection point with significant EPS growth and the strongest revenue growth in six quarters Second Quarter 2025 Key Financials | Metric | Q2 2025 | Q2 2024 | Change | Non-GAAP Q2 2025 | Non-GAAP Q2 2024 | Non-GAAP Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Diluted EPS | $2.44 | $1.92 | +27% | $2.78 | $2.40 | +16% | | Revenue | $5.4B | $5.3B | +2% | - | - | - | - Orders reached **$8.3 billion**, resulting in a book-to-bill ratio of **1.5x**, indicating strong demand and future revenue potential[5](index=5&type=chunk) - Adjusted segment operating margin expanded for the seventh consecutive quarter, increasing by **30 basis points to 15.9%** in Q2 2025[5](index=5&type=chunk)[6](index=6&type=chunk)[11](index=11&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) The CEO highlighted impressive Q2 results driven by record orders and margin expansion, aligning with a generational defense investment cycle - The company achieved a record book-to-bill of **1.5x** and solid organic growth, marking a clear inflection point towards the 2026 Financial Framework[4](index=4&type=chunk) - Defense is entering a generational investment cycle with rapidly growing U.S. and allied budgets, aligning with L3Harris's portfolio in key growth areas[4](index=4&type=chunk) - The 'Trusted Disruptor' strategy drives differentiated, mission-critical solutions, creating value for shareholders and meeting evolving customer needs[4](index=4&type=chunk) [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) Strong Q2 2025 orders, revenue growth, and margin expansion led to an upward revision of 2025 guidance and 2026 outlook - Orders: **$8.3 billion**; book-to-bill of **1.5x**[5](index=5&type=chunk) - Revenue: **$5.4 billion**, up 2% (**6% organically**)[5](index=5&type=chunk) - Operating margin: **10.5%**; Adjusted segment operating margin: **15.9%**[5](index=5&type=chunk) - Diluted EPS: **$2.44**; Non-GAAP diluted EPS: **$2.78**, up 16%[5](index=5&type=chunk) - 2025 guidance and 2026 outlook increased due to strong performance and improved expectations[5](index=5&type=chunk) [Consolidated Financial Results](index=3&type=section&id=Consolidated%20Financial%20Results) [Summary Financial Performance](index=3&type=section&id=Summary%20Financial%20Performance) The company reported revenue growth and improved EPS, though cash flow declined due to working capital timing and legal settlements Summary Financial Results (Q2 2025 vs Q2 2024) | Metric | Q2 2025 ($M) | Q2 2024 ($M) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 5,426 | 5,299 | 2% | | Operating income | 571 | 476 | - | | Adjusted segment operating income | 863 | 825 | 5% | | Operating margin | 10.5% | 9.0% | +150 bps | | Adjusted segment operating margin | 15.9% | 15.6% | +30 bps | | Diluted EPS | $2.44 | $1.92 | - | | Non-GAAP diluted EPS | $2.78 | $2.40 | 16% | | Cash from operations | 640 | 754 | (15%) | | Adjusted free cash flow | 574 | 714 | (20%) | Summary Financial Results (YTD 2025 vs YTD 2024) | Metric | YTD 2025 ($M) | YTD 2024 ($M) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 10,558 | 10,510 | —% | | Operating income | 1,096 | 854 | - | | Adjusted segment operating income | 1,663 | 1,613 | 3% | | Operating margin | 10.4% | 8.1% | - | | Adjusted segment operating margin | 15.8% | 15.3% | +50 bps | | Diluted EPS | $4.48 | $3.40 | - | | Non-GAAP diluted EPS | $5.18 | $4.64 | 12% | | Cash from operations | 598 | 650 | (8%) | | Adjusted free cash flow | 502 | 558 | (10%) | [Revenue Analysis](index=5&type=section&id=Revenue%20Analysis) Second quarter revenue increased 2% (6% organically), driven by higher volumes and increased international demand across all segments - Q2 2025 revenue increased **2% to $5.4 billion**, with organic revenue growth of **6%**[5](index=5&type=chunk)[9](index=9&type=chunk) - Growth was primarily attributed to higher volumes, new program ramps, and increased international demand across all segments[9](index=9&type=chunk) [Operating Margin Analysis](index=5&type=section&id=Operating%20Margin%20Analysis) GAAP operating margin increased by 150 bps, while adjusted segment operating margin expanded by 30 bps from cost savings and asset monetization - GAAP Operating Margin increased **150 bps to 10.5%** in Q2 2025[10](index=10&type=chunk) - The GAAP margin improvement was primarily driven by lower unallocated corporate expenses and the absence of prior year business divestiture-related losses[10](index=10&type=chunk) - Adjusted Segment Operating Margin expanded **30 bps to 15.9%** in Q2 2025, mainly due to monetization of legacy assets and LHX NeXt driven cost savings[11](index=11&type=chunk) [Earnings Per Share (EPS) Analysis](index=5&type=section&id=Earnings%20Per%20Share%20(EPS)%20Analysis) Both GAAP and non-GAAP diluted EPS increased significantly, benefiting from higher operating income and lower interest expense - GAAP Diluted EPS increased **27% to $2.44** in Q2 2025[12](index=12&type=chunk) - Non-GAAP Diluted EPS increased **16% to $2.78**, and Pension Adjusted Non-GAAP Diluted EPS increased **22% to $2.42**[13](index=13&type=chunk) - EPS growth was driven by higher operating income and lower interest expense, partially offset by a higher effective tax rate[12](index=12&type=chunk)[13](index=13&type=chunk) [Cash Flow Analysis](index=5&type=section&id=Cash%20Flow%20Analysis) Cash from operations and adjusted free cash flow decreased in Q2 2025 due to working capital timing and a legal settlement - Cash From Operations decreased **15% to $640 million** in Q2 2025[14](index=14&type=chunk) - Adjusted Free Cash Flow decreased **20% to $574 million** in Q2 2025[14](index=14&type=chunk) - The decrease in cash flow was driven by working capital timing and a legal settlement, partially offset by operating income growth and lower capital expenditures[14](index=14&type=chunk) [Condensed Consolidated Statements](index=10&type=section&id=Condensed%20Consolidated%20Statements) The condensed consolidated financial statements provide a detailed view of the company's financial position, performance, and cash flows [Statement of Operations](index=10&type=section&id=Statement%20of%20Operations) The statement of operations shows Q2 2025 revenue of $5,426 million and net income attributable to L3Harris of $458 million Condensed Consolidated Statement of Operations (Unaudited) | Metric ($ millions, except per share amounts) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $5,426 | $5,299 | $10,558 | $10,510 | | Operating income | $571 | $476 | $1,096 | $854 | | Income before income taxes | $524 | $390 | $983 | $680 | | Net income attributable to L3Harris | $458 | $366 | $844 | $649 | | Diluted EPS | $2.44 | $1.92 | $4.48 | $3.40 | [Statement of Cash Flow](index=11&type=section&id=Statement%20of%20Cash%20Flow) The statement of cash flow indicates net cash from operating activities of $640 million for Q2 2025, a decrease from the prior year Consolidated Statement of Cash Flow (Unaudited) | Metric ($ millions) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $640 | $754 | $598 | $650 | | Net cash (used in) provided by investing activities | $(78) | $58 | $666 | $(58) | | Net cash (used in) provided by financing activities | $(610) | $(744) | $(1,415) | $(600) | | Net decrease in cash and cash equivalents | $(35) | $70 | $(133) | $(13) | | Cash and cash equivalents, end of period | $482 | $547 | $482 | $547 | [Balance Sheet](index=12&type=section&id=Balance%20Sheet) The balance sheet shows total assets of $41,240 million and total equity of $19,278 million as of June 27, 2025 Condensed Consolidated Balance Sheet (Unaudited) | Metric ($ millions) | June 27, 2025 | January 3, 2025 | | :--- | :--- | :--- | | Total current assets | $7,608 | $8,218 | | Total assets | $41,240 | $42,001 | | Total current liabilities | $7,322 | $7,633 | | Total liabilities | $21,962 | $22,422 | | Total equity | $19,278 | $19,579 | [Segment Performance](index=6&type=section&id=Segment%20Performance) [Communication Systems](index=6&type=section&id=Communication%20Systems) The Communication Systems segment reported a 2% revenue increase driven by international demand, with flat operating margin Communication Systems Segment Results | Metric ($ millions) | Q2 2025 | Q2 2024 | Change | YTD 2025 | YTD 2024 | Change | 2025 Guidance | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,376 | $1,346 | 2% | $2,728 | $2,640 | 3% | $5,600 - $5,700 | | Operating margin | 24.4% | 24.4% | — bps | 25.0% | 24.2% | 80 bps | ~25% | - Revenue growth was primarily driven by increased international demand for resilient communication equipment and related waveforms[16](index=16&type=chunk) - Operating margin was flat due to higher volume and LHX NeXt driven cost savings, offset by the absence of favorable legal settlements from 2024[17](index=17&type=chunk) [Integrated Mission Systems](index=6&type=section&id=Integrated%20Mission%20Systems) Integrated Mission Systems organic revenue increased 6% from ISR program ramps, and operating margin significantly increased by 120 bps Integrated Mission Systems Segment Results | Metric ($ millions) | Q2 2025 | Q2 2024 | Change | YTD 2025 | YTD 2024 | Change | 2025 Guidance | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,622 | $1,671 | (3)% | $3,214 | $3,298 | (3)% | ~$6,400 (Prior: ~$6,300) | | Operating margin | 13.2% | 12.0% | 120 bps | 13.0% | 11.7% | 130 bps | ~12% (Prior: high 11%) | - Excluding the CAS business divestiture, organic revenue increased **6%**, primarily due to ISR classified program ramp[18](index=18&type=chunk) - Operating margin increased **120 bps to 13.2%**, driven by monetization of legacy assets, partially offset by an unfavorable EAC adjustment[19](index=19&type=chunk) [Space & Airborne Systems](index=7&type=section&id=Space%20%26%20Airborne%20Systems) Space and Airborne Systems organic revenue increased 7% due to higher FAA volume, while operating margin slightly decreased Space and Airborne Systems Segment Results | Metric ($ millions) | Q2 2025 | Q2 2024 | Change | YTD 2025 | YTD 2024 | Change | 2025 Guidance | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,787 | $1,707 | 5% | $3,398 | $3,458 | (2)% | ~$7,100 (Prior: $6,900 - $7,100) | | Operating margin | 12.3% | 12.6% | (30) bps | 11.7% | 12.5% | (80) bps | low 12% | - Excluding the antenna business divestiture, organic revenue increased **7%**, driven by increased FAA volume and improved program performance[20](index=20&type=chunk) - Operating margin decreased **30 bps to 12.3%** primarily from unfavorable mix, partially offset by asset monetization and cost savings[21](index=21&type=chunk) [Aerojet Rocketdyne](index=7&type=section&id=Aerojet%20Rocketdyne) Aerojet Rocketdyne's organic revenue increased 12% due to higher production, and operating margin improved by 50 bps Aerojet Rocketdyne Segment Results | Metric ($ millions) | Q2 2025 | Q2 2024 | Change | YTD 2025 | YTD 2024 | Change | 2025 Guidance | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $698 | $633 | 10% | $1,327 | $1,217 | 9% | ~$2,800 | | Operating margin | 13.3% | 12.8% | 50 bps | 12.7% | 13.0% | (30) bps | mid 12% | - Excluding the AOT business divestiture, organic revenue increased **12%** from increased production volume across key missile and munitions programs[22](index=22&type=chunk) - Operating margin increased **50 bps to 13.3%**, primarily due to improved performance driven by LHX NeXt cost savings and a favorable contract resolution[23](index=23&type=chunk) [Guidance and Outlook](index=8&type=section&id=Guidance%20and%20Outlook) [2025 Non-GAAP EPS Guidance Bridge](index=8&type=section&id=2025%20Non-GAAP%20EPS%20Guidance%20Bridge) Full-year 2025 non-GAAP diluted EPS guidance was increased to $10.40 - $10.60, reflecting strong performance and an improved outlook 2025 Non-GAAP Diluted EPS Guidance Bridge | Item | Amount | | :--- | :--- | | Non-GAAP diluted EPS (Prior) | $10.30 - $10.50 | | H1 2025 performance and guidance update | ~$0.40 | | Non-GAAP EPS (Before tax reform impact) | $10.70 - $10.90 | | Impact of tax reform | ~($0.30) | | Non-GAAP diluted EPS (New) | $10.40 - $10.60 | - The updated guidance reflects a net increase of **$0.10** to the full-year non-GAAP diluted EPS, offsetting a tax rate headwind[25](index=25&type=chunk) [Supplemental Information](index=8&type=section&id=Supplemental%20Information) Supplemental information for 2025 includes updated estimates for pension income and the effective tax rate on non-GAAP income 2025 Supplemental Information | Other Information | Current | Prior | | :--- | :--- | :--- | | FAS/CAS operating adjustment | ~$15 million | ~$15 million | | Non-service FAS pension income | ~$285 million | ~$270 million | | Net interest expense | ~$600 million | ~$600 million | | Effective tax rate on non-GAAP income | 13.5% - 14.5% | 11.0% - 12.0% | | Weighted-average diluted shares | ~188 | 188 - 189 | | Capital expenditures | ~2% revenue | ~2% revenue | - The effective tax rate on non-GAAP income is projected to be **13.5% - 14.5%**, an increase from the prior guidance of 11.0% - 12.0%[27](index=27&type=chunk) - Non-service FAS pension income is now estimated at **~$285 million**, up from ~$270 million previously[27](index=27&type=chunk) [Non-GAAP Financial Measures & Disclosures](index=9&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Disclosures) [Forward-Looking Statements](index=9&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements subject to various risks and uncertainties, and the company disclaims any obligation to update them - Forward-looking statements are made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995[29](index=29&type=chunk) - Important risks include competitive markets, U.S. Government spending priorities, inflation, supply chain disruptions, and changes in effective tax rate[29](index=29&type=chunk) - The company disclaims any intention or obligation to update or revise any forward-looking statements, other than as imposed by law[29](index=29&type=chunk) [Non-GAAP Financial Measures Explanation](index=9&type=section&id=Non-GAAP%20Financial%20Measures%20Explanation) Management uses non-GAAP financial measures to provide a clearer understanding of ongoing operating performance and business trends - Non-GAAP Financial Measures (NGFMs) are used to provide investors with information on period-over-period operating results[30](index=30&type=chunk) - Management utilizes NGFMs for forecasting, long-term planning, and compensation purposes[30](index=30&type=chunk) - Reconciliation of forward-looking NGFMs to GAAP is not available without unreasonable effort due to forecasting difficulties[30](index=30&type=chunk) [Reconciliation of Non-GAAP Measures](index=13&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) This section provides detailed reconciliations of various non-GAAP financial measures to their most directly comparable GAAP measures [Organic Revenue Reconciliation](index=13&type=section&id=Organic%20Revenue%20Reconciliation) The organic revenue reconciliation adjusts GAAP revenue by excluding amounts attributable to divested businesses Organic Revenue Reconciliation (Q2 2025 vs Q2 2024) | Segment | GAAP 2025 ($M) | Adjustments ($M) | Organic 2025 ($M) | GAAP 2024 ($M) | Adjustments ($M) | Organic 2024 ($M) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | CS | $1,376 | — | $1,376 | $1,346 | — | $1,346 | | IMS | $1,622 | — | $1,622 | $1,671 | $(138) | $1,533 | | SAS | $1,787 | — | $1,787 | $1,707 | $(32) | $1,675 | | AR | $698 | — | $698 | $633 | $(12) | $621 | | Corporate eliminations | $(57) | — | $(57) | $(58) | — | $(58) | | **Total Revenue** | **$5,426** | **—** | **$5,426** | **$5,299** | **$(182)** | **$5,117** | [Adjusted Segment Operating Income Reconciliation](index=14&type=section&id=Adjusted%20Segment%20Operating%20Income%20Reconciliation) This reconciliation adjusts GAAP operating income to derive adjusted segment operating income, reflecting core operational performance Reconciliation of Operating Income to Adjusted Segment Operating Income (Q2 2025 vs Q2 2024) | Metric ($ millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Operating income | $571 | $476 | | Amortization of acquisition-related intangibles | 193 | 215 | | Unallocated corporate department expense, net | 50 | 33 | | FAS/CAS operating adjustment | (3) | (6) | | Merger, acquisition, and divestiture-related expenses | 13 | 21 | | Business divestiture-related losses and impairment of goodwill | — | 38 | | LHX NeXt implementation costs | 39 | 48 | | **Adjusted segment operating income** | **$863** | **$825** | [Effective Tax Rate on Non-GAAP Income Reconciliation](index=15&type=section&id=Effective%20Tax%20Rate%20on%20Non-GAAP%20Income%20Reconciliation) This reconciliation adjusts the GAAP effective tax rate to present the effective tax rate on non-GAAP income Reconciliation of Effective Tax Rate to Effective Tax Rate on Non-GAAP Income (Q2 2025 vs Q2 2024) | Metric ($ millions) | Q2 2025 Earnings Before Tax | Q2 2025 Tax Expense (Benefit) | Q2 2025 Effective Tax Rate | Q2 2024 Earnings Before Tax | Q2 2024 Tax Expense (Benefit) | Q2 2024 Effective Tax Rate | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Income before income taxes | $524 | $66 | 12.6% | $390 | $23 | 5.9% | | Merger, acquisition, and divestiture-related expenses | 13 | 3 | | 21 | 7 | | | Business divestiture-related losses and impairment of goodwill | — | (18) | | 38 | (2) | | | LHX NeXt implementation costs | 39 | 4 | | 48 | 11 | | | **Non-GAAP income before income taxes** | **$576** | **$55** | **9.5%** | **$497** | **$39** | **7.8%** | [Diluted EPS to Non-GAAP Diluted EPS Reconciliation](index=16&type=section&id=Diluted%20EPS%20to%20Non-GAAP%20Diluted%20EPS%20Reconciliation) This reconciliation adjusts GAAP diluted EPS for significant and/or non-recurring items to arrive at non-GAAP diluted EPS Reconciliation of Diluted EPS to Non-GAAP Diluted EPS and Pension Adjusted Non-GAAP Diluted EPS (Q2 2025 vs Q2 2024) | Metric ($ millions, except per share data) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Diluted EPS | $2.44 | $1.92 | | Merger, acquisition, and divestiture-related expenses | 0.07 | 0.11 | | Business divestiture-related losses and impairment of goodwill | — | 0.20 | | LHX NeXt implementation costs | 0.21 | 0.25 | | Income taxes on above adjustments and other, net | 0.06 | (0.08) | | **Non-GAAP diluted EPS** | **$2.78** | **$2.40** | | Less: per share impact of: | | | | FAS/CAS operating adjustment | (0.01) | (0.03) | | Non-service FAS pension income | (0.35) | (0.39) | | **Pension adjusted non-GAAP diluted EPS** | **$2.42** | **$1.98** | [Net Cash Provided by Operating Activities to Adjusted Free Cash Flow Reconciliation](index=17&type=section&id=Net%20Cash%20Provided%20by%20Operating%20Activities%20to%20Adjusted%20Free%20Cash%20Flow%20Reconciliation) This reconciliation adjusts net cash provided by operating activities to calculate adjusted free cash flow Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow (Q2 2025 vs Q2 2024) | Metric ($ millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $640 | $754 | | Capital expenditures | (88) | (97) | | Proceeds from disposal of property, plant and equipment, net | 9 | — | | Free cash flow | 561 | 657 | | Cash used for merger, acquisition and severance | 13 | 57 | | **Adjusted free cash flow** | **$574** | **$714** | [Key Terms and Non-GAAP Definitions](index=18&type=section&id=Key%20Terms%20and%20Non-GAAP%20Definitions) This section provides definitions for key terms and non-GAAP financial measures used throughout the earnings release Key Terms and Non-GAAP Definitions | Description | Definition | | :--- | :--- | | Merger, acquisition, and divestiture-related expenses | Transaction and integration expenses associated with the AJRD acquisition; external costs related to pursuing acquisition and divestiture portfolio optimization; non-transaction costs related to divestitures; and salaries of employees in roles dedicated to planned divestiture and acquisition activity | | Business divestiture-related losses and impairment of goodwill | In 2024, includes loss on sale and impairment of goodwill recognized in connection with the sale of our antenna and related businesses and a loss associated with the then pending divestiture of our Commercial Aviation Solutions business. In 2025, includes loss recognized in connection with the sale of our Commercial Aviation Solutions business | | LHX NeXt implementation costs | Costs related to the LHX NeXt initiative are expected to continue into 2026 and are expected to include workforce optimization costs and incremental IT expenses for implementation of new systems, third party consulting expenses and other related costs, including costs related to personnel dedicated to this project | | Organic revenue* | Excludes the impact of completed divestitures and is reconciled in Table 4 | | Orders | Total value of funded and unfunded contract awards received from the U.S. Government and other customers, including incremental funding and adjustments to previous awards, excluding unexercised contract options and potential orders under ordering-type contracts, such as indefinite delivery, indefinite quantity (IDIQ) contracts | | Non-GAAP income before income taxes* | Represents income before income taxes adjusted for items reconciled in Table 6 | | Effective tax rate on non-GAAP income* | Represents the effective tax rate (tax expense as a percentage of income before income taxes) adjusted for the tax effect of items reconciled in Table 6 | | Adjusted segment operating income and margin* | On a consolidated basis represents operating income and margin, excluding unallocated corporate department items and items reconciled in Table 5 | | Non-GAAP diluted EPS* | Represents EPS (earnings per share attributable to common shareholders) adjusted for items reconciled in Table 7 | | Pension adjusted non-GAAP diluted EPS* | Represents Non-GAAP diluted EPS, described above, adjusted for the after tax per share impact of the FAS/CAS operating adjustment and Non-service FAS pension income reconciled in Table 7 | | Adjusted free cash flow* | Net cash provided by operating activities less capital expenditures, plus proceeds from disposal of property, plant and equipment and cash used for merger, acquisition and severance reconciled in Table 8 | | Cash used for merger, acquisition, and severance* | Cash related to merger, acquisition and divestiture-related expenses (described above) and severance costs included in LHX NeXt implementation costs | [Investor and Media Contacts](index=9&type=section&id=Investor%20and%20Media%20Contacts) Contact information for investor and media relations is provided for inquiries regarding L3Harris Technologies - Investor Relations Contact: Daniel Gittsovich, 321-724-3170, investorrelations@l3harris.com[31](index=31&type=chunk) - Media Relations Contact: Sara Banda, 321-306-8927, media@l3harris.com[31](index=31&type=chunk)

Core Insights - L3Harris Technologies, Inc. (LHX) is expected to report second-quarter 2025 results on July 24, 2025, before market open, with a trailing four-quarter average earnings surprise of 2.27% [1] - The Integrated Mission Systems (IMS) segment is anticipated to show weak performance due to lower aircraft missionization volume and planned mission support program ramp down [1] - Overall, LHX is projected to report modest top-line growth, although a significant decline in its IMS unit may weigh on its overall performance [7] Revenue Estimates - The Zacks Consensus Estimate for IMS' second-quarter revenues is currently pegged at $1,581.9 million, indicating a decline of 8.5% from the year-ago quarter's figure [2] - The Communication Systems unit's revenues are estimated at $1,387.3 million, implying growth of 3.1% from the prior-year quarter's figure due to strong international demand for resilient communication equipment [3] - The Missile Solutions unit within Aerojet Rocketdyne is expected to report revenues of $662.4 million, reflecting a growth of 14% from the prior-year quarter [4] - The Space and Airborne Systems (SAS) unit's revenues are estimated at $1,737.3 million, indicating growth of 1.8% from the year-ago quarter's number [6] Overall Performance Expectations - LHX's overall second-quarter sales are projected at $5.30 billion, indicating a growth of 0.1% from the prior-year quarter [9] - Earnings are projected to decline by 23.5% year-over-year, despite a slight increase in total sales [8][10] - Poor operating margin performance in the IMS, SAS, and Aerojet Rocketdyne segments, along with unfavorable non-cash non-service FAS pension income, may adversely impact LHX's second-quarter bottom line [9] Earnings Prediction - The model predicts an earnings beat for L3Harris Technologies, supported by a positive Earnings ESP of +0.46% and a Zacks Rank of 3 [11][12]

Core Insights - L3Harris Technologies plans to build over 20 new manufacturing facilities in Calhoun County, Arkansas, to produce large solid rocket motors, creating 50 new jobs over two years [1][3][4] - The investment is part of a broader strategy to strengthen the domestic solid rocket motor industrial base, essential for national missile and strategic defense [2][4] - L3Harris is investing nearly $500 million across its production sites, with $193 million allocated specifically for Arkansas [3][4] Company Overview - L3Harris' Camden site is recognized as the "Center of Excellence for Solid Rocket Motor production," employing approximately 1,300 people and producing over 100,000 solid rocket motors annually [5][6] - The new facilities are expected to provide a six-fold increase in manufacturing capacity, enhancing the company's ability to meet current demand [4][6] Economic Impact - The investment is anticipated to bolster Arkansas' economy, creating new job opportunities and reinforcing the state's position in the aerospace and defense sector [3][4][7] - Arkansas has been highlighted for its favorable business environment, including a low cost of living and strong economic growth, making it an attractive location for major companies like L3Harris [3][4]

Core Insights - The drone technology sector is experiencing significant growth, with advancements making drones essential across various industries [1] Company Summaries Jabil Inc. (JBL) - Jabil holds a Zacks Rank 1 and has seen substantial benefits from strong momentum in capital equipment, AI-powered data center infrastructure, cloud, and digital commerce [5] - The company emphasizes product diversification, aiming for no single product or family to exceed 5% of operating income or cash flows in any fiscal year [5] - Jabil's expected revenue and earnings growth rates for the next year are 5.8% and 17.8%, respectively, with a recent 8.4% improvement in the Zacks Consensus Estimate for next-year earnings [7] HEICO Corp. (HEI) - HEICO also holds a Zacks Rank 1, benefiting from increased orders for aftermarket replacement parts and repair services due to rising air travel [8] - The company anticipates strong order flows for its defense products, supported by a projected 13% increase in the U.S. defense budget to $1.01 trillion for fiscal 2026 [9] - HEICO's expected revenue and earnings growth rates for the current year are 13.2% and 23.7%, respectively, with a slight 0.2% improvement in the Zacks Consensus Estimate for current-year earnings [10] L3Harris Technologies Inc. (LHX) - L3Harris has a Zacks Rank 2 and benefits from solid U.S. budget funding, which is expected to enhance its revenues [11] - The company is experiencing strong demand for its defensive solutions from various regions, including Asia-Pacific and Latin America, and is involved in the U.S. administration's Golden Dome initiative [11] - L3Harris's expected revenue and earnings growth rates for the current year are 1% and -20%, respectively, with a 0.1% improvement in the Zacks Consensus Estimate for current-year earnings [12]