L3Harris (LHX): Scaling the 21st Century “Arsenal of Freedom”

In the 20^th century, warfare was characterized by a few dominant weapon systems like tanks, aircraft carriers, fighter jets, and heavy bombers. Having the most advanced version of these weapons gave a nation an extraordinary advantage over its adversary, with the USA the model of this technology-first approach to military strategy.

The 21st century is not going to be different, in that technology provides a key advantage to armed forces.

But the important systems will be different: connected network, space assets, cyberdefense, drones, and missile systems are now as much, if not more, important than tanks and aircraft, as illustrated by 5 years of war in Ukraine and the recent conflagration with Iran.

If that’s the case, some defense companies already leading in these categories might benefit greatly, as a portion of the trillions of dollars spent on defense is diverted toward them.

As the world map is filling with new potential conflicts, investing part of a portfolio in the defense sector can make sense.

Source: L3Harris

One of the largest defense contractors with a matching profile to this idea is L3Harris, an aerospace and communication-focused defense company.

L3Harris Overview

L3Harris History

Today, L3Harris is the result of the merger of L3 Technologies and Harris Corporation in 2019.

The Harris Automatic Press Company was founded in 1985, entered the radio market in 1957, added microwave and antenna technology in the 1970s, semiconductors in the 1980s, and further avionics in the 2000s and 2010s.

Meanwhile, L3 Technologies was formed in 1997 to absorb some business units from Lockheed Martin, soon adding to this avionics activity radars, imaging, other electronics, sensors, space components, and antennas.

With both companies previously active in wireless, telecommunication, electronics, and navigation solutions for the military, the merger created a much stronger position for the new company, making it, at the time, the 6^th largest defense contractor in the USA.

The company’s position in the defense sector broadened in July 2023 with the acquisition of hypersonic missile reactor developer Aerojet Rocketdyne for $4.7B, adding a 4th department to the company centered on missile production.

L3Harris By The Numbers

L3Harris employs more than 47,000 people, of whom 20,000 have security clearance.

More than 1 million tactical radios from the company are in use today, as well as Next-Gen Tactical Communications (NGTC), 100,000 GPS receivers, and 56 satellites providing the SDA (Space Development Agency) tracking layer for missiles and other threats.

The company also produces 1,600 components for every F-35 aircraft, including critical weapon release systems.

The company has generated $21.9B in revenues in 2025, up 5% year-to-year, and is expecting to reach $23B-$23.5B in 2026, a 7% growth. This matches a long-term trend of growing revenues in the past few years since the acquisition of Aerojet Rocketdyne, up 6% CAGR.

Free cash flow has also been growing, expected to double the 2023 cash flow by 2026, thanks to steadily growing operating margins.

Source: L3Harris

The company has distributed $903M in dividends and repurchased $1.2B in shares in 2025.

Core Business Segments

The company is splitting its activity into 4 categories.

The first is communications systems, with $5.6B in revenues in 2025, covering tactical radios, GPS systems, but also air traffic management and Beyond-Line-of-Sight communications.

The second is integrated mission systems, with $6.6B in revenues in 2025, covering command and control tools, electronic warfare, as well as Signals Intelligence (SIGINT) & intelligence, surveillance and reconnaissance (ISR).

The third is space & airborne systems, with $6.9B in revenues in 2025, covering space launch like the one used in the Artemis II mission, military satellites, space radar, weather observation, and avionics.

The fourth and last is Aerojet Rocketdyne, with $2.8B in revenues in 2025, producing missiles.

Communications Systems

Modern military requires an almost constant stream of data up and down the chain of command, with combined warfare integrating into a whole infantry, artillery, aircraft, and even naval assets.

This requires secure, encrypted communication down to the individual soldier. Such “tactical” communication forms the bulk of the revenues of this segment, making around half of the revenues with extra sensors to empower soldiers, like night vision and infrared sensors. L3Harris controls almost half of the global tactical radios market, several times larger than the next competitor.

Source: L3Harris

The rest of the segment is electronic warfare and network solutions, both of very quickly growing importance as war digitalized and became increasingly dominated by precision munitions, flying drones, and other unmanned systems.

Many of these systems have been tested in Ukraine and have proved a vital lifeline for front-line soldiers. Counter-drone systems are expected to see deliveries 4x by 2028, with production capacity growing 40%.

Source: L3Harris

Integrated Mission Systems

These systems bring together information from space, airborne, ground-based, and naval military equipment.

It also includes several (secretive) classified ISR programs, bound to replace the aging fleet of US military radar and intelligence planes.

This is, by far, together with tactical radio, the most international segment of the company, with, for example, the contract for the Airborne Early Warning and Control aircraft for the Republic of Korea still ramping up.

Integrated Mission Systems include cyber capabilities, covering secured space communication, software routers, control systems for drones, etc.

This segment used to include civilian aviation solutions, but this was sold in 2025.

Space & Airborne Systems

The company’s satellite network for the detection of missile launches is an integral part of the USA nuclear defense. It is also increasingly important for countering non-nuclear ballistic missile threats, as illustrated by the bombing of US bases in the Middle East. The satellite production rate is planned to increase 3-fold by 2028, thanks to a record backlog.

The space detection system is complemented by airborne platforms (radar planes) and naval radars. Early missile warning is expected to drive long-term growth, especially for a company like L3Harris, able to integrate together with its multiple products all levels of the detection and communication chain.

Source: L3Harris

Besides satellite and space sensors, the company used to build space propulsion systems, including the propeller of the SLS rocket. However, this less strategic business has been partially sold since January 2026 for $846M, with L3Harris keeping only a 40% ownership in the diverted activity, alongside the private investment firm AE Industrial Partners.

In addition to classical military equipment, the company is also working on “missionized business jets”, or turning cheaper business jets into intelligence, surveillance, and reconnaissance (ISR) aircraft. More than 7 different platforms are being developed for both the US and the UK military.

This segment is rather balanced, with not one activity dominating revenues, although “aircraft missionization”, or fitting aircraft with the right type of sensors and electronic equipment, is the largest activity (including the F-35).

Source: L3Harris

Missile Solutions (Aerojet)

This segment is driven by the increasing capacity of missile systems for precision strikes.

This works to the benefit of the company in both offensive and defensive roles.

On the offensive side, stand-off munitions can replace fighter jets like the F-35 for missions in airspace too hostile to risk aircraft, or for targets too distant from a secured airbase/aircraft carrier.

On the defensive side, enemy missiles and drones increase the demand for air defense missiles, leading to an unprecedented consumption rate in the past few years, and even more since the start of the war with Iran. Some key interceptors will be needed in 4x larger than previously expected (and maybe more).

This also includes the planned “Golden Dome”, a space-based missile defense system.

As a result, if missiles/munitions presented half of the segment revenues, it is expected to grow even further in importance in the coming years.

Source: L3Harris

The Missile Capacity Opportunity

To answer to this urgent surge demand, L3Harris has announced a first-of-its-kind proposed partnership with the Department of War (DoW).

The DoW will invest $1B L3Harris’ Missile Solutions business through convertible preferred security. Then L3Harris will IPO its Missile Solutions business in the second half of 2026, to some extent recreating Aerodyne Rocketdyne, but with other extra technologies from L3Harris attached as well. After the IPO, L3Harris will retain a controlling interest in the Missile Solutions business.

“Recent Trump Administration actions have placed renewed emphasis on strengthening the defense industrial base and reinvigorating competition following a 30-year wave of consolidation. Building on several years of sustained investment and operational improvements by L3Harris, this new company will serve as a key partner to the DoW in supporting efforts to deter and defeat America’s adversaries.”

Christopher Kubasik – Chairman and CEO, L3Harris

The idea is to provide funding and support for the rapid expansion of capacity for the DoW’s critical missile programs, such as PAC-3, THAAD, Tomahawk, and Standard Missile.

And of course, thanks to direct ownership by the DoW, a clear and stable commitment of the DoW to this strategy of increase missile volume, irrespective of changing and often unstable political directions, giving L3Harris the certitude its make long-term plans that its increasing production capacity will be used and profitable.

L3Harris also unveiled in the summer of 2025 its Red World missile concept. This design should cost as little as cost around $300,000 to $400,000 per unit, versus well over $1M a piece for existing standoff cruise missiles, moving in the right direction of more numerous and lower cost ammunition.

To achieve these production targets, the company is adding 1 million square feet of factory floor in 60 buildings, with full production rate targeted for 2029 and 2030, depending on the missile model.

Source: L3Harris

L3Harris Strategy

The Trusted Disruptor

The company is proud of its nickname of “the trusted disruptor“, for its reputation to create innovative technology able to disrupt with new capacities the usual military process, including sometimes its own equipment capability. The company owns 12,839 patents overall.

Among such innovations is L3Harris Autonomous Surface Vehicle (ASV) control system, as drones in land, air, and sea could, in the long run, become the replacement of many of the military equipment currently used.

This can include, for example, Shadow Fox, the company’s latest-generation naval Autonomous Surface Vehicle (ASV), as well as underwater autonomous vehicles, reconnaissance land robots, quadropter drones, etc.

The company is also the current key provider of robots for tasks like demining (explosive ordnance disposal – EOD). Such robotic systems will likely be increasingly more powerful, as progress in AI will let them perform more autonomously in future battlefields.

Another way for L3Harris to innovate is to partner with small and medium companies, through the DoW’s Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. After a 6-month lapse, the US Congress finally passed the reauthorization bill in March 2026, restarting funding for the program.

Lastly, the company is also active in the development of small modular nuclear reactors (SMRs), having developed an engineering and operator training simulator for SMR company Terrestrial Energy.

A Key Defense Supplier

The top 5 defense contractors tend to specialize in specific weapon systems or technology, building the final equipment used by the soldiers of the US Army and its allies.

In contrast, L3Harris is first and foremost a technology supplier. Through a mix of acquisitions and internal R&D, it has become an irreplaceable provider of telecom, military software, cyberdefense, intelligence, aerospace, and ammunition technology.

This means that instead of competing directly with any of the largest defense firms, they are important partner for each to compete against each other.

This gives L3Harris the option to mostly avoid the”winner-takes-all” situation of competing for bids in the development of new major weapon platforms.

Investing In L3Harris

In general, the planned growth of the US military budget from $1T to $1.5T is likely to lift all boats for investors in the defense sector, especially as the war in Ukraine has depleted inventory and the war with Iran has revealed a need for more ammunition and missile defense.

It is this last revelation of the evolution in military strategy that could benefit L3Harris the most. If Ukraine revealed the importance of drones and electronic warfare, the conflict with Iran highlighted the importance of missile defenses. And more than anything, the importance of a deep inventory of interceptors missiles, as each incoming missile consumes 2-3 interceptors.

In the same way, airborne & space-based detection systems are becoming very important as ground-based radars are being destroyed.

The company’s management has been working ahead of the problem, with already unfolding plans to multiply several-fold its missile and satellite production capacity.

The upcoming IPO of the missile segment could unlock further value as a direct way to invest in this theme, if not just the US, but also all its allies move on to build a massive inventory of air defense against future threats, while still benefiting L3Harris stock price as well.

L3Harris should also benefit from rising orders to other defense companies or an armed force growing in size, as it will be providing them with increased volume of secure radio, network capacities, drones, and other sensors, taking a little piece of every pie, almost no matter what the weapon system is finally picked.

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