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Call sheet · Q2'26

L3Harris Technologies (LHX)

Q2'26 earnings call · held July 29, 2026 · compared with the Q1'26 call · management-credibility review
4/12
Disclosure score
3 high, 4 medium, 3 low flags
Financial quality
Bottom line
The market will focus on the 8% revenue rise, but the **real story is the massive $2 bn missile‑capacity build‑out hidden in finance leases** - that’s the engine that will drive future earnings. Management’s language has shifted from “we’re delivering 15% organic growth” to “early days” and a mid‑2027 IPO, indicating weaker visibility than the headline suggests. The binding constraint now is **capacity conversion and the timing of lease‑based assets hitting the books**, not demand. My view flips if the missile factories do not hit 80% utilization by late‑2027 or if lease cash outflows exceed expectations.

The 30-second version

  • The sleeper story - missile‑capacity build‑out is the real growth engine, not the modest 8% revenue bump
  • Obvious headline - revenue up 8% and EPS +28% looks strong, but the binding constraint is supply‑chain & finance‑lease timing
  • Red flag - metric drift and vague timelines signal visibility risk

What changed this quarter

MetricQ1'26Q2'26Change
Revenue$5.7 bn (Q1), +15% YoY$5.9 bn (Q2), +8% YoY+$200 m, growth rate deceleration
GAAP EPS$2.72 (Q1), +33% YoY$3.13 (Q2), +28% YoY+$0.41, slower EPS acceleration
Operating Income$902 m (Q1)$981 m (Q2, +$79 m)+$79 m, +9%
Segment Operating Margin (consolidated)15.7% (Q1)16.0% (Q2)+30 bps
Space & Mission Systems Revenue$3.0 bn, +24% YoY$3.0 bn, +7% YoYFlat dollar, growth rate down 17 pp
Space & Mission Systems Margin10.4% (Q1)9.8% (Q2)-60 bps
Communications & Spectrum Revenue$1.9 bn, +3% YoY$1.9 bn, +4% YoY+$76 m, modest acceleration
Communications & Spectrum Margin24.7% (Q1)26.9% (Q2)+230 bps
Missile Solutions Revenue$1.0 bn, +18% YoY$1.14 bn (implied 14% YoY increase)+$140 m, growth slowing
Missile Solutions Margin12.5% (Q1)≈12.5% (Q2, “substantially similar”)Flat

Accountability tracked

8 new promises made6 narrative shifts flagged7 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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