Jan 29 (Reuters) – Defense contractor L3Harris Technologies missed Wall Street estimates for fourth-quarter revenue on Thursday, as a prolonged U.S. government shutdown delayed contract awards.
The shutdown, the longest in the country’s history, lasted 43 days and ended in November, disrupted procurement activity for the military and hurt defense suppliers like L3Harris.
Shares of L3Harris fell 5% in premarket trading in New York.
The company took a hit in its space systems business, which was also bogged down by lower volumes in its classified intel and cyber program.
In October, CEO Christopher Kubasik said that the shutdown was also slowing down its international export licenses and cash collections.
L3Harris also saw lower fourth-quarter sales for its civil communication products, which partially offset electronic warfare-related gains in its communication systems business.
Additionally, U.S. defense contractors, like other industries with complex manufacturing operations, have been impacted by U.S. President Donald Trump’s trade war, which has pressured an already strained supply chain.
Larger peer RTX said on Tuesday that it took a hit of $600 million from tariff impacts in 2025.
L3Harris’ total revenue for the fourth quarter came in at $5.65 billion, up only 2% from a year earlier and lower than Wall Street estimates of $5.78 billion, as per LSEG-compiled data.
It forecast 2026 revenue between $23 billion and $23.5 billion, roughly in line with analysts’ expectations of $23.33 billion.
However, the company said its outlook includes the financials of its space technology business, in which it sold a 60% stake to AE Industrial Partners in January.
The deal is expected to close in the second half of 2026, after which L3Harris will update its guidance, which could potentially pressure revenue.
Also earlier this month, L3Harris announced a first-of-its-kind partnership with the Department of War, which invested $1 billion in the defense contractor’s rocket motor business.
However, the government’s equity stake introduces a potential conflict of interest, as the Pentagon would hold ownership in a company that routinely competes for major defense contracts.
(Reporting by Aishwarya Jain in Bengaluru; Editing by Shailesh Kuber)
Comments