L3Harris postpones missile unit IPO until mid-2027

WASHINGTON — L3Harris is postponing its planned spin off of its missile solutions unit until at least mid-2027, with its chief executive saying that the business is being undervalued even as demand soars for solid rocket motors and other weapons components.

The company wants to let the market “settle down” and will revisit an initial public offering in mid-2027, rather than completing the spin off by the end of the year as originally projected, CEO Chris Kubasik told investors during a Wednesday earnings call.

L3Harris announced the spin off in January, concurrent with the Pentagon announcing that they would take a $1 billion stake in the new company.

“The market conditions do not reflect the value we’re building. I think we have a great business,” Kubasik told investors. “We have land, we have operating factories, backlog, great financials, a great workforce, and we’re actually making money. I think, unfortunately, a lot of the recent IPOs are obviously missing some or all of those key elements to a business, and the market is adjusting to valuation. I think we’re kind of caught in that process a little bit.”

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L3Harris will continue to invest in the facilities needed to help scale up production of solid rocket motors and other missile components, Kubasik said, adding that it won’t start to need the money from the IPO until the late 2027-2029 timeframe.

But given headwinds such as the uncertain budget environment and midterms elections — which may be impacting the market — L3Harris executives “unanimously agree[d]” to delay the public offering, he said.

“We’ve got to do what’s right for our shareholders … and that’s to stand down, focus on the business, and wait for the market to recover, which I have no doubt it will at the right time,” Kubasik said. “These things will get resolved, and I think the market will appreciate our valuation.”

Despite the IPO delay, L3Harris executives characterized its missile business as rapidly growing to meet the Defense Department’s weapons demands. Currently, the company is one of two domestic suppliers — alongside Northrop Grumman — of large solid rocket motors, a key propulsion technology used in missiles.

Earlier this week, the Pentagon announced two framework agreements with L3Harris to expand solid rocket motor production for PAC-3 and THAAD interceptors over the next seven years. (Lockheed is the prime contractor for the THAAD and PAC-3 missiles.)

L3Harris is currently negotiating for more than $20 billion in new contracts at its missile solutions division, which would triple the backlog for that unit, Kubasik said. Revenue for the unit through the first half of 2026 was about $2 billion, up from $1.7 billion last year.

Robert Stallard, an analyst with Vertical Research Partners, said the missile business IPO “always carried some risk” despite the unit currently being L3Harris’s top draw.

“We can see why investors may be a little wary of being the first to venture into such an arrangement, as it has not been tried before,” he wrote in a note to investors this morning. “While that plan has been postponed, the rest of LHX remains in good shape — obviously Missiles are a key attraction, but the company also has strong franchises across the defense electronics spectrum, and particularly good momentum in the export market.”