L3Harris delays missile business IPO to 2027 despite surging defense demand
L3Harris Technologies is postponing the initial public offering of its Missile Solutions business, concluding that Wall Street is undervaluing a business that is expanding rapidly to meet one of the Pentagon's highest priorities: rebuilding U.S. missile production.
The defense contractor said July 29 it now expects to revisit an IPO in mid-2027 rather than pursue the offering in the second half of 2026, the timetable it laid out in January after the Defense Department agreed to invest $1 billion in the business.
Chief Executive Christopher Kubasik told analysts on the company's second-quarter earnings call that demand for the business continues to strengthen, but recent IPO activity has made public markets less attractive.
"Market conditions have evolved and do not reflect the tremendous value we are building," Kubasik said. "The demand signals are outstanding. We are actively negotiating more than $20 billion in new contracts, potentially tripling our backlog and positioning us for meaningful and sustained revenue and profit growth."
The decision marks a shift in timing rather than strategy. L3Harris still intends to separate Missile Solutions into a publicly traded company while retaining majority ownership. The Pentagon's $1 billion investment also remains in place as convertible preferred securities that will convert into common equity once the IPO occurs, with the government receiving warrants to purchase additional shares.
The delay comes even as Missile Solutions has emerged as one of L3Harris' fastest-growing businesses. Second-quarter revenue rose 14% from a year earlier to $1.05 billion, making it one of the strongest-performing segments in the company's portfolio.
The business combines much of the propulsion and weapons technology L3Harris acquired through its 2023 purchase of Aerojet Rocketdyne with its other missile, hypersonics and armament operations. Rather than building complete missiles, Missile Solutions is primarily a merchant supplier of propulsion systems and related technologies to prime contractors such as Lockheed Martin and RTX.
Its largest growth drivers are solid rocket motors and propulsion components used in high-demand missile defense and strike programs as the Pentagon and allied governments work to replenish inventories and expand production capacity.
Kubasik suggested the company sees greater value in continuing to expand Missile Solutions and build its backlog before asking public investors to price the business.
"We're actually making money," he said. "And 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. So I want to let everything settle down."
He said most of the capital the company had expected to raise through the offering would not be needed until the 2027-29 period, reducing the urgency to proceed.
"So it just seemed like a prudent business decision," Kubasik said. "It's always exciting to go public. But the team unanimously agrees we have 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."
Kubasik also pointed to broader uncertainty affecting equity markets, including federal budget questions and upcoming elections.
The revised schedule gives L3Harris additional time to complete a multibillion-dollar expansion of its missile manufacturing network. The company has been adding factories, assembly lines and production capacity for solid rocket motors and propulsion systems, investments that executives believe will produce stronger financial results before the business is introduced to public investors.
"The Pentagon's $1 billion investment gave us the confidence to invest 12-18 months earlier than we would have," Kubasik said.
The original plan called for L3Harris to create Missile Solutions as a standalone public company by selling newly issued shares while retaining a controlling stake. The company submitted a draft registration statement to the Securities and Exchange Commission on April 29, at which point it was still targeting a second-half 2026 IPO, subject to market conditions and regulatory approvals.
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