WASHINGTON — L3Harris is postponing the planned spin-off of its missile solutions unit until at least mid-2027. The defense contractor cited market valuation concerns and an uncertain budget environment as the primary reasons for delaying the public offering.

Executives at L3Harris unanimously agreed to delay the transaction after assessing current headwinds, including the approaching midterm elections. The company had originally projected completing the spin-off by the end of the year, a timeline that was first announced in January.

CEO Chris Kubasik addressed the decision during an earnings call, stating that the business is being undervalued despite soaring demand for solid rocket motors and other weapons components. "The market conditions do not reflect the value we’re building. I think we have a great business," Kubasik said.

Kubasik noted the tangible assets and financial health of the division. "We have land, we have operating factories, backlog, great financials, a great workforce, and we’re actually making money," he said. He contrasted these fundamentals with other recent market entrants that may lack similar operational depth.

"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," he said. "I think we’re kind of caught in that process a little bit." The CEO emphasized that the company would prioritize shareholder interests by waiting for more favorable conditions.

"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," he said. He added that the company does not require the capital from the initial public offering immediately. L3Harris will not need the money from the IPO until the late 2027-2029 timeframe.

During the period leading up to the delay, the missile solutions unit demonstrated revenue growth. Revenue for the missile solutions unit through the first half of 2026 was about $2 billion. This figure represents an increase from the $1.7 billion recorded in the first half of the previous year.

The division is also pursuing new business opportunities. L3Harris is currently negotiating for more than $20 billion in new contracts at its missile solutions division. If secured, the new contracts under negotiation would triple the backlog for the missile solutions unit. This potential growth marks a substantial rise from the $2 billion revenue baseline, representing a 900% increase in scale.

L3Harris remains one of two domestic suppliers of large solid rocket motors, alongside Northrop Grumman. 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 serves as the prime contractor for the THAAD and PAC-3 missiles.

The federal government has already signaled its financial commitment to the standalone entity. The Pentagon announced in January that it would take a $1 billion stake in the new company. L3Harris stated it will continue to invest in facilities needed to scale up production of solid rocket motors and other missile components during the interim period.

Kubasik expressed confidence that the external factors affecting the valuation would eventually stabilize. "These things will get resolved, and I think the market will appreciate our valuation," he said. The company continues to monitor the budget environment and election cycle as it prepares for the eventual separation.

Why It Matters

Delaying the spin-off until at least mid-2027 keeps L3Harris as one of only two domestic suppliers of large solid rocket motors during a period of expanding Pentagon production agreements. The postponement allows the company to continue scaling facilities and negotiating $20 billion in new contracts that could triple the division's backlog before separation. Executives determined that waiting for improved market valuations better serves shareholder interests than proceeding with the offering under current budget uncertainty.