10-KPeriod: FY2021

L3HARRIS TECHNOLOGIES, INC. /DE/ Annual Report, Year Ended Jan 1, 2021

Filed March 1, 2021For Securities:LHX

Summary

L3Harris Technologies, Inc. (LHX) reported its fiscal year results ending January 1, 2021, demonstrating resilience and strategic execution despite the challenging economic environment shaped by COVID-19. The company experienced a significant increase in consolidated revenue to $18.2 billion, largely driven by the inclusion of L3 operations post-merger. Pro forma revenue showed a modest 1% increase, reflecting growth in core U.S. Government and international businesses, partially offset by divestitures and COVID-related impacts on commercial aviation and public safety segments. While income from continuing operations saw a decrease compared to the pro forma prior year, mainly due to significant non-cash impairment charges related to the commercial aviation downturn, the company maintained a strong backlog of $21.7 billion at year-end. L3Harris continued its commitment to shareholder returns by increasing its quarterly dividend and authorizing substantial share repurchases, underscoring its confidence in future performance and cash generation. The company's strategic focus remains on technology-driven growth, operational excellence, and portfolio reshaping, positioning it to capitalize on key defense priorities and international market opportunities.

Financial Highlights

57 data points
Beta

Revenue

$17.81B

19.7% Gross Margin

Net Income

$1.84B

10.3% Net Margin

EPS (Diluted)

$9.09

Total Assets

$36.96B

Cash & Equivalents

$1.28B

Free Cash Flow

$2.35B

Financial Statements
Beta
Revenue$17.81B
Cost of Revenue$14.31B
Gross Profit$3.51B
SG&A Expenses$3.28B
Operating Income$2.11B
Interest Expense$270.00M
Net Income$1.84B
EPS (Basic)$9.17
EPS (Diluted)$9.09
Shares Outstanding (Basic)201.30M
Shares Outstanding (Diluted)203.20M

Key Highlights

  • 1Consolidated revenue increased 42% to $18.2 billion in fiscal 2020 compared to the prior year period, largely due to the inclusion of L3 operations.
  • 2Pro forma revenue increased 1% to $18.2 billion, indicating resilience and growth in core U.S. and international businesses.
  • 3The company recorded $767 million in impairment charges for goodwill and other assets, primarily driven by COVID-19 impacts on the commercial aviation sector.
  • 4Total backlog increased 5% to $21.7 billion as of January 1, 2021.
  • 5Net cash provided by operating activities significantly increased to $2.79 billion in fiscal 2020.
  • 6L3Harris announced a 20% increase in its quarterly dividend to $1.02 per share and a new $6 billion share repurchase authorization, signaling a strong commitment to shareholder returns.

Frequently Asked Questions

The L3Harris Merger, which closed in June 2019, significantly impacted the company's financial reporting for fiscal year 2020. The reported revenue of $18.2 billion represents the combined entity, showing a 42% increase from the prior year's comparable period (which only included Harris operations for half the period). Pro forma figures, which adjust for the full year inclusion of L3's operations, indicate a more modest 1% revenue growth, highlighting the underlying performance of the combined business.

The COVID-19 pandemic had a mixed impact. While the company's significant exposure to U.S. government defense spending provided some stability, its commercial aviation and public safety businesses were adversely affected. This led to a substantial $767 million in impairment charges for goodwill and other assets, primarily impacting the commercial aviation segment due to reduced air traffic and customer operations. Restructuring costs were also incurred to align resources with the market outlook.

L3Harris demonstrated a strong commitment to shareholder returns. The company announced a 20% increase in its quarterly cash dividend, raising the annualized rate to $4.08 per share. Furthermore, a new $6 billion share repurchase authorization was approved, in addition to the existing unused authorization, signaling confidence in future cash flows and a strategy to return capital to shareholders.

The company's total debt stood at approximately $6.8 billion at January 1, 2021. L3Harris refinanced some of its debt and maintained a healthy debt-to-total capital ratio of 25%, well within its financial covenants. The company expects its existing cash, operational cash flow, and credit facilities to be sufficient for its working capital needs, capital expenditures, dividend payments, and debt repayments for the foreseeable future.