01—Abstract
Summary
Summary of the 10-K filed March 1, 2021. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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.
02—Key points
Key Highlights
- Consolidated revenue increased 42% to $18.2 billion in fiscal 2020 compared to the prior year period, largely due to the inclusion of L3 operations.
- Pro forma revenue increased 1% to $18.2 billion, indicating resilience and growth in core U.S. and international businesses.
- The company recorded $767 million in impairment charges for goodwill and other assets, primarily driven by COVID-19 impacts on the commercial aviation sector.
- Total backlog increased 5% to $21.7 billion as of January 1, 2021.
- Net cash provided by operating activities significantly increased to $2.79 billion in fiscal 2020.
- L3Harris 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.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, L3HARRIS Technologies, Inc. kept $0.10.
- Revenue$17.81B100.0%
- Cost of revenue−$14.31B80.3%
- Gross profit$3.51B19.7%
- Operating costs−$1.40B7.9%
- Operating income$2.11B11.8%
- Interest, other & tax−$267.0M1.5%
- Net income$1.84B10.3%
04—Financials
Financial Highlights
Figures from 10-KFY2021filed March 1, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $17.81B$12.86B | +38.6% |
| Cost of Revenue | $14.31B$9.09B | +57.4% |
| Gross Profit | $3.51B$3.77B | −6.9% |
| SG&A Expenses | $3.28B$2.54B | +29.1% |
| Operating Income | $2.11B$1.60B | +31.8% |
| Interest Expense | $270.00M$217.00M | +24.4% |
| Net Income | $1.84B$1.33B | +38.2% |
| EPS (Basic) | $9.17$8.04 | +14.1% |
| EPS (Diluted) | $9.09$7.89 | +15.2% |
| Shares Outstanding (Basic) | 201.30M166.00M | +21.3% |
| Shares Outstanding (Diluted) | 203.20M169.00M | +20.2% |
05—Questions
Frequently Asked Questions
What was the impact of the L3Harris Merger on the company's financial performance in fiscal year 2020?
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.
How did the COVID-19 pandemic affect L3Harris's financial results?
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.
What is the company's outlook regarding shareholder returns and capital deployment?
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.
How is L3Harris managing its debt and capital structure?
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.
06—Continue