01—Abstract
Summary
Summary of the 10-K filed February 24, 2023. Cited figures are marked; the original filing is the authoritative source.
L3Harris Technologies, Inc. (LHX) reported fiscal year 2022 results reflecting a challenging macroeconomic environment, including increased input costs and supply chain disruptions, which led to a decline in revenue and net income compared to fiscal year 2021.
Despite these headwinds, the company maintained a strong backlog of $22.3 billiona, indicating robust demand for its products and services. The company is actively pursuing strategic growth initiatives, highlighted by the recent acquisition of Viasat's Tactical Data Links (TDL) product line and the pending acquisition of Aerojet Rocketdyne Holdings, Inc. (AJRD). These moves are expected to significantly expand L3Harris' capabilities and market reach, particularly in advanced propulsion systems and missile defense.
Financially, L3Harris demonstrated solid operating cash flow generation. The company also continued its commitment to shareholder returns through consistent dividend payments and share repurchases, signaling confidence in its future financial performance and strategic direction.
02—Key points
Key Highlights
- Revenue decreased by 4% to $17.1 billion in fiscal 2022 compared to $17.8 billion in fiscal 2021, primarily due to business divestitures and supply chain disruptions.
- Net income attributable to common shareholders decreased by 42% to $1.1 billion ($5.49 per diluted share) in fiscal 2022, significantly impacted by $802 million in goodwill and other asset impairment charges.
- The company's total backlog increased by 5% to $22.3 billion at the end of fiscal 2022, with a funded backlog of $16.2 billion.
- L3Harris completed the acquisition of Viasat's Tactical Data Links (TDL) product line for approximately $1.96 billion, which closed in January 2023.
- A definitive agreement was signed to acquire Aerojet Rocketdyne Holdings, Inc. (AJRD) for approximately $4.7 billion, a transaction expected to close in fiscal 2023.
- The company declared a quarterly cash dividend of $1.14 per share, representing its twenty-second consecutive annual increase.
- L3Harris has approximately 46,000 employees, including about 20,000 engineers and scientists.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, L3HARRIS Technologies, Inc. kept $0.06.
- Revenue$17.06B100.0%
- Cost of revenue−$12.13B71.1%
- Gross profit$4.93B28.9%
- Operating costs−$3.80B22.3%
- Operating income$1.13B6.6%
- Interest, other & tax−$65.0M0.4%
- Net income$1.06B6.2%
Where FY2022 revenue went
$17.06B- Cost of revenue: $12.13B, 71% of revenue
- SG&A: $3.00B, 18% of revenue
- Net income: $1.06B, 6.2% of revenue
- Other operating costs: $802.0M, 4.7% of revenue
Kept 6.2% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 24, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $17.06B$17.81B | −4.2% |
| Cost of Revenue | $12.13B$14.31B | −15.2% |
| Gross Profit | $4.93B$3.51B | +40.5% |
| SG&A Expenses | $3.00B$3.28B | −8.6% |
| Operating Income | $1.13B$2.11B | −46.6% |
| Net Income | $1.06B$1.84B | −42.3% |
| EPS (Basic) | $5.54$9.17 | −39.6% |
| EPS (Diluted) | $5.49$9.09 | −39.6% |
| Shares Outstanding (Basic) | 191.80M201.30M | −4.7% |
| Shares Outstanding (Diluted) | 193.50M203.20M | −4.8% |
05—Questions
Frequently Asked Questions
What were the primary drivers for the revenue decline in fiscal year 2022?
The revenue decline in fiscal year 2022 was primarily attributed to the impact of $655 million in lower revenue from business divestitures completed in fiscal 2021 and ongoing supply chain disruptions that affected program performance and product deliveries.
How is L3Harris positioning itself for future growth?
L3Harris is pursuing future growth through strategic acquisitions, notably the recent acquisition of Viasat's TDL product line and the pending acquisition of Aerojet Rocketdyne Holdings (AJRD). These acquisitions are intended to expand the company's capabilities in critical areas like integrated architectures (JADC2) and advanced propulsion systems, strengthening its position in the aerospace and defense market.
What significant financial impacts did the company experience in fiscal year 2022?
The company recorded substantial non-cash impairment charges totaling $802 million related to goodwill and other assets, primarily impacting the Integrated Mission Systems and Communication Systems segments. These impairments were driven by factors including lower demand for certain products and increased interest rates, which led to a significant decrease in net income and income from continuing operations compared to fiscal year 2021.
How is the company managing its debt and capital structure, especially with upcoming acquisitions?
L3Harris has managed its debt structure, including establishing a new $2.25 billion term loan facility to finance the TDL acquisition and expects to primarily use debt financing for the AJRD acquisition. The company maintains a revolving credit facility and manages its debt in line with its covenants. The company's capital allocation strategy includes continued dividend payments and share repurchases, balanced with strategic investments.
06—Continue