01—Abstract
Summary
Summary of the 10-K filed February 20, 2024. Cited figures are marked; the original filing is the authoritative source.
L3Harris Technologies, Inc. (LHX) reported solid performance in its fiscal year ending December 29, 2023, marked by significant growth driven by strategic acquisitions and organic expansion across its key segments.
The company's revenue increased by 14%a year-over-year, largely attributed to the full-year impact of the Tactical Data Links (TDL) acquisition and the significant Aerojet Rocketdyne (AJRD) acquisition completed in July 2023. These acquisitions have reshaped the company's operational landscape, with AJRD forming the new Aerojet Rocketdyne (AR) segment, bolstering L3Harris's capabilities in propulsion, power, and armament. Operationally, L3Harris demonstrated resilience and strategic focus.
The Space & Airborne Systems (SAS) segment saw revenue growth and improved operating margin, while the Integrated Mission Systems (IMS) segment remained stable. The Communication Systems (CS) segment experienced substantial revenue and operating income growth, partly due to the TDL acquisition.
Despite challenges such as inflation and supply chain disruptions, the company's backlog increased significantly to $32.7 billionb. L3Harris also advanced its "LHX NeXt" initiative, aimed at enhancing organizational agility and performance, and continues to prioritize returning capital to shareholders through dividends and share repurchases.
02—Key points
Key Highlights
- Revenue increased by 14% to $19.4 billion in fiscal 2023, driven by acquisitions and segment growth.
- Completed the significant acquisition of Aerojet Rocketdyne (AJRD) for $4.7 billion, establishing a new Aerojet Rocketdyne (AR) segment.
- Acquired the Tactical Data Links (TDL) product line for $1.96 billion, enhancing the Communication Systems (CS) segment.
- Company-wide total backlog grew to $32.7 billion, a 47% increase year-over-year, indicating strong future demand.
- Invested $480 million in company-funded R&D, focusing on technology expansion across its domains.
- Continued share repurchases, with $0.5 billion repurchased in fiscal 2023, and maintained a $3.9 billion remaining authorization.
- Effective tax rate decreased significantly to 1.9% in fiscal 2023 from 16.7% in fiscal 2022, primarily due to favorable impacts from divestitures and restructuring.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, L3HARRIS Technologies, Inc. kept $0.06.
- Revenue$19.42B100.0%
- Cost of revenue−$14.31B73.7%
- Gross profit$5.11B26.3%
- Operating costs−$3.69B19.0%
- Operating income$1.43B7.3%
- Interest, other & tax−$199.0M1.0%
- Net income$1.23B6.3%
Where FY2023 revenue went
$19.42B- Cost of revenue: $14.31B, 74% of revenue
- SG&A: $3.31B, 17% of revenue
- Net income: $1.23B, 6.3% of revenue
- Other operating costs: $374.0M, 1.9% of revenue
- Interest, other & tax: $199.0M, 1.0% of revenue
Kept 6.3% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 20, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $19.42B$17.06B | +13.8% |
| Cost of Revenue | $14.31B$12.13B | +17.9% |
| Gross Profit | $5.11B$4.93B | +3.8% |
| SG&A Expenses | $3.31B$3.00B | +10.5% |
| Operating Income | $1.43B$1.13B | +26.5% |
| Net Income | $1.23B$1.06B | +15.5% |
| EPS (Basic) | $6.47$5.54 | +16.8% |
| EPS (Diluted) | $6.44$5.49 | +17.3% |
| Shares Outstanding (Basic) | 189.60M191.80M | −1.1% |
| Shares Outstanding (Diluted) | 190.60M193.50M | −1.5% |
05—Questions
Frequently Asked Questions
What were the main drivers of L3Harris's revenue growth in fiscal 2023?
L3Harris's revenue growth in fiscal 2023 was primarily driven by the inclusion of revenue from the acquisitions of Tactical Data Links (TDL) and Aerojet Rocketdyne (AJRD), as well as organic growth in the Space & Airborne Systems (SAS) and Communication Systems (CS) segments. The AJRD acquisition, in particular, established the new Aerojet Rocketdyne (AR) segment.
How has the acquisition of Aerojet Rocketdyne (AJRD) impacted L3Harris?
The acquisition of AJRD for $4.7 billion significantly expanded L3Harris's capabilities, particularly in advanced propulsion and power systems for defense and space missions. It established the new Aerojet Rocketdyne (AR) segment and contributed $1.05 billion in revenue from the acquisition date through the end of fiscal 2023, along with $2.4 billion in goodwill. The integration of AJRD is a key focus for the company.
What is the outlook for L3Harris's backlog, and what does it signify?
L3Harris ended fiscal 2023 with a company-wide total backlog of $32.7 billion, a substantial increase of 47% from the previous year. This growth in backlog reflects strong demand for L3Harris's products and services, particularly in the current geopolitical environment, and provides visibility into future revenue streams. The company expects to recognize approximately 40% of this backlog by the end of 2024.
How is L3Harris managing its debt and capital resources?
L3Harris ended fiscal 2023 with $11.5 billion in long-term debt, largely incurred to finance acquisitions. The company's liquidity assessment indicates sufficient resources for the next 12 months and the foreseeable future through existing cash, operating cash flow, credit facilities, and commercial paper programs. Its capital deployment priorities include funding the business, debt repayment, and returning cash to shareholders via dividends and share repurchases.
06—Continue