01—Abstract
Summary
Summary of the 10-Q filed May 4, 2011. Cited figures are marked; the original filing is the authoritative source.
L3Harris Technologies, Inc. (LHX) reported its Q3 fiscal year 2011 results, showing a revenue increase of 6.3% year-over-year, reaching $1.41 billiona.
This growth was primarily driven by the acquisition of CapRock in the first quarter and strength in international sales within the RF Communications segment. However, net income for the quarter declined by 16.1% to $139.5 millionb, or $1.09 per diluted share, compared to the prior year. This decrease was influenced by a less favorable product mix in the RF Communications segment and increased interest expenses related to recent and pending acquisitions.
The company has also realigned its business segments for better market focus, creating a new Integrated Network Solutions segment. Despite the quarterly net income dip, the year-to-date revenue increased by 13.5% to $4.26 billionc, with net income also showing an 10.8% increase to $454.5 million. L3Harris demonstrated strong operating cash flow and maintained a healthy liquidity position, with cash and cash equivalents increasing significantly due to strong operational performance and recent debt issuances.
02—Key points
Key Highlights
- Revenue increased by 6.3% year-over-year to $1.41 billion in Q3 FY2011, driven by the CapRock acquisition and international sales.
- Net income decreased by 16.1% to $139.5 million ($1.09 per diluted share) in Q3 FY2011 compared to Q3 FY2010, impacted by product mix and higher interest expenses.
- For the first three quarters of FY2011, revenue grew 13.5% to $4.26 billion, and net income increased 10.8% to $454.5 million.
- The company realigned its operating segments, forming a new Integrated Network Solutions segment, effective in Q3 FY2011.
- Net cash provided by operating activities was $556.8 million for the first three quarters of FY2011, though lower than the prior year's $635.3 million.
- Acquisitions, notably CapRock, Schlumberger GCS, and Carefx, are significantly impacting revenue and segment structure, with further acquisitions completed shortly after the quarter's end.
- The company maintained strong liquidity, with cash and cash equivalents increasing to $885.1 million at the end of the quarter.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2012, L3HARRIS Technologies, Inc. kept $0.10.
- Revenue$1.41B100.0%
- Cost of revenue−$896.6M63.5%
- Gross profit$516.2M36.5%
- Operating costs−$54.5M3.9%
- Operating income$461.7M32.7%
- Interest, other & tax−$322.2M22.8%
- Net income$139.5M9.9%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2012filed May 4, 2011Financial Statements
Q1 FY2012 against Q1 FY2011
| Line item | Q1 FY2012Q1 FY2011 | Change |
|---|---|---|
| Revenue | $1.41B$1.33B | +6.3% |
| Cost of Revenue | $896.60M$820.00M | +9.3% |
| Gross Profit | $516.20M$509.50M | +1.3% |
| Operating Expenses | $281.00M$245.00M | +14.7% |
| Operating Income | $461.70M$166.20M | +177.8% |
| Interest Expense | $27.10M$18.10M | +49.7% |
| Net Income | $139.50M$166.20M | −16.1% |
| EPS (Basic) | $1.10$1.27 | −13.4% |
| EPS (Diluted) | $1.09$1.26 | −13.5% |
| Shares Outstanding (Basic) | 125.00M128.80M | −3.0% |
| Shares Outstanding (Diluted) | 126.00M130.00M | −3.1% |
05—Questions
Frequently Asked Questions
What was the primary driver for the revenue growth in the third quarter?
The primary driver for the revenue growth in the third quarter of fiscal year 2011 was the acquisition of CapRock, which was completed in the first quarter of fiscal 2011, and strong international sales in the RF Communications segment.
Why did net income decrease in the third quarter despite revenue growth?
Net income decreased in the third quarter of fiscal year 2011 compared to the prior year primarily due to a less favorable product mix in the RF Communications segment, which benefited significantly from large tactical radio shipments for MRAP vehicles in the prior year's quarter, and an increase in interest expense related to borrowings for acquisitions.
How has the company's business segment structure changed?
Effective for the third quarter of fiscal 2011, L3Harris realigned its operations to form a new Integrated Network Solutions segment. This new segment combines Harris IT Services, Harris CapRock Communications, Healthcare Solutions, and Cyber Integrated Solutions with Broadcast Communications. The Government Communications Systems segment now comprises Civil Programs, Defense Programs, and National Intelligence Programs. The RF Communications segment remained unchanged.
What is the company's current liquidity position?
L3Harris maintained a strong liquidity position, with cash and cash equivalents increasing to $885.1 million at the end of the third quarter of fiscal 2011. The company also had significant availability under its revolving credit facilities and no major long-term debt maturities until fiscal year 2016.
06—Continue