01—Abstract
Summary
Summary of the 10-Q filed April 30, 2014. Cited figures are marked; the original filing is the authoritative source.
L3Harris Technologies, Inc. (LHX) reported solid financial results for the third quarter of fiscal year 2014, with total revenue increasing by 5.3% to $1,267.5 milliona compared to the prior year period.
This top-line growth was driven primarily by the Government Communications Systems and RF Communications segments. Income from continuing operations saw a notable increase of 9.8% to $137.3 millionb, leading to a 13.4% rise in diluted earnings per share to $1.27, reflecting improved operational efficiency and a favorable business segment mix. The company demonstrated strong operational execution, evidenced by a 1.3% increase in gross margin for the first three quarters of the fiscal year, and maintained disciplined control over engineering, selling, and administrative expenses.
Net cash provided by operating activities remained robust, although it saw a slight decrease year-over-year due to timing of shipments and collections. Despite some segment-specific revenue pressures, particularly in Integrated Network Solutions, the overall financial health appears strong with a healthy balance sheet and ample liquidity.
02—Key points
Key Highlights
- Total revenue increased by 5.3% to $1,267.5 million for the third quarter of fiscal year 2014 compared to the prior year.
- Income from continuing operations grew by 9.8% to $137.3 million for the quarter.
- Diluted earnings per share (EPS) from continuing operations increased by 13.4% to $1.27.
- The RF Communications segment showed strong revenue growth of 9.5%, and the Government Communications Systems segment increased revenue by 10.7%.
- Gross margin percentage improved slightly year-over-year, indicating effective cost management and pricing.
- Net cash provided by operating activities was $454.0 million for the first three quarters of fiscal year 2014.
- The company repurchased approximately $214.4 million of its common stock in the first three quarters of fiscal year 2014, demonstrating a commitment to returning capital to shareholders.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2015, L3HARRIS Technologies, Inc. kept $0.11.
- Revenue$1.27B100.0%
- Cost of revenue−$841.0M66.4%
- Gross profit$426.5M33.6%
- Operating costs−$24.5M1.9%
- Operating income$402.0M31.7%
- Interest, other & tax−$260.6M20.6%
- Net income$141.4M11.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2015filed April 30, 2014Financial Statements
Q1 FY2015 against Q1 FY2014
| Line item | Q1 FY2015Q1 FY2014 | Change |
|---|---|---|
| Revenue | $1.27B$1.20B | +5.3% |
| Cost of Revenue | $841.00M$803.50M | +4.7% |
| Gross Profit | $426.50M$400.20M | +6.6% |
| Operating Expenses | $203.20M$202.50M | +0.3% |
| Operating Income | $402.00M$395.80M | +1.6% |
| Interest Expense | $23.20M$27.60M | −15.9% |
| Net Income | $141.40M$94.80M | +49.2% |
| EPS (Basic) | $1.32$0.85 | +55.3% |
| EPS (Diluted) | $1.31$0.85 | +54.1% |
| Shares Outstanding (Basic) | 106.20M110.60M | −4.0% |
| Shares Outstanding (Diluted) | 107.40M111.20M | −3.4% |
05—Questions
Frequently Asked Questions
What were the key drivers of revenue growth in the third quarter of fiscal year 2014?
Revenue growth was primarily driven by increases in the Government Communications Systems segment, notably from programs like Aireon hosted payload, Federal Aviation Administration's NextGen Data Communications Integrated Services (DataComm), and the U.S. Army Modernization of Enterprise Terminals (MET) program. The RF Communications segment also contributed with higher international revenue in Tactical Communications.
How did the company manage its expenses, and what was the impact on profitability?
Engineering, selling, and administrative (ESA) expenses remained largely stable year-over-year, resulting in a lower ESA as a percentage of revenue due to higher revenue. Gross margin percentage saw a slight increase, reflecting improved operational efficiency and a favorable segment mix. These factors, combined with disciplined expense management, contributed to the significant increase in income from continuing operations and diluted EPS.
What is the company's financial position and liquidity outlook?
The company maintained a strong financial position with $349.6 million in cash and cash equivalents at the end of the quarter. They have significant undrawn credit facilities and no material long-term debt maturing in the near future. Management expressed confidence that existing cash, operational cash flow, and credit facilities are sufficient to meet working capital requirements, capital expenditures, and dividend payments for the foreseeable future, despite ongoing uncertainties in government budgets and the global economy.
Are there any significant impacts from discontinued operations?
The company reported positive results from discontinued operations in the third quarter of fiscal year 2014, primarily due to tax benefits related to Broadcast Communications and a gain on the sale of remaining assets from Cyber Integrated Solutions (CIS). While these are now in the past, the net impact on overall net income for the period was positive.
06—Continue