10-QPeriod: Q3 FY2015

L3HARRIS TECHNOLOGIES, INC. /DE/ Quarterly Report for Q3 Ended Sep 26, 2014

Filed October 29, 2014For Securities:LHX

Summary

L3Harris Technologies, Inc. (LHX) reported a slight decrease in revenue for the quarter ended September 26, 2014, compared to the prior year, with total revenue falling by 3.1% to $1.155 billion. This revenue decline was primarily driven by weaker performance in the Integrated Network Solutions and RF Communications segments, partially offset by growth in the Government Communications Systems segment. Despite the revenue dip, net income attributable to common shareholders remained stable at $125.1 million, resulting in diluted earnings per share of $1.18, consistent with the previous year's quarter. The company also demonstrated a commitment to returning value to shareholders, increasing its quarterly cash dividend and continuing its share repurchase program. Liquidity remains strong, with ample cash and cash equivalents and an available revolving credit facility, although net cash provided by operating activities saw a significant decrease compared to the prior year due to timing of product shipments and inventory build-up.

Financial Highlights

51 data points
Beta

Revenue

$1.16B

34.0% Gross Margin

Net Income

$125.00M

10.8% Net Margin

EPS (Diluted)

$1.18

Total Assets

$4.84B

Cash & Equivalents

$449.00M

Free Cash Flow

$39.00M

Financial Statements
Beta
Revenue$1.16B
Cost of Revenue$762.00M
Gross Profit$393.00M
Operating Expenses$195.00M
Operating Income$125.10M
Interest Expense$23.00M
Net Income$125.00M
EPS (Basic)$1.19
EPS (Diluted)$1.18
Shares Outstanding (Basic)104.60M
Shares Outstanding (Diluted)105.80M

Key Highlights

  • 1Revenue decreased by 3.1% to $1.155 billion for the quarter, primarily due to declines in Integrated Network Solutions and RF Communications segments.
  • 2Net income attributable to common shareholders remained stable at $125.1 million, and diluted EPS was $1.18, matching the prior year's quarter.
  • 3Government Communications Systems segment showed strong growth, with revenue increasing by 11.9%.
  • 4Net cash provided by operating activities decreased significantly by 53.6% to $80.1 million, largely due to working capital changes.
  • 5The company increased its quarterly cash dividend by 11.9% to $0.47 per share.
  • 6Share repurchases continued, with $111.7 million spent in the current quarter.
  • 7The company maintained a strong liquidity position with $449.1 million in cash and cash equivalents and an undrawn $1 billion revolving credit facility.

Frequently Asked Questions

The revenue decline of 3.1% was primarily driven by lower sales in the Integrated Network Solutions segment (down 13.3%) and the RF Communications segment (down 8.5%). This was partially offset by a 11.9% increase in revenue from the Government Communications Systems segment.

Engineering, Selling, and Administrative (ESA) expenses decreased by 6.1% year-over-year, and as a percentage of revenue, improved from 17.4% to 16.9%. This improvement was attributed to lower general and administrative expenses from operational excellence initiatives and cost-reduction actions.

L3Harris maintains a strong financial position. As of September 26, 2014, the company had $449.1 million in cash and cash equivalents, no significant long-term debt maturing until December 2017, and an available $1 billion revolving credit facility. The company expects its current cash, cash generated from operations, and credit facility to be sufficient for its needs over the next 12 months and beyond.

L3Harris continues to prioritize shareholder returns. The company announced a 11.9% increase in its quarterly cash dividend to $0.47 per share, marking its thirteenth consecutive annual increase. It also actively engaged in share repurchases, spending $111.7 million in the quarter.