01—Abstract
Summary
Summary of the 10-Q filed October 29, 2014. Cited figures are marked; the original filing is the authoritative source.
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 billiona.
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 millionb, 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.
02—Key points
Key Highlights
- Revenue decreased by 3.1% to $1.155 billion for the quarter, primarily due to declines in Integrated Network Solutions and RF Communications segments.
- Net income attributable to common shareholders remained stable at $125.1 million, and diluted EPS was $1.18, matching the prior year's quarter.
- Government Communications Systems segment showed strong growth, with revenue increasing by 11.9%.
- Net cash provided by operating activities decreased significantly by 53.6% to $80.1 million, largely due to working capital changes.
- The company increased its quarterly cash dividend by 11.9% to $0.47 per share.
- Share repurchases continued, with $111.7 million spent in the current quarter.
- The company maintained a strong liquidity position with $449.1 million in cash and cash equivalents and an undrawn $1 billion revolving credit facility.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2015, L3HARRIS Technologies, Inc. kept $0.11.
- Revenue$1.16B100.0%
- Cost of revenue−$762.0M66.0%
- Gross profit$393.0M34.0%
- Operating costs−$267.9M23.2%
- Operating income$125.1M10.8%
- Interest, other & tax−$100,0000.0%
- Net income$125.0M10.8%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2015filed October 29, 2014Financial Statements
Q3 FY2015 against Q3 FY2014
| Line item | Q3 FY2015Q3 FY2014 | Change |
|---|---|---|
| Revenue | $1.16B$1.19B | −3.1% |
| Cost of Revenue | $762.00M$774.50M | −1.6% |
| Gross Profit | $393.00M$417.40M | −5.8% |
| Operating Expenses | $195.00M$207.80M | −6.2% |
| Operating Income | $125.10M$127.50M | −1.9% |
| Interest Expense | $23.00M$23.70M | −3.0% |
| Net Income | $125.00M$125.80M | −0.6% |
| EPS (Basic) | $1.19$1.17 | +1.7% |
| EPS (Diluted) | $1.18$1.16 | +1.7% |
| Shares Outstanding (Basic) | 104.60M106.40M | −1.7% |
| Shares Outstanding (Diluted) | 105.80M107.30M | −1.4% |
05—Questions
Frequently Asked Questions
What were the main drivers of the revenue decline in this quarter?
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.
How did L3Harris manage its operating expenses?
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.
What is the company's financial health and liquidity situation?
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.
What is the outlook for shareholder returns?
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.
06—Continue