10-QPeriod: Q3 FY2016

L3HARRIS TECHNOLOGIES, INC. /DE/ Quarterly Report for Q3 Ended Jan 1, 2016

Filed February 3, 2016For Securities:LHX

Summary

L3Harris Technologies, Inc. (LHX) reported a significant shift in its financial performance for the second quarter ended January 1, 2016, compared to the prior year. The company incurred a substantial net loss of $152 million, or $1.23 per diluted share, a stark contrast to the net income of $139 million, or $1.32 per diluted share, reported in the same period last year. This downturn was largely driven by a significant non-cash impairment charge of $367 million related to goodwill and other assets in its Critical Networks segment, attributed to a downturn in the energy market impacting customer operations. Despite the substantial loss in the current quarter, the company experienced robust revenue growth of 52.8% year-over-year, reaching $1.843 billion. This growth was primarily fueled by the inclusion of Exelis operations, acquired in the fourth quarter of fiscal 2015. However, the integration of Exelis and ongoing market pressures presented challenges, as reflected in increased engineering, selling, and administrative expenses and a lower gross margin percentage. Net cash provided by operating activities saw a healthy increase, indicating operational cash generation strength despite the reported loss.

Key Highlights

  • 1Reported a net loss of $152 million ($1.23 per diluted share) for the quarter, a significant decline from a net income of $139 million ($1.32 per diluted share) in the prior year's quarter.
  • 2Recorded a substantial $367 million non-cash impairment charge for goodwill and other assets in the Critical Networks segment, impacting profitability.
  • 3Revenue increased by 52.8% to $1.843 billion, primarily due to the acquisition of Exelis.
  • 4Engineering, selling, and administrative expenses increased by 27.1% to $239 million, partly due to Exelis integration costs and amortization of intangible assets.
  • 5Net cash provided by operating activities increased significantly by 74.3% to $387 million for the first two quarters of fiscal 2016 compared to the prior year.
  • 6The company continues to return capital to shareholders, paying cash dividends of $0.50 per share in the current quarter, up from $0.47 per share in the prior year's quarter.

Frequently Asked Questions