01—Abstract
Summary
Summary of the 10-Q filed January 31, 2018. Cited figures are marked; the original filing is the authoritative source.
Harris Corporation (now L3Harris Technologies, Inc.) filed its 10-Q for the period ending December 28, 2017.
The report indicates a slight decrease in revenue for the quarter compared to the prior year, primarily driven by mixed performance across its segments, with Communication Systems showing strong growth while Electronic Systems and Space and Intelligence Systems experienced modest declines or remained flat. Despite the revenue fluctuations, the company managed to increase operating income year-over-year, showcasing improved operational efficiency and cost management. The company also reported a significant increase in net cash provided by operating activities, suggesting strong cash generation.
Of note is the impact of the Tax Cuts and Jobs Act of 2017, which led to a significant adjustment in the company's deferred tax assets and a higher effective tax rate for the quarter. The company also continued its share repurchase program and maintained its quarterly dividend, signaling a commitment to returning capital to shareholders. Overall, the report paints a picture of a company navigating revenue challenges in certain segments while demonstrating operational resilience and strong cash flow generation.
02—Key points
Key Highlights
- Revenue for the quarter was $1.535 billion, a 6% increase compared to $1.449 billion in the prior year quarter, primarily driven by growth in Communication Systems and Electronic Systems segments.
- Income from continuing operations for the quarter was $139 million, a decrease from $163 million in the prior year quarter, impacted by a higher effective tax rate due to the Tax Cuts and Jobs Act.
- Operating income remained relatively stable at $272 million for the quarter, down slightly from $277 million in the prior year quarter, demonstrating cost management efforts.
- Net cash provided by operating activities significantly increased by 26% to $373 million for the first two quarters of fiscal 2018 compared to the same period in fiscal 2017.
- The company repurchased $150 million of its common stock in the first two quarters of fiscal 2018, continuing its capital return strategy.
- The Tax Cuts and Jobs Act of 2017 resulted in a $52 million write-down of deferred tax assets and an increase in the effective tax rate for the quarter.
- The company maintained its quarterly cash dividend, increasing it to $0.57 per share.
03—Questions
Frequently Asked Questions
What was the overall revenue performance for the quarter and how did the segments contribute?
For the quarter ended December 29, 2017, Harris Corporation reported revenue of $1.535 billion, a 6% increase compared to $1.449 billion in the same quarter of the prior year. The Communication Systems segment saw an 18% revenue increase, while Electronic Systems increased by 2%, and Space and Intelligence Systems experienced a slight 1% decrease.
How did the Tax Cuts and Jobs Act of 2017 impact the company's financial results?
The Tax Cuts and Jobs Act enacted in late 2017 had a notable impact. It led to an estimated $52 million write-down of existing net deferred tax asset balances due to the lower U.S. statutory corporate income tax rate. This, along with other factors, contributed to an increase in the effective tax rate for the quarter to 39.3% from 30.6% in the prior year quarter.
What is the company's cash flow situation and capital allocation strategy?
The company demonstrated strong operating cash flow, with net cash provided by operating activities increasing by 26% to $373 million for the first two quarters of fiscal 2018 compared to the prior year. Harris continued its commitment to returning capital to shareholders through share repurchases, spending $150 million in the first two quarters of fiscal 2018, and maintained its quarterly cash dividend, increasing it to $0.57 per share.
Are there any significant changes in the company's debt structure?
During the second quarter of fiscal 2018, the company issued $250 million in floating rate notes and used the proceeds to repay the remaining $253 million of its 5-year term loan. Overall long-term debt remained relatively stable, indicating proactive management of its debt obligations.
04—Continue