Summary
L3Harris Technologies, Inc. (LHX) reported its third-quarter and year-to-date results for the period ending March 30, 2018. For the quarter, revenue increased by 5% to $1.57 billion compared to the prior year quarter, driven by growth across all segments, notably Electronic Systems and Communication Systems. However, operating income saw a decline of 7% due to increased Engineering, Selling, and Administrative (ESA) expenses, largely attributed to exit costs from a commercial line of business. Despite this, income from continuing operations surged by 24% to $203 million, leading to a 27% increase in diluted earnings per share to $1.67, benefiting from a lower effective tax rate due to the Tax Cuts and Jobs Act and a significant voluntary pension contribution. For the first three quarters of fiscal year 2018, revenue grew by 4% to $4.52 billion. While operating income remained flat year-over-year, income from continuing operations increased by 8% to $509 million, and diluted earnings per share rose by 11% to $4.19. A notable factor affecting cash flow was a $300 million voluntary pension contribution, which reduced operating cash flow significantly year-over-year, despite improved net income. The company maintained a strong liquidity position with $443 million in cash and cash equivalents and an undrawn revolving credit facility.
Financial Highlights
50 data points| Revenue | $1.56B |
| Cost of Revenue | $1.03B |
| Gross Profit | $534.00M |
| Operating Expenses | $331.00M |
| Operating Income | $256.00M |
| Interest Expense | $41.00M |
| Net Income | $196.00M |
| EPS (Basic) | $1.65 |
| EPS (Diluted) | $1.62 |
| Shares Outstanding (Basic) | 118.40M |
| Shares Outstanding (Diluted) | 121.00M |
Key Highlights
- 1Revenue for the third quarter increased 5% year-over-year to $1.57 billion, driven by growth in all business segments.
- 2Income from continuing operations for the quarter saw a substantial 24% increase to $203 million.
- 3Diluted Earnings Per Share (EPS) from continuing operations increased 27% to $1.67 for the quarter.
- 4Engineering, Selling, and Administrative (ESA) expenses increased by 19% for the quarter, impacting operating income, largely due to a $45 million charge for exiting a commercial business line.
- 5Net cash provided by operating activities for the first three quarters decreased significantly by 53% to $230 million, primarily due to a $300 million voluntary pension contribution.
- 6The company's effective tax rate decreased significantly in the current quarter (5.6% vs. 29.6% in the prior year quarter) due to the Tax Cuts and Jobs Act and other factors.
- 7Long-term debt increased, partly due to the issuance of new floating rate notes and repayment of existing term loans, while the company maintained a strong liquidity position with $443 million in cash and cash equivalents.