01—Abstract
Summary
Summary of the 10-Q filed May 2, 2019. Cited figures are marked; the original filing is the authoritative source.
L3Harris Technologies, Inc. (LHX) reported a strong third quarter for fiscal year 2019, with revenue increasing by 11% year-over-year to $1.73 billiona and income from continuing operations rising by 23% to $243 million.
Diluted earnings per share also saw a significant increase of 24% to $2.02b. This growth was driven by solid performance across all three business segments: Communication Systems, Electronic Systems, and Space and Intelligence Systems. The company also reported a substantial increase in net cash provided by operating activities, up 280% to $874 million for the first three quarters of the fiscal year, indicating improved operational efficiency and working capital management.
The company is progressing towards its planned merger with L3, which was approved by shareholders of both companies on April 4, 2019. The merger is expected to close mid-calendar year 2019.
Concurrently, LHX entered into an agreement to sell its Night Vision business for $350 millionc, with proceeds intended for pension funding and shareholder returns. These strategic moves, combined with strong operational results, position L3Harris for future growth and value creation.
02—Key points
Key Highlights
- Revenue increased 11% to $1.73 billion in Q3 FY19 compared to Q3 FY18.
- Income from continuing operations grew 23% to $243 million in Q3 FY19.
- Diluted earnings per share increased 24% to $2.02 in Q3 FY19.
- Net cash provided by operating activities surged by 280% to $874 million for the first three quarters of FY19.
- All three business segments (Communication Systems, Electronic Systems, Space and Intelligence Systems) reported revenue and operating income growth.
- Shareholder approval for the merger with L3 was obtained on April 4, 2019, with an expected closing in mid-calendar year 2019.
- Agreement to sell the Night Vision business for $350 million announced on April 4, 2019.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2020, L3HARRIS Technologies, Inc. kept $0.14.
- Revenue$1.73B100.0%
- Cost of revenue−$1.14B65.9%
- Gross profit$589.0M34.1%
- Operating costs−$346.0M20.0%
- Operating income$243.0M14.1%
- Interest, other & tax$-00.0%
- Net income$243.0M14.1%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2020filed May 2, 2019Financial Statements
Q1 FY2020 against Q1 FY2019
| Line item | Q1 FY2020Q1 FY2019 | Change |
|---|---|---|
| Revenue | $1.73B$1.56B | +10.6% |
| Cost of Revenue | $1.14B$1.03B | +10.8% |
| Gross Profit | $589.00M$534.00M | +10.3% |
| SG&A Expenses | $310.00M— | — |
| Operating Expenses | $310.00M$331.00M | −6.3% |
| Operating Income | $243.00M$256.00M | −5.1% |
| Interest Expense | $43.00M$41.00M | +4.9% |
| Net Income | $243.00M$196.00M | +24.0% |
| EPS (Basic) | $2.06$1.65 | +24.8% |
| EPS (Diluted) | $2.02$1.62 | +24.7% |
| Shares Outstanding (Basic) | 117.90M118.40M | −0.4% |
| Shares Outstanding (Diluted) | 120.30M121.00M | −0.6% |
05—Questions
Frequently Asked Questions
What is the overall financial performance of L3Harris in this quarter?
L3Harris demonstrated strong financial performance in the third quarter of fiscal year 2019. Revenue increased by 11% to $1.73 billion, and income from continuing operations grew by 23% to $243 million, leading to a 24% increase in diluted earnings per share to $2.02. This growth was consistent across all business segments.
What is the status of the merger with L3?
The merger with L3 is progressing as planned. Both companies' shareholders approved the transaction on April 4, 2019. The merger is expected to close in the mid-calendar year 2019, subject to regulatory approvals and other closing conditions. Harris Corporation will be renamed L3 Harris Technologies, Inc. upon completion.
Are there any significant divestitures or strategic actions occurring?
Yes, on April 4, 2019, L3Harris entered into a definitive agreement to sell its Night Vision business to Elbit Systems of America for $350 million. The proceeds are intended to be used for pre-funding pension plans and returning cash to shareholders. This sale is contingent on the completion of the L3 merger.
How is the company managing its cash flow and liquidity?
The company has shown significant improvement in cash flow generation, with net cash provided by operating activities increasing substantially by 280% to $874 million for the first three quarters of FY19. This strong performance, coupled with an available revolving credit facility, indicates sound liquidity management, although the company acknowledges potential future uncertainties related to government budgets and economic conditions.
06—Continue