10-QPeriod: Q1 FY2020

L3HARRIS TECHNOLOGIES, INC. /DE/ Quarterly Report for Q1 Ended Mar 29, 2019

Filed May 2, 2019For Securities:LHX

Summary

L3Harris Technologies, Inc. (LHX) reported a strong third quarter for fiscal year 2019, with revenue increasing by 11% year-over-year to $1.73 billion and income from continuing operations rising by 23% to $243 million. Diluted earnings per share also saw a significant increase of 24% to $2.02. 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 million, 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.

Financial Highlights

53 data points
Beta

Revenue

$1.73B

34.1% Gross Margin

Net Income

$243.00M

14.1% Net Margin

EPS (Diluted)

$2.02

Total Assets

$9.79B

Cash & Equivalents

$334.00M

Free Cash Flow

$368.00M

Financial Statements
Beta
Revenue$1.73B
Cost of Revenue$1.14B
Gross Profit$589.00M
SG&A Expenses$310.00M
Operating Expenses$310.00M
Operating Income$243.00M
Interest Expense$43.00M
Net Income$243.00M
EPS (Basic)$2.06
EPS (Diluted)$2.02
Shares Outstanding (Basic)117.90M
Shares Outstanding (Diluted)120.30M

Key Highlights

  • 1Revenue increased 11% to $1.73 billion in Q3 FY19 compared to Q3 FY18.
  • 2Income from continuing operations grew 23% to $243 million in Q3 FY19.
  • 3Diluted earnings per share increased 24% to $2.02 in Q3 FY19.
  • 4Net cash provided by operating activities surged by 280% to $874 million for the first three quarters of FY19.
  • 5All three business segments (Communication Systems, Electronic Systems, Space and Intelligence Systems) reported revenue and operating income growth.
  • 6Shareholder approval for the merger with L3 was obtained on April 4, 2019, with an expected closing in mid-calendar year 2019.
  • 7Agreement to sell the Night Vision business for $350 million announced on April 4, 2019.

Frequently Asked Questions

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.

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.

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.

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.