10-QPeriod: Q3 FY2021

L3HARRIS TECHNOLOGIES, INC. /DE/ Quarterly Report for Q3 Ended Oct 2, 2020

Filed November 2, 2020For Securities:LHX

Summary

L3Harris Technologies, Inc. (LHX) reported revenue of $4.46 billion for the third quarter of fiscal year 2020, a slight increase of 1% compared to the prior year's quarter. Net income attributable to common shareholders was $426 million, resulting in diluted earnings per share of $1.99, a modest increase from $1.90 in the same period last year. The company continued its strategy of share repurchases, spending $1.85 billion during the first three quarters of the year, while also maintaining dividend payments. Significant events during the period included ongoing integration efforts following the L3Harris Merger and various divestitures. The company also faced headwinds, particularly in its Aviation Systems segment, due to the COVID-19 pandemic's impact on the commercial aviation market, leading to goodwill impairment charges. Despite these challenges, L3Harris generated strong operating cash flow, indicating resilience in its core defense and government-related businesses.

Financial Highlights

53 data points
Beta

Revenue

$4.46B

29.4% Gross Margin

Net Income

$430.00M

9.6% Net Margin

EPS (Diluted)

$1.98

Total Assets

$37.15B

Cash & Equivalents

$1.34B

Free Cash Flow

$671.00M

Financial Statements
Beta
Revenue$4.46B
Cost of Revenue$3.15B
Gross Profit$1.31B
SG&A Expenses$817.00M
Operating Income$928.00M
Interest Expense$66.00M
Net Income$430.00M
EPS (Basic)$2.00
EPS (Diluted)$1.98
Shares Outstanding (Basic)213.40M
Shares Outstanding (Diluted)215.10M

Key Highlights

  • 1Revenue for the third quarter of FY2020 was $4.463 billion, a slight increase of 1% year-over-year.
  • 2Net income attributable to L3Harris common shareholders was $426 million, with diluted EPS of $1.99, up from $1.90 in the prior year's quarter.
  • 3The company repurchased $1.85 billion of its common stock in the first three quarters of FY2020.
  • 4Goodwill impairment charges of $394 million were recorded, primarily related to the Commercial Aviation Solutions sector impacted by COVID-19.
  • 5Net cash provided by operating activities was strong at $2.092 billion for the first three quarters of FY2020.
  • 6The company completed several divestitures during the reporting period, including EOTech, Applied Kilovolts, and Analytical Instrumentation businesses.

Frequently Asked Questions

For the third quarter ended October 2, 2020, L3Harris reported revenue of $4.463 billion, representing a slight increase of 1% compared to $4.431 billion in the same period of the prior year. This growth was primarily driven by increases in the Integrated Mission Systems, Space and Airborne Systems, and Communication Systems segments, partially offset by lower revenue in the Aviation Systems segment.

The COVID-19 pandemic had a notable impact, particularly on the Aviation Systems segment's Commercial Aviation Solutions sector, due to disruptions in global air traffic and the commercial aviation market. This led to goodwill impairment charges totaling $397 million in the first three quarters of 2020. While L3Harris' significant business with the U.S. Government provided some resilience, its commercial and public safety businesses were more exposed to adverse impacts.

L3Harris demonstrated strong operating cash flow, generating $2.092 billion in the first three quarters of 2020. During this period, the company actively repurchased $1.85 billion of its common stock and paid $546 million in cash dividends. Investing activities included $1.002 billion in net proceeds from business sales. The company also managed its debt, with a revolving credit facility of $2 billion remaining undrawn.

L3Harris completed several divestitures, including EOTech, Applied Kilovolts, and Analytical Instrumentation. The company continues to see growth in its Integrated Mission Systems, Space and Airborne Systems, and Communication Systems segments. However, the Aviation Systems segment, particularly Commercial Aviation Solutions, is expected to face continued revenue declines for the remainder of 2020 due to the ongoing impacts of the pandemic on air travel and customer operations. The company also noted that its Public Safety sector has been adversely impacted by COVID-19 pressures on state and local government customers.