01—Abstract
Summary
Summary of the 10-Q filed November 2, 2020. Cited figures are marked; the original filing is the authoritative source.
L3Harris Technologies, Inc. (LHX) reported revenue of $4.46 billiona 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 millionb, 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.
02—Key points
Key Highlights
- Revenue for the third quarter of FY2020 was $4.463 billion, a slight increase of 1% year-over-year.
- Net 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.
- The company repurchased $1.85 billion of its common stock in the first three quarters of FY2020.
- Goodwill impairment charges of $394 million were recorded, primarily related to the Commercial Aviation Solutions sector impacted by COVID-19.
- Net cash provided by operating activities was strong at $2.092 billion for the first three quarters of FY2020.
- The company completed several divestitures during the reporting period, including EOTech, Applied Kilovolts, and Analytical Instrumentation businesses.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2021, L3HARRIS Technologies, Inc. kept $0.10.
- Revenue$4.46B100.0%
- Cost of revenue−$3.15B70.6%
- Gross profit$1.31B29.4%
- Operating costs−$383.0M8.6%
- Operating income$928.0M20.8%
- Interest, other & tax−$498.0M11.2%
- Net income$430.0M9.6%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2021filed November 2, 2020Financial Statements
Q3 FY2021 against Q3 FY2020
| Line item | Q3 FY2021Q3 FY2020 | Change |
|---|---|---|
| Revenue | $4.46B$4.43B | +0.7% |
| Cost of Revenue | $3.15B$3.24B | −2.8% |
| Gross Profit | $1.31B$1.19B | +10.3% |
| SG&A Expenses | $817.00M$999.00M | −18.2% |
| Operating Income | $928.00M$941.00M | −1.4% |
| Interest Expense | $66.00M$67.00M | −1.5% |
| Net Income | $430.00M$429.00M | +0.2% |
| EPS (Basic) | $2.00$1.93 | +3.6% |
| EPS (Diluted) | $1.98$1.90 | +4.2% |
| Shares Outstanding (Basic) | 213.40M222.60M | −4.1% |
| Shares Outstanding (Diluted) | 215.10M225.40M | −4.6% |
05—Questions
Frequently Asked Questions
What was L3Harris' revenue performance in the third quarter of 2020?
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.
How did the COVID-19 pandemic impact L3Harris' financial results?
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.
What significant financial activities occurred in terms of cash flow and capital allocation?
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.
What is the outlook for L3Harris' business segments, particularly in light of recent divestitures and market conditions?
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.
06—Continue