01—Abstract
Summary
Summary of the 10-Q filed August 4, 2021. Cited figures are marked; the original filing is the authoritative source.
L3Harris Technologies, Inc. reported strong financial results for the second quarter of fiscal year 2021, driven by revenue growth across its key segments and improved profitability.
Total revenue increased by 5% year-over-year to $4.67 billiona, with notable growth in Integrated Mission Systems and Space and Airborne Systems. Net income attributable to common shareholders rose significantly by 46% to $413 million, or $2.01 per diluted share. This performance was bolstered by substantial gains from business divestitures, which more than offset impairment charges related to specific business units.
The company also demonstrated robust operating cash flow, enabling significant share repurchases and continued dividend payments, reinforcing its commitment to returning capital to shareholders. Strategic divestitures of non-core assets are progressing, contributing to a more streamlined and focused business portfolio. The company's financial health remains solid, supported by strong cash flow generation and an undrawn $2 billionb revolving credit facility.
L3Harris is actively managing its portfolio through strategic divestitures, which generated significant proceeds during the quarter. The company's outlook is positive, with a substantial backlog of $20.2 billionc providing visibility for future revenue. Despite ongoing macroeconomic uncertainties, L3Harris is well-positioned due to its diversified business segments and strong customer relationships, particularly with the U.S. Government.
02—Key points
Key Highlights
- Total revenue for the quarter increased 5% year-over-year to $4.67 billion.
- Net income attributable to common shareholders surged 46% to $413 million ($2.01 per diluted share).
- Gross margin percentage improved to 30% from 29% in the prior year's quarter.
- Significant positive impact from business divestiture-related gains ($180 million pre-tax) offset impairment charges.
- Net cash provided by operating activities was strong at $1.38 billion for the first two quarters of the fiscal year.
- The company repurchased $1.55 billion of its common stock and paid $416 million in dividends during the first two quarters.
- Ending backlog stood at $20.2 billion, providing good revenue visibility.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2022, L3HARRIS Technologies, Inc. kept $0.09.
- Revenue$4.67B100.0%
- Cost of revenue−$3.25B69.6%
- Gross profit$1.42B30.4%
- Operating costs−$535.0M11.5%
- Operating income$882.0M18.9%
- Interest, other & tax−$469.0M10.0%
- Net income$413.0M8.8%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2022filed August 4, 2021Financial Statements
Q2 FY2022 against Q2 FY2021
| Line item | Q2 FY2022Q2 FY2021 | Change |
|---|---|---|
| Revenue | $4.67B$4.45B | +5.0% |
| Cost of Revenue | $3.25B$3.17B | +2.4% |
| Gross Profit | $1.42B$1.27B | +11.6% |
| SG&A Expenses | $891.00M$855.00M | +4.2% |
| Operating Income | $882.00M$501.00M | +76.0% |
| Net Income | $413.00M$278.00M | +48.6% |
| EPS (Basic) | $2.03$1.31 | +55.0% |
| EPS (Diluted) | $2.01$1.30 | +54.6% |
| Shares Outstanding (Basic) | 203.60M215.90M | −5.7% |
| Shares Outstanding (Diluted) | 205.60M217.80M | −5.6% |
05—Questions
Frequently Asked Questions
What drove the increase in revenue for the quarter?
The increase in revenue was primarily driven by organic growth across all four business segments, partially offset by lower revenue from completed business divestitures. Specifically, Integrated Mission Systems and Space and Airborne Systems showed strong performance.
How did the business divestitures impact the financial results?
Business divestitures had a significant positive impact, generating $180 million in pre-tax gains during the quarter. These gains helped to offset impairment charges and contributed to the overall increase in net income.
What is the company's approach to returning capital to shareholders?
L3Harris demonstrated a strong commitment to returning capital through share repurchases and dividend payments. During the first two quarters of the fiscal year, the company repurchased $1.55 billion of its common stock and paid $416 million in dividends. The company also has a substantial remaining authorization for future share repurchases.
What is the outlook for future revenue, given the current backlog?
The company's ending backlog stood at $20.2 billion as of July 2, 2021. L3Harris expects to recognize approximately 66% of this backlog by the end of 2022 and 78% by the end of 2023, indicating strong revenue visibility for the coming years.
06—Continue