10-QPeriod: Q2 FY2022

L3HARRIS TECHNOLOGIES, INC. /DE/ Quarterly Report for Q2 Ended Jul 2, 2021

Filed August 4, 2021For Securities:LHX

Summary

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 billion, 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 billion 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 billion 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.

Financial Highlights

52 data points
Beta

Revenue

$4.67B

30.4% Gross Margin

Net Income

$413.00M

8.8% Net Margin

EPS (Diluted)

$2.01

Total Assets

$36.06B

Cash & Equivalents

$2.03B

Free Cash Flow

$659.00M

Financial Statements
Beta
Revenue$4.67B
Cost of Revenue$3.25B
Gross Profit$1.42B
SG&A Expenses$891.00M
Operating Income$882.00M
Net Income$413.00M
EPS (Basic)$2.03
EPS (Diluted)$2.01
Shares Outstanding (Basic)203.60M
Shares Outstanding (Diluted)205.60M

Key Highlights

  • 1Total revenue for the quarter increased 5% year-over-year to $4.67 billion.
  • 2Net income attributable to common shareholders surged 46% to $413 million ($2.01 per diluted share).
  • 3Gross margin percentage improved to 30% from 29% in the prior year's quarter.
  • 4Significant positive impact from business divestiture-related gains ($180 million pre-tax) offset impairment charges.
  • 5Net cash provided by operating activities was strong at $1.38 billion for the first two quarters of the fiscal year.
  • 6The company repurchased $1.55 billion of its common stock and paid $416 million in dividends during the first two quarters.
  • 7Ending backlog stood at $20.2 billion, providing good revenue visibility.

Frequently Asked Questions

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.

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.

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.

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.