10-QPeriod: Q1 FY2023

L3HARRIS TECHNOLOGIES, INC. /DE/ Quarterly Report for Q1 Ended Apr 1, 2022

Filed April 29, 2022For Securities:LHX

Summary

L3Harris Technologies, Inc. reported its first quarter fiscal year 2022 results, ending April 1, 2022. Total revenue saw a 10% decrease to $4.103 billion compared to $4.567 billion in the prior year period, primarily attributed to prior year divestitures and ongoing supply chain disruptions, particularly in the Communication Systems segment. Despite the revenue decline, income from continuing operations increased by 2% to $475 million, leading to a diluted Earnings Per Share (EPS) of $2.44, an 8% increase from $2.25 in the prior year, driven by a lower share count due to share repurchases and cost management initiatives. The company's cash flow from operations significantly decreased year-over-year, largely due to increased working capital requirements. However, L3Harris maintained a strong liquidity position with $402 million in cash and cash equivalents and an undrawn $2 billion revolving credit facility. The company continued its commitment to shareholder returns, increasing its quarterly dividend and actively repurchasing shares, although at a lower pace than the previous year. Management expressed confidence in their ability to meet financial obligations and fund operations for the foreseeable future.

Financial Highlights

52 data points
Beta

Revenue

$4.10B

30.3% Gross Margin

Net Income

$475.00M

11.6% Net Margin

EPS (Diluted)

$2.44

Total Assets

$34.44B

Cash & Equivalents

$402.00M

Free Cash Flow

-$16.00M

Financial Statements
Beta
Revenue$4.10B
Cost of Revenue$2.86B
Gross Profit$1.24B
SG&A Expenses$745.00M
Operating Income$475.00M
Net Income$475.00M
EPS (Basic)$2.46
EPS (Diluted)$2.44
Shares Outstanding (Basic)193.20M
Shares Outstanding (Diluted)195.10M

Key Highlights

  • 1Revenue decreased by 10% year-over-year to $4.103 billion, impacted by divestitures and supply chain issues.
  • 2Income from continuing operations increased by 2% to $475 million.
  • 3Diluted Earnings Per Share (EPS) grew by 8% to $2.44, benefiting from share repurchases and cost efficiencies.
  • 4Net cash provided by operating activities decreased significantly to $39 million from $661 million in the prior year period.
  • 5The company repurchased $308 million of its common stock during the quarter, with $2.2 billion remaining under its repurchase program.
  • 6L3Harris increased its quarterly cash dividend to $1.12 per share, marking its twenty-first consecutive annual increase.
  • 7The company reorganized its business segments from four to three, streamlining operations.
  • 8The effective tax rate remained stable at approximately 11%.

Frequently Asked Questions

The primary reasons for the 10% revenue decrease were the impact of divestitures completed in the prior year, ongoing supply chain disruptions (especially electronic component shortages impacting the Communication Systems segment), and transitions in airborne programs.

The increase in diluted EPS was primarily driven by a reduction in the weighted-average number of shares outstanding due to substantial share repurchases under the company's buyback program, alongside efforts to manage engineering, selling, and administrative expenses.

L3Harris maintains a strong liquidity position with $402 million in cash and cash equivalents as of April 1, 2022, and an undrawn $2 billion revolving credit facility. Management believes these resources are sufficient to meet its obligations and operational needs.

Effective January 1, 2022, L3Harris streamlined its operations from four to three reportable business segments: Integrated Mission Systems, Space & Airborne Systems, and Communication Systems. The former Aviation Systems segment was eliminated and its operations integrated into the remaining segments.