01—Abstract
Summary
Summary of the 10-Q filed April 29, 2022. Cited figures are marked; the original filing is the authoritative source.
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 billiona 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 millionb 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.
02—Key points
Key Highlights
- Revenue decreased by 10% year-over-year to $4.103 billion, impacted by divestitures and supply chain issues.
- Income from continuing operations increased by 2% to $475 million.
- Diluted Earnings Per Share (EPS) grew by 8% to $2.44, benefiting from share repurchases and cost efficiencies.
- Net cash provided by operating activities decreased significantly to $39 million from $661 million in the prior year period.
- The company repurchased $308 million of its common stock during the quarter, with $2.2 billion remaining under its repurchase program.
- L3Harris increased its quarterly cash dividend to $1.12 per share, marking its twenty-first consecutive annual increase.
- The company reorganized its business segments from four to three, streamlining operations.
- The effective tax rate remained stable at approximately 11%.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2023, L3HARRIS Technologies, Inc. kept $0.12.
- Revenue$4.10B100.0%
- Cost of revenue−$2.86B69.7%
- Gross profit$1.24B30.3%
- Operating costs−$768.0M18.7%
- Operating income$475.0M11.6%
- Interest, other & tax$-00.0%
- Net income$475.0M11.6%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2023filed April 29, 2022Financial Statements
Q1 FY2023 against Q1 FY2022
| Line item | Q1 FY2023Q1 FY2022 | Change |
|---|---|---|
| Revenue | $4.10B$4.57B | −10.2% |
| Cost of Revenue | $2.86B$3.21B | −11.0% |
| Gross Profit | $1.24B$1.35B | −8.2% |
| SG&A Expenses | $745.00M$801.00M | −7.0% |
| Operating Income | $475.00M$469.00M | +1.3% |
| Net Income | $475.00M$468.00M | +1.5% |
| EPS (Basic) | $2.46$2.26 | +8.8% |
| EPS (Diluted) | $2.44$2.25 | +8.4% |
| Shares Outstanding (Basic) | 193.20M206.70M | −6.5% |
| Shares Outstanding (Diluted) | 195.10M208.50M | −6.4% |
05—Questions
Frequently Asked Questions
What is the primary reason for the year-over-year revenue decline?
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.
How did L3Harris manage to increase its EPS despite lower revenue?
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.
What is the company's liquidity situation?
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.
What significant changes were made to the company's business segments?
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.
06—Continue