01—Abstract
Summary
Summary of the 10-Q filed April 26, 2024. Cited figures are marked; the original filing is the authoritative source.
L3Harris Technologies, Inc. reported a net income of $283 milliona ($1.48 diluted EPS) for the quarter ended March 29, 2024, a decrease from $337 million ($1.76 diluted EPS) in the prior year's quarter.
This decline was primarily driven by increased general and administrative expenses, including LHX NeXt initiative costs, and higher interest expense related to recent debt issuances. The company saw a significant 17% increase in revenue to $5,211 millionb, largely due to the inclusion of Aerojet Rocketdyne (AJRD) revenue and growth in the Communication Systems (CS) and Space & Airborne Systems (SAS) segments. Despite the revenue growth, operating income slightly decreased due to higher unallocated corporate expenses, particularly those related to the LHX NeXt transformation program.
The company continues to manage its liquidity effectively, with substantial credit facilities available and a strong backlog of $32.1 billionc, providing visibility into future revenue. Key financial activities during the quarter included the issuance of $2.25 billion in new long-term debt to repay the Term Loan 2025, demonstrating active debt management.
The company also returned capital to shareholders through dividends and share repurchases, signaling confidence in its financial position and future prospects. Investors should monitor the impact of ongoing integration of AJRD, continued execution of the LHX NeXt initiative, and the broader defense spending environment.
02—Key points
Key Highlights
- Revenue increased by 17% to $5,211 million, primarily driven by the inclusion of Aerojet Rocketdyne (AJRD) revenue and growth in the CS and SAS segments.
- Net income decreased to $283 million ($1.48 diluted EPS) from $337 million ($1.76 diluted EPS) in the prior year, impacted by higher expenses.
- General and administrative expenses increased significantly due to LHX NeXt initiative costs, including employee severance and consulting expenses.
- Interest expense increased, mainly due to interest on the AJRD Notes and commercial paper borrowings.
- The company issued $2.25 billion in new long-term fixed-rate debt and used the proceeds to repay its Term Loan 2025.
- Backlog remains strong at $32.1 billion, providing significant revenue visibility.
- The company repurchased $233 million of its common stock during the quarter, demonstrating commitment to shareholder returns.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2025, L3HARRIS Technologies, Inc. kept $0.05.
- Revenue$5.21B100.0%
- Cost of revenue−$3.86B74.1%
- Gross profit$1.35B25.9%
- Operating costs−$970.0M18.6%
- Operating income$378.0M7.3%
- Interest, other & tax−$95.0M1.8%
- Net income$283.0M5.4%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed April 26, 2024Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $5.21B$4.47B | +16.6% |
| Cost of Revenue | $3.86B$3.31B | +16.9% |
| Gross Profit | $1.35B$1.17B | +15.6% |
| SG&A Expenses | $970.00M$773.00M | +25.5% |
| Operating Income | $378.00M$393.00M | −3.8% |
| Net Income | $283.00M$337.00M | −16.0% |
| EPS (Basic) | $1.49$1.77 | −15.8% |
| EPS (Diluted) | $1.48$1.76 | −15.9% |
| Shares Outstanding (Basic) | 189.80M190.20M | −0.2% |
| Shares Outstanding (Diluted) | 190.80M191.20M | −0.2% |
05—Questions
Frequently Asked Questions
What were the primary drivers of the year-over-year decrease in net income?
The decrease in net income for the quarter was primarily driven by higher general and administrative expenses, notably those related to the LHX NeXt initiative, and an increase in interest expense due to recent debt issuances and commercial paper borrowings.
How did the acquisition of Aerojet Rocketdyne (AJRD) impact the financial results?
The acquisition of AJRD contributed $542 million in revenue and $72 million in operating income during the quarter, bolstering the company's Aerospace & Defense (AR) segment. However, it also contributed to increased interest expenses.
What is the company's outlook on liquidity and debt management?
L3Harris maintains a strong liquidity position with available credit facilities and cash on hand. The company recently refinanced debt by issuing $2.25 billion in new notes to repay its Term Loan 2025, indicating proactive debt management. The company expects sufficient resources for working capital, capital expenditures, and debt repayments.
How is the company managing its significant backlog?
The company's backlog stands at $32.1 billion, with approximately 50% expected to be recognized in revenue over the next twelve months. This provides a solid foundation for future revenue and operational planning.
06—Continue