01—Abstract
Summary
Summary of the 10-Q filed July 26, 2024. Cited figures are marked; the original filing is the authoritative source.
L3Harris Technologies, Inc. (LHX) reported its financial results for the second quarter and first half of fiscal year 2024.
The company demonstrated solid revenue growth, primarily driven by the inclusion of the Aerojet Rocketdyne (AJRD) acquisition and increased demand in its Communication Systems (CS) segment. Total revenue for the quarter increased by 13% year-over-year, reaching $5.3 billiona, while first-half revenue grew 15% to $10.5 billion. Profitability saw an increase in operating income for both periods, with a notable 28% rise in the SAS segment for the quarter.
However, diluted Earnings Per Share (EPS) for the first half of the year saw a slight decrease, primarily due to increased general and administrative expenses and higher interest expenses, partially offset by improved gross margins. The company continues to manage its debt effectively, having repaid significant portions of its term loan and notes, and maintains a strong liquidity position with ample availability under its credit facilities.
02—Key points
Key Highlights
- Revenue increased by 13% to $5.3 billion for the quarter and 15% to $10.5 billion for the first half of fiscal year 2024, significantly boosted by the AJRD acquisition and growth in the CS segment.
- Operating income for the quarter increased by 19% to $476 million, and by 8% to $854 million for the first half.
- The SAS segment showed a significant 28% increase in operating income for the quarter, indicating improved performance and cost management.
- The company repaid $2.25 billion of its Term Loan 2025 and $350 million of its 3.95% 2024 Notes during the first half of the year, strengthening its debt profile.
- Despite revenue and operating income growth, diluted EPS for the first half decreased to $3.40 from $3.60 in the prior year, impacted by higher G&A and interest expenses.
- L3Harris successfully completed the divestiture of its Antenna Disposal Group in May 2024, generating net cash proceeds of $166 million.
- The company maintains a strong liquidity position with $547 million in cash and cash equivalents and $1.4 billion in available borrowing capacity under its credit facilities.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2025, L3HARRIS Technologies, Inc. kept $0.07.
- Revenue$5.30B100.0%
- Cost of revenue−$3.94B74.3%
- Gross profit$1.36B25.7%
- Operating costs−$884.0M16.7%
- Operating income$476.0M9.0%
- Interest, other & tax−$110.0M2.1%
- Net income$366.0M6.9%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed July 26, 2024Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $5.30B$4.69B | +12.9% |
| Cost of Revenue | $3.94B$3.51B | +12.4% |
| Gross Profit | $1.36B$1.19B | +14.6% |
| SG&A Expenses | $884.00M$787.00M | +12.3% |
| Operating Income | $476.00M$400.00M | +19.0% |
| Net Income | $366.00M$349.00M | +4.9% |
| EPS (Basic) | $1.93$1.84 | +4.9% |
| EPS (Diluted) | $1.92$1.83 | +4.9% |
| Shares Outstanding (Basic) | 189.70M189.20M | +0.3% |
| Shares Outstanding (Diluted) | 190.60M190.10M | +0.3% |
05—Questions
Frequently Asked Questions
What were the primary drivers of revenue growth in the current quarter?
Revenue growth was primarily driven by the inclusion of $581 million in revenue from the acquisition of Aerojet Rocketdyne (AJRD) in the AR segment, and an increase of $57 million in the Communication Systems (CS) segment due to higher demand for tactical and broadband communications.
What is the company's current debt situation and liquidity position?
L3Harris has significantly managed its debt, repaying $2.25 billion of its Term Loan 2025 and $350 million of its 3.95% 2024 Notes. The company ended the period with $547 million in cash and cash equivalents and maintains a strong liquidity position with $1.4 billion in available borrowing capacity under its credit facilities.
What factors led to the decrease in diluted EPS for the first half of the year despite revenue growth?
The decrease in diluted EPS for the first half was primarily due to an increase in general and administrative expenses and higher interest expense, partially offset by an increase in gross margin. Specifically, G&A expenses rose due to LHX NeXt implementation costs, amortization of acquisition-related intangibles, and losses on business divestitures.
Has L3Harris completed any significant divestitures or acquisitions recently?
Yes, L3Harris completed the divestiture of its Antenna Disposal Group on May 31, 2024, for net cash proceeds of $166 million. The company also continues to report results from its acquisition of Aerojet Rocketdyne (AJRD), which closed in July 2023 and is integrated into the AR segment.
06—Continue