First Quarter
| 2024 Guidance* | ||||||
($ millions, except per share data) | 2024 | 2023 | Change | Current | Prior | ||
Revenue | |||||||
Space & Airborne Systems | $ | 1,751 | $ | 1,655 | |||
Integrated Mission Systems | 1,669 | 1,700 | |||||
Communication Systems | 1,294 | 1,163 | |||||
Aerojet Rocketdyne | 542 | - | |||||
Corporate eliminations | (45) | (47) | |||||
Revenue | $ | 5,211 | $ | 4,471 | 17% | $20.8B - $21.3B | $20.7B - $21.3B |
Operating income | |||||||
Space & Airborne Systems | $ | 216 | $ | 187 | |||
Integrated Mission Systems | 190 | 185 | |||||
Communication Systems | 310 | 266 | |||||
Aerojet Rocketdyne | 72 | - | |||||
Unallocated items | (410) | (245) | |||||
Operating income | $ | 378 | $ | 393 | (4)% | ||
Operating margin | 7.3 | % | 8.8 | % | (150) bps | ||
Adjusted segment operating income1
| |||||||
Space & Airborne Systems | $ | 216 | $ | 187 | |||
Integrated Mission Systems | 190 | 185 | |||||
Communication Systems | 310 | 266 | |||||
Aerojet Rocketdyne | 72 | - | |||||
Adjusted segment operating income1
| $ | 788 | $ | 638 | 24% | ||
Adjusted segment operating margin1
| 15.1 | % | 14.3 | % | 80 bps | > 15% | ~15% |
Effective tax rate (GAAP) | 1.7 | % | 9.1 | % | (740) bps | ||
Effective tax rate (non-GAAP1)
| 13.1 | % | 13.4 | % | (30) bps | ||
EPS | $ | 1.48 | $ | 1.76 | (16)% | ||
Non-GAAP EPS1
| $ | 3.06 | $ | 2.86 | 7% | $12.70 - $13.05 | $12.40 - $12.80 |
Cash from operations | $ | (104) | $ | 350 | (130)% | ||
Adjusted free cash flow1
| $ | (156) | $ | 315 | (150)% |
~$2.2B
|
~$2.2B
|
First Quarter
| 2024 Guidance | ||||||
($ millions) | 2024 | 2023 | Change | Current | Prior | ||
Revenue | $ | 1,751 | $ | 1,655 | 6% | ~$7,000 | $6,900 - $7,100 |
Operating margin | 12.3 | % | 11.3 | % | 100 bps | ~12%* | mid-high 11%* |
First Quarter
| 2024 Guidance | ||||||
($ millions) | 2024 | 2023 | Change | Current | Prior | ||
Revenue | $ | 1,669 | $ | 1,700 | (2)% | $6,400 - $6,600 | $6,400 - $6,600 |
Operating margin | 11.4 | % | 10.9 | % | 50 bps | low-mid 11%* | low-mid 11%* |
First Quarter
| 2024 Guidance | ||||||
($ millions) | 2024 | 2023 | Change | Current | Prior | ||
Revenue | $ | 1,294 | $ | 1,163 | 11% | $5,300 - 5,400 | $5,300 - 5,400 |
Operating margin | 24.0 | % | 22.9 | % | 110 bps | low-mid 24%* | low-mid 24%* |
First Quarter
| 2024 Guidance | |||||
($ millions) | 2024 | 2023 | Change | Current | Prior | |
Revenue | $ | 542 | $ | - | $2,400 - $2,500 | $2,400 - $2,500 |
Operating margin | 13.3 | % | - | % | high 11%* | high 11%* |
2024 | 2023 | ||
Other Information | Current | Prior | Actuals |
FAS/CAS operating adjustment | ~$30 million | ~$40 million | $110 million |
Non-service FAS pension income | ~$310 million | ~$260 million | $310 million |
Net interest expense | ~$650 million | ~$650 million | $543 million |
Effective tax rate on GAAP income | 1.9% | ||
Effective tax rate on non-GAAP income1*
| 13.0% - 13.5% | 13.0% - 13.5% | 13.0% |
Average diluted shares | flat - up slightly | flat - up slightly | 190.6 |
Capital expenditures | ~2% sales | ~2% sales | 2% sales |
Quarter Ended | ||||
(In millions, except per share amounts) | March 29, 2024 | March 31, 2023 | ||
Revenue | $ | 5,211 | $ | 4,471 |
Cost of revenue | (3,863) | (3,305) | ||
General and administrative expenses | (970) | (773) | ||
Operating income | 378 | 393 | ||
Non-service FAS pension income and other | 88 | 82 | ||
Interest expense, net | (176) | (102) | ||
Income before income taxes | 290 | 373 | ||
Income taxes | (5) | (34) | ||
Net income | 285 | 339 | ||
Noncontrolling interests, net of income taxes | (2) | (2) | ||
Net income attributable to L3Harris Technologies, Inc. | $ | 283 | $ | 337 |
Net income per common share attributable to L3Harris Technologies, Inc. common shareholders | ||||
Basic | $ | 1.49 | $ | 1.77 |
Diluted | $ | 1.48 | $ | 1.76 |
Basic weighted average common shares outstanding | 189.8 | 190.2 | ||
Diluted weighted average common shares outstanding | 190.8 | 191.2 |
Quarter Ended | ||||
(In millions) | March 29, 2024 | March 31, 2023 | ||
Operating Activities | ||||
Net income | $ | 285 | $ | 339 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||
Amortization of acquisition-related intangibles | 217 | 165 | ||
Depreciation and other amortization | 103 | 85 | ||
Share-based compensation | 26 | 23 | ||
Share-based matching contributions under defined contribution plans | 70 | 57 | ||
Pension and other postretirement benefit plan income | (72) | (71) | ||
Deferred income taxes | (111) | (115) | ||
(Increase) decrease in: | ||||
Receivables, net | 7 | 48 | ||
Contract assets | (340) | (269) | ||
Inventories | (21) | (86) | ||
Other current assets | 10 | (40) | ||
Increase (decrease) in: | ||||
Accounts payable | 9 | 90 | ||
Contract liabilities | (152) | 97 | ||
Compensation and benefits | (170) | (115) | ||
Other accrued items | (18) | 63 | ||
Income taxes | 103 | 130 | ||
Other operating activities | (50) | (51) | ||
Net cash (used in) provided by operating activities | (104) | 350 | ||
Investing Activities | ||||
Net cash paid for acquired businesses | - | (1,973) | ||
Additions to property, plant and equipment | (115) | (71) | ||
Other investing activities | (1) | (4) | ||
Net cash used in investing activities | (116) | (2,048) | ||
Financing Activities | ||||
Proceeds from borrowings, net of issuance cost | 2,237 | 2,248 | ||
Repayments of borrowings | (2,250) | (255) | ||
Change in commercial paper, maturities under 90 days, net | 326 | - | ||
Proceeds from commercial paper, maturities over 90 days | 480 | - | ||
Repayments of commercial paper, maturities over 90 days | (205) | - | ||
Proceeds from exercises of employee stock options | 35 | 11 | ||
Repurchases of common stock | (233) | (396) | ||
Cash dividends | (224) | (220) | ||
Other financing activities | (22) | (27) | ||
Net cash provided by financing activities | 144 | 1,361 | ||
Effect of exchange rate changes on cash and cash equivalents | (7) | 2 | ||
Net decrease in cash and cash equivalents | (83) | (335) | ||
Cash and cash equivalents, beginning of period | 560 | 880 | ||
Cash and cash equivalents, end of period | $ | 477 | $ | 545 |
(In millions) | March 29, 2024 | December 29, 2023 | ||
Assets | ||||
Current assets | ||||
Cash and cash equivalents | $ | 477 | $ | 560 |
Receivables, net | 1,209 | 1,230 | ||
Contract assets | 3,502 | 3,196 | ||
Inventories | 1,476 | 1,472 | ||
Other current assets | 466 | 491 | ||
Assets of business held for sale | 1,136 | 1,106 | ||
Total current assets | 8,266 | 8,055 | ||
Non-current assets | ||||
Property, plant and equipment, net | 2,836 | 2,862 | ||
Goodwill | 20,070 | 19,979 | ||
Other intangible assets, net | 8,340 | 8,540 | ||
Deferred income taxes | 113 | 91 | ||
Other non-current assets | 2,191 | 2,160 | ||
Total assets | $ | 41,816 | $ | 41,687 |
Liabilities and equity | ||||
Current liabilities | ||||
Short-term debt | $ | 2,203 | $ | 1,602 |
Current portion of long-term debt, net | 365 | 363 | ||
Accounts payable | 2,112 | 2,106 | ||
Contract liabilities | 1,777 | 1,900 | ||
Compensation and benefits | 379 | 544 | ||
Other accrued items | 1,174 | 1,129 | ||
Income taxes payable | 182 | 88 | ||
Liabilities of business held for sale | 245 | 272 | ||
Total current liabilities | 8,437 | 8,004 | ||
Non-current liabilities | ||||
Long-term debt, net | 11,140 | 11,160 | ||
Deferred income taxes | 683 | 815 | ||
Other long-term liabilities | 2,826 | 2,879 | ||
Total liabilities | 23,086 | 22,858 | ||
Total equity | 18,730 | 18,829 | ||
Total liabilities and equity | $ | 41,816 | $ | 41,687 |
Quarter Ended | ||||||
March 29, 2024 | ||||||
(In millions) | GAAP |
Adjustments1
| Organic | |||
SAS | $ | 1,751 | $ | - | $ | 1,751 |
IMS | 1,669 | - | 1,669 | |||
CS | 1,294 | - | 1,294 | |||
AR | 542 | (542) | - | |||
Corporate eliminations | (45) | - | (45) | |||
Revenue | $ | 5,211 | $ | (542) | $ | 4,669 |
Quarter Ended | ||||||
March 31, 2023 | ||||||
(In millions) |
GAAP
|
Adjustments2
| Organic | |||
SAS
| $ | 1,655 | $ | (9) | $ | 1,646 |
IMS
| 1,700 | - | 1,700 | |||
CS
| 1,163 | - | 1,163 | |||
AR
| - | - | - | |||
Corporate eliminations | (47) | - | (47) | |||
Revenue | $ | 4,471 | $ | (9) | $ | 4,462 |
1Adjustment to exclude amounts attributable to each acquired business.
| ||||||
2Adjustment to exclude amounts attributable to each divested business.
|
Quarter Ended | ||||
(In millions) | March 29, 2024 | March 31, 2023 | ||
Revenue (A) | $ | 5,211 | $ | 4,471 |
Operating income (B) | $ | 378 | $ | 393 |
Corporate items add back1
| 26 | (16) | ||
Significant and/or non-recurring items2:
| ||||
Amortization of acquisition-related intangibles | 217 | 165 | ||
Additional cost of revenue related to the fair value step-up in inventory sold | - | 15 | ||
Merger, acquisition, and divestiture-related expenses | 40 | 50 | ||
Impairment of goodwill and other assets | - | 18 | ||
LHX NeXt implementation costs | 127 | 13 | ||
Total significant and/or non-recurring items2
| 384 | 261 | ||
Adjusted segment operating income (C) | $ | 788 | $ | 638 |
Margins | ||||
Operating margin (B)/(A) | 7.3 | % | 8.8 | % |
Adjusted segment operating margin (C)/(A) | 15.1 | % | 14.3 | % |
Quarter Ended | ||||
(In millions) | March 29, 2024 | March 31, 2023 | ||
Net income attributable to L3Harris Technologies, Inc. | $ | 283 | $ | 337 |
Significant and/or non-recurring items2:
| 384 | 261 | ||
Noncontrolling interest portion of significant and/or non-recurring items2
| - | (1) | ||
Taxes on significant and/or non-recurring items2
| (83) | (51) | ||
Total significant and/or non-recurring items after tax and noncontrolling interest portion of adjustments2
| 301 | 209 | ||
Non-GAAP net income attributable to L3Harris Technologies, Inc. | $ | 584 | $ | 546 |
1Corporate items add back includes unallocated corporate department expense, net of $33M and $6M for the quarter ended March 29, 2024 and March 31, 2023, respectively, and the FAS/CAS operating adjustment of $7M and $22M for the quarter ended March 29, 2024 and March 31, 2023, respectively. The FAS/CAS operating adjustment represents the difference between the service cost component of Financial Accounting Standards ("FAS") pension and Other Postretirement Benefits ("OPEB") income or expense and total U.S. Government Cost Accounting Standards ("CAS") pension and OPEB cost.
2Refer to Non-GAAP Financial Measures on page 15 |
Quarter Ended March 29, 2024
| ||||||
(In millions) | Earnings Before Tax | Tax (Benefit) Expense | Effective Tax Rate | |||
Income before income taxes | $ | 290 | $ | 5 | 1.7 | % |
Merger, acquisition, and divestiture-related expenses1
| 40 | 9 | ||||
LHX NeXt implementation costs1
| 127 | 12 | ||||
Amortization of acquisition-related intangibles1
| 217 | 62 | ||||
Non-GAAP income before income taxes1
| $ | 674 | $ | 88 | 13.1 | % |
Quarter Ended March 31, 2023
| ||||||
(In millions) | Earnings Before Tax | Tax Expense (Benefit) | Effective Tax Rate | |||
Income before income taxes | $ | 373 | $ | 34 | 9.1 | % |
Merger, acquisition, and divestiture-related expenses1
| 50 | 3 | ||||
LHX NeXt implementation costs1
| 13 | 2 | ||||
Amortization of acquisition-related intangibles and additional cost of revenue related to the fair value step-up in inventory sold1
| 180 | 43 | ||||
Impairment of goodwill and other assets1
| 18 | 3 | ||||
Non-GAAP income before income taxes1
| $ | 634 | $ | 85 | 13.4 | % |
1Refer to Non-GAAP Financial Measures on page 15.
|
Quarter Ended | ||||
(In millions) | March 29, 2024 | March 31, 2023 | ||
Diluted weighted average common shares outstanding | 190.8 | 191.2 | ||
EPS | $ | 1.48 | $ | 1.76 |
Significant and/or non-recurring items included in EPS above1:
| ||||
Amortization of acquisition-related intangibles | 1.14 | 0.86 | ||
Additional cost of revenue related to the fair value step-up in inventory sold | - | 0.08 | ||
Merger, acquisition, and divestiture-related expenses | 0.21 | 0.26 | ||
Impairment of goodwill and other assets | - | 0.09 | ||
LHX NeXt implementation costs | 0.67 | 0.07 | ||
Income taxes on above adjustments | (0.44) | (0.26) | ||
Non-GAAP EPS | $ | 3.06 | $ | 2.86 |
1Refer to Non-GAAP Financial Measures on page 15.
|
Quarter Ended | ||||
(In millions) | March 29, 2024 | March 31, 2023 | ||
Net cash provided by operating activities | $ | (104) | $ | 350 |
Additions to property, plant and equipment | (115) | (71) | ||
Free cash flow | (219) | 279 | ||
Cash used for merger, acquisition and severance1,2
| 63 | 36 | ||
Adjusted free cash flow1
| $ | (156) | $ | 315 |
1Refer to Non-GAAP Financial Measures on page 15.
21Q23 amount reclassified to include cash paid for severance.
|
Description | Definition |
Amortization of acquisition-related intangibles | Consists of amortization of identifiable intangible assets acquired in connection with business combinations. Amortization charges are recorded over the estimated useful life of the related acquired intangible asset, and thus are generally recorded over multiple years. |
Additional cost of revenue related to the fair value step-up in inventory sold | Difference between the balance sheet value of inventory from the acquiree and the acquisition date fair value. |
Merger, acquisition, and divestiture-related expenses | Transaction and integration expenses associated with TDL and AR acquisitions. Also, includes external costs related to pursuing acquisition and divestiture portfolio optimization, non-transaction costs related to divestitures and salaries of employees in roles established for and dedicated to planned divestiture and acquisition activity. |
Impairment of goodwill and other assets | In 2023, charges for the impairment of contract assets and other assets related to the restructuring of a customer contract. |
LHX NeXt implementation costs |
Costs associated with transforming multiple functions, systems and processes to increase agility and competitiveness. Costs related to the LHX NeXt initiative are expected to continue through 2025, and are expected to include workforce optimization costs ($64M in 1Q24) and incremental IT expenses for implementation of new systems, third-party consulting expenses and other related costs, including costs related to personnel dedicated to this project ($63M in 1Q24), totaling $400M. We expect gross run-rate savings of $1B exiting year 3.
|
Orders | Represents the total value of funded and unfunded contract awards received from the U.S. Government, plus the total value of funded and unfunded contract awards received from customers other than the U.S. Government. This includes incremental funding and adjustments to previous awards, and excludes unexercised contract options and potential orders under ordering-type contracts, such as indefinite delivery, indefinite quantity (IDIQ) contracts. |
Organic revenue |
Organic revenue excludes the impact of completed divestitures and first year revenue associated with acquisitions; refer to non-GAAP financial measure (NGFM) reconciliations in the tables accompanying this press release and to the disclosures in the non-GAAP section of this press release for more information. Organic revenue is reconciled in table 4.
|
Adjusted segment operating income and margin |
Adjusted segment operating income and margin on a consolidated basis represents operating income and margin (GAAP measures) excluding the FAS/CAS operating adjustment, corporate expenses and other unallocated items. Refer to the disclosures in the non-GAAP financial measures section of this press release for more information. Adjusted segment operating income and margin is reconciled in table 5.
|
Non-GAAP net income attributable to L3Harris Technologies, Inc.
|
Non-GAAP net income attributable to L3Harris Technologies, Inc. represents net income attributable to L3Harris Technologies, Inc., a GAAP measure, adjusted for amortization of acquisition-related intangibles; additional cost of revenue related to the fair value step-up in inventory sold; merger, acquisition, and divestiture-related expenses; impairment of goodwill and other assets; LHX NeXt implementation costs, and the income tax and noncontrolling interest portion of the adjustments. Refer to the disclosures in the non-GAAP financial measures section of this press release for more information. Non-GAAP net income attributable to L3Harris Technologies, Inc. is reconciled in table 7.
|
Non-GAAP EPS |
Non-GAAP EPS represents EPS (net income per common share attributable to L3Harris Technologies, Inc. common shareholders, a GAAP measure) adjusted for amortization of acquisition-related intangibles; additional cost of revenue related to the fair value step-up in inventory sold; merger, acquisition, and divestiture-related expenses; impairment of goodwill and other assets; and LHX NeXt implementation costs. Refer to the disclosures in the non-GAAP financial measures section of this press release for more information. Non-GAAP EPS is reconciled in table 7.
|
Adjusted Free Cash Flow (FCF) |
Adjusted FCF represents net cash provided by operating activities (a GAAP measure) less capital expenditures (additions to property, plant and equipment less proceeds from sale of property, plant and equipment, net), cash used for merger, acquisition, and severance. Adjusted FCF is reconciled in table 8.
|
Cash used for merger, acquisition, and severance | Cash related to merger and acquisition expenses as discussed in the "merger, acquisition, and divestiture-related expenses" heading above and cash related to severance costs included in our LHX NeXt implementation costs. |
Effective tax rate on non-GAAP income |
Effective tax rate on non-GAAP income represents the effective tax rate (tax expense as a percentage of income before income taxes, a GAAP measure) adjusted for the tax effect associated with amortization of acquisition-related intangibles; additional cost of revenue related to the fair value step-up in inventory sold; merger, acquisition, and divestiture-related expenses; impairment of goodwill and other assets; and LHX NeXt implementation costs. Refer to the disclosures in the non-GAAP financial measures section of this press release for more information. Non-GAAP effective tax rate is reconciled in table 6.
|
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L3Harris Technologies Inc. published this content on 25 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 April 2024 20:10:34 UTC.