Highlights*
- Orders of $7.2 billion; book-to-bill of 1.4x
- Revenue of $5.3 billion, up 8%, and 5% organically
- Operating margin of 9.4%; adjusted segment operating margin
of 15.7%
- Diluted earnings per share (EPS) of $2.10; non-GAAP diluted
EPS of $3.34
- 2024 revenue guidance range increased to $21.1B -
$21.3B
- 2024 adjusted segment operating margin guidance increased to
~15.5%
- 2024 non-GAAP diluted EPS guidance range increased to $12.95
- $13.15
L3Harris Technologies (NYSE: LHX) reported third quarter 2024
diluted EPS of $2.10, an increase of 4% from third quarter 2023, on
third quarter 2024 revenue of $5.3 billion, an increase of 8%.
Third quarter 2024 non-GAAP diluted EPS was $3.34, a 5% increase
from third quarter 2023. A reconciliation of non-GAAP results are
detailed in tables beginning on page 11.
"We delivered strong third-quarter results, highlighted by
outstanding book-to-bill of 1.4x, solid organic growth, and while
continuing to improve margins as we make progress toward the
financial framework announced at our 2023 Investor Day. These
results reaffirm that our Trusted Disruptor strategy is working,
driving value for our customers, shareholders and employees," said
Christopher E. Kubasik, Chair and CEO.
Kubasik added, "We are making impressive progress on our LHX
NeXt initiative and expect to exceed the 2024 cost savings target
of $400 million. As a result, we are updating our 2024 savings
target to at least $600 million and now expect to reach the overall
target of $1 billion a year early. Our pipeline provides
opportunity for additional cost savings opportunities to exceed the
$1 billion target. All of this gives us confidence to deliver 2026
segment operating margins of at least 16%."
*Organic revenue, adjusted segment operating margin and non-GAAP
diluted EPS are non-GAAP financial measures defined on page 17. A
reconciliation of adjusted segment operating margin guidance and
non-GAAP diluted EPS guidance is not available. See the note on
page 2 and Non-GAAP Financial Measures on page 7 for more
information.
SUMMARY FINANCIAL RESULTS AND 2024 GUIDANCE*
Third Quarter
Year to Date
2024 Guidance
($ millions, except per share data)
2024
2023
Change
2024
2023
Change
Revenue (see Table 4 for organic
revenue)
Space & Airborne Systems
$
1,683
$
1,686
$
5,141
$
5,056
Integrated Mission Systems
1,671
1,568
5,069
5,003
Communication Systems
1,382
1,255
4,022
3,707
Aerojet Rocketdyne
596
455
1,719
455
Corporate eliminations
(40
)
(49
)
(149
)
(142
)
Revenue
$
5,292
$
4,915
8
%
$
15,802
$
14,079
12
%
$21.1B - $21.3B (Prior:
$21.0B - $21.3B)
Operating income
Space & Airborne Systems
$
195
$
210
$
626
$
565
Integrated Mission Systems
204
187
600
534
Communication Systems
359
282
998
873
Aerojet Rocketdyne
75
56
222
56
Corporate unallocated items
(338
)
(256
)
(1,097
)
(756
)
Operating income
$
495
$
479
3
%
$
1,349
$
1,272
6
%
Unallocated items (see Table 5)
338
256
1,097
795
Adjusted segment operating income
$
833
$
735
13
%
$
2,446
$
2,067
18
%
—
—
—
—
Margin
Operating margin
9.4
%
9.7
%
8.5
%
9.0
%
Adjusted segment operating margin
15.7
%
15.0
%
70 bps
15.5
%
14.7
%
80 bps
~15.5% (Prior: 15.2% -
15.4%)
Tax rate
Effective tax rate (GAAP)
6.0
%
4.5
%
4.9
%
6.4
%
Effective tax rate (non-GAAP)
12.9
%
12.9
%
13.0
%
13.2
%
EPS
Diluted EPS
$
2.10
$
2.02
4
%
$
5.50
$
5.61
(2
%)
Non-GAAP diluted EPS
$
3.34
$
3.19
5
%
$
9.63
$
9.01
7
%
$12.95 - $13.15 (Prior:
$12.85 - $13.15)
Pension adjusted non-GAAP diluted EPS
$
2.94
$
2.71
8
%
$
8.44
$
7.62
11
%
Cash flow
Cash from operations
$
780
$
543
44
%
$
1,430
$
1,307
9
%
Adjusted free cash flow
$
728
$
617
18
%
$
1,286
$
1,273
1
%
~$2.2B
Revenue: Third quarter revenue increased 8%, primarily
driven by the acquisition of Aerojet Rocketdyne (AR) and 5% total
organic growth, primarily from continued robust demand for our
resilient communication products and night vision devices in our
Communication Systems (CS) segment. Organic growth was also driven
by our Integrated Mission Systems (IMS) segment, with higher
aircraft missionization volumes, increased volumes for advanced
electronics related to space and munitions programs, and higher
volumes in our Commercial Aviation business, the divestiture of
which is pending closure.
* Adjusted segment operating income and margin, effective tax
rate on non-GAAP income, non-GAAP diluted EPS, pension adjusted
non-GAAP diluted EPS, organic revenue and adjusted free cash flow
are non-GAAP financial measures defined on page 17. A
reconciliation of adjusted segment operating income and margin,
effective tax rate on non-GAAP income, non-GAAP diluted EPS and
adjusted free cash flow on a forward-looking basis to GAAP is not
available without unreasonable effort due to the unavailability of
items for exclusion from the GAAP measure. We are unable to address
the probable significance of this information, the variability of
which may have a significant impact on future GAAP results. See
Non-GAAP Financial Measures on page 7 for more information.
Operating Margin:
GAAP: Third quarter operating
margin decreased 30 bps to 9.4% primarily driven by an increase in
unallocated items, including an increase in valuation allowance
related to the pending Commercial Aviation Solutions business
divestiture and increases in fair value of non-qualified retirement
plan liabilities. This was partially offset by improved segment
performance and a full quarter of contribution from AR.
Adjusted segment operating margin:
Expanded 70 bps to 15.7%, with solid contribution from LHX NeXt
cost savings, strong performance from higher volume and favorable
mix in our CS segment, and improved program performance in our IMS
segment. This was partially offset by the absence of a
non-recurring license sale that positively impacted 2023 and
challenges on classified space development programs, both in our
SAS segment.
Diluted EPS:
GAAP: Third quarter diluted EPS
increased 4% to $2.10 due to an increase in operating income and
lower FAS/CAS operating adjustment, partially offset by higher
interest expense.
Non-GAAP: Increased 5% to $3.34
driven by higher adjusted segment operating income, partially
offset by higher interest expense.
Pension Adjusted Non-GAAP:
Increased 8% to $2.94 driven by higher adjusted segment operating
income, partially offset by higher interest expense. We believe
this represents the best economic measure of our EPS as it reflects
the operational performance of our segments without non-cash
impacts of pension accounting, primarily FAS/CAS operating
adjustment.
The largest differences between GAAP and Non-GAAP diluted EPS
are attributable to amortization of acquisition-related intangibles
and LHX NeXt implementation costs.
Cash Flows:
Cash from Operations: Third quarter
cash from operations increased 44% to $780 million driven by net
income growth and decreases in transaction costs related to the
AJRD acquisition, partially offset by timing of working
capital.
Adjusted free cash flow: Increased
18% to $728 million driven by net income growth and decreases in
capital expenditures, partially offset by timing of working
capital.
SEGMENT RESULTS AND GUIDANCE*
SAS
Third Quarter
Year to Date
2024 Guidance
($ millions)
2024
2023
Change
2024
2023
Change
Revenue
$
1,683
$
1,686
—
%
$
5,141
$
5,056
2
%
~$7,000
Operating margin
11.6
%
12.5
%
(90) bps
12.2
%
11.2
%
100 bps
low 12%
Revenue: Third quarter revenue was flat, reflecting the
divestiture of the antenna business in the second quarter.
Excluding the divestiture impact, organic revenue increased 2%,
primarily from growth of classified programs in Intel and Cyber,
and increased volume in our FAA mission-critical safety of flight
networks business. Organic revenue was partially offset by lower
F-35 related volumes as TR-3 development ramps down in our Airborne
Combat Systems business. Growth was also impacted by challenges on
classified development programs, LHX NeXt cost savings and the
absence of a non-recurring license sale that positively impacted
2023.
Operating Margin: Third quarter operating margin
decreased 90 bps, primarily due to the absence of an $18 million
non-recurring license sale that positively impacted 2023 and
challenges on classified development programs, partially offset by
growth in Intel and Cyber and FAA mission-critical safety of flight
networks businesses, and LHX NeXt cost savings.
IMS
Third Quarter
Year to Date
2024 Guidance
($ millions)
2024
2023
Change
2024
2023
Change
Revenue
$
1,671
$
1,568
7
%
$
5,069
$
5,003
1
%
$6,600 - $6,700
(Prior: $6,500 - $6,700)
Operating margin
12.2
%
11.9
%
30 bps
11.8
%
10.7
%
110 bps
mid - high 11%
(Prior: mid 11%)
Revenue: Third quarter revenue increased primarily from
higher aircraft missionization volumes, increased advanced
electronics demand for space and munitions programs, and higher
volumes in our Commercial Aviation Solutions business, the
divestiture of which is pending closure.
Operating Margin: Third quarter operating margin
increased 30 bps, primarily from improved program performance
across the segment, LHX NeXt cost savings and higher volume and
favorable mix in Commercial Aviation Solutions, partially offset by
unfavorable mix impact in our aircraft missionization business.
*Organic revenue is a non-GAAP financial measure defined on page
17.
CS
Third Quarter
Year to Date
2024 Guidance
($ millions)
2024
2023
Change
2024
2023
Change
Revenue
$
1,382
$
1,255
10
%
$
4,022
$
3,707
8
%
~$5,400
(Prior: $5,300 - $5,400)
Operating margin
26.0
%
22.5
%
350 bps
24.8
%
23.6
%
120 bps
mid - high 24%
(Prior: mid 24%)
Revenue: Third quarter revenue increased 10%, primarily
driven by robust demand for our resilient communication equipment,
related waveforms, and night vision devices. Growth for software
defined tactical radios was especially strong across international
markets, in particular from NATO countries, reflecting demand for
our superior capabilities for critical battlefield communications
equipment and waveforms.
Operating Margin: Third quarter operating margin
increased 350 bps as a result of strong performance from higher
volumes, favorable high margin international mix, proprietary
waveform license sales, and LHX NeXt cost savings.
AR
Third Quarter
Year to Date
2024 Guidance
($ millions)
2024
2023
Change
2024
2023
Change
Revenue
$
596
$
455
31
%
$
1,719
$
455
278
%
$2,400 - $2,500
Operating margin
12.6
%
12.3
%
60 bps
12.9
%
12.3
%
60 bps
mid 12%
(Prior: high 11%)
Revenue and Operating Margin: Third quarter results are
attributed to program execution across both sectors, Missile
Solutions and Space Propulsion and Power Systems, reflecting a full
quarter of contribution for 2024 and a partial quarter for 2023,
from the July 28, 2023 acquisition date. Operating margins include
the positive impact of amortization related to purchase price
adjustments.
SUPPLEMENTAL INFORMATION*
2024
2023
Other Information
Current
Prior
Actuals
FAS/CAS operating adjustment
~$30 million
~$30 million
$110 million
Non-service FAS pension income
~$310 million
~$310 million
$310 million
Net interest expense
~$660 million
~$660 million
$543 million
Effective tax rate on GAAP income
1.9%
Effective tax rate on non-GAAP income
13.0% - 13.5%
13.0% - 13.5%
13.0%
Average diluted shares
Flat
Flat
190.6
Capital expenditures
~2% sales
~2% sales
2% sales
*Effective tax rate on non-GAAP income is a non-GAAP financial
measure defined on page 17. A reconciliation of effective tax rate
on non-GAAP income guidance is not available. See Non-GAAP
Financial Measures on page 7 for more information.
Forward-Looking Statements
This earnings release contains forward-looking statements within
the meaning of federal securities laws made in reliance on the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. Examples include, but are not limited to: potential
divestitures and their timing; 2024 guidance; 2026 financial
framework; anticipated LHX NeXt initiative costs and savings
targets and 2026 margins; supplemental information for 2024;
projection of other financial items; and assumptions underlying any
of the foregoing. Investors should not place undue reliance on
forward-looking statements, which reflect management’s current
expectations, estimates, projections, assumptions and information
currently available to management, and are not guarantees of future
performance or actual results. Important risks that could cause our
results to differ materially from those expressed in or implied by
these forward-looking statements or from our historical results
include, but are not limited to, risks arising from: competitive
markets; U.S. Government spending priorities; changes in contract
mix; inflation; unilateral contract action by the U.S. Government;
uncertain economic conditions; future geo-political events; supply
chain disruptions; impacts of LHX NeXt; indebtedness; defined
benefit plan liabilities and returns; interest rates and other
market factors; changes in effective tax rate or additional tax
exposures; pending and contemplated divestitures.These and other
important risks that could impact forward-looking statements are
described more fully in the "Risk Factors" in our Form 10-K for
fiscal 2023 filed with the SEC. All subsequent written and oral
forward-looking statements attributable to us or any person acting
on our behalf are qualified by the cautionary statements in this
section, and we have no duty to and disclaim any intention or
obligation, other than imposed by law, to update or revise any
forward-looking statements, whether as a result of new information,
future events or developments or otherwise.
Non-GAAP Financial Measures
Management believes the adjustments to non-GAAP Financial
Measures ("NGFMs") in the tables beginning on page 11 are useful to
investors because the excluded costs do not reflect our ongoing
operating performance. Such adjustments, considered together with
the unadjusted GAAP financial measures, provide information that
management believes is useful to investors to understand
period-over-period operating results separate from items that
management believes may disproportionately impact operating results
in any particular period; however there is no guarantee that items
excluded from NGFMs will not reoccur in future periods. Management
also believes that NGFMs enhance the ability of investors to
analyze business trends, understand performance and evaluate our
initiatives to drive improved financial performance. Management
utilizes NGFMs to guide forecasting and long-term planning and for
compensation purposes. NGFMs should be considered in addition to,
and not as a substitute for, financial measures presented in
accordance with GAAP. A reconciliation of forward-looking NGFMs to
GAAP is not available without unreasonable effort because of
inherent difficulty in forecasting and quantifying comparable GAAP
measures and applicable adjustments and other amounts necessary for
a reconciliation because of potentially high variability,
complexity and low visibility of applicable adjustments and other
unusual amounts that could disproportionately impact future GAAP
results, such as the impact of the acquisition of AR, LHX NeXt,
potential divestitures and their timing, and the extent of tax
deductibility.
Conference Call and Webcast
L3Harris Technologies will host a call tomorrow, October 25,
2024, at 8:30 a.m. Eastern Time (ET). Participants are encouraged
to listen via webcast, which will be broadcast live at
L3Harris.com/investors. The dial-in numbers for the teleconference
are (U.S.) 800-274-8461 and (International) 203-518-9814, and
participants will be directed to an operator. A recording of the
call will be available on the L3Harris website, beginning at
approximately 12 p.m. ET on October 25, 2024.
Table 1 - Condensed Consolidated Statement of Operations
(Unaudited)
Third Quarter
Year to Date
(In millions, except per share
amounts)
2024
2023
2024
2023
Revenue
$
5,292
$
4,915
$
15,802
$
14,079
Cost of revenue
(3,873
)
(3,608
)
(11,675
)
(10,419
)
General and administrative expenses
(924
)
(828
)
(2,778
)
(2,388
)
Operating income
495
479
1,349
1,272
Non-service FAS pension income and other,
net
101
80
275
245
Interest expense, net
(166
)
(159
)
(514
)
(372
)
Income before income taxes
430
400
1,110
1,145
Income taxes
(26
)
(18
)
(54
)
(73
)
Net income
404
382
1,056
1,072
Noncontrolling interests, net of income
taxes
(4
)
1
(7
)
(3
)
Net income attributable to L3Harris
Technologies, Inc.
$
400
$
383
$
1,049
$
1,069
Net income per common share attributable
to L3Harris Technologies, Inc. common shareholders
Basic
$
2.11
$
2.02
$
5.53
$
5.64
Diluted
$
2.10
$
2.02
$
5.50
$
5.61
Basic weighted-average common shares
outstanding
189.6
189.3
189.7
189.6
Diluted weighted-average common shares
outstanding
190.5
190.1
190.7
190.6
Table 2 - Consolidated Statement of Cash Flow
(Unaudited)
Third Quarter
Year to Date
(In millions)
2024
2023
2024
2023
Operating Activities
Net income
$
404
$
382
$
1,056
$
1,072
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
324
310
963
816
Share-based compensation
23
22
76
67
Pension and other postretirement benefit
plan income
(72
)
(68
)
(215
)
(209
)
Share-based matching contributions under
defined contribution plans
57
51
199
172
Deferred income taxes
467
(34
)
220
(277
)
(Increase) decrease in:
Receivables, net
188
158
163
53
Contract assets
(207
)
36
(372
)
(136
)
Inventories, net
40
(80
)
46
(195
)
Other current assets
(6
)
(15
)
(32
)
(87
)
Increase (decrease) in:
Accounts payable
155
(41
)
(45
)
(18
)
Contract liabilities
(12
)
(18
)
(150
)
202
Compensation and benefits
(44
)
(45
)
(145
)
(55
)
Other current liabilities
(26
)
(24
)
59
(27
)
Income taxes
(469
)
5
(258
)
15
Other operating activities
(42
)
(96
)
(135
)
(86
)
Net cash provided by operating
activities
780
543
1,430
1,307
Investing Activities
Net cash paid for acquired businesses
—
(4,715
)
—
(6,688
)
Additions to property, plant and
equipment
(78
)
(148
)
(290
)
(312
)
Proceeds from sales of businesses, net
—
—
158
71
Other investing activities
(15
)
(1
)
(19
)
(9
)
Net cash used in investing activities
(93
)
(4,864
)
(151
)
(6,938
)
Financing Activities
Proceeds from borrowings, net of issuance
cost
585
5,319
2,826
7,568
Repayments of borrowings
(2
)
(2,099
)
(2,609
)
(3,159
)
Change in commercial paper, maturities
under 90 days, net
(404
)
806
93
1,330
Proceeds from commercial paper, maturities
over 90 days
—
646
688
701
Repayments of commercial paper, maturities
over 90 days
(520
)
—
(1,205
)
—
Proceeds from exercises of employee stock
options
48
5
111
18
Repurchases of common stock
(190
)
—
(512
)
(518
)
Dividends paid
(220
)
(216
)
(665
)
(652
)
Other financing activities
(6
)
(1
)
(36
)
(34
)
Net cash (used in) provided by financing
activities
(709
)
4,460
(1,309
)
5,254
Effect of exchange rate changes on cash
and cash equivalents
14
(6
)
9
(4
)
Net decrease in cash and cash
equivalents
(8
)
133
(21
)
(381
)
Cash and cash equivalents, beginning of
period
547
366
560
880
Cash and cash equivalents, end of
period
$
539
$
499
$
539
$
499
Table 3 - Condensed Consolidated Balance Sheet
(Unaudited)
(In millions)
September 27, 2024
December 29, 2023
Assets
Current assets
Cash and cash equivalents
$
539
$
560
Receivables, net
1,042
1,230
Contract assets
3,401
3,196
Inventories, net
1,399
1,472
Income taxes receivable
329
61
Other current assets
462
430
Assets of business held for sale
1,130
1,106
Total current assets
8,302
8,055
Non-current assets
Property, plant and equipment, net
2,795
2,862
Goodwill
20,433
19,979
Intangible assets, net
7,874
8,540
Deferred income taxes
119
91
Other non-current assets
2,366
2,160
Total assets
$
41,889
$
41,687
Liabilities and equity
Current liabilities
Short-term debt
$
1,177
$
1,602
Current portion of long-term debt, net
640
363
Accounts payable
2,049
2,106
Contract liabilities
1,878
1,900
Compensation and benefits
402
544
Income taxes payable
35
88
Other current liabilities
1,549
1,129
Liabilities of business held for sale
243
272
Total current liabilities
7,973
8,004
Non-current liabilities
Long-term debt, net
11,093
11,160
Deferred income taxes
885
815
Other long-term liabilities
2,876
2,879
Total liabilities
22,827
22,858
Total equity
19,062
18,829
Total liabilities and equity
$
41,889
$
41,687
Reconciliation of Non-GAAP Financial Measures Table 4
- Organic Revenue (Unaudited)
Third Quarter
2024
2023
(In millions)
GAAP
Adjustments1
Organic
GAAP
Adjustments2
Organic
SAS
$
1,683
$
—
$
1,683
$
1,686
$
(42
)
$
1,644
IMS
1,671
—
1,671
1,568
—
1,568
CS
1,382
—
1,382
1,255
—
1,255
AR
596
(159
)
437
455
—
455
Corporate eliminations
(40
)
—
(40
)
(49
)
—
(49
)
Revenue
$
5,292
$
(159
)
$
5,133
$
4,915
$
(42
)
$
4,873
Year to Date
2024
2023
(In millions)
GAAP
Adjustments1
Organic
GAAP
Adjustments2
Organic
SAS
$
5,141
$
—
$
5,141
$
5,056
$
(70
)
$
4,986
IMS
5,069
—
5,069
5,003
—
5,003
CS
4,022
—
4,022
3,707
—
3,707
AR
1,719
(1,282
)
437
455
—
455
Corporate eliminations
(149
)
—
(149
)
(142
)
—
(142
)
Revenue
$
15,802
$
(1,282
)
$
14,520
$
14,079
$
(70
)
$
14,009
1Adjustment to exclude amounts
attributable to each acquired business through the date of
acquisition.
2Adjustment to exclude amounts
attributable to each divested business.
Table 5 - Operating Income and Margin and Adjusted Segment
Operating Income and Margin (Unaudited)
Third Quarter
Year to Date
(In millions)
2024
2023
2024
2023
Revenue (A)
$
5,292
$
4,915
$
15,802
$
14,079
Operating income (B)
$
495
$
479
$
1,349
$
1,272
Corporate items add back1
33
(41
)
86
(45
)
Significant and/or non-recurring
items:
Amortization of acquisition-related
intangibles and additional cost of revenue related to the fair
value step-up in inventory sold2
210
208
642
576
Merger, acquisition, and
divestiture-related expenses2
25
56
86
144
Business divestiture-related losses, net
and impairment of goodwill and other assets2
29
—
67
52
LHX NeXt implementation costs2
41
33
216
68
Total significant and/or non-recurring
items
305
297
1,011
840
Unallocated items
338
256
1,097
795
Adjusted segment operating income (C)
$
833
$
735
$
2,446
$
2,067
Margins
Operating margin (B)/(A)
9.4
%
9.7
%
8.5
%
9.0
%
Adjusted segment operating margin
(C)/(A)
15.7
%
15.0
%
15.5
%
14.7
%
1Corporate items add back includes
unallocated corporate department expense of $40M and $106M for the
third quarter and year to date 2024, respectively, and unallocated
corporate department income of $14M for the third quarter 2023 and
unallocated corporate department expense of $27M for year to date
2023. Additionally, includes the FAS/CAS operating adjustment of
$7M and $20M for the third quarter and year to date 2024,
respectively, and $27M and $72M for the third quarter and year to
date 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 Key Terms and Non-GAAP
Definitions on page 17.
Table 6 - Effective Tax Rate on Non-GAAP Income
(unaudited)
Third Quarter
2024
2023
(In millions)
Earnings Before Tax
Tax Expense
(Benefit)
Effective Tax Rate
Earnings Before Tax
Tax Expense
Effective Tax Rate
Income before income taxes
$
430
$
26
6.0
%
$
400
$
18
4.5
%
Amortization of acquisition-related
intangibles and additional cost of revenue related to the fair
value step-up in inventory sold1
210
52
208
53
Merger, acquisition, and
divestiture-related expenses1
25
5
56
8
Business divestiture-related losses, net
and impairment of goodwill and other assets1
29
(6
)
—
3
LHX NeXt implementation costs1
41
18
33
8
Non-GAAP income before income taxes
$
735
$
95
12.9
%
$
697
$
90
12.9
%
Year to Date
2024
2023
(In millions)
Earnings Before Tax
Tax Expense
(Benefit)
Effective Tax Rate
Earnings Before Tax
Tax Expense
Effective Tax Rate
Income before income taxes
$
1,110
$
54
4.9
%
$
1,145
$
73
6.4
%
Amortization of acquisition-related
intangibles and additional cost of revenue related to the fair
value step-up in inventory sold1
642
159
576
137
Merger, acquisition, and
divestiture-related expenses1
86
16
144
26
Business divestiture-related losses, net
and impairment of goodwill and other assets1
67
(8
)
52
9
LHX NeXt implementation costs1
216
54
68
17
Non-GAAP income before income taxes
$
2,121
$
275
13.0
%
$
1,985
$
262
13.2
%
1Refer to Key Terms and Non-GAAP
Definitions on page 17.
Table 7 - Non-GAAP Diluted EPS (unaudited)
Third Quarter
Year to Date
(In millions, except per share
data)
2024
2023
2024
2023
Diluted weighted-average common shares
outstanding
190.5
190.1
190.7
190.6
Diluted EPS
$
2.10
$
2.02
$
5.50
$
5.61
Significant and/or non-recurring items
included in diluted EPS above:
Amortization of acquisition-related
intangibles and additional cost of revenue related to the fair
value step-up in inventory sold1
1.10
1.09
3.37
3.02
Merger, acquisition, and
divestiture-related expenses1
0.13
0.29
0.45
0.76
Business divestiture-related losses, net
and impairment of goodwill and other assets1
0.15
—
0.35
0.27
LHX NeXt implementation costs1
0.22
0.17
1.13
0.36
Income taxes on above adjustments
(0.36
)
(0.38
)
(1.17
)
(1.01
)
Non-GAAP diluted EPS
$
3.34
$
3.19
$
9.63
$
9.01
1Refer to Key Terms and Non-GAAP
Definitions on page 17.
Table 8 - Adjusted Free Cash Flow (unaudited)
Third Quarter
Year to Date
(In millions)
2024
2023
2024
2023
Net cash provided by operating
activities
$
780
$
543
$
1,430
$
1,307
Additions to property, plant and
equipment
(78
)
(148
)
(290
)
(312
)
Free cash flow
702
395
1,140
995
Cash used for merger, acquisition and
severance1,2
26
222
146
278
Adjusted free cash flow
$
728
$
617
$
1,286
$
1,273
1Refer to Key Terms and Non-GAAP
Definitions on page 17.
22023 amounts reclassified to include cash paid for severance.
Table 9 - Pension Adjusted Non-GAAP Diluted EPS
(unaudited)
Third Quarter
Year to Date
(In millions)
2024
2023
2024
2023
Non-GAAP diluted EPS1
$
3.34
$
3.19
$
9.63
$
9.01
Per share impact of:
FAS/CAS operating adjustment2
0.03
0.12
0.09
0.33
Non-service FAS pension income2
0.37
0.36
1.10
1.06
Pension adjusted non-GAAP diluted EPS
$
2.94
$
2.71
$
8.44
$
7.62
1Reconciled in Table 7.
2Net of tax effect.
Key Terms and Non-GAAP Definitions
Description
Definition
Amortization of acquisition-related
intangibles and additional cost of revenue related to the fair
value step-up in inventory sold
Amortization of identifiable intangible
assets acquired in connection with business combinations.
Additional cost of revenue related to the fair value step-up in
inventory is the 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 Tactical Data Links and AR acquisitions; external
costs related to pursuing acquisition and divestiture portfolio
optimization; non-transaction costs related to divestitures; and
salaries of employees in roles dedicated to planned divestiture and
acquisition activity.
Business divestiture-related losses, net
and impairment of goodwill and other assets
In 2023, includes a gain on sale of our
Visual Information Solutions business, impairment of contract
assets and other assets related to the restructuring of a customer
contract and impairment of in-process research and development
associated with a facility closure. In 2024, includes valuation
allowance increase related to the pending sale of our Commercial
Aviation Solutions business (QTD and YTD) and impairment of
goodwill and loss on sale recognized in connection with the sale of
our antenna and related businesses (YTD).
LHX NeXt implementation costs
Costs related to the LHX NeXt initiative
are expected to continue through 2025 and are expected to include
workforce optimization costs 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.
LHX NeXt cost savings
Represents annual gross run rate savings
driven by the LHX NeXt transformation initiative. It is an
operational measure that includes savings from initiatives related
to labor and function optimization, direct and indirect
procurement, and infrastructure expected to recur on an ongoing
basis.
Orders
Total value of funded and unfunded
contract awards received from the U.S. Government and other
customers, including incremental funding and adjustments to
previous awards, excluding unexercised contract options and
potential orders under ordering-type contracts, such as indefinite
delivery, indefinite quantity (IDIQ) contracts.
Organic revenue*
Excludes the impact of completed
divestitures and first year revenue associated with acquisitions
and is reconciled in Table 4.
Adjusted segment operating income and
margin*
On a consolidated basis represents
operating income and margin, excluding the FAS/CAS operating
adjustment, corporate unallocated items and items reconciled in
Table 5.
Non-GAAP diluted EPS*
Represents EPS (net income per diluted
common share attributable to L3Harris Technologies, Inc. common
shareholders) adjusted for items reconciled in Table 7.
Pension adjusted non-GAAP diluted EPS*
Represents Non-GAAP diluted EPS, described
above, adjusted for the after tax per share impact of the FAS/CAS
operating adjustment and Non-service FAS pension income reconciled
in Table 9.
Adjusted Free Cash Flow*
Net cash provided by operating activities
less capital expenditures, cash used for merger, acquisition, and
severance reconciled in Table 8.
Cash used for merger, acquisition, and
severance*
Cash related to merger and acquisition
expenses (described above) and severance costs included in LHX NeXt
implementation costs.
Non-GAAP income before income taxes*
Represents income before income taxes
adjusted for items reconciled in Table 6.
Effective tax rate on non-GAAP income*
Represents the effective tax rate (tax
expense as a percentage of income before income taxes) adjusted for
the tax effect of items reconciled in Table 6.
_____
*Refer to Non-GAAP Financial Measures on
page 7 for more information.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241024360274/en/
Investor Relations Contact: Daniel Gittsovich,
321-724-3170 investorrelations@l3harris.com
Media Relations Contact: Sara Banda, 321-306-8927
media@l3harris.com
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