L3Harris Technologies Inc. has released its financial results for the first quarter of 2024, showcasing a robust performance driven by strategic acquisitions and a solid uptick in revenue. The company continues to navigate the complexities of the U.S. government budget environment while focusing on operational efficiency and growth across its diverse segments.

1. Financial Highlights

For the quarter ended March 29, 2024, L3Harris reported a 17% increase in revenue, reaching $5.21 billion, up from $4.47 billion in the previous year. This growth was significantly bolstered by the inclusion of $542 million from the acquisition of Aerojet Rocketdyne (AJRD) and increased revenues across its Communications Systems (CS) and Space & Airborne Systems (SAS) segments.

Key Financial Metrics

Net Income: $283.0 million, down from $337.0 million in Q1 2023.

Diluted Earnings Per Share (EPS): $1.62, compared to $1.89 in the previous year.

Gross Margin: Remained stable despite increased volume, indicating effective cost management practices.

Income Statement of L3Harris Technologies Inc

	Apr 2023	Apr 2024
Net Income	924M	1.17B
Net Income to Non-controlling Interest	1M	-29M
Profit	925M	1.14B
Net Income Continuing	925M	1.14B
Income Tax Expense	185M	-6M
Pretax Income	1.11B	1.13B
Non-operating Income	401M	-375M
Operating Income	1.02B	1.41B
Revenue	17.43B	20.15B
Costs and Expenses	16.40B	18.74B
Cost of Revenue	12.54B	14.86B
Operating Expenses	3.86B	3.88B
Impairment Expense	802M	374M
Selling, General & Administrative	3.05B	3.45B
Other Operating Expenses	0	51M

2. Segment Performance

L3Harris operates through four primary segments, each contributing to the company’s overall performance.

Space & Airborne Systems (SAS)

Revenue: Increased significantly, driven by program growth in Space Systems and Intelligence and Cyber sectors.

Operating Income: Enhanced by improved program performance and favorable program matters.

Integrated Mission Systems (IMS)

Revenue: Experienced a decline, mainly due to lower aircraft program revenues in Intelligence, Surveillance, and Reconnaissance (ISR) and Ground Operations Solutions (GOS).

Operating Income: Increased thanks to better program performance and a favorable mix in ISR, although it faced pressure from reduced product volumes in GOS.

Communication Systems (CS)

Revenue: Grew due to increased demand for Tactical Communications, Integrated Vision Solutions, and Broadband Communications.

Performance: Higher volumes and improved program execution were the primary drivers of growth.

Aerojet Rocketdyne (AR)

Results: The segment's performance was strong, benefiting from ongoing programs in Missile Solutions and Space Propulsion.

3. Costs and Expenses

The company's general and administrative expenses rose due to costs associated with the LHX NeXt implementation, including employee severance charges and consulting fees. Additionally, amortization of acquisition-related intangibles contributed to the increase in overhead costs.

Despite these challenges, L3Harris remains focused on maximizing operational efficiency and maintaining a stable gross margin.

4. Cash Flow and Capital Resources

L3Harris reported a net change in cash of -$83 million for the quarter, reflecting various cash movements across its operations. The company continues to maintain a healthy liquidity position with $477 million in cash and cash equivalents, supported by operational cash flows and access to credit facilities.

Cash Flow Overview

Net Cash from Operating Activities: -$104 million

Net Cash from Investing Activities: -$116 million

Net Cash from Financing Activities: $144 million

Cash Flow Statement of L3Harris Technologies Inc

	Apr 2023	Apr 2024
Net Change in Cash	143M	-68M
Effect of Exchange Rate Changes	-15M	2M
Net Cash from Operating Activities	2.46B	1.64B
Operating Profit	925M	1.14B
Adjustment to Operating Profit	1.54B	498M
Net Cash from Investing Activities	-2.23B	-5.08B
Business & Interest in Affiliates	2.02B	4.63B
Productive Assets	236M	437M
Other Investing Activities	22M	-13M
Net Cash from Financing Activities	-77M	3.37B
Debt	1.98B	4.59B
Dividends	866M	872M
Equity Issuance/Repurchase	-1.13B	-307M
Other Financing Activities	-65M	-36M

5. Dividend Increase

In a show of confidence in its financial stability, L3Harris declared a quarterly dividend of $1.16 per share, up from $1.14 in the previous quarter. This reflects the company's commitment to returning value to its shareholders despite facing operational costs.

6. Outlook and Strategic Direction

L3Harris has a robust backlog of $32.7 billion, indicating strong future growth potential. The company is well-positioned to navigate the challenges posed by the current U.S. government budget environment, particularly under the Fiscal Responsibility Act of 2023, which has suspended the federal debt limit until January 2025.

The strategic acquisition of AJRD is expected to bolster L3Harris's capabilities, although it may introduce new risks and uncertainties. Overall, the company is focused on leveraging its technological innovations and strategic investments to enhance its competitive position in the defense sector.

7. Conclusion

L3Harris Technologies Inc. continues to demonstrate resilience and growth potential in Q1 2024 amidst a challenging economic landscape. With strategic acquisitions, a strong revenue trajectory, and a commitment to shareholder returns, the company is poised for continued success in the defense technology sector. Investors and stakeholders will be keenly watching how L3Harris navigates the complexities of government budgets and operational efficiencies in the coming quarters.

Balance Sheet of L3Harris Technologies Inc

	Apr 2023	Apr 2024
Total Assets	35.50B	41.81B
Total Current Assets	7B	8.26B
Cash and Equivalents	545M	477M
Net Inventories	1.54B	1.47B
Accounts Receivable	1.23B	1.20B
Non-trade Receivables	41M	0
Other Current Assets	3.64B	5.10B
Total Non-current Assets	28.50B	33.55B
Intangible Assets	24.97B	28.41B
Non-current Deferred Tax Assets	74M	113M
Net PP&E	2.13B	2.83B
Lease Assets	756M	0
Other Non-current Assets	565M	2.19B
Total Liabilities and Equity	35.50B	41.81B
Total Liabilities	17.09B	23.08B
Total Current Liabilities	6.15B	8.43B
Accounts Payable and Accrued Liabilities	3.79B	3.84B
Current Debt	813M	2.56B
Current Deferred Revenue	1.52B	1.77B
Other Current Liabilities	20M	245M
Total Non-current Liabilities	10.94B	14.64B
Long-term Debt	8.22B	11.14B
Non-current Deferred Tax Liabilities	570M	683M
Other Non-current Liabilities	2.15B	2.82B
Total Equity and Non-controlling Interests	18.40B	18.73B
Total Equity	18.30B	18.66B
Non-controlling Interests	102M	64M

Original filing: sec.gov