L3Harris Technologies Reports Fourth Quarter and 2021 Results; Initiates 2022 Guidance

Orders and revenue

2021 orders of $18.1 billion; funded book-to-bill of 1.02

Q4 revenue of $4.4 billion, down 7% versus prior year, and down 1% on an organic basis; 2021 revenue of $17.8 billion, down 2% versus prior year, and up 2% on an organic basis

Margins and earnings

Q4 GAAP net income margin of 11.1%, and GAAP earnings per share from continuing operations (EPS) of $2.46; 2021 GAAP net income margin of 10.3%, and GAAP EPS of $9.09

Q4 non-GAAP adjusted earnings before interest and taxes (EBIT) margin of 19.2%, and non-GAAP EPS of $3.30; 2021 non-GAAP adjusted EBIT margin of 19.1%, and non-GAAP EPS of $12.95

Cash flow and capital deployment

2021 operating cash flow of $2.7 billion and adjusted free cash flow (FCF) of $2.75 billion

Returned $4.5 billion to shareholders in share repurchases and dividends in 2021

Initiated 2022 financial guidance

MELBOURNE, Fla. - L3Harris Technologies, Inc. (NYSE: LHX) reported fourth quarter and 2021 results, and initiated its 2022 financial guidance.

The L3Harris team delivered solid EPS growth, consistent with expectations, despite supply chain headwinds and budget uncertainty, said Christopher E. Kubasik, Vice Chair and Chief Executive Officer. In 2022, we look forward to taking the next step as the industrys trusted disruptor to deliver innovative and affordable solutions, and with a focus on creating value over the long term.

Summary Financial Results

Fourth Quarter

Full Year

($ millions, except per share data)

2021

2020

Change

2021

2020

Change

(GAAP comparison)

Revenue

$ 4,350

$ 4,660

(7%)

$ 17,814

$ 18,194

(2%)

Net income

$ 484

$ 184

163%

$ 1,842

$ 1,086

70%

Net income margin

11.1 %

3.9 %

720 bps

10.3 %

6.0 %

430 bps

EPS

$ 2.46

$ 0.92

167%

$ 9.09

$ 5.19

75%

(Non-GAAP comparison)2

Revenue

$ 4,350

$ 4,660

(7%)

$ 17,814

$ 18,194

(2%)

Adjusted EBIT

$ 836

$ 864

(3%)

$ 3,397

$ 3,280

4%

Adjusted EBIT margin

19.2 %

18.5 %

70 bps

19.1 %

18.0 %

110 bps

EPS

$ 3.30

$ 3.14

5%

$ 12.95

$ 11.60

12%

Organic revenue1

$ 4,350

$ 4,379

(1%)

$ 17,814

$ 17,542

2%

Funded book-to-bill3

0.90

0.93

1.02

1.04

Fourth Quarter 2021 Results:

Revenue decreased 7% versus the prior year, primarily due to divestitures within Aviation Systems and supply chain-related constraints within Communication Systems, and decreased 1% on an organic basis. At the segment level, organic revenue was driven by Integrated Mission Systems and Space & Airborne Systems, up 6% and 2%, respectively, offset by a decline in Communication Systems and Aviation Systems, down 11% and 5%, respectively. Funded book-to-bill3 was 0.90 for the quarter.

Net income margin expanded 720 bps and adjusted EBIT margin expanded 70 bps to 19.2% versus the prior year. GAAP EPS increased 167% to $2.46 driven primarily by prior-year charges for the impairment of intangibles, goodwill, and other assets related to the commercial aerospace business and other COVID-related impacts. Non-GAAP EPS increased 5% to $3.30 versus the prior year driven by e3 performance, integration benefits, expense management, and a lower share count, more than offsetting supply chain and divestiture-related impacts.

Full Year 2021 Results:

Revenue decreased 2% versus the prior year, primarily due to divestitures within Aviation Systems and supply chain-related constraints within Communication Systems, and increased 2% on an organic basis. At the segment level, organic revenue was driven by Integrated Mission Systems and Space & Airborne Systems, up 5% and 3%, respectively, partially offset by a decline in Communication Systems and Aviation Systems, down 3% and 2%, respectively. Funded book-to-bill was 1.02 for the year.

Net income margin expanded 430 bps and adjusted EBIT margin expanded 110 bps to 19.1% versus the prior year. GAAP EPS increased 75% to $9.09 driven primarily by prior-year charges for the impairment of goodwill and other assets and other COVID-related impacts. Non-GAAP EPS increased 12% to $12.95 versus the prior year driven by e3 performance, integration benefits, and a lower share count, more than offsetting supply chain and divestiture-related impacts as well as higher R&D investments.

Segment Results

Integrated Mission Systems

Fourth Quarter

Full Year

($ millions)

2021

2020

Change

2021

2020

Change

Revenue

$ 1,558

$ 1,465

6%

$ 5,839

$ 5,538

5%

Operating income

$ 259

$ 209

24%

$ 950

$ 847

12%

Operating margin

16.6 %

14.3 %

230 bps

16.3 %

15.3 %

100 bps

Funded book-to-bill3

0.85

1.04

1.00

1.17

Fourth Quarter 2021 Results:

Revenue increased 6% from strong growth in ISR, driven by aircraft missionization on a NATO program, and in Electro Optical from higher product deliveries, partially offset by classified program timing in Maritime. Operating income increased 24% to $259 million, and operating margin expanded 230 bps to 16.6% versus the prior year from e3 and program performance, expense management, and integration benefits. Segment funded book-to-bill was 0.85.

Key contract awards in the fourth quarter included:

Approximately $350 million in orders for advanced ISR capabilities across incumbent platforms, such as the Rivet Joint reconnaissance, National Command Authority, Compass Call and classified aircraft, further solidifying the companys position as a partner of choice with the U.S. Air Force

More than $200 million in orders for WESCAM airborne, maritime and ground sensor systems from both domestic and international customers across key regions

More than $150 million in fol

LINK:	https://www.l3harris.com/newsroom/press-release/2022/01/l3harris-techn...
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