L3Harris Reports Strong First Quarter 2021 Results

Revenue

$4.6 billion, down 1.3% versus prior year, up 1.8% on an organic1 basis

Funded book-to-bill2 of 1.10

Margins and earnings

Net income margin of 10.2%; adjusted earnings before interest and taxes (EBIT) margin3 of 18.9%

GAAP earnings per share from continuing operations (EPS) of $2.25, up 127%

Non-GAAP EPS3 of $3.18, up 14%

Cash flow and capital deployment

Operating cash flow of $661 million; adjusted free cash flow (FCF)3 of $630 million

Returned $909 million to shareholders through $700 million in share repurchases and $209 million in dividends

Raised 2021 non-GAAP EPS guidance to $12.70 - $13.00

MELBOURNE, Fla. - L3Harris Technologies, Inc. (NYSE:LHX) reported first quarter 2021 revenue of $4.6 billion, down 1.3% versus prior year, and up 1.8% on an organic1 basis. GAAP net income was $466 million, up 140% versus prior year. Adjusted EBIT3 was $862 million, up 6.7% versus prior year, and adjusted EBIT margin3 expanded 140 basis points (bps) to 18.9%. GAAP EPS was $2.25, up 127%, and non-GAAP EPS3 was $3.18, up 14% versus prior year.

Our first quarter results demonstrate continued strong execution by the L3Harris team in spite of the pandemic, which provides us confidence in delivering on our increased guidance for the year, said William M. Brown, Chair and Chief Executive Officer. Our ability to perform exceptionally, along with the differentiated capabilities highlighted at our Investor Briefing, position us to continue creating value for all stakeholders over the long term.

Summary Financial Results

First Quarter

($ millions, except per share data)

2021

2020

Change

(GAAP comparison)

Revenue

$

4,567

$

4,626

(1.3%)

Net income

$

466

$

194

140%

Net income margin

10.2

%

4.2

%

600 bps

EPS

$

2.25

$

0.99

127%

(Non-GAAP comparison)3

Revenue

$

4,567

$

4,626

(1.3%)

Adjusted EBIT

$

862

$

808

6.7%

Adjusted EBIT margin

18.9

%

17.5

%

140 bps

EPS

$

3.18

$

2.80

14%

Organic revenue1

$

4,567

$

4,485

1.8%

First quarter revenue decreased 1.3% versus prior year primarily due to divestitures and COVID-related impacts within the commercial businesses. Organic revenue increased 1.8% for the quarter as 4.8% growth in U.S. and international government businesses, excluding commercial aviation and Public Safety, more than offset the anticipated COVID-related decline. At the segment level, revenue growth was driven by Integrated Mission Systems, Space and Airborne Systems and Communication Systems, partially offset by a decline in Aviation Systems primarily due to COVID-related impacts. Funded book-to-bill2 was 1.10 for the quarter.

First quarter net income margin expanded 600 bps and adjusted EBIT margin expanded 140 bps to 18.9% versus prior year. GAAP EPS increased 127% versus prior year driven by a reduction in charges for impairment of goodwill and other assets, operational excellence, integration benefits and a lower share count, partially offset by COVID and divestiture-related impacts. Non-GAAP EPS increased 14% versus prior year driven by operational excellence, integration benefits and a lower share count, net of COVID and divestiture-related impacts.

Segment Results

Integrated Mission Systems

First Quarter

($ millions)

2021

2020

Change

Revenue

$

1,451

$

1,370

5.9%

Operating income

$

240

$

201

19%

Operating margin

16.5

%

14.7

%

180 bps

Organic revenue1

$

1,451

$

1,370

5.9%

First quarter revenue increased 5.9% from growth in Maritime, driven by a ramp on manned platforms, and in ISR from a newly awarded NATO program, with moderate growth in Electro Optical. First quarter operating income increased 19% to $240 million, and operating margin expanded 180 bps to 16.5% versus prior year, driven by cost management, integration benefits and operational excellence.

Segment funded book-to-bill was 1.32 for the quarter.

ISR award activity continued with over $380 million in orders for advanced capabilities across incumbent platforms, including the Rivet Joint reconnaissance, National Command Authority and classified aircraft, further strengthening the companys position as a partner of choice with the U.S. Air Force. L3Harris also expanded its international presence with over $450 million in orders, including a contract to deliver a series of missionized Gulfstream G550 aircraft to a NATO customer, with significant follow-on opportunity.

In Maritime, the company received a six-year, multi-award IDIQ contract for up to $827 million to provide engineering services across a range of platforms for the U.S. Navy in support of the Hull, Mechanical and Electrical Systems modernization program. L3Harris also was awarded multiple contracts totaling over $60 million to provide imaging systems on submarines for customers in the Asia Pacific and Middle East regions, strengthening its position as a leading provider of maritime solutions.

In Electro Optical, domestic and international demand was strong and included a $127 million award to provide mission-critical avionics on the Vulcan Centaur rocket for U.S. Space Force launches. The company also reinforced its international position with $85 million in orders for WESCAM airborne sensor systems from customers primarily in Europe and Northern Africa, as well as over $120 million in orders for in-service support of fighter and surveillance aircraft, extending L3Harris long-standing incumbency with the Canadian Department of National Defence.

Space and Airborne Systems

First Quarter

($ millions)

2021

2020

Change

Revenue

$

1,236

$

1,192

3.7%

Operating income

$

240

$

221

8.6%

Operating margin

19.4

%

18.5

%

90 bps

Organic revenue1

$

1,236

$

1,187

4.1%

First quarter revenue increased 3.7% versus prior year and 4.1% on an organic basis, primarily due to a ramp on missile defense and other responsive

LINK:	https://www.l3harris.com/newsroom/press-release/2021/04/l3harris-repor...
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