L3Harris Reports Strong Second Quarter 2021 Results

Revenue

$4.7 billion, up 5.0% versus prior year and 6.2% on an organic1 basis

Margins and earnings

Net income margin of 8.8%; adjusted earnings before interest and taxes (EBIT) margin3 of 18.6%

GAAP earnings per share from continuing operations (EPS) of $2.01, up 55%

Non-GAAP EPS3 of $3.26, up 15%

Cash flow and capital deployment

Operating cash flow of $720 million; adjusted free cash flow (FCF)3 of $685 million

Returned $1,057 million to shareholders through $850 million in share repurchases and $207 million in dividends

Raised 2021 adjusted EBIT margin guidance to 18.5% and non-GAAP EPS guidance to $12.80 - $13.00

Signed definitive agreement to sell Electron Devices business for $185 million

MELBOURNE, Fla. - L3Harris Technologies, Inc. (NYSE: LHX) reported second quarter 2021 revenue of $4.7 billion, up 5.0% versus prior year, and up 6.2% on an organic1 basis. GAAP net income was $413 million, up 49% versus prior year. Adjusted EBIT3 was $869 million, up 7.3% versus prior year, and adjusted EBIT margin3 expanded 40 basis points (bps) to 18.6%. GAAP EPS was $2.01, up 55%, and non-GAAP EPS3 was $3.26, up 15% versus prior year.

We are now at the 2-year mark for L3Harris and our second quarter results demonstrate the mergers value creation and operating momentum. Our accomplishments to-date and a continued focus on execution give us confidence to raise guidance for the year, said Christopher E. Kubasik, Vice Chair and Chief Executive Officer. As we look forward, a commitment to our strategic priorities along with our differentiated capabilities position us for further value creation over the long term.

Summary Financial Results

Second Quarter

First Half

($ millions, except per share data)

2021

2020

Change

2021

2020

Change

(GAAP comparison)

Revenue

$

4,668

$

4,445

5.0%

$

9,235

$

9,071

1.8%

Net income

$

413

$

278

49%

$

879

$

472

86%

Net income margin

8.8

%

6.3

%

250 bps

9.5

%

5.2

%

430 bps

EPS

$

2.01

$

1.30

55%

$

4.26

$

2.29

86%

(Non-GAAP comparison)3

Revenue

$

4,668

$

4,445

5.0%

$

9,235

$

9,071

1.8%

Adjusted EBIT

$

869

$

810

7.3%

$

1,731

$

1,618

7.0%

Adjusted EBIT margin

18.6

%

18.2

%

40 bps

18.7

%

17.8

%

90 bps

EPS

$

3.26

$

2.83

15%

$

6.44

$

5.63

14%

Organic revenue1

$

4,668

$

4,396

6.2%

$

9,235

$

8,881

4.0%

Second quarter revenue increased 5.0% versus prior year and 6.2% on an organic basis, with solid growth across key end-markets as well as growth in all four segments. At the segment level, organic revenue was driven by Integrated Mission Systems and Aviation Systems, up 12% and 4.7%, respectively, and 3.2% growth in both Communication Systems and Space and Airborne Systems. Funded book-to-bill2 was 1.00 for the quarter and 1.05 for the first half.

Second quarter net income margin expanded 250 bps and adjusted EBIT margin expanded 40 bps to 18.6% versus prior year. GAAP EPS increased 55% versus prior year driven by higher volume, operational excellence, integration benefits and a lower share count, along with net divestiture-related gains and lower acquisition-related amortization, partially offset by an increase in asset impairment charges and higher internal investments. Non-GAAP EPS increased 15% versus prior year driven by higher volume, operational excellence, integration benefits and a lower share count, more than offsetting the impact from higher internal investments.

Segment Results

Integrated Mission Systems

Second Quarter

First Half

($ millions)

2021

2020

Change

2021

2020

Change

Revenue

$

1,494

$

1,331

12%

$

2,945

$

2,701

9.0%

Operating income

$

229

$

224

2.2%

$

469

$

425

10%

Operating margin

15.3

%

16.8

%

(150) bps

15.9

%

15.7

%

20 bps

Second quarter revenue increased 12% from strong growth in ISR, driven by aircraft missionization on a recently awarded NATO program, and in Maritime from a ramp on key platforms, partially offset by a decline in Electro Optical due to product delivery timing. Second quarter operating income increased 2.2% to $229 million, and operating margin contracted 150 bps to 15.3% versus prior year as cost management, operational excellence and integration benefits were more than offset by mix impacts, including a ramp on growth programs.

Segment funded book-to-bill was 0.81 and 1.06 for the quarter and first half, respectively.

ISR award activity continued with over $350 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.

In Maritime, the company received several key awards that strengthen its position as a leading provider of global maritime solutions, including:

More than $100 million in awards for sensors and shipboard systems on the U.S. Navys Virginia and Columbia-class submarines, increasing inception-to-date awards on the platforms to more than $700 million

$60 million award to provide engineering support for the Medium Unmanned Surface Vehicle, a key platform in the U.S. Navys distributed maritime operations strategy and with significant follow-on opportunity

More than $50 million contract to provide imaging systems on a submarine from a customer in Europe

Within Electro Optical, WESCAM sensor demand remained strong and included a sole-source IDIQ contract for up to $96 million in support of the U.S. Special Operations Commands Improved Rotary-wing Electro-optical/Infra-red Sensor program. The company also reinforced its international position with over $75 million in orders for airborne sensor systems from customers primarily in the European and Asia Pacific regions.

Space and Airborne Systems

Second Quarter

Firs

LINK:	https://www.l3harris.com/newsroom/press-release/2021/08/l3harris-repor...
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