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L3Harris Technologies (LHX) Q1 Earnings Beat, Sales Fall Y/Y

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L3Harris Technologies, Inc.’s LHX first-quarter 2021 adjusted earnings came in at $3.18 per share, which surpassed the Zacks Consensus Estimate of $2.92. The bottom line also increased 13.6% from the year-ago quarter’s $2.80.

Including one-time items, the company reported GAAP earnings of $2.25 per share compared with the year-ago quarter’s 99 cents.

This year-over-year upside in earnings was driven by operational excellence, integration benefits and a lower share count, net of COVID and divestiture-related impacts.

Total Revenues

During the reported quarter, the company’s revenues came in at $4,567 million, exceeding the Zacks Consensus Estimate of $4,550 million. However, revenues edged down 1.3% on a year-over-year basis, due to divestitures and COVID-related impacts within the commercial businesses.

Segmental Performance

Integrated Mission Systems: Net sales at the segment came in at $1,451 million, up 5.9% on growth in Maritime, driven by the ramp-up on manned platforms, and in ISR from a newly-awarded NATO program, with moderate growth in Electro Optical.

Operating income came in at $240 million compared with the year-ago quarter’s $101 million. Moreover, operating margin expanded 180 basis points (bps) to 16.5%.

Space and Airborne Systems: The segment recorded net sales of $1,236 million in the first quarter, up 3.7% year over year. This upside resulted from the ramp-up of missile defense and other responsive programs on the Space and the F-35 platform in Mission Avionics, as well as classified growth in Intel and Cyber.

Operating income increased to $240 million from the $221 million registered in the year-ago quarter. Operating margin expanded 90 bps to 19.4%.

Communication Systems: Net sales at the segment inched up 1.6% to $1,112 million. This year-over-year growth was aided by the ramp-up in U.S. DoD modernization programs in Tactical Communications.

Operating income increased to $281 million from the year-ago quarter’s $250 million. Operating margin expanded 240 bps to 25.3%.

Aviation Systems: Net sales at the segment came in at $814 million, down 19% year over year. This decline was due to the divestiture of the airport security and automation business, COVID-related impacts in the commercial aviation business and program timing in military training.

Operating income increased to $128 million from $147 million in the year-ago quarter. Operating margin expanded 120 bps to 15.7%.

L3Harris Technologies Inc Price, Consensus and EPS Surprise

L3Harris Technologies Inc Price, Consensus and EPS Surprise
L3Harris Technologies Inc Price, Consensus and EPS Surprise

L3Harris Technologies Inc price-consensus-eps-surprise-chart | L3Harris Technologies Inc Quote

Financial Position

As of Apr 2, 2021, L3Harris had $976 million in cash and cash equivalents compared with $1,276 million as of Jan 1, 2021.

Long-term debt as of Apr 2, 2021, was $7,066 million compared with $6,943 million as of Jan 1, 2021.

Net cash inflow from operating activities amounted to $661 million at the end of first-quarter 2021 compared with the year-ago cash inflow of $533 million.

During the January-March quarter, L3Harris generated $630 million in adjusted free cash flow and returned $909 million to shareholders through $700 million in share repurchases and $209 million in dividends.

2021 View

L3Harris currently expects to generate revenues of $18.5-$18.9 billion, up organically 3-5%, during 2021. The Zacks Consensus Estimate for revenues, pegged at $18.81 billion, lies above the mid-point of the company’s guided range.

The ongoing-year earnings are now projected at $12.70-$13.00 per share, up from the previous guidance of $12.60-$13.00. The Zacks Consensus Estimate for EPS, pegged at $12.90, lies above the mid-point of the company’s guided range.

Zacks Rank

L3Harris currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

Lockheed Martin Corp. LMT delivered first-quarter 2021 earnings of $6.56 per share, which surpassed the Zacks Consensus Estimate of $6.32.

Hexcel Corporation HXL reported first-quarter 2021 loss of 10 cents per share, narrower than the Zacks Consensus Estimate of a loss of 16 cents.

Raytheon Technologies Corporation’s RTX first-quarter 2021 adjusted earnings per share of 90 cents outpaced the Zacks Consensus Estimate of 88 cents.

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