On July 25, 2024, L3Harris Technologies Inc (LHX, Financial) released its 8-K filing for the second quarter of 2024. L3Harris Technologies provides products for the command, control, communications, computers, intelligence, surveillance, and reconnaissance (C4ISR) market. The firm produces uncrewed aerial vehicles, sensors, and avionics, as well as provides military and commercial training services and maintains the US Federal Aviation Administration's communications infrastructure. In July 2023, the company acquired Aerojet Rocketdyne, a key supplier of rocket motors to the space and defense industry.
Performance Overview
L3Harris Technologies Inc (LHX, Financial) reported second-quarter revenue of $5.3 billion, surpassing the analyst estimate of $5.297 billion and marking a 13% year-over-year increase. However, the company's diluted earnings per share (EPS) of $1.92 fell short of the estimated $2.10. On a non-GAAP basis, EPS was $3.24, up 9% from $2.97 in the same quarter last year.
Key Financial Achievements
The company's operating margin improved to 9.0%, a 50 basis point increase from the previous year. Adjusted segment operating margin also saw an 80 basis point increase to 15.6%. These improvements were attributed to better operational performance and cost savings from the LHX NeXt initiative.
We delivered another strong quarter of financial results with improved margins, reflecting our commitment to operational excellence and a relentless focus on execution that delivers value to our customers and shareholders," said Christopher E. Kubasik, Chair and CEO.
Segment Performance
| Segment | Revenue ($ millions) | Change | Operating Margin | Change |
|---|---|---|---|---|
| Space & Airborne Systems | 1,707 | Flat | 12.6% | +280 bps |
| Integrated Mission Systems | 1,729 | Flat | 11.9% | +260 bps |
| Communication Systems | 1,346 | +4% | 24.4% | -80 bps |
| Aerojet Rocketdyne | 581 | N/A | 12.9% | N/A |
Income Statement Highlights
Operating income for the quarter was $476 million, a 19% increase from $400 million in the same period last year. The effective tax rate on GAAP income was 5.9%, up 30 basis points from the previous year. Cash from operations was $754 million, an 82% increase from $414 million in Q2 2023. Adjusted free cash flow also saw a significant rise, reaching $714 million, up 109% from $342 million last year.
Guidance and Future Outlook
L3Harris Technologies Inc (LHX, Financial) has raised its 2024 revenue guidance from a range of $20.8 billion - $21.3 billion to $21.0 billion - $21.3 billion. The company also increased its non-GAAP EPS guidance from $12.70 - $13.05 to $12.85 - $13.15. The adjusted segment operating margin guidance has been revised from greater than 15% to a range of 15.2% - 15.4%.
As we celebrate the five-year anniversary of the L3 and Harris merger, I'm proud of the progress we've made as the industry's Trusted Disruptor. Our first-half results reflect progress toward achieving our 2026 financial framework," added Kubasik.
Overall, L3Harris Technologies Inc (LHX, Financial) demonstrated strong revenue growth and improved margins, driven by strategic acquisitions and operational efficiencies. However, the shortfall in EPS compared to analyst estimates highlights the challenges the company faces in managing costs and interest expenses. Investors will be keenly watching how the company navigates these challenges while capitalizing on its growth opportunities in the aerospace and defense industry.
Explore the complete 8-K earnings release (here) from L3Harris Technologies Inc for further details.
