L3Harris Technologies, Inc.
CEO : Mr. Christopher E. Kubasik CPA, CPA
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | 5.2% YoY | -7.5% | -16.5% | 2023-01-27 |
Chris Kubasik says,
Q4 2022 Earnings Report
- LHX delivered a solid top-line growth of 6% organically with communications leading the way.
- EPS was just above the recently guided midpoint, and free cash flow stood at $2 billion outlook.
- Segment margins were around expectations, with ongoing pressures from macro factors such as inflated costs for materials and labor.
2023 Guidance
- LHX aims to expand revenue in the 2% to 4% range and maintain industry-leading margins steady at about 15.5%.
- EPS adjusted for pension headwinds points to stable operating results.
- Expecting an improving cash flow profile in 2023.
M&A Activity
- LHX acquired ViaSat’s Tactical Data Link business and Aerojet Rocketdyne within the balanced capital allocation framework.
- TDL acquisition is complete, and Aerojet Rocketdyne will be integrated in the future.
- Aerojet Rocketdyne adds exposure to new growth markets for LHX with munitions, space exploration, and hypersonics and brings nearly $7 billion of backlog.
Investor Day
- Investor Day will be held later in the year to discuss the strategy and outlook for LHX’s growing company.
Michelle Turner says,
ISR Missionization Business
- No large international ISR pursuits in the plan
- One domestic pursuit in the first half of the year (C3D program)
Supply Chain
- Assuming consistent results in the second half of 2022 throughout the full year of the 2023 guide
Influence of 2022 on 2023 Outlook
- Two key components: ISR missionization demand and supply chain
- Prudent decision to not include ISR missionization demand in the guide
- Optimistic about landing a contract
Q & A sessions,
Acquisition Strategy
- The munitions, space, and hypersonics markets are growth markets with significant demand
- Aerojet Rocketdyne has $7 billion in backlog and multi-year programs coming up for renegotiation
- The acquisition should lead to cost savings of around $50 million by eliminating public company costs and reducing overhead
IRAD and R&D Investments
- L3Harris is investing heavily in IRAD and external R&D, with over $2 billion spent
- New technologies include replicated composite optics, advanced tactical data links, and autonomous undersea vehicles
- Investments are expected to result in new business programs of record
Integration and Operations
- Integrating Aerojet Rocketdyne is expected to be quick, with many systems migrating to L3Harris’ systems
- L3Harris has experience with converting systems and is confident in its ability to expand margins
- New business segment presidents are excited about the potential for Aerojet Rocketdyne
Revenue Synergies
- There are currently no revenue synergies between L3Harris and Aerojet Rocketdyne
- The acquisition is focused mostly on accessing new markets and technologies
Capital Deployment and Dividends
- L3Harris plans to sell non-core assets to bring down debt over the next few years
- The company plans to repurchase shares to absorb any dilution, with a target of $500 million per year
- Annual dividend increases will continue to be a priority
No bad stock 