-
Fourth Quarter 2020 Results
- Revenue of $4.7 billion, down 3.6% versus prior year; flat on an organic1 basis; funded book-to-bill of 0.93
- Net income margin of 3.9%; adjusted earnings before interest and taxes (EBIT)2 margin of 18.5%
- GAAP earnings per share from continuing operations (EPS) of $0.92, down 48%
- Non-GAAP EPS2 of $3.14, up 10%
- Operating cash flow of $698 million; adjusted free cash flow (FCF)2 of $642 million
-
Full Year 2020 Results
- Revenue of $18.2 billion, up 42% versus prior year, 0.5% versus prior-year pro forma3, and 2.9% on an organic basis; funded book-to-bill of 1.04
- Net income margin of 6.0%; adjusted EBIT margin of 18.0%
- GAAP EPS of $5.19, down 34%; non-GAAP EPS of $11.60, up 13%
- Operating cash flow of $2,790 million; adjusted FCF of $2,686 million
- Initiated 2021 guidance consistent with medium-term growth framework
- Raised quarterly dividend by 20% and established new $6 billion share repurchase authorization
MELBOURNE, Fla.–(BUSINESS WIRE)–L3Harris Technologies, Inc. (NYSE:LHX) reported fourth quarter 2020 revenue of $4.7 billion, down 3.6% versus prior year, and flat on an organic1 basis. GAAP net income was $184 million, down 54% versus prior year. Adjusted EBIT2 was $864 million, up 3.5% versus prior year, and adjusted EBIT margin expanded 120 basis points (bps) to 18.5%. GAAP EPS was $0.92, down 48%, and non-GAAP EPS2 was $3.14, up 10% versus prior year.
“Thanks to the hard work of our employees we continued to deliver the benefits of the merger and ended the year with solid performance, exceeding our initial 2020 guidance for margins, EPS and free cash flow as we overcame headwinds due to the global pandemic,” said William M. Brown, Chairman and Chief Executive Officer. “We’re clearly making progress in building a high-performance, technology-focused operating company and positioning L3Harris as a full end-to-end mission solutions prime. In 2021, we’ll build on our momentum as we remain focused on meeting employee, customer and shareholder commitments.”
Summary Financial Results
Fourth Quarter 2020 Results:
|
|
|
|
|
|
|
|
|
||||
|
|
|
Fourth Quarter |
|
||||||||
|
|
($ millions, except per share data) |
2020 |
|
2019 |
|
Change |
|
||||
|
|
|
|
|
|
|
|
|
||||
|
|
(GAAP to GAAP comparison) |
|
|
|
|
|
|||||
|
|
Revenue |
$ |
4,660 |
|
|
$ |
4,832 |
|
|
(3.6%) |
|
|
|
Net income |
$ |
184 |
|
|
$ |
399 |
|
|
(54%) |
|
|
|
Net income margin |
3.9 |
% |
|
8.3 |
% |
|
(440) bps |
|
||
|
|
EPS |
$ |
0.92 |
|
|
$ |
1.77 |
|
|
(48%) |
|
|
|
|
|
|
|
|
|
|
||||
|
|
(Non-GAAP to non-GAAP comparison)2 |
|
|
|
|
|
|||||
|
|
Revenue |
$ |
4,660 |
|
|
$ |
4,832 |
|
|
(3.6%) |
|
|
|
Adjusted EBIT |
$ |
864 |
|
|
$ |
835 |
|
|
3.5% |
|
|
|
Adjusted EBIT margin |
18.5 |
% |
|
17.3 |
% |
|
120 bps |
|
||
|
|
EPS |
$ |
3.14 |
|
|
$ |
2.85 |
|
|
10% |
|
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|
|
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|
|
||||
|
|
(Organic revenue comparison)1 |
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|
|
|
|
|
||||
|
|
Organic revenue |
$ |
4,660 |
|
|
$ |
4,672 |
|
|
—% |
|
|
|
|
|
|
|
|
|
|
||||
Fourth quarter revenue decreased 3.6% versus prior year primarily due to divestitures and COVID-related impacts, mainly for commercial-related sales. Organic revenue was flat for the quarter as 3.7% growth in core U.S. and international businesses, excluding commercial aviation and Public Safety, was offset by the anticipated COVID-related decline. At the segment level, revenue growth was driven by Space and Airborne Systems and Communication Systems, offset by a decline in Aviation Systems primarily due to COVID-related impacts. Funded book-to-bill was 0.93 for the quarter.
Fourth quarter GAAP EPS decreased 48% versus prior year primarily due to charges for the impairment of intangibles, goodwill and other assets related to the commercial aviation business and other COVID-related impacts. These charges and other impacts were partially offset by operational excellence, integration benefits, cost management, a decrease in integration costs and a lower share count. Non-GAAP EPS increased 10% versus prior year driven by operational excellence, integration benefits, cost management and a lower share count, partially offset by COVID and divestiture-related impacts. Net income margin contracted 440 bps and adjusted EBIT margin expanded 120 bps to 18.5% versus prior year.
Full Year 2020 Results:
|
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|
|
|
|
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|
||||
|
|
|
Full Year |
|
||||||||
|
|
($ millions, except per share data) |
2020 |
|
2019 |
|
Change |
|
||||
|
|
|
|
|
|
|
|
|
||||
|
|
(GAAP to GAAP comparison) |
|
|
|
|
|
|
||||
|
|
Revenue |
$ |
18,194 |
|
|
$ |
12,856 |
|
|
42% |
|
|
|
Net income |
$ |
1,086 |
|
|
$ |
1,345 |
|
|
(19%) |
|
|
|
Net income margin |
6.0 |
% |
|
10.5 |
% |
|
(450) bps |
|
||
|
|
EPS |
$ |
5.19 |
|
|
$ |
7.90 |
|
|
(34%) |
|
|
|
|
|
|
|
|
|
|
||||
|
|
(GAAP to pro forma comparison)3 |
|
|
|
|
|
|
||||
|
|
Revenue |
$ |
18,194 |
|
|
$ |
18,097 |
|
|
0.5% |
|
|
|
Net income |
$ |
1,086 |
|
|
$ |
1,650 |
|
|
(34%) |
|
|
|
Net income margin |
6.0 |
% |
|
9.1 |
% |
|
(310) bps |
|
||
|
|
EPS |
$ |
5.19 |
|
|
$ |
7.25 |
|
|
(28%) |
|
|
|
|
|
|
|
|
|
|
||||
|
|
(Non-GAAP to adjusted pro forma comparison) 2,3 |
|
|
|
|
|
|
||||
|
|
Revenue |
$ |
18,194 |
|
|
$ |
18,097 |
|
|
0.5% |
|
|
|
Adjusted EBIT |
$ |
3,280 |
|
|
$ |
3,039 |
|
|
7.9% |
|
|
|
Adjusted EBIT margin |
18.0 |
% |
|
16.8 |
% |
|
120 bps |
|
||
|
|
EPS |
$ |
11.60 |
|
|
$ |
10.26 |
|
|
13% |
|
|
|
|
|
|
|
|
|
|
||||
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|
(Organic revenue comparison)1 |
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|
|
|
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|
||||
|
|
Organic revenue |
$ |
18,194 |
|
|
$ |
17,677 |
|
|
2.9% |
|
|
|
|
|
|
|
|
|
|
||||
Full-year revenue increased 42% versus prior year primarily due to the post-merger inclusion of L3 operations in results, partially offset by divestitures and COVID-related impacts, mainly for commercial-related sales. Full-year revenue increased 0.5% versus prior-year pro forma and 2.9% on an organic basis as 5.6% growth in core U.S. and international businesses, excluding commercial aviation and Public Safety, more than offset the COVID-related decline. At the segment level, revenue growth was driven by Space and Airborne Systems, Integrated Mission Systems and Communication Systems, partially offset by a decline in Aviation Systems primarily due to COVID-related impacts. Funded book-to-bill was 1.04 for the year.
Full-year GAAP EPS decreased 34% versus prior year primarily due to charges for impairment of goodwill and other assets and other COVID-related impacts, higher amortization of acquisition-related intangibles, divestitures and a higher share count. This decline was partially offset by the inclusion of L3 operations in results for the full year in 2020 compared with only the second half in 2019, operational excellence, integration benefits, cost management and a decrease in integration costs. Full-year non-GAAP EPS increased 13% versus prior year driven by operational excellence, integration benefits, cost management and a lower share count, net of COVID and divestiture-related impacts. Net income margin contracted 450 bps and adjusted EBIT margin expanded 120 bps to 18.0% versus prior year.
Segment Results
Integrated Mission Systems
Fourth Quarter 2020 Results:
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|
|
|
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|
||||
|
|
|
Fourth Quarter |
|
||||||||
|
|
($ millions) |
2020 |
|
2019 |
|
Change |
|
||||
|
|
|
|
|
|
|
|
|
||||
|
|
(GAAP to GAAP comparison) |
|
|
|
|
|
|||||
|
|
Revenue |
$ |
1,465 |
|
|
$ |
1,466 |
|
|
(0.1%) |
|
|
|
Operating income |
$ |
209 |
|
|
$ |
195 |
|
|
7.2% |
|
|
|
Operating margin |
14.3 |
% |
|
13.3 |
% |
|
100 bps |
|
||
|
|
|
|
|
|
|
|
|
||||
|
|
(Organic revenue comparison)1 |
|
|
|
|
|
|
||||
|
|
Organic revenue |
$ |
1,465 |
|
|
$ |
1,466 |
|
|
(0.1%) |
|
|
|
|
|
|
|
|
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|
||||
Fourth quarter revenue was flat as strong growth in Maritime from a ramp in manned and classified platforms was offset by a moderate decline in ISR due to aircraft timing and in Electro Optical due to program timing. Fourth quarter operating income increased 7.2% to $209 million, and operating margin expanded 100 bps to 14.3% versus prior year, driven by cost management, integration benefits and operational excellence.
Segment funded book-to-bill was 1.04 for the quarter.
In ISR, domestic and international demand remained strong with a 5-year, $668 million single-award IDIQ to perform sustainment services for the U.S. Air Force C-130, enabling the Air Force to maintain its fleet readiness. L3Harris also received $142 million in international orders, including a contract to provide ISR capabilities on a fleet of maritime patrol aircraft for an Asia Pacific customer.
In Maritime, the company received a $62 million follow-on award to provide power systems in support of the U.S. Navy’s Virginia-class submarine program. In addition, the company received a $60 million follow-on award to provide multiple autonomous surface vehicles (ASV) with advanced capabilities for the United Kingdom and France’s joint Maritime Mine Counter Measures (MMCM) program, strengthening the company’s position as a leader in unmanned surface vessel technology.
In Electro Optical, the company received several sensor awards, including a $26 million order to deliver WESCAM turrets for SOCOM’s AC-130J aircraft and an $18 million order for F-35 systems. The company also reinforced its international position with a $68 million award to provide WESCAM sighting sensors for the Swiss Armed Forces’ new land-based TASYS tactical reconnaissance system.
Full Year 2020 Results:
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
Full Year |
|
||||||||
|
|
($ millions) |
|
2020 |
|
2019 |
|
Change |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
|
|
(GAAP to GAAP comparison) |
|
|
|
|
|
|
|
||||
|
|
Revenue |
|
$ |
5,538 |
|
|
$ |
2,783 |
|
|
n/m |
|
|
|
Operating income |
|
$ |
847 |
|
|
$ |
377 |
|
|
n/m |
|
|
|
Operating margin |
|
15.3 |
% |
|
13.5 |
% |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||||
|
|
(GAAP to pro forma comparison) |
|
|
|
|
|
|
|
||||
|
|
Revenue |
|
$ |
5,538 |
|
|
$ |
5,360 |
|
|
3.3% |
|
|
|
Operating income |
|
$ |
847 |
|
|
$ |
698 |
|
|
21% |
|
|
|
Operating margin |
|
15.3 |
% |
|
13.0 |
% |
|
230 bps |
|
||
|
|
|
|
|
|
|
|
|
|
||||
|
|
(Organic revenue comparison)1 |
|
|
|
|
|
|
|
||||
|
|
Organic revenue |
|
$ |
5,538 |
|
|
$ |
5,360 |
|
|
3.3% |
|
|
|
|
|
|
|
|
|
|
|
||||
n/m: Not meaningful
For the full year, the comparison to prior-year GAAP operating results is not meaningful as the segment is almost entirely comprised of former L3 businesses. Full-year revenue increased 3.3% versus prior-year pro forma driven by strong growth in Maritime, from a ramp in manned and classified platforms, and moderate growth in ISR. Full-year operating income increased 21% to $847 million versus prior-year pro forma, and operating margin expanded 230 bps to 15.3%, driven by operational excellence and integration benefits. Funded book-to-bill was 1.17.
Space and Airborne Systems
Fourth Quarter 2020 Results:
|
|
|
|
|
|
|
|
|
||||
|
|
|
Fourth Quarter |
|
||||||||
|
|
($ millions) |
2020 |
|
2019 |
|
Change |
|
||||
|
|
|
|
|
|
|
|
|
||||
|
|
(GAAP to GAAP comparison) |
|
|
|
|
|
|||||
|
|
Revenue |
$ |
1,256 |
|
|
$ |
1,204 |
|
|
4.3% |
|
|
|
Operating income |
$ |
245 |
|
|
$ |
217 |
|
|
13% |
|
|
|
Operating margin |
19.5 |
% |
|
18.0 |
% |
|
150 bps |
|
||
|
|
|
|
|
|
|
|
|
||||
|
|
(Organic revenue comparison)1 |
|
|
|
|
|
|
||||
|
|
Organic revenue |
$ |
1,256 |
|
|
$ |
1,199 |
|
|
4.8% |
|
|
|
|
|
|
|
|
|
|
||||
Fourth quarter revenue increased 4.3% versus prior year and 4.8% on an organic basis, primarily due to a ramp on the F-35 platform in Mission Avionics and growth in Space from recent program wins, partially offset by a moderate decline in Intel & Cyber due to program timing. Fourth quarter operating income increased 13% to $245 million, and operating margin expanded 150 bps to 19.5% versus prior year, driven by cost management, operational excellence and integration benefits, net of program mix.
Segment funded book-to-bill was 0.81 for the quarter.
The Space business received several key awards that extend L3Harris’ exquisite space franchise, including contracts totaling more than $100 million to deliver imaging payloads for classified customers and a $137 million award to provide four fully-digital navigation payloads to be integrated into GPS III follow-on space vehicles 13 to 16.
Within Mission Avionics and Electronic Warfare, L3Harris booked more than $200 million in orders on long-term platforms (F-35, F/A-18 and F-16), increasing total orders for the year to more than $1.1 billion on these aircraft.
In Intel & Cyber, the company received a $320 million ceiling increase up to $800 million on an existing sole-source IDIQ contract to provide continued end-to-end mission solutions for a classified customer, sustaining its ground-based adjacency franchise.
Full Year 2020 Results:
|
|
|
|
|
|
|
|
|
||||
|
|
|
Full Year |
|
||||||||
|
|
($ millions) |
2020 |
|
2019 |
|
Change |
|
||||
|
|
|
|
|
|
|
|
|
||||
|
|
(GAAP to GAAP comparison) |
|
|
|
|
|
|
||||
|
|
Revenue |
$ |
4,946 |
|
|
$ |
4,352 |
|
|
14% |
|
|
|
Operating income |
$ |
932 |
|
|
$ |
816 |
|
|
14% |
|
|
|
Operating margin |
18.8 |
% |
|
18.8 |
% |
|
— bps |
|
||
|
|
|
|
|
|
|
|
|
||||
|
|
(GAAP to pro forma comparison) |
|
|
|
|
|
|
||||
|
|
Revenue |
$ |
4,946 |
|
|
$ |
4,689 |
|
|
5.5% |
|
|
|
Operating income |
$ |
932 |
|
|
$ |
873 |
|
|
6.8% |
|
|
|
Operating margin |
18.8 |
% |
|
18.6 |
% |
|
20 bps |
|
||
|
|
|
|
|
|
|
|
|
||||
|
|
(Organic revenue comparison)1 |
|
|
|
|
|
|
||||
|
|
Organic revenue |
$ |
4,946 |
|
|
$ |
4,677 |
|
|
5.8% |
|
|
|
|
|
|
|
|
|
|
||||
Full-year revenue and operating income increased 14% versus prior year, primarily due to the post-merger inclusion of L3 operations in results and the factors below regarding pro forma and organic revenue growth. Full-year revenue increased 5.5% versus prior-year pro forma and 5.8% on an organic basis, primarily due to a ramp on the F-35 platform in Mission Avionics and classified growth in Intel & Cyber, partially offset by program transition timing in Space and Electronic Warfare. Full-year operating income increased 6.8% to $932 million versus prior-year pro forma, and operating margin expanded 20 bps to 18.8%, driven by cost management, operational excellence and integration benefits, net of program mix. Funded book-to-bill was 0.99.
Communication Systems
Fourth Quarter 2020 Results:
|
|
|
|
|
|
|
|
|
||||
|
|
|
Fourth Quarter |
|
||||||||
|
|
($ millions) |
2020 |
|
2019 |
|
Change |
|
||||
|
|
|
|
|
|
|
|
|
||||
|
|
(GAAP to GAAP comparison) |
|
|
|
|
|
|||||
|
|
Revenue |
$ |
1,143 |
|
|
$ |
1,119 |
|
|
2.1% |
|
|
|
Operating income |
$ |
296 |
|
|
$ |
259 |
|
|
14% |
|
|
|
Operating margin |
25.9 |
% |
|
23.1 |
% |
|
280 bps |
|
||
|
|
|
|
|
|
|
|
|
||||
|
|
(Organic revenue comparison)1 |
|
|
|
|
|
|
||||
|
|
Organic revenue |
$ |
1,143 |
|
|
$ |
1,105 |
|
|
3.4% |
|
|
|
|
|
|
|
|
|
|
||||
Fourth quarter revenue increased 2.1% versus prior year and 3.4% on an organic basis from strong growth in Tactical Communications, primarily from the Middle East and Central Asia, as well as the continued ramp in U.S. DoD modernization. This growth was partially offset by international program timing in Integrated Vision Solutions and lower demand within Public Safety due to anticipated COVID-related impacts. Fourth quarter operating income increased 14% to $296 million, and operating margin expanded 280 bps to 25.9% versus prior year from operational excellence, integration benefits and cost management.
Segment funded book-to-bill was 0.95 for the quarter.
The Broadband business secured a key strategic win of the U.S. Navy’s Next Generation Jammer Low Band (NGJ-LB) Tactical Jamming System program to upgrade airborne electronic warfare capabilities for the EA-18G Growler fleet. Under this five-year, $496 million contract, the company will deliver prototype tactical jamming pods designed to extend U.S. air superiority, with a significant multi-billion-dollar follow-on opportunity.
Tactical Communications received several key awards that support U.S. DoD modernization and strengthen its domestic and international presence:
- $57 million award under the U.S. Army’s $3.9 billion two-channel Leader radio IDIQ contract
- $41 million in orders from the U.S. Air Force for advanced two-channel Falcon IV® manpack radios as well as vehicular C4I and radio systems
- Three-year, $115 million contract from the Australian Defence Force to deliver tactical radios and waveforms that support emerging crypto modernization standards
- $70 million order from a country in the Middle East for Falcon III® products, bringing total orders booked to-date to the full contract value of $174 million
In addition, the company received a five-year, $88 million single-award IDIQ contract, with an initial $21 million order, to deliver its Panther II Very Small Aperture Terminals (VSATs) under the U.S. Marine Corps Wideband Satellite-Expeditionary (MCWS-X) modernization program.
In Integrated Vision Solutions, the company received a $105 million contract to deliver advanced night vision goggles to the Australian Army under the Land 53 Tranche 2 modernization program, following successful performance on Tranche 1 and increasing inception-to-date awards to over $300 million.
Full Year 2020 Results:
|
|
|
|
|
|
|
|
|
||||
|
|
|
Full Year |
|
||||||||
|
|
($ millions) |
2020 |
|
2019 |
|
Change |
|
||||
|
|
|
|
|
|
|
|
|
||||
|
|
(GAAP to GAAP comparison) |
|
|
|
|
|
|
||||
|
|
Revenue |
$ |
4,443 |
|
|
$ |
3,340 |
|
|
33% |
|
|
|
Operating income |
$ |
1,084 |
|
|
$ |
836 |
|
|
30% |
|
|
|
Operating margin |
24.4 |
% |
|
25.0 |
% |
|
(60) bps |
|
||
|
|
|
|
|
|
|
|
|
||||
|
|
(GAAP to pro forma comparison) |
|
|
|
|
|
|
||||
|
|
Revenue |
$ |
4,443 |
|
|
$ |
4,278 |
|
|
3.9% |
|
|
|
Operating income |
$ |
1,084 |
|
|
$ |
958 |
|
|
13% |
|
|
|
Operating margin |
24.4 |
% |
|
22.4 |
% |
|
200 bps |
|
||
|
|
|
|
|
|
|
|
|
||||
|
|
(Non-GAAP to pro forma comparison)4 |
|
|
|
|||||||
|
|
Revenue |
$ |
4,443 |
|
|
$ |
4,278 |
|
|
3.9% |
|
|
|
Operating income |
$ |
1,085 |
|
|
$ |
958 |
|
|
13% |
|
|
|
Operating margin |
24.4 |
% |
|
22.4 |
% |
|
200 bps |
|
||
|
|
|
|
|
|
|
|
|
||||
|
|
(Organic revenue comparison)1 |
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|
|
|
|
|
||||
|
|
Organic revenue |
$ |
4,443 |
|
|
$ |
4,257 |
|
|
4.4% |
|
|
|
|
|
|
|
|
|
|
||||
Full-year revenue increased 33%, operating income increased 30% and operating margin contracted 60 bps versus prior year, primarily due to the post-merger inclusion of L3 operations in results. Full-year revenue increased 3.9% versus prior-year pro forma and 4.4% on an organic basis from strong growth in Tactical Communications, primarily from the ramp in U.S. DoD modernization that also benefited Integrated Vision Solutions, partially offset by lower demand in Public Safety due to COVID-related impacts. Full-year GAAP and non-GAAP operating income increased 13%, and operating margin expanded 200 bps to 24.4% versus prior-year pro forma from operational excellence, integration benefits and cost management. Funded book-to-bill was 0.94.
Aviation Systems
Fourth Quarter 2020 Results:
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||||
|
|
|
Fourth Quarter |
|
||||||||
|
|
($ millions) |
2020 |
|
2019 |
|
Change |
|
||||
|
|
|
|
|
|
|
|
|
||||
|
|
(GAAP to GAAP comparison) |
|
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|
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|
|||||
|
|
Revenue |
$ |
845 |
|
|
$ |
1,090 |
|
|
(22%) |
|
|
|
Operating income (loss) |
$ |
(131) |
|
|
$ |
162 |
|
|
(181%) |
|
|
|
Operating margin |
(15.5) |
% |
|
14.9 |
% |
|
(3,040) bps |
|
||
|
|
|
|
|
|
|
|
|
||||
|
|
(Non-GAAP to non-GAAP comparison)5 |
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|
|
|
|||||
|
|
Revenue |
$ |
845 |
|
|
$ |
1,090 |
|
|
(22%) |
|
|
|
Operating income |
$ |
126 |
|
|
$ |
162 |
|
|
(22%) |
|
|
|
Operating margin |
14.9 |
% |
|
14.9 |
% |
|
— bps |
|
||
|
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|
|
|
|
|
|
|
||||
|
|
(Organic revenue comparison)1 |
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|
||||
|
|
Organic revenue |
$ |
845 |
|
|
$ |
949 |
|
|
(11%) |
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|
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|
||||
Fourth quarter revenue decreased 22% versus prior year primarily due to the divestiture of the airport security and automation business, and 11% on an organic basis driven by COVID-related impacts in the commercial aviation business, consistent with expectations. This decline was partially offset by growth in Defense Aviation, from a ramp on classified programs and combat propulsion systems, and higher FAA volume in Mission Networks. The fourth quarter GAAP operating loss was driven by charges for impairment of goodwill and other assets related to our commercial aviation business, other COVID-related impacts and the divestiture of the airport security and automation business, partially offset by growth in Defense Aviation and Mission Networks. Non-GAAP operating income decreased 22% due to COVID-related impacts and the divestiture of the airport security and automation business, net of growth in Defense Aviation and Mission Networks. Non-GAAP operating margin was flat at 14.9% as operational excellence, integration benefits, and cost management offset COVID-related headwinds.
Segment funded book-to-bill was 0.89 for the quarter.
Order momentum in Defense Aviation was reflected in several key awards, including:
- $142 million contract with a multi-million-dollar initial order from the U.S. Space and Missile Systems Center to develop next-generation application-specific integrated circuits (ASICs) for M-Code GPS receivers, a critical element in support of U.S. national security and bringing total awards to-date to over $500 million
- $32 million in orders for combat propulsion systems under a five-year, $974 million sole-source IDIQ in support of the U.S. Army’s ground vehicle recapitalization
- More than $30 million order to provide RF signal amplification for satellite communication in support of the Airbus OneSat program
- $29 million follow-on production order for fuzing and ordnance systems from the U.S. Army
Full Year 2020 Results:
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||||
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|
|
Full Year |
|
||||||||
|
|
($ millions) |
2020 |
|
2019 |
|
Change |
|
||||
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|
|
|
|
|
|
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|
||||
|
|
(GAAP to GAAP comparison) |
|
|
|
|
|
|
||||
|
|
Revenue |
$ |
3,448 |
|
|
$ |
2,368 |
|
|
n/m |
|
|
|
Operating income (loss) |
$ |
(177) |
|
|
$ |
325 |
|
|
n/m |
|
|
|
Operating margin |
(5.1) |
% |
|
13.7 |
% |
|
|
|
||
|
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|
|
|
|
|
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|
||||
|
|
(GAAP to pro forma comparison) |
|
|
|
|
|
|
||||
|
|
Revenue |
$ |
3,448 |
|
|
$ |
3,917 |
|
|
(12%) |
|
|
|
Operating income (loss) |
$ |
(177) |
|
|
$ |
503 |
|
|
(135%) |
|
|
|
Operating margin |
(5.1) |
% |
|
12.8 |
% |
|
(1,790) bps |
|
||
|
|
|
|
|
|
|
|
|
||||
|
|
(Non-GAAP to pro forma comparison)5 |
|
|
|
|||||||
|
|
Revenue |
$ |
3,448 |
|
|
$ |
3,917 |
|
|
(12%) |
|
|
|
Operating income |
$ |
476 |
|
|
$ |
503 |
|
|
(5.4%) |
|
|
|
Operating margin |
13.8 |
% |
|
12.8 |
% |
|
100 bps |
|
||
|
|
|
|
|
|
|
|
|
||||
|
|
(Organic revenue comparison)1 |
|
|
|
|
|
|
||||
|
|
Organic revenue |
$ |
3,448 |
|
|
$ |
3,553 |
|
|
(3.0%) |
|
|
|
|
|
|
|
|
|
|
||||
n/m: Not meaningful
For the full year, the comparison to prior-year GAAP operating results is not meaningful as the segment is mainly comprised of former L3 businesses. Full-year revenue decreased 12% versus prior-year pro forma primarily due to the divestiture of the airport security and automation business, and 3.0% on an organic basis driven by COVID-related impacts in the commercial aviation business. This decline was partially offset by growth in Defense Aviation, from a ramp on classified programs and combat propulsion systems, and higher FAA volume in Mission Networks.
The full-year GAAP operating loss versus prior-year pro forma was due to charges for the impairment of goodwill and other assets, COVID-related impacts and the divestiture of the airport security and automation business, partially offset by growth in Defense Aviation and Mission Networks. Non-GAAP operating income decreased 5.4% to $476 million versus prior-year pro forma due to the divestiture of the airport security and automation business and COVID-related impacts, net of growth in Defense Aviation and Mission Networks. Non-GAAP operating margin expanded 100 bps to 13.8% as operational excellence, integration benefits and cost management more than offset COVID-related headwinds. Funded book-to-bill was 1.03.
Cash and Capital Deployment
|
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||||||||||||
|
|
|
Fourth Quarter |
|
Full Year |
|
||||||||||||||||||||
|
|
($ millions) |
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Operating cash flow |
$ |
698 |
|
|
$ |
858 |
|
|
$ |
(160) |
|
|
$ |
2,790 |
|
|
$ |
1,655 |
|
|
$ |
1,135 |
|
|
|
|
Adjusted free cash flow |
$ |
642 |
|
|
$ |
831 |
|
|
$ |
(189) |
|
|
$ |
2,686 |
|
|
$ |
2,095 |
|
|
$ |
591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
In the fourth quarter of fiscal 2020, L3Harris generated $642 million in adjusted free cash flow and returned $619 million to shareholders through $440 million in share repurchases and $179 million in dividends. For the full year, the company generated $2,686 million in adjusted free cash flow and returned $3,015 million to shareholders through $2,290 million in share repurchases and $725 million in dividends.
The L3Harris Board of Directors approved a 20 percent increase in the company’s quarterly cash dividend rate from 85 cents per share to $1.02 per share, commencing with the dividend to be declared for the first quarter of 2021. The L3Harris Board also approved a new $6 billion share repurchase authorization.
Guidance
L3Harris initiated the following guidance for 2021:
-
Revenue
- $18.5 billion – $18.9 billion, up organically 3.0% – 5.0%
-
Margin and earnings
- GAAP net income margin of 10.8% – 11.1%
- Adjusted EBIT margin of 18.0% – 18.5%
- GAAP EPS of $9.80 – $10.11
- Non-GAAP EPS of $12.60 – $13.00
-
Cash flow and capital deployment
- Operating cash flow and adjusted free cash flow of $3.1 billion – $3.2 billion and $2.8 billion – $2.9 billion, respectively
- ~$2.3 billion in share repurchases, excluding use of divestiture proceeds
COVID
As communicated in connection with the company’s prior releases of quarterly financial results for 2020, the ongoing attempts to contain and reduce the spread of COVID, such as mandatory closures, “shelter-in-place” orders and travel and quarantine restrictions, have caused significant disruptions and adverse effects on the U.S. and global economies, such as impacts to supply chains, customer demand, international trade and capital markets. L3Harris’ response has involved increasing its focus on keeping its employees safe while striving to maintain continuity of operations, meet customer commitments and support suppliers. For example, the company instituted work-from-home (for employees who are able to work remotely) and social distancing arrangements; canceled travel and external events; procured personal protective equipment for employees; implemented health screening procedures at all facilities; staggered work shifts, redesigned work stations, implemented stringent cleaning protocols and initiated more detailed safety precautions and protocols for on-site work, such as daily health assessments and mandatory face coverings, which currently remain in effect.
Contacts
Investor Relations Contact:
Rajeev Lalwani, 321-727-9383
rajeev.lalwani@l3harris.com
Media Relations Contact:
Jim Burke, 321-727-9131
jim.burke@l3harris.com
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