- 2Q20 revenue
- $4.4 billion, up 138% and flat versus prior-year GAAP and
pro forma1, respectively
- Up 2.3% on an organic2 basis; funded book-to-bill of
1.09
- 2Q20 margin and earnings
- Net income margin of 6.3%; adjusted earnings before interest
and taxes (EBIT)3 margin of 18.2%
- GAAP earnings per share from continuing operations (EPS) of
$1.30, down 41% and 29% versus prior-year GAAP and pro forma,
respectively
- Non-GAAP3 EPS of $2.83, up 13% versus prior-year adjusted
pro forma
- 2Q20 cash flow
- Operating cash flow of $802 million; adjusted free cash flow
(FCF)4 of $785 million
L3Harris Technologies, Inc. (NYSE:LHX) reported second quarter
2020 revenue of $4.4 billion, up 138% and flat versus prior-year
GAAP and pro forma1, respectively, and up 2.3% on an organic2
basis. Net income was $278 million, up 4% and down 33% versus
prior-year GAAP and pro forma, respectively. Adjusted EBIT3 was
$810 million, up 9% versus prior-year adjusted pro forma, and
margin increased 150 basis points (bps) to 18.2%. GAAP EPS was
$1.30, down 41% and 29% versus prior-year GAAP and pro forma,
respectively. Non-GAAP EPS3 was $2.83, up 13% versus prior-year
adjusted pro forma.
“Our top priority continues to be the safety of our workforce,
and I am proud of their dedication as well as the progress we have
made delivering on customer and shareholder commitments during the
pandemic. We’re now at the 1-year mark post-merger and our
performance highlights the benefits of the combination,” said
William M. Brown, Chairman and Chief Executive Officer. “Our
traction with the integration and execution against strategic
priorities give us confidence in our current-year outlook and
position us well over the medium term."
Summary Financial Results
($ millions, except per share data)
Second Quarter
First Half
2020
2019
Change
2020
2019
Change
(GAAP to GAAP comparison)
Revenue
$
4,445
$
1,865
138%
$
9,071
$
3,593
152%
Net income
$
278
$
268
4%
$
472
$
511
(8%)
Net income margin
6.3
%
14.4
%
(810)bps
5.2
%
14.2
%
(900)bps
EPS
$
1.30
$
2.21
(41%)
$
2.29
$
4.23
(46%)
(GAAP to pro forma comparison)
Revenue
$
4,445
$
4,448
(0.1%)
$
9,071
$
8,834
2.7%
Net income
$
278
$
416
(33%)
$
472
$
816
(42%)
Net income margin
6.3
%
9.4
%
(310)bps
5.2
%
9.2
%
(400)bps
EPS
$
1.30
$
1.82
(29%)
$
2.29
$
3.57
(36%)
(Non-GAAP to adjusted pro forma
comparison)4
Revenue
$
4,445
$
4,448
(0.1%)
$
9,071
$
8,834
2.7%
Adjusted EBIT
$
810
$
745
9%
$
1,618
$
1,438
13%
Adjusted EBIT margin
18.2
%
16.7
%
150bps
17.8
%
16.3
%
150bps
EPS
$
2.83
$
2.51
13%
$
5.63
$
4.83
17%
Revenue for the quarter increased 138% versus prior-year GAAP
due to the post-merger inclusion of L3 operations in results. On a
pro forma basis, revenue was largely unchanged for the quarter,
primarily driven by growth in the core U.S. defense-related
businesses, offset by the divestiture of the airport security and
automation business and COVID-19-related impacts, mainly in
commercial-related businesses. On an organic5 basis, revenue
increased 2.3% for the quarter primarily from growth in Integrated
Mission Systems, Space and Airborne Systems, and Communication
Systems, partially offset by a decline in Aviation Systems due to
the pandemic.
GAAP EPS decreased 41% and 29% for the quarter versus prior-year
GAAP and pro forma, respectively, due to divestiture-related
charges, COVID-19-related impacts and amortization of
merger-related intangibles, partially offset by operational
excellence, cost management and integration benefits. Second
quarter non-GAAP EPS6 increased 13% versus prior-year adjusted pro
forma driven by the favorable factors noted above, partially offset
by the impacts of the pandemic.
For the quarter, net income margin decreased 810 bps and 310 bps
versus prior-year GAAP and pro forma, respectively. Adjusted EBIT6
margin increased 150 bps to 18.2%.
Segment Results
Integrated Mission Systems
($ millions)
Second Quarter
First Half
2020
2019
Change
2020
2019
Change
(GAAP to GAAP comparison)
Revenue
$
1,331
$
11
n/m
$
2,701
$
25
n/m
Operating income
$
224
$
3
n/m
$
425
$
6
n/m
Operating margin
16.8
%
27.3
%
15.7
%
24.0
%
(GAAP to pro forma comparison)
Revenue
$
1,331
$
1,240
7.3%
$
2,701
$
2,602
3.8%
Operating income
$
224
$
162
38%
$
425
$
327
30%
Operating margin
16.8
%
13.1
%
370bps
15.7
%
12.6
%
310bps
n/m: Not meaningful
The comparison to prior-year GAAP segment operating results is
not meaningful because this segment is comprised almost entirely of
former L3 businesses. On a pro forma basis, second quarter revenue
was up 7.3% from growth in Electro Optical and Maritime, while ISR
was largely unchanged due to the timing of aircraft inductions.
Second quarter operating income increased 38% to $224 million, and
margin expanded 370 bps versus prior-year pro forma to 16.8%,
driven by integration benefits, operational excellence and cost
management.
Segment funded book-to-bill was 1.19 for the quarter and 1.12
since the merger.
Orders strength in ISR missionization continued with over $380
million in funding across several platforms, including $139 million
supporting the Rivet Joint program and $45 million from the U.S.
Air Force to upgrade systems for data collection and management
during ISR missions.
Domestic and international demand for L3Harris electro-optical
systems remained strong with a $380 million single-award IDIQ for
WESCAM products in support of global U.S. Army operations and a $33
million order for WESCAM sensor suites supporting the U.S. Army's
Shadow UAV program. The company also reinforced its incumbency with
international customers, receiving $100 million in orders for
electro-optical systems driven by European and Middle Eastern
customers.
In Maritime, the company leveraged its investments in innovation
to grow its unmanned maritime franchise and was awarded $53 million
from a classified customer to support an unmanned surface vehicle
program.
Space and Airborne Systems
($ millions)
Second Quarter
First Half
2020
2019
Change
2020
2019
Change
(GAAP to GAAP comparison)
Revenue
$
1,249
$
1,019
23%
$
2,441
$
1,975
24%
Operating income
$
235
$
195
21%
$
456
$
369
24%
Operating margin
18.8
%
19.1
%
(30)bps
18.7
%
18.7
%
—bps
(GAAP to pro forma comparison)
Revenue
$
1,249
$
1,200
4.1%
$
2,441
$
2,312
5.6%
Operating income
$
235
$
228
3%
$
456
$
426
7%
Operating margin
18.8
%
19.0
%
(20)bps
18.7
%
18.4
%
30bps
Second quarter revenue increased 23% and operating income
increased 21% versus prior-year GAAP, primarily due to the
post-merger inclusion of L3 operations in results and the factors
below regarding pro forma revenue growth. Second quarter revenue
increased 4.1% versus prior-year pro forma from a ramp on the F-35
platform in Avionics and classified growth in Intel and Cyber,
partially offset by program transition timing and double-digit
prior-year growth in Space. Second quarter operating income
increased 3% to $235 million versus prior-year pro forma. Second
quarter operating margin contracted 20 bps versus prior-year pro
forma to 18.8% as operational excellence and integration benefits
were more than offset by unfavorable program mix.
Segment funded book-to-bill was 0.94 for the quarter and 0.97
since the merger.
Order momentum in ground-based adjacencies, responsive satellite
technology, specialized communications and commercial capabilities
was reflected in wins with significant follow-on opportunities in
Space and Intel and Cyber, including:
- $81 million sole-source, follow-on award to provide end-to-end
mission solutions for a classified customer, extending the
ground-based adjacency franchise
- Multi-million-dollar competitive award for small satellites,
reinforcing the company's position as a responsive mission
prime
- $100 million in specialized communication awards, including $57
million from the U.S. Space Force to provide key communications
services to the Enhanced Mobile Satellite Solutions program office
and a $43 million sole-source award from the U.S. Army as the prime
system integrator to design, develop and integrate tactical cyber
equipment
- Multi-million-dollar order from an international customer for a
large commercial space reflector supporting a next-generation
satellite, furthering the company's space antenna presence
internationally
L3Harris continued to strengthen its position in Avionics and
Electronic Warfare with $146 million in orders for F-35
modernization and avionics components as well as a $34 million
contract to upgrade electronic warfare systems on international
F-16s, leveraging the company's next-generation software-defined
open systems architecture to maximize aircraft survivability and
mission success.
Communication Systems
($ millions)
Second Quarter
First Half
2020
2019
Change
2020
2019
Change
(GAAP to GAAP comparison)
Revenue
$
1,112
$
609
83%
$
2,206
$
1,189
86%
Operating income
$
265
$
176
51%
$
515
$
343
50%
Operating margin
23.8
%
28.9
%
(510)bps
23.3
%
28.8
%
(550)bps
(GAAP to pro forma comparison)
Revenue
$
1,112
$
1,086
2.4%
$
2,206
$
2,127
3.7%
Operating income
$
265
$
239
11%
$
515
$
465
11%
Operating margin
23.8
%
22.0
%
180bps
23.3
%
21.9
%
140bps
(Non-GAAP to pro forma comparison)7
Revenue
$
1,112
$
1,086
2.4%
$
2,206
$
2,127
3.7%
Operating income
$
266
$
239
11%
$
516
$
465
11%
Operating margin
23.9
%
22.0
%
190bps
23.4
%
21.9
%
150bps
Second quarter revenue increased 83% and operating income
increased 51% versus prior-year GAAP, primarily due to the
post-merger inclusion of L3 operations in results and the factors
below regarding pro forma revenue growth. On a pro forma basis,
second quarter revenue increased 2.4% versus the prior year as the
ramp in U.S. DoD modernization programs in Tactical Communications
and Integrated Vision Systems was partially offset by international
tactical radio sales timing as well as lower demand, as expected,
within Public Safety due to COVID-19. Second quarter operating
income and non-GAAP7 operating income increased 11%, and non-GAAP
operating margin expanded 190bps to 23.9% versus prior-year pro
forma from integration benefits and cost management.
Segment funded book-to-bill was 1.03 for the quarter as well as
since the merger.
DoD tactical radio modernization order momentum continued in the
second quarter, with a $95 million award for the third production
order under the U.S. Army's $12.7 billion HMS Manpack IDIQ. The
company experienced solid international tactical radio demand in
Europe for software-defined radio modernization, counter terrorism
operations and anti-jamming networks, including strategic wins with
the Ukraine Ministry of Defence for Falcon III HF and multi-band
radios.
In Broadband Communications, L3Harris extended its position as a
key strategic SATCOM provider for the U.S. Army through a $41
million contract, with significant follow-on opportunity, to
provide depot and sustainment services for the Modernization of
Enterprise Terminals program. The company also received a $74
million order for ROVER® transceivers, supporting situational
awareness and surveillance.
Aviation Systems
($ millions)
Second Quarter
First Half
2020
2019
Change
2020
2019
Change
(GAAP to GAAP comparison)
Revenue
$
800
$
186
n/m
$
1,811
$
330
n/m
Operating income
$
31
$
19
n/m
$
(146)
$
36
n/m
Operating margin
3.9
%
10.2
%
(8.1)
%
10.9
%
(GAAP to pro forma comparison)
Revenue
$
800
$
965
(17%)
$
1,811
$
1,879
(3.6%)
Operating income
$
31
$
109
(72%)
$
(146)
$
214
(168%)
Operating margin
3.9
%
11.3
%
(740)bps
(8.1)
%
11.4
%
(1,950)bps
(Non-GAAP to pro forma comparison)9
Revenue
$
800
$
965
(17%)
$
1,811
$
1,879
(3.6%)
Operating income
$
100
$
109
(8%)
$
247
$
214
15%
Operating margin
12.5
%
11.3
%
120bps
13.6
%
11.4
%
220bps
n/m: Not meaningful
The comparison to prior-year GAAP segment operating results is
not meaningful because this segment is comprised largely of former
L3 businesses. Second quarter revenue decreased 17% versus
prior-year pro forma and 7.4% on an organic8 basis, driven by
COVID-19-related impacts in the commercial aviation business, which
was down in-line with expectations, partially offset by classified
growth in Defense Aviation Products. Second quarter operating
income decreased versus prior-year pro forma due to
COVID-19-related impacts and divestiture-related charges. Second
quarter non-GAAP8 operating income decreased 8% to $100 million
versus prior-year pro forma. Second quarter non-GAAP operating
margin expanded 120 bps versus prior-year pro forma to 12.5%, as
operational efficiencies, integration benefits, cost management and
restructuring savings were partially offset by COVID-19-related
headwinds.
Segment funded book-to-bill was 1.26 for the quarter and 1.13
since the merger.
Order growth was solid in the second quarter with strength in
defense-related businesses. In Defense Aviation Products, the
company was awarded $45 million in orders for combat propulsion
systems in support of the U.S. Army's ground vehicle
recapitalization strategy, increasing the contract value to-date to
over $500 million, and a $73 million award for radars supporting
the E-2D aircraft. In addition, the company was awarded a $975
million IDIQ to provide real-time responsive airborne ISR solutions
to the U.S. Special Operations Command supporting Mid-Endurance
Unmanned Aircraft Systems.
L3Harris furthered its position in Military Training with a $900
million single-award IDIQ to develop and manage simulator common
architecture requirements and standards across the U.S. Air Force's
portfolio.
Cash and Capital Deployment
($ millions)
Second Quarter
First Half
2020
2019
Change
2020
2019
Change
Operating cash flow
$
802
$
311
$
491
$
1,335
$
716
$
619
Adjusted free cash flow10
$
785
$
267
$
518
$
1,318
$
646
$
672
In the second quarter of fiscal 2020, L3Harris generated $785
million in adjusted free cash flow10 and returned $184 million to
shareholders through dividends.
L3Harris also completed the divestitures of its airport security
and automation business and its Applied Kilovolts and Analytical
Instrumentation business in the quarter, and expects to complete
the divestiture of its EOTech business imminently. Aggregate
proceeds from those divestitures total $1,055 million.
Guidance
L3Harris updates 2020 guidance as follows:
- Revenue
- $18.2 - $18.6 billion, up organically11 3% - 5% on an adjusted
pro forma basis12 (unchanged from previous guidance)
- Margin and earnings
- GAAP net income margin of 7.1%+ (decreased from previous
guidance of ~8.4%)
- Adjusted EBIT13 margin of 17.5%+ (increased from previous
guidance of ~17.5%)
- GAAP EPS of $6.03 - $6.43 (decreased from previous guidance of
$6.95 - $7.35)
- Non-GAAP EPS13 of $11.15 - $11.55 (unchanged from previous
guidance)
- Cash flow and capital deployment
- Operating cash flow and adjusted free cash flow10 at $2.8 -
$2.9 billion and $2.6 - $2.7 billion, respectively (unchanged from
previous guidance)
- ~$1.7 billion in share repurchases, inclusive of proceeds from
divestitures announced year-to-date (unchanged from previous
guidance)
COVID-19
As communicated in connection with the company’s release of
financial results for the first quarter of 2020, L3Harris’ response
to the COVID-19 pandemic and attempts to contain it, such as
mandatory closures, “shelter-in-place” orders and travel
restrictions, which 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,
included an increased focus on keeping its employees safe while
continuing to strive to meet customer commitments and support
suppliers. For example, L3Harris instituted work-from-home (for
employees who are able to work remotely) and social distancing
arrangements; canceled travel and external events; implemented
procedures for personal protective equipment; initiated health
screening procedures at all facilities; staggered work shifts,
redesigned work stations and implemented stringent cleaning
protocols; maintained an active dialog with key suppliers and
developed plans to mitigate supply chain risks; and shifted the
timing of share repurchases, which bolstered liquidity in support
of employees, suppliers and customers. As part of the company
maintaining its increased focus on those areas and seeking to
maintain continuity of operations, it has implemented more detailed
safety precautions and protocols for on-site work, such as daily
health assessments and mandatory face coverings. The company also
has allowed certain essential business travel to resume, and it
expects to utilize a phased approach based on local conditions for
transitioning employees from work-from-home arrangements to on-site
work. The U.S. Government response to the COVID-19 pandemic has
included identifying the Defense Industrial Base as a Critical
Infrastructure Sector and enhancing cash flow and liquidity for the
Defense Industrial Base, such as by increasing progress payments
and accelerating contract awards. As part of the Defense Industrial
Base, these actions have enabled L3Harris to keep its U.S.
production facilities largely operational in support of national
security commitments to U.S. Government customers and to accelerate
more than $230 million in payments to small business suppliers in
47 states.
Although the company continues to believe that the large
percentage of its revenue, earnings and cash flow that is derived
from sales to the U.S. Government, whether directly or through
prime contractors, will be relatively predictable, in part due to
the responsive actions taken by the U.S. Government described
above, the company’s commercial, international and public safety
businesses remain at higher risk of adverse impacts related to the
COVID-19 pandemic. For example, the severe decline in global air
traffic from travel restrictions and the resulting downturn in the
commercial aviation market and its impact on customer operations
has significantly reduced demand for flight training, flight
simulators and commercial avionics products in the company’s
Aviation Systems segment’s Commercial Aviation Solutions sector. As
a result, the company temporarily closed some of its flight
training facilities, initiated restructuring and other actions to
align its resources with the outlook for the commercial aviation
market (including workforce reduction and facility consolidation)
and also has recognized $69 million and $394 million of charges for
impairment of goodwill and other assets and other COVID-19-related
impacts in the second quarter and first half of 2020,
respectively.
The company’s updated 2020 guidance reflects the company’s
current expectations and assumptions regarding disruptions and
other impacts related to the COVID-19 pandemic and associated
containment actions, including on the U.S. and global economies.
These assumptions continue to include a measured assessment of the
downturn in the commercial aerospace business and in demand for
public safety solutions, as well as additional potential risks from
facility shutdowns, supply chain disruptions and international
activity weakness. The company’s current expectations and
assumptions could change, which could negatively affect the
company’s outlook. The extent of these disruptions and impacts,
including on the company’s ability to perform under U.S. Government
and other contracts within agreed timeframes and ultimately on its
results of operations and cash flows, will depend on future
developments, including the severity and duration of the pandemic
and associated containment actions taken by the U.S. Government, as
well as state, local and international governments, and
consequences thereof, and global air traffic demand, all of which
are uncertain and unpredictable, and could exacerbate other risks
described in the company’s filings with the SEC and could
materially adversely impact the company’s financial condition,
results of operations and cash flows.
Conference Call and Webcast
L3Harris will host a conference call today, July 31, 2020, at
8:30 a.m. Eastern Time (ET) to discuss second quarter 2020
financial results. The dial-in numbers for the teleconference are
(U.S.) 877-407-6184 and (International) 201-389-0877, and
participants will be directed to an operator. Please allow at least
10 minutes before the scheduled start time to connect to the
teleconference. Participants are encouraged to listen via live
webcast and view management’s supporting slide presentation at
https://www.l3harris.com/investors. A recording of the call will be
available on the L3Harris website beginning at approximately 12
p.m. ET on July 31, 2020.
About L3Harris Technologies
L3Harris Technologies is an agile global aerospace and defense
technology innovator, delivering end-to-end solutions that meet
customers’ mission-critical needs. The company provides advanced
defense and commercial technologies across air, land, sea, space
and cyber domains. L3Harris has approximately $18 billion in annual
revenue and 48,000 employees, with customers in more than 100
countries. L3Harris.com.
Non-GAAP and Pro Forma Financial Measures
This press release contains non-GAAP financial measures within
the meaning of Regulation G promulgated by the Securities and
Exchange Commission (“SEC”), including earnings per diluted share
from continuing operations for the second quarters and first halves
of 2020 and 2019; adjusted earnings before interest and taxes
(“EBIT”) and adjusted EBIT margin for the second quarters and first
halves of 2020 and 2019; adjusted free cash flow for the second
quarters and first halves of 2020 and 2019; organic revenue growth
for the second quarter of 2020 for the company and the Aviation
Systems segment; segment operating income and margin for the second
quarter and first half of 2020 for the Communication Systems
segment and the Aviation Systems segment; and expected earnings per
diluted share from continuing operations, adjusted EBIT margin,
adjusted free cash flow and organic revenue growth for 2020; in
each case, adjusted for certain costs, charges, expenses, losses or
other amounts as set forth in the reconciliations of non-GAAP
financial measures included in the financial statement tables
accompanying this press release. A “non-GAAP financial measure” is
generally defined as a numerical measure of a company’s historical
or future performance that excludes or includes amounts, or is
subject to adjustments, so as to be different from the most
directly comparable measure calculated and presented in accordance
with generally accepted accounting principles (“GAAP”). L3Harris
management believes that these non-GAAP financial measures, when
considered together with the GAAP financial measures, provide
information that is useful to investors in understanding
period-over-period operating results separate and apart from items
that may, or could, have a disproportionately positive or negative
impact on results in any particular period. L3Harris management
also believes that these non-GAAP financial measures enhance the
ability of investors to analyze L3Harris business trends and to
understand L3Harris performance. In addition, L3Harris may utilize
non-GAAP financial measures as guides in forecasting, budgeting and
long-term planning processes and to measure operating performance
for some management compensation purposes. Non-GAAP financial
measures should be considered in addition to, and not as a
substitute for, or superior to, financial measures presented in
accordance with GAAP.
This press release also contains pro forma financial measures
for the prior year which are reflected in the pro forma condensed
combined income statement information (prepared in a manner
consistent with Article 11 of Regulation S-X) included in the
company’s Current Report on Form 8-K filed with the SEC on May 4,
2020. Adjusted pro forma financial measures are included among the
non-GAAP financial measures described in the preceding paragraph
and refer to the applicable prior-year pro forma financial measure
as adjusted for certain costs, charges, expenses, losses or other
amounts as set forth in the reconciliations of non-GAAP financial
measures included in the financial statement tables accompanying
this press release.
Attachments: Financial statements (9 tables)
Forward-Looking Statements
Statements in this press release that are not historical facts
are forward-looking statements that reflect management's current
expectations, assumptions and estimates of future performance and
economic conditions. Such statements are made in reliance on the
safe harbor provisions of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements in this press release include but are
not limited to: revenue, earnings per share, operating cash flow,
adjusted free cash flow, net income, adjusted EBIT margin and share
repurchase guidance for 2020; statements regarding workforce
safety, confidence in our outlook and being well-positioned over
the medium term; statements regarding the timing of the expected
divestiture of the EOTech business and proceeds attributable
thereto; statements regarding expected, potential or contingent
impacts or actual, potential or contingent plans related to the
COVID-19 pandemic; potential program and contract opportunities and
awards and the potential value and timing thereof; and other
statements regarding outlook or that are not historical facts. The
company cautions investors that any forward-looking statements are
subject to risks and uncertainties that may cause actual results
and future trends to differ materially from those matters expressed
in or implied by such forward-looking statements. The company's
consolidated results, future trends and forward-looking statements
could be affected by many factors, risks and uncertainties,
including but not limited to: actual impacts related to the
COVID-19 pandemic; risks related to disruption of management time
from ongoing business operations due to the combination of L3 and
Harris; risks related to the inability to realize benefits or to
implement integration plans and other consequences associated with
the combination; the risk that any announcements relating to the
combination could have adverse effects on the market price of the
company’s stock; the risk that the combination could have an
adverse effect on the company’s ability to retain customers and
retain and hire key personnel and maintain relationships with
suppliers and customers, including the U.S. Government and other
governments, and on its operating results and businesses generally;
the loss of the company’s relationship with the U.S. Government or
a change or reduction in U.S. Government funding; potential changes
in U.S. Government or customer priorities and requirements
(including potential deferrals of awards, terminations, reductions
of expenditures, changes to respond to the priorities of Congress
and the Administration, budgetary constraints, debt ceiling
implications, sequestration, and cost-cutting initiatives); a
security breach, through cyber attack or otherwise, or other
significant disruptions of the company’s IT networks and systems or
those the company operates for customers; the level of returns on
defined benefit plan assets and changes in interest rates; risks
inherent with large long-term fixed-price contracts, particularly
the ability to contain cost overruns; changes in estimates used in
accounting for the company’s programs; financial and government and
regulatory risks relating to international sales and operations;
effects of any non-compliance with laws; the company’s ability to
continue to develop new products that achieve market acceptance;
the consequences of uncertain economic conditions and future
geo-political events; strategic transactions, including mergers,
acquisitions, divestitures, spin-offs and the risks and
uncertainties related thereto, including the company’s ability to
manage and integrate acquired businesses and realize expected
benefits, the potential disruption to relationships with employees,
suppliers and customers, including the U.S. Government, and to the
company’s business generally, and potential tax, indemnification
and other liabilities and exposures; performance of the company’s
subcontractors and suppliers; potential claims related to
infringement of intellectual property rights or environmental
remediation or other contingencies, litigation and legal matters
and the ultimate outcome thereof; downturns in global demand for
air travel and other economic factors impacting our commercial
aviation products, systems and services business; risks inherent in
developing new and complex technologies and/or that may not be
covered adequately by insurance or indemnity; changes in the
company’s effective tax rate; significant indebtedness and unfunded
pension liability and potential downgrades in the company’s credit
ratings; unforeseen environmental matters; natural disasters or
other disruptions affecting the company’s operations; changes in
future business or other market conditions that could cause
business investments and/or recorded goodwill or other long-term
assets to become impaired and the company’s ability to attract and
retain key employees, maintain reasonable relationships with
unionized employees and manage escalating costs of providing
employee health care. Further information relating to these and
other factors that may impact the company's results, future trends
and forward-looking statements are disclosed in the company's
filings with the SEC. The forward-looking statements contained in
this press release are made as of the date of this press release,
and the company disclaims any intention or obligation, other than
imposed by law, to update or revise any forward-looking statements,
whether as a result of new information, future events, or
otherwise. Persons reading this press release are cautioned not to
place undue reliance on forward-looking statements.
1
In this release, "pro forma" refers to the
applicable prior-year result in the pro forma condensed combined
income statement information (prepared in a manner consistent with
Article 11 of Regulation S-X) included in our Current Report on
Form 8-K filed on May 4, 2020; and “adjusted pro forma" refers to
such result as adjusted for certain item(s) indicated in the
non-GAAP financial measure reconciliations in the tables.
2
Organic revenue growth excludes revenue
attributable to each divested business for the remaining portion of
the prior-year quarter that is equivalent to the balance of the
current-year quarter following the date the business was divested;
refer to non-GAAP financial measure reconciliations in the
tables.
3
Excludes discontinued operations, as
applicable, merger deal and integration costs, COVID-19-related
charges and adjustments (including charges and adjustments for
impairment of goodwill and other assets), restructuring and other
items, divestiture expenses and losses, amortization of
acquisition-related intangibles, additional cost of sales related
to the fair value step-up in inventory sold and other prior-period
items; refer to non-GAAP financial measure reconciliations in the
tables.
4
Adjusted free cash flow represents
operating cash flow less capital expenditures adjusted to add back
cash flow for merger deal and integration costs; refer to non-GAAP
financial measure reconciliations in the tables.
5
Organic revenue growth excludes revenue
attributable to each divested business for the remaining portion of
the prior-year quarter that is equivalent to the balance of the
current-year quarter following the date the business was divested;
refer to non-GAAP financial measure reconciliations in the
tables.
6
Non-GAAP adjustments exclude discontinued
operations, as applicable, merger deal and integration costs,
COVID-19 related charges and adjustments (including charges and
adjustments for impairment of goodwill and other assets,
restructuring and other items), divestiture expenses and losses,
amortization of acquisition-related intangibles, additional cost of
sales related to the fair value step-up in inventory sold and other
prior-period items; refer to non-GAAP financial measure
reconciliations in the tables.
7
Non-GAAP adjustments exclude
COVID-19-related charges; refer to non-GAAP financial measure
reconciliations in the tables.
8
Organic revenue growth excludes revenue
attributable to each divested business for the remaining portion of
the prior-year quarter that is equivalent to the balance of the
current-year quarter following the date the business was divested;
refer to non-GAAP financial measure reconciliations in the
tables.
9
Non-GAAP adjustments exclude
COVID-19-related charges; refer to non-GAAP financial measure
reconciliations in the tables.
10
Adjusted free cash flow is operating cash
flow less capital expenditures and adjusted to add back cash flow
for merger deal and integration costs; refer to non-GAAP financial
measure reconciliations in the tables.
11
Organic revenue growth excludes revenue
attributable to each divested business for the remaining portion of
the prior-year quarter that is equivalent to the balance of the
current-year quarter following the date the business was divested;
refer to non-GAAP financial measure reconciliations in the
tables.
12
In this release, "pro forma" means results
developed from condensed combined income statement information
prepared in a manner consistent with Article 11 of Regulation S-X,
which is contained in our Current Report on Form 8-K filed with the
Securities and Exchange Commission on May 4, 2020 and is
incorporated herein by reference. "Adjusted pro forma" means pro
forma results adjusted for certain items noted below: refer to
non-GAAP financial measure reconciliations in the tables.
13
Excludes discontinued operations, as
applicable, merger integration costs, COVID-19-related charges and
adjustments (including charges and adjustments for impairment of
goodwill and other assets), restructuring and other items,
divestiture expenses and losses, amortization of
acquisition-related intangibles, and additional cost of sales
related to the fair value step-up in inventory sold; refer to
non-GAAP financial measure reconciliations in the tables.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200731005205/en/
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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