- 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
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%
(Organic revenue comparison)1
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:
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%
(Organic revenue comparison)1
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:
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%)
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
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:
Fourth Quarter
($ millions)
2020
2019
Change
(GAAP to GAAP comparison)
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
Revenue
$
845
$
1,090
(22%)
Operating income
$
126
$
162
(22%)
Operating margin
14.9
%
14.9
%
— bps
(Organic revenue comparison)1
Organic revenue
$
845
$
949
(11%)
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
- $29 million follow-on production order for fuzing and ordnance
systems from the U.S. Army
Full Year 2020 Results:
Full Year
($ millions)
2020
2019
Change
(GAAP to GAAP comparison)
Revenue
$
3,448
$
2,368
n/m
Operating income (loss)
$
(177)
$
325
n/m
Operating margin
(5.1)
%
13.7
%
(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 $476 million versus prior-year pro forma due to the
divestiture of the airport security and automation business and
COVID-related impacts, net of growth in Defense Aviation and
Mission Networks. Non-GAAP operating margin expanded 100 bps to
13.8% as operational excellence, integration benefits and cost
management more than offset COVID-related headwinds. Funded
book-to-bill was 1.03.
Cash and Capital Deployment
Fourth Quarter
Full Year
($ 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. The company has also maintained an
active dialog with key suppliers and developed plans to mitigate
supply chain risks. The company has allowed certain essential
business travel to resume, and continues to expect 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 COVID 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 a part of the Defense Industrial Base, these actions
have enabled the company to keep its U.S. production facilities
largely operational in support of national security commitments to
U.S. Government customers and to accelerate payments to small
business suppliers, which it expects to continue while the U.S.
Government’s responsive actions remain in effect.
Although the company believes 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 are at a
higher risk of adverse COVID-related impacts. 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 $767 million of
charges for impairment of goodwill and other assets and other
COVID-related impacts for full-year 2020.
The company’s 2021 guidance reflects the company’s current
expectations and assumptions regarding disruptions, containment
actions and other COVID-related impacts, 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 contracts 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 COVID-related impacts and associated containment and mitigation
actions taken by the U.S. Government, state and local government
officials and international governments, and consequences thereof,
and global air traffic demand and governmental subsidies to
airlines, all of which are uncertain and unpredictable, 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, January 29, 2021, at
8:30 a.m. Eastern Time (ET) to discuss fourth 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
L3Harris.com. A recording of the call will be available on the
L3Harris website beginning at approximately 12 p.m. ET on January
29, 2021.
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 (“EPS”), adjusted earnings before
interest and taxes (“EBIT”), adjusted EBIT margin and adjusted free
cash flow for the fourth quarters and full years of 2020 and 2019;
organic revenue growth for the company, for the company excluding
its Commercial Aviation Solutions and Public Safety sectors, and
for its Space and Airborne Systems, Communication Systems and
Aviation Systems segments for the fourth quarter and full-year
2020; segment operating income and margin for the Communication
Systems segment for full-year 2020 and for the Aviation Systems
segment for the fourth quarter and full-year 2020; and expected
EPS, adjusted EBIT margin, adjusted free cash flow and organic
revenue growth for 2021; 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 full-year 2019, which combine the applicable actual GAAP
results for the third and fourth quarters of 2019 (which occurred
following the L3Harris Merger) with the corresponding results for
the first two quarters of 2019 (preceding the L3Harris Merger) 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 (11 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 and adjusted EBIT margin and
share repurchase guidance for 2021; statements regarding expected,
potential or contingent impacts or actual, potential or contingent
plans or expectations related to the COVID-19 pandemic; program,
contract and order opportunities and awards and the value or
potential value and timing thereof; statements regarding building
on momentum; 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 COVID; 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. The declaration of dividends and the amount
and timing thereof and the level and timing of share repurchases
will depend on a number of factors, including the company’s
financial condition, capital requirements, cash flow, results of
operations, future business prospects and other factors. There can
be no assurances that the company’s cash dividend rate will
continue to increase or that the company will complete any or all
share repurchases under the new authorization, which authorizes
open market purchases, private transactions, transactions
structured through investment banking institutions and any
combinations thereof. The timing, volume and nature of share
repurchases are subject to business and market conditions,
applicable securities laws, and other factors, and are at the
discretion of the company and may be suspended or discontinued at
any time without prior notice. 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.
__________________________________________________________________
1In this release, organic revenue growth excludes revenue
attributable to each divested business for the portion of the
prior-year period equivalent to the portion of the current-year
period following the date the business was divested; refer to
non-GAAP financial measure (NGFM) reconciliations in the tables
accompanying this press release. 2Adjusted EBIT, adjusted EBIT
margin, non-GAAP EPS and adjusted free cash flow (FCF) are NGFMs;
refer to NGFM reconciliations in the tables accompanying this press
release for applicable adjustments and/or exclusions and to the
disclosures in the “Non-GAAP and Pro Forma Financial Measures”
section of this press release for more information. 3In full-year
comparisons in this release, "pro forma" refers to the applicable
result for full-year 2019, which combines the actual GAAP results
for the third and fourth quarters of 2019 (which occurred following
the L3Harris merger) with the corresponding results for the first
two quarters of 2019 (preceding the L3Harris merger) in the pro
forma condensed combined income statement information (prepared in
a manner consistent with Article 11 of Regulation S-X) included in
L3Harris' Current Report on Form 8-K filed on May 4, 2020; and
“adjusted pro forma" refers to such combined results as adjusted
for certain items indicated in the NGFM reconciliations in the
tables accompanying this press release. 4Excludes COVID-related
charges; refer to NGFM reconciliations in the tables accompanying
this press release. 5Excludes COVID-related charges and adjustments
(including impairment of goodwill and other assets related to
commercial aviation business); refer to NGFM reconciliations in the
tables accompanying this press release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210129005238/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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