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L3Harris Reports Fourth Quarter and 2020 Results; Initiates 2021 Guidance

L3Harris Technologies reported Q4 2020 revenue of $4.66 billion, a decline of 3.6% year-over-year, primarily due to divestitures and COVID-related impacts.

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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%