L3Harris Technologies, Inc. (LHX - Free Report) reported fourth-quarter fiscal 2019 results for Harris Corporation on a standalone basis, following the completion of L3 Technologies and Harris Corp’s merger on Jun 29.
L3Harris’ adjusted earnings from continuing operations came in at $2.44 per share, which surpassed the Zacks Consensus Estimate of $2.30 by 6.1%. The bottom line also increased 39% from the year-ago quarter’s figure of $1.76.
Excluding one-time items, the company reported GAAP earnings of $2.21 compared with $1.72 registered in the year-ago quarter.
For fiscal 2019, L3Harris’ adjusted earnings of $8.29 per share increased 30% from $6.39 in the prior year. The reported figure also surpassed the Zacks Consensus Estimate of $8.15 by 1.7%.
Total Revenues
In the quarter under review, total revenues came in at $1.87 billion, outpacing the Zacks Consensus Estimate of $1.80 billion by 3.4%. The top line also improved 12% year over year. The year-over-year upside was driven by steady growth across all its three segments.
For fiscal 2019, total revenues increased 10% year over year to $6.80 billion. The top line also surpassed the Zacks Consensus Estimate of $6.74 billion by a mere 0.9%.
Orders & Margin
Orders in the fourth quarter totaled $1.90 billion, reflecting a 2% rise from the year-ago quarter.
Operating income came in at $293 million compared with $272 million in fiscal 2018’s fourth quarter. However, operating margin contracted 70 basis points (bps) to 15.7% in the reported quarter.
Segmental Performance
Electronic Systems: Net sales at the segment improved 14% to $728 million from the prior-year quarter’s $636 million driven by sustained growth on long-term platforms – F-35, F/A-18 and F-16.
Operating income summed $144 million compared with $118 million in the year-ago quarter. Moreover, operating margin expanded 120 bps to 19.8%.
Space and Intelligence Systems: The segment recorded net sales of $542 million in the fiscal fourth quarter, up 8% year over year. The upside can be attributed to double-digit growth from classified programs.
Operating income increased to $94 million from $81 million in the year-ago quarter, whereas operating margin expanded 120 bps to 17.3%.
Communication Systems: Net sales at the segment rose 14% to $600 million on account of double-digit growth in all three businesses of this segment.
Operating income increased 11% to $180 million, whereas operating margin contracted 70 bps to 30%.
Financial Position
As of Jun 28, 2019, L3Harris had $311 million in cash and cash equivalents compared with $521 million as of Jun 29, 2018.
Long-term debt as of Jun 28, 2019, was $2,763 million compared with $3,408 million as of Jun 29, 2018.
Net cash flow from operating activities amounted to $1,185 million at the end of fiscal 2019 compared with the year-ago cash flow of $751 million. Capital expenditures totaled $161 million compared with the year-ago figure of $136 million.
In fiscal 2019, Harris generated $1,055 million in adjusted free cash flow, up 15% year over year, and returned $525 million to its shareholders through dividends and share repurchases.
2019 View
L3Harris issued guidance for the calendar year 2019. The combined company expects to generate revenues in a range of $18.0-$18.1 billion, up 9.5-10.5% from calendar year 2018. The company also anticipates adjusted earnings in the range of $9.60-$9.70 per share.
Additionally, L3Harris expects net cash from operating activities to be in the $2.26-$2.31 billion band, while expectation for free cash flow stands at $2.30-$2.35 billion.
Zacks Rank
L3Harris currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Defense Releases
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Lockheed Martin Corp. (LMT - Free Report) reported second-quarter 2019 earnings of $5 per share, which exceeded the Zacks Consensus Estimate of $4.74 by 5.5%.
Hexcel Corporation (HXL - Free Report) reported second-quarter 2019 earnings of 94 cents per share, which outpaced the Zacks Consensus Estimate of 88 cents by 6.8%.
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L3Harris Technologies, Inc. (LHX - Free Report) reported fourth-quarter fiscal 2019 results for Harris Corporation on a standalone basis, following the completion of L3 Technologies and Harris Corp’s merger on Jun 29.
L3Harris’ adjusted earnings from continuing operations came in at $2.44 per share, which surpassed the Zacks Consensus Estimate of $2.30 by 6.1%. The bottom line also increased 39% from the year-ago quarter’s figure of $1.76.
Excluding one-time items, the company reported GAAP earnings of $2.21 compared with $1.72 registered in the year-ago quarter.
For fiscal 2019, L3Harris’ adjusted earnings of $8.29 per share increased 30% from $6.39 in the prior year. The reported figure also surpassed the Zacks Consensus Estimate of $8.15 by 1.7%.
Total Revenues
In the quarter under review, total revenues came in at $1.87 billion, outpacing the Zacks Consensus Estimate of $1.80 billion by 3.4%. The top line also improved 12% year over year. The year-over-year upside was driven by steady growth across all its three segments.
For fiscal 2019, total revenues increased 10% year over year to $6.80 billion. The top line also surpassed the Zacks Consensus Estimate of $6.74 billion by a mere 0.9%.
Orders & Margin
Orders in the fourth quarter totaled $1.90 billion, reflecting a 2% rise from the year-ago quarter.
Operating income came in at $293 million compared with $272 million in fiscal 2018’s fourth quarter. However, operating margin contracted 70 basis points (bps) to 15.7% in the reported quarter.
Segmental Performance
Electronic Systems: Net sales at the segment improved 14% to $728 million from the prior-year quarter’s $636 million driven by sustained growth on long-term platforms – F-35, F/A-18 and F-16.
Operating income summed $144 million compared with $118 million in the year-ago quarter. Moreover, operating margin expanded 120 bps to 19.8%.
Space and Intelligence Systems: The segment recorded net sales of $542 million in the fiscal fourth quarter, up 8% year over year. The upside can be attributed to double-digit growth from classified programs.
Operating income increased to $94 million from $81 million in the year-ago quarter, whereas operating margin expanded 120 bps to 17.3%.
Communication Systems: Net sales at the segment rose 14% to $600 million on account of double-digit growth in all three businesses of this segment.
Operating income increased 11% to $180 million, whereas operating margin contracted 70 bps to 30%.
Financial Position
As of Jun 28, 2019, L3Harris had $311 million in cash and cash equivalents compared with $521 million as of Jun 29, 2018.
Long-term debt as of Jun 28, 2019, was $2,763 million compared with $3,408 million as of Jun 29, 2018.
Net cash flow from operating activities amounted to $1,185 million at the end of fiscal 2019 compared with the year-ago cash flow of $751 million. Capital expenditures totaled $161 million compared with the year-ago figure of $136 million.
In fiscal 2019, Harris generated $1,055 million in adjusted free cash flow, up 15% year over year, and returned $525 million to its shareholders through dividends and share repurchases.
2019 View
L3Harris issued guidance for the calendar year 2019. The combined company expects to generate revenues in a range of $18.0-$18.1 billion, up 9.5-10.5% from calendar year 2018. The company also anticipates adjusted earnings in the range of $9.60-$9.70 per share.
Additionally, L3Harris expects net cash from operating activities to be in the $2.26-$2.31 billion band, while expectation for free cash flow stands at $2.30-$2.35 billion.
Zacks Rank
L3Harris currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Defense Releases
Textron Inc. (TXT - Free Report) reported second-quarter 2019 earnings from continuing operations of 93 cents per share, which surpassed the Zacks Consensus Estimate of 85 cents by 9.4%.
Lockheed Martin Corp. (LMT - Free Report) reported second-quarter 2019 earnings of $5 per share, which exceeded the Zacks Consensus Estimate of $4.74 by 5.5%.
Hexcel Corporation (HXL - Free Report) reported second-quarter 2019 earnings of 94 cents per share, which outpaced the Zacks Consensus Estimate of 88 cents by 6.8%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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