Back to top

Image: Bigstock

L3Harris' (LHX) Q4 Earnings Beat Estimates, Revenues Fall Y/Y

Read MoreHide Full Article

L3Harris Technologies, Inc.’s (LHX - Free Report) adjusted earnings from continuing operations in fourth-quarter 2020 came in at $3.14 per share, which surpassed the Zacks Consensus Estimate of $3.07 by 2.3%. The bottom line also increased 10% from the year-ago quarter’s $2.85 per share.

Excluding one-time items, the company reported GAAP earnings of 92 cents per share compared with $1.77 in the year-ago quarter.

For 2020, earnings were $11.60 per share, up 13% from the year-ago quarter. Moreover, 2020 earnings exceeded the Zacks Consensus Estimate of $11.55 by 0.4%.

Total Revenues

In the quarter under review, the company’s revenues came in at $4,660 million, missing the Zacks Consensus Estimate of $4,875 million by 4.4%. Moreover, revenues declined 3.6% from the year-ago quarter’s $4,832 million. Revenues in the reported quarter were negatively impacted by a decline in Aviation systems sales.

In 2020, total revenues increased 0.5% year over year to $18,194 million. Full-year revenues, however, missed the Zacks Consensus Estimate of $18,410 million by 1.2%.

Segmental Performance

Integrated Mission Systems: Net revenues in the segment came in at $1,465 million, down 0.1% year over year, driven by strong growth in Maritime from a ramp-up in manned and classified platforms.

Operating income improved 7.2% year over year to $209 million, while operating margin expanded 100 basis points (bps) to 14.3%.

Space and Airborne Systems: The segment recorded net revenues of $1,256 million in the fourth quarter, up 4.3% year over year. This upside was driven by a ramp-up in the F-35 platform in Mission Avionics and classified growth in Intel and Cyber.

Operating income increased 13% to $245 million, while operating margin contracted 150 bps to 19.5%.

Communication Systems: Net revenues in the segment rose 2.1% to $1,143 million, driven by growth in Tactical Communications, primarily owing to strong demand in the Middle East and Central Asia. Further, continued ramp-up in U.S. DoD modernization contributed to this unit’s revenue growth.

Operating income increased 14% to $296 million. Operating margin expanded 280 bps to 25.9%.

Aviation Systems: Net revenues declined 22% to $845 million primarily due to the divestiture of the airport security and automation business and on account of COVID-19-related impacts in the commercial aviation business.

The segment reported an operating loss of $131 million against the operating income reported in the fourth quarter of 2019.

L3Harris Technologies Inc Price, Consensus and EPS Surprise

Financial Position

As of Jan 1, 2021, L3Harris had $1,276 million in cash and cash equivalents compared with $824 million as of Jan 3, 2020.

Long-term debt as of Jan 1, 2021, was $6,908 million compared with $6,694 million as of Jan 3, 2020.

Net cash inflow from operating activities amounted to $2,790 million at the end of the fourth quarter compared with the year-ago cash inflow of $1,655 million.

2021 View

L3Harris currently expects to generate revenues of $18.5-$18.9 billion, up organically 3-5%, during 2021. The Zacks Consensus Estimate for revenues, pegged at $19.17 billion, is higher than the guided range.

The 2021 earnings are expected to be $12.6-$13 per share. The Zacks Consensus Estimate for EPS, pegged at $12.83, lies above the midpoint of the company’s guided range.

Zacks Rank

L3Harris currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

Lockheed Martin Corp. (LMT - Free Report) reported fourth-quarter 2020 earnings from continuing operations of $6.38 per share, which came in line with the Zacks Consensus Estimate.

Hexcel Corporation (HXL - Free Report) reported fourth-quarter 2020 loss of 18 cents per share, in line with the Zacks Consensus Estimate.

General Dynamics Corp. (GD - Free Report) reported fourth-quarter 2020 earnings from continuing operations of $3.49 per share, which missed the Zacks Consensus Estimate of $3.55 by 1.7%.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

Published in