L3Harris Technologies, Inc.’s ( LHX Quick Quote LHX - Free Report) first-quarter 2022 adjusted earnings from continuing operations came in at $3.12 per share, which surpassed the Zacks Consensus Estimate of $3.02 by 3.3%. The bottom line however declined 1.9% from the year-ago quarter’s $3.18 per share due to a decline in revenues and margins.
Excluding one-time items, the company reported GAAP earnings of $2.44 per share compared with $2.25 in the year-ago quarter.
In the quarter under review, the company’s revenues came in at $4,103 million, missing the Zacks Consensus Estimate of $4,123.3 million by 0.5%. Moreover, revenues declined 10.2% from the year-ago quarter’s $4,567 million.
The deceleration witnessed in the revenues in the reported quarter can be attributed to continued supply chain disruptions, award timing and airborne program transitions.
Starting from first-quarter 2022, L3Harris Technologies has three reportable segments:
Integrated Mission Systems: Net revenues in the segment came in at $1,721 million, down 2% year over year, on account of lower aircraft procurement and delivery volume.
Operating income improved 9% year over year to $255 million while operating margin expanded 140 basis points (bps) to 14.8%.
Space and Airborne Systems: The segment recorded net revenues of $1,450 million in the first quarter, down 0.6% year over year. This downside was driven by poor performance delivered by the airborne, Intel & Cyber as well as Mission Networks businesses.
Operating income decreased 10.44% to $172 million while operating margin contracted 130 bps to 11.9%.
Communication Systems: Net revenues in the segment declined 13.4% to $963 million on account of lower revenues from Tactical Communications and Broadband Communications.
Operating income declined 15.2% to $229 million. Operating margin contracted 50 bps to 23.8%.
As of Apr 1, 2022, L3Harris had $402 million in cash and cash equivalents compared with $941 million as of Dec 31, 2021.
Long-term debt as of Apr 1, 2022 was $6,795 million compared with $7,048 million as of Dec 31, 2021.
Net cash inflow from operating activities amounted to $39 million at the end of first-quarter 2022 compared with the year-ago cash inflow of $661 million.
L3Harris reaffirmed its 2022 outlook. It still expects to generate revenues of $17.5 billion in 2022. The Zacks Consensus Estimate for revenues, pegged at $17.55 billion, is slightly higher than the guided figure.
Earnings in 2022 are also still expected to be in the range of $13.35-$13.65 per share. The Zacks Consensus Estimate for EPS, pegged at $13.57, lies above the midpoint of the guided range.
L3Harris currently carries a Zacks Rank #4 (Sell).
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