L3Harris Technologies, Inc.’s ( LHX Quick Quote LHX - Free Report) second-quarter 2022 adjusted earnings from continuing operations came in at $3.23 per share, which surpassed the Zacks Consensus Estimate of $3.16 by 2.2%. The bottom line however declined 2% from the year-ago quarter due to a decline in revenues and margins.
Excluding one-time items, the company reported GAAP earnings of $2.42 per share compared with $2.01 in the year-ago quarter.
In the quarter under review, the company’s revenues came in at $4,135 million, missing the Zacks Consensus Estimate of $4,234 million by 2.3%. Moreover, revenues declined 11.4% from the year-ago quarter’s $4,668 million.
The deceleration witnessed in the revenues in the reported quarter can be attributed to continued supply chain disruptions as well as 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 $1,673 million, down 6.6% year over year, on account of lower aircraft procurement and delivery volume.
Operating income improved 52.8% year over year to $271 million while operating margin expanded 510 basis points (bps) to 13%.
Space and Airborne Systems: The segment recorded net revenues of $1,498 million in the second quarter, down 0.8% year over year. This downside was largely due to a decline in its airborne businesses, reflecting production transitions and lower development on the F-35 program, as well as a decline in Intel & Cyber business, primarily due to classified program transitions.
Operating income decreased 4.4% to $195 million while operating margin contracted 50 bps to 13%.
Communication Systems: Net revenues in the segment declined 11.9% to $993 million on account of lower volume on legacy platforms and Tactical Communications.
Operating income declined 13.8% to $238 million. Operating margin contracted 50 bps to 24%.
As of Jul 1, 2022, L3Harris had $420 million in cash and cash equivalents compared with $941 million as of Dec 31, 2021.
Long-term debt as of Jul 1, 2022 was $6,782 million compared with $7,048 million as of Dec 31, 2021.
Net cash inflow from operating activities amounted to $749 million at the end of second-quarter 2022 compared with the year-ago cash inflow of $720 million.
L3Harris updated its 2022 outlook. It now expects to generate revenues in the range of $17.3-$17.7 billion, compared with prior guidance of $17.5 billion. The Zacks Consensus Estimate for revenues, pegged at $17.47 billion, is slightly lower than the midpoint of the guided figure.
Earnings in 2022 are still expected to be in the range of $13.35-$13.65 per share. The Zacks Consensus Estimate for EPS, pegged at $13.55, lies above the midpoint of the guided range.
L3Harris currently carries a Zacks Rank #3 (Hold). You can see
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