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L3Harris (LHX) Q2 Earnings Top Estimates, Revenues Fall Y/Y

L3Harris Technologies, Inc.’s LHX 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.

Total Revenues

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.

L3Harris Technologies Inc Price, Consensus and EPS Surprise

L3Harris Technologies Inc Price, Consensus and EPS Surprise
L3Harris Technologies Inc Price, Consensus and EPS Surprise

L3Harris Technologies Inc price-consensus-eps-surprise-chart | L3Harris Technologies Inc Quote

Segmental Performance

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%.

Financial Position

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.
2022 View

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.

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

Lockheed Martin Corporation LMT reported second-quarter 2022 earnings of $6.32 per share, which surpassed the Zacks Consensus Estimate of $6.29 by 0.5%. The bottom line, however, declined 1.6% year over year.

The company’s net sales amounted to $15.45 billion, which missed the Zacks Consensus Estimate of $16.16 billion by 4.4%. The top line also declined 9.3% from $17.03 billion reported in the year-ago quarter.

Hexcel Corporation HXL reported second-quarter 2022 adjusted earnings of 33 cents per share, which exceeded the Zacks Consensus Estimate of 30 cents by 10%.

The company’s net sales totaled $393 million, which beat the Zacks Consensus Estimate of $383 million by 2.6%. Moreover, the top line witnessed an improvement of 22.7% from the year-ago quarter’s $320.3 million.

Teledyne Technologies Inc. TDY reported second-quarter 2022 adjusted earnings of $4.43 per share, which surpassed the Zacks Consensus Estimate of $4.38 by 1.1%. However, the bottom line declined 3.9% from the year-ago quarter’s $4.61 per share.

Total sales in the second quarter amounted to $1,355.8 million, which exceeded the Zacks Consensus Estimate of $1,352 million by 0.3%. The top line also improved 21% from $1,121 million reported a year ago.


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