L3Harris Technologies (LHX) Tops Q3 EPS by 11c; Raises FY20 EPS Outlook, Narrows FY20 Revenue Guidance

L3Harris Technologies (NYSE: LHX) reported Q3 EPS of $2.84, $0.11 better than the analyst estimate of $2.73. Revenue for the quarter came in at $4.46 billion versus the consensus estimate of $4.48 billion.

• 3Q20 revenue
  • $4.5 billion, up 0.7% versus prior year
  • Up 4.4% on an organic1 basis; funded book-to-bill of 1.02
• 3Q20 margin and earnings
  • Net income margin of 9.6%; adjusted earnings before interest and taxes (EBIT)2 margin of 17.9%
  • GAAP earnings per share from continuing operations (EPS) of $1.99, up 4.7%
  • Non-GAAP EPS2 of $2.84, up 10%
• 3Q20 cash flow
  • Operating cash flow of $757 million; adjusted free cash flow (FCF)2 of $726 million
  • Narrowed revenue and increased EBIT margin, EPS and adjusted FCF2 guidance for 2020

“The L3Harris team delivered a strong quarter that demonstrated integration progress, portfolio resiliency and the perseverance of our employees,” said William M. Brown, Chairman and Chief Executive Officer. “Our on-going execution puts us in a position to deliver on an improved outlook for the year, which we'll build on over the medium term.”

GUIDANCE:

L3Harris Technologies sees FY2020 EPS of $11.55, versus the consensus of $11.43. L3Harris Technologies sees FY2020 revenue of $18.4 billion, versus the consensus of $18.47 billion.

L3Harris updates 2020 guidance as follows:

• Revenue
  • ~$18.4 billion, up organically ~4.0% on a pro forma6 basis(narrowed to mid-point of previous range of $18.2 - $18.6 billion, up 3% - 5%)
• Margin and earnings
  • GAAP net income margin of ~7.4% (increased from previous guidance of 7.1%+)
  • Adjusted EBIT margin of ~17.75% (increased from previous guidance of 17.5%+)
  • GAAP EPS of ~ $6.44 (increased from previous guidance of $6.03 - $6.43)
  • Non-GAAP EPS of ~$11.55 (increased to upper end of previous guidance of $11.15 - $11.55)
• Cash flow and capital deployment
  • Operating cash flow and adjusted free cash flow of $2.82 - $2.87 billion and $2.65 - $2.70 billion, respectively (expanded to upper end of previous ranges of $2.8 - $2.9 billion and $2.6 - $2.7 billion, respectively)
  • ~$2.2 billion in share repurchases, inclusive of proceeds from divestitures announced year-to-date (increased from previous guidance of ~$1.7 billion)

For earnings history and earnings-related data on L3Harris Technologies (LHX) click here.

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