Highlights*
- 2024 orders of $24.2 billion; book-to-bill of 1.14x
- 2024 revenue of $21.3 billion, up 10%, and 4%
organically
- 2024 cash from operations of $2.6 billion, adjusted free
cash flow of $2.3 billion
- 4Q24 revenue of $5.5 billion, up 3%, and 4%
organically
- 4Q24 operating margin of 10.3% and 9.0% for 2024
- 4Q24 adjusted segment operating margin of 15.3% and 15.4%
for 2024
- 4Q24 diluted earnings per share (EPS) of $2.37 and $7.87 for
2024
- 4Q24 non-GAAP diluted EPS of $3.47 and $13.101 for
2024
L3Harris Technologies (NYSE: LHX) reported fourth quarter 2024
diluted EPS of $2.37 on fourth quarter 2024 revenue of $5.5
billion. Fourth quarter 2024 non-GAAP diluted EPS was $3.47. Fourth
quarter results reflect growth in the business and continued
operational efficiencies driving margin improvement.
Reconciliations of non-GAAP results are detailed in tables
beginning on page 13.
"2024 was a year of significant accomplishments as we delivered
on our financial commitments, underscoring our agility and position
as the defense industry’s Trusted Disruptor, and achieved a record
backlog of $34 billion. These results reflect our alignment with
customer priorities, driving strong demand across all domains.
Through our LHX NeXt initiative, we exceeded our cost-savings
target for 2024, achieving $800 million, and are raising our
overall cost-savings goal to $1.2 billion by the end of 2025, a
year ahead of schedule," said Christopher E. Kubasik, Chair and
CEO.
Kubasik added, "As we move into 2025, our momentum remains
strong, driven by strong bookings, a robust pipeline, expanding
international opportunities, and continued transformation and
operational improvements. We are on track to achieve our 2026
financial framework and remain committed to returning excess cash
to shareholders. We are confident in our ability to sustain
profitable growth and drive long-term value for our stakeholders.
We are the agile defense player that is able to rapidly adapt to
changing industry dynamics to deliver mission-critical capabilities
for our customers."
_____ *Organic revenue, adjusted segment operating margin,
non-GAAP diluted EPS and adjusted free cash flow are non-GAAP
financial measures defined on page 19.
SUMMARY FINANCIAL RESULTS*
Fourth Quarter
Full Year
($ millions, except per share data)
2024
2023
Change
2024
2023
Change
Revenue (see Table 4 for organic
revenue)
Space & Airborne Systems
$
1,728
$
1,800
$
6,869
$
6,856
Integrated Mission Systems
1,773
1,627
6,842
6,630
Communication Systems
1,437
1,363
5,459
5,070
Aerojet Rocketdyne
628
597
2,347
1,052
Corporate eliminations
(43
)
(47
)
(192
)
(189
)
Revenue
$
5,523
$
5,340
3%
$
21,325
$
19,419
10%
Operating income
Space & Airborne Systems
$
186
$
191
$
812
$
756
Integrated Mission Systems
238
(75
)
838
459
Communication Systems
326
356
1,324
1,229
Aerojet Rocketdyne
72
66
294
122
Corporate unallocated items
(253
)
(384
)
(1,350
)
(1,140
)
Operating income
$
569
$
154
$
1,918
$
1,426
Adjusted segment operating income
(see Table 5)
$
846
$
807
5%
$
3,292
$
2,874
15%
Margin
Operating margin
10.3
%
2.9
%
9.0
%
7.3
%
Adjusted segment operating margin
15.3
%
15.1
%
20 bps
15.4
%
14.8
%
60 bps
Tax rate
Effective tax rate (GAAP)
6.4
%
(65.8
%)
5.3
%
1.9
%
Effective tax rate (non-GAAP)
12.1
%
12.6
%
12.7
%
13.0
%
EPS
Diluted EPS
$
2.37
$
0.83
$
7.87
$
6.44
Non-GAAP diluted EPS
$
3.47
$
3.35
4%
$
13.10
$
12.36
6%
Pension adjusted non-GAAP diluted EPS
$
3.06
$
2.82
9%
$
11.50
$
10.44
10%
Cash flow
Cash from operations
$
1,129
$
789
43%
$
2,559
$
2,096
22%
Adjusted free cash flow
$
1,033
$
756
37%
$
2,319
$
2,029
14%
* Adjusted segment operating income and
margin, effective tax rate on non-GAAP income, non-GAAP diluted
EPS, pension adjusted non-GAAP diluted EPS, organic revenue and
adjusted free cash flow are non-GAAP financial measures defined on
page 19.
Revenue: Fourth quarter revenue increased 3%, supported
by solid growth in Integrated Mission Systems (IMS) and
Communication Systems (CS) of 9% and 5%, respectively. The
increases were driven by demand for resilient communication
products and night vision devices, higher aircraft missionization
volume, increased volume for advanced electronics for space and
munitions programs and higher volume in our Commercial Aviation
Solutions (CAS) business.
2024 revenue increased 10% due to the inclusion of a full year
of results for our Aerojet Rocketdyne (AR) segment and 4%
organically due to continued strong demand for our resilient
communication products, higher volume for advanced electronics and
higher volume in our CAS business.
Operating Margin:
GAAP Operating Margin: Fourth
quarter increased 740 bps to 10.3% and 2024 increased 170 bps to
9.0%.
Adjusted Segment Operating Margin:
Fourth quarter expanded 20 bps to 15.3% and 2024 expanded 60 bps to
15.4%.
Fourth quarter operating margin increase was primarily driven by
improved program performance at IMS, the absence of a prior year
goodwill impairment associated with CAS and the monetization of
certain legacy end of life assets, aligned with our transformation
and value creation priorities. Such increases were partially offset
by mix at CS, challenges on classified development programs at SAS
and an impairment of other assets related to the Tactical Data
Links acquisition. Adjusted segment operating margin excludes the
impact of a prior year goodwill impairment associated with CAS and
an impairment of other assets related to the Tactical Data Links
acquisition in 2024.
2024 operating margin increased driven by the absence of a prior
year goodwill impairment associated with CAS. Adjusted segment
operating margin increased, with all four segments contributing to
margin improvement; IMS in particular increased 100 bps versus
prior year.
Diluted EPS:
GAAP Diluted EPS: Fourth quarter
increased 186% to $2.37 and 2024 increased 22% to $7.87.
Non-GAAP Diluted EPS: Fourth
quarter non-GAAP diluted EPS increased 4% to $3.47 and 2024
non-GAAP diluted EPS increased 6% to $13.10.
Pension Adjusted Non-GAAP Diluted
EPS: Fourth quarter pension adjusted non-GAAP diluted EPS
increased 9% to $3.06 and 2024 pension adjusted non-GAAP diluted
EPS increased 10% to $11.50.
Fourth quarter and 2024 diluted EPS increase was driven by
higher operating income, partially offset by a lower Financial
Accounting Standards/U.S. Government Cost Accounting Standards
(FAS/CAS) operating adjustment and higher income taxes. Non-GAAP
diluted EPS increased due to higher adjusted segment operating
income, partially offset by a lower FAS/CAS operating adjustment.
Over the same period, pension adjusted non-GAAP diluted EPS
increased due to higher adjusted segment operating income.
Cash Flow:
Cash from Operations: Fourth
quarter increased 43% to $1.1 billion and 2024 increased 22% to
$2.6 billion.
Adjusted Free Cash Flow: Fourth
quarter increased 37% to $1.0 billion and 2024 increased 14% to
$2.3 billion.
Fourth quarter cash from operations increased due to tax
planning strategies, less cash used to fund working capital and
less cash used for merger, acquisition and severance payments.
Adjusted free cash flow excludes the impact of cash used for
merger, acquisition and severance payments.
2024 cash from operations increased due to tax planning
strategies and a decrease in transaction costs related to the AJRD
acquisition, partially offset by more cash used to fund working
capital. Adjusted free cash flow excludes the impact of cash used
for merger, acquisition and severance payments.
SEGMENT RESULTS*
SAS
Fourth Quarter
Full Year
($ millions)
2024
2023
Change
2024
2023
Change
Revenue
$
1,728
$
1,800
(4)%
$
6,869
$
6,856
—%
Operating margin
10.8%
10.6%
20 bps
11.8%
11.0%
80 bps
Adjusted segment operating margin
10.8%
10.6%
20 bps
11.8%
11.4%
40 bps
Revenue: Fourth quarter revenue decreased 4%, reflecting
the divestiture of our antenna business in the second quarter.
Excluding the divestiture impact, organic revenue decreased 1%,
primarily due to lower F-35 related volume as TR-3 transitions from
development to a more gradual production ramp in our Airborne
Combat Systems business, partially offset by increased volume in
our FAA safety of flight networks business and growth of classified
programs in Intel & Cyber.
2024 revenue was flat, reflecting the divestiture of the antenna
business. Excluding the divestiture impact, organic revenue
increased 2% primarily due to program growth in Intel & Cyber
and higher volume in our FAA safety of flight networks business,
partially offset by lower F-35 related volume.
Operating Margin:
GAAP Operating Margin: Fourth
quarter increased 20 bps to 10.8% and 2024 increased 80 bps to
11.8%.
Adjusted Segment Operating Margin:
Fourth quarter increased 20 bps to 10.8% and 2024 increased 40 bps
to 11.8%.
Fourth quarter operating margin and adjusted segment operating
margin increased primarily due to LHX NeXt cost savings, growth in
our FAA safety of flight networks business and the monetization of
certain legacy end of life assets, aligned with our transformation
and value creation priorities; increase was partially offset by
challenges on classified fixed price development programs in Space
Systems that are in later stages of completion.
2024 operating margin increased 80 bps, primarily due to LHX
NeXt cost savings, growth in our FAA safety of flight networks
business, the monetization of certain end of life assets, aligned
with our transformation and value creation priorities, and the
impact of a non-cash charge for impairment of other assets which
occurred during FY23. Such increases were partially offset by
challenges on classified fixed price development programs in Space
Systems. 2023 adjusted segment operating margin excludes the impact
of the non-cash charge.
*Organic revenue and adjusted segment operating margin are
non-GAAP financial measures defined on page 19.
IMS
Fourth Quarter
Full Year
($ millions)
2024
2023
Change
2024
2023
Change
Revenue
$
1,773
$
1,627
9%
$
6,842
$
6,630
3%
Operating margin
13.4%
(4.6%)
1,800 bps
12.2%
6.9%
530 bps
Adjusted segment operating margin
13.4%
11.9%
150 bps
12.2%
11.2%
100 bps
Revenue: Fourth quarter revenue increased 9.0% primarily
due to higher aircraft missionization volume, higher volume in our
CAS business, the divestiture of which is pending closure, and
increased advanced electronics demand for space and munitions
programs.
2024 increased due to higher revenue for advanced electronics,
higher aircraft missionization volume, higher volume in CAS and
Maritime, and higher commercial revenue for airborne
electro-optical sensors.
Operating Margin:
GAAP Operating Margin: Fourth
quarter operating margin increased to 13.4% and 2024 increased 530
bps 12.2%.
Adjusted Segment Operating Margin:
Fourth quarter adjusted segment operating margin increased 150 bps
to 13.4% and 2024 increased 100 bps to 12.2%.
Fourth quarter operating margin increased primarily due to
improved program performance across the segment, including LHX NeXt
cost savings, absence of a prior year goodwill impairment
associated with CAS, and the monetization of certain end of life
assets, aligned with our transformation and value creation
priorities. Adjusted segment operating margin increase excludes the
prior year goodwill impairment.
2024 operating margin increased primarily due to improved
program performance across the segment, including LHX NeXt cost
savings, and the absence of a prior year goodwill impairment
associated with CAS that is not included in adjusted segment
operating margin.
CS
Fourth Quarter
Full Year
($ millions)
2024
2023
Change
2024
2023
Change
Revenue
$
1,437
$
1,363
5%
$
5,459
$
5,070
8%
Operating margin
22.7%
26.1%
(340) bps
24.3%
24.2%
10 bps
Adjusted segment operating margin
24.4%
26.1%
(170) bps
24.7%
24.2%
50 bps
Revenue: Fourth quarter and 2024 revenue increased 5% and
8%, respectively, primarily driven by robust demand for our
resilient communication equipment, related waveforms, and night
vision devices. Growth for software defined tactical radios was
especially strong across international markets, in particular from
NATO countries, reflecting demand for our superior capabilities for
critical battlefield communication equipment and waveforms.
Operating Margin:
GAAP Operating Margin: Fourth
quarter decreased 340 bps to 22.7% and 2024 increased 10 bps to
24.3%.
Adjusted Segment Operating Margin:
Fourth quarter decreased 170 bps to 24.4% and 2024 increased 50 bps
to 24.7%.
Fourth quarter operating margin decreased due to higher mix of
domestic radios related to competitive IDIQ contracts and a
non-cash impairment of other assets related to the Tactical Data
Links acquisition, partially offset by LHX NeXt cost savings.
Adjusted segment operating margin decrease excludes the impact of
the non-cash impairment of other assets.
2024 operating margin increased due to LHX NeXt cost savings,
partially offset by a higher mix of domestic radios related to
competitive IDIQ contracts and the non-cash impairment of other
assets. Adjusted segment operating margin increase excludes the
impact of the non-cash impairment of other assets.
AR
Fourth Quarter
Full Year
($ millions)
2024
2023
Change
2024
2023
Change
Revenue
$
628
$
597
5%
$
2,347
$
1,052
123%
Operating margin
11.5%
11.1%
40 bps
12.5%
11.6%
90 bps
Revenue: Fourth quarter revenue increased 5%, primarily
from increased production volume across key missile programs,
partially offset by a reduction in space propulsion revenue due to
program related delays and lower volume of in-space propulsion
work.
2024 results are attributed to program execution across both
sectors, Missile Solutions and Space Propulsion and Power Systems,
relative to the 5 months of AR results in 2023.
Operating Margin: Fourth quarter and 2024 operating
margin increased, primarily from the benefit of increased
production volumes and strong program execution.
2025 GUIDANCE
Beginning in 1Q25 and reflected in our 2025 guidance, we are
revising our Non-GAAP diluted EPS metric to exclude an adjustment
for amortization of acquisition-related intangible assets that are
in full year results for both years. We believe this better aligns
to industry standard presentation of Non-GAAP diluted EPS and
provides our investors with a more appropriate metric that better
reflects our performance. In this press release, 4Q24 and 2024
"Non-GAAP diluted EPS" and "Pension adjusted non-GAAP diluted EPS"
include an adjustment for amortization of acquisition-related
intangible assets, and "Non-GAAP diluted EPS (New)" does not
include an adjustment for amortization of acquisition-related
intangible assets.
Guidance assumes a Continuing Resolution through March of 2025
and no other funding delays or impacts. The administration has
issued several Executive Orders that are still being assessed but
are not expected to have a significant impact on our 2025 results.
However, as US Government contracting officers assess the impact of
Executive Orders on new contracts, we could see an effect on our Q1
2025 bookings and revenue.
Revenue
Adjusted Segment Operating
Margin
Space & Airborne Systems
$6.9B - $7.1B
low 12%
Integrated Mission Systems
$7.0B - $7.2B
low 12%
Communication Systems
$5.6B - $5.7B
high 24%
Aerojet Rocketdyne
~$2.5B
mid 12%
Total Company
$21.8B - $22.2B
mid - high 15%
2025
2024
Earning per share
Guidance1
Actuals
Non-GAAP diluted EPS (Prior)
$13.70 - $14.00
$13.10
Intangible amortization, net of income
taxes
~(3.15)
(3.40)
Non-GAAP diluted EPS (New)
$10.55 - $10.85
$9.70
Growth
10%*
5%
Adjusted free cash flow
$2.4B - $2.5B
$2.3B
1A reconciliation of adjusted segment operating income and
margin, effective tax rate on non-GAAP income, non-GAAP diluted EPS
(prior and new) and adjusted free cash flow on a forward-looking
basis to GAAP is not available without unreasonable effort due to
the unavailability of items for exclusion from the GAAP measure. We
are unable to address the probable significance of this
information, the variability of which may have a significant impact
on future GAAP results. See Non-GAAP Financial Measures on page 9
for more information.
*Based on mid-point
SUPPLEMENTAL INFORMATION
2025
2024
Other Information
Current
Actuals
FAS/CAS operating adjustment
~$15 million
$28 million
Non-service FAS pension income1
~$260 million
$322 million
Net interest expense
~$630 million
$675 million
Effective tax rate on GAAP income
5.3%
Effective tax rate on non-GAAP income
(New)2
11.0% - 12.0%
Average diluted shares
~190
190.7
Capital expenditures
~2% sales
2% sales
1Includes the reduction in non-service FAS
pension income resulting from the anticipated transfer of ~$1.2
billion of pension assets and liabilities to a third party in Q1
2025.
2Effective tax rate on non-GAAP income is
a non-GAAP financial measure defined on page 19. A reconciliation
of effective tax rate on non-GAAP income guidance is not available.
See Non-GAAP Financial Measures on page 10 for more information.
Excludes the adjustment for amortization of acquisition-related
intangible assets.
Forward-Looking Statements
This earnings release contains forward-looking statements within
the meaning of federal securities laws made in reliance on the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. Examples include, but are not limited to: share
repurchases; potential divestitures and their timing; 2024
guidance; 2026 financial framework; anticipated LHX NeXt initiative
costs and savings targets; 2026 margins; supplemental information
for 2024; projection of other financial items; and assumptions
underlying any of the foregoing. Investors should not place undue
reliance on forward-looking statements, which reflect management’s
current expectations, estimates, projections, assumptions and
information currently available to management, and are not
guarantees of future performance or actual results. Important risks
that could cause our results to differ materially from those
expressed in or implied by these forward-looking statements or from
our historical results include, but are not limited to, risks
arising from: competitive markets; U.S. Government spending
priorities; changes in contract mix; inflation; unilateral contract
action by the U.S. Government; uncertain economic conditions;
future geo-political events; supply chain disruptions; impacts of
LHX NeXt; indebtedness; defined benefit plan liabilities and
returns; interest rates and other market factors; changes in
effective tax rate or additional tax exposures; pending and
contemplated divestitures. These and other important risks that
could impact forward-looking statements are described more fully in
the "Risk Factors" in our Form 10-K for fiscal 2023 filed with the
SEC. All subsequent written and oral forward-looking statements
attributable to us or any person acting on our behalf are qualified
by the cautionary statements in this section, and we have no duty
to and disclaim any intention or obligation, other than imposed by
law, to update or revise any forward-looking statements, whether as
a result of new information, future events or developments or
otherwise.
Non-GAAP Financial Measures
Management believes the adjustments to non-GAAP Financial
Measures ("NGFMs") in the tables beginning on page 13 are useful to
investors because the excluded costs do not reflect our ongoing
operating performance. Such adjustments, considered together with
the unadjusted GAAP financial measures, provide information that
management believes is useful to investors to understand
period-over-period operating results separate from items that
management believes may disproportionately impact operating results
in any particular period; however there is no guarantee that items
excluded from NGFMs will not reoccur in future periods. Management
also believes that NGFMs enhance the ability of investors to
analyze business trends, understand performance and evaluate our
initiatives to drive improved financial performance. Management
utilizes NGFMs to guide forecasting and long-term planning and for
compensation purposes. NGFMs should be considered in addition to,
and not as a substitute for, financial measures presented in
accordance with GAAP. A reconciliation of forward-looking NGFMs to
GAAP is not available without unreasonable effort because of
inherent difficulty in forecasting and quantifying comparable GAAP
measures and applicable adjustments and other amounts necessary for
a reconciliation because of potentially high variability,
complexity and low visibility of applicable adjustments and other
unusual amounts that could disproportionately impact future GAAP
results, such as the impact of defined benefit plan performance,
LHX NeXt, potential divestitures and their timing, and the extent
of tax deductibility.
Conference Call and Webcast
L3Harris Technologies will host an earnings call on January 30,
2025, at 10:30 a.m. Eastern Time (ET). Participants are encouraged
to listen via webcast, which will be broadcast live at
L3Harris.com/investors. The dial-in numbers for the teleconference
are (U.S.) 800-549-8228 and (International) 289-819-1520, and
participants will be directed to an operator. A recording of the
call will be available on the L3Harris website, beginning at
approximately 12 p.m. ET on January 30, 2025.
Table 1 - Condensed Consolidated
Statement of Operations (Unaudited)
Fourth Quarter
Full Year
(In millions, except per share
amounts)
2024
2023
2024
2023
Revenue
$
5,523
$
5,340
$
21,325
$
19,419
Cost of revenue
(4,126
)
(3,935
)
(15,801
)
(14,306
)
General and administrative expenses
(804
)
(955
)
(3,568
)
(3,313
)
Impairment of goodwill and other
assets
(24
)
(296
)
(38
)
(374
)
Operating income
569
154
1,918
1,426
Non-service FAS pension income and other,
net
79
93
354
338
Interest expense, net
(161
)
(171
)
(675
)
(543
)
Income before income taxes
487
76
1,597
1,221
Income taxes
(31
)
50
(85
)
(23
)
Net income
456
126
1,512
1,198
Noncontrolling interests, net of income
taxes
(3
)
32
(10
)
29
Net income attributable to L3Harris
Technologies, Inc.
$
453
$
158
$
1,502
$
1,227
Net income per common share attributable
to L3Harris Technologies, Inc. common shareholders
Basic
$
2.38
$
0.83
$
7.91
$
6.47
Diluted
$
2.37
$
0.83
$
7.87
$
6.44
Basic weighted-average common shares
outstanding
189.7
189.6
189.8
189.6
Diluted weighted-average common shares
outstanding
190.6
190.6
190.7
190.6
Table 2 - Consolidated Statement of
Cash Flow (Unaudited)
Full Year
(In millions)
2024
2023
Operating Activities
Net income
$
1,512
$
1,198
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
1,289
1,166
Share-based compensation
97
89
Net periodic benefit income
(286
)
(275
)
Share-based matching contributions under
defined contribution plans
264
231
Impairment of goodwill and other
assets
38
374
Deferred income taxes
174
(423
)
(Increase) decrease in:
Receivables, net
128
124
Contract assets
(194
)
62
Inventories, net
96
(182
)
Other current assets
(29
)
(55
)
Increase (decrease) in:
Accounts payable
(90
)
87
Contract liabilities
126
195
Compensation and benefits
(128
)
38
Other current liabilities
155
(88
)
Income taxes
(383
)
(333
)
Other operating activities
(210
)
(112
)
Net cash provided by operating
activities
2,559
2,096
Investing Activities
Net cash paid for acquired businesses
—
(6,688
)
Capital expenditures
(408
)
(449
)
Proceeds from sale of property, plant and
equipment, net
1
56
Proceeds from sales of businesses
273
71
Other investing activities
(129
)
(11
)
Net cash used in investing activities
(263
)
(7,021
)
Financing Activities
Proceeds from issuances of long-term debt,
net
2,827
7,568
Repayments of long-term debt
(2,620
)
(3,170
)
Change in commercial paper, maturities
under 90 days, net
(567
)
623
Proceeds from commercial paper, maturities
over 90 days
688
1,181
Repayments of commercial paper, maturities
over 90 days
(1,205
)
(205
)
Proceeds from exercises of employee stock
options
133
24
Repurchases of common stock
(554
)
(518
)
Dividends paid
(886
)
(868
)
Other financing activities
(40
)
(41
)
Net cash (used in) provided by financing
activities
(2,224
)
4,594
Effect of exchange rate changes on cash
and cash equivalents
(17
)
11
Net increase (decrease) in cash and
cash equivalents
55
(320
)
Cash and cash equivalents, beginning of
period
560
880
Cash and cash equivalents, end of
period
$
615
$
560
Table 3 - Condensed Consolidated
Balance Sheet (Unaudited)
(In millions)
January 3, 2025
December 29, 2023
Assets
Current assets
Cash and cash equivalents
$
615
$
560
Receivables, net
1,072
1,230
Contract assets
3,230
3,196
Inventories, net
1,330
1,472
Income taxes receivable
379
61
Other current assets
461
430
Assets of business held for sale
1,131
1,106
Total current assets
8,218
8,055
Non-current assets
Property, plant and equipment, net
2,806
2,862
Goodwill
20,325
19,979
Intangible assets, net
7,639
8,540
Deferred income taxes
120
91
Other non-current assets
2,893
2,160
Total assets
$
42,001
$
41,687
Liabilities and equity
Current liabilities
Short-term debt
$
515
$
1,602
Current portion of long-term debt, net
640
363
Accounts payable
2,005
2,106
Contract liabilities
2,142
1,900
Compensation and benefits
419
544
Income taxes payable
29
88
Other current liabilities
1,648
1,129
Liabilities of business held for sale
235
272
Total current liabilities
7,633
8,004
Non-current liabilities
Long-term debt, net
11,081
11,160
Deferred income taxes
942
815
Other long-term liabilities
2,766
2,879
Total liabilities
22,422
22,858
Total equity
19,579
18,829
Total liabilities and equity
$
42,001
$
41,687
Reconciliation of Non-GAAP Financial
Measures
Table 4 - Organic Revenue
Reconciliation (Unaudited)
Fourth Quarter
2024
2023
(In millions)
GAAP
Adjustments
Organic
GAAP
Adjustments1
Organic
SAS
$
1,728
$
—
$
1,728
$
1,800
$
(54
)
$
1,746
IMS
1,773
—
1,773
1,627
—
1,627
CS
1,437
—
1,437
1,363
—
1,363
AR
628
—
628
597
—
597
Corporate eliminations
(43
)
—
(43
)
(47
)
—
(47
)
Revenue
$
5,523
$
—
$
5,523
$
5,340
$
(54
)
$
5,286
Full Year
2024
2023
(In millions)
GAAP
Adjustments2
Organic
GAAP
Adjustments1
Organic
SAS
$
6,869
$
—
$
6,869
$
6,856
$
(124
)
$
6,732
IMS
6,842
—
6,842
6,630
—
6,630
CS
5,459
—
5,459
5,070
—
5,070
AR
2,347
(1,282
)
1,065
1,052
—
1,052
Corporate eliminations
(192
)
—
(192
)
(189
)
—
(189
)
Revenue
$
21,325
$
(1,282
)
$
20,043
$
19,419
$
(124
)
$
19,295
1Adjustment to exclude amounts
attributable to divested businesses.
2Adjustment to exclude amounts
attributable to AR through the date of acquisition.
Table 5 - Reconciliation of Operating
Income to Adjusted Segment Operating Income (Unaudited)
Fourth Quarter
Full Year
(In millions)
2024
2023
2024
2023
Operating income
$
569
$
154
$
1,918
$
1,426
Unallocated corporate items1
9
(3
)
95
(48
)
Significant and/or non-recurring
items:
Amortization of acquisition-related
intangibles and additional cost of revenue related to the fair
value step-up in inventory sold2
211
233
853
809
Merger, acquisition, and
divestiture-related expenses2
16
30
102
174
Business divestiture-related (gains)
losses, net and impairment of goodwill and other assets2
(10
)
373
57
425
LHX NeXt implementation costs2
51
47
267
115
Gain on sale of property, plant and
equipment2
—
(27
)
—
(27
)
Total significant and/or non-recurring
items
268
656
1,279
1,496
Unallocated items
277
653
1,374
1,448
Adjusted segment operating income
$
846
$
807
$
3,292
$
2,874
1Includes unallocated corporate department
expense of $17M and $123M for the fourth quarter and year to date
2024, respectively, and $35M and $62M for the fourth quarter 2023
and year to date 2023, respectively. Additionally, includes the
FAS/CAS operating adjustment of $8M and $28M for the fourth quarter
and year to date 2024, respectively, and $38M and $110M for the
fourth quarter and year to date 2023, respectively. The FAS/CAS
operating adjustment represents the difference between the service
cost component of Financial Accounting Standards net periodic
benefit income and total U.S. Government Cost Accounting Standards
pension cost.
2Refer to Key Terms and Non-GAAP
Definitions on page 19.
Table 6 - Reconciliation of Operating
Income to Adjusted Segment Operating Income by Segment
(Unaudited)
Fourth Quarter
2024
2023
(In millions)
SAS
IMS
CS
AR
SAS
IMS
CS
AR
Operating income
186
238
326
72
191
(75
)
356
66
Segment impairment of goodwill and other
assets1
—
—
24
—
—
296
—
—
Gain on sale of property, plant and
equipment1
—
—
—
—
—
(27
)
—
—
Adjusted segment operating income
$
186
$
238
$
350
$
72
$
191
$
194
$
356
$
66
Full Year
2024
2023
(In millions)
SAS
IMS
CS
AR
SAS
IMS
CS
AR
Operating income
812
838
1,324
294
756
459
1,229
122
Segment impairment of goodwill and other
assets1
—
—
24
—
27
308
—
—
Gain on sale of property, plant and
equipment1
—
—
—
—
—
(27
)
—
—
Adjusted segment operating income
$
812
$
838
$
1,348
$
294
$
783
$
740
$
1,229
$
122
1Refer to Key Terms and Non-GAAP
Definitions on page 19.
Table 7 - Reconciliation of Effective
Tax Rate to Effective Tax Rate on Non-GAAP Income
(unaudited)
Fourth Quarter
2024
2023
(In millions)
Earnings Before Tax
Tax Expense
(Benefit)
Effective Tax Rate
Earnings Before Tax
Tax Expense
Effective Tax Rate
Income before income taxes
$
487
$
31
6.4
%
$
76
$
(50
)
(65.8
)%
Amortization of acquisition-related
intangibles and additional cost of revenue related to the fair
value step-up in inventory sold1
211
40
233
53
Merger, acquisition, and
divestiture-related expenses1
16
3
30
7
Business divestiture-related (gains)
losses, net and impairment of goodwill and other assets1
(10
)
4
346
72
LHX NeXt implementation costs1
51
13
47
10
Non-GAAP income before income taxes
$
755
$
91
12.1
%
$
732
$
92
12.6
%
Full Year
2024
2023
(In millions)
Earnings Before Tax
Tax Expense
(Benefit)
Effective Tax Rate
Earnings Before Tax
Tax Expense
Effective Tax Rate
Income before income taxes
$
1,597
$
85
5.3
%
$
1,221
$
23
1.9
%
Amortization of acquisition-related
intangibles and additional cost of revenue related to the fair
value step-up in inventory sold1
853
205
809
191
Merger, acquisition, and
divestiture-related expenses1
102
22
174
31
Business divestiture-related (gains)
losses, net and impairment of goodwill and other assets1
57
(13
)
398
83
LHX NeXt implementation costs1
267
67
115
26
Non-GAAP income before income taxes
$
2,876
$
366
12.7
%
$
2,717
$
354
13.0
%
1Refer to Key Terms and Non-GAAP
Definitions on page 19.
Table 8 - Reconciliation of Diluted EPS
to Non-GAAP Diluted EPS and Pension Adjusted Non-GAAP Diluted EPS
(unaudited)
Fourth Quarter
Full Year
(In millions, except per share
data)
2024
2023
2024
2023
Diluted weighted-average common shares
outstanding
190.6
190.6
190.7
190.6
Diluted EPS
$
2.37
$
0.83
$
7.87
$
6.44
Significant and/or non-recurring items
included in diluted EPS above:
Amortization of acquisition-related
intangibles and additional cost of revenue related to the fair
value step-up in inventory sold1
1.11
1.22
4.47
4.25
Merger, acquisition, and
divestiture-related expenses1
0.08
0.16
0.53
0.91
Business divestiture-related (gains)
losses, net and impairment of goodwill and other assets1
(0.05
)
1.95
0.30
2.23
LHX NeXt implementation costs1
0.27
0.25
1.40
0.60
Gain on sale of property, plant and
equipment1
—
(0.14
)
—
(0.14
)
Income taxes on above adjustments
(0.31
)
(0.75
)
(1.47
)
(1.74
)
Noncontrolling interests portion of
adjustment
—
(0.17
)
—
(0.19
)
Non-GAAP diluted EPS
$
3.47
$
3.35
$
13.10
$
12.36
Less: per share impact of:
FAS/CAS operating adjustment2
(0.04
)
(0.17
)
(0.13
)
(0.50
)
Non-service FAS pension income2
(0.37
)
(0.36
)
(1.47
)
(1.42
)
Pension adjusted non-GAAP diluted EPS
$
3.06
$
2.82
$
11.50
$
10.44
1Refer to Key Terms and Non-GAAP
Definitions on page 19.
2Net of tax effect.
Table 9 - Reconciliation of Net Cash
Provided by Operating Activities to Adjusted Free Cash Flow
(unaudited)
Fourth Quarter
Full Year
(In millions)
2024
2023
2024
2023
Net cash provided by operating
activities
$
1,129
$
789
$
2,559
$
2,096
Capital expenditures
(118
)
(137
)
(408
)
(449
)
Proceeds from sale of property, plant and
equipment, net
1
56
1
56
Free cash flow
1,012
708
2,152
1,703
Cash used for merger, acquisition and
severance1,2
21
48
167
326
Adjusted free cash flow
$
1,033
$
756
$
2,319
$
2,029
1Refer to Key Terms and Non-GAAP
Definitions on page 19.
22023 amounts reclassified to include cash
paid for severance.
Key Terms and Non-GAAP
Definitions
Description
Definition
Amortization of acquisition-related
intangibles and additional cost of revenue related to the fair
value step-up in inventory sold
Amortization of identifiable intangible
assets acquired in connection with business combinations.
Additional cost of revenue related to the fair value step-up in
inventory is the difference between the balance sheet value of
inventory from the acquiree and the acquisition date fair
value.
Merger, acquisition, and
divestiture-related expenses
Transaction and integration expenses
associated with Tactical Data Links and AR acquisitions; external
costs related to pursuing acquisition and divestiture portfolio
optimization; non-transaction costs related to divestitures; and
salaries of employees in roles dedicated to planned divestiture and
acquisition activity.
Business divestiture-related (gains)
losses, net and impairment of goodwill and other assets
Inclusive of segment impairment of
goodwill and other assets noted below. 2023, includes a gain on
sale of our Visual Information Solutions business, impairment of
contract assets and other assets related to the restructuring of a
customer contract and impairment of in-process research and
development associated with a facility closure. In 2024, includes
valuation allowance increase related to the pending sale of our CAS
business (QTD and YTD) and impairment of goodwill and loss on sale
recognized in connection with the sale of our antenna and related
businesses (YTD).
Segment impairment of goodwill and other
assets
In 2023, charges for goodwill impairment
recorded at our IMS segment related to the pending divestiture of
our CAS business and charges at our IMS and SAS segment related to
restructuring of a customer contract impacting both segments and
facility closures in IMS. In 2024, charges for an impairment of
other assets recorded at our CS segment related to the Tactical
Data Links acquisition.
Gain on sale of property, plant and
equipment
In 2023, related to the sale of a building
in our IMS segment.
LHX NeXt implementation costs
Costs related to the LHX NeXt initiative
are expected to continue through 2025 and are expected to include
workforce optimization costs and incremental IT expenses for
implementation of new systems, third-party consulting expenses and
other related costs, including costs related to personnel dedicated
to this project.
LHX NeXt cost savings
Represents annual gross run rate savings
driven by the LHX NeXt transformation initiative. It is an
operational measure that includes savings from initiatives related
to labor and function optimization, direct and indirect
procurement, and infrastructure expected to recur on an ongoing
basis.
Orders
Total value of funded and unfunded
contract awards received from the U.S. Government and other
customers, including incremental funding and adjustments to
previous awards, excluding unexercised contract options and
potential orders under ordering-type contracts, such as indefinite
delivery, indefinite quantity (IDIQ) contracts.
Organic revenue*
Excludes the impact of completed
divestitures and first year revenue associated with acquisitions
and is reconciled in Table 4.
Adjusted segment operating income and
margin*
On a consolidated basis represents
operating income and margin, excluding the FAS/CAS operating
adjustment, corporate unallocated items and items reconciled in
Table 5.
Segment operating income and margin for
each segment represents each such segment's operating income and
margin (GAAP measures), excluding impairment of goodwill and other
assets and gain on sale of property, plant and equipment, as
reconciled in table 6.
Non-GAAP diluted EPS*1
Represents EPS (net income per diluted
common share attributable to L3Harris Technologies, Inc. common
shareholders) adjusted for items reconciled in Table 8.
Pension adjusted non-GAAP diluted
EPS*1
Represents Non-GAAP diluted EPS, described
above, adjusted for the after tax per share impact of the FAS/CAS
operating adjustment and Non-service FAS pension income reconciled
in Table 8.
Adjusted Free Cash Flow*
Net cash provided by operating activities
less capital expenditures, plus proceeds from sale of property,
plant and equipment, cash used for merger, acquisition, and
severance reconciled in Table 9.
Cash used for merger, acquisition, and
severance*
Cash related to merger and acquisition
expenses (described above) and severance costs included in LHX NeXt
implementation costs.
Non-GAAP income before income taxes*
Represents income before income taxes
adjusted for items reconciled in Table 7.
Effective tax rate on non-GAAP income*
Represents the effective tax rate (tax
expense as a percentage of income before income taxes) adjusted for
the tax effect of items reconciled in Table 7.
_____
*Refer to Non-GAAP Financial Measures on
page 7 for more information.
1 Beginning in 1Q25 and reflected in our
2025 guidance, we are revising our Non-GAAP diluted EPS metric to
exclude an adjustment for amortization of acquisition-related
intangible assets. We believe this better aligns to industry
standard presentation of Non-GAAP diluted EPS and provides our
investors with a more appropriate metric that better reflects our
performance. In this press release, "Non-GAAP diluted EPS" and
"Pension adjusted non-GAAP diluted EPS" include an adjustment for
amortization of acquisition-related intangible assets, and
"Non-GAAP diluted EPS (New)" and "Pension adjusted non-GAAP diluted
EPS (New)" does not include an adjustment for amortization of
acquisition-related intangible assets.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250130388384/en/
Investor Relations Contact: Daniel Gittsovich,
321-724-3170 investorrelations@l3harris.com
Media Relations Contact: Sara Banda, 321-306-8927
media@l3harris.com
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