L3Harris Q2 Results Tops Consensus, Updates FY21 Outlook

L3Harris Technologies Inc LHX reported second-quarter FY21 revenue growth of 5% year-on-year to $4.67 billion, beating the analyst consensus of $4.63 billion.
The revenue grew 6.2% Y/Y on an organic basis. The Q2 marked solid growth across key end markets and in all four segments.
Integrated Mission Systems revenue grew 12% Y/Y to $1.5 billion from solid growth in ISR, driven by aircraft missionization on a recently awarded NATO program and Maritime from a ramp on critical platforms.
Space and Airborne Systems revenue increased 3% Y/Y to $1.3 billion due to a ramp on missile defense and other responsive programs in Space and classified growth in Intel & Cyber.
Communication Systems revenue rose 1.3% Y/Y to $1.1 billion and Aviation Systems revenue grew 1.1% Y/Y to $809 million.
The adjusted EBIT expanded 40 bps to 18.6%.
Non-GAAP EPS of $3.26 beat the analyst consensus of $3.18.
It generated $720 million in operating cash flow. The company returned $1.06 billion via share buybacks and dividends.
Outlook: L3Harris lowered FY21 revenue guidance to $18.1 billion - $18.5 billion (prior $18.5 billion - $18.9 billion), below the analyst consensus of $18.74 billion.
It sees non-GAAP EPS of $12.80 - $13.00 (prior $12.70 - $13.00), versus the analyst consensus of $13.02.
L3Harris also completed the divestitures of the Military Training and Combat Propulsion Systems businesses, with total gross proceeds in the quarter of $1.45 billion.
Additionally, L3Harris agreed to sell its Electron Devices business for $185 million, bringing total gross proceeds from completed and announced divestitures since the merger to $2.7 billion.
Arlington Capital Partners will acquire Electron Devices and Narda Microwave-West divisions. After closing, the newly formed Stellant Systems will be a standalone platform for Arlington's mission-critical defense electronics market.
Price action: LHX shares traded higher by 1.29% at $228.86 on the last check Tuesday.

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