L3Harris Technologies Reports Mixed Q3 Results, Cuts FY21 Revenue Outlook

L3Harris Technologies Inc LHX reported a third-quarter FY21 revenue decline of 5% year-over-year to $4.229 billion, -1% on an organic basis, missing the consensus of $4.51 billion.
The revenue decline was due to strategic divestitures, ISR aircraft award timing in Integrated Mission Systems, and supply chain-related constraints within Communication Systems.
Integrated Mission Systems revenue was $1.34 billion (-3% Y/Y), an operating margin of 16.6%, an improvement of 110 bps.
Space and Airborne Systems revenue was $1.28 billion (+3% Y/Y), and operating margin of 18.8% up 30 bps.
Communication Systems revenue was $1.03 billion (-6% Y/Y), and operating margin 26.3%, up 130 bps.
Aviation Systems revenue $625 million was (-21% Y/Y), and adjusted operating margin of 14.4%, up 140 bps.
Funded book-to-bill was 1.07 for the quarter and 1.06 year-to-date.
Adjusted EPS improved to $3.21 compared to $2.84 in 3Q20, beating the consensus of $2.73.
L3Harris Technologies generated $484 million in operating cash flow and $673 million in adjusted free cash flow.
Adjusted EBIT was $830 million (+4% Y/Y), and the margin expanded 170 bps to 19.6%.
"And in spite of unprecedented global supply chain disruptions that are reducing our organic revenue growth guidance for the year, we're positioned to meet our earnings and cash flow commitments," said CEO Christopher E. Kubasik.
FY21 Outlook: L3Harris lowered revenue guidance to ~$17.9 billion ($18.1 billion - $18.5 billion) and organic growth to be up ~2% (prior up 3%-5%). It sees non-GAAP EPS of $12.85 - $13.00 (prior $12.80 - $13.00).
It expects an adjusted EBIT margin of ~18.75% (prior 18.5%) and an Adjusted free cash flow of $2.8 billion - $2.9 billion.
Price Action: LHX shares are trading lower by 1.37% at $220.95 during the premarket session on Friday.

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