L3harris Technologies (LHX) Q2 2024 earnings summary

Executive summary

• Revenue increased 13% year-over-year to $5.3 billion in Q2 2024, driven by the Aerojet Rocketdyne acquisition and organic growth in Communication Systems.

• Non-GAAP EPS rose 9% to $3.24, while GAAP EPS was $1.92; net income reached $366 million for the quarter.

• Adjusted segment operating margin improved to 15.6%, and operating margin to 9.0%, reflecting cost savings and operational efficiency.

• Orders totaled $5.2 billion, with a book-to-bill ratio of 1.0x and a total backlog of $32 billion.

• Portfolio realignment and divestitures, including antennas and commercial aviation businesses, sharpened focus on national security priorities.

Financial highlights

• Q2 2024 revenue was $5.3 billion, with adjusted segment operating income of $825 million and adjusted free cash flow of $714 million.

• Net income for the quarter was $366 million; diluted EPS was $1.92; non-GAAP EPS was $3.24.

• Book-to-bill ratio was 1.0 for Q2, with a $32 billion backlog; Communication Systems segment backlog reached a record $6 billion.

• Debt repayment of $350 million reduced net leverage to 3.2x, with a target of below 3.0x by year-end.

• Dividends paid were $221 million, and share repurchases totaled $89 million for the quarter.

Outlook and guidance

• 2024 revenue guidance raised to $21.0B–$21.3B, with adjusted segment operating margin guidance of 15.2%–15.4%.

• Non-GAAP EPS guidance increased to $12.85–$13.15; adjusted free cash flow expected to be ~$2.2 billion.

• Confident in achieving midterm targets: $23 billion revenue, 16% margin, and $2.8 billion free cash flow by 2026.

• Continued strong demand from U.S. and international defense customers, supported by increased DoD funding.

• Elevated commercial paper balances expected through fiscal 2025, with no material liquidity issues anticipated.