L3harris Technologies (LHX) Q2 2024 earnings summary

Executive summary

• Revenue rose 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 increased 9% to $3.24, while GAAP EPS was $1.92; net income reached $366 million.

• Adjusted segment operating margin expanded to 15.6%, with GAAP operating margin at 9.0%.

• Orders totaled $5.2 billion, book-to-bill ratio was 1.0x, and total backlog stood at $32 billion.

• 2024 guidance for revenue, margin, and EPS was raised, reflecting strong execution, LHX NeXt cost savings, and ongoing integration of Aerojet Rocketdyne.

Financial highlights

• Q2 revenue: $5.3B; adjusted segment operating income: $825M; net income: $366M; adjusted free cash flow: $714M.

• Operating income for Q2 was $476M, up 19% year-over-year.

• Dividends paid: $221M; share repurchases: $89M in Q2.

• Net leverage at 3.2x, trending toward <3.0x by year-end.

• Cash from operations reached $754M, with adjusted free cash flow up 109% year-over-year.

Outlook and guidance

• 2024 revenue guidance raised to $21.0B–$21.3B; adjusted segment operating margin guidance increased to 15.2%–15.4%.

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

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

• Segment revenue guidance: SAS ~$7.0B, IMS $6.5B–$6.7B, CS $5.3B–$5.4B, AR $2.4B–$2.5B.

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