L3harris Technologies (LHX) Q3 2024 earnings summary

Executive summary

• Achieved record order volume and robust book-to-bill ratio of 1.4x, with Q3 2024 revenue up 8% year-over-year to $5.3 billion, driven by strong demand in Communication Systems and Integrated Mission Systems.

• Portfolio refined through key acquisitions, notably Aerojet Rocketdyne, and divestitures, enhancing focus on national security, innovation, and technology.

• Strategic partnership with Palantir to deliver advanced AI-enabled solutions, aligning with government directives to increase AI adoption in defense.

• LHX NeXt transformation program and cost savings initiatives are driving operational efficiency, digital modernization, and are on track to exceed $1 billion in savings a year early.

• Non-GAAP diluted EPS increased 5% to $3.34, with net income for the quarter at $400 million.

Financial highlights

• Q3 2024 revenue was $5.3B, up 8% year-over-year; adjusted segment operating income rose 13% to $833M; adjusted free cash flow was $728M.

• Operating margin improved to 15.7% (up 70 bps), while GAAP operating margin was 9.4% for the quarter.

• Net income for the quarter was $400M; diluted EPS was $2.10, up 4% year-over-year.

• Record backlog of $34B, with new awards exceeding $7B.

• Cash from operations increased 44% to $780M for the quarter.

Outlook and guidance

• 2024 guidance raised: revenue of $21.1–$21.3B, segment operating margin ~15.5%, non-GAAP EPS $12.95–$13.15, and free cash flow of $2.2B.

• 2026 targets: $23B revenue, at least 16% segment operating margin, $2.8B free cash flow.

• LHX NeXt cost savings target for 2024 increased to at least $600M, with a path to exceed $1B in total savings.

• Capital expenditures for 2024 expected at ~2% of revenue; share repurchases and dividends to continue.

• Free cash flow per share growth expected in mid-double digits as leverage target is reached and share repurchases resume.