L3Harris Technologies (LHX) announced that it has received a five-year contract, worth $587.4 million, to deliver custom tactical jamming pods designed to modernize the U.S. Navy's Aerial Electronic Attack capability. Details of LHX's New Contract The Next Generation Jammer-Low Band (NGJ-LB) is an advanced airborne electronic warfare system. The L3Harris solution will be simpler to maintain than the Navy's present system because of its modular, opensystem architecture, which allows for seamless updates. It ...

Core Viewpoint - The article emphasizes L3Harris Technologies (LHX) as a strong long-term investment in the defense sector, highlighting its diversified revenue streams, growth potential, and strategic positioning in critical defense areas like missile propulsion and ISR [8][29][30]. Group 1: Company Overview - L3Harris Technologies generated $19.4 billion in revenue in 2023 with 14.8% operating margins, aiming for $23 billion in revenue by 2026 with at least 16% margins, indicating a 3-year revenue CAGR of 5.8% and an implied free cash flow CAGR of 12% [11][10]. - The company is a critical supplier in the defense supply chain, particularly in missile propulsion, capturing approximately 20% of the total costs of every missile it is involved with [10][12]. - L3Harris is one of only two U.S. companies capable of supplying solid rocket motors, with growth opportunities in space launch propulsion, in-space propulsion, tactical missiles, air defense, and strategic deterrence [12][10]. Group 2: Market Dynamics - The ISR market is projected to grow from $40.2 billion in 2022 to $74 billion by 2032, with a CAGR of over 6%, indicating strong demand growth in this segment [16]. - Government spending on defense is under pressure due to rising interest payments, which exceed the national defense consumption budget, but elevated geopolitical risks are likely to sustain defense spending [6][7]. Group 3: Strategic Initiatives - L3Harris is focusing on innovation and cost reduction, targeting a $1 billion reduction in run-rate costs by 2026 through its LHX NeXt program, and is ahead of schedule in achieving this goal [21][24]. - The company is investing in startups, holding 2-8% ownership in around 40 high-tech companies, which allows it to integrate new technologies into its solutions without acquiring these companies [21][30]. Group 4: Financial Outlook - Analysts project a path to $2.8 billion in free cash flow by 2026, translating to 6.6% of its current market cap, with a cash dividend payout ratio of just 30%, indicating significant room for aggressive dividend growth and buybacks [24][25]. - The company currently yields 2.0%, with a five-year dividend CAGR of 10.5%, and plans to return 100% of excess free cash flow to shareholders once leverage targets are met [23][24]. Group 5: Competitive Positioning - L3Harris's diversified portfolio mitigates risks associated with reliance on specific programs, unlike competitors such as Lockheed Martin, which heavily depend on the F-35 fighter jet [9][31]. - The company’s strategy allows it to win contracts as both a prime contractor and a subcontractor, providing flexibility and resilience against market shifts and new entrants [20][31].

Core Viewpoint - The proposal for a Space National Guard by Donald Trump contrasts with the Biden administration's preference for expanding the existing Space Force, highlighting a potential shift in defense strategy and investment opportunities in the space sector [1][6][7]. Group 1: Space Force and National Guard - The U.S. Space Force was established in 2019, consolidating around 14,500 personnel, with fewer than 10,000 being active-duty military [2][3]. - Trump has proposed creating a Space National Guard to complement the Space Force, which currently relies on Air National Guard units for support [5][4]. - There are two bills in Congress aimed at establishing a Space National Guard as a primary reserve component of the Space Force, but the Biden administration opposes this [6]. Group 2: Defense Industry Implications - The growth of the Space Force is expected to occur at the expense of the Air Force, creating potential investment opportunities in defense stocks focused on space [7][8]. - Companies like Lockheed Martin, Northrop Grumman, and L3Harris are positioned to benefit from the Space Force's initiatives, particularly in missile defense and rocket launch services [11]. - In contrast, companies such as Boeing, Huntington Ingalls, and Textron are seen as less relevant to the expanding focus on space [9][10]. Group 3: Investment Valuations - Current valuations for major space defense stocks range from about 20 times earnings for Lockheed Martin to over 30 times for L3Harris and Northrop Grumman, indicating that none are particularly cheap [13]. - General Dynamics, with a valuation of 23 times earnings and a 14% long-term growth rate, is considered the closest to a bargain among these stocks, though still appears pricey [12][13]. - The investment landscape may change over time, suggesting that current high valuations could become more appealing in the future [14].

Bill Chizek Introduction Something very interesting is happening in the defense sector. Momentum has clearly shifted to the upside despite weakness in the S&P 500. Over the past four weeks alone, the S&P 500 has been outperformed by five of the nation's largest defense contractors. Only The Boeing Company (BA) had a worse performance than the market's 4.4% loss Liftarris Technologies Inc (LHX) Price % Change RTX Cord (RTX) Price > (Change St Change Lookhood (RTX) Price > (Change St Change Lookhood Mumin Cor ...

New 5-year agreement supports L3Harris' Space Business beyond Firefly's existing agreement for three L3Harris launches in 2026 CEDAR PARK, Texas, Aug. 7, 2024 /PRNewswire/ -- Firefly Aerospace, Inc., an end-to-end space transportation company, today announced it signed a multi-launch agreement with L3Harris Technologies (NYSE: LHX) for up to 20 launches on Firefly's Alpha rocket, including two to four missions per year from 2027 to 2031 depending on customer needs. The new agreement is in addition to Firefl ...

Set to Beat the Market? Momentum investing is all about the idea of following a stock's recent trend, which can be in either direction. In the 'long' context, investors will essentially be "buying high, but hoping to sell even higher." And for investors following this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving in that direction. The goal is that once a stock heads down a fixed path, it will lead to timely an ...

Excluding one-time items, the company reported GAAP earnings of $1.92 per share, up from $1.83 generated in the prior-year period. L3Harris' second-quarter revenues totaled $5.30 billion, which missed the Zacks Consensus Estimate by 0.1%. However, the top line rose 13% from the year-ago quarter's level of $4.69 billion. Segmental Performance The segment's operating income improved to $215 million from $168 million reported in the year-ago quarter. The operating margin expanded 280 bps to 12.6%, driven by im ...

Part I. Financial Information [ITEM 1. Financial Statements (Unaudited)](index=2&type=section&id=ITEM%201.%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements reflect results for the recent quarter and year-to-date periods Condensed Consolidated Statement of Operations Highlights (Q2 2024 vs Q2 2023) | Financial Metric | Q2 2024 (In millions) | Q2 2023 (In millions) | Change | | :--- | :--- | :--- | :--- | | **Revenue** | **$5,299** | **$4,693** | **+13.0%** | | Gross Margin | $1,360 | $1,187 | +14.6% | | Operating Income | $476 | $400 | +19.0% | | Net Income Attributable to L3Harris | $366 | $349 | +4.9% | | **Diluted EPS** | **$1.92** | **$1.83** | **+4.9%** | Condensed Consolidated Balance Sheet Highlights (As of June 28, 2024) | Balance Sheet Item | June 28, 2024 (In millions) | Dec 29, 2023 (In millions) | | :--- | :--- | :--- | | Total Current Assets | $8,047 | $8,055 | | **Total Assets** | **$41,657** | **$41,687** | | Total Current Liabilities | $8,981 | $8,004 | | Long-Term Debt, net | $10,533 | $11,160 | | **Total Liabilities** | **$22,753** | **$22,858** | | **Total Equity** | **$18,904** | **$18,829** | Condensed Consolidated Statement of Cash Flows Highlights (YTD 2024 vs YTD 2023) | Cash Flow Item | Two Quarters Ended June 28, 2024 (In millions) | Two Quarters Ended June 30, 2023 (In millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $650 | $764 | | Net cash used in investing activities | ($58) | ($2,074) | | Net cash (used in) provided by financing activities | ($600) | $794 | | **Net decrease in cash and cash equivalents** | **($13)** | **($514)** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes explain accounting policies, acquisitions, debt, and segment information supporting the financial statements - The financial statements have been prepared in accordance with U.S. GAAP for interim financial information and should be read in conjunction with the company's Fiscal 2023 Form 10-K[12](index=12&type=chunk) - **Acquisition of AJRD:** On July 28, 2023, the company acquired Aerojet Rocketdyne (AJRD) for a total net purchase price of $4.715 billion, with results reported in the new AR segment[116](index=116&type=chunk) - **Pending Divestiture of CAS:** The company has a definitive agreement to sell its Commercial Aviation Solutions (CAS) Disposal Group for $700 million, with the transaction expected to close in fiscal 2024[123](index=123&type=chunk) - **Divestiture of Antenna Group:** On May 31, 2024, the company completed the divestiture of its Antenna Disposal Group for net cash proceeds of $166 million and a $25 million note receivable[182](index=182&type=chunk) - **Debt and Credit:** In Q1 2024, the company issued $2.25 billion in new fixed-rate notes, using the proceeds to repay its Term Loan 2025 and $350 million of its 3.95% 2024 Notes[47](index=47&type=chunk)[298](index=298&type=chunk)[300](index=300&type=chunk) - Total backlog was **$31.7 billion** at June 28, 2024, with approximately 45% expected to be recognized as revenue over the next twelve months[59](index=59&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes financial performance, segment results, liquidity, and capital allocation strategies [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Consolidated revenue grew due to the AR acquisition, while higher G&A and interest expenses impacted net income Consolidated Results of Operations (YTD 2024 vs YTD 2023) | Financial Metric | Two Quarters Ended June 28, 2024 (In millions) | Two Quarters Ended June 30, 2023 (In millions) | Change | | :--- | :--- | :--- | :--- | | **Revenue** | **$10,510** | **$9,164** | **+14.7%** | | Gross Margin | $2,708 | $2,353 | +15.1% | | Operating Income | $854 | $793 | +7.7% | | Net Income Attributable to L3Harris | $649 | $686 | -5.4% | | **Diluted EPS** | **$3.40** | **$3.60** | **-5.6%** | - The increase in revenue was primarily driven by the inclusion of **$1.1 billion from the AR segment** for the first two quarters of 2024[213](index=213&type=chunk) - General and Administrative (G&A) expenses increased mainly due to higher LHX NeXt implementation costs, increased amortization of acquisition-related intangibles, and losses on divestitures[150](index=150&type=chunk)[176](index=176&type=chunk) - Interest expense, net, increased by **$135 million** for the two quarters ended June 28, 2024, primarily due to debt related to the AJRD acquisition[178](index=178&type=chunk) [Discussion of Business Segment Results of Operations](index=36&type=section&id=Discussion%20of%20Business%20Segment%20Results%20of%20Operations) Performance is detailed across four segments, highlighting the new AR segment's contribution and varied results elsewhere Segment Revenue and Operating Income (Q2 2024 vs Q2 2023) | Segment | Revenue (Q2'24, $M) | Revenue (Q2'23, $M) | % Change | Op. Income (Q2'24, $M) | Op. Income (Q2'23, $M) | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | SAS | 1,707 | 1,715 | 0% | 215 | 168 | +28% | | IMS | 1,729 | 1,735 | 0% | 206 | 162 | +27% | | CS | 1,346 | 1,289 | +4% | 329 | 325 | +1% | | AR | 581 | N/A | N/A | 75 | N/A | N/A | - **SAS:** Flat revenue was due to lower legacy airborne platform volume, offset by growth in Intel & Cyber and Space Systems, while operating income increased from improved program performance[207](index=207&type=chunk) - **IMS:** Flat revenue resulted from higher Maritime volume being offset by lower Commercial Aviation volume, with operating income growth from improved performance and cost savings[74](index=74&type=chunk) - **CS:** Revenue growth was driven by higher volumes in Broadband and Tactical Communications, while operating income increased due to a favorable legal settlement and cost savings[75](index=75&type=chunk) - **AR:** The new segment reported **revenue of $581 million** and **operating income of $75 million** for the quarter, driven by Missile Solutions and Space Propulsion[79](index=79&type=chunk)[217](index=217&type=chunk) [Liquidity, Capital Resources and Financial Strategies](index=39&type=section&id=Liquidity%2C%20Capital%20Resources%20and%20Financial%20Strategies) The company maintains a solid liquidity position despite lower operating cash flow, managing debt and capital returns - Net cash from operating activities decreased by **$114 million** in the first two quarters of 2024 compared to 2023, primarily due to a higher use of cash for net working capital[82](index=82&type=chunk) - Net cash used in investing activities decreased by **$2.0 billion**, mainly because the prior-year period included $1.97 billion in cash paid for acquisitions[83](index=83&type=chunk) - Financing activities saw a **$1.4 billion swing** from cash provided to cash used, driven by a $1.5 billion increase in debt repayments[84](index=84&type=chunk) - The company established a new **$1.5 billion, 364-day senior unsecured revolving credit facility**, with no borrowings outstanding as of June 28, 2024[40](index=40&type=chunk)[44](index=44&type=chunk) - During the first two quarters of 2024, the company used **$322 million to repurchase 1.5 million shares** of its common stock[91](index=91&type=chunk) - The quarterly cash dividend was increased from $1.14 to **$1.16 per share**, commencing in the first quarter of fiscal 2024[95](index=95&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Market risk exposures related to currency, interest rates, and benefit plans remain materially unchanged from fiscal 2023 - There were no material changes to the market risk disclosures from the Fiscal 2023 Form 10-K, with key risks including foreign currency exchange rates, interest rates, and defined benefit plan returns[156](index=156&type=chunk) [ITEM 4. Controls and Procedures](index=44&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed effective, with integration of AJRD's internal controls underway - Management concluded that the company's disclosure controls and procedures were **effective** as of the end of the quarter[112](index=112&type=chunk) - The company is incorporating internal controls for the AJRD acquisition and will include them in the fiscal 2024 year-end assessment of internal control over financial reporting (ICFR)[190](index=190&type=chunk) Part II. Other Information [ITEM 1. Legal Proceedings](index=45&type=section&id=ITEM%201.%20Legal%20Proceedings) A stockholder class action lawsuit was resolved and dismissed after the company paid attorneys' fees to avoid litigation - A putative class action lawsuit filed by a stockholder regarding a cooperation agreement with D. E. Shaw was **dismissed as moot** after the company entered into a waiver[193](index=193&type=chunk) - The company agreed to pay **$500,000 in attorneys' fees** and expenses to resolve the claim and avoid further litigation[193](index=193&type=chunk) [ITEM 1A. Risk Factors](index=45&type=section&id=ITEM%201A.%20Risk%20Factors) Risk factors remain materially unchanged from those disclosed in the Fiscal 2023 Form 10-K - There have been **no material changes** to the risk factors disclosed in the company's Fiscal 2023 Form 10-K[219](index=219&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company continued its share repurchase program and did not issue any unregistered equity securities during the quarter Issuer Purchases of Equity Securities (Q2 2024) | Period (Fiscal Months) | Total Shares Purchased (Program) | Average Price Paid per Share | Approx. Value Remaining ($M) | | :--- | :--- | :--- | :--- | | Month 1 | 0 | N/A | $3,702 | | Month 2 | 30,000 | $217.05 | $3,696 | | Month 3 | 378,000 | $220.59 | $3,612 | | **Total** | **408,000** | **-** | **$3,612** | - As of June 28, 2024, the company had a remaining unused authorization of **$3.6 billion** under its share repurchase program[93](index=93&type=chunk)[220](index=220&type=chunk) - No unregistered equity securities were sold during the quarter ended June 28, 2024[195](index=195&type=chunk) [ITEM 5. Other Information](index=46&type=section&id=ITEM%205.%20Other%20Information) An executive officer adopted a Rule 10b5-1 trading plan for the potential sale of company shares - Ross Niebergall, President of the AR segment, adopted a **Rule 10b5-1 trading plan** on June 3, 2024, for the potential sale of up to 12,214 shares[224](index=224&type=chunk)[228](index=228&type=chunk) [ITEM 6. Exhibits](index=47&type=section&id=ITEM%206.%20Exhibits) A list of filed exhibits includes corporate governance documents, incentive plans, and required certifications - Exhibits filed include the L3Harris Technologies, Inc. 2024 Equity Incentive Plan, various award agreements, and CEO/CFO certifications[229](index=229&type=chunk)

Core Insights - L3Harris reported revenue of $5.3 billion for the quarter ended June 2024, reflecting a year-over-year increase of 12.9% and an EPS of $3.24 compared to $2.97 a year ago [4] Revenue Performance - Corporate eliminations revenue was -$64 million, compared to an estimated -$49.64 million, marking a +39.1% change year-over-year [3] - Revenue from Space and Airborne Systems was $1.71 billion, slightly below the estimated $1.74 billion, with a year-over-year change of -0.5% [3] - Aerojet Rocketdyne revenue was $581 million, compared to an estimate of $595.08 million [3] - Integrated Mission Systems revenue was $1.73 billion, exceeding the estimated $1.66 billion, with a year-over-year change of -0.4% [3] - Communication Systems revenue was $1.35 billion, slightly above the estimated $1.34 billion, reflecting a +4.4% change year-over-year [3] Segment Operating Income - Aerojet Rocketdyne segment operating income was $75 million, surpassing the estimated $70.27 million [3] - Communication Systems segment operating income was $329 million, compared to an estimate of $321.88 million [3] - Space and Airborne Systems segment operating income was $215 million, exceeding the estimated $210.59 million [3] - Integrated Mission Systems segment operating income was $206 million, above the estimated $186.93 million [3] Stock Performance - L3Harris shares have returned +6.1% over the past month, outperforming the Zacks S&P 500 composite, which saw a -0.3% change [6] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [6]

Core Insights - L3Harris has consistently surpassed consensus EPS estimates over the last four quarters, indicating strong earnings performance [1] - The recent quarterly report showed an earnings surprise of 1.89%, with actual earnings of $3.24 per share compared to the Zacks Consensus Estimate of $3.18 [2][8] - The company reported revenues of $5.3 billion for the quarter ended June 2024, slightly missing the consensus estimate by 0.09%, but showing a year-over-year increase from $4.69 billion [9] Earnings and Revenue Performance - L3Harris achieved earnings of $3.24 per share, up from $2.97 per share a year ago, reflecting a positive year-over-year growth [8] - The current consensus EPS estimate for the upcoming quarter is $3.27, with projected revenues of $5.28 billion, while the estimate for the current fiscal year is $12.99 on $21.25 billion in revenues [5] - The company has topped consensus revenue estimates three times in the last four quarters, showcasing a trend of strong revenue performance [9] Market Position and Outlook - L3Harris shares have increased by approximately 12.6% since the beginning of the year, slightly underperforming compared to the S&P 500's gain of 13.8% [10] - The Zacks Rank for L3Harris is currently 2 (Buy), indicating expectations for the stock to outperform the market in the near future [12] - The Aerospace - Defense industry, to which L3Harris belongs, is currently ranked in the top 33% of over 250 Zacks industries, suggesting a favorable industry outlook [13]