L3Harris Technologies, Inc. (NYSE:LHX) Q1 2025 Earnings Conference Call April 24, 2025 10:30 AM ET Company Participants Dan Gittsovich – Vice President-Investor Relations Chris Kubasik – Chair and Chief Executive Officer Ken Bedingfield – Senior Vice President, Chief Financial Officer and President-Aerojet Rocketdyne Conference Call Participants Seth Seifman – J.P. Morgan Ronald Epstein – Bank of America Doug Harned – Bernstein Sheila Kahyaoglu – Jefferies Matt Akers – Wells Fargo Noah Poponak – Goldman Sac ...

Core Viewpoint - L3Harris Technologies, Inc. (LHX) reported strong adjusted earnings for Q1 2025, exceeding expectations, but faced revenue challenges due to divestitures and segment performance variations [1][3][11]. Financial Performance - Adjusted earnings per share for Q1 2025 were $3.47, surpassing the Zacks Consensus Estimate of $2.32 by 3.9% and increasing 7.1% from $2.25 in the previous year [1]. - GAAP earnings were reported at $2.04 per share, up from $1.48 in the prior-year period [1]. - Total revenues for L3Harris were $5.13 billion, missing the Zacks Consensus Estimate of $5.23 billion by 1.9% and down 1.5% from $5.21 billion year-over-year [3]. Segmental Performance - Integrated Mission Systems reported net revenues of $1.59 billion, a 2% decline year-over-year, but operating income increased to $203 million from $185 million, with an operating margin of 12.8% [4][5]. - Space and Airborne Systems had net revenues of $1.61 billion, an 8% decline year-over-year, with operating income dropping to $176 million and an operating margin of 10.9% [6]. - Communication Systems saw a 4% increase in net revenues to $1.35 billion, with operating income improving to $345 million and an operating margin of 25.5% [7]. - Aerojet Rocketdyne reported revenues of $629 million, an 8% year-over-year increase, but operating income slightly decreased to $76 million with an operating margin of 12.1% [8]. Financial Position - As of March 28, 2025, L3Harris had $517 million in cash and cash equivalents, down from $615 million as of January 3, 2025 [9]. - Long-term debt decreased to $10.98 billion from $11.08 billion [10]. - Adjusted free cash flow for Q1 2025 was $72 million, down from $156 million in the same quarter of 2024 [10]. 2025 Guidance - L3Harris updated its revenue guidance for 2025 to a range of $21.40-$21.70 billion, lower than the previous guidance of $21.80-$22.20 billion [11]. - The company expects adjusted earnings to be in the range of $10.30-$10.50, with the consensus estimate at $10.57 per share [12]. - The adjusted segment operating margin is anticipated to be in the mid-to-high 15% range, with expected adjusted free cash flow between $2.40 billion and $2.50 billion [12].

Core Insights - L3Harris (LHX) reported $5.13 billion in revenue for Q1 2025, a year-over-year decline of 1.5% and an EPS of $2.41, down from $3.06 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $5.23 billion by 1.89%, while the EPS exceeded the consensus estimate of $2.32 by 3.88% [1] Revenue Breakdown - Corporate eliminations reported at -$52 million, slightly worse than the average estimate of -$50.35 million, showing a year-over-year change of +15.6% [4] - Revenue from Space and Airborne Systems was $1.61 billion, below the average estimate of $1.72 billion, reflecting a year-over-year decline of -8% [4] - Aerojet Rocketdyne generated $629 million, surpassing the average estimate of $561.74 million, with a year-over-year increase of +16.1% [4] - Integrated Mission Systems reported $1.59 billion, below the average estimate of $1.69 billion, indicating a year-over-year decline of -4.6% [4] - Communication Systems achieved $1.35 billion, exceeding the average estimate of $1.31 billion, with a year-over-year increase of +4.5% [4] Segment Operating Income - Aerojet Rocketdyne's segment operating income was $76 million, above the average estimate of $68.50 million [4] - Communication Systems reported segment operating income of $345 million, exceeding the average estimate of $318.34 million [4] - Space and Airborne Systems had segment operating income of $176 million, below the average estimate of $202.47 million [4] - Integrated Mission Systems reported segment operating income of $203 million, slightly above the average estimate of $200.65 million [4] Stock Performance - L3Harris shares returned +2.1% over the past month, contrasting with the Zacks S&P 500 composite's -5.1% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Financial Performance - Total revenue for the first quarter of 2025 was $5,132 million, a decrease of 1.5% from $5,211 million in the first quarter of 2024[90]. - The operating income for the first quarter of 2025 was $525 million, an increase from $378 million in the first quarter of 2024[90]. - Net EAC adjustments for the first quarter of 2025 resulted in a loss of $21 million before income taxes, compared to a gain of $19 million in the same period of 2024[79]. - The company completed the sale of its CAS disposal group for cash proceeds of $831 million, with a pre-tax loss of $17 million recognized in the first quarter of 2025[83][85]. - Capital expenditures for the first quarter of 2025 totaled $59 million, significantly lower than $115 million in the first quarter of 2024[100]. - The company reported a total of $301 million in depreciation and amortization for the first quarter of 2025, down from $320 million in the same period of 2024[100]. - The CS segment generated revenue of $1,352 million in the first quarter of 2025, up from $1,294 million in the first quarter of 2024[90]. - The IMS segment reported revenue of $1,592 million in the first quarter of 2025, a decrease from $1,627 million in the first quarter of 2024[90]. Environmental Liabilities - As of March 28, 2025, the estimated environmental liability under applicable statutes and regulations for identified sites was $637 million[105]. - The recoverable portion of environmental costs from the U.S. Government was recorded as $463 million as of March 28, 2025[106]. - The current and non-current portions of the estimated environmental liability are included in "Other current liabilities" and "Other long-term liabilities" on the balance sheet[105]. - The current and non-current portions of the recoverable costs are included in "Other current assets" and "Other non-current assets" on the balance sheet[106]. - The company is identified as a potentially responsible party under various environmental laws, with uncertainties regarding liability and cost sharing[104]. - The company is subject to numerous environmental laws and regulations, with some liabilities considered de minimis[104]. Legal Matters - The company is involved in various legal proceedings, but as of March 28, 2025, the accrual for potential unfavorable resolutions was not material[103]. - The company has recorded accruals for losses related to legal matters that are considered probable and can be reasonably estimated[103]. - The company’s management believes that any probable settlements or judgments will not have a material adverse effect on its financial condition[103]. Strategic Initiatives - The company is undergoing the LHX NeXt initiative, expected to continue through 2026, aimed at transforming multiple functions and increasing competitiveness[94]. Market Risk - There were no material changes in market risk exposure during the first quarter of 2025 compared to the previous fiscal year[176]. Backlog - As of March 28, 2025, the company's ending backlog was $33.2 billion, with an expectation to recognize approximately 50% of this revenue over the next twelve months[82].

L3Harris (LHX) came out with quarterly earnings of $2.41 per share, beating the Zacks Consensus Estimate of $2.32 per share. This compares to earnings of $3.06 per share a year ago. These figures are adjusted for non- recurring items. This quarterly report represents an earnings surprise of 3.88%. A quarter ago, it was expected that this technology and communications company would post earnings of $3.43 per share when it actually produced earnings of $3.47, delivering a surprise of 1.17%. Over the last four ...

Exhibit 99.1 Earnings Release L3Harris Technologies Reports First Quarter 2025 Results, Updates 2025 Guidance Highlights* MELBOURNE, Fla., April 24, 2025 — L3Harris Technologies (NYSE: LHX) reported first quarter 2025 diluted EPS of $2.04 on first quarter 2025 revenue of $5.1 billion. First quarter 2025 non-GAAP diluted EPS was $2.41. Reconciliations of non-GAAP results are detailed in tables beginning on page 10. "We're building on our momentum with a strong start to the year, driven by solid operational e ...

Core Viewpoint - L3Harris Technologies, Inc. (LHX) is expected to report first-quarter 2025 results on April 24, 2025, with a projected revenue growth of 0.9% year-over-year, despite a decline in earnings per share by 23.5% compared to the previous year [1][7][9]. Group 1: Revenue Performance by Segment - The Integrated Mission Systems (IMS) segment is anticipated to see a revenue increase of 1.4% year-over-year, with estimates at $1,692 million, driven by higher demand for defense electronics and airborne sensors [2]. - The Communication Systems unit is expected to report revenues of $1,309 million, reflecting a growth of 1.2% from the prior year, supported by increased demand for resilient communication equipment [3]. - The Aerojet Rocketdyne segment is projected to achieve revenues of $561.7 million, indicating a growth of 3.6% year-over-year, aided by synergies from its acquisition and strong demand for rocket motor production [4]. - The Space and Airborne Systems (SAS) segment is estimated to generate revenues of $1,719.4 million, which represents a decline of 1.8% from the previous year, impacted by the divestiture of its antenna business and challenges in classified development programs [5][6]. Group 2: Overall Financial Expectations - The overall revenue for LHX is estimated at $5.26 billion for the first quarter, marking a growth of 0.9% from the prior-year quarter [7]. - Despite solid revenue growth expectations, the earnings per share estimate is pegged at $2.34, reflecting a significant decline of 23.5% year-over-year, primarily due to lower non-cash non-service FAS pension income [9]. - The company has an Earnings ESP of -1.77% and a Zacks Rank of 3, indicating that the model does not predict a definitive earnings beat for this quarter [10].

In its upcoming report, L3Harris (LHX) is predicted by Wall Street analysts to post quarterly earnings of $2.34 per share, reflecting a decline of 23.5% compared to the same period last year. Revenues are forecasted to be $5.26 billion, representing a year-over-year increase of 0.9%.The consensus EPS estimate for the quarter has undergone a downward revision of 1.8% in the past 30 days, bringing it to its present level. This represents how the covering analysts, as a whole, have reassessed their initial est ...

Wall Street expects a year-over-year decline in earnings on higher revenues when L3Harris (LHX) reports results for the quarter ended March 2025. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on April 24. On the o ...

Group 1: Company Overview - L3Harris (LHX) shares increased by 6.8% to close at $214.35, with trading volume significantly higher than usual, contrasting with a 5.5% loss over the past four weeks [1][2] - The recent rise in LHX's share price is linked to the U.S. President's announcement of a substantial increase in defense spending, with approximately $1 trillion allocated to defense in the upcoming fiscal 2026 budget [2] Group 2: Earnings Expectations - L3Harris is projected to report quarterly earnings of $2.55 per share, reflecting a year-over-year decline of 16.7%, while revenues are expected to reach $5.25 billion, a slight increase of 0.8% from the previous year [3] - The consensus EPS estimate for L3Harris has been revised down by 0.6% over the last 30 days, indicating a negative trend in earnings estimate revisions, which typically does not lead to price appreciation [4] Group 3: Industry Context - L3Harris is part of the Zacks Aerospace - Defense industry, where another company, Textron (TXT), saw a 9.6% increase in its stock price, closing at $66.78, despite a -17.3% return over the past month [4] - Textron's consensus EPS estimate remains unchanged at $1.23, representing a 2.5% increase from the previous year, and it also holds a Zacks Rank of 3 (Hold) [5]