L3Harris(LHX) - 2025 Q4 - Annual Results

Revenue and Growth - Full year revenue increased by 3% to $21.9 billion, with organic growth of 5%[8] - Orders totaled $27.5 billion, resulting in a book-to-bill ratio of 1.3x[5] - Fourth quarter revenue for Aerojet Rocketdyne was $763 million, a 10% increase from $694 million in the same quarter of 2024[24] - Full year revenue reached $2.845 billion, up 10% from $2.580 billion in 2024[24] - Organic revenue growth was 12%, driven by increased production volumes across key missile, munitions, and space programs[24] - For fiscal year 2025, total revenue reached $21,865 million, with an operating income of $2,110 million and an operating margin of 9.7%[44] - The Space & Mission Systems (SMS) segment generated $10,711 million in revenue, with an operating income of $1,055 million and a margin of 9.8%[44] - The Communication & Spectrum Dominance (CSD) segment reported revenue of $7,566 million, achieving an operating income of $1,924 million and a margin of 25.4%[44] - The Missile Solutions (MSL) segment earned $3,797 million in revenue, with an operating income of $364 million and a margin of 9.6%[44] Profitability and Margins - Diluted EPS for the full year increased by 8% to $8.53, with non-GAAP diluted EPS rising by 11% to $10.73[12] - Operating margin for the full year improved by 70 basis points to 9.7%, and adjusted segment operating margin increased by 40 basis points to 15.8%[9] - The operating margin for the fourth quarter decreased to 0.7%, down 980 basis points from 10.5% in the previous year[25] - Adjusted segment operating margin improved to 11.8% in the fourth quarter, an increase of 130 basis points from 10.5%[25] - The adjusted segment operating income for the full year 2025 was $3,451 million, reflecting a margin of 15.8%[44] - The CSD segment's operating margin improved to 27.8% in Q4 2025, with revenue of $1,961 million[43] Cash Flow and Assets - Cash from operations rose by 21% to $3.1 billion, while adjusted free cash flow also increased by 21% to $2.8 billion[13] - Free cash flow for 2026 is anticipated to be $3.0 billion, with net cash from operating activities expected to be approximately $3.6 billion[29] - Free cash flow for the fourth quarter of 2025 was $1,849 million, compared to $1,012 million in the fourth quarter of 2024, reflecting an increase of 82.2%[40] - Adjusted free cash flow for the full year 2025 reached $2,814 million, up from $2,319 million in 2024, indicating a growth of 21.3%[40] - Total current assets increased to $8,593 million in January 2026 from $8,218 million in January 2025, representing a growth of 4.6%[35] - Cash and cash equivalents rose significantly to $1,069 million, up from $615 million, marking a 73.8% increase year-over-year[35] - Total liabilities decreased to $21,560 million in January 2026 from $22,422 million in January 2025, a reduction of 3.9%[35] Future Outlook - The company anticipates strong results for 2026, supported by a record backlog and strong demand signals[5] - For 2026, revenue guidance is projected to be between $23 billion and $23.5 billion, with segment revenues of approximately $11.5 billion for Space & Mission Systems, $8.0 billion for Communication & Spectrum Dominance, and $4.4 billion for Missiles Solutions[29] - The expected diluted EPS for 2026 is between $11.30 and $11.50[29] - The company plans to reorganize its business structure into three segments starting in Q1 2026[28] - A majority stake in the Space Technology disposal group is expected to be sold, with the transaction anticipated to close in the second half of 2026[28] Segment Performance - Integrated Mission Systems segment revenue remained flat at $6.6 billion, but organic revenue increased by 8% excluding the impact of divestitures[20] - Communication Systems segment revenue grew by 4% to $5.7 billion, with an operating margin of 25.2%[15] - Space and Airborne Systems segment revenue increased by 1% to $6.9 billion, with an operating margin of 12.3%[23] Corporate Actions and Adjustments - The company plans to realign its segments into three reportable segments effective for fiscal 2026, focusing on common capabilities and business models[41] - The company reported a goodwill impairment of $85 million in the fourth quarter, impacting overall operating income[44] - Corporate expenses totaled $(355) million for the full year 2025, compared to $(369) million in 2024[44] - Amortization of acquisition-related intangibles for the full year 2025 was $769 million, down from $853 million in 2024, a decrease of 9.8%[36]