L3Harris Technologies (LHX) delivered robust third-quarter results in 2024, reflecting significant growth, strong operational efficiency, and record contract wins.
The defense contractor saw an 8% year-over-year revenue increase, driven by a record order volume and a healthy book-to-bill ratio of 1.4.
CEO Christopher Kubasik expressed confidence in the company’s trajectory, highlighting its ability to meet rising global demand for its advanced technology solutions.
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L3Harris Partners with Palantir to Boost Digital Infrastructure and Supply Chain Efficiency
The company’s Q3 performance was bolstered by several major contract wins, including a $600 million Next Generation Jammer contract and a $1.2 billion Indefinite Delivery/Indefinite Quantity (IDIQ) contract with the U.S. Navy.
These wins underscore L3Harris’ position as a critical supplier in the defense sector, particularly in electronic warfare and communications systems.
L3Harris also announced a strategic partnership with Palantir Technologies (PLTR) to enhance its supply chain management and digital infrastructure, a move designed to strengthen its operational capabilities in a highly complex global environment.
Full-Year Guidance Raised
Given its strong performance, L3Harris raised its full-year revenue guidance to between $21.1 billion and $21.3 billion, up from its previous range.
The company now expects earnings per share (EPS) to fall between $12.95 and $13.15. Free cash flow guidance was reiterated at $2.2 billion, providing a solid foundation for future growth initiatives.
L3Harris also remains on track to exceed its 2024 cost savings target, with expectations now set at $600 million, up from the original goal of $400 million.
This cost efficiency will be a crucial factor in delivering long-term profitability and maintaining competitive margins.
Full-Year Guidance Raised
The company reported solid free cash flow of over $700 million in the third quarter, alongside healthy operating margins in key segments. Its Communication Systems (CS) division delivered an impressive margin of 26%, up 350 basis points year-over-year.
Meanwhile, Integrated Mission Systems (IMS) reported a 30-basis point margin increase to 12.2%, and Aerojet Rocketdyne’s margins came in at 12.6%, benefiting from the amortization of purchase price adjustments.
However, the Space & Airborne Systems (SAS) segment experienced margin pressure, dropping to 11.6%, primarily due to challenges in classified development programs.
Despite this, L3Harris remains committed to refining its portfolio and considering divestitures of smaller business units to improve overall performance.
With $500M Buyback and Modernization Efforts, L3Harris Looks to Sustain Growth in Defense
Looking ahead, L3Harris is optimistic about its growth prospects, particularly in the defense sector.
The company’s leadership emphasized continued modernization cycles for its products, such as radios and night vision systems, as key drivers of future revenue.
Additionally, the company’s LHX NeXt initiative, aimed at improving cost structures and boosting competitiveness, is expected to help achieve a 16% margin by 2026.
L3Harris also reaffirmed its plan to execute $500 million in share repurchases by 2025, signaling its commitment to returning value to shareholders.
L3Harris Technologies’ strong third-quarter results and raised full-year guidance reflect its successful execution of strategic initiatives and strong demand for its technology solutions.
The company secures significant contracts, focuses on operational efficiency, and commits to shareholder value, positioning itself for sustained growth in the defense industry.
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