• Full Year 2024 Revenue: $21.3 billion, up 10% and 4% organically.
• Full Year 2024 Segment Operating Margin: 15.4%.
• Full Year 2024 Non-GAAP EPS: $13.10.
• Full Year 2024 Free Cash Flow: $2.3 billion, up 14%.
• Q4 2024 Revenue: $5.5 billion, up 4% organically.
• Q4 2024 Segment Operating Margin: 15.3%.
• Q4 2024 Non-GAAP EPS: $3.47.
• Q4 2024 Free Cash Flow: Over $1 billion.
• SAS Q4 2024 Revenue: $1.7 billion, down 4% year over year.
• SAS Q4 2024 Operating Margin: 10.8%.
• IMS Q4 2024 Revenue: $1.8 billion, up 9%.
• IMS Q4 2024 Operating Margin: 13.4%.
• CS Q4 2024 Revenue: $1.4 billion, up 5%.
• CS Q4 2024 Operating Margin: 24.4%.
• Aerojet Rocketdyne Q4 2024 Revenue Growth: 5%.
• Aerojet Rocketdyne Q4 2024 Operating Margin: 11.5%.
• 2025 Revenue Guidance: $21.8 billion to $22.2 billion, 4% organic growth at midpoint.
• 2025 Segment Operating Margin Guidance: Mid to high 15% range.
• 2025 Free Cash Flow Guidance: $2.4 billion to $2.5 billion.
• 2025 Non-GAAP EPS Guidance: $10.55 to $10.85, 10% growth at midpoint.

• Warning! GuruFocus has detected 7 Warning Signs with LHX.

Release Date: January 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• L3Harris Technologies Inc (NYSE:LHX) achieved a record backlog, positioning the company well for future growth.
• The company reported a 10% increase in revenue for 2024, reaching $21.3 billion, with a 4% organic growth.
• L3Harris Technologies Inc (NYSE:LHX) successfully integrated Aerojet Rocketdyne and Tactical Data Link acquisitions, strengthening its portfolio.
• The company exceeded its cost savings target, achieving $800 million in 2024, and expects to reach $1.2 billion by the end of 2025.
• L3Harris Technologies Inc (NYSE:LHX) won significant contracts, including a $1 billion IDIQ award for the US Navy and the next-gen jammer competition, enhancing its market position.

Negative Points

• The SAS segment experienced a 4% decline in revenue year-over-year, primarily due to the divestiture of the antenna business.
• Challenges were noted in some fixed-price development programs in the space sector, impacting margins.
• The company faces potential impacts from new executive orders and government contracting changes, which could affect Q1 2025 bookings and revenue.
• L3Harris Technologies Inc (NYSE:LHX) reported negative EAC adjustments of approximately $100 million in 2024 due to issues in space programs.
• The divestiture of the commercial aviation solutions business is taking longer than expected, impacting revenue projections.

Q & A Highlights

Q: Chris, you wrote a letter to the DOGE leaders with policy recommendations. Have you received any feedback, and how do you think this will impact the DoD bureaucracy? A: Christopher Kubasik, Vice Chair & CEO: We've received positive feedback from Congress and the Pentagon. The letter aims to start a dialogue on reducing risk and improving efficiency. We expect unprecedented change in 2025, and we plan to adapt and take advantage of it.

Q: Ken, can you elaborate on the growth in free cash flow for 2025 and 2026, and the impact of LHX NeXt savings on margins? A: Kenneth Bedingfield, CFO: Free cash flow growth aligns with our revenue growth and margin expansion. We expect continued margin expansion supported by LHX NeXt savings, with at least 40% of savings contributing to margin improvements.

Q: How do you view the potential for margin expansion in the communication systems business? A: Kenneth Bedingfield, CFO: We are evaluating the mix between US DoD and international deliveries. Software sales and LHX NeXt savings will drive high-margin opportunities. We aim to meet or exceed our segment guidance.

Q: How are you approaching M&A in the current environment, especially with potential changes under the new administration? A: Christopher Kubasik, Vice Chair & CEO: We expect the administration to be more favorable towards acquisitions. We focus on partnerships, especially in AI, and are open to bolt-on acquisitions to expand capabilities.

Q: Can you discuss the impact of fixed price development contracts and potential changes in the contracting environment? A: Christopher Kubasik, Vice Chair & CEO: There's a desire to go quicker and reduce bureaucracy. We expect changes by mid to late 2025, benefiting companies that can deliver solutions quickly and efficiently.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.