L3Harris Technologies [LHX] last Thursday after the markets closed posted slightly higher earnings in its first quarter due to a number of non-operating costs in the same period a year ago that did not recur and sales fell due to business divestitures, supply chain issues, award timing and program transitions.
Net income was a percent higher in the quarter, $475 million, $2.44 earnings per share (EPS), versus $468 million ($2.25 EPS) a year ago. Per share results were up 8 percent L3Harris repurchasing enough shares to lower the share count.
Excluding amortization costs related to acquisitions, impairment charges, losses related to divested businesses, merger-related integration expenses and unallocated corporate expense that weighed on the bottom-line a year ago, adjusted earnings fell to $3.12 EPS from $3.18 EPS, still six cents ahead of consensus estimates.
Sales in the quarter were $4.1 billion, 10 percent lower than the $4.6 billion reported a year ago, largely due to $270 million related to divestitures.
Excluding the divestitures, organic revenue was down 5 percent, primarily on lower sales at the Communications Segment, which was impacted by the supply chain issues and lower volume on legacy programs. Sales were slightly lower at Integrated Mission Systems, and Space & Airborne Systems on a number of programs including intelligence, surveillance and reconnaissance aircraft, fuzing and ordnance systems, less development work for the F-35 fighter, and award timing related to intelligence and cyber efforts.
Supply chain constraints, which are centered around the global shortage of computer chips, cost the company less than $100 million in the quarter. L3Harris expects the disruptions to continue through the second quarter and then recover later this year.
Adjusted free cash flow was $23 million, orders were just shy of sales volume, and backlog stood at $21.1 billion, up 6 percent from $19.9 billion a year ago.
The outlook for 2022 remains unchanged, with sales forecast to be up 1 to 3 percent organically to between $17.3 billion and $17.7 billion. Adjusted earnings are expected to be in the range of $13.35 to $13.65 EPS and adjusted free cash flow between $2.2 billion and $2.3 billion.