L3Harris’ Q3 Growth Offset by Pandemic Supply Chain Issues
L3Harris Technologies’ Space and Airborne Systems segment posted modest 3% growth in the third quarter of 2021 compared to 2020, but the Communication Systems segment saw a 6% dip in revenues for the quarter due to supply chain impacts.
The Space and Airborne Systems segment reported $1.3 billion in revenue for the quarter. The company attributed 3% growth to a ramp on missile defense and other responsive programs.
L3Harris highlighted more than $225 million in awards for the quarter that could potentially lead to multi-billion-dollar follow-on opportunities. The segment also was awarded a multi-million-dollar study contract for next-generation weather sounders in support of the U.S. National Oceanic and Atmospheric Administration‘s future Geostationary and Extended Observations satellite system.
Space and Airborne Systems’ book-to-bill ratio stands at 0.98 and 1.05 for the quarter and year-to-date, respectively.
L3 Harris’ Communication Systems division, which includes its tactical satellite technology portfolio, reported $1 billion in revenue in Q3. The company attributed the 6% revenue decrease compared to 2020 to product delivery delays from supply chain-related constraints within Tactical Communications, lower volume on legacy unmanned platforms in Broadband Communications, delivery timing within Integrated Vision Solutions, and contract roll-offs in Global Communications Solutions.
The company highlighted several awards in its tactical communications business including $132 million and $72 million initial full-rate production awards under the U.S. Army‘s HMS Manpack and two-channel Leader radio IDIQ contracts. The broadband communications business received a $36 million follow-on award to provide advanced Manned-Unmanned Teaming airborne data link systems to the U.S. Army and international parties.
Communication Systems’ book-to-bill ratio stands at 1.20 and 1.13 for the quarter and year-to-date, respectively.
Overall, L3Harris reported revenue of $4.2 billion in Q3, down 5% versus the prior year, and down 1% on an organic basis, impacted by the global electronic component shortages. Communication Systems and Integrated Mission Systems drove the decline, which was partially offset by growth in Space and Airborne Systems and Aviation Systems.
L3Harris lowered its guidance for 2020 due to the effect of completed divestitures and global supply chain-related impacts. Revenue guidance for 2021 now stands at about $17.9 billion, down from $18.1 billion to $18.5 billion in August 2021 guidance.
“The L3Harris team delivered solid bookings, margins, and bottom-line results in the quarter, overcoming revenue headwinds due to supply chain delays and award timing. And in spite of unprecedented global supply chain disruptions that are reducing our organic revenue growth guidance for the year, we’re positioned to meet our earnings and cash flow commitments,” said Christopher E. Kubasik, vice chair and CEO. “We ultimately view these pandemic-related impacts as temporary and remain focused on creating value for our stakeholders over the long term.”