L3Harris Supply Chain Disruptions Contribute to 2Q Revenue Dip
While L3Harris logged a dip in revenues in the second quarter of 2022, citing supply-chain constraints, the company also reported a $53 million increase in Space revenue. Overall, L3Harris revenue declined 11% in the second quarter, compared to the same time last year. The company reported $4.7 billion in revenue.
L3Harris is maintaining its 2022 guidance provided in January, but shifting its outlook toward the low end of the range. Revenue guidance is from $17.3 billion to $17.7 billion, which would mean 1% to 3% revenue growth for the company.
The company also reported “modest impacts” from the competitive hiring market.
“The current market for labor remains highly competitive; the company experienced modest impacts to date and has had success attracting talent. L3Harris actively monitors compensation trends, with targeted actions taken as necessary to maintain competitiveness among the industry and peers,” the company said.
Revenue for the Space & Airborne Systems (SAS) segment decreased 1% compared to the second quarter last year because of a $35 million decline in the airborne business, including lower development on the F-35 program. This revenue decline was partially offset by a $53 million increase in Space revenue due to growth in responsive satellite programs. Revenue for the segment was $1.51 billion, compared to $1.49 in the same period last year.
The company highlighted a $250 million follow-on award to provide avionics and communication equipment for United Launch Alliance Vulcan Centaur rocket to support launches for Amazon’s Project Kuiper satellites. The segment also received several development awards in classified space, including over $25 million supporting a program for responsive space strategies.
L3Harris said it has a $4 billion multi-year pipeline for classified space.
The Communications Systems segment, which includes satellite terminals, saw a 12% revenue decline in the second quarter compared to the same period last year. Revenue was $1.1 billion. L3Harris reported that Broadband Communications declined $69 million, due to lower volume on legacy platforms, and Tactical Communications declined $66 million, primarily from continued supply chain disruptions arising from electronic component shortages.
“Global supply chain disruptions continued to weigh on revenue and margin, most notably in Communication Systems. The second quarter impact of approximately $60 million was in line with expectations, as L3Harris continued to successfully deploy a number of mitigation strategies focused on meeting customer commitments and supporting a recovery,” the company said.
Tactical Communications second quarter-funded backlog grew to $1.5 billion, on a book-to-bill of 1.5x.