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L3Harris Technologies targets 16% segment operating margins, $23bn in revenue through 2026

Published 12/12/2023, 02:08 PM
Updated 12/12/2023, 02:10 PM
© Reuters.  L3Harris Technologies (LHX) targets 16% segment operating margins, $23bn in revenue through 2026

L3Harris Technologies (NYSE:LHX) hosted its 2023 Investor Day on Tuesday, providing a review of the company's financial objectives and value-creation strategy.

In a press release, the company outlined its medium-term financial framework based on the company’s current portfolio through 2026, which included revenue of $23 billion, segment operating margins of 16%, and $2.8 billion of free cash flow. The company also emphasized its commitment to return all excess cash to shareholders.

LHX shares are down around 0.5% at the time of writing, trading just above the $200 per share mark.

Chairman and CEO Christopher Kubasik highlighted L3Harris' transformation of its portfolio into a national security and technology-focused company. He also stated the company intends to discontinue its M&A program for the foreseeable future to prioritize strengthening its balance sheet.

"Today, L3Harris has industry-leading margins and is well positioned to grow as a result of our differentiated Trusted Disruptor strategy," Kubasik stated. "We will focus on driving operational improvements to enhance productivity, reduce expenses, drive margin expansion, and generate strong cash flow."

Furthermore, the company revealed its 2024-2026 capital deployment priorities, which include investing in the business, including research and development and capital expenditures, paying down debt, not pursuing any acquisitions, and returning all excess cash to shareholders.

“Our solid financial foundation gives us confidence in our ability to meet our medium-term targets and deliver value for shareholders,” added Kubasik.

LHX’s CEO also said he would work with the board’s newly formed Business Review Committee to identify opportunities for further margin and cash flow improvement.

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