L3Harris completed the sale of its Commercial Aviation Solutions (CAS) disposal group on March 28, 2025, for $831 million net of cash divested. This move aligns with the company's strategy to focus on core defense and government sectors.

Effective in Q1 2025, the Fuzing and Ordnance (FOS) business was transferred from the IMS segment to the AR segment. This realignment is intended to better align the company's businesses and improve operational efficiency.

As of March 28, 2025, L3Harris reported a total backlog of $33.2 billion, indicating continued demand for its products and services. The company expects to recognize approximately 50% of this revenue over the next twelve months.

General and administrative expenses decreased by $145 million year-over-year, driven by lower LHX NeXt implementation costs. This indicates effective cost management and progress in the company's transformation initiative.

L3Harris repurchased $569 million of common stock during Q1 2025, demonstrating a commitment to returning capital to shareholders. As of March 28, 2025, $2.8 billion remains authorized for future repurchases.

The Board of Directors increased the quarterly dividend rate to $1.20 per share, marking the 24th consecutive annual dividend increase. This reflects confidence in the company's financial stability and future prospects.

The company acknowledges a significant shift in U.S. trade policy, including increased tariffs, which could impact the supply chain and business. These changes are outside of L3Harris's control and could adversely affect its operations.

The report highlights that ongoing federal deficits could impact U.S. Government spending priorities for L3Harris's products and services. This uncertainty poses a risk to future revenue and profitability.

The macroeconomic environment continues to evolve, which has impacted our business and may continue to impact our future results. The ongoing uncertainty related to the impacts of inflation, as well as the interest rate environment and ongoing federal deficits, which raises the cost of borrowing for the federal government, could in the future impact U.S. Government spending priorities for our products and services.

The CS segment saw a revenue increase, primarily due to higher international volume on resilient communication equipment and sale of satellite communications terminal inventory. This suggests a strengthening competitive position in these areas.

The SAS segment revenue decreased due to lower volume associated with program timing and negative EAC adjustments from challenges on certain classified development programs. This indicates potential competitive pressures or execution issues in the space systems area.

The AR segment revenue increased due to higher revenues in Missile Solutions from increased production volume on key missile and munitions programs. This showcases a strong competitive position and growing market share in this area.

The LHX NeXt initiative has contributed to reduced G&A expenses, indicating improved operational efficiency. Lower employee severance and third-party consulting expenses are specific examples.

Cash used in operating activities was affected by a $242 million increase in cash used to fund working capital, driven by timing of billing and collection activity. This suggests ongoing challenges in optimizing working capital management.

Net interest expense decreased due to lower average outstanding notes under the Commercial Paper (CP) Program. This indicates more efficient management of short-term debt.

Company-funded R&D costs totaled $112 million, demonstrating a continued commitment to innovation and technological advancement. However, the level is consistent with the previous year.

The Space Systems segment experienced negative EAC adjustments from challenges on certain classified development programs, suggesting potential issues with technology development or program execution.

The CS segment revenue increase is partly attributed to higher international volume on resilient communication equipment, indicating successful innovation and market adoption of new technologies.

L3Harris used $569 million to repurchase shares, demonstrating a commitment to returning capital to shareholders. This suggests management believes the company's stock is undervalued.

The Board increased the quarterly dividend, showcasing a consistent track record of rewarding shareholders and confidence in future cash flows.

The company anticipates capital expenditures to be around 2% of revenue, indicating a balanced approach to investing in future growth while maintaining financial discipline.

L3Harris executed a nonparticipating single premium group annuity contract to transfer $1.2 billion of its pension obligation, reducing exposure to pension volatility. This demonstrates proactive management of retirement benefit liabilities.

L3Harris established a new $2.5 billion, five-year senior unsecured revolving credit facility and a new $500 million 364-day senior unsecured revolving credit facility. Both agreements contain customary representations, warranties, covenants and events of default for investment grade borrowers and financings of this type.

The company's estimated liability under applicable environmental statutes and regulations for identified sites was $637 million as of both March 28, 2025 and January 3, 2025.

The overall defense spending environment, both in the U.S. and internationally, reflects the continued impacts of global conflicts and geopolitical tensions, and changes to U.S. Government or international spending priorities have and could in the future impact our business.

On March 15, 2025, the President signed into law a full-year Continuing Resolution (“CR”) for GFY 2025. The CR funds the government through September 30, 2025 and provides $893 billion for defense funding, including $851 billion for the DoD.

The macroeconomic environment continues to evolve, which has impacted our business and may continue to impact our future results. The ongoing uncertainty related to the impacts of inflation, as well as the interest rate environment and ongoing federal deficits, which raises the cost of borrowing for the federal government, could in the future impact U.S. Government spending priorities for our products and services.