Christopher E. Kubasik
Vice Chairman and Chief Executive Officer at L3Harris Technologies
Okay. Let's get started. This morning, we reported our 2021 earnings and I'm pleased with the result. Our company delivered another solid year of bottom line performance, growing EPS and free cash flow per share by 12% and 9%, respectively. It wasn't, however, without its challenges, as the pandemic stressed our supply chain at a time when budgets remain uncertain. Organic revenues were up 2% for the year and our margin performance was exceptional, as merger cost synergies alongside e3 savings enabled expansion of 110 basis points.
Looking ahead to this year. We initiated guidance today that reflects current market conditions. Organic revenues are expected to be up 1% to 3%, with steady-to-rising segment margins. And when combined with the share count decline, we expect EPS of $13.35 to $13.65, reflecting another solid year of growth.
Our free cash flow guide of $2.15 billion to $2.25 billion incorporates current tax regulations, which requires us to capitalize R&D expenditures beginning in 2022 versus the prior practice of annual deductions resulting in tax cash payment increases. Excluding this impact, free cash flow per share growth would have been up by double digits. We'll provide more details on these figures later on the call.
Our focus on both value creation and advancing our strategy of leading as a non-traditional prime has driven our success to date. Moreover, in recent months, we made progress in our focus areas of growing the top line, strengthening our operations and augmenting our disciplined allocation of capital.
Let's start with the top line. With the integration of the company largely behind us, we're progressing on our efforts to grow the business through a three-pronged approach. First, investing in our capabilities. Second, bidding, winning and priming more programs and finally, expanding our international presence. Our award activity throughout the year demonstrated traction against all three of these efforts across all domains.
As a leading defense technology company, we're maintaining our industry-leading R&D spend as a percentage of revenues with an emphasis on open-architecture, multi-function and software-defined solutions across our broad portfolio of capabilities. This remains instrumental in expanding our revenue synergy pipeline as we reached a cumulative $1 billion in funded orders, including a contract for a classified next-generation system in the fourth quarter.
We are also accelerating momentum with internal investments in the maritime and cyber domains. Our leading sensor and integration capabilities for naval solutions on programs, such as the Columbia and Virginia-class submarines, led to awards of several hundred million dollars in 2021. In addition, we received a $100 million sole-source IDIQ from the U.S. Navy for cyber hardened electronic attack shipboard systems in the quarter.
Our capabilities positioned us for multibillion dollar opportunities across ship classes and geographies that we're pursuing in 2022 and beyond. We also expanded our external investments to broaden overall offerings in various capability sets. We're making calculated investments in partnerships and companies so we can bring unique technological solutions to global defense customers. There will be more on this topic throughout the year.
Next, let me update you on the progress we've made as a non-traditional prime, what we call being a trusted disruptor. Our positioning at the nexus of traditional defense players and new experimental commercial entrants, aligns well with the U.S. government's desire for agile, advanced and affordable solutions to address near-peer threats. We expect budget dollars to continue gravitating in this direction.
A notable example is within the space domain and the need for responsive satellites that can be rapidly procured and deployed to address a range of threats. We were awarded over $0.5 billion in responsive satellite contracts as a prime in 2021, including the $200 million award for a classified mission within the Intel community in the fourth quarter, and we have considerable and exciting opportunities ahead of us.
Turning to international. We continue to see demand for our defensive solutions that are aligned with U.S. export policies and ensure partner security. And with a book-to-bill of 1.1 on solid revenue growth in 2021, our strategy is solid. We had a strong growth in our ISR aircraft missionization business from a key NATO customer with awards of over $600 million, including $70 million in the fourth quarter, which is part of a broader multibillion dollar opportunity set we're pursuing in 2022 and beyond.
In addition, our international Tactical Communications business continued to experience robust order activity for land modernization in the U.K., Australia, and a Mideast country that totaled approximately 500 million for the year and over 200 million in the quarter. This pairs well with the expanding DoD modernization goals, supporting multiyear growth potential for our business.
In fact, just last week, we were awarded a $750 million IDIQ by the U.S. Marines to manufacture the Falcon IV multi-channel advanced handheld radio that meets modern crypto security standards, while providing them resilient networking capabilities. Overall, I'm pleased with the tangible progress we made in 2021, as we delivered a funded book-to-bill above 1.0, and grew our organic backlog by 5%.
Let's pivot to operations. Our integration efforts were quite successful and will wrap up in early 2022. We also continue to drive a performance culture through our e3 program that pervades the organization and has been key in mitigating the unforeseen challenges related to the pandemic.
Let me talk about the key components of our e3 program, factory optimization, engineering excellence, supply chain and overhead management. In 2022, we expect these factors to at least offset predicted inflationary pressures for both labor and materials, which we'll look to improve upon as the year progresses. We're off to a good start with our segment and business consolidation efforts. And over the last two quarters, we've delivered margins at or above 19% on a consolidated basis, or approximately 16% on a segment basis using our new reporting structure.
We've also reached several key operational milestones this quarter. Within space, we successfully completed critical design reviews for two major responsive satellite programs. First, the Space Development Agency's tracking layer and second, Missile Defense Agency's Hypersonic and Ballistic Tracking Space Sensor, known as HBTSS. We are gearing up for prototype launches of five satellites over the next two years.
Within our ISR business, we completed a key flight test and received a Supplemental Type Certificate for the first Compass Call cross-deck aircraft, the U.S. Air Force's missionized business jet. This strategic aircraft arrived in our Waco, Texas facility in the fourth quarter, where we began the next phase of modification. It is scheduled for delivery to the customer later this year.
Lastly, our WESCAM product line within our electro-optical business concluded its transition to a new state-of-the-art manufacturing facility and delivered a record high number of turrets in the fourth quarter as well as for the year. Concerning our supply chain, the environment continues to be fluid. For 2022, we expect supply chain disruptions to continue into the first half. As a result, our team is set to continue utilizing the various tools we outlined to address the challenges, such as engaging with lower tiers of the supply chain, accelerating our purchase commitments, utilizing DPAS designations and leveraging smart inventory in selected areas.
Shifting to capital allocation. Our focus remains on maximizing cash generation and strengthening our portfolio, while sustaining a shareholder-friendly approach. Growth in free cash flow per share is a key metric for us. This will remain a 2022 focus as we drive our profit growth, reduce working capital days, continue tax planning and manage capital expenditures. When combined with our share repurchases in 2021 and our current target of $1.5 billion of repurchases this year, we expect free cash flow per share growth of 10%, assuming the R&D tax credit is repealed, contributing to double-digit annual growth since the merger.
Regarding the dividend, it remains part of our balanced capital allocation framework, with opportunities to grow it further as we've done in prior years. Finally, with respect to M&A, we'll be opportunistic and use our balance sheet capacity judiciously to complement our capital return program.
Let me now provide details on our 2021 results and the consolidated guidance for 2022, and I'll ask Michelle to fill in the segment and other details on the outcome. So let's start on Slide 4. I'll refer to all 2021 figures in our prior four segment structure, given our realignment became effective in early 2022.
Fourth quarter organic revenue was down 1% versus the prior year. CS and AS were down 11% and 5%, respectively, with electronic component shortages in its supply chain, weighing down the tactical business at CS, while AS was impacted by the timing of awards. IMS saw solid 6% growth from continued ISR aircraft missionization activity and the SAS segment was up 2%, driven by growth in our responsive space franchise.
Margins expanded 70 basis points to 19.2%, with the most notable drivers being e3 performance and integration benefits, which offset volume-related supply chain headwinds. We exceeded our internal outlook by 100 basis points through favorable mix related to award timing, continued strong e3 performance and by containing supply chain impacts. These drivers, along with our share repurchase activity, drove EPS up 5% to $3.30, as shown on Slide 5.
For the full year, organic revenue was up 2% and in line with our prior guidance at the consolidated level. At the segment level, IMS and SAS were up 5% and 3%, respectively, while CS and AS were down in low single digits. CS would have been up in low single digits, excluding these supply chain impacts. Margins expanded 110 basis points to 19.1%, exceeding our prior guidance of approximately 18.75% and we're more than 75 basis points ahead of our midpoint at our initial guide, with e3 performance and integration benefits being the primary drivers.
Earnings per share grew 12% or $1.35, primarily from operations, synergy benefits and a 6% lower share count that overcame divestiture and supply chain headwinds, enabling us to deliver double-digit EPS for another year. Our full-year free cash flow came in just below the bottom end of our prior guidance range as we consciously built inventory levels to reduce supply chain risk. With this cash flow, along with proceeds from divestitures, we repurchased $3.7 billion in stock and paid over $800 million in dividends, returning about 10% of our market cap to our shareholders.
Next, on Slides 6 through 9, we provide details on segment results, which are largely consistent with prior commentary. In the interest of time, we can take questions in a few minutes so that we can shift our discussion to the 2022 guide.
Starting with the top line. Revenue is expected to be in the range of $17.3 billion to $17.7 billion, implying organic growth of 1% to 3% and reflecting growth in every segment. We expect a weaker first half down in the mid-single digits, driven by continued global supply chain impacts in our product-heavy businesses at CS, along with international ISR aircraft award timing IMS given tough compares. We expect high single-digit growth coming in the second half of 2022.
Segment operating margins are expected to be 16% to 16.25%, positioning us for another year of expansion and are expected to follow sales with more profit in the second half of the year. This, combined with a 4% lower share count, will result in 2022 EPS of $13.50 at the midpoint. On free cash flow, our $2.15 billion to $2.25 billion guide includes a $600 million to $700 million headwind from the R&D tax policy.
So with that, I'll turn it over to Michelle.
