LHX - Earnings call transcript Q2 2021 | L3Harris Technologies, Inc.

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Operator

Greetings! Welcome to the L3Harris Technologies, Second Quarter Calendar Year 2021 Earnings Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this call is being recorded. It is now my pleasure to introduce your host, Rajeev Lalwani, Vice President, Investor Relations. you. Thank

begin. may You

Rajeev Lalwani

Good call. welcome Rob. quarter our XXXX earnings morning, you, to and second Thank

call me the Jay On with Malave, CEO Kubasik, our and our CFO. today are Chris

measures. words statements on First, a and few non-GAAP forward-looking

actual Forward-looking statements involve differ assumptions and results could uncertainties materially. to that risks, cause

a more see section included is where release, you. available. will is in Investor Relations our For our call presentation A website, filings. lXharris.com, measures SEC information, I'll GAAP of non-GAAP of comparable please of also which that reconciliation With to financial turn press this and replay measures to the over it be Chris,

Chris Kubasik

thank Well, year new company. for and team a I’d everyone. job well as like a we morning third to you done the our LXHarris Rajeev thank entire as good began

in the above created XX.X% $X.XX, billion, have and performance over free carry The set business pandemic. markets second for of in quarter end book-to-bill quarter are $X of exceeded increased of $XXX X% over as X.XX the flow challenges a was reported million resulting we've cash and to up of across to key returns integration was including year-to-date. high this with quarter, contributed despite four Funded EPS today's forward, XX%. shareholder the We Margins $X.X solid X.X billion We is and organic and strong segments. team all had $XXX which our up year-to-date. million, repurchases many are such revenue leadership plan reflected targets our in which results. the We momentum growth to culture and executing

and priorities execution supports closing as Jay operational more offset coupled make to three with announcing EPS another performance the Execution strategic with slide divestiture that and which continued line in deliver the return capital and opportunities, top back the to on half and for performance, we our half than build cover. our delivering progress guidance first on raise commitments. our company's against value divestitures and headwinds will our expectations Our continue results create stakeholders momentum are for

line, seeing of start In progress while key top growth our of market focused points objectives with strategy. validate our end that the against best terms since data are our we the the R&D quarter pandemic, at

Our businesses X% quarter, were driven double second up growth by government internationally. the in digit

modernization regions international Our and Asia as to Pacific increased SATCOM space way. programs, from the and vision Europe. products based responsive our land maritime front, sales in broad And and revenue night ISR the growth radio and benefited for aircraft leading domestic was the on with as well the

Our strategy to deliver utilizing end-to-end continues to gain the across capabilities scale organization broader momentum. mission solutions and the

also awards strategy are working to solutions. over XX% $XXX responsive ground pipeline. These space plus growing million in over on awards billion is the $XXX and capturing awards revenue synergy for quarter, of totaling win Our capture efforts XX% our we from the $X satellite rate business of grew as and classified bring million part a to-date

commercial aerospace aerospace aggregate, were in our from digits base, and up were safety business, over up Turning they and X% to led low in commercial our sales. double and a public off by product businesses, strength

more public but and proposal decline, modest improvement increased the there stable On bid from sequential was side, with activity safety in a a backdrop.

pride top $XX to strategic roles. win backlog all with solid year-over-year notable that activity across over increased continue by programs Our was to organically line domains. we as billion X% growth, accompanied award Backlog several includes

previously dollars finder and time. the optics billions space for capabilities which mission from fresh combining the deliver more to over that growth. across electronics company disrupter. won, viewing an is of revenue nearly environment. opportunity contested us awards have are a and programs our side synergy of of incremental increasingly of solutions there as three pathfinder understands billion, pipeline to company for are They came These see a the solutions. we as With On and potential $XX continued offer LXHarris the can space year the creative a trusted Customers complexity

progressing existing domain, Within Aircraft and for the franchise with Electronic Display cut-in production air in on Panoramic $XXX the to platform TRX support hardware. year of we qualification F-XX and of about systems year-to-date the strengthened XX initial through awards orders three Unit brings the the our This the We're System this of million. the production on and under integration program. TRX planned Cockpit all Memory Lot total

infrared roughly secured EO for million Sensors $XXX with modernization platforms, have opportunities SOCOM Rotary our We on a furthering IDIQ also LXHarris. across

side, land that domestic signed key markets. the both to over and several touched contracts Moving we international

modernization five IDIQ X product year scope. terminals. expands across range new we radios to supports the which billion prior partner our countries foreign of continued a and $X.X contract, our products, $X.X portfolio and of year military a including SATCOM broader This our validates geographies sales, for First, received replaces billion and from

the UK U.S. our a Force we in are other reach. a pursuing with international competitive the modernization in $X few robotic to expanding contract Legacy Air received customer TX Second, the in And support After launching we TX Multi further the supply opportunity third, with now well years UK radios, Bowman area. MORPHEUS IDIQ Robots, logistics country. Mission XX future for us and we our opportunities the covering that billion year positioning a won back,

Warfare leading business. while markets, to to of USWTR prime international in training domain, nearly the systems award above and successful specialized program XXX nature, and further value extending additional book-to-bill mission opportunities. In warfare maritime received international in sensor leading Cyber platforms our we due can position Intel to the this distributed orders and an domain, team complex range to another communications over range pursue cyber domestic say our million limiting and and undersea business our a domestic what solutions million This support classified both $XXX of for builds Within $X of of sea quarter for has billion U.S. credibility Navy the was for called its for the in Undersea X.X training operations. and and

had adjacent also award business, to its for market XX contract key year system continue an a $XXX a our public law upgrade million Florida enforcement of with and responders. first in state safety operating from the with We

over NASA initial capabilities the support and budget to the we a budgets, FY while Moving is [ph] XX file the ongoing, for is await aligned FAA process to the with we the in spending priorities. and as pleased stability DoD, and investment up with our and were request

our stability seen builds on is technology on key programs where and military and the at For markets, a as are broad around trend and well such countries to the continuing through which we've peer the we near including portfolio look there's revealing, others. Australia, relevant when spending, line revolve Congress address in international items, Canada, UK, it's the amongst threats, supported. the focused high DoD, This value Japan in

We Export for for to are the offer the security. policies ensure our systems with also partner growing seeing demand U.S. defensive alignment type of we

our our top modernization opportunities other All-in-all, ISR ability consider Our we significant years, we confident most in enhanced of force remain domestic for drive remain trajectory we synergies coming expansion and the continue as for operational budget international leading over to growth investments. positioning, outgrow and surpass the our line through milestones our and aircraft upgrades, Systems. priority and performance, pipeline to to Maritime missionization large the land R&D sustainable to a underpinned of revenue programs. deliver Shifting by opportunities

for self-protection the For team capability Shield called UUVs. demonstrations, solution differentiators as successful customer SAS our can unmanned advanced small and example, torpedo a deliver highlighting and as an Maritime for at completed and that on recovery design with for Strategy At review we F-XX. preliminary USVs, tube Block our autonomy predictive Viper engagements a IMS EW advanced XX several launch submerged well

in the initiatives, breadth also We to factory team prototype program of quarter. a conditions, through with a continues we completed offerings. while of excellence allowing a offset as strong incremental financially, including $XX aircraft And utilizing million demonstration from had programs totaling for margins LX productivity, another SOCOM of the Harris variety early challenging to successfully and quarter Multirole synergies in eX impacts three cost us an flow mixed stage the

synergy and we'll on on schedule. this million half from progress of upside to level incorporated first deliver in year the run our $XXX million integration here operational range be is will a Any rate we by $XXX discussed consolidation ahead minimum the driven April the efforts into and excellence $XXX in efficiencies. the programs, up as year, see eX million, still addition, with this We initiatives. facilities, IT blending from In our now

us ahead. on the XX.X% for about guide of in level we’ll margins hand at year, years a the the this top Our prior look to build leaves and the for

Aviation divested our our announced Next, the end. with on close $X.X two $XXX When these and of Systems in for proceeds year to small under shaping within we cash, million gross today should roughly the sale segment capital total billion. are $X.X set be billion initiative, before combined businesses portfolio allocation,

divested XX% complete. program completed those allocation largely shareholder our part propulsion capital few including process, program, XXXX Proceeds recently portfolio our training have shaping in military with of combat friendly in We consistent businesses will divestitures others and with nearly completion of our revenues be of now and the approach. from returns is a announced capital from our the

about $X.X combined our for prior with capital up to When is buybacks will versus be XXXX. be roughly dividends, billion billion $X.X in now expectation $X.X returns Our this of year, guide billion.

So deliver phase the up, Jay. hand ability confident flow with I'm share LXHarris. EPS pleased consistently to execution about free for the against double With and in next cash strategic double priorities, our over that, digit excited I'll to growth, I'm digit it wrap to our and per

Jay Malave

everyone. you, morning good and Thank Chris

Starting eX the $X.XX; at stood up with of in receivables up and billion price drivers, in dividends. sequential below I'll timing revenue was our last share timing. of finish to along XX repurchases have price. an Of return of Margins IMS followed quarter. our with million led repurchases, well $X.XX a a basis share $XXX growth way flow XX% points note, to from as results contributed First, the remaining benefits, to on $XXX $X over due repurchases a expanded average billion AS $X.XX four with growth share X.X% to The X.X%. capital growth, color XX R&D. on return higher organic with And led days shown segment expected. up XX.X%, productivity, months also partially also $X.XX. our primarily pension shareholder while the at performance provide was program lower to and our the as cover second and R&D $X count operations by being share, in due EPS updated this accounted $XXX share decline $XXX integration was margin returns by of up to offset I'll totaled interest the were another working all for current and contributed of of share slide outlook. tax These segments. more XX%, XX Free million comprised in and volume, $X.XX million, at and Of over synergies five. cash to per quarter,

quarterly the NATO XX%, program. was to Integrated turning aircraft Mission in revenue growth by a digit ISR Systems on Now, led slide awarded segment missionization up on double results six. recently

growth the across X.XX strength half driving the cyber. space, and was airborne and ramp and book-to-bill a & X%, first to single Optical our basis timing digit from while along expected in business XXX Funded back and which deliveries, on Airborne, the to growth strength impact our digit the from the revenue that businesses. This key than including the from including the was missile for classified Class quarter increase X.XX Electro mid-single WESCAM half. increased frigate. up in low addition due and on maritime XX.X%, in we digit modernization program outweighed turret transitions platforms, responsive reflecting defense in In mid-single mixed growth submarine other Class segment. expect in XX% X.X% programs, our This the a Space to In with income impacts, growth platforms Operating more with margins Constellation in Intel in decline points programs. contracted Virginia of was ramp offset organic to

over integration higher was both X.X% XX F-XX program Shield Viper than XX.X% Advanced pension up driven operational X program XX have first investments, margins We was as Avionics Tech income funded R&D within eight increased more book-to-bill performance, expanded the Electronic basis and Refresh Warfare benefits points Mission and excellence, System. and income and and Operating space. offset by half, quarter one for including to

and and primarily in Next, by year's up Systems decline volume low to benefit unmanned was broadband contested to single And Europe, permissive platforms with the from was from legacy income X.X% operational Communication growth Asia quarter, and higher and down vision high U.S. X.X% driven X.X modernization in and global in as points businesses DoD was by related digits volume, on XX.X% due from expected. revenue up and transition to to that from public benefits, growth mid-single X.X modernization digit pandemic second half continued safety single integrated last and digit down for lower organic Tactical from plus was up an Operating growth. communication expanded operating margins in the basis first to X% quarter digit Pacific XX% impacts. environments integration funded XXX digits, Conversely, leading and grew book-to-bill demand the included double respectively. Communications, international excellence, anticipated DoD residual respectively. double

revenue business OEM organic primarily XX% and air recovering sales. up product increased driven from was Systems, Aviation commercial in that X.X%, by transport aerospace our training Finally,

saw on programs expanded from in excellence, volume. higher was volume. networks also benefits X.X in basis mission for from the points quarter digit Operating XXX XX.X% XX% a half. inordinance integration a FAA from and to up about mid-single higher fusing and book-to-bill We Funded aviation defense growth and margins first operational income and was ramp

line shifting Overall, a X% year-to-date. Okay, over X% our to at with expected organic our growth half by trending revenue for funded and unchanged top to first supported XXXX the X.XX at X% outlook. book-to-bill as is

Classified in Intel within Integrated driven Space, Our expected and and U.S. Defense Solutions the Vision Government half businesses to Cyber Communications, Growth are Tactical Aviation. and back accelerate by

growth outlook And with our the And timing guide digit supply chain, On side in year with expect commercial first mid-single the strong results encouraging international the for sales of of think segment will second moderates. to be the confidence Consistent lastly, our as the as aircraft the a by and items our led growth continue second ISR and back the the continued flattish plus overall we Tactical double of the quarter in businesses maintained build half. year, guide key our in in half, recovery. a our international digit commercial the for consolidated performance the the year, well. level, awards, we half at about the we also as pace watch Radios of

point to in end to our Turning continue our raised execute approximately previous a to to-date increase XX confidence range top back the board, margin to higher do to growth performance margins, the outlook the but margins expect and earlier ability to segment investment XX.X%, have to strong basis are synergies, lower we on midpoints We new, across to moved holding given to at their a divestiture our their eX raising given we're of strong with due deliverables. and expecting EPS, the cost of reflecting ranges our expected steady holding be end AS their commitment at our a dilution of $XX, the AS range divestitures. CS. On and and upper growth mix XXXX, IMS we're now toward in to-date from at SAS and from end of performance guide range of upper pressure full our and are double the CS at spite the dilution on to XX% delivering $XX.XX and our to we and guidance From programs. program due perspective, R&D in to prior midpoint stage half digit previous stronger have on ranges year

count about on prior lower million slide shares, of divestitures. driven at divested lower XX%, than dilution with in $X.XX shown a of standalone more from synergies a along $X.XX and we a from X.XX% about $X.XX. earnings As of from operations $X.XX basis XX, of of net improvement and XXX On expect all the tax is by midpoint offset rate increase the share which

for divestiture of Moving to working to $XX $X.X reflect despite three free related guide million cash billion $X.X roughly continues and headwinds divestitures. to billion lower divestitures. improvement capital flow, days, our expected to now completed is guide of intact, the million, that’s day million from be to prior is $XX due versus about the XX year-end around XX adjusted $XXX to CapEx to

repurchases, billion we $X.X recently this year. to shareholders $X.X return divestitures. approximately proceeds share reflects now to expect in about $X.X billion net increase also an account closed our from guide billion told, of from guidance for to prior Our All

We annual up the drive strong execute and growth digit earnings So as it and Rob, revenue our let guide in on continue open questions. another let's and margins free solid to and growth. sum quarter leading in half, and double me With line per priorities expansion deployment, first all raise Further delivered cash we generation share. enabling performance for flow up. that the cash consistent book-to-bill of all and industry strategic

Operator

We'll And conducting a Bernstein. you. from our first with be your proceed Instructions]. question. now Doug [Operator question-and-answer with is Harned Thank session. Please question

Doug Harned

morning. you. Good Thank

Chris Kubasik

Good morning, Doug.

Doug Harned

little understand to a on more Communication got well. Night Radio I margin about QX this Systems. high to big growth and mean and and had for I wanted the awards you those strong I outlook positions Vision, already be in expect would you add as some then should Monetization and should growing

the is when current you how trajectory the you see term to now? potential here, three at that so, do longer there And here? above XX% to over growth look the five up look their margins levels take at next And revenue years,

Chris Kubasik

you absolutely domestically those Communication of but with the Yes Thanks this well. got Segment We've here been the as successful and for internationally Doug, not some Chris. late is of it question, wins yes, quite in only right.

continuation radios, the really over the for a about a book-to-bill, longer when land we've is whether had what you in quarter think position. good, the we're revenue margins the modernization looked seeing pressure night of term, we're it's force like at for the goggles, talked vision and some is, great We upward So SATCOM before. I growth the and

over throw a color. Jay I'll give to maybe it So little you to more

Jay Malave

Sure.

– a on the just over term, comment medium maybe Doug. another Just growth quick revenue

the If this what somewhat we you year. have recall future, to at similar and if you it's look

If four six look SAS to now by you we at had AS. CS four followed it’s at our to and six, IMS segments, at and

term. more the those would gives in you expect drive as continue medium segments little if the a in look than CS future, probably we to I Chris If we in say growth. those expect two us to leaders mentioned, this will two CS to be outlook, to growth the higher confidence

are a and on margin the we bit really going new of see, we On little reflection first that's a the back year this are profile, half the – taking programs. the from mix

HMS We broadband pretty better have our the Gen track CMS the able drive actually is Next thing cost army, the take margin we margins that Monetization in communication, being Program, have sizable are programs the programs, so time. that’s good also record Jammer The dilutive. out, that over to the about some

we're could delivered So if view a what end the XX.X% over first when the first you and shows half gives in be, term that over look time. at -- right We now that you year, the like midpoint. of potential so of this of segment kind year we'll of be the medium XX% XX% the the we the what that year saying you in the at look could half say

Chris Kubasik

of for first next contract billion in potential phase with signed there. good and momentum. of up And a years, Yesterday has this over lot for just to the STR the I'll a $X program, several Next positive standardization chime Gen the Mid-East a multi-year so the we country

Operator

next question Morgan line question. your the with from Stanley. comes of with Kristine Please Our Liwag

Kristine Liwag

Hey! Good guys. morning,

Chris Kubasik

morning. Good

Kristine Liwag

available bid the more landscape, Chris, in can color performing? for and you you're provide the how on Space, programs competitive

Chris Kubasik

know of in months. year a successful Now this good in you so a in we've just prime last good space far was run and in quarter and had XX absolutely! X.X been winning positions book-to-bill mentioned, XX we've I we space had the Oh as XX

defense something that that's we've of and into quite So proud we're the missile also moved arena.

mission. to all and domains, The we've in we're So, customers’ five done what in longer answer. is little maybe understanding similar a it's space taking the really approach

XX,XXX employees clearances. XX,XXX employees engineers with We have XX,XXX and and

spending are their solutions needs. are are develop SATs, and we were know able So at alternatives IRAD lot capabilities, we meet responsive as past to develop you within in we're a looking and where our that We've months. and twenty we how our launch we about to satellites looking the at trying our talked

win the the understand The is a these So and that's payload We focus positions. lot speed. and solutions. have on us helping mission, of prime we integration the innovative

find to out to a So have payloads contributed think some the you been strategically, at so then and awards just traditional have and success of with can And exquisite we up we larger I some collaboratively continue mover. months we're needle compete, to some we entrants, that seems working with classified. next coming these has When new in the that where look working prime be we're satellites, and we it usually I know the that's few partners, can the the do of partner, with primes where there, are working. some like and we best

growth of is team clearly as this and proud the budget that very outlook the and quite well. in So supporting positive is space

Operator

you. Thank

Our Barclays. of next your proceed Strauss from the question question. with David with comes Please line

David Strauss

Hi! Thanks, morning. good

Chris Kubasik

Good morning.

David Strauss

Chris, margin wanted about side. ask just to I the

here talk pension the you own on hinting at also from under further idea higher say here. your the you you You're that Can much guidance? just is upside margin of what's see from what margins versus from margin you're assuming about dependent How And see? you kind for drivers then of different for control eX from volume there perspective? upside an when the

Chris Kubasik

year a we is the about basis. $XXX I continual a does focused you rate. to something committed of A contributor. and We've investments But which million or about and of David. and upside. proven years big and mean sometimes trajectory, organic it, than a ahead the we're the Jay thanks lot about, Well, this, and part the know growth driver we're run volume function three and processes, talked are ultimately in believe and that's that margin on so improvement just systems talked each is a review schedule from developed more we we've small eX, and talked of this come there's synergies we've I regular two It a plan. takes but on every executing takes transformation a

So has to why the but Jay pension EACs able helpful been margins. assumptions, We're our the eX commitments and that up can't no in what's I'll control we see the we our again, and to jump the program customers. continue. reason the let on execution sign with driving

Jay, color. So little more a

Jay Malave

Yes, sure.

Just to the and the that’s on confirm new little right the with we margins, headwinds That's in a thinner typically is when mix about programs absorption talk factored benefit. usually coming in these margins.

that. is As per key able going to Chris points driver. mentioned, to XX about the drive benefited if in expansion to The an eX basis of feel year, on $XXX confident we and million think medium of talked to about over is basis. us It’s CAS drive about all-in this the XX and absolute between and pension, continue FAS you term year pretty being

to We that legislation, a as result enacted little the the the a an was next earlier element CAS ARPU year it year. bit decline to expect in

for our requirements funding CAS for FAS down that but by be out pushed that income. little pension recovery bit, a some As should offset will come

much pension would So year-over-year I expect net-net be the to pretty flat.

Operator

you. Thank

is Vertical question. your Research. the Please of Our next with Stallard question proceed line with Robert from coming

Robert Stallard

much. Good so Thanks morning.

Chris Kubasik

morning. Good

Robert Stallard

probably for Chris, this is one you.

shift the Thank strategy in to the assets disposal and perhaps much expectations, wondering is start that again and was you on now done. at have you. process your compared You mentioned the maybe versus prices a how that acquisitions? do look sold now we I see pretty

Chris Kubasik

the you question. for thank Well,

the that transactions had billion. numerous Now $X.X comprise we've

our You and generally meet went had we in question projected. original know been and cases have exceed and I answered back what we've or your to at some able looked estimates slightly

divestitures of $X.X proceeds way gross I and about couple ones. talked X.X a about maybe all mentioned we these know small You as back billion from of where

the clearly within we'll expectations. So get range our of

M&A two we during year and integration expected. know on or of were the I'm we two that's the period. even the the on to than box out ago that market. better even we as said anything You I've watched and focus well very highlighted year maybe come going and years the stand didn't and gone really did in divestitures, we period on M&A two miss highly But front, the down confident

to where we anything must as continue market we'll survey it. So is call that looking have” the we're “a at

I said look gaps. five at we over all two we're know really needs or as any portfolio, domains. I the You glaring in when the see don't years,

to or discipline, So to respond things hurdles going we're at at operationally, sense. to really the approach but calls, strategically, we'll sure continue hold make companies inbound the either look proactively look financial them make

we've So a in really organically. not to able pleased very rush with and what win been

So, some as know let that you you insight we'll hopefully Robert and progress. that gives things

Operator

is line question your Please next question. the Our Walton from Myles of with UBS. proceed with

Myles Walton

second good margins. wondering if comment a SAS I the you implied Hey, morning. sit in to could was bit down on half

Generation factor GAO anyway? guess Would here on couple I or that is top have line Jammer? know protest Jay, I I adjudicated update just for guess being us just guidance a Next R&D of talked I the decision weeks. past think in could you the the and second by you next – or swing due in about in and also Chris year's or on know has mix, maybe quantify that's been those. this you And a

Chris Kubasik

Yes, guidance. to Gen chime model Jay process supportive the then the built on that the in in first within assuming you're and of in results. mid-August work we're and be and I'll Navy we Next We're August U.S. began the and take ask Jammer right. the that and hear SAS. ran the one when that's we to It's confident No, very going

win forward that, a upside started So and we're huge from to no looking additional getting but and delivering those capabilities.

Jay Malave

half down key the got make the first is We've half, of about mixed – high on missile defense back end half number in XX.X% about programs driver had we're fact of back on we continue the able guide year that new a know to There's you of pretty the the contemplated XX% year But the of to these the Space. ballpark. XX.XX%. programs. by range programs, plus at again, we're step other that we some those the margins of particularly set these really the and Myles, guide in maybe half. on in up anticipate impressed put pressure we've The the same winning The classified to guidance XX%, And now the originally to the won new that the on coming this SAS you in does into the that based step year, back to margins when in already which will the and are high know programs. things on end here we go

Operator

Seaport of Please with Our Richard question. the with Safran next question from proceed your Global. line comes

Richard Safran

everybody. good you? are How Hey, morning

Chris Kubasik

Good morning. doing? Fine! How are you

Richard Safran

answer, You you the Great! market to able what with systems, the where and is you here. follow-up know, international types answer, LXHarris. outlook, the wondering you international opportunity etc. of just demand us overall seeing coming I an for drive discuss and was of you for for being always and I'd you know you in improve this from in where on and Could set give you're remarks could government relationships Can with customers, see Chris, have opportunities your defense reputation if dynamic thought some opening your I update the

Chris Kubasik

and time that I encourage Yeah, lot to we I Okay. of go listen our try got to mean spend questions challenges with my customers backwards. there. to and their Well, a team there's I'll such.

have bring in in and actually services the of evening from and customers and me. be leaders Pentagon OSD with meetings I'll the whole variety key this So, the DC with obviously P&L a to of headed single days three

them them listen how our the help can customers such, and see we and to budget work to like and with so. process collaboratively on we So

areas were of we focused one shoot a said, we think we think XX% I form everybody could we we underperforming our out it, on as know on. thought the I'm probably a were does we company, but that's and and around combined better this you was XXXX. revenue, maybe XX in of do said I came basis the of XX% back something or – right and International, pro

of about So XX% we're far year international. revenue our this at from coming

positive a seeing we're So little movement.

a it’s you As lumpy. little

I really know maybe the stable budgets have surprising, with You know globe mentioned, as you the been U.S. the consistent somewhat across

think you and the two-fold. surprise talked of a really Japan, U.K., about Australia, was given that think so that and I I've Canada environment So and pleasant our strategy threat is approach

we have to or border is ex-pats the local bringing and when day-to-day, at to process, threats deals. focus close ten the national executives, either in on understanding opened P&L least We where country our the try countries the there have leaders,

seems we've that you been to traditional more be expand then reps we use the well and the working able know and the on So use the product relationships and to distributors previous portfolio. side, to

through, know That the IDIQ the mentioned know allows traditional an all products to new you come just I of company for You that the FMS not radio. now as example.

think I So, a positive. that's

ability in know hearing focused lot defensive a contested the we more our communicate ultimately on of is what and customers, awareness because do to You want from situational international environment. systems they we're a

ISR our things and know something business and at you jet, the prop a like to we're I in rivet look cases aircraft, portfolio to doing So it's a some on whether aircraft. a joint single

our the quite the talked to East in situational library, Pacific seeing them usual all to growth a about regions the opportunities about awareness. place, those East, get have you the relative none second is Waveforms We've and resilient broad capability, it’s portfolio and that comps our Far which we're areas. Asia We to a know – and bit allows Mid

So you laid years a out we're on but that's executing a we the strategy two ago. optimistic I we're position wanted, longer and in than and think probably answer good

Jay Malave

the to kind the we've of chat ISR capabilities, world in Chris back And is missionization, not of aircraft of about capability our pod laid recall affordability, just and that. bringing as some it year over customer to for comfortable what add amount international, Richard, so you a there’s the exquisite you of going our briefing, if to are growth investor for to know Joint medium had digit that March the with bit mid-single if based better. that to on capability. talked be And little these business that. Bringing significant said, around quickly taking growth demand framework target this we're also a Rivet doing a that out term we plus Obviously we

the see power You in other as as maritime, provide, in the Communications, these like and both And modernization so I'd countries control, request of say we support the unmanned, and autonomy. know manned electrical same at areas a would we in and see Tactical things is distribution path lot say capabilities opportunities for look well you DoD there. foreign we following both

a just see comfortable objective growth with that pretty term. medium growing to continue we we're and So pipeline over the

Operator

Our is Please the from question. next question proceed with line Khanna of Gautam Cowen. with your

Gautam Khanna

morning, thanks. guys. Yes, Good

Chris Kubasik

morning. Good

Gautam Khanna

have for what to kind on beyond. ‘XX you frame growth beyond on you could I for the domestic I of then just growth tactical a rates us sort to IVAS. international ask wanted did RF question follow-up an then of and in and expect Maybe And prospects of pipeline a to and year? earlier this and if the follow-up be

talk of potential the program about you is a that addition? can as view legacy threat Thank your you. opportunity or for what If

Chris Kubasik

Okay.

high question. Com first can and me and on some I'll back Let color the Jay more give do then and come level question Tac IVAS you on the answer

are about the specifically HMS some So quarter. Manpack, those third here upcoming we've here, occurring talked domestically hopefully awards Leader, the be should domestically, coming in forward HMS that

little orders region. East pretty really some Australian mentioned numbers East Tac and in Com. marines pipeline. color Again, the later the just Asia it the looking pretty the year Jay success the internationally competition in you let a forward that the But in getting Europe, know a increase strong Asia, be we're focus fourth more quarter to to give that and the have course good from had in results. of Pacific relates Then to we good Mid Mid and a here going handheld there a again, also I’ll yesterday, You to we've I in is have as

Jay Malave

probably think you're a that on to far early the in rate medium a there world at growth as the there’s programs, of would DoD of Yeah mid-single in you for the low to mentioned business got in growth, have of solid in growth drive some think digit, that Gautam, you with to this we other to digit a I year. production before, the low piece strong both reduction about and now back of now in half that's our as innings that largest growth Internationally being way I and more but base put the coming we’re over bit overall look significant mid-single is you little while it new start particularly the and have cannibalize think best of as cases, come DoD so to around the program, the on right again does countries it's of upgrades digit off the probably both and mid-single international we've here reason modernization monetization really I but Army know going programs, looking know modernization, obviously the full term. the just fall Chris a for that on, countries and it. demand growth Part at so rate

Chris Kubasik

Going all back know our you say when program our clearly I would job focus you know for maybe commitments. which on to and budget money at bit and funded our you're team done head-to-head and look is to a meet of going you deliver, little our great although both were schedule has battling IVAS, and I ENVG-B kind a IVAS, think that of

question I think be going to split. ultimately get of these how its a

devices I slightly and they sets. think mission several needed thousand hundred have capabilities there's different and

there's split would two. be time the over between to I So think a going

you the within capabilities. on You vision about the the the we've talking know been know augmented publicly reality capabilities of a some ENVG-B, real night focus little more

converge on capabilities, two would But different and we're making sure some know meet and I commitments. point the our think how focused different wants the we'll we to army now right mission just see play delivering So that and at you out.

Operator

Thank you.

from Please Kahyaoglu proceed Our Jefferies. with next question question. Sheila of comes the line with your

Sheila Kahyaoglu

IMS, seeing, X% the of of and you talk the what in got second you for growth thank you're time. and guys, the puts some year, about half, and morning On it deceleration flat you're are X% growth that robust forecasting the some Good can for the so half first maybe for Hey! you implies takes?

Chris Kubasik

a second in happening the here mostly in these customers. IMS Yes will to moderate the second back growth expecting strong the half rate normalize half to growth and international half international the to which with year, is what Sheila, the in the moderates year in bit what's full in abate we so of had was ISR the strong rate. is of the key first for the that's we and little business, a really the for driver, the back That half are really year, just normal really back that really going business

Jay Malave

the this and our know quarters, procurements but Sheila, hockey rather large deliveries all a of and of or kind is be segment get stick. so more think much quarter fourth of lumpy a up on of you little based coming the strong than out one chute down I significant Yeah, these you having of I'd aircraft

in So know you what that's mainly ISR happens IMS, in sector. the

Operator

of Please from Our the line question. Suisse. proceed Rob with next question comes Spingarn your Credit with

Rob Spingarn

Hi! Good morning.

Chris Kubasik

morning. Good

Rob Spingarn

but and I'm increase because the funny shortages we're sequentially training curious business and is I latest either recovering expectation or what about actually Thanks. sales, about talked was, overall it's things reading or Jay the is this Chris, how non-core. whether recovery year-over-year how commercial if of You now big can or know and core think pilot change quantify kind you not

Chris Kubasik

in questions. little digit great good the double did driven We and the more recovery, Rob, products some Right a training. quarter by actual see second the

I think there's a slight there. lag

variety models an a a the XX, you to due for that's so our cadets to have from a XX period. know little the academies we come of of where That's challenged into closures, lagging. month been border know training XX little You actually some facilities

what open would little in compared of recovery delta is coming thought we is the ball it up see the borders there, course lagging the an everything as be, bit. think viruses so we'll a to through on uptick a I curved

for may refreshed we've retired to early are already but August, of people know converting pilots though You training we’ll those start have to new manufacturing going next it's the we get know there's going in far quarter, the in be been People even slow expect, that there's some simulators, year need course lot you a XX had to either the the the two not awarded the to or simulators, would simulators as buying here XX to the third lot contracts to as and need actual a you pilots you days. so of now pilot said training. and And then simulator shortage. a be of a

seeing So we growth the second in you are know an to it's drive half. uptick and going

Jay – I’ll double commercial the exact in growth give assuming let numbers, aviation. We’re digit

a company what strategically market, the good it uptick, we business that Jay? excited is So run and it's to so good it’s going and of want now to continue about the contributing it. we're part do we're evaluate technology determine and But and with to its got and

Jay Malave

about also we’re as terms our the and seen in a the our the that what leads This of the just lot year we're month some commercial Yeah, good also July demand in and and year. new here training. in in XX% the we far The and quarter. of activity from so the seeing support consistent simulator thus simulator trends as really it or had we've the got in academies of increased half is going cadet on back sales pretty seen of have we and to in training expected into seeing coming up business know in growth XX% that second you step know far with we've you

specific and and far with of mentioned, as You saying. regions mixed smallest know down these our confident on – that on thing maybe the us, operate keep simulator locked a our to that's just had what one business. been – little up growth we company training lockdowns as do based XX% as back is an we're Chris back opens so bit Overall but pretty the for more that in eye that’s this it we're piece

Operator

of with next question. Ciarmoli proceed your Please Michael comes the with Our from Truist. line question

Michael Ciarmoli

is kind start hit is for on top year-to-date. either offset growth breaking to bookings impossible kind or the I'm of of it this Chris taking is this to what Gautam question. guys. year or quantify is either on trying dilution deal of kind new what even if with, line programs coming programs getting but are growth organic How guess at know on new of down the don't from Hey! I Good or Thanks you and know guess you kind I Jay, morning I the your of much and it.

seeing you from any commercial are know we're in seeing IVAS players, pressure, pressures pricing like what know you new competitive You start program. more the

Chris Kubasik

said, great for Yeah mean question. great, It’s X.X% that. I organic a I growth. as X%, Michael, thanks

know You – XXXX in we the visibility we it's you to through operating when kind of process you already know put and we go we as backlog, for know the and build good up in XX%. of know look forward, so so year what's – start I good have at annual plan, XX% December planning into our usually going when back a look pretty out of lot visibility, guidance the ’XX as you range we pretty our

You know there's maybe XX-ish of follow-on. or so

revenue XX%, you question, from at to could idea. some say XX% new is you the guess you know business give I to maybe answer So most your maybe derived

– how then driven at contracts, you rate DoD a programs is know low with the out as the suggest, those, of production, contracts I into it. production. some on of new know you rate as And kind cost especially its by look You is plus full a it start new migrated or

secret plus price on lower fixed on tend cost what no than that we're contracts. so it's know realizing, and to margins you dilutive So the the be front even then currently that it's

mitigate and the think pretty I until generally retire we start poking we’re conservative those in how we risk.

your answers question there. So maybe that

than or as the decade As had in competitive industry. or over last far two this new nothing pressures, you we’ve what different know pricing

they sophisticated You and at and past at look look technical they management schedule. at at they I look very at selection are think team, they our they criteria solutions, the cost, by know look customers the performance, the look varies program

work those add find and when earlier, to increase entrants, to you can taking they So collaboratively Like if question, new are know consideration. we and I probability our earlier into of these all to when. try value things an said ways they with

know, Jay anything [Cross I Talk] So, don't further?

Jay Malave

of and our productivity really at gross year-to-year. that say on will anywhere so like points you're a XX mean about offset points probably XX is net just, basis year-to-year. points or around I'd I'd average improvement from headwind it’ll XX varies I say again a think just level, of have that challenge But Yeah, that the XX an it so headwind, be to talking about. to maybe with vary. basis mix it to basis we year-to-year. And

Operator

next Our Seth of with the proceed comes JPMorgan. question Please from Seifman question. line your with

Unidentified Analyst

on guys! morning. Seth. It's Hey [ph] Tyler for Good

Chris Kubasik

morning. Good

Unidentified Analyst

risk F-XX the schedule Just, growth I you have execution Can on speak a the ahead? and trends ones and couple remaining touching TRX on just through just the here. quick maybe

Chris Kubasik

quick me yeah F-XX. Yeah, a give let

in looking talk we getting we're the day. we've We TRX, focus production But about XXXX contract, we've which indicative know at is I two about I a has jet. per a mentioned main top of deliver We three just where the You were the successful XX made. think other have components; progress of three. supplier, it been those parts before

know we just so in three right the on to October, made a flight third and per it's where You lot I'd week teams Lockheed We're XX the all lot completed safety committed and big the and of over cut the One schedule. of of is are products. about both focus focused on now the last six ready these have going good test. sure through in. the start That's [inaudible] progress. later and this starts One is say we're has months a making for the

risk. we communicating, understand the are understand we We schedule, the

program feel their to allowing I in good Lockheed know our about to So jet. contributing you great deliver that of piece and them

there's development there's and dependencies accustomed that around. manage any and work change, to So stuff and to as usual, we're government and used program directed in

that better April. probably say the I'd So feel in did I about now program

Operator

proceed question Shapiro next from line Please the with comes Our your question. Research. George Shapiro of with

George Shapiro

Good morning.

Chris Kubasik

George. morning, Good

George Shapiro

the capital working days thought been could goal end days. has if you Jay XX go for you The the through year. I of the expect

This going just on where to there. $XXX all actually divestiture? about $XXX quarter then up looking so just due at are million million you a was in to like And working sales reduction the it capital like looks basis, sequential the was verify,

Chris Kubasik

quarter businesses by million right. here The of for million $XXX second the amount. so the combined of about the divested impact that end at half George. sales driving we sales, half question multiple the and down were $XXX come that’s I'll what's two that exactly first, That's reported about businesses, to second take the the

divestitures the working capital these also adjusted the we so observation. with days. George, XX-ish year to the was end at we're of turn programs, those the of and planned, receivables and first in Part again around XX had an days it's now will the some We second impact to where good reset half quarter, collections of we're trying of back On and get into of on basis the deliverables year. the this billings the half in

in process. turn milestones, capital high really inventory. delivering us we always really just just been the so can and that really with collect program our reduced capital and improving receivable third and and the the had balance normalize been Two here second the it's year. talking reduction billings then the into quarter, that working we'll that initiatives quarter our of collations. also cycle as the those cash as working key will We timing so is our elements mentioned; the I and for delivering far we’ve driving as sales the as for is It's same one second forecasting on element into on are really about time, And is these just things in

for believe new kind on to us, a of say that it the way I’d And this we we and George divestitures. that on is actually big for of end had know the taking basis, track XX that. planned second half it’s these you adjusted really and year So we are out XX days

Operator

the with next from Please Carter question with Our question. Research. is Melius proceed your of line Copeland

Carter Copeland

in Good the Right guys. and morning. Thanks under hour.

Chris Kubasik

Good morning, Carter.

Carter Copeland

look of with mindset and in divestitures, at of kind inorganic next five what's you you're now gotten not higher internally to Is where value and you here When the just know and you in now level and divestitures, and about five hurry years kind it to know products integration, simultaneous you elements of end so do the over the seen leg on creation question terms mindset and point done at want the and creation value with I continue to the you’re than that said years you the where a creating last years? drive know over the strategy. to ago When in Chris, customers you you on came going a growth, five you've formulary? M&A. development LX growth a think you're maintain of next to more that five? R&D next we've the How have about value try disruptive organic

Chris Kubasik

got about throughout where good a it position was get thanks you Alright, clearly talked to Well, memory, and for to the the the you so somewhat Harris I know I'll a try point. that trying vision I've listened effort great to explain and to Carter. team we're to since LX day, questions this here. all

traditional our couple more commercial position underestimate we're was a and those the a There trusted to primes importance customers of be listen ourselves a to Harris maybe more middle questions We are don't little mindset, the which mission. and I best to and little take and creative, a little the trying these LX two the to do lot cash the disrupter. understanding want in of maybe our of and both with great of and agile, is put right a employees more about some of have what companies new processes. entrants which a

the R&D for we position know So customers we industry take ourselves the can that and know leading investment and growth. we mission, our with

they're the to is and going Jab[ph] on there, all focus to we cash flow ourselves drive something metrics; improvement, help talk margin problems future we can that's to value. in think digit CX want calls, double out the focus but customers free our I their position on You the per know about growth, really that organic more share solve

and our want the in mind necessarily So that's technology defense also team I our mind of be that's largest what is the the the the on. not shareholders, most in company ultimately of to valuable and executing customers

Operator

you. Thank

proceed with question Baird. your of the Our with Peter question. comes Arment from Please final line

Peter Arment

Yes, good still to in eX, are greatest operational morning of about the any you culture Chris, Chris and becoming here of driving, you Outside Jay, of kind opportunity know that of nice now. guess just ingrained the is excellence you see kind your thinking savings? I buckets incremental as kind Hey kind show results. the there of other it’s

Chris Kubasik

We've Yes to model our taken eX be the actually Peter, question. thanks operating for broadest that in sense.

roll our initiative, We at much, taken management. eX look all of lot those the broader. continuous aspects, it we EH&S, is approach that we've a everything on encompasses So supply our it much improvement, look quality, fee ratings, just on yield, drives the our including people on looked chain, performance, where performance we It programs throughput at encompasses ESG, that our the but of value think times award scores. our improvement at continuous customer

our to So at those all and flow look things holistically, when cash our you and each everyone contributes profitability.

is what's and for we and get we yield success as of bring that's look the higher. the those part our the quality, or to-date So quality, times can down of umbrella, times, every future. the cycle the had eX we of Each driving lead one improve really have at and cost poor optimism we've

Chris Kubasik

I opportunities Harris. LX feel up. team on going have as to talking is great heard, execute you months thanks I joining employees, the in look to so Again, to we ahead We think strong that to the everybody good quarter wouldn't them. we the wrap in ahead. to time and to continue the growing and forward a positive. again and the call. taking of about for leadership XX,XXX thanks focus We're it it everybody just operational without Obviously, be with Hopefully call So I'll appreciate the today. kind performance momentum as and possible all my

Operator

teleconference. today's concludes This

You day! for a have this may participation wonderful disconnect Thank your lines your at and you time.

L3Harris (LHX) 3 Aug 212021 Q2 Earnings call transcript