L3Harris (LHX) 28 Oct 222022 Q3 Earnings call transcript

Company Profile

Participants

Rajeev Lalwani	Vice President, Investor Relations
Chris Kubasik	Chief Executive Officer
Michelle Turner	Chief Financial Officer
Sheila Kahyaoglu	Jefferies
Robert Stallard	Vertical Research Partners
Richard Safran	Seaport Research Partners
Doug Harned	Bernstein
Scott Deuschle	Credit Suisse
David Strauss	Barclays
Gautam Khanna	Cowen
Peter Arment	Baird
Ken Herbert	RBC Capital Markets
Ron Epstein	Bank of America

Call transcript

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Operator

Greetings. Welcome to the L3Harris Technologies Third Quarter Calendar Year 2022 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 conference call is being recorded. pleasure Investor your Relations. my Vice Rajeev now of President is to host, introduce Lalwani, It Thank you.

now may You begin.

Rajeev Lalwani

our the Thank you, will XXXX published quarter to primarily our letter Rob. Good answering morning earnings and be focused call. your Today's closed yesterday market welcome on third investor call after questions. We

forward-looking CFO. measures. measures. the on forward-looking words call for our A me few words Chris Kubasik, non-GAAP CEO; and A non-GAAP statements and Joining are Michelle few on Turner, and our statements

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

replay SEC For A to be also see more included section lXharris.com, information, our of please measures available. a website, GAAP of investor in measures this letter financial call our and Investor Relations is of filings. will non-GAAP the is reconciliation which comparable where

going will questions, some comments. Chris brief to Before make

Chris Kubasik

who the pioneer we outlooks, our of mission. and Dr. a Delivering midst the the and week, great fair we Earlier can lost this Defense. easily fighters never results of to importance In sight of fight is the are American financial technologies imperative. in in a quarterly lose war

to Ash the Carter We he we LXHarris, Ash between the changed Valley, industrial family combat Carter. our and Board of friends. of his our condolences collaboration including and or the to successfully for He all terrorists knew Silicon base, and women. roles worked opened Pentagon. at combat defense Many fostered way us deepest either Directors, send

it's of SOCOM, in tangible strategy awards Starting trusted notable Defense energy My driven a to record funded These excitement network you've heard clear non-traditional of By over tracking build prime I'd carved is as and like yielding Overwatch Armed leadership that investor you for and space prime our environment. strategy. disruptor roughly billion our with to good Before well-aligned released peers, the out news. Navy. $X have letter questions, responsive operating quarter jumping make results team's a normally the the into now, few book-to-bill a and comments. we we're like with as We've a do, in much were continues a from our is SDA read a and position X.X. with US the for X by with National systems orders recently related to and tranche position as dynamic

ubiquitous our acquisition acquiring first We fits product Viasat's and the to business line This portfolio, enabling network. comms announced We're to networking-centric in DoD's Link nicely also bring the the JADCX's Tactical and merger. Link since gaining us access effort Data XX to our life.

building, value-creating Our news, in current a realities. more momentum measured Conversely, of the progress, And half ahead. optimistic XXXX good making we We a today's backdrop the and our so steep approach. on guidance is based rightsized I'm year. back while the the highlighted not we're ramp on about previously opportunities necessitates

start of Let's We grew mid-single-digit factors. the is two our line. though quarters short primary four This expectations. of in X%, for at first time with because fell the top

included a international continues year, of landscape that sale points customer, of to were signing the the have and a profitable but growth out timing program now pushed profits has formal cash. Mideast full of shifting hamper previously This two contract for aircraft a for First, to the we geopolitical been missionization supported alongside would certain as selected key the awards. the

recovery expectations. and chain the supply headwinds our improved, aligned Second, was although with continue, not

remain availability Thus, volatile. and taking approach the of We end to commercial make unit of model, we deliveries. quarter As as in prudent radio of the components need is to a a products, are our XX% order as revenue reminder, revenue. tied recognize with a our assemble the to fourth parts deliveries business XXX% such electronic mainly our more in

a expectations versus to deferrals roughly We lost decline growth these our X% sales. XXXX is as So ultimately versus X% view pointed for previously. the we in

approximately The previous our a inflationary going cost in is margins. our input focused result we average. of segment costs controlling This year-to-date on by and net XX% range guide closer in Next, proactive the is of what to to XX.X% can. higher on be offset actions

revenues revenue As for of expectation free of with expected, flow. the focus know decline properly process guide relatively flow our cash are margins, said, a and typically and in couple guidance steady XXXX, work reduced months. a This free being growing year-end and That as remains driving margins we and here, lot is improving I free flow On share the we'll while cash year-over-year. the do and EPS next results January. in in cash for per there's

necessary but executing up and the We line our dynamic tough, for being disruptor a strategy controllables on open in focused that, of update. financial today's Question-and-Answer With a So the controlling remain Rob, environment. Session trusted let's questions.

Operator

Thank you.

our And the We comes with Please be Instructions] from with [Operator a Kahyaoglu session. Sheila of first will proceed your now question. conducting line Thank Jefferies. question you. question-and-answer

Sheila Kahyaoglu

on kind much. Chris, letter Good and guys so and your Thanks Carter. so words Secretary for much morning, thanks

and there's in that that does a picked the the to human or a but talking only that element it's same. no Michelle you not doubt add everything think, DoD you're you do, to you I disruptor, partner a investor the whether trusted community,

the prior situation mention But the to analyzing question, my in XXXX next talked the providing of to in over you guidance. about few So just letter, that. terms wanted months

think you're on about how So, sales points, margins range pinch or the you of whether and maybe about it's the outcomes? thinking do how

Chris Kubasik

Tranche I'll as We're team motivated I focus and Michelle customers, of and we our business, talk here the winning Well, first and including the planned know. support work, for all, the noted our first XXXX? working. fighter to war as And of XX lot the then have as you we Why show XXXX Okay. Sheila, and with don't for and scheduled in margins scheduled example. an Overwatch launch highly as prime, The we'll or decade. on Armed which for speed tracking making I thanks satellites, and just the an X, revenue doing the sales previously of X to comments. example. you SDA a won highlighted the ask about this obviously and piece, launches Tranche kind for won for are We be is in strength, to well delivery We for later had those strategy I book-to-bill we XXXX. is March whole agility

is We looking while. for haven't mid-XXXX. talked That HBTSS in launch about good a

So not the have other while about And next XX working. months. XX we in I the revenue just launch, the volume which the looking in at scheduled to day, spacecraft be manifest launched and we're highlight upon speed we want the cadence in to recognize may the just

world. you decreased compared gives headwind, XXXX. We we're historically of F-XX, that in doing the airborne to the talked a in how of that So space about XXXX using for as which kind some an idea proxy of

everybody like the kind else think leveling a I on of off. seeing we're program,

will not we So but provide have tailwind, it that flatten won't It out. a nonetheless, will headwind.

is double question X% But chain focus, relative for to I the quite the TACOM really subsequent supply was more digit. get and booked may on I volatile. is it that, a CS one. can detail give if grew the So I quarter. assure you,

ago. Of course, compare year a that pretty was a easy to

will as at the December, just give So insight. and we're November making progress run to us and we're going look rate of that

chain much you to would think as a I shipping there's tend with talk it's electronic in know, But, still fragmented. improvements and We expect supply homogeneous about all components. and turmoil, entity. chemicals, as a you lot more components of but we see as

XXXX. data available then last achieve and for we the take be we'll we'll So guidance give have Michelle? confidence able to that

Michelle Turner

Yes. of And before revenue for in I'll the into based jumping add portfolio, look the XX% on is call, overall a on reminder delivery. terms at margins. When just we our recognized just those

than So the that's different industry. others a little bit within

is associated higher-margin as supply So a it some our of is recognized think the Also, the business. about revenue and incurred it, being us. like deferrals revenue It the about runs versus XX% of entirety recognition. over constraints of for you cost type this with chain really the

to meet our environment, headwind $XXX XX.X control point, increased across constraints, more to lost. we're parts that Chris' portfolio. with these of chain to comments, Chris' we to able things. for to segment us ensure about how playing with in terms this One give in of hearing critical overall again, around color whether is revenue cost really can Higher all things supply be in to versus the perspective, we've out margins, the the by we terms to XX% volume about missions, But chain, and with an of equating peers. million we two successfully the been driven is you're overall redesigning and offset accretive be guide supply bit mix, XXXX, reduce the ecosystem. our little continue along to controllables, tend in that just deferred input macro was overall for own from a operating it's XXXX our can we across opening to of how So a recognition our reflective internally costs, labor, margin about inflation, in aircraft did doing of missionization along But cost operating it XXXX, like of which more to what customers' consistent us also just thinking incremental are this

end with all into of year the of we along from we supply perspective. as points the we're So, XXXX, where chain taking think about at do these land data a effect,

guidance, Given and point relevant year. we of is set to line that overall nature, cycle a XX% bottom top both how perspective be that line in is data in for of from next terms going portfolio short very do our

Operator

Thank you.

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

Robert Stallard

Thanks so Good much. morning.

Michelle Turner

morning. Good

Robert Stallard

exactly you weakened, seeing. to non-cash this seems being against to that in for And go that broader taken we're the the like that the you of precision grain mentioned quarter. what delve here? guidance charges defense be booked And particular, charges those into given timing the environment I'd the would demand but drove

Michelle Turner

Yes.

thanks, take I'll and highlighting demand. jump in So, for in, Chris overall of free But Rob, this. this, to terms feel

terms our it's think noise creating some in reporting. I of overall

of good This our So, a to opportunity amplifying portfolio. about. really continuation it's been a we've across talk what is

about a being of just QX. for the terms X.X% while of overall our we've talking a perspective, $XX put It's LXHarris the billion about in on been that of within balance legacy a this charge at X%, took the on low to of growth have targeted from our We two So, million portfolio $XXX goodwill to balance. merger. end of related into sheet perspective. Really businesses our we

of we risk within as what our really with highlighting went updated the what that a overall been plan highlighted the is budgets, on and so perspective, Similarly, to we're with we've we've lower from continuation And where seeing through the just are going areas like areas from and we're last with portfolio DoD these space businesses this in associated of over a as our growth product the month, customer along our a strategic parts end be focus of of really have to our aligning DoD perspective two of portfolio, spectrum. legacy businesses investing that cyber. we

surprise consistent a here. talking portfolio. we've across about not is So, This overall the what with been

Chris Kubasik

I ought look goodwill to most the instance to aware at a question, to year it. the this for at you of extent Rob, requirements per check, companies think an And do you become think, to the the timing I accounting. But do of the end

numbers the we here the our and preliminary So, charge and rising Michelle looked environment, we QX. went ahead at just said, completed in as the took interest plan, having ran rate and when

the that's So, timing.

Operator

next the Please question. line proceed you. Seaport Safran with question Partners. from with Research your The Richard of Thank is

Richard Safran

Chris, good Rajeev, Michelle, morning.

Chris Kubasik

Good morning.

Richard Safran

categorize really under ugly. budget Chris, in I and was the defense letter. really I But appreciate like to commentary surprised environment you see your I

have I to you I So, things two here. ask want

Do is -- pertains of CR importantly that And the inflation bipartisan First, support the moment, CR as the a CR if continued just programs? December? year-over-year nobody could generally your for short-term. above spending hold and positive it LXHarris to a defense, but given you thinks especially go increases you do thinking exclude we defense for view and see they're or is is past good, that think more

Chris Kubasik

Yeah, We good, out the bad, the ugly. the Rich, thanks the lay Rich. is ugly. Clearly, for war did that.

like CRs So that on in And getting to done to we business, time on there's be regard. and honest, us of no annual for have the And basis. those that are old. an things dispute run a

years. I think XX in CR this the is XXth

in it a I But still can that hold budget have hope out So becomes almost manner. norm. a the we timely

your we on to in have point, do So upcoming an election specifically, we the November. as CR, know,

the in ceilings, budget see conference you debt of occurs total the us But December. we look our we'll hopeful country, look were how So out. many And when you that debt plays at I'm at have in and that and The that's those and things the there looming And the a couple to things we billion. and XXX, sequestration in does me between. all was markups around are have and Budget that XXX Control from $XXX a Act, concern. out PBR remember give different of accumulating

agree. a to a past have be our I December, pressures industry We that has think, same it's is on thing could get run all be there process to this the a my peers, So There business and we approved. And signed, prefer experienced it's to I we some think, that budget And year. talk potential to and extended there until put business. this I the to – conference. has hard when

seeing we're the budget aligned on of look the I customers increases with internationally, all upside, So when threats. at our

news just D.C., good CR budget it. the Pentagon I'm customers the me, I more get trust there. overall feeling. than When a to same They probably is some growing. So need The environment in do. the have We hate is in there

decided until I to So budget. a call it we have ugly,

Operator

you. Thank

of Our Bernstein. next question Please line Doug from is with question. proceed your Harned with the

Doug Harned

deliveries, systems. to I it And one how confident bit some and Good back at I I'm as and – talked on trying the other components appeared have chain tag can some is this top if delays are more? highlighted that, to was semiconductors of same or pent-up – at then also trying basically this been understand what communication in components. – the point, of wanted point demand XXXX late are into I'm expand little in you this is, a say, in here that guess, Should now terms as back about in the as into an expanded understand about then, a how it you XXXX? you letter. to a you some expecting to – surge to has go problem? for we what This you you you're Has shipments, be seeing morning. Thank issue you. And time. And supply on I to

Chris Kubasik

Doug, right, thanks. All

And on Let have this so chain. example. were me a take great we supply part And the ask on week but to I Michelle situation, question. I'll use TCOM surge. it's over a control let I'll the And the first or I'll ago. reviewing say, complexities me comment explain an the we think as just as

you've make So continue the we heard say, about delivered until revenue, Michelle the say, the delivery. we'll quarter, radios. say me And in and XX,XXX and we to probably the book we don't profit

split million needed I'll to in parts event is on hosted. So bottom think do handheld handheld. talk X,XXX few we a chain looked down XX,XXX a Michelle about the you to manpacks KIA up they the at XX,XXX radios the radios. manpack into XXX team, just line call for it, and I were in X,XXX we a go schematics, between a The at weeks we And those you. radios. ago when supply that there and parts There's details, was math X,XXX manpack; the deliver

monitor this parts we But basis. a we would said I So say daily don't the if in. get my have all parts, in you I a XX.X% the comments, you prepared can't radio. deliver on of

You with airplane can an missing deliver parts.

or can't you things arguably a of parts, can deliver cameras. vision with missing and parts, night you with ship deliver You deliver or radio but a lot missing a goggles

didn't what people's think question, but to I'm doing ask I the sure heck fair So question that's that's And is we on got a which minds. do here, this that, be, unique. what's the we're know you

an key ago, XX,XXX we looked parts. example, XX supplier where ordered we a months So as at

all parts expect. which the pay to stuff closer up maybe cash, But the X,XXX us the delivery, an process. because have would mid-September good We there's our guidance, you prior We have would to a ramp allowed commitment. and arrived allocation get only

commitment the commitments these that and passes up CEOs and us, come get the short. of through they corporations, personally we all me of So get an to and you talking system, allocation major

basis. on said, Like happens regular We're this leveraging outreach. executive So I a have DPAS. we

down But that's one maybe and for the XXX how for We of have weeds, quarter, we're We tracking, million it's entity daily. example an that's that's but parts what we came this at look contacts. in up stick see look question, December, to Sheila's are. just entities where November want. why, I track with you if we'll radios, we go and we can and that's And I'll how do but the all through one

on about to the allocation. that had QX. have back quality in the We watch down We or We're XX key XXX that either were list, on are the XX cutting suppliers. meaning watch poor list

but be say, And you can that's to almost that we're progress, we I regard. So where making why are. in that's perfect have

know, I don't you if the said or I what Michelle, surge. supplement want about So to talk

Michelle Turner

Yeah.

I of So a couple would things highlight.

on to think improvement quarter-on-quarter. I see sequential continue we positives, the right,

it's significant with second change, the half. that So we ramp-up to even I the note important guidance a think assumed within

So the acute started although improvement we're not in getting we're we disappointed today. where ramp point that year that from we anticipated, this last originally pain versus seeing at of are QX having to we where had we're

$X.X quarter to thing our at billion. had started other ending continue to if the TCOM $X backlog, billion you continues from at And we business. that We're that highlight strong look grow. Communications. would within led QX it bookings the record our the really $X.X within Tactical then I systems, demand see across Chris We year The particularly was at billion. is we communication noted

-- do expectations we next recognition to particularly is continue Chris' next tailwind short-cycle for be a communication bit this give will Chris the that a anticipate a in to year, end a in supply to by even We we volatility react. But I headwind terms few supply getting going to again, at an our year. want businesses going And And an and quarter. however, to want chain the volatility talk To ago. we're continue that Rochester our we the to within the with the TCOM what We into up actually about XXXX this team. is from strong with of Rochester takes props arms to muted volatility want certainly with to talk huge going chain event on because was of within highlight deliver demand gaining be I a I just point, along to our it give disappointed what growth ability have the a One So to of lot what our that that AIA perspective. noted we're product. for thing terms on do it is see demand appreciation that. within double-digit lot the around deliver I results but systems. just for don't the in about like challenge that through did volatile quarter, weeks goes a

an matter And book the QX, so order team of seven of urgent the a At we received for days. and were that end Ukraine turn within request to able

it rising mission our just continue these to create so speaks it volatility first. the internally agility the to of within also ensuring perspective, -- customers within ecosystem, things speaks from we're we're the a our continuing that to But to even put of how and disrupt with to And all company. mission the challenge from

Operator

The Scott with proceed you. Deuschle from question next Credit Please line comes question. with Thank your Suisse. the of

Scott Deuschle

taking Thank morning. Hey, my for you good question.

Michelle Turner

morning. Good

Scott Deuschle

always me visibility prone unpredictable pretty be quarter the since prone of better reminds to that type have I honest, less business. had which and the an this old you'd to Chris, to company approach LX, thought be happening the with into surprises. was perhaps switch would this operating to

just approach or us hasn't understand environment helped it help too the you Thank has just better is the and that that why switch maybe the say company unpredictable? would to just driven it's predictability simply So operating you.

Chris Kubasik

just back LXHarris. And with to we're across it the that you like that build I about asking up can Scott, a you in taken is And thanks because, and having my is question. what mind for people LX over here thought kind your encouraging the tough ask XXXX. appreciate culture kind speak I similar of aligns questions. trying question I of at to it imagine, And the actually had as

an work So merger model. a one key the this of variety was do of the really in that companies, how accelerate the is whole operating basis we doesn't which holding transition of reasons from for this basis industry -- to

it So I think helped. has

back think been public for have probably it's months go and least and six outspoken been if we look, venues in the about other certain, last at Michelle that risks. XX and the months I pretty I clearly, and forums

supply million here had needed I occurred, ramp contracts up And think example back an first in time. half. said, just our going the the XXX were quarter, laid talked this go assumption I first second QX. We which January, the I going I as examples about And transparent in up the happy to but look, right? -- we products short. three and we go components we were International was really which and enough on as we it, we it. just to quality a Mid-East and expect, opinion. half. were matter I've we we shrunk signed. chain, One accordingly. one honored a parts good the main an then slope was And that missionized that in then very think on on in in out we're given plan, on -- going shrink it my word second And getting And were to I delivering mean we're aircraft normal that have And you there to drive focus is steep supplier which the executed to and came the our in the would that we of wasn't was half

going not for you was whole of be XXth, the to with revenue go contract it's the get And points XX to where to signed. of is figured down this days it XXth September and probably year. its So signed, we the X

in a don't visibility. would of companies company. involved CEOs Michelle, say, monthly of I have there's participate have I, and a reviews. in think along personally, with financial at their size our monthly I who good lot we review level the very So

we have and risks. mitigate we measured and you to trying can. visibility. Ukraine. those. And on We in pop telling like where prudent Opportunities up good So be them We transparent We capitalize what's track happening. the we're

I So, that it. addressed hopefully, and a think, question, great that was

Michelle Turner

revenue add thing just only and Scott, previous our would to it, the than others being I XX% this is to delivery, within within recognize right? And a different on going for back the in our you part of I to you're so, portfolio The Yes. going our seeing program-based example, recognition could you're be that's what portfolio still a missing but maybe think industry revenue. scenario,

Here, point, quickly those to Chris' you pretty don't And a not a about can radio, we and within recognize that. every turn part, we we're think to week. if book going when have

and I of has the and revenue there with within to been nature, based there so, continue be be combination that And cycle will volatility the get we think, on fact you take the there the can coupled short quarter. delivery,

Operator

from next question the proceed David The Please, Barclays. line you. of your question. Thank is with Strauss with

David Strauss

Thanks. Good morning.

Chris Kubasik

Good morning, David.

David Strauss

I cash a mechanics can of grow. But some cash going pension if also give because have free going there, to that to then, headwind EPS think is as next does think well. pension you're I the want flow Chris, to to given, I pretty going as meaningful I headwind? year, said see, have you're we just adjusted you a about us Thanks. think, think grow, And you

Chris Kubasik

flow, impact million watching the tax to the David. that cash have Yes, capitalization. be to still of issue. assuming cap -- fix R&D there's less. that no something free there’s The that the Thanks, will Yes. be we got we're about $XXX That's --

more the We can we'll So the operations we margin from have million from keep steady. a $XXX should little the grow plus line, taxes. if top cash

that free The cash pensions in the in mid me to on is growth flow zero. outlook We're cash just flow the at going share confidence on So be funded current high free growth. XXs. gives cash to and per

the is at you there Michelle no on pension of the final a cash be to give to there up adjusted details ask headwind. EPS, Relative year. pensions. draw end yes, I'll pension. those But, true assumptions the We'll the So will on

I ends you just to we year. next up year and give think, impact. got we'll So what where we the the And give see for

XXXX. it XXXX flattish up for final think on the a -- sorry, I'm points, as maybe or of be XXXX I could where a down couple depending takeoff assumptions end we where to end we point

So, Michelle?

Michelle Turner

Yes.

Chris' point, your do impacts incremental funding income to line just well-funded. our a about don't David, a think two from perspective heard questions, peers. having we to industry consistent When EPS, any anticipate there, with hit the of couple from you what you very So pension and to but

representing income XXXX. what shared that line, recoverability impact million On continue to cash the anticipate to XXXX. it about a impact FAS about over we be in that next $XX And expect will historically, perspective, $XXX with with million from a then into going dwindle consistent we we've the few years

So, $XXX million. in about totality,

Operator

you. Thank

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

Gautam Khanna

morning good guys. Hey

Chris Kubasik

morning. Good

Gautam Khanna

offset? describe of the if what your was volatility, to just as other comments of the headwinds the maybe quantify to CS year. annual of you're year? now full do stable relative And to margin the I rates you the on going potentially you've you about that -- the wondering can you or Obviously, maybe out of Thanks. about need explained. you exit on see could stable or XXXX talk levels margins kind think elaborate next segments, like two But

Michelle Turner

Yes.

component, margin of all close we're seen of well, our strong to how free, that, as communications kind mix going about just here we given product in the little year What's to from of also to there's context, be and impact a the a is key particularly perspective, give how is across portfolio. and within tactical feel So, internationally. we've Chris, thinking it. jump QX Within demand color right? So, a bit

about we're And really is be that I into assuming volatile. does around There's a to as I the it's into going to higher think that. we QX. as so going rising to to right? And we look be XXXX impact. we continuing as to We're inflation think next of us the that like equation. year. we're environment, about macroeconomic of these going next that going perspective, next then headwind year, that continue end year, to a to about help program actions at the going great think costs. particularly offset we're talked side the about retirement see are announced continue this taking terms And is of we tailwinds internally -- of in what From the think costs. to on But the going it's voluntary labor example input That's

-- it's does all what our which on in how relatively so come point based around of terms today. of that know flat this And triangulating we're we guide, together

Chris Kubasik

so on Gautam, it's execute we workforce important in to And talented talk about. order everything a to have

larger money, to to headwinds So, bit. XXXX. do think focusing of has spending will focus We're engaged, co-pays motivated. great, stabilized the these the I on leadership through open and But a in hard a that seems a company, does a we're engaged years, the workforce, The And But that But they focusing We're it's going the we keep keep rather be made of in ways XXXX time holding lot little it particular, investments more money seems pool. compared team a spend which way for, that absorb. I couple these flat feedback last work. that to to I'd over workforce on now, of and all we been enrollment going speak, team we're workforce the was think, and the provide I our to industry margins, we're and to Everybody lot found to on new that every and leadership and can programs is as admit hit support. to getting have vision there have make but a to on great the we're cost the motivated merit the going that a decision. try we increase find this going medical decision headwind of workforce, and dental to the year-over-year. attrition

Operator

with question comes question. Arment line Baird. Peter Proceed with from next Our of the your

Peter Arment

morning, Yeah. Good Michelle. Chris,

Michelle Turner

Good morning.

Peter Arment

flows supply just on update thinking just, or Maybe just pricing us inflation, reprice you you integration when then to ability Chris, think help the given us But XX% how on further or either as some a your Thanks. disruptions offset that the to to any thoughts you've that we Michelle, And help about get the chain. exposure. mentioned XXXX? your details in through try could limit we're that you've your of help on just an of are redesign thoughts vertical lot had? aside, short-cycle

Michelle Turner

the question. Thanks, Peter, for

like So in of have our today. and the is a about XX% portfolio an reprice consider environment folks, what in for just we overall to ability we're reminder commercial, we

increases. And the that accept good teams those terms to doing price the higher we're so getting a in as of input where job will market are reacting priced we're costs, ensuring

terms about XXXX, of nature in or we that to of our which XX% on and As of the cost be is I about including period one tends piece, is -- think do performance. we I benefits program do in it of side portfolio shorter think the XX%, of our of house, side what the

of performance period average our XX is to months. XX so about And

so of And that end by in starting I of about that increased that, through pre-inflationary year, inflationary think this anticipate environment. next the you the in the middle year, backlog priced we've environment this was if worked

the that's are one -- but thinking also of our advantages to into year so given plays one that that guidance taking next into think there's for shorter of And back we nature, and variables that multiple being them. going cycle it we're consideration, we have, how I about

Chris Kubasik

a merger, out build we're the have rolling your on on really of come products, an efficient to years that it out in Yeah. chain. manufacturing have the about new late, engineers way days, a given we supply design been for affordability. so as focused supply I existing something past, design There post initiatives And question, actually companies on can't rolling for that our a complicated for manner. process to should are cost, had redesign focused of think focus the continuing emphasized that in and our chain And we to have have we're design lot old not in design the I

consider probably makes when is designing we where point acquisitions to you talking all if portfolio, against adjust. supplier had if single now you now we're And the versus a sub two think in a to -- that work days. I'm generally days, keep old product, I did we're redesigning In out in the you it times, days. that we vertical does Lead supply. mentioned doing going supplier. or old to those and up to the the acquire three is bring or to sense. the one our So new case, ability integration, going unique, inventory, that we're XX Relative going our not company suggesting have days, a as existing our have just-in-time doesn't changing. that's months back were factors and, acquisitions, making But of in everything And to which I XX old anymore. And a example, the are and that sources

these play company realities, the off the will think have, So which we accept adjust in that long-term. new ultimately I can and

lots to I our high-tech through that's at we've of work talked how about venture companies, capital look We're smaller and So example. an disruptive continuing it. with Valley as still and companies Shield Silicon

our of that I I XX them. referenced, And see good far, happen, key think these starting our can't I with positions. point to talks systems that And design those really on industrial it goes And into companies reward focus say early going open Defense not And like base. they're to National can strategy. fielding. cutting-edge talks the to an strategies to about and own. because is so be And I receptivity interesting rapid starting companies in again, from embracing we're of working up But we're the on on the different programs the there incorporated encouraging and we're record that into that's about and and technologies. prior transforming pool acquisition out technology NDS get their think to of incentivizing portfolio. the to to minority it the customers I think, ours guys there's that their are investments, the part think there companies experimentation, with And --

to NDS open align. to our with of systems I to because have reference been seeing speed, and as like the So see we the it seeing operationalize But trusted about was open a what of like you and it's reference because just when and you the come strategy LXHarris, their we've to out, disruptor, now consistent good talking to I and strategy speed. think should systems, think

Operator

Thank you.

with Our Ken Markets. your with next question question. from the Herbert of is RBC proceed Please Capital line

Ken Herbert

and Yes. Hi. Good morning, Chris Michelle.

Chris Kubasik

morning. Good

Michelle Turner

Good morning.

Ken Herbert

I Tactical hasn't yet, thinking but can closed a bit terms Chris, it little supports If obviously, your interesting maybe And once opportunities? think upgrade see in we acquisition. Links starting you opportunity on maybe in your provide how some of it's that and modification the obviously, the but the top off Because JADCX an I and assets, more mature a a technology could I this relatively and this just mature business could strategically broader of line know portfolio? acceleration maybe just could Data of part how set it present supports opportunities. it's of

Chris Kubasik

you. thank Ken, Yes,

I think the at great and it answered you asked question a probably same time.

financially. the and said of of so well, supplement. can I've our mean, all, let see I I before, one look this first operationally at So only strategically, being far, all as what me acquisitions, we

JADCX, the on they're plus real XX,XXX or acquisition. platforms pretty aircraft straightforward it matters the ships It that strategically, fits and This asked mean other on for we're perfectly platforms. easy, couldn't comms, we known networks for. into these and And you ties first everything footprint fill better a was into pretty have as us platforms, gap or it had. whether So I our suggested. gives portfolio, I estate

So and upgrade able in be on work we'll to to modernize be Link resiliency. able and other forms focus way We'll XX.

for on think So making side, it the a Tactical bit, business well, been Everything is regulatory little my an you their filings. tracking. only not And but our I the expectation, it's for is said we've accelerant JADCX efforts.

are We been until of deal. we positive so receptivity. to to calls XXXX that there first has have of couple But got the close. customers we projecting We still meet. a wanted we're close of actually some half a And excited course, wait from they

to excited we straight already. to financially, think as it And will business. I be this hear Operationally, So said, were integrate that straightforward I've accretive. pretty it's then

the move table on again, seat gives one only at us the us, mentioned So and was up to we I'll continues – a just did. also the say this food the it chain. I

outbid out We are just bids We properties. we make did couple were financial a point XX%. market. in from active of or a like XX% And on I by other perspective the discipline

but prices not we going and the were those them not going can't So overpay, that win were and they you And deals. to we're right We're all. wish maybe did. lock wrong, they to paid we chase bad

Operator

you. Thank

comes Ron America. Please question. from question final Bank of Our of your Epstein proceed with

Ron Epstein

morning. Good Yeah.

follow-up. maybe a Just and question a

if legacy conflict. this was a now? you about me, impetus? mean, I charges a little then legacy were got late businesses businesses? little call what Forgive I to bit, Harris Chris, the you LX why because those already talked on or did I the a take mean, Anyway, due bit the And

Chris Kubasik

back variety base. company I three and had the who key me had And on a one let a years Well, Yeah, of of merger accounting, shareholder And to rule of the larger equals. based – the rules. think throw other acquire for variety then Yeah. to first, I'll to but was it go have you a to Michelle. go remember it this, is

think was So is LX. if XX I my XX-XX, right, XX Harris; it memory

So for accounting, Harris acquired LX.

regardless. goodwill that But Michelle. were is ahead, all Had go charges. So, the went goodwill Harris the and come all took from gone properties. have would same goodwill up But the the applied legacy yeah, answer Pretty flipped, ones businesses, all properties. those legacy this would to the it LX to the we the with to LX have – acquisition, sure, the the the

Michelle Turner

was timing-wise, and your aligning Ron, plan through a DoD just with as Yeah. And our result strategic the question, this going process of to priorities. overall

on we've two illuminating lower for important the portfolio that, growth I with they're from the businesses of been think end to note these perspective. while that a it's a

if really End with. were from of no begin part the perspective, just bubble annual here. on budget and the that It's priorities a to the already assessment, are in surprises strategic recognition looking then where there's of you Q&A with the our plan will, these at businesses So

Chris Kubasik

everybody, we you, work and as move thank team want today. get for the year, like, our forward. your It thank across Michelle. agility to we and call continue challenges, to XX,XXX thanks, new And the Well, right. I hard globe. seems I joining All members appreciate each

I'd off, a X%. the dedicated their progress we've industry, recently leader And like the over signing defense ESG last in Sustainalytics, before ranking the to has front, acknowledge aerospace become with global the few and top for on effort years. made So the the in team

Thank strategy you. non-traditional great hope many everybody our levels. paying So on is weekend. a off has I

Operator

teleconference. today's This concludes

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

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