LHX - Earnings call 3 2023 | L3Harris Technologies, Inc.

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Operator

Greetings. Welcome to L3Harris Technologies Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mark Kratz, Vice President, Investor Relations. now. may you you, Thank

Mark Kratz

Thanks, Rob. us everyone, joining thank morning, discuss third and to you, quarter for Good results.

our our Joining me our letter company published Turner, and CEO; and detailing updates. investor are Chris CFO. Kubasik, Yesterday, our results, key guidance Michelle we

morning's on questions. So call be will focused this answering

forward-looking uncertainties always, cause that As constitute results may involve statements to certain discuss These we materially. could risks, that differ matters statements. assumptions and

reference please and our provisions our in letter filings. information, found our investor SEC more For

financial which are non-GAAP GAAP discuss in the to also letter. measures will We measures, reconciled investor

Chris would some to I like turn now remarks. it over to for brief

Christopher Kubasik

Okay. Middle busy everyone. we week, morning, remind than we what East Thank current LXHarris us I a appreciate critical ever we all before. The you us joining and which that had and in you, at the and industry Mark, do operate this the know matters more in good is morning. you've events

technology-focused and to security the committed world. company, remain to national foster around and allies a aggression its As stability we U.S. the supporting deter

on proud our I'm merger LX is the of fifth team a our since and year Harris, that integrating company. embark We've seasoned our and diverse achievements. of we built As

company. disruptive and industrial focusing a excellence, our portfolio strategy system as ultimately is viewed value a U.S. products our that This on security for defense benefits creates quality shareholders. delivering long-term is LXHarris a focus the out our cost base. our of reshaping our underpinning customers operational Meanwhile, competitor is on time, and national driving as

conversion. more on third of look of strong margin team and our to solid challenging, our consecutive operational flow the are footing, our growth, providing XX% XXXX The free flow positive environment considerable is resulting While momentum. cash quarters our quarter, extends of on than details Investor cash sequential progress. quarter the top reported building forward been in second The and December. has line in making we This cash and are we I in each outlook a trend at macro generating improvement generation, the free since In the we XXX% more and merger. strategy Day business

Rob, that, open for questions. with And line let's the

Operator

Kristine Instructions] Stanley. is Morgan from first question with Liwag [Operator Our

Kristine Liwag

Chris, Michelle, months, few positive to are for negative Aerojet any seen? Rocketdyne now that owning after a the there you've or surprises

Christopher Kubasik

question. Okay. Well, an I expected Aerojet

able and So let in a in question little me X.X announced think back take Rocketdyne. to it insight months, we and signed impressive we're deal just your maybe memory, on this more one close try pretty to refresh answer the this to and which But everyone's environment. I Aerojet and December, give in is

there probably obviously, either was support the to from Department the acquisition industry of objections to no go So Defense through. or and allow

So a we than little probably closed expected. quicker

to track the headquarter such. X get $XX and ready We're California. we million previously. payroll in cost down that is of to January savings shut well. transition on Rocketdyne about benefits to Aerojet going take to did all We've I'll clearly it we LXHarris team XX we we're But the we say, could up day to months. to I ground said business, integration it, going the hit think I success that critical an when the thought deployed running leadership which run was the on to from to the for million system, all LXHarris announced realize. perspective, to We're $XX talked X, employees

-- network. connected all already The the IT a team networked is

of month will that were ago LXHarris, I to results workforce, have is the perspective. a being being the confidence that's that part larger and the the was charts. of we part company I business the than a working on space. see about and and such say to from the defense actually and we and obviously longer-term security So the communication they actually national did have alignment workforce workforce, of survey the strategy pleased off IT the a more and enthusiasm little focused of of optimize the well, a

So get results. encouraging types of to that's those

clear #X deliveries, specifically least that priority internally been externally motor increase and the to our So hopefully is rocket sector. at in we've the

start the everything on at deliveries. having to It Alabama, Virginia for myself supplemented leadership think going and So executing We plan, and think And has key and production I some results. developed flow the immediate energetics focused that's of experience a going I deliveries. we're with the to separately. teams Arkansas on doing of is and excellence [indiscernible] it. team off it locations that and is help reviewed and with includes existing increased in we're showing We've leadership and resources centers

sometimes sub-tier to our challenge motor nozzles. some And levels is or igniters cases, resources rocket munitions the a deployed then and and couple we in is And the suppliers of of And business suppliers. that cases certified really X we've only in down. have, X and

to So year, over that on as that products. main X as was need us on a you've that's choke million The Defense the focused $XXX earlier point and Act, focus that Production industry a awarded the ultimately we about country. heard is DPA, an talk this

a have plan upon We that. we're and execute to starting

facility. and that capacity In building that leased fact, order in just at the we Alabama, increase we a equipment modify so can to

necessarily going for So that other to and use we'll revitalize that the by the a that We're as the DPA we'll use covered weren't products framework. business, money.

they they expected, motors to to the the us support very discussions will to Obviously, and services, is in expect of full I've and this XXXX and to We've our to starting different ramp-up challenges improvements see of then end problems the end the and by own has this have LXHarris military also contribute I as discussions asset. continuing they had XXXX. that see the and are a all So their -- relative would output, had which industry have but excited XXXX answer with I encouraging. we customers, noticeable and into have rocket had to

that's of Aerojet should performing don't Space business. too but Rocketdyne, upper We And flawlessly. about is the X/X business that which engine, RLXX we well. much, The talk stage Engine operating maybe about the is is

not decades has failed. back a goes even successes failure. ever And of run without it the think sure I

So Vulcan that's Launch first launch on be launches. great to We're and subsequent the United excited Alliance, news. ULA

there's XXX RLXXs have in backlog. launch. today, And X So as over of we per

us So and good pretty the that stability to gives visibility space side.

that's kind Kristine. relative So Rocketdyne, of where we to are Aerojet operationally

and But I taking I at I questions. for a we, also rationale on said, asking want to markets. And the acquire businesses aligning growing don't then but are to still strategy, looking LXHarris, that defense divesting a necessarily of but still those year, with focus. building are we're hasn't strategic We're quite people approach. businesses portfolio But as businesses not a strategy company. acquisition. our step with been that part good are our our back We're align are It know technology-focused nation's in but defense-focused, the

Aerojet faster legacy LXHarris So business. is the than growing Rocketdyne

since these the we that has happened these products production in the I up U.S. signed capacity, flow there cases, demand as at look in which million, they no on and digitize will And $XXX is the think the why and deal lines I increase output. the primes in the increased significantly everything in need us December, to move money most which X through DPA when be of engineering. on mentioned help we already is focus lines; particular we world, should to the for dispute in

well. So the tailwinds there are as

did than the be to So acquisition feel with today better December you. about I in honest

then our in think a contracted. to need country, several that the go I last money peace highlighting I peace for We're feed to I wartime dividend, And going ramp challenges the needs time point, not generally believe, 'XXs the mindset capacity users. to the last of primes and end the some contracted, us, back industry we through it's other of my the kind like the to and said, a on I industry focus as the of sub-tier to footing. up decades, into industry and to only think a partners, but more And suppliers and time

a wanted, surrounds to but of longer different answer I than topics Kristine, a maybe you it tried Rocketdyne. So Aerojet as hit lot

on just end I'll think I that. So

Operator

line from Cowen. Khanna is question with Gautam next of Our the TD

Gautam Khanna

could give the backlog I actually and switch and that you Tactical color, business domestically chain both if if the ask to evolved about questions, how quarter line? wanted and pipeline also supply you talk Maybe answer can some RF. in And where stands in us internationally? subjects about book-to-bill that's

Michelle Turner

Yes.

continue [indiscernible] to the Data the well. that our We're for question. be our to comps From along to the thanks an which guidance, challenges strong business. across an we internationally about to through demand Tactical continue from point, Links see with chain DoD of perspective, we acquisition perspective, the And So overall comms modernization which program. to we growth and supply radios we continue includes deliver your overall way track to Specific to support. see budgetary double-digit to business, which continue XX% as see was on of

I'd overall, we're so in a good a like place And say, comps we're perspective. from feeling

Communication shareholders. pivot that to would supply The complements put just hiccups a supply significant for these XX in then resilient to And our I overall industry, our customers our looking our deliveries across like continue deliver building enabling allows over quarter And continue note we Mehta, in specifically, QX. supply is thing when other truly last chain chain Sam to XX up for from us see to actually Aebli. the the but we they've our continue months to to for Chris us business, at you're hearing that experience from chain, efforts this is to hiccups Tactical that the are and

that so to and put the in And months. results efforts the the the to diligence last the we continue XX team see XX of over has

Operator

comes Noah from of with Poponak Goldman question next Our line Sachs. the

Noah Poponak

thinking you I are guess deficit for versus maybe the do what well, guess, as alluded market geopolitically with rate some about on items what of end in versus national growth you And is? so your latest spending. rate? think about LXHarris battle Chris, spread I short-term thinking that competing the what's medium-term how your you evolving you've the to growth security evolving what's the -- the inputs when U.S.,

Christopher Kubasik

I the back there moment, a thanks. Noah, is in to the implied No, with appreciate Yes. supplemental. -- happen and going of I budget Step in kind think what's the question.

So more as house, it's it X. we do an I that's speaker step dangerous it world pretty this, I've the ever even we been like the have has and feels know, so than all been. outspoken on of believe finally

in look I'm China a Mid that concerned And You on going weaken top East, resolution. clearly does would shutdown our government has security continuing to security as at a Sea, be South a Ukraine, the priority. what's national national

budget start can having think our base. the the the customers, a the hope entire so next for we flow get we I industrial we speak I and that in money So weeks, here to of industry probably couple

split of X between south portfolio radios, Ukraine night billion, of and There's think And our be been a I Taiwan when there Ukraine and kind goggle, $XXX vision know look DoD Israel about been we a and sites, supplemental sensors, the the we've products, and it at state border, I or or the cameras. necessarily will positioned, literally don't a X of playing near with lot or the will quick talk I systems specifically turn I be platforms, think be as I if but somehow at well partitioned, not confident in over the term. supplemental look into products, and on supplemental, feel

budget invest at keep strategy, look for continued that as to national midterm, growth, but I is relying peer near-peer these us in our about of keep kind other distracted So getting by defense conflicts. to term. The on the And advanced I the technologies a we or of need we threats. technologies, more near in talking think, help the a part supplemental

air it. all that's think were I space. lot where of arena, about in we've I of but been And the in people get the saying conducted shaped portfolio our the not feel probably normally missions some them, So me I space know them how have of of specifically to good a moving that domain, tired

and in satellites prime. likely trusted is manifest the strategy disruptor date example orbit years. at in backlog, at as our our in this And could think And merger, the the LXHarris the to had of of XX, orbit next X working. look LXHarris XX, X have X-X, X satellites a we I as I our Prime best very

to X- constellations. LEO there. we're I X-year They lives, to So more large well tend be positioned useful satellites, think

see of ongoing annuity. potential kind as can you a So that

In for fact, state-of-the-art integration. we're satellite factory the building

So clearly, I upside see there.

munitions. the about talked we Rocketdyne, Aerojet

ultimately We are in the rocket motor the who motor, supporting business integrate rocket missile. primes solid great

about from the So different the Data land, about is connectivity keep Links connect I services, feel is way happen. waveforms earlier hear, our Michelle ViaSat. going comfortable to sea, hard I things made air, happening simplest with Tactical on It's but doing an is and someone budgetary categorizing able network, We the numbers, be to there. this to come and year as it's explain with all they XX. multi-domain, talked has to find we the position I and of just cross And we're and talking up best domains, critical space, it's it acquisition radios. it with happening me have this asked communications. Link it all to could think with that we those and stealth different these buzzwords to And but these try

at that's to way think kind I it. look of a simple

footprint the And we platforms. XX,XXX have on these

network I'll of So connectivity say, and it stealth. making we're will, upgrading, an just if you existing

is Kristine, world in to the way growth nation, not that's we're of industrial I what the mentioned budget got we I the capacity So areas. striving feel for. a products and given certain mid-single-digit to infrastructure have And base this surge events, find midterm. the of key a to think unreasonable you I depending to like as And still build over invest as an to aspiration think on the

see that's So I it, how Noah.

Operator

of question line Deuschle is Deutsche Bank. next the Scott with from Our

Scott Deuschle

X Michelle. have questions, quick I both for

I million adjusted on XX% implied is add-backs million what's flow? add-backs quarter, free on first the the the think then drive to and difference question my in is The question. of the -- CS range cash first expense for driving what's $XXX between would the margins in on the P&L fourth is So that's M&A And of million which $XXX guide? $XX my the M&A second what

Michelle Turner

portfolio. a Thanks it address we the about think with to back take our for as this that, start margin kind going Scott. And enterprise and I'm margins with starting managing step of question the really and because

as results improving second the X of So we're our of months quarter. quarter encouraged XX% margin consecutive our with overall within at Aerojet is the includes of This portfolio. this margins sequential and part

And because First Performance so of most it's our our is grounded our efforts starting improvement. initiative, and you in actions which commitments pay the we're we're customers starting dividends meeting terms of of to margin and pleased see shareholders, to now remember, to related may really the in

you the little So I'll to each your plus about how forward. walk lot good models it segments organization, there's of of think should through because happening bit I a the think as of that's gives go across work a flavor you

that of we The to spend, start business. mods SAS on at quarter. construct And successful profit adopters I'll most and Space into leaning maniacally QX of initiative and within with Systems managing also Airborne So terms delivered really been also LHX and really business accretive contract business. on have It effectively our SAS are the [indiscernible] from a in to record looking and ensure able that cost running being our margins. our a couple early but they benefited and team XX.X% were organizational deliver in the

of QX. look there onetime step-down occurred QX, that is you result accretive when within as so actions a those a And at

From this of margin John the Rambo's an perspective, leadership business XXX QX. Integrated points saw IMS and from Systems leadership business along with sequential basis team, improvement Mission

sit are so and may we've are starting doing half the programmatic had a most John acute dividends this his remember And we work where pay the the challenges here of you is QX. where year. that lot of team in now And the EAC first to in

terms behind part But programmatic challenges will our is this within expect us Now the IMS. we overall a bit portfolio. be a of to continue that lumpy of in worst of

delivered with I'm expectations QX. consistent along Scott, business, specifically within our with question, consistent quarter CS Within to with CS the our getting your

anticipated as mix DoD be more we a so lower radio perspective. radios shipment a delivered heavier aligned actually noted QX margins with from And tactical we quarter. to And I earlier, this

this teams speaks really putting really of A to from has a supply that this gone So to this around chain. the resilient into make we're efforts lot the work happen. driving

And part days XX% XX portfolio, perspective, a as quarter. then X an of Aerojet roughly our margins finally, the over within months, little from

about You of did price within a will million within the is quarter. step-down accounting from note purchase though benefit $X QX QX. there adjustments

that consistent we the in guide expect updated the have we So year with for.

between what the to cash by and out perspective, Scott, originally Aerojet question cash Aerojet your booked on paid expense flowed the is difference cash then, closure the was really impact. books expense of And closing. driven acquisition, about that an This the from we actually post the from that

Operator

of line Our Citi. comes Gursky next Jason from question the with

Jason Gursky

Space here the to business. industry the start for positive competitors in your one this wanted customers in a very had world just out to don't of in on there quarter, Little the a large a going back minute, go the EAC things of Aerospace mind. you if contracting one your in I business this guys quarter -- you at

are us and help wonder little could if versus from that what in I of bit are opportunities risks the around you So us a EACs the what of overall kind and better understand the tell both portfolio maybe I be plus just cost of think kind importantly, most it the a walk on we're future. fixed as revenue or us price understand you in that might help what portfolio But health execution risks relates the of help and space about mix have us kind business? just given in and seeing the the across what industry, what to

Christopher Kubasik

me years. you changed, if go bring two. mean risk it's that plus or being generally as to back cost that thought over cost more would XX people change between I everyone. mean, in big have space know, has yes, plus to XX or a Jason. you the so. And price, let predominantly fixed the And one, decade trend of that's Great the the I Well, on take last give Okay. question. answer And XX-XX about

which portfolio, were a having What were referring lot we've a if that chain, back sure industry supply I'm we think combination goes back, short-cycle of -- But the is few that. getting on years, you're don't lot I the parts. quick-turn a you of go who to. from our But specifically is hearing I this challenges reliant a microelectronic the stems talking about that think I know, of old having products,

is couldn't given kind adverse So the workmanship our would of of profit. And throw think dealing and supply I end spear like longer and with chain the industry of deliver also space recognize fact cycle business having was the supply I LXHarris But more we and which the then revenue -- everybody at is I that impacts parts there, quality on believe, and inflation the those there, the leading the the those kind to then in I felt issues. is products and pointy is challenge chain get challenges.

the while longer-cycle chain And they're think So now. challenges, there's still think businesses shifted. hitting I they've supply I

double I of So the factoring done taking some what going on our whether terms reopenings, bids, we've current like. protect contract in best to and would probably things escalation the clearly than it's ourselves. down back making going bid to and is the But really clauses money we're not longer-cycle most and less are risks, years, we're estimates, the bidding can, appropriate margin discipline, on the we new do lose to conditions, X

So job feel on like we're pretty bidding doing the I discipline. a good

on again, that the workaround. we of to independent early then and identify regular and mitigation reviews key any We helps, extent or work programs, have our risk have

you how in write-offs. major margins relative doing haven't had, see peers, to compared fortunately, solid pretty any we and space, we're the our to and others we're So on the

the for simultaneously before. XXXX. continue We and or in said and X commit to development, X, 'XX I've programs to enough fixed-price for production, bid It's development production hard let X alone that as not to lots ask estimate 'XX, development

we So those. continue will no-bid to

the ultimately, the And stop fight the will use customer everyone solution. get I vehicle, think the And contracting point will will bidding it right vehicle, time, to in industry has at and I best the right for out believe. and some in

is the more what than to I've And programs, and line profitability, the to -- writing the off margin. So for growth trying said on get stop top before, your moves do. best money happy that and margins to needle, way up sacrifice that's and cash we're

We we the X it's be missile for now, for call FDA, think those some X and some price Agency, and the HBTSS, waiting contracts Tranche Defense had we refer to fixed it real evidence. tracking. satellites Force I one to for have as Missile Space we for tangible are And tracking, done have launched.

get all that's to supply notwithstanding the I those to orbit. So and and challenges evidence able chain to meet good commitments I the pretty can't we're our cost from And that relative schedule in wait things inflation, attrition such. think

about pretty which we've So we been able good and to new attract space talent, as our business, well. feel helps

there, hopefully, So question that your answers Jason.

Michelle Turner

Chris the along and that I add to. NDA referred would just with work to complement just FDA that

very from a stable for we've have civil also business that in a been We decades perspective. steady, weather

also there's that's cycle business. -- that a happening so about $X.X growth And there, that with booked associated billion we've and

a other to good complement growing the it's work So DoD from a really that's perspective.

Operator

Richard Safran comes question from the line of next with Global Research. Seaport Our

Richard Safran

thought Chris, your but the thought in willing grow discuss there, give assessment would 'XX? XXXX be have I I to you the to could color remarks about I you segments qualitative helpful. in most be maybe which and provide of Day, room a Any might Investor heard

Christopher Kubasik

us Rich? come visit December in to going Investor you Are at Day, our

Richard Safran

up. signed already I'm

Christopher Kubasik

this there the attraction I you Florida here. there -- apparently. coming ticket is mean, second Swift, after the go, in go. it's is Taylor like Well, This you hottest

of segments of you our actually going growing. on XXXX process tell and to our be an you, see be what going based I'm through will not will So the looks answer right that I yes, we're -- I now, month will in like all give next so satisfying. it plan X actually

faster year what's X to can't the get So for want next We We happen. because doesn't see true. in kind and that X We all time. less have or December. all continuing growing any quarters But can't are ones business. to which we XXXX We or a impact our a shutdown month we'll impact know through is seriousness, really It's say, have in going more the of the reveal on all has government over. of resolution. it period

world I'm But want no what's some not to all and is to get And idea in November going I on to of get those CR, including cash like happen. can it all top we the growth XXXX, which and we're and revenue one events. things will -- But But consolidated in be grow. now, D.C. we in to OI which happen going through segments. at on right experience we'll basis, headwinds of have thing talking growth X-year suggesting about us, behind looks kind all a line agree And pension expect notwithstanding and December, EPS all I

that's but to So details encouraging, come.

Operator

the comes Ken next line Capital Markets. Our from of RBC Herbert with question

Kenneth Herbert

this maybe importantly, LXHarris following comments then and opening with legacy and Act you're maybe up the across to of the opportunities, the XXXX of Michelle it free viewing beyond some relates off in are you can you year? how of some AJRD CapEx as on more of of Chris, the AJRD that specifically next and CapEx on accelerate about just Defense the of sort Production that And sort outlined? talk just remarks, comment some about year? AJRD as address growth about you should we to And think issues we in how think in need to of sort cash a seeing

Christopher Kubasik

CapEx and on we're mean, start needs. cases prioritize to to I'll and in. going off it based on our R&D business fill our ask and Michelle continue Yes. based I'll I then to

that CapEx Rocketdyne don't look have. other at we'll investments I in plan, all so Aerojet had always come to change -- down where it million, think million I we $XX $XX would scenario of see But compared any the significantly. that that their or

pretty it's and market I trying to we're high-growth said, think I've already accelerate. a

So we between million, sometimes portfolio funding million all it within our of fits overall the the DPA municipalities, get the we else to annual expense that at states as to other having need and $XXX or supplemental it $XX be in near-term more, of from something local which CapEx, sources is we I extent ROI. legacy need don't think any money, over million will the the view CapEx the the $XX target. And

the case I exciting on case, see those new will of but but once that's there's this within the down we focused up backlog catch by now. on kind So new markets Aerojet And a and technologies how the the for business road could be core kind is acceleration. be team There of lot it. really Rocketdyne, of

Michelle Turner

Yes.

I of add your question, next terms free flow in So around would Ken, year. cash just for

So to income grow. Chris' do comments, to we expect

So be we will that overall perspective. an cash think that, tailwind from a

We in working for reminder initial Aerojet then capital. a just X. expect model in nominal kind as some free of that, our accretion deal offsetting improvement year flow And on everybody, assumed cash

that We're there'll level the just we we any as investment into some change not kind in So go fundamental be year. totality around And expect where at next of marginal impact in program then they're of X%. CapEx, cycle. of in on overall expecting we typically run

Operator

is question Wells Matt of line Akers from Fargo. next Our with the

Matthew Akers

of other you touch I we a the called customer think wanted curious your flow of specifically, much back LHX do to ask $XXX get if keep? on that just or offsets any any little to million Does that you NeXt bit. you could And about? how to out, should benefit

Michelle Turner

it this for I'm Thanks question. talk glad getting we're Yes. bit a to about little more.

so of evolution, will. this merger if the LX and And Harris our is next you phase

we're did And focused that initial on and several if leveraging this, of creation. will. that we optimized value really it's so offsets, parts, harder a along company, if as to also for our kind ensure you savings the you to next with about of integration the phase drive is the efficiencies some scale million this And organization think hundred functional

do investment anticipate this line so of we bottom the And point your journey, impact, that Matt. to phase there's with the goes specifically overall around along more that

we you'll out $XXX see in laid million investment. our investor So about letter, of

as we And flow have nominal this, start stages it high about a all talking not want what early so couple you examples so that bottom But of talking line. LHX can in are from just the the to you tailwind already driven a tangible and to perspective NeXt. margin as the about of more highlight do think of this should level a I we're we're teams and to characterize

holding complement [indiscernible], job renegotiating the they've of we're benefits employee again, HR flat scale I'll our a our also to one going to and in benefit to save costs, on recent our And also not fantastic employees. cost new done only portfolio our team leveraging of LXHarris but wins, our be in the benefit increase employee package, our

terms really communications, have right? is So And and from are comms a team we that redesigned you value about and the of a cost terms a in perspective company the communications creation our to then external move a Tania and focusing the the perspective by led that things so send that creating the side both how shareholder equation, shareholders. to out going think opportunity, organizational what when they really internal families. And really has employees flow of their comms we win-win or needle the from perspective comms in back things to on how our this of our matter, are better serve Hanna the from while maintaining on benefits

of communications overall actually And number so we've they reduced and as double-digits that focused we're distributing workflows, our a result. on the streamlining

here of equation. both of bit we're side little a are you looking opportunities, direct the the around highlight biggest buckets I gives the things to and But color the indirect at. that So would the the really material on side as

company a table can LXHarris what our $XX we year the our shareholders. And we're for so a suppliers cap drive and a -- and as fifth to has billion market bring and truly going leveraging real of the scale to as back our negotiating with to value again, opportunity in

Operator

the next Seifman with Seth comes The from JPMorgan. question of line

Seth Seifman

for you. another Michelle, question maybe

about path talk balance sheet. kind of to to you and have just the how the the need much on If cash you could delevering

more think up, I debt there's probably -- to have will then the repay. some coming company ability an

So how to about think do to now? term what repay you out what versus

Michelle Turner

Thanks we want to debt we Yes. We this repayment. on opportunity are question. focused highlight for that can every

target you about billion, focus on going at end what paper, on debt. to We're of by Where the interest the to rates, commercial today, to are billion focus if our we're $XX.X so get rates, And higher to $XX the post the acquisition, of first? variable the will. we sit and we is year going

perspective, we're a we that And next the And so over get X.X. X at our from couple below years. is leverage looking of to be ratio expectation

Operator

Jefferies. The Kahyaoglu next of question the comes Sheila from with line

Christopher Kubasik

question will be last morning. Rob, this this our

Sheila Kahyaoglu

that big back, systems, business do shake How and And do you run are expansion some then supply can from think your specifically today. and XX% how issues? takes off think extent, here? that Is away about communication you about from the about picture, we on stepping maybe core there? progress here? Just margin margins puts it talk possible? these improvement and chain the the just of of you Can And to

Christopher Kubasik

Okay.

guess snuck I think since it's our right in you under one question, this last I Sheila, and wire I'll take the here.

which acknowledging think we which proud industry good grow thanks for leading, XX%, continue And I of. they are are the even to Yes, we So find those industry-leading morning. margins. quite ways committed margins, are to are though to

model with played and some commercial -- of well we WESCAM side, us. our goes do CS just also at sensors. the radios for And we the the commercial turrets have our has model, which beyond tactical on have business that So

effect So that's to been And I an doesn't need something naturally leverage. dilutive that's cover I increase. do. cost the this that the we our prices that We've think just think area industry increasing of to

day-to-day the over all all in lives, our up I are see prices place. going think we

try we costs more So buy components to hold to to is you reality the pricing flat. But and it tend want to new labor.

X flat benefit were of power costs for try that's keep the buy lot enterprise. able And the We direct a the leverage supply by priced and a corporate-wide pull basis a the the maybe all And the successful recently we'll going increase together the help products, does row. it. and but had negotiating to Michelle and simple, across in again, plain even to it not negotiations material, harder, employee our to off. where and chain, profitability that segments for be to that at everybody actually are is all going is, and we holding indirect, if years direct getting and Those into mentioned for sectors, some working

So key of it. I a think that's part

bottom key really every I some is LHX continue a started will DNA. is NeXt, you our We like line. of and something Michelle talked great we think, It's description, gave It's with for that to and to do about what we differentiator in of day, contribute That headwinds the eX. as just the offset continuation, us. the a haven't said, merger. the

it, I to I just we overhead, we that the heck can we ultimate base, Everyone G&A way an think and/or business. the and more there's our their she do, gave And do stuff cost looking wants will easy make simplify if to and examples, but cut do the the to eliminate and it early competitive the first, some we change lower at to the line. of more contribute business or a is lowering take us will can are did everything differently. to arbitrary piece which we lot good and seeing this is contribute goal think but and harder a bottom

it just the at And don't you naturally don't grow. if appreciate. programs and don't profit you I the the debook you have if to, I said all have earlier, and just will think which you truth, But margins it's the I losses, look visibility

reason, contracting labor, contracting of writing that can harder right So material simple, get we sounds growth revenue and to there's get the to and and it's off I do, to every only if And sometimes say programs the to week the profitable you jobs and programs. discipline for the we're it's comes the point programs. on the vehicle, to overhead day off where have on have end all, long-term you're I that's the we're a our going are the potential mix, front customer there on deal cost-plus negotiate what a do fair a to the to and is, for or to have think something and always back jobs, absolutely and out annuity of getting franchise generally going we cost-plus of and push do. Relative terms, we portfolio but will but money fixed for trade whatever and development right not price easy back

we and infinite. And an margins dilutive. on it cost-plus programs. basis, effectively all I But those bid, are we we at it's look ROIC So win will will know

will bid a X%, XX%, our financial is full And rate to results cost-plus the a that exporting, production, XX% we time. said, get that company lead to XX%, and of jobs look it's production, portfolio, rate run can each business, lead that as portfolio. the as grand we that it Michelle lead we every slam new a we at if low as So portfolio, to

I something quarter, all and more of could put be the segments cash accomplish We don't. proud quarter, quite exceeded revenue, and of. it's some we're not to team the and in Some third good it expectations a were proud together, we have what able the EPS on

just call So for hard quarter. thank another the can't with to I that, I early and in in Florida. through here see Day third everybody morning working a and I for out really the QX, our I'll joining great this we're think employees to and all know on everybody down coming shout wait for Investor delivering December

again. So we that, with will you thank and off, sign

Operator

today's Thank teleconference. concludes you. This

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

L3Harris (LHX) 27 Oct 232023 Q3 Earnings call transcript