LHX - Earnings call transcript Q3 2024 | L3Harris Technologies, Inc.

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Operator

Good morning, everyone. Welcome to the L3Harris Technologies Third Quarter 2024 Earnings Call. [Operator Instructions] Also, today's call is being recorded. [Operator Instructions] Now at this time, I'll turn things over to Mr. Dan Gittsovich, Vice President, Investor Relations. sir. ahead, go Please

Daniel Gittsovich

Good call. welcome Bob. quarter our XXXX earnings morning, you, to and third Thank

this are our me earnings third guidance. Joining morning also presentation quarter published Yesterday, We've earnings our on we our release a detailing provided financial website. and Chris results supplemental and Ken.

statements. that discussion actual could Today's forward-looking results include risks, involve to matters certain statements will materially. cause assumptions constitute differ that These and uncertainties

reference please our earnings SEC and information, release filings. more For

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

With Chris that, I'll for some turn it over opening to remarks.

Christopher Kubasik

had Good is made very free morning, everyone, are cash record made so book-to-bill, that and thanks, are track year on We and to results. flow. the we confident operating and quarter, Dan. order our strategy We We're this solid proud commitments we've our segment an impressive a robust deliver and achieved volume, progress far on to we strong delivering stakeholders. of margins the

that and time, meeting tell to our capabilities right the customers This fully at allies. deliver evolving the agile, needs us its priorities. their us nation the of empowers Our with right aligned we're and fast

to environment gives us us a with and our partner addressing supplier, and utilizing prime, This model operate threat commercial business mission-critical to in customers' to a our It platform-agnostic rapidly as offering in changing the flexibility unique or merchant either sub Our nontraditional pricing enables traditional effectively us advantage new the government needs. also or adapting approach. a enables contractors. a entrants acquisition approach

assets. security Links, reinforce These our Data focus. and to portfolio national noncore to acquisitions, moves divesting further We've including us made key Rocketdyne simultaneously hone Tactical Aerojet have our allowed while

munition, all the and the areas sensing in of ISR entirety across allowing across our us electromagnetic Our like passive communications, spectrum. to providing domains customers capabilities superiority solutions deliver with and resilient are innovative, space,

ability a lower over to growth Our single a program, steady term. enabling and diversified portfolio variability the limits long our greater with manage reliance on risk

strategic are Palantir, our Partnerships together strategy. deliver disruptor a to partnership with our we announced to of hallmark working solutions a trusted customers. On Wednesday, advanced

and In House the fact, yesterday, intel the use White agencies increase AI. of the ordered to the Pentagon

this So I evolving we're positioned well in market. feel

focus sustained on grow We that prioritize improvement, drive allows financial which continue approach strategy. Growth growth us and sake our to to growth. appropriate while profitable is This drives cash generation. margin We outperformance. returns for growth's delivering not profitable will

sub not in programs or strategy to Our also participate strategic merchant enables a to key prime. to choose we when as us act supplier even

that NeXt on made report pleased elaborate? LXHarris would innovative you Ken, to progress to considerable our transform like LHX and we've we I'm program how to operate.

Kenneth Bedingfield

the on track XXXX million run $XXX of by We're at Chris. Thanks, least now achieve end exceed $XXX of cost million to year. savings expect the and our rate to target

our confident billion year and also reach additional to pipeline provides $X $X our savings the ability cost are billion early, for to We exceed our cost savings in target target. a opportunity

and our we surpass give target our Day, we as that well value XXXX. we XX% now the accelerated aggressively our at delivering improving expect transforming achieve managing program margin costs, ongoing in performance highlights operational The management efficiency This set we to the XX% commitment least to and of will segment confidence at savings us as way all work, to shareholders. that Investor operating

our name manufacturing, for to better the across all of engineering a power our ERP, real-time realizing systems, few, decision-making. products and even are of We data

the tools scale shifted opportunity like stability differentiator. Palantir, customers. for At management this demand primary using giving alongside same Supply our competitive the digital phase AI-enabled grow focus optimization creates for our of times delivery By Moving strengthening infrastructure. chain to time, them from into NeXt, of and enterprise the modern us. has a LHX supply improving to our we workforce the management are is and our from cost, next chain partners quality becoming modernizing our suppliers, leveraging

to Chris. Back you,

Christopher Kubasik

We we a Generation Next our million segment, had won wins the Jammer contract. during communication $XXX quarter. several In key

cost-plus enable and worth LXHarris dollars jamming types technology development airborne to portfolio. of will high-margin franchise of the strength sustained it establish Following long-term the and driving long-term pods. phase, critical our are in of profitable a These wins of diversity production billions growth to reinforce

IDIQ billion U.S. the P-XA quarter to the ISR Another provide the Navy of support relationship fleet. highlight on with a X was the Poseidon This this positions securing contract within X Navy strengthens sector. our $X.X for with contract

were international the allies front, displaying choose speed the totaling increased can software-defined with our We for we customers. software-defined demand over our began which with The to million. detect of $XXX LXHarris NATO contracts tactical indigenous in low for over these and X quarter, capabilities again, at leading awarded we intercept international the resilient On waveforms provide radios probability communications. our highlights our by low frequency. to capability radios This proprietary products is solutions driving of and allies probability deliveries

strategically new several and space-based Over mission tracking, orbit. to leading satellites, missile we bringing X important a warning years, have invested missile for orders of the in in are in set, which last XX capabilities

of establishes the against advanced interceptor a mission real interceptor glide as and on also will vehicles, different hypersonics, critical our industry were of solid another provide illustrated systems, leadership by Glide Phase contract is motor a attitude defense Interceptor technology defense missile motor power third an stage counter-hypersonics team critical environment. propulsion threat solid Interceptor our large recent advanced where Glide a precise year, plays part advanced will the This and demonstrating of This we win The team. in part control. where role X today's a and in rocket award this franchise this hypersonic propulsion for industry Phase Our the including missile. set, rocket missile alongside an stage earlier we our the including interceptor long-term first technology, motor next-generation in win to

it turn to Ken. like I'd to back that, With

Kenneth Bedingfield

to next key of ahead free margin, to growth anticipate operating across XXXX framework look track on flow. achieve and our we metrics, we year, billion revenue, financial We're including segment As in cash $XX EPS least in at growth flow. over budgetary and operating the to dynamics next in rate months. XX% XXXX revenue, and $X.X 'XX free political few cash We the given do expect exceed billion segment margin

provide on more a our profitability. but We'll focus are detailed growth guidance in these January, ongoing and commitments XXXX testament to disciplined

growth, flow margin financial mid-single-digit as cash and framework low free targets. anticipates double-digit revenue Our continued achieve growth we our organic expansion

digits shares, baseline. our share the reach X.X of free a cash we and to excess ratio target growth over per near-term XXXX As capital leverage accelerate into repurchase mid-double our flow debt deploy will

the all consolidated overall our financial with strong totaling of with straight We're for results quarter, third company results strong into billion quarter dive the see expectations. of $X Let's over of book-to-bill this at awards achieve demand X.X, This book-to-bill delivering across versus fifth to new an allowed X quarter. to delivery board, continuing X. segments us of least

Our had segments this both Aerojet with above Rocketdyne strong quarter, Systems recording X.X. well particularly Communication and book-to-bill past bookings

backlog total $XX reached of Our now has a record billion. new

third increase contributions improved an execution with Operating revenue operational Turning program margins by from increased to XX-basis-point strong driven the financials. by X% performance, and quarter. continuing impressive to NeXt. XX.X%, in LHX Consolidated the

pension-adjusted EPS X%. Non-GAAP by and basis, a on increased EPS grew by our X%,

of in XX% is We of top highlighting pension-adjusted measure X% full disciplined our Our earnings performance our bottom this how guidance per on share, track the believe results. to far so economic year delivering is us to growth. EPS puts strong 'XX range achieve of end our best the focus line

growth see reducing you risk take million the low driven millions. grow. effective this need recognize by our can working we $XXX limit managing flow and increased digestible we are X.X, double-digit as of nearing enable our free to to over by to from management. net profitable single-digit on to target. We our to $XXX leverage $XXX reduced generated million And of quarter, overall free risk primarily capital quarter's and results, We operating this cash adjusted the flow million and during debt And cash with income portfolio quarter,

with performance. for equipment resilient well waveforms segment by international volumes in growth related communications saw increased We and and demand as to up devices. vision XX% night Turning strong domestic supported for CS, higher revenue as

increased year-over-year. volume aircraft advanced and driven and higher was revenue for munitions up products, by avionics of IMS, volume customers programs. domestic increased space international for At and X% for electronics volume integration This was

lower volume by SAS QX, volumes revenue down business. SAS and in This supporting FAA business classified Intel was Cyber about development TR-X flat space ramps program basis, development an networks. of antenna growth for increased F-XX organic due and to in safety related divestiture programs our of On the mission-critical was flight challenges few the offset on was in X%. revenue as a and classified growth

approximately overall contributed revenue our Rocketdyne $XXX Aerojet quarter. this to million

mentioned. have booked and growth, with are to the future Chris new We performance profitable as support segment's pleased significant business

All right.

excellent to year-over-year, from delivered XXX-basis-point Turning waveform effective NeXt years, of our our driven are CS products. attention from favorable license sales, mix, international higher the volumes, margins a software-enabled demonstrating Waveform proprietary high-margin cost XX%, to focused LHX a sales by and in effort savings. last performance few margins. strong improvement transition hardware-centric

IMS of EAC program in net due the to NeXt well Commercial and as previous driving mix primarily up our execution margins also improved year, Solutions basis XX.X%, performed adjustments Aviation LHX the positive well, in reporting business. contributions XX as quarter from favorable points

development and a the largely our in programs onetime year space savings. mentioned partially by margins in classified to SAS declined the offset to due LHX XX.X%, on previously license NeXt challenges sale business, prior

amortization XX.X%, of Aerojet $XX million always remind which price I'll our from margins purchase were these of adjustments Rocketdyne guidance. benefit adjustments. in delivered included you considered of that off-market

off, to profit amortizes gap. economic As we expect in to programs of the PPA continue new fill

Turning to guidance.

are free segment performance of We flow year, total billion. the margin $XX.X we $XX.XX EPS company to again. expect strong reiterating cash billion guidance far in $XX.X of XX.X%, of range so of revenue our to $XX.XX $X.X billion, per guidance and this we're Given share, approximately now operating increasing

additional release on the find can presentation and segment our in guidance earnings website. details You

our built a our how performance LXHarris has year ago, with I'm strengths. Overall, pleased we're extremely I so we've impressed on nearly year. since the far Reflecting by the joined team strong made truly progress on this

differentiators, to our have leadership deliver informed most responsiveness, company ability being enables decisions are and honest clear and that fully we broker this of mission-critical to the customers' our while it's to made and this with on agility a stakeholders. staying decisive innovation, needs aligned make Our culture commitments fast, platform-agnostic,

Looking on trusted while value. disrupt and drive LXHarris' this innovation and disciplined to to more opportunities financial ahead, focus the maintaining team and about pushing of sustained continually confident disruptor trajectory. established The is new ourselves and a industry, unlock future We've excellence in bright, trusted continue I'm LXHarris the will operational more through to as performance.

to that, With back you, Chris.

Christopher Kubasik

our I clear. is want to that mission reinforce

helping forefront, for AI, an customers' the needs. Unlike next deliver and we of environment, hardware, proud War democracy. to our the threat our uniquely to here nation's positioned mission-critical build platforms. it's be of It's global are to and building we're just software World for more In future. We arsenal complex increasingly II, are the convergence at than

Our delivering fully committed our remain the its solutions team's work the safety will warfighter to ensure vital is technologies and allies, nation defend and and protect security we of and that helping to the and democracy.

let's open line for So questions. the

Operator

We'll this [Operator Sheila go morning first Instructions] to Kahyaoglu Jefferies. at

Sheila Kahyaoglu

could off if we picture. start Maybe, big Chris,

target You levels long-term reiterated and organic implies of revenue, 'XX of $XX which 'XX. growth to billion 'XX an of the from acceleration

biggest So the to left that at strong What talk looking you're quarter? of given drivers What's book-to-bill capture? the can acceleration? this opportunities you about are maybe the

Christopher Kubasik

when a you at recall had believe grow All X and have allow We're right, Sheila. I of meet I if said, important months. will areas XXXX, in for the U.S. as we backlog. that our And Ken Yes, us aligned billion our after are of And sitting we $XX portfolio thanks we commitment. record the a look question. X.XX budget, to at and that with book-to-bill the X.XX.

There $XX the CS radios. about I in look looking other that billion Europe in last we're opportunities are pipeline time, talked just we at still CS, right about like have international at When we And NATO a talked alone. now. we software-defined

But growth term. there's threat to space more side, pressures XXXX, move customer I continues given think years. I we be air should in the here from the the well-documented think see the budget On space, environment by the and to out in as near able some missions to

and chain. those That should the so Glide which in enable improving. will the investing interceptor us In I as are Interceptor that XXXX, supply the hit Aerojet accelerate in growth. mentioned We're to very large Rocketdyne, us operations capacity. are very, rocket significant. expansion next-gen in the Phase opportunities motor solid investing are We're well,

our good think provide which opportunities IMS, little that upside international well. But lumpy. ISR as And far so I then, we that performance of always course, market, are have us in can given a in

Operator

Walton now go Research. with Wolfe to Myles next We'll

Myles Walton

coming year the ahead touch reduction I was of in effort hoping could time. cost on you a

$X you the Day, knocking talked in cost 'XX? margins. through And think benefit I billion have Are XX% so, in door efforts Investor the in if you or million when at $XXX that you reduction you 'XX? about the in near of on was accomplished, margins why aren't that

Christopher Kubasik

Yes.

Then Look, for X is that, part now shortly we a really this is about and to me with transformation merger, were which little this past integration of -- I'll talking entire me the talked let the team. I've the LXHarris. we've did top pandemic. after the easy Phase the disrupted give And more Let of of the with a priority detail. Myles. and start as a the leadership in how we Ken integration,

of every looking on We waste in focused down or eliminating are function, non-value every systems We're really at systems. the line just to business. policies, single and

very been aggressive. we've So

We and see results. and this starting have a the team focused dedicated you're on leader XX/X, to

quite think and $X push was of proud and I of there I'm we're next the year it's to we're schedule, exciting, thereafter. that ahead continue and proud I'm of billion going achieve a fact the to of to more lot team. skepticism.

I'll margin But let impact. talk Ken about the

Kenneth Bedingfield

Yes. Myles. thanks Chris, and the question, Thanks, for

well absolutely the the additional of we of team we through I as as the tracking realize try I that turning say opportunity are to to working sure think margin the aggressively the target savings possible. or the can -- as we margins in that margin terms realize making target In is of much through ultimate of set. combination the would either out flow-through, as overdelivery of savings, opportunity into a to And

XXXX we a won't least on see it as detail the at to that, 'XX necessarily approximately margin think path, more And be in improvement moved margin in from opportunity January. target give XXXX We well. as but for remarks We'll has guidance mentioned XX% XX%. certainly in linear about we that

is really Remember, and on as savings, team certainly We're are but will long-term them recur we the the it's performing see rate run in well. at is The just firing again, 'XX really benefit. and results these all we we benefit like flow-through. so to expect need. program look And delivering feel on have certainly long term, that it, the we cylinders focused

Operator

Partners. Richard Research next go We to Seaport now Safran at

Richard Safran

the I'd like to ask about. talked partnership you about Palantir, if that you I might,

So X things here.

you tell the and of could what's us, investment what's if sharing profit First, -- the arrangement X between you?

bit mean your view. capabilities. And strategic I second, could take you rationale this? go looking technology into a here. me doing mentioned we'd complementary But huge get was the a spend I avoid to It R&D about you're to my on that you little seems it. for maybe thought

Christopher Kubasik

upfront before relationship another This Richard, and back there's wanted the X mission for aligned, investment this. No, strategic work, about years. at only sure to but aligned, no with the There Yes. company, organization. the thanks. was not make And or that top X is just signed relationship a we capital organizations goes of on great team our a throughout of are focus cultures the we lot

to we to that, on next the based it level. wanted So take

will teams This to opportunities be for bid. looking both

programs R&D We where have mobile where is to prime. There we're comms projects the comm then the working a hardware. Palantir it's architecture, -- are prime, one where on TITAN, together. a comms, program sub and resilient the other we're the vehicular providing mobile going there's network we're

So X I it's together. putting capabilities business it's as and would say really usual, the

really pressure AI the the any no our can, if mean not on to referenced, a mean, hadn't have putting really As all. that they far and better to are the they White what more. chance think They agencies it at DoD timed the And strategic announcement company do use secret sauce had it. I you is intel isn't. can as House I there's look but could the one to rationale, think I there that I may

models they companies platform-agnostic literally and and build partnering billions I to And a have have think, is of I strategy or the it. dollars best skills is our with of years large and AI X have algorithms in to and language of don't differentiator. dollars. And that billions the the key working the manner, XX a

So excited be that. and not could to we and more about ought collaboratively team work

Maybe received proud I -- also as I'll about we team. lot shortly of couldn't about and side, a this after and customer the and let more calls talked Ken the from There's customers as announcement. yesterday, the excitement few early of be a

how also of just as of give you we're their helping know, using products But couple us? part don't NeXt. do to examples that's LHX a internally of want Ken, I

Kenneth Bedingfield

call Yes, layer. Thanks. We we're using data Sure. product. unified the a Palantir it

some mentioned point across remarks, it systems, I whether strategic all of of the ERP our my labor, data even, in systems, like products the look order to about other, some in of of those partnership. and are to the generated to to things customer that the in enables talked that, engineering, subject systems, Chris terms real-time targeting, do are As opportunities, targeting advanced looking the us manufacturing our across out of

effort again, contributor efficiencies, but of We've the drive process only But factory that down. to we're as internals, efficiencies, areas decisions the for to using contributing improvements, it not significantly to real-time, labor cost some that back to identifying data-driven well. is data in a as seen supply make chain

So really excited the partnership. about

side, internal it itself I are benefit operations we of certainly on that our operationalize actually think really upfront to customers. will and realizing show it's benefit there's how the one our these customer in where for

Christopher Kubasik

can either time. to real earlier your programs. exciting. in And all end chime for rolled the and the a managers is more it's risks, data it's And -- risks. data, mitigate analysts, identify Rich, can about financial their this out And recently a And at to in. day, the and ability We to our timely, it struggle get of and get managing I'll or program the easier even just realize always the get earlier the data, opportunities you those opportunities you been it's the timely industry the

a to financial and Our real-time think going analysts operations a make difference data, in have it's XXX way. our I positive in

Operator

We'll go to Harned at Doug now Bernstein. next

Douglas Harned

results inning the the do what the NATO, When for at in see side say you outlook CS, how on you then and are well? would I Series outfitting had playing look the first NATO here, In countries radios. with on World demand U.S. then out Marines Army and and good U.S. as the with its in you radios? since Day, we and And with next-gen in in, Marines guess that Army NATO I

Christopher Kubasik

Yes.

Let me X -- with start of demand. of lot those bottom the the the think, I in we're agree U.S., still is strong we're can't the or here DoD. There's the positioned where but we'll we somewhere third where, with the between whether top of fourth, a

latest I'm waveforms software-defined just there's proud gives waveforms. team. of We're And continue to market to great all sometimes addition as annual although hardware, great, an of we in our opportunity. thought every upselling a That win. the it's buy, the now the time radios, us about

there. excited pretty I'm So

I'd we're is NATO, probably absolutely it's inning. interoperability NATO the within say what on the is even And the earlier, countries. maybe seeing really critical second

us why mods, providers. over are resilience, a NATO huge our all are Our indigenous crypto their these huge, It's radio reasons opportunity. selecting countries

congressional years. U.S. In process. over Congressional That's going recently $X.X the fact, program the billion Netherlands notification -- through XX won a for with we

this the only one that the X% NATO key for coming but they not need and need in GDP the for out to. of are, think majority Ukraine fact, interoperability of the up And lessons countries is spending of signing I of committed resilient comms. the learned

The radio we $XX about here excited in couple said, already and a is we're And have international Eastern the We won Europe. in pipeline. healthy, tactical pipeline billion business. I QX software-defined opportunities as real that of

Ken?

Kenneth Bedingfield

the Yes, that's to a radios XXX,XXX the XXX,XXX Doug, on in almost think been just shy question cycle. couple put and of has We modernization in just a awarded. Corps, U.S. Marine DoD have to about those of your And numbers of current the side, cycle. Army particular,

leaves That of radios seen have coming shy We LXHarris. go. about XX% of about to somewhere XXX,XXX X/X those, to

a bit little numbers Chris' behind on U.S. comments the put So of just market.

cycle the I competitive modernization good feel how about really doing that and against landscape we're there.

as handhelds set You there's may competitor well on as or different a in X manpack the a and vehicular. remember,

Douglas Harned

outlook funding ENVG, there? can, next you goggles but this like we're every edge turn I being night In a award. for then if you How we vision get on around, like seems follow-on. stopped is on as time do And it -- something the a the CS, the where next the of see

Christopher Kubasik

Yes. We're on the vision goggles. optimistic night

budget This money then try and they we I put And X. it's a there. get is time, Usually, the think go in. change. put actually to in in for money the the actually to money a back D.C.

out. to reality, going ultimately it's in VAS think high reality virtual I be how the augmented plays

pretty that well ENVG they're the think product superior struggling. warfighters. they're it's and is for behind a I documented And schedule,

the So and X I are going going used, be to there's ultimately think be to a convergence.

I about we're to some But the safe feel fair majority buys, winning lot year business is been we are meeting competitor the and commitments, we've and ago. are a a or now our again, say X by our And goggle amount split procurements vision of a night better DoD than delivering, as behind. it's think these maybe we

delivering we're Doug. but always doing. the And good feel company is we'll Army going what business about and that's award to the it, That's pretty the it performing. closely, So to watch

Operator

to with We go Matt next Wells Fargo. now Akers

Matthew Akers

sort competitiveness to customers And and they helping that? maybe of convert got responding this some that Chris, you on to that are better of also you LX, quarter? the those progress your Are to of orders guys I And a that about goes on to want goes of -- making the lot but lot you talk obviously, cost a they're is taking notice? savings. it how

Christopher Kubasik

Yes. Matt. Thanks,

imagine, how they in always are and the it's customers, a and ask when going. lot with team how flattering would and you you my spend time of and going I NeXt As LHX D.C. things is

to use the only more ability timely. cost not of data-driven looking but a digital they're a make think transformation, it the as at decisions I engineering, savings

We the what the overhead gives and it team X. roll be what new on rates us some we know we giving and the that with of us know materials, are. definitely costs We programs. either our it rates, and center Ken We front flexibility as higher-margin bids. our and win these advantage, everybody allows And labor share an I what excited up to are, customer we bid know the split couldn't our more think I about it. with. try clearly and book-to-bill But or based the meet to with it's it's and our

Operator

We'll go next now to David Strauss at Barclays.

David Strauss

Chris, so far, been ratable the the margin has progress we've across seen segments. pretty individual

from As a how individual do above see you XX%, up out? playing similar Do see still across margin of segments? of that you progress here you kind opportunity kind the

Christopher Kubasik

level. David. Yes. segment Yes, level. we we And course, the it see it the We sector see of at do, at

have to XX been margins. improve has has the everybody We mantra and sectors, their

do We how that. a have toolbox to on

great. I Ken is think the opportunities next progress, As indirect some the and supply We've mentioned, early are that. costs. both on excited chain, had about phase I'm and direct really

know Again, the situation. spend how to we win-win getting hard down negotiate we of kind sit and all much is with able part And a data. the once we're supplier, each

about excited I'm that. So

number. a our XX% and bunch people to I XX%. is bunch look XX.XX%. well think above interesting There's people an a there's of If close anybody don't sectors, at really XX we below of XX%

XX.X%, to XX% need XX% go making XX% need So XX.X%, to or people the to and get the XX% and XX.X%, to making XX%. guys

enterprise-wide about I'm is progress. are company. NeXt spread across The an LHX benefits the is excited everybody going initiative. the So And forward.

to add? anything want Ken, know, you don't I

Kenneth Bedingfield

think margin was part the performance our and investments also the big progress, NeXt the is just to going of in the a the I we've in I of Yes. our say, terms at But the programs. of it's made that. team on day, tools, certainly LHX end

one negative I is big some the the of contributors of the solid getting performance, out think of just impacts system.

as bidding don't not to about want bidding discipline, work. come we're I across and that new that means message talk We

right margin more We and what ability determine is amount right are opportunity structure the and effective We gives for is of the a us amount of that and the customers. bidding. cost to have think for than peers, us cost lower our we what win the

during look Certainly, to I with with sort issues an as is to is cost. again, really of certainly, programs some bid competitive the new than peers. avoiding negative as industry reflect win able more lower-margin, the past. some back are to And pandemic, what the working we a the deal kind So at piece pricing focusing in and, and We but and saw cost of view of the having of program better knowing of chain, of it, think, more we're it that had I supply inflation. that inflationary the now on our pressures on we many appropriate a

the So of us it's help us in in what kind drive saying all that that's think, going confidence that, margin XX% get pieces and that I combination least gives various those the of we're to XXXX. upside, to to at

David Strauss

Ken. helpful. for quick a follow-up you, And That's Great.

per talked your repo just pivot through you a confirm you that. significant target 'XX. flow as double-digit a pretty about It here free of back would growth low kind of share kind leverage soon I share cash approach think imply I to out wanted level. to

Kenneth Bedingfield

$XXX in share million XXXX. That's in about talked confirmed. Thanks, Yes. We repurchases David.

We target in I'm that now sorry, XXXX. year-to-date hit have --

now We year-to-date. have hit that target

which leverage, X.X, thing. be to value-creating repurchase of plans is near back in mentioned that offsetting target about. would 'XX of us we kind That more terms we our least talked In sort X.X incentive at should equity of dilution that 'XX, that and 'XX. share and we're to from we levels enable get at

growing and about the per as shareholders, it as one what double-digit I flow about share right, this our we're for cash excited free clip. at So thinking of contributors see we really you're think creation absolutely, mid-teen, solid that to value

Operator

to now next We go Michael at Ciarmoli Truist.

Michael Ciarmoli

growing that's some motors. one rocket quick environment, Ken, specifically and the collaboration on an looks EACs get said, the just clarification in trying been got sense I'm got on just guess seemingly, solid like to as relates Any entrants. of some new It I you've in confidence on start it your program. quarter? to entrants, I GMLRS the of or existing Aerojet And maybe a There's maybe Lockheed, players. then I your new even guess, and you've margin some performance. competitive GD some on going update in mean, like I targeting just share where your maintaining with

So general there. just a update

Kenneth Bedingfield

Yes. to Great. question it of the some Chris turn I'll on well. Thanks, then start, as I'll Michael. and entrant new over

our margin years as classified Look, the we are, number I some on of adjustments, on talked from These programs and EAC mentioned, our we that did are customers. to program particular, very ago. pressures, of We question a perspective a important a in the area about bid in realize couple space about delivering we programs. programs

also generate some represents our think we're programs, of they where offset realize growth portfolio, of able to basis more some But were our does critical that's on pressure some margin work upside work I XX the and missions, cost that our to in certainly the a and that schedule bit realizing than us. still working of enable think power to that area, pressure of year-over-year. rate little driving team been we it and of and proud on I accelerate, other in points

of the X segments. were we positive EACs, the in terms In X of

SAS, the direction stability some on company. to as about IMS those we're quarter. on see their real the a we mentioned, I ended happy the in together, positive that generating that area working programs sign third good the team was performance. that, the in team all same a growing growth that mentioned, manageable realize I that take is again, their for and offset, red are pressures in what As performance significant and quarter. But I this did the challenges this is up for as again,

look, disruptor terms new what's and trusted well. a part Aerojet the going with are say, there's strategy. that we recognize question more risk And certainly has we're to see a new partnering doing talked of if We about I Chris In terms would that entrants the in working partnerships of as than new of our entrants. upside the entrants, as we've few got importance on of on. Aerojet in

capacity significant in terms To the the in opportunity see as discussion there. we customer question increases growth need, on GMLRS a and been that significant of of there's specifically, needed

figuring working And maximize a at as get they're capacity. there our increase other anticipated that's fair significant opportunities, time sure the diligence. share growing And out to of time certainly looking is at that there, team acquisition is the Aerojet we opportunity. customer more how at opportunity. that we're at at hard working looking us, are of the to our for how hard get the We ever we of we And least market they of our make at than and share

Christopher Kubasik

There's recently think talking give Michael, just, about joint arrangement on rocket motors more with midpoint. or more based you year. XX,XXX, We're solid the a I'll is to mentioned. XX,XXX it X,XXX. demand call investments our and specifically, capacity, has teaming The a currently supply. is ramp venture just producing, We're for which in to XX,XXX GMLRS need little you Yes, XX,XXX to that Army been there making I that a there,

So best we we the think welcome the have technology. competition. We

We new have up. already buildings. to infrastructure. We're building the We've ramp equipment bought

facility, motors Arkansas Camden, out a perspective, XXX,XXX just in just year, solid our put to of XXX,XXX rocket motors. And solid delivered rocket we it

So a strong, We a the get to Aerojet get new the performing. couple just data pleased qualified, more than point. was and years of the develop them tested. welcome I rockets, a them It demand takes today is to with of The ago. competition, team long time acquisition is that's but

to more come. So

Operator

TD Gautam We'll take Cowen. our next Khanna question at now from

Gautam Khanna

you've last wanted and give you progress results. that can stands. just on you an getting update on where to there the if made just ask Refresh challenges And control? opine of those year margin then at X, also were under IMS us Tech if could some Great that I

Christopher Kubasik

I of discussion I we're through been just with Lot under clarify contract want Martin lot to in days. last XX. Yes. several TR-X a Lockheed the there's that on On know F-XX,

as financial possible. headwinds are working and not field it's from any soon we these all So impact aircraft We're ourselves and say subs effort. to delivered But to the on negotiations. or the experiencing prime great this, team a together from will sure their it make as I get

our processor TR-X, whether memory commitments cockpit on at system you we're Overall, or look the the the or core display. meeting

to happy effort get good a the prime updates the we're are from team. end think been And on doing. with user it's progress customers, what the So and weekly I the

regard. good in So that pretty

ago. investing good you've we're are We're progress. We're They to The years seen leadership performing pretty getting well. customer clearly in IMS, improvement. a the in Relative few place improving. seeing new And is systems. relationship

don't wants don't the on which we program a NeXt. for customer change margins it's the don't ago, back don't LHX It's goes with board. negotiation. were execution. possible. and it, was do I kind pleased changes think they're But it, to than they just orders. It's again, and identifying we that They get But IMS, what Ken years getting across getting It's of So where was want when the few thought paid anyone it. elaborate saying, more to on

So good way progress all around. the

Operator

to Pete Alembic Global. next go Skibitski now We at

Peter Skibitski

quarter. Nice

how kind year playing half, between the mix tactical of wondering way us similar second radios; CS, Do the 'XX And play half, shift a obviously, out margins. at in Can you out at XXXX out Just domestic/international, heavy give guys, Or of 'XX? one that another? versus will just international. domestic or a you sense seeing heavy broke might it 'XX? mix, you expect versus first with we're

Kenneth Bedingfield

Thanks, Pete.

domestic terms the did a in a and and of half, was out we margin, playing bit CS 'XX, second of we more that's would the of a half, expected. I profile in One, international things. the that about say terms as In first in talk couple

that And the of in we quarter some in received I the strategy sure we into margin highlight the to and margins a booked just waveform but in were products play working, not actually saw of to make I customers the job first that opportunities, 'XX. number of as that the number at CS Some of the and a saw. from a XXX-basis-point in XX% of demand great over catch-up is the international late awards CS half then to deliveries quickly able quarter. ship a same responding did year-over-year. mix third was And they in a increase team made domestic-heavier international through think should the were to driver that international we

would we'll and internationally. first I delta quarter-to-quarter, both half, in expect look, say, XXXX, a got necessarily half. We've domestic see To to January. guidance for second timing give much domestically and international more between demand, But as of 'XX I growing don't

as I team things we about the one those in I of they invested XXXX. in the And CS think the stands. give capacity, I mix they've profile, where And you of think some domestic capability are see international we'll forward. a it as some has single expanded think, that to customers as look that's Whether we in stable can or for is ability, and test international on we'll growing would able be customers, because driving think, expanded that, is domestic both done more test information in great but testing Again, be, at efficiency. January, that, that more multiple should radios bit

Christopher Kubasik

Yes, I'll just chime in.

we'll it and, probably Our is years confidence in of the about 'XX, last CS on than January, talk better software-defined in in going to business. which has particular, the be couple radio

to today supply than in radio all was supply to this week, in things earlier confident talked and you we I you hard it as if If shape Pete, believe. the hard today about we chain of and going our going have a Ken that are headwind really find you're deliver recall, 'XX, were the But through chain don't is But I some pandemic. know kind parts. 'XX, better actually the to before this was and

pandemic, more a silver supply have chain. lining the talk looking about you we resilient for So a much in

it alternate parts. pandemic. confidence that entered we the strategic have before think give particular We've in that us And during I not where that's makes only didn't to going but sense. sector long-term have agreements pandemic the We

don't ever pretty much So norm, better it's supply progress. It's go in it to We the was. norm. back new exciting and the chain than

that thought share insight. I'd I So

Peter Skibitski

appreciate that's I quick great. follow-up. A No, Yes. it.

-- waveforms want higher margin it at guys, to answer So don't even if like the this that talking, or now know way waveforms seems I but international almost you're not, than you point? is. are it

Christopher Kubasik

Yes, they are.

Operator

We go next Seth at to Seifman JPMorgan. now

Seth Seifman

Definitely demand there. investment Aerojet have guys that appreciate in the made all you the and

the big gives kind specifically there then that's quarter looking maybe you end step-up to at the And do of free guess what kind a the in terms confidence Just of we of, that's requires fourth think the seasonal I and something again, sequentially in just cadence the a year-over-year. degree breaking of of and pace that? there? to the that sales kind as what versus in range and something of impact pretty low of

Kenneth Bedingfield

and as really Yes. we Thanks, capacity for AR, think, At I making appreciate see. to we the in mentioned, that are Seth. the I question. opportunities realize we progress, good operationalizing the really

We're off, capacity to in In place. get it we kick of should of in terms time of to and perspective. starting a some growth, pay revenue does start that that that take revenue see some investments from to made increase the

than -- a of bit just the a in place been for around their have well little has contracts of own NeXt, whether little cost headwind. time hanging legacy longer bit of revenue integration acquisition, They we the integration on LHX as on as been the cost a been working hard a and of management, headwind at little down were of that expected, that some the and piece that's driving or that's a also

to fourth for confidence AR range things that, supply cost we us of look guide. revenue see quarter, flow-through But the that the we forward as chain like there's year the to some timing giving and XXXX full

and the feeling as year we're about revenue trajectory long-term that So to margin investments think, on pretty that well AR. the making both, to rate the as at good ability I we're our importantly, guide most drive full and realize

Operator

next go to We'll Baird. at now Peter Arment

Peter Arment

Chris, thoughts get latest sort on updated nice shaping. portfolio maybe Really of thoughts results. just your any just on

you're NeXt, wanted that maybe doing about the you progress to all businesses given there. talked that divest LHX potentially some just and You've

there. Just your latest thoughts

Christopher Kubasik

No, Peter. Thanks, we continue to process. Yes.

We are properties market. the smaller of have that a couple in

following. we would So and I in announce know there I $XX be these materially, We of be QX. we're process get None million might million have if thing. viewed something, $XXX think, don't to we'll here, anything that able closed really, a type don't

in have handful who's doesn't of that we there And here couple but always helps, the think of would that or the portfolio, owners and better you these I right management we'll But no, value think hope million It's be we're of. a the these oversight, strategic entities the keep with the refining owner, Peter. are I in businesses time the good best others and small hundred to we the But align. range. amount of it informed, hands. and and really us effort sometimes

Peter Arment

follow-up, appreciate a Yes, Ken. quick And just that. I

how Have since cash free been Just et just thoughts a your at just about cetera? just and there. you're LX flow growth any you upon you've now the and capital, I opportunities year, about with touched LHX know seen with the working NeXt, latest for you thinking opportunities --

Kenneth Bedingfield

investment. a the drive, also growth probably effective of this required to we contributor of a said, and capital management perspective, working certainly managers flow operating through again, profitable our look capital but being That on growth want make Thanks. some And working at working see free to to flowing Yes. the investing times, those takes being in of to that, the we're being business. a of those growth, that's From income, for opportunities. flow increasing investments. cash are free run that we cash kind at capital effective that and the drive plan CapEx profitable business, part be growth, the part we that to with top And as driven capital in We at growth it willing by, or working means as we that biggest growth margins whether that. the line with then

capital. difficult as things the and made those we're in want the around not make of benefits to business managing tools enabled drive investing drive I dollar And to growth. And short-termists of working infrastructure, our make workforce, is investments around for our all enable we decisions we cost. health terms the we've to the think supply clear, and to that hard important LHX be of of term, us that around in are every that We NeXt, But by long to about and those invest. this chain, decisions profitable needed

really feel growing see. it. But do is -- I'm to growing sorry, The we increase in So about cash how contributor working the the growth biggest free the management. to we really, capital that certainly knows effective and good profit team that working flow

Daniel Gittsovich

question. And so take the last let's

Operator

We'll that now Gursky at Citi. Certainly. take from question Jason

Jeremy Jason

you for Proliferated Jason I an Architecture just going with Space could Jason programs. Link your Warfighter TDL, This today. wondering Gursky update is the with XX and was on if the trends on provide efforts Jeremy

good made support guys here strides to like You have been investing some them. facilities have and in

was Or kind think just things curious do for the planned. been company you I this if what So of be have might next tracking as in area?

Christopher Kubasik

of Okay. business just presented. everything case successfully We Directors. business the that facility. TDL the We reviewed a question. Thanks with for we We're Board our moved the into our actually of little actually Salt case ahead City Lake

of part operations. the flow supply received we've streamlined XX. is that in the process, are leverage we handheld chain Hours As significant a It's BATS-D. There's improving, Link down, product and orders. a called

time a Sold in or of first one them while. in long the a actually lots long,

demos example: in So we've and about XX with the customer. and Link security budget the defense aligned a national there. being acquisitions I resilient that we're earlier making are align progress made And going with talked well. space happy with and communications. the really perfect And here's

heard it We're telling that's spot. sweet You've I'm the years. us the future. say you for in

We've and workforce. off. to starting capability, the got We've technology. we're it pay the got see have the We

country not with to drive only success just and Their our take transform think but wrap I concluding industry. So efforts team. to the that, a of dedication moment I'll and the acknowledge up the before and innovation continue our

and to This I a strength our prouder accomplished not the risen to overcoming quarter, adaptability workforce. from faced the together. testament of we've resilience hurricanes, This of be could in have tornadoes of we teams what occasion. consistently to the yet obstacles challenges significant particular, is

you challenges, made again I'm we'll talk progress. build for the this positioned call, tremendous in to these thank I years everybody confident the on despite we're momentum So and And joining we've January. that ahead. well to in

Operator

third quarter Thank again, great Technologies us, you, gentlemen, does for the conclude call. everyone, and wish a Again, so all much thanks joining day. we and Kubasik. Goodbye. Ladies earnings that you Mr. LXHarris

L3Harris (LHX) 25 Oct 242024 Q3 Earnings call transcript