L3harris Technologies, Inc. · NYSE:LHX
L3harris Technologies — Q2 2020 Earnings Presentation
15 slides from L3harris Technologies's earnings presentation, Jul 31, 2020
Slide 1: L3Harris CY2020 Second Quarter Earnings Call Presentation
L3HARRIS CY2020 SECOND QUARTER EARNINGS CALL PRESENTATION July 31, 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements in this presentation that are not historical facts are forward-looking statements that reflect management's current expectations, assumptions and estimates of future performance and economic conditions. Such statements are made in reliance on the safe harbor pro
Slide 3: L3Harris strategic priorities update
L3Harris strategic priorities update Execute seamless integration...$500M • Cost synergies ahead of plan...increasing to $185M, $20M above prior guide in gross cost synergies • Plan to achieve $300M net ($500M gross) in 2021 intact...1 year ahead of schedule • 150 bps of adjusted EBIT margin1 expans
Slide 4: Working capital opportunity
Working capital opportunity Roadmap of opportunities... ...to drive best in class working capital 2,000 10 businesses drive ~75% of Path to 40 - 50 days in 1 75 working capital Represents 2022 and beyond working capital 1,750 dollars Inventory (55 - 65 days) 68 – Reduce cycle times 1,500 55 – Enhanc
Slide 5: Solid 2Q20 financials
Solid 2Q20 financials1 ($million, except per share amounts) Revenue EBIT and Margin GAAP 1,865 4,445 3,593 9,071 1,618 8,834 9,071 1,438 +13% +2.7% EBIT2 810 17.8% 4,448 4,445 745 +9% 16.3% Flat Pro forma Comparison EBIT 18.2% 16.7% margin2 2Q19 2Q20 1H19 1H20 2Q19 2Q20 1H19 1H20 EPS Operating Cash
Slide 6: Integrated Mission Systems
Integrated Mission Systems 1 ($million) Revenue 2Q20 GAAP 11 1,331 25 2,701 2,602 2,701 • Revenue up 7.3% versus prior-year pro forma1 +3.8% –Growth in Electro Optical and Maritime Pro forma –ISR flattish 1,240 1,331 Comparison +7.3% • Operating income increased 38% versus prior- year pro forma 2Q19
Slide 7: Space & Airborne Systems
Space & Airborne Systems 1 ($million) Revenue GAAP 1,019 1,249 1,975 2,441 2Q20 2,312 2,441 +5.6% • Revenue up 4.1% versus prior-year pro forma1 –F-35 growth in Avionics and classified growth in Intel Pro forma Comparison 1,200 1,249 & Cyber +4.1% –Partially offset by program transition timing and t
Slide 8: Communication Systems
Communication Systems 1 ($million) Revenue GAAP 609 1,112 1,189 2,206 2Q20 2,127 2,206 +3.7% • Revenue up 2.4% versus prior-year pro forma1 Pro forma –DoD Tactical and Integrated Vision Systems Comparison 1,086 1,112 modernization demand +2.4% –Partially offset by International Tactical sales timing
Slide 9: Aviation Systems
Aviation Systems 1 ($million) Revenue 2Q20 186 800 330 1,811 GAAP 1,879 • Revenue down 17% versus prior-year pro forma1 1,811 -3.6% and down 7.4% on an organic2 basis Pro forma –Commercial Aviation Solutions performance in-line Comparison 965 with expectations 800 -17% –Mid-teens growth in Defense A
Slide 10: Non-GAAP 2Q20 EPS bridge
Non-GAAP 2Q20 EPS1 bridge $0.06 $2.83 $0.10 $0.22 + Pension + Minority interest $2.51 $(0.03) $0.15 - Tax $(0.18) + Volume + Operational efficiencies + Cost mgmt. - Mix 2Q19 Adjusted Divestitures Pandemic- Operations Synergies Share count Other 2Q20 Actual Pro forma 2 related end- market 1 Non-GAAP
Slide 11: 2020 full-year guidance
2020 full-year guidance Total L3Harris By Segment Organic revenue1 Margin2 Organic revenue 1 Margin 2 IMS up 5.5 - 7.0% 13.50%+ (vs. ~13.50%) up 3.0 - 5.0% 17.50%+ (vs. ~17.50%) SAS up 6.0 - 7.5% ~18.75% EPS2 FCF3 CS up 3.5 - 5.0% ~23.75% $11.15 - $11.55 $2.6 - $2.7B AS down 1.0 - 5.0% ~13.25% 1 Com
Slide 12: Non-GAAP 2020 guidance EPS bridge
Non-GAAP 2020 guidance EPS1 bridge $0.19 $11.35 $0.41 $0.69 + Pension $10.26 + Minority Interest $(0.19) $0.54 - Tax $(0.55) + Volume + Operational efficiencies - Mix - Contingency 2019 Adjusted Divestitures Pandemic- Operations Synergies Share Other 2020 guidance pro forma2 related end- count midpo
Slide 13: Appendix
Appendix L3Harris CALENDAR YEAR 2020 SECOND QUARTER EARNINGS PRESENTATION 13
Slide 14: Other financial information
Other financial information ($million except noted) CY20 2Q19 2Q20 Guide Cost synergies (net) n/a $60 ~$185 (prior ~$165) Net interest expense1 $63 $65 ~$255 Integration expenses2 $18 $37 ~$158 Effective tax rate (non-GAAP) 16.0% 16.9% ~17% Noncontrolling interests, net of income taxes1 $6 $2 ~$10 (
Slide 15: Supplemental L3Harris tactical communications history
Supplemental L3Harris tactical communications history ($million) 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 Orders 289 488 371 486 450 458 Sales 407 435 401 435 454 477 DoD 189 195 193 227 270 279 International 218 240 208 208 184 198 Funded Backlog1 1,034 1,079 1,049 1,100 1,096 1,077 1 Funded backlog includes
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