L3harris Technologies, Inc. · NYSE:LHX
L3harris Technologies — Q4 2023 Earnings Presentation
14 slides from L3harris Technologies's earnings presentation, Jan 26, 2024
Slide 1: 2023 Fourth Quarter Earnings Presentation
2023 FOURTH QUARTER EARNINGS PRESENTATION January 26, 2024
Slide 2: Forward-Looking Statements; Non-GAAP Measures
Forward-Looking Statements; Non-GAAP Measures 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
Slide 3: Reaffirming Commitment to Drive Shareholder Value
REAFFIRMING COMMITMENT TO DRIVE SHAREHOLDER VALUE STRONG FOUNDATION FOR GROWTH 2026 FINANCIAL FRAMEWORK Strengthened leadership team and Board of Directors Portfolio focused on national security and technology Driving profitable growth through program excellence and LHX NeXt Capital deployment prior
Slide 4: 2023 Highlights and 2024 Guidance
2023 HIGHLIGHTS AND 2024 GUIDANCE DELIVERING ON 2023 COMMITMENTS INITIATING 2024 GUIDANCE $22.8B orders, 1.18x book-to-bill driving Guidance aligned with Investor Day framework record backlog of $33 billion, setting the stage for continued growth Revenue: $20.7B to $21.3B 1 Delivered solid revenue g
Slide 5: Delivering on 2023 Financial Commitments
DELIVERING ON 2023 FINANCIAL COMMITMENTS $22.8B 1.18x $33B Orders Book-to-Bill Total Backlog $19.4B $2.9B 14.8% Revenue Segment Operating Segment Operating Income1 Margin1 $12.36 1 $2.0B 1 $868M $518M Non-GAAP EPS Free Cash Flow Dividends Share Repurchase 1) NGFM - reference the 4Q23 earnings releas
Slide 6: Space & Airborne Systems
SPACE & AIRBORNE SYSTEMS ($ millions) Revenue Segment Operating 1 Income and Margin $6,856 $6,384 7% $745 $783 5% 11.7% 11.4% 2022 2023 2022 2023 2023 DRIVERS Revenue: Increased 7% Margin: down 30 bps + Space Systems - Estimate at Completion + Mission Networks (EAC) performance - Mix + Intelligence
Slide 7: Integrated Mission Systems
INTEGRATED MISSION SYSTEMS ($ millions) Revenue Segment Operating 1 Income and Margin $6,626 $6,630 ~flat $861 $740 (14)% 13.0% 11.2% 2022 2023 2022 2023 2023 DRIVERS Revenue: ~flat Margin: down 180 bps - Intelligence, Surveillance & - Unfavorable net EAC Reconnaissance (ISR) - Higher domestic ISR m
Slide 8: Communication Systems
COMMUNICATION SYSTEMS ($ millions) Revenue Segment Operating 1 Income and Margin $5,070 $4,217 20% $1,229 $1,022 20% 24.2% 24.2% 2022 2023 2022 2023 2023 DRIVERS Revenue: Increased 20% Margin: flat + Tactical Data Links (TDL) acquisition + Broadband Communications + Tactical Communications + Public
Slide 9: Aerojet Rocketdyne
AEROJET ROCKETDYNE ($ millions) Revenue Segment Operating Income and Margin $1,052 $122 11.6% 2023 2023 2023 DRIVERS Results are attributed to program execution across missile and space programs for the 5-month post-acquisition period L3HARRIS 2023 Fourth Quarter Earnings Presentation 9
Slide 10: Key Awards
KEY AWARDS SPACE & AIRBORNE SYSTEMS INTEGRATED MISSION SYSTEMS > Following quarter close, ~$900 million to design > ~$400 million for the procurement, modification, and build 18 satellites for the Space Development and testing of four G550 aircraft for the Compass Agency's (SDA) Tranche 2 Tracking l
Slide 11: Making Progress Toward Debt Leverage Target
MAKING PROGRESS TOWARD DEBT LEVERAGE TARGET DRIVING TO <3.0x LEVERAGE CAPITAL ALLOCATION PRIORITIES 3.7x Invest in the business 3.4x • Capex: ~2.0% of revenue < 3.0x Debt pay down to <3.0x Pay cash dividend • Increased 22 consecutive years • Target payout: 35% - 40% of FCF Return 100% excess cash af
Slide 12: 2024 Guidance
2024 GUIDANCE Consolidated Segment Segment Revenue Operating Margin1 Revenue 1 operating margin SAS $6.9B - $7.1B mid-high 11% $20.7B - $21.3B ~15% IMS $6.4B - $6.6B low-mid 11% Non-GAAP EPS 1 FCF 1 CS $5.3B - $5.4B low-mid 24% AR $2.4B - $2.5B high 11% $12.40 - $12.80 ~$2.2B 1) NGFM - a reconciliat
Slide 13: 2024 Supplemental Information
2024 SUPPLEMENTAL INFORMATION FAS/CAS operating adjustment ~$40 million Non-service FAS pension income ~$260 million Net FAS/CAS pension* ~$300 million Net interest expense* ~$650 million 1 Effective tax rate on non-GAAP earnings 13.0% - 13.5% Average diluted shares Flat - up slightly Capital expend
Slide 14: 2023 Leverage Reconciliation
2023 LEVERAGE RECONCILIATION Fiscal Year (In millions) 2023 Short-term debt $ 1,602 Current portion of long-term debt, net 363 Long-term debt, net 11,160 Total debt 13,125 Less cash and cash equivalents 560 Net debt (A) $ 12,565 Net income $ 1,227 Adjustments: Income taxes 23 Net interest expense 54
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