Slide 1: L3Harris CY2019 Fourth Quarter Earnings Call Presentation
L3HARRIS CY2019 FOURTH QUARTER EARNINGS CALL PRESENTATION February 4, 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: Basis of Preparation
Basis of Preparation As supplemental information to aid with year-over-year comparability following the L3Harris merger, this presentation includes combined financial results, with "combined" meaning, in the case of prior-year results, L3 and Harris combined results for the applicable prior-year per
Slide 4: Summary: Strong CY19 combined results...initiating CY20 guidance
Summary: Strong CY19 combined results...initiating CY20 guidance • EPS1 $2.85 — up 28%...margin1 expansion of 240bps to 17.3% 4Q19 • Revenue up 10%...growth in all four segments • Adjusted FCF2 of $831M • EPS1 $5.43 — up 27%...margin1 expansion of 220bps to 17.3% 2H19 • Revenue up 10%...strong growt
Slide 5: L3Harris strategic priorities update
L3Harris strategic priorities update Execute seamless integration...$500M • Cost synergies ahead of plan...delivered $65M net in 2019, or $15M above guide 1 in gross cost synergies • Path to achieve $300M net ($500M gross) earlier than planned • Common operational metrics and improvement goals at th
Slide 6: Strong 4Q19, 2H and CY19 combined financials
Strong 4Q19, 2H and CY19 combined financials ($million, except per share amounts) Revenue EBIT and Margin 18,074 2,995 16,404 + 10% + 22% 2,456 9,240 1,601 8,392 1,266 + 26% 16.6% + 10% 1 EBIT 835 4,382 4,832 654 15.0% + 28% 17.3% + 10% 15.1% EBIT 14.9% 17.3% margin1 4Q18 4Q19 2H18 2H19 CY18 CY19 4Q
Slide 7: Integrated Mission Systems
Integrated Mission Systems ($million) Revenue 5,387 4,851 + 11% • 2H revenue up 10% and CY19 revenue up 11% – Strength in ISR aircraft missionization 2,517 2,774 + 10% – Increased domestic and international demand for 1,331 1,471 + 11% Wescam turret systems 4Q18 4Q19 2H18 2H19 CY18 CY19 • 2H operati
Slide 8: Space & Airborne Systems
Space & Airborne Systems ($million) Revenue 4,661 4,015 + 16% • 2H and CY19 revenue up 16% 2,360 – Increased content wins and production ramp on long- 2,039 1,068 1,198 + 16% term platforms — F-35, F/A-18, F-16 + 12% – Sustained growth in classified programs 4Q18 4Q19 2H18 2H19 CY18 CY19 • 2H operat
Slide 9: Communication Systems
Communication Systems ($million) Revenue 4,277 3,853 + 11% • 2H revenue up 10% and CY19 revenue up 11% 1,949 2,151 – DoD Tactical up > 30%...modernization up 2x CY18 1,119 + 10% – Public Safety and IVS up double digits 1,016 + 10% • 2H and CY19 operating income up 16% 4Q18 4Q19 2H18 2H19 CY18 CY19 •
Slide 10: Aviation Systems
Aviation Systems ($million) Revenue 3,835 3,917 + 2% • 2H revenue up 3% and CY19 revenue up 2% 1,970 2,038 + 3% – Strong growth in Defense Aviation Products 1,017 1,090 – Offset by prior year C-17 training loss + 7% • 2H operating income up 68% and CY19 up 38% 4Q18 4Q19 2H18 2H19 CY18 CY19 • 2H marg
Slide 11: Non-GAAP EPS bridges
Non-GAAP EPS1 bridges 4Q19 Year over year 2019 Year over year $0.15 $10.08 $0.29 $0.24 $0.15 $2.85 $1.48 + Interest $0.36 $0.20 $(0.08) - Tax + Interest $2.22 - Tax $7.92 + IMS, SAS & CS volume + Operational efficiencies - Mix 4Q18 Operations Synergies Pension Other 4Q19 CY18 Operations Synergies Pe
Slide 12: CY 2020 guidance
CY 2020 guidance Total L3Harris By Segment Revenue1 Margin2 Revenue1 Margin2 IMS up 5.0 - 7.0% 13.00 - 13.50% up 5.0 - 7.0% 17.00 - 17.50% SAS up 5.5 - 7.5% 18.50 - 19.00% EPS2 FCF3 CS up 6.5 - 8.5% 22.50 - 23.00% $11.35 to $11.75 $2.6 - $2.7B AS up 3.5 - 5.5% 13.75 - 14.25% 1 Compared with L3 and H
Slide 13: Non-GAAP CY20 EPS bridge
Non-GAAP CY20 EPS1 bridge $11.35 to $11.75 Midpoint of $0.32 $0.23 - $0.63 $0.29 range $0.43 + Share count $10.08 $0.43 + Interest + Volume - Tax + Operational efficiencies - Mix CY19 Operations Synergies Pension & Intangibles Other CY20 1 Non-GAAP EPS excludes, as applicable, merger deal and integr
Slide 14: Appendix
Appendix L3Harris CALENDAR YEAR 2019 FOURTH QUARTER EARNINGS PRESENTATION 14
Slide 15: Other combined financial information
Other combined financial information ($million, except where noted) Q4 CY19 2H CY19 CY19 CY20 Cost synergies guidance (gross/net) $100/$65 $100/$65 $300/$180 Net interest expense $65 $123 $270 ~$256 Integration expenses, net of gains and losses $68 $214 $244 ~158 Effective tax rate (non-GAAP) 16.9%
Slide 16: Supplemental L3Harris combined tactical communications history
Supplemental L3Harris combined tactical communications history ($million) 4Q18 1Q19 2Q19 3Q19 4Q19 Orders 450 289 488 371 486 Sales 388 407 435 401 435 DoD 172 189 195 193 227 International 216 218 240 208 208 Funded Backlog1 1,151 1,034 1,079 1,049 1,100 1 Funded backlog includes the impact of fore