Slide 1: Fiscal 2017 Second Quarter Earnings Call Presentation
Place image here (10” x 3.5”) FISCAL 2017 SECOND QUARTER EARNINGS CALL PRESENTATION HARRIS.COM | #HARRISCORP
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: Strategic update
Strategic update • $1.4 B divestitures completely reshapes company − IT services sale pending @$690M; CapRock sold @$425M − Sharpens focus on core franchises where technology is key differentiator − Results in streamlined portfolio of higher-growth, higher-margin businesses • More than $1B in net pr
Slide 4: 2Q17 summary and highlights
2Q17 summary and highlights ($million, except per share amounts) EPS Organic revenue* • CapRock reported as discontinued GAAP operations; final quarter reporting 4 1.58 1.33 Non-GAAP 1.47 1.42 1,730 1,700 segments - 3% - 2% • Non-GAAP EPS $1.42 − Operating margin up 50 bps to 17.6% on lower costs an
Slide 5: Communication Systems
Communication Systems ($million) Revenue • Segment revenue down 16%; lower operating income due to lower volume, but 489 margin trending higher on lower costs 413 Public 108 • Tactical Comms revenue down 19% on Safety 103 higher DoD and lower international; B:B >1 Tactical • Legacy tactical: Comms 3
Slide 6: Space and Intelligence Systems
Space and Intelligence Systems ($million) Revenue • Segment revenue up 5%; higher operating income on continued strong program 446 468 performance and higher pension income • Higher revenue and continued strength from intel customers − $53M and $29M follow-on contracts for space asset protection and
Slide 7: Electronic Systems
Electronic Systems ($million) Organic revenue* • Segment organic revenue* up 6%; higher operating income on continued strong program performance and higher 363 384 pension income • Higher revenue from electronic warfare and ramping of Middle East integrated battle management system partially offset
Slide 8: Critical Networks
Critical Networks ($million) Revenue • Segment revenue up 2%; higher operating income from contract 446 454 settlement • Higher revenue from FAA NextGen modernization programs and NASA’s Space Communications Network partially offset by lower IT services 2Q16 2Q17 • Awarded $700M Florida state-wide O
Slide 9: Transaction details, use of proceeds, and share repurchases
Transaction details, use of proceeds, and share repurchases ($millions) CapRock IT services Total Price: 425 690 1,115 FY17 expectations Revenue: ~300 ~1,070 Op margin ~5 - 6% ~7 - 8% • Reported as discontinued • Reported as discontinued operations beginning 2Q17 operations beginning 3Q17 • Transact
Slide 10: Expected impact of divestitures and other items
Expected impact of divestitures and other items* ($ per share) FY17 guidance FY18 expected dilution Prior guid. 5.70 – 5.90 5.70 – 5.90 • Includes $150M share repurchases Divestiture related CapRock op. inc. 0.09 0.09 • ~$17M operating income IT services op. inc. 0.44 0.44 • IT services reported in
Slide 11: Updated fiscal 2017 outlook – reflects CapRock and IT services in discontinued operations
Updated fiscal 2017 outlook – reflects CapRock and IT services in discontinued operations* ($million, except per share amounts) Guidance Unaudited fiscal 16 Updated fiscal 17 $ EPS $ EPS Revenue $ 5,881 $ 5,760 – 5,881 GAAP EPS from continuing operations ~$ 4.87 $ 5.21 – 5.41 Acquisition-related Net
Slide 12: Updated fiscal 2017 segment outlook
Updated fiscal 2017 segment outlook* Segment outlook updated only to reflect CapRock and IT Services as discontinued operations, add air traffic management business to Electronic Systems segment, and eliminate the Critical Networks segment ($million) Segment operating Other information Revenue margi
Slide 13: Estimated historical non-GAAP reclassified segments
Estimated historical non-GAAP reclassified segments* FY16 FY17 1Q 2Q 3Q 4Q FY16 1Q 2Q Revenue Communication Systems 454 489 485 435 1,864 431 413 Space & Intelligence Systems 435 446 489 529 1,899 453 468 Electronic Systems 529 517 545 582 2,173 537 563 Eliminations (17) (13) (9) (16) (55) (17) (18)
Slide 14: Supplemental information – Harris legacy tactical
Supplemental information – Harris legacy tactical ($million) Harris legacy tactical history FY17 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 FY13 FY14 FY15 FY16 YTD Orders 288 263 286 402 378 215 251 199 358 280 1,336 1,129 1,238 1,044 638 Sales 276 317 356 366 296 314 302 217 293 254 1,256 1,