L3harris Technologies, Inc. · NYSE:LHX
L3harris Technologies — Investor Presentation (August 2023)
49 slides from L3harris Technologies's investor presentation, August 2023
Slide 1: Investor Overview August 2023
Investor Overview August 2023
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements in this Investor Overview 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 harbo
Slide 3: L3Harris Technologies overview
L3Harris Technologies overview L3Harris Technologies is the Trusted Disruptor for the global aerospace and defense industry. With customers’ mission-critical needs always in mind, our 46,000 employees deliver end-to-end technology solutions connecting the space, air, land, sea and cyber domains. 1 S
Slide 4: Three well-positioned segments
Three well-positioned segments Integrated Mission Systems Space & Airborne Systems Communication Systems ISR: Signals intelligence and communication Space: Intelligence, global positioning, space Tactical Communications: Tactical radios for systems, including fleet management support exploration, we
Slide 5: A leading financial profile
A leading financial profile Leading margin with expansion …and the highest cash opportunity… conversions versus peers ~15% 12.1% 104% 93% 2023 Segment 11.1% 11.1% 10.6% 2023 FCF conversion, operating margin1 (excluding R&D related tax payments) 1 104% 66% 59% LHX LHX guide guide …with pension relati
Slide 6: A growing need for L3Harris offerings
A growing need for L3Harris offerings… Threats accelerating… …and in key international markets… 1 NATO Budget excluding U.S. ($B) $360 $353 $302 $326 $300 2018 2019 2020 2021 2022 …driving demand for agile, advanced …with budgets rising domestically… 1 and affordable solutions $billions ~840 ~650 Re
Slide 7: As The Trusted Disruptor with leading positions in all domains
…As “The Trusted Disruptor” with leading positions in all domains Communication ~$8.0B Systems Integrated Mission • Signals intelligence (SIGINT) • Multi-function processing Air Systems • Electro-Optical / Infrared • Electronic warfare Space & Airborne turrets • Datalinks and waveforms Networks and
Slide 8: Positioned to navigate a shifting revenue environment
Positioned to navigate a shifting revenue environment Invest in innovation Bid, win and “prime” more programs Expand internationally Industry-leading R&D investments driving Broad and advanced capabilities… Demand for L3Harris capabilities… internal capabilities… Aircraft Soldier Modernization & Mis
Slide 9: Segment operating margin remains stable
Segment operating margin remains stable Recent setbacks from macroeconomic …with e3 driving sustainment opportunities environment… 16.0% Facility consolidation 15.5% 15.4% ~15% Overhead Supply chain management management Program & 14.4% ERP engineering reduction excellence Segment operating margin1
Slide 10: Cash generation to remain robust
Cash generation to remain robust Supply chain disruptions driving “smart …with supportive outlook inventory” build in near-term… ($billion) 2.7 2.75 2.5 • Segment operating income growth • Working capital focus on optimizing inventory 2.0 2.0+ • CapEx discipline…~1.5% of revenue • Pension well-funde
Slide 11: Balanced capital deployment
Balanced capital deployment Total Capital Deployment (mid-2019 to 2025E) • Repurchased ~$9 billion in shares since mid- Debt Repayments 2019 • Continue to support a competitive dividend on both a yield and pay-out ratio Dividends • Completed the strategic Tactical Data Links (TDL) and Aerojet Rocket
Slide 12: Multiple levers for growth and value creation
Multiple levers for growth and value creation Performance Growth Innovation • Program execution • Bidding, winning and • Develop discriminating • Continuous improvement “priming” more programs solutions • Strengthening risk • International expansion • Leverage investments in management culture exter
Slide 13: L3Harris committed to ESG
L3Harris committed to ESG Environmental Social Governance 2026 Goals1 Dedicated to fostering a diverse and inclusive Board of Directors elected annually by work environment… shareholders ~ 50% 2022 ➢ 11 of 12 directors are independent Reduce Greenhouse Long-term ~ 33% Gases (GHG) by 30% goal 25% 28%
Slide 14: Integrated Mission Systems
‘> L3HARRIS* FAST. FORWARD. Integrated Mission Systems
Slide 15: Integrated Mission Systems overview
Integrated Mission Systems overview Segment financials1 2023 guidance drivers Revenue: $6.7B - $6.8B Segment operating 9,000 income1 $861M $765M - $800M Intelligence, Surveillance, Reconnaissance 8,000 Maritime Revenue1 7,000 $6.6B $6.7B - $6.8B Electro Optical 6,000 Commercial Aviation Solutions 1
Slide 16: Discriminating signals intelligence, communications and modernization capability
Discriminating signals intelligence, communications and modernization capability The world’s most advanced ISR Aircraft ~30 Aircraft $800M-$1B/ RC-135 year USAF Rivet Joint Special Purpose Aircraft International Rivet Joint Signals Intelligence The nation’s highest priority missions ~50 Aircraft $30
Slide 17: Expanding airborne ISR building off leading position
Expanding airborne ISR…building off leading position Current Future Premier Signals Intelligence and Electronic Warfare capability • 60+ years premier airborne SIGINT mission system integration and operations (Rivet Joint) Multi-Modal Targeting Platforms • 10+ years of medium altitude ISR operations
Slide 18: A range of offerings within the sea domain
A range of offerings within the sea domain Constellation-class Frigate Integrated C5ISR Systems Acoustic total program value: ~$1B Sensors 20 ships + development + services Mast Mounted Steering Aviation Bridge and Sensors Controls Systems Navigation Power Management Systems Flight Deck Equipment Sh
Slide 19: Systems provider to systems integrator on maritime platforms
Systems provider to systems integrator on maritime platforms… Maritime opportunity driven by: • Higher content on new ship classes • Evolving Systems Integrator role RAN SEA1350 Indigenous Defensive • Growth in size of U.S. Navy Submarine • International expansion and modernization Canadian Surface
Slide 20: Unique autonomy, seabed acoustics and network capabilities
…with unique autonomy, seabed acoustics and network capabilities Discriminating capability: Joint All Domain Command • Over 125 L3Harris ASVs and 350 AUVs operating and Control around the world in survey, maritime domain awareness, C5ISR-T and mine counter measures Resilient Naval Networks missions
Slide 21: Expanding reach of Electro-Optical capabilities
Expanding reach of Electro-Optical capabilities Driving growth through: • Differentiating capabilities: Extensive service footprint, proven reliability, superior performance and global product portfolio • New platform captures International unmanned surface Shipboard Panoramic vehicles Electro-Optic
Slide 22: Stabilizing commercial aerospace exposure
Stabilizing commercial aerospace exposure Significant downturn for air traffic in 2020, …LHX managed headwind via right-sized cost with modest recovery to date… structure to position for continued recovery Revenue of $500M+ on a LTM basis Recorders Traffic Collision Avoidance • Optimized cost struct
Slide 23: Space & Airborne Systems
‘> L3HARRIS* FAST. FORWARD. Space & Airborne Systems
Slide 24: Space & Airborne Systems overview
Space & Airborne Systems overview Segment financials1 2023 guidance drivers Revenue: $6.7B - $6.8B Segment operating Space $745M $735M - $760M income1 8,000 Mission Avionics 7,000 $6.7B - $6.8B Intel & Cyber Revenue1 $6.4B Mission Networks 6,000 Electronic Warfare 1 5,000 Segment operating income :
Slide 25: Space threats require a resilient and responsive architecture
Space threats require a resilient and responsive architecture Exquisite Solutions $700 $725 Responsive Solutions 60-year legacy of providing Augmenting Exquisite Systems high performance mission Weather with rapid delivery of end-to-end payloads mission solutions ISR WON PNT PNT Antennas GOES-R NOAA
Slide 26: Customer acquisition strategies centered on selecting the mission capabilities, not the platform
Customer acquisition strategies centered on selecting the mission capabilities, not the platform INTELLIGENCE, SURVEILLANCE, & RECONNAISSANCE WON WON • Over 60 years delivering high priority mission solutions • Leading EO/IR and RF mission payload provider WON Classified • Leading provider of reflec
Slide 27: Driving to full operational constellations and rapid factory production
Driving to full operational constellations and rapid factory production INTELLIGENCE, SURVEILLANCE, & RECONNAISSANCE SATELLITE DELIVERIES ~$4B PER YEAR Radio 45 Frequency Full Mission 50+ 4x 40 Electro Optical Full Mission 50+ 35 Radio Full Frequency Mission 10+ 30 25 POSITION, NAVIGATION, & TIMING
Slide 28: Modernizing existing platforms and integrating advanced capabilities
Modernizing existing platforms and creating and integrating advanced capabilities for future platforms $6B+ $3B+ NEXT-GENERATION EXQUISITE PLATFORMS INTEGRATED RESPONSIVE AIR SOLUTIONS Open architecture modular, advanced and integrated electronics Small form electronics enabling distributed, novel o
Slide 29: Cyber capabilities to counter hardened problem set
Cyber capabilities to counter hardened problem set Design, build and operate solutions for the most complex cyber and intelligence needs Strategic Missions • 2,500 employees, 5 countries • 30 years mission experience 140 Complex mission solutions for classified customers • Intelligence, defense and
Slide 30: Leveraging trusted FAA partnership and performance
Leveraging trusted FAA partnership and performance 20+ years delivering resilient and secure …combine to enable growth infrastructure “as a service”… LHX owned and operated infrastructure Strong pipeline of opportunities COMMUNICATIONS FTI Continuation and network upgrades to prolong life 10+ years
Slide 31: Communication Systems
‘> L3HARRIS* FAST. FORWARD. Communication Systems
Slide 32: Communication Systems overview
Communication Systems overview Segment financials1 2023 guidance drivers 6,500 Segment operating Revenue: $4.9B - $5.0B $1,022M $1,200M - $1,230M income1 6,000 Tactical Communications 5,500 Broadband Communications $4.9B - $5.0B Integrated Vision Solutions 5,000 Revenue1 4,500 $4.2B Public Safety 1
Slide 33: Global leadership
Global leadership ($billion) Historical growth in L3Harris …led to L3Harris as #1 provider Tactical Communications - globally Radios1… 2.0 1.8 1.8 1.7 1.5 All others All others Harris 1.4 1.0 39% L3Harris 1.3 1.3 1.3 0.8 0.8 International 45%+ 1.2 1.2 0.9 0.7 0.9 0.8 0.9 0.9 0.8 0.8 1.0 1.0 1.0 ~$3.
Slide 34: #1 position driven by commercial model
#1 position driven by commercial model Commercial business model… … enabled competitive edge 1 Global customer intimacy • Anticipating and driving requirements • Extensive distribution network • Large installed base 1 2 2 Continuous innovation • Investment of internal R&D…supports opportunities to e
Slide 35: Executing on well-funded DoD modernization priority
Executing on well-funded DoD modernization priority… DoD Tactical Radio modernization spend set to …with LHX awarded positions on all major be ~$8B through mid-decade… U.S. tactical radio contracts1 ($million) 2,115 $390M SOCOM Tactical Comms IDIQ 2-channel multiband handheld Single-award 1,778 $552
Slide 36: Maintaining international leadership
…and maintaining international leadership L3Harris’ growing share of the …with multi-billion-dollar Focus areas international installed base1… pipeline1 (Thousands of tactical radios) • Support conflict regions 447 • Incumbency / local partnerships, driving global refresh and modernization • Ally /
Slide 37: Tightly managing supply chain delays
Tightly managing supply chain delays Global supply chain disruptions creating …but outlook reinforced by strong funded shortages for electronic components… backlog1… • Demand for LHX products remains strong...no anticipated • Sourcing environment for global electronic impact to bookings nor win-rate
Slide 38: Incumbency position and technology in broadband communications
Incumbency position and technology in broadband communications… Leverage strong incumbent position in …to drive spectrum superiority networked communications and integration… Primary platforms driving ~$1B in annual revenue Assured Communications Advanced tactical datalinks, networked-collaborative
Slide 39: Expanding with Tactical Data Link acquisition
…expanding with Tactical Data Link acquisition that aligns with L3Harris Trusted Disruptor strategy • Combined with world class technologies at L3Harris, acquisition enhances communications and networking capabilities • Company will utilize scale and scope to expand datalink technology and integrate
Slide 40: Strong position within integrated and networked vision market
Strong position within integrated and networked vision market L3Harris has grown into an industry leader… • Leading edge Night Vision technology • Full suite of electro-optic / infrared day / night fighting equipment for the soldier • Bundled portfolio solutions for U.S. DoD and trusted allies • Int
Slide 41: 2Q23 results and 2023 guidance
2Q23 results and 2023 guidance
Slide 42: L3Harris 2Q23 financials
L3Harris 2Q23 financials 13% 12% -24% -8% 7% -25% Refer to endnotes on slides 45 and 46 L3HARRIS L3Harris Investor Overview 42
Slide 43: L3Harris full-year 2023 Guidance
L3Harris full-year 2023 Guidance Consolidated Actuals and Guidance Segment Actuals and Guidance Refer to endnotes on slides 45 and 46 L3HARRIS L3Harris Investor Overview 43
Slide 44: L3Harris full-year 2023 Supplemental Guidance
L3Harris full-year 2023 Supplemental Guidance 2023 Supplemental Guidance Items Refer to endnotes on slides 45 and 46 L3HARRIS L3Harris Investor Overview 44
Slide 45: Endnotes
Endnotes Refer to endnotes on slides 45 and 46 L3HARRIS L3Harris Investor Overview 45
Slide 46: Endnotes (continued)
Endnotes (continued) Refer to endnotes on slides 45 and 46 L3HARRIS L3Harris Investor Overview 46
Slide 47: 2022 segment recast
2022 segment recast (Unaudited) Refer to endnotes on slides 45 and 46 L3HARRIS L3Harris Investor Overview 47
Slide 48: Regulation G Disclosures
Regulation G Disclosures To supplement our condensed consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), we provide additional non- GAAP measures, including organic revenue, segment operating income and margin, non- GAAP operating inco
Slide 49: Reconciliation of Non-GAAP Financial Measures – Organic Revenue
Reconciliation of Non-GAAP Financial Measures – Organic Revenue Refer to endnotes on slides 45 and 46 L3HARRIS L3Harris Investor Overview 49
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