L3harris Technologies, Inc. · NYSE:LHX
L3harris Technologies — Q3 2019 Earnings Presentation
16 slides from L3harris Technologies's earnings presentation, Oct 30, 2019
Slide 1: L3Harris CY2019 Third Quarter Earnings Call Presentation
L3HARRIS CY2019 THIRD QUARTER EARNINGS CALL PRESENTATION October 30, 2019
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: Strong Q3CY19 and YTD combined financials
Strong Q3CY19 and YTD combined financials3 ($million, except per share amounts) Revenue EBIT and Margin Double digit growth in Q3 and YTD Accelerating margin expansion...210 bps in Q3 and 130bps YTD 13,242 2,160 12,022 + 10% + 20% 1,802 766 16.3% 4,010 4,408 EBIT1 612 15.0% + 10% + 25% EBIT 15.3% 17
Slide 4: L3Harris strategic priorities update
L3Harris strategic priorities update Execute seamless integration...$500M • Cost synergies ahead of plan...exit 2019 with ~$200M vs. $150M gross run rate 1 in gross cost synergies • On target to exceed $500M goal in 2022 Drive flawless execution and margin • Institutionalizing e3...210 bps of margin
Slide 5: Integrated Mission Systems
Integrated Mission Systems ($million) Revenue1 3,916 3,520 + 11% • 3Q revenue up 10%, YTD revenue up 11%, – Strength in ISR aircraft missionization – Increased global demand for Wescam turret systems 1,186 1,303 + 10% • 3Q operating income up 24%; YTD up 19% Q3CY18 Q3CY19 CY18 YTD CY19 YTD 1 • 3Q ma
Slide 6: Space & Airborne Systems
Space & Airborne Systems ($million) Revenue1 3,463 2,947 + 18% • 3Q revenue up 20%; YTD revenue up 18% – Increased content wins and production ramp on long 1,162 term platforms - F-35, F/A-18, F-16 971 + 20% – Sustained growth in Classified Space Q3CY18 Q3CY19 CY18 YTD CY19 YTD • 3Q operating income
Slide 7: Communication Systems
Communication Systems ($million) Revenue1 3,158 2,837 + 11% • 3Q and YTD revenue up 11% – Tactical Communications revenue up 19% in Q3 – DoD up 33% and International up 9% 933 1,032 + 11% – Public safety up double digits in Q3 Q3CY18 Q3CY19 CY18 YTD CY19 YTD • 3Q operating income up 18%; YTD up 17%
Slide 8: Aviation Systems
Aviation Systems ($million) Revenue1 • 3Q and YTD revenue flat 2,818 2,827 – Strong growth in Defense driven by fuzing and Flat ordnance – Offset by prior year C-17 training loss and lower 953 948 volume for full flight simulators Flat Q3CY18 Q3CY19 CY18 YTD CY19 YTD • 3Q operating income increased
Slide 9: Non-GAAP CY19 Q3 EPS bridge
Non-GAAP CY19 Q3 EPS1 bridge $0.15 $0.06 $2.58 $0.43 $(0.10) $2.04 + Interest - Share count + IMS, SAS & CS volume - Tax + Operational efficiencies - Mix 2 CY18 Q3 Combined Operations Synergies Pension & Intangibles Other CY19 Q3 1 Non-GAAP EPS excludes merger deal and integration costs and amortiza
Slide 10: CY 2019 2H revised guidance
CY 2019 2H revised guidance Total L3Harris By Segment Revenue1 Margin2 Revenue1 Margin2 IMS up ~10.5% ~13.3% (vs. 12.5%) up ~10.0% ~17.1% (vs. up 9.5 - 10.5%) (vs. 16.7%) SAS up ~15.5% ~18.8% (vs. up ~11.5%) (vs. 18.7%) EPS2 FCF3 CS up ~10.0% ~22.5% (vs. up ~9.5%) (vs. 22.1%) ~$5.35 ~$1.35B (vs. $4.
Slide 11: CY 2019 Full year revised guidance
CY 2019 Full year revised guidance Total L3Harris By Segment Revenue1 Margin2 Revenue1 Margin2 IMS up ~11.2% ~12.7% (vs. 12.3%) up ~10.0% ~16.4% (vs. up 9.5 - 10.5%) (vs. 16.2%) SAS up ~16.0% ~18.5% (vs. up ~13.9%) (vs. 18.4%) EPS2 FCF3 CS up ~10.8% ~22.1% (vs. up ~10.7%) (vs. 21.8%) ~$10.00 ~$2.35B
Slide 12: Non-GAAP EPS bridges
Non-GAAP EPS1 bridges 2019 Guide to guide 2019 Year over year $0.19 ~ $10.00 $0.29 $0.05 ~ $10.00 $0.12 $0.20 $9.65 $0.04 $1.54 + Interest + Interest - Tax + Tax - Share count $7.92 + IMS, SAS & CS volume + Operational efficiencies - Mix Prior Synergies Pension Other Current CY18 Operations Synergie
Slide 13: Appendix
Appendix L3Harris CALENDAR YEAR 2019 THIRD QUARTER EARNINGS PRESENTATION 13
Slide 14: Other combined financial information
Other combined financial information1 ($million except noted) 2H Prior 3Q CY19 2H CY19 Guide CY19 Cost synergies guidance (gross/net) ~$80/$50 ~$65/$40 ~$80/$50 Net capital expenditures $84 ~$190 ~$190 ~$380 Net interest expense $58 ~$118 ~$157 ~$265 Minority Interest $6 ~$12 ~$14 ~$24 Effective tax
Slide 15: Supplemental L3Harris tactical communications history
Supplemental L3Harris tactical communications history 3Q18 4Q18 1Q19 2Q19 3Q19 Orders 504 450 289 488 371 Sales 336 388 407 435 401 DoD 145 172 189 195 193 International 190 216 218 240 208 Funded Backlog1 1,094 1,151 1,034 1,079 1,049 1 Historical funded backlog and sales have been restated for ASC
Slide 16: Basis of Preparation
Basis of Preparation As supplemental information to aid with year-over-year comparability following the L3Harris merger, L3Harris has included certain unaudited combined L3 and Harris historical financial information, which combines L3 and Harris historical operating results as if the businesses had
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