Slide 1: Fiscal 2017 Fourth Quarter Earnings Call Presentation
Place image here (13.33” x 3.5”) FISCAL 2017 FOURTH 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: Inflecting to top-line growth
Inflecting to top-line growth • EPS $1.49 – up 15% with margin expansion of 60bps • Revenue up 0.6%; double-digit revenue growth for legacy HRS tactical; B:B of 1.02 4Q17 • Strong FCF* of $440M • Completed sale of IT services • EPS $5.53 – up 8%; revenue of $5.90B – down 0.5% organically**; B:B of 1
Slide 4: Solid 4Q and FY17 results…
Solid 4Q and FY17 results… ($million, except per share amounts) GAAP 1.13 1.35 4.87 5.12 Non-GAAP 1.30 1.49 5.14 5.53 + 15% + 8% • Strong 4Q FCF of $440M*; record FY17 FCF EPS of $850M* • 4Q non-GAAP EPS up 15% to $1.49; up 8% 4Q16 4Q17 FY16 FY17 to $5.53 for FY17 1,533 1,542 5,932** 5,900 + 0.6% -
Slide 5: …driven by strong execution on strategic priorities
…driven by strong execution on strategic priorities Rebalance, focus on high- • Completed CapRock and IT services divestitures 1 margin portfolio • Simplified operating model to focus on technology-differentiated, high-margin businesses Execute Exelis integration • Completed integration 2 an
Slide 6: Communication Systems
Communication Systems ($million) 1,864 1,753 • 4Q revenue up 3%; FY17 down 6% vs. prior - 6% 435 413 expectation of down ~7% 436 449 + 3% − Tactical Comms 4Q revenue up 8%; HRS legacy up 28% Public Safety 125 115 − Int’l up 37% with continued strength in Europe, positive signs in Asia/ME − DoD up 8%
Slide 7: Electronic Systems
Electronic Systems ($million) 591 2,251 571 2,173* + 4% + 4% • 4Q revenue up 4%; FY17 up 4% driven by EW, avionics, integrated battle management system • 4Q operating income down 15% reflecting ADS-B Revenue transition; FY17 up 5% with margins up 30bps • FY17 B:B > 1; strong 4Q wins in avionics − Se
Slide 8: Space & Intelligence Systems
Space & Intelligence Systems ($million) • 4Q revenue down 4%; FY17 ~flat as expected with 1,899 1,902 529 ~ flat higher classified revenue offset by lower revenue 506 from environmental programs - 4% • 4Q operating margin up 70bps; FY17 operating Revenue income up 8% with margins expanding 120bps –
Slide 9: FY18 strategic focus
FY18 strategic focus 1 Grow revenue…all 3 segments Drive flawless execution while 2 maintaining margins through operational excellence 3 Maximize cash flow with balanced capital deployment Fiscal 2017 Fourth Quarter Earnings Call Presentation | 9
Slide 10: FY18 guidance summary
FY18 guidance summary Total Harris By Segment Revenue Operating margin Revenue Operating Margin $1.81 - 1.84B CS 29.5 - 30.5% $6.02 - 6.14B up 3 - 5% 19.0 - 19.5% up 2 - 4% $2.32 - 2.36B 19.0 - 20.0% ES EPS FCF up 3 - 5% $5.85 - $6.05 $1.90 - 1.92B $850 - 900M S&IS 16.5 - 17.5% up 6 - 9%* flat to up
Slide 11: FY18 EPS bridge
FY18 EPS bridge range $0.30 - $0.50 $5.85 - $6.05 $0.40 $5.53 $0.07 DoD tactical, Avionics, EW, $0.22 Net interest Battlefield mgmt., $0.17 Exelis amortization Classified space − Environmental FY17 repurchases − Mix FY18 expected repurchases ($150M) Pension income Integration savings F
Slide 12: Path to accelerating growth
Path to accelerating growth Business FY18 Medium term FY18 and medium term drivers Communication Systems up 3 - 5% Tactical Comm. International • Near term stability, ME recovery, modernizations (Australia, U.K,) $1.75B DoD • Army and SOCOM modernization programs continue to ramp Public
Slide 13: Supplemental information
Supplemental information ($million except noted) FY17 FY18 Exelis synergy savings $136 $145 Amortization of Exelis acquisition intangibles $110 ~$103 Non-GAAP CHQ costs $56 $55 - 60 Pension FAS expense/(income)** ($90) ~($120) Net capital expenditures $119 ~$130 Net interest expense $170 ~$162 Effec
Slide 14: Supplemental information – tactical history
Supplemental information – tactical history ($million) 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 FY15 FY16 FY17 Orders 378 215 251 199 358 280 232 241 1,044 1,110 Legacy HRS Sales 296 314 302 217 293 254 304 277 1,129 1,128 DoD 98 75 81 68 101 92 64 73 322 330 International 199 238 221 149 192 16