L3Harris (LHX) 26 Jan 242023 Q4 Earnings call transcript

Greetings. Welcome to the L3Harris Technologies Fourth Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded.

It is now my pleasure to introduce your host, Mark Kratz, Vice President of Investor Relations.

You may begin.

Rob. you, Thank and Call. everyone, our Quarter Fourth Good welcome Earnings XXXX morning, to

Joining our and on approach Chris Bedingfield, are detailing earnings published me morning this presentation earnings quarter Kubasik, also And evening, We've release provided our our supplemental fourth feedback. financial our updated CEO; We've quarterly our on earnings results website. based our yesterday we guidance. CFO. Ken and a

risks, forward-looking today's materially. reminder, certain will and statements. cause These could discussion involve differ constitute a As matters actual statements include assumptions to that uncertainties that results

more release For information, SEC please earnings reference and our filings.

We'll earnings are release. which also reconciled the measures in financial discuss non-GAAP to measures GAAP

at which Specifically, items and impairments, such the I level. as reported goodwill business note will segment operating income, excludes the assets segment other

now for it Chris over I to turn to some remarks. would and like opening Ken

welcome, first to Thanks, to have Okay. on earnings excited the you Ken, and team. call. We're Mark, your LXHarris

team. be Thanks, Chris. to excited I'm of a the part

start investors All a want thanking Day appreciate turnout month. We from event. and our attending the right. Investor and the to analysts great positive had for feedback last I by strong our

growth noncore focused few on a a our announced further business, national our our point disruptions. of returned year following marked as commitments, inflection XXXX of merger We security macroeconomic and sale that are in aligning acquisitions to financial two integrating aligned closed met And and many full the we with and We an defense seen spending years the respects. priorities. benefits portfolio. served the since of fourth we the

outlook drive and This set detail. we Day us that laid reaffirming key at Directors, Investor and team leadership our year's progress financial are and to investors, talent out with that have customers This of employees. past year, our today for strengthened we foundation that the help segment-level will value we achieve our adding gives the confidence future also Board

for a With our allies, to our most we emphasizing national environment and customers' continue the remains solutions mission. Globally, importance support elevated, the missions. the vital security-focused critical threat its of U.S. portfolio, providing

Domestically, a has appropriation areas an programs, pending XX all and support we line which in most resilient budget, for by intelligence April, for including of notably $XXX our of space, await Congress the billion defense to solid end top pass vote bills missiles, communications. the

than The orders, billion, more more continued XXXX, In to in awards the multiple for in for a momentum We XXXX for million. guided strong. and from record This received U.S. contributed jets motors rocket system. Army's radios, the backlog billion including record by business underscored Space Army's Development positive the demand into the we recent award a of Compass at Call $XX the remained orders reported XXXX, leader of missionized billion for manpack and rocket of $XX satellites launch XX $XX early merger. Agency the than the time double backlog $XXX key

next-generation weather Internationally, leverages Japan's up orders international to deliver systems satellite. Ukraine XX%, that an including trusted space award build for advanced payloads and heritage radios, VAMPIRE our tactical and XX-year were for

that the are growth international over to medium We aim maintaining our improve and strategy term. mix

Operationally, gaining our are focus momentum we as driving been commitments, financial factor profitable and on performance-first in meeting culture our has growth. we a

to progressing The We're the about synergies cost X months million we savings integration, the that into using have deploy in team the $XX from is resources Aerojet and targeting. we Rocketdyne captured were and improve we time In are are ultimately help operational performance towards seeing improvements this contracted short increase owning to production levels. LXHarris to returning business, across we capacity. and our

at a to gross including number These LHX achieve delivering leverage X reduce over our our optimize scale, exiting and efficiencies leases, cost NeXt We and $X facility billion enables us square initiative executed of overall our As we in expansion footage. projects, forward. which Day, years. infrastructure executing will the margin to are moving our highlighted at savings Investor cost aimed on next

month. with our reporting better focus has with the continue this X our performance. program at We EAC ERP consolidation excellence And continued XX consolidated on being program units level, helped earlier unit reporting drive into

However, we have this to more work in area. do

we our margin are prioritizing XXXX, execution, and focus growing cash flow. In on free expansion

Additionally, strategic we noncore portfolio parts of against for will continue our to evaluate alternatives assets.

we transform should journey the that progress be clear made the to company. significant It on have

us many is provide deployment Our unchanged core capital create discuss our aligned Investor detail, priorities but discussed Ken in what we Day. are customers' it enable from value. to at shareholder businesses with our levers strategy and to will more

delever We will organically, to then excess shareholders. cash return to to grow and to invest the sheet balance

and backed Our our imperatives financially and we team, workforce the in gives to diverse continue me both leaders that our we execute is our place in by long-term professionally. have talented and confidence and value. to right This shareholder invest strategy drive

for XXXX financial including some With our it that, Ken to turn details, guidance. me let over

It's LXHarris morning, to good be team great and of and everyone. part Chris. alongside working the Thanks,

weeks, I be We'll week with approach you Over the conferences plan. look more the and team, over coming X each forward with the few the confident investors meeting I'm during day. attending quarter, on next road and all the financial the to and grow with last business a reviewing months. so in, reengaging with all been actively engaged I our have in our

billion, from which reported all segment free consolidated high end billion. $X and of primarily guidance, and of share We was start was earnings our segments. year in our XX% a in organically, $XX.XX flow up just and $XX.X Space delivered over margin cash & year-over-year Systems of Airborne XX.X%, were of full Let's growth line which Communication our with results at Systems guidance. the operating X% revenue We with latest

Aerojet growth acquisitions billion, Systems fourth quarter, strong EAC net Data Rocketdyne positive Fourth product and $X.XX. better mid-XXXX. XX all in since favorable volume higher adjustments, from up For net which continued first up driven mix resilient the performance, quarter grew earnings program quarter points XX%, Space and the to Fourth X% revenue margin the Tactical segment was and quarter by per share XX.X%, Links Communications. was and in $X.X and largely basis positive resulted

in how taking we seeing share. to in doing made demonstrates It's Let and me this we've before for To been SAS see in to on markets. XXXX year, X% Mission and Space. growth with targeted billion what and exciting the how we Intel impressed enduring revenue guidance. see hit up me, strong Networks investments much responding quickly, to results Cyber continue I've Space, pay differently, are space, turning are making we growing where them $X.X of as off progress segment programs. and responsive we're reported in thinking

margin growth XX.X% basis in Segment was early points, programs. down the phase operating XX year, for driven the by space

phase mature more to We beginning to are improve we in XXXX. look move of as into programs these now margin the production

stability business roughly operational programmatic challenges and margin In changes and believe in We've that multipronged risk business which the and greater program was financial basis sequential XXX these already XX.X%, and expect changes, Segment at the year seen the international will IMS, address the implemented the improve revenue lower challenges operating throughout improvements XXXX. team the for down within points maturing mix. was was flat. year, the processes, has to leadership $X.X forward. billion from looked approach, management going including I've training

year-over-year XX% XX% up organic billion, $X.X was with growth. revenue CS

the equipment. operating since higher was QX by was year-over-year flat were I acquisition record driven Beyond operating volume merger Segment higher will XX.X%. tactical revenue lower TDL, with of growth margin of margins offset had XX.X%, international volumes note great that the by CS mix. communication as a at

XX.X% the its Chris' Lastly, drive operational the to was in critical Aerojet new over their Aerojet and investing deploying on leadership post-acquisition team in working sites, Rocketdyne co-investing we We has comments. sharing for of more progress you operating these improving throughput look period. improvements with products. as supplier actions Early increase Expanding and data resources is taken The suppliers, was Rocketdyne critical on revenue XXXX. forward $X team margin to to efforts in infrastructure. at billion processes include to

at Turning Day. consistent XXXX we now guidance, is presented Investor framework with the which to that

billion $XX.X billion We all $XX.X revenue in in growth with expect to organic segments.

strong expect guidance out SAS potential you favorable to XXXX and revenue CS line with some rate IMS growth fill note within fourth would results CAS the sale As any we top ranges. also timing year. models, that, contemplates total company guidance the with slower quarter the and your a in start timing, impact at margin I of and

LHX Consolidated mix cost NeXt efficiencies NeXt Rocketdyne. increased of segment is driven by savings. Throughout program and and partially This ramps, momentum gain should approximately cost product full LHX year, operating savings. XX% be to operational year margin is offset international margins a volume, improvements by gained Aerojet the accelerating from anticipated with

million. $XXX than headwinds We do more two have nonoperational totaling

non-GAAP anticipated to ultimately to EPS First the a second we ratably we range across interest reflecting it much an about is year; million quarters, anticipate $XX.XX this grow grow lower count, pension income, netting to XXXX. like We share $XXX build $XX.XX. saw million should sequential to of a anticipate With expense. which and in in we see $XXX taxes and is

The with from I several focused We out the cash over grow to capital team next XXXX years. closed on as solid keenly down are and free this elevated aim working we flow levels during coming pandemic. the improvement,

efficiency. earnings expect billion, of balance approximately continued by we driven growth XXXX, cash free $X.X For XX%, flow sheet up and

to billion to billion, At to anticipated mix. expect operating be we margin mid- $X.X billion the $X.X XX% margin revenue range, billion, mid-XX% to lower-than-historical $X.X to with IMS the with of operating high in international a segment low range. by driven in revenue is level, SAS $X.X

billion billion CS range. margin of operating low Aerojet range. revenue in mid expect high of billion margin $X.X to $X.X $X.X we XX% XX% the for operating revenue Rocketdyne, to anticipate the to We $X.X in billion And and with

allocation less and excess X.X, leverage down shift Chris a achieve a our As to all ratio on returning capital to focused shareholders share of dividends then debt repurchases. through first and priority cash remains mentioned, to paying than

On to of XX% the a continue dividend, XX% cash of ratio payout flow. target free to we

targeting repurchases, returned in accelerate we we look XXXX, $X.X that to will note I and we similar XXXX. For amount in in over buybacks 'XX XXXX, share billion are and a

reasons out, and on my I one the of have commitments. more I In that value my can we close is time here, potential. To future deliver tremendous LXHarris was that XXXX our belief joined confidence gained there

open questions. that, the Rob? With line let's for

first Deuschle question Our Instructions] Scott is with the line from Deutsche [Operator Bank. of

program at IMS? give attrition Chris, can update us an performance on you and

segment the guide for then margins, IMS the second 'XX. half And 'XX down I Ken, implies be will think, margin to of relative

hear So bit a more thinking on like the to there. I'd

for viewing of or guidance spectrum terms on you as where sit you to on in aspiration, a promise. Ken, closer also comment operational the then and can just an your plan, guidance philosophy maybe And an on

timing about IMS, in to XXXX, you'll is aircraft in Talking Yes. did little out the half. half have we Scott. second that lumpy to if Day especially stability, business purchases. of continue the we was improve based improvement. the All margins We the of about, we've strategy it focus first looked And performance, on Thanks, here as right. near with bit on to term a our at in margin that really laid see compared Investor a and program talked the

here not next So answer the but only specifically confidence question seeing the that's opportunities, what we I in the are to and performance, years. XXXX, short gives better term, us think program for several your in

subcontractor's being so starting improving. rigor our authority, training is is but hiring lowered suppliers, specifically in case, maybe more in to that's The those improve the disruptions. the new down. And in more successful the people, We've I of level. are slowing definitely to corporate important segment attrition reviewed as We've think macroeconomic reflected through be new equally got starting performance not been this at as only is our is and bidding bids performance. employees. we delegations level, And The

for I until the it I continue a we it instance and and at do quarter and program. And for again. the I've in said will so one programs we're risk sacrifice course, been to and every we day revenue will will say development the at we're the fixed least the where we year, contract structural earnings no-bid assuming. we of continue type to changes appropriate have cash year, And of talking in changes. not least And business. no-bid that And I'll is where price this a making fourth December, for to about

international of upside see WESCAM we're the IMS. at that years, to I to going couple the internationally business this by jets. In driven year. margins range XX% as at about looking midterm, XX% We're I a the international getting and grow in see into

In and fact, to this will awarded be award quarter missionization, our margins. already, to a for that European $XXX a accretive million us customer has aircraft

have talk eight like comments, LHX X migrated mention we ERP the so progress. years, XX we're that clearly vendors, fact, part, reporting my that action, remains, we've is NeXt sure taken has some then XXX all in think were last work and ripe still XX team segment opportunities. facilities, that path making our different and the more units. this have in the we'll momentum I'm into And I out -- but the but those, We did the investment time when we I good And we're we laid done have the of the still X, despite we on takes on. about I in for

continue? want you do Ken, that, with maybe to So

of said it the CAS I'll CAS average than One, little does of guidance the XXXX. IMS margin level higher divestiture have a just couple for during Sure. as question, IMS that's Chris so a IMS. Scott. well. Thanks for for a headwind add does think I segment, assume at a points. a And margins the bit

terms procurements the aircraft 'XX. in large In XXXX. did second Nothing half have of of the some half in we timing, of first

the that look as and well 'XX We up second we as [ see, the program helped as forward, we team on solid do a of delivering stabilizing performance. look (sic) the in to 'XX margin So that. pick bit little forward it again, ] half

is year. what got to line as we'll in And well. solid contributing then see that margins, I thirdly, That's product tends commercial-like the say EO the throughout so guess build likely more and second would I half the

are With I'll to respect of on about team. thinking to excited the we guidance of can just kind question be part of second business this part spent of I'm your what a philosophy, the where look, say, a time We've again, and do. lot

laid to the deliver to deliver that confidence guidance something that this out we've we during and and meet is out that a think putting I on intend can something there And is we're something to build work we on. year.

question Harned comes next Our from line Doug Bernstein. of with the

the XXX looking across investor XXXX, about each conference, look the basically, At was it talked when there, there of segments. guide the point to can't them, and basis upside to you But be a uniform. opportunity you

for difficult each it might And of you can the maybe look us you some number. think that perhaps segments, So where's help opportunity to in through, get when cases, at more to more? be

that one. take Yes. me let Doug, Yes,

Space term. We me start some but some have where to we margins. want made term, mention on I think the we we we that highlighting well consciously regard. Let the But last the margins also in create businesses, and with are across believe I And of I in investments that in impacted performance have programs that the in the example short the long which is value declined mean, best probably high-growth have keep we've had margins years. documented we issues that couple acknowledge portfolio. our

Investor goal of That by calling there's $X the with XXX look, LHX reasons, entire savings variety of gross 'XX. we We're differences and is out Day, billion X framework savings for basis we're a of agree And I setting you by we floor. across well program the did step you the kind that know. years as end segment out, put enterprise. to points the up run so rate a goes NeXt, our that cost

Communications maybe basis start in form realize Systems. either some ability to exceed or to If to I'd I like go early them through it, relative the order points of the XXX with

and that, international I for model that potential growth. a the commercial know more think has we all business

key drivers. be will those think I

look sales, and example, to regard, making hardware. also that a dollar the can yield. if in our quality, of the looking that at and cost line. increasing aggressive We upside. the falls And the as pretty that to much potential more us make the throughput software seeing equipment like roll models We're an on where bottom In we radios, quality, We're addition every the we be investments poor in the commercial we factory, run give training at

of my CS would probably top list. the at be So

only just months. Since in billion. starting mention new proposals $XX we've them, owning in for increase, it we've contracts, some And capacity. negotiating investment for volume XXX turned now. Aerojet already Rocketdyne, to big I'll improvements. Big see X had We're over maybe

Of clearly, them we negotiate course, but them, the win and supply. have to is outweighing the demand

So feel good ability about even historical return margins better. the potential to there and to the their or

Scott asked IMS. about

I laid out. think that I

the WESCAM want you a model, the have that's there business. and we down provides volatility shape with comes think or I it to we which program the contracts, think stabilizing to designs the a margins them. whatever gimbals, international. on better leadership of that Again, some builds in negotiations with changes or new accretive better business Again, to I upside delivers there's day, to and be commercial turrets the and should And end and And the call performance. business has cameras shift there.

contracts, then, does And highest or have mix the know. of Space Doug, cost-plus you SAS. It as course, of

to go some So to those Space, the most of these get of have back investments decreased. savings made we've decreasing be or new markets, will customer. that such But into the again, as

a know gives don't more granularity. if I you So that little

order we agree as know, the specific. of Ken, XXXX, be But basis to there. put that's points get if how thoughts I'd able the XXX different have floor, closer I is be kind I think more and or you them. to of we'll don't my

No, I think well. you hit it

America. line Epstein of of the from with Ron comes question next Bank Our

Yes.

layers, tracking Day focuses how can transport give your for the a that into going, work maybe maybe opportunities us was SDA maybe on And continued big you business. Investor growth the and deeper if and in dive that's of at the business. One the Space

our strategy. kind about that Trusted for and Disruptor highlighting Yes. as Space Space, of the keep model talking we

tracking just the SDA. we're have on won we -- So for really

X, ago, we X. So won won And as weeks just I X. couple we of were Tranche we mentioned Tranche Tranche awarded a

X satellites gone to X XX. to I satellites So think we've from

there I -- So and would will Tranche and be beyond, X expect. a

I which and was part those the bid can tell we of strategy. of in margins you successive contracts, increased, that that expect have our each

is So the team performing well.

to We have satellites launched. be waiting

at consolations. So we're annuity, looking these long-cycle

talked lives over these be domain migrating space useful single-digit it the and missions And to think seeing we're from the here. about I we've time. air to the need have satellites they'll will And and domain, really repopulated

where at be they'll annuity, will look of launched. X in to additional satellites need deorbit years, Tranche as an kind I satellites So this the and several

So X pleased X, with our proud think and performance. quite team, for of customers the obviously I our

I have did see do weather good us satellite, get a pretty mention in it opportunities. business some was exciting we international so to

see time Space business. all necessarily the don't You that in the

So that's exquisite still some are sub provide of we satellites a additional we're growth. classified. primes. for And those the where Most payloads to

good So pretty backlog.

at and investing Day, and We Investor in also that in excited building broken, mentioned we're about has ground factory satellite we're Florida, been that. a here

we'll quick be So a pretty in pace at to the able near here turn satellites term.

from The David line Barclays. next question is Strauss the of with

guess think for guidance looks following growth. like I Ron's like SAS, 'XX, on year your did up It So this in question, organic growth. you Chris, something organic X% only I X% is

slowdown and the out anticipating, the you broken I between you're maybe Space if avionics piece So the touch of that could there on guess, business.

on not you growth really of could sales, you're the you looks then year? Aerojet It Aerojet this touch at kind just anticipating this of all out any forecast rate annualize if of run also the like for And year.

David. No, question. Yes. good right, All

at sectors just F-XX, a business. good for relatively This margins. with that some several air are a cases. a we there. some are as mentioned, in flat. is good but mission migrating flat And of perform relatively business them, Space look I It's classified talked we Two flat on into domain about market. have SAS, So those if missions we've systems The platform, where is F-XX, I F-XX, large,

So out. that's how we see that playing

Good a foreseeable does lot of some business. pretty the which the traditionally FAA. especially that's is the margins, for flat future, FAA, work Networks, for at Mission of given very a but business budget the pressures a solid

well. -- segments our are Cyber or Space of of and and two two sectors. growing growing that's as Intel is our So

this aside, Just a business mentioned as cost-plus more of an this lot of is most. than I --

we sometimes, -- to think bit a ultimately little as does continue cost, always reduce as sometimes David, your So well. I not it reduce revenue

out the and and interesting, the news And cash get good higher little continue costs, a that's I you headwind. the of but say, and as taking is margins of I'll day, to So bit revenue EBIT take margins. every

I see out does. how coming SAS that's it So where

question on is. Rocketdyne. say that second Aerojet And knows because revenue nobody what really that Interesting XXXX you their

the will forma when We then that that the They XX-K. were X based X pro months. only we're the works. quarter, and first right you disclosed the XXXX months. The compared see in will Aerojet reported cracks there the those X around months X% see disclosed weren't X. you X top disclose accounting XXXX, numbers, Anyway, reported reported through growth. just line the We on to fell how that

the put that growth. we'll and X% there, all So see in you'll

is from question Truist the next The line Ciarmoli of Securities. with Michael

sounds you Maybe, Chris, mean, cost costs. initiative? a just of low-hanging said public of I there? you layered more company mean, the is all lot on to into I like, think Aerojet. it was synergies $XX that I achieved. Looks there that NeXt Is stay got fruit like million

What the does you in the is then did I one flowed as the savings? $XXX on million out benefit through million progress in disproportionately NeXt? segment I cost. And think you we quarter? saw guess mean, And in maybe net NeXt, year. through $XX the I goal what for just

I'd what and tools. do to a mean, effort, the we the little second systems still a work it. of time part. Yes, a go not, there's out executed. get but to the ask to takes Yes, more more relative on to the I'll and lower-hanging we realize than more million, we It I call IT chime integration. was take Ken absolutely first And little on in $XX the fruit lot to expect did and part and quickly obviously

our on payroll of already them aligned systems, already have and stuff. that and type are our plans We procedures. on personnel policies All benefit the

would additional that an million that think NeXt. million roll will that into I $XX LHX probably we there's integration call can or So just get yes, $XX we

Ken? But

I drive is job the throughput No, more. getting of aggressively savings. business focus that out top can on at were But Yes. really of initial that some increase operational team that critical to a the say the We're did integration working continuing this to front. I great target. on get agree We would for the drive did hit to cost point, primary deliver through the the and bottlenecks what of to Aerojet. around so customers these working some of we way efficiencies, to capabilities production our at the

So team great would at certainly further, And as for to drive volume. opportunity only work but continues. the drive not operational again, we'll by this integration, importantly, continue say more Chris mentioned, efficiencies, I to point,

will are LHX In we what at NeXt, savings question, any your million that. that this don't Investor And billion first very of exiting I of at is would $X see XXXX. benefit point run gross with we talked that rate terms margin to I sector discussed about, I $XXX from individual see improvement we The the think consistent what business. Day. necessarily we across of say

I margin the the XX% think getting talked and XXXX our margin framework. to opportunity at sectors Chris through about

terms in a of team. in program, in of NeXt, LHX But confidence the the lot confidence

target have set an there. out We initial

see the benefit least it, to here we're As of of that. to further drive XXXX. the of working out segments that should savings. that again, to of the confidence at drive saw think, I got started in we level that And through we savings work ability to all I've

from next Peter Baird. the The Arment of with line is question

out? guidance, just on if first maybe half -- Ken, Ken. cadence, there just call half, on could maybe level-set second really versus anything to Welcome, you us

would in over guidance How you And highlighted just a then it thinking working the going from and a profile seeing Day are forward? opportunities and be working positive one kind capital Investor also perspective -- the of on the was at cash certainly any period. capital contributor that maybe capital

on half at Peter. growth side Appreciate question. relatively and the from quarter. as the think second look accelerated Probably say, we in between more growth the in a the year, probably revenue of relatively XX-XX Sure. I starting steady half split, should would quarter-by-quarter. in even revenue throughout of cadence, second ramp a first terms an XXXX, be XXXX of little terms the Yes, itself the the we Thanks,

In talked half would terms bit of I margin saw of EPS, year quarter the margins kind be the in at the segments. a across kind in of board fourth I the as little about the a of follow would trend. slower the strong we'll the performance say we first

so of that build EPS. momentum And That should kind over work quarter-over-quarter we'll the to to see And we we build XXXX. through fall through as kind margin sequentially through expect probably year the year. of momentum that again,

and never done. towards second cash to flow continue the continue 'XX, but the working then team working is will And end We'll in from the capital, I profile a free I on And capital perspective year. at to try on in free think the the the half did a job to capital work weighted question, flow XXXX. cash say would of improve be great driving down that working our of the

about as management. in growth, free and the flow the a sheet our growing cash revenues improvement got of growing talked we've be by margin lot on continued well balance as That will growth. XX% confidence But free We certainly cash margin driven disciplined flow.

to one in, a and Peter. how chime really just know we I'll and we've tend The resolution, continuing And slow industry does it with since every while down to deal the perspective. had things customer I it, year XXXX, think from

so can other I bit every get does much XX pass But back So appropriation and we year normal. that a defense start, of March. causes it XX. through bills a for as like we little Hopefully, we'll a pretty last unfortunately, get to budget CR are the mentioned, slow under the

line the comes of question next JPMorgan. from Seifman Our Seth with

kind business, and if what in XXXX ended those. wonder could radio sales the you talk international, XXXX domestic each the of for up and you where and of on tactical for Communications expect trajectory I in

Yes.

DoD the and me that. talk great a tactical we about is here, the actually Let -- really The especially international. year take the pretty we specifically. thing and radios mix the margins, had interesting CS as We between had a in

heavily when X it in So more the in and domestic, we'll towards international quarters, then commercial were with flipped start in deliveries looked it at and QX, domestic versus we first X. then little a half. And I back flips again weighted XXXX the

So revenue we came in it when TCOM. a record year had had a we to

business coming we We've the that tracking, the we key when just overcome talked suppliers of really to now think hundreds supply past, most we're I know of in nicely. chain a had together I quite challenges. we handful. literally the were down is

getting recently that wins are some results yet, the news TCOM. we've not them coming informed we've of of to had a lot better. of in So there's been fact, some getting we're We're good And disclose out quite in new dual but sources. authorized markets

question next is Research. Robert Spingarn Melius Our of from with line the

Ken. Welcome,

Rob. Thanks,

Chris, chain this, quick context in but on a So maybe touched but Aerojet, more some update there. on these the are bottlenecks supply of of operational Ken that still

your well back couple this part started obviously, proposition pace, getting but is Now on and acquisition the of it before there value things. a of

any a Anduril problem Does standing talking to it make third business. up And any in-house? is about of building suppliers the Lockheed's then supplier, sense bring a

share to wanted come about implications you if the others how see think I So longer-term in. market

Thanks, Yes. Rob.

Rocketdyne more thing got the We've There's never systems demand, fact dropped to the progress. the overall to of the acquisition. And We tribute there's great got integrated The them couple the surveys. billion supply, $XX And these attrition X-month there a $XX And a got great question. X/X on XXX Aerojet has just lot is regular enthusiasm them in work. your think a the we in period. The do look -- engineers. policies. personnel. for something strategy. that welcomed I we proposals which XX% the expected I for in excitement about and We've is work Let earlier, into talent million. by how and the on a demand me of it's we the would repeat a We've infrastructure, and have myself, The than are front, just in start specifically acquisition, is the IT successfully things team shows cover back at and LXHarris. when mentioned have

DPA the on for million and investment capacity. demand, Stinger. about the focused We've to Going all GMLRS $XXX back about Javelin and talked it's

in acquired In Alabama. building already fact, Huntsville, we've a

it and inert of Xx, which Our capacity is is will ultimately great. is, there and excellence, ultimately our be that but will footprint -- center

at sense We've bring the of invested by a ownership, you suppliers, helping of not as an them in think makes challenges I as really some in-house. are said. and The lot these, sub-tier to it capital. actually don't with tooling them but

-- customer and have end also our Our our also customers invested. prime immediate have customers

We the shy said, a a away think third bit Personally, time, we've as sub-tier. motor chokepoint fine. a provider from over here the So the competition. such. But of doesn't rocket for going problem there's for the day, solid is igniters, to and don't at the cases, for same solve the I going because at of nozzles everybody's sub-tiers, that the be really little end to the

So -- We're have by we fix doing we improving to it. And their capacity. financially, sub-tier. to the out our equipment, helping getting the them part the see started

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line next of from Walton with The comes Wolfe Research. question the Myles

it and paid benefit cash what can 'XX, 'XX maybe Section Ken, maybe you there would the I'm retroactively LHX hoping you could at Or a for as get what it Investor few surface, XXX NeXt then reversed you laid that out relates if details provide from and the just on the the the Day? you've just million back. And what for out they $XXX is are it, other stripping should the cash to we of be numbers, also adjustments impact consider?

Myles. Thanks,

XXX second Let me of little a and get the question. -- then I'll bit first talk part about into the

well I that team credits. with and support hard works do R&D we saying every is me to and in the getting got really businesses the great think And So by to deductions that the drive just day start things our data, let we've really business. we get tax information well so one the do get all value all needed of them we the them that supporting for they a integrated

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perspective. profile, little 'XX, up that, to able cash a payments the of on in is catch from say I'll terms timing what a we're tax some bit In

new In that. cash the impact to the current catch -- to amortization we're able kind Section the XXX, of back end on of of impact up terms the 'XX of of being through

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a And but and 'XX I believe, as retroactive impact I don't 'XX. it's put it, have number want on to currently some would drafted, for,

on then be So cash we trade bit willing we rate of would benefit for bit rate very would positive see. be a cash. think as forward. to But ultimately headwind we'd there say the little benefit little that a that of And look I I

To would that free think be at And LHX be would cash then the and of adjusted that onetime question, guide be terms At adjustments. for time, in looking for implementation NeXt terms largely of should point in of largest in flow cost. XXXX this your item the what the there. we're kind I what

of Our Kahyaoglu from Sheila line Jefferies. is with next question the

please. you, for One

seeing of the More what are And timing the you within international are conversion? about mentioned you that You international how mix in broadly, thinking IMS. pipeline?

the growth relative and X% about internal are how margin guidance thinking for what just And to organic domestic, overall 'XX, track does the implications? broader

like Yes. implication with than margin mean, is higher the tend I to Thanks commercial. we margins in do the domestic, have we question. for just international obviously, broader

hanging an comes the revenue of 'XX increase of XX% year-over-year. our I We're helps. and 'XX, in point little every But 'XX. XX%, -- uptick increase around kind slight So see from international, a maybe

to put $XXX down for the about going Israel DC a a think Ukraine, to be there out move lot year the is the haven't Taiwan to last budget. I bit little a And whole in we -- supplementals. comes this one is going the talked billion. that's needle for there and supplemental it out But

in I tied think it about $XX billion It's security. border is up targeted DoD. the politics to relates as all for

these given backfilling But we've the passed I several the mentioned. stockpile it's of the because really get the to day, I think already of need we countries into just that at end things

So that regions hopefully, opportunities growth we specifically. and solidify get that our behind us, those will in

of know, a as each as through So that couple of Aerojet, look most of I goes at the primes. segments. you

Aerojet, just of we X don't that any the wherever products but to get we sell several to for notwithstanding X disclose revenue -- from way deployed primes actually perspective, or them from and put So international need them have it go. these they our they then we

we domestic worth. call that just that's So for what

IMS, they many talked given bizjets, do. it's so the upside really of SAS, I things and about see nature there. WESCAM I classified

I satellite, mentioned, in an occasional have like We space Japan.

as radio well. percentage international Some And tactical mainly of then avionics stuff highest the coming has the business. out goes CS of the of international

in what East Ukraine I look East, and it's done looking Mid rather at needed Far Europe when what's the the in and and positive. And we've

So Sheila. I hope that help,

up on last coming this the maybe so hour, take we'll our we're question morning. Rob,

Sure.

Vertical comes last Our Research Partners. question from Robert Stallard with

Ken. back, Welcome

Thank you.

you. for question a probably Chris,

side, any see But to more have terms Jim could and the the future? was talking Your fits maybe issues industry regard about that with wondering you Taiclet lingering if in of portfolio was whether at of the Lockheed that criteria. I opportunity Martin, contracting the future. you defense sort the change pricing problems kind to in counterpart in LXHarris contracts in on the grow flip commercial do and structural that

Robert. we've where in this and decades, Good and everybody to thought Yes. of been migrates back in 'XXs, a the and fixed-price other in development all goes good question, and kind was for 'XXs idea programs industry goes cost-plus cycles it then Look, the it way.

where have figure understand Just There's is lots with to where kind the out of of they're going. them. to opportunities and interface customer

commercial successful been our we've models business that mentioned. with We're I've

that we more there's in look think at I that can regard.

I and new towards things a moving think are I more software, it's and think more area.

struggling software again, think the how I how markets. how software. new think figure truth to out in different out and we where has to type done. that's And cost-plus, a been sense. with, model it's sell get negotiation traditional your I of that's to regulations those business There into what than have a make DoD some may also lot are have to cases figure to probably not figure out buy the entrants to But

review get and to we're the the probably that of no-bid. our disciplined. one all bid them, you DoD RFPs. little We we development the entire the look, we X have on going balance these you have, or is doing when and and But to back get will a X award, upside risk financial change. sometimes with bids, So push draft not more And days, industry to to we a contract going just the they're so make best to fixed-price

decades, where they this engage from. I customer, the But and for to we with industry an ongoing the appreciate coming think and and probably continue has is debate understand been

we'll months ahead. So see in and years the what happens

thank off, they're customer them, focus employees take XX,XXX would and So to really their a in throughout critical shareholders, Clearly, not and performance the our look, like and success but to only on this before sign execution year. I without moment our I is commitments. our for meeting our impossible

really Ken, to team. all Thanks. talking So the joining soon. to appreciate call. And again, we'll the be everybody you welcome

This today's concludes teleconference.

your lines your for day. have you a wonderful disconnect may You and time. participation, at Thank this