Summary of L3Harris Technologies (LHX) FY Conference Call - May 22, 2025 Company Overview - **Company**: L3Harris Technologies (LHX) - **Segment**: Aerojet Rocketdyne, a key growth area for the company Key Points and Arguments Aerojet Rocketdyne Growth Potential - Aerojet Rocketdyne is viewed as a fantastic business with significant growth potential, particularly in tactical solid rocket motors, which are expected to see a decade-long demand due to recent conflicts and customer needs [5][6] - The company is investing in various programs, including the Sentinel program, next-generation interceptors, and glide phase interceptors, which are expected to contribute to growth [6][7] - The space propulsion business is also highlighted, with a solid backlog for the RL-ten second stage liquid fuel engine and ongoing work with NASA's SLS rocket [7][8] Capacity Constraints and Investments - The company is addressing capacity constraints through investments and has received funding from the U.S. Government under the Defense Production Act to support capacity increases [11][12] - New facilities are expected to come online by late 2025 to early 2026, which will significantly increase capacity for tactical solid rocket motor programs [13] Golden Dome Initiative - The Golden Dome initiative presents significant opportunities for Aerojet Rocketdyne, particularly in ground-based interceptors and new interceptor programs [17][18] - The company is exploring space-based interceptor opportunities and evaluating how to leverage its capabilities in this area [21] Financial Targets and Growth Projections - L3Harris aims for a revenue target of $23 billion by 2026, with confidence in achieving this even before the Golden Dome opportunities [30][31] - The missile business is projected to grow at double-digit rates in 2025 and 2026, contributing to overall revenue growth [32] Tax Legislation Impact - The potential reversal of the capitalization rule for R&D could provide a cash benefit of approximately $700 to $800 million over three to four years, which would positively impact cash flow [38] Margin Expectations - The company expects to maintain margins above 16% in 2026, with a focus on balancing growth and margin improvement across its diverse portfolio [46][48] Additional Important Insights - The company is agile and responsive to changing market dynamics, which is seen as a competitive advantage [42] - There are ongoing opportunities in various segments, including electronic warfare, unmanned vehicles, and missile defense systems [43][44] - The company is committed to maintaining a robust portfolio while managing margin expectations and growth opportunities [47][48]

Core Framework and Key Details - The "Golden Dome" project is expected to cost $175 billion, with $25 billion already allocated in the 2025 appropriations bill [2] - General Michael Guetlein has been appointed as the project lead [2] - Funding priorities include space-based sensors, new interception technologies, and non-kinetic interceptors like laser weapons [2] - Many of these capabilities are still immature, indicating high risks of delays and R&D challenges [2] - Lockheed Martin's next-generation interceptor is not expected until FY2030, while Northrop Grumman's hypersonic interceptor may not be ready until 2035 even with accelerated development [2] Focus Companies - L3Harris is highlighted for its work in missile warning satellites and is expected to play a leading role in the project [3] - The company has recently expanded its facilities in Fort Wayne, Indiana, positioning itself favorably in a resource-intensive area of the "Golden Dome" [3] - Interceptor rocket engines may provide another avenue for L3Harris's involvement [3] Industry-Wide Participation Expectations - Major contractors like Lockheed Martin, Northrop Grumman, and Raytheon are also expected to benefit from the project [4] - Raytheon recently delivered its first missile defense radar using gallium nitride (GaN) arrays, which could be a key component of the new system [4] - The government is encouraging participation from non-traditional players and small tech companies, with firms like SpaceX, Palantir, and Anduril potentially playing significant roles [4] - An industry conference originally scheduled for late April has been postponed to June 11, where more specific guidance on contractor roles is expected [4] Political and Financial Uncertainties - The project's future heavily depends on political continuity, with concerns that the next administration may not prioritize it as the current one does [5] - Despite the uncertainties, the "Golden Dome" plan may remain a priority due to rising defense spending and increasing geopolitical tensions [5] - Various stakeholders are competing not only for contracts but also to translate this ambitious vision into actual operational capabilities [5]

Group 1: Defense Sector Overview - President Trump announced plans for a "Golden Dome" missile defense project, estimated to cost $175 billion, involving satellites to detect and destroy missiles [1] - The announcement has positively impacted L3Harris Technologies Inc, with shares up 0.9% to $232.99, marking the highest level since early December and a 20.4% increase over the last three months [2] - Lockheed Martin Corp shares are down 0.7% to $472.33, facing pressure at the $480 level, despite a 9% increase over the last three months [3] - RTX Corp stock is down 0.8% to $136.13 after reaching a record peak of $138.82, but it has a 29.2% year-over-year lead and has gained over 17% in 2025 [4]

Core Viewpoint - L3Harris Technologies is positioned to benefit from President Trump's announcement of a $175 billion investment in the Golden Dome missile defense system, with shares experiencing a notable increase following the news [1][5]. Group 1: Golden Dome Overview - The Golden Dome missile defense system is designed to intercept missiles globally and is expected to be operational within three years [3]. - A budget allocation of $25 billion has been made for the initial construction phase of the Golden Dome as part of the fiscal year 2026 budget proposal [4]. Group 2: L3Harris Opportunities - L3Harris received specific mention during the announcement, indicating its potential involvement alongside other defense contractors such as Northrop Grumman, Lockheed Martin, and SpaceX [5]. - The company has recently expanded its satellite manufacturing facility in Fort Wayne, Indiana, with a $125 million investment, positioning it well for contracts related to missile detection and tracking systems [6]. - L3Harris may also profit from supplying rocket motors for interceptors as part of the Golden Dome initiative [7].

Core Points - The Trump administration has established an emergency task force to address telecommunications issues at Newark Liberty International Airport, involving experts from Verizon, L3Harris, and the FAA [1][5] - The task force aims to add three new telecommunications connections between New York and Philadelphia to ensure redundancy in communications [2] - Recent outages have caused significant disruptions, including hundreds of flight delays and stress among air traffic controllers [3][4] Telecommunications Issues - The task force was formed in response to three recent incidents where air traffic controllers lost their main telecommunication lines, leading to 90-second outages [2] - The FAA implemented a software patch that allowed backup lines to function properly during the third outage, preventing total communication loss [4] Task Force Objectives - The task force is composed of technical experts focused on daily progress and transparency regarding telecommunications improvements [5] - The FAA is awaiting Congressional approval for a new plan to spend tens of billions of dollars to modernize the U.S. air traffic control system [6] Flight Operations - Transportation Secretary Sean Duffy emphasized the need for a manageable number of flights landing in Newark to reduce passenger wait times [7]

Group 1 - L3Harris Technologies, Inc. is represented by Ken Bedingfield, who serves as both Chief Financial Officer and President of Aerojet Rocketdyne, one of the company's four business segments [1] - The conference call is part of the Barclays Americas Select Franchise Conference, indicating a focus on investor relations and strategic communication [1] - Ken Bedingfield has a background in accounting and has held significant roles at Northrop Grumman, including CFO of an operating segment, which adds depth to his perspective in the defense industry [5] Group 2 - The discussion includes forward-looking statements that involve risks and uncertainties, highlighting the importance of understanding potential challenges in the company's future [3] - The conference aims to provide insights into the company's strategic direction and operational performance, reflecting the interests of investors and analysts [2] - Ken Bedingfield's experience in both public and private sectors of the defense industry positions him uniquely to address current market dynamics [4]

Company Overview - L3Harris Technologies is a significant contractor in the aerospace and defense industry, employing approximately 46,000 individuals and serving over 100 countries globally [1]. Business Segments - The company operates through four distinct segments: integrated mission systems (IMS), space & airborne systems (SAS), communications systems (CS) [1].

Summary of L3Harris Technologies (LHX) Conference Call - May 06, 2025 Company Overview - **Company**: L3Harris Technologies (LHX) - **Key Speaker**: Ken Benningfield, Chief Financial Officer and President of Aerojet Rocketdyne Industry Insights - **Defense Industry**: The company operates within the defense technology sector, focusing on advanced electronics, missile systems, and space capabilities. Key Points and Arguments Budget and Government Spending - The fiscal year 2025 budget is a full year continuing resolution, providing flexibility in spending and reprogramming funds [8][10] - Defense spending is a clear priority for the administration, with significant alignment between L3Harris's capabilities and government priorities [10][12] - The administration's budget request includes approximately $25 billion allocated for the Golden Dome initiative, emphasizing missile warning and tracking capabilities [13] Growth and Market Position - L3Harris's revenue is approximately 80% from U.S. customers and 20% from international sales, with potential for international growth exceeding 20% [17][20] - The company has strong international exposure through various segments, including software-defined radios and high-end electro-optic capabilities [21][22] - Recent awards and contracts indicate a solid start to Q2, with expectations for a book-to-bill ratio exceeding one for 2025 [29] Aerojet Rocketdyne and Capacity Expansion - Aerojet Rocketdyne is projected to grow from a $2.5 billion business to approximately $4 billion by 2028, driven by increased demand for solid rocket motors and missile solutions [45][48] - The company is investing in capacity increases for various programs, including GMLRS, Stinger, and Javelin, to meet long-term demand [46] Financial Performance and Projections - L3Harris aims for margins to increase from mid-15% to at least 16% by 2026, supported by cost-saving initiatives and a commercial business model [56][57] - Free cash flow is projected to grow from $2 billion in 2023 to $2.8 billion in 2026, representing a 40% increase [58][60] - The company has a history of increasing dividends and plans to return significant cash to shareholders through share repurchases, targeting $1 billion in 2025 [62][63] Challenges and Risks - The company acknowledges challenges in managing fixed-price contracts, particularly in the space segment, but expects to mitigate risks by the end of the year [41][42] - There is a focus on understanding customer needs and delivering capabilities efficiently, which is crucial for maintaining competitive margins [51][54] Strategic Initiatives - L3Harris is committed to a commercial model that allows for faster delivery of capabilities to customers, particularly in defense [54][55] - The company is investing in facilities and technology to enhance its position as a prime contractor in the space sector, aligning with future opportunities like the Golden Dome [43][44] Additional Important Content - The company emphasizes the importance of understanding customer missions and needs to effectively deliver capabilities [52] - There is a strong focus on international business growth, with existing operations in the UK and Italy supporting allied defense needs [22][24] This summary encapsulates the key insights and strategic directions discussed during the L3Harris Technologies conference call, highlighting the company's growth potential, financial outlook, and alignment with government defense priorities.

Group 1 - The U.S. is collaborating with L3Harris Technologies to modify a used Qatari government jumbo jet, potentially creating a new presidential plane [1] - President Trump expressed frustration over delays in the modification of two Boeing 747s, which were initially contracted to serve as the next Air Force One [2][3] - Boeing has incurred over $2 billion in cost overruns related to the Air Force One project, prompting Trump to consider alternative aircraft options [3] Group 2 - Despite the delays with the Air Force One planes, the U.S. Air Force awarded Boeing a contract for a next-generation fighter jet, estimated to be worth around $20 billion or more [5] - Boeing's CEO stated that the company is working to revise the program plan for the Air Force One project to allow for an earlier delivery while ensuring safety and quality [4]

Group 1 - The professional background includes experience in private banking, corporate finance, and strategic advisory across multiple continents [1] - A private banking department was developed and led in Dubai, focusing on tailored investment solutions for affluent clients in the Middle East [1] - Involvement in managing cross-border M&A transactions in Indonesia, with a successful track record in emerging markets [1] Group 2 - The goal is to provide well-researched commentary on various industries and asset classes, including high-growth technology equities and undervalued blue-chip stocks [1] - The aim is to help readers navigate complex global markets with a risk-aware and fundamentally driven investment approach [1]