L3Harris Technologies, Inc. (LHX) Baird's Global Industrial Conference (Transcript)

Company and Industry Overview * Company: L3Harris Technologies, Inc. (NYSE:LHX) * Market Cap: $50 billion * Industry: Aerospace & Defense * Focus: Trusted disruptor in the industry, delivering advanced capabilities for U.S. industry allies, leading industry operating margins, mid-teens and trending higher. Key Growth Drivers * Space: Significant growth with over 40 satellite contracts awarded by the Space Development Agency. * Air: Flattish industry growth, but focus on electronic warfare and components. * Navy and Maritime: Growth area with focus on autonomy, including autonomous surface and autonomous undersea vehicles. * Land: Networks, radios, and night vision goggles. * Cyber: $1 billion cyber business growing well over the last few years. * Aerojet Rocketdyne: Acquisition driving growth, with significant demand and investments in new facilities. Business Model and Strategy * Commercial Business Model: Selling to the government in a commercial-like manner, reducing regulations and streamlining the acquisition process. * Agile and Responsive: Positioning the company to rapidly respond to changing threats or budget dynamics. * Innovation: Investing in venture capital, strategic partnerships (e.g., Palantir), and technology development. Communications Systems * Tactical Radios: Significant growth opportunities with a $10 billion pipeline of opportunities. * Software-Defined Radios: Focus on software and network capabilities, with a new go-to-market approach. * Interoperability: High demand for interoperable hardware, particularly in Europe. Aerojet Rocketdyne * Demand: Significant demand for solid rocket motors, with high demand and investments in new facilities. * Supply Chain: Addressing supply chain challenges through long-term agreements and investments in new facilities. * Employee Morale: High employee satisfaction and retention rates. LHX NeXt * Cost Savings: Targeting $1 billion in run rate savings by 2026, with $600 million expected in 2024. * Transformation: Transforming the business function by function, investing in technology, and streamlining operations. * Employee Engagement: High employee engagement and motivation. Future Outlook * Revenue: Targeting $23 billion in sales by 2026. * Margins: Targeting at least 16% margins by 2026. * Free Cash Flow: Targeting $2.8 billion of free cash flow per share by 2026. * Innovation: Embracing new entrants and technology to disrupt the industry.