L3harris Technologies (LHX) FY Conference Transcript

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]