L3harris Technologies (LHX) Baird 2024 Global Industrials Conference summary

Strategic positioning and industry outlook

• Positioned as a 'Trusted Disruptor' with a focus on innovation, speed, and advanced capabilities across all defense domains.

• Emphasizes a commercial business model to streamline government sales and reduce bureaucracy.

• Sees industry-wide need for acquisition reform to accelerate defense procurement and lower costs.

• Agile approach enables rapid response to changing threats and budget dynamics.

• Partnerships with tech firms like Palantir and investments in 40+ venture-backed companies to drive AI and software integration.

Business segment growth drivers

• Space is a major growth area, with over 40 satellite contracts and a strong pipeline for future awards.

• Maritime business focuses on autonomy, while land segment leverages networks, radios, and night vision.

• $1 billion cyber business growing steadily; Aerojet Rocketdyne acquisition is a key growth engine.

• Communications systems benefit from a multi-year modernization cycle and international demand, especially in Europe.

• Largest tactical radio backlog and $10 billion pipeline globally.

Margin expansion and operational transformation

• Industry-leading margins with ongoing focus on further expansion, especially in high-margin segments.

• Next Gen Jammer Low Band contract expected to yield future high-margin opportunities.

• Aerojet Rocketdyne margins improved from high 11% to mid-12%, with further expansion expected as legacy contracts roll off by late 2025/early 2026.

• Employee morale and retention at Aerojet Rocketdyne have improved significantly post-acquisition.