Revenue Growth Drivers
Q: What are the biggest drivers to reach the $23B revenue target?
A: CEO Christopher Kubasik highlighted a record backlog and a book-to-bill ratio of 1.14 after nine months. He emphasized alignment with key areas of the U.S. budget. Growth drivers include Communication Systems (CS) with a $10 billion international pipeline, especially NATO software-defined radios ; in Space, despite near-term budget pressures, growth is expected by 2026 as missions move from air to space ; Aerojet Rocketdyne's operations are improving, with investments in supply chain and capacity expansion that should accelerate growth in 2026, including opportunities with the Glide Phase Interceptor and next-gen interceptor.

Margin Expansion Goals
Q: Are you on track for 16% margins by 2025-2026?
A: The company is tracking towards its $1 billion cost reduction target a year ahead of schedule. CEO Kubasik emphasized efforts to eliminate non-value activities, expecting to achieve the $1 billion savings next year and more thereafter. CFO Bedingfield stated they are "absolutely tracking" to the margin targets set, moving the 2026 margin target from approximately 16% to at least 16%. Margin improvements are expected across all segments.

Aerojet Rocketdyne Growth
Q: How do you view growth prospects and competition in solid rocket motors?
A: The company recognizes increased demand, with the Army indicating a need for 32,000 solid rocket motors a year. Currently producing 8,000, L3Harris is investing to ramp up to 10,000–14,000. CEO Kubasik welcomes competition but believes they have the best technology and infrastructure. He is "more pleased with the acquisition of Aerojet today than...a couple of years ago" due to strong demand.

Free Cash Flow and Share Repurchases
Q: Will you increase share repurchases as you approach target leverage?
A: CFO Bedingfield confirmed plans to return to more value-creating share repurchase levels in 2025 and 2026 as leverage reaches the 3.0 target. The company has already met its $500 million share repurchase target for 2024. Growing free cash flow per share is a priority.

Palantir Partnership
Q: What's the strategic rationale for partnering with Palantir?
A: The partnership involves no upfront investment. CEO Kubasik emphasized that combining capabilities provides a competitive edge, especially in AI. They are collaborating on programs like TITAN, where Palantir is the prime and L3Harris provides resilient communications. Internally, L3Harris is using Palantir products as part of LHX NeXt to make real-time, data-driven decisions, driving cost reductions and operational efficiencies.

Supply Chain Improvements
Q: How is the supply chain impacting CS segment growth in 2025?
A: CEO Kubasik stated that the supply chain is in better shape today than before the pandemic. This resilience provides confidence in the CS sector, especially in the software-defined radio business. They anticipate both domestic and international demand growth in 2025, with a more stable mix compared to 2024.

F-35 Tech Refresh 3
Q: What's the status of F-35 TR-3 and its impact?
A: L3Harris is under contract with Lockheed Martin through Lot 19 and is not experiencing financial headwinds from their negotiations. The company is meeting commitments on TR-3 components like the core processor, memory system, and cockpit display. CEO Kubasik mentioned that the customers and prime are satisfied with their performance.

Night Vision Goggles Outlook
Q: What's the outlook for night vision goggles given funding uncertainties?
A: CEO Kubasik is optimistic, noting that funding is actually included in the budget this time. He believes both ENVG and IVAS systems will be used, with ENVG being a superior product for warfighters. The company feels better about the night vision goggle business now than a year or two ago.

Tactical Data Links and Link 16
Q: Can you update on TDL and Link 16 developments?
A: The company is ahead of its TDL business case, successfully moving production to the Salt Lake City facility. They've streamlined operations, reduced hours, and improved supply chain leverage. Significant orders have been received, including for the BATS-D handheld Link 16. Link 16 demonstrations in space are progressing well.

Working Capital Management
Q: How are you approaching working capital and free cash flow growth?
A: CFO Bedingfield stated they aim to be effective managers of capital while willing to invest in the business to drive growth. The growth and increase in profit are the biggest contributors to growing free cash flow. They are not short-termists and make decisions to invest for long-term benefits, enabled by LHX NeXt.