L3Harris Technologies, Inc. (NYSE:LHX) Q4 2022 Earnings Call Transcript

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It takes about two-thirds of the time to manufacture, and it’s significantly less expensive. And we’re going to be launching the first ever replicated optics in the middle of the year. So I think this is going to reduce risk. We’ll see how it performs, but this could be a game changer for a satellite business. And the air and land domains with ViaSat. We’re investing in the advanced Tactical Data Link with a lot more resiliency. So that’s part of the whole strategy there to modernize Link 16. And I think we have the largest library of waveform. So we’re very excited about that. And then, maybe on the maritime front, I’m pretty excited that our — we’ve talked about our Iver vehicle in the past. This is our autonomous undersea vehicle, just recently has achieved the first ever repetitive submerged launch and recovery from a torpedo tube.

This is a significant step for our company, and I think it gives us an opportunity to considerably enhance the nation’s autonomous undersea capabilities. So trying to give you some tangible examples and each of those will result in new business programs of record and maybe give you some insight to what’s coming out of all the money that we’re spending, whether it’s IRAD or ERAD. As you probably saw in the letter in other release, we have two new segment presidents join us this year, and I can speak for them and say as they went through our portfolio and looked at the IRAD and some of the things we’re working on, both John and Sam were pretty excited about the potential. So thank you, Sheila.

Operator: Our next question is from the line of Scott Deuschle with Credit Suisse. Please proceed with your question.

Scott Deuschle: Hey, good morning and congratulations on the progress this quarter. It’s great to see.

Michelle Turner: Good morning.

Scott Deuschle: Michelle, are there any large ISR missionization contracts and the guides that haven’t been finalized yet, particularly on the international side? I’m just trying to get a sense of whether there’s any timing-related downside risk from that. Or if that’s more just an upside opportunity, if one or more contracts do go your way? Thank you.

Michelle Turner: Yes. No, I appreciate the question, Scott, and thanks for this, because it is important to note that, as we think about our guide for this year, we did take a different approach on a couple of things. Our ISR missionization business is one of them. So to directly answer your question, no, there are not any large international ISR pursuits in the plan. We do have one domestic pursuit, which we’re anticipating in the first half of the year. We already have the aircraft. So that’s minimizing the risk, and it’s funded from a budgetary perspective. It’s our C3D program. So we have four aircraft tied around that. And I think this is important, because as we walk through the guide that, this, along with supply chain, were the two key components when we think about how 2022 played out that’s really influencing how we’re thinking about our guide for 2023.

And so I’ll just hit supply chain upfront, because I’m assuming we’re going to get the question. I’d be disappointed if we didn’t get the question. But when we look at our guide for the current year, what we’re assuming is something consistent with what we did in the second half of 2022. Coming off of the strong Q4 results, we’re incredibly proud of all the teams across our product based businesses in particular. So I want to do a shout-out to our Tactical Communications team, WESCAM, PSPC, along with commercial aviation. We had a really strong finish to the year. And as we’re building on that momentum coming into 2023, we’re assuming that we’re having consistent results in the second half of 2022 throughout the full year of the 2023 guide.

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