L3Harris Technologies, Inc.

Greetings and welcome to the Harris Corporation's third quarter fiscal year 2019 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the form of presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Anurag Maheshwari, Vice President of Investor Relations. Thank you. You may begin.

Thank you, Michelle. Good morning, everyone, and welcome to our third quarter fiscal 2019 earnings call. On the call with me today is Bill Brown, Chairman and Chief Executive Officer, and Raoul Guy, Senior Vice President and Chief Financial Officer. First, a few words and forward-looking statements. Discussions today will include forward-looking statements and non-GAAP financial measures. These statements involve assumptions, risks, and uncertainties that could cause actual results to differ materially from those statements. For more information, please see the press release, the presentation, and Harris SEC filings. A reconciliation of non-GAAP financial measures to comparable GAAP measures is included in the quarterly materials and investor relations section of our website, which is www.harris.com, where a replay of this call also will be available. With that, Bill, I will turn it over to you. Okay.

Well, thank you, Anurag, and good morning, everyone. Earlier today, we reported strong third quarter results with non-GAAP earnings per share up 30% to $2.11 on revenue growth of 11%, the highest top-line growth we've seen in eight years. Overall company margin expanded 80 basis points to 19.7%, and free cash flow improved by over $250 million compared to the third quarter of last year. These results extend our exceptional year-to-date performance with non-GAAP earnings per share over the first three quarters up 26% on 10% revenue growth, and free cash flow up 75% to $788 million. To highlight again, this quarter was our accelerating top-line growth, a double-digit increase after three quarters of high single-digit increases, with strong growth in all three segments and continued solid operating performance. Border momentum remains strong with a book to bill of 1.03 for the quarter and 1.1 for the first three quarters, with total company funded backlog up 15% over last year. These results demonstrate a relentless focus on day-to-day execution by our team in the midst of integration planning, and I want to especially recognize and applaud their efforts. With the approval from both L3 and Harris shareholders and Harris signing a definitive agreement to divest our night vision business, we remain on track to close the merger at mid-calendar 2019. Let me start by first providing some details on the quarter performance before closing our prepared remarks with some additional color on the merger. So turning to slide four in the webcast, communications systems revenue grew double digits for the fourth consecutive quarter, up 19%, driven by solid growth in DoD tactical communications and public safety. DoD tactical delivered another strong quarter with revenue up 55% driven by more than $100 million of modernization revenue from the Army, Marine Corps, and SOCOM. This ramp in modernization, combined with strong readiness demand in the first quarter, has driven year-to-date DoD tactical revenue growth of 28%. With 100% of Q4 revenue in backlog, we now expect DoD revenue to be up mid-20% versus the prior expectation of low 20% growth, and mid-teens when we started the year. International tactical is flat for the quarter as the ramp of Australia modernization program, early adoption of multi-channel products in Canada, and ongoing counterterrorism support in the Middle East were offset by a tough compare in Eastern Europe. With international tactical revenue of 4% for the first three quarters, 70% of Q4 revenue in backlog, and increasing demand for multi-channel products, we're confident that international will go low to mid single digits in fiscal 19. And we continue to execute well on our tactical radio strategy, win all DOD ground radio modernization programs, leverage platform investments to maintain international leadership, and expand our addressable market into network systems and airborne. On DOD ground radios, we're at the front end of the Army modernization ramp, and with SOCOM and Marine Corps following close behind, we're expecting strong multi-year growth, well supported by the President's recent budget request. In GFY 20, the total tactical radio budget across the services grows to over a billion dollars, with the Army HMS request at $504 million, or about two-thirds higher than GFY 19. We're expecting another LREP on both the HMS MANPAC and two-channel radio this summer, reflecting the Army's commitment to ramp from low rate to full rate production after the operational test in 2020. For the SOCOM two-channel handheld program, we've completed the operational user acceptance test and received a $39 million production order in the quarter as we progress toward full rate production. And finally, from the Marine Corps, we received an initial order for HF and multi-channel MANPAC radios, solidifying our incumbent position as they begin their modernization effort. All of these programs are well supported in the FIDIP, with a tactical budget request once again growing by more than $1 billion to $7.3 billion over the next five years. The successful launch of our multi-channel products and recent U.S. DOD wins have driven faster international adoption than we expected. In the quarter, we received an order from the Canadian Armed Forces as part of their multi-year modernization program, and were selected by the special forces of two other NATO countries to supply two-channel radios as they standardized on Harris in support of NATO and U.S. coalition interoperability. And we continue to have a strong pipeline of opportunities across Europe, Asia Pacific, and the Middle East looking to refresh their large Harris-installed base of about 150,000 radios with next-generation products. And for the third prong of our strategy to expand into broader network systems, we recorded a win in New Zealand, leveraging our radio incumbency position, and were selected as the prime systems integrator to modernize and upgrade their command and control network. This win builds on prior successes in Australia, UAE, and other Middle Eastern and Asian Pacific countries as we open our aperture and provide more complete mission solutions. And then finally in March, we received our first international order for airborne radios on the Apache platform for a Middle East customer, opening a new market opportunity for us. This strategic win will help us expand in other air platforms in the region and increase our share of wallet with international customers as we grow our addressable market from ground to airborne radios. Overall, for the first three quarters, tactical revenue grew 14%, with a book-to-bill of 1.1%, resulting in a 21% year-over-year backlog increase to over a billion dollars. With strong growth in DOD tactical and another quarter of double-digit growth in public safety, we're raising communications systems revenue guidance to be up about 12% for the year versus prior guidance of up 10 to 11%. In electronic systems, revenue increased 7% from continued strong growth in avionics and electronic warfare as they continue to execute well in long-term platforms, the F-35, the F-A-18, and the F-16. Order momentum remains strong as well with ES, recording the seventh consecutive quarter with a book to build greater than one. In electronic warfare, we received a $212 million contract to upgrade electronic countermeasure capabilities for U.S. Navy and Kuwaiti F-18s. This is our largest order to date on the F-18 platform solidifying a 20-plus year relationship and bringing total contract value to $2 billion. In avionics, we were awarded a $129 million contract for the development phase of the open systems integrated core processor on the F-35. This strategic win, combined with previous awards to provide the aircraft memory system and the panoramic cockpit display, make us an integral part of the Tech Refresh 3 program and position us well for future opportunities on the F-35 platform. We've also leveraged our open architecture technology and were selected to provide the processor for the newly redesigned trainer and MQ-25 platforms. We believe these wins provide us with a head start at open systems design and a foundation to build upon as additional platforms move towards a non-proprietary solution. In the C4I business in the UAE, Following the successful completion of the initial operating capability phase of the ELTS program, we were awarded a contract to provide tech support and training to the armed forces. This is an important milestone in this $1 billion-plus opportunity, which includes full operational capability across five Army brigades, tactical radios, and networking systems for other military services. Year-to-date, electronic systems revenue was up 7%, and book-to-bill was 1.2%. With strong backlog and progress made in compressing the cycle time in our factory and our supply chain to accelerate the delivery of capability to our customers, we are increasing electronic systems revenue guidance to up about 8.5% versus prior guidance of up 7% to 8%. Finally, in space and intelligence systems, revenue is up 7% as mid-teens growth in the classified business from the ramp of small sats, exquisite systems, and next-generation technology more than offset the headwinds on environmental programs. Order strength was broad-based across classified, environmental, and other civil programs, resulting in a segment booked a bill of greater than one. In classified, we received more than $400 million in orders, once again up double digits, as we leveraged investments in innovation and strong customer relationships to strengthen our incumbency and increase our share of wallet with existing customers. In civil, we strengthen our position as a trusted mission partner on longstanding environmental programs and on GPS. In environmental, we received a $293 million three-year contract extension for NOAA's GOES-R ground system program, increasing the total contract value to $1.7 billion. This brings book-to-bill on environmental programs to 1.4 for the first three quarters, and reinforces our confidence that the environmental business will return to growth next year. On the GPS program, our investment in a 100% digital mission data unit has extended our 40-year partner of choice position and resulted in a $243 million award for the first two of 22 space vehicles under the sole source GPS 3 follow-on contract. For space and intel, year-to-date performance was strong with revenue up 7%. And with nearly all of Q4 revenue and backlog and high confidence follow-on opportunities, we now expect revenue growth of about 7% for the segment, at the high end of our previous guidance range of up 6% to 7%. With our strong year-to-date performance, improving business outlook, and growing backlog, we are once again increasing guidance across all metrics, with company revenue now expected to be up about 9% versus previous guidance of up 8% to 8.5%. earnings per share of $8.15, and free cash flow of approximately $1.025 billion. So now let me turn it over to Rahul to cover financial results in more detail before I close with a few comments on the merger. Rahul? Thank you, Bill. Good morning, everyone.