L3Harris Technologies, Inc. (LHX) Earnings Call Transcript & Summary

Good morning. Please welcome to the stage, Tony Calderon, Vice President of Investor Relations and Corporate Development at L3Harris Technologies.

Good morning, everyone, and welcome to our 2026 L3Harris Investor Day. This morning, I really appreciate having all of you join us, both here in the room who brace some elements over the weekend and even this morning and are those who are joining us by webcast. Today, the L3Harris leadership team will walk you through our strategy, segment-level capabilities and growth drivers and lay out our road map for long-term shareholder value creation including our 2028 financial framework. Before we begin, just a reminder that you'll be hearing forward-looking statements that are subject to risks, assumptions, uncertainties that may cause actual results to differ from that which is presented here today. Before we get started, if I could ask everyone to silence their phones and other electronic devices, really would appreciate that for here in the room. With that, let's get started. We're going to start with a short video sort of set the stage for today. Following that, our Chairman and CEO, Chris Kubasik, will come up and talk to you about our L3Harris strategy. [Presentation]

Can you see us in your portfolio? If you can, thank you for the commitment. Thank you for the investment, and thank you for supporting L3Harris. If you can't see us in your portfolio over the next 2 to 3 hours, we're going to tell you what we've accomplished, and we're going to tell you about a bright future that is facing a very unique defense tech company, L3Harris and we're excited to have everybody here. I will say we're proud to admit we're probably the only Floridians that flew to New York this week. And it's great to be back in New York City. Many of you know that L3 was formed here 30 years ago, about 4 blocks away. So it's always good to come back to the city and see so many familiar faces in the audience. I believe we're the best positioned defense tech company in the industry, and we're going to talk a lot about that over the next few hours. First and foremost, I think we act quickly. This environment changes on a daily basis, the financial markets, the political markets, the Department of War executive orders, we and my team absorbed the information, make a decision and act quickly. And I think that is what's given us a lead relative to the others in the industry. We're scaling our business faster than anyone else, and we're going to talk a lot about the investments we're making to get ahead of the curve, we're in a race, and we plan to win that race, and we're going to do it through scaling smartly. And the combination of going quick and scaling the infrastructure is going to allow us to outgrow our competitors and the defense budget. Going forward, I believe that capability is going to be -- capacity is going to be the new capability for the defense industry. You have to have the infrastructure and the assets to scale. So we last talked at an Investor Day in 2023. We've been busy executing upon that strategy that we laid out at that particular day. And what we're most proud of is we believe we have the best portfolio in the industry. And it just didn't happen. 6.5 years ago, we merged L3 and Harris, merger of equals, everything went exactly as we knew it would, almost flawless, but the portfolio wasn't aligned with where we needed to be. We wanted to be a national security company, broadly defined, focused on national security. So we made the tough calls and we shape the portfolio. We had 10 different divestitures totaling about $3 billion, $3.5 billion of revenue that just didn't fit our strategy or didn't fit our growth profile. And then we doubled down and made 2 acquisitions, as you know, in 2023. We bought the tactical data link business of Viasat, all in anticipation of the future of warfare, resilient communications is the key. Everything has to connect everything has to communicate and I think we're seeing this every day in the conflicts around the world, specifically in Ukraine. We also bought Aerojet Rocketdyne. I think we had a great portfolio. We had capabilities in space, air, land, sea, cyber, but munitions were a missing part of our portfolio. We've invested in IRAD for seekers. We had weapon release, we had fuses and the only way that seemed to get into the market was to buy the solid rocket manufacturer at Aerojet when it came on the market, and we'll talk a lot more about that. So is the strategy working? It is, because you see it in these big wins, missionized aircraft around the world, missile warning and defense. You'll hear a lot about that, but we're going to say it over and over again, we're the only company that is one tranche 0,1, 2 and 3. Investments we made 5 years ago are paying off and the international software-defined radio is a high-growth market. We're also not a shame to partner with companies where we don't have the technology. Some of these companies call us. Some of these companies we call them. Our partnership is unique. We see the convergence of AI hardware and software coming together in the work we're doing with Palantir, missionized capabilities that we have, we're putting on platforms such as [ JOBY ] and the Amazon LEO satellites. And of course, we're open to much more partnerships as we go forward. So those of you that invest and as we spend a lot of time talking to investors, this is what we hear back. Why would you want to own L3Harris stock because we have a track record of meeting our commitments. Our strategic commitments, our operational commitments, our financial commitments. And you remember back in '23, we gave a 2026 framework that I'll talk about on the next chart, and we met those commitments. We have a unique strategy, as I've laid out, the venture capital investments, the partnerships, the willingness just like you do, to buy and sell, to get the portfolio that you want that is optimized to get the greatest returns. Talk about my world-class leadership team, got a great picture of all the 11 people, we'll wait to talk more and more about that. But the financials, Ken will go through this. We have industry-leading growth. We have industry-leading margins. And if you look at our cash conversion, it's world-class. So what's not to like? We're super excited over the past 3 years, and we're more excited about the future. This is what we showed back in '23 and there was a lot of questions understandably maybe if you didn't think we could get there. It was Ken's first day on the job. I think he stood up and said, yes, not a problem. We can get there. And here we are. Not only did we meet these expectations. The guidance we gave last month exceeds every one of these, the revenue, the margins and the adjusted free cash flow. We have 10 months to go but we will get there. And that's why today, we're going to roll out our 2028 framework. And the key message I want to leave with you is this team does whatever it takes to make our commitments. We rolled out at December '23, LHX NeXt. We said would take out $1 billion of cost in 3 years. We took out $1.5 billion in 2. This is on top of the $650 million we took out a few years earlier when we put the merger together. So we're looking at every single part of the business. We're adopting AI tools. We're in the midst of our transformation over on top of what we're already doing with the cost savings. We redid the front end of the business. You'll hear from Tania from shortly after me. It's one of the few companies where we have a single person responsible for Congress, [ Pentagon ] inside the [ Beltway ], outside the [ Beltway ], all over the world, our international partners and allies, and I think this should give you all confidence and increase our credibility, which I'll admit we didn't have in 2023, but hopefully, we've proven and have earned it. So our focus is clear. I talked about adapting fast, scaling smart and accelerating growth. You're going to hear that throughout the day. This is understood and accessible by our employees, our customers understand it, and it will ultimately create value for all of our shareholders. We adapt fast like the new entrants. Everybody loves the new entrants. They go fast, they're innovative, they're quick, they shorten the cycle. We're doing that. The primes, they invest with scale. We invest in scale like a prime. We have the capital to do so and the strategy. So we're scaling smart, we're going quick, and we're trying to take the best of the best from the ecosystem in which we operate. But that's just not words. Here's evidence. The [ DOW ] investment in partnership, which we'll talk about a little later, was a quick, thorough decision -- it's unique, it's creative, and I think it's going to create a lot of value, not only for the new missile shareholders when we go public, but ultimately, the L3Harris shareholders as we will continue to own at least 80% of that company consolidate it, run it like a segment but also happens to be a public company. We talk about scaling. We have 2 million square feet that we're adding. A couple of years ago, we added 200,000 square feet for 2 different facilities to build the space satellite factory of the future, 1 in Indiana, 1 in Florida. Those are up and running. They're state-of-the-art, they're full, and we have the capacity to execute on all the wins and we have room for even more Golden Dome awards hopefully here in the new future. And missionized business jets. A decade ago, we jumped into this market, disrupting the market by bidding a Gulf Stream 550, taking on what was known as Compass Call back then. And here we are, a decade later, we've delivered over 100 missionized jets around the world, and we're winning orders each and every day. The strategy is working. So we talk about disruption. I mentioned that in this world, we have the defense primes that you know. I feel like they get kind of misaligned and poorly spoken about in the media but these are very good companies. Many of us came from a prime. They have backlog. They have a balance sheet. They have the capacity, the facility, the technology. These are great companies in our defense industrial base and our national security would not be where it is today without them. But then we have the new entrants that are coming in because this is a growth market. Why not, right? We have the speed, we have the innovation, we have the sizzle, the cachet. And what we're trying to build over the last several years is take the best of the best. And L3Harris has record backlog. We have a great workforce, 45,000 employees. We do annual engagement surveys. Our scores go up each and every year, this last year, whoever administers for us that it was almost statistically impossible to see a company improve this high in a 1-year period. The amount of calls and resumes we get from other people and other companies that want to join this, we think we're the hottest place to work in the industry, and we're having a lot of fun doing it, and we have the facilities. We have 33 million square feet of facilities. And that gives us the ability to scale. At the end of the day, whatever the budget is, Tania, will tell us here shortly, you need to be able to produce. Ken will tell you we're producing 100,000 components for missiles a year, 100,000. I'm glad someone can do 500 or 1,000. There's more than enough room. Make your 1,000. We're doing 100,000 and have a plan to go a lot quicker. I mentioned we're very fast. We're very innovative, and I think we're unique in what we're doing. And this is how we've designed and worked to form L3Harris. The government relations I mentioned, you'll hear from Tania, the facility is the workforce. We're really proud of what we've built. We're never done. We're constantly challenging our strategy, constantly looking out there to see how we can even make it even better. And we're spending a lot of time and effort smartly adopting AI tools to make us even more efficient and better performing. So the portfolio is built for the future of warfare. So earlier this year, we went from 4 segments to 3 and I think a lot of people were anticipating us to go to 3. And I think a lot of people were assuming we were going to bury Aerojet Rocketdyne somewhere else, which is kind of a common thing to do in this industry. You make an acquisition, you're accused of overpaying it, you bury it somewhere and you never talk about it again. But we didn't do that. We actually broke it out and highlighted it. And now we have the missile segment, right, which is basically Aerojet Rocketdyne and all the other components I mentioned from the legacy companies, the weapon release, the fuses, the seekers. This is a one-of-a-kind world-class missile solution company. Sam is running SMS. He wanted a new job in January. So we moved him around, and now he has the legacy SAS and IMS businesses for the most part. Jon, who is run an IMS is now running CSD. And this consolidated all of our resilient comms, our electronic warfare and our WESCAM turrets. We talk about innovation and speed. This is what we're doing. Again, real evidence, real examples, the missile warning, missile defense 5 years ago, at the date of the merger, we didn't have 1 satellite in orbit. Five years later, we're a force to be reckoned with. I think we have over 50 satellites in production today. That is a game changer, that is disrupting the market. That happened very quickly by investing upfront, understanding the customer, listening, making a decision and investing. We talk about the software-defined radios. I mean everything that's going on in Ukraine, it's a terrible situation, but the reality is you get to see how these products work in a real war. And going forward, everything has to work in a contested environment. So people have PowerPoint charts. People have demos. People have one-offs that they built in their garage. The end of the day, you have to have these things work and the threats evolve. And the Russian threat is constantly changing the way they jam these radios. In a relatively quick time, we're able to change the way forms, change the technology and get it back into the field. They don't have to send the radios to Rochester, New York. It's all done remotely. And that is why we have the premier software-defined radio business in the world. And then we had the Aerojet Rock acquisition. And we knew it was a broken company, and we quickly in less than 2 years, which surprised me, I can't lie fix this business. This business is caught up on its delinquencies. The customer relationship is better. We started investing on day 1, hundreds of millions of dollars. Ken will talk more about it. We have billions to go to double triple quadruple production. This business was turned around quicker than I thought. We made quick decisive decisions, immediately changed most of the management team, brought in expertise, highly motivated workforce and things could not be going any better. Now the interesting thing now that we have these 3 segments, we have the Space & Mission Systems, which is about half of our revenue. They're on the enduring platforms. You should think of the aircraft, the satellites. And this is more of a traditional defense contracting ecosystem, right? We have the contracts, we have the FAS, the cost plus fixed price pretty traditional. We have a couple of things that are unique that Sam will talk about. Then we have CSD. This is the commercial business model. Nobody else has a commercial business model to the scale we do. Over 24% margins, we're not embarrassed about it, and we plan to make a hell of a lot more. 24% for a big part of this portfolio. This includes the radios. This includes the turrets. And we're working hard to get more and more of our products to be deemed commercial so we can invest, go faster, increase the margins and get the products to our customers sooner. We've been pretty outspoken as a company, fully supporting the Department of War in its effort to transform and get rid of all this bureaucracy, rules and regulations, and we're seeing some success. And then [ MSL ] half of our growth tied there. Ken will give you a few more details on this in a little bit, but I think it's a very unique, balanced portfolio. If you like traditional defense, if you like commercial, if you like growth, one-stop shopping, all is there. I think it's pretty exciting. And we actually think each of these businesses deserves a different multiple that Ken will talk about, and I think we're underappreciated and undervalued relative to the growth and some of the numbers we'll be showing you later. Talking about the leadership team. A lot of people work for different reasons. Some people want a sense of purpose, some people focus on the mission, a couple of these people want money, someone all of the above. I like to work and have some fun. And I've been working for 40 years, and I can tell you, I have never had more fun than I had in the last several years on next one's coming up, and it's all because of this team. We have a good time. It's a serious business. We're collaborative. We get along. We debate stuff. We make a decision and we move forward. It is an incredibly fun, exciting culture. We have people, it's kind of like a collection of recovering primes that have joined the team. Ken came from Northrop. But before joining us, he was the CEO of a defense tech start-up. Sam was at UTC, a couple of different locations there. John was at Lockheed Martin. Tania, I think she joined when the founding father signed the constitution, been around forever, can get us a meeting with anybody in D.C., pretty much anybody around the world, amazing, amazing government relations. And the functions, a lot of companies look down on the functions, look up with the functions. This is a great functional team, both [ Dave ] and Ed ran businesses Nobody wants to take advice and input from people and a function who've never actually done the job. Every one of these has experienced [ Heidi ] was a sell-side analyst. Now came from UTC, [ Kim Textron ], our General Counsel is here in the back, nervously wondering if he's going to have to file an 8-K, if any of us say anything that we shouldn't, but we're going to say what we want and he could file 8-Ks all night long for all I care. So [ Christophe ] joined us, doing a great job. So that's the team. We're super excited, and we have a great time, and I think you'll see the energy as they get on stage today. So again, I talked about the missile solutions. I think it's a good point -- time for me to tell you about what we're planning here, which is the government investment and the IPO. We basically have a market-leading company. We do have a market-leading company. We have a competitive moat built around 75% of the existing missiles. Solid rocket motors, DACs, all sorts of components. So when we decided that we needed billions of dollars to meet this demand, the demand signal is there, you've read about the NDA authorizing 7-year multiyear contracts. All this comes together to justify the business case. The $1 billion, the reason we wanted the $1 billion is an anchor investor is to give us confidence that we can invest today. And we're investing and redoing the entire facility. We're taking a holistic approach. Every other company goes program by program, just in Camden, Arkansas, where we'll be later in a few days, Secretary of Defense. Secretary Duffy will come down and visit us, talk to our workforce. So we're looking forward to having them in Arkansas. You will see hundreds of buildings program by program, some are Army programs. Some are Navy, some are Air Force. We're taking a whole different approach. We're going to have all this stuff be interoperable, easily switched over based on supply and demand. We have tactical missiles, intercept missiles, we also have strategic missiles. This is a game changer, and this will justify the growth. Secondly, is speed, right? This is a national imperative. At the highest level, we need more munitions. This isn't JADC2 and all these things that sound nice that nobody understands. Missiles, we don't have enough, they need more. We have the scale, and we're scaling even larger to make more. This isn't time for experiments. This isn't time for demos. We need to crank out the serious amount of solid rocket motors and the OEMs that we work for need to deliver a ton of missiles, and this is the way to do it. And then as I alluded to, I think it will be interesting to see the valuation that this asset gets as we IPO it because I believe the growth is undervalued and not appreciated as we tend to have all of our businesses peanut buttered as a defense prime multiple. But we'll see what the market says. We're excited about it. Just to wrap up here pretty quickly. This just shows we have a proven track record of investment 10 years ago, plus we invested commercially in the software-defined radios and now look at it as a growth engine, profit engine for L3Harris. Five years ago, the satellites. They keep coming, more to come. Again, you had to make the decision, you had to invest. You had to have a calculated risk. You can't study this stuff for weeks and months and years and hire consultants. All of us have 25, 30 years experience. We know what the heck we're doing and we're not afraid to make decisions. And then here we are today, talking about missiles. Buying Aerojet Rocketdyne 2.5 years ago, seemed like the right thing to do, not everybody agreed, here we are. The ability to invest IPO and take the government money to be a preferred stock shareholder convertible upon the IPO is going to give us a huge advantage not only for L3Harris, but for our nation. So you can see why I think we have the best portfolio in the industry. It's up for you to decide. But look, our customers are in a race against China and real threats and the focus of their strategy is piece through strength. And the only way you have strength is you have a big defense budget, you have a strong defense industrial, a strong industrial base. And then you have the actual capacity to build stuff. And that's what the Department of War is talking about. We are their partner. We get the memo. We are doing it faster and faster than anyone else. The world is changing, the DOW is changing. As I've said several times, we listen, the team forms an opinion. We make a decision and we act. And so there's no confusion. We're in a race too. We're in a race against our competitors. And I can assure you, this team wakes up every morning and plans to win that race, and I'm here to tell you, we will. So thank you very much. And let me turn it over to Tania.

Good morning, everyone. As you all can see, I'm the only one who did not get the memo about wearing a pullover today, it was not in the forward-looking statement, so I missed it. Tony, I blame you. But we'll get started. Let me pick up where Chris left off, everyone. L3Harris has evolved tremendously since the 2019 merger of equals and we are uniquely positioned for growth, both domestically and internationally. My focus today is to show you how we get there. I want to walk you through the threat environment, the budget environment and then map our capabilities to the demand signals we are receiving and then turn it over to the segment presidents, who will go into more detail. But before we dive in, I want to highlight 3 key points that Chris touched upon. First, this administration is laser focused on rebuilding the defense industrial base. Production capacity is being treated as a national security imperative. And Congress is supporting that imperative by driving multiyear procurement authorities, accelerating unique contractual mechanisms and leveraging DPA tools to drive throughput across the defense ecosystem. The second point, allied burden sharing, national security strategy in the national defense strategy. This is more than short-term political pressure to increase military spending. This is about restructuring FMS processes to drive capacity. From our perspective, this will increase visibility into the international markets, and reduce the transaction friction we see across international military sales. The final point that I want to highlight for you -- all of you is the idea emphasized in the [ NDS ] around advanced capabilities to drive and enhance deterrents. What's important there is you are seeing the focus on space, missile warning, missile tracking, ISR capabilities, resilient communications. These advanced capabilities have become major modernization priorities not just domestically but internationally. And when you combine a multi-theater threat environment that looks like this, with a focus on industrial capacity and allied burden sharing, you end up with a durable demand signal that goes beyond any single administration. But let's talk about the threat environment. You are all tracking that there is a war raging in Europe today, and the Ukrainians are bearing the brunt of it. But what the Europeans recognize is the security reality for them has changed dramatically. And they are preparing to meet that threat head on. In the Indo-Pacific region, whether we're talking about Taiwan or North Korea, there is increased accelerating Chinese gray zone activities in those regions, but also very aggressive, fly -- very aggressive -- I'm not going to say attacks, but very aggressive military actions taking place in the Indo-Pacific to test Taiwan defenses and frankly, to test U.S. resolve in the region. In the Middle East, you can see what's happening today. Obviously, the Iranian threat is significant enough to trigger sustained policy attention. And all of these things together are driving significant demand signals for key L3Harris capabilities. But let's talk for a moment about U.S. defense spending. 2025, we were operating on a continuing resolution, fairly flat with the '24 cycle. In 2026, we saw the PBR come in that was also flat with 2025. What we did not expect was reconciliation to pass with $113 billion going to the Pentagon. So our new baseline, when we think about defense spending, we're talking about $1 trillion, in the range of $1 trillion. That new baseline is what Mike Rogers and Senator Wicker are talking about when they talk about increasing defense spending. Whether we get to 5% of GDP or not, doesn't matter. The baseline has changed, Defense spending is going to increase. On the international side, obviously, the allied burden sharing narrative has forced NATO to increase their military spending from 2% of GDP to a commitment to get to 5% by 2035, 3% in direct spending, 1.5% in infrastructure spending. Across INDOPACOM, we are seeing Taiwan's 2026 national defense budget, increased 20% year-over-year with a focus on a new air defense system called [ Taiwan Dome ]. They plan on exceeding their defense spending by 3% of GDP by the end of 2026 and hitting 5% of GDP by 2030. That's incredible. In South Korea, we're seeing an 8% increase year-over-year. A lot of focus on ISR and [ C2 ] coming from the South Koreans. And in the Middle East, Chris just completed a recent trip that was driven by customers wanting access to L3Harris capabilities. They are also growing their defense budgets. Lots of interest in the Middle East around ISR, Brazilian comms and space and our space capabilities. So let me take a step back for a moment. What we see is a reset in the security environment. Policy changes have reinforced this new shift. The budget reflects that change. And the fastest-growing segment of global defense spending are aligned with L3Harris capabilities, space, missile production, ISR and resilient comms. That alignment underpins our confidence in sustained and durable growth across the framework Chris outlined. So having said that, let me turn it over to KB who will go into more detail from the Missile Solutions segment. Thanks.

All right. Good morning, everybody. I'm going to talk for a little bit about the MSL segment. And before I do, I just wanted to maybe talk a little bit about myself and how I ended up at L3Harris. Chris mentioned, I had a previous career at one of the defense primes. I also have, I think, a little bit of a unique experience and that I worked at one of the defense tech start-ups. I was the CEO of a new defense tech company. And I've got the sort of big defense prime experience. I've got the [ Newtek ] kind of start-up experience that kind of never-ending valley of death that seems to just continue to stretch out. And now I met L3Harris, and I've got to say it really is the best of both worlds. We move fast. We listen to the customer. We make decisions, we invest, and we're seeing the results. So it really has been a great experience in my time here. Let's see. As we built the MSL segment really going from 4 to 3, we thought it was really important to design a pure-play missile solutions company that has both breadth and depth. And I think that's what you see here with MSL. In terms of capabilities, I'm not going to focus too much on solid rocket motors because I think you all know that we do that. But there's a lot that's important in this portfolio, advanced technologies. Chris mentioned some of the infrared seekers. Divert and attitude control systems is probably an underappreciated part of what Aerojet Rocketdyne did and what MSL does today. It's not just about propulsion, but how do you precisely control a missile to get it where it needs to be precisely, which is really important, in particular, when you have an interceptor which is I think why you see that we are on every interceptor program in the U.S. inventory. Munitions fuses and igniters an important part of the portfolio and then air launched effects. We'll talk a little bit more about [ Red Wolf and Green Wolf ]. There's a model back here in the back of the room. And we're excited about that. We're on contract now with the customer on that. And then we are investing pretty significantly in R&D for things like hypersonics. We are absolutely a leader in that in terms of the ability to travel fast, not just propulsion, but again, some of the body and designs. And then we are the world's leader in advanced weapons, racks and weapons release systems. In terms of growth drivers, we all know that missile ammunition growth is -- there is an incredible need for that, we've underinvested in missiles and munitions over the years. Unfortunately, as with the conflict in Ukraine, the Middle East, defending our fleets in the Red Sea. We've used a lot of missiles and it's time to restock. We have an opinion that this is going to be a significant period of acceleration and then stable production after that. We'll talk a little bit more through that. Certainly, Golden Dome as a piece of it. And then we had kind of gotten out of the large solid rocket motor business for a while at Aerojet Rocketdyne, but we're back, and we'll talk a little bit more about our capability on that front. And then low-cost extended range effects is absolutely something that we're focused on as well. The bottom line is we stand ready to support the customer. We're going to invest, and we are the company that can scale rapidly to deliver the capability that is required. And I think we have great relationships with the primes and it's great that we have new technology, new entrants, but scale is important and MSL is the company that can do it. So let's just talk a little bit about MSL. This is our 2026 guidance. You can see we're going to be at $4.4 billion, growing from $3.8 billion in 2025, so that's high teens growth. You can see we're about 50% in the missiles business, missiles and munitions, the legacy Aerojet Rocketdyne propulsion. We do have space propulsion in here. That is inclusive of the business that will be transacted with AE Industrial Partners. So that's in our guide. We do hope that transaction will close. We think it will close in the second half of '26. Most of that space propulsion piece will then come out. We will be keeping the [ RS-25 ], which is about $400 million of revenue in that space propulsion piece. We'll talk a little bit more about why that makes sense. And then advanced effects. This is about 25% weapons release, about 10% precision navigation and timing electronics, about 30% sensors, IR seekers, and then it's about 1/3 classified, just important capabilities that we can't talk about in this room. And I want to point out, importantly, it's not only the propulsion business that's growing. Advanced effects as it came in and was put together from a few pieces of IMS and SAS. Advanced effects is growing every bit as fast as missile propulsion. It has high double-digit durable growth itself. And then we do have diversity of the portfolio. We're on over 30 missile programs either internationally or in the U.S. inventory. So the demand and our ability to deliver drives high growth and our operational excellence and the ability to yield margin out of the production programs will drive margin expansion. So we are creating a high growth, again, end-to-end missile technologies company. As Chris mentioned, we put a lot of work, a lot of time and effort into making sure that we fixed some of the challenges that Aerojet Rocketdyne was experiencing. We hired the talent not just at the executive level, but we've hired 500 and trained 500 employees on the production floors in Camden, Arkansas, in Orange, Virginia and Huntsville, Alabama. And I think we've rebuilt the customer confidence. What's the evidence that we've rebuilt the customer confidence? When the Department of War committed to put $1 billion in as the anchor investor into our plans to IPO Missile Solutions. They said, we chose speed. So it's clear. We are the company that can climb the ramp faster than anybody else. We are the company that can get those motors into the hands of our customers so that they can get them into the hands of the war fighters to execute their missions. So we've done that work. Today, we're doing their portfolio shaping, put MSL together, negotiating a deal with the Department of War, working to get the IPO complete this year. And then as we look forward, it's really about outsized growth. We're pushing the system hard in '26 and '27 to make sure that we get that high teens growth. But once the facility has come online, '28 and beyond, there will really be that sort of automated new factories, repeatable growth, high teens through the end of the decade, likely getting to 20% type growth as we near 2030. And we think that there is a significant durability of that well into the 2030s. So let's just talk a little bit more about the capabilities of Missile Solutions. We do have generational demand. Chris mentioned it, program by program on the MAC programs, Munitions Acceleration Council set up by the Secretary of War and Deputy Secretary Feinberg. We're on 75% to 80% of those programs, and there is a 3 to 4x on average overall increase in volumes. We'll talk a little bit more about that in the coming slides. I mentioned 30 -- over 30 programs that we're on and about 80% of those are sole sourced. And then in terms of the growth, again, durable, high teens growth in this business and not just in missile propulsion, but in divert attitude control, and absolutely in the advanced effects sector as well. And again, scale is important, right? We're moving faster than the primes. We're going to be able to deliver on the capability. One of the reasons, as Chris mentioned, that we thought it was important to get the investment going today was that we could start to invest today. A year is going to be important. Waiting for a year to drive the investment waiting until the framework agreements are actually on contract and delivering, waiting then to invest would mean others have the opportunity to catch up in a market that has significant demand. We believe that we are in a race. We believe that this investment enables us to get a head start and then we believe that we'll be able to win that race by staying ahead. And then certainly, margin expansion opportunity as we automate our factories, as we get on to multiyear contracts, as we get the factories humming, we think that there is absolutely margin expansion into the mid-teens. And quite frankly, the only limiting factor on margin expansion because we will deliver strong margins on our production programs. The only limiting factor on the margin expansion is that we will always invest in R&D. And not that R&D itself is the limiting factor, but it will yield new development programs in areas like hypersonics, advanced effects, unique capabilities around how solid rocket motors burn. So we will always have some early-stage development programs in the portfolio as well that will be below average margins. Just another way to look at how we fit across the missile value chain, we're on tactical missiles. We're on interceptors and we're on strategic missiles. So if you think about the near-term growth drivers, we are building a new facility for GMLRS. That's the one program that is sort of split between us and the legacy [ ATK ] solid rocket motor business, Javelin, [ Tomahawk ], munitions, fuses all growing rapidly in terms of tactical missiles. Interceptors, as I mentioned, we are on every interceptor program in the U.S. inventory. PAC-3, [ FAD ], standard missile all in the munitions acceleration council and all growing significantly. And we've got another chart coming up to show you some of the data on that. And then again, into the strategic missile side of the portfolio, Sentinel, NextGen Interceptor, [ Zus ], multipurpose booster. We are producing big motors that I will tell you will be really hard for others to replicate. Some of these are the size of this stage. So I would be curious to see how a new entrant may try to address that market. Let's talk about our competitive moat for a minute because I really think we do have a competitive moat that is deep and it is wide. And it starts with our people. I've often heard, hey, the customer owns the technical data package. So someone else will try to come in and produce motors. I will tell you that our years of experience, our talented employees who know how to build these motors, who control what we call the MDP, the manufacturing data package not how it's designed, but how it's actually produced, the 400 million hours of experience that they have in building these motors is much more important and much more valuable than the design. And they are a source of unique knowledge. They pass it down generation to generation, training as we bring new employees in. So I would just say our people are an incredible part of the moat and do not underestimate the importance of the manufacturing process beyond the technical data package. Portfolio. We've talked about the portfolio. Just another way to look at it for a minute here. We do produce a product for the Army, the Navy, the Missile Defense Agency, certainly, Golden Dome will be there as well as the Air Force. And then in terms of production, Chris talked about scale. We have over 4,000 acres where we produce our propulsion capabilities, again, whether it's solid rocket motors, divert attitude control systems, fuses igniters, it takes a lot of space. It takes a lot of facilities. We have over 200 buildings today. We're going to bring about 60 more online, and we are absolutely embracing AI in terms of how we ensure the quality control of our production, and we're certainly going to be embracing robotics and automation as we bring the new factories online. Chris mentioned capacity is the new capability, agree 100%. Let me just focus for a minute on the adapt fast part of this chart. Again, we have moved back into large solid rocket motors. We're bringing facilities online. We've repurposed what was back in the day in Sacramento, California, now into Camden, Arkansas. So we're ready to move to support all things, large solid rocket motors, just there, we're on 5 or 6 programs that we support. Air launched effects. You can see Red Wolf here. We're really excited about that, working with the Marine Corps to bring a low-cost air launch effect to market and then hypersonics. We have significant capability in the world of hypersonics. I wish I could talk more about it, but much of it is classified. And in scaling smart, we are going to invest $3 billion. I will say it's a bit of a temporal investment, '26, '27, '28 as we bring the facilities online and then it should largely be more of a normal CapEx profile consistent with the 2 to 2.5 percentage points of revenue with the rest of the L3Harris portfolio. And then in terms of accelerated growth, the combination of the 2, we believe we grow this business from, again, $3.8 billion in 2025 to about $6.3 billion in 2028. We do this in Alabama. We've already got new facilities in Huntsville for inert. So anything that doesn't go boom. Arkansas, we're already clearing land and starting construction for advanced propulsion facility 1. Very excited about that. We know how to do this. We've been building new facilities already. We have a large GMLRS, Javelin and Stinger set of facilities that we've been building, both in Arkansas and Virginia. We're going to take that expertise, move it to APF 1 and APF 2 bring those online, as fast as possible and be able to get these motors built. And then importantly, I mentioned [ RS25 ] previously. So the motor or the engine for Artemis, it is produced on our [ Canoga Park ] campus in California. That is also our divert and attitude control system center of excellence. And we are making investments to be able to produce more DACs consistent with what we're doing on the propulsion side. And that's why we wanted to make sure that we kept the RS-25, an incredibly talented workforce an incredibly important facility. We will also start to do additional large solid rocket motor work there, both Sentinel and next-generation interceptor as well. I think you know about the geopolitical drivers, but I just wanted to put a little bit of data in front of us around the capacity expansion. These are some of the critical munition acceleration counsel programs. THAAD, today, we produce about 150 systems. We're going to 3x that. Standard Missile, about 700 systems today, we're going to 3x that. PAC-3 is going 4x and [ Tomahawk ] launches, we're seeing a 5x demand increase. These numbers are largely pretty solid. We've been working closely with our customers, whether it's the missile primes and/or the Department of War. Chris and I have spent a lot of time in the Pentagon making sure that these are understood and locked in. So just in terms of our priorities, again, we're going to expand our competitive moat. We're going to rely on our incredibly talented and experienced employees. We're scaling for this generational demand. I've been in this industry a long time, 30-plus years. I don't have the 40 years that Chris has, but I'm getting close. I've never seen a demand like this, and we are absolutely investing to scale at a speed with quality and with deliveries that nobody else can. And then certainly, we want to get the Department of War investment complete and the IPO complete here in 2026. With that, I've got a quick video, and then we will go to a break.

We will now take a 10-minute break. [Break]

Ladies and gentlemen, please welcome to the stage, Jon Rambeau, President of the Communications & Spectrum Dominant segment.

All right. Well, good morning, everyone, and thanks for the opportunity to talk to you a little bit this morning about the Communications & Spectrum Dominance segment. I'm Jon Rambeau. I've been in the industry now for 30 years, and I can tell you 3 decades go by pretty quickly when you're having a good time. Especially the last 3.5 years that I've spent at L3Harris has been a particularly energizing part of my career. It's great to be part of a company that is able to move with decisive speed, agility, invest smartly, place strategic bets. And right now, to lean into a relationship with a customer here on the domestic front that is different than any I have encountered over the last 3 decades. They're serious about driving change, not just in defense, but in defense industry. And I think L3Harris is incredibly well positioned to meet that customer demand. And I think that sort of ties into the overall vision for Communications & Spectrum Dominance. We, from a capability point of view, offer products and solutions across the entirety of the electromagnetic spectrum. The products that we provide to our customers are typically used on the front lines. So they really matter. They have to be in our customers' hands when they need them and they have to operate as intended every time. So those customers can do their jobs and return home safe to their families. From a business point of view, Chris talked a little bit about the thought process behind the 3 segments. And as you look across the L3Harris Corporation, it's really hard to find a company outside of L3Harris in this industry that has been a traditional player that has been able to figure out how to do commercial business at scale in a defense environment. L3Harris has done that, not just once but in multiple product lines across the company. And those have now been brought together as part of the CSD segment. So when you think about CSD from a business point of view, I think commercial business model, I think commercial products, think high volume. We're going to deliver 2.3 million pieces of hardware in 2026 alone. So this really is a high-volume commercial business. A little bit more about the segment, as I said, commercial business model. We'll deliver mid-single-digit growth over the next several years, and we'll do that at significant commercial margins. Were what really helped drive this portfolio to deliver the outsized margins that you see year after year in line with our guidance. From a capabilities point of view, number one, resilient software-defined radios. This is our tactical radio business. I know a lot of you focus on this business. This business is doing well on the domestic front. It's doing just as well on the international front. I'll talk a little bit more about that and how we're scaling this business as we get into the presentation. Passive sensing capabilities. Chris mentioned our WESCAM business up in Canada. What you see in the photo on this slide is a WESCAM sensor mounted on an unmanned air vehicle. We do encrypted data links for weapons and for unmanned systems, the [ TDL ] acquisition that we made several years back, has exceeded our expectations from a revenue point of view. We're seeing increased demand, not just on the international front -- I'm sorry, not just on the domestic front, also on the international front. And we're seeing Link 16 in places where it has never been before. Link 16 is now operating in space. So that TDL acquisition was a good one that business is performing above our expectations. Counter drone systems. We'll talk about the VAMPIRE family of systems. This is a smaller part of the portfolio now, but it has a lot of potential to grow as we're just seeing explosive production of military drones around the globe, no place that you're seeing them more visibly than in the conflict in Ukraine today. We also have within my portfolio advanced electronic warfare capabilities. Think about the NextGen Jammer program, for example, is part of this business. Drivers for growth are really 3 that we're focused on modernization of advanced communication systems, that's modernization of tactical radios for the U.S. Army as well as for militaries around the globe, operations and contested environments. We've never had a greater need for the advanced waveforms that we provide on our software-defined radios or for the ability to provide our advanced EW solutions. And then again, the rapid proliferation of military drones around the globe, how those are going to change conflict and the way we need to defend against those systems. Digging a little bit more deeply into the portfolio. There are 4 main components in how we've structured the business. As I said, previously, tactical communications, Tactical radios, the single largest part of the portfolio today. Then we have our datalink business, encrypted communications, electronic warfare solutions, the second largest part of the portfolio. The electro-optical sensing business, and then we also have our advanced night vision goggle business as part of this portfolio. Not the largest part of the business, but again, a market-leading position here where we produce the tubes that are used in the goggles that are really a discriminator that allow our customers to see in substantially degraded visibility environments. And we continue to see that business see strong demand domestically in the international market. Overall guidance revenue for 2026 about $8 billion this year. We're going to be growing to about $9 billion by 2028. From a mix point of view, international was about 35% of the revenue for CSD last year, it's going to be 40% of our revenue this year. So we're seeing a significant increase in demand from customers internationally. Margin guidance, about 25%, consistent with how the business performed last year and how we continue to see it performing into the future. And about 80% of the revenue that we do in CSD is under that commercial product model where we invest in advance of demand, we build capacity, we have product on the shelf ready to go when our customers need it. A little bit more about our competitive moat in CSD. And as you would have imagined, it really is that commercial product model. It's about 3 things for us in CSD. It's about depth. It's about breadth, it's about speed. From a depth point of view, we have market-leading positions in each 1 of the 4 wedges I showed you on the prior slide. So if you think about whether it's tactical radios, night vision goggles, encrypted data links across the board we have very strong positions. And those positions generate the resources for us to continue to invest in advanced technology and continuing to scale our production capacity to support our customers in the U.S. and abroad. From a breadth point of view, over 12,000 employees in the CSD enterprise. And outside the U.S., we have 10 global business hubs where we also have production operations. So we're able to support our customers locally wherever they are in the world. Millions of systems fielded across our customer countries, over 130 customer countries to date, and this year alone will take orders from over 100 nations around the world. Speed, agile, high-capacity production. The picture that you see at the bottom of the slide is what's known as our Jefferson Road operations center. It's located in Rochester, New York, and it is the heart of our tactical radio business. If you haven't had a chance to visit this facility, I would strongly recommend make some time to go see it, it is very impressive. The facility would rival the scale of any commercial electronics manufacturing facility, and we're pushing a very large volume of standardized product through this factory every day. Because we self-fund our R&D, we're able to deliver NextGen technology to our customers ahead of need so that when they need the product, it's there, it's off the shelf, and it's in the configuration that's going to be useful for them. A little bit of an example. Last year, we got a call from the U.K. military, they urgently needed some tactical radios to support an operational unit in the field. From the time we took that phone call, until we had product in the operator's hands in theater, 26 hours, 26 hours from phone call to fielding and that's because we have so much standard product moving down this line. Our radios are about 80% common. There's about 20% of the hardware that's tailored to the individual customer. And then we load it with that software-defined capability and the waveforms that are needed for that particular customer in their environment, we're well to turn that very quickly because we have so much standard product coming down the line. We can support them, whether they're in the field conducting offensive or defensive operations. A little bit more about the threats that are driving that demand in these offensive and defensive environments. First off, from an offense point of view, you're going to go into combat what's the first thing that you need to be able to do? You need to communicate. You need to communicate consistently, it needs to be secure, and it needs to be safe so that the people who are using those radios don't become targets. Ukrainians are facing some very sophisticated threats based on some of the new Russian technology that's being fielded from a jamming point of view. The resilient waveforms and radios, we're providing in Ukraine allow the Ukrainians to circumvent these advanced threats to continue to communicate effectively in the battle space. Additionally, the advanced electronic warfare solutions that we provide are able to reduce the effective range of these systems, which gives our customers additional freedom to maneuver in battle. From both an offensive and a defensive point of view, I'd ask you to think a little bit about the Indo-Pacific theater and how U.S. and our allies would traditionally navigate, detect track and target something in that environment, typically by radar, right? It's a very effective technology. The problem is with some of the sophisticated systems, the Chinese are now fielding they're able to detect the source of those radar signals, geo-locate them and then our customers become a target. So what we're providing is electro-optical and infrared sensing technology, which gives additional modalities to our customers to perform that same navigation, detect, track and target without putting any energy out into the atmosphere. So you're not able to be detected and you don't become a target. It's a really important capability that we're feeling for our customers today. And finally, from a defensive point of view, I talked about the rapid ramp-up of military drone production around the globe and how that continues to challenge our customers. And again, know more visibly than what you're seeing in Ukraine. Our VAMPIRE family of systems is modular, it's adaptable, it's low cost. It has both kinetic and nonkinetic effects that can defeat drones of all shapes and sizes. We've incorporated artificial intelligence algorithms into the system so it can detect and track drones at very, very long ranges. Again, using the same electro-optical and infrared systems that I just spoke about. So across the board, to counter these advanced threats, we're seeing L3Harris product and technology in demand. So what are we doing to scale up our production capacity? We're making targeted investments in growth product lines. And there really are 3 here, resilient communications. We're going to deliver over 140,000 tactical radios in 2026 alone. Passive sensing will be delivering over 600 electrooptical infrared turrets this year. And from a counter drone system perspective, we expect deliveries to increase by a factor of 4 between now and 2028. So we're investing. We're investing in partnership with Ken and the Missile Solutions team in a shared facility in Huntsville, Alabama, where we're going to be producing the VAMPIRE counter drone systems. And we anticipate getting that factory to a point where we'll be able to produce 20 to 40 systems a month by the end of 2026. We're also investing in a new electro-optical infrared sensor manufacturing facility in Rochester, New York. Our large world-class manufacturing facility today for WESCAM is located just outside Toronto. In Canada, and we want to have greater access to the U.S. market. We have an administration that's insisting on U.S. production capacity. We're responding to that demand. We're going to put a facility in Rochester that's going to increase our access to the U.S. market. Overall, we're committed between now and 2028 to a 40% expansion of production capacity in these growth product lines. So we're scaling up production. What are we doing to ramp the output of product through these factories? I need somebody to help me advance the slide. There we go. All right. So how does it all come together? What does this look like in terms of production output and how that drives increase in our installed base. Resilient comms, in 2023, we had about 1 million tactical radios out there in the field. By the end of 2026, that's going to grow to 1.3 million and 2028, 1.5 million. As we look back to when some of these radios were delivered, about 500,000 of the radios that are fielded today, particularly with the international community, are 10 years old or older. They are ready for refresh. And so our customers are actively engaged and you're seeing that international demand come through in the refresh of that inventory. And so we anticipate a couple of hundred thousand of those 0.5 million radios that are more than 10 years old are going to be replaced between now and '28. From a passive sensing point of view, 7,000 sensors installed across the world in 2023, that's going to grow to over 8,500 by the end of this year. And that will be across about 300 different types of platforms. Most of them airborne, but also in other domains as well. We continue to see the increase in that installed base growing to about 10,000 systems worldwide by '28. And why that's important is because those customers continue to need service on those turrets as well as periodic upgrades and replacements over the life cycle. So even as we're expanding our customer base, we're going back and refreshing those customers we're already supporting. And finally, from a counter drone system point of view, this is an area where it's so fast moving, and our customers are working very hard to define their requirements. The biggest opportunity we're tracking here is the U.S. Army. It's a program called [ Unit Common ]. We anticipate this will be a $1 billion or larger acquisition program. The army is going through a process right now of defining their specific requirements, which organization that's going to lead this acquisition. But we see that really driving significant demand, and we think VAMPIRE is very well positioned to meet that demand. If you look at where the threat is going, the number of military drones being produced worldwide from '23 to '26 increased by a factor of 10 from 1.5 million to 15 million a year, and we think that's going to double again between now and 2028, so over 31 million. And again, VAMPIRE is going to be well positioned to meet that threat as it continues to increase. So across the board, substantially increasing our deliveries over the next 3 years in these growth product lines. So to wrap up before I hand it over to Sam, I'll just hit it again. We're continuing to focus on strengthening and expanding our positions in those 4 core markets that I talked about at the beginning of my presentation, we're going to continue to drive growth across those 3 growth vectors of sensors, communications and interceptor effects for drone defense. We're going to maintain those industry-leading margins that you've come to expect at this part of the L3Harris portfolio. We're going to position for the future by making smart investments and scaling capacity. So with that, thanks for your time. Look forward to taking some questions in a little while. I'm going to turn it over to Sam Mehta to talk about SMS.

Good morning. Thanks, Jon. Good morning. My name is Sam Mehta, and I'm privileged to be the President of SMS. A little bit about my background. I spent 25 years in the aerospace and defense industry, part of my time here at L3Harris, is spent my first 17 years in a company named Sikorsky Aircraft where we operated largely, as you know, is a defense prime. Then I've transitioned to Collins Aerospace, where I ran almost a pure-play commercial business for the last 5 or 6 years, and I'm looking forward to bringing that experience to this great business that we have in SMS. One thing, I think, has to be said very definitively. There's never been a better time to be in the aerospace and defense industry. I will also tell you there's never a better -- there's never been a better place to be than L3Harris right now. Hopefully, you'll feel the same way I do. First, a little bit about Space & Mission Systems. We're really a combination of large parts of legacy IMS and legacy SAS. We offer a traditional business model, long-term enduring generational franchise programs. What is unconventional about we offer is upper single-digit growth. And I'll talk a little bit about some of the drivers of that growth in a couple of our specific businesses. From a capability standpoint, we should look very familiar to you from SAS and IMS, space missile and defense solution, building upon decades of experience largely based upon weather satellites that we've been doing for many, many years. If you're in bright warm and sunny New York City, you probably very recently looked at an image of space for the weather. If you've been anywhere in the Eastern seaboard, you'll look at an imaging space for weather. I'd be willing to bet that, that image was brought to you by one of our payloads operating on the weather satellite. It is that very same technology that we are now leveraging to make sure that we apply to missile warning and missile defense, and I'll talk a little bit more about that applicability. We are the largest provider of missionized ISR and military avionics, a massive growth opportunity for us. One that we're capitalizing on, not just in the future, but literally every day, every week, and I'll have an exciting announcement later on in the presentation. We are the predominant company in Maritime power, taking nuclear power, converting it to electricity on about 1,700 ships if you heard more about concepts programs like golden fleet coming up, we're well positioned to be able to capitalize on that growth. Intel and product solutions, fantastic capability, helping the DOW and other agencies within the U.S. government ecosystem, making sure that we're always up to speed on what other countries, maybe our adversaries are up to. And mission-critical networks, this is our business that supports the FAA air traffic control. Just to give you a size, we've been talking quite a bit about adapt, accelerate. But I want to talk a little bit about scale. Last year, this business and mission network successfully conveyed 123 billion individual messages across the air traffic control network, and they did it with [ Six Sigma ] reliability. Now that's scale. Growth drivers, I'll talk about quite a bit as we go through the presentation. One of the things I want to make sure we convey about SMS that we're an extraordinarily well-balanced portfolio. If you look at the breakdown of our revenue of our $11.5 billion, there's actually no one part of the portfolio that's responsible for more than 1/3 of our overall revenue. And when that balance comes strength and diversity in the sources of revenue and the types of contracts we have. We're very confident in our 2026 margin guidance, and we're extraordinarily proud of our classified business. The hardest part of my job is not being able to tell you about the 1/3 of my business, the almost 1/3 of my business that works in areas that keep ourselves, our allies and our partners safe and secure every single day. I can tell you that of my 11,000 employees at SMS about 7,700 of them have top secret or better clearance. 5,500 of those 7,700 work in engineering and technical areas. We're extraordinarily proud of supporting the customers' most sensitive classified missions. If you would like to compete with SMS, here's just a few of the things that you would have to do. Number one, you'd have to have differentiated technical depth from a capability standpoint. What does that mean? We have about 300 PhDs who have dedicated their entire technical careers towards not only perfecting but in many cases, even developing the technologies that form the foundations of our customers' ability to be able to provide an essential defense capability. We're mission improvement. We have a legacy of customer intimacy. I'm very proud of the fact that 20% of our employees in SMS, we're actually at one time, our customers, they're veterans and they're some of the most talented and the most mission-oriented employees that we have. We have about 500 employees that are field service representatives that are actually deployed with our customers. And many times, in the most dangerous missions and on the front lines. And from an agility standpoint, we are agnostic to where we land in the value chain. One of our fastest-growing businesses is as a prime in space. We're also willing to partner with companies like [ Joby Aviation ] and provide missionized solutions. We're willing to become a prime on ISR. We're willing to become a component supplier to the fighter jet community. So we can actually play with our flexible business model in many different elements in many different parts of the value chain. So why do we have such a strong foundation of growth? I mentioned before in space the image in the spectral and sensing system. A large portion of this portfolio is actually in the classified realm as well. We've been leveraging decades of experience of providing payloads, leveraging that to become more preeminent in the prime contracting space to provide full up satellite solutions. In the airborne domain, we have 70 years of experience in aircraft missionization, providing [ signing ] capability to many of our customers around the world. We've actually delivered F-35 mission avionics systems for over 1,300 aircraft. On the sea, we have 80 years plus equipping 500 naval vessels with integrated comms, [ NAVs ] and platform management systems. I mentioned the work that we do on the intel and networks. There's a tremendous amount of FAA modernization occurring. We are an integral player in making sure that as we go forward as our nation modernizes in air traffic network. We will be a very, very significant partner to the FAA in achieving that modernization. I mentioned the different capabilities we have. It's also important to talk about some of the advantages we have in the market. I mentioned before, we adapted the same sensing solution that we have on our weather satellites to make sure that we leverage that towards missile warning, missile defense. We have the appetite at L3Harris and certainly within SMS to go ahead and invest ahead of scale. What you see there is a picture from a facility in Palm Bay, in Melbourne, Florida where we've invested between Palm Bay and Fort Wayne, $250 million, making sure that we are ready to be able to manufacture and deliver at scale. These advanced satellite technologies that are most important to our classified customers and certainly for missile warning and missile defense. And of course, accelerating. We're very, very well positioned with record backlog in our business right now to be able to deliver upon that 2028 commitment of $13 billion of revenue. Why are we well positioned? We have a more than $4 billion pipeline in missile warning and missile defense. Homeland defense, if you look at the National Defense strategy, one of the things that the Department of War called out very clearly was the importance of homeland defense. The capabilities that we have developed through many decades of experience of providing these payloads is going to make us an integral player in Golden Dome defense. We've provided missionized business jets. Our model, our flexible business model that I mentioned before, we can take commercial business jets off a hot active production line and in very short order, provide mission equipment customization to that aircraft so that they can fly and they can provide ISR capability to our partners, our allies and our nation. Now look, there are alternative solutions out there. You could go ahead and you can buy a purpose-built ISR missionized aircraft. As long as those threats that Tania talked about in her presentation, are willing to wait many, many years before they'd act against you. What we've done is significantly cut down that lead time by providing creative capable solutions that are platform agnostic that allow our customers to take a business jet, missionize it and put it into service in a fraction of a time that it would take a purpose-built aircraft. What I mentioned before, manufacturing at scale, we're not just talking about future investments, investments that we plan to make in the future. We've gone ahead and we've actually demonstrated manufacturing at scale in our space business. Since 2023, we've doubled our capacity for satellite production. By 2028, we will have tripled our capacity for satellite production. So we're not investing after winning the contracts, we're investing in anticipation of winning the contract, and we will be poised to deliver to our customers on time. We have a track record of delivery. We've delivered 80 contracts. We have a record space backlog to deliver against with this new capacity. I mentioned a couple of the facilities over 200,000 square feet, Fort Wayne, Indiana, Palm Bay, Florida. It's impressive that those buildings look from the outside? I can tell you they're even more impressive from the inside, we're adopting the most modern manufacturing methods available to make sure that we can go ahead and build and deliver with scale and speed. Digital infrastructure, working partners, you're using -- leveraging our partnerships with companies like Palantir to make sure that we infuse AI into our manufacturing capabilities to enhance efficiency. Very proud of the investment. We're going to be extraordinarily proud to be able to make sure that we continue to deliver on time to our customers. One of the primary areas of growth driving our business in space and why that capacity investment and increased capacity was so important is the important opportunity that awaits us for missile warning and missile defense. I call it an opportunity. Realistically, this is defending us against an existential threat. And the important thing to know about L3Harris, SMS, we play a very large role in this, but L3Harris actually plays a role in this across the entire value chain. Take a few seconds to talk a little bit more about that. First of all, SMS, very, very active and left of launch prevention. It's not just important to know what our adversaries are doing after they launch. It's very important to know and anticipate when they're preparing to launch. Who is preparing to launch? What's the time line? What's the effect? We provide capabilities and solutions to the DOW and other agencies to make sure that we -- our customers and our government can adequately predict and accurately predict when a launch might be able to occur. That's an important capability left of launch. If we're not successful in helping our customer preventing the launch, we are -- we will be successful in helping them warn. It's extraordinarily important to know exactly when our customer has -- when our adversaries have decided to take action and launch. So we provide imaging and spectral systems that are able to detect that as soon as the launch takes place so we can provide that information. Of course, it's important to track the threat. We have -- we're the only company that has proven to track a hypersonic ballistic threat. The only company that has been able to prove that capability. So we're well positioned for follow-on opportunities in programs like hypersonic ballistic tracking space and sensor. We have launched and delivered 4 satellites to the [ FCA ], and we have 52 on production in order. This is that healthy pipeline I talked about on our earlier chart. After you've tracked the threat, it's also important to make sure that you have reliable, resilient communications that CSD and John Rambeau and his team provide to make sure all the important allies, partners and agencies involved in dealing with that threat have the latest information as to how that threat is progressing. And of course, if all else fails, you need to be able to intercept that threat with kinetic force. And that's where Ken and some of the propulsion products that he has in his business, along with the divert and attitude controllers will help defend the country against that threat. So we play in all elements of the value chain in this very, very important capability. On the ISR market, I mentioned not only the investments we've made and the incredible investments that we've made in capacity to make sure that we can quickly missionize these business jets and provide that capability to our customer. We're seeing unprecedented strong market demand. And by the way, we are the market leader in this area. So much so that if you took the next 8 competitors and added up their -- the number of aircraft they've delivered, we'd still be the largest. We are largest -- we are 10x larger than our next biggest competitor in this area of missionized business jets. We have important wins. We recently went ahead and announced Korea, our [ AWC ] contract. By the way, at the time of this chart was made, we had $3 billion awarded since Q4 of 2025. As of last week, that is closer to $4 billion. We recently won a very important strategic contract with the NATO ally to provide missionized business jet capability, and we'll be able to be able to announce that in the next couple of weeks. And that will add about $750 million of backlog to this business with another at least $2 billion of options to follow. So we have $20 billion plus of opportunity in the pipeline for this important capability. So what do we focus on? What are key priorities in SMS? Number one, we will continue to invest in capacity, technology and modernization. The threats are evolving, our technology and our ability to be able to deliver to our customers must also advance and evolve. We'll partner. We'll work with the defense tech start-up. We'll work with the primes, we'll work with component suppliers. We work as a component supplier. We'll work as a prime. Our flexible business model allows us to be able to work in all elements of the value chain. Third is execute, execute, execute. We will meet or exceed our customers' expectations on delivery and capability. The Secretary of War has made it very clear to the defense industrial base that is either execute or be executed. Fourth, we will remain focused ahead of the industry and strategic capability and talent to outpace competitors. Similar to what Ken mentioned about the artisan he has, the technical depth that we have in our business is a competitive advantage for us. We continue to invest in our workforce. We continue to invest in the development of technologies by that workforce that will keep us ahead of our competitors and more importantly, keep us ahead of our adversaries. So with that, I'm going to turn it over to Ken Bedingfield to talk a little bit more about the financials.

All right. Good morning. I'm Ken. I've been doing this about -- no, I'm kidding. Just wanted to kind of wrap it all up with a little bit of kind of financial overview. I'll highlight some things that we've already talked about, but that I think are really important to underscore. In terms of commitment, as Chris mentioned, we are a company that's very focused on saying what we're going to do and then going off and doing it. We deliver on our commitments quarter by quarter, year by year and framework by framework. So this will be the second financial framework that we lay out. We set the first one in '23, delivering through to '26. We're now going to set another one to deliver '26 through '28. I'll talk through that in a few minutes. Unlocking value, we've mentioned some of the strategic transactions. I'll talk a little bit more about that. in this presentation, and then we'll certainly talk a little bit about capital deployment. But very clearly, investing in the business for growth is our first priority. We've got a lot of flexibility. We've got a strong balance sheet. We're going to continue to pay a competitive dividend, and we'll talk a little bit more through those details. So just to reiterate, again, the financial framework that we set in 2023. At the time, we were sitting roughly at $19 billion of revenue, we were struggling to perform a little bit on some of our programs, 14.8% segment operating margin. I will say at that same time, we were investing to become a prime in space, and that was a part of it as well as you grow into a new business like that. Sometimes you're taking on some more aggressive contracts, and we work through that. And we had free cash flow of about $2 billion. At the time, we said we're going to grow the business to $23 billion, we're going to generate about 16% margins, and we're going to generate $2.8 billion of free cash flow. A lot of folks looked at us and said, oh, how are you going to do that? But the team went off and did it. We move fast. We're agile, we're nimble, and we figure out how to add value, how to grow the business while increasing margin which is not the easiest thing to do and generating solid cash and as Chris mentioned, I think we are, if not the best converter of earnings and the cash in the industry is certainly one of the best. This business generates as much cash as some of our competitors who are significantly larger than we are. Just to touch again on the margin side. I would say one of the things that we're certainly focused on is winning new business and you can see that we've been growing from $19 billion to $23 billion. But importantly, we win that new business with rigor, and we win new business that we can perform on. That is what enables us to continue to drive our industry-leading margin rates up. So we don't over analyze. We don't overthink it. But we make sure that we have the confidence that we can perform on our programs. And then as we've continued to grow, we've also brought in some new leadership, brought in some new tools brought in the ability to really effectively manage our programs to generate the margins. You heard about this from each of the segments, just to reiterate, and so you can see it in one place. SMS, solid growth to $11.5 billion, solidly increasing its margins into the mid-10%. That's, call it, 70, 80 basis points of increase in margin rate, so significant. CSD, $8 billion business with 20 -- about 25% commercial operating margins and then as we put MSL together, again, the purpose-built Missile Solutions company, about $4.4 billion in sales and increasing margin to about mid-12% at MSL. We're going to spend a few minutes on this chart. I think everyone was sort of wondering what was our next financial framework going to look like. So I wanted to spend some time talking about our 2028 targets. We are going to grow our revenue to $27 billion in 2028. That is an 8% organic CAGR as we work through some of the divestitures and other transactions that Chris mentioned. That is a $5 billion increase in sales. As we look at segment operating income for our next financial framework, we're going to generate $4.4 billion of segment operating income, that's a 9% CAGR. So growing faster than our sales as we continue to generate strong and growing margins. And that is going to result in an increase of $1 billion of additional operating income in '28. And then in terms of cash from operations, we're going to generate $5 billion of cash from ops in 2028. That's a 15% CAGR as we effectively continue to convert our earnings into cash. That's a $2 billion increase in annual cash generation. And even as we deploy capital into CapEx to grow the business, '26, '27, '28, in particular, we're still going to be able to generate $3.5 billion of growing free cash flow from today. So we feel really good about these '28 targets, our next financial framework. I know that I think this is one of the things folks were hoping to hear today. We are excited about it. I think it's really -- the result of a lot of hard work, a lot of positioning. The portfolio is right, the performance is right, the team is right to deliver this value to our customers, how we get product in their hands and to deliver this value to our shareholders in terms of growing the business, expanding margins and generating cash and then ultimately deploying it in value-creating ways. Just in terms of kind of the capabilities, the areas of growth in terms of the framework, how do we get from where we are today, roughly $22 billion to $27 billion in sales. You've heard about communications and spectrum dominance growth. You've heard about the significant capability, market leading -- global leader in ISR, we've talked about missiles and munitions, the potential ultimately to double MSL sales towards the end of the decade. This is an important step in that process and then space. You heard about the incredible work that our space team has been doing, taking decades in weather payloads and turning that into a position as a prime in the incredibly important mission of missile warning, missile defense and missile tracking. So those are the drivers that ultimately get us to the $27 billion in revenue, about $13 billion in Sam's business at SMS. John Rambeau growing to about $9 billion in CSD. And as we mentioned, MSL about $6.3 billion in revenue. And I think it's important to point out, if you look at this chart, I don't think anyone else in industry is showing this level of balanced growth, showing this level of multi-domain growth and showing the ability to climb the ramp at this pace. Chris mentioned, we listen to our customers, we form an opinion. We don't have to wait for all of the budget docs to come out and look through all the documents and see where all the funding is going because we listen to our customers. We know where those budgets are going or at least we form an opinion on where those budgets are going and we invest. You've heard us talk about investing ahead of need. What that means is that we listen, we digest, we form an opinion and we act. That's how we -- that's one of the ways that we move faster than the competition. It's that long lost art of actually listening, not just telling the customer what you think they want you to do or what you think you want them to do. Actually listening, helping them solve their problems and then investing ahead of need smartly. I don't think we've had any issues where we've invested and ultimately decided, you know what, that wasn't the smartest investment. Okay. Let's just talk about the segment operating income for a second. I think this chart kind of stands on its own, $3.4 billion in 2025, growing to $4.4 billion in 2028. Revenue growth is about 80% of the increase. And then we will continue to drive some margin improvement. That's continued performance on our programs, that's continued growth in the international markets and continued growth in our businesses that generate commercial margins. I remember when we were moving into the business, the space prime, right? And our competition was saying, oh, they don't know how to be a prime, they're not going to be able to do this. Guess what? We do know how do it, and we are able to do it. And it's actually more complicated to produce incredibly complex payloads and space systems than to do program management, manage a schedule, manage the workforce. We've learned how to do it. You can see it. That's how we generate $4.4 billion of operating income in 2028. Structurally attractive free cash flow. Again, as I mentioned, we're not the biggest company in the defense industry. But I think we generate outsized free cash flow. As I mentioned, there are some other of our peers who are significantly larger than we are, but we generate as much cash as they do. How do we do that? Industry-leading margins certainly helps, growing the business, effectively managing our working capital. And then as we grow in some of these areas, really making sure that we get milestone-based payments or other payment structures that enable us to recover the cash as quickly as we can as we put billions of dollars to work on investment. So I often get asked, some of the framework agreements of your competition have were told relatively attractive free cash -- or relatively attractive milestone payments we'll certainly work to do precisely the same. And as I mentioned, $5 billion of operating cash, $3.5 billion here of free cash flow even after we're investing heavily in CapEx, '26, '27, '28 before in '29, we really returned to that more normalized level of free cash flow, 2% to 2.5% of sales. Capital allocation, again, we've talked on the internal investment side. Baseline CapEx, 2% to 2.5% of sales, $3 billion invested through Missile Solutions. Again, it's temporal, '26, '27, '28, we'll return to a more normal level after that. And it's interesting. As those factories come online, the CapEx will start to come down and the capacity, the revenue will really start to increase. So even though we're at I think a solid growth trajectory today, high teens. But when those factories come online and they really start humming and spitting out motors, Chris mentioned, we produce over 100,000 motors a year in Missile Solutions. So we get a lot of questions about these new entrants. They can do 40 motors here or they got $40 million of investment there. Our strategy, as I mentioned, is to build the capacity as rapidly as possible to deliver against the demand that is durable that I just -- I haven't seen in my 30 years, demand like this before, and then get a head start in a very attractive market and stay ahead. And as Chris mentioned, we know it's an attractive market. We know we're in a race, but we fully intend to win it. We do have flexibility. I talked about a strong balance sheet, certainly a well-aligned portfolio and a diverse portfolio. It's interesting with the diversity of the portfolio it's actually hard to be the fastest grower in the industry. It's actually easier to grow if you have a single program that's growing really fast. We don't have any program that accounts for more than 5% of sales. With that diversity, there's always something growing. There's something shrinking, there's something about the same. But even with that diversity and the power of that diversity, we're growing faster than anybody else, while expanding margins and generating some of the best free cash flow conversion. We do intend to maintain a competitive dividend. And then we've certainly indicated that from a share repurchase perspective, we will offset dilution as we, again, invest to grow the business. So just talking about unlocking shareholder value. We did make some announcements, some strategic announcements in 2026, early '26. Certainly, the segment realignment. And I will say, we've gone from [ 4 to 3 ]. But importantly, the capabilities within this company are now structurally aligned in the right places within the segments. Before we just had -- we had too many places where we did similar capabilities across multiple segments within the company. I think we've got that alignment laid out. Ultimately, I think that enables us to grow faster and then ultimately, I think it enables us to be more effective as we invest in the business and in our technology for future growth. Again, we announced the sale of the majority stake in our space propulsion and power systems business. We're excited about that. We're selling it to a very capable party in the industry, AE Industrial Partners. We're going to maintain a 40% stake and as they combine that with other investments, other businesses they have, we'll be able to realize some upside from that. So we're excited to partner with AE Industrial on that. And then as we talk about the Missile Solutions transaction, again, we're excited, incredible demand, and I'll talk a little bit more about that on the next slide. So really, again, we do have a portfolio that we think delivers significant shareholder value. If you think about SMS as more akin to a defense prime. We think it grows significantly faster, high single-digit growth in SMS relative to most of the primes that are growing 5%, we're pushing high single digits. So significantly faster growth at SMS. If you think about CSD as a commercial entity, more like a mid-cap defense supplier. We're talking about mid-single-digit growth there as they work through the various parts of their portfolio, some of the factory optimization that Jon is working. So we see that very well aligned with sort of the mid-cap defense companies, and we think it's certainly compares favorably. But if you think about MSL, again, high teens growth. We believe towards the end of the decade, 20% growth, potentially greater than 20% growth. And we think that, that grows well into the 2030s. Again, the capacity will just be coming online '28, '29. It will take some time to get those factories fully loaded with capacity and burning at full rate production into the 2030s. That's where we think really we see that 20-plus percent growth. So really excited about that. And that's ultimately why we decided to do what we did in terms of the transaction. Again, timing matters. The government putting its money where its mouth is, putting $1 billion to work gives us the confidence to invest today to drive the capacity increases to scale at speed that nobody else can. And we think that MSL compares very favorably in terms of growth, in terms of margin expansion, in terms of being a world leader in the markets that it's in, and it's not just singular growth. Again, it's not just propulsion. It's not just solid rocket motors. It's divert and attitude control systems. The AE sector within MSL is also growing high teens. So it's really a diversity of the portfolio as it grows. So with that, I think I'm about at time. I will say Chris has asked me to really focus on driving the growth in MSL. And pretty soon, I'm going to be taking that responsibility on full time. So we don't have an efficient announcement to make today, but it is possible that this will be the last presentation you hear from me as CFO of L3Harris. It's been a great run. I'm actually not going anywhere, but excited to lead MSL through these times. It's a great team. I've got great partners in Sam and John, and really enjoy working with all the folks here and seeing how we can continue to add value for all of you. With that, we're going to take a 10-minute break, and then we'll go to Q&A.

We will now take a 10-minute break. [Break]

Ladies and gentlemen, we will now begin the question-and-answer session. Please direct your attention to the panelists on stage.

Okay. We're going to start our Q&A session here. We'll take questions here in the room, and we'll take questions from our webcast audience. If you're here in the room, you've got 2 options. You can raise your hand and one of our mic runners will run you a mic over. If you are also here in the room and you want to ask a question anonymously, there's a little QR code on the tables in front of you. [Operator Instructions] Why don't we get the -- as we get in the mic sort of situated here. Why don't we take the first question from the web here. And this will be a missile solutions question. And Chris, want me to start with you. You kind of talked about this a bit earlier. Maybe you can talk a little bit more about when you bought Aerojet, did you really think it was going to rise and value this quickly. And now that you realize this additional value, why raise the equity capital to expand solid rocket motor capacity when the other defense primes are effectively self-investing?

Okay. Great. Great question. Well, we're still not sure what it's worth. But as I said, we turned it around and fixed it quicker than I thought. You see the demand, you see the growth. So it probably is, if I'm honest, a little better sooner than I would have expected. We'll see what the IPO brings. And like I said, this is a unique and creative transaction. Could we fund it ourselves. We already have the $11 billion, $12 billion of debt. We got to be careful to keep the investment-grade credit rating. I thought it was a unique opportunity to allow the customer to share in the upside. We're not the first company where we -- they take a stake in it. And number one, it gives us the confidence to invest now. Ken said it multiple times. I tried to say it, we are building capacity. You saw those were real pictures. The dirt has been cleared. We're building this capacity. We're going to be in a race. We're going to win the race and we're staying ahead of the competition. The $1 billion gives us the confidence. And again, this is a national imperative. This isn't some hobby that the DOW is playing around with. They need munitions. We're the only guys that can scale and deliver well over 100,000 in a couple of years. And then I think it does unlock the valuation and as shareholders of L3Harris, 80%, 83%, 84% of a bigger number sure beats what it is now in our financials. So that's how I look at it. And the Board has been supportive. We kicked this around as a team, and we all thought this was a good way to go.

I would just add maybe one thing to that, and that is that we are modernizing the entirety of the ecosystem, the entirety of how solid rocket motors divert and attitude control systems, fuses and other munitions products are built. We are not just increasing the capacity for a single product, say a PAC-3 missile. We're not just increasing the capacity for standard missile or THAAD. We are going to be able to produce at greater scale across 30 different missile programs, and that's why we're doing things a bit differently than, say, someone who's delivering more capacity of a product or a program. And so this is modernizing the entirety of the Missile Solutions, the entirety of propulsion, divert and attitude control and fusing systems.

Excellent. Appreciate it. We take a question here in the room. Why don't we start way over here.

Thanks. John Godyn at Citi. I wanted to ask about the enduring growth profile just in the context of the budget. I think it was very clear from this presentation that you guys see accelerating growth for many years to come and there are a number of charts going out to 2030 and commentary extending beyond that. What I often hear from investors concern about the budget environment and whether it can support that growth? Perhaps you can elaborate on that?

Sure. Let me kick it off. From the budget environment, I would say we've seen on the domestic side a resetting of the budgets with this reconciliation package. So we anticipate additional growth in '27. Can I promise you that it will be $1.5 billion -- $1.5 trillion, absolutely not. But I don't think anyone can make a promise today. We do know that the administration plans on building and reinforcing what they accomplished in '27. So that's on the domestic side. The other piece to think about is the international side. And the growth on the budgets in the defense ecosystem both in Europe and INDOPACOM and the Middle East are growing. And it's up to all of us to work together to figure out how to leverage that growth and drive our capabilities forward. And that's exactly what we're doing.

I'll just add to that. I think it's really important to think about this beyond just a simple math exercise of the budgets growing and we should grow with the budget. Our portfolio is very well aligned to the needs of our customers not just the Department of War, but also our international allies. And because of that, we think that we're going to be able to grow potentially faster than the budget. And it's easy to say, oh, okay, well, it's $1 trillion in '26, and maybe it's going to be $1.5 trillion in '27. It takes a while for those to get outlaid and then ultimately to get on contract and then to generate revenue. But again, importantly, we think the portfolio very purpose-built, designed to be aligned to the needs of our customers, and that will drive the growth that we're talking about. So I describe it as growing within the budget rather than growing with the budget. And we say the budget, it's not just department work but also international allies.

Yes. Maybe I'll just add one point to that, which is maybe the question for investors as well as based on what you've seen today and heard from this team, are we focusing on the right areas? Do we think missile warning, missile defense, ISR missionized aircraft within that top line number that Ken and Tania talked about do you think they'll be disproportionately higher funded? Do we think resilient communications and electronic warfare in an increasingly dangerous international environment is going to be a greater competency that and get capability that our own customer will want here domestically. Do we think that munitions need to be recapped with solid rocket motors? Do the world have enough munitions and solid rocket motors, I would say probably not. And so the question is within that, whether it's $1.2 trillion or $1.3 trillion that Ken and Tania talked about, are we focused in the right areas? Do we have capability? Do we have demonstrated expertise? Do we have programs of records in all these growing areas hopefully, I think the answer is yes. So as Ken said, we look at -- we're looking to grow faster than the budget wherever possible because of these capabilities.

Right here in the center. Let's wait for a mic, please.

Hello. My name is [ John Kendall ]. I'm an investor for a long time. I started when L3 had its IPO way back. It was $22 a share. I still have those shares and look at the increase over those years. I've been with Chris, watching Chris, as CEO with L3Harris, it's been up above. Dividends have been fantastic. Growth has been fantastic. And I have to tell you, get in now because it's going up, and I'm telling you -- and this isn't a commercial. I'm an investor started with L3 which was Frank Lanza, [ Bob LaPenta ] from 10 Lockheed Martin Companies. And that was the original L3. And now with Harris, stronger than ever. And growth has been incredible. I've made a lot of money. And guess what, I would say we're going to continue to make a lot of money Chris is the best CEO. He's fabulous. And this is not a commercial. This company is programmed to go way up. And I've seen -- I've been around long enough to see many administrations in Washington. And whichever administration has been in, we've still grown because there's always a need for defense to make sure the world is safe for freedom and democracy. So take it for me, this is the best investment going.

Mr. Kendall, do you have a question?

The question would be, do you have any idea what this new IPO company will be named and when it's going to happen or any indication of value to start or off?

I just want to clarify, there's no relation between me and -- we are working on the name of the new company that we intend to IPO. It will not be Aerojet Rocketdyne, and it will not be missile solutions. We're working on a name that aligns with the growth, with the capabilities, with the culture of the company, and that is still to be determined. In terms of valuation perspective, I tried to lay it a little bit out on the previous chart when I was in my CFO hat that we think that business is very attractive relative to other kind of defense tech names. And we think that with that strong growth, growing margins and then ultimately, solid free cash flow. Once we get this kind of investment behind us, that we ought to be valued very much like some of those defense tech names, and I won't name them by name here, but I think you all know what they are and pick your valuation, but we certainly think that as a stand-alone company, it is valued significantly higher than kind of where we've been kind of tied in with some of the defense primes, even though we are a bit different, we are not a prime. [This call length has exceeded streaming capabilities -- Please refer to the preliminary transcript that will be posted shortly.]