L3Harris Technologies, Inc. Morgan Stanley's 14th Annual Laguna Conference
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Hi. Good afternoon, everyone. I'm Kristine Liwag, Morgan Stanley's Head of Aerospace and Defense Equity Research. I'm very excited to host our next panel with Ken Sharp, CFO of L3Harris.
Ken, welcome. Thank you, Christine, and I'm the L3Harris CFO, so great to be here today.
Look forward to the dialogue.
Hope you like Laguna enough to come back next year.
Yeah. It's terrible duty here.
For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley representative. With that, we will dive into some Q&A. Ken, with the recent CEO change, how is the transition progressing under Sam, and are there any meaningful changes in company approach, in operations, or priorities?
Sure. One, I think we have a great portfolio. Chris did a really nice job of, I think when you look at it, bringing L3 and Harris together, then two strategic acquisitions, and then about 13 divestitures. We did all that in four or five years. It has been a lot. Sam would say, "Hey, Ken, we got a great business, so I am really about execution. We need to go drive what we have. We have got to the portfolio we want to have. We are very well positioned in areas like space, sensing, the whole ISR side, the communication side, certainly with our tactical radios, and then missiles. We have got a great hand. Let us go execute." I think that is what you are going to hear from Sam when he comes out in the next one of these, I am sure.
What is it like working with Sam?
Yeah, I think it is great. We were kidding around. I think he may go to bed a little earlier than me, but he gets up a little earlier than me as well, so I will have to get my cadence right with him. But he is very passionate about operations. It used to be when I would call him as the CFO, I think your whole goal is you call somebody when you think there is a problem, and you hope they are in some level of detail, and they are thoughtful. I joke around with Sam because I ask the question, and then I really just want two levels deep at most, and he is like at level 6, and I am like, "Okay, Sam, we are all good." That was pre-CEO, so now CEO.
It's great that he was in that level of detail, so I enjoy that because it made my job as the CFO a lot easier. I think he's still there as far as being very operational, getting into the business, understanding what drives performance. So I think you'll see a little bit more of a bend going more operational. For those of you that have been CFOs, I'd argue that makes your life a little bit easier and a lot more just kind of focused around making boring quarters and a little bit more boring operations as far as we just hit our numbers and go on, report the next quarter and the next quarter. So kind of beating and delivering and whatnot. I think that's what you'll hear from Sam. He's definitely very in tune with the portfolio.
I think you know he had about 80% of the business before the latest role, so he's really getting up to speed on the missiles. I think that's pretty short putt for him because he knows a lot as well, and he knows a lot of the customers, so I think it makes it pretty easy.
I think he enjoyed being here at Laguna last year, so next year we hope to have both of you.
Well, he's really looking forward to it, and he's a little bit disappointed he couldn't make it, but he's got a lot going on with customers and really just getting into the business and the details and making sure we're driving it the right way. So it made sense for me to come out. So next time you'll absolutely have Sam, you'll have both of us together, and I think we'll have a lot of fun. Though we'll probably go to bed a little earlier than you is my guess, so.
Well, we'll have drinks at the Laguna bar later. With that, Ken, you mentioned the portfolio a few times and the reshaping that's already occurred the past few years, but as you and Sam evaluate the portfolio today, how do you think of where it should be? Are you exposed and aligned to the priorities that the U.S. government wants to go? Also, are there still some businesses where you're looking at it, and it may fit better elsewhere?
Sure. I think in general, the portfolio is well-aligned. We look at our business, the sectors we have. There's some pieces that maybe they're not growing as fast. You kind of look at those. Maybe we'll look at them a little more carefully going forward. That could, I guess, potentially be something, but I don't think so. At the end of the day, I think it's really about driving the business we have, and I think we're in a good place.
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