L3Harris Highlights Performance Progress One Year After Acquiring Aerojet Rocketdyne

Rhea-AI Summary

L3Harris Technologies (NYSE:LHX) has reported significant progress one year after acquiring Aerojet Rocketdyne. The company has increased internal investments in Aerojet Rocketdyne by 40% year-over-year, focusing on expanding and modernizing manufacturing capabilities. L3Harris has also provided over $25 million in funding to sub-tier suppliers and qualified additional suppliers to strengthen the solid rocket motor subcomponent supply chain.

Performance improvements include record-setting months of deliveries for five programs and reducing late deliveries by nearly half. L3Harris propulsion systems have supported key missile defense tests and historic launches. The company has also been selected for hypersonics and critical defense programs like Next Generation Interceptor, while demonstrating advanced solid rocket motors and completing RS-25 rocket engine certification testing for NASA's Artemis campaign.

Positive

• 40% year-over-year increase in internal investments for Aerojet Rocketdyne
• Over $25 million provided to sub-tier suppliers to bolster supply chain
• Record-setting months of deliveries for five programs
• Reduction of late deliveries by nearly half
• Selection for hypersonics and critical defense programs
• Successful demonstration of advanced solid rocket motors
• Completion of RS-25 rocket engine certification testing for NASA's Artemis campaign

Negative

• None.

Insights

Financial Analyst

L3Harris Technologies' acquisition of Aerojet Rocketdyne a year ago appears to be yielding positive results, particularly in terms of operational efficiency and strategic positioning. The 40% year-over-year increase in internal investments in Aerojet Rocketdyne demonstrates L3Harris' commitment to enhancing its newly acquired capabilities. This substantial investment, coupled with the $25 million provided to sub-tier suppliers, suggests a strong focus on vertical integration and supply chain resilience.

From a financial perspective, the performance improvements, including record-setting deliveries for five programs and a nearly 50% reduction in late deliveries, are likely to translate into improved revenue recognition and potentially higher margins. The expansion of solid rocket motor facilities, leveraging government investments, also indicates a capital-efficient approach to growth.

However, investors should note that while these operational improvements are promising, the financial impact may take time to fully materialize in L3Harris' bottom line. The defense sector often operates on long-term contracts and the full benefit of these enhancements may not be immediately reflected in quarterly earnings. Additionally, the increased investment could pressure short-term profitability, although it positions the company for long-term growth in the high-demand missile and space sectors.

Overall, this update suggests that L3Harris is executing well on its integration strategy, which could lead to improved competitive positioning and financial performance in the medium to long term. Investors should watch for upcoming financial reports to gauge the quantitative impact of these operational improvements on L3Harris' revenue growth and profit margins.

Defense Industry Analyst

The acquisition of Aerojet Rocketdyne by L3Harris Technologies marks a significant shift in the defense industrial base landscape. The emphasis on increasing production capacity for solid rocket motors is particularly noteworthy given the current geopolitical climate and the high demand for missiles mentioned by CEO Christopher E. Kubasik.

The investment in expanding and modernizing manufacturing capabilities across product lines is a strategic move that aligns with the U.S. Department of Defense's push for increased missile production. This positions L3Harris favorably for future contract awards and could potentially lead to a larger market share in the propulsion systems sector.

The company's focus on strengthening the sub-tier supplier base through financial support and qualification of additional suppliers is crucial. This approach not only mitigates supply chain risks but also enhances L3Harris' ability to meet increased demand and potentially accelerate production timelines.

The successful support of key programs such as Vulcan, Starliner and the final Delta IV Heavy launch demonstrates L3Harris' expanded capabilities in both defense and space sectors. Moreover, the selection for hypersonics and critical defense programs like the Next Generation Interceptor indicates that the company is well-positioned in high-priority, cutting-edge areas of defense technology.

From a national security perspective, L3Harris' increased capacity and improved performance in propulsion systems contribute to the overall robustness of the U.S. defense industrial base. This aligns with broader government objectives to ensure domestic capabilities in critical defense technologies.

Aerospace Engineer

The technical achievements highlighted in L3Harris' update are significant from an aerospace engineering standpoint. The successful hot-fire tests of advanced solid rocket motors, including Zeus 2, demonstrate progress in propulsion technology that could have far-reaching implications for both defense and space applications.

The completion of RS-25 rocket engine certification testing for NASA's Artemis campaign is a important milestone. The RS-25, originally developed for the Space Shuttle program, has been adapted and upgraded for the Space Launch System (SLS). This certification indicates that L3Harris is maintaining and advancing legacy technologies critical for deep space exploration.

The company's involvement in a diverse range of programs - from traditional missiles to hypersonics and from commercial space launches (Vulcan) to NASA's space exploration efforts - showcases a broad technical capability. This diversification is technically challenging but strategically advantageous, allowing for cross-pollination of technologies and expertise across different aerospace domains.

The reported improvements in production and on-time delivery are particularly impressive from a manufacturing engineering perspective. Achieving record-setting months of deliveries for five programs while simultaneously reducing late deliveries by nearly half suggests significant enhancements in production processes, quality control and supply chain management.

Looking forward, the expansion of solid rocket motor facilities for key missile programs indicates a focus on scaling up production capabilities. This will be important for meeting the increasing demand for both defense and space applications, but will also present technical challenges in maintaining quality and reliability at higher production volumes.

MELBOURNE, Fla.--(BUSINESS WIRE)-- L3Harris Technologies (NYSE:LHX) has marked the one-year anniversary of its acquisition of power and propulsion provider Aerojet Rocketdyne with significant performance progress.

“L3Harris made important commitments to shareholders and customers when we announced our intent to acquire Aerojet Rocketdyne, and over the past year have been delivering on those promises,” said Christopher E. Kubasik, Chair and CEO, L3Harris. “The high demand for missiles and the solid rocket motors that propel them makes our investment in Aerojet Rocketdyne even more crucial to our national security. We remain focused on helping meet that demand while strengthening the U.S. defense industrial base.”

L3Harris increased internal investments in Aerojet Rocketdyne by 40% year-over-year, including the expansion and modernization of manufacturing to enhance production across its product lines. The company also provided sub-tier suppliers with more than $25 million in funding and qualified additional suppliers to bolster the solid rocket motor subcomponent supply chain. Further, the company is leveraging government investments to expand solid rocket motor facilities for key missile programs.

“Through significant investments and a focus on excellence, we have markedly increased propulsion production and on-time delivery,” said Ross Niebergall, President, Aerojet Rocketdyne, L3Harris. “The Aerojet Rocketdyne team is now better positioned to design and deliver the highest quality systems that support critical defense and space missions.”

Performance improvements since the acquisition include record-setting months of deliveries for five programs and reducing late deliveries by nearly half.

L3Harris propulsion systems over the past year have enabled key missile defense tests and supported the historic launches of Vulcan and Starliner and the final Delta IV Heavy rocket. While being selected to support hypersonics and critical defense programs like Next Generation Interceptor, the company also demonstrated advanced solid rocket motors in hot-fire tests including Zeus 2, met key delivery milestones and completed RS-25 rocket engine certification testing for NASA’s Artemis campaign.

About L3Harris Technologies

L3Harris Technologies is the Trusted Disruptor in the defense industry. With customers’ mission-critical needs always in mind, our employees deliver end-to-end technology solutions connecting the space, air, land, sea and cyber domains in the interest of national security. Visit L3Harris.com for more information.

Forward-Looking Statements

This press release contains forward-looking statements that reflect management's current expectations, assumptions and estimates of future performance and economic conditions. Such statements are made in reliance upon the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The company cautions investors that any forward-looking statements are subject to risks and uncertainties that may cause actual results and future trends to differ materially from those matters expressed in or implied by such forward-looking statements. L3Harris disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240729714156/en/

Eileen Lainez

Aerojet Rocketdyne

Eileen.Lainez@L3Harris.com

571-239-7839

Sara Banda

Corporate

Media@L3Harris.com

321-306-8927

Source: L3Harris Technologies

FAQ

What improvements has L3Harris (LHX) made since acquiring Aerojet Rocketdyne?

L3Harris has increased internal investments in Aerojet Rocketdyne by 40% year-over-year, provided over $25 million to sub-tier suppliers, achieved record-setting deliveries for five programs, reduced late deliveries by nearly half, and supported key missile defense tests and historic launches.

How much has L3Harris (LHX) invested in Aerojet Rocketdyne since the acquisition?

L3Harris has increased internal investments in Aerojet Rocketdyne by 40% year-over-year and provided over $25 million in funding to sub-tier suppliers to strengthen the solid rocket motor subcomponent supply chain.

What new programs has L3Harris (LHX) been selected for since acquiring Aerojet Rocketdyne?

L3Harris has been selected to support hypersonics and critical defense programs like the Next Generation Interceptor. The company has also demonstrated advanced solid rocket motors and completed RS-25 rocket engine certification testing for NASA's Artemis campaign.

How has L3Harris (LHX) improved delivery performance since the Aerojet Rocketdyne acquisition?

L3Harris has achieved record-setting months of deliveries for five programs and reduced late deliveries by nearly half since acquiring Aerojet Rocketdyne.