INVESTOR BRIEFING
FISCAL 2018 Q4 RESULTS
REPORTED JULY 31, 2018
| 2Investor briefing
Forward-looking statements
Statements in this presentation that are not historical facts are forward-looking statements that reflect management's current expectations, assumptions and estimates of future performance and economic conditions. Such statements are made in reliance on the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements in this presentation include but are not limited to: earnings, revenue, operating margin, free cash flow, capital deployment, segment and other guidance for fiscal 2019; strategic focus for fiscal 2019; earnings, revenue, operating margin and free cash flow outlook for the medium term; potential contract opportunities and awards; the potential value and timing of contract awards; statements regarding the improving U.S. Government defense spending environment, capturing share, growth and expansion; and other statements regarding outlook or that are not historical facts. 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. The company's consolidated results, future trends and forward-looking statements could be affected by many factors, risks and uncertainties, including but not limited to: the loss of the company’s relationship with the U.S. Government or a change or reduction in U.S. Government funding; potential changes in U.S. Government or customer priorities and requirements (including potential deferrals of awards, terminations, reductions of expenditures, changes to respond to the priorities of Congress and the Administration, budgetary constraints, debt ceiling implications, sequestration, and cost-cutting initiatives); a security breach, through cyber attack or otherwise, or other significant disruptions of the company’s IT networks and systems or those the company operates for customers; the level of returns on defined benefit plan assets and changes in interest rates; risks inherent with large long-term fixed-price contracts, particularly the ability to contain cost overruns; changes in estimates used in accounting for the company’s programs; financial and government and regulatory risks relating to international sales and operations; effects of any non-compliance with laws; the company’s ability to continue to develop new products that achieve market acceptance; the consequences of uncertain economic conditions and future geo-political events; strategic acquisitions and divestitures and the risks and uncertainties related thereto, including the company’s ability to manage and integrate acquired businesses and realize expected benefits and the potential disruption to relationships with employees, suppliers and customers, including the U.S. Government, and to the company’s business generally; performance of the company’s subcontractors and suppliers; potential claims related to infringement of intellectual property rights or environmental remediation or other contingencies, litigation and legal matters and the ultimate outcome thereof; risks inherent in developing new and complex technologies and/or that may not be covered adequately by insurance or indemnity; changes in the company’s effective tax rate; significant indebtedness and unfunded pension liability and potential downgrades in the company’s credit ratings; unforeseen environmental matters; natural disasters or other disruptions affecting the company’s operations; changes in future business or other market conditions that could cause business investments and/or recorded goodwill or other long-term assets to become impaired; the company’s ability to attract and retain key employees, maintain reasonable relationships with unionized employees and manage escalating costs of providing employee health care; or potential tax, indemnification and other liabilities and exposures related to Exelis’ spin-off of Vectrus, Inc. and Exelis’ spin-off from ITT Corporation. Further information relating to these and other factors that may impact the company's results, future trends and forward-looking statements are disclosed in the company's filings with the SEC. The forward-looking statements contained in this presentation are made as of the date of this presentation, and the company disclaims any intention or obligation, other than imposed by law, to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
| 3Investor briefing
Leading technology innovator, solving
customers’ toughest mission-critical
challenges
• ~$6.2 billion in FY18 revenue
• 7,900 engineers and scientists…45% of total
• Customers in more than 100 countries
Space &
Intelligence
Systems
Communication
Systems
Critical
Networks
Electronic
Systems
Harris Corporation overview
Space and
Intelligence Systems
Electronic Systems
Communication
Systems
$1.9B $1.9B
$2.4B
| 4Investor briefing
Segment descriptions
Tactical Communications: radio
communications and networking for U.S. and
international defense
Public Safety: communication systems for
public safety networks
Night Vision: goggles and soldier systems
for U.S. and international customers
Classified: payloads, sensors, and full-
mission solutions for space, air and ground
Civil: end-to-end weather solutions from
remote sensing to ground processing, GPS
Commercial: space antennas and geospatial
solutions
Electronic Warfare: airborne and maritime
platforms
Avionics: data links, antennas and
carriage/release
C4ISR: signals intelligence products,
SATCOM, integrated battle management
Mission Networks: communications and
networking solutions for FAA and others
1,753 1,903
-
500
1,000
1,500
2,000
2,500
3,000
FY17 FY18 FY19 Guid.*
0
500
1000
1500
2000
2500
3000
FY17 FY18 FY19 Guid.
0
500
1000
1500
2000
2500
3000
FY17 FY18 FY19 Guid.
2,251
20.6% 18.6%
($million)
Communication
Systems $1.9B
Space and Intelligence
Systems $1.9B
Electronic
Systems $2.4B
2,3731,902
16.4% 17.0 – 18.0%
up 4.0-5.0%
29.9%29.5 – 30.5%
up 8.0-10.0%
For non-GAAP reconciliations reference quarterly earnings and related materials on the Harris investor relations website.
*Guidance updated July 31, 2018, reflects adoption of new revenue recognition standard (ASC 606) – refer to 4Q18 quarterly earnings and related materials on the investor relations website.
Revenue
non-GAAP
operating
margin
30.0%
1,921
17.5%18.0 – 19.0%
up 7.0-8.0%
* *
| 5Investor briefing
Medium
Term
FY17 &
Prior
FY18
FY19
• Grew revenue in all three segments…CS up 9%, ES up 5%, SIS up 1%
• Delivered best-in-class margins of 19.2%*…18% EPS* growth
• Achieved record $915M** in adjusted FCF…~60% returned to shareholders
• Accelerating revenue growth
• CS/ES segment and total company margin expansion…double-digit EPS growth
• Sustained FCF growth…dividends, share buy-back, M&A
• Re-shaped portfolio “high growth and high margin”
• Completed Exelis integration…exited FY17 with $145M in run-rate savings
• Invested in technology for future growth…R&D spend >5% of sales
• Accelerate revenue growth…CS up 8–10%; ES up 7–8%; SIS up 4–5%
• Expand margins…18-21% EPS growth
• Deliver FCF of ≥$1B…shareholder friendly deployment
*For non-GAAP reconciliations reference other quarterly earnings materials and the Harris investor relations website.
**FCF (free cash flow) = operating cash flow less capital expenditures; adjusted FCF excludes 3Q18 $300M voluntary pension contribution.
Executing on multi-year strategy
| 6Investor briefing
3.4%3.0% 2.9%
2.5% 2.4%
1.7%
0.2%
HRS
~5%
174
589 300
650
585
555
FY16 FY17 FY18
Successfully executed
Exelis integration
Proven track record…
2
Invested in differentiated technology
to position for continued growth 3
Reshaped, focus on
high growth, high margin portfolio1
($millions)
Original plan Actual
100 - 120
145FY17 exit rate
Peer
HRS
Broadcast
Comms (BCD)
Commercial
Healthcare
Cyber Integrated
Solutions (CIS)
Cyber Integrated
Solutions (CIS)
Aerostructures
Services
CapRock
Derisked the balance sheet through
debt paydown and pre-funded pension4
Exelis synergy savings
FY12 FY17
Synergies higher
than original plan…
…and a full year
ahead of schedule
($million)
Debt payments
Pension funding
Net debt/ adj. EBITDA
Pension %
funded 66%
80%
88%Industry leading 5% R&D Investment
2.9x 2.4x2.5x
| 7Investor briefing
…inflecting to top-line growth across all segments
5,932 5,900
6,182
4,024 4,150
5,212
FY16 FY17 FY18
($millions)FY18 Revenue up 5%
CS
ES
SIS
up 9%
up 1%
up 5%
• Tactical up 11%
• DoD up 35% on strong readiness demand and start of
modernization ramp
• International stabilizing
• Night Vision up double digits
• B:B of 1.3
• Strong growth on long-term platforms (F-35, F/A-18, F-16), up >20%
• Double-digit growth in weapon release systems
• International expansion…U.K. robotics and UAE battle management
• B:B of 1.3
• Strong classified growth
• Strengthened position in exquisite systems
• Increased share of wallet with existing customers
• Expanded addressable market – small sats
• Headwinds in Environmental systems
• B:B of 1.0
Revenue & Backlog
1.0 1.0 1.2B:B
Revenue
Funded
Backlog(year end)
| 8Investor briefing
Record EPS and free cash flow
*Non-GAAP EPS excludes adjustments incurred in the fiscal year. For non-GAAP reconciliations reference quarterly earnings and the Harris investor relations website.
**FCF excludes 3Q18 $300M and 4Q17 $400M voluntary pension contributions.
713
772
850
915
FY15 FY16 FY17 FY18
($millions)
• Returned ~$2B or 65% of FCF to shareholders over the
past four years
• Structural improvement in working capital performance
Generated strong free cash flow**
4.58
5.14
5.53
6.50
FY15 FY16 FY17 FY18
Continued EPS* growth
• Best-in-class operating margin of 19.2% in FY18
• Harris culture of operational excellence (HBX)
12%
CAGR 9%
CAGR
($)
| 9Investor briefing
($billion)
U.S. Government defense spending environment improving…
528 530
496 496 496522 524
601617
159
115
88 8559
5982
65
69
11 12 13 14 15 16 17 18 19
DoD budget
Government Fiscal Year (GFY)
OCO
Base
OCO
10% budget growth for 2018…additional
step up in GFY19
• Focus on warfighting, readiness and
modernization
Positive outcome for Harris with major
programs funded
• Tactical radios budget ~$6B over next 5 yrs
• 20 F-35 and 10 F/A-18 plus-ups in 18 omnibus
• 6-7% growth in classified budgets
International grant funding 2x of GFY16
$85B gap between investment account
budgets and outlays over the past three
years… driving sustainable growth over
medium-term
NDAA
686
| 10Investor briefing
…accelerating growth in FY19…
Accelerate revenue growth…all 3 segments
1
2
3
Drive flawless execution while expanding margins through operational excellence
Sustain cash flow with shareholder friendly capital deployment
CS ES S&IS
up 8.0 – 10.0% up 4.0 – 5.0%up 7.0 – 8.0%
up 6.0 – 8.0%
CS ES S&IS
19.3 - 19.7%
≥ $1B
29.5 – 30.5% 17.0 – 18.0%18.0 – 19.0%
FY19 EPS guidance of $7.65 to $7.85
Total Company Margin*
Free cash flow
Total company revenue
*Total company represents EBIT margin = earnings before interest and taxes as a percent of revenue. For non-GAAP reconciliations reference other quarterly materials and the Harris investor relations website. Segments
represent operating margin.
Guidance updated July 31, 2018, reflects adoption of new revenue recognition standard (ASC 606) – refer to 4Q18 quarterly earnings and related materials on the investor relations website.
| 11Investor briefing
…and the medium-term
Space & Intelligence Systems
Electronic Systems
Communication Systems
Business FY18
Tactical Comm.
DoD
Public Safety
Night Vision
Mission Networks
C4ISR/Battle Mgmt.
Electronic Warfare
Avionics
Classified
Civil
Commercial
up 9%
$1.9B
$2.4B
$1.9B
up 1%
up 5%
International
Medium term drivers
Medium term
up high-single digit
up high-single digit
up mid-single digit
Margin
~30.0%
~18.5%
~17.5%
• Continued classified budget
support; expansion into
adjacencies
• E. Europe stability; ME recovery;
installed-base modernizations
• Long-term platform upgrades -
international and domestic
• Budget pressures subside; new
customers; GPS IIIF
• UAE battle mgmt system roll-
out; regional expansion
• F-35 ramp and new content wins;
new and long-term platforms
• Product launches; new
customers
• Army, SOCOM, Marines
modernization programs to ramp
• Army modernization;
leverage int’l tactical channel
• Stable FAA budget; international
air traffic mgmt demand
• Value added services; space
recapitalization
| 13Investor briefing
Overview of Communication Systems
Industry trends supporting
long-term growth
Segment financials and key customers
U.S. Department of Defense
International governments
Australia Poland Iraq MexicoSaudi Arabia
Air Force NavyArmy Marines SOCOM
0
500
1000
1500
2000
2500
3000
FY17 FY18 FY19 Guid.
($million)
29.9% 29.5 – 30.5%
1,753up 8.0-10.0%
Revenue
non-GAAP
operating
margin
30.0%
1,903
Tactical, International
Tactical, DoD
Public Safety
Night Vision
Global security issues; increased focus on
warfighter readiness supported by strong
budget growth
Transforming voice-centric legacy equipment
with information-driven, fully-connected
air/ground networks
Converging ISR and communications into a
single tactical device
U.S. and international modernizations
underway
• Multi-billion dollar U.S. DoD modernization
• International modernizations
*
For non-GAAP reconciliations reference quarterly earnings and related materials on the Harris investor relations website.
*Guidance updated July 31, 2018, reflects adoption of ASC 606 – refer to 4Q18 quarterly earnings and related materials on the investor relations website.
| 14Investor briefing
HRS tactical grew into world leader
0.10.2
0.20.3
0.5
0.9
1.11.0
1.21.1
0.8
0.60.5
0.4 0.4 0.4
0.5
0.20.2
0.2
0.2
0.3
0.3
0.40.7
0.40.7
0.8
0.70.8
0.9 0.90.8
0.8
0.30.3
0.4
0.5
0.8
1.2
1.5
1.7
1.6
1.8
1.6
1.31.3 1.3
1.31.2
1.4
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
Domestic
International
Historical growth in HRS
tactical……led to HRS as #1 provider in
DoD and international
Harris
39%All others
Source: 10K and company estimates.
($billion)
$3.0B CY2017 ground tactical segment
Harris
40% All others
| 15Investor briefing
#1 position driven by commercial model
Cost excellence
• Product cost reduction while increasing
capabilities
• Footprint consolidation into one world-class
manufacturing facility
• Global supply chain
Continuous innovation
• Investment of internal R&D resources
• Broadest, combat proven product portfolio
• Unmatched portfolio of waveforms
Global customer intimacy
• Anticipating and driving requirements
• Extensive distribution network
• Large installed base
Commercial business model…
1 2
3
1
2
3
… enabled competitive edge
| 16Investor briefing
Continuous innovation and platform strategy driving differentiation
• Market-driven innovation through internal R&D provides differentiation
• Unmatched portfolio of waveforms with strong software development expertise
• Platform investing results in core technology shared across multiple products –U.S. and international
• Spiral development reduces time-to-market, provides up-sell technology refresh, reduce risk of obsolescence
| 17Investor briefing
332
569
666
1,160
1,000
1,143
1,363 1,351
'16 '17 '18 '19 '20 '21 '22 '23
NDAA
963
GFY18 PBR
DoD Tactical Radio-related budget increased to
~$6B over the next 5 years…
($million)
Army and USMC
modernization
driving growth
Army
Air Force
Marines/Navy
SOCOM
GFY19 President’s Budget Request
GFY
…with HRS awarded positions on all major U.S.
tactical radio contracts
Executing on well-funded DoD modernizations...
Army HMS Manpack2-channel multiband manpack
$12.7B
IDIQ
Multi-vendor
Army Rifleman Radio1-channel, 2-channel Leader radio
$3.9B
IDIQ
Multi-vendor
Navy and USMC tactical radiosHF and next-gen 2-channel radios
$765M
IDIQ
Single-award
SOCOM Tactical Comms2-channel multiband manpack
$255M
IDIQ
Single-award
SOCOM Tactical Comms (STC)2-channel multiband handheld
$390M
IDIQ
Single-award
COTS
* SOCOM = GFY20-23 prior administration’s budget request
716 712
867
964
641
| 18Investor briefing
…and maintaining international leadership
Harris’ large and growing installed base in over 100 countries
will continue to add stable and repeatable revenue
* Excludes trade restricted countries and the U.S.
HRS Share*
(Thousands of tactical radios)
Growth
Refresh
Growth
Refresh
2008 2018
Growth
Refresh
Future
Narrow
band
Wide
band
Penetrate new customer
segments, increase
share… Special Forces to
Army, Air Force
Expand footprint… Asia,
Europe
Grow into systems…
Australia, U.K
Leverage incumbency
(continuous upgrade and
refresh of growing installed
base)
Harris’ growing share of the
international installed base…
Growth strategy…increasing baseload
revenue over time
Revenue Mix
2008 2018
Falcon 1
Falcon 3
Falcon 2
345
SINCGARS
135
21% 31%
| 19Investor briefing
Expand into near adjacencies
Source: Company estimates.
Airborne radios and ISR
Manned
Unmanned
ARC-201
SINCGARS
Small Tactical
RadioSmall Secure
Data Link
Embedded
Modular Radio
Integrated network systems
• Target key standardization programs by
leveraging incumbency, customer intimacy
and strength of installed base
• Add/integrate command and control (C2) and
network mgmt. capabilities into ground
tactical network
• Differentiate solution by combining systems
engineering expertise with market leading
tactical radio networking technologies
• Growing demand for manned and
unmanned aerial platforms
• Leverage position on legacy Exelis ARC-201
platform
• Interoperability with Harris ground tactical
installed base
• Manufacturing scale and commonality with
ground tactical radio technology platforms
Ground
Network
Systems
Airborne
Tactical radio
segments
Growing addressable
segment by 2x
Raven
| 21Investor briefing
Overview of Electronic Systems
Electronic warfare capability in “near-peer” countries approaching U.S. – driving modernizations and multi-domain capabilities
DoD’s affordability initiative driving a shift towardslow-cost solutions and shorter technology cycles
Innovating to improve SWaP and to support converging multi-mission capabilities
Continuing F-35 ramp and desire to add new capabilities opening competitive window
FAA budget solid, supporting current NextGen requirements and future scope expansion
($million)
Aerospace and Defense Primes
International governments
EgyptAustralia TurkeyIraq UAE
U.S. Government customers
NavyMarinesArmyAir Force F.B.I. FAA
Industry trends supporting
long-term growth
Segment financials and key customers
• 80% fixed price
• 68% prime
0
500
1000
1500
2000
2500
3000
FY17 FY18 FY19 Guid.
2,251
20.6%18.6%
2,373
Revenue
non-GAAP
operating
margin
18.0 – 19.0%
up 7.0-8.0%
*
Mission
Networks
Electronic
WarfareC4ISR/Battle Mgmt
Avionics
For non-GAAP reconciliations reference quarterly earnings and related materials on the Harris investor relations website.
*Guidance updated July 31, 2018, reflects adoption of ASC 606 – refer to 4Q18 quarterly earnings and related materials on the investor relations website.
| 22Investor briefing
B-52ALQ-172
F/A-18E/FALQ-214 IDECM
CV-22ALQ-211
50-year history; strong incumbency on platforms
with long modernization tails…
…while investing in future EW systems for
variety of platforms
Platforms
= opportunity $M
ANALOG
DIGITAL
Hardware DefinedStove-PipedStandalone
Single MissionStatic Techniques
Software DefinedModular
NetworkedMulti-Function
Adaptive
Advanced Integrated Defensive
Electronic Warfare Suite (F-16)
Integrated Defensive Electronic
Countermeasures (F/A-18)
Software Defined EW
Multi-Function Array
Disruptor SRx™
Custom legacy systems
Software-defined open EW
Small size, weight, power systems
Fixed
Wing
Rotary
F-16AN/ALQ-211 AIDEWS
MH-47ALQ-211
MH-60ALQ-211
~$500 combined
Leverage electronic warfare position on long term platforms and develop next-generation technology
Gen 5
refresh F-35B-2F-22
~$1,000
~$2,500~$1,500
Rotary
Fixed
Wing
| 23Investor briefing
Solid position on F/A-18 platform
Navy F/A-18 service life extension program –
production into 2020s; service until 2040s
International partner expansion includes Australia,
Kuwait, Canada
Recently awarded upgrade for Digital Targeting
Processor system – a key element of Block 3
upgrade plans
Pursuing additional Block 3 upgrade opportunities
Kuwait
CanadaAustralia
USA
Top F/A-18 Opportunities
Fiber Channel Network Switch
(FCNS)
Distributed Targeting Processor (DTP) & Mass
Storage Unit (MSU)
ALQ-99 UEU Pod(Growler Only)
Multifunction InformationDistribution System (MIDS)Low Volume Terminal (LVT) 1
Digital Map Computer(DMC) Digital VideoMap Computer (DVMC)
Digital Memory Device (DMD)
Conformal Broadband Antenna Q-134
Active ElectronicallyScanned Array (AESA)
Fiber Channel Switch
Smart Bomb Rack UnitBRU-55
Integrated Defensive Electronic Countermeasures
(IDECM) ALQ-214
Revenue per shipset ~$3M
| 24Investor briefing
Strong position on F-35…
Accelerate growth in Avionics
…and global leadership in carriage
and release systems
PIC
Infrastructure
Components PIC
Multifunction
Advanced Data
Link (MADL)
Carriage and
Release weapon
racks
PIC
Panoramic Cockpit
Display, Advanced
Memory Sys
Smart Weapon
Racks
PIC
Classified
PIC
Open Systems
SONOBUOY LAUNCHING SYSTEM
F/A-18 Launching system for SDBII…
UNIVERSAL ARMAMENT
INTERFACE
P-8
KF-X SINGLE STATION RACKS
AND
SMART MULTIPLE CARRIAGE
Program is at the onset of production
ramp…executing against multi-year block
buy and expanding content per shipset
F-16SMART MULTIPLE CARRIAGE
| 25Investor briefing
Increase ELTS scope and leverage model into other Gulf Cooperation Council countries
ELTS = Emirates Command & Control System (ECCS) Land Tactical System
ELTS Initial Operations
Initial deployment of battle
management systems
(1 brigade)
ELTS Full Operations
Full deployment of battle
management systems
(4 brigades)
ELTS Sustainment
Maintenance of battle
management systems
EW Ops Center
Provide signals intelligence
reports to UAE armed
forces commands
ELTS Joint Systems
Emirates command and control
system joint system for forces
interoperability
ELTS Radios
Opportunity for Communication
Systems to provide Harris
radio solution
ELTS
IOC
$189M
ELTS
IOC
$189M
~$900M
ELTS
FOC
ELTS
O&M
EW
Ops
Center
EJS
Radios
Battle management
systems integration
Moving from voice to
data-centric operations
Providing situational
awareness and C2 software
ELTS Scope
Expanding into C4ISR integrated battle management systems for land forces
(300 Vehicles)
Completing in
Q1FY19
| 26Investor briefing
Leverage success in U.S. to drive international expansion
Positioned on FAA NextGen Growth and expansion
Continued success with $2.9B in wins on NextGen programs
FAA Telecommunications
Infrastructure (FTI)
Early FAA successes led to FTI cornerstone win – July 2002
20-year, $5B
Nationwide air traffic telecommunications network providing critical voice, data, video
Harris owned and operated
Excellent performance
99.999% network availability
Connects 4,400+ FAA, DoD facilities
25,000+ services supporting 50,000+ users
2003 2008 2015
A Model Public-Private Partnership
Bandwidth
Up 5x
FAA Telecom Spend
Down 50%
Comms-Related
Air Traffic Delays
Down 99%
ADS-B: largest air traffic control surveillance network in world; aircraft broadcast position to ground
DCISSWIM CSS-Wx
Harris owned and operated
650+ radio stations
Covering 4 million miles2 of U.S. airspace with 1,100 surveillance sensors
Leveraging 25-year trusted FAA partnership to grow air traffic management franchise
Leveraging aviation grade surveillance solution for emerging UAS market
Positioned to provide real-time Detect-and-Avoid network
Early partnerships with FAA – supporting all 7 FAA UAS test sites, including feasibility studies
| 28Investor briefing
Overview of Space and Intelligence Systems
• 28% fixed price
• 72% prime
• Global instability…new threats, increased security issues
• Space transition from safe-haven to theater-of-war…need for dis-aggregated solutions
• Strong intelligence budget support... Merging of DoD and IC budget line items
• U.S. Government adopting commercial models to lower costs and provide flexibility
• Integrated solutions focused on analyticsU.S. Government customers
Commercial customers
NOAA NRO NSADIA NGAAir Force
Industry trends supporting
long-term growth
Segment financials and key customers
1,902 1,921
-
500
1,000
1,500
2,000
2,500
3,000
FY17 FY18 FY19 Guid.
16.4%17.0 – 18.0%
Up 4.0-5.0%
Revenue
non-GAAP
operating
margin
17.5%
*
Classified
Civil
Commercial
($million)
For non-GAAP reconciliations reference quarterly earnings and related materials on the Harris investor relations website.
*Guidance updated July 31, 2018, reflects adoption of ASC 606 – refer to 4Q18 quarterly earnings and related materials on the investor relations website.
| 29Investor briefing
Capitalize on strong demand for Harris broad solutions in a robust classified environment
7076
80 79 76
68 69 6771 73
79 81
08 09 10 11 12 13 14 15 16 17 18 19
($billions)
Increasing threats driving higher
intelligence budgets• SENSOR program - supporting missile warning,
defense, and space surveillance missions
• 50-year trusted partner with Intelligence Community
• Developing most advanced sensor technology… with data processing and analytics
• Moving from component provider to sub-systems to full mission solutions…new small-sats franchise
Focus and execute on high-value programs…
…and strengthen position in exquisite space
systems
Intelligence
agencies
DoD/Military
GFY
| 30Investor briefing
Leveraging capabilities from exquisite payload provider to small sat end-to-end solutions
Deployable mesh reflectors
Telescopes and other space
electronics
Specialized manufacturing
processes and
infrastructure for mission-
enabling technologies
RF Payload, Mission Mgmt.
Payload Command & Control
Won contract for 81 hosted
payloads; expanded to 230
by selling excess SWaP
Expanded launch options
shift responsive market to
SmallSats… Harris
recognized shift occurring
1960’s
1970’s
2012
Specialty sensors and
antenna/RF subsystems
Telescopes with supporting
electronics
Penetration in ISR, Weather,
and Communications
missions
Fully integrated modular RF
SmallSat and supporting
ground station
Two recent pathfinder
wins…new classified award
>$100M
Launching multi-purpose
small sat: Harris SAT 1
Today
Exquisite
Technology Enablers
Exquisite
Payloads & Subsystems
Hosted Payloads
SmallSat End-to-End
Solutions
| 31Investor briefing
Execute on civil programs and position for future opportunities
Korean advanced meteorological imager
Providing world-class solutions to
Environmental customers…
GOES-R program
…and a 40+ year history providing precision
timing solutions on every GPS satellite
Sensors to collect weather,
climate and ocean
information
Enterprise-wide backbone
to ingest, process,
distribute weather data
Harris technologies over the years
• Interplex waveform generation – GPS II
• Advanced timekeeping – GPS II-M
• Digital waveform generation – GPS II-F
• Modular Mission Data Unit (MDU) – GPS III
Global Positioning System (GPS) III
Developed and demonstrated a fully digital
solution for GPS III vehicles 11-32 re-compete
Fully Integrated GPS
Payload
Next-Gen GPS Operational
Control System (OCX - ground)
Provides 4x data, 4x resolution to improve
weather forecasting
1 of multiple international weather imagers
Maintain global position while expanding into new
customer base with Air Force weather franchise
| 33Investor briefing
“Best-in-class” margins…room for further expansion
*Non-GAAP operating margin excludes adjustments incurred in the fiscal year. For non-GAAP reconciliations reference quarterly earnings and the Harris investor relations website
…driven by focus on operational
excellence and flawless program execution
• Adoption of Harris Business Excellence (HBX)
• Culture of continuous improvement
• Improved program execution
• Increased factory and supply chain productivity
• Exelis integration and synergy savings
18.7%
19.2% 19.2%
19.3% - 19.7%
FY16 FY17 FY18 FY19 Guide MediumTerm
Medium term initiatives
• Building the foundation for digital transformation
• Dev Ops implementation to accelerate innovation
while increasing productivity
• Continued supply chain momentum to improve quality
and reduce product cost
Operating
margin*
Proven track record of margin
improvement…
FY18 and prior initiatives
| 34Investor briefing
Driving digital transformation
28
17
12
3
24
10
5 3
Baseline FY18 FY19 FY21
Standardizing ERP systems & transitioning
to cloud based infrastructure…
…building the platform for digital
transformation
0 10%
30%
100%
Baseline FY18 FY19 FY21
Cloud Migration Roadmap
ERP System Roadmap Intelligent Factory
Connected Supply Chain
Digitized payables and billing
processes
Automated asset tracking
Robotic Process Automation
Digital Engineering
Connect current standalone
manufacturing elements
Increased capacity
Reduced downtime
(select examples)
Subcontracts digitization
Integrated buyer dashboard
Cybersecurity risk management
Model-based systems engineering
Product Lifecycle Management
DevOps adoption
# ERP
systems
# data
centers
| 35Investor briefing
DevOps adoption driving accelerated and cost effective innovation
Design
Tools
Code Integration & TestReq. &
Archit.
1 2 3 4 5 6
years
Tools System
Test
DeploymentWaterfall
Timeline
DevOps
Development
Timeline
Req. &
Archit.
Software development improvements increasing productivity and time to market
64%
Australia Land 200
Tactical Network
32%
20%
Decreased integration & test defect escapes550 defects 350 defects
Decreased total defect rework labor 4.4K hrs 3K hrs
Decreased project management hours2.5 FTE 2 FTE
98%
37X
12X
Reduced build time per capability211 minutes 3.75 minutes
Faster capability release time2.75 days < 3 hours
Increased release frequency2-3 per year 2-3 per month
| 37Investor briefing
FY18: Strong execution against strategic priorities
Grow revenue across all 3 segments1
*For non-GAAP reconciliations, reference other quarterly earnings materials and the Harris investor relations website. **Adjusted FCF(free cash flow) = operating cash flow excluding 3Q18
$300M voluntary pension contribution, less capital expenditures.
✓
3
2
Drive flawless execution while
maintaining margins through
operational excellence
Maximize cash flow with
balanced capital deployment
✓
✓
Revenue up 9%...Tactical up 11%, Night Vision up double
digits
• DoD up 35% and International down <1%
• Strong Tactical order momentum from readiness and
modernization programs and expansion into adjacencies
• Tactical backlog up 82%
Revenue up 5%...first half ~flat, second half up 9%
• Long-term platforms (F-35, F/A-18, F-16) up >20%...orders >$1B
• International expansion…U.K. robotics, UAE and FTI India
• Backlog up 30%, $17B pipeline, $4.5B proposals outstanding
Revenue up 1%...Classified growth offset by Environmental
headwinds
• Classified orders up double digits…hosted payloads leadership,
increased share of wallet with existing customers & expanded
addressable market
• Orders growth of 6%, B:B >1.0, $14B pipeline
• Communication Systems
− Night Vision: improvement in yield and OTD; strong win rate
• Electronic Systems
− F-35 on-time delivery >99.95%...higher content
− F/A-18 100% OTD over 20 yrs, cycle time down 10%
• Space & Intelligence Systems
− SENSOR on-time delivery 90% (from 35%)
− GPSIIIF - developed fully digital payload
Communication Systems
Electronic Systems
Space & Intelligence Systems
• Record adjusted FCF of $915M**…116%* of NI
• Returned ~60% to shareholders…$272M
repurchases & $272M dividends…double-digit
10-yr CAGR
| 38Investor briefing
Strong 4Q18 and FY18 financial results
All financials are as reported per the 4Q18 earnings release
*For non-GAAP reconciliations, reference other quarterly earnings materials and the Harris investor relations website.
**Adjusted operating cash flow excludes 3Q18 $300M and 4Q17 $400M voluntary pension contributions. Adjusted FCF (free cash flow) = adjusted operating cash flow less capital expenditures.
| 39Investor briefing
FY19 guidance* summary
By Segment
CS
ES
SIS
Revenue
up 8.0 – 10.0%
up 4.0 – 5.0%
up 7.0 – 8.0%
Margin**
29.5 – 30.5%
17.0 – 18.0%
18.0 – 19.0%
Total Harris
Revenue
EPS
$7.65 – $7.85
Margin**
19.3 – 19.7%
FCF**
up 6.0 – 8.0%
≥ $1B
*Reflects adoption of new revenue recognition standard (ASC 606)
**Harris represents EBIT margin = earnings before interest and taxes as a percent of revenue. For non-GAAP reconciliations reference other quarterly materials and the Harris investor relations
website. Segments represent operating margin.