L3Harris planning to use Defense Production Act funding to boost Aerojet Rocketdyne capacity

By Shelley K. Mesch  / October 27, 2023

L3Harris Technologies plans to use $216 million in Defense Production Act funding to boost capacity and long-term growth at recently acquired Aerojet Rocketdyne, executives said today.

Acquired on July 28, solid-rocket motor supplier Aerojet brought in $455 million in revenue for L3Harris in August and September, according to the company’s third-quarter financial earnings letter released last night. The revenue was generated predominantly from contracts for the Guided Multiple Launch Rocket System, Terminal High Altitude Area Defense system and Patriot Advanced Capability 3 missile system.

“Operationally at [Aerojet], my team and I are focused and actively working to stabilize and enhance performance on a few visible programs that are behind schedule,” CEO Chris Kubasik wrote in the letter. “We are leveraging L3Harris standard tools, processes and global operations resources, and we expect to drive continuous improvement throughout the AR portfolio.”

The DPA funds would go to increasing capacity, moving production lines and digitizing engineering, he said during the earnings call today.

“I think when we look at everything that has happened since we signed the deal in December,” Kubasik said, “there should be no dispute that the demand for these products, as they flow through the primes in most cases, is up significantly in the U.S. and in the world, which is why we need to focus on the increase in output.”

L3Harris has shut down Aerojet’s headquarters in California and is “on track to get the $40-50 million of cost savings” it had estimated previously Kubasik said.

With the Aerojet acquisition, L3Harris is increasing its 2023 guidance from $18-$18.3 billion to $19.2-$19.4 billion.

Revenue across the business was up 16% year-over-year in the third quarter, according to the letter. The communications systems and space and airborne systems segments were up 18% to $1.3 billion and 6% to $1.7 billion respectively but integrated mission systems revenue was down 4% to $1.6 billion.

The communications systems growth stems primarily from acquiring Viasat’s Link 16 tactical data links business last year and a “higher domestic volume” in tactical communications.

In the third quarter, L3Harris delivered the first of 10 EC-37B Compass Call aircraft for operational testing and began the checkout procedures on four missile-tracking satellites for the Space Development Agency’s Transport Layer Tranche 0.