L3 Establishes Business Segment To Focus On ISR, Bolster Growth And Boost Margins

As part of L3 Technologies’ [LLL] major transformation plans this year, the company on Thursday said it has consolidated its Aerospace Systems and Sensors Systems business segment into one focused on intelligence, surveillance and reconnaissance (ISR) solutions for customers worldwide.

The $4.7 billion Texas-based ISR Systems segment supplies sensor solutions from the “ocean floor to space,” according to L3’s website page for the segment, which is led by Jeffrey Miller, who previously was president of Sensor Systems.

Last week on L3’s second quarter earnings call, Christopher Kubasik, chairman, president and CEO, said a consolidation was imminent as the company seeks to be a “non-traditional sixth prime” to deliver integrated solutions, more quickly and at lower costs to its customers.

Christopher Kubasik, L3 Technologies Chairman, President and CEO. Photo: L3 Technologies

Christopher Kubasik, L3 Technologies Chairman, President and CEO. Photo: L3 Technologies

“In order to move up the food chain and deliver more integrated solutions, we need to be better coordinated in developing technology and agile in addressing customer needs,” Kubasik said on the July 26 analyst call.

As part of Thursday’s announcement, Kubasik said in a statement “The increased scale of our new ISR Systems segment highlights our attractive position as a global ISR prime contractor and accelerates our ability to address our customers’ increasingly complex needs.” He also said the realignment will help L3 work toward achieving a 12 percent operating margin in 2019.

The ISR Systems segment conducts operations in the U.S., Canada, Europe and Australia, and some of its business units, among others, include Brashear, Cincinnati Electronics, EO/IR, Inc., Insight Technology, OceanServer and Wescam.

Mark Von Schwarz, president of Aerospace Systems, will retire once the transition is complete.

Early last December, just weeks before assuming the role of CEO, Kubasik outlined his plans for transforming L3 into a company able to provide more integrated solutions to its customers more rapidly and before technologies become obsolete.

At $4.7 billion in sales, the ISR segment is L3’s largest, accounting for nearly half of the company’s revenue. L3 didn’t change its financial guidance for 2018, which calls for sales between $10 billion and $10.2 billion. The Electronic Systems segment projects between $3.2 billion and $3.3 billion in sales this year while Communications Systems expects its top line to be between $2.1 billion and $2.2 billion.





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