Raytheon 3Q13 Earnings Call Notes

posted in: Notes | 0

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“As you know, the U.S. government was shut down for 16 days this month, and we’re operating under a sequestration and yet another CR. To call this a very challenging environment would be an understatement.

Clearly, this is not the way we’d prefer the budget process to operate. No one wants to have to manage their strategic business plans under such circumstances. But by working closely with our customers and focusing on performance, we continue to deliver the solutions our customers need.”

“Financially, the shutdown impact was minimal and has been captured in our updated financial guidance. But personally, the situation was hard on the individuals and the government and the industry who devoted their entire careers to supporting our nation. And while a larger company such as Raytheon have the ability to mitigate the impact to our workforces, our industry supply base does not. These companies are often small and minority owned, don’t have the same resources or flexibility to weather these ongoing budget storms.”

“we’re raising our guidance for sales, EPS and cash flow for the year. This kind of performance doesn’t just happen, rather, it’s a function of a dedicated team working every day to find new ways to improve, to lower our cost and to respond more quickly to our customers’ needs.”

“The growth we are experiencing in our international business partially offsets the decline we’re seeing in our domestic business as a result of sequestration and CRs.”

“we do expect strong bookings for the year, particularly international, and there’s several significant awards that we anticipate in the quarter. As I mentioned, every one of them has got a milestone plan that’s associated with them. They’re reviewed daily or weekly, depending on the business or the program.”

“we’re planning for sequestration to continue. I mean, that’s the environment we’re in. I’d like to think that this budget process is not working. I’ve grown up in an industry where we have appropriations bill. There was a sequence to what we’re doing. You could see it, you could plan on it. Today, we operate under CRs. We have another one that goes to January 15.”

“From what I understand, our customers are planning 2 budgets. Which one gets submitted, I can’t tell you. That’s a product of somebody else making that decision. I just know that American industry really likes to have some finality in what we do. And if you give us a number, we know how to put our strategies and plans in place to make that happen.”

” In my experience, in price, when you buy that way, you don’t get all the capabilities you want, and so they’re going to have to deal with that.”

“clearly, I’m an engineer by training and a technologist, I’d like to think of myself that way. And people, when they look at U.S. systems, they are still state-of-the-art. What people don’t realize is that life cycle costs really run into these decisions. And if you don’t take that into account, you’re going to be really sorry with some stuff you bought. And we know of systems around the world produced by other countries that aren’t working and can’t be [ph] manned. And you have to almost learn that lesson the hard way. So we’ll see what happens here.”

“our customers stay with us because they recognize that we consistently deliver value and equipment to them to be able to handle the threat environment that they’re in.”

“The Army is under the most pressure. They have the largest headcount of any of the services, and the hard choices are strategically, how do you handle the future, do you do it with a smaller service? Do you do it that’s more mobile, more light, and how do you think through that? And when you come from very high numbers to a smaller number, it really makes it hard for them to do that, plus planning, do they have sequester, don’t they have sequester? That’s really tough on them. We’re really trying to work with them in any way we can. But Dave and I would both tell you that, from our standpoint, planning for sequester, we know exactly in our minds what the Army will be doing and that’s in our forecast as we look at things. And we’re not centric around any one service. And from that standpoint, we could weather the storm and why our portfolio is probably in better shape than others.”

“if you look at missile defense, it’s one of the key areas going forward. The other part of missile defense is it never stands still from my standpoint, have been doing this a long time. When you realize you need missile defense, you put it in, then you go through the training to get your troops up to speed. But the threat keeps evolving and changing. ”

“the supply base, and especially minority or small-owned businesses, they are the heartbeat of this country. And for some of them, they’re really key to what we do. So we work with them and try and help them in any way. We send Six Sigma teams in to some of our suppliers to help them be more competitive, that’s good for us and it’s good for them. We’ve sent people in to help on technical issues. And financially, if they’re in trouble, we’ll sit down and work with them to figure out what we can do to be able to get through this. I mean, the shutdown was really hard. I mean, we spent time every day trying to figure out how to make sure that people were getting paid. How did we move, work around? I mean, one of the beauties in our company is with our common systems and processes. We were able to do things, and it identifies areas for us real quick. But it is an area that, as a person that’s been in this industry my whole career, I worry what we’re doing to that, into the business, as a country.”