Post by Admin on Oct 24, 2019 18:49:01 GMT
Raytheon executives like to say their products hit the sweet spot of the Pentagon's desire for next-generation weapons. The company makes fast-flying hypersonic missiles, radars that can track all sorts of flying objects, anti-missile interceptors, and more.
Last week, the company locked down another big deal to replace the Army's Patriot missile defense radar. This new Lower Tier Air and Missile Defense Sensor is supposed to track drone swarms, maneuvering cruise missiles, and fast-flying hypersonic weapons — all expected on the battlefields of the future.
And that initial $384 million contract covers just a half-dozen of the 250 Patriot radars operated by the United States and its allies, leaving lots of room for more sales.
"This is a $20 billion-plus type of opportunity for us over a number of years," Raytheon CFO Toby O'Brien told me this morning before the company's quarterly earnings call with Wall Street analysts. "It's not going to happen overnight, but it's significant financially, from both an upgrade point of view and then beyond that sustainment and maintainability of these fire units. It's significant."
"The win really reinforces the company's position as the leading air and missile defense radar capability provider as well," O'Brien said.
Here's some rapid-fire Q&A from my chat with O'Brien, who is slated to continue on as CFO under the proposed Raytheon-UTC merger.
Q. What are the next big milestones in the planned Raytheon-UTC merger now that shareholders approved the deal?
A. Really, the next big step is continuing to work closely with regulatory authorities, both in the U.S. and other jurisdictions, to get the required clearances and approvals for the merger. Things are on track there. It's not a Raytheon thing to do, but UTC obviously has to successfully spin off their Carrier and Otis businesses. So bottom line, we're confident in the merger. We believe it's on track [and] that it's going to be good for everyone, for shareholders, customers and employees.
Q. Now that the Army has disqualified Raytheon and its German partner Rheinmetall from competing to replace the Army's Bradley Fighting Vehicle, how is your company responding?
A. Raytheon, with our partner, we remain ready to engage [and] work with the Army, trying to identify if there is a potential path forward back into the program...in order to enable competition, which, I think generically is clearly in the best interest of the customer. We will continue to work that and stand by ready to do so. At the end of it, obviously, we're going to do what the Army wants and what's right for the Army, but we think we've got a good offering. The vehicle that we were putting forward here had been selected for a similar program in Australia. We're confident in the capabilities and the features that the offering would have and we'll keep working with all stakeholders here to see if there's anything we can do going forward.
Q. Can you talk about new hypersonic or counter-hypersonic work?
A. We continue to work in the same areas that we've talked about in the past. We did get some incremental work. Our backlog has grown to about $750 million through the third quarter, based upon some of the awards that we saw in the quarter, which mostly was add-ons or follow-ons to work that we were working on. We'll probably do about $300 million in revenue, combined on hypersonics and counter-hypersonics work this year. We're progressing well and we're pleased with what the teams are doing there.
Q. What are the next big milestones in the planned Raytheon-UTC merger now that shareholders approved the deal?
A. Really, the next big step is continuing to work closely with regulatory authorities, both in the U.S. and other jurisdictions, to get the required clearances and approvals for the merger. Things are on track there. It's not a Raytheon thing to do, but UTC obviously has to successfully spin off their Carrier and Otis businesses. So bottom line, we're confident in the merger. We believe it's on track [and] that it's going to be good for everyone, for shareholders, customers and employees.
Q. Now that the Army has disqualified Raytheon and its German partner Rheinmetall from competing to replace the Army's Bradley Fighting Vehicle, how is your company responding?
A. Raytheon, with our partner, we remain ready to engage [and] work with the Army, trying to identify if there is a potential path forward back into the program...in order to enable competition, which, I think generically is clearly in the best interest of the customer. We will continue to work that and stand by ready to do so. At the end of it, obviously, we're going to do what the Army wants and what's right for the Army, but we think we've got a good offering. The vehicle that we were putting forward here had been selected for a similar program in Australia. We're confident in the capabilities and the features that the offering would have and we'll keep working with all stakeholders here to see if there's anything we can do going forward.
Q. Can you talk about new hypersonic or counter-hypersonic work?
A. We continue to work in the same areas that we've talked about in the past. We did get some incremental work. Our backlog has grown to about $750 million through the third quarter, based upon some of the awards that we saw in the quarter, which mostly was add-ons or follow-ons to work that we were working on. We'll probably do about $300 million in revenue, combined on hypersonics and counter-hypersonics work this year. We're progressing well and we're pleased with what the teams are doing there.
