Defense Business Brief: The longest earnings call intros; High price tag for new USAF fighter; Poland to get UK missile; and more.

Well, here’s something new. As we close out earnings week for the big six U.S. defense companies, L3Harris Technologies is shaking up how they relay financials to investors.

Typically, a company posts its quarterly SEC filing with an accompanying press release in the morning. Then, a few hours later, the CEO and CFO hold a call with Wall Street equity analysts. That call usually begins with the CEO and CFO making introductory remarks—in which they basically read the aforementioned press release before taking 30ish minutes of questions from the analysts. Sometimes, those opening remarks drag on (more on that below).

But L3Harris Technologies CEO Chris Kubasik has decided to do something a little different. Thursday evening after the closing bell, the company posted what it calls an “investor letter” along with its quarterly SEC filing. Instead of holding the call a few hours later, it held its call Friday morning. And instead of lengthy opening remarks, much of the 45-minute-plus call was dedicated to Q&A.

“You know, we're always looking at ways to improve and challenge the status quo,” Kubasik said. “Instead of issuing a press release at 7:30 this morning, and … read[ing] prepared remarks, which were very similar to the press release and maybe with some added color, and then having to follow along with our web charts, which are just a graphic depiction of what we were going to say anyway, we thought we'd try something new and come out with what we're calling our investor letter and putting everything in one document. And that allows us all the time today to focus on the questions and talk about what's on your mind.”

The new format was well received by analysts, with several of them calling it efficient. 

“Thanks so much for the bold, new, efficient format. I like it,” Jefferies analyst Sheila Kahyaoglu said.

The change in earnings call format is the latest move by Kubasik to break the mold in a sector that tends to avoid any type of change. Before L3 Technologies merged with Harris in 2019, then-L3 CEO Kubasik made a number of organizational changes to the company so it operated more like a commercial tech firm. He’s continued that trend since becoming CEO of L3Harris last year, restructuring the company so it can respond more quickly to urgent national security needs. 

“I think we're going to do this again, and continue to do it at least for the rest of the year and see if we can come up with something even more creative,” Kubasik said of the new earnings format.

To give you a sense of just how long each CEO and CFO spends on opening remarks, I’ve crunched the numbers based on the latest round of earnings calls: 

Company Call Length Intro Remarks % of time spent on intro

Boeing 63:00 34:00 54%

General Dynamics 54:00 21:00 39%

Raytheon Technologies 56:00 20:00 36%

Northrop Grumman 60:00 19:45 33%

Lockheed Martin 60:00 18:30 31%

L3Harris Technologies 47:00 3:30 7%

As you can see, most openings are roughly 20 minutes, with Boeing spending far more time on its opening comments than others, and L3Harris spending the least. Boeing used to allow reporters to ask questions on the final 15 minutes of its quarterly earnings call, but that has stopped in recent years amid its 737 Max woes. 

Air Force Secretary Frank Kendall raised some eyebrows this week when he told a House panel that the service’s next-generation fighter jet, called the Next-Generation Air Dominance, will cost “multiple hundreds of millions of dollars … on an individual basis,” Air Force Magazine reports. For comparison, the Air Force's new B-21 stealth bomber is expected to cost about $600 million per plane, Northrop Grumman CEO Kathy Warden said Thursday during the company’s quarterly earnings call. An F-35A stealth fighter currently costs less than $80 million per plane.

Boeing rolled out the first of 351 T-7A pilot training jets it plans to deliver to the Air Force in the coming years. 

Poland plans to acquire an MBDA-made air defense weapon, the United Kingdom announced this week. “This missile is at the forefront of threat detection and deterrence, with Poland’s short-range air defence system seeing even greater alignment between our Armed Forces,” Defence Secretary Ben Wallace said.

Finally, something fun. Former professional hockey player Chris Pronger put together an amazing Twitter thread about how NHL team travel has changed over the years. AvGeeks, consider this your weekend reading.

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