Raytheon pressing forward on its tech & revenue synergy initiative

The promise of greater technology and revenue synergies for a government customer demanding more from the industry led to last year's creation of Raytheon Technologies. Now in year two, here is how that is playing out for the company's segment focused on systems and solutions integration.

Two priorities have been at or near the top of Raytheon Technologies’ agenda since last year’s merger that created the company: get the integration right and navigate the pandemic-caused economic tumult.

Raytheon certainly has more control over priority number one but much less on the second. The pandemic remains an overhang over the company’s commercial aerospace business, albeit with those headwinds lifting as travel ramps back up.

Within Raytheon itself, Roy Azevedo has been tasked with leading the consolidation of two legacy segments into the intelligence and space business that he is president of.

Technology synergies and greater capacity for investment in developing new innovations drove the combination of “old” Raytheon with United Technologies Corp. From Azevedo’s perspective, that big picture idea for what is now “RTX” in shorthand becomes more pronounced at the segment level.

“Intelligence and Space: its legacy and our future is going to be based on discriminating technologies,” Azevedo told me. “We’re part of the technology play and some of that has already borne some fruit in some of our revenue synergies.”

Raytheon Technologies climbed two spots year-over-year to reach No. 2 on the 2021 Top 100 with $6.6 billion in prime contracts. Overall revenue for Arlington, Virginia-headquartered Intelligence and Space was $15 billion in calendar year 2020 on a pro forma basis. Raytheon sees the segment’s sales growing low-to-mid single digits this calendar year.

What is now a 37,000-employee Intelligence and Space organization was formed by combining the legacy Raytheon Intelligence, Information and Services segment with the Space and Airborne Systems segment. Azevedo led the SAS segment as president before the merger.

IIS was certainly the most complex of “old” Raytheon’s segments given that business housed much of the company’s technology and solutions integration work, mainly centered around software.

Intelligence and Space sounds very much the same, given how Azevedo said the business has around 5,000 programs with none representing more than 2 percent of “new” Raytheon’s annual revenue.

The revenue split is around 80-20 between defense and civilian customers with 10 percent from international markets. Azevedo characterized the segment’s offerings around three main areas: sensing and effects; command/control and communications; and cybersecurity, training and other services.

“Part of the strength of this business is the diversity,” Azevedo said. “It does provide a level of protection, because we’re so diverse, against possible budget fluctuations.”

Back to the revenue synergies: Azevedo said Raytheon was awarded nearly $100 million of them during year one when it comes to joint efforts between the company’s Intelligence and Space and Collins Aerospace business segments.

Those two divisions have other “rather large proposals” that are being evaluated by government customers, Azevedo added.

One of those agency decisions to watch is a takeaway bid for the Federal Aviation Administration’s $3.5 billion telecommunications contract called FENS, for which Raytheon is teamed with MetTel. There again is an example of Raytheon’s Intelligence and Space and Collins Aerospace segments working on the same opportunity,

It is also worth noting that Raytheon already is a partner to MetTel on the governmentwide EIS next-generation telecom contract awarded nearly four years ago.

Along with the revenue synergies, the other big rationale behind the merger that Azevedo pointed to was the sharing of technologies between the commercial aerospace and defense sides of Raytheon.

“We’re often having conversations and there are plenty of forums that have been available at all levels of our organization, where we go out and talk to the other businesses to see what we may be able to partner with,” Azevedo said.

One example he offered was how Intelligence and Space works with the engine and propulsion making Pratt & Whitney segment of Raytheon. The former segment does not buy many motors like P&W does, but Azevedo said their technologies and scientists often contribute to what Intelligence and Space is working on.

“We pull them in for even things like independent reviews of design, and using their expertise is something that’s already demonstrating to be a valuable asset for this business,” Azevedo said.

Internal focus has obviously been paramount for Raytheon to make the most out of the merger, but an opportunity that emerged late last year to acquire small satellite maker Blue Canyon Technologies was one the buyer could not pass up.

Azevedo said when Raytheon looked at where it was in the space value stream, the company found it was not a player when it came to payloads onto satellites.

“We never were looking to get into some of the big satellite programs as a prime because that is going to be something that is very, very long term,” Azevedo said. “If you take a look at where the modernization of space is going, it’s proliferated LEO (low earth orbit) small satellites.

“So in terms of the market and customer desires, that matched.”

As did the augmenting technologies Blue Canyon has, such as stable electro-optical infrared payloads to help identify objects from long distances.

Stability is the word Raytheon hopes will both further define the world at-large and the commercial aerospace market it participates in as well, even as a recovery in travel continues to take shape.

That slow return to pre-pandemic travel activity, including international, would also give Raytheon the commercial-defense balance it envisioned as a merged company.

“With regards to the defense side of things: we had a great first year, we’ve had a great first quarter, we’re going to leverage all of that first quarter to continue through the year and continue the growth that we experienced in our first year,” Azevedo said.

(A future episode of Project 38 will feature my full conversation with Azevedo that also includes his views on Raytheon’s plans for the post-pandemic future of work, what that means for recruiting and retaining talent, and digital transformation trends across industry and government)

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.