Christopher E. Kubasik
Chair and Chief Executive Officer at L3Harris Technologies
Thanks, Dan, and welcome to the IR team and your first earnings call with us. Last month marked the five-year anniversary of the transformative merger between L3 and Harris and the creation of the industry's Trusted Disruptor, a proven alternative to both traditional primes and new entrants focused on relentless innovation to deliver capability with the speed, passion and determination that our customers' demand in executing their most challenging missions.
Unlike traditional primes and new commercial entrants, we utilize both commercial and government business models with significant presence in each. We deliver commercial short cycle products, such as software defined radios. We also execute on critical long-term programs that span the entire lifecycle, from development to production, including the international exports and ultimately, sustainment and support.
Our diverse and platform agnostic portfolio enables us to work across the ecosystem as a prime, a sub or a merchant supplier to deliver the best solutions for our customers and the best returns for our shareholders.
Further, as a Trusted Disruptor, we are actively looking for opportunities to partner with small and large companies where it makes business sense. It was one year ago that we announced a successful addition of Aerojet Rocketdyne to the L3Harris portfolio. This acquisition increases our content on missile platforms and positions us for growth in new markets.
A recent example is our role on the Missile Defense Agency's Next Generation Interceptor program. This leverages our industry-leading propulsion technology and innovative attitude control systems to defend against long-range ballistic missile threats. We are also integrating legacy L3Harris electronics capabilities.
Since closing the acquisition, and as we've discussed on our last two earnings calls, we've made substantial progress in improving the operational performance of the business and we continue to make investments to increase capacity and drive efficiencies to meet our customers' growing demand, including the expansion of key facilities in Arkansas, Alabama, and Virginia. As a result of these combined efforts, we have reduced overdue deliveries by nearly 40% in the past 12 months. Several of you had a chance to visit our Inert Center of Excellence in Huntsville, Alabama, and we know you left with a better understanding of the business and the progress to date.
Since the merger, we focused on integrating and shaping the portfolio to align with national security priorities and the future of warfare. We're in the right businesses, spanning all domains while earning the highest margins in the industry with further upside potential.
Looking forward, we remain committed to meeting the expectations of our customers and creating additional value for shareholders, and our second quarter reflects progress towards achieving these commitments.
We reported strong financial results for the second quarter, highlighted by segment operating margin of 15.6%, up 80 basis points versus the prior year, and non-GAAP earnings per share of $3.24, up 9%. These results underscore our focus on execution and driving profitable growth. On the demand side, our pipeline of domestic and international opportunities remains robust. And our total backlog stands at $32 billion.
In our Communication Systems segment, we ended the quarter with record backlog of over $6 billion from increasing demand for our resilient communication products. This is driven by DoD and international customers' needs for seamless, resilient communications across multiple domains as they face increasingly sophisticated near-peer threats. We continue to work with these customers to help them avoid the inherent vulnerability that comes from relying upon commercial communication and satellite network providers for their critical missions.
Our Tactical Communications business continues to see growing international demand for European and NATO allies, totaling more than $1 billion in the near-term opportunities and a continued robust pipeline of greater than $10 billion. Overall, we are continuing to see plenty of opportunity for resilient communications, propulsion and ISR to highlight a few of our capabilities.
We continue to make strides in our operational performance, which is reflected in our expanding margins. Programmatically, we're beginning to realize the benefits of our maturing risk management processes and disciplined bid rigor, as well as the initial benefits of our LHX NeXt program, and that is showing up in our program results.
Our first half performance provides confidence for the remainder of the year, leading us to increase our guidance, which Ken will discuss in more detail. I'm pleased with the progress we're making on our LHX NeXt initiative in the second quarter, our efforts focused on workforce and infrastructure optimization, including the strategic collaboration for managed services designed to accelerate the modernization and automation of our IT infrastructure while reducing cost and transforming how we operate as a business.
We've made great progress, and we're ahead of schedule. The next phase of LHX NeXt is centered around the supply chain management and leveraging the scale of our enterprise. This will improve cost, quality and delivery for our customers while simultaneously offering our suppliers demand stability and an opportunity to grow along with us. And for us, it means supply chain management will be a competitive discriminator.
Turning to capital deployment. As promised, we are prioritizing debt paydown, continuing to maintain a competitive dividend and returning excess capital to shareholders. In the quarter, we returned over $300 million to shareholders through dividends and share repurchases, and remain on track to meet our stated 2024 target of approximately $500 million in share repurchases holding outstanding shares flat year-over-year.
Aligned with our national security focus, we recently completed the sale of our antennas business and expect to finalize the pending divestiture of our Commercial Aviation business later this year as we satisfy the remaining conditions to close.
And finally, I want to thank the four Board members who served on our Ad Hoc Business Review Committee. Their recommendations were presented to the Board last week, and we are implementing actions in accordance with those recommendations. The focus was on reviewing our strategy and portfolio, program management, disciplined bidding processes and LHX NeXt plans. The business review committee executed as per its charter. And as such, is now dissolved. His recommendations are appreciated and, as I noted, are being executed in a rapid manner to continue to drive value for our shareholders and customers.
I'll now turn it over to Ken to provide insight on our second quarter results and 2024 guidance.
