And so we anticipated Q3 to be lower margins aligned with a heavier DoD shipment mix from a tactical radio perspective. And as I noted earlier, we actually delivered more radios this quarter. So this really speaks to the efforts that we’re really putting around driving a resilient supply chain. A lot of work has gone into this from the teams to make this happen. And then, finally, from an Aerojet perspective, 2 months, a little over 90 days as part of our portfolio, roughly 12% margins within the quarter. You will note though there is a step-down within Q4. Q3 did benefit from about $8 million of purchase price accounting adjustments within the quarter. So we expect in the year consistent with the guide that we have updated for. And then, Scott, to your question about the difference between the expense and the cash impact.
This is really driven by the Aerojet acquisition cash that flowed out closure from what was originally booked on the books of Aerojet from an expense perspective, we actually paid that cash post-closing.
Operator: Our next question comes from the line of Jason Gursky with Citi.
Jason Gursky: I just wanted to go back to the Space business for a minute, if you don’t mind. Little contracting things going on here in the industry this quarter, you guys had a positive EAC in one of your customers, one of your competitors out there in the world at a very large start this quarter in the aerospace business. So I wonder if you could just help us or maybe walk around the space portfolio and tell us a little bit about what you have in that portfolio from a fixed price versus cost plus kind of mix and help us understand what the risks are and what the opportunities are as it relates to both revenue in the future. But I think most importantly, given what we’re seeing across the industry, kind of what the risks might be on execution in EACs and just kind of help us better understand the overall health of that business.
Chris Kubasik: Okay. Well, let me take that one, Jason. Great question. And yes, I mean to give the answer on the cost plus fixed price, it’s about 50-50 between the 2. And that’s a big change over the last decade or so. I mean, people generally would have thought of space being predominantly cost plus if you go back 10 or 20 years. And as you know, that trend has changed, bringing more risk to everyone. I think a lot of this goes back, I don’t know specifically who you’re referring to. But I think a lot of the challenges that the industry is having stems from the supply chain, which I’m sure is getting hold hearing that. But if you go back a few years, we were talking about our portfolio, having a combination of short-cycle, quick-turn products that were reliant on microelectronic parts.
So I felt like L3Harris was kind of at the pointy end of the spear and leading the industry and the supply chain adverse impacts given the fact we couldn’t get those parts to deliver our core products and recognize the revenue and profit. And then I think the longer cycle business is, which I would kind of throw space in there. It’s also having supply chain issues. But the challenge there, I believe, is more on inflation and then workmanship that everybody is dealing with those quality challenges. So while there’s still supply chain challenges, I think they’ve shifted. And I think they’re hitting the longer-cycle businesses now. So what we’ve done is really double down on our bidding discipline, some of the longer-cycle things going back 5 years, probably are making less margin than I would like.
But on the new bids, we’re clearly factoring in the appropriate risks, taking the most current estimates, and we’re not going to bid to lose money and do the best we can whether it’s terms and conditions, contract reopenings, escalation clauses to protect ourselves. So I feel like we’re doing a pretty good job on the bidding discipline. We have regular independent reviews of our key programs, and that helps, again, identify risk early to the extent we have any and then work on mitigation or workaround. So you see how we’re doing relative to the others on margins in space, and we’re pretty solid compared to our peers, and we haven’t had, fortunately, any major write-offs. We continue to not bid fixed-price development programs that simultaneously ask for development and production, as I’ve said before.
It’s hard enough to estimate the development let alone commit to production for 1, 2 or 3 lots in ’26, ’27 and 2028. So we will continue to now bid those. And ultimately, the customer has to use the right vehicle — contracting vehicle, I believe. And I think at some point in time, everyone in the industry will stop bidding and we’ll get the right vehicle, and we’ll fight it out for the best solution. We are more than happy to sacrifice top-line growth for profitability, cash and margin. And I’ve said before, the best way to get your margins up is stop writing off money on programs, and that moves the needle, and that’s what we’re trying to do. I think it’s some real tangible evidence. We had some fixed price contracts for missile tracking, we have one for the Missile Defense Agency.
We refer to as HBTSS, and we have 4 for the SDA, call it Space Force Now, Tranche 0 for tracking. And those satellites are done and waiting to be launched. So I can’t wait to get those things in orbit. And I think that’s pretty good evidence that we’re able to meet our commitments relative to cost and schedule notwithstanding all the challenges from the supply chain inflation, attrition and such. So we feel pretty good about our Aerospace business, and we’ve been able to attract new talent, which helps as well. So hopefully, that answers your question there, Jason.
Michelle Turner: I would just add to complement that along with the SDA and NDA work that Chris just referred to. We also have a very steady, stable business that we’ve been in for decades from a civil weather perspective. And so that — there’s also a growth cycle that’s happening there, and we booked about $1.5 billion associated with that business. So it’s a good complement to the other work that’s really growing from a DoD perspective.
Operator: Our next question comes from the line of Richard Safran with Seaport Global Research.
Richard Safran: Chris, I heard your remarks about 2024 in the Investor Day, but I thought you might be willing to discuss and maybe give a qualitative assessment of which segments have the most room to grow in ’24? Any color you could provide there, I thought would be helpful.
Chris Kubasik: Are you going to come visit us in December at our Investor Day, Rich?
Richard Safran: I’m already signed up.
Chris Kubasik: Well, there you go, there you go. I mean this is like the coming attraction here. This is after Taylor Swift, it’s the second hottest ticket in Florida apparently. So we’re in the process of going through our 2024 plan, actually next month. So I’m not going to actually give you an answer that will be satisfying. I will tell you, based on what I see right now, it looks like all 4 of our segments will be growing. So we’ll reveal which ones are growing faster in December. But in all seriousness, we kind of want to get through the next month or two and see what’s going to happen. We can’t have a government shutdown for any period of time. We can’t have a continuing resolution. We all know the impact that has on our business.
We all say it really doesn’t impact 2023 because the year is 3 quarters over. It’s more or less true, but 2024, a 1-year CR, which I’m not at all suggesting will happen. But the one thing we can all agree on is we have no idea what’s going to happen in D.C. And I kind of want to get through November and get some of those things behind us, including world events. But right now, it looks like we’re going to experience top line growth in all segments. And on a consolidated basis, which we’ll be talking about in December. I expect cash and OI and EPS notwithstanding pension headwinds and revenue to all grow. So that’s encouraging, but details to come.
