28 Feb 14. Exelis (NYSE: XLS) reported 2013 financial results for the fourth quarter and full year of 2013. Fourth-quarter revenue was $1.2bn, a 9 percent decrease from the fourth quarter of 2012. Fourth-quarter earnings were $0.41 per share, a 9 percent decrease from the fourth quarter of 2012. Adjusted earnings, which exclude costs related to the pending spin-off of Exelis Mission Systems and a tax-related item related to the 2011 spin-off from ITT Corporation, were $0.44 per share for the fourth quarter, a 6 percent decrease from the same period in 2012. The company generated $173m in free cash flow in the fourth quarter of 2013. For the full-year 2013, Exelis reported revenue of $4.8bn, a 13 percent decline from 2012, and earnings of $1.46 per share, a 17 percent decrease compared to 2012. Adjusted earnings were $1.50 per share, down 19 percent from 2012. Earnings and adjusted earnings for the full year were driven by lower sales volumes and increased restructuring expenses of $83m, partially offset by increased profitability in the Information & Technical Services segment. Free cash flow for the year was $234m, which reflects approximately $200m in payments made by the company to its pension plans. The company secured $5.3bn in orders in 2013, earning significant new business within our four Strategic Growth Platforms, extending key existing contracts, and continuing steady orders in our more mature business areas. International orders for the full-year increased 50 percent over 2012. Key contract awards included: A contract with South Korea for an advanced geostationary weather imager to support the country’s forecasting capabilities; An award to supply electronic support measure (ESM) suites to several classes of Royal Australian Navy ships; An order from the U.S. Navy for a second production lot of Exelis AN/AQ-214 jammers, a key electronic warfare subsystem on U.S. and Australian F/A-18 aircraft; Long-term commercial agreements from Boeing to produce the composite airframe substructure for the 787 Dreamliner, and to continue producing composite tanks for several of its aircraft series; A contract extension from the Jet Propulsion Laboratory for maintenance, operations and engineering services for NASA’s Deep Space Network; Nearly $300m in orders for night vision and communications equipment from a variety of international customers.
“In 2013, we proactively and significantly restructured our business to improve operational efficiency and focus on the emerging needs of customers in the global C4ISR, aerospace and information solutions markets,” said Exelis CEO and President David F. Melcher. “We believe that these steps, our solid backlog and the execution of the planned spin-off of our Mission Systems business have put in place the foundation for Exelis to better serve our customers and provide greater value for shareholders in 2014.”
Segment Results
C4ISR Electronics and Systems
C4ISR Electronics and Systems fourth-quarter 2013 revenue was $621m, up 3 percent from the same period in 2012. Full-year revenue for the segment was $2.1bn, down 14 percent compared to 2012 as declines in sales of legacy domestic night vision goggles, commercial imagery payloads and IED jammers were offset partially by strong international electronic warfare equipment sales. Fourth-quarter 2013 adjusted operating income was $94m, up 1 percent from the fourth quarter of 2012. Full-year 2013 adjusted operating income was $222m, a decline of 39 percent from 2012, driven by lower sales volumes, as well as restructuring expenses, which the company expects should positively impact profitability in 2014.
Information and Technical Services
Information and Technical Services fourth-quarter 2013 revenue was $618m, a decrease of 18 percent from the same period in 2012. Full-year revenue for the segment was $2.7bn, a 12 percent decline from 2012, driven by slowing in Middle East and Afghanistan programs associated with reduced U.S. military