01 Aug 14. Exelis (NYSE: XLS) reported financial results for the second quarter of 2014. Second-quarter revenue was $1.1bn, an 11 percent decrease from the second quarter of 2013, and second-quarter earnings were $61m, or $0.32 per share, a 22 percent decrease from the second quarter of 2013. Adjusted earnings, which exclude costs related to the pending spin-off of the current Exelis Mission Systems business into an independent company that will be known as Vectrus, were $0.34 per share, a 17 percent decrease from the same period in 2013. Exelis generated $174m in free cash flow during the quarter and returned $49m to shareholders via dividends and share buybacks. The company secured $1.2bn in funded orders during the second quarter of 2014, including significant new business in several of its strategic growth platforms, along with orders from a variety of international customers. Key contract announcements in the quarter included:
• A contract awarded by NASA worth up to $208m to build a satellite payload that will improve scientific understanding of climate change
• Securing positions on the EAGLE and OASIS IDIQ contract vehicles
• A $25m contract to deliver five additional infrared sensing systems for use on the Gorgon Stare program
• Contract awards from NATO, the U.S. Army and General Dynamics – U.K. for communication equipment and support
• A multim dollar contract award from Airbus to supply composite floor beam struts for the A380 aircraft
“New business, which included contracts in several of our strategic growth platforms, remained strong in the second quarter and we continue to work toward the spin-off of Mission Systems, which we expect to complete later this summer or early fall,” said Exelis CEO and President David F. Melcher. “While encouraged by our business performance, we continue to see significant contraction in our Afghanistan programs, and as a result, we are adjusting our full-year expectations to account for this trend.”
C4ISR Electronics and Systems
C4ISR Electronics and Systems second-quarter 2014 revenue was $523m, up one percent from the same period in 2013 due to sales of airborne electronic warfare equipment and counter-IED jammer products, partially offset by volume declines in domestic tactical radios. Segment adjusted operating income for the quarter was $64m, an increase of 60 percent from the second quarter of 2013, due to improved revenue mix and lower restructuring and pension expenses.
Information and Technical Services
Information and Technical Services second-quarter 2014 revenue was $594m, a decrease of 19 percent from the same period in 2013, driven by lower customer activity on U.S. government contracts in Afghanistan, partially offset by an increase in professional and engineering services programs. Second-quarter adjusted operating income for the segment was $47m, down 46 percent from the same period in 2013, primarily due to favorable contract modifications in 2013.
Mission Systems Spin-off
The company continues to progress through regulatory and legal requirements for the scheduled spin-off of its current Mission Systems business into an independent, publicly traded company that will be known as Vectrus. The most current public information on the Mission Systems spin-off can be found at www.exelisinc.com/transformation.
Adjusted Operating Margin 10.5%
Adjusted Earnings Per Share $1.44 – $1.50
Free Cash Flow $200 m
Exelis is adjusting its 2014 financial guidance due to further contraction in Afghanistan programs. Financial guidance includes approximately $15m of projected restructuring expense and excludes approximately $25m of expenses related to the planned spin-off of Mission Systems.
31 Jul 14. L-3 Communications Holdings, Inc. (NYSE: LLL) reported preliminary unaudited financial results for the second quarter of 2014. The results are preliminary because the Company is currently conducting an internal rev