Tuesday, April 29, 2014

Harris Reports 3rd Quarter Earnings

MELBOURNE, Florida-- Harris Corporation (NYSE:HRS) reported revenue in the third quarter of fiscal 2014 of $1.27 billion and income from continuing operations of $137 million, or $1.27 per diluted share. In the prior year, revenue was $1.20 billion and income from continuing operations was $125 million, or $1.12 per diluted share. Orders in the third quarter were $1.11 billion compared with $1.13 billion in the prior year.


“Third quarter revenue and earnings were higher than the prior year as a result of strong performance in Government Communications Systems and RF Communications’ international tactical radio business,” said William M. Brown, chairman, president and chief executive officer. “Results reflected our continued commitment to operational excellence in a tough U.S. Government spending environment.”


RF Communications

Harris reported that revenue in the third quarter for the RF Communications segment was $457 million compared with $418 million in the prior year. Tactical Communications revenue was $335 million, increasing 21 percent, and Public Safety revenue was $122 million, decreasing 14 percent. Segment operating income was $144 million compared with $116 million in the prior year.

 

Orders for the segment totaled $405 million, including $285 million in Tactical Communications and $120 million in Public Safety. Book-to-bill was 0.89 for the segment, and funded backlog was $680 million in Tactical Communications and $578 million in Public Safety.

 

International tactical radio orders included $82 million and $49 million from two countries in Asia. U.S. government tactical radio orders included $45 million from the U.S. Department of Defense and $11 million from the U.S. Air Force. Public Safety orders included $12 million from the U.S. Marine Corps and a $49 million (CAD) follow-on order from Alberta, Canada, bringing orders to-date to $346 million (CAD).


Following the close of the quarter, Harris was awarded a 5-year, $988 million multi-vendor Indefinite Delivery Indefinite Quantity (IDIQ) contract from the U.S. Army for Soldier Radio Waveform (SRW) vehicular appliqué systems.


 
Integrated Network Solutions

Revenue in the third quarter for the Integrated Network Solutions segment was $348 million, decreasing 7 percent compared with $375 million in the prior year, Harris reported.  Segment operating income was $21 million compared with $31 million in the prior year.

 

During the quarter, IT Services received a $21 million follow-on order from the Canadian Department of National Defense for the CF-18 Avionics Optimized Weapons System Support program. CapRock Communications orders included $17 million from an international oil and gas drilling company.


 
Government Communications Systems

Revenue in the third quarter for the Government Communications Systems segment was $477 million, increasing 11 percent compared with $431 million in the prior year. Higher revenue was driven by the Aireon hosted payload program, the FAA’s NextGen DataComm program, the Army’s Modernization of Enterprise Terminals program and the F-35 program. Segment operating income was $77 million compared with $67 million in the prior year.

 

During the quarter, Harris was awarded an 8-year, single-award IDIQ follow-on contract for $133 million for the U.S. Navy’s Commercial Broadband Satellite Program, bringing total potential program value to more than $250 million. Harris also received awards totaling $59 million from classified customers.


 
Earnings Guidance

Harris increased its fiscal 2014 guidance for income from continuing operations from a range of $4.80 to $4.90 per diluted share to a range of $4.90 to $5.00 per diluted share. Fiscal 2014 revenue is now expected to decline 2 to 3 percent compared with the prior year.