Defense operator L-3 Communications Holdings
Inc. ( LLL
) reported first quarter 2013 adjusted earnings from continuing
operations of $2.00 per share, surpassing the Zacks Consensus
Estimate of $1.93 by 3.6%, thanks to strong international and
commercial operations. The results also surged 7.5% from the
year-ago profit of $1.86 per share.BOEING CO (BA): Free Stock Analysis ReportL-3 COMM HLDGS (LLL): Free Stock Analysis
ReportLOCKHEED MARTIN (LMT): Free Stock Analysis
ReportNORTHROP GRUMMN (NOC): Free Stock Analysis
ReportTo read this article on Zacks.com click here.Zacks Investment
Quarterly net sales went up 25% year over year to $3,185 million,
easily beating the Zacks Consensus Estimate of $2,976 million by
During the quarter, the company witnessed higher sales from its
Command, Control, Communications, Intelligence, Surveillance and
Reconnaissance (C3ISR), Electronic Systems and Platform &
Logistics Solutions (P&LS) segments, offset by lower sales from
the National Security Solutions (NSS) segment.
It appears that the company is doing well in its international and
commercial businesses as evidenced by 18% year-over-year growth in
the reported quarter. However, uncertainty in the U.S. defense
budget continues to be an overhang on future prospects.
C3ISR : The segment recorded net sales
of $888.4 million, up 2.3% year over year.
Higher demand for airborne ISR systems for U.S. government and
foreign military customers was offset by lower deliveries of remote
video terminals to the U.S. Army.
Electronic Systems : Electronic Systems
generated net sales of approximately $1,349.9 million in the
reported quarter, up a considerable 37.3% year over year.
This segment benefited from higher contribution from Simulation
& Training, Precision Engagement, Microwave Products and Marine
P&LS, formerly known as Aircraft Modernization
& Maintenance or AM&M: Net sales at the
segment increased 2.5% year over year to $616.5 million.
This segment gained primarily from Platform Solutions owing to
higher volume for aircraft maintenance for the Canadian Department
of National Defence, EC-130 aircraft for the U.S. Air Force (USAF),
international head-of-state aircraft modifications, and the
Australia C-27J. This was partially offset by decline in logistics
support services due primarily to the competitive loss of a task
order for U.S. Army contract field team support services in
NSS : The NSS unit generated net sales
of $329.7 million, a decrease of 18% from the year-ago level. The
downtrend reflects waning demand for U.S. Special Operations
Command information technology (IT) support services.
Total operating income in the first quarter 2013 dropped almost 4%
to $313.3 million from $325.3 million in the first quarter 2012.
Operating margin contracted 50 basis points to 9.8% in the reported
The company experienced a drop in operating margin across all its
segments except the NSS unit. The NSS division registered an 80
basis point improvement in operating margin in the quarter.
Interest expenses were $43 million, reflecting a decline of 4.4%
year over year due to lower debts.
Cash and cash equivalents as of Mar 31, 2013 were $276 million
versus $349 million as of Dec 31, 2012. Long-term debt stood at
$3.62 billion versus $3,629 million at the end of first quarter
2013 with a debt to capitalization ratio of 39.4%.
During the quarter, the company repurchased $122.0 million of its
common stock and paid $52 million through dividends.
The company reaffirmed its guidance for 2013 which included
earnings per share from continuing operations in the range of
$8.15-$8.35. The company maintained its revenue guidance in the
range of $12,550-$12,750 million. Operating margin expectation for
2013 remained unchanged at 10.0%.
Other Defense Company Releases
Northrop Grumman Corporation ( NOC ) delivered first
quarter 2013 adjusted earnings per share of $1.94, easily
surpassing the Zacks Consensus Estimate of $1.73 and the year-ago
figure of $1.88. The significant upside in earnings was
attributable to a lower share count and strong operating
The Boeing Company ( BA ) reported stellar
first quarter 2013 results, attributable to solid performance
across the company's businesses. Its adjusted first quarter 2013
earnings came in at $1.73 per share, beating the Zacks Consensus
Estimate of $1.47 by 17.7% as well as the year-ago profit level of
$1.40 by 24%.
Again, the world's largest stand-alone defense contractor,
Lockheed Martin Corporation ( LMT ) posted first
quarter 2013 adjusted earnings of $2.48 per share, comfortably
surpassing the Zacks Consensus Estimate of $2.01 by 23.4%. The
upcast in earnings was mainly attributable to lower tax
L-3 Communications, Northrop Grumman, Lockheed Martin and General
Dynamics all retain a Zacks Rank #3 (Hold).