Harris Corp.
's (
HRS
) first-quarter of fiscal 2013 adjusted earnings per share
(excluding acquisition related cost) came in at $1.14, beating
the Zacks Consensus Estimate of $1.12. GAAP net loss in the
quarter was $85.8 million or $1.14 per share compared with $121.6
million or $1.09 per share in the year-ago quarter.
Consolidated revenue in the reported quarter stood at $1,261.5
million, down 5.58% year over year. Revenue also missed the Zacks
Consensus Estimate of $1,297 million.
Cost of sales in the quarter was $848.3 million compared with
$893.9 million in the prior-year quarter. Engineering, selling
& administrative expenses were $198.2 million versus $223.4
million in the year-ago quarter.
At the end of the quarter, Harris generated $120.5 million in
cash from operations compared with $78.7 million in the
prior-year quarter. Free cash flow (cash flow from operations
excluding capital expenditures) for the period was $80.6 million
compared with $1.3 million in the year-ago quarter.
At the end of the reported quarter, Harris had cash and cash
equivalents of $328.6 million compared with $356.0 million at the
end of fiscal 2012. Total debt at the end of the quarter was
$1,882.9 million compared with $1,883.0 million at the end of
fiscal 2012. Debt-to-capitalization ratio was 0.50 compared with
0.49 at the end of fiscal 2012.
Government Communications System Segment
Quarterly revenue for the segment improved 4.9% year over year
to $465.5 million. Operating income in the quarter was $67.1
million versus $63.1 million in the prior-year quarter. Quarterly
operating margin was 14.41% compared with 14.43% in the year-ago
quarter.
RF Communications Segment
Revenue in the quarter was $444.7 million, down 10.54% year
over year. "Tactical Radio Communications" and "Public Safety and
Professional Communications" contributed roughly 69% and 31%,
respectively. Operating income was $134.1 million compared with
$154.0 million in the year-ago quarter. Quarterly operating
margin was 30.2% as against 31.0% in the year-ago quarter.
In the reported quarter, the segment generated new orders
worth $363 million with $254 million in the Tactical Radio
Communications business and $109 million in the Public Safety and
Professional Communications business. Total order backlog in the
Tactical Radio Communications segment was $612 million and $623
million in Public Safety and Professional Communications.
Integrated Network Solutions
The segment generated revenues of $375.7 million, down 10.2%
year over year. Operating income in the quarter was $32.4 million
compared with $21.8 million in the year-ago quarter. Quarterly
operating margin was 8.62% compared with 5.21% in the year-ago
quarter.
Financial Outlook
Management kept earnings guidance unchanged for fiscal 2013
between $5.10 and $5.30 per share. The revenue growth is expected
in between 0% to 2%.
Our Viewpoint
Huge order backlog, strong demand for Harris' next-generation
Falcon III tactical radio coupled with significant order wins in
the international markets are expected to drive top-line growth
going forward.
However, slowdown in international as well as domestic defense
expenditures, coupled with intense competition from the likes of
General Dynamics Corp.
(
GD
) and
Motorola Solutions, Inc.
(
MSI
) are expected to be headwinds. We thus maintain our long-term
Neutral recommendation on the company.
Harris also has a Zacks #4 Rank, implying a short-term Sell
rating.
GENL DYNAMICS (GD): Free Stock Analysis
Report
HARRIS CORP (HRS): Free Stock Analysis Report
MOTOROLA SOLUTN (MSI): Free Stock Analysis
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