) declared fourth quarter 2012 financial results, where EPS meet
the Zacks Consensus Estimates but revenue missed.
Reported GAAP net loss in the quarter was $136.7 million or
$1.20 per share compared with $133.6 million or $1.06 per share in
the year-ago quarter. Quarterly adjusted (excluding acquisition
related cost) earnings per share (EPS) of $1.42 were in line with
the Zacks Consensus Estimate.
Consolidated revenue in the reported quarter stood at $1,436.2
million, down 5.57% year over year and also below the Zacks
Consensus Estimate of $1,451 million.
Cost of sales in the quarter was $939.6 million compared with
1,013.5 million in the prior-year quarter. Engineering, selling
& administrative expenses were $225.4 million versus $247.5
million in the year-ago quarter.
At the end of the fourth quarter of fiscal 2012, Harris
generated $852.9 million in cash from operations compared with
$833.1 million in the prior-year quarter. Free cash flow (cash flow
from operations excluding capital expenditures) for the period was
$643 million compared with $521.8 million in the year-ago
At the end of the reported quarter, Harris had cash and cash
equivalents of $356 million compared with $366.9 million at the end
of fiscal 2011. Total debt at the end of the quarter was $1,883
million compared with $1,887.2 million at the end of fiscal 2011.
Debt-to-capitalization ratio was 0.49 compared with 0.43 at the end
Government Communications System Segment
Quarterly revenue for the segment dipped 0.5% year over year to
$497.2 million. Operating income in the quarter was $66.1 million
versus $63.2 million in the prior-year quarter. Quarterly operating
margin was 13.3% compared with 12.7% in the year-ago quarter.
RF Communications Segment
Revenue in the quarter was $583.6 million, down 7.1% year over
year. "Tactical Radio Communications" and "Public Safety and
Professional Communications" contributed roughly 70% and 30%,
respectively. Operating income was $195.7 million compared with
$190.7 million in the year-ago quarter. Quarterly operating margin
was 33.5% compared with 30.4% in the year-ago quarter.
In the reported quarter, the segment generated new orders worth
$529 million with $356 million in the Tactical Radio Communications
business and $173 million in the Public Safety and Professional
Communications business. Total order backlog in the Tactical Radio
Communications segment was $665 million and $635 million in Public
Safety and Professional Communications.
Integrated Network Solutions
The segment generated revenues of $379 million, down 9.6% year
over year. Operating income in the quarter was $34.1 million
compared with $33.1 million in the year-ago quarter. Quarterly
operating margin was 9% compared with 7.9% in the year-ago
Management provided its financial outlook for full-year 2013.
GAAP EPS guidance for fiscal 2013 remained unchanged at
$5.10-$5.30. The company expects revenue growth of 0% to 2% for
Continuous order wins, huge order backlog coupled with strong
demand for Harris' next-generation Falcon III tactical radio in the
international markets will drive top-line growth going forward.
However, the slowdown in international as well as national
defense expenditures coupled with intense competition from the
General Dynamics Corp.
Motorola Solutions, Inc.
) will set Harris back. We thus maintain our long-term Neutral
recommendation on Harris Corp.
Currently, Harris Corporation has a Zacks #3 Rank, implying a
short-term Hold rating on the stock.
GENL DYNAMICS (GD): Free Stock Analysis Report
HARRIS CORP (HRS): Free Stock Analysis Report
MOTOROLA SOLUTN (MSI): Free Stock Analysis
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