) reported second quarter 2013 adjusted earnings of $1.64 per
share, beating the Zacks Consensus Estimate of $1.30 by 26.1%.
Earnings were also higher than the year-ago figure of $1.57 per
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The upside was driven by strong program execution and the ability
of the company to match the security needs of its customers
through premium quality products.
Reported quarter revenue was $6.1 billion, up 2% year over year.
The top-line surpassed the Zacks Consensus Estimate of $5.8
billion by 5.3%.
New bookings in the second quarter were $5.3 billion and the
total backlog at the end of the reported period was $32.4
billion, down 4.4% year over year.
Research and development expenses were down 9.3% year over year
to $176 million. Total operating expenses were $5.34 billion, up
1.7% year over year. Operating income during the quarter was $766
million, up 3.2% year over year.
As announced earlier, Raytheon has started to report in four
reporting segments in contrast to the six in the first quarter of
Integrated Defense Systems
(IDS): Segment revenue increased 9% year over year to $1.72
billion driven by higher sales on various international air and
missile defense programs.
The international programs boosted the operating income of this
segment, which increased 21% year over year to $326 million.
Intelligence, Information and Services
(IIS): Segment revenue was down 2% year over year to $1.57
billion. Operating income in the reported quarter was down
5% to $131 million.
(MS): Segment revenue increased 7% year over year to $1.69
billion. The improvement in net sales was due to higher sales on
Standard Missile-3 (SM-3) and an international Paveway program.
Operating income improved nearly 2% year over year to $213
Space and Airborne Systems
(SAS): Revenue in the quarter declined 5% year over year to $1.62
billion. The decline in revenue was due to lower sales volume in
the classified programs. Operating income also dropped 12% year
over year to $216 million due to change in contract mix and lower
Raytheon ended the reported period with cash and cash equivalents
of $2.46 billion versus $3.2 billion as of Dec 31, 2012.
Long-term debt was $4.7 billion, unchanged from the debt level as
of Dec. 31, 2012.
Raytheon made capital expenditure of $56 million in the reported
quarter, down $11 million from the year-ago quarter. The company
utilized $14 million in the reported quarter to make
In the second quarter Raytheon repurchased 3.4 million shares of
common stock for $225 million as per its share repurchase
program. Year to date, Raytheon repurchased 7.6 million shares of
common stock at an average price of $59.2 per share.
Raytheon increased the low end of its 2013 sales guidance to the
range of $23.5 billion to $23.7 billion versus its prior
expectation of $23.2 billion to $23.7 billion. The company raised
its adjusted earnings per share guidance to a range of $6.00 to
$6.10 from $5.75 to $5.90 earlier.
The company reiterated its operating cash flow from continuing
operations forecast in the range of $2.1 billion to $2.3 billion
for full-year 2013.
Other Company Release
Northrop Grumman Corp.
) reported earnings of $1.97 per share in the second quarter
2013, surpassing the Zacks Consensus Estimate of $1.70 by 15.9%.
Lockheed Martin Corporation
) announced second-quarter 2013 operating earnings of $2.64 per
share, comfortably surpassing the Zacks Consensus Estimate of
$2.21 by 19.5%.
The Boeing Company
) reported second quarter 2013 earnings of $1.67, up 5.7% from
the Zacks Consensus Estimate of $1.58 per share.
Raytheon continues to surpass earnings expectations, thanks to
its consistent research and development efforts. State-of-the-art
technology and missiles developed by the company allow it to have
a competitive edge and ensure a continuous flow of contracts from
the U.S. defense department and from its global customers.
Towards the end of the second quarter, Raytheon made a strategic
acquisition of privately held Visual Analytics Inc. This
acquisition will enhance Raytheon's capabilities in the area of
However, we remain concerned about apprehensions over the
sequester impact on the U.S. defense budget, the fate of
high-cost programs, risks related to key project executions and
order cancellations. The company presently retains a short-term
Zacks Rank #3 (Hold).