Harris Corp (HRS) Beats on Q2 Earnings, Misses Revenues

Harris CorporationHRS reported second-quarter fiscal 2017 earnings (on an adjusted basis for the quarter ended Dec 30, 2016) of $1.42 per share beat the Zacks Consensus Estimate by 5 cents. Quarterly earnings declined 4.7% on a year-over-year basis.

Revenues in the second quarter came in at $1.7 billion. The top line missed the Zacks Consensus Estimate of $1.76 billion and declined from the year-ago figure.

Cost of product sales and services in the reported quarter was $1,138 million compared with $1,203 million in the prior-year quarter. Engineering, selling & administrative expenses totaled $276 million in the quarter under review as against $217 million in the second quarter of fiscal 2016.

Harris has been consistently focusing on business innovation, in a bid to deliver some of the best technology and products in the industry. The company has also won several noteworthy contracts in 2016. Despite stiff competition from peers, including ARC Group World ARCW , Clearfield Inc CLFD and Comtech Telecom CMTL Harris has been one of the key players in the industry.

Segmental Performance

This was the sixth full quarter at Harris after its acquisition of Exelis. Since the first quarter of fiscal 2016, the company has been reporting under four operating units - Communication Systems, Critical Networks, Electronic Systems and Space and Intelligence Systems.

Revenues at the Communication Systems segment came in at $413 million in the quarter, down 16%. Segmental operating income declined significantly to $121 million due to lower volumes.

Revenues at the Space and Intelligence Systems unit were $468 million, up 5%. The upside was driven by multiple factors, including higher revenues from intelligence community customers. Operating income for the segment was $77 million, up 13.2%. Results were boosted by a strong program performance as well as higher pension income.

Revenues at the Electronic Systems unit totaled $384 million, up 1%. The top line expanded 6% on an organic basis. Segmental operating income was $79 million, up 14%.

Revenues at the Critical Networks unit grossed $454 million, up 2%. Increased revenues from FAA NextGen modernization programs and NASA's Space Communications Network program drove the upside. Operating income at the segment improved to $75 million.

At the end of the reported quarter, the company had cash and cash equivalents of $361 million compared with $487 million at the end of fiscal 2016. Total long-term debt at the end of fiscal second quarter was $4,087 million compared with $4,120 million at the end of fiscal 2016.

Harris Corporation Price, Consensus and EPS Surprise

Harris Corporation Price, Consensus and EPS Surprise | Harris Corporation Quote

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Following the completion of the sale of CapRock and the pending sale of government IT services, this Zacks Rank #2 (Buy) company adjusted its guidance for fiscal 2017. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

The company now expects earnings per share (on an adjusted basis) in fiscal 2017 in the band of $5.40 to $5.60 (old guidance: $5.70 to $5.90). The Zacks Consensus Estimate for fiscal 2017 currently stands at $5.78 per share, above the guidance range. While the company projects fiscal 2017 revenues in the range of $5.76-$5.88 billion (old guidance: $7.11 billion to $7.33 billion), the Zacks Consensus Estimate currently stands at $7.16 billion.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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