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Harris Corp Q1 Earnings Beat, Grow Y/Y on Exelis Buyout

Harris Corporation 's HRS first quarter fiscal 2016 (ended Oct 2, 2015) earnings (on an adjusted basis) of $1.31 per share beat the Zacks Consensus Estimate by 3 cents.

Quarterly earnings were 11% above the year-ago figure. The Exelis acquisition, completed in May 2015, boosted the quarter's results.

Harris Corporation (HRS) - Earnings Surprise | FindTheCompany

Revenues came in at $1.81 billion, marginally short of the Zacks Consensus Estimate of $1.82 billion. Revenues improved 56% from the year-ago figure aided by the Exelis deal.

Cost of product sales and services in the reported quarter was $1.22 billion compared with $762 million in the prior-year period. Engineering, selling & administrative expenses totaled $329 million versus $195 million in the first quarter of fiscal 2015.

At the end of the reported quarter, the company had cash and cash equivalents of $320 million compared with $481 million at the end of the final quarter of fiscal 2015. Total long-term debt stood at $4,901 million, compared with $5,053 million at the end of the final quarter of fiscal 2015. The debt-to-capitalization ratio for the quarter was 0.59, compared with 0.60 at fiscal 2015-end. Free cash flow in the quarter stood at $40 million

Segment Information

This was the first full quarter at Harris Corporation following the closure of the acquisition of Exelis in May this year. With effect from the first quarter of fiscal 2016, the company is now reporting through four operating units, namely, Communication Systems, Critical Networks, Electronic Systems and Space and Intelligence Systems.

Revenues at the Communication Systems unit came in at $454 million in the quarter. Tactical radio orders in the quarter included $38 million and $26 million from a country in Central Asia, $39 million from 2 Baltic countries, $27 million from multiple countries in the Middle East and Africa, $21 million from a Latin American nation apart from $13 million from the U.S. Air National Guard. Segmental operating income stood at $138 million.

Revenues at the Space and Intelligence Systems unit came in at $435 million. Quarterly orders at the unit included $184 million from classified customers primarily in support of space superiority missions and advanced sensors systems apart from $45 million from the U.S. Naval Research Laboratory for commercial antennas and ground communication system upgrades. Segmental operating income stood at $68 million.

Revenues at the Electronic Systems unit came in at $374 million in the reported quarter. Orders at the division included $111 million from the U.S. Air Force, $97 million from the U.S. Navy for F/A-18 jammer systems apart from $27 million from the U.S. Department of State for EGON counter improvised explosive device (IED) systems. Segmental operating income stood at $69 million.

Revenues at the Critical Networks unit came in at $566 million in the reported quarter. Segmental operating income stood at $63 million.

Harris Corporation won multiple contracts in the reported quarter.

Guidance

The company still expects earnings per share (on an adjusted basis) in fiscal 2016 in the band of $5.60 to $5.80. The Zacks Consensus Estimate for fiscal 2016 currently stands at $5.73 per share, within the guidance range. The company still expects fiscal 2016 revenues in the band of $7.67 billion to $7.83 billion. The Zacks Consensus Estimate currently stands at $7.74 billion for fiscal 2016.

Zacks Rank

Currently, Harris Corp. carries a Zacks Rank #4 (Sell). Better-ranked stocks in the same space include Juniper Networks Inc. JNPR , CenturyLink, Inc. CTL and Windstream Holdings, Inc. WIN . All the three stocks carry a Zacks Rank #2 (Buy).

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HARRIS CORP (HRS): Free Stock Analysis Report

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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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