ITT Exelis [XLS] on Friday reported double-digit dips in both its profits and sales amid tightening defense budgets and corporate restructuring charges that lopped $49 million off the bottom line.
Net income slid 37 percent to $44 million, 23 cents earnings per share (EPS), from $70 million (37 cents EPS), edging consensus estimates by two pennies. Operating margins fell 250 basis points to 6.2 percent. Sales dropped 17 percent to $1.2 billion from $1.4 billion.
Exelis said the results were inline with its expectations and the company reaffirmed its guidance for 2013, including free cash flow above $225 million. In the quarter, free cash was an $82 million outflow.
Exelis’ C4ISR Electronics and Systems segment drove the declines in the top and bottom lines as its revenues were off 24 percent to $499 million while its operating profits dove 79 percent to $19 million. Lowers sales of combat radios, night vision and counter-improvised explosive device products combined with restructuring charges drove profits down.
The Information and Technical Services segment saw its operating profits rise 17 percent despite an 11 percent decline in sales to $686 million. Profits rose on productivity improvements while sales fell on decreased activity on several information systems and Middle East facility operations programs.
Orders in the quarter were $1.1 billion while total backlog stood at $9.1 billion, down $400 million from the end of 2012.
Exelis said that during the next two years it will continue with its restructuring, including consolidating and rationalizing facilities, trimming jobs, reducing discretionary expenses, reducing overhead, and investing in enterprise systems and priority technologies.