L-3 Communications [LLL] yesterday said its second quarter earnings and sales declined as each one of its segment reported lower operating income and only the C3ISR segment boosted sales.
L-3 said that United States troop withdrawals in Afghanistan and Iraq combined with government budget pressures drove sales down 6 percent to $3.6 billion from $3.8 billion a year ago. The sales decline includes the recent spin-out of the company’s technical services operations, now called Engility [EGL]
Net income tumbled 16 percent to $205 million, $2.08 earnings per share (EPS), from $243 million ($2.26 EPS) a year ago. The second quarter results included $7 million (5 cents EPS) in expenses associated with the spin-off of Engility, versus a $12 million (11 cents EPS) tax benefit a year ago.
L-3 also executed on its stock repurchase program, reducing its share count by 8 percent, to help boost per share earnings.
For the year, L-3 still expects sales between $13 billion and $13.2 billion and earnings in the range of $7.70 to $7.85 EPS, adjusting for the divestiture of Engility.
Targeted growth areas for L-3 include intelligence, surveillance and reconnaissance, electro-optic/infrared systems, cyber security, and strategic commercial opportunities and international business, Michael Strianese, L-3’s chairman, president and CEO, said in a statement.
Free cash flow in the quarter was $333 million while orders were $3.9 billion. Funded backlog was $11.7 billion at the end of the quarter, up 9 percent since the end of 2011, with the increase due to a recent Australian contract for C-27J aircraft.