By Calvin Biesecker
Raytheon [RTN] yesterday reported strong first quarter earnings and sales driven by double-digit income gains at five of its six business segments and the company raised its financial expectations for the year.
Net income increased 14 percent to $452 million, $1.11 earnings per share (EPS), from $398 million (92 cents EPS) a year ago, topping analysts’ estimates by a dime. Sales climbed 10 percent to $5.9 billion from $5.4 billion as each of the company’s segments saw top line gains.
Raytheon’s robust earnings were led by its Network Centric Systems business, which posted a 31 percent increase in operating income due to improved program performance and higher volume on certain Army programs.
Operating income at the Technical Services segment jumped 26 percent on a 34 percent gain in sales to $696 million. Sales were up particularly in training programs.
Space and Airborne Systems (SAS), Intelligence and Information Systems and Missile Systems also turned in strong income results due to a mix of higher sales and improved program performance. Income at SAS also benefited from favorable contract closeouts.
Integrated Defense Systems was the only segment with lower income, which fell 11 percent due to the ending of some programs a year ago. The segment still reported a 6 percent jump in sales to nearly $1.3 billion mainly on growth in domestic and international Patriot programs.
The strong results led Raytheon to boost its earnings and sales outlook for 2009. The company added 10 cents to its expected EPS, which is now in the range of $4.55 to $4.70, with half of the increase due to growth and improved performance. A portion of the increase is also due to a lower projected share count. Sales are expected to be between $24.4 billion and $24.9 billion, an increase of $100 million.
Total backlog at the end of the quarter was $37.9 billion, up $200 million from a year ago but down $1 billion since the start of 2009. However, funded backlog was up about $1 billion since the start of the year.
William Swanson, Raytheon’s chairman and CEO, said that he is encouraged by Defense Secretary Gates’ budget outline from earlier this month. He said the Pentagon’s emphasis on intelligence, surveillance and reconnaissance, unmanned systems, training, certain missile defense programs, cyber security, and a three-ship buy of DDG-1000 destroyers, bodes well for the company.