We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Defense contractor L-3 Communications Holdings Inc. posted third-quarter 2016 adjusted earnings of $1.88 per share, beating the Zacks Consensus Estimate of $1.82 by 3.3%. Earnings also improved 7.4% from the year-ago figure of $2.03.
Total revenue of $2,505 million in the quarter missed the Zacks Consensus Estimate of $2,561 million by 2.9%. Revenues were also down 2.3% year over year.
Organic sales to the U.S. government increased 5%, while that to international and commercial customers were down 19%. Overall, organic sales declined 2.5% in the third quarter.
Orders & Margin
Funded orders in the reported quarter were $2.7 billion, reflecting a 22.2% year-over-year increase. Funded backlog was $8.3 billion, as of Sep 23, 2016, down 1.5% from $8.4 billion as of Dec 31, 2015.
Operating margin contracted 210 basis points (bps) to 8.6% in the quarter.
Aerospace Systems: Net sales at the segment declined 5.1% to $1,012 million from the prior-year figure of $1,066 million mainly on account of lower sales of Aircraft Systems and ISR Systems.
Operating income was $56 million, compared to the year-ago number of $102 million, while operating margin contracted 410 bps to 5.5%.
Electronic Systems: The segment recorded net sales of $989 million in the reported quarter, down 0.2%. The decrease mainly reflects lower sales for Aviation Products and Security.
Operating income declined 1.7% to $119 million, while operating margin contracted 20 bps to 12%.
Communication Systems: Net sales at the segment dipped 0.6% to $504 million, primarily due to lower sales at Tactical Satcom, and Space & Power Systems.
Operating income plunged 23.1% to $40 million, while operating margin contracted 240 bps to 7.9%.
Financial Position
As of Sep 23, 2016, L-3 Communications had $411 million in cash and cash equivalents, compared with $207 million as of Dec 31, 2015.
Long-term debt as of Sep 23, 2016 was $2,782 million, compared with $3,125 million as of Dec 31, 2015.
Net cash from operating activities was $210 million in the third quarter, down 27.1% year over year. Capital expenditure was $47 million, compared with $53 million in the year-ago period.
2016 Guidance
The company increased its revenue forecast to the $10,250−$10,350 billion band (previous guidance: $10,150−$10,250 billion).
The adjusted earnings per share outlook was raised to the range of $7.85−$7.95 per share from the earlier projection of $7.65−$7.85.
Interest expenses for 2016 are still expected to be $157 million, while segment operating margin is expected to be 9.6%, down from 9.8%. The capital expenditure forecast was reaffirmed at $205 million. The company continues to expect generating $825 million of free cash flow.
Peer Review
Pentagon’s prime contractor, Lockheed Martin Corp. (LMT - Free Report) reported third-quarter 2016 earnings of $3.61 per share, surpassing the Zacks Consensus Estimate of $2.86 by 26.2%. Earnings also increased 49.2% from the year-ago level, courtesy of strong revenue and operating margin growth.
Northrop Grumman Corporation (NOC - Free Report) reported third-quarter 2016 adjusted earnings of $3.35 per share, beating the Zacks Consensus Estimate of $2.81 by 19.2%. Reported earnings were also up 22% from $2.75 recorded in the year-ago quarter.
General Dynamics Corporation (GD - Free Report) announced third-quarter 2016 earnings from continuing operations of $2.48 per share, beating the Zacks Consensus Estimate of $2.37 by 4.6%. Reported earnings were also up 8.8% from $2.28 recorded in the year-ago quarter.
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
L-3 Communications (LLL) Q3 Earnings Beats, Raises View
Defense contractor L-3 Communications Holdings Inc. posted third-quarter 2016 adjusted earnings of $1.88 per share, beating the Zacks Consensus Estimate of $1.82 by 3.3%. Earnings also improved 7.4% from the year-ago figure of $2.03.
Total Revenue
Total revenue of $2,505 million in the quarter missed the Zacks Consensus Estimate of $2,561 million by 2.9%. Revenues were also down 2.3% year over year.
Organic sales to the U.S. government increased 5%, while that to international and commercial customers were down 19%. Overall, organic sales declined 2.5% in the third quarter.
Orders & Margin
Funded orders in the reported quarter were $2.7 billion, reflecting a 22.2% year-over-year increase. Funded backlog was $8.3 billion, as of Sep 23, 2016, down 1.5% from $8.4 billion as of Dec 31, 2015.
Operating margin contracted 210 basis points (bps) to 8.6% in the quarter.
L-3 COMM HLDGS Price, Consensus and EPS Surprise
L-3 COMM HLDGS Price, Consensus and EPS Surprise | L-3 COMM HLDGS Quote
Segment Performance
Aerospace Systems: Net sales at the segment declined 5.1% to $1,012 million from the prior-year figure of $1,066 million mainly on account of lower sales of Aircraft Systems and ISR Systems.
Operating income was $56 million, compared to the year-ago number of $102 million, while operating margin contracted 410 bps to 5.5%.
Electronic Systems: The segment recorded net sales of $989 million in the reported quarter, down 0.2%. The decrease mainly reflects lower sales for Aviation Products and Security.
Operating income declined 1.7% to $119 million, while operating margin contracted 20 bps to 12%.
Communication Systems: Net sales at the segment dipped 0.6% to $504 million, primarily due to lower sales at Tactical Satcom, and Space & Power Systems.
Operating income plunged 23.1% to $40 million, while operating margin contracted 240 bps to 7.9%.
Financial Position
As of Sep 23, 2016, L-3 Communications had $411 million in cash and cash equivalents, compared with $207 million as of Dec 31, 2015.
Long-term debt as of Sep 23, 2016 was $2,782 million, compared with $3,125 million as of Dec 31, 2015.
Net cash from operating activities was $210 million in the third quarter, down 27.1% year over year. Capital expenditure was $47 million, compared with $53 million in the year-ago period.
2016 Guidance
The company increased its revenue forecast to the $10,250−$10,350 billion band (previous guidance: $10,150−$10,250 billion).
The adjusted earnings per share outlook was raised to the range of $7.85−$7.95 per share from the earlier projection of $7.65−$7.85.
Interest expenses for 2016 are still expected to be $157 million, while segment operating margin is expected to be 9.6%, down from 9.8%. The capital expenditure forecast was reaffirmed at $205 million. The company continues to expect generating $825 million of free cash flow.
Peer Review
Pentagon’s prime contractor, Lockheed Martin Corp. (LMT - Free Report) reported third-quarter 2016 earnings of $3.61 per share, surpassing the Zacks Consensus Estimate of $2.86 by 26.2%. Earnings also increased 49.2% from the year-ago level, courtesy of strong revenue and operating margin growth.
Northrop Grumman Corporation (NOC - Free Report) reported third-quarter 2016 adjusted earnings of $3.35 per share, beating the Zacks Consensus Estimate of $2.81 by 19.2%. Reported earnings were also up 22% from $2.75 recorded in the year-ago quarter.
General Dynamics Corporation (GD - Free Report) announced third-quarter 2016 earnings from continuing operations of $2.48 per share, beating the Zacks Consensus Estimate of $2.37 by 4.6%. Reported earnings were also up 8.8% from $2.28 recorded in the year-ago quarter.
Zacks Rank
L-3 Communications currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>