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Defense contractor, L3 Technologies, Inc. , posted second-quarter 2017 earnings of $2.21 per share from continuing operations, beating the Zacks Consensus Estimate of $2.03 by 8.9%. Earnings also improved 17.6% from the year-ago figure of $1.88.
The company reported earnings of $2.54 per share excluding a pre-tax gain of 33 cents related to a sale of the company’s property in San Carlos, CA.
Total Revenue
Total revenue of $2.73 billion in the quarter surpassed the Zacks Consensus Estimate of $2.70 billion by 1.1%. Revenues were also up 2.6% year over year.
Organic sales to the U.S. government increased 5%, while that to international and commercial customers declined 8%. Overall, organic sales increased 1% in the quarter.
Orders & Margin
Funded orders in the reported quarter were $2.36 billion, reflecting a 10% year-over-year rise. Funded backlog was $8.51 billion as of Jun 30, down 4% from $8.86 billion as of Mar 31.
Operating margin contracted 210 basis points (bps) to 11.4% in the quarter.
Segmental Performance
Electronic Systems: Net sales at the segment increased 16% to $768 million from the prior-year figure of $662 million, mainly on account of significant organic sales growth.
Operating income was $105 million compared with the year-ago figure of $83 million, while operating margin expanded 120 bps to 13.7%.
Aerospace Systems: The segment recorded net sales of $1,026 million in the reported quarter, down 10.6%. The downside was driven by lower sales of Aircraft systems and ISR Systems.
Operating income remained flat at $70 million, while operating margin expanded 70 bps to 6.8%.
Communication Systems: Net sales at the segment improved 10.9% to $549 million, primarily owing to increased volume and deliveries of secure networked communication systems to the U.S. Department of Defense (DoD).
Operating income improved 63.5% to $85 million and operating margin expanded 500 bps to 15.5%.
Sensor Systems: Net sales at the segment grew 8.4% to $389 million, primarily buoyed by organic sales growth.
Operating income rose 23.8% to $52 million and operating margin expanded 170 bps to 13.4%.
L-3 Communications Holdings, Inc. Price, Consensus and EPS Surprise
As of Jun 30, L3 Technologies had $385 million in cash and cash equivalents compared with $363 million as of Dec 31, 2016.
Long-term debt as of Jun 30 was $3,327 million compared with $3,325 million as of Dec 31, 2016.
Net cash from operating activities was $351 million at the end of the quarter, down 6.6% from the year-ago figure. Capital expenditure totaled $98 million compared with $75 million in the prior year.
2017 Guidance
L3 Technologies has raised its 2017 outlook again. The company now expects earnings in the range of $8.65−$8.85 per share (versus the prior range of $8.50−$8.70) and revenues of $10,800−$11,000 million (the prior range being $10,750−$10,950 billion) for 2017.
However, the company expects cash from operations of around $1,030 million compared with the prior guidance of $1,085 million, and resultant free cash flow of $875 million compared with $865 million, guided earlier.
Peer Earnings Review
Lockheed Martin Corp. (LMT - Free Report) reported second-quarter 2017 earnings from continuing operations of $3.23 per share, beating the Zacks Consensus Estimate of $3.10 by 4.2%. Earnings also surpassed the year-ago period’s bottom-line figure by 10.2%.
Textron Inc. (TXT - Free Report) reported second-quarter 2017 adjusted earnings from continuing operations of 60 cents per share, beating the Zacks Consensus Estimate of 55 cents by 9.1%.
The Boeing Company (BA - Free Report) reported adjusted earnings of $2.55 per share for second-quarter 2017, beating the Zacks Consensus Estimate of $2.32 by 9.9%. In the year-ago quarter, the company had incurred a loss of 44 cents.
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L3 Technologies (LLL) Beats Q2 Earnings, Updates '17 View
Defense contractor, L3 Technologies, Inc. , posted second-quarter 2017 earnings of $2.21 per share from continuing operations, beating the Zacks Consensus Estimate of $2.03 by 8.9%. Earnings also improved 17.6% from the year-ago figure of $1.88.
The company reported earnings of $2.54 per share excluding a pre-tax gain of 33 cents related to a sale of the company’s property in San Carlos, CA.
Total Revenue
Total revenue of $2.73 billion in the quarter surpassed the Zacks Consensus Estimate of $2.70 billion by 1.1%. Revenues were also up 2.6% year over year.
Organic sales to the U.S. government increased 5%, while that to international and commercial customers declined 8%. Overall, organic sales increased 1% in the quarter.
Orders & Margin
Funded orders in the reported quarter were $2.36 billion, reflecting a 10% year-over-year rise. Funded backlog was $8.51 billion as of Jun 30, down 4% from $8.86 billion as of Mar 31.
Operating margin contracted 210 basis points (bps) to 11.4% in the quarter.
Segmental Performance
Electronic Systems: Net sales at the segment increased 16% to $768 million from the prior-year figure of $662 million, mainly on account of significant organic sales growth.
Operating income was $105 million compared with the year-ago figure of $83 million, while operating margin expanded 120 bps to 13.7%.
Aerospace Systems: The segment recorded net sales of $1,026 million in the reported quarter, down 10.6%. The downside was driven by lower sales of Aircraft systems and ISR Systems.
Operating income remained flat at $70 million, while operating margin expanded 70 bps to 6.8%.
Communication Systems: Net sales at the segment improved 10.9% to $549 million, primarily owing to increased volume and deliveries of secure networked communication systems to the U.S. Department of Defense (DoD).
Operating income improved 63.5% to $85 million and operating margin expanded 500 bps to 15.5%.
Sensor Systems: Net sales at the segment grew 8.4% to $389 million, primarily buoyed by organic sales growth.
Operating income rose 23.8% to $52 million and operating margin expanded 170 bps to 13.4%.
L-3 Communications Holdings, Inc. Price, Consensus and EPS Surprise
L-3 Communications Holdings, Inc. Price, Consensus and EPS Surprise | L-3 Communications Holdings, Inc. Quote
Financial Position
As of Jun 30, L3 Technologies had $385 million in cash and cash equivalents compared with $363 million as of Dec 31, 2016.
Long-term debt as of Jun 30 was $3,327 million compared with $3,325 million as of Dec 31, 2016.
Net cash from operating activities was $351 million at the end of the quarter, down 6.6% from the year-ago figure. Capital expenditure totaled $98 million compared with $75 million in the prior year.
2017 Guidance
L3 Technologies has raised its 2017 outlook again. The company now expects earnings in the range of $8.65−$8.85 per share (versus the prior range of $8.50−$8.70) and revenues of $10,800−$11,000 million (the prior range being $10,750−$10,950 billion) for 2017.
However, the company expects cash from operations of around $1,030 million compared with the prior guidance of $1,085 million, and resultant free cash flow of $875 million compared with $865 million, guided earlier.
Peer Earnings Review
Lockheed Martin Corp. (LMT - Free Report) reported second-quarter 2017 earnings from continuing operations of $3.23 per share, beating the Zacks Consensus Estimate of $3.10 by 4.2%. Earnings also surpassed the year-ago period’s bottom-line figure by 10.2%.
Textron Inc. (TXT - Free Report) reported second-quarter 2017 adjusted earnings from continuing operations of 60 cents per share, beating the Zacks Consensus Estimate of 55 cents by 9.1%.
The Boeing Company (BA - Free Report) reported adjusted earnings of $2.55 per share for second-quarter 2017, beating the Zacks Consensus Estimate of $2.32 by 9.9%. In the year-ago quarter, the company had incurred a loss of 44 cents.
Zacks Rank
L3 Technologies currently sports a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
More Stock News: Tech Opportunity Worth $386 Billion in 2017
From driverless cars to artificial intelligence, we've seen an unsurpassed growth of high-tech products in recent months. Yesterday's science-fiction is becoming today's reality. Despite all the innovation, there is a single component no tech company can survive without. Demand for this critical device will reach $387 billion this year alone, and it's likely to grow even faster in the future.
Zacks has released a brand-new Special Report to help you take advantage of this exciting investment opportunity. Most importantly, it reveals 4 stocks with massive profit potential. See these stocks now>>