New book by Larry Connors Click here Improve your trading - See how
L-3's net income allocable to the company's common shareholders increased to $248 million, or $2.12 per share, from $207 million, or $1.70 per share, in the previous year. The latest results included a tax benefit of $0.22 per share.
On average, 15 analysts polled by Thomson Reuters expected the company to earn $1.85 per share for the quarter. Analysts' estimates typically exclude special items.
Net income for the quarter increased to $253 million from $212 million. After discounting net income attributable to non-controlling interests, net income attributable to L-3 was $250 million, up from last year's $210 million.
Operating income rose to $418 million from $400 million in the prior year.
Net sales for the quarter rose to $3.842 billion from $3.662 billion in the prior year. Analysts were looking for revenues of $3.89 billion.
The company operates in four segments: Command, Control, Communications, Intelligence, Surveillance and Reconnaissance, or C3ISR, Government Services, Aircraft Modernization and Maintenance, or AM&M, and Specialized Products.
C3ISR net sales for the 2009 third quarter increased by 21% from last year, primarily due to a rise in demand and new business from the U.S. Department of Defense for airborne ISR and networked communication systems for manned and unmanned platforms. The segment's operating income increased to $78.1 million from $55.8 million in the previous year.
In Government Services, net sales slipped to $1.011 billion from $1.042 billion in the previous year, owing to reduced subcontractor pass-through sales volume, lower Iraq-related linguist services and lower volume for intelligence support for the U.S. Army and U.S. Government agencies. However, operating income improved to $102.8 million from $100.1 million.
In AM&M, net sales rose to $742.0 million from $633.7 million, while operating income at the segment, slipped to $67.1 million from $70.3 million. The company attributed the increase in sales to new contracts and higher demand from existing contracts for systems field support services for U.S. Army and U.S. Air Force rotary and fixed wing training aircraft and U.S. Special Operations Forces logistics support, as well as higher sales for Joint Cargo Aircraft.
In Specialized Products, net sales declined to $1.336 billion from $1.365 billion, reflecting lower sales volumes, and operating income dropped to $169.8 million from $173.9 million.
Effective income tax rate for the latest quarter was 28.3 %, compared to 36.7 % last year., due to the tax benefit.
Funded orders for the 2009 third quarter decreased 15% to $3.4 billion compared to $4 billion from the 2008 third quarter. Funded backlog decreased 6% to $10.8 billion compared to $11.6 billion at December 31, 2008.
In July, L-3 reported a drop in second-quarter profit, hurt by pension-related expenses and absence of certain gains recorded in the prior-year quarter. Net income attributable to L-3 common shareholders dropped to $223 million or $1.90 per share from $273 million or $2.21 per share in the same quarter a year ago. Net income was $227 million, down from $278 million in the year-earlier quarter. Sales for the quarter rose 6% to $3.93 billion from $3.72 billion in the prior-year quarter.
For the first three quarters of the fiscal, net income allocable to the company's common shareholders was $668 million or $5.68 per share, compared to $668 million or $5.42 per share in the previous year. Net sales for nine months increased to $11.407 billion from $10.890 billion in the previous year.
Commenting on the results, Michael Strianese, chairman, president and chief executive officer of the company, said, "L-3 had a good third quarter, led by our C3ISR businesses...Looking ahead, we are well positioned for shifting customer priorities and slowing U.S. Department of Defense budgets. Our focus will continue to be strong program performance, rapidly delivering innovation and value to our customers, and disciplined capital allocation."
Further, the company lifted its earnings per share outlook for 2009 to $7.45-$7.50 per share from the prior range of $7.25-$7.35 per share. Analysts look for 2009 earnings in the range of $7.25-$7.47 per share.
The company attributed the earnings revision to the impact of the $0.22 per share tax benefit, $0.05 per share charge related to redemption of notes, and an additional interest expense of $0.02 for the fourth quarter.
Net sales are now estimated in the range of $15.5 billion-$15.6 billion, compared to the previous outlook of $15.5 billion-$15.7 billion. Wall Street sees full year revenues in the range of $15.50 billion-$15.69 billion.
For 2010, the company expects earnings to range between $7.85 per share and $8.05 per share. Analysts estimate earnings of $6.45-$8.30 per share. Net sales for 2010 are estimated to be between $15.7 billion and $15.9 billion, while analysts look for $15.60-$16.76 billion.
L-3 operates in a sector that is more or less insulated from the vagaries of weather, recession, currency fluctuation and piled up inventories. However, the shift in U.S. government's focus to insurgencies and beefing up security systems rather than fighting traditional wars, which the Bush Administration followed, is perceived to affect the sales of defense contractors.
Early this month, Goldman Sachs reportedly lowered its rating on L-3 to 'Sell' from ""Neutral", citing revenue pressures, stemming from lower exposure to Iraq and more government insourcing, which could see the company issuing a depressing 2010 outlook. The firm expected the revenue guidance to be 4% to 5% below Wall Street consensus of $16.07 billion for 2010.
On October 12, FBR Research lowered its 2010 earnings per share expectation for the company by 4.8% to $7.90 from $8.30 and its revenue estimate for the company by 4.2% to $15.9 billion from $16.6 billion. The firm also reduced its price target to $94.00 from $106.00. The revision was attributed to an ongoing program protest in L-3's aircraft maintenance and modernization business related to the loss of the JOG program and the negative impact on a program in the company's government services business related to base realignment and closure, or BRAC.
The JOG program was a multi-year program valued at about $5 billion. FBR Research excluded the potential for an L-3 win in this regard, while arriving at its revenue estimate for 2010. The brokerage further said that due to the latest BRAC initiative, some government services contracts are being condensed and modified, eliminating the role of subcontractors. This could affect L-3, as in one of its many government services contracts, the company is acting as a subcontractor to a prime.
Last week, Lockheed Martin Corp. (LMT | Quote | Chart | News | PowerRating) reported a 4.5% increase in its third-quarter sales and witnessed just over 1% growth in its segment operating profit. Although quarterly profit increased marginally year-over-year, the company issued a lackluster guidance for 2010. Lockheed suffered cancellations of several of its defense contracts this year.
Later in an interview with the Wall Street Journal, Lockheed's chief financial officer Bruce Tanner said slower spending growth at the U.S. Department of Defense prompted the company to a make a conservative financial forecast for 2010. There is a possibility that earnings will come in lower than 2009, Tanner reportedly said.
LLL is currently trading at $75.88, up $1.72 or 2.32% from the previous close. For the past year, the stock traded in the range of $57.12-$83.19.
For comments and feedback: contact editorial@rttnews.com Copyright(c) 2009 RTTNews.com, Inc. All Rights Reserved
More News:
Market Updates |
Stock Alerts |
All Trading News |
Stock Index
About TradingMarkets | Contact | Advertise | Careers | Link to Us | Site Map | Help | Terms & Conditions | Privacy Policy | Return Policy | Testimonials | Feedback
The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice.
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system, and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of Company's products (collectively, the "Information") are provided for informational and educational purposes only and should not be construed as investment advice. Examples presented on Company's website are for educational purposes only. Such set-ups are not solicitations of any order to buy or sell. Accordingly, you should not rely solely on the Information in making any investment. Rather, you should use the Information only as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments. You should always check with your licensed financial advisor and tax advisor to determine the suitability of any investment.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHER SLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
The Connors Group, Inc.
10 Exchange Place, Suite 1800
Jersey City, NJ 07302
© Copyright 2009 The Connors Group, Inc.
