Defense contractor Raytheon Co. (RTN) on Thursday reported a 57% decline in second-quarter profit and lowered its full-year outlook, after recognizing the potential financial impact of a program termination notice it received recently from the U.K. Border Agency. The company, however, kept its full-year adjusted earnings guidance unaltered.
The Waltham, Massachusetts-based company's net income for the second quarter more than halved to $208 million or $0.55 per share from $489 million or $1.23 per share in the previous-year quarter.
Income from continuing operations for the quarter was $212 million or $0.56 per share, lower than $492 million or $1.24 per share in the prior-year period.
The results for the latest quarter included a charge of $274 million or $0.71 per share due to the previously announced program termination notice received from the UK Border Agency on July 22.
The UK government terminated on July 22 its GBP 750 million contract with a consortium led by Raytheon to install an electronic border security system, stating that it had "no confidence" in Raytheon.
In a statement, the company said that it believes to have performed well and delivered substantial capabilities to the customer under this program, and intends to pursue vigorously the collection of the unbilled receivables and damages and defend itself against the claims for losses and previous payments.
Adjusted for this charge and other items, earnings from continuing operations for the latest quarter grew to $1.36 per share from $1.22 per share in the year-ago period. On average, twenty one analysts expected the company to report earnings of $1.19 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the second quarter were $5.97 billion, down 2% from $6.13 billion in the same period last year, and reflected the $316 million reduction for the UK Border Agency program termination. Analysts had a consensus revenue estimate for the quarter of $6.43 billion.
By segment, revenue from integrated defense systems increased 1% to $1.35 billion from a year ago, primarily due to growth in international Patriot programs. Intelligence and Information Systems revenues were down 42% from the prior-year period to $472 million. The impact of the UK Border Agency program termination reduced the segment's net sales by $316 million.
Missile Systems revenues increased 2% from the prior-year period to $1.42 billion, while Network Centric Systems revenues increased 1% from the year-ago quarter to $1.21 billion.
Total bookings in the second quarter declined to $5.90 billion from $7.65 billion in the same period last year. Total backlog at June 27 declined to $35.98 billion from $36.88 billion as at December 31, 2009.
In the quarter, the company repurchased 8.6 million shares of common stock for $475 million, as part of its previously announced share repurchase program. Year-to-date, the company has repurchased 14.2 million shares of common stock for $775 million.
Looking ahead, for the full year, Raytheon lowered its outlook for earnings from continuing operations to a range of $4.00-$4.15 per share from the prior guidance of $4.75-$4.90 per share. However, the company maintained its adjusted earnings outlook for the year in a range of $5.13-$5.28 per share. Analysts currently expect the company to report earnings of $5.00 per share for the year.
The company also lowered its net sales guidance for the year to a range of $25.6 billion-$26.1 billion from the prior range of $25.9 billion-$26.4 billion. This compares to actual sales of $24.9 billion in the previous year. Analysts currently estimate revenues of $26.25 billion for the year.
RTN closed Wednesday's regular trading session at $48.27, down $0.04 on a volume of 3.40 million shares. In Thursday's pre-market trading, the stock is trading at $48.00, down $0.27 or 0.56%. In the past 52 weeks, the stock has been trading in a range of $45.02-$60.10.
by RTT Staff Writer
For comments and feedback: email@example.com