Harris Corporation Reports Fiscal 2014 Second Quarter Results
Melbourne, Florida, January 29, 2014 — Harris Corporation reported revenue in the second quarter of fiscal 2014 of US$ 1.22 billion and income from continuing operations of US$ 137 million, or US$ 1.27 per diluted share. Income from continuing operations in the prior year was US$ 142 million, or US$ 1.25 per diluted share. Orders in the second quarter were US$ 1.47 billion compared with US$ 1.36 billion in the prior year and book-to-bill for the company was 1.20.
"Second quarter results were solid with earnings per share above prior year," said William M. Brown, president and chief executive officer. "Outstanding program execution and operational excellence improvements, including the benefit of prior-year restructuring, resulted in higher operating margin. Orders were higher than in the prior year, and both revenue and orders were particularly strong in international markets."
RF Communications
Revenue in the second quarter for the RF Communications segment was US$ 455 million compared with US$ 486 million in the prior year. Tactical Communications revenue was $320 million, decreasing 5 percent, and Public Safety revenue was US$ 135 million, decreasing 9 percent. Segment operating income was US$ 142 million compared with US$ 151 million in the prior year. Operating margin was 31.3 percent compared with 31.1 percent in the prior year.
Orders for the segment totaled US$ 512 million. Tactical Communications orders were US$ 387 million, increasing 35 percent from the prior year. Public Safety orders were US$ 125 million, increasing 8 percent. Book-to-bill was 1.13 for the segment, and backlog was US$ 730 million in Tactical Communications and US$ 591 million in Public Safety.
International tactical radio orders included a US$100 million follow-on order from Australia, $49 million from a country in the Middle East, $36 million and $21 million from two NATO countries, and US$ 28 million from a country in Latin America. Public Safety orders included US$ 20 million from York County, Pennsylvania and a US$ 14 million follow-on order under the previously awarded San Francisco Metropolitan Transport Authority contract.
Integrated Network Solutions
Revenue in the second quarter for the Integrated Network Solutions segment decreased to US$ 366 million compared with US$ 403 million in the prior year, due to lower revenue from U.S. Government customers in both CapRock Communications and Healthcare Solutions. Segment operating income was US$ 33 million, flat with the prior year.
During the quarter, IT Services received orders totaling $61 million from the U.S. Navy to extend continuity of services on the Navy/Marine Corps Intranet program, and a US$ 53 million follow-on order to operate and support the U.S. Air Force Space Command's 50th Space Wing. Also in the quarter, IT Services was awarded a position on the 6-year, multi-vendor NETCENTS-2 Products IDIQ contract from the U.S. Air Force with a US$ 6.9 billion ceiling value.
CapRock Communications was awarded a 5-year contract from Carnival Corporation to provide dual-band satellite voice, data and Internet services across its fleet of 103 ships and received a $75 million follow-on order from the Defense Information Systems Agency to provide end-to-end managed terrestrial network services.
Government Communications Systems
Revenue in the second quarter for the Government Communications Systems segment was US$ 433 million, increasing 1 percent compared with US$ 428 million in the prior year. Major drivers included higher revenue from classified and space customers, the ramp-up of the FAA's NextGen DataComm program, and the start of full-rate production on the Army's Modernization of Enterprise Terminals (MET) program, partially offset by lower revenue from NOAA's GOES-R weather program as it transitions to an integration and test phase. Segment operating income was US$ 66 million compared with US$ 65 million in the prior year. Operating margin in the second quarter was 15.4 percent and resulted from strong program performance.
During the quarter, Harris received orders of US$ 46 million from the FAA for the NextGen DataComm program and $31 million for avionics infrastructure for the F-35 program as well as awards totaling $121 million from classified customers.
Earnings Guidance
Harris increased its fiscal 2014 guidance for income from continuing operations from a range of US$ 4.65 to US$ 4.85 per diluted share to a range of US$ 4.80 to US$ 4.90 per diluted share. Revenue guidance remains unchanged from an expected decline of 1 to 3 percent compared with the prior year.
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