Harris Corporation Reports Fiscal 2015 Second Quarter Results
Melbourne, Fla., February 6, 2015--Harris Corporation (NYSE:HRS) reported revenue in the second quarter of fiscal 2015 of US$ 1.21 billion and income from continuing operations of US$ 140 million, or US$ 1.32 per diluted share. In the prior year, revenue was US$ 1.22 billion and income from continuing operations was US$137 million, or US$ 1.27 per diluted share. Orders in the quarter were US$1.11 billion.
“We performed well in the second quarter,” said William M. Brown, chairman, president and chief executive officer. “Government Communications Systems posted its fifth consecutive quarter of year-over-year revenue growth and generated excellent operating income, demonstrating again the strength of its core franchises. We continue to track well in our strategy to expand internationally and drive operational excellence initiatives to lower costs, while investing in technology and innovation for the future.”
RF Communications
RF Communications segment revenue in the second quarter was $432 million compared with $455 million in the prior year. Tactical Communications revenue was $316 million, decreasing 1 percent, and Public Safety revenue was $116 million, decreasing 14 percent. Segment operating income was $125 million compared with $142 million in the prior year.
Orders for the segment totaled $356 million, including $263 million in Tactical Communications and $93 million in Public Safety. Book-to-bill for the segment was 0.82 and funded backlog was $523 million in Tactical Communications and $507 million in Public Safety.
Government Communications Systems segment revenue in the second quarter was $454 million, increasing 5 percent compared with $433 million in the prior year. Major drivers included higher revenue from the F-35 program, classified programs and wireless products, partially offset by lower revenue from NASA’s Space Network Ground Segment Sustainment program. Segment operating income was $78 million compared with $66 million in the prior year. Operating margin was 17.1 percent, reflecting continued strong program performance and favorable product mix.
During the quarter, Harris was awarded a 10-year (3-year base, 7 option years), $98 million follow-on contract from the Federal Aviation Administration (FAA) for the Operational and Supportability Implementation System II (OASIS II) that integrates real-time weather and flight planning data for Alaska air travel; a $60 million follow-on contract for the F-35 program; a 2-year, $16 million follow-on contract from ViaSat Inc. to provide Multifunctional Information Distribution System (MIDS) terminals for military aircraft, bringing total contract awards to-date to $250 million; and awards totaling $46 million from classified customers.
Following the close of the quarter, Harris was awarded a 3-year, $23 million contract from a classified customer for space situational awareness and a 5-year, $300 million, single-award Indefinite Delivery Indefinite Quantity (IDIQ) contract from a classified customer to integrate various intelligence systems.
Integrated Network Solutions
Integrated Network Solutions segment revenue in the second quarter was $340 million, decreasing 7 percent compared with $366 million in the prior year. Revenue growth in CapRock was more than offset by the previously reported wind-down of two IT Services programs. Segment operating income was $28 million compared with $33 million in the prior year.
During the quarter, IT Services received a $27 million order to upgrade the Wi-Fi infrastructure at 65 medical centers across the country for the Department of Veterans Affairs and was awarded a 5-year, $25 million contract from a classified customer. CapRock orders included $29 million from OceanRig for 3 new drill ships and an extension of existing service.
Earnings Guidance
Harris increased its fiscal 2015 guidance for income from continuing operations from a range of $4.75 to $5.00 per diluted share to a range of $4.95 to $5.05 per diluted share. Fiscal 2015 revenue guidance is unchanged and expected to decline 1 to 3 percent compared with the prior year. Fiscal 2015 guidance does not include the impact of Harris’ pending acquisition of Exelis announced today.
