L-3 Communication Holdings Inc. Earnings Cheat Sheet: The Profit Streak Continues

S&P 500 (NYSE:SPY) component L-3 Communication Holdings Inc. (NYSE:LLL) reported net income above Wall Street’s expectations for the second quarter. L-3 Communications Holdings Inc. is a system contractor in aircraft modernization and maintenance, serving customers in commercial telecommunications and government.

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L-3 Communication Holdings Earnings Cheat Sheet for the Second Quarter

Results: Net income for the aerospace/defense products and services company rose to $242 million ($2.26 per share) vs. $228 million ($1.95 per share) in the same quarter a year earlier. This marks a rise of 6.1% from the year earlier quarter.

Revenue: Fell 4.2% to $3.8 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: LLL beat the mean analyst estimate of $2.11 per share. Analysts were expecting revenue of $3.84 billion.

Quoting Management: “Despite a challenging sales environment, the company posted good sales growth in C3ISR, intelligence and cyber support in Government Services and systems field support services in AM&M due to recent competitive wins, and also EO/IR products in Electronic Systems. For the quarter, our funded orders were $3.8billion, resulting in a book-to-bill ratio of 1.0 and funded backlog of $10.9billion, and we generated strong cash flow, which is a testament to L-3’s solid performance and operational strength in a challenging environment,” said Michael T. Strianese, chairman, president and chief executive officer. “We won several competitive programs, secured key awards for legacy programs and continued to focus on excellent program execution and innovative solutions that enhance support to our customer base.”

Following a comprehensive strategic review across its business units, L-3 announced today a plan to spin-off to L-3 shareholders 100% of a new, independent, publicly traded government services company. This transaction will better position both companies to pursue expanded growth opportunities and more effectively address customer priorities.

Key Stats:

The company has now topped analyst estimates for the last four quarters. It beat the mark by 17 cents in the first quarter, by 6 cents in the fourth quarter of the last fiscal year, and by 5 cents in the third quarter of the last fiscal year.

Margins rose in the first quarter after falling the quarter before. Gross margin rose 0.4 percentage point to 11.5% from the quarter earlier quarter. In the fourth quarter of the last fiscal year, the figure rose 0.5 percentage point to 10.8% from the year earlier quarter.

The increase in profit last quarter comes after net income fell in the previous quarter. In the first quarter, net income declined 7.7% to $204 million.

Revenue has fallen in the past two quarters. In the first quarter, revenue declined 0.6% to $3.6 billion from the year earlier quarter.

Competitors to Watch: Northrop Grumman Corp. (NYSE:NOC), FLIR Systems, Inc. (NASDAQ:FLIR), Cubic Corporation (NYSE:CUB), The Boeing Company (NYSE:BA), Rockwell Collins, Inc. (NYSE:COL), ITT Corporation (NYSE:ITT), Herley Industries, Inc. (NASDAQ:HRLY), Innovative Solutions & Support Inc (NASDAQ:ISSC) and Irvine Sensors Corporation (IRSN).

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(Source: Xignite Financials)