L-3 Communication Holdings Inc. Earnings: Two Straight Quarters of Profit Drops

S&P 500 (NYSE:SPY) component L-3 Communication Holdings Inc. (NYSE:LLL) reported its results for the fourth quarter. L-3 Communications 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 Fourth Quarter

Results: Net income for the aerospace/defense products and services company fell to $246 million ($2.72 per share) vs. $268 million ($2.37 per share) a year earlier. This is a decline of 8.2% from the year earlier quarter.

Revenue: Fell 5.6% to $4.01 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: LLL reported adjusted net income of $2.44 per share. By that measure, the company beat the mean estimate of $2.41 per share. It fell short of the average revenue estimate of $4.18 billion.

Quoting Management: “Overall, we had a solid fourth quarter, underscored by strong cash flow and EPS. Sales performance reflected our areas of competitive strength as well as a challenging defense budget environment which is creating headwinds in the AM&M, Government Services and Electronic Systems segments. C3ISR sales grew by 8%, and sales were also solid in contractor logistics support services within AM&M due to recent competitive wins. Also, volume increased for EO/IR products within Electronic Systems. We ended the quarter with funded backlog of $10.7 billion,” said Michael T. Strianese, chairman, president and chief executive officer.

Key Stats:

The company has now topped analyst estimates for the last four quarters. It beat the mark by 9 cents in the third quarter, by 4 cents in the second quarter, and by 17 cents in the first quarter.

Revenue has fallen in the past four quarters. Revenue declined 1.3% to $3.79 billion in the third quarter. The figure fell 5% in the second quarter from the year earlier and dropped 0.6% in the first quarter from the year-ago quarter.

The company has now seen net income fall in each of the last two quarters. In the third quarter, net income fell 1.3% from the year earlier quarter.

Looking Forward: Expectations for the company’s next quarter results are lower than they have been. Over the past sixty days, the average estimate for first quarter of the next fiscal year has fallen from $2.04 per share to $1.95. The average estimate for the fiscal year is now $8.73 per share, down from $8.79 sixty days ago.

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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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com