Harris Corporation (NYSE:HRS) today announced preliminary financial results for the third quarter of fiscal 2015 in order to expand timing options for completing the permanent debt financing for its pending acquisition of Exelis Inc. (NYSE:XLS).
Third quarter fiscal 2015 income from continuing operations is estimated to be $126 million, or $1.20 per diluted share on a GAAP basis and $139 million, or $1.32 per diluted share on a non-GAAP basis, excluding acquisition-related costs. Both GAAP and non-GAAP amounts benefited from a lower than expected tax rate estimated to be 30.0 percent, adding approximately $.07 per diluted share. In the prior year, income from continuing operations was $137 million, or $1.27 per diluted share. Third quarter fiscal 2015 revenue and orders are estimated to be $1.19 billion and $1.21 billion, respectively, compared to $1.27 billion and $1.11 billion, respectively, in the prior year. Third quarter fiscal 2015 free cash flow (net cash provided by operating activities less capital expenditures) is estimated to be $150 million compared to $120 million in the prior year. A reconciliation of GAAP to non-GAAP financial measures is provided in the tables.
Non-GAAP operating income performance in the third quarter was slightly better than management expected, benefiting from lower costs, excellent execution and a favorable product mix in RF Communications and Government Communications Systems. Revenue in the third quarter was somewhat weaker than expected. Higher year-over-year revenue in Tactical Communications, driven by continuing strength in international markets and a pickup in the U.S. market, was more than offset by further weakness in Public Safety, IT Services and CapRock energy business areas.
“Performance was solid in the third quarter, and we remain confident in delivering good operating results for the full fiscal year,” said William M. Brown, chairman, president and chief executive officer. “We’ve increased earnings per share guidance by $.05 to reflect a lower than anticipated tax rate of approximately 30 percent and lowered revenue guidance. Our continuing focus on operational excellence and lowering costs is supporting earnings and higher investment in R&D in the face of continuing market headwinds in Public Safety, IT Services and CapRock energy. In Tactical Communications, we’re encouraged by continuing international strength and some improvement in the U.S. market, and in Government Communications our strong core franchises are driving excellent performance.
“Although we are still awaiting antitrust clearance, our acquisition of Exelis, which we believe will be transformational for our company and create significant value, is progressing towards an expected June closing.”
Harris increased its fiscal 2015 guidance for non-GAAP income from continuing operations per diluted share from a range of $4.95 to $5.05 to a range of $5.00 to $5.10. Harris also updated fiscal 2015 revenue guidance from a decline in a range of 1 to 3 percent to an expected decline of about 4 percent. The fiscal 2015 non-GAAP guidance does not include any impact from the pending acquisition of Exelis. The fiscal 2015 GAAP results would include potential post-closing revenue and income attributable to Exelis, increased share count from the transaction, and acquisition-related costs that are expected to be in a range of $270 million to $290 million.
Harris will issue a press release reporting its third quarter fiscal 2015 results on Tuesday, May 5, 2015, and host a conference call to discuss those results at 8:30 a.m. Eastern Time (ET). The dial-in numbers for the teleconference are (877) 303-9481 (U.S.) and (760) 666-3582 (International), using participant code 32693125. Please allow at least 10 minutes before the scheduled start time to connect to the teleconference. Participants are encouraged to listen via webcast and view management’s supporting slide presentation www.harris.com/webcast/quarterly/2015Q3. A recording of the call will be available on the Harris website beginning at approximately 12 p.m. ET on May 5.
About Harris Corporation
Harris is an international communications and information technology company serving government and commercial markets in more than 125 countries. Headquartered in Melbourne, Florida, the company has approximately $5 billion of annual revenue and about 13,000 employees — including 6,000 engineers and scientists. Harris is dedicated to developing best-in-class assured communications® products, systems, and services. Additional information about Harris Corporation is available at harris.com.
Attachments: Financial Statements (2 tables).
