L-3 Communication Earnings: Tops Analyst Profit Estimate

S&P 500 (NYSE:SPY) component L three Communication Holdings Inc. (NYSE:LLL) reported its results for the second 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 three Communication Holdings Inc. Earnings Cheat Sheet

Results: Net income for L three Communication Holdings Inc. fell to $205 million ($2.08 per share) vs. $243 million ($2.26 per share) a year earlier. This is a decline of 15.6% from the year-earlier quarter.

Revenue: Fell 5.5% to $3.56 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: L three Communication Holdings Inc. beat the mean analyst estimate of $2.03 per share. Analysts were expecting revenue of $3.56 billion.

Quoting Management: “Overall, we had a good second quarter, underscored by strong orders and solid EPS and cash flow. Sales performance reflected the challenging U.S. defense budget environment. C3ISR sales grew by 4%, while sales in our other segments declined due to overseas U.S. troop drawdowns and budget pressures, most pronounced in Government Services,” said Michael T. Strianese, chairman, president and chief executive officer. “Orders grew 4% compared to last year, driven by the Australian C-27J aircraft award, resulting in a book-to-bill ratio of 1.10x. We ended the quarter with funded backlog of $11.7 billion, up 9% compared to December 2011.”

Key Stats:

The company has now surpassed analyst estimates for four quarters in a row. It beat the mark by 13 cents in the first quarter, by 13 cents in the fourth quarter of the last fiscal year, and by 9 cents in the third quarter of the last fiscal year.

Revenue has fallen in the past four quarters. Revenue declined 0.4% to $3.59 billion in the first quarter. The figure fell 5.6% in the fourth quarter of the last fiscal year from the year earlier and dropped 1.3% in the third quarter of the last fiscal year from the year-ago quarter.

The company’s net income has fallen for two quarters in a row. In the first quarter, net income fell 1.5% from the year-earlier quarter.

The company’s cost of sales slipped to $3.18 billion, a dip of 89.3% from a year ago. Last quarter, cost of sales was 89.5% of revenue versus 89.3% a year earlier.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the third quarter has moved up from $2.11 a share to $2.12 over the last thirty days. The average estimate for the fiscal year is now $8.49 per share, down from $8.54 sixty days ago.

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

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