Raytheon Company Earnings Call Nuggets: Operational Activity Margins and Eventual Benefits

Raytheon Company (NYSE:RTN) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Operational Activity Margins

Joseph Nadol – JPMorgan: Bill, could we go to the NCS segment, it looks like your guidance there is for margins coming down a bit and I know this is where a lot of the operational activity or operational tempo type of activity in the business have been located, but you’ve been restructuring that business to some degree. Can you just give us an update on what’s happening there?

William H. Swanson – Chairman and CEO: Yes, sure Joe. We feel confident that that business has stabilized; I guess is a good way to say it. As you know, part of the focus there has been to concentrate on the network part of the business and show why our customers need to be presented with accurate actionable data on the move. So for us when we look at their full year sales and margin, they were consistent with the guidance we gave. Back in Q3 and in Q4, NCS had bookings of about $1.5 billion including the key international C4I win which drove their full year book-to-bill about 1.13 in line with guidance and bookings increased about $500 million over 2011, positioning them well for 2013. So taken together, I feel pretty good about where we are going and where we’re headed in that regard.

David C. Wajsgras – SVP and CFO: Joe, let me just add one thing. As the 2013 guidance also includes about 50 basis points related to the encryption acquisition that we made, so if you adjust for that, it’s basically in line with ’12.