Harris Reports Fourth Quarter, Fiscal Year 2016 Results
Tuesday, August 02, 2016 | Comments

Harris reported revenue of $1.90 billion in the fourth quarter of fiscal 2016 compared with $1.53 billion in the same quarter the prior year. For full fiscal year 2016, revenue was $7.47 billion, compared with $5.08 billion in the prior year.

GAAP income from continuing operations in the fourth quarter was $162 million, or $1.29 per diluted share, and non-GAAP income from continuing operations was $183 million, or $1.45 per diluted share, excluding acquisition-related costs and restructuring and other charges. In the prior year quarter, GAAP loss from continuing operations was $56 million, or $0.51 per diluted share, and non-GAAP income from continuing operations was $148 million, or $1.32 per diluted share, excluding acquisition-related costs and restructuring and other charges.

GAAP income from continuing operations in fiscal 2016 was $345 million, or $2.75 per diluted share, and non-GAAP income from continuing operations was $715 million, or $5.70 per diluted share, excluding acquisition-related items, asset impairments and restructuring and other charges. In the prior year, GAAP income from continuing operations was $334 million, or $3.11 per diluted share, and non-GAAP income from continuing operations was $551 million, or $5.14 per diluted share, excluding acquisition-related costs and restructuring and other charges.

Fiscal 2016 orders were $7.51 billion, bringing book-to-bill for the year to greater than one. Net cash provided by operating activities was $924 million and free cash flow was $772 million. Fourth quarter and full fiscal year 2015 results included results of Exelis operations only for the partial period following the May 29, 2015 acquisition closing date.

“Our results reflect our continued success in integrating Exelis and achieving our targets for synergy savings and earnings accretion,” said William M. Brown, Harris chairman, president and CEO. “We delivered on our earnings goals and ended the year with a book-to-bill of greater than one. This performance demonstrates the benefits of the Exelis acquisition, which has added scale, technology, and greater operating resilience against the backdrop of lower tactical revenue.”

Communication systems segment revenue in the fourth quarter was $436 million. Segment operating income was $117 million, and non-GAAP operating income was $120 million, excluding restructuring and other charges.

Harris was awarded two, five-year single-award follow-on indefinite delivery, indefinite quantity contracts (IDIQs) from U.S. Army Communications-Electronics Command (CECOM) for $1.77 billion and $405 million in support of foreign military sales in the international market.

Critical networks segment revenue in the fourth quarter was $575 million. Segment operating income was $80 million, and non-GAAP operating income was $81 million, excluding restructuring and other charges.

Contract awards from the U.S. Naval Research Laboratory (NRL) included $21 million in orders to develop prototype systems that improve the electronic warfare capability of naval ships; a five-year, $245 million ceiling, multiaward follow-on IDIQ to provide engineering and technical services; and a one-year, $25 million contract to provide technical and engineering support for the design and operation of command and control, electronic warfare, communication and sensing systems related to free space photonics. Harris received two follow-on IDIQs, a five-year, $137 million multiaward contract and a five-year, $42 million single-award contract from the Defense Information Systems Agency (DISA) to provide electromagnetic spectrum capabilities, engineering, and services.

Harris also received a 21-month $54 million follow-on contract with a $26 million order from the U.S. Customs and Border Protection Agency to improve low-level radar surveillance for the U.S. southern border under the Tethered Aerostat Radar System (TARS) program and a multiyear contract from Norwegian-based Hurtigruten to provide end-to-end satellite communication services for its global fleet of 13 cruise ships.

Initial guidance for fiscal 2017 for GAAP income from continuing operations is a range of $5.53 to $5.73 per diluted share and for non-GAAP income from continuing operations is a range of $5.70 to $5.90 per diluted share, excluding integration and other acquisition-related charges. GAAP net income guidance could change as a result of any further restructuring or integration actions. Initial guidance for fiscal 2017 revenue is a range of $7.11 to $7.33 billion.

“Combining the capabilities of Harris and Exelis enables our company to address the most compelling opportunities in the marketplace,” Brown said. “While we continue to face top-line pressure in certain markets in fiscal 2017, the long-term trends driving demand are positive. We will capitalize on these opportunities through commitment to innovation and creation of product and systems-based solutions that leverage extensive capabilities across our businesses.”

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