• Orders up 14 percent from second-quarter 2012 on strength in C4ISR segment
• Information and Technical Services segment operating income up 47 percent from 2012
• Funded status of pension improves more than 10 percentMCLEAN, Va., Aug. 2, 2013 - ITT Exelis (NYSE: XLS) reported second-quarter 2013 financial results today. Second-quarter revenue was $1.3 billion, compared to $1.4 billion in the second quarter of 2012. Operating income was $127 million and net income was $0.41 per diluted share, compared to $145 million and $0.46 per diluted share during the same period in 2012. Orders received in the second quarter of 2013 totaled $1.4 billion, a 14 percent improvement from the second quarter of 2012. Funded status of the company’s pension also improved by more than 10 percent primarily due to pension actions announced during the second quarter.
“During the second quarter, we demonstrated particular success in both retaining core programs and in securing a wide variety of new business across both segments,” said Exelis CEO and President David F. Melcher. “We remain on-track to deliver results in line with our expectations for 2013 and will continue to proactively align our strategy and operations with the market environment to deliver affordable, world-class solutions for our customers.”
C4ISR Electronics and Systems
C4ISR Electronics and Systems second-quarter 2013 revenue was $518 million, compared to $620 million during the same period in 2012, mainly due to decreased domestic sales of night vision and counter-IED products, partially offset by upgrades to SINCGARS and strong geospatial intelligence systems revenue. Segment operating income for the quarter was $40 million, versus $86 million for the second quarter of 2012, primarily driven by volume declines and restructuring charges taken in the segment.
Information and Technical Services
Information and Technical Services second-quarter 2013 revenue was $733 million, compared to $759 million in the second quarter of 2012, primarily due to decreased activity on Middle East facility operations programs. Segment operating income for the quarter was $87 million, compared to $59 million for the same period in 2012, positively impacted by contract productivity improvements.
Exelis also reaffirms its previously published guidance for 2013 sales, operating margin, earnings per share and free cash flow.
||9.4% - 9.8%|
|Earnings Per Share
||$1.45 - $1.55|
|Free Cash Flow
||> $225 million|
The company’s 2013 financial guidance includes $70 million to $80 million of projected restructuring expense. FAS pension expense for the year is projected in the range of $80 million to $90 million, at the midpoint, an increase of approximately $53 million from the prior year. The company anticipates generating free cash flow in excess of $225 million after making pension contributions in the range of $142 million to $152 million.
The company notes that forward-looking statements of future performance made in this release are based upon current expectations and are subject to factors that could cause actual results to differ materially from those suggested here, including those factors set forth in the Safe Harbor Statement below.
Transition of the Exelis Brand
The company also announced that it will initiate the final steps in separating its corporate identity from former parent company ITT Corporation by removing “ITT” from the Exelis brand, effective November 2013. Exelis has used the “ITT” name alongside “Exelis” as part of its branding strategy since November 2011, under a licensing agreement with ITT.
Investor Call Today
Exelis senior management will host a conference call for investors today at 10 a.m. Eastern Daylight Time to review second-quarter 2013 financial results and to answer questions. The briefing can be monitored live via webcast at the following address on the company's website: www.exelisinc.com/investors
About ITT Exelis
Exelis is a diversified, top-tier global aerospace, defense, information and technical services company that leverages a 50-year legacy of deep customer knowledge and technical expertise to deliver affordable, mission-critical solutions for global customers. We are a leader in communications, sensing and surveillance, critical networks, electronic warfare, navigation, air traffic solutions and information systems with growing positions in C4ISR, composite aerostructures, logistics and technical services. Headquartered in McLean, Va., the company employs about 19,900 people and generated 2012 sales of $5.5 billion. For more information, visit our website at www.exelisinc.com
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Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 (the “Act”): Some of the information included herein includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995 (the “Act”). Whenever used, words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target,” “may,” “could,” “outlook” and other terms of similar meaning are intended to identify such forward-looking statements. Forward-looking statements are uncertain and to some extent unpredictable, and involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed in, or implied from, such forward-looking statements. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the company’s historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to:
• Our dependence on the defense industry and the business risks peculiar to that industry, including changing priorities or reductions in the U.S. government or international defense budgets;
• Government regulations and compliance therewith, including changes to the Department of Defense procurement process;
• Our international operations, including sales to foreign customers;
• Competition, industry capacity and production rates;
• Misconduct of our employees, subcontractors, agents and business partners;
• The level of returns on postretirement benefit plan assets and potential employee benefit plan contributions and other employment and pension matters;
• Changes in interest rates and other factors that affect earnings and cash flows;
• The mix of our contracts and programs, our performance, and our ability to control costs;
• Governmental investigations;
• Our level of indebtedness and our ability to make payments on or service our indebtedness;
• Subcontractor performance;
• Economic and capital markets conditions;
• The availability and pricing of raw materials and components;
• Ability to retain and recruit qualified personnel;
• Protection of intellectual property rights;
• Changes in technology;
• Contingencies related to actual or alleged environmental contamination, claims and concerns;
• Security breaches and other disruptions to our information technology and operations; and
• Our ability to execute our internal performance plans including restructuring, productivity improvements and cost reduction initiatives;
• Unanticipated changes in our tax provisions or exposure to additional income tax liabilities.
The forward-looking statements in this release are made as of the date hereof and the company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the company’s historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in the Exelis Inc. Form 10-K for the fiscal year ended December 31, 2012, and those described from time to time in our future reports filed with the Securities and Exchange Commission.