Exelis reports solid second-quarter 2012 financial results; maintains 2012 full-year outlook• Earnings per share of $0.46, up 10 percent from same period in 2011• Adjusted operating margin for the quarter was 10.7 percent, up 180 basis points from 2011• New orders were $1.2 billion, an increase of 7 percent over second-quarter 2011McLean, Va., Aug. 3, 2012 -
ITT Exelis (NYSE: XLS) today reported 2012 second-quarter revenue of $1.4 billion, a 7 percent decrease from the same previous-year period. Net income was $86 million, up 9 percent from the second quarter of 2011. Adjusted operating income grew 12 percent, to $148 million, and adjusted operating margin increased 180 basis points to 10.7 percent from the same period in 2011, due to productivity improvements and lower pension costs. Adjusted earnings were $0.46 per share, unchanged from the second quarter of 2011.
During the second quarter, Exelis secured $1.2 billion in new orders, and announced more than $300 million in contract awards for electronic warfare equipment from U.S. and international customers, further solidifying the company’s role as a leader in this global market.
In early July, Exelis completed the acquisition of Space Computer Corporation (SCC), a Los Angeles, Calif., company focused on information-processing software and solutions associated with advanced hyper-spectral sensor systems. SCC became part of the company’s C4ISR Electronics and Systems business, enhancing the ability for Exelis to provide geospatial solutions from sensors to decisions for its customers.
The company also continued to diversify outside of the U.S. federal government market with sales of its Symphony airport management solution to several customers, including the Metropolitan Washington Airports Authority, as well as delivery of the imaging system for the GeoEye-2 satellite. Exelis continued to add to its international portfolio, delivering a coastal surveillance radar system to the Swedish government and securing a $54 million foreign military sales contract for defensive aircraft electronics.Segment ResultsC4ISR Electronics and Systems
C4ISR Electronics and Systems second-quarter 2012 revenue was $620 million, down 9 percent from the same period in 2011, due to expected declines in sales of radios, jammers and domestic night vision equipment, partially offset by increased sales of upgrade kits to the installed base for CREW jammers. C4ISR Electronics and Systems second-quarter adjusted operating income was $88 million, down 11 percent from the second-quarter of 2011, due to lower volume and a sales mix shift toward new product lines, partially offset by lower pension expense. Information and Technical Services
Information and Technical Services second-quarter 2012 revenue was $759 million, 6 percent lower than the same period in 2011 mainly due to moderating revenue on a large Middle East services contract reflecting a more sustainable activity level. Second-quarter adjusted operating income for the segment was $60 million, up 82 percent over the second quarter of 2011, primarily driven by productivity improvements on Afghanistan and air traffic management programs.2012 Guidance
The company affirms its guidance for 2012. Full-year 2012 revenue is expected to be near the higher end of the previously announced $5.4 billion to $5.5 billion range, a decrease of 6 percent from 2011. Full-year adjusted operating margin is expected to be 10.6 percent to 10.8 percent, an increase of 60 to 80 basis points year-over-year. Adjusted earnings are expected in the range of $1.80 to $1.86 per share, at the midpoint reflecting a decrease of 8 percent from 2011. 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. 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 2012 results and 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 and information solutions company with strong positions in enduring and emerging global markets. Exelis is a leader in networked communications, sensing and surveillance, electronic warfare, navigation, air traffic solutions and information systems with growing positions in cyber security, composite aerostructures, logistics and technical services. The company has a 50-year legacy of innovation and technology expertise, partnering with customers worldwide to deliver affordable, mission-critical products and services for managing global threats, conflicts and complexities. Headquartered in McLean, Va., the company employs about 20,500 people and generated 2011 sales of $5.8 billion. www.exelisinc.comSafe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 (the “Act”): Certain material presented herein includes forward-looking statements intended to qualify for the safe harbor from liability established by the Act. These forward-looking statements include, but are not limited to, statements about the separation of the company from ITT Corporation, the terms and the effect of the separation, the nature and impact of such a separation, capitalization of the company, future strategic plans and other statements that describe the company’s business strategy, outlook, objectives, plans, intentions or goals, and any discussion of future operating or financial performance. Whenever used, words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target” 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 or implied in, or reasonably inferred from, such forward-looking statements. Factors that could cause results to differ materially from those anticipated 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
• Unanticipated changes in our tax provisions or exposure to additional income tax liabilities.
In addition, there are risks and uncertainties relating to the separation including whether those transactions will result in any tax liability, the operational and financial profile of the company or any of its businesses after giving effect to the separation, and the ability of the company to operate as an independent entity.
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, 2011, and those described from time to time in our future reports filed with the Securities and Exchange Commission.