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• First-quarter revenue of $1.4 billion was up 6 percent compared to same period in 2011
• Company secures new international product orders, extends several key service contracts

McLean, Va., May 4, 2012 - ITT Exelis (NYSE: XLS) today reported 2012 first quarter revenue of $1.4 billion, a 6 percent increase over the same previous-year period.  Net income was $70 million, down 15 percent from the first quarter of 2011, due in part to costs associated with the company’s recent spinoff from ITT Corporation.  Adjusted operating income grew 29 percent, to $151 million, and adjusted operating margin improved to 10.6 percent from 8.7 percent in the first quarter of the previous year.  Adjusted earnings were $0.47 per share, up 4 percent from the same period in 2011.

The company secured several strategic international product contracts during the first quarter, including: aircraft weapons release equipment to Saudi Arabia, night vision goggles to the United Kingdom and radiation detection sensors to Japan.  Exelis also signed a memorandum of understanding with technology company Tata Advanced Systems, Limited to assemble and sell night vision equipment in India.  The company was successful in retaining or extending several large U.S. military services contracts, including Operations Maintenance and Supply-Europe (OPMAS-E) which was re-awarded to Exelis and is potentially worth as much as $160 million in revenue with all options exercised.

During the quarter, Exelis completed the acquisition of Applied Kilovolts Group Holdings, Limited, a leading provider of precision high voltage power supplies for medical, scientific, pharmaceutical and food safety instruments. The acquisition supports a key growth strategy for the company, enabling the expansion of its position as a leading provider of geospatial solutions from sensors to decisions, in this case, as a supplier of key components for the high-growth medical and scientific instrumentation market.  

“Despite continued challenges in the U.S. defense market, Exelis delivered solid results in the first quarter of 2012, while advancing critical technologies, adding new capabilities to our business portfolio and managing our pension.” said Dave Melcher, Chief Executive Officer and President of Exelis. “We also capitalized on several key international product sales opportunities and are excited to continue serving our valued customers through extensions and recompetes on several service contract programs.”

Segment Results
C4ISR Electronics and Systems
C4ISR Electronics and Systems first-quarter 2012 revenue was $653 million, down 5 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 of CREW jammers. C4ISR Electronics and Systems first-quarter adjusted operating income rose to $99 million, 22 percent higher than the first-quarter of 2011, driven by benefits from restructuring and decreased pension expenses.

Information and Technical Services
Information and Technical Services first-quarter 2012 revenue was $768 million, 16 percent higher than the same period in 2011, due to several large services contracts reaching full operational tempo. First-quarter adjusted operating income for the segment was $52 million, up 44 percent over the first quarter of 2011, primarily due to program productivity and decreased pension expenses.

2012 Guidance
The company confirms its guidance for full-year 2012. Full-year 2012 revenue is expected to be $5.4 billion to $5.5 billion, a decrease of 7 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, down 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 first-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.com

Safe 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 Private Securities Litigation Reform Act of 1995. 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 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, 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.
 
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Media Contacts:

Investors:
Katy Herr
703-790-6376
Katy.Herr@exelisinc.com  
                               
Media:
B.J. Talley
703-790-6349
William.talley@exelisinc.com