Exelis reports fourth-quarter and full-year 2014 financial results

  • Book-to-bill ratio of greater than 1.0x; Revenue from international customers up 11 percent over full-year 2013
  • Fourth quarter earnings from continuing operations up 43 percent over same period in 2013; Full-year earnings from continuing operations up 29 percent over 2013
  • Year-end cash position of $510 million

MCLEAN, Va. — (BUSINESS WIRE) — February 27, 2015 — Exelis (NYSE: XLS) reported 2014 financial results for the fourth quarter and full year of 2014. Fourth-quarter revenue from continuing operations was $933 million, a one percent increase from the fourth quarter of 2013. Fourth-quarter earnings from continuing operations were $0.45 per share, a 45 percent increase from the fourth quarter of 2013. Adjusted earnings from continuing operations, which exclude costs related to the spin-off of Vectrus, were $0.47 per share for the fourth quarter, up 38 percent from the same period in 2013. The company generated $112 million in free cash flow in the fourth quarter of 2014.

For the full-year 2014, Exelis reported revenue from continuing operations of $3.3 billion, a 2 percent decline from 2013, and earnings from continuing operations of $1.19 per share, a 28 percent increase compared to 2013. Adjusted earnings were $1.23 per share, 29 percent greater than 2013. Earnings and adjusted earnings for the full year were driven by lower restructuring charges, lower SG&A expenses and lower full year tax expense. Free cash flow for the year was $114 million, which reflects $145 million in payments made by the company to its pension plans.

Results from continuing operations reflect the September spin-off of the former Mission Systems business into Vectrus, an independent, publicly traded company. Exelis shareholders at the time of the spin-off received one share of Vectrus common stock for every 18 shares of Exelis common stock held on the spin-off record date.

The company secured $3.3 billion in orders in 2014, earning significant new business within our four Strategic Growth Platforms, and continuing steady orders in our more mature business areas. Key new business for the year included:

  • More than $250 million in orders from NASA and a Japanese customer for satellite payloads that will monitor climate conditions and improve weather forecasting;
  • Nearly $200 million in contracts for airborne electronic warfare equipment from the U.S. Navy, Turkey, Pakistan and other international customers, as well as electronic support measures technologies that will provide Swedish submarines with situational awareness, self-protection and surveillance capabilities;
  • More than $200 million in orders, primarily from international customers, for our battle-tested, world-class night vision and networked communications equipment; and
  • Continued expansion of our composite aerostructures business with key customers, including Airbus, Lockheed Martin and Boeing.

“We delivered results in line with full-year expectations in 2014, increased our international sales, continued to book strategic new business and ended the year in a very favorable cash position – all while successfully executing the spin-off of Vectrus,” said Exelis CEO and President David F. Melcher. “Looking to the future, I believe the merger agreement, signed February 5th with Harris Corporation, represents an excellent opportunity for Exelis businesses and employees to achieve our stated growth strategy and bring our customers and shareholders greater capabilities and value.”

Segment Results

C4ISR Electronics and Systems

C4ISR Electronics and Systems fourth-quarter 2014 revenue was $636 million, up 2 percent from the same period in 2013. Full-year revenue for the segment was $2.1 billion, nearly identical to 2013, as more volume in airborne and ship-based electronic warfare equipment was somewhat offset by declines in sales of communications solutions products. Fourth-quarter 2014 adjusted operating income was $107 million, up 19 percent from the fourth quarter of 2013. Full-year 2014 adjusted operating income was $273 million, 33 percent better than 2013, driven by decreased restructuring and SG&A costs.

Information and Technical Services

Information and Technical Services fourth-quarter 2014 revenue from continuing operations was $297 million, a decrease of 1 percent from the same period in 2013. Full-year revenue for the segment was $1.1 billion, a 6 percent decline from 2013, driven by lower activity on the U.S. Air Force Spacelift Range Services program and several other services contracts, partially offset by increased revenue from Federal Aviation Administration programs. Fourth-quarter adjusted operating income from continuing operations was $38 million, up 19 percent from the fourth quarter of 2013. Full-year 2014 adjusted operating income was $135 million, 5 percent higher than 2013 due to improved contract performance, operational efficiencies and lower restructuring costs.

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