Tags: Raytheon | Earnings | Forecast | Defense

Raytheon Boosts Earnings Forecast After Strong Quarter

Thursday, 25 Apr 2013 10:41 AM

Raytheon Co. increased its forecast for 2013 on Thursday after a stronger-than-expected jump in first-quarter earnings, the only major arms company to do so despite fresh U.S. defense budget cuts.

Raytheon, the maker of Patriot missiles and a wide array of other military equipment, said it now expected earnings of $5.26 to $5.41 per share from continuing operations for the year, up from $5.16 to $5.31.

It also raised its forecast for full-year cash flow to $2.1 billion to $2.3 billion, up from $2.0 billion to $2.2 billion.

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Shares added 0.4 percent to $58.38 in early trading

Chief Financial Officer David Wajsgras said U.S. bookings will likely be trimmed by $400 million to $600 million this year due to mandatory U.S. budget cuts, effective March 1. The estimate contained no surprises since it has been in discussions with Pentagon officials.

"We have been talking about sequestration for well over a year. What we see today is not really different from what we had been expecting," Wajsgras told Reuters in an interview.

First-quarter earnings from continuing operations rose 8.9 percent to $490 million from $450 million a year earlier, and earnings per share (EPS) increased to $1.49 from $1.33. Revenue edged lower to $5.88 billion from $5.93 billion.

Analysts had looked for EPS of $1.28 on revenues of $5.69 billion, according to a poll by Thomson Reuters I/B/E/S.

Raytheon revised its revenue target for the full year downward slightly to a range of $23.2 billion to $23.7 billion - from $23.6 billion to $24.1 billion.

Wajsgras said Raytheon's results exceeded its expectations, adding that its businesses remained well-aligned with the U.S. government's priorities in missile defense, electronic warfare, cyber and intelligence gathering operations.

"We are confident in our ability to continue to perform well, even in a more difficult environment," he said.

Defense analyst Rob Stallard of RBC Capital Markets said the results were much better than expected. "The company continues to weather the storm in pretty good shape, helped in no small part by its significant exposure to defense exports," he said.

Bookings were sharply lower in the quarter, but Wajsgras said bookings would rise later in the year, when several large international orders come in. For the full year, Raytheon expects a book-to-bill ratio of 1-to-1, he said, reflecting orders received to orders shipped.

Its results were in line with trends seen across the defense industry this week. The main impact of mandatory across-the-board budget cuts were expected to be felt later this year or early next.

Wajsgras said Raytheon, which generates more revenue overseas than rivals, continued to see strong international demand, and international bookings were expected to rise 20 percent in 2013.

As a result, international sales would comprise about 27 percent to 29 percent of revenues in 2013.

As seen across the sector, Raytheon's adjusted operating margin rose 10 basis points to 13.2 percent in the quarter.

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Raytheon Co. increased its forecast for 2013 on Thursday after a stronger-than-expected jump in first-quarter earnings, the only major arms company to do so despite fresh U.S. defense budget cuts.
Raytheon,Earnings,Forecast,Defense
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2013-41-25
Thursday, 25 Apr 2013 10:41 AM
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