Harris Corp. Tops Estimates
International communications and information technology company Harris Corp. (NYSE: HRS – $56.36) reported revenue in the fourth quarter of fiscal 2013 of $1.36 billion compared with $1.44 billion in the prior year. Adjusted income from continuing operations came in at $154 million, or $1.41 per diluted share, compared with $162 million, or $1.42 per share in the prior year. Analysts were expecting $1.15 on revenues of $1.31 billion. “Fourth quarter results were solid in a tough government spending environment,” said William M. Brown, president and CEO. The company has reacted to weak defense spending by concentrating on ongoing cost-reduction efforts, including restructuring actions announced in April that were executed faster than expected. An additional $60 million of cost savings are on tap for fiscal 2014. For the full year, HRS earned $4.90 on $5.11 billion in revenue vs. $5.20 with a top line of $5.45 billion in fiscal 2012. Free cash flow was strong at $655 million compared with $619 million in the prior year. The company now expects revenue to drop about 1% – 3% in 2014 and earnings of $4.65 – $4.85. The future is still questionable for Harris given the tough operating environment, but the dividend program is solid (2.8% yield) and the company should benefit from diversification in healthcare, maritime communications and public safety to partly offset declining domestic defense spending in the years ahead.