GovCon Index Defense & Services Primes Report Mixed 1Q Earnings; Boeing Misses

Six companies listed in Executive Mosaic’s GovCon Index plus another large non-GCI government contractor reported their latest quarterly earnings statements before U.S. financial markets opened Wednesday.

Of those seven total, six posted results for the first quarter of their respective fiscal years that run on a calendar basis, with one for the second quarter of its fiscal year that runs on an October-September basis.

Five of the reporting companies are also listed in the S&P 500 composite index, which has gained 2.34 percent from the year’s start and declined 1.23 percent over 12 months.

Below is a summary of results and other items from these seven companies’ financial statements.

Boeing (NYSE: BA) (A Dow Jones Industrial Average and S&P 500 stock):

• Earnings per share: $1.74 misses Wall Street estimate by 9 cents
• Profit: $1.22 billion, down 8.27 percent from prior year period
• Revenue: $22.63 billion, up 2.16 percent, beats Wall Street estimate of $22.44 billion
• Guidance: unchanged at $8.15-$8.35 earnings per share and $93 billion-to-$95 billion revenue
• Notes:
  • Profit hit by after-tax charge of $156 million, or 24 cents per share,  on Air Force KC-46 program
  • Defense segment revenue up 18.48 percent to $7.95 billion on F-15 and C-17 deliveries
  • Defense segment revenue represented 35.13 percent of total sales, up from 30.29 percent in the fiscal year 2015 first quarter
• Shares are down 7.85 percent from the year’s start and down 10.22 percent over 12 months

General Dynamics (NYSE: GD) (An S&P 500 stock):

• Earnings per share: $2.34 beats Wall Street estimate by 18 cents
• Profit: $717 million, up $1 million from prior year period
• Revenue: $7.72 billion, down $60 million, beats Wall Street estimate of $7.69 billion
• Guidance: $9.20 per share and $31.6 billion-to-$31.8 billion revenue
• Notes:
  • Four of five segments excluding marine systems post year-over-year sales declines
  • Marine systems up 9.79 percent on ramp up of Navy Ohio-class submarine production program
• Shares are up 0.98 percent from the year’s start and 3.44 percent over 12 months

Northrop Grumman (NYSE: NOC) (An S&P 500 stock):

• Earnings: $3.03 per share beats Wall Street estimate by 54 cents
• Profit: $556 million, up 23.14 percent from prior year period
• Revenue: flat at $5.96 billion,  beats Wall Street estimate of $5.93 billion
• Guidance:
  • Earnings lifted to $10.40-to-$10.70 per share from prior $9.90-to-$10.20 outlook
  • Revenue unchanged at $23.5 billion-to-$24 billion
• Notes:
  • Aerospace segment revenue up 2.8 percent on manned and unmanned aircraft sales
  • Revenue in both mission systems and technology services segments down
• Shares are up 7.82 percent from the year’s start and 25.83 percent over 12 months

L-3 Communications (NYSE: LLL) (An S&P 500 stock):

• Earnings per share: $2.08 beats Wall Street estimate by 51 cents
• Profit: $164 million,  up 41.37 percent from prior year period
• Revenue: $2.35 billion,  down 5.62 percent,  misses Wall street estimate of $2.36 billion
• Guidance:
  • Earnings up to $7.55-to-$7.75 per share from previous $7.47-to-$7.60 range
  • Revenue unchanged at $9.95 billion-to-$10.15 billion
• Notes:
  • Operating margin up from 7.5 percent in prior year period to 10.7 percent
  • Organic sales excluding business divestitures such as NSS to CACI declined 2.1 percent
• Shares are up 4.44 percent from the year’s start and 1.18 percent over 12 months

Leidos Holdings (NYSE: LDOS):

• Earnings per share: 72 cents beats Wall Street estimate by 4 cents
• Profit: $49 million, up 19.51 percent from prior year period
• Revenue: $1.31 billion, up 5.64 percent,  beats Wall Street estimate of $1.27 billion
• Guidance: unchanged at $2.75-to-$2.95 earnings per share and $5.1 billion-to-$5.3 billion revenue
• Notes:
  • Health and infrastructure segment revenue up 7.53 percent on ramp up of Defense Department electronic health record modernization program
  • National security segment revenue up 4.17 on sales in U.K. defense ministry logistics program
• Shares are down 7.86 percent from the year’s start and up 22.99 percent over 12 months

CGI Group (NYSE: GIB) (Second quarter for fiscal year 2016):

• Earnings per share: 90 cents misses Wall Street estimate by 2 cents
• Profit: $224.77 million, up 12.54 percent from prior year period
• Revenue: $2.8 billion, up 5.8 percent
• Guidance: Not detailed in release
• Notes:
  • U.S. federal government revenue represented 13.5 percent of total sales, down from 14.1 percent in the fiscal year 2015 second quarter
  • Global government revenue represented 33 percent of total sales, down from 35 percent in the fiscal year 2015 second quarter
• Shares are up 18.99 percent from the year’s start and 4.29 percent over 12 months

United Technologies Corp. (NYSE: UTX) (A Dow Jones Industrial Average and S&P 500 stock, plus non-GovCon Index company):

• Earnings per share: $1.47 beats Wall Street estimate by 8 cents
• Profit: $1.19 billion, down 16.78 percent from prior year period
• Revenue: $13.36 billion, up $40 million,  beats Wall Street estimate of $13.18 billion
• Guidance: unchanged at $6.30-to-$6.60 earnings per share and $56 billion-to-$58 billion in revenue
• Notes:
  • Company to repurchase $3 billion in shares
  • Company has set aside $1 billion-to-$2 billion for acquisitions
• Shares are up 9.09 percent from the year’s start and down 9.78 percent over 12 months