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Raytheon Company

Raytheon Earnngs Surge After Sale of Aircraft Division

July 26, 2007: Raytheon Company (NYSE:RTN) reported an income from continued operations of $356 million or $0.79 per diluted share second quarter 2007, compared to $276 million or $0.61 in the second quarter 2006. The increase was attributed to improvements in operations and market conditions. The quarter's total income reached $1.335 billion, reflecting almost one billion peak reflecting the cash received for Raytheon Aircraft Company. Dale of William H. Swanson, Raytheon's Chairman and CEO is pleased with the results, particularly two of the recent wins – the Navy Multiband Terminal and Warfighter FOCUS programs "these programs are representing a potential of $12 billion over the life of these programs," said Swanson. Net sales for the second quarter 2007 were $5.4 billion, up 9% $5.0 billion last year. The increase was led by Integrated Defense Systems (IDS), Missile Systems (MS) and Network Centric Systems (NCS).

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Raytheon increased its full-year 2007 guidance for earnings per share from continuing operations, bookings and Return on Invested Capital (ROIC), and updated its projections for bookings (up one billion to 22-23 Billion through 2007. Improved operations are expected to further improve net income, raising earnings to 3.05 – 3.20 EPS.
All of the company's units performed well in Q2, Raytheon's Intelligence and Information Systems (IIS) accumulated net sales of $666 million. Main contributor to the increase was funding received on several USAF and other classified programs. During the quarter, the unit booked $332 million on a number of classified contracts, including $157 million on a major classified contract. Raytheon's Missile Systems (MS) reported sales of $1,244 Billion, 11% percent compared 2006. Main drivers for growth were high deliveries of Standard Missiles, AIM-9X and Phalanx. The unit booked $175 million for the production of Advanced Medium-Range Air-to-Air Missile (AMRAAM) for the U.S. Air Force. MS also booked $105 million for additional development on the Rolling Airframe Missile (RAM) program for the U.S. Navy and $91 million for the production of Standard Missile-3 (SM-3). Network Centric Systems (NCS) reports net sales of $1.052 Billion, up 20% from last year attributed primarily to US Army programs. Space and Airborne Systems (SAS) reported sales of $1,065 million with lower operating profit - $133 million income compared to $152 million in the second quarter 2006 caused primarily due to adjustments in some of the . Operating income was lower primarily due profit adjustments taken on certain programs.

April 25, 2007: Raytheon Company (NYSE: RTN) reported its income from continuing operations during the first quarter of 2007 was $314 million or $0.69 Earning per diluted Share (EPS) 13% increase from Q1/06. The two largest operating segments were missile systems and integrated defense systems which increased their sales by 15% and 13% respectively. Sales in the intelligence and information systems and space segments were down slightly, reflecting program transitions and delays. Net centric systems' sales increased 17%, primarily from ongoing Army programs.

Net sales for the first quarter 2007 were $4.9 billion, up 6% from $4.7 billion in Q1/06. Main contributors for the growth were the Integrated Defense Systems (IDS), Missile Systems (MS) and Network Centric Systems (NCS). The Company reported total bookings for the first quarter 2007 of $5.3 billion compared to $5.0 billion in the first quarter 2006. The Company ended the first quarter 2007 with a record backlog of $33.9 billion compared to $31.8 billion at the end of the first quarter 2006 and $33.8 billion at the end of 2006. For the entire year Raytheon projects net sales in the range of $21.4 to $21.9 billion with EPS of $2.85 – $3.00.

The largest operation at Raytheon during the past quarter was Missile Systems with net sales of $1,140 million, for Q1/07, up 15% to Q1/06. The increase is attributed mainly to higher volume on Standard Missile and Phalanx. New orders booked in this period include $255 million for the production of Block IV Tactical Tomahawk cruise missiles for the U.S. Navy and $101 million for continued production of the Joint Standoff Weapons (JSOW) for the U.S. Air Force and Navy.

Integrated Defense Systems (IDS), accumulating net sales of $1,092 million, up 13% from Q1/06. This growth was contributed mainly from operations related to THAAD radar, supported by the US Missile Defense Agency, work on the US Army Patriot missiles and system development related to the US Navy's Zumwalt destroyer. International programs also contributed to the growth of this segment, which presented a healthy growth in operating income from $158 million in Q1/06 to $199 million this year.

Sales of the Intelligence and Information Systems (IIS) were down in the first quarter 2007, with net sales of $588 million, compared to $611 million in Q1/06. Raytheon explained the decrease due to 'reprioritization and procurement delays on certain classified programs'. Nevertheless, the company booked $286 million on a number of classified contracts thus contributing to healthier future of this segment. The operating income of $55 million remained unchanged from Q1/06.

Sales of the Network Centric Systems (NCS) increased 17% during the past quarter to $929 million, representing increased orders on U.S. Army programs. Among the ongoing programs are $122 million for support for the Firefinder locating radar program and $92 million for the production of Commander's Independent Viewers (CIVs).
Space and Airborne Systems of $964 million were down 5% compared to $1,018 million in Q1/06, anticipating upcoming transition of several programs from development to production. New orders worth $96 million were booked at this segment, on a number of classified contracts.

The Company repurchased 5.1 million shares for $275 million as part of share repurchase program in addition to a 6% increase to the Company's annual dividend, from $0.96 to $1.02 per share announced in March 2007. Net debt was increased to $2.3 billion, from $1.5 billion at year-end 2006.

 


 

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