Harris Cuts FY 2016 Earnings, Revenue Forecasts on Slowing Middle East Demand

HARRISHarris Corp. (NYSE: HRS) — an S&P 500 company listed in Executive Mosaic’s GovCon Index — has cut full-year revenue guidance for a second consecutive quarter in its current fiscal year with this reduction due to a slowdown in tactical communications product demand from the Middle East.

The Melbourne, Florida-based military radio manufacturer now expects 12-month sales to total approximately $7.5 billion for its 2016 fiscal year compared to its prior outlooks of $7.6 billion-to-$7.68 billion issued in its second quarter financial statement and $7.67-billion-to-$7.83 billion in Harris’ first quarter report.

Harris also adjusted its earnings forecast to $5.70 per share, the lower end of its guidance issued in the second quarter of current its fiscal year.

A plunge in oil prices led Harris to issue a writedown on its maritime communications business for the second quarter that swung the company to a net loss then and scale back revenue forecasts.

Revenue for the third quarter ended April 1 totaled $1.91 billion to fall just short of Wall Street’s $1.92 billion outlook and register an approximate 64.65 percent increase from the prior year period on contributions from Exelis, which Harris purchased for $4.75 billion in May 2015.

Organic growth without Exelis’ additions fell 3.04 percent from the prior year period to $1.91 billion.

Excluding acquisition costs, Harris reported third quarter earnings of $1.45 per share to exceed analyst forecasts by 6 cents and $1.36 EPS when including items related to the Exelis transaction.

Third quarter profit increased 34.92 percent year-over-year to $170 million.

As of Monday’s close, shares in Harris are down 6.95 percent from the start of the year and up one-half percent over 12 months compared to the S&P 500 composite index’s respective gain of 1.83 percent for 2016 to-date and decline of 1.27 percent for 52 weeks.

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