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Harris & Engility Top Wall Street’s Quarterly Earnings Forecasts, KBR Reports 3Q Net Loss

MoneyThree GovCon Index-listed government contractors and one also included in the S&P 500 composite index posted quarterly financial results before markets opened Tuesday.

Co-listed Harris Corp. (NYSE: HRS) posted fiscal year 2017 first quarter results above Wall Street’s consensus forecasts and in conjunction announced a $425 million sale of its CapRock communications business as part of its ongoing portfolio review.

Melbourne, Florida-based Harris announced the divestiture almost three months after the company disclosed an agreement on two additional board of directors appointments with Jana Partners, an activist hedge fund founded by investor Barry Rosenstein that is one of Harris’ 10 largest shareholders.

Government services contractor Engility Corp. (NYSE: EGL) reported third quarter earnings per share that exceeded analyst expectations and lifted its full-year EPS guidance, while the company posted July-September revenue below Wall Street’s forecast but held to full-year sales guidance.

KBR reported a net loss for its third quarter with revenue short of Wall Street’s consensus in the Houston-based company’s first financial statement since its acquisitions of Wyle and the former Honeywell Technology Solutions businesses,  plus subsequent inclusion in Executive Mosaic’s GovCon Index.

As of Monday’s close, the GovCon Index is up 4.85 percent since the start of the year and has risen 2.26 percent over 12 months.

By comparison, the S&P 500 has added 4.02 percent on a year-to-date basis and climbed 2.25 percent for 52 weeks.

Earnings figures in the list below for Harris and Engility exclude costs related to acquisitions, divestitures and integration work.

Engility’s earnings per share do not include those costs nor fees related to its debt refinancing initiative.

Harris Corp. (Fiscal year 2017 first quarter):

  • Earnings per share: $1.39 excluding items beats Wall Street estimate of $1.34
  • Net income: $160 million up 8.11 percent from prior year period
  • Revenue: $1.75 billion, down 3.14 percent, beats Wall Street estimate of $1.74 billion
  • Guidance:
    • Earnings excluding items held at $5.70-$5.90 per share
    • Revenue held at $7.11 billion-$7.33 billion
  • Notes:
    • Third quarter revenue figure excludes $19 million from the now-sold aerostructures business
    • Space and intelligence systems the only segment out of four to show revenue increase,
      up 4.14 percent on intelligence community and sensors for NASA climate change monitoring satellite
  • Stock is up 2.39 percent from the year’s start and has risen 13.4 percent over 12 months

Engility Corp.:

  • Earnings per share: $0.52 excluding items beats Wall Street estimate of $0.39
  • Net income: loss of $16.78 million versus profit of $3.65 million in prior year period
  • Revenue: $511.8 million, down 10.28 percent, misses Wall Street estimate of $526.12 billion
  • Guidance:
    • Earnings excluding items lifted to $1.56-$1.66 per share from prior $1.18-$1.33 outlook
    • Revenue narrowed to $2.05 billion-$2.1 billion from prior $2.05 billion-$2.15 billion outlook
  • Notes:
    • Earnings guidance up on interest expense savings related to debt refinancing
    • Net bookings totaled $1.1 billion at company-record book-to-bill ratio of 2.2x,
      year-to-date goal of 1.4x
  • Stock is down 10.44 percent from the year’s start and has declined 11.63 percent over 12 months

KBR:

  • Earnings: loss of $0.44 per share versus Wall Street estimate of negative $0.53
  • Net income: loss of $63 million versus profit of $55 million in prior year period
  • Revenue: $1.07 billion, down 10.51 percent, misses Wall Street estimate of $1.18 billion
  • Guidance:
    • Earnings at $0.30-$0.50 per share
    • Revenue not stated in release
  • Notes:
    • Government services segment up from $176 million to $401 million on Wyle and Honeywell Technology Solutions acquisitions
    • Acquisitions added roughly $200 million to government services segment revenue
    • Government services segment revenue represented 37.37 of total sales,
      up from 14.68 percent in prior year period
  • Stock is down 12.83 percent from the year’s start and has declined 19.12 percent over 12 months

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