Raytheon Profit Tops Estimates as Missile, Space Units Gainby
Defense contractor boosts earnings forecast for the year
International orders a key driver in quarter, CFO says
Raytheon Co. topped analysts’ second-quarter profit estimates as the defense giant boosted sales in its missile and space businesses.
Earnings from continuing operations rose to $2.38 a share, the Waltham, Massachusetts-based company said Thursday in a statement. The total included a tax-free gain of 53 cents a share after Raytheon modified a joint venture, as well as a 10-cent tax benefit from new accounting standards. Analysts projected adjusted earnings of $1.72 a share, according to the average of estimates compiled by Bloomberg.
The maker of Patriot missile-defense systems has looked to increase non-U.S. sales to counter a slowdown in Pentagon spending in recent years. Raytheon also has diversified its business by pursuing more commercial sales through a growing cybersecurity unit.
Raytheon increased its 2016 profit forecast to $7.13 to $7.33 a share, a 20-cent boost. Analysts project annual earnings of $7.18 a share on average. The company held its sales forecast steady at $24 billion to $24.5 billion.
Second-quarter sales rose 3.2 percent to $6.04 billion. That exceeded analysts’ average estimate of $5.83 billion.
Revenue increased 6.2 percent in the Missile Systems division, primarily due to the Paveway laser-guided bomb program. Classified programs boosted the Space and Airborne Systems unit, where net sales climbed 9.3 percent.
International orders accounted for 31 percent of total bookings in the quarter, and the company expects that to rise to 35 percent for the full year, Chief Financial Officer Toby O’Brien said in an interview. Raytheon booked a $487 million deal during the quarter to provide Patriot capabilities to Kuwait, along with smaller contracts with the U.S. Navy and the Royal Australian Navy.
“Our global growth strategy continues to pay off. The bookings were really strong,” with the growing threat of terrorism key to driving orders, he said. “It’s really a broad demand for the capabilities that we offer.”
The shares rose 2.7 percent to $139 at 8:01 a.m. in premarket trading in New York. Raytheon advanced 8.7 percent this year through Wednesday, outpacing the 6 percent gain in the Standard & Poor’s 500 Index.