L-3 Communications Holdings Inc.’s net income edged lower in the first quarter as governments spent less on its services.
It was still good enough to beat Wall Street expectations, however, and the defense contractor boosted its full-year earnings guidance as well, sending shares up 6 percent April 26.
L-3′s net income for the three months ended March 31 fell to $201 million, or $2.03 per share, from $203 million, or $1.85 per share in the same period a year earlier.
The result was hurt by higher tax expenses and lower revenue from L-3′s government services segment, which includes communication software support, IT services, engineering services and technical and management services.
The Pentagon is cutting back on spending and expectations for the entire section have been lowered.
Overall revenue fell slightly, to $3.59 billion from $3.6 billion in 2011. The government segment results were weaker because of much-lower revenue from Engility Corp., a subsidiary specializing in systems engineering, training and operational support for U.S. government agencies.
L-3 says it plans to spin off Engility into a separate company later this year. L-3 recorded a $6 million charge in the first quarter for expenses related to the Engility spinoff.
Revenue increased for L-3′s other segments that break out financial results: command, control, communications, intelligence, surveillance and reconnaissance systems; aircraft modernization and maintenance; and electronic systems.
Analysts projected net income of only $1.85 per share on revenue of $3.4 billion.
L-3 now expects to earn $8.45 to $8.60 per share this year on revenue of $14.55 billion to $14.75 billion. That compares with previous guidance of $8.35 to $8.55 per share on revenue of $14.40 billion to $14.60 billion.
On average, analysts surveyed by FactSet were expecting per-share earnings in 2012 of $8.48 on revenue of $14.28 billion. AP