Electronic Systems
Electronic Systems revenue in the fourth quarter was $591 million, up 4 percent compared with the prior year. Higher revenue from electronic warfare solutions, avionics and the UAE integrated battle management system was partially offset by lower revenue from wireless products and the ADS-B program as it transitions from buildout to sustainment. Segment operating income was $104 million compared with $119 million GAAP and $122 million non-GAAP in the prior year, reflecting the ADS-B program transition.
Harris strengthened its strategic position in electronic warfare and avionics on large platforms in the quarter. The company was selected by BAE Systems to produce phased array antennas for the C-130J Radio Frequency Countermeasures electronic warfare system. Harris also was selected by Lockheed Martin to provide the Aircraft Memory System and the Panoramic Cockpit Display Electronic Unit as part of the third Technology Refresh program for the F-35 platform, expanding Harris’ content on future aircraft.
Avionics awards also include a 3-year, $30 million contract from the U.S. Navy for 300 aircraft ejector racks for the F/A-18 and a 2-year, $10 million development contract for release systems on the Korean Next Generation Indigenous Fighter with the potential for significant follow-on production orders. Other notable awards include two, 3-year contracts totaling $64 million for production and other services from the U.S. Army under the Modernization of Enterprise Terminals (MET) program and an 8-year, $36 million air traffic management contract to implement surveillance and broadcast services at seven airports.
Space and Intelligence Systems
Space and Intelligence Systems revenue in the fourth quarter was $506 million, down 4 percent compared with the prior year. Higher revenue from intelligence community customers was more than offset by lower revenue from environmental programs. Segment operating income was $80 million, flat to prior year.
Harris continued to see strength in classified space program orders in the quarter, including $63 million from the U.S. Air Force in support of U.S. missile warning, missile defense and space surveillance missions under the System Engineering and Sustainment Integrator (SENSOR) program. Harris also received a $51 million production order for navigation payloads for GPS III space vehicles 9 and 10, and met key program milestones, including the delivery of the navigation payload for the third GPS III satellite.
Harris extended its strong position on the GOES-R program, receiving an additional $32 million contract to support instrument usability modifications, enhancements and post-launch support. Harris also met key milestones on an international weather program, delivering an advanced digital satellite instrument to the Korea Aerospace Research Institute that will enable improved weather forecasting.
Guidance
Initial guidance for fiscal 2018 income from continuing operations is a range of $5.85 - $6.05 per diluted share. Initial guidance for fiscal 2018 revenue is a range of $6.02 - 6.14 billion, up 2 - 4 percent from fiscal 2017. Harris expects fiscal 2018 free cash flow in a range of $850 - 900 million.
Harris will host a conference call today, August 1, at 8:30 a.m. Eastern Time (ET) to discuss its fourth quarter and full year fiscal 2017 financial results. The dial-in numbers for the teleconference are (877) 303-9481 (U.S.) and (760) 666-3582 (International), using participant code 58100171. Please allow at least 10 minutes before the scheduled start time to connect to the teleconference. Participants are encouraged to listen via live webcast and view management’s supporting slide presentation at https://www.harris.com/investors/financial-reports. A recording of the call will be available on the Harris website beginning at approximately 12 p.m. ET on August 1.
About Harris Corporation
Harris Corporation is a leading technology innovator, solving customers’ toughest mission-critical challenges by providing solutions that connect, inform and protect. Harris supports government and commercial customers in more than 100 countries and has approximately $6 billion in annual revenue. The company is organized into three business segments: Communication Systems, Electronic Systems and Space and Intelligence Systems. Learn more at harris.com.
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures within the
meaning of Regulation G promulgated by the Securities and Exchange
Commission (“SEC”), including income from continuing operations and
income from continuing operations per diluted share for the fourth
quarter of fiscal 2017, the fourth quarter of fiscal 2016, the full year
fiscal 2017 and the full year fiscal 2016, in each case excluding
acquisition-related and other items; net cash provided by operating
activities and free cash flow for fiscal 2017, excluding the voluntary
pension contribution in the fourth quarter of fiscal 2017, and in the
case of free cash flow, also excluding cash flow for net capital
expenditures; free cash flow as a percentage of income from continuing
operations, excluding acquisition-related and other items; revenue for
fiscal 2016 on an organic basis, excluding revenue attributable to the
Aerostructures business divested in the fourth quarter of fiscal 2016;
operating income for the fourth quarter of fiscal 2016 for the
Communication Systems and Electronic Systems segments, in each case
excluding restructuring and other charges; and expected free cash flow
for fiscal 2018, excluding cash flow for net capital expenditures. A
“non-GAAP financial measure” is generally defined as a numerical measure
of a company’s historical or future performance that excludes or
includes amounts, or is subject to adjustments, so as to be different
from the most directly comparable measure calculated and presented in
accordance with generally accepted accounting principles (“GAAP”).
Harris management believes that these non-GAAP financial measures, when
considered together with the GAAP financial measures, provide
information that is useful to investors in understanding
period-over-period operating results separate and apart from items that
may, or could, have a disproportionately positive or negative impact on
results in any particular period. Harris management also believes that
these non-GAAP financial measures enhance the ability of investors to
analyze Harris business trends and to understand Harris performance. In
addition, Harris may utilize non-GAAP financial measures as guides in
forecasting, budgeting and long-term planning processes and to measure
operating performance for some management compensation purposes.
Non-GAAP financial measures should be considered in addition to, and not
as a substitute for, or superior to, financial measures presented in
accordance with GAAP.
