(Adds CEO comments from earnings call, updates stock price)
By Andrea Shalal
April 24 U.S. weapons maker Raytheon Co
reported higher first-quarter profit on Thursday after a tax
credit and favorable pension adjustments and forecast strong
bookings and a slight gain in margins for the rest of the year.
But the company, which makes missiles and other military
equipment, did not change its full-year forecast, which drove
down shares more than 4 percent. Other defense stocks were more
Raytheon said net income attributable to shareholders rose
to $596 million, or $1.89 per share, from $488 million, or $1.49
a share, a year earlier. Excluding the tax and pension impact,
earnings dropped to $1.43 per share from $1.56.
Raytheon Chief Financial Officer David Wajsgras told Reuters
the company expected strong bookings and improved operating
margins for the rest of this year after posting the highest
quarterly earnings per share and cash flow in over a decade.
Cash flow reached $659 million in the first quarter, up from
$422 million a year earlier. The company expects full-year cash
flow to reach $2.3 billion to $2.5 billion.
Wajsgras said the company's international demand remained
strong, and that foreign orders would account for nearly 30
percent of revenues and nearly 40 percent of bookings in 2014.
Revenues fell 6.3 percent to $5.5 billion in the first
quarter, a reflection of U.S. budget cuts, but Raytheon programs
fared well in the 2015 U.S. budget proposal, Wajsgras said.
Sales and operating income were down at three of Raytheon's
four business divisions. Operating profit at its information and
services unit rose 1 percent despite a 5 percent drop in sales.
The company still expected revenue to reach $22.5 billion to
$23 billion for the full year, with earnings of $6.74 to $6.89
per share, or $5.76 to $5.91, excluding special items.
Wajsgras said first-quarter bookings rose to $4.3 billion
from $3.6 billion a year earlier due to a missile defense order
from Kuwait and a cybersecurity order from an unnamed country.
Bookings would likely top $7 billion in the second quarter.
The company expected a slight improvement in operating
margin over the course of the year, after the measure reached
14.3 percent in the first quarter, he said.
Raytheon reported an operating margin of 12.4 percent for
the 2013 year, up 20 basis points from the previous year.
Chief Executive Officer Thomas Kennedy told analysts the
company viewed acquisitions as a critical part of its long-term
growth strategy, with a particular eye to expanding
international and commercial sales in the cyber security area.
Kennedy said tensions between Russia and Ukraine have
boosted demand for Raytheon's products in eastern Europe, and
should firm up Poland's plans for a competition over a missile
Byron Callan, an analyst with Capital Alpha Securities, said
Raytheon's results were largely in line with those of other
defense companies, adding that the stock drop was likely because
it did not increase its full-year earnings forecast.
Raytheon shares fell 4.5 percent to $95.73 at midday on the
New York Stock Exchange.
(Reporting by Andrea Shalal; Editing by Lisa Von Ahn and