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By Andrea Shalal
WASHINGTON, Oct 23 (Reuters) - Raytheon Co on Thursday beat analysts’ forecasts for third-quarter earnings despite a bigger-than-expected drop in revenue, and the U.S. weapons maker said its bookings pointed to renewed sales growth in coming years.
The company also announced it was acquiring a privately held company in its core defense business for $400 million and said it would provide more details after the deal closed next month.
“We still have confidence in how the year will play out,” Chief Financial Officer Dave Wajsgras told Reuters. He said fourth-quarter sales should rise, given a large deal with Qatar for a Patriot missile defense system now being finalized.
Chief Executive Officer Tom Kennedy told analysts that geopolitical tensions and rising threats from Islamic State extremists were boosting demand for Tomahawk missiles and other products. Raytheon also expected a separate $2 billion Patriot deal with another country by year-end, he said, but did not name it.
Bookings were now exceeding sales on a quarter-to-quarter and year-to-date basis, Wajsgras told Reuters.
“If you look at any comparison ... our bookings have exceeded our sales, which implies a positive trajectory over the next three or four years from a sales perspective,” he said.
Raytheon said income from continuing operations rose 5.7 percent to $515 million, or $1.65 per share, from $487 million, or $1.51 per share, a year earlier.
On that basis, analysts polled by Thomson Reuters I/B/E/S had forecast earnings per share of $1.60.
Adjusted for changes in pension accounting rules, earnings dropped to $1.57 a share from $1.60, the company said.
Revenue declined at each of the four divisions. It fell 6.3 percent to $5.47 billion from $5.84 billion companywide, missing analysts’ forecasts of $5.61 billion.
Raytheon said bookings rose 3.4 percent to $5.88 billion, bringing the year-to-date total to $16.9 billion, up $2.3 billion from a year earlier.
The company said it expected 2014 earnings per share of $5.91 to $6.01, adjusted for pension accounting, up from an earlier forecast of $5.76 to $5.91. It raised the low end of its sales outlook to $22.7 billion from $22.5 billion while keeping the high end at $23 billion.
Wajsgras said foreign sales would account for 30 percent of 2014 revenue and more than 40 percent of the company’s backlog.
Over time, international sales would comprise an even larger share of revenue without exceeding domestic sales, he said.
Wajsgras said the Qatar Patriot deal was the first of several multibillion-dollar sales Raytheon expected to complete with the country, including a large early-warning radar system.
Kennedy said the company’s investments in new technologies were paying off in a series of contract wins over the past year, including a deal to develop a long-range radar system for the U.S. Air Force that has been protested by losing bidders Northrop Grumman Corp and Lockheed Martin Corp.
But he said Raytheon would look at acquisitions to fill gaps in its core markets, including the cybersecurity sector.
Wajsgras said Raytheon’s strong balance sheet meant the company could well do larger deals than in recent years, but it also wanted to retain cash for other capital deployment plans.
Raytheon shares were up 0.4 percent at $97.86 in midday trading. (Reporting by Andrea Shalal; Editing by Lisa Von Ahn and Chizu Nomiyama)