(Reuters) - Tomahawk missile maker Raytheon Co RTN.N sees increased demand fueling the company's growth as a pro-defense Trump administration and U.S. allies grapple with geopolitical instability, it said on Thursday as it reported improved quarterly results.
Raytheon shares hit an all-time high after the company reported a 3.4 percent rise in revenue, helped by sales in its divisions that make Tomahawk cruise missiles and electronic warfare systems. The stock rose to $158.86 in New York trading before giving up some of the gains.
Thomas Kennedy, Raytheon’s chief executive officer, told Wall Street analysts during a conference call: “The tempo in Syria is pretty up right now.” He added that Raytheon is seeing significant demand “to provide solutions and keep up with the replenishment requirements.”
The U.S. Navy fired 59 Tomahawk missiles at a Syrian air base earlier this month, and the U.S. military caries out daily missile strikes against Islamic State militants in Syria and Iraq as the United States prefers not to put large numbers of soldiers directly in harm’s way.
Raytheon, which also makes Patriot missile systems, said total sales rose to $6.00 billion from $5.80 billion a year earlier. Income from continuing operations rose to $1.73 per share, from $1.43 per share.
Analysts on average had expected first-quarter sales of $5.83 billion, and earnings from continuing operations of $1.61 per share.
Raytheon also raised its 2017 forecast for sales by about $100 million, to $24.9 billion-$25.4 billion, and earnings from continuing operations by 5 cents per share, to $7.25-$7.40.
Analysts on average were expecting sales of $25.09 billion, and earnings of $7.40 per share, according to Thomson Reuters I/B/E/S.
Toby O’Brien, Raytheon’s chief financial officer, told Reuters that even if the U.S. government struggles to pass a budget this fiscal year, the company’s projections would not be affected significantly.
Raytheon grew its order backlog during the quarter to $36 billion, with 41 percent of that from international customers, O’Brien said.
Revenue in Raytheon’s space and airborne systems business, its second-biggest unit by sales, rose 7.6 percent to $1.56 billion in the first quarter ended April 2, helped by higher sales of an electronic warfare systems program.
Operating margins in the unit increased to 12.2 percent, from 11.6 percent. The business accounted for about 26 percent of Raytheon’s quarterly revenue.
The unit makes electronic warfare systems for tactical aircraft, helicopters and ships, as well as tracking and navigation sensors used on airborne platforms, among other products.
Sales in the company’s missile systems unit, which also makes Paveway smart bombs and advanced medium-range air-to-air missiles, rose 1.9 percent to $1.76 billion.
Operating margins in the business rose to 12.3 percent, from 11.1 percent. The missile systems unit, which is Raytheon’s biggest business, accounted for 29.3 percent of its quarterly revenue.
Bookings fell 8.3 percent to $5.69 billion in the first quarter, compared with a year earlier. Bookings is a forward-looking metric that measures the value of firm orders won by Raytheon.
Raytheon’s single biggest booking of the first quarter was an early warning radar system for Qatar, O’Brien said.
The Waltham, Massachusetts-based company repurchased 2.7 million shares of its common stock for $400 million in the quarter, and increased its annual dividend rate by 8.9 percent to $3.19 per share.
Reporting by Mike Stone in Washington and Ankit Ajmera in Bengaluru; Editing by Clive McKeef and Dan Grebler
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