Q1 2012 Earnings Call
October 26, 2011 4:30 pm ET
Gary L. McArthur - Chief Financial Officer and Senior Vice President
Howard L. Lance - Executive Chairman, Chief Executive Officer and President
Pamela Padgett - Vice President of Investor Relations
Chris Quilty - Raymond James & Associates, Inc., Research Division
Noah Poponak - Goldman Sachs Group Inc., Research Division
Michael S. Lewis - Lazard Capital Markets LLC, Research Division
Joseph Nadol - JP Morgan Chase & Co, Research Division
Michael K. French - Morgan Joseph TriArtisan LLC, Research Division
Peter J. Skibitski - SunTrust Robinson Humphrey, Inc., Research Division
Carter Copeland - Barclays Capital, Research Division
Josephine Lin Millward - The Benchmark Company, LLC, Research Division
Mark C. Jordan - Noble Financial Group, Inc., Research Division
Lawrence M. Harris - CL King & Associates, Inc.
Previous Statements by HRS
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Good day, ladies and gentlemen, and welcome to the First Quarter 2012 Harris Corp. Earnings Conference Call. [Operator Instructions] At this time, I'd like to introduce Ms. Pamela Padgett, Vice President of Investor Relations. Please proceed.
Good afternoon, everyone, and welcome to our call. We're very sorry about the delay. It seems like our conference call company had a little bit of a technical difficulty. So on the call with me today is Howard Lance, Chairman President and CEO; and Gary McArthur, Senior Vice President and Chief Financial Officer.
Before we get started, a few words about forward-looking statements. In the course of this teleconference, management may make forward-looking statements. Forward-looking statements involve assumptions, risks and uncertainties that could cause actual results to differ materially from those statements. For more information and the discussion of such assumptions, risks and uncertainties, please see the press release and filings made by Harris with the SEC. In addition, in our press release and on this teleconference and the related presentation, we will discuss certain financial measures and information that are non-GAAP financial measures. A reconciliation to the comparable GAAP measures is included in tables in our press release and on the Investor Relations section of our website, which is www.harris.com. A replay of this call will also be available on the Investor Relations section of our website.
And with that, Howard, I'll turn it over to you.
Howard L. Lance
Thank you, Pam. I want to welcome all of you to our First Quarter Fiscal 2012 Earnings Call. Before I turn to the quarter's results, earlier this month, the Harris Board of Directors announced the appointment of William M. Brown as President and CEO to become effective on November 1. Bill joins Harris from United Technologies Corporation, where he most recently served as Senior Vice President, of Corporate Strategy and Development. Previously, he served for 5 years as President of UTC's Fire & Security business, which has revenues of $6.5 billion and 45,000 employees. He has a proven track record, driving growth, building and motivating teams and delivering financial results. I'm confident that his P&L management experience, his operating and commercial skills and strategic acumen will allow him to be very successful as he comes forward to lead Harris.
Moving now to first quarter results in Slides 3 and 4 in our presentation. We began fiscal 2012 with a number of important new wins and strong orders that we're off to a good start. Orders increased 23% compared to the prior year. They exceeded revenue, and that drove a book-to-bill for the total company of greater than 1 during the first quarter. Consolidated revenue was $1.46 billion. That increased 4% over the prior year. If we exclude the impact of acquisitions, then revenue declined about 2%. Expedited tactical radio shipments in the prior year of $235 million created a difficult year-over-year comparison to both revenue and income. And you'll remember these were for the expedited MRAP vehicle program. This was expected, the year-over-year change, and included in our prior guidance.
Non-GAAP earnings per share was $1.06 in the first quarter. Also during the first quarter, we repurchased $400 million in outstanding shares, reducing the share count by 8.6% and achieving our targeted share reduction that we had previously discussed of 8% to 9% for the fiscal year.
Moving now to the segment results, first on Slide 5. First quarter revenue for RF Communications was $497 million, comprised $373 million from Tactical Communications and $124 million from Public Safety and Professional Communications. Againthe year-over-year revenue decline in RF Communications was as a result of the $235 million of expedited tactical radio shipments in the prior year quarter.
The worst of these year-over-year quarterly comparisons is now behind us, and our baseline for future growth is essentially reset. All that remains of the $1 billion in expedited MRAP shipments that occurred over 5 quarters is the last $80 million that shipped in the second quarter in fiscal 2011.
We believe the underlying performance in the quarter was strong, with segment revenue of $497 million. Excluding deliveries with the MRAP program shipments, U.S. DoD revenue and Tactical Communications increased significantly year-over-year, driven by continuing Falcon III adoption, supporting the DoD vision to deploy wideband networking to replace outdated voice-centric and line-of-sight tactical communications. International revenue growth was also strong in the quarter, increasing significantly over the prior year, driven by major deliveries to Australia, Kenya and other countries in North Africa and Central Asia. Revenue from Public Safety and Professional Communications is $124 million in the first quarter, and that was a 3% increase over the prior year. Significant new wins, including the province of Alberta in Canada, Oregon's, Department of Transportation, Floyd County, Georgia and Linn County, Iowa, which were all announced in the back half of fiscal 2011, are contributing to the seals ramp up and allowing us to maintain a healthy backlog in this business. For the segment, operating income in the first quarter was lower as expected, at $154 million compared with the $229 million in the prior year.