Harris Corporation’s CEO Bill Brown on Q1 2015 Results Earnings Call Transcript
Harris Corporation released its first quarter 2015 financial results and conducted a conference call with financial analysts and investors. This is the transcript.
Executives
– Pamela Padgett – VP, IR
– Bill Brown – Chairman & CEO
– Mick Lopez – SVP & CFO
Operator
Good day ladies and gentlemen and welcome to the Harris Corporation First Quarter 2015 Earnings Call. (Operator Instructions). I would now like to introduce your host for today’s conference Pamela Padgett, Vice President of Investor Relations. Ma’am, you may begin.
Pamela Padgett – VP, IR
Thank you. Good morning, everyone, and welcome to our first quarter fiscal 2015 earnings call. I’m Pamela Padgett. And on the call today is Bill Brown, Chairman and CEO; and Mick Lopez, Senior Vice President and Chief Financial Officer. And before we get started, a few words on 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 a 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 the tables of 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.
Bill with that I’ll turn it over to you.
Bill Brown – Chairman & CEO
Okay. Thank you, Pam and good morning everybody. We began our fiscal year posting strong revenue and orders growth in government communications systems and in RF communications’ international tactical radio business. Operating performance was solid as we continued to benefit from lower costs and good execution.
Turning to Slides 3 and 4 of the presentation. Earnings-per-share was $1.18, flat with the prior year and favorably impacted by $0.06 from a lower tax rate in the quarter. Operational earnings came in as expected.
Revenue was down 3% with continued strong growth in government communications systems and in international tactical radios more than offset by continued weakness in the US tactical radio market and declining IT services revenue, primarily due to the wind-down of two major programs.
We remain focused on expanding outside the US, and in the first quarter, international revenue was up 15% to 31% of total revenue, trending favorably compared to 30% of total revenue for all of fiscal ’14. While our focus on operational excellence is reading through the margins and earnings, some of the savings is being reinvested in R&D to drive future growth.
Company-funded R&D was up 5% to 5.4% of total revenue with essentially all of the increase in tactical radio. Orders in the quarter were $1.11 billion and book-to-bill was 0.96. Orders were down 7% year-over-year, primarily due to the decline in IT services. Sequentially, orders were up 3% in the quarter.
Turning to a few segment highlights, and I’ll begin with government communications systems which had an excellent start to the year with revenue, orders and operating income, all up significantly over the prior year. This is the fourth consecutive quarter of positive year-over-year growth for GCS.
