Yahoo Finance L-3 Communications’ Full-Year 2014 Performance Was Weak
Despite Weak 2014 Results, L-3 Communications Is Poised for Growth (Part 3 of 10)
Fiscal 2014 performance
L-3 Communications’ (LLL) performance for 2014 was poor. Most of its key indicators such as revenues, operating income, earnings per share, and cash flows saw a decline in their values. The net sales saw a 4% year-over-year (or YoY) decline from $12,622 million in 2013 to $12,124 million this year.
The decline was a result of poor performance across all segments during the year due to the challenging market conditions. The diluted earnings per share for the year stood at $7.56, down 8% YoY from last year’s $8.24. The operating income also fell by 10% YoY while the operating margins saw a marginal 70 basis points improvement to end the year at 8.9%. The total funded orders for the year were $12.1 billion.
The book-to-bill ratio of the company for the full-year 2014 stood at one, reflecting the continued strength of its market positions. The company also generated $946 million cash flows during the year, which was 11% lower than last year. The company benefited from slightly lower tax rates.
The company also recently acquired MITEQ in order to enhance its portfolio. This strategy of continued portfolio shaping will likely help to enhance and augment the company’s business capabilities with niche acquisitions that create long-term value for its shareholders.
The year saw some challenging conditions for the company, and the industry in general, due to lower demand from local government agencies because of the defense budget cuts. However, the company was able to manage its business effectively and was successful in exceeding its 2014 financial plan for orders. The order execution also continues to be strong, with its international and commercial business posting strong growth every year. The company created value for its shareholders through disciplined capital allocation and its strong dividend strategy.
Other companies in the aerospace and defense segment are Honeywell (HON), General Dynamics (GD), Exelis (XLS), and Northrop Grumman (NOC). Together these companies, except for Exelis, form ~5% of the iShares Select Dividend ETF (DVY).
Overall, the company had an average year in 2014, but saw stronger orders, earnings, and cash generation throughout and has a strong balance sheet to back it.
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