Harris Corp. (HRS) Tops Q2 EPS by 28c, Beats on Revenues; Boosts FY18 EPS/Revenue Mid-Point Guidance Above Consensus

Harris Corp. (NYSE: HRS) reported Q2 EPS of $1.67, $0.28 better than the analyst estimate of $1.39. Revenue for the quarter came in at $1.5 billion versus the consensus estimate of $1.49 billion.

• 2Q18 revenue up 6% to $1.5 billion; orders up 13%
• 2Q18 EPS from continuing operations down 12% to $1.15 GAAP; up 21% to $1.67 non-GAAP
• 2Q18 results impacted by $52 million one-time, non-cash write-down of deferred tax assets and $26 million lower tax rate benefit from enactment of Tax Cuts and Job Act of 2017
• 1H18 revenue up 3% to $2.9 billion; EPS from continuing operations up 3% to $2.52 GAAP and up 15% to $3.05 non-GAAP
• 1H18 operating cash flow up 26% to $373 million; free cash flow up 34% to $330 million
• Solid operating performance plus tax reform resulting in increased EPS guidance for fiscal 2018

Guidance

As a result of the company\'s strong first half performance and benefits from tax reform, Harris updated its guidance for fiscal 2018 to the following:

• Revenue in a range of $6.08 - 6.14 billion, up 3 - 4% from fiscal 2017 (tightened from previous guidance of $6.02 - 6.14 billion, up 2 - 4%)
• GAAP EPS from continuing operations in a range of $5.78 - $5.98 and non-GAAP EPS2 from continuing operations in a range of $6.30 - $6.50 (an increase from previous guidance of $5.85 - $6.05 GAAP and non-GAAP)
• Free cash flow of approximately $900 million (tightened from previous guidance of $850 - 900 million)
• Share repurchases of $200 million (up $50 million from previous guidance)
• Tax rate of approximately 28% GAAP; 23% non-GAAP (a decrease from approximately 28.5% previously, including a half-year benefit of 5 percentage points from tax reform)

GUIDANCE:

Harris Corp. sees FY2018 EPS of $6.30-$6.50, versus the consensus of $6.08. Harris Corp. sees FY2018 revenue of $6.08-6.14 billion, versus the consensus of $6.09 billion.

For earnings history and earnings-related data on Harris Corp. (HRS) click here.

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