Raytheon on Thursday, April 25 announced its first quarter 2019 results, reporting a 7.4% increase in net sales and a 23% rise in continuing operations income for the quarter.
Net sales for the quarter were up to $6.7 billion from $6.3 billion in the same period last year, with income from continuing operations up 23.2% to $781 million and EPS from continuing operations up 25.9% to $2.77, primarily driven by operational improvements and pension-related items, the company said.
“We delivered strong operating performance in the first quarter with our company bookings, sales, earnings per share and cash flow all ahead of our expectations,” Raytheon Chairman and CEO Thomas A. Kennedy said.
Operating cash flow for the quarter was down from the same period in 2018, to $411 million in outflow compared to an inflow of $283 million. Raytheon attributed the fall to higher net cash taxes and the timing of payments. However, it said operating cash flow from continuing operations was higher than the company’s prior guidance.
Raytheon had bookings of $5.4 billion in the first quarter 2019, compared with $6.3 billion in the first quarter 2018 and a backlog of $41.1 billion, an increase of $2.9 billion or 8% from last year.
The company’s updated financial outlook maintained net sales at $28.6 to $29.1 billion.
Segment results
The Integrated Defense Systems segment had net sales of $1.55 million, up 4% from the same period in 2018, primarily driven by higher sales in the Patriot missile program and the Air and Missile Defense Radar (AMDR) program for the U.S. Navy.
The segment’s operating income was down 5% to $258 million from $273 million, which Raytheon said was primarily driven by a change in mix.
Raytheon booked $418 million on the AMDR program during the quarter, along with $413 million for Patriot for the U.S. Army and foreign buyers.
Net sales in the Intelligence, Information and Services segment were up 12% to $1.777 billion, driven by higher net sales in classified space and cyber programs, the company said. The segment recorded $187 million in operating income, up from $117 million last year.
The segment booked $744 million on classified programs during the quarter, as well as $148 million on domestic and foreign training programs and $82 million to provide support for the North Warning System for the Canadian government.
The Missile Systems segment saw a 9% increase in set sales, taking in $2.006 billion compared to $1.848 billion in the first quarter 2018. It reported $190 million in operating income, down from $212 million in 2018, attributed to lower net program efficiencies and a change in program mix.
Raytheon booked $102 million for Evolved Seasparrow Missiles (ESSM) and $93 million for Rolling Airframe Missiles (RAMTM) for the U.S. Navy and international customers, and $154 million on classified contracts.
Space and Airborne Systems reported $1.653 billion in sales, an increase of 5% from 2018, driven primarily by classified programs, for which the segment booked $451 million during the quarter.
The segment recorded $212 million in operating income, up from $193 million in the same period last year, primarily due to higher volume and a change in program mix and other performance, Raytheon said.
In addition to classified contracts, SAS booked $288 million on the Advanced Synthetic Aperture Radar System (ASARS) program and $90 million for the Next Generation Overhead Persistent Infrared (Next Gen OPIR) program, both for the U.S. Air Force.
The Forcepoint segment had a 12% increase in net sales to $158 million compared to $141 million in the same period in 2018. It recoded a $9 million loss, compared to a $7 million loss in the first quarter of 2018.