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$PLL 3Q15 10-Q: Provision for income taxes was up 43.5% to $22.11MM vs. $15.41MM in 3Q14. PLL effective tax rate was 18.7% vs. 14.8% in 3Q14. As of April 30, 2015, the amount of net unrecognized income tax benefits that, if recognized, would impact the ETR was $104,594.
$NOC continues to expect that capital expenditures will remain elevated in 2018 and 2019 before starting to return to a new normal that reflects a larger business. For 2018, the company does have additional CapEx as well as $100-150MM in costs from incremental interest and transaction cost related to its pending acquisition of $OA.
For 2018, $NOC expects Technology Services sales to be in the mid $4Bil range, with an operating margin rate of about 10%. Lower 2018 revenue is primarily due to expected declines in the KC-10 and JRDC programs. Lower revenue for these programs is being partially offset by growth in other programs.
For 2018, $NOC expects Mission Systems sales to grow to the mid to high $11Bil range with an operating margin of about 13%. Primary revenue growth drivers include continued ramp-up on combat avionics and communications programs, including F-35 sensors, SABR radar, and infrared countermeasures.
For 2018, $NOC expect Aerospace Systems to grow at top line at a high single-digit rate to the high $12Bil range. Growth in restricted activities will continue to be a major driver of revenue growth, along with continued ramp-up on the F-35 program. The company expects 2018 operating margin at Aerospace Systems to be in the low to mid 10% range.
$NOC currently expect the $OA transaction to close in 1H of this year. In late November, $OA shareholders overwhelmingly approved the terms of the transaction. The FTC is reviewing the proposed transaction in the U.S. in consultation with the DoD and $NOC notified the European Commission on Jan. 18 under the simplified procedure notice.
$RTN expects to see higher productivity and operational efficiencies at missiles in 2018. This is a broad portfolio. The company has seen growth in development and classified programs but there are slight impacts to margin. Overall, $RTN is pleased with the portfolio and the mix of programs and is optimistic on the missiles business growth.
$RTN's international sales were up 8.4% in 4Q17. In early January, the company booked a new direct commercial contract for Patriot capabilities worth over $1.5Bil. Domestic sales were up 7.9% in 4Q17. In the missile business, bookings grew 23% YoY, mainly driven by an increase in precision weapon contracts.
During 4Q17, net sales in $RTN’s Integrated Defense Systems segment increased 6% versus 4Q16. Intelligence, Information and Services segment net sales grew 4%. The Missile Systems segment posted an increase of 15% while Space and Airborne Systems posted a growth of 4% in net sales. Forcepoint net sales grew 9% versus 4Q16.
$RTN reported a 29% decrease in 4Q17 earnings. Net income attributable to Raytheon was $393MM or $1.35 per share compared to $555MM or $1.88 per share in 4Q16. 4Q17 results included an unfavorable $0.59 provisional tax-related impact due to the enactment of the Tax Cuts and Jobs Act. Net sales grew 8% to $6.8Bil versus last year.
For 2018, $NOC expects sales of about $27Bil and EPS of $15.00-15.25. The company predicts segment operating margin in low-mid 11% range and operating margin of about 12%. $NOC sees effective tax rate of about 19.5%, capital expenditures of about $1Bil and free cash flow in the range of $2.0-2.3Bil.
$NOC's Aerospace Systems sales for 4Q17 rose 5% year-over-year, due to growth in Manned Aircraft and Autonomous Systems. Mission Systems sales grew 6%, on higher volume for Sensors and Processing and Advanced Capabilities programs. Technology Services sales slid 1% on lower volume for System Modernization and Services and Advanced Defense Services.
$NOC's operating income for 4Q17 decreased to $767MM from $831MM last year. The decline is primarily due to higher transaction costs from pending acquisition of $OA and deferred state tax expense from discretionary pension contribution. It also includes changes in contract mix at Aerospace Systems and Mission Systems.
$NOC reported a drop in 4Q17 earnings due to higher tax expenses from Tax Cuts and Jobs Act enactment and $500MM discretionary pre-tax pension contribution related to the write-down of deferred tax assets. Net income fell to $178MM or $1.01 per share from $525MM or $2.96 per share last year. Sales rose 4% to $6.6Bil. Adjusted EPS was $2.82.
With regard to $COL acquisition, $UTX still does expect to close the deal sometime in midyear. $UTX is working through the second request with the DOJ right now. $UTX had earlier expected to fund part of the cash aspect of the deal through foreign cash and now the company is going to bring back about $1Bil a year to pay down the debt.
$UTX feels good about EPS growth outlook of $6.85-7.10, with all four business units contributing. As in the prior years, $UTX's earnings growth will be weighted more towards the back half of the year as it gets the benefit of cost reduction efforts. $UTX sees 1Q18 EPS to be basically flat to 2017, on the profile of the commercial businesses.
Operationally, $UTX continued to execute against its growing aerospace backlog. At Pratt & Whitney, $UTX shipped 374 Geared Turbofan engines in 2017, which is in the range of its 350-400 target and nearly triple its 2016 shipments. The company successfully implemented the engine improvements that it promised to customers in 2017.
$UTX announced the transformative $COL acquisition which will create a premier aerospace supplier. As a result of this proposed transaction, together with the investments in the company's businesses and in its digital strategies, $UTX is positioned well for years to come. The company expects all of its businesses to grow sales and earnings in 2018.