McLean, Va.-based Exelis (NYSE: XLS ) shares were tumbling in early Friday trading, following a Q3 2013 earnings report that showed the company hitting analysts' earnings target, but missing rather badly on revenues.
Q3 2013 revenues of $1.1 billion were down 21% from the year-ago quarter, and fell short of analysts' expected $1.25 billion. Earnings per share of $0.41 precisely matched the analysts' target, but were down 13% year over year.
Yet despite the bad news, Exelis appears to be positioning itself for a turnaround. New orders taken in over the quarter amounted to $2 billion, or nearly twice the amount of backlog converted into revenue in Q3. This suggests an improvement in revenues -- and profits -- could be imminent. As CEO David F. Melcher commented in the press release: "In spite of complex economic pressures, our customers continue to value our ability to deliver mission critical and affordable products and services. We continue to proactively align our business to the dynamic market environment and enable future investment in our strategic growth platforms."
Looking forward, Exelis ratcheted back revenue expectations in line with the Q3 shortfall, saying it expects to book between $4.9 billion and $5 billion in business this year. Operating profit margins should tend toward the upper range of previous guidance, approaching 9.8%, with earnings per share still expected to range between $1.45 and $1.55 per share, and free cash flow exceeding $225 million.