New York, November 20, 2012 -- Moody's Investors Service affirmed Exelis, Inc.'s ("Exelis") Baa3 senior unsecured and Prime-3 ratings but revised the rating outlook to negative from stable. Following its 2011 distribution from ITT Corporation ("ITT"), Exelis' operating performance has met expectations. However, it, along with many defense contractors, now face a challenging environment from prospective declines in U.S. defense spending in 2013 and beyond. This coincides with an earlier significant widening of the underfunded position of its pension plan which will require substantial contributions for several years, keep adjusted leverage above levels anticipated at the time of the initial rating assignment, and limit financial flexibility should cuts in defense spending become more severe.
Going into ITT's separation into three independent organizations, ITT's consolidated pension plans were roughly $1.3 billion underfunded. The bulk of the domestic liabilities and related plan assets were channeled into Exelis at the time of its spin-off with an assumed underfunded position of roughly $1 billion at the time. The combination of lower discount rates and weaker asset valuations contributed to an increase in the underfunded position to approximately $1.9 billion at the end of 2011. Through September 2012Exelis contributed $265 million into the qualified plans, well in excess of its annual pension service costs. Although asset performance has been positive to date, the impact of low discount rates will likely keep the underfunded position at elevated levels for an extended period.
Exelis borrowed under its revolving credit and issued commercial paper during the first half of 2012 to fund its pension contribution and working capital needs. Those borrowings have since been reduced and the historical pattern of its cash flows (weighted toward the 2nd half) should enable it to repay the bulk of remaining commercial paper outstandings by the end of the year. Moody's still expects Exelis to generate cash flows net of capital expenditures and dividends in excess of its funding requirements for the plan liabilities. But the magnitude of that excess is less than previous expectations and will constrain Exelis's ability to either reduce funded debt or invest in growth initiatives that may otherwise strengthen its business position. The effect of MAP 21 (Moving Ahead for Progress in the 21st Century act) will defer pension contributions for the next 2 years but does not reduce the extent of underfunding. Furthermore, substantial uncertainties are involved on the level of future discount rates used in calculating pension liabilities as well as asset valuations in the plan, and, more importantly, the outcome of political decisions on military expenditures and priorities that would affect demand for the company's product and service offerings. In the interim, Moody's adjusted leverage will remain high for the Baa3 category (Moody's anticipates debt/EBITDA above 3 times at year-end 2012). Pressure on U.S. and European defense spending may also lead to weaker revenues and earnings going forward.
The Baa3 rating incorporates Exelis' stature as a leading provider of critical C4ISR equipment and technical services to the U.S. Department of Defense ("DoD") and other U.S. government agencies with a track record of consistent profitability and ongoing free cash flow generation. The rating also considers the company's elevated leverage resulting from both balance sheet indebtedness and adjustments for a significantly underfunded pension plan. The rating incorporates limited prospects for revenue driven earnings growth over the next several years as budgetary issues constrain DoD outlays. The company's business profile benefits from a backlog of contract awards providing revenue visibility and advantages of being an incumbent provider on critical information and support services on classified programs. Exelis possesses a diversified collection of technology applied across electronic communication, sensing and surveillance equipment, sectors that are viewed as less vulnerable to reductions in government expenditures and, to a lesser extent, used in commercial aviation. Significantly, Exelis has both a higher margin product/equipment segment and a less capital intensive service component with the blended mix still yielding solid margins for the defense sector. Nonetheless, pressure on margins in both its equipment and service segments is anticipated over the intermediate period as contracts come up for renewal and volumes are re-set in budgetary decisions.
Funded debt levels are relatively modest in comparison to revenues and EBITDA and the company is expected to generate meaningful free cash flow over the next few years even after contributions to its domestic pension plans. Although balance sheet cash is modest for the size of the organization, the company has a good liquidity profile flowing from ongoing free cash flow and access to a $600 million back-up revolving credit facility with no scheduled principal repayments of long-term debt until 2016. While the company's free cash flow will facilitate a moderate level of transactions, any significant acquisitions or shareholder returns that result in a higher debt burden while organic prospects for revenue or earnings growth remain limited would intensify downward pressure on the rating.
The negative rating outlook reflects the challenging environment for defense related businesses in the U.S. as significant political decisions are awaited over the coming year(s) on aggregate defense expenditures as well as the individual programs that will be affected. This could lead to further pressure on revenues and margins at a time when Exelis's leverage is elevated for the rating category.
A stable outlook or stronger ratings are not anticipated over the near term. A resumption of meaningful organic growth in revenues and operating profitability would be viewed favorably as would reduction in adjusted debt levels. Quantitatively, a stable outlook would involve debt/EBITDA falling below 3 times with EBITA/interest consistently above 5 times and retained cash flow/debt at or above 30%. Negative pressure on the rating could magnify should revenues or profitability appear likely to fall below expectations or if the company experiences negative free cash flow. Similarly, debt funded acquisitions, shareholder returns or deterioration in earnings which would cause debt/EBITDA to increase while its pension plans remained significantly underfunded or lead to EBIT/interest coverage under 3 times could lead to lower ratings.
Ratings affirmed: Senior unsecured, Baa3 Short-term, Prime-3 The last rating action was on October 19, 2011 at which time a Prime-3 short-term rating was assigned.
The principal methodology used in rating Exelis was the Global Aerospace & Defense Industry Methodology published in June 2010. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
Exelis Inc., headquartered in McLean, VA, provides C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance) related products and systems as well as information and technical services to military, government and commercial customers in the U.S. and globally. Revenue in 2011 was approximately $5.8 billion.
The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.
For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.
Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.
Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.
Edwin Wiest VP - Senior Credit Officer Corporate Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Michael J. Mulvaney MD - Corporate Finance Corporate Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. ("MIS") AND ITS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MOODY'S ("MOODY'S PUBLICATIONS") MAY INCLUDE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY'S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY'S OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND MOODY'S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY'S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY'S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED,DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.
All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error negligent or otherwise or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The ratings, financial reporting analysis, projections, and other observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. Each user of the information contained herein must make its own study and evaluation of each security it may consider purchasing, holding or selling.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.
MIS, a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Shareholder Relations -- Corporate Governance -- Director and Shareholder Affiliation Policy."
Any publication into Australia of this document is by MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657, which holds Australian Financial Services License no. 336969. This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001.
Notwithstanding the foregoing, credit ratings assigned on and after October 1, 2010 by Moody's Japan K.K. ("MJKK") are MJKK's current opinions of the relative future credit risk of entities, credit commitments, or debt or debt-like securities. In such a case, "MIS" in the foregoing statements shall be deemed to be replaced with "MJKK". MJKK is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO.
This credit rating is an opinion as to the creditworthiness or a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be dangerous for retail investors to make any investment decision based on this credit rating. If in doubt you should contact your financial or other professional adviser.
Nachrichten zu ITT Corp.
- vom Unternehmen
- Peer Group
Um Ihnen die Übersicht über die große Anzahl an Nachrichten, die jeden Tag für ein Unternehmen erscheinen, etwas zu erleichtern, haben wir den Nachrichtenfeed in folgende Kategorien aufgeteilt:
Relevant: Nachrichten von ausgesuchten Quellen, die sich im Speziellen mit diesem Unternehmen befassen
Alle: Alle Nachrichten, die dieses Unternehmen betreffen. Z.B. auch Marktberichte die außerdem auch andere Unternehmen betreffen
vom Unternehmen: Nachrichten und Adhoc-Meldungen, die vom Unternehmen selbst veröffentlicht werden
Peer Group: Nachrichten von Unternehmen, die zur Peer Group gehören
Analysen zu ITT Corp.
|17.02.2015||ITT Equal Weight||Barclays Capital|
|22.01.2015||ITT Neutral||UBS AG|
|05.01.2015||ITT Buy||Stifel, Nicolaus & Co., Inc.|
|05.01.2015||ITT Buy||Stifel, Nicolaus & Co., Inc.|
|Keine Nachrichten im Zeitraum eines Jahres in dieser Kategorie verfügbar.|
Eventuell finden Sie Nachrichten die älter als ein Jahr sind im Archiv
Alle: Alle Empfehlungen
Buy: Kaufempfehlungen wie z.B. "kaufen" oder "buy"
Hold: Halten-Empfehlungen wie z.B. "halten" oder "neutral"
Sell: Verkaufsempfehlungn wie z.B. "verkaufen" oder "reduce"
Mehr zur ITT-Aktie
Heute im Fokus
STADA spricht anscheinend mit CVC über eigenen Verkauf. Novartis-Chef denkt laut über Verkauf von Roche-Paket nach. Philips muss bei Lichtsparten-Börsengang wohl kleinere Brötchen backen. Microsoft streicht Smartphone-Geschäft weiter zusammen. MyBucks sagt Börsengang ab. Griechenland bekommt neue Hilfsgelder von über zehn Mrd. Euro.
In welcher Metropolregion leben am meisten Menschen?
Diese Aktien sind auf den Verkauflisten der Experte
Volatilität in Schwellenländern