L-3 Communications(LLL) affirmed in today’s first quarter earnings release that it is moving forward with its plan to
spin off Engility.
With our filing of the Engility initial registration statement, the spin-off of those businesses should occur around mid-year, and we continue to believe that this will unlock opportunity and value for both companies.
The performance of Engility continues to be weaker than the rest of the company:
The Engility businesses, which are included in the Government Services segment, had net sales of $427 million and operating margin (excluding $6 million of transaction expenses for the spin-off) of 7.9% for the 2012 first quarter, compared to net sales of $542 million and operating margin of 8.7% for the 2011 first quarter. Excluding the Engility businesses, consolidated net sales would have increased by 3% to $3,161 million for the 2012 first quarter from $3,059 million for the 2011 first quarter and segment operating margin would have decreased by 80 basis points to 10.4% for the 2012 first quarter from 11.2% for the 2011 first quarter.
Engility’s initial Form 10, filed last month, can be found here.
In a separate release today, Fairfax County, Virginia revealed that it will be home to Engility’s new headquarters and that the company will spend $6.5 million and hire 50 new employees to make the move.
We previously discussed Engility here.
Disclosure: The author holds no position in any stock mentioned