Contractors say budget cuts, shutdown took toll on sales

February 2

With government spending on the decline, a number of local defense contractors reported last week that their sales took a hit.

Arlington-based CACI International said revenue for the three-month period ended Dec. 31 fell 4 percent to $894.2 million, partly because of the government shutdown in October.

The quarter “started with [the] shutdown and we ended before we got to the budget compromise,” said Kenneth Asbury, the contractor’s chief executive. “We saw the customers starting to really tighten up as they faced the second round of sequestration.”

CACI said that profit fell, too, declining nearly 12 percent to $34.9 million ($1.38 per share). The company said the reduction was primarily because of $9.7 million in one-time expenses related to its acquisition of McLean-based Six3 Systems.

The story was the same at Falls Church-based Northrop Grumman, where sales declined nearly 5 percent in the fourth quarter to $6.2 billion. Profit hit $478 million ($2.12 per share), down 10 percent.

Wes Bush, Northrop’s chief executive, said the company expects lower sales in 2014, particularly in its information systems and technical services units. In its most recent quarter, the information systems business saw sales decline by 14 percent, reflecting sequestration and the shutdown, according to James F. Palmer, Northrop’s chief financial officer.

The recent spending plans “reduced some of our customers’ budgeting uncertainty,” Bush said. But “it continues to be a challenging U.S. budget environment in terms of absolute dollars spent on national security.”

At McLean-based Booz Allen Hamilton, quarterly sales fell to $1.27 billion, down from $1.39 billion in the same three-month period a year earlier. Profit sank 16 percent to $47.2 million (31 cents per share).

Company executives partly attributed the declines to the government shutdown and ongoing spending cuts. Still, they credited workforce cuts with keeping results in line with expectations.

Arlington-based Alliant Techsystems bucked the trend, posting a 14.4 percent uptick in sales in the three-month period ended Dec. 29 to $1.2 billion. Alliant was able to offset shrinking defense sales with growth in its sporting and aerospace groups.

Some contractors said they’re looking to work abroad to help them offset U.S. government spending cuts.

Bush said Northrop hopes to grow its international business, which in 2013 made up slightly more than 10 percent of its revenue, to 13 percent in 2014.

Booz Allen, too, is seeking additional international work as well as commercial business.

“While our commercial and international businesses remain small, we have been seeing traction and are confident of the foothold we’ve established,” said Samuel R. Strickland, the contractor’s chief financial and administrative officer.

Booz Allen also announced that Strickland will retire this summer. Kevin L. Cook has been named the next chief financial officer, while Joseph W. Mahaffee will become chief administrative officer.

Executives said they’re optimistic that the recent budget agreement will bring more predictability — if not much more funding.

“We’re still in a sequestered world,” Asbury said. But with the budget in place, contractors have access to “better planning stability and a little bit more money.”

SECTION: {section=business, subsection=capitalbusiness}!!!
INITIAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, comments_period=14, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=3, source=washpost.com, allow_photos=false, maxitems=15, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!!

UGC FROM ARTICLE: {allow_comments=true, allow_photos=false, allow_videos=false, comments_period=14, comments_source=washpost.com, default_sort=, default_tab=, display_comments=true, is_ugc_gallery=false, max_items_to_display=15, max_items_to_display_top=3, moderation_required=false, stream_id=}!!!

FINAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, comments_period=14, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=3, source=washpost.com, allow_photos=false, maxitems=15, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!
Comments
SECTION: {section=business, subsection=capitalbusiness}!!!
INITIAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, comments_period=14, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=3, source=washpost.com, allow_photos=false, maxitems=15, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!!

UGC FROM ARTICLE: {allow_comments=true, allow_photos=false, allow_videos=false, comments_period=14, comments_source=washpost.com, default_sort=, default_tab=, display_comments=true, is_ugc_gallery=false, max_items_to_display=15, max_items_to_display_top=3, moderation_required=false, stream_id=}!!!

FINAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, comments_period=14, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=3, source=washpost.com, allow_photos=false, maxitems=15, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!
Show Comments