Defense contractor L-3 Communications Holdings Inc posted a higher quarterly profit on Tuesday on demand for products that gather and monitor intelligence, but cut its full-year forecast in wake of a contract loss.

The company also said it expects an agreement with the U.S. Air Force that will allow a logistics unit to resume receiving federal contracts.

The maker of explosive-detection devices and airport security scanners said net income was $227 million, or $1.95 a diluted share for the second quarter, compared with $223 million, or $1.90 a share, a year earlier.

Excluding 9 cents tied to debt retirement and interest expense, profit was $2.04 a share. Analysts on average expected $1.93 a share, according to Thomson Reuters I/B/E/S.

Sales rose 1 percent to nearly $4 billion, compared with $4.03 billion expected by analysts.

L-3 said it now expects earnings of $8.05 to $8.25 for this year, compared with an April forecast calling for a profit of $8.13 to $8.33 a share. It cut its sales forecast to $16 billion to $16.1 billion from $16.2 billion to $16.3 billion previously.

In June, the U.S. government awarded a contract worth up to $5 billion for logistics support to Lockheed Martin Corp after the L-3 unit that was doing the work was suspended from receiving new federal contracts amid a criminal investigation [ID:nN21270116].

L-3 said the loss of that follow-on contract under the Special Operations Forces Support Activity (SOFSA) would shave $150 million from full-year sales and 4 cents from per-share profit.

The company said on Tuesday that it expects an agreement with the Air Force under which the suspension of its Special Support Programs Division will be lifted.

(Reporting by Karen Jacobs, editing by Maureen Bavdek, Dave Zimmerman)