Company Reports Adjusted Pro Forma Revenue
of $1.12 Billion and Adjusted Diluted Earnings Per Share of $1.14
in the Quarter
Orbital ATK Sets Financial Guidance For
Calendar Year 2015
Orbital ATK will pay its quarterly dividend for shareholders of
record as of June 8 on June 25, not June 28 stated in today’s press
release. The correction has been made on the company’s website.
The corrected release reads:
ORBITAL ATK ANNOUNCES FINANCIAL RESULTS FOR
QUARTER ENDED MARCH 31, 2015
Company Reports Adjusted Pro Forma Revenue
of $1.12 Billion and Adjusted Diluted Earnings Per Share of $1.14
in the Quarter
Orbital ATK Sets Financial Guidance For
Calendar Year 2015
Orbital ATK, Inc. (NYSE: OA), a global leader in aerospace and
defense technologies, today announced both GAAP and adjusted pro
forma financial results for the quarter ended March 31, 2015.* In
addition to GAAP results, the company is presenting adjusted
results because it believes they are useful to describe the
underlying operating performance of the company by including the
pre-merger Orbital results and excluding significant transaction,
non-operational and other merger-related expenses in the quarter
(for details see reconciliation tables at the end of this
release).
For the March 2015 quarter, the company reported adjusted pro
forma revenues of $1,116 million compared to $1,155 million in the
comparable period of 2014. Adjusted operating income and profit
margin were $116.7 million and 10.5%, respectively, in the quarter
compared to $74.3 million and 6.4%, respectively, in the same
period of 2014. Adjusted earnings per share in the quarter were
$1.14 compared to $0.67 in the same period of 2014. Adjusted free
cash flow from continuing operations was $58.7 million in the
quarter ended March 31, 2015.
The company also reported GAAP revenues from continuing
operations of $970 million for the March 2015 quarter compared to
$791 million in the same quarter of 2014. GAAP operating loss from
continuing operations was $1.1 million in the quarter compared to
operating income from continuing operations of $78.1 million in the
comparable period last year. The company reported a GAAP loss per
diluted share of $0.87 in the March 2015 quarter compared to $1.17
earnings per share in the March 2014 quarter. Free cash flow was
$91.9 million in the March 2015 quarter. GAAP results from
continuing operations represent three months of legacy ATK
(excluding the_______* The adjusted financial results contained in
this press release are non-GAAP financial measures and are adjusted
to give effect to the merger of Orbital Sciences Corporation
(Orbital) and Alliant Techsystems Inc. (ATK) in February 2015. The
adjusted results exclude merger-related and other non-recurring
expenses. Please refer to the reconciliation tables contained in
this press release for more details.
Sporting Group) and approximately seven weeks of Orbital results
from the date of the merger in February 2015. The results of the
company’s Sporting Group are reported in discontinued operations
for all periods as a result of the divestiture of this group in
February 2015.
“With the completion of the Orbital ATK merger in early
February, our team hit the ground running and has performed
extremely well in all facets of our combined operations,” said
David W. Thompson, Orbital ATK’s President and Chief Executive
Officer. “This excellent performance has helped us begin calendar
year 2015 with a strong quarter of new business bookings, operating
margin expansion and earnings growth, and solid cash flow
generation. For the remainder of the year, we will continue to
maximize the benefits of the merger by realizing significant cost
synergies and offering our customers a broader range of innovative
and affordable products they can count on for the success of their
missions.”
Adjusted Consolidated Financial Highlights
All financial measures discussed below are adjusted pro forma
financial results from continuing operations.
Revenues decreased $39 million, or 3%, in the quarter compared
to the same period in 2014. Revenues decreased $18 million in the
Flight Systems Group and $19 million in the Defense Systems Group,
partially offset by an $11 million increase in the Space Systems
Group. Corporate revenue eliminations increased by $13 million.
Operating income increased $42.4 million, or 57%, in the quarter
compared to the same quarter in 2014 due to increases in all
operating segments. Operating income increased $11.0 million in the
Flight Systems Group, $11.2 million in the Defense Systems Group,
$2.3 million in the Space Systems Group and $17.9 million at
corporate driven by better FAS/CAS pension results and lower
intracompany eliminations.
The increase in adjusted net income and earnings per share in
the March 2015 quarter as compared to the same period last year was
attributable to the improvement in operating income discussed
above. Adjusted net income and earnings per share for both
quarters presented assume interest expense at a blended rate of
3.6% on approximately $1.6 billion of debt, an income tax rate of
34% and a diluted share count of 59.4 million (see the Non-GAAP
reconciliation tables for details).
“These solid financial results in the first quarter will pave
the way for strong results for the year,” said Garrett E. Pierce,
the company’s Chief Financial Officer. “In addition, we will be
deploying our expected strong free cash flow to execute a balanced
capital allocation program that returns value to shareholders
primarily in the form of share buybacks and dividends,” he
added.
Adjusted Segment Results
Orbital ATK conducts its operations in three business units:
Flight Systems Group (FSG), Defense Systems Group (DSG) and Space
Systems Group (SSG). Each of these groups in turn consists of
several product-line divisions, as noted below. Segment operating
profit excludes the FAS/CAS pension adjustment, which represents
the difference between total pension expense recorded in accordance
with GAAP (FAS) and pension costs recoverable under U.S. Government
contracts as determined in accordance with government Cost
Accounting Standards (CAS). This difference is recorded at the
corporate level. The amortization of intangible assets recorded in
connection with the merger with Orbital is also recorded in
corporate results. All financial measures discussed below are
adjusted pro forma financial results.
Flight Systems Group:
FSG revenues decreased $18 million, or 5%, due to lower revenues
in the Launch Vehicles Division. Operating income increased $11.0
million, or 33%, primarily due to a contract close-out in the
Propulsion Systems Division.
Defense Systems Group:
DSG revenues decreased $19 million, or 4%, largely due to lower
revenue in the Small Caliber Systems Division. Operating income
increased $11.2 million, or 28%, primarily due to a contract
adjustment in the Missile Products Division and higher margins in
the Armament Systems Division.
Space Systems Group:
SSG revenues increased $11 million, or 4%, and operating income
increased $2.3 million, or 12%, primarily due to higher revenues
and margins in the Commercial Satellite Division.
Adjusted Free Cash Flow and Capital Allocation Plan
Adjusted free cash flow was $58.7 million during the three month
period, including $110.0 million of cash from operations and $51.3
million of capital expenditures (see Non-GAAP reconciliation table
for details).
Earlier this year, the company’s Board of Directors declared a
$0.26 per share dividend for shareholders of record as of June 8,
2015 payable on June 25, 2015. The company’s Board also authorized
a share repurchase program to purchase up to the lesser of one
million shares or $75 million for the remainder of calendar year
2015. In addition, the company will pay approximately $60 million
in required debt amortization during 2015.
Operational Highlights
Orbital ATK’s excellent operational execution led to the
achievement of numerous milestones in the quarter. These included
the following important events:
- In FSG, the company successfully
completed a major test of the five-segment solid rocket booster for
NASA’s Space Launch System and completed full-duration hot-fire
certification testing of the new main engine for the Antares
rocket. Orbital ATK delivered its 200th ship-set of advanced
composite structures for the Lockheed F-35 military aircraft, its
50th ship-set of structures for the Airbus A350 commercial
aircraft, and its first composite frames for the Boeing 787
aircraft. The company also celebrated the 25th anniversary of the
first flight of the Pegasus rocket.
- In DSG, the company successfully
demonstrated outstanding performance and accuracy for its Precision
Guidance Kit (PGK) technology that transforms conventional
artillery rounds into “smart” munitions. Orbital ATK also
successfully carried out a final pre-production capabilities
demonstration of an all-electric “smart bomb” fuze for the U.S. Air
Force. In addition, DSG delivered over 4,700 tactical missile
rocket motors, warheads and related products, and approximately 300
million rounds of small- and medium-caliber ammunition in the
quarter.
- In SSG, the company-built Dawn
spacecraft entered orbit around Ceres, the largest asteroid in the
solar system, continuing its eight-year mission of discovery for
NASA. SSG also launched a super-pressure scientific balloon, the
first mission of its kind since NASA awarded a contract to the
company to manage its scientific balloon program. Orbital ATK also
delivered the SKYM-1 commercial broadcasting satellite to DIRECTV
ahead of schedule, which was successfully deployed into orbit
yesterday aboard an Ariane rocket.
“We are very pleased with progress made in integrating the two
companies and are on track to achieve the cost synergies we
targeted for this year and in 2016,” said Blake E. Larson, Orbital
ATK’s Chief Operating Officer. “Our operational execution has been
outstanding and it remains our number one priority to deliver our
large backlog of orders with best-in-class quality, on schedule and
on cost, for our customers.”
New Business Summary
In the first three months of 2015, Orbital ATK recorded
approximately $1,480 million in new firm and option contract
bookings. In addition, the company received approximately $120
million in option exercises under existing contracts. As of March
31, 2015, the company’s firm backlog was approximately $7.97
billion and its total backlog (including options, indefinite
quantity contract and undefinitized orders) was approximately
$12.08 billion.
Adjusted Calendar Year 2015 Financial Guidance
The company provided the following financial guidance for
calendar year 2015 which has been adjusted to include Orbital’s
results from January 1 to February 8, 2015 and exclude transaction,
restructuring and certain other one-time expenses. The guidance
also includes $50 million of annual non-cash intangible asset
amortization expense resulting from the merger with Orbital in
2015.
Guidance
Calendar Year 2015 Revenues ($ in millions)
$4,350 - $4,450 Operating Income Profit Margin
10.25% - 10.75% Diluted Earnings Per
Share $4.40 - $4.60 Free Cash Flow ($
in millions) $225 - $275
Orbital ATK currently expects an effective tax rate of
approximately 34% and interest expense of about $58 million in
2015. Pension funding is expected to be approximately $40 million
and capital expenditures are projected at about $150 million for
the year. Shares outstanding are expected to average about 59
million this year.
Fiscal Year 2015 Results
On or before June 1, 2015, Orbital ATK will file a Form 10-K for
its fiscal year 2015 (April 1, 2014 - March 31, 2015), which
includes results of Orbital from February 9, 2015, the date of the
completion of the merger, through March 31, 2015. The period from
April 1 through December 31, 2015 will be a nine-month transition
period to a calendar-based fiscal year that will begin on January
1, 2016.
Conference Call Information
Investors can listen to a live audio webcast of the conference
call with analysts that Orbital ATK will host at 9:00 a.m. (EDT)
today. To listen to the call, visit the company’s website at
http://www.orbitalatk/investors. For
those who cannot listen to the live webcast, a telephone recording
of the conference call will be available by dialing (855) 859-2056
and using the conference ID 42619413. The recording will be
available until June 4, 2015. Orbital ATK has also posted on its
website a presentation of first quarter 2015 financial results and
operational highlights.
About Orbital ATK
Orbital ATK is a global leader in aerospace and defense
technologies. The company designs, builds and delivers space,
defense and aviation systems for customers around the world, both
as a prime contractor and merchant supplier. Its main products
include launch vehicles and related propulsion systems; missile
products, subsystems and defense electronics; precision weapons,
armament systems and ammunition; satellites and associated space
components and services; and advanced aerospace structures.
Headquartered in Dulles, Virginia, Orbital ATK employs more than
12,000 people in 20 states across the United States and in several
international locations. For more information, visit
www.orbitalatk.com.
“Safe Harbor” Statement Under the Private Securities
Litigation Reform Act of 1995
Certain statements in this press release may be “forward-looking
statements” as defined by the Private Securities Litigation Reform
Act of 1995. Forward-looking statements often include the words
“forecast,” “expect,” “believe,” “will,” “intend,” “plan,” and
words of similar substance. Such forward-looking statements are
subject to risks and uncertainties that could cause actual results
or performance to differ, including the following: potential
difficulties in achieving expected merger synergies and
efficiencies within the expected time-frames or at all; the
integration of business operations being more difficult,
time-consuming or costly than expected; operating costs, customer
loss and business disruption that might result from the merger;
potential difficulties in retaining key employees; the Company’s
ability to maintain and grow its relationship with its customers;
reductions or changes in U.S. Government military or NASA spending,
including impacts of sequestration under the Budget Control Act of
2011; changes in cost and revenue estimates and/or timing of
programs and payments; the potential termination of U.S. Government
contracts; the impact of the Antares launch failure; failure to win
or retain key contracts; costs of servicing debt, including cash
requirements and interest rate fluctuations; the company’s capital
deployment strategy, including share repurchases and dividend
payments; actual pension asset returns and assumptions regarding
future returns, discount rates and service costs; supply,
availability, and costs of raw materials and components, including
commodity price fluctuations; performance of subcontractors and
other third parties; development of key technologies; and the costs
and ultimate outcome of contingencies, including litigation,
government investigations and other legal proceedings. Additional
information concerning these and other factors can be found in
Orbital ATK’s filings with the Securities and Exchange Commission.
Orbital ATK undertakes no obligation to update any forward-looking
statements.
Disclosure of Non-GAAP Financial Measures
We define free cash flow as GAAP (U.S. Generally Accepted
Accounting Principles) net cash provided by (used in) operating
activities less capital expenditures for property, plant and
equipment. Management believes that the company’s presentation of
free cash flow is useful because it provides investors with an
important perspective on the company’s liquidity, financial
flexibility and ability to fund operations and service debt.
The adjusted financial results contained in this press release
are non-GAAP financial measures adjusted to give effect to the
merger of Orbital and ATK, and eliminate transaction costs,
severance and stock accelerated vesting costs, goodwill impairment
charges, legal settlement charges, restructuring expenses and other
non-recurring expenses. In addition, the adjusted results reflect
estimates of interest expense, the income tax rate and diluted
shares that would be in effect for the period as if the merger with
Orbital and divestiture of the Sporting Group had occurred on
January 1, 2014. Please refer to the reconciliation tables below
for more details.
Adjusted measures are provided so investors can more easily
compare current and prior period results of the combined companies
without the impact of significant non-recurring expenses. The
reconciliation of GAAP results to adjusted results is as
follows:
Consolidated
Results
Quarter Ended March 31,
($ in millions, except per share data)
2015
2014 Revenues
$
1,116
$
1,155
Operating Income 116.7 74.3 Net Income 67.5 39.5 Diluted Earnings
Per Share
$
1.14
$
0.67
Adjusted results. See reconciliation tables in the
"Disclosure of Non-GAAP Financial Measures" section for details.
Flight Systems
Group
Quarter Ended March 31, ($ in millions)
2015 2014 % Change Revenues $ 366.0 $
384.0 (5%) Operating Income 44.7 33.7 33% Operating Margin
12.2%
8.8%
Adjusted results. See reconciliation tables in the
"Disclosure of Non-GAAP Financial Measures" section for details.
Defense Systems
Group
Quarter Ended March 31, ($ in millions)
2015 2014 % Change Revenues $ 502.0 $
521.0 (4%) Operating Income 51.6 40.4 28% Operating Margin 10.3%
7.8% Adjusted results. See reconciliation tables in the
"Disclosure of Non-GAAP Financial Measures" section for details.
Space Systems
Group
Quarter Ended March 31, ($ in millions)
2015 2014 % Change Revenues $ 287.0 $
276.0 4% Operating Income 22.1 19.8 12% Operating Margin 7.7% 7.2%
Adjusted results. See reconciliation tables in the
"Disclosure of Non-GAAP Financial Measures" section for details.
First Three Months of 2015
($ in millions) 2015
Net cash provided by operating activities
$
143.2 Capital expenditures (51.3 ) 91.9
Adjustments (1) (33.2 )
Adjusted Free Cash Flow
$ 58.7
(1) Includes Orbital cash flow for
premerger period; excludes merger and other non-recurring
cashexpenditures and adjusts for the timing of certain significant
cash expenditures.
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version on businesswire.com: http://www.businesswire.com/news/home/20150528005455/en/
Investor and Media Contact:Orbital ATK Inc.Barron
Beneski, 703-406-5528Barron.Beneski@orbitalatk.com
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