Company Reports Revenues of
New Business Bookings of
The company reported GAAP revenues of
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 ATK s third quarter was a period of solid progress for the
company on multiple fronts, said
For the first nine months of calendar year 2015, the company reported
adjusted revenues of
Adjusted Consolidated Financial Highlights
Except as noted, all financial measures discussed below are non-GAAP adjusted financial results from continuing operations. See the reconciliation tables for details.
Third Quarter |
First Nine Months
|
|||||||||||||||||||||
($ in millions, except per share data) | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||
Revenues | $ | 1,135 | $ | 1,112 | $ | 3,381 | $ | 3,322 | ||||||||||||||
Operating Income | 134.9 | 120.5 | 383.1 | 310.5 | ||||||||||||||||||
Net Income | 80.0 | 69.0 | 224.1 | 174.3 | ||||||||||||||||||
Diluted Earnings Per Share | $ | 1.35 | $ | 1.15 | $ | 3.77 | $ | 2.92 | ||||||||||||||
Adjusted results. See reconciliation tables in the "Disclosure of Non-GAAP Financial Measures" section for details. | ||||||||||||||||||||||
Revenues increased
Operating income increased
The increases in net income and earnings per share in the 2015 third quarter as compared to the same period last year were attributable to the improvement in adjusted operating income results. Net income and earnings per share for both quarters reflect an income tax rate of 33.2% for the third quarter of 2015 and an income tax rate of 34.0% for the third quarter of 2014.
In the third quarter, Orbital ATK s financial results were solid,
highlighted by strong growth in the
Adjusted Segment Results
Third Quarter |
|
First Nine Months |
|||||||||||||||||||||||||
($ in millions) | 2015 | 2014 | % Change | 2015 | 2014 | % Change | |||||||||||||||||||||
Revenues | $ | 325 | $ | 366 | (11.4 | %) | $ | 1,089 | $ | 1,118 | (2.6 | %) | |||||||||||||||
Operating Income | 51.1 | 51.3 | (0.4 | %) | 153.9 | 129.5 | 18.8 | % | |||||||||||||||||||
Operating Margin | 15.8 | % | 14.0 | % | 14.1 | % | 11.6 | % | |||||||||||||||||||
Adjusted results. See reconciliation tables in the "Disclosure of Non-GAAP Financial Measures" section for details. | |||||||||||||||||||||||||||
FSG revenues for the third quarter of 2015 decreased
Third Quarter | First Nine Months | |||||||||||||||||||||||||||||||
($ in millions) | 2015 | 2014 | % Change | 2015 | 2014 | % Change | ||||||||||||||||||||||||||
Revenues | $ | 453 | $ | 487 | (7.0 | %) | $ | 1,394 | $ | 1,449 | (3.8 | %) | ||||||||||||||||||||
Operating Income | 43.4 | 51.0 | (14.9 | %) | 139.5 | 137.2 | 1.6 | % | ||||||||||||||||||||||||
Operating Margin | 9.6 | % | 10.5 | % | 10.0 | % | 9.5 | % | ||||||||||||||||||||||||
Adjusted results. See reconciliation tables in the "Disclosure of Non-GAAP Financial Measures" section for details. | ||||||||||||||||||||||||||||||||
DSG revenues for the third quarter of 2015 decreased
Third Quarter
|
First Nine Months | ||||||||||||||||||||||||||||||
($ in millions) | 2015 | 2014 | % Change | 2015 | 2014 | % Change | |||||||||||||||||||||||||
Revenues | $ | 371 | $ | 282 | 31.9 | % | $ | 968 | $ | 823 | 17.6 | % | |||||||||||||||||||
Operating Income | 41.6 | 23.0 | 80.7 | % | 105.1 | 58.3 | 80.2 | % | |||||||||||||||||||||||
Operating Margin | 11.2 | % | 8.2 | % | 10.9 | % | 7.1 | % | |||||||||||||||||||||||
Adjusted results. See reconciliation tables in the "Disclosure of Non-GAAP Financial Measures" section for details. | |||||||||||||||||||||||||||||||
SSG revenues for the third quarter of 2015 increased
Adjusted Free Cash Flow and Capital Allocation Plan
Adjusted free cash flow in the third quarter was
The company also reported that it repurchased approximately
Operational Highlights
Orbital ATK s strong operational execution led to the achievement of numerous milestones in the quarter. These included the following important events:
-
In the
Flight Systems Group , on-schedule progress continued on the integration of the new main stage propulsion system for the Antares rocket. Repairs to the Mid-Atlantic Regional Spaceport launch pad were completed and system testing is now underway in preparation for the resumption of cargo delivery missions fromWallops Island in 2016. Additionally,Orbital ATK carried out two successful flights of its Coyote naval target missile and supported several successful customer launches with propulsion systems and composite structures, including a Minuteman III missile for theAir Force and three ULA operations including two Atlas V and one Delta IV space launch vehicles. The company also reached production milestones in its aerospace structures division, including the production of the 50,000th composite part for the Airbus A350 program and the delivery of its 500th part for theBoeing 787 program. -
In the
Defense Systems Group , the company delivered more than 6,400 tactical missile rocket motors, warheads and related products, and approximately 300 million rounds of small- and medium-caliber ammunition in the third quarter. The company s Precision Guidance Kit program achieved 100% successful testing results and made its first delivery to an international customer. The AARGM tactical missile program reached a production rate of 15 units per month and scored a direct operational hit against a mobile target using upgraded guidance software during the quarter. The company also successfully tested a new scramjet engine combustor that was built through an additive manufacturing process. -
In the
Space Systems Group , two company-built GSSAP satellites entered operational service for theU.S. Air Force during the third quarter in support of a program to enhance space situational awareness in geosynchronous orbit. In addition, final testing of theThaicom -8 commercial communications satellite progressed toward delivery by the end of the year.Orbital ATK also carried out eight successful research rocket and scientific balloon missions in the quarter. The company s next cargo delivery mission to theInternational Space Station forNASA remains on schedule for an early December launch aboard an Atlas V rocket fromCape Canaveral, Florida . The Cygnus spacecraft for this mission completed testing in the quarter and was recently delivered to the launch site and is now being prepared for the upcoming mission.
Commenting on third quarter 2015 operations, Chief Operating Officer
New Business Summary
In the third quarter of 2015,
Adjusted Calendar Year 2015 Financial Guidance
The company provided the following revised financial guidance for
calendar year 2015. This guidance is adjusted to include Orbital s
results from
Guidance | Previous 2015 Guidance | Current 2015 Guidance | |||||||
Revenues ($ in millions) | $4,425 - $4,500 | $4,450 - $4,500 | |||||||
Operating Income Profit Margin | 10.5% - 11.0% | 10.75% - 11.0% | |||||||
Diluted Earnings Per Share | $4.60 - $4.80 | $4.75 - $4.85 | |||||||
Free Cash Flow ($ in millions) | $225 - $275 | $225 - $275 | |||||||
Conference Call Information
Investors can listen to a live audio webcast of the conference call with
analysts that
Social Media Disclosure
About
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
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 in all periods and adjust for the impact of costs and
expenses itemized in the tables below. In addition, the adjusted results
reflect estimates of interest expense, the income tax rate and diluted
shares that would be in effect for the periods as if the merger of
Orbital and ATK and divestiture of ATK s
Adjusted measures are provided so investors can more easily compare current and prior period results of the combined companies. The reconciliation of GAAP results to adjusted results are as follows:
Adjusted Consolidated Results
Quarter Ended
($ in millions, except per share data) | Revenue |
Operating |
Operating |
||||||||||||||||
As Reported | $ | 1,135 | $ | 123.9 | 10.9 | % | |||||||||||||
Merger- related adjustments (1) | 11.0 | ||||||||||||||||||
As Adjusted | $ | 1,135 | $ | 134.9 | 11.9 | % | |||||||||||||
Interest Expense (2) | (14.8 | ) | |||||||||||||||||
Taxes (3) | (39.9 | ) | |||||||||||||||||
Minority Interest | (0.1 | ) | |||||||||||||||||
Adjusted Net Income | $ | 80.0 | |||||||||||||||||
Adjusted EPS (4) | $ | 1.35 | |||||||||||||||||
(1) Includes the impact of transaction expenses and merger related costs. | |||||||||||||||||||
(2) Interest expense excludes an approximately $9 million charge related to the September 2015 debt refinance transaction. | |||||||||||||||||||
(3) Calculated using an effective tax rate of 33.2%. | |||||||||||||||||||
(4) Calculated using a diluted share count of 59.3 million. | |||||||||||||||||||
First Nine Months 2015
($ in millions, except per share data) | Revenue |
Operating |
Operating |
|||||||||||||||
Continuing Operations, As Reported | $ | 3,235 | $ | 248.6 | 7.7 | % | ||||||||||||
Orbital results for Jan. 1 to Feb. 8, 2015 | 129 | (7.5 | ) | |||||||||||||||
$ | 3,364 | $ | 241.1 | 7.2 | % | |||||||||||||
Transaction expenses | 33.4 | |||||||||||||||||
Severance and accelerated vesting | 25.2 | |||||||||||||||||
Intangible amortization | (7.0 | ) | ||||||||||||||||
Goodwill impairment | 34.3 | |||||||||||||||||
Legal settlement | 25.0 | |||||||||||||||||
Other (1) | 17 | 31.1 | ||||||||||||||||
As Adjusted | $ | 3,381 | $ | 383.1 | 11.3 | % | ||||||||||||
Interest expense (2) | (44.7 | ) | ||||||||||||||||
Taxes (3) | (114.1 | ) | ||||||||||||||||
Minority Interest | (0.2 | ) | ||||||||||||||||
Adjusted Net Income | $ | 224.1 | ||||||||||||||||
Adjusted EPS (4) | $ | 3.77 | ||||||||||||||||
(1) Includes change in intracompany eliminations, restructuring and other transaction impacts. | ||||||||||||||||||
(2) Interest expense excludes an approximately $9 million charge related to the September 2015 debt refinance transaction. | ||||||||||||||||||
(3) Calculated using an effective tax rate of 33.8%. | ||||||||||||||||||
(4) Calculated using a diluted share count of 59.48 million. | ||||||||||||||||||
Quarter Ended
($ in millions, except per share data) | Revenue |
Operating |
Operating |
|||||||||||||||
Continuing Operations, As Reported | $ | 743 | $ | 80.2 | 10.8 | % | ||||||||||||
Orbital results for July 1 to September 30, 2014(1) | 338 | 33.9 | ||||||||||||||||
$ | 1,081 | $ | 114.1 | 10.5 | % | |||||||||||||
Intangible amortization | (11.8 | ) | ||||||||||||||||
Transaction expenses | 9.0 | |||||||||||||||||
Change in intracompany eliminations | 31 | 9.1 | ||||||||||||||||
As Adjusted | $ | 1,112 | $ | 120.5 | 10.8 | % | ||||||||||||
Interest expense (2) | (15.8 | ) | ||||||||||||||||
Taxes (3) | (35.6 | ) | ||||||||||||||||
Minority Interest | (0.1 | ) | ||||||||||||||||
Adjusted Net Income | $ | 69.0 | ||||||||||||||||
Adjusted EPS (4) | $ | 1.15 | ||||||||||||||||
(1) Per Orbital Sciences Corporation Form 10-Q for the quarter ended September 30, 2014. | ||||||||||||||||||
(2) Calculated assuming a blended interest rate of 3.6% on $1.6 billion average outstanding debt. | ||||||||||||||||||
(3) Calculated using an effective tax rate of 34%. | ||||||||||||||||||
(4) Calculated using a diluted share count of 59.75 million. | ||||||||||||||||||
First Nine Months 2014
($ in millions, except per share data) | Revenue |
Operating |
Operating |
|||||||||||||||
Continuing Operations, As Reported | $ | 2,249 | $ | 230.1 | 10.2 | % | ||||||||||||
Orbital results for January 1 to September 30, 2014(1) | 979 | 84.1 | ||||||||||||||||
$ | 3,228 | $ | 314.2 | 9.7 | % | |||||||||||||
Transaction expenses | 22.3 | |||||||||||||||||
Intangible amortization | (36.8 | ) | ||||||||||||||||
Pension close-out | (30 | ) | (30.5 | ) | ||||||||||||||
Environmental settlement | 5.2 | |||||||||||||||||
Change in intracompany eliminations | 124 | 25.5 | ||||||||||||||||
Facility Rationalization | 10.6 | |||||||||||||||||
As Adjusted | $ | 3,322 | $ | 310.5 | 9.3 | % | ||||||||||||
Interest expense (2) | (46.2 | ) | ||||||||||||||||
Taxes (3) | (89.9 | ) | ||||||||||||||||
Minority Interest | (0.1 | ) | ||||||||||||||||
Adjusted Net Income | $ | 174.3 | ||||||||||||||||
Adjusted EPS (4) | $ | 2.92 | ||||||||||||||||
(1) Per Orbital Sciences Corporation Form 10-Q for the quarter ended September 30, 2014. | ||||||||||||||||||
(2) Calculated assuming a blended interest rate of 3.6% on $1.6 billion average outstanding debt. | ||||||||||||||||||
(3) Calculated using an effective tax rate of 34%. | ||||||||||||||||||
(4) Calculated using a diluted share count of 59.63 million. |
Flight Systems Group Adjusted Results
Third Quarter 2015 | First Nine Months 2015 | ||||||||||||||||||||||||||||||
($ in millions) | Revenue |
Operating |
Operating |
Revenue |
Operating |
Operating |
|||||||||||||||||||||||||
GAAP as Reported | $ | 325 | $ | 51.1 | 15.8 | % | $ | 1,051 | $ | 151.9 | 14.5 | % | |||||||||||||||||||
Orbital results for Jan. 1 to Feb. 8, 2015 | 38 | 2.0 | |||||||||||||||||||||||||||||
As Adjusted | $ | 325 | $ | 51.1 | 15.8 | % | $ | 1,089 | $ | 153.9 | 14.1 | % | |||||||||||||||||||
Third Quarter 2014 | First Nine Months 2014 | |||||||||||||||||||||||||||||||||
($ in millions) | Revenue |
Operating |
Operating |
Revenue |
Operating |
Operating |
||||||||||||||||||||||||||||
GAAP as Reported | $ | 252 | $ | 34.5 | 13.7 | % | $ | 756 | $ | 89.2 | 11.8 | % | ||||||||||||||||||||||
Orbital results(1) | 130 | 16.8 | 393 | 39.6 | ||||||||||||||||||||||||||||||
$ | 382 | $ | 51.3 | 13.4 | % | $ | 1,149 | $ | 128.8 | 11.2 | % | |||||||||||||||||||||||
Other eliminations | (16 | ) | (31 | ) | 0.8 | |||||||||||||||||||||||||||||
As Adjusted | $ | 366 | $ | 51.3 | 14.0 | % | $ | 1,118 | $ | 129.5 | 11.6 | % | ||||||||||||||||||||||
(1) Per Orbital Sciences Corporation Form 10-Q for quarter ended September 30, 2014. | ||||||||||||||||||||||||||||||||||
Defense Systems Group Adjusted Results
Third Quarter 2015 | First Nine Months 2015 | ||||||||||||||||||||||||||||||
($ in millions) | Revenue |
Operating |
Operating |
Revenue |
Operating |
Operating |
|||||||||||||||||||||||||
GAAP as Reported | $ | 453 | $ | 35.3 | 7.8 | % | $ | 1,387 | $ | 119.4 | 8.6 | % | |||||||||||||||||||
Transaction-related impacts | 8.1 | 7 | 20.1 | ||||||||||||||||||||||||||||
As Adjusted | $ | 453 | $ | 43.4 | 9.6 | % | $ | 1,394 | $ | 139.5 | 10.0 | % | |||||||||||||||||||
Third Quarter 2014 | First Nine Months 2014 | ||||||||||||||||||||||||||||||||
($ in millions) | Revenue |
Operating |
Operating |
Revenue |
Operating |
Operating |
|||||||||||||||||||||||||||
GAAP as Reported | $ | 488 | $ | 50.3 | 10.3 | % | $ | 1,478 | $ | 135.9 | 9.2 | % | |||||||||||||||||||||
Pension close out and other eliminations | (1 | ) | 0.7 | (29 | ) | 1.3 | |||||||||||||||||||||||||||
As Adjusted | $ | 487 | $ | 51.0 | 10.5 | % | $ | 1,449 | $ | 137.2 | 9.5 | % | |||||||||||||||||||||
Space Systems Group Adjusted Results
Third Quarter 2015 | First Nine Months 2015 | ||||||||||||||||||||||||||||||
($ in millions) | Revenue |
Operating |
Operating |
Revenue |
Operating |
Operating |
|||||||||||||||||||||||||
GAAP as Reported | $ | 371 | $ | 41.6 | 11.2 | % | $ | 872 | $ | 64.5 | 7.4 | % | |||||||||||||||||||
Orbital results for Jan. 1 to Feb. 8, 2015 | 92 | 2.3 | |||||||||||||||||||||||||||||
$ | 371 | $ | 41.6 | 11.2 | % | $ | 965 | $ | 66.8 | 6.9 | % | ||||||||||||||||||||
Goodwill impairment | 34.3 | ||||||||||||||||||||||||||||||
Transaction-related impacts | 4 | 4.0 | |||||||||||||||||||||||||||||
As Adjusted | $ | 371 | $ | 41.6 | 11.2 | % | $ | 968 | $ | 105.1 | 10.9 | % | |||||||||||||||||||
Third Quarter 2014 | First Nine Months 2014 | ||||||||||||||||||||||||||||||||||
($ in millions) | Revenue |
Operating |
Operating |
Revenue |
Operating |
Operating |
|||||||||||||||||||||||||||||
GAAP as Reported | $ | 78 | $ | 4.8 | 6.2 | % | $ | 240 | $ | 19.1 | 8.0 | % | |||||||||||||||||||||||
Orbital results(1) | 212 | 19.7 | 599 | 41.8 | |||||||||||||||||||||||||||||||
$ | 290 | $ | 24.5 | 8.5 | % | $ | 839 | $ | 60.9 | 7.3 | % | ||||||||||||||||||||||||
Other eliminations | (8 | ) | (1.5 | ) | (16 | ) | (2.5 | ) | |||||||||||||||||||||||||||
As Adjusted | $ | 282 | $ | 23.0 | 8.2 | % | $ | 823 | $ | 58.3 | 7.1 | % | |||||||||||||||||||||||
(1) Per Orbital Sciences Corporation Form 10-Q for quarter ended September 30, 2014. | |||||||||||||||||||||||||||||||||||
Adjusted Free Cash Flow
($ in millions) |
Third |
First Nine |
|||||||||||||||
Net cash used in/provided by continuing operating activities | $ | 141.0 | $ | 273.2 | |||||||||||||
Capital expenditures | (27.2 | ) | (104.7 | ) | |||||||||||||
113.8 | 168.5 | ||||||||||||||||
Adjustments | 0.9 |
(1) |
|
(0.6 | ) |
(2) |
|
||||||||||
Adjusted Free Cash Flow | $ | 114.7 | $ | 167.9 | |||||||||||||
(1) Excludes litigation settlement and merger related cash expenditures | |||||||||||||||||
(2) Includes Orbital cash flow for premerger
period; excludes merger, litigation settlement and other
non-recurring cash expenditures |
|||||||||||||||||
Condensed Consolidated Statements of Income | ||||||||||||||||
GAAP As Reported | ||||||||||||||||
Third Quarter | ||||||||||||||||
(In millions except per share data) | 2015 | 2014 | ||||||||||||||
Sales | $ | 1,134.9 | $ | 743.2 | ||||||||||||
Cost of sales | 884.7 | 579.8 | ||||||||||||||
Gross profit | 250.2 | 163.4 | ||||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 28.7 | 8.9 | ||||||||||||||
Selling | 28.1 | 23.2 | ||||||||||||||
General and administrative | 69.5 | 51.1 | ||||||||||||||
Income from continuing operations, before interest, income taxes and | ||||||||||||||||
noncontrolling interest | 123.9 | 80.2 | ||||||||||||||
Interest expense | (24.3 | ) | (23.3 | ) | ||||||||||||
Income from continuing operations, before income taxes and | ||||||||||||||||
noncontrolling interest | 99.6 | 56.9 | ||||||||||||||
Income taxes | 33.1 | 15.6 | ||||||||||||||
Income from continuing operations, before noncontrolling interest | 66.5 | 41.3 | ||||||||||||||
Less net income attributable to noncontrolling interest | 0.1 | 0.1 | ||||||||||||||
Income from continuing operations of Orbital ATK, Inc. | 66.4 | 41.2 | ||||||||||||||
Discontinued operations: | ||||||||||||||||
Income from discontinued operations, before income taxes | - | 80.4 | ||||||||||||||
Income taxes | - | 26.5 | ||||||||||||||
Income from discontinued operations | - | 53.9 | ||||||||||||||
Net income attributable to Orbital ATK, Inc. | $ | 66.4 | $ | 95.1 | ||||||||||||
Basic earnings per common share: | ||||||||||||||||
Continuing operations | $ | 1.13 | $ | 1.30 | ||||||||||||
Discontinued operations | - | 1.70 | ||||||||||||||
Net income attributable to Orbital ATK, Inc. | $ | 1.13 | $ | 3.00 | ||||||||||||
Weighted-average number of common shares outstanding | 58,746 | 31,689 | ||||||||||||||
Diluted earnings per common share: | ||||||||||||||||
Continuing operations | $ | 1.12 | $ | 1.29 | ||||||||||||
Discontinued operations | - | 1.68 | ||||||||||||||
Net income attributable to Orbital ATK, Inc. | $ | 1.12 | $ | 2.97 | ||||||||||||
Weighted-average number of diluted common shares outstanding | 59,304 | 32,058 | ||||||||||||||
Condensed Consolidated Balance Sheets | |||||||||||||
GAAP As Reported | |||||||||||||
(In millions) | October 4, 2015 | March 31, 2015 | |||||||||||
Assets | |||||||||||||
Current assets: | |||||||||||||
Cash and cash equivalents | $ | 65 | $ | 139 | |||||||||
Net receivables | 1,883 | 1,794 | |||||||||||
Net inventories | 175 | 196 | |||||||||||
Other current assets | 237 | 260 | |||||||||||
Total current assets | 2,360 | 2,389 | |||||||||||
Net property, plant and equipment | 798 | 807 | |||||||||||
Goodwill | 1,875 | 1,875 | |||||||||||
Other noncurrent assets | 378 | 433 | |||||||||||
Total assets | $ | 5,411 | $ | 5,504 | |||||||||
Liabilites and Equity | |||||||||||||
Current liabilities: | |||||||||||||
Current portion of long-term debt | $ | 40 | $ | 60 | |||||||||
Accounts payable | 227 | 158 | |||||||||||
Other current liabilities | 708 | 879 | |||||||||||
Total current liabilities | 975 | 1,097 | |||||||||||
Long-term debt | 1,497 | 1,529 | |||||||||||
Pension and other noncurrent liabilities | 1,033 | 1,090 | |||||||||||
Total liabilities | 3,505 | 3,716 | |||||||||||
Total equity | 1,906 | 1,788 | |||||||||||
Total liabilities and equity | $ | 5,411 | $ | 5,504 | |||||||||
Source:
For Orbital ATK, Inc.:
Investors and Media:
Barron
Beneski, 703-406-5528
Barron.Beneski@orbitalatk.com