Income from continuing operations was
Mr.
Financial Highlights
Summary financial results were as follows:
Second Quarter | First Six Months | |||||||||||||
(in millions, except per share data) | 2009 | 2008 | 2009 | 2008 | ||||||||||
Revenues | $ | 270.1 | $ | 301.2 | $ | 565.9 | $ | 584.8 | ||||||
Operating Income | 12.8 | 26.5 | 24.0 | 46.5 | ||||||||||
Income from Continuing Operations | 8.7 | 10.1 | 17.9 | 22.2 | ||||||||||
Income from Discontinued Operations | - | 15.0 | - | 15.9 | ||||||||||
Net Income | 8.7 | 25.1 | 17.9 | 38.1 | ||||||||||
Diluted Earnings per Share: | ||||||||||||||
Continuing Operations | $ | 0.15 | $ | 0.17 | $ | 0.31 | $ | 0.36 | ||||||
Discontinued Operations | - | 0.24 | - | 0.26 | ||||||||||
Net Income | 0.15 | 0.41 | 0.31 | 0.62 |
Revenues decreased
Operating income decreased
Certain non-operating transactions also impacted the company’s financial
results in 2009 and 2008. In the second quarter of 2009, the company
recorded a
As previously disclosed, Orbital adopted a new accounting standard in
the first quarter of 2009 that changed the accounting for the company’s
convertible debt for current and prior periods. As a result, the company
recorded non-cash interest expense of
The effective income tax rate decreased to approximately 30% in the first six months of 2009 compared to approximately 37% in the first six months of 2008, primarily due to an increase in research and development tax credits in 2009.
Net income in the second quarter of 2009 was
Segment Results
Launch Vehicles
|
||||||||||||||||
Second Quarter |
First Six Months |
|||||||||||||||
($ in millions) | 2009 | 2008 | % Change | 2009 | 2008 | % Change | ||||||||||
Revenues | $ | 117.1 | $ | 115.0 | 2% | $ | 236.3 | $ | 220.3 | 7% | ||||||
Operating Income | 4.1 | 13.4 | (69%) | 8.4 | 21.0 | (60%) | ||||||||||
Operating Margin | 3.5% | 11.7% | 3.6% | 9.5% |
Launch vehicles segment revenues increased
Launch vehicles segment operating income decreased
Launch vehicles segment adjusted operating income** was
Satellites and Space Systems
Second Quarter |
First Six Months |
|||||||||||||||
($ in millions) | 2009 | 2008 | % Change | 2009 | 2008 | % Change | ||||||||||
Revenues | $ | 94.1 | $ | 108.1 | (13%) | $ | 204.3 | $ | 214.5 | (5%) | ||||||
Operating Income | 7.7 | 7.6 | 1% | 15.5 | 15.5 | - | ||||||||||
Operating Margin | 8.2% | 7.0% | 7.6% | 7.2% |
Satellites and space systems segment revenues decreased
Satellites and space systems segment operating income was approximately the same in the 2009 periods compared to the 2008 periods. Segment operating margin increased in the second quarter and first half of 2009 compared to the same periods in 2008 primarily due to improved profit margins on communications satellite programs.
Advanced Space Programs
Second Quarter |
First Six Months |
|||||||||||||||
($ in millions) | 2009 | 2008 | % Change | 2009 | 2008 | % Change | ||||||||||
Revenues | $ | 62.1 | $ | 79.7 | (22%) | $ | 130.4 | $ | 152.3 | (14%) | ||||||
Operating Income | 1.0 | 5.7 | (82%) | 0.1 | 10.6 | (99%) | ||||||||||
Operating Margin | 1.6% | 7.2% | 0.1% | 7.0% |
Advanced space programs segment revenues decreased
Advanced space programs segment operating income decreased
Cash Flow
Cash flow for the second quarter and first six months of 2009 was as follows:
Second Quarter | First Six Months | ||||||||
(in millions) | 2009 | 2009 | |||||||
Net Cash Provided by Operating Activities | $ | 28.3 | $ | 44.3 | |||||
Capital Expenditures | (12.5 | ) | (18.3 | ) | |||||
Free Cash Flow | 15.8 | 26.0 | |||||||
Repurchase of Common Stock | (2.1 | ) | (16.7 | ) | |||||
Other | 2.1 | 2.7 | |||||||
Net Increase in Cash | 15.8 | 12.0 | |||||||
Beginning Cash Balance | 324.5 | 328.3 | |||||||
Ending Cash Balance | $ | 340.3 | $ | 340.3 |
Free cash flow was
New Business Highlights
During the second quarter of 2009, Orbital received approximately
Operational Highlights
In the second quarter of 2009, Orbital carried out three major space missions and delivered seven additional launch vehicles and satellites for missions to be carried out in the future. In May, Orbital’s Minotaur I space launch vehicle successfully launched the U.S. Air Force’s TacSat-3 satellite in a mission that originated from NASA’s Wallops Flight Facility. It was the sixteenth mission for a Minotaur rocket, all of which have been fully successful. In June, the Orbital-built MEASAT-3a communications satellite was launched into geosynchronous orbit and recently completed its in-orbit testing and hand-over to the customer. Orbital also supported NASA’s Hubble Space Telescope servicing mission in May.
For the remainder of 2009, Orbital expects to carry out up to 12
additional space missions and rocket launches and deliver another six to
eight systems for future operations or deployments. The remaining 2009
operational schedule includes the first launches of two new rocket
systems – the Minotaur IV space launch vehicle for the
2009 Financial Guidance
The company updated its financial guidance for full-year 2009 as follows:
Current | Previous | |||
Revenues (in millions) | $1,110 - $1,135 | $1,150 - $1,175 | ||
Operating Income Margin | 4.25% - 4.50% | 5.25% - 5.50% | ||
Diluted Earnings per Share | $0.55 - $0.60 | $0.68 - $0.75 | ||
Free Cash Flow (in millions) | $50 - $60 | $65 - $75 |
Orbital has lowered its 2009 guidance as a result of a reduction in forecasted revenue on missile defense and communications satellite programs, in addition to a reduction in advanced space programs operating profit margins.
As previously reported, the 2009 guidance includes a
Disclosure of Non-GAAP Financial Measures
Free cash flow is defined as GAAP (Generally Accepted Accounting Principles) net cash provided by operating activities less capital expenditures for property, plant and equipment. A reconciliation of free cash flow to net cash provided by operating activities is included above in the section entitled “Cash Flow.” 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.
Launch vehicles segment adjusted operating income and adjusted operating
margin are defined as launch vehicles segment GAAP operating income and
operating margin adjusted to exclude the unrecovered Taurus II research
and development expenses in 2009 and 2008. Launch vehicles operating
income and operating margin in 2008 has also been adjusted to exclude a
Second Quarter | First Six Months | |||||||||||
(in millions) | 2009 | 2008 | 2009 | 2008 | ||||||||
Reported segment operating income | $ | 4.1 | $ | 13.4 | $ | 8.4 | $ | 21.0 | ||||
Unrecovered Taurus II research and development | 6.9 | 1.7 | 13.1 | 3.9 | ||||||||
U.S. Government investigation profit adjustment | - | (4.0) | - | (4.0) | ||||||||
Adjusted segment operating income | $ | 11.0 | $ | 11.1 | $ | 21.5 | $ | 20.9 | ||||
Adjusted segment operating margin | 9.4% | 10.0% | 9.1% | 9.7% |
Orbital does not intend for the above non-GAAP financial measures to be considered in isolation or as a substitute for the related GAAP measure. Other companies may define these measures differently.
About Orbital
Orbital develops and manufactures small- and medium-class rockets and space systems for commercial, military and civil government customers. The company’s primary products are satellites and launch vehicles, including low-Earth orbit, geosynchronous-Earth orbit and planetary spacecraft for communications, remote sensing, scientific and defense missions; human-rated space systems for Earth-orbit, lunar and other missions; ground- and air-launched rockets that deliver satellites into orbit; and missile defense systems that are used as interceptor and target vehicles. Orbital also provides satellite subsystems and space-related technical services to government agencies and laboratories.
“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995
Certain statements in this press release may be forward-looking in
nature or “forward-looking statements” as defined in the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements are subject to risks, trends and uncertainties that could
cause the actual results or performance of the company to be materially
different from the forward-looking statement. Uncertainty surrounding
factors such as continued government support and funding for key space
and defense programs, new product development programs, product
performance and market acceptance of products and technologies,
government contract procurement and termination risks, as well as other
risk factors and business considerations described in the company’s
A transcript of the earnings teleconference call will be available on Orbital’s website at http://www.orbital.com/Investor.
________
* “Free cash flow” is a non-GAAP financial measure discussed in this release. For additional details, please refer to the sections of this press release entitled “Cash Flow” and “Disclosure of Non-GAAP Financial Measures.”
** “Adjusted operating income,” and “adjusted operating margin” are non-GAAP financial measures discussed in this release. For additional details, please refer to the section of this press release entitled “Disclosure of Non-GAAP Financial Measures.”
ORBITAL SCIENCES CORPORATION |
||||||||||||||||
Condensed Consolidated Income Statements |
||||||||||||||||
(in thousands, except per share data) |
||||||||||||||||
|
||||||||||||||||
Second Quarter | First Six Months | |||||||||||||||
2009 | 2008* | 2009 | 2008* | |||||||||||||
Revenues | $ | 270,129 | $ | 301,223 | $ | 565,870 | $ | 584,768 | ||||||||
Cost of revenues | 208,815 | 242,789 | 455,163 | 477,471 | ||||||||||||
Research and development expenses | 30,734 | 10,202 | 49,705 | 18,406 | ||||||||||||
Selling, general and administrative expenses | 17,759 | 21,745 | 37,017 | 42,413 | ||||||||||||
Income from operations | 12,821 | 26,487 | 23,985 | 46,478 | ||||||||||||
Investment impairment charge | (600 | ) | (10,600 | ) | (1,300 | ) | (10,600 | ) | ||||||||
Interest income and other | 1,750 | 1,452 | 7,413 | 3,838 | ||||||||||||
Interest expense | (2,157 | ) | (2,187 | ) | (4,414 | ) | (4,321 | ) | ||||||||
Income from continuing operations before income taxes | 11,814 | 15,152 | 25,684 | 35,395 | ||||||||||||
Income tax provision | (3,075 | ) | (5,041 | ) | (7,743 | ) | (13,222 | ) | ||||||||
Income from continuing operations | 8,739 | 10,111 | 17,941 | 22,173 | ||||||||||||
Income from discontinued operations, net of taxes | - | 14,969 | - | 15,918 | ||||||||||||
Net income | $ | 8,739 | $ | 25,080 | $ | 17,941 | $ | 38,091 | ||||||||
Basic income per share: | ||||||||||||||||
Continuing operations | $ | 0.15 | $ | 0.17 | $ | 0.31 | $ | 0.37 | ||||||||
Discontinued operations | - | 0.25 | - | 0.27 | ||||||||||||
Net income | 0.15 | 0.42 | 0.31 | 0.64 | ||||||||||||
Diluted income per share: | ||||||||||||||||
Continuing operations | $ | 0.15 | $ | 0.17 | $ | 0.31 | $ | 0.36 | ||||||||
Discontinued operations | - | 0.24 | - | 0.26 | ||||||||||||
Net income | 0.15 | 0.41 | 0.31 | 0.62 | ||||||||||||
Shares used in computing basic income per share | 56,450 | 58,656 | 56,818 | 58,575 | ||||||||||||
Shares used in computing diluted income per share | 57,183 | 60,087 | 57,566 | 59,854 | ||||||||||||
_________________________ |
* The company’s 2008 financial statements have been adjusted to record $1.1 million and $2.2 million of additional interest expenses in the second quarter and first half of 2008, respectively, required by a new accounting standard pertaining to the company’s convertible debt. |
ORBITAL SCIENCES CORPORATION |
||||||||||||||||
Segment Information |
||||||||||||||||
(in millions) |
||||||||||||||||
Second Quarter | First Six Months | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Revenues: | ||||||||||||||||
Launch Vehicles | $ | 117.1 | $ | 115.0 | $ | 236.3 | $ | 220.3 | ||||||||
Satellites and Space Systems | 94.1 | 108.1 | 204.3 | 214.5 | ||||||||||||
Advanced Space Programs | 62.1 | 79.7 | 130.4 | 152.3 | ||||||||||||
Eliminations | (3.2 | ) | (1.6 | ) | (5.1 | ) | (2.3 | ) | ||||||||
Total Revenues | $ | 270.1 | $ | 301.2 | $ | 565.9 | $ | 584.8 | ||||||||
Income from Operations: | ||||||||||||||||
Launch Vehicles | $ | 4.1 | $ | 13.4 | $ | 8.4 | $ | 21.0 | ||||||||
Satellites and Space Systems | 7.7 | 7.6 | 15.5 | 15.5 | ||||||||||||
Advanced Space Programs | 1.0 | 5.7 | 0.1 | 10.6 | ||||||||||||
Eliminations | - | (0.2 | ) | - | (0.6 | ) | ||||||||||
Total Income from Operations | $ | 12.8 | $ | 26.5 | $ | 24.0 | $ | 46.5 |
ORBITAL SCIENCES CORPORATION |
||||||
Condensed Consolidated Balance Sheets |
||||||
(in thousands) |
||||||
June 30, | December 31, | |||||
2009 | 2008* | |||||
Assets | ||||||
Cash | $ | 340,287 | $ | 328,307 | ||
Receivables, net | 217,740 | 203,111 | ||||
Inventory | 44,941 | 33,434 | ||||
Deferred income taxes, net | 39,331 | 35,368 | ||||
Other current assets | 3,533 | 8,951 | ||||
Total current assets | 645,832 | 609,171 | ||||
Non-current investments | 14,700 | 16,700 | ||||
Property, plant and equipment, net | 115,932 | 104,880 | ||||
Goodwill | 55,551 | 55,551 | ||||
Deferred income taxes, net | 52,248 | 63,206 | ||||
Other non-current assets | 24,848 | 4,387 | ||||
Total Assets | $ | 909,111 | $ | 853,895 | ||
Liabilities and Stockholders’ Equity | ||||||
Accounts payable and accrued expenses | $ | 149,646 | $ | 179,658 | ||
Deferred revenues and customer advances | 152,928 | 80,059 | ||||
Total current liabilities | 302,574 | 259,717 | ||||
Long-term debt | 117,780 | 115,372 | ||||
Other non-current liabilities | 8,170 | 5,700 | ||||
Total stockholders’ equity | 480,587 | 473,106 | ||||
Total Liabilities and Stockholders’ Equity | $ | 909,111 | $ | 853,895 | ||
_________________________ |
* The company’s 2008 financial statements have been adjusted as required by a new accounting standard pertaining to the company’s convertible debt. |
ORBITAL SCIENCES CORPORATION |
||||||||
Condensed Consolidated Statements of Cash Flows |
||||||||
(in thousands) |
||||||||
June 30, 2009 | ||||||||
Second Quarter |
First Six Months |
|||||||
Net income | $ | 8,739 | $ | 17,941 | ||||
Investment impairment charge | 600 | 1,300 | ||||||
Depreciation | 4,756 | 9,632 | ||||||
Deferred income taxes | 2,622 | 6,668 | ||||||
Changes in assets and liabilities | 8,688 | 2,093 | ||||||
Other | 2,846 | 6,683 | ||||||
Net cash provided by operating activities | 28,251 | 44,317 | ||||||
Capital expenditures | (12,460 | ) | (18,357 | ) | ||||
Sale of investment | 1,138 | 1,138 | ||||||
Other | 184 | 184 | ||||||
Net cash used in investing activities | (11,138 | ) | (17,035 | ) | ||||
Repurchase of common stock | (2,101 | ) | (16,681 | ) | ||||
Net proceeds from issuance of common stock | 733 | 1,262 | ||||||
Other | 47 | 117 | ||||||
Net cash used in financing activities | (1,321 | ) | (15,302 | ) | ||||
Net increase in cash | 15,792 | 11,980 | ||||||
Cash, beginning of period | 324,495 | 328,307 | ||||||
Cash, end of period | $ | 340,287 | $ | 340,287 | ||||
Source:
Orbital Sciences Corporation
Barron Beneski, 703-406-5528
Public
and Investor Relations
beneski.barron@orbital.com