Aerospace and defense contractor Orbital ATK outperformed expectations, as its adjusted net income rose 16 percent to $80 million while surging sales in its space systems group meant a 2 percent overall revenue boost to $1.14 billion.
The Dulles, Va.-based company posted earnings of $1.12 per share, or $1.35 per share when adjusted for merger-and-acquisition costs and other nonrecurring expenses. Those compared with a Wall Street consensus that had forecast $1.08 per share in unadjusted earnings.
Orbital (NYSE: OA) was formed from the merger of Orbital Sciences Corp. and Alliant Techsystems Inc. in February. The company was created in the aftermath of Orbital’s high-profile mission failure of Oct. 28, 2014, when the explosion of its Antares rocket meant the simultaneous disintegration of a cargo spacecraft loaded with supplies for the International Space Station.
Last month, Aerojet Rocketdyne said it would pay Orbital $50 million to settle a dispute over Aerojet’s role in the explosion. But questions have lingered about Orbital’s ability to get back on track with ISS cargo missions.
More positively, the company recently won an important new contract from United Launch Alliance to provide boosters for the Atlas V and Vulcan launch vehicles.
Orbital shares rallied on news of its quarterly results, released just before trading on Oct. 27. The stock closed up $2.18, or 2.6%, at $84.66. That flirted with the high end of the stock’s 52-week range of $46.76-$85.63.
“Orbital ATK’s third quarter was a period of solid progress for the company on multiple fronts,” CEO David Thompson said. “In addition to better-than-expected financial results, we also booked near-record new orders that included several large and strategically important contracts.”
Looking ahead, the company expects “another period of robust new-order activity and operational milestones, including our next cargo delivery mission to the International Space Station for NASA,” Thompson said.
Orbital has said it will use one of ULA’s Atlas V rockets for its next ISS mission until Antares’ problems can be sorted fully. That mission is set for early December from Cape Canaveral in Florida.
“The Antares team is moving forward with the integration of the new main stage propulsion system, and all of the hardware needed for the next Antares launch in the spring of 2016 is now on site at (NASA’s facility in Virginal on) Wallops Island,” said Blake Larson, Orbital’s chief operation officer.
Orbital operations are divided into three groups: flight systems, defense systems and space systems. Space system successes in the quarter included eight research rocket and scientific balloon missions, while satellite services were credited for pumping group sales to $371 million.
Chief Financial Officer Garrett Pierce said Orbital’s quarterly gains were driven largely by its space systems group, where operating margin increased to 11 percent from a year-earlier 8 percent.
“We recently completed an important refinancing of the company’s debt structure and credit facility which significantly improves our capital structure,” Pierce added. “We also continued to execute our capital allocation plan by deploying $36 million toward share repurchases and paying about $15 million in dividends in the quarter.”