Orbital ATK [OA] on Thursday posted strong earnings and sales in its third quarter driven by top and bottom line gains in all three operating segments.
Net income soared 57 percent to $94.8 million, $1.64 earnings per share (EPS), from $60.4 million ($1.04 EPS). Excluding expenses related to the pending acquisition of the company by Northrop Grumman [NOC] and for restating financial statements over a number of quarters, adjusted earnings were $1.75 EPS, 21 cents above consensus estimates.
Operating margins were 11.7 percent, up 3 percent from last year.
The key reasons for the strong earnings were unfavorable profit adjustments a year ago that for the most part didn’t recur in the recent quarter, the company said. Higher sales also helped raise the bottom line.
Sales increased 17 percent to $1.2 billion from $1 billion a year ago.
At the segment level, the Space Systems Group led the top and bottom line increases with sales up 27 percent on satellite systems and advanced programs and earnings that more than doubled. The Flight Systems Group posted a 17 percent gain in sales on the aerostructures and launch vehicles businesses and operating profit rose 40 percent, in part on higher margins in aerostructures and propulsion systems.
At the Defense Systems Group, sales increased 13 percent on armament systems and missile products, while operating income was up 46 percent.
Order activity was strong in the quarter, $1.4 billion in new orders for a book-to-bill ratio nearing 1.2 times sales, with an additional $400 million in existing option exercises. Total backlog was up 5 percent from a year ago to $15.7 billion and funded backlog was up 3 percent to $9.6 billion.
Free cash flow was a strong $153 million.
Due to the planned acquisition by Northrop Grumman, Orbital ATK didn’t provide guidance or host an earnings call. The acquisition is still on track to close in the first half of 2018.