Orbital ATK [OA] on Thursday said its fourth quarter net income fell slightly due to a one-time tax charge although operating results overall were strong.
The company didn’t host an investor call and the earnings report is likely the last before it is acquired by Northrop Grumman [NOC], which is expected to occur during the first half of 2018. Orbital ATK also didn’t provide guidance due to the pending acquisition.
Net income fell 5 percent to $61.2 million, $1.06 earnings per share (EPS), from $64.2 million ($1.11 EPS), with the tax hit cleaving $41 million (71 cents EPS) from the results. Excluding the tax expense, which is related to a tax reform package that reduces federal taxes beginning this year, as well as certain acquisition and other expenses, per share results were $1.81, three cents above consensus.
Sales increased 6 percent to just over $1.3 billion from just under $1.3 billion a year ago.
At the operating level, the top line growth was led by gains in the Flight Systems and Defense Systems Groups on work across all divisions. Sales in the Space Systems Group were down on lower volume in the Satellite Systems division.
Operating income at the segments was higher, driven by profit adjustments at Space Systems and work at Defense Systems. Adjusted operating margin in the quarter was 10.8 percent, up 60 basis points from a year ago.
For the year, Orbital ATK reported $4.8 billion in sales, up 7 percent from $4.5 billion in 2016, while net income increased 6 percent to $309.5 million ($5.34 EPS) from $292.6 million ($5.01 EPS). Adjusted operating margin was flat at 11.6 percent versus a year ago.
Free cash flow in the quarter was $256.3 million and for the year was $275.8 million. New orders for the year were very strong at $5.8 billion, and the company also tallied another $1.7 billion in existing option exercises.
The new awards drove total backlog to a record $16 billion, with firm backlog also a record at $10.2 billion. Total backlog at the end of 2016 was $14.4 billion and firm backlog $9.3 billion.