Aerojet Rocketdyne [AJRD] on Monday posted lower earnings and sales in its second quarter due to supply chain disruptions, favorable performance a year ago on a rocket engine that made for challenging comparison in the latest quarter, and litigation costs associated with bruising proxy battle and lower volume on several programs.

Net income dove 64 percent to $16.4 million, 20 cents earnings per share (EPS), from $45 million (54 cents EPS) a year, 27 cents below consensus estimates. Sales fell 5 percent to $528.5 million from $556.9 million a year ago.

Net unfavorable changes in contract estimates were $21 million during the second quarter versus $18 million in net favorable changes a year ago, a $39 million swing caused by several factors, the company said.

Supply chain disruptions for some materials and components and technical and manufacturing changes on a portion of the Standard Missile program “to increase production capacity and accelerate unit deliveries throughout the remainder of our contract period of performance” led to cost growth on the program, Eileen Drake, president and CEO of Aerojet Rocketdyne, said on the company’s earnings call.

The problems with work on the Standard Missile relate to a “subset” of the program and the company’s work on other parts of the program are performing well, she said.

Favorable contract performance a year ago on the RS-68 liquid engine program did not repeat in the recent quarter, the company said. And litigation costs associated with a proxy contest started by the company’s former executive chairman to oust Drake and replace directors allied with her also contributed to the bottom-line decline.

The drop in sales was driven by declines in the Standard Missile, RS-68 and the RS-25 liquid fuel engine programs.

Drake said the RS-25 continues to experience delays ramping up its supply chain after decades of not producing the engine, leading to delays in first article qualification testing.

“We’re working closely with our suppliers and we’re confident we’ll manage through these issues and see accelerated sales growth for the second half of the year,” she said.

Dan Boehle, Aerojet’s chief financial officer, said on the call that the company’s supply chain is mostly domestic-based and that about 75 percent of its overall supplies come from 25 suppliers, allowing it to “closely manage those suppliers.”

Through the first half of the year sales are down a percent to just over $1 billion, but the company is still targeting a mid-single-digit percentage increase in revenue in 2022, Boehle said.

The challenge in meeting the growth target is a competitive market for labor that is affecting the company’s “hiring of skilled workers needed to support the impressive sales growth we foresee in the second half of the year,” Drake said.

Backlog at the end of June stood at $6.9 billion, up $100 million since the end of 2021, driven by the largest contract the company ever received for its RL10 liquid fuel rocket engine in April from United Launch Alliance

(ULA). ULA awarded the contract for 116 RL10C-X engines for its Vulcan Centaur rocket that will launch satellites for Amazon’s [AMZN] Kuiper satellite internet constellation.

Free cash flow in the quarter was a negative $43.1 million.