ATK (NYSE: ATK) today reported operating results for the fourth quarter and Fiscal Year 2013, which ended on March 31, 2013.
Fourth quarter orders were $2.5 billion, mostly driven by strong orders in ATK’s Sporting Group. Fourth quarter sales of $1.2 billion were down 12 percent from the prior-year quarter, primarily driven by lower sales in the Defense Group.
Fourth quarter margins of 10.5 percent were up compared with the prior-year quarter of 8.6 percent. Excluding sales and associated profit from contracts at the Radford Army Ammunition Plant (RFAAP) and a prior-year accrual regarding a previously disclosed settlement related to the LUU flares litigation (LUU flares accrual), FY13 fourth quarter margins as adjusted were 10.5 percent compared to 8.0 percent in FY12 . The increase was driven primarily by higher sales and profit in the Sporting Group, partially offset by lower sales and the absence of profit from the completion of international contracts in the Defense Group, and the absence of restructuring charges taken in the prior year. Fully diluted earnings per share (EPS) in the quarter were $2.23 compared to $1.86 in the prior-year period. As adjusted fully diluted EPS was $2.22 compared to $1.69 . Fourth quarter EPS benefited from reduced interest expense and a lower tax rate due to the retroactive extension of the Federal R&D tax credit in the current quarter.
“The company recorded strong year-over-year performance for the fourth quarter,” said Mark DeYoung, ATK President and Chief Executive Officer. “During the period, the Sporting Group achieved strong orders, record sales volume and improved operating margins. Our Aerospace and Defense Groups reached significant milestones in our rocket motor, precision weapon, missile warning and special mission aircraft programs. These accomplishments confirm our ability to deliver highly engineered, mission-critical capabilities to our customers, whose requirements are changing and where affordability is paramount.”
While the Company is pleased with the strong orders volume in both the fourth quarter and FY13, ATK believes the increase in Sporting Group orders, which account for approximately half of the orders, may not be indicative of future sales, as there may have been a number of ammunition orders placed that may have exceeded actual customer requirements.
FISCAL YEAR 2013
Orders for the year were $6.3 billion, bringing the full-year book-to-bill ratio to 1.4. Approximately half of the orders came from within the Sporting Group. The company achieved full-year sales of $4.4 billion, down 5 percent from the prior year, largely driven by the sales decline in the Defense Group. Full-year operating margins were 10.8 percent, up slightly compared to the prior year. Excluding sales and profit from RFAAP, a tax settlement, the prior-year favorable contract resolution, and the absence of the LUU flares accrual, as adjusted margins were 9.8 percent, driven by lower sales and the absence of profit from the completion of international contracts in the Defense Group (see reconciliation table for details). For the full year, net income was up 3 percent to $272 million, compared to $263 million in the prior year. Full-year EPS was $8.34, compared to $7.93 in the prior year. Adjusted EPS decreased from $7.69 to $7.10 driven by lower sales and the absence of profit from the completion of international contracts in the Defense Group (see reconciliation table for details).
“The company secured strategic contracts — such as the operation and maintenance of the Lake City Army Ammunition Plant, AARGM and the A400M — and achieved significant milestones on NASA’s Space Launch System and the Airbus A350,” said DeYoung. “We also delivered improved earnings and working capital, strengthened the corporation through our commitment to execution excellence and announced a change to the pension formula that will allow the company to have more competitive, predictable and sustainable benefit costs in the future. While the company, like others in our industry, faces federal budget uncertainties and questions regarding sequestration, our three-group operating structure enabled ATK to realize its intended cost reductions, efficiency gains and overall agility within our markets. The pension plan changes and retirement of debt strengthen our balance sheet. All of these achievements, along with increasing the dividend and share repurchases, have delivered ATK shareholder value.”
The remainder of the report, tables and charts can all be seen here.
