Orbital ATK (OA) Q3 Earnings and Revenues Beat Estimates

Orbital ATK, Inc. OA posted third-quarter 2017 adjusted earnings of $1.75 per share, beating the Zacks Consensus Estimate of $1.56 by 12.2%. Earnings improved 52.1% year over year from $1.15 per share.

During the quarter, the company entered into a definite agreement with Northrop Grumman NOC. Per the agreement, Northrop with acquire Orbital ATK in all cash transaction. The deal is expected to close during the first half of 2018, subject to regulatory approvals.

Total Revenues

Orbital ATK's total revenues in the third quarter came in at $1,216 million, beating the Zacks Consensus Estimate of $1,166 million by 4.3%.

Revenues were 16.5% higher than the year-ago figure of $1,043 million, primarily due to improved sales from all three segments.

Orbital ATK, Inc. Price, Consensus and EPS Surprise
 

Orbital ATK, Inc. Price, Consensus and EPS Surprise | Orbital ATK, Inc. Quote

Segmental Update

Flight Systems Group: Segment sales were up 13.6% year over year to $426 million owing to higher activity in the Aerospace Structures Division and Launch Vehicles.

Defense Systems Group: The segment reported sales of $515 million, up 12.9% year over year due to higher activity on Armament Systems and Missile Products Divisions contracts.

Space Systems Group: The segment reported sales of $314 million, up 26.6% year over year due to higher activity on Satellite Systems and Advanced Programs Divisions contracts.

Highlights of the Release

Research and development expenses in the third quarter totaled $24 million compared with $25 million in the year-ago quarter. The consistent investment in research allowed the company to upgrade its existing products and develop new products.

As of Sep 30, Orbital ATK's firm contract backlog was approximately $9.6 billion, up 5% year over year. Total backlog (including options, indefinite quantity contracts and undefinitized orders) was approximately $15.7 billion, up 3%.

Total adjusted operating income in the quarter under review improved 56% to $142 million from $91 million in the year-ago quarter.

Financial Highlights

Cash provided from operating activities during the quarter was $196.8 million and free cash flow was $153 million in the third quarter.

Capital expenditure was $43.8 million in the quarter and the company invested $138 million in the first nine months of 2017.

Guidance

Due to proposed acquisition of Orbital ATK by Northrop, the company’s management decided not to provide annual earnings guidance for it.

Zacks Rank

Orbital ATK currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peers Releases

Rockwell Collins Inc.’s COL fourth-quarter fiscal 2017 adjusted earnings per share of $1.80 came in line with the Zacks Consensus Estimate.
    
Raytheon Company RTN reported third-quarter 2017 earnings from continuing operations of $1.97 per share, beating the Zacks Consensus Estimate of $1.90 by 3.7%.

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