While Orbital ATK (NYSE: OA) was up against a tough comparable quarter, its second-quarter results came in ahead of its expectations. Consequently, the company is on track to exceed its initial guidance, which led it to boost its full-year outlook.
Orbital ATK results: The raw numbers
What happened with Orbital ATK this quarter?
Orbital ATK was up against some tough comps again this quarter.
- Revenue in the flight systems group rose 13.6% versus the year-ago quarter to $425 million as a result of higher production in both government and commercial aircraft programs. However, operating income only increased by 2.1% to $59.1 million because of lower margins due in part to a favorable profit adjustment for a contract in last year's second quarter.
- Defense systems group revenue slipped 6.8% to $424 million due to a production slowdown at its Lake City facility during the early part of the quarter as the result of an industrial accident. That incident, as well as a favorable contract profit adjustment in the year-ago quarter, caused a 20% slump in operating income, which fell to $42.9 million.
- Space systems group revenue was up 8.2% to $302 million as higher activity on government satellite programs offset a decrease in activity on commercial satellite programs. That said, operating income fell 33.3% because of a favorable contract profit adjustment last year.
- Orbital ATK booked $1.4 billion of new and option orders during the quarter and received about $200 million of option exercises under existing contracts. Those orders boosted its firm backlog up 10% versus last year to $9.5 billion and its total backlog to $15.4 billion, which is up 4% year over year.
What management had to say
CFO Garrett Pierce commented on the company's financial performance:
As Pierce notes, the company performed well during the quarter as sales rose despite the fact that the temporary production slowdown at Lake City clipped $40 million from its top line. As a result of its solid showing, the company enters the second half in an excellent position to deliver accelerated revenue and earnings growth.
In fact, according to CEO David Thompson, "based on our strong results in the second quarter and a positive outlook for the remainder of the year, we are on track to exceed our initial financial objectives for 2017." Because of that, the company is increasing its full-year outlook. It now sees revenue coming in between $4.6 billion and $4.65 billion, which is up from the range of $4.55 billion to $4.625 billion it provided earlier this year. Likewise, it sees earnings rising from its prior guidance range of $5.80 to $6.20 per share to a new range of $5.95 to $6.25 per share.
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