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Orbital ATK Announces Fourth Quarter and Full Year 2016 Financial Results

Press Release From: Orbital ATK
Posted: Wednesday, March 8, 2017

Orbital ATK, Inc. (NYSE: OA), a global leader in aerospace and defense technologies, today announced preliminary unaudited financial results for the fourth quarter and full year ended December 31, 2016.

Orbital ATK reported GAAP revenues of $1,272 million for the fourth quarter of 2016, up 11% compared to $1,145 million in the fourth quarter of 2015. GAAP income from continuing operations, before interest, income taxes and non-controlling interest (which the company refers to as operating income) was $114.9 million, or 9.0% operating margin, for the fourth quarter of 2016 compared to $94.3 million or 8.2% operating margin, in the comparable 2015 period. The company reported GAAP earnings per diluted share of $1.08 and $0.89 in the fourth quarters of 2016 and 2015, respectively. Free cash flow, which is a non-GAAP measure defined as GAAP cash from operating activities ($414.7 million) minus capital expenditures ($84.5 million), was $330.2 million in the fourth quarter of 2016 compared to $122.2 million in the fourth quarter of 2015.

The company also reported the following non-GAAP adjusted results for the fourth quarter of 2016. Adjusted operating income and profit margin were $131.6 million and 10.3%, respectively, in the fourth quarter of 2016, compared to $140.0 million and 12.2%, respectively, in the comparable 2015 period. Adjusted diluted earnings per share were $1.26 and $1.44 in the fourth quarter of 2016 and 2015, respectively. Adjusted free cash flow, which excludes certain merger and restatement related cash expenses of $9.7 million, was $339.9 million in the fourth quarter.

For the full year, Orbital ATK reported GAAP revenues of $4,455 million in 2016, compared to $4,363 million in 2015. Operating income was $474.0 million, or 10.6% operating margin, in 2016 compared to $336.2 million, or 7.7% operating margin, in 2015. The company reported GAAP earnings per diluted share of $5.00 in 2016 compared to $2.59 in 2015.

The company also reported the following non-GAAP adjusted results for the full year 2016. Revenues were $4,455 million in 2016 compared to $4,509 million in 2015. Adjusted operating income and profit margin were $518.4 million and 11.6%, respectively, in 2016, compared to $516.4 million and 11.5%, respectively, in 2015. Adjusted diluted earnings per share in 2016 were $5.55 compared to $5.10 in 2015. Adjusted free cash flow, which excludes certain merger and restatement related cash expenses totaling $29.9 million, was $360.9 million in 2016 compared to $290.0 million in 2015.

"Orbital ATK’s 2016 was characterized by solid operational performance, excellent new orders, and strong earnings and cash flow," said David W. Thompson, Orbital ATK’s President and Chief Executive Officer. "We exceeded our initial profit margin expectations, free cash flow targets and new business booking goals for the year. In addition, we continued to implement a disciplined cash deployment strategy that included a mix of share repurchases, dividend payments and investments in long-term growth initiatives that will benefit the company in the years ahead."

Cash Flow and Capital Allocation Activities

Cash generated by operating activities totaled approximately $522 million, while capital expenditures were $191 million in 2016. Free cash flow in 2016 was about $331 million. Adjusted free cash flow was $361 million, which excludes $30 million of merger-and restatement-related cash expenses (see non-GAAP reconciliation tables below for details).

Orbital ATK repurchased approximately $124 million of its common stock and also paid dividends of approximately $70 million during 2016, returning a total of nearly $195 million to shareholders during the year. The company also invested about $305 million in research and development and capital equipment in 2016.

"Orbital ATK’s financial performance last year reflected solid profit margin and earnings per share results. The company generated over $360 million in adjusted free cash flow in 2016 on top of $290 million in 2015. We returned approximately $195 million to shareholders last year, and almost $135 million the previous year, in the form of dividends and share repurchases," said Garrett E. Pierce, the company’s Chief Financial Officer.

New Business Summary

In the fourth quarter of 2016, Orbital ATK recorded approximately $1,225 million in new firm and option contract bookings. In addition, the company received approximately $750 million in option exercises under existing contracts. For the full year 2016, new firm and option orders totaled $6,615 million and option exercises under existing contracts were $1,850 million. As of December 31, 2016, the company’s firm backlog was approximately $9.34 billion, up 13% compared to a year ago, and its total backlog (including options, indefinite quantity contracts and undefinitized orders) was approximately $14.36 billion, 10% higher than in the prior year.

- Read the full financial statements here.

About Orbital ATK

Orbital ATK is a global leader in aerospace and defense technologies. The company designs, builds and delivers space, defense and aviation systems for customers around the world, both as a prime contractor and merchant supplier. Its main products include launch vehicles and related propulsion systems; missile products, subsystems and defense electronics; precision weapons, armament systems and ammunition; satellites and associated space components and services; and advanced aerospace structures. Headquartered in Dulles, Virginia, Orbital ATK employs approximately 12,500 people in 18 states across the United States and in several international locations. For more information, visit www.orbitalatk.com.

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