Alliant Techsystems Inc. (ATK) reported first-quarter fiscal 2015 adjusted earnings of $2.86 per share, surpassing the Zacks Consensus Estimate of $2.45 by 16.7%. Quarterly earnings improved 28% from the prior-year figure.
The company’s quarterly GAAP earnings per share were $2.59 compared with $2.24 in the prior-year quarter. The variance between adjusted and GAAP earnings was due to the combined impact of a 20 cent charge related to facility rationalization, a transaction cost of 13 cents and a gain of 6 cents from the closure of the Radford Army Ammunition Plant pension segment.
Total Revenue
Alliant's total revenue of $1,275.4 million in the reported quarter beat the Zacks Consensus Estimate of $1,241 million by 2.8%. On a year-over-year basis, reported revenue exceeded the year-ago figure of $1,078.7 million by 18.2%.
An improved performance from the company’s Sporting Group (up 57.3% year over year) and Aerospace Group (up 8.4%) segments led to the revenue surge. This was partially offset by lower contribution from the Defense Group (down 6.9%) segment.
Operational Highlights
In the quarter under review, Alliant's cost of sales increased 15.3% to $964.8 million from $836.7 million a year ago.
The company’s gross profit increased to $310.6 million from $242 million registered in the prior-year period, indicating growth of 28.3%.
Total operating expenses in the reported quarter were up 33.2% to $155 million from $116.4 million a year ago. Higher expenses were attributed to a rise in selling as well as general and administrative expenses.
Alliant's interest expenses increased 68.3% year over year to $23.4 million in the fiscal first quarter.
Financial Update
As of Jun 29, 2014, Alliant had cash and cash equivalents of $132.7 million compared with $266.6 million as of Mar 31, 2014.
Long-term debt, as of Jun 29, 2014, was $1,843.8 million, flat with the fiscal 2014 year end level.
During the first three months of fiscal 2015, cash from operating activities was $99.8 million versus $135.8 million in the year-ago period.
Alliant’s capital expenditure was $29.5 million during the fiscal first quarter versus $29.6 million in the prior-year period.
Guidance
Alliant reiterated its sales guidance for fiscal 2015 in the range of $5.15–$5.25 billion. The company increased its fiscal 2015 earnings projection to the band of $11.50–$11.90 per share from the earlier estimate of $10.80–$11.20 per share. The rise in earnings guidance was driven by robust performance in the first quarter of fiscal 2015, the retirement of convertible notes and changes in the tax rate.
Alliant increased its fiscal 2015 free cash flow guidance to the range of $280–$305 million from previous projection of $250–$275 million.
In fiscal 2015, the company intends to invest around $135 million as capital expenditure.
At the Peer
Triumph Group Inc.’s (TGI) adjusted earnings from continuing operations for the fiscal first quarter 2015 ended Jun 30, 2014, came in at $1.19 per share, missing the Zacks Consensus Estimate by a penny.
Our View
Alliant registered robust bottom-line growth on the back of higher revenues, a rise in profit in the Sporting Group and a decline in pension expenses.
Alliant continues to introduce new products and upgrade existing ones in its Sporting Group and Aerospace Group segments. The company plans to unveil its expanded satellite products and capabilities at the 28th Annual AIAA/USU Conference on Small Satellites in Logan, UT. These initiatives will enable the company to win more contracts in the future.
Alliant’s decision to form two independent public companies with leadership in Outdoor Sports and Aerospace and Defense will allow it to focus more on the respective operations.
The market reacted positively with Alliant’s share price increasing around 1.5% to $129.93 on Jul 31, 2014 from the previous session.
Alliant currently has a Zacks Rank #2 (Buy). Some other stocks worth considering in the same industry include Curtiss-Wright Corp. (CW) and CAE Inc. (CAE). Both the stocks carry a Zacks Rank #2 (Buy).
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