Aerospace and defense company Alliant Techsystems Inc. (ATK) announced operating earnings of $2.16 per share for its first quarter of fiscal 2013 ended July 1, 2012, exceeding the Zacks Consensus Estimate of $1.40 and the year-ago earnings of $2.13 per share.
The year-over-year growth in earnings was due to proper execution of the programs, increase in the ammunition sales volume and a continuous order flow.
Total Revenue
Alliant's total revenue in the first quarter of fiscal 2013 was $1,082.3 million, up from $1,075.2 million reported in the year-ago quarter.
Alliant’s revenues during the quarter surpassed the Zacks Consensus Estimates of $964 million.
The first quarter results were driven by better execution at the Defense Group and Sporting Group segments, marginally offset by a slackened performance from Aerospace Group.
As previously announced, the company has started to report it results under three operating segments from the first quarter of fiscal 2013.
Segmental Update
Defense Group sales in first quarter of fiscal 2013 were $514 million versus $492 million recorded in the prior-year quarter. The 4.5% year-over-year growth was due to higher volume and updated sales and profit rates as the company completed contracts at the Radford Army Ammunition Plant.
Sporting Group sales in first quarter of fiscal 2013 were $273 million versus $229 million recorded in the prior-year quarter. The 19.2% year-over-year rise was due to higher sales from commercial ammunition and tactical accessories businesses.
First quarter of fiscal 2013 sales from Aerospace Systems decreased 16.7% to $295 million from $353.6 million reported in the prior-year quarter. The decline was attributable to lower sales in NASA human space flight programs and lower revenue from commercial aerospace sales.
Financial Update
Total cash and cash equivalents as of July 1, 2012, were $212.4 million versus $568.8 million as of March 31, 2012.
Long-term debts of the company as of July 1, 2012 were $1.26 billion versus $1.27 billion as of March 31, 2012.
Cash used in operating activities in the first quarter of fiscal 2013 was $296.1 million versus $151.5 million in the first quarter of fiscal 2012.
Alliant spent $23.9 million on capital expenditure in the first quarter of fiscal 2013, down 42.5% from the prior year.
Outlook
Riding on the back of strong first-quarter results and a lower-than-expected tax rate, the company raised its guidance for fiscal 2013.
Alliant now expects total revenue for fiscal 2013 in a band of $4.05 billion to $4.15 billion, up from the prior range of $4.0 billion to $4.1 billion.
The company now expects earnings per share for fiscal 2013 in the range of $7.00 to $7.30, up from $6.25 to $6.55 earlier.
Cash flow from operating activities for fiscal 2013 is expected to range between $240 million and $265 million. Free cash flow for the full year is expected to come in between $140 million and $165 million after capital expenditures of $100 million.
Peer Comparison
Among the top Alliant competitors, General Dynamics Corporation (GD) announced operating earnings for the second quarter 2012 of $1.77 per share, beating the Zacks Consensus Estimate by three cents but falling short of its year-ago results by 2 cents.
Operating revenue in the second quarter 2012 was $7.92 billion, increasing 0.5% year over year and beating the Zacks Consensus Estimate marginally by $7 million.
Our View
The company has started to report results under three operating segments to increase the efficiency and competitiveness of its business operations. We need to assess the results of the realigned segments for a few more quarters before coming to any conclusion as to its practical effectiveness.
Overall, the performance of the company during the reported quarter was good. It kept up with its earnings-beat record of the past four quarters. The strong financial performance in conjunction with regular dividend payment makes this company attractive to income seeking investors.
On the flip side, not unlike other defense operators, the future growth prospects of the company are tied to the U.S. defense budgets, which are expected to decline in the long run.
Alliant Techsystems currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
Based in Minneapolis, Minnesota, Alliant Techsystems supplies aerospace and defense products to the United States government agencies. The company also supplies ammunition and related accessories to law enforcement agencies and commercial customers.
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