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Alliant Beats 3Q Estimates

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Alliant Techsystems Inc. (ATK) reported third quarter fiscal 2013 pro forma earnings of $1.84 per share, up 8.2% from the Zacks Consensus Estimate of $1.70. Quarterly results were lower than the year-ago earnings of $2.03 per share, mainly due to higher pension expenses and lower sales on higher margin programs at the energetics division.

GAAP earnings per share were $1.93 compared with $1.51 per share in the prior-year quarter. The difference of 9 cents was due to a one-time impact from the sales and profits associated with Radford Army Ammunition Plant.

Total Revenue

Alliant's total revenue in the third quarter of fiscal 2013 was $1,056.2 million, surpassing the Zacks Consensus Estimate by $52.2 million. Reported revenue was down 5.5% year over year primarily due to the loss of an agreement for operation and maintenance activities at the U.S. Army's Radford Army Ammunition Plant. This was partially offset by solid bookings worth $1.4 billion.

Segmental Update

Aerospace Group: Sales from this segment in the quarter dropped 0.2% to $301.1 million from $301.8 million in the prior-year quarter. The year-over-year shortfall was due to a decline in sales at the space systems operations division, partially offset by strong performance from the space structures and components division.

Defense Group: This segment reported revenue of $467.5 million, down 18.4% year over year due to a decrease in sales at the small caliber systems and energetics divisions internationally as well as domestically.

Sporting Group: This segment reported sales of $287.6 million versus $243.1 million in the prior-year quarter. The 18.3% year-over-year growth in sales was backed by an increase in unit volumes and earlier announced price-rise for ammunitions.

Operational Highlights

Alliant’s cost of sales was $836.6 million, down 4% from $871.7 million in the year-ago quarter. Gross profit decreased 10.7% year over year to $219.6 million.

Interest expenses totaled $14.1 million, down 28.8% year over year primarily attributable to the declining debt level.

Financial Update

Cash and cash equivalents as of Dec 30, 2012, were $361.9 million versus $568.8 million as of Mar 31, 2012.

Long-term debt as of Dec 30, 2012, were $1.04 billion versus $1.27 billion as of Mar 31, 2012.

Cash provided by operating activities in the nine months ending Dec 30, 2012, was $118.4 million versus $124.7 million in the year-ago comparable period.

Alliant’s capital expenditure was $61.4 million in the nine months ending Dec 30, 2012, down 37.3% year over year.


Alliant raised its sales forecast to the range of $4.25-$4.3 billion from $4.1-$4.2 billion projected previously.

The company also revised its fiscal 2013 earnings guidance to the range of $7.90-$8.10 per share, up from its prior expectation of $7.40-$7.70 per share encouraged by increased sales estimates and improved operating results.

Alliant reaffirmed its fiscal-year 2013 cash flow guidance in the range of $175-$200 million. The company expects its full-year 2013 capital expenditure to be $100 million.

Other Aerospace and Defense Company Releases

Lockheed Martin Corporation (LMT) posted fourth-quarter 2012 operating earnings of $1.73 per share, which fell short of the Zacks Consensus Estimate of $1.79.

Raytheon Company (RTN) reported fourth-quarter adjusted earnings of $1.60 per share, beating the Zacks Consensus Estimate by 30 cents.

General Dynamics Corporation (GD) reported fourth quarter earnings of $1.39 per share, missing the Zacks Consensus Estimate of $1.90 per share.

Our View

We expect Alliant’s strong financial position and continued contract wins to provide a positive earnings stream in the near term. The company has also increased its shareholders value through payment of dividend.

In addition, we expect the company’s recently incorporated business segment and realignment strategy to improve its operating efficiency while benefiting margins.

Alliant Techsystems Inc. currently has a short-term Zacks Rank #1 (Strong Buy).

Arlington, Virginia-based Alliant Techsystems Inc. delivers aerospace and defense products to the U.S. government agencies. The company also supplies ammunition and related accessories to law enforcement agencies and commercial customers.

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