ATK (NYSE: ATK) today reported operating results for the fourth quarter and Fiscal Year 2014 (FY14), which ended on March 31, 2014.
FOURTH QUARTER
ATK reported operating profit in the fourth quarter of $170 million, an approximately $49 million increase from the prior-year period. Excluding the Radford Army Ammunition Plant (RFAAP) pension segment close out, an environmental settlement, and acquisition inventory step-up, FY14 fourth quarter operating profit as adjusted was approximately $153 million compared to $122 million in the fourth quarter of FY13 (see reconciliation table for details). The increase was driven primarily by higher sales and profit in the Sporting Group and lower pension expense. Fully diluted earnings per share (EPS) in the quarter were $2.90 compared to $2.23 in the prior-year period. As adjusted fourth quarter fully diluted EPS was $2.59 (see reconciliation table for details). Fourth quarter EPS increased due to higher Sporting Group results and lower pension expense.
Fourth quarter sales of $1.3 billion were up 17 percent from the prior-year quarter. Excluding the RFAAP pension segment close out, as adjusted sales for the quarter were $1.3 billion, due to increased sales in the Sporting Group, partially offset by a decline in the Aerospace and Defense Groups (see reconciliation table for details). Fourth quarter orders were $1.6 billion, down from $2.5 billion, mostly driven by lower orders in ATK’s Sporting Group, partially offset by an increase in the Defense Group. The decline in Sporting Group orders is due to unusually high orders in the prior year, which ATK previously noted might not have been indicative of future sales. ATK’s book-to-bill ratio for the quarter was 1.2. Please see segment and corporate results below.
“ATK achieved record profitability in the quarter,” said Mark DeYoung, ATK President and Chief Executive Officer. “We have proactively positioned the company to compete in new markets and adjacent lanes to ensure we continue to deliver stability and long-term growth to our shareholders. We have strategically invested in our international market opportunities, while driving execution excellence and new innovation in our core businesses.”
FISCAL YEAR 2014
Full-year operating profit was $590 million compared to $470 million in the prior year. Excluding the RFAAP pension segment close out, transaction costs associated with acquisitions, an environmental settlement, and inventory step-up, as adjusted operating profit was $598 million (see reconciliation table for details) driven by higher sales and profit in the Sporting Group and lower pension expense, partially offset by a decrease in sales and profit in the Defense Group. For the full year, net income was up 25 percent to $341 million, compared to $272 million in the prior year. As adjusted net income was $346 million compared to $231 million in the prior year (see reconciliation table for details). Full-year EPS was $10.42, compared to $8.34 in the prior year. As adjusted EPS increased from $7.10 to $10.59, driven by higher Sporting Group results and lower pension expense compared to the prior year, partially offset by increased interest expense and a higher tax rate (see reconciliation table for details).
The company achieved full-year sales of $4.8 billion, up 9 percent from the prior year. Excluding the RFAAP pension segment close out, as adjusted full-year sales were $4.7 billion (see reconciliation table for details), largely driven by increased sales in the Sporting and Aerospace Groups, partially offset by a decline in the Defense Group. Orders for the year were $5.8 billion, down from $6.3 billion, resulting in a full-year book-to-bill ratio of 1.2. The decrease in orders was due to lower orders in the Sporting Group, partially offset by increases in the Defense and Aerospace Groups.
“This was an outstanding year full of accomplishments,” said DeYoung. “The company recorded exceptional performance. ATK delivered record-level operating income and generated strong free cash flow, grew during a time of government budget uncertainty, and completed two strategic acquisitions and secured new business to position the company for future success.”
