Top 5 Companies To Watch: Alliant Techsystems

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Alliant Techsystems

Headquarters: Minneapolis

Employees: 18,000

Revenue: $4.8 billion

The decision by the administration of U.S. President Barack Obama to cancel NASA’s Ares 1 rocket and scale back the Orion crew capsule reduced Alliant Techsystems’ contract backlog by about $650 million — money the Minneapolis-based missiles and munitions builder had been counting on to soften the blow of the space shuttle’s impending retirement.

For more than 30 years, Alliant Techsystems (ATK) and its legacy companies have been building space shuttle solid-rocket boosters in Utah. In the past two years, ATK’s Aerospace Systems group has laid off approximately 1,500 people as work winds down on the shuttle and on a Minuteman ICBM-related contract.

The end of the shuttle program, in the words of ATK Chief Financial Officer John Shroyer, deprives ATK of “one of our high-margin programs.” Building the shuttle’s solid-rocket boosters has accounted in recent years for a large portion of the company’s $500 million in annual NASA revenue. In 2010, ATK reported roughly $300 million in shuttle-related work; that figure is expected to drop to around $100 million for ATK’s current fiscal year, which ends March 31.

ATK sought to reassure investors in January that its NASA revenue will stabilize at between $300 million and $500 million a year thanks in large part to legislation Obama signed into law in October. The NASA Authorization Act of 2010 directs the agency to build a heavy-lift rocket that incorporates, among other space shuttle- and Ares-derived hardware, solid-rocket boosters very similar to those ATK built for the space shuttle.

NASA’s 2012 budget proposal, sent to Congress in February, said the agency will spend the year defining “a sufficiently affordable, sustainable and realistic” development plan for a heavy-lift rocket “derived from Ares and Shuttle hardware” including “two Ares-derived five-segment solid rocket boosters.” While NASA has publicly embraced the Ares- and shuttle-derived heavy lifter as its “reference vehicle design,” it also put Congress on notice late last year that it cannot afford to field the rocket on the schedule and budget laid out in the NASA Authorization Act.

The law recommended a significantly higher funding profile for the heavy lifter than NASA likely will be able to afford under the flat-to-declining budget scenario the agency faces for the next several years. Meanwhile, other companies  — including Space Exploration Technologies and United Launch Alliance — are pushing NASA, the White House and Congress to consider less-expensive architectures.

Meanwhile, ATK has been pursuing the space launch business from different angles. A year ago, ATK and Lockheed Martin Space Systems announced plans to reintroduce the dormant Athena family of small rockets. In September, NASA selected the solid-fueled Athena for inclusion in the NASA Launch Services 2 contract. In early February, ATK and Astrium Space Transportation of Europe announced they had submitted a bid under NASA’s Commercial Crew Development program to jointly develop a crew launch vehicle called Liberty that would combine the main stage developed for Ares 1 with an upper stage based on the cryogenic booster core Astrium builds for the Ariane 5 rocket.