Orbital Sciences Corporation (ORB), the developer and manufacturer of small and medium class rockets and space systems, has announced a 29.54 percent decline in profit for the quarter ended Mar. 31, 2014.
The company earned $13.81 million or $0.23 a share in the first-quarter, compared with $19.60 million or $0.33 a share a year ago. Analysts on average had predicted net income of $0.33 a share.
Revenue during the first-quarter declined 3.44 percent to $323.28 million from $334.81 million in the last year period.
Revenues declined $18 million in the satellites and space systems segment and $6 million in the advanced space programs segment, while revenues increased $2.9 million in the launch vehicles segment. Intersegment revenue eliminations decreased $9.6 million, the company said.
Gross margin contracted by 958 basis points over the last year period to 16.83 percent. Total expenses as a percentage of revenues increased to 92.89 percent from 90.71 percent in the same period last year. That resulted in contraction of 218 basis points in operating margin to 7.11 percent.
The company reported operating income of $22.98 million, compared with an operating income of $31.11 million in the previous year period.
"The operating income decreased $7.6 million in the satellites and space systems segment, $0.3 million in the launch vehicles segment and $0.2 million in the advanced space programs segment," the company said.
David W Thompson, chairman and chief executive officer, Orbital said, "Orbital's free cash flow in the first quarter of 2014 set a new record for the company, reflecting achievement of important milestones in connection with the completion of our first operational cargo mission to the International Space Station under the company's commercial resupply services (CRS) contract with NASA."
"Although first quarter revenues and operating income were lower than expected due to an anomaly on a recently launched communications satellite, the company remains on track with our financial guidance for 2014."
The company continues to expect full year 2014 revenues at $1,450 - $1,500 million and earnings per share at $1.10-1.20. It also retained guidance for operating margin at 7.25 - 7.75 percent for the year 2014. While it has increased outlook for free cash flow to $130 - $150 million for the year 2014 from $120 - $140 million earlier.
Cash flow
Orbital has generated cash of $85.47 million from operating activities during the quarter, as against cash outgo of $25.82 million in the last year period.
The company has generated cash of $1.56 million from investing activities during the quarter, as against cash outgo of $8.40 million in the last year period. It has made net capital expenditure of $18.44 million during the quarter, which was higher by 119.64 percent or $10.05 million from a year ago.
The company has spent $2.06 million in cash to meet financing activities during the quarter, as against cash inflow of $1.27 million in the last year period.
The company has made net repayment of $2.61 million debt during the quarter. It has raised net of $0.55 million by issuing common stocks.
As on Mar. 31, 2014, Orbital's cash balance stood at $350.80 million, up 75.94 percent or $151.42 million from Mar. 31, 2013.
Working Capital
Orbital witnessed an increase in the working capital over the last year. It stood at $666.23 million as at Mar. 31, 2014, up $110.88 million or 19.97 percent from $555.35 million on Mar. 31, 2013. The company's current ratio increased to 3.73 as at Mar. 31, 2014 from 2.65 on Mar. 31, 2013.
Debt Position
Orbital has witnessed a decrease in total debt over the last year. As at Mar. 31, 2014, the company's total debt stood at $140.62 million, down 5.53 percent or $8.24 million from Mar. 31, 2013.
The company's total debt accounts for 11.40 percent of total assets on Mar. 31, 2014, compared with 11.92 percent on Mar. 31, 2013.
The company witnessed a decline in debt to equity ratio to 0.17 on Mar. 31, 2014 when compared with 0.20 on Mar. 31, 2013.
Interest coverage ratio, which determines how easily a company can pay interest expenses on outstanding debt, has declined to 20.87 from 28.02 in the same period last year.
Shares of Orbital rose $1.35 or 5.21 percent to close at $27.26 on Thursday.
