Orbital Sciences Corporation (ticker: ORB, exchange: New York Stock Exchange (.N))
News Release -
20-Jul-2004
Orbital Reports Second Quarter 2004 Financial Results DULLES, Va.--(BUSINESS WIRE)--July 20, 2004--Orbital Sciences
Corporation (NYSE:ORB)
Second Quarter Financial Highlights
-- Revenue Increases 12% to $178 Million
-- Operating Income Reaches $14.5 Million
-- Net Income Improves to $11.1 Million
-- Diluted Earnings Per Share Climbs to $0.17
-- Common Stock and Debt Repurchases Total $7 Million
Orbital Sciences Corporation (NYSE:ORB) today announced financial
results for the second quarter of 2004 and the first six months of the
year, reporting significant improvements in revenue, operating income
and net income relative to the same periods in 2003. Orbital reported
second quarter 2004 revenues of $177.7 million, up 12% over second
quarter 2003 revenues of $158.4 million. The company's second quarter
2004 operating income rose to $14.5 million as compared to second
quarter 2003 operating income of $1.5 million. Net income was $11.1
million, or $0.17 diluted earnings per share in the second quarter of
2004, versus a $4.6 million net loss, or $0.10 net loss per share, in
the second quarter of 2003. The company also reported positive free
cash flow(1) of $5.5 million in the second quarter of 2004. During the
quarter, Orbital repurchased approximately $5 million of its 9% senior
notes due 2011 and $2 million of its common stock in connection with a
$50 million securities repurchase program that was announced in April.
Commenting on the second quarter's financial results, Orbital's
Chairman and Chief Executive Officer, Mr. David W. Thompson, said, "We
completed another very solid quarter, marked by outstanding execution
of our operational programs and continued improvements in our
financial performance. In the second quarter, our satellites and
related space systems segment's revenues and profits continued to
grow, our launch vehicles segment turned in another strong quarter and
our transportation management systems segment continued on its path of
steady improvement."
(1)"Free cash flow" is a non-GAAP financial measure discussed in
this release. For additional details, please refer to the section of
this press release entitled "Disclosure of Non-GAAP Financial
Measures."
Financial Highlights
Summary financial results for the second quarter of 2004 as
compared to the second quarter of 2003 were as follows ($ in millions,
except per share data):
Quarter Ended June 30,
2004 2003
----------------------------------------------------------------------
Revenues $177.7 $158.4
Operating Income 14.5 1.5
Net Income (Loss) 11.1 (4.6)
Diluted Net Income (Loss) per Share $ 0.17 $(0.10)
Summary financial results for the first six months of 2004 as
compared to the first six months of 2003 were as follows ($ in
millions, except per share data):
Six Months Ended June 30,
2004 2003
----------------------------------------------------------------------
Revenues $329.1 $295.1
Operating Income 28.7 10.8
Net Income (Loss) 22.5 (1.2)
Diluted Net Income (Loss) per Share $ 0.34 $(0.03)
Revenues
Orbital's second quarter 2004 revenues were $177.7 million, up 12%
over second quarter 2003 revenues of $158.4 million. This increase was
primarily driven by the company's satellites and related space systems
segment largely as a result of recent contract awards in its science,
technology and defense satellite product line.
For the first six months of 2004, Orbital reported $329.1 million
in revenues, up 12% from $295.1 million in the same period last year.
As in the second quarter, the increase in year-to-date revenues was
primarily attributable to the company's satellites and related space
systems segment.
Revenues by segment for the second quarter were as follows ($ in
millions):
Quarter Ended June 30,
2004 2003
----------------------------------------------------------------------
Launch Vehicles $ 86.5 $ 85.2
Satellites and Related Space Systems 85.8 68.8
Transportation Management Systems 8.0 6.0
Eliminations (2.6) (1.6)
------- -------
Total Revenues $177.7 $158.4
Revenues by segment for the first six months were as follows ($ in
millions):
Six Months Ended June 30,
2004 2003
----------------------------------------------------------------------
Launch Vehicles $163.0 $165.7
Satellites and Related Space Systems 155.2 117.4
Transportation Management Systems 15.3 15.2
Eliminations (4.4) (3.2)
------- -------
Total Revenues $329.1 $295.1
Operating Income
Orbital reported operating income of $14.5 million in the second
quarter of 2004, compared to operating income of $1.5 million in the
same quarter of 2003. This increase was largely attributable to
improved results in the satellites and related space systems segment
and the transportation management systems segment, in addition to the
absence in 2004 of $3.5 million in settlement charges related to
litigation with the company's former affiliate, Orbital Imaging
Corporation ("ORBIMAGE"), recorded in the second quarter of 2003.
The improvement in operating income in the satellites and related
space systems segment was due to a number of factors including profit
derived from the revenue growth in the science, technology and defense
satellites product line, favorable revenue and cost adjustments on
certain contracts and the absence of a loss accrued in 2003 on the
OrbView-3 satellite program. The transportation management systems
segment's operating results improved largely due to the absence of
contract cost increases and inventory-related charges recorded in the
second quarter of 2003. Operating income in the launch vehicles
segment decreased slightly in the second quarter of 2004 as compared
to the same quarter last year. The launch vehicles segment's missile
defense interceptor product line produced higher operating income, but
this improvement was more than offset by lower quarterly results from
the other product lines in this segment.
Operating income for the first six months of 2004 was $28.7
million compared to $10.8 million in the same period in 2003. This
increase was largely due to the same factors that drove the
improvements in the second quarter as described above. In addition,
Orbital recorded a $2.5 million non-recurring gain earlier this year
on the sale of notes that the company had received from ORBIMAGE.
Operating income by segment for the second quarter was as follows
($ in millions):
Quarter Ended June 30,
2004 2003
----------------------------------------------------------------------
Launch Vehicles $ 7.2 $ 8.6
Satellites and Related Space Systems 7.0 3.2
Transportation Management Systems 0.3 (6.8)
Corporate and Other -- (3.5)
----- -----
Total Operating Income $14.5 $1.5
Operating income by segment for the first six months was as
follows ($ in millions):
Six Months Ended June 30,
2004 2003
----------------------------------------------------------------------
Launch Vehicles $14.1 $17.8
Satellites and Related Space Systems 11.5 5.9
Transportation Management Systems 0.6 (8.4)
Corporate and Other 2.5 (4.5)
------ ------
Total Operating Income $28.7 $10.8
Net Income
Orbital's net income in the second quarter was $11.1 million, or
$0.17 diluted earnings per share, as compared to a net loss of $4.6
million, or $0.10 loss per share, in the second quarter of 2003. The
improvement in net income was due to the $13.0 million increase in
operating income and a $3.3 million decrease in interest expense in
the second quarter of 2004. The interest expense reduction is
attributable to the company's third quarter 2003 debt refinancing
transaction. The second quarter of 2004 includes $0.6 million, or
$0.01 diluted earnings per share, in debt extinguishment expenses
pertaining to the repurchase of approximately $5 million of the
company's 9% senior notes.
Orbital's net income for the first half of 2004 was $22.5 million,
or $0.34 diluted earnings per share, compared to a net loss of $1.2
million, or $0.03 loss per share, in the same period of 2003.
Cash Flow and Balance Sheet
As of June 30, 2004, Orbital's unrestricted cash balance was
$105.8 million. The company had positive free cash flow of $5.5
million in the second quarter of 2004 and $46.9 million for the first
six months of 2004.
The company's cash flow was as follows ($ in millions):
Second First Six Months
Quarter 2004 of 2004
----------------------------------------------------------------------
Net Cash Provided by Operating
Activities $ 8.0 $ 52.1
Capital Expenditures (2.5) (5.2)
------- -------
Free Cash Flow 5.5 46.9
Net Increase in Cash Restricted
for Letters of Credit (3.5) (1.9)
Repayment of Debt and Other (5.1) (5.1)
Repurchase of Common Stock (2.0) (2.0)
Proceeds from Issuance of Common Stock 4.7 7.0
------- -------
Net Decrease in Cash (0.4) 44.9
Beginning Cash Balance 106.2 60.9
------- -------
Ending Cash Balance $105.8 $105.8
Summary balance sheet data as of June 30, 2004 is as follows ($ in
millions):
Assets Liabilities and Equity
----------------------------------------------------------------------
Cash and Equivalents $105.8 Short-Term Debt $ 0.3
Other Current Assets 190.9 Other Current Liabilities 157.1
Property and Equipment 80.2 Long-Term Debt 131.4
Goodwill 95.3 Other Non-Current Liabilities 1.7
Other Assets 12.1 Stockholders' Equity 193.8
------ ------
Total Assets $484.3 Total Liabilities and Equity $484.3
New Business Highlights
During the second quarter of 2004, Orbital booked approximately
$110 million in new firm and option contracts. In addition, the
company received approximately $60 million of option exercises under
existing contracts. As of June 30, 2004, the company's firm contract
backlog was approximately $870 million, up 36% over its value a year
ago, while its total backlog (including options, indefinite-quantity
contracts and undefinitized orders) was approximately $2.34 billion,
down about 9% compared to this time last year.
Operational Highlights
In the second quarter of 2004, Orbital conducted two suborbital
launches of its missile defense target vehicles and one space launch
of its Taurus rocket. The target vehicles included the third launch of
the "Coyote" Supersonic Sea-Skimming Target (SSST) vehicle for the
U.S. Navy in May and the first launch of the Short-Range Air-Launched
Target (SRALT) for the U.S. Army in June. Also in May, Orbital
successfully launched the Taurus XL space launch vehicle that carried
the Republic of China's ROCSAT-2 remote sensing satellite into
low-Earth orbit. The mission was the inaugural flight of the enhanced
performance "XL" version of the Taurus launch vehicle.
In addition to these operational events, Orbital delivered three
of its Orbital Boost Vehicle (OBV) long-range missile defense
interceptors and five science and technology satellite systems to
customers for upcoming launches or deployments. These included the
delivery of the first two operational OBV interceptors for the U.S.
Missile Defense Agency's (MDA's) Ground-based Midcourse Defense (GMD)
system that are scheduled to be deployed in Alaska this month. Also
delivered in the second quarter were five small scientific satellite
platforms for the Republic of China's ROCSAT-3 remote sensing
satellite program.
Orbital's third quarter 2004 operational mission plans and product
delivery schedule remain very active. The company is scheduled to
conduct the fourth test flight of its OBV interceptor vehicle to
support MDA's Integrated Flight Test 13c, as well as to deliver four
more interceptors to complete the initial deployments in Alaska.
Orbital is also on track to conduct several additional flight tests of
the "Coyote" SSST vehicle for the U.S. Navy and to carry out two
medium-range target launches for MDA and the U.S. Army in the third
quarter.
2004 Guidance Update
Orbital reaffirmed its full-year 2004 forecast of revenues in the
range of $660 to $670 million and operating income margin in the range
of 7% to 8% of revenues. Based on estimated average diluted shares of
66 to 67 million for the year, Orbital continues to anticipate that
its 2004 diluted earnings per share will be in the range of $0.60 to
$0.65.
The company increased its free cash flow guidance by $5 million to
a new range of $45 to $55 million for the year. In addition, to date
Orbital has received approximately $2 million from common stock
warrant exercises and may receive up to $20 million from the exercise
of common stock warrants that expire in the third quarter of this
year.
Disclosure of Non-GAAP Financial Measures
The company uses a non-GAAP (Generally Accepted Accounting
Principles) financial measure, free cash flow, within this press
release. Orbital does not intend for the information to be considered
in isolation or as a substitute for the related GAAP measures. Other
companies may define this measure differently. Free cash flow is
defined as GAAP net cash provided by operating activities (the most
directly comparable GAAP financial measure) less capital expenditures
for property, plant and equipment. Management believes that free cash
flow provides investors with an important perspective on the company's
liquidity, financial flexibility and ability to fund operations and
service debt.
About Orbital
Orbital develops and manufactures small space and rocket systems
for commercial, military and civil government customers. The company's
primary products are satellites and launch vehicles, including
low-orbit, geosynchronous and planetary spacecraft for communications,
remote sensing, scientific and defense missions; ground- and
air-launched rockets that deliver satellites into orbit; and missile
defense systems that are used as interceptor and target vehicles.
Orbital also offers space-related technical services to government
agencies and develops and builds satellite-based transportation
management systems for public transit agencies and private vehicle
fleet operators.
A transcript of the earnings teleconference call will be available
on Orbital's website at http://www.orbital.com/Investor
"Safe Harbor" Statement Under the Private Securities Litigation
Reform Act of 1995
Certain statements in this press release may be forward-looking in
nature or "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements are subject to risks, trends and uncertainties that could
cause the actual results or performance of the company to be
materially different from the forward-looking statement. Uncertainty
surrounding factors such as continued government support and funding
for key space and defense programs, product performance and market
acceptance of products and technologies, as well as other risk factors
and business considerations described in the company's SEC filings,
including the annual report on Form 10-K, as amended, could impact
Orbital's actual financial and operational results. Orbital assumes no
obligation for updating the information contained in this press
release.
Orbital Sciences Corporation
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)
For the Quarter Ended
June 30,
2004 2003
--------- ---------
Revenues $177,684 $158,400
Costs of goods sold 148,034 136,906
--------- ---------
Gross profit 29,650 21,494
Research and development expenses 1,455 1,316
Selling, general and administrative expenses 13,687 15,227
Settlement expense -- 3,500
--------- ---------
Income from operations 14,508 1,451
Other income, net 227 79
Interest expense (2,889) (6,156)
Debt extinguishment expense (561) --
--------- ---------
Income (loss) before provision for income taxes 11,285 (4,626)
Provision for income taxes (233) --
--------- ---------
Net income (loss) $ 11,052 $ (4,626)
========= =========
Basic net income (loss) per share $ 0.23 $ (0.10)
========= =========
Diluted net income (loss) per share $ 0.17 $ (0.10)
========= =========
Shares used in computing basic net income (loss)
per share 48,764 46,392
Shares used in computing diluted net income
(loss) per share 65,772 46,392
Orbital Sciences Corporation
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)
For the Six Months Ended
June 30,
2004 2003
----------- -----------
Revenues $ 329,056 $ 295,081
Costs of goods sold 274,488 247,353
----------- -----------
Gross profit 54,568 47,728
Research and development expenses 3,197 2,898
Selling, general and administrative expenses 25,196 29,492
Settlement expense (income) (2,538) 4,500
----------- -----------
Income from operations 28,713 10,838
Other income, net 653 195
Interest expense (5,798) (12,223)
Debt extinguishment expense (561) --
----------- -----------
Income (loss) before provision for income
taxes 23,007 (1,190)
Provision for income taxes (461) --
----------- -----------
Net income (loss) $ 22,546 $ (1,190)
=========== ===========
Basic net income (loss) per share $ 0.47 $ (0.03)
=========== ===========
Diluted net income (loss) per share $ 0.34 $ (0.03)
=========== ===========
Shares used in computing basic net income
(loss) per share 48,405 46,074
Shares used in computing diluted net income
(loss) per share 65,559 46,074
Orbital Sciences Corporation
Condensed Consolidated Balance Sheets
(In thousands)
June 30, December 31,
2004 2003
------------ ------------
Assets (Unaudited)
Cash $ 105,842 $ 60,900
Receivables, net 154,355 149,508
Inventory 12,043 12,642
Other current assets 24,433 24,754
------------ ------------
Total current assets 296,673 247,804
Property, plant and equipment, net 80,229 82,364
Goodwill 95,293 95,293
Other non-current assets 12,143 13,839
------------ ------------
Total Assets $ 484,338 $ 439,300
============ ============
Liabilities and Stockholders' Equity
Short-term borrowings $ 273 $ 297
Accounts payable and accrued expenses 131,653 116,026
Deferred revenues 25,482 16,292
------------ ------------
Total current liabilities 157,408 132,615
Long-term debt 131,432 137,116
Other non-current liabilities 1,657 2,692
Total stockholders' equity 193,841 166,877
------------ ------------
Total Liabilities and Stockholders'
Equity $ 484,338 $ 439,300
============ ============
Orbital Sciences Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
Quarter Six Months
Ended Ended
June 30, 2004 June 30, 2004
------------- -------------
Net income $ 11,052 $ 22,546
Depreciation and amortization 3,652 7,304
Amortization of debt costs 233 467
Debt extinguishment expense 561 561
Changes in assets and liabilities (7,664) 21,796
Other 158 (520)
------------- -------------
Net cash provided by operating activities 7,992 52,154
------------- -------------
Capital expenditures (2,524) (5,152)
Change in cash restricted for letters of
credit (3,439) (1,872)
------------- -------------
Net cash used in investing activities (5,963) (7,024)
------------- -------------
Repayment of debt and other (5,070) (5,139)
Repurchase of common stock (2,000) (2,000)
Net proceeds from issuance of common stock 4,710 6,951
------------- -------------
Net cash used in financing activities (2,360) (188)
------------- -------------
Net increase (decrease) in cash (331) 44,942
Cash, beginning of period 106,173 60,900
------------- -------------
Cash, end of period $ 105,842 $ 105,842
============= =============
CONTACT: Orbital Sciences Corporation, Dulles
Public and Investor Relations:
Barron Beneski, 703-406-5528
beneski.barron@orbital.com
SOURCE: Orbital Sciences Corporation
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Orbital Sciences Corporation
