Alliant Beats Q4 Earnings & Revs - Analyst Blog

Alliant Techsystems Inc. ATK reported fourth-quarter fiscal 2014 adjusted earnings of $2.59 per share, surpassing the Zacks Consensus Estimate of $2.40 by 7.9%. Quarterly earnings surged 16.7% from $2.22 per share a year ago, primarily on the back of an increase in revenues and a drop in pension expenses.

The company's quarterly GAAP earnings per share were $2.90 compared with $2.23 in the prior-year quarter.

For fiscal year 2014, Alliant posted adjusted earnings of $10.59 per share, outpacing the Zacks Consensus Estimate of $9.94 by 6.5%. The reported earnings jumped 49.2% from $7.10 per share in the prior-year quarter.

On a GAAP basis, the company's earnings were $10.42 per share versus $8.34 per share a year ago. The variance between adjusted and GAAP earnings was due to the combined impact of gains from close out of the Radford pension segment and changes in tax law, and several charges related to the inventory step-up, Bushnell transaction, environmental settlement and written off of the deferred financing.

Total Revenue

Alliant's total revenue in the fourth quarter of fiscal 2014 was $1,345.6 million, beating the Zacks Consensus Estimate of $1,315 million by 2.3%. On a year-over-year basis, reported revenue exceeded the year-ago figure of $1,153.9 million by 16.6%.

An improved performance from the company's Sporting Group (up 71.5% year over year) and Defense Group (up 2.7% year over year) segments led to the revenue surge. The positives were partially offset by lower contribution from the Aerospace Group (down 4.3% year over year) segment.

Total revenue in fiscal 2014 also increased 9.5% year over year to $4,775.1 million. Top line beat the Zacks Consensus Estimate of $4,741 million by 0.7%.

Operational Highlights

In the quarter under review, Alliant's cost of sales increased 10.3% to $1,004.6 million from $910.5 million a year ago.

The company's gross profit increased to $341 million from $243.4 million registered in the prior-year period, indicating growth of 40.1%.

Total operating expenses in the reported quarter were up 40.1% to $170.6 million from $121.8 million a year ago. Higher expenses were attributed to a rise in research and development, selling, and general and administrative expenses.

Interest expenses totaled $24.1 million, up 73.4% year over year due to higher long-term debt level.

Financial Update

Alliant's cash and cash equivalents, as of Mar 31, 2014, were $266.6 million versus $417.3 million as of Mar 31, 2013.

Long-term debt, as of Mar 31, 2014, was $1,843.8 million versus $1,023.9 million as of Mar 31, 2013.

Cash provided by operating activities in fiscal 2014 was $388 million versus $273.6 million in the comparable year-ago period.

Alliant's capital expenditure was $146 million at the end of fiscal 2014 versus $96.9 million in the comparable year-ago period.

Guidance

Alliant provided its sales and earnings guidance for fiscal 2015 to the range of $5.15 - $5.25 billion and $10.80 - $11.20 per share, respectively.

In fiscal 2015, the company intends to invest around $135 million as capital expenditure.

In addition, Alliant expects fiscal 2015 free cash flow in the range of $250 - $275 million.

Alliant intends to form two independent public companies with leadership in Outdoor Sports and Aerospace and Defense. The board of directors of Alliant approved a definitive agreement that offers tax-free spin-off of its Sporting Group to the shareholders. The spin-off will be followed by a tax-free all-stock merger between Alliant's Aerospace and Defense Groups and Orbital Sciences Corp. ORB. Alliant expects to complete the deal within calendar year 2014.

Other Company Releases

Lockheed Martin Corp. LMT posted first-quarter 2014 operating earnings of $2.87 per share, surpassing the Zacks Consensus Estimate of $2.52 by 13.9%.

General Dynamics Corp. GD reported first-quarter 2014 earnings of $1.71 per share, beating the Zacks Consensus Estimate of $1.63.

Zacks Rank

Alliant Techsystems currently has a Zacks Rank #2 (Buy).