Alliant Techsystems Management Discusses Q1 2013 Results - Earnings Call Transcript

Alliant Techsystems (ATK)

Q1 2013 Earnings Call

August 09, 2012 10:00 am ET

Executives

Steven P. Wold - Former Vice President and Treasurer

Mark W. DeYoung - Chief Executive Officer, President and Director

Neal S. Cohen - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Analysts

Robert Spingarn - Crédit Suisse AG, Research Division

Christopher Sands - JP Morgan Chase & Co, Research Division

Greg Konrad - Jefferies & Company, Inc., Research Division

Carter Copeland - Barclays Capital, Research Division

Gautam Khanna - Cowen and Company, LLC, Research Division

Carl Gardiner - Schafer Cullen Capital Management, Inc.

Michael F. Ciarmoli - KeyBanc Capital Markets Inc., Research Division

George Shapiro

Cecile Ferrie

Presentation

Operator

Good day, everyone, and welcome to today's ATK First Quarter and Fiscal Year 2013 Earnings Results Conference Call. Today's call is being recorded, and at this time, I would like to turn the conference over to ATK's Vice President of Investor Relations and Corporate Finance, Mr. Steve Wold. Please go ahead, sir.

Steven P. Wold

Thanks, Melody. Good morning, and thank you for joining us today on our first quarter of fiscal '13 earnings call. With me today, I have Mark DeYoung, ATK's President and Chief Executive Officer; and Neal Cohen, Executive VP and Chief Financial Officer.

Before we begin today, I'd like to remind everyone that we'll be making several forward-looking statements that are made pursuant to the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made based on our best estimates, based on the understanding we have today, that are subject to the risks and uncertainties that face all businesses. We'd encourage you to review today's press release and our SEC filings for more information on those risks and uncertainties. Please also note that we posted charts on our website at atk.com, which will supplement the comments we make this morning and you'll see a reconciliation of non-GAAP financial measures there.

And with that said, I'll turn the call over to you, Mark.

Mark W. DeYoung

All right. Thank you, Steve. Good morning, everyone. Thanks for joining us again today. We appreciate it. We just completed our first quarter, operating and our streamlined 3-group structure. It's delivering expected benefits of improved customer engagement on existing and future programs, improved efficiency, reduced costs and enhanced support of our customers' needs, to remain competitive and growing in a challenging environment, and a support evolving customer needs. ATK will continue to focus on efficiency improvement, cost reduction and our execution excellence initiatives. In addition, we'll strengthen our balance sheet, we'll invest in the future, and we'll focus on delivering long-term growth and shareholder value.

I want to take a moment today and break down some of the performance in each of the 3 business groups. The Aerospace Group is meeting expectations and delivering as planned on the Airbus A350 program. The group has shipped aircraft 6th and has manufactured more than 8,000 quality parts. We learned last week, that NASA did not select ATK's Liberty System for commercial crew, but we offered a safe, mature, affordable solution to NASA, and we're looking forward to learning more about their decision.

NASA did announce that we received the Space Launch System advanced booster award. Our proposed motor design leveraged our broad experience and composites in advanced propellants and emerging propulsion technologies. ATK also, with our technologies, have played a critical role on the NASA "Curiosity" Rover that recently landed on Mars, and we're proud of our contributions and congratulate NASA on a great achievement in space exploration.

Moving to Defense Group. The U.S. Air Force designated our Mk44 Bushmaster Automatic Cannon ready for operational use on airborne platforms. We've integrated this reliable weapon system into a palletized mount for weaponizing small aircraft. We displayed a version of the system in our Alenia MC-27J gunship at the Farnborough Air Show, and we're happy to report we received numerous inquiries from potential new international customers for that solution.

We successfully completed transition of operations at the Radford Army Ammunition Plant, and we supported the Army in every aspect of that transition, including delivering increased quantities of product to our customers in the last quarter. As we completed our production contracts during the transition, the group achieved higher sales, improved efficiencies and as a result, higher profit rates. As a side note, our New River Energetics business, that manufactures both gunpowder and medium-caliber ammunition, will continue to operate at the Radford facility.

We recently completed the transition of the Army's enhanced performance round or the M855A1 to modernize high-speed production lines, improving our ability to meet volume demands and reducing the cost of this new round. In terms of the Lake City competition, we still expect the Army will make an award this fall.

The Precision Guidance Kit, which we refer to as PGK, continues to perform well, and we're approaching the Milestone C decision on the program. Passing Milestone C will allow us to make this affordable and innovative guided artillery capability available to international allies. We anticipate the Navy will declare our AARGM ready for initial operational capability and potentially a water production contract later this year. This is a new missile that provides a much-needed capability to DoD, and it will establish a new growth platform for the Defense Group.

In addition, our third stage rocket motor contributed to 2 recent successful ballistic missile defense tests and the Joint Allied Threat Awareness System, or you may know it as JTAS, that team recently reached a significant milestone on the program, and we conducted a very successful critical design review.

Read the rest of this transcript for free on seekingalpha.com

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