Orbital Reports Record Free Cash Flow in 1st Quarter 2014
Dulles, VA, April 17, 2014 – Orbital Sciences Corporation today reported its financial results for the first quarter of 2014. First quarter 2014 revenues were US$ 323.3 million, compared to US$ 334.8 million in the first quarter of 2013. First quarter 2014 operating income was US$ 23.0 million, or 7.1% operating margin, compared to US$ 31.1 million, or 9.3% operating margin, in the first quarter of 2013.
Net income in the first quarter of 2014 was US$ 13.8 million, or $0.23 diluted earnings per share, compared to net income of US$ 19.6 million, or $0.33 diluted earnings per share, in the first quarter of 2013. Orbital's free cash flow* in the first quarter of 2014 was positive $87.0 million, a new quarterly record for the company, compared to negative $34.2 million in the first quarter of 2013. The company's cash balance as of March 31, 2014 increased to $350.8 million, up 76% compared to March 31, 2013.
David W. Thompson, Orbital's Chairman and Chief Executive Officer, said, "Orbital's free cash flow in the first quarter of 2014 set a new record for the company, reflecting achievement of important milestones in connection with the completion of our first operational cargo mission to the International Space Station under the company's Commercial Resupply Services (CRS) contract with NASA." He continued, "Although first quarter revenues and operating income were lower than expected due to an anomaly on a recently launched communications satellite, the company remains on track with our financial guidance for 2014."
Revenues decreased US$ 11.5 million, or 3%, in the first quarter of 2014 compared to the first quarter of 2013. Revenues declined US$ 18.0 million in the satellites and space systems segment and $6.0 million in the advanced space programs segment, while revenues increased US $2.9 million in the launch vehicles segment. Intersegment revenue eliminations decreased US$ 9.6 million.
Operating income decreased US$ 8.1 million, or 26%, in the first quarter of 2014 compared to the first quarter of 2013. Operating income decreased $7.6 million in the satellites and space systems segment, $0.3 million in the launch vehicles segment and $0.2 million in the advanced space programs segment.
Operating results in the first quarter of 2014 reflected the impact of an anomaly detected during in-orbit testing of the Amazonas 4A communications satellite that was launched in March 2014. Although the investigation of the anomaly is currently in progress, the company believes that the satellite's capacity could be diminished. Accordingly, in the first quarter of 2014, the company reduced revenues by approximately US$ 13 million and operating income by US$ 6.4 million to reflect the potential loss of performance incentives partially offset by related costs that are not expected to be incurred. The company believes that the loss of incentives is covered by insurance and that insurance proceeds could be recognized as income as early as the second quarter of 2014.
Net income in the first quarter of 2014 was US$ 13.8 million, or $0.23 diluted earnings per share, compared to US$ 19.6 million, or $0.33 diluted earnings per share, in the first quarter of 2013. The company's effective income tax rate was 37% in the first quarter of 2014 compared to 36% in the first quarter of 2013.
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