A Global Leader in Aerospace and Defense Systems Presentation to - - PowerPoint PPT Presentation

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a global leader in aerospace and defense systems
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A Global Leader in Aerospace and Defense Systems Presentation to - - PowerPoint PPT Presentation

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A Global Leader in Aerospace and Defense Systems Presentation to Investors and Analysts November 2017 OA Investor - Nov2017 1 Caution Regarding Forward-Looking Statements This communication, and any documents to which Orbital ATK refers you

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SLIDE 1

A Global Leader in Aerospace and Defense Systems

Presentation to Investors and Analysts

OA Investor - Nov2017

November 2017

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SLIDE 2

Caution Regarding Forward-Looking Statements

OA Investor - Nov2017 2

This communication, and any documents to which Orbital ATK refers you in this communication, contains not only historical information, but also forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often include the words “forecast,” “expect,” “believe,” “will,” “intend,” “plan,” and words of similar substance. Such forward-looking statements are subject to risks and uncertainties that could cause actual results or performance to differ materially from those expressed in or contemplated by the forward-looking statements, including the risk that the proposed acquisition of Orbital ATK by Northrop Grumman may not be completed in a timely manner or at all, which may adversely affect Orbital ATK’s business and the price of Orbital ATK’s common stock; potential increased costs, liability, or reputational harm associated with the recent restatement of the company’s financial statements; the company’s ability to maintain and grow its relationship with its customers; reductions or changes in U.S. Government spending; changes in cost and revenue estimates and/or timing of programs and payments; the potential termination of U.S. Government contracts; failure to win or retain key contracts; supply, availability, and cost of raw materials and components; performance of subcontractors and other third parties; development of key technologies; the costs and ultimate outcome of contingencies, including litigation, government investigations and other legal proceedings; and other risks described in Orbital ATK’s filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.

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SLIDE 3

Orbital ATK Overview

Global Aerospace and Defense Systems Company Established by Merger of Orbital and Alliant Techsystems in 2015

Leading Developer and Manufacturer of Innovative, Reliable and Affordable Products for Government and Commercial Customers

  • Launch Vehicles, Rocket Propulsion Systems and Aerospace Structures
  • Tactical Missile Products, Armament Systems and Ammunition
  • Satellites, Space Components and Technical Services

Approximately 13,000 Employees, Including About 4,200 Engineers and Scientists

Targeting About $4.6 Billion in Revenue and Over $6.00 in EPS in 2017

Total Contract Backlog of $15.7 Billion Providing High Revenue Visibility

OA Investor - Nov2017

Aerospace Systems Defense Systems Innovation… Delivered

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The Partner You Can Count On

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SLIDE 4

Top Customers and Revenue Composition

11% 37% 27% Military & Commercial Aircraft Programs National Security Space Systems Civil & Commercial Space Systems

2017 Revenue by Market Area

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35% 40% 25% Defense Systems Flight Systems Space Systems

2017 Revenue by Business Segment

Strategic Missiles & Missile Defense Tactical Missiles & Armament Systems 12% 13%

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SLIDE 5

Operating Groups and Product Divisions

Flight Systems Group

Annual Revenue ~$1.6 Billion

Segment EBIT Margin ~12.5%

Workforce ~5,250 People

3 P&L Divisions

  • Launch Vehicles
  • Propulsion Systems
  • Aerospace Structures

5 OA Investor - Nov2017

Defense Systems Group

Annual Revenue ~$1.9 Billion

Segment EBIT Margin ~9.5%

Workforce ~4,700 People

4 P&L Divisions

  • Missile Products
  • Armament Systems
  • Defense Electronics
  • Ammunition

Space Systems Group

Annual Revenue ~$1.2 Billion

Segment EBIT Margin ~10.5%

Workforce ~2,750 People

4 P&L Divisions

  • Satellite Systems
  • Advanced Programs
  • Space Components
  • Technical Services
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SLIDE 6

Major Flight Systems Programs

Launch Vehicles

 GMD Launch Vehicle (MDA/ Boeing)  Missile Defense Target Vehicles (MDA)  Antares Launch Vehicle (NASA)  Pegasus/Taurus/Minotaur Launch

Vehicles (Various)

Propulsion Systems

 Space Launch Boosters (NASA)  Trident II D5 SLBM Motors (Navy/

Lockheed)

 GEM Solid Boosters (ULA)

Aerospace Structures

 F-35 Fighter (Various/Lockheed)  A-350 Aircraft (Airbus)  Restricted Programs

OA Investor - Nov2017 6

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SLIDE 7

Major Defense Systems Programs

Missile Products

 GMLRS/Hellfire Missiles

(Army/Lockheed)

 Sidewinder/AMRAAM/SM-3 Missiles

(Air Force and MDA/Raytheon)

 Advanced Warheads and Munition

Fuzes (Air Force and Navy)

Armament Systems

 Precision Guidance Kits (Army)  Advanced Gun Systems (Various)  Large-Cal Ammo (Army)  Medium-Cal Ammo (Army)

Defense Electronics

 AARGM Missiles and Derivatives

(Navy and International)

Small Caliber Systems

 Small-Cal Ammo (Army)  Small-Cal Ammo (Commercial)

OA Investor - Nov2017

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SLIDE 8

Major Space Systems Programs

Satellite Systems

 GSSAP Satellites (Air Force)  Restricted Space Systems  Commercial Satellites (Various)  Medium Science Satellites (NASA)  Small Science Satellites (NASA)

Advanced Programs

 ISS Cargo Supply Vehicles (NASA)  Mission Extension Vehicles (Various)

Space Components

 Spacecraft Structures, Propulsion

Tanks, Deployable Arrays, Thermal Systems (Various)

Technical Services

 Scientific Balloon Program (NASA)  Sounding Rocket Program (NASA)  Space Technical Services (Various)

OA Investor - Nov2017

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SLIDE 9

Major Growth Areas in 2017-2019

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Commercial and Military Aerostructures Medium/Large Space Launch Vehicles Advanced Med/Large Caliber Ammunition Tactical Missiles and Subsystems Defense and Science Satellites Small Precision Weapons

Flight Systems Defense Systems Space Systems

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SLIDE 10

53% 30% 17% 51% 30% 19%

Large Contract Backlog… High Revenue Visibility

10 OA Investor - Nov2017

Defense Systems Group Flight Systems Group Space Systems Group

Firm Backlog ∼$9.6 Billion Total Backlog ∼$15.7 Billion

 Total Contract Backlog Worth ∼$15.7 Billion as of Third Quarter 2017

  • Firm Backlog ∼$9.6 Billion
  • Option Backlog ∼$6.1 Billion

 Current Backlog Provides Excellent Visibility to Near-Term Revenue Growth

  • ~99% of Targeted 2017 Revenue
  • ~85% of Targeted 2018 Revenue
  • ~60% of Targeted 2019 Revenue
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SLIDE 11

Balance Sheet and Capital Deployment Plans

 Summary Balance Sheet as of October 1, 2017 ($ Millions) 

Capital Deployment and Investment Plans for 2017

  • Stock Repurchases ~$25 Million
  • R&D Investments ~$135 Million*
  • Dividend Payments ~$75 Million
  • Capital Expenditures ~$225 Million*
  • Debt Repayments ~$40 Million
  • Pension Funding ~$25 Million

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*Includes ~$60 Million of R&D and ~$75 Million of Capex for New Growth Investments

OA Investor - Nov2017

Cash and Equivalents $119 Short-Term Debt $40 Accounts Receivable 1,939 Accounts Payable 141 Other Current Assets 357 Other Current Liabilities 1,112 Property, Plant and Equipment 858 Long-Term Debt 1,370 Goodwill 1,832 Pension and Other 811 Other Assets 432 Shareholders’ Equity 2,063 Total Assets $5,537 Total Liabilities and Equity $5,537

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SLIDE 12

Key Investment Highlights

 Highly Innovative, Agile and Competitive Space, Defense and Aviation Systems

Manufacturer With a Sharp Focus on Affordability

 Long-Standing Customer Relationships, Many Franchise Programs and High-

Visibility Backlog in Both Prime Contractor and Merchant Supplier Businesses

 Exceptional Operational Performance on Over 100 Major R&D and Production

Programs, Including Over 20 Product Development Projects

 Strong Prospects for Sustainable Growth, Robust Free Cash Flow and Substantial

Capital Deployment to Benefit Shareholders

OA Investor - Nov2017 12

Commitment to Shareholder Value Increases in 2017 and Beyond

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SLIDE 13

Current Equity Research Analysts

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Analyst Firm E-mail Phone # George Godfrey CL King & Associates ggodfrey@clking.com 617-357-4028 Gautam Khanna Cowen and Co gautam.khanna@cowen.com 617-946-3978 Robert Spingarn Credit Suisse robert.spingarn@credit-suisse.com 212-538-1895 Myles Walton Deutsche Bank myles.walton@db.com 617-217-6259 Noah Poponak Goldman Sachs noah.poponak@gs.com 212-357-0954 Sheila Kahyaoglu Jefferies & Co sheila.kahyaoglu@jefferies.com 212.336.7216 Joseph DeNardi Stifel Nicolaus denardij@stifel.com 443-224-1358 Michael Ciarmoli SunTrust Robinson Humphrey michael.ciarmoli@suntrust.com 212-303-0136 Sam Pearlstein Wells Fargo Securities sam.pearlstein@wellsfargo.com 212-214-5054