Orbital Plunges Most in Almost a Year After Accounting ErrorBy
Orbital ATK Inc. posted its sharpest drop in almost a year after the weapon and space-systems manufacturer delayed its second-quarter earnings filing to regulators because of previous accounting mistakes.
A loss provision for a U.S. Army contract will reduce previously reported pretax operating income by $400 million to $450 million and “result in a net loss over its 10-year term,” Dulles, Virginia-based Orbital said in a statement Wednesday. It expects that restatements regarding the long-term, $2.3 billion contract to supply small-caliber ammunition at an Army plant in Lake City, Missouri, will include several periods through the first quarter of this year.
“The cost targets for the Lake City contract were more aggressive than the company realized,” Jefferies Group analyst Howard A. Rubel said in a research note. Orbital has since changed management of the unit and put new business practices into place, he said.
The company also reported preliminary second-quarter revenue of $1.05 billion, missing the $1.13 billion expected by analysts, according to the average of estimates compiled by Bloomberg. Adjusted earnings of $1.35 a share beat the $1.32 predicted.
Revenue will be $4.45 billion to $4.5 billion for this year, down from previous guidance of $4.58 billion to $4.65 billion, Orbital said. The company raised the low end of its 2016 profit forecast by 5 cents to $5.25 to $5.50 a share.
Shares fell 22 percent to $68.89 at 11:49 a.m. in New York. The stock earlier dropped as much as 23 percent, the most intraday since Aug. 24, 2015. Orbital was little changed this year through Tuesday.