A representative model of an ATK precision guidance kit or PGK.
JIM GEHRZ , Star Tribune
A bin full of shotgun shells at Alliant Techsystems.
Alliant Techsystems ,
Shotgun shells coming off loader at Alliant Techsystems (ATK).
Sport-shooting sales help Alliant profits beat expectations
- Article by: Dee Depass
- Star Tribune
- February 5, 2013 - 11:21 PM
The national debate on guns and the growing sport-shooting market helped defense firm Alliant Techsystems Inc. bolster fiscal third-quarter results and overcome the loss of a critical U.S. Army factory contract, officials reported Tuesday.
Alliant Techsystems, which frequently goes by the name ATK, makes guided missiles and rocket boosters. But it also is the world’s largest maker of small-caliber ammunition and caters to military, law enforcement and hunting and sport-shooting markets.
It is that last division that saved the quarter as sporting group sales jumped 18 percent to $288 million.
At the same time, the company — which is based in Arlington, Va., but has significant operations in Eden Prairie and Anoka — saw defense sales fall 18 percent to $301 million because of the loss of a key contract to run the U.S. Army’s Radford Army Ammunition Plant. Aerospace sales were largely flat at $301 million for the quarter.
Alliant’s dominance as a defense contractor has come under pressure since the U.S. government has pulled out of Iraq and prepares to curtail operations in Afghanistan and cull other military spending. In addition, the company’s aerospace division has been hamstrung by NASA’s termination of its regular space shuttle program.
As a result, emphasis on its sporting division has become more pronounced.
CEO Mark DeYoung told analysts previously that more women and youth are engaging in recreational shooting and that the sport has gained popularity due in part to recent cable TV shows.
That plus the national debate on tightening gun control laws in the wake of the Newtown, Conn., massacre in December has sent hunting and Second Amendment enthusiasts to stores in droves, searching for guns and ammunition. In some cases, supplies are increasingly short. That is benefiting manufacturers such as Alliant Techsystems.
In a conference call with analysts on Tuesday, DeYoung said there has been a threefold increase since 2002 in the excise taxes levied on ammunition sales. “These appear to be trends, not [the] kind of episodic spikes that are going on around elections,” he said. DeYoung also acknowledged that politics can cause spikes in demand.
“Yes, elections and changes in political parties and platforms and legislation do create changes in demand,” he said. “But over the long haul, you’re seeing a growth in the shooting sports, which I think is pretty significant.”
Total sales for the third quarter fell 5.5 percent to $1 billion. Earnings beat estimates, however, coming in at $1.93 per share, up from $1.51 a year ago because improved margins, higher ammunition prices, cost cutting and operational improvements.
Alliant shares closed up 2.6 percent, or $1.67, at $65.22.
DeYoung upgraded the company’s forecast, and predicted fiscal 2013 sales of $4.25 billion to $4.3 billion, up from the earlier guidance of $4.1 billion to $4.2 billion. Full-year earnings are expected to reach $7.90 to $8.10, up from $7.40 to $7.70 per share.
Dee DePass • 612-673-7725
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