Space is not the final frontier for Alliant Techsystems (ATK), as long as its aerospace/defense offerings are paving new paths. Through several operating segments, ATK is a leading manufacturer of mission-critical products, including military ammunition and gun propellants (armament systems), rocket motors and small satellites (aerospace systems), and defense electronics and missile components (missile products). It also makes ammunition for the law enforcement and sporting markets (security and sporting). The company is a top supplier of ammunition -- from small-caliber rounds to tank ammunition -- to the US and its allies. In 2014 ATK agreed to merge its aerospace and defense operations with Orbital Sciences.
Change in Company Type
Alliant Techsystems and Orbital Sciences agreed to merge their aerospace and defense operations in mid-2014, in a $5 billion transaction that will create Orbital ATK, a defense and aviation systems developer with a combined $4.5 billion in revenue. As part of the deal, ATK will spin off its sporting segment, which focuses on commercial sporting equipment, to its shareholders.
ATK is stationed in Arlington, Virginia, and it has nearly 60 locations in 21 states, Canada, Puerto Rico, and other countries.
In fiscal 2013 ATK realigned to form a three-group structure of aerospace (aerospace structures, space systems operations, and structures and components); defense (including the former armament systems and missile products); and sporting (accessories and commercial ammunition). The reorganization is intended to bring more efficiency and lower costs, among other goals.
The company's aerospace systems segment develops and produces rocket motor systems for human and cargo space vehicles, missiles, missile defense interceptors, small satellites, and satellite components. It also offers engineering and technical services. Its space systems operations division is the production home for the company's reusable solid rocket motors for NASA's current and planned human spaceflight programs, including the International Space Station Cargo Re-supply Services and the Space Launch System heavy-lift vehicle.
The defense segment serves the defense, aerospace, security, and energy sectors by developing and producing tactical solid rocket motor for a variety of air-, sea-, and land-based systems. Included among the segment's projects is the US Navy's Advanced Anti-Radiation Guided Missile and the Multi-stage Super Sonic Missile. Besides ammunition, the sporting segment also supplies such accessories as reloading equipment, gun care products, targets, and rifle scopes. Other products from the segment include tactical systems and equipment for the armed forces and law enforcement.
Sales and Marketing
The US Army is its largest customer. Other significant customers include the US Navy, NASA, and the US Air Force.
ATK has seen revenues declines over the last few years. Revenues fell 5% from $4.61 billion in 2012 to $4.36 billion in 2013. Profits, however, jumped 4% from $263 million to $272 million due to lower operating expenses and the absence of litigation, accrual, and realignment charges.
The declines were driven by a 7% drop in aerospace sales as a result of the completion of NASA's Space Shuttle program and reduced production levels on other programs. Within its defense segment, ATK was hurt by a dip in energetics systems sales as a result of the loss of a facility management contract. This segment also experienced a decrease in small-caliber systems sales due to lower demand for non-standard ammunition.
Mergers and Acquisitions
In a large move to bolster its sporting segment, ATK in late 2013 purchased Bushnell for $985 million. Bushnell makes rifle scopes, binoculars, and gun accessories, and ATK is making the transaction to capitalize on the surge in overall sales for guns and ammunition in the US. The purchase allowed it to penetrate the new sports markets of golf, camping, and snow skiing.
Also in 2013, ATK picked up Caliber Company (the parent company of Savage Sports Corporation) for $315 million. Savage is a leading maker of rifles and shotguns, and the deal fortified ATK's own portfolio of consumer brands.
First Eagle Investment Management owns 16% of the company.