Aerojet Rocketdyne Holdings, Inc. Declares Second Quarter 2021 Outcomes | information

EL SEGUNDO, Calif., July 26, 2021 (GLOBE NEWSWIRE) – Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD) (the “Company”) today released results for the three months ended June 30, 2021.

Financial overview

————————— * The company offers non-GAAP measures to supplement financial results based on generally accepted accounting principles in the United States (“GAAP”). A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures is included at the end of the publication.

"Aerojet Rocketdyne had a great second quarter of strong revenue growth and solid profit margins," said Eileen P. Drake, CEO and President of Aerojet Rocketdyne Holdings, Inc. "Revenue of $ 557 million was up 9% and up from last year 12%. over the first quarter. We see expected revenue growth from new development programs, including GBSD, as well as continued growth in our portfolio of legacy programs. Adjusted EBITDAP margin for the quarter was 15.6%, reflecting the strong performance of our overall program portfolio, ”Drake continued. The backlog remains high, ending the quarter at $ 6.7 billion, of which $ 2.2 billion is expected to be converted into revenue over the next twelve months. Free cash flow for the second quarter was $ 81 million.

Second quarter of 2021 compared to second quarter of 2020

The increase in net sales was primarily driven by the Ground Based Strategic Deterrent (“GBSD”) and Army Tactical Missile Systems (“ATACMS”) programs, which were partially offset by a decline in the Terminal High Altitude Area Defense (“THAAD”) program.

The increase in net income was influenced by the following factors: (i) favorable contract performance under the RS-68 program; (ii) lower interest expenses; and (iii) reduced depreciation expense. These factors have been partially offset by (i) merger-related costs in the current period (see discussion below); and (ii) higher stock-based compensation as a result of increases in the fair value of the stock appreciation rights in the current period. The company recorded positive net changes of $ 18.0 million in contract estimates of net income for the current period, compared to positive net changes of $ 11.4 million in the second quarter of 2020.

First half of 2021 compared to first half of 2020

The increase in net sales was primarily driven by the GBSD, RS-25 and ATACMS programs, which were partially offset by decreases in the THAAD and PAC-3 programs.

The decrease in net income was influenced by: (i) merger-related charges in the current period (see explanation below); (ii) loss on debt settlement (see discussion below); (iii) lower interest income; and (iv) higher stock-based compensation as a result of increases in the fair value of the stock appreciation rights in the current period. These factors were partially offset by (i) lower interest expenses and (ii) lower depreciation charges. The company recorded positive net changes of $ 16.1 million in contract estimates of net income for the current period, compared to positive net changes of $ 13.3 million in the first half of 2020.


As of June 30, 2021, the company's total remaining performance obligation, also known as backlog, was $ 6.7 billion compared to $ 6.7 billion as of December 31, 2020. The company expects to be approximately 33%, or 2 , $ 2 billion of the remaining benefit obligations recognized as revenue for the next twelve months, an additional 24% in the following twelve months, and 43% thereafter. A summary of the company's backlog is as follows:

The total backlog includes both the funded backlog (unfulfilled orders for which funding is approved, assigned and contractually required by the customer) and the unfunded backlog (firm orders for which no funding has been used). Open-ended supply and quantity contracts as well as options that have not been exercised are not shown in the total arrears. The backlog is subject to funding delays or program reorganizations / cancellations that are beyond the control of the company.


On December 20, 2020, the Company entered into an agreement and plan (the "Merger Agreement") with Lockheed Martin Corporation ("Lockheed Martin") and Mizar Sub, Inc., a wholly-owned subsidiary of Lockheed Martin ("Merger Sub"), which Merger Sub will merge with and into the Company (the "Merger"), subject to the terms and conditions, with Company being the surviving company and a wholly-owned subsidiary of Lockheed Martin. Subject to the terms of the Merger Agreement, any common stock that is immediately prior to effective Floating around the merger, automatically converted into the right to receive cash of $ 51.00 per share (adjusted) starting at $ 56.00 after paying the dividend prior to closing as detailed below).

In December 2020, the Company's Board of Directors declared a one-time cash dividend of USD 5.00 per share (including the shares underlying the 2.25% Convertible Senior Notes ("2¼% Notes") that participate on the basis of the convertible bond) (the "Pre-Final Dividend"). On March 24, 2021, the company paid the dividend prior to closing to the holders of record on March 10, 2021. The pre-closing dividend was paid in connection with the anticipated acquisition of the company by Lockheed Martin. In accordance with the terms of the Merger, the Company's pre-closing dividend payment adjusted Lockheed Martin's consideration at closing from $ 56.00 per share to $ 51.00 per share.

On February 18, 2021, as part of the regulatory review process for Lockheed Martin's acquisition of the Company, the Company received a request for additional information (“Second Request”) from the Federal Trade Commission (“FTC”).

On March 9, 2021, the company's shareholders voted in a special meeting to approve the merger agreement. The merger is expected to close in the fourth quarter of 2021, subject to receipt of regulatory approval under the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended, and other closing conditions set out in the Merger Agreement.

For the six months ended June 30, 2021, the company had costs related to the merger of $ 13.6 million. The components of the merger costs are made up as follows (in millions):

2¼% notes

In the six months ended June 30, 2021, the company settled $ 141.8 million of its 2¼% bonds as a result of receiving exchange notices from the holders of the 2¼% bonds. The face value of $ 141.8 million was paid in cash and the conversion premium was paid in 2.7 million shares of common stock. The company incurred a pre-tax charge of $ 9.6 million for the six months ended June 30, 2021 related to the settlement of the 2¼% bond.

Forward-Looking Statements

This press release contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the completion of the merger. Such statements in this press release and in subsequent discussions with management are based on management's current expectations and are subject to risks, uncertainties and changes in circumstances that could cause actual results, performance or achievements to differ materially from those anticipated. Achievements or achievements differ. All statements contained herein and in subsequent discussions with management of the company that are not clearly historical in nature are forward-looking and the words "anticipate", "believe", "expect", "estimate", "plan" and similar expressions are in the Generally intended to identify forward-looking statements. A variety of factors could cause actual results or results to differ materially from those anticipated and expressed in the company's forward-looking statements. Important risk factors that could cause actual results or results to differ from those expressed in the forward-looking statements include the following:

failure to complete the merger could adversely affect the company's common stock price and its future business and financial results; Cuts, delays, or changes in US government spending; Termination or material amendment of one or more significant contracts; Failure of the company's subcontractors or suppliers to comply with their contractual obligations; Loss of qualified key suppliers of technologies, components and materials; the release, unplanned ignition, explosion, or improper handling of hazardous materials used in Company's stores; Real estate market risks; the COVID-19 pandemic and its impact on economic and other conditions worldwide, including global spending, sourcing and operations of the Company and its customers and suppliers, among others; Cost overruns in the company's contracts that require the company to pay any excess costs; Failure of the company's IT infrastructure, including a successful cyber attack, accident, unsuccessful outsourcing of certain information technology and cybersecurity functions, or security breaches that could disrupt the company's operations; Changes in economic and other conditions in the Greater Sacramento, California real estate market or changes in interest rates that affect the value of real estate in that market; the loss of key employees and the lack of available skilled labor to achieve the expected growth; a strike or other stoppage of work or the company's inability to renew collective agreements on favorable terms; Changes in estimates related to contract accounting; the funded status of the Company's defined benefit plan and the Company's obligation to make cash contributions in excess of what the Company can collect in its ongoing overhead rates; the substantial amount of debt that places significant cash demands on the company and could limit the company's ability to raise additional funds or expand its business; the company's ability to meet financial and other obligations contained in the company's debt agreements; Changes in LIBOR reporting practices or the method of determining LIBOR; Failure to secure contracts; The costs and time involved in potential and / or actual acquisition activities, including the merger, could exceed expectations; Failure to comply with regulations applicable to contracts with the US government; Failure of the company's IT infrastructure or non-performance by the company's third-party providers; Product failures, deadline delays or other problems with existing or new products and systems; the possibility that environmental and other government regulations affecting the company may become stricter or expose the company to material liability beyond its established reserves; Environmental claims related to current and past business and operations of the company, including the inability to protect or enforce previously entered into environmental agreements; Reductions in the reimbursable amount for environmental damage; significant exposures and potential liabilities that are not adequately covered by insurance; Limitations related to our shareholders' ability to obtain a positive judgment in the Delaware Court of Chancery; Operational disruptions, unless insured; Changes or clarifications in applicable tax law or procedural guidelines could adversely affect the company's tax liabilities and the effective tax rate; Risks and uncertainties associated with claims and litigation, including litigation arising from the merger; The effects of changes in discount rates and actuarial estimates, actual return on plan assets, and government regulations on defined benefit plans; Inability to protect the company's patents and property rights; and the risks identified in the company's filings with the SEC.

About Aerojet Rocketdyne Holdings, Inc.

Aerojet Rocketdyne Holdings, Inc., headquartered in El Segundo, California, is an innovative technology-based manufacturer of aerospace and defense products and systems with a real estate segment that has activities related to the entitlement, sale and rental of the surplus of the company includes Company real estate assets. For more information, please visit the company's websites at or

Contact Information: Investors: Kelly Anderson, Investor Relations 310.252.8155

The company rates its operating segments based on several factors, the primary financial metric of which is segment performance. Segment performance is net sales less costs, expenses, and provisions for unusual items related to the segment. Excludes segment performance: corporate income and expenses, interest expense, interest income, income taxes, and unusual items that are unrelated to the segment . The company believes that segment performance provides investors with useful information in understanding the underlying operational performance.

Use of unaudited, non-GAAP financial measures

Adjusted EBITDAP, Adjusted Net Income, and Adjusted EPS

The company provides the non-GAAP financial measures of its performance known as Adjusted EBITDAP, Adjusted Net Income, and Adjusted EPS. The company uses these metrics to measure its operational and overall company performance. The Company believes that in order for management and investors to be able to effectively compare core performance from period to period, the metrics should exclude items that are not indicative of or unrelated to ongoing business results, such as: . B. Retirement benefits (pension and retirement benefits), material non-cash expenses, effects of financing decisions on the result and matters that arise outside the normal, ongoing and customary course of business. Accordingly, the company defines Adjusted EBITDAP as GAAP net income, adjusted for interest expense, interest income, income taxes, depreciation and amortization, retirement benefits minus amounts recoverable under the company's U.S. government contracts, and unusual items (costs and losses on mergers ). for debts). Adjusted net income and adjusted earnings per share do not include retirement benefits minus amounts collectable under its U.S. government contracts and unusual items that the company does not believe to reflect such ordinary, ongoing and customary activities. Adjusted net income and adjusted earnings per share are not and should not be viewed as alternatives to GAAP net income or diluted earnings per share.


(1) The income tax burden is calculated on the basis of the statutory rates of the federal and state governments in the corresponding period.

Free cash flow

The company also provides the non-GAAP financial measure of free cash flow. Free cash flow is defined as cash flow from operating activities less investments. Free cash flow should not be viewed in isolation, as a measure of remaining cash flow available for discretionary purposes, or as an alternative to cash flows from business activities presented in accordance with GAAP. The company uses free cash flow both in presenting its results to stakeholders and the investing community, and in the company's internal evaluation and management of the business. Management believes this financial metric is useful as it provides additional information to help investors view the business using the same tools management uses to assess progress in achieving company goals. The following table summarizes the free cash flow:

Because the company's methodology for calculating these non-GAAP measures may differ from the methods used by other companies, the non-GAAP measures presented above may not be comparable to similarly named measures from other companies. These measures are not recognized in accordance with GAAP, and the Company does not intend to use this information in isolation or as a substitute for GAAP measures.