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Alliant Techsystems Inc. at Barclays Capital Industrial Select Conference - Final.

Publication: Fair Disclosure Wire
Publication Date: 10-FEB-09
Format: Online
Delivery: Immediate Online Access
Full Article Title: Alliant Techsystems Inc. at Barclays Capital Industrial Select Conference - Final.(Broadcast transcript)

Article Excerpt
UNIDENTIFIED PARTICIPANT: On to the next one. Well, usually at this time we have ATK up here, and I say, well, these are the guys that have had the largest temperature swing. Usually John records numbers in the teens or something, and if we're lucky we get a 100 degree swing. But John says it's warm out there.

And the other thing I usually say is that ATK is, you know, the smallest, best little Company we follow. The trouble is it's not true anymore. The darn thing, they keep growing, and it's gotten to be a big Company. So we're delighted that the big ATK could join us from not-so-cold Minnesota. John Shroyer and Jeff Huebschen are here to tell the story. And with no further adieu, John, thank you very much for coming.

JOHN SHROYER, SVP, CFO, ALLIANT TECHSYSTEMS INC.: Thanks for the warm welcome, [Joe]. Welcome to the afternoon conference. I'm going to spend obviously a few minutes going through the standard brief here, but I'd obviously like to open it up and have time to answer most of your questions. I guess we have a follow-up meeting upstairs.

But it's not quite a 100 degree temperature difference, but I think 20 to 80, that's still a pretty good change in temperature. So enjoy all this nice weather for those of you that get to stick around for another couple of days.

But just quickly, we just finished up our third quarter. We do end our fiscal year in March. We had another very strong quarter in the Company. 5% year-over-year organic sales growth and 19% year-over-year EPS growth. It really puts us on track now for the year for another strong organic growth of about 8% on the top line, and an average of about 17%, 18% on the bottom line year-over-year EPS growth, which now for the third year in a row, ATK EPS year-over-year growth of about 17% on average. So the Company's doing very well. We'll walk through a bunch of those specifics in detail here in the pitch.

But, Jeff, if you can, flip to the next slide there.

Just a quick overview for those of you who may not be aware. We do operate three business groups, all over $1 billion. Armament, the largest at about $1.6 billion, mission $1.2 billion, and space a close second, just under $1.6 billion. So all groups over $1 billion. All have very good core business platforms as well as good growth opportunities that we'll touch on as we head forward here.

I mentioned the quarter and the year results, but the Company really has been, as Joe mentioned, growing quite a bit over the last five years, six years. It was just that long ago we weren't slightly over a couple billion dollars. We're now a $4.5 billion Company, part of that through acquisitions. But more importantly, those acquisitions, along with the core capability, enabled us to have four years of double digit organic growth and then another good solid year this year.

And with that, a whole numerous myriad of growth opportunities that really position us well for the future. We're going to talk a little bit about our backlog today. Very strong order year, again, for ATK. Record backlog. Really giving us a lot of confidence for the growth for the future of this Company.

Next slide, Jeff.

This just gives you a little graphical representation of the sales growth over the last four years. You can see $3.2 billion in '06, on up to $4.5 billion this year. And more impressive, that EPS of $4.11 back then, up to $7.40 to $7.50. As I mentioned we are going to end up our fiscal year here at the end of March. We're guiding to the upper end of that $7.50 right now, and that will represent, again, about 19% year-over-year EPS growth for a Company.

Spent quite a bit of time on backlog. You can see it's been growing near leaps and bounds for us the last couple years, from $4.7 billion, up to what was a record $6.5 billion last year. And now we're expecting $7 billion in backlog by the end of this year. It's driven by orders this year of greater than $5 billion.

A couple of keys to that. In the commercial aerospace we're just entering this market, really positioning ourselves for the next wave in commercial aerospace.

In the third quarter we announced the Rolls-Royce engine component award, about $250 million. That's our second entry into commercial aircraft engines. We already produced the fan containment case for the GE 747-8 engines. This is just another entry into that market for us. That engine is for the A350 wide body that will go into production 2013 and out.

We're also expecting here very shortly about an $800 million order for strings and frames, think of a skeleton of a commercial aircraft. And again, we hope to be able to announce that here shortly. And again, that revenue will go primarily from the 2013 on out through the 2018 time horizon.

On the advanced weapons area, this fits right in with the -- if you've been following Gates' -- Secretary Gates' initiative of just the good-enough solutions, the 70% solutions at an affordable price. Well, that's all about ATK. That's what we've been doing the last five years, most notably in this weapons area.

We've taken our...



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