Aerojet Rocketdyne Holdings Inc. reported net income of $13.7 million in its third-quarter earnings report last Tuesday, which showed that the company is still contending with supply chain challenges and costs from its mid-year proxy battle.
The income represented a 17% decrease from the previous quarter and the lowest posted profit reported in more than a year from the El Segundo-based company.
Revenue clocked in at $550 million, missing analysts’ projections by 1.5%. However, Aerojet had adjusted earnings per share of 45 cents, edging out analysts’ expectations by more than a percentage point.
Aerojet Chief Executive Officer and President Eileen P. Drake said in a statement that the company delivered strong operating profit and improved cash flow and had a healthy backlog that demonstrated its role as a preferred supplier.
“As we look to the future, we are intently focused on investing in line with our nation’s defense and space priorities, driving improvements to increase our competitive edge and positioning Aerojet Rocketdyne for enhanced shareholder value creation,” Drake said.
The RS-25, a rocket engine made for NASA, experienced production delays last quarter caused by supply chain issues that impacted testing. The supply chain issues persisted into this quarter, but Drake said in an earnings call last week that Aerojet believes the timing delays to be short term in nature.
Another income-hindering factor faced by Aerojet included $46.5 million worth of costs and “unusual expenditures related to the proxy contest and related litigation, other legal matters and costs related to the terminated Lockheed Martin merger agreement.”
The proxy contest was a multi-month ordeal that involved Drake facing off against Warren Lichtenstein, Aerojet’s former executive chairman. The contest included a lawsuit and ended with Drake’s independent slate of directors receiving more than 75% of votes, with Drake receiving the most votes of any individual director.
The special meeting and board vote occurred on June 30. Proxy costs and related litigation accounted for $16.3 million of Aerojet’s total expenses for the third quarter. It is unclear how much money the terminated Lockheed Martin merger agreement cost Aerojet.
Aerojet was nearly acquired by Lockheed earlier this year in a deal that would have been worth around $4.4 billion. The Federal Trade Commission (FTC) moved to block the deal in late January, citing concerns that it would remove the last independent missile-propulsion provider in the country and consolidate markets crucial to national security. Lockheed later terminated the deal following the FTC’s decision.
According to Reuters, the company is soliciting acquisition offers from potential suitors that include private equity firms.
