The rocket explosion that cost Aerojet Rocketdyne Holdings Inc. a $50 million settlement also erased a quarter’s worth of profits.
The Rancho Cordova rocket engine maker reported a $38.1 million quarterly loss Tuesday, largely the result of a spectacular launchpad explosion last October that forced Aerojet to pay a hefty settlement to a key customer and prompted the end of a profitable supply contract.
Aerojet, which has embarked on a cost-cutting program, said the third-quarter loss came to 62 cents a share. It compared to a year-ago loss of $9.9 million, or 18 cents a share.
Despite the loss, revenue in the quarter rose to $440.5 million from $421.2 million a year earlier, and Aerojet President and Chief Executive Eileen Drake said: “We are pleased with these third-quarter results.” Aerojet saw higher revenue from several contracts, including a deal to supply rocket-booster engines for NASA.
Nonetheless, the quarter was clearly overshadowed by the fallout from the explosion of an unmanned Orbital Antares rocket a few seconds after liftoff Oct. 28 from a NASA launchpad in Virginia. The rocket, powered by an Aerojet AJ-26 engine, was supposed to deliver cargo to the International Space Station.
Last month, Aerojet disclosed it would pay $50 million to Orbital ATK Inc. to settle damages over the ill-fated launch. Aerojet also said the two companies had “mutually agreed” to sever their contract, in which Aerojet supplied refurbished Soviet-made AJ-26 rockets to Orbital.
Because of the lost revenue, Aerojet recorded an $11.5 million loss on the AJ-26 contract during the quarter, over and above the $50 million settlement. During the third quarter a year ago, Aerojet earned a $17.5 million profit on the contract.
In her first comments since the settlement was disclosed, Drake said in a prepared statement that the agreement “eliminates the uncertainty associated with the Antares … launch failure and the AJ-26 supply contract.” Aerojet and Orbital have other supply deals, including a contract signed in February to provide propulsion systems to Orbital communications satellites.
Besides the losses related to Orbital, Aerojet was also weighed down during the quarter by a $29.5 million expense related to environmental cleanup at its old Baldwin Park site in the San Gabriel Valley.
Aerojet has undergone a fair amount of turmoil in recent months. The company switched CEOs earlier this year and started a cost-cutting plan that is expected to eliminate 250 of its 1,600 jobs in Rancho Cordova, and 500 jobs nationally, over four years. In mid-September, its bid to buy rocket-maker United Launch Alliance was rejected.
Aerojet shares closed Wednesday at $16.61, down 64 cents, on the New York Stock Exchange.