Space systems developer Orbital Sciences is expecting a rebound in commercial satellite orders in the second half of 2013 following a difficult year.
Speaking on the company’s results conference call, David Thompson, Orbital’s co-founder, chairman…
Space systems developer Orbital Sciences is expecting a rebound in commercial satellite orders in the second half of 2013 following a difficult year.
Speaking on the company’s results conference call, David Thompson, Orbital’s co-founder, chairman and CEO, said: “For Orbital, up until just two months ago, the commercial satellite business had been pretty weak in terms of new orders since about this time last year. We were not able to book any new commercial satellite orders in the second half of last year or in the first quarter of this year.
“And during that time we completed and delivered five satellites that had been going through the factory. So the backlog situation had really declined. Fortunately, it looks like that’s turned around now, and between second quarter contracts and a new program awarded in the early part of July, we have 4 new commercial satellites that we’ll start to design, or have started the design phase, and will start to generate additional revenue and work in the factory in the second half of the year.”
In its second quarter 2013 results, Orbital reported a 10% year-on-year fall in revenues to US$333m. This decline was predominantly driven by its satellites and space systems division, where revenues fell by about 28%. In particular, the company’s GEO communications satellite revenues declined by US$54m year-on-year to around US$30m, Orbital’s weakest showing on record.
Orbital booked only four commercial satellite orders in 2012, compared to its 10-year average of six satellites per annum. It had a peak of eleven in 2008.
Thompson, though, believes that the company can build on the three orders and one option that it has secured in the past three months.
He commented: “Looking across the industry, announced orders or other bookings that are not yet publicly announced have totalled, by our count, thirteen firm (commercial satellite) orders, of which three have been in our addressable market for lower power satellites and we’ve won all three of those plus an option order on a fourth one. So although the year started off slow for us, the pace has picked up in the last couple of months and hopefully it will continue from here on.
“We’ve also been awarded two new scientific satellite programs in the second quarter and are pursuing another opportunity for later in the year in that market. So the overall outlook is one that is promising for the future.
“It’ll take a couple of quarters to see the full effect of revenue growth, and it will take a while to get back to the levels of US$125m to US$130m of quarterly revenue, similar to what we saw in 2011 and 2012 in our satellites segment. But hopefully, if we can build on the momentum we’ve established recently, that’s where we’ll head over the next year or two.”
Orbital stated that new contract awards and option exercises in the second quarter amounted to approximately US$875m. Along side the firm and option orders for four satellites, the company secured contracts for three new launch vehicles and various Advanced Programs and Technical Services contracts.
Overall its firm contract backlog increased 7% on Q1 to US$2.15bn, while total backlog climbed about 10% to US$5.4bn. In addition, the book-to-bill was at its highest level in a year and a half at 2.5x compared to 2.3x this time last year.
