Aerojet Rocketdyne (AJRD) Posts Q3 GAAP Loss of 16c/Share

Aerojet Rocketdyne (NYSE: AJRD) reported Q3 EPS of ($0.16), which may not compare with the analyst estimate of $0.17. Revenue for the quarter came in at $440.5 million versus the consensus estimate of $443.4 million.

Net loss for the third quarter of fiscal 2015 included (i) a pre-tax expense of $50.0 million associated with a legal settlement and (ii) a pre-tax expense of $29.5 million associated with higher environmental remediation reserve requirements primarily at the Baldwin Park Operable Unit ("BPOU") site

Competitive Improvement Program

During the second quarter of fiscal 2015, the Company initiated a competitive improvement program (the "CIP") comprised of activities and initiatives aimed at reducing costs in order for the Company to continue to compete successfully. The CIP is composed of three major components: (i) facilities optimization and footprint reduction; (ii) product affordability; and (iii) reduced administrative and overhead costs. Under the CIP, the Company expects an estimated 500 headcount reduction in its total employee population. The Company currently estimates that it will incur restructuring and related costs over the next four years totaling approximately $110 million. A summary of the Company's CIP reserve activity for the first nine months of fiscal 2015 is shown below:

The costs associated with the CIP will be a component of the Company's U.S. government forward pricing rates, and therefore, will be recovered through the pricing of the Company's products and services to the U.S. government. In addition to the employee-related CIP obligations, the Company incurred non-cash accelerated depreciation expense of $0.4 million in the first nine months of fiscal 2015 associated with changes in the estimated useful life of long-lived assets impacted by the CIP.

In addition, as part of the Company's ongoing effort to optimize business resources and achieve headcount reduction goals established through the CIP, the Company offered a Voluntary Reduction in Force ("VRIF") in July 2015 to its employees. In connection with the VRIF, the Company recorded a liability of $2.6 million in the third quarter of fiscal 2015, consisting of costs for severance, employee-related benefits and other associated expenses. These costs will be a component of the Company's U.S. government forward pricing rates, and therefore, will be recovered through the pricing of the Company's products and services to the U.S. government.

For earnings history and earnings-related data on Aerojet Rocketdyne (AJRD) click here.

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