According to its latest financial results issued Oct. 18, Orbital increased its quarterly operating income 27 percent from the same period last year to $31.3 million, with third quarter EPS of $0.33 also beating consensus estimates of $0.25. Net income was $19.5 million the third quarter of 2012, compared to net income of $16.5 million, or $0.28 diluted earnings per share, in the third quarter of 2011.  Orbital’s free cash flow during the period was negative $20.8 million compared to positive $16.3 million last year.

Orbital Sciences Chairman and CEO David Thompson said the company set new records for revenues and operating income for a second consecutive quarter. “This quarter’s financial results reflected strong growth in revenues, particularly for the launch vehicles segment, which grew by more than 20 percent, as well as increased operating income in all three business segments,” said Thompson.

Orbital carried out two launch vehicle and satellite missions during the quarter and delivered another eight systems to customers for future missions. The company also completed several important milestones in the Antares rocket and Cygnus spacecraft programs, including the commencement of initial Antares operations at the Mid-Atlantic Regional Spaceport at Wallops Island, Va.

Raymond James Analyst Chris Quilty said the results were a pleasant surprise to analysts, with Orbital maintaining its 2012 guidance and providing preliminary 2013 EPS guidance that is only 10 percent below the consensus forecast.

“Orbital’s operating margins were strong this quarter, improving to 8.4 percent –its best performance since the second quarter of 2008,” Quilty said in a research note. “All three business segments exhibited sequential and year-over-year margin improvement. Orbital’s 2013 outlook, however, is disappointing. Management forecast midpoint 2013 revenue growth of only 3.5 percent and an EPS in the range of $1.00 to $1.15, which is 10 percent below the consensus forecast of $1.19. Despite the strong third quarter performance, we expect the stock to come under pressure due to the weaker-than-expected 2013 outlook. We suspect this forecast could prove to be conservative due to cautious assumptions, but Orbital is unlikely to receive greater clarity before a new congress is seated. The 2013 and 2014 budgets are already fleshed out.”