Once more, it's time to hear from one of the most interesting, least followed, and most financially stretched companies in the universe. Cosmic builder Spacehab (NASDAQ:SPAB) reports fiscal Q2 2007 earnings on Tuesday.

What analysts say:
Nada. Spacehab, which provides space services to the aerospace and commercial markets, is one of those companies that gets absolutely no analyst coverage, either in the U.S. or internationally. Accordingly, revenue and earnings (i.e., losses) estimates are anybody's guess.

What management says:
Hmm. Not good. Just last month, the company announced the departure of two of its senior-level execs. Both Michael Chewning, senior VP for flight services, and Michael Bain, senior VP and chief operating officer, have left the building. Also less than encouraging was the news that Spacehab has parted ways with its auditing firm, Grant Thornton, and has signed up instead with a non-name-brand outfit: PMB Helin Donovan, LLP. Both of these developments came hard on the heels of news that Spacehab is laying off 16% of its workforce in hopes of conserving $3.9 million annually. The good news: Severance and related costs for the downsizing will amount to just $450,000, meaning the company can make up the cost with just two months' worth of savings.

What management does:
The company has put together back-to-back quarters of rising, rolling gross margins, notched its first quarter in which rolling operating margins emerged into the black, and reduced the negativity of its rolling net margins to where they were one year ago. It's not a lot, but it's a start.

Margins

6/05

9/05

12/05

3/06

6/06

9/06

Gross

20.6%

20.2%

19.9%

19.2%

20.0%

22.7%

Operating

6.4%

(9.1%)

(11.0%)

(12.7%)

(1.3%)

1.5%

Net

8.8%

(6.2%)

(19.7%)

(22.4%)

(24.4%)

(19.6%)
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

One Fool says:
Wondering why Spacehab is cutting so many employees so suddenly? Well, at one level, management says it simply doesn't need these employees anymore, as its involvement with the NASA space shuttle program winds to a close (along with the space shuttle program itself). But at another level, the numbers simply aren't working out well. Reviewing the last two quarters' results, we see that sales are down 5% and cost of goods sold is down 12%. That's a good relationship -- but selling, general, and administrative expenses (SG&A) shot up 44% year over year. In order to bring SG&A trends back in line with how sales are going, the firm needed to shave about $1 million per quarter off its operating expenses. I think it no coincidence that that's almost exactly the sum to be saved through the layoffs.

That said, it would be hard to argue that this augurs well for the continued growth of the business.

Competitors:

  • Boeing (NYSE:BA)
  • Lockheed Martin (NYSE:LMT)
  • Oceaneering International (NYSE:OII)

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Fool contributor Rich Smith does not own shares of any company named above. The Fool has a disclosure policy.