Source: Orbital Sciences Corporation. 

Orbital Sciences (NYSE:OA) announced third-quarter results before the opening bell this morning. The company reported revenue of $338.2 million and adjusted net income of $23.3 million, or $0.38 per share. While revenue missed analysts estimates by $27.7 million, earnings soared past estimates by $0.11 per share. Thanks to Orbital's strong earnings, the company was able to increase its full-year guidance.

A closer look at the numbers that matter
While revenue came in a little lighter than analysts expected, the company still delivered strong year-over-year growth as revenue increased by $16.2 million or about 5%. More important, the company was able deliver really strong earnings growth as adjusted net income increased from $15.6 million or $0.26 per share in last year's third quarter to $23.3 million or $0.38 per share in this year's third quarter. This earnings growth was due to stronger margins at the company's Launch Vehicles and Advanced Space Program segments in the quarter.

Orbital's Launch Vehicles segment saw just a $2 million, or 2%, increase in revenue in the quarter. However, the company's operating income surged 49% as operating margins increased from 8.8% to 12.9%. The improved profitability on the Antares launch vehicle was largely responsible for the segment's strong results this quarter.

The other highlight this quarter was the company's Advanced Space Program segment. Revenue in this segment actually decreased by $15.1 million, or 12%, over the third quarter of last year. However, operating income jumped 129%, which improved the segment's operating margin from 5.1% to 13.4%. This was due to the improved profitability on the Commercial Resupply Services contract.

The improved margins in the Launch Vehicles and Advanced Space Program segments helped to offset lower margins in the Satellite and Space Systems segment. While the segment's revenue soared 20% over the third quarter of last year, operating income fell 32% and operating margins slipped to 5.2% from 9.2%. The culprit was a reduction in communication satellite operating profits.

A look ahead
In addition to solid results this quarter, Orbital also announced that it recorded $405 million in new firm and option contract bookings. Furthermore, the company received $265 million in option exercises under its existing contracts. This pushes the company's firm contract backlog to $2.3 billion and its total backlog up to $4.7 billion.

The combination of solid profitability and strong bookings is giving Orbital the confidence to increase its full-year financial guidance. While the company is cutting its revenue outlook, it is increasing its outlook for earnings and cash flow. The company now expects full-year revenue of $1.35 billion-$1.375 billion, adjusted earnings per share of $1.20-$1.25 and free cash flow of $165 million-$175 million. This is against its previous guidance for revenue of $1.4 billion-$1.425 billion, adjusted earnings per share of $1.10-$1.25 and free cash flow of $130 million-$150 million.

Overall, this was a very solid quarter for Orbital Sciences. The company was able to deliver strong earnings growth even as revenue was a bit weaker than expectations. Looking ahead, the company expects its strong earnings to continue as it's raising its full-year guidance.