Question-and-Answer Session
Operator
Thank you, sir. (Operator Instructions). Your first question comes from the line of Troy Lahr with Stifel Nicolaus
Troy Lahr - Stifel Nicolaus
Thanks for taking my question. I am wondering if you guys could address the margins a little bit at Satellite Space Systems. I think last October, Dave, you said that Orion margins were kind of going to start at around 8% to 10% and then you'd like to approach 12%. I guess it seems like we are not getting there.
And then you've talked about the GEO business actually booking work at around 8% to 10%. Is there a certain time when we should start seeing that translate through into the segments, or I guess I'm just kind of curious on when that's going to start impacting the number?
David Thompson
Yes, sure Troy. Let me take a pass at that and then Garrett may want to add some more to it. Let me take it in reverse order, and talk about the GEO Communication Satellites first and then the Orion program second.
We've seen very good improvements in the profit margins on the commercial GEO Satellites over the past year. In the third quarter a year ago, margins in that product line were approximately 3%. This quarter they are or were approximately 7%.
So, we’ve come a good way largely, because this time last year we were still carrying a little bit of our research and development on the high powered, what we call the STAR 2.4 configuration that has since gone on to be very popular with customers. We also had the final effects of one of our early contracts that was a loss in that business.
So those things have washed through the system, and the new contracts that have driven revenue growth this year have generally speaking been more profitable.
But we’re not finished there and I think over the course of the next 12 to 18 months, we?re aiming to add another 150 or 200 basis points of operating margin in the GEO product line. So if successful there, that would take it to something in the neighborhood of 9% by 2009.
Now, with regards to Orion, we are looking at what we believe to be a suitably conservative rate profit on that contract.
We are still early; we are not yet at the 20% point from the standpoint of our current contract value. So we’ve got a long way to go and very much like we did four or five years ago on the Orbital Boost Vehicle program for Missile Defense. We want to get a little farther into this contract to get a couple of award fees under our belt before it would be appropriate to adjust the profit margins.
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