Miami University 2016 Cleveland Research Company Stock Pitch Competition Winner

Cleveland Research Company Stock Pitch Competition | 2016

Orbital ATK, Inc.Andrew Ames | Dan Ames | Michael Loffredo | Natalie Quintero

“The Partner You Can Count On”

Investment Thesis & Overview

Industry Dynamics

Growth Opportunities & Drivers

Valuation

Risks & Final Thoughts

3

7

10

15

19

Appendix 21


Industry Dynamics Growth Opportunities & Drivers

Valuation Risks & Final Thoughts

Appendix

$60.00 $80.00 $100.00 $120.00 $140.00

52-Week Trading Range

Bear Case - Segmented DCF

Comparables - EV/EBITDA

Comparables - P/E

Base Case - Segmented DCF

Traditional DCF

Bull Case - Segmented DCF

Investment Thesis

International Military

Spending

Ramp-up in Aircraft

Orders and Deliveries

Innovation in Space Systems

Effective Use of Capital and FCF

v Strength in airliners will drive orders and backlogs above current record levels

v Deterioration in average life of wide-body planes presents opportunity for Orbital ATK to expand within this high-margin vertical

v Strategic R&D has led to revolutionary concepts that were unobtainable just a few years ago

v Execution of innovative contracts with inaugural customers will lead to ancillary contracts

v Combined entities of Orbital Sciences and ATK enable capacity for further leverage to return capital to shareholders

v Commencement of key contracts allows for favorable working capital conditions

v Unrest in the Middle East and Southeast Asia has led to large defense budget increases by many countries in these regions

v Orbital ATK is well positioned to take advantage through the presence of international offices

Valuation Range

Recommendationv We recommend Orbital ATK as a Buy with a 12

month price target of $110.00, which represents an upside of 27.1% from the current share price of $86.56

3Sources: Team Projections


Industry Dynamics Valuation Risks & Final Thoughts

AppendixGrowth Opportunities & Drivers

Company Overview

Company Description CY 2015 Revenue End-Markets

Key Statistics Stock Performance

v Orbital ATK, Incorporated is an aerospace and defense systems company and supplier of related products to the U.S. Government, allied nations, and other customers

v Orbital ATK maintains 18 domestic facilities in 8 states totaling over 17 million square feet

Ø Employs more than 12,000 people

v Based in Dulles, VA

v NYSE Listed – OA

Market Data ValueCurrent Price $86.56 EV/EBITDA 10.1xMarket Cap. 5,076.0M EV/Sales 1.5xAnnual Dividend $1.20 Price/Book 2.6xDividend Yield 1.34% Price/Earnings 17.3xFCF per Basic Share $6.90 PEG 1.2x

Operations Capital StructureRevenue 4,517.4M Debt 1,481MEBITDA Margin 14.5% Cash & Equivalents 104MOperating Margin 12.1% Quick Ratio 2.0xProfit Margin 6.8% Current Ratio 2.2x

49%

21%

30%

National Security

NASA/Civil Government

Commercial/International

0

1

2

3

4

5

6

$50.00

$60.00

$70.00

$80.00

$90.00

$100.00

2/10/2015 5/10/2015 8/10/2015 11/10/2015 2/10/2016

Mill

ions

4Sources: Bloomberg, Yahoo Finance, Company 10-K




Appendix

33%

41%

26%

Flight Systems Group

Defense Systems Group

Space Systems Group

Operations

Flight Systems By the Numbers

Defense Systems

CY 2015 Revenue Breakdown

v Orbital ATK focuses on Launch Systems and Propulsion Systems for government and commercial use

Ø Main supplier for the International Space Station

v Provides Aerospace Structures for commercial customers such as Boeing and Airbus

v Delivers small, medium, and large-caliber ammunition through its Armaments and Small Caliber Systems

Ø Largest producer of small-caliber ammo in the U.S.

v Strong relationship with the U.S. Army through its Defense Electronic and Missile Products

Space Systemsv Manufactures and prepares Commercial and Government

Satellites for launch into orbit

v Is a market-leading supplier of Space Components and provides a full spectrum of Technical Services to NASA and other government agencies

$4.5B in Revenue

Operational Activities

Rocket Propulsion Systems

Satellites & Other Subsystems

Missile Defense Interceptors and Target Systems

Medium-Caliber Gun Systems

Small Research Rockets & Scientific Balloons

Small & Medium Caliber Ammunition

Figures

Over 16,000 Motors

More than 1,000

More than 300

15,000 units installed

30 missions/year

8 Billion since 2011

5Sources: Company 10-K




Appendix

Orbital ATK Merger

Transaction Details Synergy Executionv Created a leader in Aerospace & Defense with an

enterprise value >$5 billion

v Deal closed in February 2015Ø ATK paid 0.449 shares for every 1 share of Orbital

Ø ATK spun off its Sports Group business to its shareholders via Vista Outdoors

v Cash raised from Vista spin-off and additional debt issuance was used to repurchase shares at an accelerated rate and to internally invest in R&D

v Cost reductions and an expanded geographic presence resulting from the merger continue to benefit Orbital ATK and its customers

Ø New product offerings broaden customer relationships

Ø Larger size allows for SG&A reductions and more efficient operations

Ø Orbital ATK can leverage its size and compete for larger contracts

v Orbital exceeded its synergy projections in 2015Ø Sees an additional 10% in revenue/cost synergies

46.2% 53.8%100%

6Sources: Merger S-4, Company Earnings Call




Appendix

Industry Overview

The aerospace and defense industry is mainly consolidated amongst the top four companies, together holding over 55% of total market share

Stable growth in global GDP, lower commodity prices, and the resurgence of global security threats will drive revenues moving forward

($ in

bill

ions

)

Orbital ATK can succeed in a low-growth environment by concentrating on high-margin revenue segments while gaining market share

Orbital ATK is a niche player within the industry, concentrating more on ammunition, flight systems, and propulsion systems

0 25,000 50,000 75,000 100,000

Orbital ATK

BAE Systems

General Dynamics

Lockheed Martin

United Technology

Airbus Group

The Boeing Company

2015 Revenue Dispersion

($ in millions)

600

650

700

750

800

2010 2011 2012 2013 2014 2015 2016E 2017E

Aerospace and Defense Industry Growth

7Sources: Deloitte, IBIS World, PwC




Appendix

Industry Segments

v Produces precision weapons and ammunition

Ø Recent developments allow for Global Positioning System-guided weapons

Ø Ammunitions are sold to defense departments and recreational customers

v Small arms ammunition commands nearly two thirds of the total ammunition market

Defense & Ammunitions

0

5,000

10,000

15,000

20,000

($ in

mill

ions

)

U.S. Ammunition Sales

v Includes research and development of space vehicles and missiles

Ø Propulsion unit and component manufacturing

Ø Assembles guided missiles and space vehicles

v Provides customers with aircraft engines, engine parts, and auxiliary equipment

Flight Systems

0

2

4

6

8

10

12

0

500

1,000

1,500

2,000

2,500

3,000

(RPK

in tr

illio

ns)

Airc

rafts

Aircraft Deliveries World Annual Traffic

*RPK = Revenue Passenger Kilometer1

Commercial Aircraft Metrics

Space Systems

v Manufactures commercial, scientific, and security satellites

v Supplies subsystems that provide power, propulsion, and support for satellites

Ø Includes spacecraft panels, deployable structural systems, solar arrays, and propulsion tanks

60%21%

5%

7%7%

Commercial Transportation Services (79)

Other Commercially Launched Satellites (28)

Technology Test and Demonstration (6)

Commercial Telecommunications (9)

Commercial Remote Sensing (9)

Proj. NGSO2 Launches by Payload

8Sources: IBIS World, FAA, Boeing, Company 10-K




Appendix

Competitor Profile

Competitor Overview SpaceX / United Launch Alliance

Breadth of Competition Space Vehicle & Missile Manufacturing

v Orbital ATK operates in a wide variety of sub-industries with few direct competitors

Ø No single company competes with all three of Orbital’s segments

v Many competitors have significantly more resources to deploy when competing for government contracts

v SpaceX: Aims to be the low-cost provider of LEO’s3

Ø Private valuation of $12 billion

Ø Increasing the amount of reusable parts on the rocket leads to larger payload penalties4

v United Launch Alliance: Joint venture between Lockheed Martin and Boeing

Ø Aerojet placed a $2.2 billion unsolicited bid in September 2015

Ø Facing pressure to lower launch costs

32%

24% 11%

8%

6%

19% Lockheed Martin

Raytheon

Boeing

Orbital ATK

Aerojet Rocketdyne

Other

9Sources: IBIS World, WSJ, Bloomberg




Appendix

0

300

600

900

1,200

1,500

2009 2010 2011 2012 2013 2014 2015 2016EU.S. World ex. U.S.

Conflicts Around The World

Military Spending Foreign Boom

Orbital ATK Foreign Sales Positioning Abroad

v International demand for defense and military products is increasing as nations deal with uncertainties brought on by regional tensions

Ø Includes Middle East, East Asia, and Eastern Europe

v Non-NATO countries are expected to grow their defense budgets by upwards of 5% this year

Ø Largest growth is expected to be in Southeast Asia at 7.5%

v Orbital ATK has used its post-merger structure to compete for foreign military contracts

Ø Has opened facilities in Singapore, United Arab Emirates, and Saudi Arabia in the last 12 months

Ø Closer geographic representation

v Around 20% of sales are to international customers, including government and commercial entities

0

300

600

900

2013 2014 2015 2015*

($ in

mill

ions

)

Defense Systems Space Systems Flight Systems* 9 months ended 12/31/15

($ in

bill

ions

)

10Sources: SIPRI, IBIS World, Company 10-K




Appendix

Flight Systems Lift-Off

Airplane Turnover Younger Retirement

Deliveries Take Off Orbital Contracts Begin Delivery

v A growing number of wide-body airplanes are reaching the age of retirement

Ø Orbital is presented with the opportunity to provide newer, more efficient aircrafts to fill the demand

v Moving forward, the average retirement age of wide-body airplanes is expected to decrease, further securing Orbital’s position

v Boeing and Airbus are increasing annual deliveries of their wide-body airplanes over the next few years

Ø Orbital will benefit as a main supplier of composite structures for these airplanes

v As of 2015, cumulative orders for the 787-9 and 787-10 have soared to over 700 airplanes

v Orbital has partnered with Rolls Royce, further cementing relationships with major airplane component suppliers

0

40

80

120

160

2014 2015 2016E 2017E 2018E

Airp

lanes

Boeing 787-9 Airbus A350 XWB Boeing 787-10

20

22

24

26

28

30

0

50

100

150

200

250

2015 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E

Age

Airp

lanes

WBs Reaching 25 Years Average WB Retirement Age

11Sources: Boeing, Airbus, Company 10-K, Avolon




Appendix

222

385

27

197

34

7

Investments & Innovations

Antares Upgrade Satellite Servicing

Geosynchronous Satellites

v The Antares’5 engines have been replaced with RD-181s, which will allow for improved payload performance and reliability

Ø Rocket is expected to return to space in mid-2016

v Orbital ATK has entered into contracts with NASA to provide Commercial Resupply Services to the International Space Station

Ø NASA awarded Orbital a minimum of six additional missions through CRS-26, which involves servicing the ISS into the early 2020s

v Contract with Intelsat SA allows Orbital ATK to service off-path geosynchronous7 orbiting satellites

Ø These servicing vehicles grapple fuel-depleted communication satellites, placing them back into orbit

v Longer operational capabilities of Intelsat’s satellites extends their revenue streams

In Orbit Satellites vs. Out of Orbit

Total Satellites vs. Intelsat Satellites

Intelsat Satellites in Orbit vs. Out of Orbit As of Nov. 2015, there were 419 geosynchronous satellites in space. Dozens of these telecommunications satellites continue to run low on fuel each year, drifting off orbit.

12Sources: FAA, Company 10-K, Company Earnings Call




Appendix

Capital Usage

Leverage Return of Capital

Free Cash Flow Debt Levels

v Orbital plans to undergo a “vigorous program” of capital return over the next 3-5 years

Ø Will be mainly facilitated by share repurchases and dividends

Ø Since recent sell-off, purchasing own stock at 15.5x forward earnings is an effective use of cash

v Long-term commitment of returning 60-70% of free cash flow back to shareholders

v Orbital recently issued $500 million in senior notes for “general corporate purposes”

Ø Primarily used to fund share repurchases

Ø The combined entity of Orbital and ATK produces solid cash flows that can support a higher leverage ratio

v Management will be cautious to issue more debt moving forward

Ø Keen on keeping BB+ credit rating2015* 2016E 2017E 2018E 2019E 2020E

* Nine months ended 12/31/15

0

75

150

225

300

375

450

($ in

mill

ions

)

Free Cash Flow Share Repurchases Dividends Paid

0

1,000

2,000

3,000

0.0x

2.0x

4.0x

6.0x

FY 2014 FY 2015 CY 2015 CY 2016E

CY 2017E

CY 2018E

CY 2019E

CY 2020E

($ in

mill

ions

)

Debt/EBITDA Debt

13Sources: Team Projections, Bloomberg, Company Earnings Call




Appendix

Backlog and Margin Expansion

Margin Expansion Revenue vs. Backlog Breakdown

Contract Structure Future Revenue Visibility

v EBIT Margins:Ø Defense Systems: 10.0% — 11.5%

Ø Flight Systems: 13.0% — 14.0%

Ø Space Systems: 9.0% — 10.0%

v Flight Systems Group commands a higher percentage of backlog which will improve margins as mix of revenue becomes favorable

v Orbital’s book-to-bill ratio8 was 116% in 2015Ø Continues to generate more backlog than revenue

v Backlog provides relatively certain revenue and subsequent cash flows

Ø Current Backlog ~$8.1 Billion

Ø Option Backlog ~$5.4 Billion

v Research and Development comprises ~2.5% of salesØ In-line with competitionØ Increasing R&D to source new contracts via innovative

technologies

Ø All contract-related R&D is passed on to customer

41%

33%

26%

30%

51%

19%



Space Systems Group

2015 Revenue: InsideTotal Backlog: Outside

0

2,000

4,000

6,000

2016E 2017E 2018E

Estimated Revenue Current Backlog

($ in

mill

ions

)

14Sources: Company 10-K, Company Investors Report




Appendix

$60.00 $70.00 $80.00 $90.00 $100.00 $110.00 $120.00 $130.00 $140.00




Comparables - P/E


Traditional DCF


Valuation Overview

2016E Earnings: $5.63 Forward P/E: 19.5x2017E Earnings: $6.20 Forward P/E: 17.7x

Current Price: $86.56 Price Target: $110.00





Appendix

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

FY 2015 CY 2015 2016E 2017E 2018E 2019E 2020E

Historical Bull Base Bear Consensus

Multiples Analysis

EPS Projections Unwarranted Pessimism

Multiple Premium vs. Peer Group Paying a Discount for Premium Growth

v Orbital ATK will beat consensus EPS over the medium-term as Wall Street has become negative

Ø Recent downgrades in EPS due to weaker revenue guidance and unfavorable mix of revenue

Ø Overlooking strength in foreign spending and continued execution of synergies

v Free cash flow generation greater than 100% of net income will fund share buybacks and dividend hikes

Ø Provides a floor to any short-term weakness in equity markets

v Orbital ATK has typically traded in-line or at a premium multiple versus its peer group

Ø Sell-off at beginning of 2016 was due to systemic risk

Ø No major change in Orbital’s underlying cash flows

v No one company competes with Orbital in all three business segments

Ø Allows OA to compete individually with competitors

Ø Orbital ATK should trade at a premium relative to its peers

(20.0%)

(10.0%)

0.0%

10.0%

20.0%

2/19/2015 5/19/2015 8/19/2015 11/19/2015 2/19/2016P/E Ratio EV/EBITDA

16Sources: Bloomberg, Team Projections




Appendix

Comparables

($ and € in millions except per share data)

Company Name Ticker & Exchange Share Price % of 52-

WK. HighMarket

Cap.Enterprise

ValueLTM Price Enterprise Value

EPS (TTM) Estimated EPS

Forward PE

Profit MarginEBITDA Revenue Earnings Book EBITDA Revenue

AEROJET ROCKETDYNE AJRD US $17.66 35.5% 1,107 1,548 99 1,703 -- -- 15.6x 0.9x $0.17 $0.96 16.7x 2.2%

AIRBUS GROUP SE AIR FP €65.28 37.1% 50,887 38,603 5,310 71,540 22.9x 7.4x 7.2x 0.6x € 2.78 € 3.43 18.6x 3.4%

BOEING CO/THE BA US $131.97 57.5% 86,382 84,356 9,276 96,114 17.6x 13.6x 9.1x 0.9x $7.34 $9.44 13.7x 6.6%

GENERAL DYNAMICS CORP GD US $136.29 45.7% 41,917 42,531 4,660 31,469 15.6x 3.9x 9.1x 1.3x $8.56 $10.09 13.2x 9.4%

L-3 COMMUNICATIONS LLL US $122.50 70.7% 9,552 13,061 1,151 11,194 16.5x 2.1x 11.4x 1.1x $7.27 $7.57 15.8x 5.7%

LOCKHEED MARTIN CORP LMT US $227.14 98.1% 69,034 83,205 6,462 46,132 20.1x 22.1x 12.9x 1.8x $11.26 $13.60 16.6x 8.1%

NORTHROP GRUMMAN CORP NOC US $202.79 97.9% 36,523 40,620 3,543 23,526 20.2x 6.6x 11.5x 1.7x $9.90 $11.93 16.8x 8.2%

RAYTHEON COMPANY RTN US $126.35 89.5% 37,498 40,185 3,502 23,247 18.1x 3.7x 11.5x 1.7x $6.96 $7.92 15.9x 7.4%

THALES SA HO FP €87.45 94.3% 18,490 16,594 1,562 15,610 22.7x 3.5x 10.6x 1.2x €3.82 €4.18 20.7x 5.7%

1st Quartile 45.7% 18,490 16,594 1,562 15,610 17.7x 3.7x 9.1x 0.9x $3.82 $4.18 15.8x 5.7%

Median 70.7% 37,498 40,185 3,543 23,526 19.2x 5.2x 11.3x 1.2x $7.27 $7.92 16.6x 6.6%

Mean 69.6% 39,043 40,078 3,952 35,615 19.5x 7.9x 11.0x 1.2x $6.45 $7.68 16.5x 6.3%

3rd Quartile 94.3% 50,887 42,531 5,310 46,132 21.1x 8.9x 11.5x 1.7x $8.56 $10.09 16.8x 8.1%

ORBITAL ATK INDUSTRIES OA US $86.56 79.3% 5,076 6,422 634 4,371 17.0x 2.6x 10.2x 1.5x $5.11 $5.55 15.5x 7.1%

Valuation Commentary Implied Valuationv Comparable companies derive revenue from numerous

sources within the aerospace & defense industryØ No one company operates solely within a subsector, as

the top players are conglomerates with multiple revenue-generating products and services

v Orbital ATK is undervalued based on backwards and forward-looking multiples

EV/EBITDA1st Quartile Median Mean 3rd Quartile

Implied Price $73.16 $96.44 $93.27 $98.56

Upside (15.4%) 11.5% 7.8% 13.9% P/E

1st Quartile Median Mean 3rd QuartileImplied Price $90.45 $98.11 $99.65 $107.82

Upside 4.6% 13.4% 15.2% 24.6%

17Sources: Bloomberg, Team Projections




Appendix

Intrinsic Valuation

($ in millions) 9 months ended Dec 31 2015

Fiscal Year Ended December 31,2016E 2017E 2018E 2019E 2020E

EBITDA 458,931 691,661 720,157 764,858 778,689 796,394 Less: D&A 136,544 159,125 156,132 154,763 154,809 155,842

EBIT 322,387 532,536 564,025 610,095 623,880 640,552 Tax Effect 103,164 170,411 180,488 195,230 199,641 204,977

NOPAT 219,223 362,124 383,537 414,865 424,238 435,575 Add: D&A 136,544 159,125 156,132 154,763 154,809 155,842 Less: CapEx (104,634) (138,922) (145,868) (153,162) (159,288) (165,660)Less: Change in NWC 3,435 (8,942) 3,146 (14,967) (1,620) (2,452)

Free Cash Flow 254,568 373,385 396,947 401,498 418,139 423,305

Traditional Discounted Cash Flow

Valuation Commentaryv Two intrinsic valuations were calculated

Ø Traditional income statement

Ø Segmented EBIT margins

v Debt issued last year for “corporate purposes” results in a lower cost of capital for Orbital ATK versus peers

v Favorable draw downs in future accounts receivable allow free cash flow to be a significant percentage of NOPAT

WACC

Perp

etui

ty

Gro

wth

$115.10 7.5% 7.2% 7.0% 6.7% 6.5% 3.0% $116.97 $125.27 $134.61 $145.21 $157.34 2.8% $110.98 $118.49 $126.88 $136.33 $147.06 2.5% $105.59 $112.42 $120.02 $128.52 $138.08 2.3% $100.72 $106.97 $113.88 $121.57 $130.17 2.0% $96.30 $102.04 $108.37 $115.37 $123.15

WACC

Exit

Mul

tipl

e $102.40 7.5% 7.2% 7.0% 6.7% 6.5% 11.2x $110.20 $111.63 $113.08 $114.55 $116.04 10.7x $105.46 $106.83 $108.23 $109.64 $111.08 10.2x $100.72 $102.04 $103.38 $104.74 $106.11 9.7x $95.98 $97.25 $98.53 $99.83 $101.15 9.2x $91.24 $92.45 $93.68 $94.92 $96.18

Traditional DCF Sensitivity





Appendix

Situation Analysis

v Competes against private companies that do not have to be mindful of shareholders in business decisions

WTO

v Diversified products allow for more growth opportunities and restrict direct competition

v Large portion of backlog is concentrated in high margin segments

v Strong cash flow generation Sv Strong dollar puts Orbital at a

disadvantage to international competition

v Capitalize on trend towards precision strikes and guided weapons systems in modern combat

v Execution of new programs winning incremental contracts

v Erupting conflict among unstable regions

v Significant reductions in NASA/DoD spending

v Complications arising from launching supplies and satellites into orbit

v Lose contracts due to mission failures or innovative competition

v Lower asset returns can disrupt current pension funding plans

19Sources: Team Projections, Company 10-K




Appendix

Final Thoughts

$60.00 $80.00 $100.00 $120.00 $140.00




Comparables - P/E


Traditional DCF


International Military

Spending

Ramp-up in Aircraft

Orders and Deliveries

Innovation in Space Systems

Effective Use of Capital and FCF

v Strength in airliners will drive orders and backlogs above current record levels

v Deterioration in average life of wide-body planes presents opportunity for Orbital ATK to expand within this high-margin vertical

v Strategic R&D has led to revolutionary concepts that were unobtainable just a few years ago

v Execution of innovative contracts with inaugural customers will lead to ancillary contracts

v Combined entities of Orbital Sciences and ATK enable capacity for further leverage to return capital to shareholders

v Commencement of key contracts allows for favorable working capital conditions

v Unrest in the Middle East and Southeast Asia has led to large defense budget increases by many countries in these regions

v Orbital ATK is well positioned to take advantage through the presence of international offices

Valuation Range

Recommendationv We recommend Orbital ATK as a Buy with a 12

month price target of $110.00, which represents an upside of 27.1% from the current share price of $86.56





Appendix

Appendix

21




Appendix

Appendix Contents

v Pro Forma Income Statement

v Pro Forma Balance Sheet

v Pro Forma Statement of Cash Flows

v Pro Forma Merger Financials

v Further Financial Breakdown

v Case Conditions

v North American Operations

v Major International Locations

v Management

v Industry Terminology

22




Appendix

Pro Forma Income Statement

Income Statement 9 months ended Dec 31

2015Amounts in thousands, except per share data Fiscal Year Ended March 31, Fiscal Year Ended December 31,

2013 2014 2015 2016 2017 2018 2019 2020

Sales $3,206,096 $2,925,237 $3,173,967 $3,399,089 $4,630,746 $4,862,283 $5,105,397 $5,309,613 $5,521,998 Cost of sales 2,521,277 2,277,939 2,469,865 2,729,898 3,505,474 3,675,886 3,852,022 4,006,103 4,174,630

Gross profit 684,819 647,298 704,102 669,191 1,125,271 1,186,397 1,253,375 1,303,510 1,347,367 Research and development 55,958 48,536 49,349 83,209 138,922 145,868 142,951 159,288 165,660 Selling 90,219 87,554 89,941 88,177 129,661 136,144 142,951 148,669 154,616 General and administrative 200,568 209,251 298,559 225,418 324,152 340,360 357,378 371,673 386,540 Gain on settlement 0 0 0 (50,000) 0 0 0 0 0 Goodwill impairment 0 0 34,300 0 0 0 0 0 0

Income from continuing operations, before interest, taxes and noncontrolling interest 338,074 301,957 231,953 322,387 532,536 564,025 610,095 623,880 640,552 Interest expense, net (65,386) (79,792) (88,676) (57,163) (55,659) (54,887) (54,096) (76,151) (105,350)Loss on extinguishment of debt (11,773) 0 (26,626) 0 0 0 0 0 0

Income from continuing operations, before income taxes and noncontrolling interest 260,915 222,165 116,651 265,224 476,876 509,138 555,999 547,729 535,202 Income taxes 73,746 62,542 39,117 83,659 152,600 162,924 177,920 175,273 171,265

Income from continuing operations, before noncontrolling interest 187,169 159,623 77,534 181,565 324,276 346,214 378,079 372,456 363,937 Less net income attributable to noncontrolling interest 436 171 99 143 0 0 0 0 0

Income from continuing operations of Orbital ATK, Inc. 186,733 159,452 77,435 181,422 324,276 346,214 378,079 372,456 363,937 Discontinued Operations:

Income from discontinued operations, net 85,072 181,463 125,049 1,008 0 0 0 0 0 Net income attributable to Orbital ATK, Inc. $271,805 $340,915 $202,484 $182,430 $324,276 $346,214 $378,079 $372,456 $363,937

Basic earnings per common share from:Continuing operations $5.76 $5.03 $2.18 $3.06 $5.63 $6.20 $7.04 $7.21 $7.32 Discontinued operations 2.62 5.73 3.53 0.02 0.00 0.00 0.00 0.00 0.00

Earnings attributable to Orbital ATK, Inc. $8.38 $10.76 $5.71 $3.07 $5.63 $6.20 $7.04 $7.21 $7.32 Weighted-average number of common shares outstanding 32,447 31,671 35,469 59,358 57,572 55,872 53,712 51,655 49,696

Diluted earnings per common share from:Continuing operations $5.73 $4.87 $2.14 $3.03 $5.60 $6.17 $7.00 $7.17 $7.29 Discontinued operations 2.61 5.55 3.46 0.02 0.00 0.00 0.00 0.00 0.00

Earnings attributable to Orbital ATK, Inc. $8.34 $10.42 $5.60 $3.04 $5.60 $6.17 $7.00 $7.17 $7.29 Weighted-average number of diluted common shares outstanding 32,608 32,723 36,140 59,915 57,860 56,151 53,981 51,914 49,945

23Back




Appendix

Pro Forma Balance SheetBalance Sheet

December 31,2015

Amounts in thousands, except per share data Fiscal Year Ended March 31, Fiscal Year Ended December 31,2013 2014 2015 2016 2017 2018 2019 2020

Cash and cash equivalents 266,632 139,253 104,032 144,708 199,937 202,253 948,776 1,085,328 Net receivables 1,175,674 1,793,556 1,784,434 1,771,323 1,825,021 1,888,298 1,934,736 1,999,084 Net inventories 134,390 196,114 211,712 215,500 216,525 221,623 219,512 216,716 Income taxes receivable 0 31,415 50,769 50,769 50,769 50,769 50,769 50,769 Deferred income taxes 28,802 107,484 0 0 0 0 0 0 Prepaid expenses and other current assets 43,331 121,084 89,495 127,346 121,557 127,635 132,740 124,245 Current assets of discontinued operations 798,253 0 0 0 0 0 0 0

Total current assets 2,447,082 2,388,906 2,240,442 2,309,646 2,413,809 2,490,578 3,286,533 3,476,142 Net property, plant, and equipment 508,455 807,057 806,187 808,058 816,556 830,904 848,938 870,279 Goodwill 1,043,463 1,875,269 1,832,066 1,832,066 1,832,066 1,832,066 1,832,066 1,832,066 Net intangibles 10,470 165,207 147,156 125,083 106,320 90,372 76,816 65,294 Deferred income taxes 101,147 140,321 209,861 209,861 209,861 209,861 209,861 209,861 Deferred charges and other noncurrent assets 111,157 127,642 117,844 127,346 133,713 140,398 146,014 151,855 Noncurrent assets of discontinued operations 1,636,003 0 0 0 0 0 0 0

Total assets 5,857,777 5,504,402 5,353,556 5,412,059 5,512,325 5,594,179 6,400,229 6,605,496

LiabilitiesCurrent portion of long-term debt 249,228 59,997 40,000 40,000 40,000 40,000 630,000 0 Accounts payable 64,804 158,137 129,312 119,722 130,922 147,749 159,147 171,091 Contract-related liabilities 69,241 357,296 340,888 333,020 349,209 365,942 380,580 396,590 Contract advances and allowances 105,787 173,198 172,046 185,230 194,491 204,216 212,385 220,880 Accrued compensation 98,412 135,528 125,278 136,144 142,951 150,099 156,103 162,347 Other current liabilities 215,790 212,628 159,455 172,449 181,071 190,125 197,730 205,639 Current liabilities of discontinued operations 326,888 0 0 0 0 0 0 0

Total current liabilities 1,130,150 1,096,784 966,979 986,565 1,038,645 1,098,130 1,735,943 1,156,547 Long-term debt 1,843,750 1,528,504 1,450,000 $1,410,000 $1,370,000 $1,330,000 $1,450,000 $2,200,000 Postretirement and postemployment benefits 72,116 74,658 59,202 59,202 59,202 59,202 59,202 59,202 Pension 525,775 851,001 761,632 721,632 681,632 641,632 601,632 561,632 Other noncurrent liabilities 103,730 165,795 167,798 181,525 190,601 200,132 208,137 216,462 Noncurrent liabilities of discontinued operations 260,118 0 0 0 0 0 0 0

Total liabilities 3,935,639 3,716,742 3,405,611 3,358,925 3,340,080 3,329,096 4,054,914 4,193,843

Commitments and contingenciesCommon stock 318 594 587 587 587 587 587 587 Additional paid-in-capital 534,015 2,182,814 2,187,940 2,187,940 2,187,940 2,187,940 2,187,940 2,187,940 Retained earnings 2,789,264 1,160,272 1,305,550 1,560,739 1,829,850 2,122,688 2,402,920 2,669,258 Accumulated other comprehensive loss (680,809) (847,648) (785,908) (785,908) (785,908) (785,908) (785,908) (785,908)Common stock in treasury, at cost (731,213) (719,034) (771,029) (921,029) (1,071,029) (1,271,029) (1,471,029) (1,671,029)

Total Orbital ATK, Inc. stockholders' equity 1,911,575 1,776,998 1,937,140 2,042,329 2,161,440 2,254,278 2,334,510 2,400,848 Noncontrolling interest 10,563 10,662 10,805 10,805 10,805 10,805 10,805 10,805

Total equity 1,922,138 1,787,660 1,947,945 2,053,134 2,172,245 2,265,083 2,345,315 2,411,653 Total liabilities and equity 5,857,777 5,504,402 5,353,556 5,412,059 5,512,325 5,594,179 6,400,229 6,605,496

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Appendix

Pro Forma Cash Flow StatementCash Flow Statement

9 months ended Dec 31 2015

Amounts in thousands, except per share data Fiscal Year Ended March 31, Fiscal Year Ended December 31,2013 2014 2015 2016 2017 2018 2019 2020

Operating ActivitiesNet income 272,241 341,086 202,583 182,573 324,276 346,214 378,079 372,456 363,937 Net income from discontinued operations (85,072) (181,463) (125,049) (1,008) 0 0 0 0 0

Income from continuing operations 187,169 159,623 77,534 181,565 324,276 346,214 378,079 372,456 363,937 Adjustments to reconcile income from continuing operations to cash provided by operating activities:

Depreciation 77,605 69,192 75,764 90,507 137,052 137,370 138,815 141,254 144,320 Amortization of intangible assets 3,330 3,112 9,263 33,371 22,073 18,762 15,948 13,556 11,522 Amortization of debt discount 6,875 7,364 3,212 0 0 0 0 0 0 Amortization of deferred financing costs 3,847 10,222 5,157 12,666 0 0 0 0 0 Goodwill impairment 0 0 34,300 0 0 0 0 0 0 Loss on the extinguishment of debt 11,773 0 26,626 0 0 0 0 0 0 Deferred income taxes (11,717) 6,828 (6,119) 51,295 0 0 0 0 0 (Gain) loss on disposal of property (1,542) 594 2,114 11,197 0 0 0 0 0 Share-based plans expense 12,025 12,701 25,325 19,589 0 0 0 0 0 Excess tax benefits from share-based plans (2) (833) (7,004) (4,997) 0 0 0 0 0 Changes in assets and liabilities:

Net receivables 38,608 5,533 (55,243) 5,122 13,111 (53,698) (63,276) (46,438) (64,348)Net inventories (12,892) (63,437) 13,570 (15,598) (3,788) (1,024) (5,098) 2,111 2,797 Accounts payable (30,851) (71,314) 55,710 (29,276) (9,590) 11,199 16,827 11,398 11,945 Contract advances and allowances 1,718 (39,465) 27,123 (1,152) 13,184 9,261 9,725 8,169 8,495 Accrued compensation 3,614 (16,362) (39,950) (10,243) 10,866 6,807 7,148 6,004 6,244 Contract-related liabilities 22,961 (13,725) 93,298 (16,408) (7,868) 16,189 16,733 14,638 16,010 Pension and other postretirement benefits (31,990) 70,750 (41,569) (3,736) (40,000) (40,000) (40,000) (40,000) (40,000)Other assets and liabilities (95,600) 21,178 (108,256) (20,500) (20,631) 17,120 5,820 4,889 18,889

Cash provided by operating activities of continuing operations 184,931 161,961 190,855 303,402 438,685 468,201 480,719 488,035 479,812 Cash provided by operating activities of discontinued operations 88,660 226,060 120,476 0 0 0 0 0 0 Cash provided by operating activities 273,591 388,021 311,331 303,402 438,685 468,201 480,719 488,035 479,812 Investing ActivitiesContinuing operations:

Capital expenditures (73,494) (105,730) (112,704) (104,634) (138,922) (145,868) (153,162) (159,288) (165,660)Cash acquired in Merger with Orbital 0 0 253,734 0 0 0 0 0 0 Cash dividend received from Vista Outdoor, net of cash transferred to Vista Outdoor 0 0 188,878 (6,500) 0 0 0 0 0 Proceeds from the disposition of property plant and equipment 172 5,488 2,290 40 0 0 0 0 0

Cash provided by (used for) investing activities of continuing operations (73,322) (100,242) 332,198 (111,094) (138,922) (145,868) (153,162) (159,288) (165,660)Cash used for investing activities of discontinued operations (23,395) (1,341,747) (30,585) 0 0 0 0 0 0 Cash provided by (used for) investing activities (96,717) (1,441,989) 301,613 (111,094) (138,922) (145,868) (153,162) (159,288) (165,660)Financing ActivitiesContinuing operations:

Borrowings on line of credit 0 280,000 798,000 1,040,000 0 0 0 0 0 Repayments of line of credit 0 (280,000) (798,000) (1,040,000) 0 0 0 0 0 Payments made on bank debt (35,000) (38,263) (58,249) (24,999) (40,000) (40,000) (40,000) (40,000) 0 Payments made to extinguish debt (409,000) (510,000) (777,220) (1,273,502) 0 0 0 0 (630,000)Proceeds from issuance of long-term debt 200,000 1,560,000 150,000 1,200,000 0 0 0 750,000 750,000 Payments made for debt issue costs (1,458) (21,641) (1,008) (10,262) 0 0 0 0 0 Purchase of treasury shares (58,371) (53,270) (16,788) (81,344) (150,000) (150,000) (200,000) (200,000) (200,000)Dividends paid (30,033) (35,134) (41,056) (46,103) (69,087) (77,103) (85,241) (92,224) (97,599)Proceeds from employee stock compensation plans 5,461 729 0 3,684 0 0 0 0 0 Excess tax benefits from share-based plans 2 833 7,004 4,997 0 0 0 0 0

Cash provided by (used for) financing activities of continuing operations (328,399) 903,254 (737,317) (227,529) (259,087) (267,103) (325,241) 417,776 (177,599)Effect of foreign currency exchange rate fluctuations on cash 0 58 (3,006) 0 0 0 0 0 0Increase (decrease) in cash and cash equivalents (151,525) (150,656) (127,379) (35,221) 40,676 55,229 2,316 746,522 136,553 Cash and cash equivalents at beginning of year 568,813 417,288 266,632 139,253 104,032 144,708 199,937 202,253 948,776 Cash and cash equivalents at end of year 417,288 266,632 139,253 104,032 144,708 199,937 202,253 948,776 1,085,328

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Appendix

Pro Forma Merger Financials

Income StatementAmounts in thousands, except per share data

For the Year Ended March 31, 2014

ATK (As Reported)

Bushnell and Savage Arms Pro Forma

Adjustments

ATK pre-Distribution

(As Adjusted)

Vista Outdoor Pro Forma Combined Adjustments

ATK pre-Merger (As Adjusted)

Orbital (As Reported)

December 31, 2013

Merger Pro Forma

Adjustments

Orbital ATK Pro Forma

Consolidated

Sales 4,775,128 405,755 5,180,883 (2,279,674) 284,832 3,186,041 1,365,271 (78,826) 4,472,486 Cost of sales 3,635,486 234,347 3,869,833 (1,640,963) 284,373 2,513,243 1,062,466 (78,826) 3,496,883

Gross profit 1,139,642 171,408 1,311,050 (638,711) 459 672,798 302,805 0 975,603 Research and development 62,520 0 62,520 (13,984) 0 48,536 89,233 0 137,769 Selling 203,976 90,098 294,074 (201,780) (4,740) 87,554 28,707 0 116,261 General and administrative 282,840 33,079 315,919 (140,909) 16,567 191,577 71,320 29,151 292,048

Income before interest, taxes, and noncontrolling interest 590,306 48,231 638,537 (282,038) (11,368) 345,131 113,545 (29,151) 429,525 Interest expense (80,044) 0 (80,044) 15,469 (15,469) (80,044) (4,556) 28,134 (56,466)Interest income and other, net 252 0 252 0 0 252 (5,368) 0 (5,116)

Income before taxes and noncontrolling interest 510,514 48,231 558,745 (266,569) (26,837) 265,339 103,621 (1,017) 367,943 Income tax provision 169,428 17,845 187,273 (102,926) (9,930) 74,417 35,255 (376) 109,296

Net income before noncontrolling interest 341,086 30,386 371,472 (163,643) (16,907) 190,922 68,366 (641) 258,647 Less net income attributable to noncontrolling interest 171 0 171 0 0 171 0 0 171

Net income 340,915 30,386 371,301 (163,643) (16,907) 190,751 68,366 (641) 258,476

Earnings per common share:Basic $10.76 $11.72 $6.02 $1.13 $4.39 Diluted $10.42 $11.35 $5.83 $1.13 $4.31

Weighted-average number of common shares outstanding:Basic 31,671 31,671 31,671 60,161 58,866 Diluted 32,723 32,723 32,723 60,444 59,918

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Appendix

59% 22%

19%



Space Systems Group

Further Financial Breakdown

39%

42%

19%

Firm Backlog Option Backlog

~$8.1 Billion ~$5.4 Billion

WACC CalculationTotal Debt 1,450,000 22.2% Total Equity 5,076,014 77.8%

6,526,014 100.0% Beta 0.842 Expected Market Return 9.4% Risk Free Rate 1.8%

Cost of Equity 8.2% Pre-Cost of Debt 3.8% Tax Rate 32.0%

Cost of Debt 2.6% WACC 7.0%

OPERATING SEGMENT MODEL DCFBASE CASE 9 months

ended Dec 31 2015

($ in millions) Fiscal Year Ended December 31,2016E 2017E 2018E 2019E 2020E

EBITDA 458,931 661,608 691,832 731,874 770,627 800,415 Less: D&A 136,544 159,125 156,132 154,763 154,809 155,842

EBIT 322,387 502,483 535,700 577,112 615,817 644,573 Tax Effect 103,164 160,795 171,424 184,676 197,061 206,263

NOPAT 219,223 341,689 364,276 392,436 418,756 438,310 Add: D&A 136,544 159,125 156,132 154,763 154,809 155,842 Less: CapEx (104,634) (138,922) (145,868) (153,162) (159,288) (165,660)Less: Change in NWC 3,435 (8,942) 3,146 (14,967) (1,620) (2,452)

Free Cash Flow 254,568 352,949 377,686 379,070 412,657 426,039

Sources: Team Projections and Company 10-K Back

27




Appendix

Case Conditions

Bear BullBasev Steep decline of revenue in 2020

as existing contracts run dry

v Orbital is unable to perform initial contract successfully

v Lack of asset returns cause Orbital to have to contribute significant capital to pension

v Catastrophic failure of upgraded Antares rocket inhibits Orbital’s return to space for a significant amount of time

v Nominal performance of global economy with average GDP growth at 2.5%-3.0%

v Continued execution of synergies and increased global footprint

v Slight margin improvement as costs come down and revenue mix becomes favorable

v Sales growth tapers off in 2020 as growth opportunities become realized

v Acceleration of global economy, especially in developing markets

v Strong demand for space travel from commercial and government customers

v Continued cost-cutting measures are fully passed along to shareholders

v Escalation of military involvement in terror-affected regions

4,000

4,400

4,800

5,200

5,600

6,000

2016E 2017E 2018E 2019E 2020E

Revenue Projections

Bear

Base

Bull

($ in

mill

ions

)

500

600

700

800

900

2016E 2017E 2018E 2019E 2020E

EBITDA Projections

Bear

Base

Bull

($ in

mill

ions

)

Sources: Team Projections Back

28




Appendix

North American Operations

Corporate HeadquartersFlight SystemsDefense SystemsSpace Systems

29Sources: Company 10-K Back




Appendix

Major International Locations

*Several other, undisclosed international locations

Sources: Company 10-K Back

30




Appendix

Management

David W. Thompson Dr. Antonio L. Elias

Garrett E. Pierce Solid Education and Experience

v President and Chief Executive Officer of Orbital ATK

v Co-founded Orbital Sciences in 1982Ø Prior to that, was special assistant to the president of

Hughes Aircraft Company’s Missile Systems Group

Ø Has worked with NASA through JPL and the Johnson Space Center since he was in college

v Received a B.S. in Aeronautics and Astronautics from MIT, an M.S. in Aeronautics from Caltech, and a M.B.A. from the Harvard School of Business

v Chief Financial Officer and Vice Chairman of the Board

v Joined Orbital Sciences in 2000Ø Previously was an executive at various semiconductor

companies that were acquired

v Holds a B.A. and a M.S. in economics from Southern Illinois University

Ø Certified Public Accountant

v Attended Stanford University’s Executive Financial Management Program

v Executive VP and Chief Technical Officer

v Has held management roles within Orbital since 1987Ø Led original design team of the Pegasus rocket

v Held various teaching and research roles in the Department of Aeronautics and Astronautics at the Massachusetts Institute of Technology

v Holds B.S., M.S., E.A.A. & Ph.D. degrees from MIT

31Sources: Company 10-K Back




Appendix

Industry Terminology

[1] Captures the total distance flown by the airlines’ revenue passengers in kilometers

[2] Orbits not in GSO (see 7)

[3] Satellites which orbit between 400 and 1,000 miles above the Earth’s surface

[4] Carrying capacity hindered due to other use of fuel not related to initial propulsion of space vehicle

[5] Orbital’s two-stage vehicle that provides LEO launch capability for payloads weighing over 7,000 kg

[6] NASA’s second commercial resupply service missions to the International Space Station

[7] An orbit around the equator following the direction of the Earth’s rotation

[8] The ratio of orders received to amount billed for specific period

32Sources: Company website, Company 10-K, FAA Back