It seems the stars may finally be aligning for a small commercial aerospace company. Astrotech Corporation (ASTC), based in Austin, Texas provides space services to NASA, the United States Department of Defense, and commercial customers worldwide. From Titusville, Florida, and Vandenberg Air Force Base, California, Astrotech Space Operations provides support for its customers to successfully process their satellite hardware for launch, including advance planning, use of unique facilities, spacecraft checkout, encapsulation, fueling, and transport.
Astrotech's backlog is now the strongest it has been in years and earnings are getting back into positive territory after several lean quarters. 3rd quarter earnings per share were $0.05 on almost a 100% increase in revenue to $10.0M. The company's rolling 18 month backlog was $34.8M at March 31st, 2012. Tangible book value sits at $1.84 per share and the market cap is only slightly over $23M.
Recent news from the space industry indicates that things are starting to pick back up. Private space flight is becoming a reality after the SpaceX Dragon was able to successfully attach to the International Space Station in June. Just last week NASA announced over $1.1B in contracts to design and develop the next generation of spaceflight capabilities over the next 5 years. Included in the contract were SpaceX ($440M), who Astrotech specifically congratulated on their success with the Dragon in June. Boeing (BA) was also awarded a $460M contract and has worked with Astrotech on several previous projects. While it remains to be seen whether or not Astrotech gets any work out of this sizable contract, it appears spending on spaceflight is on the way up again.
Astrotech is still holding its own when it comes to contract awards. In June, they were awarded a $1.1M propellants purchase order. On June 28th, Astrotech was referenced by Alliant Techsystems (ATK) as a subcontractor for the Liberty Transportation Service. In July, they were awarded a $2M contract from NASA for satellite processing, part of a $12.5 million NASA indefinite delivery, indefinite quantity (IDIQ) contract with Astrotech. Also in July, Astrotech was selected by the U.S. Navy to provide payload processing services for the second in a series of Mobile User Objective System (MUOS) satellites.
On July 24th, NASA KSC announced they plan to award Astrotech a sole source IDIQ contract for commercial payload processing support for East Coast launch vehicle missions with an ordering period between Calendar Years 2013 and 2017. While this contract has not been officially announced yet, it seems all but a foregone conclusion considering that NASA states, "Astrotech Space Operations, Inc. is the only known vendor that can provide the required East Coast payload processing services. There will be only one award made for this requirement. This is a sole source commercial item acquisition under FAR 6.302-1 and FAR Part 12. The Government believes only one responsible source can satisfy the agency's requirements." While it may be premature to speculate on the amount of the contract, past awards indicate it could be in the $10-20M range. Additionally, on August 2nd, NASA announced a Request for Proposal for payload processing capabilities to support various missions launching from the Western Range. The services include payload processing capability at Vandenberg Air Force Base (VAFB), CA, for west coast payloads launching on expendable launch vehicles. Considering that Astrotech already operates a subsidiary at VAFB, it is reasonable to assume they will be a strong contender for this contract as well.
If the space operations isn't a compelling enough reason to own this company, consider that they also have two other subsidiaries in both the mass spectrometer market (1st Detect) and biotechnology (Astrogenetix). In my opinion, the market is only fractionally valuing the space business and is not valuing the other two businesses at all. The fact that Astrotech trades significantly below its tangible book value, given its recent profitability and growth prospects, shows obvious market inefficiencies.
Financial Figures: CapitalIQ
Disclosure: I am long ASTC.
Additional disclosure: I am not a financial advisor. You should consult your own financial advisor before acting on recommendations to consider its suitability for your investment circumstances.