Aerojet Ramps Up Rocket Production for NASA

Aerojet Rocketdyne Holdings Inc. is on track to complete construction next year at its Chatsworth campus on new buildings and manufacturing lines for the rocket engines to power humans back to the moon – and potentially to Mars.The El Segundo company’s Aerojet Rocketdyne subsidiary is repurposing existing buildings as well as constructing two new ones, along with buying new equipment to fill them.According to Fernando Vivero, the site lead at the San Fernando Valley location who has overall responsibility of the day to day operations, the two-year, $60 million building project is expected to be complete in the second quarter of next year. “Different elements of the project will be completed before then, but the finish finish would be the end of May,” Vivero said. The company is adding to its manufacturing capacity and payroll in preparation to build the RS-25 engine for NASA’s Space Launch System, or SLS, the space agency’s newest heavy lift rocket. Aerojet Rocketdyne has two contracts – one awarded in November 2015 and the second in May – to build 24 of the engines.The NASA contractor employs some 1,335 workers on its 44-acre campus at De Soto Avenue and Nordhoff Street. It plans to add to its manufacturing ranks with more welders, machinists, furnace operators and inspectors as well as some administrative positions, Vivero said. “We are actively interviewing and hiring right now,” he added. The RS-25 is a modified version of the Space Shuttle main engine that has been updated with new controllers and adapted for the new launch system. At launch, the engines will produce 2 million pounds of thrust to take the four-crew Orion spacecraft to the moon.The company has already delivered 16 RS-25s to NASA for testing, enough to power the first four flights of the new heavy rocket. Those engines were left over from the Space Shuttle program, which ended in 2011.The RS-25 was designed in the 1970s as a reusable engine, but with the SLS, it will be a one-time engine.Revenue growth aheadAerojet is currently on track to produce two RS-25 engines a year and will then ramp up production to four engines a year.“We are well into manufacturing the third or fourth unit,” Vivero said. “We are able to accommodate it with the space we have.”In addition to the RS-25, Aerojet Rocketdyne facilities elsewhere in the country are contributing the RL10 engines for use on the second stage of the Space Launch System; as well as the jettison motor for the Orion spacecraft, which generates 40,000 pounds of thrust for the launch abort system; the Orion main engine on the service module that will maneuver the spacecraft; and eight auxiliary engines on the service module and 12 reaction control thrusters on the crew module.Alex King, founder of Cestrian Capital Research Inc., an equity research firm in Newport Beach that follows the space industry, said that with a multi-year contract from NASA there is no way that Aerojet Rocketdyne can lose market share to competitors because no one else can supply the hardware that it does.“Unless that program (SLS) is just cancelled by the federal government, that is a long run of growth for the company,” King said. “I would expect them to grow revenue and grow in people off of that order.”It does not surprise him that Aerojet is making improvements at the Valley facility. But he said that the company is really only well known among people who follow the space industry. “They are not well known among the market at large, which surprises me because they are doing very well,” he added.In July, the company reported second quarter earnings of adjusted net income of $38.5 million (46 cents a share) for the quarter ending June 30, compared to adjusted net income of $41.4 million (50 cents) in the same period a year earlier. Revenue increased by 6 percent to $512 million.But it was the company’s backlog that King liked the most – up to $6.8 billion, or a 48 percent increase from the second quarter of 2019. “Backlog growth is a good directional indicator for future revenue growth,” King wrote in a research note on Aerojet in August. “The contracts in backlog here tend to be very long-lived and indeed themselves of variable length, so one cannot derive a linear relationship between backlog growth and revenue growth. But one can say with some certainty that if backlog is moving up over time, revenue will also be moving up over time.”Military satellitesThe Chatsworth campus makes other engines, including the RS-68 engine that powers the Delta IV rockets taking military satellites into space and the new AR-1 engine proposed as the replacement for a Russian-made engine used on the Atlas V rocket. It is also a subcontractor on the CST-100 space capsule being developed by Boeing Co. to take astronauts to the International Space Station as well as for the Terminal High Altitude Area Defense, or THAAD, anti-ballistic missile system made by Lockheed Martin Corp. But the work on the Chatsworth campus will primarily benefit the RS-25. A total of just more than 35,000 square feet are being added to three buildings, in portions of 7,000, 3,000 square feet and 25,145 square feet. The company is repurposing existing space by moving some machine operations from one building to another. That opens up space in the main factory to do assembly work and welding on the larger pieces that make up the RS-25, Vivero said.“We are moving smaller machines to low bay area, so this gives us more space in the high bay for the larger hardware,” he added.One of the two new buildings being constructed will be for assembling the nozzles and powerheads for the rocket engine, he continued, while the second will be to give storage space for all the additional tools needed to support production.“This combination, with the repurposing and moving machines to another building and opening up the factory, plus the two (new) buildings, it gives us the capacity of handling a higher rate of the RS-25 when we reach the production rate,” Vivero said. The plant is being sized to accommodate producing four engines a year. At any one time there could be up to seven different engines being worked on, depending on the hardware, he added. “Even though you are only delivering four, you have multiples in line,” Vivero said. Except for the engines for the THAAD anti-ballistic missile system, final assembly on the engine parts made in the Valley is done elsewhere, including Aerojet Rocketdyne facilities in West Palm Beach, Fla. and at Stennis Space Center, NASA’s main rocket engine testing site in Mississippi. “Once the pumps are done in West Palm Beach, they are shipped to Stennis and the engine is then assembled, tested and delivered from there to the ultimate customer,” Vivero said.