Amazon’s rocket contracts will ensure Aerojet Rocketdyne’s annual profit

In April 2022, Amazon.com Inc. (AMZN) signed a record number of contracts for space launches. As a result, launch operators will send orders to Aerojet Rocketdyne Holdings, Inc. (AJRD) that can provide an additional amount comparable to annual profit. Two of the most well-known launch operators are Jeff Bezos’ Blue Origin and the ULA alliance with Lockheed Martin Corporation (LMT) and The Boeing Company (NYSE: BA). Amazon.com has ordered more than 90 rocket launches from them.

All taken together, the contracts are estimated at about $10 billion. The money will be distributed among different operators, but Aerojet Rocketdyne may receive $2.33 billion of this amount as a key supplier of rocket engines. Aerojet Rocketdyne produces engines for many launch operators. For some, these are the huge main engines of the first stage, while for others, they are compact vacuum engines of the second and third upper stages.

For example, ULA is buying RL10 engines for the last stages of the Atlas V and Delta IV rockets and also plans to use them in the promising Vulcan Centaur rocket. Aerojet Rocketdyne sells disposable RL10 engines at a price of $15—$20 million (the cost is not officially disclosed). Thus, Aerojet Rocketdyne is expected to have a significant revenue growth stage ahead.

At the same time, the year 2021 was already a record year for the company in terms of revenue, as sales amounted to about $2.2 billion at the end of the year. Aerojet Rocketdyne’s operating margin is just over 13%, and if it persists for Amazon contracts, the company could make an additional operating profit of about $300 million. This is more than $242 million for the whole of 2021.