Industry Week in Review – May 17, 2013
In an interview last week, Lockheed Martin CEO Marillyn Hewson expressed optimism about the F-35 Joint Strike Fighter, which has experienced numerous setbacks and budget overruns throughout its development. According to Hewson, the international partners in the program, including Australia, Norway, and the Netherlands are reaffirming their support, and are increasingly likely to purchase the jets. Australia recently decided to move forward with its planned procurement of 100 F-35s, and Lockheed officials believe that Singapore and South Korea are likely to do the same. Additionally, Canada is currently assessing its planned purchase of 65 fighter jets, though the timing of its decision remains unclear. Hewson highlighted the program’s recent achievements, such as the completed assembly of the 100th jet and the ongoing advanced test flights around the world, as demonstrations of the program’s momentum.
Pilot training on the F-35 also saw a milestone during the week, with the qualification of U.S. Air Force instructor pilots to perform aerial refueling. This will allow aerial refueling to become part of the standard F-35 training syllabus, and will extend the range of training missions. The additional capability augments a number of training missions cleared in recent months for the F-35, including the use of its internal electro-optical targeting system and simulated weapons systems.
Big Movers
ViaSat (Up 21.6%) – shares were up for the week following a strong earnings announcement for fiscal 4Q13. Revenue rose 28.34% year-over-year to $308.7 million, while EPS of $0.19 beat analyst estimates of $0.02. Sales were up across segments, including Government Systems, which saw 37% higher product revenues and 48% higher service revenues than fiscal 4Q12.
Relevant Transactions
TransDigm agreed to acquire Arkwin Industries, a manufacturer of hydraulic and fuel system components for civil and military aircraft, for approximately $286 million. The acquisition further expands TransDigm’s capabilities in aftermarket components and land based aero-derivative turbine engine components. Arkwin’s 2012 revenue was approximately $95 million in 2012, with 40% from aftermarket services.
The SI Organization acquired Applied Communication Sciences, a provider of cybersecurity, network communications, data analytics, and other critical infrastructure protection technologies to government agencies, power utilities, and commercial customers. The acquisition augments the SI’s capabilities in niche technology areas and strengthens its relationships with key government clients.
