Industry Week in Review – August 15, 2014
Aerospace & Defense Update
The U.S. Army recently selected Textron’s Bell division in partnership with Lockheed Martin and the team of Boeing and Sikorsky in a Joint Multi-Role program to each build a helicopter that could effectively replace hundreds of Black Hawk and Apache models. The Army intends to use the two prototypes to assist in the evaluation of the service’s Future Vertical Lift helicopter replacement program, which could cost an estimated $100 billion. The companies will leverage advances in engine and other technologies in the development of their demonstrator designs, which are expected to result in new helicopters being operational by the mid-2030s. Bell and the Sikorsky and Boeing team are offering designs that make use of rotors capable of moving from their conventional positions for takeoff and landing to act as propellers for forward flight. The long-term plan focuses on meeting the uptick in demand for a new generation of faster and more durable rotorcraft.
This fall, Boeing intends to announce plans to increase production rates of its 737 single-aisle jet. Over the past four years, the company has escalated its production rates across all airplane programs 17 times. An increase in production output before the end of the decade would facilitate Boeing’s efforts to open new and earlier delivery slots for customers, while helping to narrow a sales gap with Airbus’s A320neo. 737 Max jet production rates of 42 aircraft per month are expected to rise to 52 a month in 2018 or 2019 in response to an increase in global demand for single-aisle, narrow-body jets.
Government Technology Solutions Update
The Department of Defense (“DoD”) announced this week that it will identify a set of five pilot programs in the next twenty days to test commercial cloud solutions for sensitive data storage. These pilot programs are initial steps towards giving the DoD confidence in moving its networks in the direction of agility and security at lower cost. The move is part of a larger network modernization strategy driven by the Joint Information Environment.
Similarly, the Securities Exchange Commission (“SEC”) is moving raw data files to the cloud in order to support programs such as the Market Information Data Analytics System (“MIDAS”), as well as a host of other modernization projects. The efforts are expected to save the SEC over $3 million a year and opens up opportunities for companies with big data analytics capabilities. For example, MIDAS is able to sort through more than one billion trading records a day, a process that would take weeks or months without large-scale analytics capabilities. The SEC’s move to the cloud has significantly increased internal capabilities as well as expanded the amount of trading information that the SEC makes available to the public.
Big Movers
Magellan Aerospace Corporation (Up 6.5%) – Shares were up this week after the Company released its second quarter earnings. The Company reported gross profit and net income for 2Q14 of $34.5 million and $13.6 million, respectively, up from 2Q13 gross profit of $28.8 million and net income of $11.2 million.
Relevant Transactions
Denel SOC Limited to acquire BAE Systems Land Systems South Africa Proprietary Limited, a designer, developer, and manufacturer of mine protected armored vehicles and turret system. The deal is worth an estimated $80.1 million.
Novetta Solutions, LLC acquired SigInt Technologies, LLC, a provider of advanced signals intelligence and intelligence analysis products and services. Terms of the deal were not disclosed.
