Industry Week in Review – August 22, 2014
Aerospace & Defense Update
On August 20th, the U.S. Navy selected five companies to develop and install a new shipboard tactical electronic network on its fleet over the next eight years. The indefinite-delivery / indefinite-quantity contract was valued at $2.53 billion to install the shipboard network known as Consolidated Afloat Networks and Enterprise Services (“CANES”) aboard 180 units by 2022. The five winners include: BAE Systems Technology Solutions & Services, Inc., General Dynamics C4 Systems, Global Technical Systems, Northrop Grumman Systems Corp., and Serco, Inc. Currently, nine destroyers have been outfitted and sixteen more are in progress. The five companies will continue to compete for CANES delivery orders throughout the eight year period. CANES relies on commercial off-the-shelf hardware and open systems architecture to keep the system’s costs well below initial projections. A full deployment decision to authorize the program is expected by spring 2015.
The U.S. Air Force awarded Boeing a five year, $216 million contract to upgrade the fleet of 59 KC-10 aerial tanker / transports with new cockpit avionics. Improvements will be made to the communication, navigation, surveillance, and air traffic management system in order to ensure that the fleet will comply with expected standards updates. The Federal Aviation Administration and the International Civil Aviation Organization are working to mandate changes by 2015 that tighten the requirements for flying in civilian airspace without a permit, a matter that will significantly affect mission routes and fuel consumption.
Government Technology Solutions Update
This week, the Department of Labor (“DoL”) announced that modernization of their information technology (“IT”) infrastructure is a top priority despite budget stagnation. To date, the DoL has one of the lowest Federal IT budgets and it has not seen a significant budget increase since 2010. While limiting, the DoL now has significant room for change. The department is currently consolidating internal customers into a centralized infrastructure, moving its financial system to a Federal shared service provider, and updating its IT governance structure to support these new projects.
Big Movers
TASER International, Inc. (Up 12.9%) – Shares were up this week as the Company announced strong revenue growth. Since the same quarter one year prior, revenues rose by 15.5%.
OHB Technology AG (Up 5.3%) – Shares were up this week as the Company began deployment of satellites for the European Space Agency in order to kick-off new generation of global-positioning satellites.
Relevant Transactions
Standex International Corporation acquired Enginetics Corporation, a leading producer of aircraft engine components for all major aircraft platforms. The deal is worth an estimated $55.2 million.
Defense & Aviation Wiring Inc. to acquire the Manufacturing Division of Rutter, Inc., a producer of enhanced radar systems, including oil spill detection, ice navigator, and small target detection systems. Terms of the deal were not disclosed.
