Industry Week in Review – January 9, 2015
Aerospace & Defense Update
On Tuesday, Boeing reported the highest annual orders and deliveries of its commercial jetliners in the Company’s history. With net new orders of 1,432 in 2014, Boeing topped its previous record of 1,355 orders made in 2007. Boeing has enjoyed continuous growth in net orders since 2009 when the recession knocked net new orders down to 142 and cancellations peaked above 38%. The current trend of large growth has resulted in a record order book of 5,789 jets; however, it has also narrowed focus to deliveries rather than gross new orders, as investor concern over cancellations rises. Despite this concern, Boeing delivered a record 723 jets in 2014 and analysts forecast a rise to more than 760 deliveries in 2015 and as high as 900 deliveries by the end of the decade. Furthermore, cancellations dropped to 118 in 2014, down from 176 in 2013.
The U.S. Air Force awarded its Space and Missile Systems Center’s Launch and Test Range Systems (“LTRS”) Integrated Support (“LISC”) opportunity, a potentially multi-billion-dollar contract, to the joint venture Range Generation Next (“RGNext”). The joint venture consists of Raytheon and General Dynamics who will conduct the operation, maintenance, and sustainment of the launch ranges at Florida’s Space Coast and Vandenberg Air Force Base in California. Work will further consist of organizational and depot-level maintenance and sustainment for safe and effective launch, testing, and tracking of Department of Defense, civil, commercial, and international space vehicles. Currently, the contract is a single-award worth $1.5 billion with a one-year base period and nine one-year options under primarily fixed-price-incentive firm work.
Government Technology Solutions Update
The Department of Defense (“DoD”) is planning on setting up a 5-year, indefinite delivery, indefinite quantity (“IDIQ”) information technology (“IT”) shared services contract. The contract would provide affordable support to the Defense Health Agency (“DHA”), the Military Health System, and the Department of Veterans Affairs (“VA”). Task orders issued by the DHA seek to improve customer interaction and will cover service desk support, customer services, and system / application management for medical IT initiatives. Additionally, the IDIQ may seek capabilities relating to priority medical IT initiatives, such as web-based environments, electronic health records, and inter-agency medical collaborations.
The U.S. Air Force is further securing its network with role-cased authentication as the Joint Information Environment (“JIE”) construct comes into fruition. In addition to enhancing cybersecurity, this transition will allow the user to be more mobile, with globally recognized security access at any location. The Air Force is in the process of operationalizing JIE by migrating portions of its common computing environment to the DoD MilCloud and carrying out several pilot programs, such as mobility and shared services for email and Microsoft SharePoint.
Big Movers
Sturm, Ruger & Company, Inc. (Up 8.8%) – Shares were up this week after the Company announced that it repurchased a total of 680,800 shares of common stock during the fourth quarter of 2014, at an average price per share of $35.22.
Transactions
Meggitt PLC acquired Precision Engine Controls Corporation, a supplier of actuation systems and fuel metering valves to manufacturers and small-frame gas turbines. The deal is worth an estimated $44.2 million.
PCX Aerostructures, LLC acquired Cam-Tech Manufacturing, LP, a manufacturer of large structural assemblies for aerospace platforms serving the commercial and military markets. Terms of the deal were not disclosed.
Arlington Capital Partners acquired United Flexible Group, a manufacturer and provider of support of performance critical flexible engineered solutions for the transfer of fluids and gases in extreme environments for the aerospace and defense, satellite, and other markets. Terms of the deal were not disclosed.
Centene acquired LiveHealthier, a provider of technology and services designed to help large organizations foster positive health behaviors among their members.
Day & Zimmermann acquired the interests of co-owner SOC-SMG, Inc. to become the sole owner of SOC LLC, a provider of security, logistics, and life support services to the U.S. Government domestically and abroad.
