Industry Week in Review – March 6, 2015

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Aerospace & Defense Update

Boeing Chief Financial Officer, Greg Smith offered a strong rebuttal to investor concern over aircraft demand this past week at the J.P. Morgan Aviation, Transportation, & Industrials Conference.  He refuted the concern that lower oil prices would reduce demand for new, more fuel-efficient aircraft and asserted that, “there is really no correlation between oil and demand for airplanes.”  To highlight this statement, Smith noted that in 2004 when the 787 program was launched, oil prices were $40 per barrel, $10 per barrel lower than they are today.  Investment in an aircraft is long-term and must consider overall operating expenses instead of simply near-term oil prices.

The world’s largest exposition of rotorcraft, the Heli-Expo 2015 conference, took place this week in Orlando, Florida.  With attendance at an all-time high, Heli-Expo attracted 700 exhibiting companies from across the world and thousands of attendees.  Among the highlights from the conference were Airbus’s unveiling of its long-awaited H160 medium twin aircraft, designed to take on AgustaWestland’s AW139 in a critical segment of the market.  Sikorsky also grabbed some headlines, with four major contracts, including a $1.3 billion long-term Blackhawk deal with Turkey.

Government Technology Solutions Update

The Office of Management and Budget (“OMB”) recently released its annual Federal Information Security Management Act (“FISMA”) report to Congress.  The report showed 70,000 cybersecurity incidents in GFY2014, a 15% increase over GFY2013.  However, the OMB noted increased visibility by agencies into their cyber networks may account for the increase in reported incidents and does not necessarily mean agencies are at more risk than in prior years.  Additionally, the largest threat in GFY2014 was not cyber related.  Instead, a fourth of security threats reported involved the loss of information from improper handling of printed materials.

The General Services Administration (“GSA”) published a draft Request for Proposal (“RFP”) for its $50 billion, 15-year communications Enterprise Infrastructure Solutions (“EIS”) contract in the last week.  The GSA aims for this contract to be utilized on at least 30% of the addressable Federal communications market while the existing GSA Networx communications contract serves about 25%, or $1.5 billion, of the market annually.  The new EIS contract is expected to capture additional Federal business from markets such as the Intelligence Community (“IC”) and Defense Information Services Agency (“DISA”) that do not currently use GSA Networx.  The final RFP is expected to be released in July 2015 with awards at the end of GFY2016.

Big Movers

Ultra Electronics Holdings plc (Down 6.2%) – Shares were down this week after the Company reported its annual profit before tax fell over 50% from 2013 due to the cancellation of an IT service contract for with Oman Airport, currency movements, and lower defense spending.

Esterline Technologies Corporation (Down 9.4%) – Shares were down this week after the Company announced first fiscal quarter 2015 revenue of $446.3 million, down from $485.9 million during the same quarter last year.

Transactions

Blue Wolf Capital Partners, LLC acquired North American Rescue, LLC a provider of mission-critical, tactical medical / rescue solutions.  Terms of the deal were not disclosed.

Sierra Nevada Corporation acquired 328 Support Services GmbH a provider of assembly line, parts production, and maintenance facilities for jet and turboprop aircrafts.  Terms of the deal were not disclosed.

Lookingglass Cyber Solutions acquired CloudShield Technologies Inc., a provider of deep packet processing to see and manipulate network traffic and fight cyber assaults.  Terms of the deal were not disclosed.

SAIC agreed to acquire Scitor Corporation, a provider of systems engineering, management consulting, and information services to Intelligence Community customers in the U.S.  The deal is valued at an estimated $790 million, implying multiples of 12.7x adjusted LTM EBITDA or 10.6x adjusted net LTM EBITDA (excludes $132 million in tax benefits).

Arrow Electronics agreed to acquire immixGroup Inc., a value-added distributor of IT solutions to the Federal market.  Terms of the deal were not disclosed.

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Industry Week in Review – February 27, 2015

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Aerospace & Defense Update

On Monday, AAR Corp. announced that it has reached an agreement with TransDigm Group Incorporated to sell its Telair Cargo Group, comprised of Telair International, Telair U.S., and Nordisk Aviation Products.  The deal, which features a purchase price of $725 million in cash subject to adjustments, is expected to close in the quarter ending May 31, 2015.  When the transaction closes, AAR will report Telair Cargo Group as discontinued operations and is expected to recognize a pre-tax gain of $200 million.  Moreover, the Company indicated that it intends to sell its Precision Systems Manufacturing business, resulting in an impairment charge of close to $40 million.  AAR will now report its results in two new business segments.  The Company’s Aviation Services segment will consist of Aviation Supply Chain and Maintenance, Repair, and Overhaul, while its Expeditionary Services segment will include Airlift and Mobility.  Ultimately, the aforementioned transactions are expected to enhance AAR’s overall return profile, reshape its balance sheet, and return capital to shareholders, while refocusing the Company’s overall strategy.

The 12th biennial Australian International Air Show kicked off this week at the Avalon Airfield in Geelong, Australia.  The 2015 Avalon Air Show features approximately 600 companies from 27 countries, and is expected to attract over 200,000 attendees.  Companies will showcase their aerospace and defense products over the course of six days, with the first three restricted to industry experts and the remainder open to the general public.  Notably, Russian companies, which have had a presence at the show in previous years, will be absent from this year’s event.

Government Technology Solutions Update

After the House of Representatives unexpectedly rejected a three-week Department of Homeland Security (“DHS”) spending bill, Congress and the President approved a one week funding extension late Friday night.  The week long budget resolution averted a partial agency shutdown and bought time for the discussion of immigration provisions in Congress.  Without passage of a funding bill by next Friday at midnight, 30,000 DHS employees will be furloughed, while 200,000 essential employees will continue to report to work without pay.

The Central Intelligence Agency (“CIA”) is preparing to launch a private app store with an offering of a few hundred apps designed to meet the Intelligence Community’s (“IC”) needs.  The marketplace will supplement the functionality of the CIA’s recently completed private cloud environment.  IC employees will be able to sample solutions before purchasing third-party subscription based offerings or directly download open source and intra-agency apps.  The availability of apps will give IC analysts quicker access to solutions and services to allow agencies to stay competitive in a dynamic threat environment.

Big Movers

Bombardier, Inc. (Up 8.4%) – Shares were up this week after the Company completed its first flight of the CS300 jet and raised $868.0 million from an equity offering.

Boeing Company (Down 4.7%) – Shares were down this week after costs on the 787 Dreamliner and a possible downturn in jet demand caused Goldman Sachs to cut the stock’s rating to “sell.”

Transactions

Transdigm acquired AAR’s Telair Cargo Group which is comprised of Telair International, a manufacturer and on-board baggage and cargo handling systems for wide and narrow body aircrafts and Nordisk Aviation Products, a manufacturer of air cargo pallets and containers.  The deal is worth an estimated $725 million.

Blue Wolf acquired North American Rescue, a manufacturer of lifesaving medical and rescue solutions for war fighters, tactical law enforcement professionals, and more.  Terms of the deal were not disclosed.

iNovex Information Systems Inc. acquired the Mercury Intelligence Systems Inc., a subsidiary of Mercury Systems Inc. and provider of predictive analytics, cloud infrastructure, and analytical, software, and intelligence programs.  Terms of the deal were not disclosed.

Computer Sciences Corporation acquired Autonomic Resources, LLC, a provider of cloud computing infrastructure.  Terms of the deal were not disclosed.

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Industry Week in Review – February 20, 2015

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Aerospace & Defense Update

Earlier this week, the U.S. State Department announced that it will begin to allow the sale of armed unmanned aircraft systems (“UAS”) to foreign militaries.  The new policy comes as the Obama administration has embraced a strategy of training and equipping its international allies.  Although the new rules remain classified, it was announced that foreign governments’ requests for UAS will be considered on a case-by-case basis, with strict conditions that include safeguards against improper use through end-use monitoring.  Today, the U.S. has only exported armed UAS to the United Kingdom, but has provided unarmed systems to ally nations such as France and Italy. Ultimately, the move is expected to benefit U.S. defense firms as they continue to focus on capturing more of the global UAS market, estimated to be worth over $6 billion a year.

Meanwhile, the Department of Transportation’s Federal Aviation Administration (“FAA”) set forth an initial framework of proposed regulations pertaining to small UAS.  The FAA proposal lays out safety rules for the non-recreational use of UAS weighing less than 55 pounds.  Notably, the proposed regulation addresses time-of-day, visual-line-of-sight, height, and speed restrictions, as well as operator certification, aircraft registration and marking, and operational limits.  Specifically, the rules mandate that an operator must always maintain constant visual (unaided) contact with the aircraft, the aircraft may not exceed 500 feet in altitude or speeds of 100 mph, the aircraft may not fly over people, and the aircraft must stay out of airport flight paths and restricted airspace areas.  Moreover, the proposal requires an operator to be at least 17 years old, pass an aeronautical knowledge test, and obtain an FAA UAS operator certificate.  Historically, the FAA had struggled to develop a cohesive set of rules to govern UAS use.  However, the aforementioned proposal, which is considered relatively flexible amongst most industry advocates, represents a meaningful step towards promoting the safe integration and proliferation of UAS in the face of an industry characterized by policy that is attempting to play catch-up with technology.

Government Technology Solutions Update

The General Services Administration (“GSA”) and National Oceanic and Atmospheric Administration (“NOAA”) are preparing to release Request for Proposals (“RFP”) for large Federal IT contracts.  The GSA will be releasing both small business and full and open versions of Alliant 2, the second generation of a government-wide IT services contract.  The contract currently includes more than 100 vendors and facilitated more than $3.7 billion in IT spending in GFY2014.  Alliant 2 will look to standardize labor categories to institutionalize base line prices and will incorporate a more objective evaluation strategy than its predecessor.  Simultaneously, the NOAA is drafting an RFP for its $3.0 billion, five year Pro-TECH contract for professional and technical services in the realms of ocean, fisheries, weather, satellite technology, and enterprise / back office functions.  The domain driven contract seeks to create a more specialized and industrial base of contractors for the NOAA.  The Pro-TECH RFP is expected to be released in summer 2015.

The Office of Management and Budget (“OMB”) is encouraging agencies to only use the Invoice Processing Platform (“IPP”), for electronic transactions.  Developed by the Treasury Department, the IPP provides electronic purchase order, payment notification, electronic invoice, intra-governmental transaction, and automated workflow services.  This OMB initiative increases efficiency and provides better data to reduce improper payments.  It is part of a larger plan in GFY2015 to direct agencies towards the use of shared services.  A circulated draft memo within the OMB currently does not require the use of the IPP, but requires justification when agencies chose a different platform.

Big Movers

Boeing Co (Up 5.7%) – Shares were up this week after CEO Jim McNerney announced that the Company intends to keep returning roughly 80% of free cash flow to investors and will not cut production rates of wide-body 777 jetliners as it shifts to a new model later this decade.

Astronics Corp. (Up 16.8%) – Shares were up this week after the Company announced fourth quarter earnings per share of $0.81, compared to $0.29 in the prior year period and analysts’ estimates of $0.64.

Transactions

Michael Baker International acquired Pacific Municipal Consultants (“PMC”), a provider of planning, environmental, and municipal services.  Terms of the deal were not disclosed. 

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Industry Week in Review – February 13, 2015

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Aerospace & Defense Update

Bombardier Inc. underwent an executive reshuffle this week as Chief Executive and President, Pierre Beaudoin, grandson of company founder, Joseph-Armand Bombardier, stepped down from his position to make way for former CEO of United Technology Corporation’s aerospace division, Alain Bellemare to take over.  Mr. Beaudoin’s father, Laurent Beaudoin, will also retire from his position as Chairman after 50 years with the firm.  The Bombardier family’s exchange of control follows the halt in production of the Learjet project and increased concern over the Company’s ability to meet its debt covenants.  Bombardier is required to have more than $1 billion in liquidity at the end of each quarter and with the $1.4 billion charge associated with the suspension of the Learjet project and few new orders, the Company faces increasing uncertainty.  To address its cash flow, Bombardier has plans to issue an additional $600 million in equity and up to $1.5 billion in debt as well as suspend its dividend payments on both class A and class B shares, saving about $250 million.

On February 12th, the Senate approved Ash Carter as defense secretary with an overwhelming final tally of 93-5.  John McCain praised Dr. Carter and spoke to his experience improving the financial management of the defense department as well as his work eradicating sequestration.  Carter’s first day on the job will be February 17th and is expected to tap current Air Force Undersecretary Eric Fanning as chief of staff and U.S. Army Major General Ron Lewis as senior military adviser.

Government Technology Solutions Update

The General Services Administration (“GSA”) released a Request for Information (“RFI”) on February 11th to explore strategies to aid Federal agencies in the acquisition of cloud computing services.  GSA is researching the types of contract vehicles used to acquire cloud services as well as the barriers that impede the agencies from staying current on technology changes.  GSA is looking to improve its two cloud BPAs for Infrastructure-as-a-Service (“IaaS”) and Email-as-a-Service (“EaaS”) by including a need for professional services to help with planning and migration efforts.

The chief counterterrorism advisor to the President, Lisa Monaco, announced the launch of the Cyber Threat Intelligence Center (“CTIC”) on February 10th.  The CTIC, modeled after the National Counterterrorism Center, will lead coordinated cyber threat assessments of intelligence collected by authorities and ensure that threat information is shared rapidly with cyber centers throughout the government.   Monaco said that the CTIC will complement the Cyber Response Group (“CRG”), the interagency group that coordinates the Federal response to cyber threats, and enable it to work more effectively.

Big Movers

VSE Corporation (Up 7.0%) – Shares were up this week after the Company’s acquisition of four aerospace companies passed the Department of Justice’s Hart-Scott-Rodino requirements.

Transactions

Accenture Federal Services agreed to acquire Agilex Technologies, Inc., a provider of digital solutions for the U.S. Federal Government.  Terms of the deal were not disclosed.

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Industry Week in Review – February 5, 2015

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Aerospace & Defense Update

On Friday, Harris Corp. announced it has reached an agreement to acquire Exelis Inc. in a cash and stock transaction with a purchase price of $4.4 billion.  The deal, which is expected to close in June, features a $23.75 per share price tag, representing a 34% premium over the stock’s closing price on Thursday.  Under the terms of the deal, shareholders of Exelis will receive $16.63 in cash per share and approximately 10% of a share of Harris stock per share of Exelis stock.  Ultimately, Harris anticipates it will achieve cost synergies in the range of $100 – $120 million as a result of the acquisition.  Harris shareholders will own roughly 85% of the combined entity, which will generate over $8 billion in annual sales and 23,000 employees.  The announcement follows Exelis’ September spinoff of its government-services business, Vectrus Inc.

Airbus recently announced plans to acquire control of MBDA, a European missile manufacturer, after Finmeccanica put its stake in the company up for sale.  Currently, Airbus owns a 37.5% stake in MBDA and intends to take over Finmeccanica’s 25% stake.  The remaining 37.5% is held by BAE Systems, which would be forced to decide whether to accept becoming a minority shareholder, sell outright, or increase its ownership stake alongside Airbus.  In September, Airbus placed MBDA at the center of a non-aircraft portfolio focused on aeronautics and space.  As MBDA’s remaining shareholders, Airbus and BAE Systems have first right of refusal on the sale of Finmeccanica’s stake, which is worth an estimated $793 million.  Meanwhile, Finmeccanica’s CEO, Mauro Moretti, has indicated that the company also intends to divest roughly $224 million of assets in DRS Technologies by the end of 2015.  Finmeccanica plans to sell select divisions of DRS, a defense electronics company, while it seeks an industrial or financial partner for the U.S. unit.

Government Technology Solutions Update

On January 2nd, President Obama proposed a record $4 trillion GFY2016 budget, representing a 6.4% increase over estimated GFY2015 spending and an end to the possibility of sequestration.  The Department of Defense (“DoD”) would receive $37.3 billion, while civilian agencies would receive $49.1 billion, which respectively are $1.1 billion and $1.2 billion increases.  Additionally, $86.4 billion is to be allocated to the Federal IT budget.  The White House reported that agencies have saved $2.7 billion in unnecessary IT spending since 2012.  Efficiencies have been largely due to the consolidation of data centers, provisioned services such as cloud computing, and improved agency oversight.  The additional $2.3 billion budget increase proposed is to encourage focus on IT innovation particularly through digital services teams, additional oversight and accountability, improved procurement processes, and cyber readiness.

The Department of Commerce’s (“DOC”) Chief Information Officer (“CIO”) has reported that IT modernization efforts will be led by a four-pronged shared services approach.  The department will be examining the use of shared services in technology, finance, human resources, and acquisition.  Once opportunities are identified in each area, the DOC will likely look to create an internal organization to select and manage providers, facilitate service level agreements, and ensure the quality of shared services.  The initiative is still in its early stages, but the department is planning on issuing a request for information (“RFI”) toward the end of this year.

Big Movers

Exelis Inc. (Up 41.0%) – Shares were up this week after it was announced that the Company will be acquired by Harris Corp.

Harris Corp. (Up 13.5%) – Shares were up this week after the Company announced it has reached an agreement to acquire Exelis Inc.

FLIR Systems, Inc. (Up 12.5%) – Shares were up this week after the Company reported fourth quarter revenue of $434.4 million, an 8.5% increase year over year.

Transactions

ANSYS, Inc. acquired Newmerical Technologies International, a developer of in-flight icing simulation software and associated design, testing, and certification services.  Terms of the deal were not disclosed.

Babcock International Group plc acquired S MacNeillie & Sons, a provider of specialist converted armored vehicles.  Terms of the deal were not disclosed.

Harris Corp. to acquire Exelis Inc., a provider of C4ISR related products and solutions.  The deal is worth an estimated $4.4 billion.

HDT Global, Inc. acquired DHS Technologies LLC, a provider of rapidly deployable expeditionary equipment.  Terms of the deal were not disclosed.

HEICO’s Flight Support Group, Inc. acquired an 80.1% equity stake of Harter Industries, Inc., a provider of component and accessories maintenance, repair, overhaul, and engineering services for commercial and military aircraft. Terms of the deal were not disclosed.

Millstein & Co. acquired DLT Solutions, a provider of Government IT software and services such as cybersecurity and project management.  Terms of the deal were not disclosed.

SAE International Industry Technologies Consortia (“ITC”) acquired ADS Aerospace Technical Standards, an organization that supports aerospace and defense manufacturing with product design standards.  Terms of the deal were not disclosed.

Teledyne Technologies, Inc. acquired Bowtech Products Limited, a manufacturer and supplier of underwater harsh environment vision systems.  Terms of the deal were not disclosed.

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Industry Week in Review – January 30, 2015

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Aerospace & Defense Update

Earlier this week, General Dynamics reported strong 4Q14 results, largely attributable to the performance of its Gulfstream business planes.  The Company exceeded analysts’ consensus estimates of $2.13 earnings per share (“EPS”) with EPS of $2.19.  Cash flow, however, was lower than expected.  Gulfstream’s 4Q14 results, which mark the division’s best quarter from a revenue standpoint in three years, come on the tailwinds of a surge in demand for business-jet flights.  Specifically, the number of business-jet flights in the U.S. increased 4.5% in the twelve months ended November 2015.  Moreover, global orders and deliveries for business-jets have risen in each of the past four years following the sharp decline in demand that accompanied the financial crisis. As a result, General Dynamics has indicated that it plans to boost production output of its midsize Gulfstream jets in 2015.  The Company also introduced guidance for FY15, including revenue growth of approximately 1.5% year-over-year (“YoY”) and EPS of $8.05 – $8.10 compared to consensus estimates of $8.38.

Domingo Ureña-Raso, head of Military Aircraft at Airbus Defense and Space, has resigned from his position and will be replaced by Fernando Alonso, the current head of Airbus’ Flight and Integration Tests.  The shake-up in management comes in the wake of new delays on the troubled A400M military transport aircraft, a program that has been under Ureña-Raso’s oversight since 2009.  The A400M, which provides various military capabilities including aerial delivery, cargo handling systems, self-defense systems, and air-to-air refueling, has encountered a series of delays and cost overruns that nearly led to the cancellation of the program in 2010.  A total of 174 A400Ms have been ordered by Belgium, Britain, France, Germany, Luxembourg, Spain, and Turkey, with revised expectations that the first batch of the aircraft will be in service by the end of 2015.

Government Technology Solutions Update

On January 26th, the Department of Veterans Affairs (“VA”) announced the reorganization of the VA’s operating regions based off of a singular map with five standard regions.  This VA reorganization is anticipated to be the first of many spurred by VA Secretary Bob McDonald’s initiative to transform and rebuild trust in the agency.  When complete, the VA will have undergone its biggest transformation in history.  Administrations within the VA, such as the Veterans Health Administration and the Veterans Benefits Administration, currently work from nine separate maps with inconsistent regions.  This results in a fragmented VA with regards to both veteran perception and internal processes.  The reorganization into consistent departmental regions instead of disparate administration regions aims to create better internal coordination and support the ability to leverage shared services.  With this alignment in place, the next step for the VA will be focused around creating shared service back office functions.

As mobility comes into focus, the National Institute of Science and Technology (“NIST”) has developed a standardized testing process for mobile apps.  While mobility allows for an unprecedented level of connectivity, the quick development processes of apps can result in security weaknesses.  The new set of standards, known as the “app vetting process” is a step in mitigating these cybersecurity threats.  It evaluates system vulnerabilities and focuses on how data is secured and deployed.

Big Movers

Triumph Group, Inc. (Down 10.4%) – Shares were down this week after the Company reported a fiscal third quarter loss of $39.8 million.

Boeing Co. (Up 8.0%) – Shares were up this week after the Company announced fiscal fourth quarter profits of $1.47 billion, up from $1.23 billion in the same period last year.

Transactions

Huntington Ingalls Industries, Inc. acquired The Columbia Group, Inc.’s Engineering Solutions Division, a manufacturer of specialized manned and unmanned undersea vehicles for military customers.  Terms of the deal were not disclosed.

Parter Capital Group acquired Cassidian Belgium, an electronics production facility that manufactures primary and secondary radar components, power amplifiers, and transponders.  Terms of the deal were not disclosed.

CAE Inc. to acquire Bombardier Inc.’s Military Aviation Training Division, a provider of aviation training services to military pilots.  The deal is worth an estimated $15.9 million.

GCR Inc., a portfolio company of Clearview Capital, acquired Quest Information Systems Inc., a provider of software to help state and local governments manage voter information and registration, elections and campaign finance information. Terms of the deal were not disclosed.

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Industry Week in Review – January 23, 2015

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Aerospace & Defense Update

Space Exploration Technologies Corporation (“SpaceX”) raised $1 billion in a financing round with two investors, Google and Fidelity Investments.  Google took down $900 million of the financing in exchange for a 7.5% stake in SpaceX.  The financing was done at an implied valuation of $12 billion.  The cash is intended to be used for research and development of spacecraft and satellites.  The new investors join the Founders Fund which includes Draper Fisher Jurvetson, Valor Equity Partners, and Capricorn.

This week, Textron Aviation agreed to purchase assets of UTC’s Aerospace Systems unit in Wichita.  The unit designs and manufactures interior furnishing for Citation business jets and King Air turboprop airplanes.  The transaction follows the sudden departure of the UTC CEO, Louis Chenevert, and the CEO of the UTC Aerospace Systems division, Alain Bellemare.  These shifts in corporate leadership led to the appointment of Gregory Hayes, previously CFO, to replace Chenevert and the hiring of a new head of strategic planning.  The combination of these corporate structure changes may signal further portfolio restructuring through a range of strategic actions including mergers and acquisitions executive departures.

Government Technology Solutions Update

The Small Business Administration (“SBA”) has proposed a new rule which, if passed, would allow small companies to go after larger government contracts.  Currently, most set-aside small business contracts require the winning company to perform at least 51% of the work.  However, under the new rule, small business contractors would be permitted to team up to meet this goal.  This would open up new and larger value opportunities for small businesses to capture.  The SBA is also proposing a standardization of how the percentage of performed work is calculated and has created a pilot small business teaming environment to identify best practices, hurdles, and tools to facilitate partnerships.

Earlier this month, the Defense Information Systems Agency (“DISA”) loosened security restrictions on cloud based environments to allow the use of public cloud services in some cases.  DISA is now willing to accept some increased risk for the cloud migration of less mission critical data in order to capture increased agility and technological benefits.  Department of Defense (“DoD”) data will now be classified into three levels in order to determine security requirements.  In conjunction with the recent policy which gave individual DoD agencies cloud procurement power, this change in policy will speed up DoD cloud migration.

Big Movers

Bombardier, Inc. (Down 6.4%) – Shares were down this week after the Company announced it will temporarily lay off workers from its railcar plant in Quebec.

Transactions

L-3 Communications Holdings Inc. acquired MITEQ Inc., a manufacturer of specialized RF microwave products and solid-state SATCOM components.  The deal is worth an estimated $41 million.

Safariland, LLC acquired Atlantic Tactical, Inc., a distributor of life-saving equipment and uniforms for law enforcement and public safety officers.  Terms of the deal were not disclosed.

Sarcos LC acquired the Raytheon Sarcos unit of Raytheon Company, a developer of robotics, micro-electro-mechanical, and sensor technologies for use in health care, life sciences, telecommunications, robotics, and defense industries.  Terms of the deal were not disclosed.

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Industry Week in Review – January 16, 2015

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Aerospace & Defense Update

On Thursday, Bombardier Inc. announced that it intends to temporarily halt work on one of its flagship models, the Learjet 85 aircraft.  Delivery of Bombardier’s Learjet 85 was originally scheduled for the end of 2013, but subsequently delayed beyond 2014 given a number of manufacturing problems.  The decision to pause development of the aircraft, attributed to persistently weak demand in the private-jet market following the economic downturn, results in a pretax charge of roughly $1.4 billion and eliminates close to 1,000 jobs.  Moreover, the Company proceeded to cut its financial forecast for 2014, reducing expected cash flow from operations in the aerospace division to approximately $800 million, down from a previously estimated range of $1.2 billion to $1.6 billion.  Following the announcement, shares in Bombardier’s stock plummeted 26% to $2.57.  Ultimately, the Learjet decision represents a major blow to Bombardier’s aerospace division.  However, Chief Executive Pierre Beaudoin has indicated that the Company will recommence development should market conditions change.

In the wake of former Chief Executive Louis Chenevert’s departure from United Technologies Corp. (“UTC”), Alain Bellemare, President and CEO of the Company’s Propulsion and Aerospace Systems Division, has decided to step down at the end of the month.  Following his exit, UTC intends to eliminate the position, with the leaders of UTC Aerospace Systems and Pratt & Whitney instead reporting directly to CEO Greg Hayes.  The UTC Aerospace Systems division, which includes Hamilton Sundstrand and Goodrich Corp., will be led by two of Mr. Bellemare’s understudies, while Paul Adams will continue in his role as president of Pratt & Whitney.  Together, these businesses generated approximately 44% of the Company’s $63 billion in revenue during 2013.  According to UTC, Mr. Bellemare will still offer his services to the Company as a consultant.

Government Technology Solutions Update

On Tuesday, President Obama unveiled new cybersecurity measures to combat the growing number of cyber threats in the U.S.  The proposed legislation, if passed, will allow private sector companies to share limited personal information with government agencies, require private sector companies to inform customers of data hacks within 30 days, contain extra powers for law enforcement agencies to target hackers, and include separate protections for consumers and children.  The proposed bill was released in the wake of the Sony Pictures hack, and just one day after the Pentagon’s own Twitter account was compromised.

The U.S. House of Representatives approved a spending bill for the Department of Homeland Security (“DHS”) on Wednesday.  The $39.7 billion DHS appropriations bill provides the agency with funds for operations, while also addressing controversial immigration issues.  However, members of the Senate have expressed doubts that the bill will pass the upper chamber given the inclusion of amendments that defund a number of immigration programs.  The language of such amendments states that none of the funding may be allocated to support President Obama’s recently issued executive actions regarding deferred deportation of millions of illegal aliens.  Should both chambers of Congress fail to pass the legislation prior to February 27th, DHS funding will run out, effectively shutting down the agency.

Big Movers

Bombardier, Inc. (Down 26.9%) – Shares were down this week after the Company announced that it would halt work on the Learjet 85.

Precision Castparts Corporation (Down 13.0%) – Shares were down this week as sales to oil and gas customers has declined due to falling oil prices.

Transactions

Textron Inc. acquired Douglas Equipment Ltd., a subsidiary of Curtiss-Wright Corp. that manufactures aviation ground-support vehicles and runway friction-measuring devices.  Terms of the deal were not disclosed.

Onex Corporation to acquire Survitec Group Ltd., a provider of survival and safety equipment for marine, offshore, defense, and aviation industries.  The deal is worth an estimated $680 million.

Axle Holdings PTE Ltd. acquired Carat Security Group, a manufacturer of commercial armored vehicles for heads of state, cash-in-transit, off-road, and defense applications.  Terms of the deal were not disclosed.

PAE acquires USIS Global Security and Solutions Business, a provider of litigation support, biometric capture and enrollment, training, and other security related services.  Terms of the deal were not disclosed.

RLJ Equity Partners acquired Phase One Consulting Group, a provider of information technology-based consulting services and solutions to various U.S. federal civilian agencies.  Terms of the deal were not disclosed.

Symantec Corporation acquired Narus, Inc., a divestiture from Boeing that provides cybersecurity data analytics solutions, such as internet-filtering software for intelligence agencies.  Terms of the deal were not disclosed.

Westat acquired Fenestra, a provider of advanced technologies and information technology solutions, specifically electronic questionnaires, data collection, metadata systems, and web-based surveys, for complex research problems.  Terms of the deal were not disclosed.

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Industry Week in Review – January 9, 2015

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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.

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Industry Week in Review – January 2, 2015

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Aerospace & Defense Update

Earlier this week, Bombardier Inc. announced a deal with an unnamed customer for a firm order of 16 of its CSeries regional jets, along with options to purchase an additional eight jets.  The order, for the CRJ900 NextGen model, is worth approximately $1.12 billion at list price should the customer exercise its options.  Deliveries of the company’s new, bigger CSeries aircraft are expected to begin in the second-half of 2015. The NextGen model of the CRJ900 aircraft is upwards of 5.5% more fuel efficient than its predecessor, making it one of the most cost efficient jets in its class.  Including this agreement, the Company has secured firm orders for 1,183 CRJ Series jets, with 359 orders for the CRJ900 and CRJ900 NextGen aircraft.

Raytheon Technical Services was awarded a $270.5 million IDIQ with the U.S. Navy.  Under the contract, Raytheon will provide avionics support for the Navy’s V-22 tilt-rotor aircraft fleet.  Specifically, Raytheon’s technical services unit will cover V-22 avionics software acquisition, engineering, integration, and testing services.  Additionally, the Company will provide support to the classified and unclassified V-22 laboratories, configuration, and data management.  Raytheon Technical Services has provided technical and support services related to the V-22 since the inception of the joint-service, multi-mission aircraft.  Work under the contract is scheduled to be completed in December 2019.

Government Technology Solutions Update

The National Geospatial Intelligence Agency (“NGA”) is the first within the Intelligence Community to put a GitHub-developed app in Apple’s iTunes store and is expected to expand its apps into Google Play in the coming weeks.  The app, Anti-shipping Activity Messages (“ASAM”), is the first open-sourced app that was created directly through GitHub and takes advantage of innovation driven by the open-source provider’s six million users.  The NGA is developing additional apps across 16 different topics such as anti-piracy and geospatial information generation and provides successful open-source examples to the IC.

The Federal Bureau of Investigation (“FBI”) has announced plans to add cybersecurity special agents to investigations teams.  Cyber now permeates every aspect of the FBI’s Criminal, Cyber, Response, and Services Branch including counterterrorism, criminal investigations, and traditional cyber-attacks.  As such, the FBI is seeking cybersecurity capabilities to combat these advanced criminal threats and needs additional talent to do so.  In particular, it is looking for seasoned investigators that are knowledgeable in hacking, network intrusion, data breaches, and botnets.

Big Movers

VSE Corporation (Up 13.1%) – Shares were up this week after the Company announced that it will acquire the Prime Turbines, CT Aerospace, Kansas Aviation, and Air Parts & Supply Co. business units of Killick Aerospace Group.

Transactions

NCI to acquire Computech, a provider of agile and lean application software development and IT operations and maintenance.  The deal is worth $55.8 million and Computech generated $40.0 million in revenue in 2014.

VSE Corporation to acquire Killick Aerospace Group’s Prime Turbines, CT Aerospace, Kansas Aviation, and Air Parts & Supply Co. business units, providers of maintenance, repair, and overhaul services and parts supply for corporate and regional jet aircraft engines and engine accessories.  The deal is worth $184.0 million, exclusive of $45.0 million in earn-outs.

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