Industry Week in Review – August 24, 2012
Mid-year earnings season for Aerospace & Defense has begun wrapping-up with nearly all major players reporting results. In a subset of about 30 major companies, roughly 80% beat earnings expectations and very few missed earnings. Despite beating expectations, several Aerospace companies such as B/E Aerospace, Hexcel, and SAFRAN kept FY2012 guidance unchanged due to a muted outlook of aftermarket growth for the year.
Meanwhile, large aircraft OEM outlook from Boeing and Airbus remains positive after the companies reported strong year-over-year performance and optimistic full-year guidance. In general, Defense companies continue to rely on cutting costs in times of flat revenue growth and a tightened procurement environment. Furthermore, roughly two-thirds of Defense companies left unchanged or lowered full-year guidance given the lack of sequestration visibility.
Big Movers
Chemring Group Plc (Down 9.9%) – Shares dropped this week amid concerns that interested suitor The Carlyle Group may not materialize. Last week, Chemring disclosed a “highly preliminary expression of interest” from The Carlyle Group.
Relevant Transactions
LORD Corporation to acquire MicroStrain, a manufacturer of micro-displacement sensors used in a number of sectors. The company specializes in combining micro-sensors with embedded processors to autonomously track operational usage and to navigate and control unmanned systems. Terms of the deal were not disclosed.
General Dynamics to acquire Fidelis Security Systems, a provider of cyber security tools that offer real-time network visibility, analysis, and control. The acquisition expands GD’s ability to provide its customers with continuous monitoring solutions to prevent advanced threats. Terms of the deal were not disclosed.
