Industry Week in Review – February 22, 2013
With spending cuts looming in the coming days, the U.S. Defense Department plans to slow payments to prime contractors in order to add roughly $1 billion of cash on-hand. This amount is worth a few days of needed working capital, though quite minimal compared to the $46 billion in 2013 budget reductions the Pentagon will be met with should sequestration begin on March 1st. The DoD typically keeps a week’s worth of working capital on-hand, however it currently only has two to four days of cash available. Since 2011, the DoD has used Quick Pay in order to get payments to contractors weeks faster. However, with current cash constraints, the Pentagon plans to inhibit Quick Pay by allowing only qualified small businesses to participate.
United Continental Holdings announced that it is taking the 787 Dreamliner out of its flying plans through June 5th, except for a single Denver-to-Tokyo route which is expected to start in May. The decision came following a Japanese investigation of a fuel leak caused by a composite material in the plane’s fuel tanks. The investigation was launched days before authorities around the globe grounded the aircraft. United is the only U.S. carrier of the 787, with ownership of six planes.
Big Movers
CIBER, Inc. (Up 15.1%) – Shares are up this week after the company announced that it had delivered a profit and beat analyst expectations in 4Q12. Revenue rose to $225.3, a 44.5% increase over the same period last year. Adjusted earnings per share decreased 33.3% to $0.02, however analysts were expecting earnings of $0.03 per share.
Barnes Group Inc. (Up 13.7%) – Shares were up this week after the company announced 4Q12 financial information that was higher than analyst expectations. Sales in the quarter jumped 16.0% to $327.4, while operating margin increased to 12.1% from 10.2%.
Relevant Transactions
Ball Aerospace & Technologies Corp. acquired certain assets of OGSystems’ TASER Business Unit, a prime awardee on the $1 billion TASER contract, which provides mission analysis, systems and software engineering, integration, and IT services for the National Geospatial-Intelligence Agency. The acquisition expands Ball’s geographic and customer footprint within its intelligence and information services business.
Computer Sciences Corp. (“CSC”) has entered into an agreement to sell its Enterprise Systems Integration unit to ITOCHU Techno-Solutions Corp. and ITOCHU Corp. for $90 million. Enterprise Systems Integration is a reseller of enterprise hardware and software, as well as a provider of maintenance services with operations in Malaysia and Singapore. The unit’s revenue in fiscal 2012 was around $180 million. The deal is CSC’s fourth divestiture in four months.
