News & Events

Industry Week in Review – June 23, 2017


Aerospace & Defense Update

Both Boeing and Airbus outperformed analyst order expectations at the Paris Airshow this past week.  At the end of the week-long show, Boeing and Airbus booked $75 billion and $42 billion in orders, respectively.  As buyers have strayed from buying bigger jets, single-aisle aircraft are driving both companies’ revenues.  Boeing’s new 737 Max garnered 16 new customers and 361 orders at the Paris Airshow while in comparison, Airbus received 286 single-aisle plane orders.  Boeing noted that 214 of the orders for the 737 Max were order conversions from other models, but the company is interpreting these conversions as an effort for customers to more quickly acquire the new plane.

During its second intercept test, the Standard Missile-3 Block IIA (“SM3 Block IIA”) failed to intercept a test missile launched off the coast of Hawaii.  The SM3 Block IIA is a joint effort between Japan and the U.S. designed to intercept short and intermediate range ballistic missiles.  The effort was initiated in light of rising missile threats from North Korea.  Though the USS John Paul Jones destroyer successfully tracked and engaged the test missile using the AN / SPY-1 radar and the latest Aegis Combat System Baseline 9.C2, it failed to intercept.  Program officials will now conduct extensive reviews of the test data to find the cause of failure.

Government Technology Solutions Update

The Trump Administration plans to launch a major upgrade to its antiquated Federal IT platform.  This endeavor is planned to be outsourced to private enterprises, such as Accenture, Amazon, AMD, Apple, IBM, and various other commercial and government services providers.  President Trump and select cabinet members held a conference earlier this week with several tech CEOs to further discuss desired internal IT advancements.  Using part of the estimated $95 billion Federal IT budget in government fiscal year 2018, Trump intends to initiate the process of revamping the Federal government’s IT infrastructure, with the objective of providing higher quality services at lower costs.  Data center consolidation, cloud migration, and modernizing legacy systems are at the forefront of this IT overhaul, which will require leaning heavily on the private sector.  Several government agencies have welcomed this initiative, including VA Secretary David Shulkin, who was acclaimed by the Trump Administration this month for transitioning the outdated Vista electronic health records system to a more effective and cost efficient commercial provider.  This is the first of a series of anticipated modernizations at the Federal level.

After two years of protests and setbacks, Raytheon has finally prevailed with a $1 billion contract to provide cybersecurity services for the Department of Homeland Security (“DHS”).  The project, known as DOMino or Development, Operations and Maintenance, requires Raytheon to protect the information systems of over 100 Federal government departments and agencies.  The contract was first awarded in 2015, however, Northrup Grumman quickly protested, citing a potential conflict of interest surrounding the company’s hiring of a former DHS official.  With the protest now resolved, Raytheon will move forward supporting the National Cybersecurity Protection System, (“NCPS”), also known as EINSTEIN, operationally.  The NCPS, which is part of the Federal government’s initiative to strengthen its cyber capabilities, provides various Federal networks with intrusion prevention and detection, data analytics, and information sharing services.

Big Movers

Triumph Group (down 7.2%) – Share prices were down this week as investors pulled back from the strong upward momentum after their full year results.

Kongsberg Gruppen (up 7.3%) – Share prices were up as the company announced a partnership with Raytheon to offer the Naval Strike Missile for the Littoral combat ship.

Transactions

Safran S.A. has acquired ISEI, a provider of flight data acquisition systems and associated services for helicopters and light airplanes.  Terms of the deal were not disclosed.

Down Range Solutions Group has acquired U.S. Optics, Inc., a provider of rifle scopes for hunting, sporting, military, and law enforcement applications.  Terms of the deal were not disclosed.

HEICO Corp. has acquired Carbon by Design LP, a provider of composite components for unmanned aerial vehicles (“UAV”), rockets, spacecraft, and other specialized applications.  Terms of the deal were not disclosed.

IPG Photonics Corp. has agreed to acquire Innovative Laser Technologies, Inc., a provider of custom laser workstations used to produce high-value, mission-critical components for numerous industries, including defense, energy, and aerospace.  The deal is worth an estimated $135.0 million.

Kaneka Americas Holding, Inc. has agreed to acquire Applied Poleramic Incorporated, a provider of high performance composites to OEMs and their subcontractors.  Terms of the deal were not disclosed.

The MEL Group has acquired Oldbury Engineering Co. Ltd, a provider and repairer of aircraft ground support equipment.  Terms of the deal were not disclosed.

Novaria Group has acquired Space-Lok, Inc., a provider of high quality fasteners and multiple component mechanisms.  Terms of the deal were not disclosed.

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