Industry Week in Review – October 18, 2013
On October 16th, Congress passed a Continuing Resolution to end the government shutdown, funding the sequester-level budget until January 15, 2014 and extending the government’s borrowing authority until February 7, 2014. Additionally, the bill grants retroactive pay for furloughed government employees and raises the possibility for federal employees to receive a 1 percent pay raise in January 2014. While experts are still debating the total cost of the shutdown for the government and the economy as a whole, Pentagon Comptroller Robert Hale estimated the shutdown cost the Department of Defense $600 million in lost productivity.
Days ahead of the annual NBAA conference, the business jet industry’s most significant event, OEMs have continued to deliver underwhelming performance. In a sign of the listlessness that has pervaded the sector since the recession, revenue at Textron’s Cessna unit fell 24% as the company delivered 25 new Citation jets in the quarter, down from 41 a year ago. Cessna, one of the largest business jet OEMs, swung to a loss of $23 million, reflecting the lower jet deliveries.
In the government contracting space, Serco Inc. hired former CACI Chief Executive Officer Dan Allen to be its new CEO. Allen is replacing Ed Casey, who has been CEO of Serco for the past eight years. Casey has been appointed the Chief Transformation Officer for the global operations of Serco Group, the British parent company of Serco Inc.
Embraer SA (Down 8.1%) – Shares were down this week after the Company released disappointing 3Q13 earnings. The Company delivered only 19 E-Jets to airlines in the third quarter, bringing total commercial deliveries to 58 aircraft for the first nine months of the year. The Company had been predicting 90 to 95 regional jet deliveries for FY2013, but this target will now be difficult to meet.
Integrated Mission Solutions, LLC, a portfolio company of DC Capital Partners, completed its acquisition of the Michael Baker Corporation, a provider of engineering services for public and private sector clients worldwide. Integrated Mission Solutions is paying $327.6 million for Michael Baker.
Delta Information Systems, Inc. acquired Acroamatics, Inc., a provider of design and manufacturing services for advanced digital signal processing products. Terms of the deal were not disclosed.