Industry Week in Review – October 24, 2014
Aerospace & Defense Update
The National Business Aviation Association’s 2014 Business Aviation Convention & Exhibition (“NBAA 2014”) took place in Orlando earlier this week. NBAA 2014 showcased approximately 1,100 exhibitors and attracted more than 26,000 business aviation professionals. Gulfstream announced its new G500 and G600 business class jets in the week leading up to the show, which subsequently provided the company with a grand stage to flaunt the new aircrafts’ capabilities. Other highlights of the convention include Bombardier introducing the mockup of its new Challenger 650 and Embraer obtaining the type certificate for its Legacy 500. Next year’s convention is scheduled for November 17th – 19th, 2015 in Las Vegas, NV.
On Wednesday, Boeing announced third quarter earnings of $2.14 per share, up from $1.80 per share for the same period one year ago and beating analysts’ estimates of $1.97 per share. The company’s revenue increased from $22.1 billion in 3Q13 to $23.8 billion for 3Q14, while its quarterly profit rose 18%, largely driven by rising commercial aircraft demand. Highlights for the third quarter include growing backlog to a record $490 billion, adding 501 net new orders for commercial aircraft, launching the 737 MAX 200 model, securing a NASA Commercial Crew Transportation contract worth $4.2 billion, and returning $1.5 billion to shareholders through share repurchases and dividends. Despite strong third quarter performance, Boeing’s shares slid 4.3% on Wednesday.
Government Technology Solutions Update
The Department of Justice (“DOJ”) has recently restructured its National Security Division (“NSD”) to shift its focus towards efforts on cybersecurity. The department made new appointments to refocus on countering state-sponsored cyber terrorism and espionage. Most new appointees have a background in cybersecurity litigation. In addition to new appointments, the DOJ also created a new Deputy Assistant Attorney General role within the NSD which has been filled by Luke Dembosky. The Deputy Assistant Attorney General will oversee the protection of national assets and critical infrastructure by leading a cybersecurity focused team of prosecutors spread across each district office of the National Security Cyber Specialists network.
The One Acquisition Solution for Integrated Services (“OASIS”) Small Business (“SB”) contract is open for business and off to a strong start. Thus far, five Federal agencies have issued task orders worth up to $68 million under OASIS SB. The largest task order, with a $57 million ceiling value, was awarded by the Security and Exchange Commission to Amyx Inc. Task orders seek services such as acquisition and contract life cycle management support. OASIS SB currently includes 123 companies, however, the GSA expects to use an on-ramp process to transition companies that have outgrown SB designation to the unrestricted portion of the contract after five years.
Big Movers
General Dynamics Corporation (Up 9.6%) – Shares were up this week after the Company reported third quarter profits of $696 million, compared to $651 million for the same period last year. General Dynamics’ earnings per share increased from $1.84 to $2.06 and beat analysts’ estimates of $1.91.
FLIR Systems, Inc. (Up 10.3%) – Shares were up this week after the Company released its third quarter earnings report and noted a 5% increase in third quarter revenue to $375 million, as well as a backlog of $579 million, up 18% YTD.
Relevant Transactions
Selex ES acquired Tactical Technologies Inc., a provider of electronic warfare analysis software and services. Terms of the deal were not disclosed.
BAE Systems entered into a definitive agreement to acquire Perimeter Internetworking Corp., doing business as SilverSky, a provider of cloud-based email and network managed security services. The deal is worth an estimated $232.5 million.
StoneCalibre acquired NetPlus, a provider of Telecom Infrastructure Management software solutions for commercial and government entities. Terms of the deal were not disclosed.
Booz Allen Hamilton acquired Genova Technologies’ healthcare unit, a provider of IT solutions and strategy for the Centers for Medicare & Medicaid Services. Terms of the deal were not disclosed.
