Industry Week in Review – January 24, 2014
Bombardier’s rough beginning to 2014 continues as the company announced it would lay off approximately 1,700 employees from its aerospace division, or 4.4% of its aerospace workforce, due to continued difficulties within the tough market and ongoing delays of its CSeries line of aircraft. Company spokesmen stated that the cuts are part of a companywide cost-containment plan, which has been in place since late 2012 and are not necessarily linked to delays with the CSeries. Of the affected employees, roughly 1,100 in the Montreal region will be affected while the remaining 600 are in North America, primarily Wichita, Kansas. Bombardier stated it delivered a total of 238 aircraft in 2013, five more than the previous year, but still 10 fewer than its original forecast.
Following funding cuts in the recently approved omnibus budget bill, the U.S. Army’s Ground Combat Vehicle program has come to a halt. The Army requested $592 million in its fiscal 2014 request for the continued development of the program, but after Congress slashed $492 million from the request, the next-generation infantry carrier has become no more than a technology development and study program. Senior officials hope the remaining funding will allow the Army to continue developing technology so that the service can be revived in the future.
Following last week’s passage of the FY14 omnibus spending bill, the White House announced on Thursday that it will release the President’s Budget Proposal for FY15 on March 4th. According to the announcement, the proposal will incorporate elements of the budget deal reached in December, which set FY15 discretionary spending at a total of $1.014 trillion. The Administration noted the partial relief from sequestration achieved by the budget deal would have to be worked into the President’s budget, which had previously assumed steeper spending cuts.
Big Movers
Parker-Hannifin Corporation (Down 10.0%) – Shares were down this week after the Company offered an updated fiscal year 2014 earnings per share outlook that was well below forecasts and analyst estimates.
Moog Inc. (Down 8.1%) – Shares were down this week after the Company announced fourth quarter earnings below analyst estimates, resulting in the Company issuing lower than expected fiscal year 2014 earnings and revenue guidance.
Relevant Transactions
Astronics Corporation to acquire EADS North America Test & Services, Inc., a provider of engineered automatic test systems, subsystems, and instruments for the semi-conductor, consumer electronics, commercial aerospace, and defense industries. The deal is worth an estimated $53 million.
AVX Learning, LLC acquired Adayana, Inc., a provider of human capital development and organizational performance improvement solutions to various industries including healthcare and the U.S. federal government. The deal is worth an estimated $5 million.
