On Thursday new details emerged about the effects of sequestration or a year-long continuing resolution on the Navy’s operations. In a message sent by Admiral Jonathan Greenert, chief of naval operations, the Navy’s top officer outlined cost-cutting steps the Navy is already taking and could further take in preparation for spending reductions.
It noted that under a continuing resolution, the Navy would see a $4.6 billion shortfall in operations and maintenance (OMN) requirements for the remainder of fiscal 2013, while sequestration would double that shortfall. Specific immediate actions noted by Adm. Greenert include the cancellation of overhauls to about 30 surface ships and a reduction of nearly 10 percent of government shipyard workers through termination of temporary employees and a civilian hiring freeze.
If sequestration does occur and the Navy does not gain authority to move investment funds into OMN, then more drastic effects would occur, such as stopping all non-deployed operations for training and exercise. According to the note, this action would ultimately prevent carrier strike groups and amphibious ready groups from deploying as well. Pursuant to Deputy Secretary of Defense Ashton Carter’s guidance issued on January 10th regarding such preparations, all of the actions being taken immediately are reversible. However, Adm. Greenert warned that once sustainment training is shut down, it could take the Navy’s ships and squadrons about nine months to conduct the training and maintenance needed to deploy again.
Oshkosk Corporation (Up 21.8%) – shares were up for the week after the company raised its FY 2013 earnings guidance to an EPS range of $2.80 – $3.05, exceeding analyst estimates of $2.63. The announcement came as the company reported a strong 1st quarter ended December 31, with earnings of $0.51 per share, compared with $0.43 a year earlier. Total sales fell 6% in the quarter, driven in large part by a 21% decline in its defense business revenue. However, the business segment reported operating margins of 7.5%, beating analyst expectations.
Embraer SA (Up 15.4%) – shares were up for the week following the company’s announcement that it has signed an agreement to deliver 47 jets to Airways Holdings Inc. The agreement includes the option to purchase an additional 47 jets, which would bring the total value of the order to $4 billion.
Kidd & Co., in collaboration with Centerfield Capital Partners, acquired Imaginetics, a manufacturer of precision metal components and assemblies for the aerospace industry. The transaction will enable the Company to leverage Kidd & Co.’s experience and financial support to expand its product offerings and attract customers in new markets.
Network Designs Inc. has merged with BitSec Global Forensics, a provider of digital forensics, electronic discovery, and data breach investigation services, for an undisclosed amount. The merger will enable the companies to expand their cybersecurity services to include vulnerability, penetration, and application testing.