Industry Week in Review – May 25, 2012

Just six years after NASA established the Commercial Orbital Transportation Services Initiative, this Friday, Space Exploration Technologies Corp., or SpaceX, became the first commercial space provider to successfully reach and dock its unmanned re-supply craft, Dragon, with the International Space Station.  The linkup marks a significant step in NASA’s move towards transferring orbital cargo and crew transport responsibilities from the space shuttle to the private sector.  NASA hopes companies, like SpaceX, will allow the space agency to focus its efforts, instead, on a decades-long goal of sending humans on deep space exploration missions, first to an asteroid, and then Mars.

After finding Type 2 cracks in many of its A380’s wing rib feet earlier this year, Airbus has announced that it will have to retrofit 120 aircraft to resolve the problem while a permanent fix is implemented into new build aircraft.  The aircraft manufacturer has only delivered 74 A380s to date, however the total number of retrofits will include work already in the production system, raising the total aircraft count to 120. With two fixes developed by Airbus to permanently deal with the cracking of rib feet – one addressing the retrofits and the other altering the production process – the total cost of resolving the situation is expected to top €260 million ($327 million).

Airbus is currently in discussions with airlines over how best to implement the retrofits. Airlines will have to choose whether to park aircraft for several weeks, in order to fully install the fix, or to implement changes over time during several C-checks. Others are choosing instead, to not take delivery of aircraft until the permanent solution is installed. Airbus’ permanent fix should be available in early 2013

Big Movers

HEICO Corp. (Up 13.1%) – Shares rose this week after the Company increased its year-over-year FY2012 estimates in net sales to 17% to 20% and growth in net income to 12% to 14%, up from 15% to 17% and 10% to 12%, respectively.

Smith & Wesson Holding Corporation (Up 10.6%) – Shares rose this week after the company reported April Quarter sales around $129 million, compared to estimates of $120 million. Additionally, the Company’s backlog increased to about $439 million, up about 135% compared to a year ago.

Relevant Transactions

Robbins-Gioia, LLC (“RG”) has been acquired by a management led team of investors for an undisclosed amount.  The acquisition will once again establish RG as an independent, U.S.-owned entity and will allow management to refocus on expanding its services and technology business.  The Company was acquired by the Institute for International Research in 2005, which was in turn acquired by Informa, the world’s largest conference and event company. Robbins-Gioia provides management consulting services to non-profit organizations, large government agencies, and major commercial companies worldwide.

Exceed Corporation acquired Valor Concepts, a designer and integrator of complex security and communication systems for the Federal Government.  The acquisition will provide Valor with the necessary capabilities in system design, consulting, system integration, and related services that are essential in the security and IT industries. Terms of the deal were not disclosed.

Moelis Capital Partners acquired Mxi Technologies, a provider of aviation maintenance management software solutions to commercial airlines, OEMs, MRO organizations, and defense operators.  The acquisition will help Mxi continue to grow and meet the needs of customers and prospects alike.  Terms of the deal were not disclosed.

Precision Castparts Corp. to acquire Dickson Testing Company, Inc. and Aerocraft Heat Treating Company, Inc., for an undisclosed amount.  Dickson tests aircraft parts by measuring metrics such as fracture toughness, shear, creep, stress fracture, corrosion, salt spray and alloy depletion, while Aerocraft, heat treats steel, titanium and high-temperature materials for aircraft-engine and structural parts. The two businesses enable Precision Castparts to integrate and expand their capabilities both within its facilities and with its many valued aerospace customers worldwide.

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