Aerospace, Defense & Government Services

What We’re Reading

Content Summary

In this March edition of our Aerospace, Defense & Government Services Industry Update, we review recent articles and developments impacting our target end markets. We also provide perspective on recent trends within the public markets as well as the M&A markets.

Navigating the Acceleration Economy: Re-Designing the Aerospace Electronics Supply Chain to Save Costs, Improve Quality & Gain Value

“Times are good and getting better in aerospace...For original equipment manufacturers (OEMs), this positive outlook is tempered by the fact they are under enormous pressure to lower costs of operations while continuing to provide the highest product reliability and faster time to market. Success requires re-evaluating existing partner networks and consolidating the number of suppliers to create modern supply chains that are more responsive and resilient to emerging market demand shifts.”

Aerospace Manufacturing and Design

Global Bizav Utilization Moves Higher in 2018

“Global business aircraft utilization swung higher in the fourth quarter and all of 2018 without being affected by a slight drop in Part 91 flights, according to the Jet Support Services Inc. (JSSI) Business Aviation Index released today. The index reported 2018 flight activity year-over-year increases of 4.9 percent in the quarter and 4.7 percent for 2018. Part 91 flight activity was down 1.5 percent year-over-year in the fourth quarter, while Part 135 jumped 9.5 percent in the same period.”

AIN

Guard Members to See Expanded Use of Robots

“The use of robots continues to grow within the National Guard and Guard members are likely to soon see additional robots with expanded capabilities, said an Army National Guard acquisitions official. ‘It's going to be a big difference in the future and I think it could impact the Guard in different areas,’ said Army Col. Nicole Clark, the Army Guard's chief of acquisition management. ‘From what we're seeing, there is just more and more development of this at a faster pace.’”

 National Guard

Shutdown Recovery Will Take Months or Longer

“The pain of the partial shutdown figuratively leaps off the screen when reviewing the results of our survey of over 100 government contractors. While a deal has been reached to end the shutdown– at least for a few weeks – the pain will be felt by contractors for a long time, according to the results of our survey. Over 17 percent of respondents said it will take more than a year for their company to recover. Another 16 percent said it would take six months to a year to bounce back.”

Washington Technology

Perspective on Public Markets^a,b,1

Most Significant Stock Price Movement – January 31st to February 28th

Successful profitability initiatives and recent investment announcements drive price increase

 

 

 

 

Outperformance in Q3 earnings and announcement of quarterly dividend drive favorable price move

 

 

 

 

New orders and new technology announcements driving the price increase

Recent M&A Transactions²

 Indicates disclosed enterprise values in millions USD, unless denoted with “B” (billion)

 

 

a. Current stock prices in USD as of 2/28/19

b. Aircraft OEMs: BA, BBD.B, EADS, ERJ

         Aerospace Supply Chain & Aftermarket Support: AIR, ARNC, ATRO, B, BBA, DCO, ESL, HEI, HRX, HXL, KAMN, MAL, MGGT, MOG.A, ROLL,
         SAF, SNR, SPR, TDG, TGI, WAIR, WWD

         Diversified Industrial: AME, CR, CW, ETN, GE, HON, PH, RR, TXT, UTX

         Defense Prime Contractors: BA, BAE, EADS, GD, HO, HII, LMT, NOC, RTN

         Defense Technologies: AVAV, CHG, CMTL, COB, CUB, ESLT, FLIR, HRS, KTOS, LLL, MRCY, TDY, ULE

         Government Services: BAH, CACI, KEYW, LDOS, MANT, SAIC, VEC

         Diversified Services: ACM, BAB, FLR, GIB, ICFI, JEC, KBR, SRP

 

1. FactSet

2. Mergermarket