What We’re Reading

In this June 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, where valuations remain at or near record highs, as well as the M&A markets, which continue to be strong across all three sub-verticals.

ENGINE TRIO HAS DUE DATE FOR BOEING NMA PROPOSALS

“The trio of largest engine makers has a June 27 deadline to respond to Boeing’s formal request for proposals to power the aircraft that will eventually become its 797 [and] while Boeing hasn’t yet finalized if it will offer or launch the NMA – which it wants in service by 2025 – the company is advancing swiftly with its aircraft concept. At the highest level, the RFP is a want ad for a 45,000 pound thrust turbofan to power a pair of new small twin-aisle aircraft.”

The Air Current

WHY PENTAGON AND SILICON VALLEY FIND WORKING TOGETHER HARD

“Many years into the Pentagon’s outreach campaign to befriend Silicon Valley and the technology community, headlines this month would lead you to believe things are not going well.”

Aviation Week

PACE OF PRINTING 3-D METAL AVIATION PARTS PICKING

“3-D printing, or additive manufacturing, of polymer parts for aircraft interiors is decades old. But metal is not naturally a convenient liquid, and metal aircraft parts tend to be safety-critical, so printing metal parts has taken longer to advance. Nevertheless, the pace of metal printing is picking up. It started with an OEM of engines, where weight and performance are critical. It is now spreading well beyond to a variety of components and structures.”

MRO Network

DOD'S CLOUD PUSH PROVES THAT THE INNOVATION PYRAMID HAS FLIPPED

“The Defense Department’s ongoing work toward a pair of big-ticket cloud computing acquisitions show the reversal of the U.S.’ innovation pyramid from government to the commercial sector but some of that can also be traced to policy changes.”    

Washington Technology

Perspective on Public Marketsa,b,1

Stock Price Performance – Last 12 Months

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Median % Change (1 Month)

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Median % Change (12 Month)

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Most Significant Stock Price Movement – May 31st to June 29th

Recent M&A Transactions2

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Notes

a.Current stock prices in USD as of 6/29/18

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

Aerospace Supply Chain & Aftermarket Support: AIR, ARNC, ATRO, B, BBA, DCO, ESL, GKN, 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, CSRA, EGL, KEYW, LDOS, MANT, SAIC, VEC

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

Sources

1. FactSet

2. Mergermarket