What We’re Reading

Content Summary

In this July 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.

Opinion: How a Move to Create More Competition Backfired

“Much has been written lately about aviation and space history, including the 50th anniversary of the first flights of the Concorde and Boeing 747 and Airbus’ founding. And more is coming, with the anniversaries of the Apollo 11 Moon landing in July and Embraer’s founding in August.

Another historical milestone is worth looking at as well: July 13, 2008.”

Aviation Week

Regulators Eye Possible Standards for Supersonic Flight

“A little more than 15 years after the Concorde took its final flight, the industry is beginning to see progress both within the U.S. FAA and the broader international spectrum on efforts to pave the way for the return of supersonic flight. But it may be at least a half-dozen years before any significant regulatory changes are in place.”

AIN Online

Opinion: What The UTC-Raytheon Deal Says About Aerospace’s Future

“The mighty consolidation wave that swept over the aerospace and defense industry after then-Deputy U.S. Defense Secretary William Perry’s ‘Last Supper’ in 1993 is taking another turn. The next inflection in the restructuring story is the proposed merger of United Technologies Corp. (UTC) and Raytheon to form what would be the third-largest global aerospace company by revenue, Raytheon Technologies. It is a stunning deal, marking a sharp change in our outlook on the markets and establishing a bellwether of new corporate-development plot lines to motivate the next chapter in the saga.”

Aviation Week

Private Equity's Growing Role in the Federal Market

“Every now and then someone says something that at first sounds like a joke and at least a little sarcastic. But then then as you listen, you realize they weren’t being flippant. They were actually making a keen observation…Senior Staff Writer Ross Wilkers was moderating a panel that included Karen Trowbridge, former CEO and current chairman of Trowbridge & Trowbridge; and John Hynes, CEO of Applied Insight. Both companies are backed by private equity groups and represent a trend we are seeing of increased activity by them to build middle-tier platforms.”

Washington Technology

Perspective on Public Marketsa,b,1

Stock Price Performance – Last Twelve Months

screen_shot_2019-07-18_at_5.36.20_pm.png

screen_shot_2019-07-18_at_5.36.44_pm.png

Most Significant Stock Price Movement – May 31st to June 30th

screen_shot_2019-07-18_at_5.37.27_pm.pngStock price rose after sales and earnings out performance in Q3 FY19 and an upward earnings revision for Q4

 

 

 

 

screen_shot_2019-07-18_at_5.38.14_pm.pngOutperformance driven by strong recent quarterly sales as well as tailwinds in its global military business

 

 

 

 

screen_shot_2019-07-18_at_5.39.03_pm.pngRecent announcement of strategic partnership with Air France Industries KLM Engineering & Maintenance

 

Recent M&A Transactions2

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picture1_324.pngIndicates disclosed enterprise values in millions USD, unless denoted with “B” (billion)

a. Current stock prices in USD as of 6/30/19

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

         Aerospace Supply Chain & Aftermarket Support: AIR, ARNC, ATRO, B, BBA, DCO, 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, LDOS, MANT, SAIC, VEC

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

 

1. FactSet

2. Mergermarket

 

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