What We’re Reading
In this November 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.
30K Feet: Key Takeaways from the Revolution.Aero Conference
Harris Williams professionals regularly attend industry conferences and events. On the flight home, they share three key takeaways to help shape your investment priorities.
Event Overview: The Revolution.Aero conference discusses how new technologies are shaping the urban air mobility environment and the future of the business aviation and general aviation market.
Further M&A is Expected Among MROs
“Another round of ownership changes are expected in the maintenance, repair and overhaul sector, driven by high valuations and private-equity companies reaching the end of their investment cycle. ‘We think, in [the] next couple of years, we’ll see a lot of private-equity companies looking to make a return on their investment,’ Alton Aviation Consultancy managing director Jonathan Berger told delegates at MRO Europe Oct. 16. ‘Right now, the whole market is hot.’”
The U.S. Army Bets on Space as Its ‘Path to the Future’
“The U.S. Army has had a role in space for years, from soldiers that operate satellites to roles as astronauts, and the service is reliant on the domain for communications and surveillance. But as the United States expands its mission in space, things are heating up for the typically terrestrial service.”
Corporate Earnings Offer Key Insights on Competitive Environment
“Large defense companies and one federal technology business reported this week their latest quarterly financial results to investors. They offer more than just numbers but also the broader trends that drive them as well as what they are optimistic about and perhaps where they might be pessimistic. The next three weeks will see more of the government market’s publicly-traded players adding their details to the picture.”
Perspective on Public Marketsa,b,1
Stock Price Performance – Last Twelve Months
Most Significant Stock Price Movement – September 30th to October 31st
Reported strong revenue growth and backlog, particularly with narrow-body commercial aircraft and defense platforms
Announced strategic & operational review and also reported a significant loss in Q3 earnings
Reduced organic revenue target for 2019 after lower than expected sales in space & transport divisions
Recent M&A Transactions2
a. Current stock prices in USD as of 10/31/19
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, KTOS, LHX, MRCY, TDY, ULE
Government Services: BAH, CACI, LDOS, MANT, SAIC, VEC
Diversified Services: ACM, BAB, FLR, GIB, ICFI, JEC, KBR, SRP
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