What We’re Reading

Content Summary

In this October 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.

Regulators to Urban Air Mobility Industry: ‘We Want to Become More Agile’

“Industry and regulatory leaders in urban air mobility (UAM) gathered this week at the Global Urban Air Summit in Farnborough, with regulators stressing their commitment to matching industry's pace but underlining the litany of challenges faced by the emerging market. During an international civil aviation regulatory panel discussion…the UK’s Civil Aviation Authority underlined the importance of learning from trials of UAM technology to developing global regulatory standards.”

Aviation Today

Parts Distribution: The New MRO Battleground

“Aircraft parts distribution is an underappreciated and vital element of the aerospace ecosystem that is rapidly consolidating and experiencing greater influence by Airbus and Boeing. The scale of aerospace parts distribution is impressive, with $22 billion spent annually by civil and military customers.”

MRO Network

Opinion: Upskilling A&D’s Workforce in a Time of Disruption

“This is a time of significant opportunity for the aerospace and defense industry, with global air travel demand expected to grow through 2035 and positive levels of defense spending. The industry is thriving and innovating to meet evolving customer demands. But as technological change accelerates, so does the competition for talent that can develop technology for continued innovation.”

Aviation Week

Coming Divestitures Likely to Spawn New Government Services Players

“Fluor Corp.’s announcement Tuesday that it will divest the company’s government services unit puts another such business out in the market. It also means that perhaps two such segments of so-called architecture, engineering and construction companies will eventually no longer be a part of that group…In the cases of Fluor and also AECOM, analysts at Bloomberg Intelligence see their moves to exit government services as having more to do with the broader corporation’s desires to refocus themselves and also clean up their balance sheets.”

Washington Technology

Perspective on Public Marketsa,b,1

Stock Price Performance – Last Twelve Months

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Most Significant Stock Price Movement – August 31st to September 30th

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Strong backlog and better than expected revenue and earnings driving increase in stock price

 

 

 

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Sudden spike in trading activity ahead of quarterly earnings release pushed stock price upward

 

 

 

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Slight reduction in stock price after achieving 52-week high upon release of strong Q3 earnings in early September

Recent M&A Transactions2

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a. Current stock prices in USD as of 9/30/19

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, KTOS, LHX, MRCY, TDY, ULE

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

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

 

1. CapitalIQ

2. Mergermarket

 

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