ITT Exelis Wins NVG Contract
Filed under: Business Line, Companies, Contract Awards, Events, ITT Corporation, ITT Exelis, logistics, production program, Services, U.S. Army
ITT Exelis (XLS) is the old defense part of ITT Corporation (ITT) that split into 3 parts last year. ITT Corporation is the heir to ITT Industries which was a conglomerate of different businesses including several defense product lines including night Vision equipment, radars, electronic warfare systems as well as engineering and technical support. The defense part along with its water and pump lines were set up as separate companies just over a year ago.
ITT Exelis has continued to compete in their core defense markets and was just recently awarded another contract by the U.S. Army for Night Vision Goggles (NVG). This new Indefinite Delivery / Indefinite Quantity (ID/IQ) contract for Generation 3 systems could be worth over $200 million. Under the ID/IQ structure the Army will order different tasks of what they need so in the end Exelis could see less then the total value of the contract.
The U.S. military has invested heavily in such equipment over the last forty years and has a significant advantage at night operations due to this. The googles are able to be used by aircrew as well as ground units to improve their capabilities in night operations. ITT and now Exelis is one of the leading producers of this equipment in the world.
Defense M&A — Seeking Alpha
Filed under: Acquisitions, Business Line, Companies, Congress, development program, Events, Federal Budget Process, HII, ITT Corporation, Northrop Grumman Corp., production program, Seeking Alpha
Here is an article I wrote for Seeking Alpha on potential defense M&A activity.
Update on ITT Since the Break Up – Seeking Alpha
Filed under: Business Line, Companies, Earnings, Events, ITT Corporation, production program, Seeking Alpha
Here is an exclusive article I wrote for Seeking Alpha on the status of ITT’s components after their first earning reports. It may be found here.
ITT Exelis Lays Offs Workers As SINGCARS Production Ends
Filed under: BAE Systems, Boeing, Business Line, Companies, Contract Additions, Contract Awards, Department of Defense, Events, Federal Budget Process, ITT Corporation, logistics, Oshkosh Truck Corp, production program, Proposal, Restructuring, Services, U.S. Army
ITT Exelis (XLS) is the defense part of the former ITT Corporation (ITT) which at the beginning of this month broke into three parts. The other two parts deal with pumps and electronics. ITT Corporation itself was created by the division of the old ITT Industries into three parts twenty years ago severing the production company from Sheraton hotels and Hartford insurance.
ITT Corporation did a lot of different things for the U.S. and other nations defense establishments including making radars, airborne jammers and radios as well as providing maintenance and other services. One of their core products was the Single Channel Ground and Airborne Radio System (SINCGARS) which became the standard tactical radio for the U.S. military and many allies. ITT and other companies under license mad tens of thousands of the radios for almost three decades. Now the SINCGARS is ending its life as the new Joint Tactical Radio System (JTRS) comes into production as well as other new systems. In June ITT received a contract to provide engineering support for the system as it will remain in service for several more years.
Even with the decision last month to end the ground radio portion of the JTRS program headed up by Boeing (BA) does not mean more SINGCARS work. The Army is planning on developing a new series of radios to fulfill the JTRS requirement rather then continue buying the legacy ITT system.
What this means is that ITT Exelis will continue to restructure its work force especially that part supporting SINCGARS. Layoffs had already been announced in the past but this week a further 200 jobs at their Fort Wayne, IN facility will be eliminated. Many of these positions were short term ones created when the last contract was awarded to cover a surge in requirements. This will bring the total jobs eliminated to over 700.
That is one of the problems with defense contracts, especially production related ones, as the military usually has a fixed number of systems to buy and will always be working on an upgrade or replacement. If the current contractor does not win the new work they will reach a point where their product is no longer needed. Gone are the days like in WW II when the U.S. and other countries could afford to have multiple systems to meet a requirement. SINCGARS is ending, JTRS and other radios is starting adn ITT Exelis has less work. Unfortunately that means less jobs.
Another unfortunate thing is that often the new work takes place at a different plant in another part of the country or world. That can bring serious economic harm to a locale. Sealy, TX is going through this after BAE Systems (BAE:LSE) lost the U.S. Army truck contract to Oshkosh (OSK) who moved the production to their plant in Wisconsin. The Texas town’s major employer now had no work and it is slowly shutting down eliminating many jobs. Sealy will probably face economic hardship for several years. Its not Oshkosh’s, the Army or BAE Systems’ fault that production moved it is just how the system works.
ITT Exelis to maintain their workforce in Fort Wayne will need to find a new product to make at that plant or see its number of employees slowly wither away. With the coming cuts in U.S. defense spending there will be many communities across the U.S. that will see the same affect as programs are reduced or ended. The U.S. economy will take a significant hit as these jobs are eliminated along with the spending.
ITT Exelis (nee Defense) Enters Brave New World of Defense Contracting
Filed under: Business Line, Companies, Department of Defense, development program, Events, Federal Budget Process, IT, ITT Corporation, logistics, Military Aviation, northrop grumman, Northrop Grumman Corp., production program, Restructuring, Services
ITT Exelis (XLS) is what used to be ITT Defense, one of the component parts of the former ITT Corporation (ITT). That company decided to break itself into three separate parts spinning its defense, water and electronic components into separately traded companies. Reportedly the flat performance of its defense business had been one of the prime factors driving the decision.
In the early Nineties ITT Corporation itself was formed as ITT broke itself apart into ITT Industries; Starwood Resorts, which managed hotels and casinos; and Hartford which sold insurance. ITT Industries changed its name to ITT Corporation in the last decade.
ITT Exelis will now have all of the defense related industries which includes electronic warfare systems, radars, command & control systems, intelligence and surveillance as well as defense services and sensor and networks.
The new company is estimated to have earnings of about $800 million for this year and there are already rumors of the defense component being the target of acquisitions by other larger defense contractors.
ITT follows Northrop Grumman (NOC) which earlier this year separated its shipbuilding piece into a separate company entirely, Huntington Ingalls Industries (HII). Northrop was concerned that with budget cuts and the U.S. Navy’s shipbuilding plans that growth in this area would be very limited. This allows them to separate that sector from other more successful parts of the parent company.
How long ITT Exelis makes its as a unique company depends on how quickly the U.S. defense spending decreases and decisions about what the U.S. and Western Europe buys. If there are smaller amounts of budget available for new electronic systems ITT Exelis could be facing a very limited market. This might make it attractive to someone looking at buying capability and access to specific parts of the ITT Exelis portfolio and would see chunks of the company wither away.
The other question will be if similar moves are made by defense contractors splitting their military and commercial arms or jettisoning pieces that in the view of management and shareholders do not have much upside in the future. Exelis could be the start of a trend.
ITT unveils new line of next generation goggles at AUSA — Press Release
Filed under: Business Line, Companies, Events, ITT Corporation, Press Releases
ITT unveils new line of next generation goggles at AUSA
ROANOKE, Va., Oct. 10, 2011- ITT Corporation (NYSE:ITT) unveils a new line of night vision goggles called i-Aware at the 2011 AUSA Annual Meeting & Exhibition. The new i-Aware goggles offer a spectrum of multipurpose night vision goggles and innovative visioning solutions for the U.S. military, first responders, homeland security, and international customers.
The i-Aware family of products are equipped with the capability to transmit and receive imagery from the soldier’s point of view, and also display live video feeds and geospatial intelligence information. In addition to the newer goggles, i-Aware products also offer an upgrade capability to the standard AN/PVS-14 goggle. This upgrade permits the goggle to be retro fitted with a clip-on display that can import colored imagery and video from the battlefield.
“ITT understands the challenges of not only conquering darkness, but also sharing timely imagery and information to protect and save lives,” said Bruce A. Wald, vice president and general manager of ITT’s Night Vision & Imaging business area. “The i-Aware product line allows the soldier or first responder the best light secure, night and visioning capability, along with the ability to view or share additional information on the same unit for enhanced situational awareness.”
The i-Aware product line uses standard interfaces to provide flexibility, expanded situational awareness and interoperability with other fielded systems. ITT has transformed the traditional night vision goggle into a multifunctional visualization device that can move battlefield information across different nodes.
About ITT Geospatial Systems
ITT Geospatial Systems (www.geospatial.itt.com) headquartered in Rochester, N.Y., is a global supplier of innovative night vision, remote sensing and navigation solutions that provide sight and situational awareness at the space, airborne, ground and soldier levels. ITT Geospatial Systems solutions range from image, and data capture through processing and dissemination. Key applications include image intensification and thermal imaging; advanced power supplies; multi-spectral image systems; weather and climate monitoring; space science; intelligence, surveillance and reconnaissance; GPS-based positioning, navigation and timing systems; and image exploitation software. Using our technologies, customers can move beyond mere image acquisition to image interchange and true knowledge sharing.
About ITT Corporation
ITT Corporation is a high-technology engineering and manufacturing company operating on all seven continents in three vital markets: water and fluids management, global defense and security, and motion and flow control. With a heritage of innovation, ITT partners with its customers to deliver extraordinary solutions that create more livable environments, provide protection and safety and connect our world. Headquartered in White Plains, N.Y., the company reported 2010 revenue of $11 billion. www.itt.com.
ITT to showcase aerospace and defense technologies at the 2011 AUSA Annual Meeting — Press Release
Filed under: Business Line, Companies, Events, ITT Corporation, Press Releases
ITT to showcase aerospace and defense technologies at the 2011 AUSA Annual Meeting
Company to unveil the new ITT Exelis brand in anticipation of the pending spinoff of its defense business from ITT Corporation
WASHINGTON, Oct. 6, 2011 — ITT Corporation’s (NYSE: ITT) Defense & Information Solutions business will showcase its industry-leading aerospace and defense products and services at the 2011 Association of the United States Army (AUSA) Annual Meeting and Exposition in Washington D.C., Oct. 10-12, 2011.
At the same time, while maintaining its heritage of innovation and customer focus, the company will unveil the new ITT Exelis brand as it prepares to spin-off from ITT Corporation in a previously announced plan to separate into three distinct, publicly traded companies. The separation will be completed Oct. 31, 2011.
With a focus on customer relationships and innovative solutions, the new ITTExelis will deliver products and capabilities in C4ISR (command, control, communications, computers, intelligence, surveillance and reconnaissance)-related products and services, as well as technical and information services.
ITT Exelis will function as an agile, efficient and reliable supplier of critical systems, components and services for core U.S. government customers and its growing allied international government and commercial customer base. The new company will hold leading positions in the areas of C4ISR-related electronics; air traffic management; secure, integrated data and voice networks; composite aerostructures; and logistics and technical services. The future ITT Exelis will also maintain core strengths in radios, night vision and soldier-protection systems that continue to evolve and serve the warfighter.
“This fall is a particularly exciting time for us as we evolve to become ITT Exelis,” said David Melcher, president of ITT Defense & Information Solutions, and future CEO of ITT Exelis. “There’s no greater opportunity for us to showcase our new company and brand than at AUSA, the premier land warfare conference for our largest customer “Throughout the week we’ll be demonstrating our latest solutions for our domestic and international customers and displaying our capabilities as an agile provider of rapidly fielded, affordable products and services.”
Some highlights of the next-generation technologies on display within the ITT Exelis AUSA exhibit include:
§ Displays of the company’s new secure GhostRider smartphone and secure GhostWarrior tablet approved for use in secret-and-below applications using commercial-off-the-shelf hardware combined with ITT’s National Security Agency- certified secure network processor.
§ A display of the company’s Hands-Free Audio Video Capturing and Transcribing Transmission System, the newest in ITT technology combining TASERTM International’s AXONTM audio and video capabilities with the ITT Spear Net radio. This innovative merging of technologies enables the end user to focus on its mission while simultaneously capturing information in digital video and audio.
Displays of the Rifleman Radio, a standalone handheld radio designed to communicate sensitive but unclassified real-time, intra-squad communications by the dismounted soldier. The Rifleman Radio allows the soldier to participate in voice networks and automatically transmits position location information to the battlefield with embedded GPS.
Industry-leading sensor-fused night vision goggle technology that provides the warfighter greater situational awareness with the ability to receive imagery into a goggle, allowing the operator to identify friendly locations, decrease fratricide on the battlefield and improve command execution.
Demonstrations of the company’s Enhanced Advanced Geospatial Imagery Library Enterprise Access System. It is a deployable, enterprise-ready imagery management and dissemination system supporting contingency operations that dramatically reduces the time needed to deliver crucial geospatial intelligence anywhere in the world.This system helps the warfighter find accurate geospatial data to make fast, effective decisions that impact mission success.
A display of the CRUX(Create, Regulate, Utilize, eXport) on-board vehicle power generator that provides more than double the electricity of conventional alternators.It supplies enough power, even at engine idle, to run the full range of vehicle-mounted electronics. The CRUX generator is the only product that delivers the power of a generator in the footprint of an alternator, saving fuel and simplifying logistics.
Demonstrations of the Automatic Dependent Surveillance-Broadcast system, the cornerstone technology of the Federal Aviation Administration’s Next Generation Air Transportation initiative that will transform the ground-based air traffic control system of today to a more efficient, satellite-based system.
Also on display within the company’s exhibit will be an MRAP (Mine Resistant Ambush Protected) vehicle featuring:
§ ITT’s Global Network On-The-Move Active Distribution, or GNOMAD, a proven Ku-band satellite communications system that extends a robust, secure, mobile network to soldiers, sailors, airmen, and Marines operating at the forward edge of the last tactical mile.
§ SINCGARS (Single Channel Ground and Airborne Radio System,) with the second channel enabling SideHat radio solution, offers rapid, affordable, and interoperable wideband network communications for Early-Infantry Brigade Combat Team deployments. With more than 350,000 SINCGARS capable of easily adding SideHat, the currently deployed system provides an economical second channel for both mounted and dismounted soldiers on the battlefield to exchange vital voice and data, including video and position location information, simultaneously and in real time.
§ The CREW 3.3 Counter Improvised Explosive Device (CIED), the next generation of CIED technology development. This new system moves from the current platform-based solutions designed solely to defeat improvised explosive devices to one that also includes data collection and networking sensors.This improves awareness of the battlespace and increases the ability to detect and rapidly respond to threats.
To learn more about ITT Defense programs on display at AUSA, please visit: http://defense.itt.com/ausa2011. The ITT exhibit is located in Hall D/E, booth 6417.
Follow ITT Defense on Twitter to get updates on the latest developments and news at the show @ITTDefense.
About ITT Corporation
ITT Corporation is a high-technology engineering and manufacturing company operating on all seven continents in three vital markets: water and fluids management, global defense and security, and motion and flow control. With a heritage of innovation, ITT partners with its customers to deliver extraordinary solutions that create more livable environments, provide protection and safety and connect our world. Headquartered in White Plains, N.Y., the company reported 2010 revenue of $11 billion. www.itt.com
Does Reports of United Technologies Acquisition Herald Start of Major Defense M&A?
Filed under: Business Line, commercial aviation, Companies, development program, General Dynamics, Goodrich, ISR, IT, ITT Corporation, Lockheed Martin, logistics, Military Aviation, Northrop Grumman Corp., Pratt & Whitney, production program, Rockwell Collins, Sikorsky
Update — On 22 September United Technologies released a press release stating their intent to acquire Goodrich for an estimated price of $18.4 billion. This would be the largest defense and aerospace related acquisition in many years. The transaction will still take several months as it goes through regulatory review. The CEO of United Technologies stated “Goodrich delivers on all of our acquisition criteria. It is strategic to our core, has great technology and people, and strengthens our position in growth markets.”
Late last week various reports began to arise the United Technologies Corp. (UTX), a large and diverse company that among its products makes military helicopters and jet engines, was interested in acquiring either Goodrich Corp. (GR) or Rockwell Collins (COL). Both of these companies make aerospace components for military and commercial uses.
The cost of the deal would be quite high compared to other recent defense M&A. Somewhere in the neighborhood of $7 billion for Goodrich requiring United Technologies to borrow a large amount of the necessary capital. Last year Goodrich’s earnings were around $7 billion while United Technologies’ sales were about $54 billion. Rockwell’s most recent quarter showed $1.19 billion in sales.
All three companies make major components for civil and military aviation so they synergy of the acquisition is there. They also all have significant business with the U.S. Department of Defense and other militaries across the world. The move would also fit in with how United Technologies is organized as it keeps strict lines of business under separate former corporations such as Sikorsky Aircraft, Pratt & Whitney and Hamilton Sundstrand. Moving another company into the group would not be difficult.
To this point there have been some large M&A moves this year by large defense contractors. Both General Dynamics (GD) and Lockheed Martin (LMT) have acquired health technology companies recently with the GD move coming in at close to $1 billion. Northrop Grumman (NOC) also spun off their shipbuilding arm into a new company called Huntington Ingalls Industries (HII) rather then sell it but it still could be a target for acquisition.
This move by United Technologies though is much larger and seems to herald a return to the Nineties when medium and even large defense contractors were merged and acquired. This was due to the lack of demand from the U.S. compared to the decade previously and it is expected that U.S. defense spending will decline in the near future due to deficit issues and the reduction in combat in Afghanistan and Iraq. The Senate Appropriations Committee in their mark-up of 2012 spending froze it at 2011 levels which is a cut when compared to what the Administration requested of about $26 billion.
The acquisition also works well for United Technologies as both companies mentioned have a significant part of the civil aviation industry as it does itself. This will allow expansion there that would offset any decline in defense sales.
If this acquisition goes through it might start a chain of similar moves as defense contractors begin to adjust to the new market and parts are jettisoned or added. ITT Corporation just broke off its former defense business into a new company called ITT Exelis. This might be a target for acquisition as it should be similar to the $7 billion in price for Goodrich.
If the United Technologies deal does happen it might be what the defense industry needs to push companies to make decisions about larger M&A that could lead to market contraction similar to the Nineties. Although the Defense Department has made clear that they do not want any of the larger defense contractors merging with each other.
Defense Industry Projects a Good 2011 but 2012 and Out Look Worse
Filed under: Acquisitions, Boeing, Business Line, Companies, Congress, Contract Additions, Contract Awards, Department of Defense, development program, Events, Federal Budget Process, General Dynamics, IT, ITT Corporation, L-3, Lockheed Martin, logistics, medicine, Military Aviation, northrop grumman, Northrop Grumman Corp., production program, Restructuring, Services, U.S. Air Force, U.S. Army, U.S. Navy
Most of the large and mid-sized defense contractors reported their most recent quarterly results in the last few weeks. While for the quarter the results were mixed with some seeing decent increases in earnings and revenue while others saw a drop overall they all felt that they would meet or exceed their estimates for the full year. The 2011 defense budget still remained high due to the extra spending for Afghanistan and Iraq as well as investment in some major weapon systems. The 2012 budget is working its way through Congress and will see some reductions based on proposals by the Services as well as Congress’ directed cuts but overall will be about the same as 2011. Spending beyond that could be considerably reduced based on the new debt reduction “super committee” as well as the pressure to decrease overall Federal deficits.
As the focus of the defense budget changes from paying for the troops in Afghanistan and Iraq and the equipment and supplies they need to invest in new systems to replace older one or achieve new technologies some defense contractors will prosper over others. If the discussed defense cuts are followed through and amounts vary from $35 billion to $70 billion a year from a $700 billion budget then some major programs will be canceled, the size of the military will decrease greatly and parts of the defense industry in the U.S. will disappear. This will either be through M&A activity or just loss of contracts causing companies to fold up.
There have already been moves by the larger defense contractors to adjust to the potential changes in how the U.S. Defense Department spends its money. ITT Corporation (ITT) has decided to split yet again into three different companies basically separating their flat performing defense business from more successful water and chip manufacturing areas. L-3 Communications Holding (L3) while it had a good quarter announced that it too was spinning off part of itself to adjust to what it sees as the future in the U.S. It is setting up its Scientific, Engineering, Technical and Analytical (SETA) business as a new company. SETA contractors support government offices most often in acquisition and research and development. Many of these positions were converted to government positions and new Organizational Conflict of Interest (OCI) rules prevent companies that provide SETA services to also bid on large hardware programs. L-3 is adjusting by getting out of the business.
Perhaps the biggest adjustment was by Northrop Grumman (NOC) who moved to separate their entire shipbuilding segment earlier this year. Rather then sell it to one of their competitors they set up a new company entirely, Huntington Ingalls Industries (HII). This was in realization that future U.S. Navy shipbuilding plans were so limited it could not necessarily support the current number of shipyards in the U.S. HII has already moved to close its yard in Louisiana with significant effect on the local economy.
Other companies have moved out to use M&A to position themselves. Many of the larger companies such as Boeing (BA) and Lockheed Martin (LMT) have been buying intelligence and cyber security companies to expand their opportunities. General Dynamics (GD) earlier this week made a big move by spending almost $1 billion on a health IT company. With the focus on health care reform including improvements in record keeping and storage IT may become a big source of business for government contractors. The company, Vangent, which was privately held also just completed a large contract with the Census Bureau that should be offered again in a few years.
The U.S. military is pursuing some large programs over the next decade. These if they are canceled or cut back will have the largest effect on revenues and earnings. For Lockheed Martin it is the F-35 Joint Strike Fighter that is finally moving towards large scale production. A reduction in planned quantities will severely affect that company. For Boeing it is the KC-46A new aerial tanker as the Air Force plans to buy at least 179 initially at a cost of over $30 billion. General Dynamics has major ship and submarine construction programs and the Navy if it cuts these will limit GD’s future performance.
Right now the next several months should see major defense contractors maintain their revenues and earnings except in odd cases where contracts are restructured or ending. Once the 2012 budget is decided upon that will give an indication of how next year will be. Then 2013 and out should start to see some cuts in defense spending with similar effect on the companies. It can be expected that there will be a decrease in performance accelerating if severe cuts are made by the United States. The ability of the contractors to move to different business areas in response to these cuts will dictate how badly they are affected. All indications are right now that this sector will struggle in the next few years to maintain what they have let alone growing it even more. There may be more moves coming similar to those by Northrop, ITT and L-3.
Photo from Images_of_Money’s Flickr photostream.
Article first published as Defense Industry Projects a Good 2011 but 2012 and Out Look Worse on Technorati.
L-3 Restructures in the Face of Budget Realities and Policy Changes
Filed under: Boeing, Business Line, Companies, Contract Additions, Contract Awards, Department of Defense, development program, Earnings, Events, Federal Budget Process, General Dynamics, IT, ITT Corporation, L-3, Lockheed Martin, logistics, Restructuring, Services, SETA
As part of their earnings announcement of the second quarter L-3 Communications Holdings (L3) announced that it would separate most of its government service unit into a stand alone company called Engility. L-3 is a diverse provider of services and hardware to the U.S. Defense Department. Management stated concerns with new rules on Organizational Conflicts of Interest (OCI) led them to this decision.
Interestingly the company has decided to keep the intelligence and cyber support parts of this business with L-3 while letting the more traditional Scientific, Engineering, Technical and Analytical (SETA) support go with the new company. The first two are potential high growth areas as illustrated by the moves of the larger defense contractors such as Boeing (BA) and General Dynamics (GD) buying up of smaller companies in that field. The use of SETA contractors who often work directly supporting new system development and acquisition is under pressure first through insourcing and now just through cuts to the size of the work force as the Pentagon moves to reduce its overhead and budget.
Overall the company reported a drop in sales due to the loss of one major contract but overall a rise in profits of about 32 cents a share. Revenue compared to the similar quarter last year fell to $3.77 billion or about fiver percent. The company followed other defense contractors reporting this week by increasing their guidance for the year raising it 15 cents a share from last quarter’s prediction.
The future defense budget remains in flux but different companies are positioning themselves for what is expected to be declines in business, more strict regulations and policies and pressure on pricing. This has been reflected in moves like ITT Corporation (ITT) which is spinning off its entire defense business into a separate company, to be called ITT Exelis or Lockheed Martin’s (LMT) plans to eliminate thousands of jobs to cut overhead and prices. L-3 is holding onto its business lines with the most potential while putting its services unit in a place where they will either sink, swim or end up being part of another company.
Army Awards GD Low Rate Initial Production Contract for JTRS
Filed under: Business Line, Companies, Contract Additions, Contract Awards, Department of Defense, development program, Editorial, Events, Federal Budget Process, General Dynamics, IT, ITT Corporation, logistics, production program, Rockwell Collins, Services, Thales
The U.S. military has been developing the Joint Tactical Radio System (JTRS) as their new standard radio for almost twenty years now. The program has had its ups-and-downs as it struggled with the level of technology required to meet the requirements of the program. On top of that the number and variations of the radio are quite complex as it will be used in aircraft, ships, vehicles, by ground troops and also be integrated into Unmanned Aerial Vehicles (UAV). The JTRS once it enters full rate production will replace the ubiquitous SINGCARS radio system used since the 1980′s.
In late June the Handheld, Manpack, Small Form Fit (JTRS HMS) Program piece approved approval to go into Low Rate Initial Production (LRIP) after having a successful Milestone C decision. This means that it has completed much of its engineering and development and is considered technically mature enough to begin production. The LRIP will demonstrate that it is possible to produce the system and allow the production to ramp up to meet full rate demands.
This has been followed by an order to General Dynamics (GD) and its partners Thales Communications and Rockwell Collins (ROC) for LRIP production of two versions: the Rifleman version and the Manpack radio. The AN/PRC-154 is meant to be carried by the individual soldier and 6,250 were ordered. The 100 Manpack are larger and will support operational testing and provide two channels.
The SINGCARS program was highly successful and earned its contractors a great deal of revenue due to the large demand. ITT Corporation (ITT) received what is most likely the last production contract for the system earlier this year. It had a value of about $600 million and includes parts and engineering support for existing radios. The JTRS contractors are hoping for the same thing with their programs.
ITT Continues to Make Money Off of Legacy Radio
Filed under: Business Line, Companies, Contract Additions, Contract Awards, Department of Defense, Events, Federal Budget Process, IT, ITT Corporation, logistics, production program, Restructuring, Services, U.S. Air Force, U.S. Army, U.S. Marine Corps, U.S. Navy
Defense contractors are able to make money off a great deal of different products and in different ways. They provide a variety of services and products that range from sweeping floors, to food and fuel, to developing and producing weapon systems as lowly as a truck to an advanced spy satellite as well as the conducting testing and research on advanced technologies. The defense budget is over $600 billion and provides many ways for a company to sell to the Government.
In a best case a contractor can make a product that the U.S. military will use for several years and require in large numbers. That is true for ITT Corporation (ITT) which since the late Eighties has been responsible for producing the standard tactical, VHF radio for the U.S. and many of its Allies. The Single Channel Ground and Airborne Radio System (SINCGARS) has been made in the tens of thousands and been put in pretty much every conceivable platform used by the U.S. This ranges from man portable systems to vehicles, ships and aircraft. The company has produced thousands of the radio for many different customers.
Since the late Nineties the U.S. has been working on a replacement, more advanced radio called the Joint Tactical Radio System (JTRS). The program has seen its ups and downs as it tries to develop a system that offers secure, broadband experience to the military. The JTRS radio will be programmable allowing it to change capabilities and bands without changing its hardware. This when it goes into use will be a significant enhancement over the SINCGARS and other radios. What this means for ITT is that they will no longer be the number one radio provider for the U.S. military as Boeing (BA), General Dynamics (GD) and other companies have been more involved in the JTRS program.
In fact in 2009 the U.S. announced that it was awarding the last production contract for the system and ITT has already begun restructuring its workforce. Unless they find an overseas market for the product or are able to get involved in JTRS production once that really ramps up the company will see one of its major product lines slowly go away as it is replaced by the newer, more advanced radio.
That does not mean though that the U.S. will not continue at least in the near term to buy services and products for the existing radios from ITT. They were just awarded a contract to provide some more radios, support equipment, spares and services to the existing user base. This contract modification is worth almost $600 million and shows that it will be several more years before the SINCGARS is gone. (http://www.defenseindustrydaily.com/2011-06-ITT-Gets-569M-SINCGARS-Radio-Order-06899/)
ITT Corporation, which in the early Nineties split into three companies from the parent ITT Industries, has now announced a further split. ITT’s defense assets will be set up as a separate company. This move was supposedly motivated by the low levels of growth demonstrated by defense when compared to the fluid and electronics parts of the company. ITT Corporation now dominates the world’s pump and water industry and has seen significant growth in that business area. (http://blogs.forbes.com/afontevecchia/2011/01/12/itts-split-up-an-attempt-to-shake-off-defense-units-anchor-on-growth/) The loss of the SINCGARS work will only reinforce this issue and there are many experts who feel that the ITT defense company will be bought or merge with another defense contractor rather quickly after the split.
The direction that ITT stock will take after the split will be interesting for investors. Currently the stock is at just under $56 and has been trading in a range of $42 – $64 for the past year. (http://www.google.com/finance?client=ob&q=NYSE:ITT) In 2007 it was over $70 but that has been the recent peak. The board must feel that jettisoning the defense work will aid their stock in the long run but it does not offer a vote of confidence in that sector or their defense business unit.
Photo courtesy of Ryan Somma flickr photostream.
Article first published as ITT Continues to Make Money Off of Legacy Radio but Defene Business Future Hazy on Technorati.
ITT Winding Down SINCGARS Production
Filed under: Business Line, Companies, Contract Awards, Department of Defense, development program, Events, Federal Budget Process, IT, ITT Corporation, production program, Services, States
For the last thirty years the standard radio for the U.S. armed forces and many of its allies has been based around the Single Channel Ground and Airborne Radio System (SINCGARS) VHF system. This radio began production in the Eighties and while multiple companies have made it the original developer and company that has made thousands of them is ITT Corporation (ITT).
As with all defense contracts at some point the military has bought all that they need or want. New systems get developed that will replace them when they enter service so ultimately production will complete and the defense contractor will lose a product line. That is what is happening now with the SINGCARS.
Unfortunately for the workforce ITT does not have a similar product to replace the radio and there are now going to be layoffs at their plant in Fort Wayne, IN where the radios are assembled. The last contract was for 58,000 systems and was awarded in 2009. The plant overall has assembled over 500,000 of the radios.
The U.S. has been working on a new comprehensive radio suite called Joint Tactical Radio System (JTRS) now for almost fifteen years and parts of that program are now starting to go into production. ITT will certainly have the ability to bid for work on that program.
Photo courtesy of Ryan Somma flickr photostream.
Defense Earnings Continue Good News (ITT, KBR, COL, OSK)
Filed under: Boeing, Business Line, Companies, Congress, Department of Defense, development program, Earnings, Events, ITT Corporation, KBR, Lockheed Martin, logistics, Military Aviation, Oshkosh Truck Corp, production program, Rockwell Collins, Services
As the latest reports of earning and profits have been coming in the last week defense contractors have reported decent growth in revenue and earnings. To date only Lockheed Martin (LMT) which saw a decline has been the only major company to report negatively. The latest reports from ITT Corporation (ITT), KBR (KBR), Rockwell Collins (COL) and Oshkosh (OSK) saw improvement.
At the same time most companies are being cautious in their future views due to concerns of future U.S. defense spending.
ITT Industries (ITT) who make radars, electronic and night vision systems as well as logistical and technical services for the Pentagon reported over one hundred percent improvement in income per share compared to last year with an increase of $0.46 cents a share. The company has increased their projection for the full year to $4.28 to $4.32 well over the analysts $4.08 to $4.18. Total revenue though was less then predicted at $2.64 billion. ITT also has a significant commercial side with a focus on pumps and water purification to aid them in balancing their defense products which did see a decline this quarter.
KBR Inc. (KBR) a leading provider of logistic and engineering services to the U.S. Defense Department as well as to the oil and construction industry reported an increase in earnings of $24 million. Revenue was reduced mainly due to the loss of the Logistics Civil Augmentation Program (LOGCAP) III contract. The U.S. Army manages the LOGCAP contracts for support in Iraq of military and civil services. KBR had worked on previous LOGCAP contracts but due to concerns expressed by the U.S. government with some of the charges and billings they were unable to bid on the latest iteration. Overall KBR expects to slightly exceed analysts expectations for the year.
Rockwell Collins (COL) who primarily provide avionics and electronic systems in support of defense programs also had a good quarter. The company also provides support to commercial aviation and saw significant business providing spare parts and retrofitting those type of aircraft. The company feels that it will meet predictions for annual earnings. There were some concerns expressed that the delay in awarding the U.S. Air Force’s KC-X new aerial tanker contract expected now to slip from this month to early next year may effect them as they are part of Boeing’s (BA) team.
Oshkosh Corp (OSK) who primarily had made construction and heavy equipment but recently had moved into the defense realm with two major contract wins in the last two years saw a drop in revenues and profit in the most recent quarter. The company had had bad years in 2008 and 2009 due to the decline in the U.S. economy affecting their sales. Recently the production of the MRAP-AT vehicle for use in Afghanistan and the FMTV truck for the Army and Marines had offset this decline in recent months. The company is saying that improved performance of the commercial side of their business will aid the company in the future. Both the MRAP and truck contracts have definitive ends as the military buys out vehicles to rebuild their inventories.
Defense contractors who also have a commercial component of their business seem to be doing the best as the latest results are announced. Boeing, Oshkosh, ITT and Rockwell all were able to strike a balance with these business lines. They may be able to offset future cuts to the U.S. defense spending but if the U.S. economy does not recover soon it may be a rough few years for these companies.
ITT Wins Night Vision equipment contract
Filed under: Contract Awards, ITT Corporation, production program, U.S. Army
The US Army awarded ITT Corporation a $174 M contract to produce night vision monoculars and related equipment. See this story here for more. The article also highlights the problem that ITT Corporation had in the past with export control. These laws are very complex and limit how much work a manufacturer can do in foreign countries.
ITT Corporation awards contract to Laser Energetics
Filed under: Contract Awards, development program, ITT Corporation, Laser Energetics, U.S. Army
ITT Corporation gave a contract to Laser Energetics to integrate their proprietary Alexandrite laser into a system they are developong for the US Army that uses lasers to detect chemical agents. See the press release on CNNMoney.com. The contract has a value of just under $500 K.
ITT Industries Completes Acquistion of EDO Corporation
In a major addition to its products and capabilities, ITT Industries completed the acquisition of EDO Corporation on December 20th. The total price of the transaction was about $1.7 billion as the EDO shares were valued at $56. EDO over the last six year also had been aggressively acquiring companies to increase the span of their business line. EDO does have complimentary products with ITT in the areas of electronic warfare. This acquisition will also expand ITT’s reach into Huntsville, Alabama where the US Army’s Aviation and Missile Command (AMCOM) is located.
ITT Industries Wins Radar Upgrade Contract
Filed under: Contract Awards, ITT Corporation, U.S. Navy
ITT Industries (Share Symbol: ITT) won a $14.2 M contract to upgrade AN/SPS-48 air search radars from the US Navy. See the Press Release.
-
Search This Site
Custom Search -
-
-
-
-
-
-
-
-
Recent Posts
-
FREE Business Downloads
-
Latest Defense News
- Contracts for July 22, 2014
- Integrator UAV Completes 24 hour flight test
- AECOM to announce fiscal year 2014 third-quarter results on Aug. 5
- Progress Hard to Gauge on Homeland Antimissile Program
- 9/11 Commission Alumni Warn of Unfinished Business Combatting Terrorism
- SES Awarded COMSATCOM Pathfinder Contract
- Border Sheriffs Perplexed by Rick Perry’s Plan to Send 1,000 Troops to Stare at Mexico
- US airlines cancel Israel-bound flights fearing rocket attacks
- FAA Suspends all U.S. Flights to Israel for 24 Hours
- Harris Corporation Receives $15 Million Order from Middle East Nation for Wideband Handheld Radios
- 1Spatial Awarded Major Ministry Of Defence Aeronautical Contract
- X2 Biosystems Partners with Soccer’s Elite Clubs National League to Tackle Concussion Care
- ALGERIA: Intractable Problems
- SURFACE FORCES : Keeping VLS Current
- PEACEKEEPING: The Problem With Permanent Refugees
- SUBMARINES: A Chinese First
- PROCUREMENT: Qatar Buys Protection Against Iran
- PHOTO: Upgraded BONE
- Contracts for July 21, 2014
- Texas Gov. Rick Perry Orders National Guard Troops to Border
- Obama on Ukraine’s Pro-Russia Separatists: ‘What Are They Trying to Hide?’
- Mutualink Achieves Milestone Communications Advances during Department of Defense Exercise
- Exelis to Supply Saudi Arabian National Guard with High-Performance Air Traffic Management Radar
- BOOK REVIEW: July 1914: Countdown to War
- IRAQ: It Is Happening Again
- MARINES: USN Forced To Consider The Best Choice
- INTELLIGENCE: The Plot To Oppress China
- SURFACE FORCES : India Halts Warship Imports
- PHOTO: Cthulhu Power
- John Kerry Makes the U.S. Case Against Russia Over Downed Plane
- BOOK REVIEW: Hoax: Hitler's Diaries, Lincoln's Assassins, and Other Famous Frauds
- ISRAEL: The Hamas Plan For Winning This War
- MURPHY’S LAW: The Robopocalypse Came And Went
- SUPPORT: Video Games To Kill For
- VIDEO: UHAC at RIMPAC
- LIBYA: Tribe Or Religion Takes Precedence Over National Loyalty
- LEADERSHIP: Wrangling The Retention Riddle
- ARMOR: M113 Thrives In Old Age
- Engineering News-Record (ENR) Ranks Baker No. 26 of Top 500 Firms Nationally
- Contracts for July 18, 2014
- On Campus, Young Veterans Are Learning How to Be Millennials
- Obama Tells Europe to Step Up on Russia
- AeroVironment Announces Establishment of 10b5-1 Trading Plan by Chief Executive Officer
- VIDEO: IDF Forces Operate Inside Gaza
- Obama: We Know At Least One American Was Killed on Downed Malaysian Flight
- Hillary Clinton’s Strange Critique of US Foreign Policy
- Balfour Beatty Communities Delivers New and Renovated Housing Communities Across Navy Southeast Region
- YEMEN: Persistent Problems
- SUBMARINES: Royal Navy Restocks
- ELECTRONIC WEAPONS: South Korea Buys The Best
- PHOTO: Ultra-Heavy Lift Amphib
- Contracts for July 17, 2014
- Army to Begin Chelsea Manning’s Gender Treatment
- All Clear at the White House After Lockdown
- Here Are the House’s Recommendations for the Border Crisis
- Israel launches a ground campaign in Gaza
- Quality Products Announces Appointment of President
- FAA Has Issued Advisories Against Region Where Plane Crashed in Ukraine
- ViON Appoints Richard Breakiron as New Senior Director of Cyber Solutions
- Congress Thinks This Statue Is a Threat to National Security
- Oshkosh Defense L-ATV Successfully Completes 200,000 Miles for JLTV EMD RAM Testing
- Orbital Announces Second Quarter 2014 Financial Results
- BOOK REVIEW: Yankee Dutchmen Under Fire: Civil War Letters from the 82nd Illinois Infantry
- INDIA-PAKISTAN: Moving Day
- PEACEKEEPING: Unstoppable
- NBC WEAPONS: Wikileaks And The Great Saddam WMD Scam
- ELECTRONIC WEAPONS: Supercharged Ceasar
- ATTRITION: China Takes The High Road to Carrier Operations
- PHOTO: Marines’ New Four Legged Friend
- Contracts for July 16, 2014
- Los Alamos Gets ‘Inadequate’ Safety Rating from Energy Dept.
- Systems Made Simple Ranked among Washington Technology’s Top 100 Federal Contractors
- Don’t Expect the VA to Improve Overnight
- First Nurse Refuses to Force Feed Guantanamo Bay Prisoners
- Dynamic Aviation Wins Significant U.S. Army Contract
- Avnet Electronics Marketing Expands Global TE Connectivity Offering to Include DEUTSCH Connectors
- AFGHANISTAN: To Get Rich, Get High, Get Laid Or Simply Get Your Way
- INTELLIGENCE: Nigeria Gets A Boost
- PROCUREMENT: North Korean UAV Developments
- AIR DEFENSE: Accounting For Iron Dome
- ATTRITION: Russia Cures Disease In The Barracks
- ON POINT: Israeli Iron Dome Demonstrates Missile Defense Payoffs
- PHOTO: Turkish Tiger
- Contracts for July 15, 2014
- Pulitzer-Prize Winning Immigration Activist Detained By Texas Border Patrol
- Farnborough Airshow 2014 News and Digital Content Available Online at www.tradeshownews.com
- Pope Urges Protection for Unaccompanied Minors Flooding the Border
- Tesla Motors Is a Favorite Employer Among Veterans
- What Would Reagan Do in Iraq?
- For Now, Kerry’s Afghan Election Deal Makes Him the Hero
- Exostar Receives DoD Interoperability Certification for SHA-2 Certificates
- IR Introduces M3G120 Series of 40W Radiation-Hardened 120V Input DC-DC Converters for Satellite Power Systems
- BOOK REVIEW: The Army in British India: From Colonial Warfare to Total War 1857 – 1947
- 777X Takes Off with BAE Systems’ Advanced, Integrated Flight Control Electronics
- Cyber Intelligence Report – July 15, 2014
- NIGERIA: Conspiracy Theories Versus Reality
- LEADERSHIP: Reports Of the Death Of UAVs May Be Premature
- ATTRITION: And Then There Were Two
- PROCUREMENT: Cost Of Doing Business
- WARPLANES: We Have Got To Stop Meeting Like This
More Defense News -->
