Defense Contracting Opportunities in Military Vehicle Refurbishment
Defense Stocks Covered: Raytheon (NYSE:RTN), Northrop Grumman (NYSE:NOC), Lockheed Martin (NYSE:LMT), Boeing (NYSE:BA), AeroVironment (NASDAQ:AVAV), General Dynamics (NYSE:GD), Optex Systems (OTCBB: OPXS)
POINT ROBERTS, Wash., DELTA, B.C. –August 17, 2009 – www.HomelandDefenseStocks.com, a leading global investor and industry portal for the defense and security sector, within Investorideas.com, presents, a defense industry overview, ‘Defense Contracting Opportunities in Military Vehicle Refurbishment’, by Lisa Springer, CFA.
Defense Contracting Opportunities in Military Vehicle Refurbishment
Defense Stocks Covered : Raytheon (NYSE:RTN), Northrop Grumman (NYSE:NOC), Lockheed Martin (NYSE:LMT), Boeing (NYSE:BA), AeroVironment (NASDAQ:AVAV), General Dynamics (NYSE:GD), Optex Systems (OTCBB: OPXS)
Defense Contracting Opportunities in Military Vehicle Refurbishment
Consistent with the changes signaled in the 2010 defense budget back in April, the Pentagon has begun cancelling contracts on a number of big ticket programs covering untested technologies. A case in point is the Kinetic Energy Interceptor program. Work contracts on the KEI laser, a technology for shooting down missiles in mid-flight, have been canceled by the Pentagon. Raytheon (NYSE:RTN), a contractor on the KEI program, lost $2.4 billion from backlog because of the cancellation while backlog for lead contractor Northrop Grumman (NYSE:NOC) fell by $5.1 billion as a result.
Lockheed Martin (NYSE:LMT) experienced a $2.6 billion reduction in backlog because of the cancellation of its contracts for high-tech helicopters and Transformational Satellite Communications systems. Boeing (NYSE:BA) received a partial termination order covering the manned ground vehicle component of the Future Combat Systems (FCS) program and subsequently reduced its FCS program workforce by 30%. FCS program cuts were cited as a reason Standard and Poor’s downgraded Boeing’s debt rating in July.
Massive spending cuts in the Army’s $200 billion FCS program were a major change in the 2010 defense budget but came as a surprise to few defense industry insiders. The intent of the FCS program, with its eight ground vehicles, was to design, test and produce the next-generation of tanks, cannons and infantry carriers to augment the U.S. military’s existing fleet of Abrams tanks and Bradley and Stryker ground vehicles. Proponents argued that FCS high-tech combat vehicles would be lighter, more maneuverable and better-suited to 21st century warfare than their predecessors. When the new vehicles were tested under actual combat conditions, however, the results were disappointing. The new vehicles were indeed faster and more maneuverable, but their light armor made them too fragile. Many were quickly destroyed or severely damaged by road-side bombs. Some pieces of the FSC program, such as ground robots and unmanned drones, did perform well in combat and continue to be funded. This was good news for AeroVironment (NASDAQ:AVAV), a supplier of unmanned military drones, which was able to beat analyst estimates in fiscal 2009 and projects at least 18% revenue growth in fiscal 2010.
General Dynamics (NYSE:GD) and a few other defense contractors that support existing military vehicle platforms are emerging as winners from the 2010 defense budget.. With the development of new platforms on-hold, Abrams tanks and Bradley and Stryker ground vehicles are likely to remain in use by the U.S. military for many more years. General Dynamics designed the Abrams tank and has produced more than 8,800 M1 and M1A1 Abrams tanks since the program’s inception in the early 1980s. General Dynamics also supplies Stryker combat vehicles and to-date has delivered 2,852 of these vehicles to seven separate Army Stryker brigades. British defense contractor BAE Systems developed the Bradley ground vehicle and has supplied more than 6,700 Bradley vehicles to the U.S. military since the early 1980s.
Instead of new vehicles, the U.S. Army is investing in upgrades and refurbishments to its aging military vehicle fleet. In July, the U.S. Army Tank Automotive Command (TACOM) awarded General Dynamics a contract potentially valued at $55.2 million to refurbish 330 Stryker infantry combat vehicles. Under the terms of the contract, General Dynamics will service, repair and upgrade Stryker vehicles returning from Iraq, restore them to like-new condition and prepare them in advance of their next deployment. This refurbishment work is long overdue; the Army’s fleet of Stryker vehicles has accumulated more than six million miles of use since 2003. The July refurbishment contract covers less than 15% of the Stryker fleet, suggesting more refurbishment contacts are likely to be awarded in the future.
Defense contractor Optex Systems (OTCBB: OPXS) should also benefit from refurbishment contract awards since it supplies General Dynamics with weapon optical sighting systems. The company provides optical sighting systems for Abrams tanks and Bradley fighting vehicles and its optical systems have been selected for installation on Stryker vehicles. In July, a General Dynamics business unit awarded Optex a $3.4 million contract to supply high-tech ICWS (Improved Commander’s Weapon Station) periscopes for Abrams tanks. Optex will begin delivering the periscopes in 2011 with delivery continuing through 2012.
Its strong relationships with major defense contractors such as General Dynamics provides Optex with high visibility in the defense contracting market, as evidenced by the company’s recent invitation to participate in the 2nd Annual Heavy Vehicle Summit this September. This event is the leading forum for developers of new technologies for heavy military vehicles such as the Abrams and Bradley. New contracts such as the one awarded in July improve Optex’s order flow and backlog and helped support a greater than 50% year-over-year improvement in revenues during the fiscal nine-month period that ended this June.
Lisa Springer Bio/ Disclaimer: http://www.investorideas.com/About/Lisa-Springer-CFA/
Additional Defense articles by Lisa Springer:
Defense Budget Winners and Losers:
How Defense Companies Boeing (NYSE:BA), Northrop Grumman (NYSE:NOC), General Dynamics (NYSE:GD), Optex Systems Holdings, Inc. (OTCBB:OPXS) and others are Impacted
Optex Systems Holdings, Inc. (OTCBB: OPXS) is a featured defense stock and showcase company on Investor Ideas defense investor portals, Homelandefensestocks.com, BorderandPortsecurity.com and http://www.nationalhomelandsecurityknowledgebase.com
Visit Optex Systems Holdings, Inc. (OTCBB: OPXS) Company Profile: http://www.investorideas.com/CO/OPTEX/
About Homelanddefensestocks.com- HomelandDefenseStocks.com Portal is a global meeting place for investors and industry following defense and security, within Investorideas.com. Global visitors use the site daily to research the latest news, articles, audio, research reports and stock directories.
Defense Stocks Directory: Research global defense and security stocks http://www.investorideas.com/Companies/HomelandDefense/Stock_List.asp
About InvestorIdeas.com:
InvestorIdeas.com is a leading global investor and industry research resource portal specialized in sector investing covering over thirty industry sectors and global markets including China, India, the Middle East and Australia.
InvestorIdeas.com Disclaimer.: www.InvestorIdeas.com/About/Disclaimer.asp
Our sites do not make recommendations, but offer information portals to investors to research news, articles, stock lists and recent research. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. We attempt to research thoroughly, but we offer no guarantees as to the accuracy of any information presented. All information relating to featured companies is sourced from public documents and/ or the company and is not the opinion of our web sites. This site is compensated by featured companies, news submissions and online advertising. OPXS Disclosure: Optex is a featured showcase company and compensates Investorideas.com $3000 month and sixty two thousand 144 shares issued quarterly.
For more information contact: Dawn Van Zant 800.665.0411 Email: dvanzant@HomelandDefenseStocks.com
Source: HomelandDefenseStocks.com, Investor Ideas, Optex Systems Holdings Inc. (OTCBB: OPXS)
Showing posts with label General Dynamics (NYSE:GD). Show all posts
Showing posts with label General Dynamics (NYSE:GD). Show all posts
Monday, August 17, 2009
Wednesday, May 6, 2009
Defense Budget Winners and Losers-How Defense Companies Boeing (NYSE:BA), Northrop Grumman (NYSE:NOC),OTCBB: OPXS) and others are Impacted
Defense Budget Winners and Losers
How Defense Companies Boeing (NYSE:BA), Northrop Grumman (NYSE:NOC), General Dynamics (NYSE:GD), Optex Systems Holdings, Inc. (OTCBB: OPXS) and others are Impacted
POINT ROBERTS, Wash., DELTA, B.C. - May 6, 2009 – http://www.homelanddefensestocks.com/, a leading global investor and industry portal for the defense and security sector, within Investorideas.com, presents a sector close-up on defense stocks following recently announced changes in the Defense Budget.
Defense Budget Winners and Losers
Lisa Springer CFA, Equity research analyst and financial writer
The 2010 defense budget presented by Defense Secretary Robert Gates offers growth prospects for defense contractors involved in cyber security, intelligence, surveillance and reconnaissance, but disappointments for big ticket programs such as F-22 fighter jets, combat search and rescue helicopters and missile intercepting lasers. Secretary Gate’s budget suggests major changes to more than 50 weapons programs, some cancellations and increased funding to a select few. At $534 billion, the 2010 budget is 4% higher than last year and nearly double America’s annual defense budget in the year leading up to the September 11, 2001 terrorist attacks. Secretary Gates is also seeking supplemental funding of $130 billion for the wars in Iraq and Afghanistan next year, down from $141.4 billion in supplemental funding for these operations in the current fiscal year.
Significant programs that lost funding included ground-based missile defense, Army ground vehicle modernization and military transport C-17 aircraft programs managed by Boeing (NYSE:BA) and the DDG-1000 Navy destroyer program jointly managed by Northrop Grumman (NYSE:NOC) and General Dynamics (NYSE:GD). In general, Secretary Gate’s budget shifts spending away from big ticket defense programs conceived during the Cold War to smaller programs that have already proven their usefulness in combat such as unmanned drones used to hunt insurgents in Afghanistan, Iraq and Pakistan. Secretary Gate’s request for a $2.0 billion increase in cyber security and reconnaissance spending for 2010 is a positive development for prime contractors Lockheed Martin ( NYSE:LMT), Northrop Grumman and Raytheon (NYSE:RTN), who have already established substantial capabilities in this segment.
Share prices for several of the major defense contractors rose after the new budget was announced because spending cuts were not as deep as many investors had feared. Lockheed Martin will see funding reductions in some areas but overall fared reasonably well under the new budget. For example, although Secretary Gate’s budget caps purchases of Lockheed’s F-22 fighters at the 187 jets already ordered, it increases 2010 funding 65% to $11.2 billion for Lockheed’s next generation F-35 Joint Strike Fighter. The Pentagon plans to acquire 513 F-35 fighter jets, priced at $80 million apiece, over the next five years and at least 2,300 F-35 fighter jets over the 30 year life of the contract. The Department of Defense also announced plans to purchase two expensive new imaging satellites as part of a contract likely to be awarded to Lockheed Martin, and the Navy shared its plans to purchase three Littoral Combat Ships (LCS) manufactured by General Dynamics and Lockheed Martin. These ships, designed to operate in shallow seas and within 100 miles of shore, are priced at approximately $500 million apiece.
A major change in the new defense budget is the gutting of the Army’s $200 billion Future Combat Systems (FCS) program and its eight program ground vehicles. These vehicles include next generation tanks, cannons and infantry carriers. When first announced six years ago, FCS was lauded as the program that would equip a 21st century military force with high-tech combat vehicles able to outgun and out-maneuver any enemy. The hard lesson learned in Iraq and Afghanistan, however, was that these lightweight vehicles were too thinly armored to survive insurgent attacks with road-side bombs. A few pieces of the FCS program will continue to be funded such as ground robots and unmanned aerial drones. This is welcome news for AeroVironment (NASDAQ:AVAV), a small cap defense contractor and leading supplier of military unmanned aerial vehicles.
Budget plans that defer spending on next-generation FCS platforms are also positive news for defense contractors supplying assemblies and spare parts for existing military vehicle platforms. Because of FCS program cuts, Abrams tanks and Bradley and Stryker ground vehicles are likely to remain the workhorses of the U.S. military for at least the next 20 years. Optex Systems Holdings, Inc. (OTCBB: OPXS ) is a small cap company benefitting from this trend. Founded in 1987, Optex supplies sighting systems and replacement optics installed on most types of U.S. military vehicles, including Abrams, Bradley and Stryker fighting vehicles. In addition, the company’s optical sighting systems target the big Howitzer guns used by the U.S. military to shell insurgent positions in the mountains of Afghanistan with lethal effectiveness. Demand for Optex sighting systems is likely to rise as the war in Afghanistan ramps up and the company is working with its military customers to increase its production and capabilities. Besides military sales, Optex also sees opportunities to integrate some of its night vision and optical sight product lines into retail applications.
In fiscal 2009, Optex (OTCBB: OPXS) expects to recognize $27.4 million in revenues from its sizable contract backlog and the company is actively pursuing on other large government contracts. Backlog was $44 million at fiscal year-end and $39 million at the end of the first quarter of fiscal 2009. Optex revenues rose 64.5% year-over-year during first quarter of fiscal 2009 to $7.2 million and net losses fell to $0.03 million from $0.69 million one year earlier.
Lisa Springer Bio/ Disclaimer: http://www.investorideas.com/About/Lisa-Springer-CFA/
Optex Systems Holdings, Inc. (OTCBB: OPXS) is a featured defense stock and showcase company on Investor Ideas defense investor portals, Homelandefensestocks.com, BorderandPortsecurity.com and http://www.nationalhomelandsecurityknowledgebase.com/
Visit Optex Systems Holdings, Inc. (OTCBB: OPXS) Company Profile: http://www.investorideas.com/CO/OPTEX/
About Homelanddefensestocks.com- HomelandDefenseStocks.com Portal is a global meeting place for investors and industry following defense and security, within Investorideas.com. Global visitors use the site daily to research the latest news, articles, audio, research reports and stock directories.
Defense Stocks Directory: http://www.investorideas.com/Companies/HomelandDefense/Stock_List.asp
About InvestorIdeas.com:
InvestorIdeas.com is a leading global investor and industry research resource portal specialized in sector investing covering over thirty industry sectors and global markets including China, India, the Middle East and Australia.
InvestorIdeas.com Disclaimer.: www.InvestorIdeas.com/About/Disclaimer.asp
Our sites do not make recommendations, but offer information portals to investors to research news, articles, stock lists and recent research. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. We attempt to research thoroughly, but we offer no guarantees as to the accuracy of any information presented. All information relating to featured companies is sourced from public documents and/ or the company and is not the opinion of our web sites. This site is compensated by featured companies, news submissions and online advertising. OPXS Disclosure: Optex is a featured showcase company and compensates Investorideas.com $3000 month and sixty two thousand 144 shares issued quarterly.
Optex Systems Holdings, Inc. has not been consulted as to the content of this article. Optex specifically disclaims any involvement with the creation or review thereof, and specifically disclaims the making of any warranties as to the factual nature of the article or its conclusions or of its failure to make a statement where one may be warranted.
For more information contact: Dawn Van Zant 800.665.0411 Email: dvanzant@HomelandDefenseStocks.com
Source: HomelandDefenseStocks.com, Investor Ideas.com
How Defense Companies Boeing (NYSE:BA), Northrop Grumman (NYSE:NOC), General Dynamics (NYSE:GD), Optex Systems Holdings, Inc. (OTCBB: OPXS) and others are Impacted
POINT ROBERTS, Wash., DELTA, B.C. - May 6, 2009 – http://www.homelanddefensestocks.com/, a leading global investor and industry portal for the defense and security sector, within Investorideas.com, presents a sector close-up on defense stocks following recently announced changes in the Defense Budget.
Defense Budget Winners and Losers
Lisa Springer CFA, Equity research analyst and financial writer
The 2010 defense budget presented by Defense Secretary Robert Gates offers growth prospects for defense contractors involved in cyber security, intelligence, surveillance and reconnaissance, but disappointments for big ticket programs such as F-22 fighter jets, combat search and rescue helicopters and missile intercepting lasers. Secretary Gate’s budget suggests major changes to more than 50 weapons programs, some cancellations and increased funding to a select few. At $534 billion, the 2010 budget is 4% higher than last year and nearly double America’s annual defense budget in the year leading up to the September 11, 2001 terrorist attacks. Secretary Gates is also seeking supplemental funding of $130 billion for the wars in Iraq and Afghanistan next year, down from $141.4 billion in supplemental funding for these operations in the current fiscal year.
Significant programs that lost funding included ground-based missile defense, Army ground vehicle modernization and military transport C-17 aircraft programs managed by Boeing (NYSE:BA) and the DDG-1000 Navy destroyer program jointly managed by Northrop Grumman (NYSE:NOC) and General Dynamics (NYSE:GD). In general, Secretary Gate’s budget shifts spending away from big ticket defense programs conceived during the Cold War to smaller programs that have already proven their usefulness in combat such as unmanned drones used to hunt insurgents in Afghanistan, Iraq and Pakistan. Secretary Gate’s request for a $2.0 billion increase in cyber security and reconnaissance spending for 2010 is a positive development for prime contractors Lockheed Martin ( NYSE:LMT), Northrop Grumman and Raytheon (NYSE:RTN), who have already established substantial capabilities in this segment.
Share prices for several of the major defense contractors rose after the new budget was announced because spending cuts were not as deep as many investors had feared. Lockheed Martin will see funding reductions in some areas but overall fared reasonably well under the new budget. For example, although Secretary Gate’s budget caps purchases of Lockheed’s F-22 fighters at the 187 jets already ordered, it increases 2010 funding 65% to $11.2 billion for Lockheed’s next generation F-35 Joint Strike Fighter. The Pentagon plans to acquire 513 F-35 fighter jets, priced at $80 million apiece, over the next five years and at least 2,300 F-35 fighter jets over the 30 year life of the contract. The Department of Defense also announced plans to purchase two expensive new imaging satellites as part of a contract likely to be awarded to Lockheed Martin, and the Navy shared its plans to purchase three Littoral Combat Ships (LCS) manufactured by General Dynamics and Lockheed Martin. These ships, designed to operate in shallow seas and within 100 miles of shore, are priced at approximately $500 million apiece.
A major change in the new defense budget is the gutting of the Army’s $200 billion Future Combat Systems (FCS) program and its eight program ground vehicles. These vehicles include next generation tanks, cannons and infantry carriers. When first announced six years ago, FCS was lauded as the program that would equip a 21st century military force with high-tech combat vehicles able to outgun and out-maneuver any enemy. The hard lesson learned in Iraq and Afghanistan, however, was that these lightweight vehicles were too thinly armored to survive insurgent attacks with road-side bombs. A few pieces of the FCS program will continue to be funded such as ground robots and unmanned aerial drones. This is welcome news for AeroVironment (NASDAQ:AVAV), a small cap defense contractor and leading supplier of military unmanned aerial vehicles.
Budget plans that defer spending on next-generation FCS platforms are also positive news for defense contractors supplying assemblies and spare parts for existing military vehicle platforms. Because of FCS program cuts, Abrams tanks and Bradley and Stryker ground vehicles are likely to remain the workhorses of the U.S. military for at least the next 20 years. Optex Systems Holdings, Inc. (OTCBB: OPXS ) is a small cap company benefitting from this trend. Founded in 1987, Optex supplies sighting systems and replacement optics installed on most types of U.S. military vehicles, including Abrams, Bradley and Stryker fighting vehicles. In addition, the company’s optical sighting systems target the big Howitzer guns used by the U.S. military to shell insurgent positions in the mountains of Afghanistan with lethal effectiveness. Demand for Optex sighting systems is likely to rise as the war in Afghanistan ramps up and the company is working with its military customers to increase its production and capabilities. Besides military sales, Optex also sees opportunities to integrate some of its night vision and optical sight product lines into retail applications.
In fiscal 2009, Optex (OTCBB: OPXS) expects to recognize $27.4 million in revenues from its sizable contract backlog and the company is actively pursuing on other large government contracts. Backlog was $44 million at fiscal year-end and $39 million at the end of the first quarter of fiscal 2009. Optex revenues rose 64.5% year-over-year during first quarter of fiscal 2009 to $7.2 million and net losses fell to $0.03 million from $0.69 million one year earlier.
Lisa Springer Bio/ Disclaimer: http://www.investorideas.com/About/Lisa-Springer-CFA/
Optex Systems Holdings, Inc. (OTCBB: OPXS) is a featured defense stock and showcase company on Investor Ideas defense investor portals, Homelandefensestocks.com, BorderandPortsecurity.com and http://www.nationalhomelandsecurityknowledgebase.com/
Visit Optex Systems Holdings, Inc. (OTCBB: OPXS) Company Profile: http://www.investorideas.com/CO/OPTEX/
About Homelanddefensestocks.com- HomelandDefenseStocks.com Portal is a global meeting place for investors and industry following defense and security, within Investorideas.com. Global visitors use the site daily to research the latest news, articles, audio, research reports and stock directories.
Defense Stocks Directory: http://www.investorideas.com/Companies/HomelandDefense/Stock_List.asp
About InvestorIdeas.com:
InvestorIdeas.com is a leading global investor and industry research resource portal specialized in sector investing covering over thirty industry sectors and global markets including China, India, the Middle East and Australia.
InvestorIdeas.com Disclaimer.: www.InvestorIdeas.com/About/Disclaimer.asp
Our sites do not make recommendations, but offer information portals to investors to research news, articles, stock lists and recent research. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. We attempt to research thoroughly, but we offer no guarantees as to the accuracy of any information presented. All information relating to featured companies is sourced from public documents and/ or the company and is not the opinion of our web sites. This site is compensated by featured companies, news submissions and online advertising. OPXS Disclosure: Optex is a featured showcase company and compensates Investorideas.com $3000 month and sixty two thousand 144 shares issued quarterly.
Optex Systems Holdings, Inc. has not been consulted as to the content of this article. Optex specifically disclaims any involvement with the creation or review thereof, and specifically disclaims the making of any warranties as to the factual nature of the article or its conclusions or of its failure to make a statement where one may be warranted.
For more information contact: Dawn Van Zant 800.665.0411 Email: dvanzant@HomelandDefenseStocks.com
Source: HomelandDefenseStocks.com, Investor Ideas.com
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