The senior leadership team of Systima Technologies, Inc. (“Systima”) has partnered with Karman Missile & Space Systems (“Karman” or the “Company”) backed by Trive Capital (“Trive”), the Dallas-based private equity firm. The addition of Systima represents another acquisition that expands the core competencies, customer base, and platform content in a strategic way to enable Karman to deliver more comprehensive solutions to its customers in the space and hypersonic markets. The leadership team of Systima will continue as equity holders and senior leaders of Karman. The acquisition of Systima represents the fifth transaction Trive has completed in the last 12 months in building the Karman platform, a purpose-built strategy dedicated to space and hypersonic system infrastructure.

Systima is one of the only companies in the world that can integrate energetic and mechanical systems into the structural design of mission critical space or hypersonic systems. Energetic technology utilizes specialized materials, such as propellants, to create separation and deployment in space launch vehicles and hypersonic platforms. In addition, one of the fastest growing product lines for Systima is high performance composite structures using high temperature materials for missile and launch platforms. Systima employs the most advanced composite manufacturing techniques and utilizes novel and proven resin formulations, fibers, and ply materials. Systima works closely with its OEM customers to design, engineer, prototype, test, qualify, and manufacture for full rate production on dozens of platforms across space, missile, and hypersonic end markets. All of these capabilities come together in order to produce a complex system like a hypersonic shroud for our customers.

“We have been watching the Karman business come together over the past year and believe with conviction that the strategic rationale of investing in the space, missile, and hypersonic supply chains is absolutely critical. The vast set of differentiated capabilities, capacity, talented team, and incredible complementary fit of Systima with Karman gave us confidence that this was the right home for Systima and its employees. We know that joining forces with Karman will only accelerate the opportunities for Systima and better equip us to be responsive to the needs of our customers,” commented Tom Prenzlow, President and former owner of Systima.

“This is another big milestone for Karman,” said Tony Koblinski, Chief Executive Officer of Karman. “Systima’s robust engineering capabilities allow Karman to work collaboratively with our customers at an earlier stage of a platform’s development to identify the ways that Karman can add value.”

“With this acquisition, Karman can now address highly engineered content from tip to tail of a rocket. We have sole sourced content from the nose cone or shroud at the front of rockets and hypersonics, to motor and nozzle assemblies at the back, and composite and metallic structural components in between,” commented David Stinnett, Partner at Trive. “We believe our ability to attract such industry leading talent and pedigree to Karman is further validation of this thesis. The alignment of what Karman is building with the industry need is resonating with business owners and being reinforced by incredibly positive feedback from our customers.”

KAL Capital Markets, LLC was the sole sell-side advisor to Systima Technologies.

About Karman

Karman Missile & Space Systems (www.karmanmss.com) is one of the largest independently owned suppliers of mission critical flight hardware and complex sub-assemblies to the space, missile, and hypersonic markets. The Company provides design & engineering, precision machining, large part forming, high temperature and structural composite material processing, and sub-assembly services, while actively adding new capabilities in collaboration with customers.

About Trive

Trive Capital is a Dallas, Texas based private equity firm with approximately $3.6 billion in assets under management. Trive focuses on investing equity and debt in what it sees as strategically viable middle-market companies with the potential for transformational upside through operational improvement. We seek to maximize returns through a hands-on partnership that calls for identifying and implementing value creation ideas.

The Trive team is comprised of seasoned investment professionals who have been involved in over 100 middle-market transactions representing in excess of $6 billion in revenue across Trive’s targeted industry sectors and situations.

Based in Valencia, CA, FMI Aerostructures is a leading manufacturer of critical structural components and assemblies for the aerospace and defense industry. With 230,000 square feet under roof and over 130 active spindles, FMI Aerostructures is one of the largest independent A&D manufacturing businesses in North America. The Company specializes in hard metal components, large aluminum structures, and complex assemblies and is proud to serve key A&D customers such as Lockheed Martin, Northrop Grumman, Boeing, Spirit AeroSystems, PPG Aerospace, and many more.

“FMI presents a unique opportunity to partner with an industry leader in a critical link of the aerospace supply chain. By continually investing in new capabilities, capacity, and its workforce, Forrest is well positioned to build off its longstanding reputation as a key solutions provider to its customers,” commented Derek Eve, Principal at Endeavour Capital. “Our mission is to create a stronger supply chain for critical structures through value added partnerships with our customers and delivering the best overall value in terms of quality, delivery, and service. We are honored and excited to advance the legacy that Bob and Joanne Butler and the employees at FMI have built over the past 30 years,” added Tim Mickael, CEO of FMI Aerostructures.

The new ownership group is committed to operational excellence through continuous improvement, developing and engaging its workforce, and investment in state-of-the-art equipment and systems. As part of the transaction, Tim Mickael joins the company as CEO and all other managers have been retained.

About Forrest:

Founded in 1978, Forrest has a long reputation as a key supplier for the aerospace and defense industry. With over 240 employees, Forrest’s full-service capabilities include complex machining up to 6-axis and parts up to 160 feet, advanced assembly, sheet metal fabrication, and forming. Forrest has invested in the latest programming and inspection equipment and performs in-house rapid prototyping, NC programming, complex tooling design and build, CMS, and laser calibration and inspection.

About Endeavour:

Endeavour Capital was founded in 1991 to be a patient source of capital and long-term partner to leading private businesses and management teams. Today, Endeavour Capital is investing its eighth fund and has offices in Los Angeles, Portland, Seattle, and Denver. Endeavour invests in Western U.S. based, companies in partnership with founders, family owners and executives. The firm acts as partners and stewards, to help companies and their owners realize their potential, while preserving legacy and culture.

Cyber threats continue to pose a major risk to international security, and companies that fail to heed these threats may be at a significant advantage when bidding for contracts with the Department of Defense. Whether you’re contracting directly or as a subcontractor, all manufacturers must be mindful of the new rule, which went into effect in November 2020. This new rule mandates that DoD subcontractors and contractors complete detailed cybersecurity self-assessments. Ultimately, this rule could affect M&A activity in the sector. 

The interim rule amends Defense Federal Acquisition Regulation Supplement (DFARS) to require the addition of a DoD Assessment Methodology and Cybersecurity Maturity Model Certification (CMMC) framework. The goal here is to protect the security of unclassified data at all points in the DoD supply chain. 

As of November 30, all prime contractors and subcontractors must complete an assessment before renewing their DoD contract. As contract renewals approach, more and more companies will be doing this. Specifically, under DFARS clause 252.202-7012, companies must implement 110 security controls the National Institute of Standards and Technology Special Publication 800-171 outlines. There is also a new assessment requirement for any DoD procurements awarded after November 30 with values in excess of $10,000. 

This marks the first year of a give-year roll-out for the CMMC. Eventually, the CMMC framework will apply to all DoD subcontractors, suppliers, and contractors. Third-party assessment organizations will eventually perform cybersecurity assessments under the rule. 

The goal here is to reduce intellectual property theft, which the Federal Register estimates to cost $570 billion to $1.09 trillion. This theft is a major threat to U.S. industry and security, yet many A&D contractors have not kept on top of the threat nor implemented appropriate cybersecurity controls to mitigate the risk. 

We are already seeing how this new DoD requirement could impact M&A. The costs of implementing these new requirements is not small, particularly for small contractors and subcontractors. Moreover, these businesses will lose clients if they do not comply. Thus many are opting to put their companies on the market rather than invest in a cybersecurity strategy that may not increase revenues. Larger companies are gobbling up these smaller entities in an attempt to expand their portfolios, streamline operations, and otherwise become more competitive. 

We anticipate this will continue as the full requirements of CMMC continue to expand. Sellers may have attractive businesses that can easily be brought into compliance with the help of larger entitles. And buyers may be able to get access to new IP and other valuable property when smaller competitors simply can’t keep up with increasing cybersecurity requirements. 

Deloitte announced today it has acquired substantially all the assets of Sentek Consulting, Inc. (Sentek Global), a San Diego-based systems engineering and cybersecurity firm primarily serving the U.S. Navy.

“The acquisition of Sentek Global’s business will expand Deloitte’s existing presence in San Diego, while also bolstering our current mission-focused systems engineering capabilities and cyber offerings to other military branches and federal agencies,” said Mike Canning, US Government & Public Services Industry leader and principal, Deloitte Consulting LLP.

Heather Reilly, Deloitte’s Defense, Security and Justice sector leader and principal, Deloitte Consulting LLP, added, “Deloitte is focused on delivering mission-relevant, complex and technology-enabled engineering, analytics and transformation solutions to our clients in the Department of Defense (DoD). The addition of Sentek Global’s capabilities expands our complement of skilled system engineering and cybersecurity professionals that will enhance DoD’s ability to accelerate its engineering and acquisition processes to ensure effective and reliable systems for our warfighters.  And, it enables us to welcome those Sentek Global professionals who are former members of the Armed Forces into our existing veteran workforce.”

Mark Nace, Deloitte Risk & Financial Advisory’s Government & Public Services leader for the Cyber & Strategic Risk practice and  principal, Deloitte & Touche LLP, said, “As cyber threats to all organizations — particularly U.S. federal agencies — continue to proliferate and become more complex, we’re investing to help our clients prevent, detect and remediate those emerging threats.  The addition of Sentek Global’s capabilities allows us to do just that.”

In addition to providing systems engineering and cybersecurity to the Defense, Security and Justice sector, Sentek Global also offers program management and integrated logistics services. 

Eric Basu, CEO and founder, Sentek Global, added, “Sentek Global and Deloitte share many common values, not the least of which is providing high quality services and solutions for the agencies that serve our country.  We are joining Deloitte to help our government clients solve complex systems engineering and cybersecurity challenges, while also accelerating the scaling of our services for defense, security and justice sector organizations.”

KAL Capital acted as the sell-side advisor for Sentek Global. View the article here.

Click Here to see the PDF

Dear Friends,

Hope everyone’s summer is off to a great start with some rest and recovery in your near-term future.  For us at KAL, our summer vacations (thankfully, no complaints here!) have been deferred to next-year as the M&A market for A&D businesses is operating at a pace that we have never witnessed.  While the increase of businesses for sale (due to changes in capital gains treatment) is not a surprise, the aggressive posture of the buyside has been amazing to witness as valuations and deal structures are firmly above pre-COVID levels and any historical precedent.   The supportive environment, already in motion during Q4 2020, has benefitted from COVID restrictions being lifted as well as natural momentum that has both private equity and strategic buyers pursuing transactions aggressively.  While we at KAL are grateful for our sell-side mandates as well as the overall M&A market, our experience (maybe cynicism) makes us all too aware that these conditions will not last forever. In the mean-time, it’s a great time to be a seller and we expect 2H 2021 to be the most active period for M&A in the sector in the last 20 years.

In the market, we have seen a few macro-themes develop over the course of 2021.  First, the recovery in commercial aerospace has exceeded expectations of even the most optimistic market participant.  Generally, the pick-up in air traffic that began in Q1 2021 accelerated dramatically in Q2 with the lifting of COVID restrictions expediting the pent-up demand for leisure travel.  The pace of the recovery provided a positive demand-shock to a supply-chain desperate for good news but generally unprepared, particularly from a labor stand-point, to support an increased operating tempo. Like we predicted earlier this year, this pick-up is now translating into a much firmer demand picture for the commercial OEM supply-chain.  Domestic airlines have taken this opportunity to place massive orders and take delivery for the many white tail B737MAX that have been built-up over the past several years.  While the recovery has been largely focused on narrow-body aircraft, we expect that that international travel will be bouncing back shortly as vaccination rates in Europe and Asia start to trend towards US-levels.  This has the supply-chain getting ready for an increase in build-rates on narrow-body programs for the first time in almost three years.

On the defense and space side, early signals from the Biden Administration around defense budget have largely been in line with expectations of 1) “flattish” total spending and 2) a pivot towards building weapon systems to defend against threats from near-peer nation states.  While the SPAC craze has subsided a bit, we expect the M&A market to focus on growing niches such as space launch, military LEO and programs like the B-21 and the T-X trainer.

Sincerely,

Trevor Bohn & Ryan Murphy

COVID-19 has been a disaster for just about every industry. It’s proven especially challenging for the A&D sector, since cyber criminals are perennially eager to gain access to sensitive data and government contract information. Most deals are still happening remotely to at least some extent. This is an important security decision in its own right, since a COVID outbreak in your company could be devastating. But this opens you up to cyber attackers. Cybersecurity must top the list of your concerns, and you must be prepared to invest in cybersecurity well before the deal gets underway. A secure company is a more valuable one, so the investment can help drive deal value. Here are the most important strategies to deploy.

Attack Assessment

Automation is now a key part of most deals, including the assessment of company assets. After all, most businesses are too large for a human to reliably audit all aspects of the business. Before proceeding with automated audits, you must review any potential attack surfaces. Look to the company’s past. Has it ever been subject to an attack before? Did it fix the problem that led to the breach? Not only is this important in preparing for M&A; it’s also a key consideration buyers may weigh when assessing the risk of a specific acquisition. 

Threat Intelligence

You must also remain abreast of industry threats, and be especially knowledgeable about the hidden risks within your own network. The key here is to think like an attacker, rather than to think defensively and ignore risk. 

Intelligence from closed source and open source intelligence can help you better understand how your organization or an organization you’re interested in purchasing could have been a target in the past. This can help you assess the true nature of any and all risks. 

Remote Architecture Issues 

Remote work, in one capacity or another, is likely here to stay. Workers like it and it can reduce costs over time. But for it to be fully effective, you need a total overhaul of your security structure to implement a secure remove environment. Remember that it’s not enough to install the right security software; hard and fast rules for your team are just as important. 

Pre-M&A Steps

Before undertaking an M&A deal, it’s important to take the following steps: 

• Include cybersecurity experts in the M&A team. 
• Assess cybersecurity resilience, including by reviewing prior attacks. 
• Assess regulatory compliance.
• Undertake a detailed cybersecurity analysis. 

Post Merger Strategies

The emphasis on cybersecurity must continue after the merger, especially since mergers can attract the attention of cyber criminals. Do the following: 

• Informed by input from cybersecurity experts, refresh and revise operating models with an eye toward security. 
• Remain vigilant about both companies’ security. 
• Assess how M&A may affect the workforce, and whether there could be any potential fallout to cybersecurity from these risks. 
• Seize the opportunity to enhance cyber resilience. 

Aerospace and defense are critical to the global economy, with $909 billion in US sales alone in 2019. It’s also a cyclical industry, with broad swings upward and dramatic downturns. 2020 marked one of its worst downturns ever, after a 2019 that promised continued growth. But A&D is poised for a comeback from the global pandemic. 

How the Global Pandemic Changed A&D

The pandemic was especially hard on airlines, who faced a massive drop in domestic and international flights. Manufacturing, too, saw huge declines directly connected to decline sin other industries. Defense contracts offered some security for suppliers with bigger portfolios, and continued to see positive growth. Aerospace suppliers also had a challenging year, with significant declines in both valuations and M&A activity. 

Government support maneuvers helped support the supply chain, preventing significant structure disruption. But now, the question is what the recovery will look like. Most analysts are primarily concerned with how quickly suppliers can ramp up to support the recovery. 

A Recovery Ahead? 

The recovery is already showing signs of becoming a reality. But it may take a few years for air travel to rise to the same level as in 2019. We anticipate that there will be major shifts across the supply chain, as well as in the way companies transport goods. 

Domestic and leisure travel should recover first, while international and business travel will likely take longer. 

Suppliers and manufacturers are already in preparations for ramping up production of single-aisle aircraft. We anticipate an increase in revenue in Q3 as compared with 2020. The recovery should continue to improve in 2022, leading to more consolidation, an increase in research and development, and movement toward the next generation of aircraft in 2025. 

Global deal volume is becoming healthier. The US has seen significant increases in M&A, but in Europe, deal activities are still fairly slow. Global deal size in 2020 was roughly half that of 2019. 

What the Future Holds 

Restructuring and divestiture carve-outs will likely dominate the M&A market in 2021 and 2022. Valuation multiples continue to be relatively high, and overall confidence in the industry is good. But the security of any specific deal depends on the viability of the companies involved. A number of strategies can increase value and support successful dealmaking: 

• Review your products: Consider whether alternative sectors or customers might offer a wider audience for your products. 
• Gain control of cash and liquidity: Maintain steady operations and strong relationships with suppliers and customers, with a focus on timely delivery, as well as quality and cost controls. 
• Examine your people strategy: Work to retain key talent, recruit new talent, and keep your teams working at optimal productivity. 
• Look beyond the immediate future: In the wake of a pandemic, it’s tempting to focus only on the immediate recovery. But the most successful businesses keep one eye on the future beyond 2022 or 2023. This empowers innovation and industry leadership, and will ultimately offer significantly more value than a reactive, immediate future-focused stance. 

Congress has set its sights on tech antitrust enforcement. The primary goal is targeting the big tech companies like Google and Amazon, but no matter how large your business is, tech antitrust enforcement could have major reverberations, especially for M&A. In the world of govcon, the number of competitors is decreasing rapidly, and many mergers may draw the attention of federal regulators. 

The Federal Trade Commission on June 30, 2020 issued new guidelines it would use to evaluate mergers and acquisitions. While targeted to tech businesses, all companies must be mindful of the sorts of transactions that may come under the purview of the Vertical Merger Guidelines and Commentary. 

Antitrust Considerations During M&A

Buyers must consider the target’s business, and whether it is likely to gain antitrust scrutiny. Ecommerce, social media, search, and online advertising are particularly likely to get the attention of the FTC. 

Some triggers for increased oversight include: 

• a transaction that merges horizontal competitors 
• a transaction that combines businesses in a vendee-vendor relationship 
• transactions bringing together companies in a diagonal relationship 

The key consideration is whether the transaction will give greater market power, which usually means the ability to greatly raise prices for a long period of time. FTC guidelines specifically note that most mergers between competitors do not create this kind of market power. That extends to the aerospace industry. 

How the FTC Might Get Involved 

One recent Antitrust Division inspection involved the 2020 merger of Plaid with Visa. The Department of Justice alleged that Visa has a monopoly among online debit service providers, with market share of about 70%. Plaid was the first direct competitor to emerge in many years, and the DOJ alleged that Visa intended to corner the market by taking over plaid. It also cited an unprecedented multiple of more than 50 as evidence that Visa intended to create a monopoly. Ultimately, the parties abandoned the merger. We are increasingly seeing regulators who either outright prohibit such mergers, or who create such significant barriers that the parties voluntarily abandon the contract. While this was in a different sector, it’s easy to see how similar concerns might arise in A&D. 

What Are the Hallmarks of an Illegal Merger? 

While many different types of mergers can trigger increased FTC scrutiny, regulators tend to focus on certain classes of mergers. If yours falls into one of these categories, you may end up having to answer more questions, or even abandon or modify the merger: 

• Prevents or deters competitors from entering the market. 
• Creates an anticompetitive environment. 
• Reduces access to information, such as when two social media companies merge and control the flow of information. 
• Discourages innovation, or removes innovative products or drugs from the market. 

It doesn’t matter if your intent is not to reduce competition in the marketplace. The FTC is interested in the actual effects of the merger. Meeting with the right deal side team can help you anticipate potential challenges from the DOJ. It may also help you structure the deal in a way that reduces the likelihood of deal-slowing FTC involvement. 

It’s been six decades since the space race began in earnest, and these missions continue to inspire awe and public excitement. But rather than focusing on the brave people of NASA, industry start-ups tend to figure prominently. Many A&D companies have an important role in the public consciousness, as well as a strong reputation for inspiring progress. Yet many A&D companies have faced serious hurdles during the coronavirus pandemic. One of the biggest obstacles we consistently see with these companies—both as they grow and when they enter the M&A process—is that their recruitment and talent strategies have failed to keep up with the current market demands or with their needs. 

The post-pandemic recovery is an ideal time to evaluate your talent strategy. Investors want to see that you have the right people at the helm, as well as exceptionally competent staff working below them. We’re seeing increased competition for digital talent, a push for remote and flexible work, and a hiring landscape that heavily favors companies that value their workers and give them strong incentives. We further anticipate that both tech skills and strong social skills will become critical in the next few years. Here’s what you need to know as you prepare your talent strategy to meet whatever comes next. 

The Headwinds Are Changing 

Despite many positive trends in A&D, we’re seeing some changes that can make attracting the right team challenging. For instance, engineers want to oversee a program from start to finish, while companies might require focus on a single project within a larger program. This adds to the perception of bureaucracy slowing things down. 

The A&D reputation for innovation has also weakened, so it’s critical to communicate the specific value you offer, and show team members how they can become part of important innovations. You must also offer highly competitive salaries, lest you lose the most promising team members to Silicon Valley. 

Recurring A&D Talent Challenges

Some of the most common issues we see with A&D companies include: 

• a weak talent pipeline
• an older, more tenured workforce that is moving toward retirement
• less willingness to put employees in digital roles 
• poor diversity and equity work, and in some cases, a hostile or discriminatory environment 

Managing Workforce Challenges

The top A&D talent will be in high demand for the foreseeable future, so if you want to hire a diverse range of qualified people, you must be prepared to compete. These tips can help you do just that: 

• Tell a compelling story about life in A&D generally, and life at your company specifically. 
• Expand the talent pipeline via strategic partnerships and investments in new skills for your team. 
• Know that diversity, inclusion, and equity are not optional. Companies with ethnically diverse leaders are simply more successful, and better equipped to anticipate challenges their peers miss. Gender diversity, too, creates a better work environment, and ensures you get the top talent—rather than missing out on 51% of the workforce. 

Recovery from the COVID-19 pandemic is likely to lead to a boom in A&D M&A, as companies look to acquisitions to propel growth. This growth can help fill the revenue gap, and offer better service to customers. Doing M&A right matters. There is a close correlation between approach to M&A and ultimate deal outcome. These three keys to M&A effectiveness increase the odds of a successful transaction and a smooth post-closing integration. Here’s what you need to know as you plan your post-pandemic recovery. Keep in mind that a skilled A&D investment bank should figure prominently in your plan. 

Making M&A Central to Your Strategy 

Incidental M&A is much less likely to be successful than that which is made central to a company’s growth strategy. This requires a major capital investment, but that investment pays off. Larger acquisitions offer larger rewards, though they also pose some risks: more extensive vetting, and a more challenging integration. These investments also require some shareholder oversight, which may slow down the process. But ultimately, they tend to be worth more. So consider how M&A figures into your larger strategy, rather than making a few acquisitions here and there. 

Choose Companies With the Right Business Models

It’s insufficient to merely choose a company that is succeeding. You need to target those with complementary business models. For example, research shows that original equipment manufacturers that acquire service companies fare better than other businesses. Creating the desired synergies hinges on having the right combined approach and assets, so consider which companies can complement or expand your operations with minimal disruption. 

Limit Acquisitions to Reduce Integration Issues 

A Deloitte analysis found that, over the last decade, companies with two or so acquisitions per year outperformed those with a more aggressive acquisition strategy. Companies with 21-40 acquisitions had a much higher acquisition failure rate, suggesting that integration issues may figure prominently. 

A&D companies must prepare for integration challenges. Some common themes include: 

• Consider operation acquisitions as standalone companies to avoid increased overhead pools. 
• Be mindful of valuation based on talent, especially in the event that the acquisition is likely to be unpopular with the target’s staff. 
• Define specific integration objectives. 

Post-merger integration can be challenging even for the most experienced acquirers. Outside expertise is critical for realizing the fulll value of an acquisition. Moreover, the right A& D investment bank can help generate a replicable process you may be able to use in subsequent mergers, steadily building a lucrative M&A strategy and integration model.  

According to the National Defense Industrial Association’s Vital Signs report, the industry could be approaching further consolidation as contractors seeking to grow their portfolios use mergers as a growth tool. 

M&A has been a primary tool since the end of the Cold War, and increased dramatically in the 1990s, with the number of primary contractors dropping from 50 to a mere six. While military budgets increased again following the 9/11 terrorist attacks, significant drawdowns since have meant that the number of prime contracts has dropped by nearly 20 percent since the 2011 Budget Control Act. 

In 2015, then-Undersecretary of Defense for Acquisition, Technology and Logistics Frank Kendall expressed concerns that the small number of prime contractors could affect innovation and perhaps even undermine national defense. 

“The trend toward fewer and larger prime contractors has the potential to affect innovation, limit the supply base, pose entry barriers to small, medium and large businesses, and ultimately reduce competition — resulting in higher prices to be paid by the American taxpayer,” he warned.

The large number of high-profile mergers in recent years suggest things may be changing, and another wave of post-COVID-19 consolidations could be just around the corner. Analysts are forecasting a range of scenarios in the new political climate—ranging from a best case of a flat budget to the worst case of a significant decline. New programs may be declined if the latter comes to fruition. 

Downturns have historically brought about big consolidations in the industry. Several other factors also point to a bonanza in mergers and acquisitions: 

• Intense competition for fewer contracts. 
• The potential re-emergence of lowest-price technically acceptable contracts. 
• The increased drive to innovate in spite of budget constraints. 
• Liquidity challenges and distressed assets that may give rise to a buyer’s market. 

It’s important to note that M&A isn’t an option only for the most powerful companies. Smaller contractors may purchase units from other companies to become more agile. While traditional economic theory suggests a wave of mergers could drive prices higher and reduce competition, many primes push back on this idea, saying that mergers offer greater efficiency while promoting innovation. 

Companies that hope to get in on the consolidation wave have little time to waste. Regulatory scrutiny of mergers can slow things down, and requires significant planning. The largest players have the most support to manage the process, so smaller companies should begin movement now to get ahead of the curve. 

Click here to see the PDF

Dear Friends,

Happy belated New Year As we reflect back on 2020 the year was obviously filled with unprecedented challenges to the aerospace and defense sector. However, the more nuanced perspective on the M&A market would be to emphasize 1) the historically seller-friendly market for defense assets and 2) the resiliency of the demand for commercial aero businesses. While the demand for defense assets was somewhat predictable (although the extent was surprising), the M&A environment for commercial aerospace businesses was driven by significant buyer demand, primarily by financial sponsors looking to capitalize on the disruption in the supply chain. That led to a more seller friendly environment than anyone could have predicted as competitive M&A processes have forced buyers to pay “peak” EBITDA multiples off of depressed operating profits.

While we never would have imagined it during 1H 2020, KAL Capital finished the year with a record seven completed sell-side transactions, including four closed deals in Q4. We were fortunate to represent great businesses in the component MRO, composite and space supply-chains. We will describe each of these transactions in the following pages.

Looking into our crystal ball, we expect 2021 to be a historically active year for A&D transaction activity. Our expectations are based on the following assumptions 1) likely changes in capital gains tax treatment, 2) improvements in the commercial aerospace operating environment, 3) near term strength in the DoD budget, and 4) (repeating for emphasis) likely changes in capital gains tax treatment.

The “blue wave” that many business owners within the sector feared has now materialized with all three legislative branches being under Democratic control. We will describe the Biden Administration’s tax plan and funding priorities in greater detail, but the real question is the extent to which slim majorities in both the Senate and House will have on muting the more progressive elements of the Democratic Party. We believe that some level of tax increases for both businesses and capital gains are a foregone conclusion, but we do not expect them to be retroactive for 2021. We feel that this view is rapidly spreading amongst business owners, creating an extremely strong catalyst to initiate liquidity events this year. Potential changes in estate tax treatment including elimination of the step up in basis at death will also nudge tax focused sellers into the market. In conclusion, 2021 will likely be amongst the most active years in A&D M&A history; should be a better ride than 2020!

Sincerely,

Trevor Bohn & Ryan Murphy

Trive Capital (“Trive”), the Dallas-based private equity firm, has partnered with the senior leadership teams of Aerospace Engineering Corp. (“AEC”) and AMRO Fabricating Corporation (“AMRO”) to create Karman Missile & Space Systems (“Karman” or the “Company”). The new platform is one of the largest independently owned suppliers focused on manufacturing complex systems for the space, missile, interceptor and hypersonic markets. The senior leadership teams of both businesses will continue as equity holders and executives at Karman.

Karman operates three centers of excellence in greater Los Angeles, a key market for space and missile manufacturing, and maintains a presence in Washington D.C. and Huntsville, Alabama. The Company’s engineering capabilities and manufacturing footprint benefits from a comprehensive set of OEM approvals and extensive proprietary process IP, which has positioned it on some of the most critical portions of a propulsion system, including engine nozzles, nose cones, iso/ortho-grid body panels, titanium attachment hardware, and heat shields. The platform’s broad suite of capabilities includes upfront design, precision machining, large part forming, corking & bonding, complex welding, composite manufacturing (ablative and structural) and special processing.

The formation of Karman creates a unique and comprehensive set of capabilities dedicated to the space sector, allowing for the Company to handle end-to-end manufacturing of the most complex sub-assemblies on current and next generation launch vehicles, missiles and hypersonics.  The Company is diversified across nearly every major platform and prime in the niche, including Vulcan, GEM-63XL, Artemis, New Glenn, Atlas V, GBSD, GMLRS, THAAD and PAC-3, among many other programs.

“We are excited to form this new partnership with the collective vision to build an integrated supplier of flight hardware and assemblies for the space and missile markets. Working collaboratively with Trive and AEC will allow us to continue growing with our customers, investing in new capabilities and adding capacity to alleviate current supply chain constraints.  Our goal is to build the preeminent Tier 1 systems integrator to the space sector, in a historically fragmented market,” commented Mike Riley, Chief Executive Officer of Karman and former owner of AMRO.

Mark Mahboubi, Chief Technology Officer for Karman and former owner of AEC, added, “Our partnership with AMRO and Trive has already allowed us to accelerate our expansion and play an increasing role in the development and manufacturing of our customers’ most important next generation programs. We are very pleased to offer enhanced solutions to OEMs and support them in the critical years ahead for space and defense.  Moreover, the team plans to continue to invest into new technologies and advanced materials for emerging requirements.”

David Stinnett, Partner at Trive, stated “Karman is well positioned to benefit from rapidly increasing demand for space launch, missile defenses, and hypersonic weapon technologies with substantial content on the leading platforms currently in development. Both AEC and AMRO have established outstanding reputations for high quality and on-time delivery on the most intricate, difficult to manufacture flight hardware and assemblies. We share management’s vision for creating a full-service supplier for these markets and anticipate significant investment to support the capabilities and capacity demanded by customers both now and in the years to come.”

KAL Capital Markets, a Los Angeles-based investment bank focused on aerospace and defense mergers and acquisitions, acted as the exclusive advisor to the shareholders of AMRO Fabricating Corporation.

ABOUT KARMAN
Karman Missile & Space Systems (www.karmanmss.com) is one of the largest independently owned suppliers of flight hardware and complex sub-assemblies to the space, missile, and hypersonic markets. The Company provides design & engineering, precision machining, large part forming, thermal coating, and sub-assembly services while actively adding new capabilities in collaboration with customers.

About Trive

Trive Capital is a Dallas, Texas based private equity firm managing approximately $2 billion in aggregate capital commitments. Trive focuses on investing equity and debt in what it sees as strategically viable middle-market companies with the potential for transformational upside through operational improvement. We seek to maximize returns through a hands-on partnership that calls for identifying and implementing value creation ideas.

The Trive team is comprised of seasoned investment professionals who have been involved in over 100 middle-market transactions representing in excess of $6 billion in revenue across Trive’s targeted industry sectors and situations.

Sunvair Aerospace Group, Inc. (“Sunvair”), a portfolio company of Blue Sea Capital (“Blue Sea”), today announced the acquisition of Mingo Aerospace, LLC (“Mingo” or the “Company”), a provider of component repair services to aircraft operators and leading maintenance, repair and overhaul (“MRO”) providers. Sunvair will support the business’ continued expansion by investing in new capabilities and equipment while maintaining the Company’s excellent track record of customer service.

Mingo, based in Tulsa, OK, is an FAA-certified repair station specializing in cargo loading systems repair and overhaul and thermal spray coatings. The Company has an extensive library of DER and OEM-approved repairs, strong relationships with aircraft operators globally and market-leading turnaround times.

“Mingo Aerospace is excited to join the Sunvair Aerospace Group,” said Brian Emery, Co-Owner of Mingo. “We are united in a vision to deliver exceptional service, value and capabilities to our customers on a large platform.”

“Our combined companies’ history of exceptional customer service and passion for the work we do make this a unique partnership and will further strengthen our continued commitment to our customers,” added Kerry Jarandson, CEO of Sunvair.

“We are thrilled to partner with the Emerys,” said Scott Kirkendall, Partner of Blue Sea Capital and Atkins & Atkins acted as the legal advisor to Mingo. KAL Capital advised on the transaction and financing for the transaction was provided by NXT Capital and Barings.

About Mingo Aerospace (Mingo)

Mingo Aerospace (www.mingoaero.com) was founded in 2000 as a niche provider of cargo system overhaul services. Over the past 20 years, Mingo has continued to develop new repair capabilities, most recently through the addition of thermal spray capabilities in 2017. Mingo is known for its market-leading turnaround times, customer service and quality and is an important partner to its customers across the passenger, cargo and military aerospace sectors.

About Sunvair Aerospace Group

Sunvair Aerospace Group (www.sunvairgroup.com) is a global provider of FAA-certified repair services through bi-coastal locations in California and New York. Sunvair’s subsidiaries specialize in the overhaul of landing gear (www.sunvair.aero) and related components, avionics, flight instruments and pressure sensing components (www.aaic.aero), as well as providing advanced coating services to the OEM and MRO aerospace supply chains (www.aerospaceplating.com). Sunvair has built a reputation among leading aircraft operators for high-quality, responsive customer service, innovative repairs and rapid turnaround times.

About Blue Sea Capital

Blue Sea Capital is a private equity firm based in West Palm Beach, Florida that invests in growth-oriented lower middle market companies valued up to $200 million. The firm has over $750 million in assets under management and invests across three industry verticals: aerospace & defense, healthcare and industrial growth. Blue Sea Capital’s strategy is to partner with talented managers and differentiated companies, typically as the first or the second institutional investor, and deliver strategic and operational value-add that drives growth acceleration, industry outperformance and business transformation.

Following years of growth, analysts are predicting flattening or declining defense budgets. This environment demands a balance of modernization, sustenance of legacy equipment, and preservation of force structure. The DoD’s strategic acquisition priorities will inform these difficult choices. To support these changes, the A&D industry must ensure the industrial base can continue to offer a strong technological advantage. World-class talent and financial capital are critical.

Attracting the right resources demands value creation through growth and capital improvement returns. But in a low budget environment, growth is challenging. M&A presents a potent opportunity for generating value and accentuating a portfolio. This proven growth strategy can generate exceptional shareholder returns and bolster corporate resilience.

A&D has witnessed unprecedented consolidation over the past five years, with deals totaling $358 billion between 2015 and 2019. The challenge now is that this wave of consolidation makes further consolidation difficult, with the combined market value of the top five defense hardware players exceeding more than four times that of the next five. Mega-deals are becoming more difficult to execute, highlighting the importance of a more strategic approach.

Programmatic M&A is the solution here. This approach involves a company engaging in two or more small or mid-sized transactions per year, with the goal of an aggregate value in excess of 15 percent of its market capitalization over five years. These deals should closely align with the company’s overall strategy to offer the most value. They must also choreograph around a specific goal, such as integrating vital capacities or scaling.

In the defense and aerospace industries, programmatic M&A should focus on a strategy focused on innovation, lower costs, and improved mission outcomes.

Yet fewer companies are taking a programmatic approach. Among those who did, the returns are undeniable. They outperform their peers by at least 10 percent. M&A was also a major factor in resilience during the last spending downturn of 2007 to 2011.

The current market environment may be a deterrent, given its competition from institutional capital, stretched valuations, and tightening squeeze on mid-tier companies. They are cautious about integrating even smaller companies into their cultures and processes. These complex circumstances demand a bold approach from players who are willing to differentiate themselves from their competitors, align their strategy with national defense priorities, and promote shareholder value. Well-executed programmatic M&A can become a foundation of your growth strategy.

A proactive deal sourcing approach, in-house execution and integration knowledge, holistic diligence, and a strategic approach can help companies transform M&A into a critical capability while mitigating the risks of reactive and ineffective projects. In the increasingly challenging environment the defense industry faces, the market will reward bold action—but only when intelligently undertaken.

Charger Investment Partners (“Charger”) today announced that it has acquired a majority stake in Advanced Composite Products and Technology, Inc. (“ACPT” or the “Company”). Financial terms of the transaction were not disclosed.

Based in Huntington Beach, California, ACPT is a market leading manufacturer of highly engineered composite structures for defense, space, aviation, automotive, marine, industrial machinery and subsea telecom applications. Founded in 1977, ACPT has a long history of excellence and innovation in advanced composites. Today, ACPT is an industry leader with an established reputation for designing, prototyping and manufacturing composite products for blue-chip customers across a variety of end markets and applications. ACPT is particularly well known for its proprietary composite-to-metal bonding capabilities that paved the way for its groundbreaking composite driveshaft products that are used by the United States Armed Forces and commercial customers alike.

“We are thrilled to partner with Ryan Clampitt, Jim Leslie and the talented ACPT management team,” said Aaron Perlmutter, co-founder and Partner at Charger. “ACPT’s impressive track record of organic growth and recent program wins in the composites space serve as an outstanding platform for future growth.  We expect the enduring category tailwinds in composites to provide meaningful growth opportunities for leaders in this industry.  ACPT’s long-tenured management team has built the trust of a blue-chip customer base, and we look forward to supporting the Leslie family’s continued contributions to the composites industry.”

“This is an important new chapter in ACPT’s growth story,” said Ryan Clampitt, President of ACPT.  “We are very excited to partner with the team at Charger as we work to further accelerate ACPT’s leadership position in the composites space.  We believe that Charger brings the expertise, operational insights and a partnership approach to ACPT, all of which will enhance our unwavering commitment to quality and innovation with our customers.  With increasing demand for composite products across a variety of end markets, ACPT will benefit from decades of heritage in the industry and a strong capital partner in Charger.”

Winston & Strawn LLP acted as legal advisor to Charger and KAL Capital Markets served as the investment banking advisor to ACPT.

About Charger Investment Partners

Based in Hermosa Beach, California, Charger Investment Partners is a private equity firm that invests in dynamic small and mid-sized companies primarily in the industrial, services, and consumer industries that can benefit from Charger’s partnership and value enhancement expertise. The firm’s principals have decades of experience successfully building market-leading companies utilizing an operationally focused, flexible capital approach that encompasses a variety of transaction types including ownership transitions, corporate carve-outs, and recapitalizations. For more information, please refer to the Charger website at www.chargerinv.com.

Please view our Full Q3 Report Here.

Dear Friends,

Hope you are well. As the general economy and other aspects of everyday life slowly start to
begin to ease towards normalcy (depending on where you are); the M&A market has
orientated itself to a post-Covid reality and has entered into a full-blown “V-Shaped
Recovery.” While that dynamic is very end-market and situation specific, we have seen
private equity and their lending partners revitalized and back into (remote) deal making
mode.

As amazing as that buy-side dynamic may seem to outside observers, the supply of
transactions has increased significantly and is close to approximating 2019 levels. While
some of the M&A activity is opportunistic, we have observed a far greater proportion of the
selling coming from family or owner-operated businesses that are seizing the opportunity to
transact ahead of any potential changes in capital gains tax treatment. Both with our
clientele and anecdotally, we have heard multiple examples of private sellers accelerating
their time horizons to prevent potential tax leakage.

For our practice, we are pleased to announce the close of Geodetics to Aevex Aerospace, a
portfolio company of Madison Dearborn Partners. The sale of Geodetics checked many
boxes for potential buyers including proprietary defense electronic products, national
security and clandestine, military customers as well as playing into specific micro trends
around operating in GPS-denied environments. We expect Q4 2020 to be our busiest to
date as we have multiple transactions that we are excited to share.

In this Quarterly Industry review, we will continue to assess the ongoing carnage in
commercial aerospace. While recent deliveries and orders do not point to near-term
recovery, we are hopeful that the upcoming quarter will finally mark a return to service for
the B737MAX and a continuation of the gradual improvement in load factors and passenger
miles. Even in this part of the market, there are multiple high-quality commercial aerospace
businesses in the market that are seeing strong demand for a wide-range of buyers.
Additionally, with the election forefront on everyone’s minds, we attempt to remind
everyone that changes in defense spending tend to be more gradual (regardless of
Administration) than partisan voices account for.

As always, please feel free to reach out to either of us with any questions.

Sincerely,

Trevor Bohn & Ryan Murphy

AEVEX Aerospace announced today its acquisition Geodetics Incorporated. Geodetics Incorporated, headquartered in San Diego, California, designs, develops, and manufactures commercial high-precision positioning and assured navigation products and solutions.

Geodetics builds a suite of low size, weight, and power (SWaP) products for high-precision, assured positioning, navigation, and timing (PNT) that are readily adaptable to any system requiring high-fidelity solutions. Additionally, Geodetics produces application-specific LiDAR mapping and photogrammetry solutions.

“The demand for our solutions is growing dramatically, and a combination with AEVEX is the logical next step for us,” said Dr. Lydia Bock, President and CEO of Geodetics. “AEVEX shares our passion for quality and performance and provides unique insights and access for the continued evolution of our solutions to meet the needs of both civilian and national security customers.”

KAL Capital Markets served as financial advisor and Boyle Law served as legal counsel to Geodetics. Alston & Bird LLP and Crowell & Moring LLP served as legal counsel to AEVEX in support of its acquisition of Geodetics.

About AEVEX Aerospace

AEVEX Aerospace, headquartered in Solana Beach, California, supports the U.S. national security mission around the world by providing full-spectrum airborne intelligence, surveillance and reconnaissance solutions. The company’s capabilities include custom design and engineering, sensor integration and sustainment, aircraft modification and certification, mission operations services, advanced intelligence data processing, exploitation, and dissemination solutions, and tailored hardware and software mission-system tools. With over 600 professionals, AEVEX uses agile and customized approaches to rapidly define, develop and deliver specialized solutions for airborne intelligence requirements to DoD, other government agencies, and commercial businesses. AEVEX has major offices in California, Massachusetts, North Carolina, Ohio, and Virginia.

About Geodetics Incorporated

Geodetics Incorporated is a leading provider of positioning, navigation, and timing (PNT) and sensor fusion technology solutions. Headquartered in San Diego, California, Geodetics has a deep engineering team with decades of experience in solutions design, engineering, prototyping, customization, and production backed by an extensive IP portfolio. Geodetics’ expertise in sensor fusion, inertial/relative navigation, interferometry, mobile mapping, LiDAR electrical/mechanical engineering, artificial intelligence, and fuzzy logic produces high quality, innovative solutions for both commercial and military applications.

Acquirers consistently pursue deals that can address their desire to add new capabilities; either to enhance their existing capabilities portfolio, attract new customers, or enter entirely new end-markets. Done well, these deals can create value and offer greater competitive advantages. However, poorly planned deals can erode value, leading to significant operational disruptions for the newly merged entity and often in the overall market. The hurdles for aerospace and defense are higher than in most other sectors, thanks to the high need for capital and the long development cycle. Every deal is unique, but these strategies can help dealmakers achieve optimal deal value: 

1. Understand deal value drivers. All value creation opportunities must be explicitly defined, with a plan for maximizing each. This is key to a well-designed acquisition and integration strategy. Value drivers vary between acquisitions, but one thing does not: the need to clearly identify specific drivers and develop a plan for managing each. 
2. Decide on the appropriate governance structure. There is significant variability between companies in geographical and operational preferences, as well as culture. Striking a balance between the two companies is key. You must preserve the best aspects of both entities. Work with an advisor to assess the right governance structure. Many companies take the traditional approach, organizing functional teams to oversee integration. That can help meet transaction objectives, but it often fails to drive value. A better approach is often to define value creation groups as the core of integration. The right governance model is a significant factor in deal value, because it enables you to distribute risk and manage interdependence in a timely and efficient fashion. 
3. Create a due diligence clean room. Prior to closing, access to data can be a huge issue. Don’t wait until after closing to delve into the specifics. Instead, use a clean room to accelerate integration. With this strategy, a third party or specific individuals who have no conflicts share data between the two parties. This helps offer strategic insights without leaking sensitive data. For instance, there might be future opportunities the parties are negotiating. If the parties cannot discuss or disclose the impacts of these opportunities, it can trigger significant additional risk and cost. A clean room allows you to assess exposure levels for both parties. 
4. Create detailed operating models for the final value chain. You must understand each company’s current position in terms of people, systems, assets, and processes. This is key to understanding potential capabilities and realizing future synergies. You must be able to begin planning for your future organizational structure, in addition to anticipating demographic, technological, and culture shifts. 
5. Perform culture assessments. Cultural mismatch is a significant source of conflict, and can quickly erode deal value. Culture is critical to every aspect of a company, including how decisions are made and whether and how well people collaborate. This is even more true for A&D companies evaluating cross-border targets or novel capabilities outside of their core business model. Cultural mismatch slows everything, and can ultimately be the undoing of your deal. 

The right assistance can help you realize more value. Work with a skilled deal team that has experience in your industry to ensure all factors are maximally aligned for success. 

The financial and human toll of COVID is difficult to overstate. Businesses have shifted from growth mode to goals of survival. Deals have slowed a lot. While last year marked a banner M&A year for aerospace and defense, 2020 will look quite different. 

While the first quarter of this year witnessed a few large deals, the crisis gripped our consciousness before the end of the quarter. The impact has been colossal, and its long-term effects are not yet certain. Here’s what we know for now. 

Looking Back at the New Peak 

Between 2012 and 2020, M&A increased steadily. Thanks in large part to the merger of Raytheon and United Techologies, 2019 was a standout deal for the sector, with total deal volume in excess of $132 billion. 

EBITDA multiples also peaked in 2019, with strong positive trends in maintenance, repair, and overhaul, logistics, and distribution. There were also some negative trends—in engineering and project management, and in machined and cast parts. 

What Now?

So what does the future hold? The truth is that we just don’t know. M&A activity will be somewhere between slow and silent over the next six months. PE firms must evaluate the effect of COVID on their portfolio companies, weigh whether they can weather the crisis, and consider options for creating more liquidity. Serial acquirers who are well-funded must wait till conditions are better. Then they will likely look for potentially high-value distressed targets. This could ultimate reconfigure the industry landscape. 

For now, even if companies were seeking acquisitions, the challenges of the credit market make such acquisitions difficult. This may continue to be the case even as the economy picks back up. Liquidity is a top priority. Banks will shift their priorities, and debt financing will continue to abate. 

Although large deals in recent times have meant a consistent stream of divestitures, this is winding down. We may still see some activity in tech-related portfolio companies by bigger cash stable firms because smaller players with significant tech assets will begin to struggle. We should look for unplanned purchases as distressed suppliers get absorb by competitors or clients. 

Despite these minor deviations, mergers and acquisitions will continue to slow as the industry turns its attention to more urgent matters and seeks opportunities to rebuild in the coming months. Firms must instead consider the immediate impact of the crisis, how it might affect cash flow, and what specific measures they must implement to ensure the business can survive. 

About KAL Capital Markets:

KAL Capital Markets is an aerospace investment banking company advising middle market clients on mergers, acquisitions, and accessing the capital markets. The firm’s professionals have an exceptional track record, rooted in deep relationships and experience within aerospace & defense manufacturing and aftermarket services sectors. For additional information, please visit https://kalcapital.wpengine.com/.

Please Review our Full Q2 Report Here.

Dear Friends,

Despite it almost being cliché at this point, we hope that you are staying safe and healthy. The past quarter has been a wild ride as we saw COVID-19 emerge as the most important global event of many of our lifetimes.

We are very pleased to announce the sale of Aero Systems Engineering, a portfolio company of Gencap America, to Calspan. ASE is a market leader in the engineering-centric world of engine and wind tunnel testing. The unique capabilities of ASE and its access to next-generation commercial engine programs as well as hypersonic missile development were critical in attracting a strong response from the buyer community. This is our second closed transaction working on behalf of Gencap America; we are grateful for the trust placed in our firm on both assignments.

For KAL Capital, it has been amazing to witness (less so to participate in) the dramatic shifts in M&A sentiment over the past few months. During April and May, we witnessed M&A activity slow to levels below the depths of the Global Financial Crisis. What followed were “green shoots” of activity level that have matured into a very sector-specific recovery. As we had cautiously expected, this improvement has been led by defense-focused businesses. This dynamic is being led by ease of end-market diligence as the defense world has seen suffered very limited virus induced reductions in demand. For our friends in the private equity community, the expectation of “COVID discounts” never materialized in the defense world. While there are certainly lower valuations aplenty in commercial aerospace, the defense sector remains seller friendly.

For our clientele, the major non-COVID, conversation topic has been the upcoming Presidential Elections and the potential effect of a Biden Administration on both defense spending as well as capital gains tax treatment. On defense spending, the nature of many large procurement programs leads to a very broad manufacturing base, supporting well paying employment. One of the few (maybe the only) topics that both sides of the aisle agree on is that manufacturing jobs are critical to the eventual broader economic recovery. To us, reductions in procurement spending seem to fly in the face of that sentiment, but the scale of economic stimulus leads to inevitable questions about corresponding spending reductions and/or tax increases. On taxes, the Biden Administration has been clear on its goal of raising capital gains tax rates to normal income, which would effectively double the tax bill of many of our clients. While avoiding economic theory, we expect these proposed changes to lead to a massive surge in M&A activity as business owners will be looking to transact ahead of any change. We witnessed a similar effect on M&A activity when the Obama Administration increased capital gains tax treatment by a much more modest degree.

Sincerely,

Trevor Bohn & Ryan Murphy

As you prepare for your next step—whether it’s financing your retirement with a business sale or graduating to your next business venture—a premium sale price can help you make your dreams for the  future a reality. 

Too often, however, owners have unrealistic assumptions about the value of their business. They allow their emotions about the company, the work they’ve put in, and their needs for retirement color their perceptions. That’s why it’s so important to have an objective strategy for valuing your business. There are a number of options for assessing what your company is truly worth: 

1. Assign a value to your assets. For many companies, their key value is their property, including intellectual property. Subtract any liabilities or debts. Then use this figure as a starting point for assessing your company’s worth. Keep in mind that most well-run businesses are worth more than assets, so this method works best if you have little revenue and do not have a competitive team in place running your company. 
2. Look at revenue. How much does your company earn in annual sales? Compare this figure to how much an industry competitor might be worth for a specific level of sales. It might, for instance, be about triple sales. 
3. Determine an earnings multiple. A better measure often uses the company’s earnings to develop a price-to-earnings ratio. Determine the likely earnings over the next few years. If a typical P/E ratio in your industry is 15, then your company’s value is 15 times its annual average revenue. 
4. Use a discounted cash flow analysis. This complex approach looks at annual cash flow, projects it into the future, then discounts that value to arrive at a net present value calculation. Many companies offer online calculators to help people who want to use this method. 
5. Look beyond simple formulas. Don’t just crunch numbers or use formulas. Look at geographic location as a source of value, then consider how your company might help a new owner realize its strategic goals, particularly if there are valuable business synergies. 

About KAL Capital Markets:

KAL Capital Markets is an aerospace investment banking company advising middle market clients on mergers, acquisitions, and accessing the capital markets. The firm’s professionals have an exceptional track record, rooted in deep relationships and experience within aerospace & defense manufacturing and aftermarket services sectors. For additional information, please visit https://kalcapital.wpengine.com/.

Headquartered in St.Paul, Minnesota, Aero Systems Engineering (ASE) is the leading global provider of mission-critical testing and engineering services to aircraft engine and airframe OEMs, operators, maintenance, repair, and overhaul providers, in both commercial and government end markets. ASE serves their customers by offering independent testing services at its aerodynamic laboratory; design and build of aerodynamic wind tunnel facilities and equipment across all speed regimes including hypersonic; and design / build of jet engine test facilities and equipment.

KAL Capital partner and co-founder, Ryan Murphy, said, “We’re so appreciative of the trust Gen Cap America put into the KAL Capital team to advise on such a marquee company in their portfolio. Even though the market developed some turbulence due to Covid, our collective effort produced a highly successful exit for a key private equity client.”

Trevor Bohn, partner and co-founder of KAL Capital, also added, “David Meier, President & CEO of ASE and his leadership team grew ASE into a dominant global leader while partnered with Gen Cap America. Now in partnership with Calspan the team will undoubtedly double the business again.”

While the Raytheon and United Technologies merger had gotten most of the media’s attention, M&A activity for family and private equity-owned defense supply-chain participants has stayed consistent despite COVID-19 challenges. This blockbuster deal may temporarily distract from the reality that defense M&A has seen only a modest slowdown in M&A deals with valuations essentially unchanged from pre-COVID-19 levels. We expect the activity and valuation levels to remain high through the remainder of 2020 but see uncertainty over the next year.

Here’s what we’re seeing now.

Positive Defense News
Though the COVID-19 crisis has slowed numerous deals, defense driven businesses have emerged as one of primary bright spots in the M&A market. The attractiveness of consistent end-market demand has led to unparalleled levels of interest from both strategic and private equity buyers. In an uncertain world, the US defense budget serves as predictable source of revenue and provides certainty of demand trends across various mission-critical programs and platforms.

In the first half of 2020, many defense contractors saw increased revenue and EBITDA. This trend was illustrated by Boeing’s public results where defense revenues have remained stable even when their commercial operations collapse. Indeed, in the case of Boeing, the corporation’s defense business may save the larger company from a COVID-related collapse.

Threats on the Horizon
While defense contracting is generally faring well, it is not immune to threats from COVID-19, nor from the virus’s potentially catastrophic economic aftermath. One of the biggest threats comes from the budget cuts governments may have to make due to decreased revenues and skyrocketing public health costs. In many nations, defense spending is a specific percentage of GDP. Following the Great Recession, many countries slashed defense spending to align with decreases in GDP. That may occur yet again as countries look to rev up health spending and the social safety net at a time of high unemployment. Defense contractors rely on a government commitment to defense. When those commitments change, so too do budgets and the money available to defense contractors.

Governments must find a way to pay for the massive funds allocated to COVID-19 in the form of stimulus checks, health spending, unemployment payments, public health response, and more. Defense will probably be safe over the short-term, but over time, governments will likely face high pressure to cut their budgets. For the US politics, it appears that early polling results are signaling a difficult road to re-election for the Trump Administration, while at the same time, the Democratic Party appears to be moving towards a more progressive viewpoint. Both of these developments will create uncertainty for DoD spending and simultaneously raise concerns about increasing tax rates of capital gains events.

In conclusion, we expect the current strength of the defense-focused M&A market and the uncertainty created by the current political environment to result in strong activity levels from owners of defense businesses. We at KAL Capital are witnessing this trend in real time as we have a number of defense transactions “in the market” that are being extremely well received by the private equity community.

The economic disruption of COVID has had  impacts in various A&D sectors. In commercial aerospace, the effects are immediate and dramatic, while defense remains mostly untouched. We don’t know yet what all of this will mean over the long-term, but as with previous disruptions, there are meaningful opportunities for growth for those who choose to take them. Here’s what you need to know about the current climate. 

Life Before COVID 

It might not seem like life before COVID ever happened, given how much the virus has disrupted the world. But just a few short years ago, we were all expecting a golden decade of growth. In 2019, though, the correlation between carrier profitability, GDP, air-traffic expansion, and orders and build rates suddenly changed. While airline profitability and GDP remained healthy, new orders dropped thanks to the 737MAX shock. Other undercurrents also started to pull things downward worldwide, even as U.S. defense spending continued to increase. 

Players in many segments continued to be confident in the long-term sector fundamentals, and opted to use M&A to build scale. Others focused on content, and initiated horizontal and vertical integration strategies. A&D deal volume reached record levels, nearly doubling in just five years. These volumes moderated a bit in 2019, thanks to more uncertainty and a pending presidential election, though the overall outlook remained rosy. 

COVID-19 Changes Everything

Air traffic collapsed in the wake of COVID, thanks to stay at home orders and travel restrictions. The MRO and aftermarket segments suddenly had to fight heavy headwinds. Defense has not faced a similar shock so far. There have not been major interruptions, nor service delays. However, a range of defense spending measures is possible, including cutting defense budgets to fund other initiatives. 

Volatility in the financial markets is also increasing, delaying and decreasing funding and forcing companies to pursue alternative liquidity options. Many underway deals have been halted or slow. The new public offering market is essentially closed. Valuation gaps between sellers and buyers have increased thanks to different perceptions of the economic effects of COVID, contrasting views on reopening, and uncertainty about what the post-COVID world will look like. With few reliable projections, credible valuations are nearly impossible, making it difficult to bridge these gaps. 

Important Developments to Watch 

Health concerns, changes in consumer behavior, and the lag between now and a vaccine makes a v-shaped recovery unlikely, especially in air traffic. As governments shift to reopening economies, the pace of the recovery will vary greatly across the globe, and also between states. There may also be long-term or even permanent changes in A&D. 

Developments to watch as economies reopen

Given the health concerns, changes in social behaviors (some of which may be slow to reverse) and anticipated lead-time to an effective vaccine, a V-shape recovery in air traffic appears increasingly unlikely. As governments move from combating coronavirus to reopening economies, the pace and extent of the economic recovery is expected to vary significantly around the world. Further, some long-lasting or permanent developments may trigger some dramatic shifts in the sector. An immediate return to pre-crisis levels is unlikely, but this sector should bounce back. 

As we move closer to the next phase, deal makers must be prepared to adapt to a world that might be quite different from the one they once knew. 

About KAL Capital Markets:

KAL Capital Markets is an aerospace investment banking company advising middle market clients on mergers, acquisitions, and accessing the capital markets. The firm’s professionals have an exceptional track record, rooted in deep relationships and experience within aerospace & defense manufacturing and aftermarket services sectors. For additional information, please visit https://kalcapital.wpengine.com/.

Given today’s environment, M&A activity in the aerospace and defense industry seems to be evolving on a daily basis. Since we last released our Quarterly Industry Review (March 2020), there has been a substantial improvement in key underlying metrics that drive A&D industry growth.

Sentiment in commercial aerospace bottomed sometime in April and has seen consistent improvement since. There has been a range of positive news, but the major US airlines announcing improving demand trends and even increased flight activity is probably the most important. American Airlines announced a July schedule that was 55% of 2020 which marked a material increase from May which was ~20% of 2020 levels. This announcement was followed by directionally similar announcements from other carriers and led to a profound rally in equity prices throughout the sector. For aerospace M&A, the recovery of air traffic is a critical leading indicator for both the aftermarket as well as the OEM build-cycle. This shift has already improved our conversations with many strategic and private equity buyers as many of the “doomsday” scenarios that had become prevalent now seem to be highly unlikely. Additionally, the gradual restart of the B737MAX production line has been an invaluable lifeline to many supply-chain participants. We are hopeful that a 2020 announcement of the B737MAX return to service will be one more piece of good news that continues us on our positive trajectory.

For the defense sector, our thesis from our Q1 newsletter that businesses with exposure to defense end-markets will continue to be in high-demand has borne itself out. We are in the market with several defense-focused transactions that have seen strong interest from buyers of all types. Admittedly, there has been essentially zero announced transactions in the last 90 days, but we anticipate closing transactions this month and the launch of several new deals. We feel that Q3 will mark a return to some level of transaction activity and by Q4 we will be seeing transaction announcements at a tempo that feels more normal.

Here is a rough summation of the some of the industry trends we’re witnessing right now:

• Over the immediate term, the sector will likely continue focusing on the defense industry, though commercial aerospace has bottomed and shown improvement
• Megamergers will become rarer, but purchases of smaller targets will likely accelerate.
• The focus in M&A will be on accessing new technologies, gaining new capacities, and geographic reach expansion.
• Consolidation has produced several major industry players who will continue to choose a highly aggressive M&A strategy for expansion.
• Investment in emergent technologies has added new competition from previously unrelated industries, including software.

About KAL Capital Markets:
KAL Capital Markets is an aerospace investment banking company advising middle market clients on mergers, acquisitions, and accessing the capital markets. The firm’s professionals have an exceptional track record, rooted in deep relationships and experience within aerospace & defense manufacturing and aftermarket services sectors. For additional information, please visit https://kalcapital.wpengine.com/.

Please review our full Q1 Report here.

Dear Friends,

Unprecedented times. Simply put, we at KAL Capital are still trying to get our arms around the profound impact of COVID-19 as it pertains to the aerospace and M&A industries, but perhaps, most importantly, these times serve as reminder of the importance of friendships and family. From our family to yours, we truly hope that you are safe and healthy and managing through this unprecedented disruption in your business.

For our business, we are fortunate to remain active with a book of clientele that are relatively insulated from much of the disruption. Given the current environment, we are particularly pleased to announce our role in the sale of AEVEX Aerospace to Madison Dearborn Partners (details enclosed). This transaction was particularly satisfying as we represented the family owners in their original recapitalization with Trive Capital in 2014, watched the business continue to grow and finally assisted in the second exit.

We remain cautiously optimistic that later this quarter or early next, life as we knew it returns to normal. We will cover in greater detail, but as demonstrated by our recently closed transaction, defense-focused M&A activity continues to march forward, albeit subject to new social distancing complications! In the mean-time, we want to engage in as much dialogue as possible as we can assist outside of our normal scope of sell-side M&A activity. We have access to both conventional and non-conventional financing sources, should the need arise.
We will take the remainder of this Industry Review to share our specific thoughts on the current implications on M&A for each of the major sub-sectors of the aerospace world, which we break out into commercial OEM, commercial aftermarket and defense. The duration and the extent of the reduction in valuations varies dramatically by sector, but overall the M&A market has abruptly shifted away from a seller friendly backdrop to one where the market is still trying to reach a point of price discovery as many M&A processes have been paused.

Reflecting on the Great Financial Crisis of 2008-2009 has been an invaluable source of perspective and a way to articulate differences, both positive and negative from today. First, the previous crisis began as a housing/banking issue that migrated into the broader economy. This amplified the negative effect on M&A activity as a prolonged lack of access to debt capital dramatically reduced private equity activity. In comparison, today’s crisis is an economic shock that did not originate from what was previously, a healthy financial system which should somewhat mitigate the adverse effect on lending risk-appetite. Additionally, many of today’s private equity and middle-market debt capital sources are from committed funds and other non-traditional banking sources. According to PitchBook estimates, these private debt funds have $275 billion of committed capital base. Secondly, private equity’s strong performance coming out of the previous recession led to an unprecedented, exponential increase in the number of funds and total committed capital that institutional investors have allocated to the sector.

Total private equity “dry powder” sits at $2.4 trillion; simply put, this capital can only stay sidelined for a limited period before fund life and other economic considerations force equity groups to again deploy capital via M&A activity. These facts are positive but are unable to balance out the negative shock that the market is experiencing; in whole we do face the grim reality that 2020 M&A activity for many sectors will be down considerably and may in fact be lower than 2009.

For the aerospace/defense sector, the comparisons between the Great Financial Crisis and today again point to a very different near-term future for M&A activity. During 2008-2009, the resiliency of the commercial OEM cycle, driven by a deep (international) order book, allowed for M&A activity in the sub-sector to continue with only limited disruption. Ultimately, the length of this crisis will determine the impact on the OEM orderbook, but today many strategic and private equity buyers are taking a “wait and see” approach that we expect to last several months particularly now that Boeing has halted nearly all production and Airbus has announced material reductions in build-rate. While the commercial OEM market will undoubtedly be adversely impacted, the nature of today’s crisis has impacted air traffic to a degree that has the aftermarket supply-chain facing unprecedented challenges. In the near-term, we expect commercial aftermarket M&A activity to be primarily distressed sellers or restructuring as the total collapse in passenger traffic will have a debilitating effect on ground handling, component MRO and other aviation services businesses. Cargo has remained a bright spot as the global economy is still requiring the movement of goods across countries; many participants in this sector have seen revenue increases and will likely emerge from this crisis in strong financial shape. Finally, in contrast to the Great Financial Crisis, we expect defense-driven businesses to continue to transact at seller friendly multiples. While sequestration hamstrung the DoD during the previous crisis, today’s funding environment is robust with strong funding for a variety of programs and platforms. We believe that private equity and strategic buyers will be drawn to these types of opportunities driven by the comparative ease of end-market diligence and the lack of alternative deal flow that will likely characterize the remainder of 2020. Additionally, many strategic buyers (public and PEGowned) have already reached out to KAL Capital expressing a desire to rebalance existing revenue mix towards a more defense-focused model via M&A.

These are crazy times. Please stay safe and as always reach out to either of us with any questions.

Sincerely,

Trevor Bohn & Ryan Murphy

We are pleased to announce that Trive Capital (“Trive”) has completed the sale of AEVEX Aerospace, LLC (“AEVEX” or the “Company”) to Madison Dearborn Partners (“MDP”) and CoVant (“CoVant”). AEVEX Aerospace is a leading provider of full spectrum, airborne Intelligence, Surveillance, and Reconnaissance (ISR) solutions for defense and intelligence agencies around the globe. The Company provides mission critical ISR services through three business units focused on engineering & technology, flight operations, and intelligence solutions.

Since Trive’s investment in the AEVEX platform in 2014, the Company has experienced significant growth driven by (i) organic investment in expanded capabilities, (ii) the targeted acquisition of other specialized service providers, and (iii) secular expansion in the collection and dissemination of ISR data to niche intelligence communities. In addition, AEVEX has built an exceptional management team that has, in partnership with Trive, driven improvement in operational execution, sales and marketing focus, capability expansion, systems, and technology innovation. As a result, the Company is well positioned in an expanding sector to service military and other government customers, globally.

David Stinnett, partner at Trive stated, “AEVEX is a unique business with a differentiated service offering that has established itself as a leader in critical ISR missions, globally. The Company’s strong customer relationships, highly specialized capabilities and talented management team, coupled with the organic and inorganic investments made over the last 6 years, have allowed the business to capitalize on significant market opportunities. Trive has appreciated the partnership with management and is excited to see AEVEX continue to succeed and expand under the ownership of MDP and CoVant.”

“Through our relationship with Trive, AEVEX was able to enhance its service offering across all three divisions and expand its global footprint to better serve its customers, employees, and missions,” commented Brian Raduenz, CEO of AEVEX. “We are proud of our successful partnership with Trive which has allowed us to collaboratively build a valuable service offering that leverages the strengths and capabilities of our team. Trive’s operational, financial, and government services sector expertise was critical in strategically positioning the Company for significant growth, and we look forward to continuing this momentum with our new shareholders.”

KAL Capital served as a financial advisor to AEVEX and Haynes and Boone provided legal counsel.

Dear Friends,

Happy New Year! KAL Capital Markets finished the year with six closed transactions; each of the businesses were well received by an aggressive set of strategic and financial buyers. We are set to embark on our fourth year, and we are proud to say that both our transaction activity and number of team members have continued to grow each year.

The year has gotten off to a wild start with headlines for the defense sector (Iran) and commercial aerospace (B737MAX halt) competing for top bill. In the near-term the MAX news has had a broader effect on the supply-chain as Q4 news went from bad to worse as the supply-chain is now grappling with a full halt of MAX production. The whipsaw of going from rate-readiness checks for 60 plus airplanes to a full-halt within a twelve-month period has very few parallels.

From an M&A perspective, we expect the near-term reverberations to be profound as B737MAX content will be heavily discounted and likely create a meaningful gap in expectations between buyers and sellers. The open question will be how long following return to service this gap will remain; we are optimistic but unfortunately, believe that the primary source of 2020 M&A activity for the MAX supply-chain will be distressed in nature. That said, we strongly believe that the MAX problems will be not only isolated but have a positive effect on M&A activity for businesses either with limited MAX content or outside of the commercial OEM space entirely. We have already seen private equity and strategic buyers looking to deploy capital aggressively in the defense and aftermarket sectors as well as to balance MAX heavy investments with other growing platforms (F-35, B777x, etc).

Getting down to it, we believe 2020 will be the most active year for M&A over the past decade. This prediction is driven by a combination of factors including a continuation of extremely seller friendly valuations and the upcoming presidential elections. Election years tend to be busy as business owners look to transact ahead of any major policy (especially defense spending) changes, but we expect activity to be amplified by the proposed tax changes being suggested by essentially all Democratic presidential candidates. While progressive ideas such as wealth taxes have garnered most headlines, several of the more centrist candidates are proposing material increases in the tax treatment of capital gains. Rightfully so, capital gains tax treatment is critical when considering a M&A event, and we saw a smaller version of this in 2012 as sellers rushed to transact ahead of the Obama Administration’s more minor increases in tax rate.

Sincerely,

KAL Capital Markets Team

Please see the KAL Capital AD Q4 2019 Newsletter

M&A Spotlight

KKR & Co., Inc. to Acquire Novaria Group from Rosewood Private Investments and Tailwind Advisors
Novaria Group is a independent supplier of complex, highly-engineered components and specialty processes for the A&D industry. The company is composed of several operating divisions specializing in brackets, fasteners, and small components for airframe and engine, as well as chemical processing and plating services.

Albany International Corp. Acquires CirComp GmbH
CirComp manufactures high-performance composite components. Founded by Dr. Ing. Ralph Funck, the company specializes in designing and manufacturing customized engineered composite components for aerospace and other demanding industrial applications.

Arlington Capital Partners Acquires the Blaenavon Forging Business of Doncasters Group Ltd, a Portfolio Company of Dubai International Capital LLC, Creating Forged Solutions Group
The business manufactures complex, precision forged rings and closed die products primarily for OEM and Tier 1 aerospace and defense engine customers. The operation offers one-stop-shop production capabilities focused on rolled rings, casings and closed die forgings in nickel, cobalt and titanium alloys and stainless steels, with complementary services including machining, heat treating, engineering, chemical processing, testing and inspection.

Arlington Capital Partners Agrees to Sell Quantum Spatial, Inc. to NV5 Global, Inc. for $303 Million
Quantum Spatial is one of the largest independent geospatial data firms, providing geographic insights to government and corporate organizations that need geospatial intelligence to mitigate risk, plan for growth, better manage resources and advance scientific understanding.

Bluestone Investment Partners, LLC Portfolio Company Intrepid Solutions and Services, Inc. Acquires BWM Outcomes, LLC
BWM Outcomes is a provider of cybersecurity and intelligence analysis services, including: cyber threat intelligence; information assurance; intrusion detection and remediation; data analytics; document and media exploitation; and; improvised threat analytics to defense, intelligence, and national security customers.

Curtiss-Wright Corp. to Acquire 901D Holdings, LLC From Graycliff Partners LP
901D is a designer and manufacturer of mission-critical integrated electronic systems, subsystems and ruggedized shipboard enclosure solutions supporting every major U.S. Navy shipbuilding program, including aircraft carriers, submarines and surface ships. Founded in 1999, the company operates from a 78,000 square foot facility.

Dubin Clark & Co., Inc. Portfolio Company Kellstrom Defense Aerospace, Inc. Acquires Airborne Technologies, Inc.
ATI offers a range of proprietary tooling for the manufacture of complex defense aircraft parts as well as strong capabilities in CNC machining, metal forming, and structural integration. Current production includes landing gear doors, wing leading edges, and other complex assemblies.

Contract Award Spotlight

NAVAIR HQ Contracts With Lockheed Martin for for Long Lead Material for 48 Low-Rate Initial Production (LRIP) Lot 15 F-35A Lightning II Aircraft for the Air Force
The U.S. Naval Air Systems Command, Headquarters (NAVAIR) (Patuxent River, MD) awarded Lockheed Martin Aeronautics Co., Fort Worth Operations (Fort Worth, TX) a $328.0 million fixed-price-incentive-firm-target advance acquisition contract (N00019-20-C-0009) to procure long lead material, parts and components in support of 48 low-rate initial production (LRIP) Lot 15 F-35A Lightning II aircraft for the Air Force.

Army ACC-RSA Mods Contract With GE Aviation for T700 Engine Deliveries
U.S. Army Contracting Command – Redstone (ACC-RSA) (Redstone Arsenal, AL) awarded GE Aviation – Military Solutions (Lynn, MA) a $1.33 billion firm-fixed-price modification (P00021) under a previously awarded contract (W58RGZ-15-D-0048) for T700 engine deliveries in support of the Army H-60 and AH-64 programs, Navy H-60 programs, Air Force programs, Foreign Military Sales (FMS) and other government agencies.

NATO Contracts With Boeing to Modernize AWACS Fleet With Digital Flight Decks and Avionics
The North Atlantic Treaty Organization (NATO/OTAN) (Brussels, Belgium) awarded Boeing Surveillance and Engagement (Kent, WA) a USD $1.0 billion contract to modernise the alliance’s Airborne Warning and Control System (AWACS) aircraft, which are based on the Boeing 707 commercial airplane.

NAVAIR Mods Contract With Lockheed Martin for 15 Lot 14 F-35A Aircraft and Associated Red Gear for the Government of Australia
The U.S. Naval Air Systems Command, Headquarters (NAVAIR) (Patuxent River, MD) awarded Lockheed Martin Aeronautics Co., Fort Worth Operations (Fort Worth, TX) a $831.0 million fixed-price-incentive-firm modification under a previously awarded advance acquisition contract (N00019-17-C-0001) for the production and delivery of 15 Lot 14 F-35A aircraft and associated red gear for the Government of Australia.

NAVAIR Mods Contract With Raytheon for Additional Next Generation Jammer (NGJ) System Demonstration Test Articles (SDTA) Shipsets and Associated Equipment
The U.S. Naval Air Systems Command, Headquarters (NAVAIR) (Patuxent River, MD) awarded Raytheon Space & Airborne Systems (SAS) (El Segundo, CA) a $403.3 million cost-plus-incentive-fee modification (P00062) under a previously awarded contract (N00019-16-C-0002) for additional Next Generation Jammer (NGJ) System Demonstration Test Articles (SDTA) shipsets and associated equipment.

Army ACC-RSA Mods Contract With Lockheed Martin for Joint-Air-to-Ground Missiles (JAGM)
U.S. Army Contracting Command – Redstone (ACC-RSA) (Redstone Arsenal, AL) awarded Lockheed Martin Missiles and Fire Control (MFC) – Orlando (Orlando, FL) a $134.7 million modification (P00094) to contract (W31P4Q-15-C-0102) for Joint-Air-to-Ground Missiles (JAGM).

Sources: DACIS and other publicly available information.

LONG BEACH, Calif., Nov. 22, 2019 /PRNewswire-PRWeb/ — KAL Capital Markets LLC (“KAL Capital”), an aerospace and defense investment bank, is pleased to announce the sale of its client Aero Pacific Corporation (“Aero Pacific”) to ARCH Global Precision, a portfolio company of The Jordan Company.

Headquartered in Garden Grove, California, Aero Pacific is a leading provider of machining services for aerospace and defense end-markets. Aero Pacific focuses on machining complex, structural components with a unique specialty in hard-metals. The acquisition marks the continuation of ARCH Global Precision’s growth in aerospace and defense.

KAL Capital partner and co-founder, Ryan Murphy, said “It’s been an honor to work with Mark Heasley and the Aero Pacific team given Mark’s standing in the Southern California aerospace machining world.”

Trevor Bohn, partner and co-founder of KAL Capital, also added “Mark has grown Aero Pacific into a market leader in hard-metals structural machining. The transaction represents another successful exit for Mark as well as our aerospace and defense-focused practice.”

About Aero Pacific Corporation:

Aero Pacific Corporation is a leading provider of large complex structural components with a focus on hard-metals machining. The company serves key fixed-wing defense platforms with components and assemblies manufacturing capabilities of up to 90 feet. Aero Pacific has two facilities located in Placentia and Garden Grove, CA including over 65 spindles with a combined facility size of 110,000 square feet. For additional information, please visit https://www.aeropacificcorp.com/.

About KAL Capital Markets:

KAL Capital Markets is an aerospace investment banking company advising middle market clients on mergers, acquisitions, and accessing the capital markets. The firm’s professionals have an exceptional track record, rooted in deep relationships and experience within aerospace & defense manufacturing and aftermarket services sectors. For additional information, please visit https://kalcapital.wpengine.com/.

Contacts

KAL Capital Markets
Ryan Murphy
Partner
contact@kalcap.com

Please see the full Q3 report here.

Dear Friends,

As we get started in the fall season, the aerospace/defense M&A market remains highly dynamic with several notable developments. That said, two main topics dominate nearly every conversation and serve as key drivers of M&A timing decisions.

First, the B737 MAX train wreck continues full steam ahead underscored by multiple unpleasant developments including Boeing executive departures, Congressional inquiries and international safety agencies defying the FAA. For us and the aerospace supply-chain, all the headlines are of limited importance in comparison to the health of the order book. To that point, Southwest CEO Gary Kelly’s comments gave us the most pause when he announced that the devoted B737 carrier would be considering diversifying its fleet into other OEMs. From a M&A perspective, we have been pleasantly surprised by the number of businesses with significant MAX content that have successfully completed transactions. That said, the number of deals put on hold or pausing due to MAX uncertainty remains sky high.

Second, now that we are approximately a year out, the US presidential election is becoming a hot button issue. While we try to stay away from political bias or agenda, the Trump Administration has been an unequivocal boon to the defense industry with supportive increases in spending nearly across the board. Businesses with defense-centric end-market exposures have seen material improvements in valuation multiples over the past three years. Additionally, the left-leaning rhetoric out of several of the leading Democratic candidates advocates material changes in the tax treatment of capital gains as well as wealth in general. Given those two factors, we would expect M&A activity to spike in the event of even the increased likelihood of a Warren/Sanders nomination. Shareholders of all political affiliations will be looking to get ahead of any potential tax increases as well as any decreases in the DoD budget.

Quarter in Review Table of Contents:

I. KAL Capital Overview

II. Q3 M&A Snapshot

III. Commercial Focus

IV. Defense Focus

V. Aftermarket Focus

Private Equity’s Aftermarket Spree Continues…

The KAL Capital team advised STS Aviation Group on their equity partnership with Greenbriar Equity Group and following the transaction the STS and Greenbriar team has made two additional acquisitions. Earlier this week, STS Aviation Group announced the acquisition of Apple Aviation, a limited powerplant and airframe repair station focused on line and base maintenance for Boeing and Airbus aircraft. UK-based, Apple Aviation specializes in engine overhauls, AOG support, aircraft storage, teardown, and recycling and parts processing. Prior to the acquisition of Apple Aviation, STS acquired Triumph Aviation’s NAAS line maintenance division – now called Tank Tigers – a provider of fuel systems maintenance, leak detection and bladder cell repair services. KAL Capital served as the sell-side investment banking advisor on this transaction as well.

UK-based aftermarket activity has been hot as of recent. In addition to the Apple Aviation deal, AerFin was also acquired by Denmark-based CataCap. AerFin focuses on end-of-life aircraft and engine lease and sales. CataCap purchased the business from another private equity fund, CarVal Investors.

The primary themes of these transactions are international footprint growth, and complete, full-service component supply chain solutions. One step further, it’s easy to see the private equity platform surge. Private equity’s investment interest has made it a lot trickier for new players seeking target deals in the space, i.e. without paying a higher price. Strategic initiatives from blue-chip aftermarket businesses are competing head-to-head with private equity investment interest. This is consequently driving the purchase price higher and higher for standalone repair stations that would promote strong synergies. While aftermarket sentiment becomes more optimistic due to air passenger increases, certification/regulation barriers to entry, and an all-time-high backlog of new aircraft entering the sky, the transaction announcements are expected to continue to be regular headliners.

Composites M&A Overview

Commercial and defense platform backlogs have driven optimistic forecasts for composite suppliers in the A&D supply chain. Defense has buoyed much of the supplier momentum and increased M&A appetite in 2019. DoD spending highlights for 2020 include 14 battleships and 96 F-35s. As the supply chain prepares for significant increases to associated advanced materials production, in-sourcing from blue-chip OEMs and platform growth within private equity are expected to drive an increase in deal flow towards key tier II & III suppliers.

Composites Overview

2019 Composites M&A – Highlights

Arcline Investment Mangement Acquires Integrated Polymer Solutions
IPS and its subsidiaries manufacture elastomeric components including seals, gaskets and tooling for composites with a global manufacturing footprint.

ESCO Technologies Acquires Globe Composite Solutions
Globe manufactures composite products for acoustic, signature-reduction, communications, and hydrodynamic-related applications, supplying 140+ parts on the Virginia and Columbia class submarines.

ITT, Inc Acquires Matrix Composites
Matrix manufactures composite components for A&D applications including fuselage components, spars, radomes, antennas, munitions housings, ducting, and fixed & rotating engine components.

Sekisui Acquires AIM Aerospace, a Portfolio Company of Liberty Hall Partners
AIM Aerospace designs and manufactures advanced composite structures, systems, engine components and thermoplastic technology for global aerospace customers.

HEICO Acquires Decavo
Decavo designs and manufactures complex composite assemblies with unique structural and electromagnetic interference characteristics for cameras, sensor assemblies, and UAV airframe applications.

HEXCEL Acquires ARC Technologies
ARC produces RF / EMI and microwave absorbing composite materials, combining metallic filler compounds with a proprietary blend of polymer resins for various structural composites and thermoplastics applications.

Please see our attached analysis on ISR services M&A in 2019.
ISR Services Update

Please see our featured analysis from AUVSI’s Unmanned Systems Magazine, September 2019 Edition.

Follow the link here.

F-35 Program Update:

While the F-35 program jumps into full rate production, a few supply chain dynamics will be at play over the next few months.

1) The dismissal of Turkish suppliers – notably aerostructures manufacturers – will inject additional work back into the U.S. supply chain, and will require significant adaptability and backlog management from key tier I-III suppliers.

2) Consolidation sprees from computing system and communications suppliers.

Please review our program update here… F-35 Overview

Thermal management system suppliers have long been a private equity favorite. Last week, Boyd Corp announced the acquisition of Lytron, a market leader in cold plates, chillers, heat exchangers, and liquid cooling solutions.

Amidst the influx of recent deal activity, the private equity backstory extends well beyond the last couple years. Please see our analysis below and dive into the timeline of add-on deals and platforms that led to the acquisition of Lytron and shaped the quickly consolidating thermal management market space.

Boyd Acquires Lytron

We are extremely pleased to have represented Valence Surface Technology, a portfolio company of Trive Capital, in their sale to ATL Partners this past quarter. The transaction marked another sale in an important sub-vertical for us (metal finishing). It was terrific to see the completion of a successful investment for both Trive Capital and several former clients of ours who made up some of the early constituents in the roll-up that eventually became Valence.

In addition, the previous quarter marked the singular most important industry networking event of the year, the Paris Air Show. Conversations at this year’s show were focused on two primary topics. The first centered around the future of the MAX; will Boeing be able to get the aircraft flying again and if so, will airlines honor existing orders. By now, no one credible is predicting with certainty when the MAX will finally fly again. Concern about the sustainability of the current build-rate is growing in a linear direction to the number of planes parked throughout the greater Seattle area. Rumors of a Boeing narrow-body MAX replacement are rampant though no definitive time line has emerged.

The second topic of conversation centered around M&A activity. The headline grabbing transaction announcements are always fun, especially the idea of two behemoths like UTC and Raytheon doing a “merger of equals.” For us and our clients in the lower tiers of the supply-chain, the M&A market remains seller-friendly primarily driven by institutional private equity deploying capital aggressively into growing businesses with clear barriers to entry.

In a continuation of what seems to be the “new normal,” we do not anticipate the months of July or August to offer any break in the action as deal activity remains high.

As always, we encourage your thoughts and questions and hope to hear from you soon.

Please see our review here…KAL Capital AD Newsletter Q2 2019

We are pleased to announce that Valence Surface Technologies, a portfolio company of Trive Capital, has been acquired by ATL Partners and British Columbia Investment Management Corporation. KAL Capital Markets served as a sell-side financial advisor on the transaction.

Founded in 2013 by Trive, Valence is the leading independent provider of aerospace surface finishing services, which has historically been a highly fragmented, geographically focused, and technically challenging part of the supply chain. The Company was built to offer a differentiated, full service, supply chain solution for critical, complex parts to the aerospace industry, delivering the lead times, capacity and technical resources needed to match growing aircraft build rate demand.

Since the formation of the Valence platform, the Company has experienced strong growth driven by investment in capacity and next generation technologies, coupled with the targeted acquisition of eight facilities in each major aerospace machining hub. In addition, Valence has built an exceptional management team, who in partnership with Trive have driven significant improvement in operational execution, process, systems and innovation. As a result, the Company is well positioned as the sector expands to leverage its strategy of simplifying supply chain complexity for aerospace OEMs and major Tier 1s.

“In less than six years, Valence expanded from one facility in one geography to eight facilities in three centers of excellence with the largest set of approvals and capabilities in the sector,” commented Tracy Glende, CEO of Valence. “We are proud of our successful partnership with Trive, collaboratively building a business and capability that has resonated with our customers and employees. Trive’s operational, financial and sector expertise were valuable in positioning the Company for growth, and we look forward to continuing this momentum with our new shareholders.”

For more information on Valence Surface Technologies, please see the link here.

About Valence Surface Technologies
Valence Surface Technologies is the world’s largest independent provider of aerostructure surface technology services. The Company provides specialized metal processing and finishing services to a diversified set of fast-growing commercial aerospace, defense, and space/satellite markets, delivering best-in-class quality, turn times and supply chain partnership.

About KAL Capital Markets
KAL Capital Markets specializes in Sell-Side M&A advisory for family-held and private equity-owned businesses throughout the A&D supply chain. Our advising experience holds a track record of leveraging tight-knit industry relationships to run targeted processes for exits and recapitalization with strategic and financial sponsors.

M&A Deal Spotlight: AIM Aerospace

Liberty Hall to Sell Portfolio Company AIM Aerospace to Japan’s Sekisui Chemical Co.

AIM is a Renton, WA-based designer and producer of advanced composite structures, systems, engine components and thermoplastic technology for the global aerospace industry. The company has more than 1,000 employees operating from its manufacturing centers of excellence and research and technology center located in the United States. AIM was originally founded in 1988 as part of the UK-based AIM Group PLC, then acquired by Liberty Hall in 2016 to serve as the foundational asset of the firm’s strategy to build a fully-integrated, diversified composites supplier. In 2017, Liberty Hall acquired Quatro Composites, a supplier of highly engineered advanced composite structures, components and assemblies, and integrated the company into AIM Aerospace. AIM’s key customers include The Boeing Company, GE, Kawasaki Heavy Industries and Spirit AeroSystems. Rowan Taylor, founder and managing partner of Liberty Hall commented, “As demand for composite components continues to increase, we are pleased that AIM Aerospace is well-positioned to deliver a new generation of complex products to the industry. We are very proud to transfer leadership to Sekisui to oversee the next chapter in AIM Aerospace’s expansion.” AIM was originally acquired in 2016 by Liberty Hall for a purchase price of $220mm and sold to Sekisui for $510mm.

M&A

AeroVironment, Inc. Acquires Pulse Aerospace, LLC

Lawrence, Kansas-based Pulse Aerospace, LLC is a developer of small VTOL UAS technology. Pulse’s HeliSynth™ technology brings flight control, payload, and endurance capabilities to market at attractive price points for both defense and commercial end markets. Pulse recently received a multi-year contract award with a maximum value of more than $13 million from an undisclosed defense customer for its Vapor unmanned VTOL systems, spares and services.

CGI, Inc. to Acquire SCISYS Group plc

Chippenham, Wiltshire, UK-based SCISYS Group plc is a developer of information and communications technology (ICT) services, e-business, web and mobile applications, editorial newsroom and advanced technology solutions. The company operates in markets including media & broadcast, space, government & defense and commerce.

DLH Holdings Corp. Acquires Social & Scientific Systems, Inc.

Silver Spring, Md.-based Social & Scientific Systems, Inc. (‘SSS’) is a public health service organization providing solutions in clinical and biomedical research, epidemiology, health policy, and program evaluation. SSS utilizes advanced research (including longitudinal studies), data analytics, and secure IT platform services to assist mission-critical public health agencies within the Department of Health & Human Services—including the National Institutes of Health (NIH) and the Centers for Medicare and Medicaid Services (CMS)—along with other healthcare-related institutions. The company, with approximately 400 employees, has offices in Durham, NC and Kampala, Uganda and was founded in 1978.

EMCORE Corp. Acquires Resilience Capital Partners, LLC Portfolio Company Systron Donner Inertial, Inc.

Concord, Calif.-based Systron Donner is a supplier of quartz microelectromechanical systems (QMEMS) used in inertial sensing products that provide precision guidance, navigation and locational solutions. The company develops products that have been used in everything from business aircraft to fighter jets to the MARS Rover. Founded in 1953, Systron Donner’s QMEMS technologies are used in gyroscopes, accelerometers, inertial measurement units and inertial navigation system/GPS products that provide highly precise and reliable stabilization, geo-location, guidance, navigation and flight control solutions for aerospace, marine and land vehicles and systems.

EMK Capital Acquires Covidence A/S From Montagu Private Equity

Denmark-based Covidence A/S provider of high-end, miniature video and audio surveillance solutions for government-approved federal, military, and law enforcement organizations worldwide. Covidence, founded by Jimmi M. Hansen (CEO) and Henrik Klebaek, is a specialist electronics manufacturer with a niche focus on miniature covert video surveillance equipment, used by police, intelligence agencies, special forces and other government approved organizations. The company, which has a global customer base, with close relationships to many of the world’s federal agencies, was founded in 2007.

IIA Technologies Corp. Acquires KeyLogic Systems, Inc.

Morgantown, W.V.-based KeyLogic is a provider of systems engineering and professional services to the public and private sectors. Founded in 1999, the company’s capabilities include enterprise solutions, business intelligence, data analysis, research and development program management, software and system engineering, and biometric solutions. The merger of IIA and KeyLogic establishes a new mid-tier technology specialist with over 600 data scientists, developers, engineers, researchers, and analysts leveraging big data analytics, cloud computing, network and cloud telemetry, machine learning, high performance computing, and cyber analytics to solve government’s business problems quicker with high-impact outcomes. KeyLogic also complements IIA with 40+ additional PhD-level subject matter experts.

Jacobs Engineering Group, Inc. Completes Acquisition of KeyW Corp.

Hanover, Md.-based KeyW Corp. is a national security provider of advanced engineering and technology solutions to the Intelligence, Cyber and Counterterrorism communities, with ‘unique and differentiated’ capabilities in the areas of intelligence, surveillance and reconnaissance (ISR); cyber operations and training; and mission-critical IT and analytics. KeyW’s advanced engineering and quick reaction capability supports the accelerated development of collection technology, processing, analysis and dissemination of information across the full spectrum of missions for the Intelligence, Cyber and Counter terrorism communities. The company’s workforce solves complex customer challenges such as preventing cyber threats, transforming data to actionable intelligence, and building and deploying sensor packages into any domain.

Rolls-Royce plc Contirms Preliminary Discussions to Sell Subsidiary ITP Aero to Indra Sistemas S.A.

Zamudio, Spain-based Industria de Turbo Propulsores S.A. (ITP) designs, develops, manufactures and maintains gas turbine engines used in aerospace (both fixed-wing and rotary-wing), naval, energy generation and other industrial applications.

TPC Wire & Cable Corp. Acquires EZ Form Cable Corp.

Hamden, Conn.-based EZ Form Cable Corp. is an AS9100D Certified provider of coaxial RF & microwave interconnect products for specialized applications common in defense, space, wireless communications and medical instrumentation.

INDUSTRY NEWS

Boeing 737 MAX: 200-Aircraft IAG Deal at Paris Air Show

On June 18 there was an announcement of a tentative deal between Boeing and International Airlines Group (IAG) for 200 737 MAX. The companies said they signed the letter of intent (LOI) at the show. The LOI splits the orders between the MAX 8 and MAX 10 variants. It also is a major blow to Airbus, which is the sole narrowbody aircraft supplier to IAG’s airlines.

Russian Helicopters at Paris Air Show

This year, Russian Helicopters Company is showing Ansat light twins in VIP and medevac configurations. The former will take part in flying display while the latter can be seen only at the static.

Amazon Unveils Delivery Drone Design

June 5 – Amazon revealed its latest design for a delivery drone, rolling out a shrouded, multi-rotor aircraft capable of vertical and wing-borne flight. Amazon unveiled its design at the company’s annual, invitation-only MARS (Machine learning, Automation, Robotics and Space) Conference in Las Vegas.

Regional Jets At The Paris Air Show

Embraer’s E195 E-2 ‘Profit Hunter’ arrived at this year’s Paris Air Show, though a new name is possible as Boeing JV is in the works. Mitsubishi’s rebranded MRJ, the SpaceJet will also be displayed at the show.

Rolls-Royce Acquires Siemens’ eAircraft Business

Rolls-Royce has agreed to acquired Siemens’ electric and hybrid-electric aerospace propulsion activities. The transaction is set to be completed in late 2019. Siemens’ eAircraft business employs around 180 electrical designers and engineers across locations in Germany and Hungary. Based in Germany and Hungary, Siemens’ eAircraft business has been developing all-electric and hybrid electric propulsion systems for aircraft such as Eviation’s Alice nine-seater commuter aircraft and the E-Fan X hybrid electric demonstrator with Airbus and Roll-Royce. Under the acquisition, the company’s electric propulsion design team of 180 specialists will be integrated into Rolls-Royce’s recently created electrification unit. Rolls-Royce sees the acquisition as a chance to quickly augment its own developments in the sector, but also to penetrate new markets ranging from electric vertical take-off and landing (eVTOL) vehicles to regional airliners.

Airbus Collects More A321XLR, A330neo Orders

Cebu Pacific: placed an order for 16 A330-900s and ten A321XLRs, the longest range version of the A321neo. The carrier will be the highest-density operator of the A330neo.
International Airlines Group (IAG): agreed to a firm order for 14 A321XLRs. The company will place eight of the aircraft with its subsidiary Iberia, six will fly for Aer Lingus. None are going to low-cost operator Level. Airbus said the aircraft will enable Aer Lingus to launch new routes beyond the U.S. East Coast and into Canada. Iberia plans to operate to new transatlantic destinations and increase frequencies in existing markets. Saudi Arabian Airlines: increased its A320neo family order from 35 to 65 aircraft. 15 of the additional aircraft are of the new A321XLR variant. Saudia is expanding capacity fast partly as it takes advantage of the new terminal at Jeddah International Airport. Air Asia: converted an order for 253 A320neos to the larger A321neo. It now holds firm commitments for 353 of the aircraft turning the airline into the model’s biggest customer.

Pratt & Whitney Orders at the Paris Air Show

Delta Airlines has added five A220-100s to its existing order of 90 of the type, increases the total P&W GTF sales announced at the Air Show to 297. JetSMART, and will see 85 A320neos powered by GTF engines. The first delivery is expected in the third quarter of this year. The second-largest portion of the overall number comes from a combined announcement of 74 sales to two airlines and one lessor in China. The identities of the end users were not revealed by P&W. Mexico-headquartered airline VivaAerobus, which selected the GTF for its firm order of 41 A320neos. This order includes 25 new aircraft and 16 conversions of a 2013 firm order. SMBC Aviation has selected the GTF in an additional order of 20 A320neo family aircraft. The order brings the lessor’s total order for GTF-powered A320s to 50. The additional aircraft are expected to be delivered by 2025. And Middle East Airlines has selected the GTF for its order of four A321XLRs, which are conversions of a 2018 firm order. An undisclosed lessor has selected the engine for 35 firm orders and a further five options, while another order from an undisclosed airline will see 28 A320neos equipped with GTF engines.

Raytheon Missile Systems and Northrup Innovation Systems Partner to Develop Scramet Missile

Raytheon Missile Systems and Northrop Grumman Innovation Systems announced a partnership at the Paris Air Show on June 18 to co-develop a scramjet-powered hypersonic missile.
The team will develop an advanced new high-speed weapon system as one of two competitors for the High-speed Air-breathing Weapon Concept (HAWC) funded by the Defense Advanced Research Projects Agency. Lockheed Martin also is developing a scramjet-powered missile for the HAWC program.

M&A

Angeles Equity Partners, LLC acquired privately held APCT, Inc.
APCT is a manufacturer of reliable, quick-turn printed circuit board (PCB) prototypes with global production management capabilities. Founded in 1977, the company provides expertise in design for manufacturability (DFM) engineering and global program management.

BAE Systems, Inc., the U.S. subsidiary of BAE Systems plc (LSE: BA.L) completed the acquisition of the key assets of Riptide Autonomous Solutions, LLC.
Riptide Autonomous Solutions is a provider of innovative, affordable unmanned underwater vehicle (UUV) technology and solutions specializing in small UUVs.

Infinite Electronics, Inc., a portfolio company of Genstar Capital, LLC, acquired privately held Integra Optics, Inc.
Integra Optics, Inc. is a provider of high-quality optical transceiver products and solutions. Founded in 2007, Integra is recognized for innovative network solutions, product reliability, technical expertise and personalized customer service.

Heroux-Devtek, Inc. (TSX: HRX.TO) acquired privately held Alta Precision, Inc.
Alta Precision Inc. manufactures complex landing gear components and assemblies for large customers such as Embraer, Safran, Liebherr and the United States Air Force.

Hanwha Aerospace, a subsidiary of Hanwha Corp., entered into an agreement to acquire EDAC Technologies Corp., a portfolio company of Greenbriar Equity Group, L.P.
EDAC Technologies Corp is a manufacturer of precision components for aircraft engines and airframes. Founded in 1946 as Gros-Ite Industries, the company’s clients include Pratt & Whitney, General Electric and Rolls-Royce.

Global capital and private equity firm Insight Partners (formerly known as Insight Venture Partners) acquired privately held Recorded Future, Inc.
Recorded Future is described by Insight as ‘the largest privately-held threat intelligence software company in the world’, whose threat intelligence software automatically collects and analyzes intelligence from technical, open web, and dark web sources and aggregates customer-proprietary data.

Park-Ohio Industries, Inc. (NasdaqGS: PKOH) completed its acquisition of EFCO, Inc., doing business as Erie Press Systems.
Erie Press Systems is a manufacturer of advanced forging presses, hydraulic and mechanical presses, and metal stretch-forming and carbon extrusion machines for several end markets, including aerospace and defense, primary metals and high-speed rail.

Teledyne Technologies, Inc. (NYSE: TDY) submitted a binding offer to acquire the gas and flame detection business of The 3M Co. (NYSE: MMM).
The gas and flame detection business includes Oldham, Simtronics, Gas Measurement Instruments (GMI), Detcon and select Scott Safety products. The gas and flame detection business provides a portfolio of fixed and portable industrial gas and flame detection instruments used in a variety of industries including petrochemical, power generation, oil & gas, food & beverage, mining and waste water treatment.

Thales S.A. (Paris: HO.PA) acquired privately held Psibernetix, Inc.
Psibernetix is a pioneer in computationally efficient artificial intelligence (AI) technologies. Psibernetix was originally made famous by its aerial combat application called ALPHA, which consistently defeated the world’s top pilots in simulated air combat.

Consolidated Precision Products Corp. (CPP), a portfolio company of private equity firm Warburg Pincus, LLC, signed a definitive agreement to acquire the Cast Products business of Allegheny Technologies, Inc. (NYSE: ATI).
Allegheny Technologies, Inc., also known as Pacific Cast Technologies, Inc., is part of the High Performance Materials & Components (HPMC) segment. It produces titanium investment castings that are primarily used by aerospace & defense OEMs in the production of commercial jet airframes and engines.

Allegheny Technologies, Inc. (NYSE: ATI) agreed to sell two non-core forging facilities to private equity firm Wynnchurch Capital, LLC.
These facilities, located in Portland, Indiana and Lebanon, Kentucky, are part of ATI’s High Performance Materials & Components (HPMC) segment. They use primarily traditional forging methods to produce carbon steel forged products for use in the oil & gas, transportation and construction & mining industries.

NEWS

Boeing Invests in Commercial UAS Services Provider Robotic Skies
Boeing [NYSE: BA] announced its investment in Robotic Skies, a services provider that connects manufacturers and operators of commercial unmanned aircraft systems (UAS) with a global network of more than 170 civil aviation authority-certified repair stations.

Centauri Announces New President and COO
Dennis Kelly Jr. has been appointed as the company’s new president and chief operating officer. He will support CEO Dave Dzaran in executing the company’s strategy and vision.

CFM56 Engine Fleet Surpasses One Billion Engine Flight Hours
This milestone represents the fastest accumulation on hours ever; the fleet reached 500 million hours in November 2010 and more than doubled that total in just over eight years.

CTS Engines Promotes Vesa Paukkeri to Chief Executive Officer
CTS Engines announced that it had promoted Vesa Paukkeri to Chief Executive Officer, completing its planned leadership transition. Mr. Paukkeri has served as President and Chief Operating Officer of the Company since his joining in 2012, prior to which he had spent 10 years at Finnair.

DSCA Notifies Congress of Possible Sale of F-16C/D Block 70/72 Aircraft with Support to Bulgaria
The State Department has made a determination approving a possible Foreign Military Sale to the Government of Bulgaria of F-16C/D Block 70/72 aircraft with support for an estimated cost of $1.673 billion. The Defense Security Cooperation Agency delivered the required certification notifying Congress of this possible sale on May 30, 2019.

NASA Opens International Space Station to New Commercial Opportunities, Private Astronauts
NASA is opening the International Space Station for commercial business so U.S. industry innovation and ingenuity can accelerate a thriving commercial economy in low-Earth orbit.

Notable Global Regulatory Updates – June 9-15
Source: MRO-Network

The Civil Aviation Administration of China has issued its first all-in-one maintenance permit to Ameco
This is a major change in managing and supervising civil aviation maintenance. The permit is a single certificate signed by multiple departments, eliminating duplication of approvals issued to the same enterprise.

The administrator of the Civil Aviation Administration of China, the president of the EU Council and the European Commissioner for Mobility and Transport have signed an agreement between the government of the People’s Republic of China and the European Union on civil aviation safety, the first time that China and the EU have signed agreements in civil aviation.
The agreement establishes a legal framework for extensive cooperation between China and the EU in various areas, such as airworthiness and environmental certification, flight operations, air traffic control services, personnel licensing and training.

FAA has issued airworthiness directive 2019-10-03 for all Boeing 737-100s, -200s, -200Cs, -300s, -400s and -500s
The new directive requires repetitive detailed inspections of the left and right side-strut support fitting lugs with bushings installed for any corrosion, any crack, or any severed lug, repetitive detailed and high frequency eddy current inspections of the left and right side-strut support fitting lugs with bushings removed for any corrosion or any crack and applicable on-condition actions, effective July 11, 2019.

FAA has issued airworthiness directive 2019-08-11 for all Bombardier CRJ 100s and 440s
The new directive requires revising the maintenance or inspection program to incorporate certain airworthiness limitations and reworking the trunnion fitting in order to meet new structural safe-life limits, effective July 11, 2019.

Transport Canada has issued airworthiness directive CF-2019-20R1 for Bombardier: CRJ 700s, 701s, 702s, 705s, 900s and 1000s
Requiring incorporation of a functional task in the aeroplane maintenance schedule to confirm the free movement of the decompression panel on the flight compartment door, effective June 14, 2019.

Magnetic MRO Prepares For Ownership Change
Magnetic MRO is currently fully owned by Hangxin Aviation Services Co. However, on June 6, Magnetic MRO detailed plans to issue up to 30,158 new shares, with a nominal value of €6.40 each. The company’s share capital currently stands at €1.09 million, but this would rise to €1.28 million following the new shares issue. Magnetic MRO said Shenzhen Yongtai Trading Co. has been authorized to subscribe for up to 26,957 of the new shares, giving it a stake of up to 13.44% for €8 million. Sapphire Investment Holding Limited has also been authorised to subscribe for up to 3,201 new shares, or up to 1.60% of the company, for €950,000.

M&A

Aeromax Industries, Inc. Acquires K&S Enterprises
Adelanto, Calif.-based K&S Enterprises is a manufacturer of elastomer products for helicopters, whose product line includes custom seals, sleeves, ducts, and gaskets.

Amplitech Group, Inc. to Acquire Specialty Microwave Corp. (SMW)
Ronkonkoma, N.Y.-based Specialty Microwave Corp. (SMW) manufactures microwave components, subsystems and specialized electronics, and services for space, defense, and military markets. The company was founded in 1979. Prior to the date of the Agreement, Amplitech had engaged SMW as service provider for housing and engineering support. Amplitech first started working with SMW in 2018.

Acorn Growth Companies Acquires DIMO Corp.
New Castle, Delaware-based DIMO Corp. is a value-added distributor of operationally critical parts and higher-level assemblies for power, electromechanical, life support and mission-specific aircraft systems. The company was founded in 1994.

Oakley Capital Limited Acquires KVH Industries, Inc. Subsidiary Videotel Marine International Limited
London, UK-based Videotel Marine is a producer of training films and e-Learning services for the commercial maritime industry. Servicing over 11,000 vessels, Videotel provides maritime training services, offering video, animation, e-Learning computer-based training (CBT), and interactive distance learning courses.

BlackBern Partners, LLC Acquires Zentech Manufacturing, Inc.
Baltimore, Md.-based Zentech Manufacturing is an engineering-driven electronics contract manufacturer specializing in the design and manufacture of highly complex electronic and RF circuit cards and assemblies. The company’s core capabilities include design, build, and testing solutions. Zentech’s primary markets are Defense and Aerospace (55%), Medical (25%), Communications (10%), and Industrial Controls (10%).

Meritor, Inc to Acquire Carlyle Group Portfolio Company AxleTech
Troy, Mich.-based AxleTech is a technology company that engineers, designs, manufactures, sells and services powertrain solutions for on- and off-highway heavy-duty vehicles. The company supports OEMs and the aftermarket for commercial and defense customers around the world. In addition to advanced powertrain systems, the company also manufacturers axles, brakes, components and aftermarket parts.

CLM Equity Partners, LLC Acquires Zircon Precision Products, Inc.
Tempe, Ariz.-based Zircon Precision Products is a precision aerospace machining business supporting both commercial and military applications. Through its CNC machining and other specialized capabilities, Zircon produces precision aerospace machined parts and has built a strong reputation for quality throughout the aerospace industry.

Envistacom, LLC Acquires Fast Fit Technologies, LLC
Jefferson, Md.-based Fast Fit Technologies®, LLC is a pioneer of open-source communication waveform and data analytics virtualization using the OpenCL framework for heterogenous computing and targeting COTS High-Performance Computing (HPC) servers equipped with FPGA-based hardware acceleration.

Macquarie Capital Makes Major Capital Investment in Dovel Technologies, Inc.
Dovel Technologies, Inc. is a provider of complex systems integration and information management solutions in data-driven environments for federal agencies requiring health IT, life sciences, and grants management services.

NEWS

Boeing Statement on 737 MAX Certification and Return to Service
Boeing has completed development of the updated software for the 737 MAX, along with associated simulator testing and the company’s engineering test flight. To date, Boeing has flown the 737 MAX with updated MCAS software for more than 360 hours on 207 flights.
Boeing is now providing additional information to address Federal Aviation Administration (FAA) requests that include detail on how pilots interact with the airplane controls and displays in different flight scenarios. Once the requests are addressed, Boeing will work with the FAA to schedule its certification test flight and submit final certification documentation.
“With safety as our clear priority, we have completed all of the engineering test flights for the software update and are preparing for the final certification flight,” said Boeing Chairman, President and Chief Executive Officer Dennis Muilenburg. “We’re committed to providing the FAA and global regulators all the information they need, and to getting it right. We’re making clear and steady progress and are confident that the 737 MAX with updated MCAS software will be one of the safest airplanes ever to fly. The accidents have only intensified our commitment to our values, including safety, quality and integrity, because we know lives depend on what we do.”

Aeromax Industries, Inc. Relocating Headquarters From California to Texas
Aeromax supports various manufacturing and spares programs for international governments, overhaul facilities, licensees, and trading companies worldwide. Areas of expertise include out-of-production aircraft like Lockheed Martin’s F-16, Northrop’s F-5 and T-38, Bell’s Sikorsky UH-60 and GE’s J-85 jet engine. Aeromax is relocating its headquarters from Canoga Park, Calif. to the Fort Worth area.

Lockheed Martin Breaks Ground On New Production Facility
U.S. Air Force and local Alabama officials joined Lockheed Martin (NYSE: LMT) executives today to break ground on the company’s new strike systems production facility in Troy.
The planned 225,000-square-foot facility, combined with the current cruise missile production factory, will provide the necessary space to meet the U.S. Air Force’s objectives.

Tom Arseneault Appointed President & COO for BAE Systems, Inc.
BAE Systems, Inc. today announced that Tom Arseneault has been named president and chief operating officer of BAE Systems, Inc. and appointed to the BAE Systems, Inc. Board of Directors. Jerry DeMuro will continue to serve as CEO for the U.S.-headquartered organization.

Mitsubishi Aircraft Corporation Announces Opening of New U.S. Headquarters
Mitsubishi Aircraft Corporation announced today the opening of a new U.S. headquarters in Renton, Washington. The office employs members of a global team, primarily focused on finalizing the development of the company’s regional jet program, including engineering, sales, marketing and customer support. It will also play a key role in future product development.

Bombardier and JETEX Sign Agreement for Establishment of New Line Maintenance Station in Dubai
Bombardier is pleased to announce that it has signed an agreement with JETEX for the establishment of a new Line Maintenance Station in Dubai, further complementing the tip-to-tail maintenance services provided by Bombardier’s Service and Support Network in the Middle East and around the globe.

KULR Technology Partners With Lockheed Martin to Provide Thermal Management Solutions
KULR Technology Group, Inc. (OTCQB: KUTG), (the “Company” or “KULR”), today announced it will provide its space-developed thermal technology for a purpose-built phase change (PCM) heat sink to leading aerospace and defense company Lockheed Martin (NYSE: LMT).

Noble Aerospace Taking Off as New Parent Company to Embee and All Metals Processing
Noble Aerospace has been established as the parent company of both Embee Processing and All Metals Processing of Orange County, CA. The move positions Noble Aerospace as a leader in the aerospace industry with a wealth of products and services to offer a growing list of global clientèle.
With over 70 years of experience, Embee Processing and All Metals Processing have solidified their reputations as premier entities in the aerospace metal finishing industry. Noble Aerospace will leverage the exemplary staff, innovative processes and vast experience of both companies, and look towards additional acquisition opportunities in the future.

Parsons Corporation Announces Pricing of Initial Public Offering
Parsons Corporation (“Parsons”), a provider of technology-driven solutions in the defense, intelligence and critical infrastructure markets, today announced the pricing of its initial public offering of 18,518,500 shares of its common stock at a price to the public of $27.00 per share. In addition, the underwriters have been granted a 30-day option to purchase up to an additional 2,777,775 shares of common stock. The shares are expected to begin trading on the New York Stock Exchange on May 8, 2019, under the ticker symbol “PSN.” The closing of the offering is expected to occur on May 10, 2019.

CONTRACTS

NIWC/SSC Pacific Awards Nine Contracts for Cyberspace Science, Research, Engineering, and Technology Integration
The U.S. Naval Information Warfare Center Pacific (NIWC Pacific) (San Diego, CA) awarded nine, seven-year, multiple award, task order, cost plus fixed fee, ID/IQ contracts, with a cumulative value of $6,164.3 million, to provide professional technical and management support services to establish and maintain cyberspace operations and enable product lines, programs and projects to include interoperability of systems, services and capabilities at the tactical, operational and strategic levels

DHS CBP Awards 45 Contracts for Tactical Communications Equipment and Services II (TacCom II)
The U.S. Department of Homeland Security (DHS), Customs and Border Protection (CBP), Procurement Directorate (Washington, DC) awarded 45, nine-year, multiple award, task order, ID/IQ contracts, with a value of $3,000.0 million, to provide commodity products and services for a wide variety of applications supporting legacy systems, updated technology and interoperable solutions for tactical communications.

Army ACC-RSA Contracts With DynAviation for Aviation Field Maintenance (AFM II East)
On behalf of the U.S. Army Aviation and Missile Life Cycle Management Command (AMCOM) (Redstone Arsenal, AL), the U.S. Army Contracting Command – Redstone (ACC-RSA) (Redstone Arsenal, AL) awarded DynAviation (Fort Worth, TX) a $4.47 billion firm-fixed-price, time and materials, cost-plus-fixed-fee, level of effort, cost-no-fee contract for aviation field maintenance (AFM II East) services in support of the Aviation Field Maintenance Directorate (AFMD).

Army ACC-RSA Awards Three Contracts for Logistics Support Facility Management Activity (LFSMA)
On behalf of the Program Executive Office (PEO) Aviation, Army Materiel Command (AMC)/Aviation and Missile Command (AMCOM) (Huntsville, AL), the U.S. Army Contracting Command, ACC-RSA, Redstone Arsenal (Redstone Arsenal, AL) awarded three, seven-year, multiple award, task order, ID/IQ contracts with a value of $2,440.0 contracts, to provide modifications to aviation systems owned by AMC/AMCOM.

NAVAIR HQ Mods Contract With Sikorsky for Lot II/III Low-Rate Initial Production (LRIP) CH-53K Aircraft
The U.S. Naval Air Systems Command, Headquarters (NAVAIR HQ) (Patuxent River, MD) awarded Sikorsky, a Lockheed Martin Company (Stratford, CT) a $1.12 billion fixed-price-incentive-firm, cost-plus-fixed-fee modification (P00026) under a previously awarded advance acquisition contract (N00019-16-C-0048) for the procurement of Lot II and Lot III low-rate initial production (LRIP) CH-53K aircraft.

TSA Contracts With L3 for Medium Speed Explosive Systems (MSEDS)
The U.S. Transportation Security Administration (TSA) (Arlington, VA) awarded L3 Technologies – Security & Detection Systems, Inc. (Tewksbury, MA) a $500.0 million firm-fixed-price contract (70T040-19-D-9CAP1049) for purchase and installation of Medium Speed Explosive Systems (MSEDS) in furtherance of the Electronic Baggage Screening program mission requirements.

Army ACC_RSA Contracts With Raytheon for Patriot New Production Hardware, Upgrade Kits and Spares for FMS to Romania
On behalf of the U.S. Army PEO Missiles & Space (PEO MS) (Huntsville, AL), the U.S. Army Contracting Command – Redstone (ACC-RSA) (Redstone Arsenal, AL) awarded Raytheon IDS – Integrated Air & Missile Defense (Andover, MA) a $384.0 million fixed-price-incentive-firm modification (P00026) under a previously awarded contract (W31P4Q-15-C-0022) for Phased Array Tracking Intercept of Target (Patriot) new production hardware, upgrade kits and spares for the government of Romania under the Foreign Military Sales (FMS) program.

NAVSEA Contracts With Raytheon for Cooperative Engagement Capability (CEC) Design Agent and Engineering Services (DA/ES)
The U.S. Naval Sea Systems Command (NAVSEA) (Washington, DC) awarded Raytheon Network Centric Systems, St. Petersburg (Largo, FL) a $279.3 million cost-plus-incentive-fee, firm-fixed-price, cost-plus-fixed-fee, and cost-only contract (N00024-19-C-5200) for Cooperative Engagement Capability (CEC) design agent and engineering services (DA/ES) in support of the U.S. Navy PEO Integrated Warfare Systems (PEO IWS), Command and Control Program Office (IWS 6.0).

USSOCOM SOF AT&L Contracts With Actionable Solutions Group for Joint Special Operations Task Force (JSOTF) Intelligence Support Services – Joint II (ISS-J II)
The U.S. SOCOM Special Operations Forces Acquisition, Technology and Logistics (USSOCOM SOF AT&L) (Tampa, FL) awarded Actionable Solutions Group, LLC (Alexandria, VA) a maximum $240.7 million firm-fixed-price contract (H92402-19-C-0006) for Intelligence Support Services – Joint II (ISS-J II) for the Joint Special Operations Task Force (JSOTF).

DLA Energy Contracts With Shore Terminals LLC for Jet Fuel Logistics Services
DLA Energy (Fort Belvoir, VA) awarded Shore Terminals LLC (San Antonio, TX) a $227.7 million firm-fixed-price contract (SPE603-19-C-5006) for jet fuel logistics services.

DLA Troop Support C&T Contracts With LiteFighter System for Commercial-off-the-Shelf (COTS) Shelters and Tents
DLA Troop Support – Clothing & Textiles (Philadelphia, PA) awarded Litefighter Systems, LLC (Canton, GA) a maximum $200.0 million firm-fixed-priced, ID/IQ contract (SPE1C1-19-D-1130) for commercial-off-the-shelf (COTS) shelters and tents.

Army ACC-RSA Contracts With Northrop Grumman for RQ-5 Hunter Unmanned Aircraft System (UAS) Fleet Support
On behalf of the U.S. Army Program Executive Office Aviation (PEO AVN) (Huntsville, AL), the U.S. Army Contracting Command – Redstone (ACC-RSA) (Redstone Arsenal, AL) awarded Northrop Grumman Technology Services – Global Logistics and Modernization Division (GLM) (Sierra Vista, AZ) a $163.6 million cost-plus-fixed-fee contract (W58RGZ-19-C-0033) for RQ-5 Hunter Unmanned Aircraft System (UAS) fleet support in support of the PEO AVN Unmanned Aircraft Systems Project Office.

DIA VACA Contracts With Engility for National Media Exploitation Center (NMEC) Exploitation Management Solutions II (EMS II)
The Defense Intelligence Agency, Virginia Contracting Activity (VACA) (Washington, DC) awarded TASC, Inc., An Engility Company (Chantilly, VA) a maximum $106.0 million cost-plus fixed-fee, ID/IQ contract (HHM402-19-D-0003) for exploitation management solutions II (EMS II) in support of DIA’s Science and Technology (S&T) Directorate, National Media Exploitation Center (NMEC).

Army ACC-RSA Mods Contract With Raytheon for Tactically-Launched Optically-Tracked Wireless (TOW) guided missiles
On behalf of the U.S. Army PEO Missiles & Space (PEO MS) (Huntsville, AL), the U.S. Army Contracting Command – Redstone (ACC-RSA) (Redstone Arsenal, AL) awarded Raytheon RMS – Land Warfare Systems (LWS) (Tucson, AZ) a $101.3 million fixed-price-incentive-firm modification (P00014) under a previously awarded contract (W31P4Q-17-C-0194) for Tactically-Launched Optically-Tracked Wireless (TOW) guided missiles.

NAVAIR HQ Mods Contract With Pratt & Whitney for F135 Propulsion Systems Long-Lead Materials, Parts, and Components
The U.S. Naval Air Systems Command, Headquarters (NAVAIR HQ) (Patuxent River, MD) awarded Pratt & Whitney Military Engines (East Hartford, CT) a $55.7 million fixed-price-incentive-firm modification (P00005) under a previously awarded acquisition contract (N00019-18-C-1021) for long-lead items to support the production delivery schedule, exercises an option for additional initial spare parts, and provides program administrative labor for the global spares pool for F135 Propulsion systems for the F-35 Lightning II Joint Strike Fighter aircraft in support of the Air Force, Marine Corps, Navy, non-U.S. Department of Defense (non-U.S. DoD) participants; and Foreign Military Sales (FMS) customers.

NEWS

Rolls-Royce, Qatar Airways Debut VR MRO Training
Rolls-Royce and Qatar Airways have introduced virtual reality (VR) training in what the engine manufacturer expects to be the beginning of widespread adoption of the technology. The initial VR instruction helps prepare Doha-based Qatar engineers for disassembling Trent XWB engines for shipment.

Bombardier Makes Moves to Better Support Africa and Middle East Customers
The Q Series aircraft regional support team will move near Johannesburg’s busiest airport to enhance support to operators in the region.

Lockheed Martin Inaugurates F-16 Production Line In Greenville, South Carolina
Lockheed Martin (NYSE: LMT) hosted a ceremony to celebrate its new F-16 production line in Greenville, South Carolina. F-16 tooling and equipment previously in Fort Worth, Texas, has since been installed in a newly-refurbished hangar in Greenville, where the company will begin manufacturing F-16 Block 70 aircraft later this year.

China’s First Airbus H215 Helicopter Delivered to SGGAC for Utility Missions
China’s State Grid General Aviation Company (SGGAC) has taken delivery of one heavy twin-engine Airbus H215 helicopter – a member of the mission-proven Super Puma family – becoming the launch customer for the H215 in China.

Airbus Appoints Jean-Marc Nasr Head of Space Systems
Airbus SE (stock exchange symbol: AIR) has appointed Jean-Marc Nasr, 57, Executive Vice President Space Systems within the Airbus Defence and Space division. Nasr will assume his new duties on 1 June 2019 and succeeds Nicolas Chamussy, 51, whose next assignment is subject to further notice. In his new role, Nasr will be Member of the Airbus Defence and Space’ Executive Committee and report to Dirk Hoke, CEO of Airbus Defence and Space.

ACJ319neo Makes Successful First Flight
The ACJ319neo successfully completed a first flight lasting one hour and 55 min. on 24 April 2019, beginning a short flight-test programme to verify its corporate jet features – such as the extra fuel tanks in its cargo-hold, which enable intercontinental range.

Polish Army to Purchase Tank Destroyers: 13 Potential Contractors
The Polish Ministry of Defence is going to acquire new tank destroyers based on tracked platforms, in order to reinforce the Polish anti-armour capabilities. Furthermore, the goal of the procedure is to replace the obsolete systems using the 9P133 Malyutka system.

Parsons Corporation Launches Initial Public Offering of Common Stock
Parsons Corporation (“Parsons”), a provider of technology-driven solutions in the defense, intelligence and critical infrastructure markets, today announced that it has commenced an initial public offering of its common stock. Parsons is offering 18,518,500 shares of its common stock at an initial public offering price between $26.00 and $28.00 per share.

M&A

Enlightenment Capital Acquires Trowbridge & Trowbridge, LLC
McLean, Va.-based Trowbridge is a provider of information technology (IT) solutions to defense, intelligence, and civilian government agencies. Founded in 2006 by Karen Trowbridge, the company provides cloud engineering, cybersecurity, IT engineering, application development, and network engineering solutions to the federal government. Trowbridge will serve as Enlightenment’s newest platform.

Jacobs Engineering Group, Inc. to Acquire KeyW Corp.
Hanover, Md.-based KeyW Corp. is a national security provider of advanced engineering and technology solutions to the Intelligence, Cyber and Counterterrorism communities, with “unique and differentiated” capabilities in the areas of intelligence, surveillance and reconnaissance (ISR); cyber operations and training; and mission-critical IT and analytics.

Mission Ready Solutions, Inc. Completes Acquisition of Unifire, Inc.
Spokane, Wash.-based Unifire, Inc. is a specialized solutions provider to the US Defense Logistics Agency, and one of six companies worldwide that is authorized to provide equipment and designated services under the multi billion-dollar Tailored Logistics Support (TLS) framework.

Intel Corp. Acquires Omnitek Ltd
Basingstoke, England-based Omnitek Ltd is a provider of optimized video and vision FPGA IP solutions. Omnitek’s technology enables customized high-performance vision and artificial intelligence (AI) inferencing capabilities on FPGAs for customers across a range of end markets, including medical, broadcast, professional AV, automotive, government homeland security, aerospace/defense, industrial/scientific, consumer, and test & measurement.

Willcrest Partners and Curran Companies Recapitalize Precision Aerospace, LLC
Phoenix, Ariz.-based Precision Aerospace is a provider of complex metal assemblies for aerospace and industrial applications. Founded in 1976, the company specializes in build-to-print, complex machined sheet metal fabrications; including welded and mechanical assemblies supporting the aerospace industry, primarily for engine and exhaust applications.

Parker Hannifin Corp. to Acquire LORD Corp.
Cary, N.C.-based LORD Corp. offers a broad array of advanced adhesives, coatings and specialty materials as well as vibration and motion control technologies. LORD’s products are used in mission-critical applications in the aerospace, automotive and industrial markets. The company’s aerospace business produces active vibration control systems, adhesives, coatings, engine attach systems, Magneto-Rheological (MR) fluid, and (through its LORD Reman program) is a provider of overhaul and repair services.

Syntonics, LLC Completes Merger with Engenium Technologies Corp. (ETC)
Columbia, Md.-based Engenium Technologies Corp. (ETC) specializes in signal processing including systems engineering and system modeling, software design and implementation, digital, analog, and RF design and hardware implementation and consulting. The company is also a subject-matter expert in radar and radio communications. ETC has been a subcontractor to Syntonics for the past several years, as the companies have jointly developed the innovative SPiDR (Sniper Projectile Detection Radar) technology for a DoD sponsor.

Comtech Telecommunications Corp. Acquires Next Generation 911 Business From General Dynamics Information Technology, Inc.
Comtech Telecommunications Corp. (NasdaqGS: CMTL) acquired the state and local government Next Generation 911 (“NG-911”) business from General Dynamics Information Technology, Inc. (“GDIT”), a subsidiary of General Dynamics Corp. (NYSE: GD).

KEY CONTRACTS

NAVAIR HQ Contracts With Boeing for F/A-18E/F and EA-18G Various External Stores/Mission Equipment Services
The U.S. Naval Air Systems Command, Headquarters (NAVAIR HQ) (Patuxent River, MD) awarded Boeing Strike, Surveillance and Mobility (Saint Louis, MO) an $89.0 million ID/IQ contract (N00019-19-D-0021) for the technical and engineering services to integrate various external stores and alternative mission equipment onto the F/A-18E/F and EA-18G aircraft.

AFLCMC Wright-Patterson Mods Contract With Raytheon for DAS-4 Production and Upgrades
On behalf of the U.S. Air Force PEO Intelligence Surveillance and Reconnaissance & Special Operations Forces (PEO ISR & SOF) (Wright-Patterson AFB, OH), the U.S. Air Force Life Cycle Management Center (AFLCMC) (Wright-Patterson AFB, OH) awarded Raytheon SAS – Intelligence, Surveillance and Reconnaissance Systems (ISRS) (McKinney, TX) a $94.3 million fixed-price-incentive-firm modification (P00004) under a previously awarded undefinitized contractual action (UCA) (FA8620-18-C-2001) for DAS-4 production and upgrades.
This modification provides for the purchase of an additional 54 production AN/DAS-4 Multi-Spectral Targeting System Model B High Definition/Target Location Accuracy (HD/TLA) turrets and one DAS-1A to DAS-4 turret unit upgrade.

Army ACC-RSA Contracts With General Atomics for MQ-1C Gray Eagle UAS Performance Based Logistics (PBL)
On behalf of the U.S. Army Program Executive Office Aviation (PEO AVN) (Huntsville, AL), the U.S. Army Contracting Command – Redstone (ACC-RSA) (Redstone Arsenal, AL) awarded General Atomics Aeronautical Systems, Inc. (GA-ASI) – Aircraft Systems (Poway, CA) a $99.0 million cost-plus-incentive-fee contract (W58RGZ-19-C-0027) for performance based logistics (PBL) support services for the MQ-1C Gray Eagle Unmanned Aircraft System (UAS).
This support consists of overall logistics support and Gray Eagle fleet sustainment operations within the Contiguous United States (CONUS) and Outside Contiguous United States (OCONUS). The logistics requirements include program management, system sustainment, readiness management and support services, contractor-managed supply maintenance support, equipment maintenance forms and records, sustainment training, urgent repairs and services, maintenance and advice on software configuration management, contractor field service representatives (CFSR) and supply chain management.

Army PEO STRI Contracts With Raytheon for Joint Multinational Readiness Center-Rotational Mission Support (JMRC-RMS)
The U.S. Army Program Executive Office of Simulation, Training & Instrumentation (PEO STRI) (Orlando, FL) awarded Raytheon IIS Navigation and Environmental Solutions (NES) (Dulles, VA) a $158.8 million firm-fixed-price contract (W900KK-19-C-0031) for Joint Multinational Readiness Center-Rotational Mission Support (JMRC-RMS) in support of the JMRC Operations Group (OPSGRP).

NAVSEA Contracts With Lockheed Martin for Combat System Warfare Federated Tactical Systems (SWFTS) System Engineering & Integration (SE&I) Services
The U.S. Naval Sea Systems Command (NAVSEA) (Washington, DC) awarded Lockheed Martin RMS – C4ISR and Undersea Systems (C4USS) (Manassas, VA) a $207.1 million cost-plus-fixed-fee contract (N00024-19-C-6400) for system engineering & integration (SE&I) services for the Combat System Warfare Federated Tactical Systems (SWFTS). The contractor will provide development, system engineering, integration, and testing of SWFTS interface baseline improvements, and technology refresh/insertion. These services cover the Systems Engineering and Integration (SE&I) of SWFTS system-level interfaces, associated architectures, and command, control, communications and information combat system design elements, in addition to the integration and testing across the SWFTS system-of systems.

NAVAIR HQ Contracts With Harris for Full-Rate Production (FRP) Lot 17-20 AN/ALQ-214(V)4/5 IDECM Jammer Sets and Support
The U.S. Naval Air Systems Command, Headquarters (NAVAIR HQ) (Patuxent River, MD) awarded Harris Integrated Electronic Warfare Systems (IEWS) (Clifton, NJ) a $212.0 million firm-fixed-price contract to manufacture and deliver Lots 17-20 full rate production (FRP) Integrated Defensive Electronic Countermeasures (IDECM) jammers for the F/A-18C/D/E/F variants. The AN/ALQ-214A(V)4/5 is the key onboard electronic warfare (EW) jamming system for the IDECM program, protecting the aircraft from electronic threats, including sophisticated integrated air defense systems. This effort also includes the repair of test assets and field support for the AN/ALQ-214A(V)4/5.

NAVSEA Mods Contract With Electric Boat for Columbia/Dreadnought Class Missile Tubes and Missile Tube Outfitting Material
The U.S. Naval Sea Systems Command (NAVSEA) (Washington, DC) awarded Electric Boat Corp. (Groton, CT) a $269.3 million cost-plus-fixed-fee modification (P00027) under a previously awarded contract (N00024-17-C-2117) for the manufacturing of 42 missile tubes and missile tube outfitting material in support of the Columbia class fleet ballistic missile submarine (SSBN) and the United Kingdom (UK) Dreadnought. Work will be performed in Quonset Point, RI (71 percent); and York, PA (29 percent), with an estimated date of completion by May 2028. Fiscal 2019 shipbuilding and conversion (Navy); and Foreign Military Funds (FMS) (UK) funding in the amount of $49,500,000 will be obligated at time of award and will not expire at the end of the current fiscal year.

CBP Awards GSA Schedule 70 Task Order to Dev Technology Group for Cargo Systems Application Development and Operations and Maintenance (O&M) Support
On behalf of the Office of Information and Technology (CIO), the U.S. Dept. of Homeland Security, Customs & Border Protection (CBP), Information Technology Center Division (ITCD) (Washington, DC) awarded Dev Technology Group, Inc. (Reston, VA) a $325.5 million time and materials task order (70B04C-19-F-00000204) under the company’s GSA Schedule 70 contract (GS35F0897R) for cargo systems application development and Operations and Maintenance (O&M) support for Cargo Systems Program Directorate (CSPD) in support of cargo systems applications.

Army ACC-RSA Contracts With Lockheed Martin for M270A2 Launcher Production
On behalf of the U.S. Army PEO Missiles & Space (PEO MS) (Huntsville, AL), the U.S. Army Contracting Command – Redstone (ACC-RSA) (Redstone Arsenal, AL) awarded Lockheed Martin Missiles and Fire Control (MFC) (Grand Prairie, TX) a $362.7 million fixed-price-incentive-firm contract (W31P4Q-19-C-0077) for the production of M270A2 launchers in support of the PEO MS Precision Fires Rocket and Missile Systems (PFRMS) Project Office. MLRS is a heavy tracked mobile launcher, transportable via C-17 and C-5 aircraft, that fires Guided MLRS rockets and Army Tactical Missile System (ATACMS) missiles. MLRS will also be able to fire the Precision Strike Missile (PrSM) and Extended-Range GMLRS rockets, both currently in development.

Army ACC-APG Contracts With Raytheon for Troposcatter Transmission System (TROPO) Production/Services
The U.S. Army Contracting Command – Aberdeen Proving Ground (ACC-APG) (Aberdeen Proving Ground, MD) awarded Raytheon IIS Navigation and Environmental Solutions (NES) (Dulles, VA) a $663.0 million firm-fixed-price, cost-plus-fix-fee, ID/IQ contract (W15P7T-19-D-0218) for Troposcatter Transmission System (TROPO), spares and associated services in support of the Program Executive Office for Command Control Communications-Tactical (PEO C3T), Project Manager (PM) Tactical Network (PM-TN), and Product Manager Network Modernization (PdM-NM).

Army ACC-RSA Contracts With Lockheed Martin for Hellfire Missiles for U.S. Armed Forces and FMS Customers
On behalf of the U.S. Army PEO Missiles & Space (PEO MS) (Huntsville, AL), the U.S. Army Contracting Command – Redstone (ACC-RSA) (Redstone Arsenal, AL) awarded Lockheed Martin Missiles and Fire Control (MFC) – Orlando (Orlando, FL) a $723.6 million fixed-price-incentive-firm modification (P00011) under a previously awarded contract (W31P4Q-18-C-0130) to procure a variety of HELLFIRE II missile variants for the U.S. and the governments of Lebanon, Netherlands, and France under the Foreign Military Sales (FMS) program.

DLA Land/TACOM Awards Three Contracts for ISO and Quadcon Containers
On behalf of the U.S. Army Tank-Automotive and Armaments Command (TACOM) (Warren MI), the Defense Logistics Agency (DLA) Land and Maritime Detachment – Warren Acquisition Center (Warren, MI) awarded three, five-year, multiple award, firm-fixed-price, ID/IQ contracts, with a combined value of $744.9 million, for ISO and Quadruple Containers (Quadcon) containers. The DLA container program services customers worldwide utilizing a combination of commercial support and Government transportation capabilities. Although many containers have similar physical and technical characteristics, they vary in price, size, construction, material, availability and capability. For these contracts, two categories of containers are being manufactured for the ISO and Quadruple (Quadcon) categories.

Army ADD-E Awards Five Other Transaction Agreements (OTAs) for the Future Attack Reconnaissance Aircraft Competitive Prototype (FARA CP) Program
The U.S. Army Aviation Development Directorate – Eustis (ADD-E) (Fort Eustis, VA) awarded five parallel other transaction agreements (OTAs) for the Future Attack Reconnaissance Aircraft Competitive Prototype (FARA CP) program in support of the U.S. Army CCDC Aviation and Missile Center (CCDCAMC) for the Future Vertical Lift Cross-Functional Team (FVL CFT).

NAVAIR HQ Contracts With Lockheed Martin for F-35 Lightning II Aircraft Sustainment Services
The U.S. Naval Air Systems Command, Headquarters (NAVAIR HQ) (Patuxent River, MD) awarded Lockheed Martin Aeronautics Co., Fort Worth Operations (Fort Worth, TX) a $1.14 billion cost-plus-incentive-fee, cost-plus-fixed-fee, firm-fixed-price, cost-share contract (N00019-19-C-1022) for sustainment services in support of the F-35 Lightning II aircraft for the Air Force, Navy, non-U. S. Department of Defense (non-U.S. DoD) participants and Foreign Military Sales (FMS) customers.
The material and non-recurring sustainment activities include: Training Material and Infrastructure, Support Equipment, Autonomic Logistics Information System (ALIS) Material and Infrastructure, Site Readiness Reviews and Site Activation Activity, On-Site Personnel and Infrastructure Stand-up, and Aircraft Structural Integrity Program Studies.

NAVSEA Contracts With VT Halter Marine for USCG Polar Security Cutter (PSC) Detail Design and Construction
The U.S. Naval Sea Systems Command (NAVSEA) (Washington, DC) awarded VT Halter Marine, Inc. (Pascagoula, MS) a $1.94 billion fixed-price incentive-firm contract (N00024-19-C-2210) for the detail design and construction of the U.S. Coast Guard (USCG) Polar Security Cutter (PSC) (formerly the Heavy Polar Ice Breaker).

AFLCMC Wright-Patterson Contracts With Boeing for KC-46 Pegasus Combat Capability (PC2)
On behalf of the U.S. Air Force PEO Tankers (Wright-Patterson AFB, OH), the U.S. Air Force Life Cycle Management Center (AFLCMC) (Wright-Patterson AFB, OH) awarded Boeing Commercial Derivative Aircraft Division (Seattle, WA) a $5.7 billion ID/IQ contract (FA8609-19-D-0007) for KC-46 Pegasus Combat Capability (PC2).

M&A

Enlightenment Capital Acquires Trowbridge & Trowbridge, LLC
McLean, Va.-based Trowbridge is a provider of information technology (IT) solutions to defense, intelligence, and civilian government agencies. Founded in 2006 by Karen Trowbridge, the company provides cloud engineering, cybersecurity, IT engineering, application development, and network engineering solutions to the federal government. Trowbridge will serve as Enlightenment’s newest platform.

American Aerospace Technologies, Inc. (AATI) to Acquire Sky Scape Industries, LLC (SSI)
Toms River, N.J.-based Sky Scape Industries, LLC (SSI) is an unmanned technology service-provider. SSI’s data collection and analysis services are widely used by critical infrastructure operators in the electric, water, and oil & gas industries. SSI will continue to provide integration services, professional drone advisory services, and inspection services nationwide.

Gryphon Investors Portfolio Company Jensen Hughes, Inc. Acquires Hillard Heintze, LLC
Chicago, Illinois-based Hillard Heintze is a provider of strategic security risk management and investigation services for Fortune-ranked enterprises, professional sports leagues and law enforcement agencies as well as many of the world’s most affluent families. Hillard Heintze supports clients across the globe through five practices: Security Risk Management, Threat and Violence Risk Management, Investigations, Law Enforcement Consulting, and Private Client and Family Office Services.

Singapore Technologies Engineering Ltd. (ST Engineering) Completes Acquisition of MRA Systems, LLC (MRAS) from General Electric Co.
Baltimore, Md.-based MRA Systems, LLC (MRAS) specializes in the design, development, production and sale of engine nacelle systems and their thrust reversers for both narrowbody and widebody aircraft, along with complex aerostructures for applications on commercial and military aircraft. The company is also a supplier of spare parts. With approximately 800 employees operating in a 1.7 million square foot facility, MRAS has competencies which range from bonding and machining to assembly, test and certification.

Mercury Systems, Inc. Acquires The Athena Group, Inc.
Gainesville, Fla.-based The Athena Group is a provider of cryptographic and countermeasure IP vital to securing defense computing systems. Specializing in differential power analysis (DPA) technology, the company offers a complete portfolio of provable DPA-resistant solutions.

Mercury Systems, Inc. Acquires Syntonic Microwave, LLC
Campbell, Calif.-based Syntonic Microwave, LLC is a provider of advanced synthesizers, wideband phase coherent tuners and microwave converters optimized for signals intelligence (SIGINT) and electronic intelligence (ELINT) applications demanding frequency coverage up to 40 GHz with 2 GHz instantaneous bandwidth.

CIVC Partners Acquires Mangrove Equity Partners, L.P. Portfolio Company Computer Aided Technology, LLC (CATI)
Buffalo Grove, Illinois-based CATI is a provider of 3D design and engineering solutions across the product development continuum, including 3D CAD, 3D CAE, PDM and PLM software, 3D printing and scanning hardware, and other related technologies and consulting, training and support services.

The Carlyle Group Completes Acquisition of a 45% Equity Stake in The Nordam Group, Inc.
Tulsa, Okla.-based The NORDAM Group, Inc. is an aerospace manufacturer and provider of maintenance, repair and overhaul services (MRO) to the business, military aviation, and commercial airline and air freight end-markets. The company designs, certifies and manufactures integrated propulsion systems, nacelles and thrust reversers for business jets; builds composite aircraft structures, interior shells, custom cabinetry and radomes; and manufactures aircraft transparencies, such as cabin windows, wing-tip lens assemblies and flight deck windows.The company provides services to a global customer base through its nine strategically-located operations and customer support facilities on three continents.

Hexagon AB Completes Acquisition of Thermopylae Sciences and Technology, LLC
Arlington, Va.-based Thermopylae Sciences and Technology, LLC is a software provider primarily focused on the U.S. government and defence market that specializes in geospatial applications, mobile frameworks, and cloud computing for enhanced location intelligence.

KKR & Co. L.P. Portfolio Company Hensoldt Holding GmbH to Acquire Major Parts of NEXEYA
Chatenay-Malabry, France-based NEXEYA is a provider of solutions for mission critical environments. Founded in 1997, the company designs, manufactures, integrates and enables specialized products and services for the areas of test and integration solutions, space systems, mission management systems, power conversion and customer support.

NEWS

Nashville International Airport Showing Strong Growth and Strong Local Economy
CAPA reports that Passenger levels at Nashville International airport have soared during the past few years, fueled in part by job growth supported by a sustained robust economy in the region. The airport continues to welcome new services from its largest operator – Southwest Airlines – but during the past couple of years has also secured new flights from the ultra low cost operators Frontier, Allegiant and Sun Country. JetBlue has also begun services from Nashville, and Alaska has also expanded from the airport.

Southwest Mechanics To Vote On Moderate Wage Increases
MRO-Network.com reports that Southwest Airlines mechanics’ real wages would increase 1.0-1.4% annually under the tentative agreement. MRO-Network.com states, “The long and sometimes acrimonious contract negotiations between Southwest Airlines and its mechanics’ union may be nearing an end. The shape of any ultimate agreement should help indicate how fast mechanic wages will increase in light of the much-discussed potential shortage of aircraft mechanics. So far, it looks like mechanic wages will accelerate, but not dramatically so.” in reference to the tentative agreement, “The tentative agreement would increase the base rate pay scale as of April 1, 2019, for each step of a mechanic’s career by 20% and then increase these pay scales further by 3% in August of 2019, 2020, 2021, 2022 and 2023.”

American Airlines Opening New Houston Line Maintenance Station
American Airlines plans to open the new line maintenance station at Houston George Bush Intercontinental Airport for its busy summer travel season.

Air New Zealand Plans New Hangar At Auckland Base
The new 10,000 square meter facility will be close to the airline’s engineering center. Construction of the facility is expected to begin in late 2019.

Symantec Joins U.S. Department of Defense’s Defense Industrial Base Cyber Security Program
Symantec (Nasdaq: SYMC) announced it has become a member of the United States’ Department of Defense’s (DOD) Defense Industrial Base (DIB) Cybersecurity (CS) program. The DIB CS program is a voluntary cyber threat information-sharing initiative established by the DOD to enhance and supplement DIB participants’ capabilities to mitigate cyber attacks.

Northrop Grumman’s Cygnus Spacecraft Successfully Completes Rendezvous and Berthing with International Space Station
Northrop Grumman Corporation (NYSE: NOC) announced that the “S.S. Roger Chaffee” Cygnus™ spacecraft successfully completed its rendezvous and berthing maneuvers with the International Space Station earlier this morning. The mission marks the company’s 11th successful berthing with the orbiting laboratory.

Bell Announces Role for Ozark Facility in Proposal for Us Navy Trainer Replacement
Bell Helicopter, a Textron Inc. (NYSE: TXT) company, announced today that, should the Bell 407GXi be selected for the US Navy Advanced Helicopter Trainer program, the company plans to conduct final assembly of the aircraft in Ozark, Alabama. Bell submitted its proposal to the Navy on April 2. The Navy is seeking to acquire 130 aircraft.

China’s Airbus H135 Final Assembly Line Starts Operations
Airbus Helicopters has expanded its industrial footprint and partnership with China with the opening of the H135 final assembly line in Qingdao. The factory is the first helicopter FAL built by a foreign manufacturer in China, as well as the first H135 FAL outside of Europe.

NASA, Blue Origin Agreement Signals Rocketing Growth of Commercial Space
Officials from NASA and the private space company Blue Origin have signed an agreement that grants the company use of a historic test stand as the agency focuses on returning to the Moon and on to Mars, and America’s commercial space industry continues to grow.

Kratos Defense and Oklahoma Leaders Announce Future Production Home of XQ-58A Valkyrie, Celebrate Completion of First MQM-178 Firejet
State and community leaders joined Kratos Defense & Security Solutions, Inc. (Nasdaq:KTOS) executives in Oklahoma City, OK, to unveil the first MQM-178 Firejet target drone aircraft produced at the new Kratos Unmanned Aircraft production facility.

CONTRACTS

Army ACC-RI Awards Four Contracts for Logistics Civil Augmentation Program (LOGCAP) V Program
On behalf of the U.S. Army Sustainment Command (ASC) (Rock Island, IL), the U.S. Army Contracting Command – Rock Island (ACC-RI) (Rock Island, IL) awarded four, ten-year, multiple award, task order, performance-based, ID/IQ contracts, with a ceiling value of $82,000.0 million, to support the geographical combatant commands under the Logistics Civil Augmentation Program (LOGCAP) V program.

AFLCMC Wright-Patterson Contracts With Boeing for B-1/B-52 Flexible Acquisition Sustainment & Modernization (BFAS)
On behalf of the U.S. Air Force PEO Fighters and Bombers (Wright-Patterson AFB, OH), the U.S. Air Force Life Cycle Management Center (AFLCMC) (Wright-Patterson AFB, OH) awarded Boeing Global Services Government – Engineering, Modifications & Maintenance (Oklahoma City, OK) a $14.3 billion firm-fixed-price, fixed-price-incentive-firm, cost-plus fixed-fee, cost-plus-incentive-fee, time and materials, ID/IQ contract (FA8628-19-D-1000) for B-1/B-52 Flexible Acquisition Sustainment & Modernization (BFAS).

USAF ICBM/SD Contracts With Lockheed Martin for Minuteman III Re-Entry Systems/Vehicles Support under the Future ICBM Sustainment and Acquisition Construct (FISAC)
The U.S. Air Force Nuclear Weapons Center (AFNWC), ICBM Systems Directorate (ICBM/SD) (Hill AFB, UT) awarded Lockheed Martin Space – Mission Solutions (King of Prussia, PA) an $879.0 million firm-fixed-price, level of effort, cost-plus-incentive-fee, cost-plus-fixed-fee, fixed-price-incentive-firm, ID/IQ contract (FA8214-19-D-0001) for the Future ICBM Sustainment and Acquisition Construct (FISAC) program in support of the Re-entry Systems/Re-entry Vehicles (RS/RV) subsystem of the LGM-30G Minuteman III (MM III) weapon system.

USAF SMC/MC Mods Contract With Boeing for Wideband Global SATCOM (WGS) Space Vehicle 11
The U.S. Air Force SMC / PEO Space Systems, MILSATCOM Systems Directorate (SMC/MC) (El Segundo, CA) awarded Boeing Satellite Systems International, Inc. (El Segundo, CA) a $605.0 million firm-fixed-price modification (P00109) under a previously awarded contract (FA8808-10-C-0001) for the production of the Wideband Global SATCOM (WGS) Space Vehicle 11.

Australia’s DoD Contracts With Northrop Grumman Australia for Through-Life-Support of the Royal Australian Air Force (RAAF) KC-30A Multi-role Tanker Transport (MRTT) Aircraft Fleet
The Australian Department of Defence (Canberra, Australia), Capability Acquisition and Sustainment Group (CASG), Joint Systems Division (JSD), Communication Systems Branch. Awarded Northrop Grumman Integrated Defence Services Pty Limited (IDS) (Alexandria, NSW, Australia) a ten (10)-year AUD $645.7 million (USD $463.8 million) contract (CN3360384), Agency Reference ID: (4600000587), for the through-life-support of the Royal Australian Air Force (RAAF) KC-30A Multi-role Tanker Transport (MRTT) Aircraft Fleet, for the Air Systems Division (ASD) – Aircraft Technical Services (ATS), Capability Acquisition and Sustainment Group (CASG).

GSA Great Lakes Region (5) Contracts With ViaSat for Rapid Migration of Command, Control, Communications and Computers/Cyber (C5AD) Capability
The U.S. General Services Administration, Great Lakes Region (5) (Chicago, IL) awarded ViaSat, Inc. (Carlsbad, CA) a $450.0 million firm-fixed-price, time and materials, ID/IQ contract (47QFLA-19-D-0006) for Rapid Migration of Command, Control, Communications and Computers/Cyber (C5AD) capability.

NAVSEA Mods Contract With Electric Boat for Columbia/Dreadnought Class Missile Tubes and Missile Tube Outfitting Material
The U.S. Naval Sea Systems Command (NAVSEA) (Washington, DC) awarded Electric Boat Corp. (Groton, CT) a $269.3 million cost-plus-fixed-fee modification under a previously awarded contract (N00024-17-C-2117) for the manufacturing of 42 missile tubes and missile tube outfitting material in support of the Columbia class fleet ballistic missile submarine (SSBN) and the United Kingdom (UK) Dreadnought.

NAVAIR HQ Mods Contract With Pratt & Whitney for F-35 Lot 14 F135 Propulsion Systems Long-Lead Materials, Parts, and Components
The U.S. Naval Air Systems Command, Headquarters (NAVAIR HQ) (Patuxent River, MD) awarded Pratt & Whitney Military Engines (East Hartford, CT) a $201.9 million fixed-price-incentive-firm modification (P00004) under a previously awarded acquisition contract (N00019-18-C-1021) for long-lead materials, parts, and components for Lot 14 F135 Propulsion systems for the F-35 Lightning II Joint Strike Fighter aircraft in support of the Air Force, Marine Corps, Navy, non-U.S. Department of Defense (non-U.S. DoD) participants; and Foreign Military Sales (FMS) customers.

Army ACC-RSA Contracts With General Atomics for MQ-1C Gray Eagle UAS Performance Based Logistics (PBL)
On behalf of the U.S. Army Program Executive Office Aviation (PEO AVN) (Huntsville, AL), the U.S. Army Contracting Command – Redstone (ACC-RSA) (Redstone Arsenal, AL) awarded General Atomics Aeronautical Systems, Inc. (GA-ASI) – Aircraft Systems (Poway, CA) a $99.0 million cost-plus-incentive-fee contract (W58RGZ-19-C-0027) for performance based logistics (PBL) support services for the MQ-1C Gray Eagle Unmanned Aircraft System (UAS).

USSOCOM SOF AT&L Contracts With Gentex for SOF Personal Equipment Advance Requirements (SPEAR) Family of Tactical Headborne Systems (FTHS)
The U.S. SOCOM Special Operations Forces Acquisition, Technology and Logistics (USSOCOM SOF AT&L) (Tampa, FL) awarded Gentex Corp. (Simpson, PA) a maximum $95.0 million firm-fixed-price, ID/IQ contract (H92403-19-D-0003) for the purchase of Special Operations Forces (SOF) Personal Equipment Advance Requirements (SPEAR) Family of Tactical Headborne Systems (FTHS) in support of USSOCOM Program Manager Special Operations Forces – Survival, Support, and Equipment Systems (PM-SOF SSES).

M&A

The Carlyle Group Completes the Acquisition of StandardAero Aviation Holdings Inc. From Veritas Capital
Scottsdale, Ariz.-based StandardAero Aviation Holdings Inc. is one of the aerospace industry’s largest independent providers of services. Services include MRO for aircraft and rotorcraft engines, auxiliary power units and components; airframe services including major alterations; FAA authorized avionics capabilities; comprehensive engineering services; and custom exterior and interior design, completion and paint. These capabilities are provided through a network of specialized facilities and mobile service teams. The company’s services are provided to commercial aviation, business aviation, military and industrial power customers.

Global Ordnance, LLC Acquires Chemring Military Products, Inc. From Chemring Group PLC
Perry, Fla.-based Chemring Military Products, Inc. is a DDTC-licensed and ISO 9001:2008-certified trading company that provides a complete set of brokering services to the U.S. and approved foreign customers. CMP’s expertise covers technical data package development, program and supply chain management, quality assurance, export control and worldwide logistics for a wide variety of NATO and Russian-standard ammunition, pyrotechnics, weapon systems and platforms for ground and air warfare.

Singapore Technologies Engineering Ltd. (ST Engineering) to Acquire Newtec Cy N.V.
Sint-Niklaas, Belgium-based Newtec develops satellite communication equipment and technologies for broadcast, government and defense, IP trunking and consumer and enterprise VSAT. Founded in 1985, the company’s products include satellite terminals, modems, modulators, demodulators, redundancy switches, OEM boards, and monitoring and control software and subsystems.

Enlightenment Capital Portfolio Company EverWatch Corp. Acquires Northwood Global Solutions, LLC
EverWatch Corp., a portfolio company of Enlightenment Capital, acquired Northwood Global Solutions, LLC.
Herndon, Va.-based Northwood Global Solutions, LLC is a provider of technology solutions specializing in cloud architecture and migration, cybersecurity, analytics, and big data systems architecture to the Intelligence Community.

FLIR Systems, Inc. Completes Strategic Investment in DroneBase, Inc.
Santa Monica, Calif.-based DroneBase, Inc. is a global drone operations company that provides businesses access to one of the largest Unmanned Aerial Surveillance (UAS) pilot networks. DroneBase and its pilots have completed over 100,000 commercial missions in more than 70 countries and in all 50 states, providing aerial images and data services across multiple industries, such as residential and commercial real estate, insurance, telecommunications, construction, and media.

KKR & Co. L.P. Portfolio Company Hensoldt Holding GmbH to Acquire Major Parts of NEXEYA
Chatenay-Malabry, France-based NEXEYA is a provider of solutions for mission critical environments. Founded in 1997, the company designs, manufactures, integrates and enables specialized products and services for the areas of test and integration solutions, space systems, mission management systems, power conversion and customer support. The acquisition of a substantial portion of NEXEYA’s activities will complement Hensoldt’s portfolio and help drive international growth.

NEWS

InTech Aerospace Makes Technology Investments, Expands Facilities for More Customer Services
InTech Aerospace LLC, a long-standing aviation technical services firm specialized in commercial and government airplane interiors and components, has expanded its main MRO facility near George Bush Int’l. Airport, and has added even more technology improvements to its capacities.

Northrop Grumman Successfully Completes Second Ground Test of New Rocket Motor for United Launch Alliance Atlas V
Northrop Grumman Corporation (NYSE: NOC) conducted its second ground test of a 63-inch diameter Graphite Epoxy Motor (GEM 63) today in Promontory, Utah. The company developed this new side-mounted rocket motor to add power to the United Launch Alliance (ULA) Atlas V launch vehicle.

Gulfstream G650ER Shatters Speed Record For Farthest Business Jet Flight In History
Gulfstream Aerospace Corp. today announced the ultralong-range Gulfstream G650ER once again proved its unrivaled performance, beating a recent competitor speed record while at the same time increasing the distance flown for the farthest business jet flight in history. The G650ER flew from Singapore to Tucson, Ariz., at an average speed of 597 miles per hour/960 kilometers per hour over a distance of 8,379 nautical miles/15,518 kilometers. The G650ER’s performance beat the previous record by 44 minutes and more than 225 nm/417 km, asserting the aircraft’s title for flying farther faster than any other jet.

ANA Takes Delivery of Airline’s First Boeing 787-10 Dreamliner
Boeing [NYSE:BA] delivered the first of three 787-10 airplanes to ANA (All Nippon Airways), the original launch customer of the 787 Dreamliner. With this milestone delivery, ANA becomes the first airline in Asia to operate the entire Dreamliner family.

Triumph Announces Channel Partnership With Honeywell
Triumph Group, Inc. (NYSE: TGI) announced at MRO Americas industry show that its Accessory Services business has entered into a five year channel partnership with Honeywell that includes access to spare parts and intellectual property, and positions Triumph as an authorized repair center for Honeywell. As an authorized repair center, Triumph Accessory Services will provide Honeywell and our global customers with support for accessories and component MRO along with supply chain solutions. Triumph Accessory Services is an operating company of Triumph Product Support.

GAMECO Becomes Boeing Supplier for MRO Support
Boeing [NYSE: BA] and Guangzhou Aircraft Maintenance Engineering Company Limited (GAMECO) have signed an MRO services agreement to work together to provide MRO support in the Asia-Pacific region. Through this agreement Boeing will provide MRO maintenance training and access to maintenance data and technical support, while GAMECO commits to maintaining Boeing’s rigorous quality standards for MRO services.

Safran Introduces B.Side, a New Engine Borescope Inspection Consulting Service
At the MRO Americas conference, Safran Aircraft Engines announced the commercial launch of B.Side®, its new service to provide remote borescope inspection recommendations in real time.

Embraer Board Selects New President and CEO
Further to the succession process, which started last March, Embraer announces that the nomination of Francisco Gomes Neto, current President of Marcopolo, will be presented to the Board of Directors for the position of President and CEO, succeeding Paulo Cesar de Souza e Silva. The election will be held during the Board meeting, after the General Shareholders’ Meeting scheduled for April 22.

General (Ret.) Richard A. Cody Joins MAG Aerospace Board of Directors
MAG Aerospace, a global leader in C4ISR integration, training, and operations, today announced that General (Ret.) Richard A. Cody, US Army has joined the company’s Board of Directors. General Cody, United States Army, served as L3 Technologies’ Corporate Senior Vice President of Washington Operations for 10 years until his retirement in October 2018.

SpaceX Falcon Heavy Launches Arabsat-6A Mission
On Thursday, April 11 at 6:35 p.m. EDT, Falcon Heavy launched the Arabsat-6A satellite from Launch Complex 39A (LC-39A) at NASA’s Kennedy Space Center in Florida. The satellite was deployed approximately 34 minutes after liftoff.

CONTRACTS

AFLCMC Wright-Patterson Contracts With Boeing for B-1/B-52 Flexible Acquisition Sustainment & Modernization (BFAS)
On behalf of the U.S. Air Force PEO Fighters and Bombers (Wright-Patterson AFB, OH), the U.S. Air Force Life Cycle Management Center (AFLCMC) (Wright-Patterson AFB, OH) awarded Boeing Global Services Government – Engineering, Modifications & Maintenance (Oklahoma City, OK) a $14.3 billion firm-fixed-price, fixed-price-incentive-firm, cost-plus fixed-fee, cost-plus-incentive-fee, time and materials, ID/IQ contract (FA8628-19-D-1000) for B-1/B-52 Flexible Acquisition Sustainment & Modernization (BFAS).

NAVAIR HQ Mods Contract With Northrop Grumman for 24 Full Rate Production (FRP) Lot 7-11 E-2D Advanced Hawkeye (AHE) Aircraft
The U.S. Naval Air Systems Command, Headquarters (NAVAIR HQ) (Patuxent River, MD) awarded Northrop Grumman E-2 and C-2 Programs (Melbourne, FL) a $3.16 billion fixed-price-incentive-firm modification (P00006) to definitize the previously awarded E-2D Advanced Hawkeye (AHE) Lot 7 advance acquisition contract (N00019-18-C-1037) for the procurement of 24 full-rate production (FRP) Lots 7-11 E-2D AHE aircraft.

South Korea’s Air Premia Selects the Rolls-Royce Trent 1000 TEN for Boeing 787-9 Dreamliners
Air Premia (Incheon, South Korea) has selected Rolls-Royce Civil Large Engines (Derby, Derbyshire, England, UK) to provide Rolls-Royce Trent 1000 TEN engines to power up to ten (1) Boeing 787 Dreamliner aircraft, at at estimated list price of USD $834.0 million.

Lockheed Martin Contracts with Harris for GPS III Follow-On (GPS IIIF) Satellites Mission Data Units (MDUs)
Lockheed Martin Space (Littleton, CO) awarded Harris Mission Networks (Melbourne, FL) a $243.0 million contract for fully-digital Mission Data Units (MDUs) for the first two GPS III Follow-On (GPS IIIF) satellites.

Army ACC-WRN Mods Contract With AM General for 648 M997A3 High Mobility Multipurpose Wheeled Vehicle (HMMWV) Ambulances
On behalf of the U.S. Army PEO Combat Support and Combat Service Support (CS&CSS) (Warren, MI), the U.S. Army Contracting Command – Warren (ACC-WRN) (Warren, MI) awarded AM General, LLC (South Bend, IN) a $185.0 million firm-fixed-price modification under a previously awarded contract (W56HZV-18-D-0084) for procurement of 648 M997A3 High Mobility Multipurpose Wheeled Vehicle (HMMWV) ambulances.

NAWCAD Contracts With AMEWAS for Integrated Battlespace Simulation and Test (IBST) Simulation Division (AIR 5.4.3) Engineering and Technical Support Services
The U.S. Naval Air Warfare Center Aircraft Division – Pax River (NAWCAD) (Patuxent River, MD) awarded AMEWAS, Inc. (California, MD) a $99.7 million cost-plus-fixed-fee, cost-reimbursable, ID/IQ contract (N00421-19-D-0054) for engineering and technical support services required for the Integrated Battlespace Simulation and Test (IBST) Simulation Division (AIR 5.4.3).

DLA Land and Maritime Awards Four Contracts for Global Tire Program (GTP) Aircraft Tires
DLA Land and Maritime (Columbus, OH) awarded four parallel three-year, firm-fixed-price, indefinite-delivery/requirements contracts with a combined value of $96.5 million for aircraft tires supporting the Global Tire Program (GTP).

USSOCOM SOF AT&L Contracts With Gentex for SOF Personal Equipment Advance Requirements (SPEAR) Family of Tactical Headborne Systems (FTHS)
The U.S. SOCOM Special Operations Forces Acquisition, Technology and Logistics (USSOCOM SOF AT&L) (Tampa, FL) awarded Gentex Corp. (Simpson, PA) a maximum $95.0 million firm-fixed-price, ID/IQ contract (H92403-19-D-0003) for the purchase of Special Operations Forces (SOF) Personal Equipment Advance Requirements (SPEAR) Family of Tactical Headborne Systems (FTHS) in support of USSOCOM Program Manager Special Operations Forces – Survival, Support, and Equipment Systems (PM-SOF SSES).

USSOCOM SOF AT&L Awards SBIR Phase III Contract to Technology Service Corp. for the Long Endurance Unmanned Aircraft System (UAS)
TheU.S. SOCOM Special Operations Forces Acquisition, Technology and Logistics (USSOCOM SOF AT&L) (Tampa, FL) awarded Technology Service Corp. (TSC) (Arlington, VA) a maximum $49.0 million cost-plus-fixed-fee, ID/IQ Small Business Innovative Research (SBIR) Phase III contract (H92408-19-D-0001) for the long endurance unmanned aircraft system (UAS) in support of U.S. Special Operations Command (USSOCOM).

Army ACC-APG Awards Other Transaction Agreement (OTA) to FLIR for the Sensor Suite Upgrade (SSU) for the Nuclear, Biological and Chemical Reconnaissance Vehicle (NBCRV)
On behalf of the Joint PEO for Chemical, Biological, Radiological and Nuclear Defense (JPEO-CBRND) (Aberdeen Proving Ground, MD), the U.S. Army Contracting Command – Aberdeen Proving Ground (ACC-APG) (Aberdeen Proving Ground, MD) awarded FLIR – ICx Nomadics, Inc. (Stillwater, OK) a $48.1 million other transaction agreement (OTA) for the Nuclear Biological Chemical Reconnaissance Vehicle Sensor Suite Upgrade (NBCRV SSU) program.

Dear Friends,

Suffice to say, 2019 is off to an interesting start! For our firm, despite the first quarter traditionally being a slower time, we had two closed transactions that both represented strong achievements for the practice. We were thrilled to represent Triumph Group (NYSE: TGI) in their divestiture of the NAAS Aviation Services business to STS Aviation. Additionally, we represented Florida Turbine Technologies, an engineering-focused service provider to the US Department of Defense in its sale to Kratos Defense (NASDAQ: KTOS).

For participants in the commercial aerospace supply-chain, the first quarter of 2019 has turned into arguably the most eventful period in over a decade. Spurred by two tragic crashes, the B737 MAX has been involved in more headlines over the past 30 days than most platforms experience over their 40 year lives. The initial ripple-effect is just now being felt as Boeing recently announced a ~20% reduction in build-rates. From our perspective, there appears to be two issues, one near-term and one long-term. The short-term issue revolves around the “fix” to the faulty MCAS system and how quickly the FAA will allow for flights (and deliveries) to resume. Media reports indicate that this will be resolved in a period of weeks which would alleviate issues around aircraft storage and working capital. The longer-term, ultimately more critical issue is the viability of the order book and whether the record-setting backlog will ever be realized.

Boeing is now dealing with a plane that has reached the consumer consciousness to an unprecedented extent. It’s difficult to state with confidence how long and to what level the traveler will retain a negative bias and how that impacts the operators of the aircraft. That said, airlines today are left with very limited options outside the MAX. Capacity growth and increased fuel efficiency remain strategic priorities of most airlines, and getting in the back of the line for an A320 is not a solution. We remain hopeful that the worst of the supply-chains’ MAX-related nightmares are behind us but the next few months will be critical as Boeing navigates an unhappy customer base.

Please see our Q1 Review Here…
KAL Capital A&D Newsletter Q1 2019

Sincerely,

KAL Capital Team

M&A

Sagewind Capital, LLC Portfolio Company By Light Professional IT Services LLC Acquires Phacil, Inc.
McLean, Va.-based Phacil, Inc. is a software, cybersecurity, systems engineering and managed services provider to the US Government.

Consortium of Private Equity Firms, Pension Funds Make Offer to Acquire Inmarsat plc
London-based Inmarsat plc is the world’s leading provider of global mobile satellite communications, with maritime, aeronautical, and land mobile operations.

New Mountain Capital, LLC Portfolio Company MAG Aerospace Acquires Encore Aviation Pty Ltd
Forest Hill, NSW, Australia-based Encore Aviation is a maintenance organization supporting general aviation in Australia and provides home base and deployed engineering and maintenance services to a wide variety of fixed and rotary wing aviation organizations, including those contracted to the National Aerial Firefighting Centre in Melbourne.

Resilience Capital Partners, LLC Acquires InnoVista Sensors Subsidiary Systron Donner Inertial, Inc. (SDI)
Concord, Calif.-based Systron Donner is a supplier of quartz microelectromechanical systems (QMEMS) used in inertial sensing products that provide precision guidance, navigation and locational solutions.

Orolia S.A. Acquires Skydel Solutions, Inc.
Longueuil, Quebec, Canada-based Skydel Solutions, Inc. is a global navigation satellite system and GPS signal simulation company, combining innovative algorithms with off-the-shelf hardware to protect critical systems that rely on GNSS and operate through global navigation satellite networks like GPS.

Rheinmetall AG to Acquire IBD Deisenroth Engineering GmbH
Lohmar, Germany-based IBD Deisenroth Engineering GmbH designs, develops, and manufactures passive protection systems, with a focus on the use of next-generation materials in association with a modular and synergistic structural approach.

News

Vector’s GalacticSky GSky-1 Satellite Developed with USC’s Space Engineering Research Center Ready for Launch Later This Year
Vector, the space access company, today announced its GalacticSky division, which has been in stealth mode since 2016. Led by veterans from VMWare and Citrix, as well as satellite innovators, GalacticSky has achieved a major milestone on its path to launch its first GalacticSky software-defined satellite, GSky-1. GSky-1 successfully completed integration at the University of Southern California’s Space Engineering Research Center (SERC) at the Information Sciences Institute (ISI) and will validate GalacticSky’s mission to enable innovators to easily and effectively deploy space application technology in space.

US Army, Raytheon Complete DeepStrike Missile Preliminary Design Review
Raytheon Company (NYSE: RTN) and the U.S. Army completed a successful preliminary design review for the new DeepStrike® surface-to-surface missile, moving the weapon down the development path toward its first flight tests planned for later this year.

Second Lockheed Martin-Built GPS III Satellite For The U.S. Air Force Arrives In Cape Canaveral For July Launch
On March 18, Lockheed Martin (NYSE: LMT) shipped the Air Force’s second GPS III space vehicle (GPS III SV02) to Cape Canaveral for an expected July launch. Designed and built at Lockheed Martin’s GPS III Processing Facility near Denver, the satellite traveled from Buckley Air Force Base, Colorado, to the Cape on a massive Air Force C-17 aircraft. The Air Force nicknamed the GPS III SV02 ‘Magellan’ after Portuguese explorer Ferdinand Magellan.

Northrop Grumman Ground System Provides Direction for the First Dual Interceptor Test for Ground-Based Midcourse Defense System
In an unprecedented display of accuracy, Northrop Grumman Corporation, (NYSE: NOC) as the strategic partner to prime contractor, Boeing, successfully provided the weapon task plans for the Ground-based Midcourse Defense (GMD) system Ground Based Interceptors (GBI) during the first dual interceptor mission against an Intercontinental Ballistic Missile (ICBM) target for the U.S. Missile Defense Agency (MDA).

Huntington Ingalls Industries Authenticates Keel of Virginia-Class Attack Submarine New Jersey (SSN 796)
Huntington Ingalls Industries’ (NYSE: HII) Newport News Shipbuilding division hosted a keel authentication ceremony for the Virginia-class attack submarine New Jersey (SSN 796).

GE Aviation’s CT7-2F1 Engine Receives FAA Certification
The newest member of GE’s CT7 engine family, the CT7-2F1, achieved type certification by the Federal Aviation Administration. This milestone is a big step forward for entry into service of the CT7-2F1-powered Bell 525 Relentless, the world’s first fly-by-wire commercial helicopter, designed to operate safely and reliably in austere environments and with decreased pilot workload.

GA-ASI Breaks Ground on New Hangar in El Mirage, Calif.
General Atomics Aeronautical Systems, Inc. (GA-ASI) held a ground breaking ceremony for a new hangar being built in El Mirage, Calif. The new facility in the high desert of southern California will be close to 150,000 square feet and be used to house and test GA-ASI’s latest Remotely Piloted Aircraft (RPA) variant, the MQ-9B SkyGuardian.

Raytheon Company Announces Executive Appointments
Raytheon Company (NYSE: RTN) Chairman and CEO Thomas A. Kennedy announced today the appointment of Wesley D. Kremer as President, Raytheon Missile Systems (RMS), succeeding Dr. Taylor W. Lawrence, who informed the company of his intention to retire from Raytheon on July 14, 2019. Additionally, Kennedy has appointed Ralph H. Acaba President, Raytheon Integrated Defense Systems (IDS), succeeding Kremer. The new appointments are effective March 30, 2019. Dr. Lawrence will serve as a senior advisor to the company during the interim period prior to his retirement.

New SelfPass Biometrics Solution from Collins Aerospace Among the First to Connect Multiple Airlines, Airports and Countries
Passengers traveling through England’s Bristol Airport and Ireland’s Dublin Airport can look forward to a new streamlined journey with Collins Aerospace’s SelfPass biometric solution. The solution, now being trialed at Bristol Airport and Dublin Airport, is believed to be the first biometric solution that enables passengers to use a single enrollment in multiple countries.

Embraer Delivers the 500th Phenom 300 Series Aircraft, the Most Successful Business Jet of the Decade
Embraer has delivered the 500th Phenom 300 series business jet. According to General Aviation Manufacturers Association (GAMA) reports, the Phenom 300 is the only business jet model to reach this milestone in the last 10 years. The Phenom 300 outperforms in the light jet class with its speed, range, comfort and technology. Being the fastest and farthest-flying light jet, the Phenom 300 has set multiple speed records, certified by the National Aeronautic Association and the Federation Aeronautique Internationale.

DSCA Notifies Congress of Possible Sale of MQ-9B SkyGuardian Remotely Piloted Aircraft (RPA) to Belgium
The State Department has made a determination approving a possible Foreign Military Sale to Belgium of MQ-9B SkyGuardian Remotely Piloted Aircraft (RPA) and related equipment for an estimated cost of $600 million. The Defense Security Cooperation Agency delivered the required certification notifying Congress of this possible sale on March 25, 2019.

Aerojet Rocketdyne’s Propulsion Supported 11th Successful Missile Defense Intercept for GMD
In a first-of-its-kind flight test of the Missile Defense Agency’s Ground-based Midcourse Defense (GMD) program, in partnership with prime contractor Boeing, Aerojet Rocketdyne’s Divert and Attitude Control System (DACS) supported Raytheon’s Exoatmospheric Kill Vehicle (EKV) in its intercept of an ICBM. The test, designated FTG-11, was the first salvo test for the GMD program. During the test, both interceptors, carrying the Raytheon-built EKVs, were launched from Vandenberg Air Force Base, California, following the launch of a threat-representative ICBM target from Kwajalein Atoll in the Pacific Ocean. The Aerojet Rocketdyne DACS helped to successfully maneuver an EKV to destroy the incoming target.

York Space Systems Ships S-class Spacecraft for Launch Ahead of Inaugural Mission
York Space Systems, an aerospace company specializing in complete space segment customer solutions and the manufacture of standardized spacecraft platforms, today announced its S-CLASS spacecraft platform has officially been shipped to the launch site for the company’s inaugural mission. A major milestone for the company, the platform completed the rigorous Environmental Test Program to obtain official clearance for imminent takeoff on its groundbreaking launch.

Lockheed Martin-Led Team Begins Construction On Navy’s Newest Multi-Mission Warship, Littoral Combat Ship 25 (Marinette)
In a ceremony that formally marks the beginning of a ship’s construction, Lockheed Martin [NYSE: LMT] and Fincantieri Marinette Marine laid the keel on Littoral Combat Ship (LCS) 25, the future USS Marinette. During the ceremony, the ship’s sponsor Jennifer Granholm, former governor of Michigan, had her initials welded into the ship’s keel plate.

General Dynamics Appoints Smith as Executive Vice President; Paddock as President of Jet Aviation; Casey to Retire
General Dynamics (NYSE: GD) has appointed Robert E. Smith as executive vice president of the Marine Systems segment, effective July 1. Smith succeeds John P. Casey, who has informed the company of his intent to retire on June 30. David Paddock, Jet Aviation’s senior vice president and general manager of U.S. aircraft services, will succeed Smith as president of Jet Aviation.

Contracts

China Aviation Supplies Holding Company Contracts With Airbus for A330 and A350 Family Aircraft
China Aviation Supplies Holding Company (CAS) (Beijing, China) awarded Airbus SAS, Airbus (Toulouse Blagnac, France) a General Terms Agreement (GTA) for the acquisition of 300 Airbus family airliners at a total list price of approximately $29.3 billion. The GTA comprises of 290 A320 Family aircraft and ten (10) A350 XWB Family aircraft, reflecting the strong demand in all market segments including domestic, low cost, regional and international long haul from Chinese carriers.

MDA Definitizes Contract Modification With Boeing for the Ground-based Midcourse Defense (GMD) Development and Sustainment Contract (DSC)
The U.S. Missile Defense Agency (MDA) (Huntsville, AL) awarded Boeing Missile and Weapons Division (Huntsville, AL) a $4.14 billion cost-plus-incentive-fee contract (HQ0147-19-C-0004) to partially definitize the $6.56 billion undefinitized contract action (UCA) issued Jan. 31, 2018, on contract HQ0147-12-C-0004 (modification P00438) for the Ground-based Midcourse Defense (GMD) Development and Sustainment Contract (DSC).

Deutsche Lufthansa Contracts With Rolls-Royce for Trent 1000 Engines to Power Boeing 787 Dreamliners
Deutsche Lufthansa AG awarded Rolls-Royce Commercial Aero Engines Ltd. (Derby, Derbyshire, England, UK) a contract for Trent 1000 engines, including TotalCare service support, to power twenty (20) Boeing 787 Dreamliners airliners.

NAVSEA Mods Contract With Ingalls Shipbuilding for Landing Platform Dock 30 (LPD 30) Detail Design and Construction
The U.S. Naval Sea Systems Command (NAVSEA) (Washington, DC) awarded Ingalls Shipbuilding (Pascagoula, MS) a $1.47 billion fixed-price-incentive-firm modification under a previously awarded contract (N00024-18-C-2406) for the procurement of the detail design and construction of Landing Platform Dock 30 (LPD 30).

Deutsche Lufthansa Contracts With Rolls-Royce for Trent XWB Engines to Power More Airbus A350-900 Airliners
Deutsche Lufthansa AG awarded Rolls-Royce Commercial Aero Engines Ltd. (Derby, Derbyshire, England, UK) a contract for Trent XWB engines, including TotalCare service support, to power twenty (20) Airbus A350-900 airliners.

Army ACC-RSA Mods Contract With Lockheed Martin for Additional Guided Multiple Launch Rocket Systems (GMLRSs)
On behalf of the U.S. Army PEO Missiles & Space (PEO MS) (Huntsville, AL), the U.S. Army Contracting Command – Redstone (ACC-RSA) (Redstone Arsenal, AL) awarded Lockheed Martin Missiles and Fire Control (MFC) (Grand Prairie, TX) an $1.13 billion cost-plus-fixed-fee, firm-fixed-price, fixed-price-incentive-fee modification (P00010) under a previously awarded contract (W31P4Q-18-C-0049) for full rate production Lot 13 Guided Multiple Launch Rocket Systems (GMLRSs).

DoD WHS Contracts With Institute for Defense Analysis (IDA) for Federally Funded Research and Development Center (FFRDC) Systems and Analyses Center
On behalf of the Under Secretary of Defense for Acquisition, Technology and Logistics (AT&L) (Arlington, VA), the U.S. Washington Headquarters Services (WHS), Acquisition Directorate (Washington, DC) awarded Institute for Defense Analyses (IDA) (Alexandria, VA) a $950.0 million cost-plus-fixed-fee, ID/IQ contract (HQ0034-19-D-0001) for Federally Funded Research and Development Center (FFRDC) effort fo research, analyses, technical evaluation, and test and evaluation support to the Office of the Secretary of Defense (OSD), the Joint Staff (JS), the Combatant Commands, and the Defense Agencies.

AFLCMC Peterson Contracts With CACI Federal for the Mobile Command and Control Support Contract (MC2SC)
On behalf of the U.S. Air Force PEO Battle Management (AFPEO BM) (Hanscom AFB, MA), the Air Force Life Cycle Management Center (AFLCMC), Air Force Space Command (AFSPC) (Peterson AFB, CO) awarded CACI, Inc. – Federal (Chantilly, VA) a not-to-exceed $810.0 million firm-fixed-price, fixed-price-incentive-firm, cost-plus-incentive-fee, cost-plus-fixed-fee, cost-reimbursement, ID/IQ contract (FA8723-19-D-0001) for the Mobile Command and Control Support Contract (MC2SC) in support of the Mobile Consolidated Command Center (MCCC) Program Office.

NAVSUP WSS Contracts With GE Aviation for F404 Engine Performance Based Logistics (PBL) Support for the F/A-18A-D Aircraft
NAVSUP Weapon Systems Support (NAVSUP WSS) (Philadelphia, PA) awarded GE Aviation – Military Solutions (Lynn, MA) a $343.5 million firm-fixed-price, indefinite delivery/requirements contract (N00383-19-D-US01) for F404 performance based logistics (PBL) support.

AFLCMC Warner Robins Contracts With Raytheon Advanced for Synthetic Aperture Radar System-2B (ASARS-2B) Development for U-2 Aircraft
On behalf of the U.S. Air Force PEO Intelligence Surveillance and Reconnaissance & Special Operations Forces (PEO ISR & SOF) (Wright-Patterson AFB, OH), the Air Force Life Cycle Management Center (AFLCMC), Warner Robins Air Logistics Complex (WR-ALC) (Warner Robins AFB, GA) awarded Raytheon SAS – Intelligence, Surveillance and Reconnaissance Systems (ISRS) (El Segundo, CA) a $320.0 million undefinitized contract to develop a new version of the Advanced Synthetic Aperture Radar System (ASARS) that flies on the U-2 Dragon Lady aircraft.

AFLCMC Warner Robins Contracts With Sierra Nevada for AC-130W/AC-130J Precision Strike Package Contractor Logistics Support (CLS)
On behalf of the U.S. Air Force PEO Intelligence Surveillance and Reconnaissance & Special Operations Forces (PEO ISR & SOF) (Wright-Patterson AFB, OH), the Air Force Life Cycle Management Center (AFLCMC), Warner Robins Air Logistics Complex (WR-ALC) (Warner Robins AFB, GA) awarded Sierra Nevada Corp. (Sparks, NV) a $317.0 million ID/IQ contract (FA8509-19-D-0001) for contractor logistics support (CLS) for the Precision Strike Package (PSP) in support of the AC-130W Stinger II and AC-130J Ghostrider gunships.

NAVSEA Mods Contract With Northrop Grumman for Additional RCIED Electronic Warfare (JCREW) Increment One Build One (I1B1) Systems
The U.S. Naval Sea Systems Command (NAVSEA) (Washington, DC) awarded Northrop Grumman Systems Corporation (Herndon, VA) a $245.0 million firm-fixed-price modification under a previously awarded contract (N00024-17-C-6327) to exercise options for the Joint Counter Radio-Controlled Improvised Explosive Device (RCIED) Electronic Warfare (JCREW) Increment One Build One (I1B1) systems full-rate production in support of the Expeditionary Warfare Program Office (PMS 408).

AFLCMC Wright-Patterson Mods Contract With L3 for ACAT III Big Safari Support Services
On behalf of the U.S. Air Force PEO Intelligence Surveillance and Reconnaissance & Special Operations Forces (PEO ISR & SOF) (Wright-Patterson AFB, OH), the U.S. Air Force Life Cycle Management Center (AFLCMC) (Wright-Patterson AFB, OH) awarded L3 Mission Integration Division (MID) (Greenville, TX) two cost-plus-fixed-fee delivery orders with a combined value of $153.5 million under a previously issued basic ordering agreement (FA8620-16-G-3027) for ACAT III Big Safari support services.

NSWCCD Awards SBIR Contract to Seemann Composites for SCRIMP Out-of-Autoclave Composite Fabrication Practices and Procedures
The U.S. Naval Surface Warfare Center, Carderock Div. (NSWCCD) (Bethesda, MD) awarded Seemann Composites, Inc. (SCI) (Gulfport, MS) a $74.4 million cost-plus-fixed-fee, ID/IQ Small Business Innovation Research (SBIR) contract (N00167-19-D-0002) for out-of-autoclave composite fabrication practices and procedures using a proprietary Seemann Composites Resin Infusion Molding Process (SCRIMP).

M&A

Cielo Global Holdings Acquires Alytica, LLC
Alytica, LLC is an aerospace and defense consulting firm specializing in emerging global business opportunities, specializing in the the markets of the Kingdom of Saudi Arabia and Gulf Cooperation Council (GCC).

AMMO, Inc. Acquires Jagemann Stamping Co.’s Wisconsin Casing Division
The Casings Division has become one of the largest brass manufacturers in the country, with the capacity to produce more than 300 million pieces of brass each year. The business has complete control over the manufacturing process, resulting in a number of advantages when it comes to the brass and magazines that leave its state-of-the-art facility.

Curtiss-Wright Corp. Acquires Tactical Communications Group, LLC (TCG)
Tactical Communications Group, LLC (TCG) is a designer and manufacturer of tactical data link (TDL) software solutions for critical military communications systems. Their products help to secure and exchange wireless communications, including voice, imagery, text, and command and control messages, between various platforms such as ships, aircraft, weapons, and ground vehicles, and by dismounted soldiers.

Gryphon Technologies, Inc. Acquires Schafer from Belcan, LLC
Arlington, Va.-based Schafer [website] is a provider of scientific, advanced engineering, and technical advisory services specializing in protecting against national security threats. Both Gryphon and Belcan are portfolio companies of AE Industrial Partners, a private equity investor in aerospace and defense, power generation, and specialty industrial companies.

Novume Solutions, Inc. Completes Acquisition of OpenALPR Technology, Inc.
Boston, Mass.-based OpenALPR Technology, Inc. is a provider of automated license plate reader (LPR) technology used by both law enforcement and commercial clients. The company’s software enables automatic license plate and vehicle recognition through virtually any IP camera.

News

AEVEX Aerospace Names Jamon Osborne as Vice President of Business Development and Strategy
With 24 years of enlisted and commissioned military service, Jamon will leverage his unique combination of strategic vision, influential leadership, operational expertise, and business acumen to execute the company’s business development efforts across its three separate business units.

United Launch Alliance Successfully Launches WGS-10 Mission
A United Launch Alliance (ULA) Delta IV rocket carrying the tenth Wideband Global SATCOM (WGS) satellite for the U.S. Air Force lifted off from Space Launch Complex-37 on March 15 at 8:26 p.m. EDT. ULA has been the exclusive launch provider for all ten WGS satellites.

Sid Fuchs Named Chief Operating Officer of Alion Science and Technology
Alion Science and Technology (Alion), headquartered in McLean, VA, announced today that Sid Fuchs has been named Chief Operating Officer (COO) of the company, reporting to Alion Chairman and CEO, Steve Schorer. In this role, he will be responsible for leading all lines of business and program operations.

Lockheed Martin’s First Smart Satellites
Lockheed Martin (NYSE: LMT) announced a new generation of space technology launching this year that will allow satellites to change their missions in orbit. Satellites that launched one, ten or even fifteen years ago largely have the same capability they had when they lifted off. That’s changing with new architecture that will let users add capability and assign new missions with a software push, just like adding an app on a smartphone. This new tech, called SmartSat, is a software-defined satellite architecture that will boost capability for payloads on several pioneering nanosats ready for launch this year.

John Cuomo Appointed CEO and President of VSE Corporation
VSE Corporation (Nasdaq: VSEC) announced today Chief Executive Officer (CEO), President and member of the Board of Directors, Maurice ‘Mo’ Gauthier, will step down next month as a company officer and director after 11 years of dedicated service. The Board has elected John Cuomo to the position of CEO and President and to the Board of Directors effective April 15, 2019.

First Pan-Arab Space Agency Founded in Abu Dhabi
Eleven states on Tuesday signed a charter to establish the Arab Group for Space Collaboration. The group’s first project will be a satellite, named 813, that will monitor environmental and climate changes.

Embraer Announces CEO Succession
Embraer, following shareholder approval of the transaction with Boeing, announces that the current President and CEO of the company, Paulo Cesar de Souza e Silva, concludes a successful professional cycle with the company on April 22, 2019 which is the end of his current two year elected term.

Comtech Telecommunications Corp. Introduces New Micro Deployable X/Y Antennas to the LEO/MEO and HAPS Markets
Comtech Telecommunications Corp. (Nasdaq: CMTL) announced today that its Command & Control Technologies group’s, Space & Component Technology division, which is part of Comtech’s Government Solutions segment, introduced an exciting line of transportable, full motion antennas for tracking Low Earth Orbit (‘LEO’) and Medium Earth Orbit (‘MEO’) satellites and High Altitude Pseudo-Satellites (‘HAPS’).

All Nippon Airways Takes Delivery of Its First A380
Japan’s All Nippon Airways (ANA) has taken delivery of its first A380 at a special ceremony in Toulouse, becoming the 15th operator of the world’s largest passenger aircraft. The delivery ceremony was attended by ANA HOLDINGS President and CEO Shinya Katanozaka and hosted by Airbus CEO Tom Enders.

Contracts

MDA Definitizes Contract Modification With Boeing for the Ground-based Midcourse Defense (GMD) Development and Sustainment Contract (DSC)
The U.S. Missile Defense Agency (MDA) (Huntsville, AL) awarded Boeing Missile and Weapons Division (Huntsville, AL) a $4.14 billion cost-plus-incentive-fee contract (HQ0147-19-C-0004) to partially definitize the $6.56 billion undefinitized contract action (UCA) issued Jan. 31, 2018, on contract HQ0147-12-C-0004 (modification P00438) for the Ground-based Midcourse Defense (GMD) Development and Sustainment Contract (DSC). – CUSTOMERS – U.S. Missile Defense Agency, Redstone Arsenal (MDA) (Huntsville, AL)

NAVAIR HQ Mods Contract With Boeing for 78 F/A-18E/F Full Rate Production (FRP) Aircraft
The U.S. Naval Air Systems Command, Headquarters (NAVAIR HQ) (Patuxent River, MD) awarded Boeing Strike, Surveillance and Mobility (St. Louis, MO) a $4.04 billion fixed-price-incentive-firm-target modification under a previously advance acquisition contract (N00019-18-C-1046) for F/A-18E/F full rate production (FRP) aircraft in support of the F/A-18 & EA-18G Program Management Activity (PMA 265).

NAVSEA Mods Contract With Electric Boat for Additional Fiscal 2019 – Fiscal 2023 Virginia Class Submarines Material
The U.S. Naval Sea Systems Command (NAVSEA) (Washington, DC) awarded Electric Boat Corp. (Groton, CT) a $2.03 billion cost-plus-fixed-fee modification under a previously awarded contract (N00024-17-C-2100) for additional material (to include long lead time material and economic ordering quantity) associated with the Fiscal 2019 – Fiscal 2023 Virginia class Block V submarines (SSNs 802 – 811).

Australia’s MoD Announces Contract With USA DoD for Peregrine Electronic Warfare Aircraft for the RAAF
On behalf of the Royal Australian Air Force (RAAF) (Canberra, Australia) the Australian Department of Defence (Canberra, Australia), Capability Acquisition and Sustainment Group (CASG) (Canberra, Australia), awarded Gulfstream Aerospace Corp. (Savannah, GA), via a Foreign Military Sale (FMS) through the U.S. Defense Security Cooperation Agency (DSCA) (Washington, DC), an AUD $2.46 billion (USD$1.8 billion) contract for the acquisition of four (4) modified Gulfstream G550 aircraft – to be designated the MC-55A Peregrine”.

Army PEO STRI Contracts With Pinnacle Solutions for TRADOC Aviation Center of Excellence (USAACE) Unmanned Aircraft Systems (UAS) Instruction and Mission Support (IMS)
The U.S. Army Program Executive Office of Simulation, Training & Instrumentation (PEO STRI) (Orlando, FL) awarded Pinnacle Solutions, Inc. (PSI) (Huntsville, AL) a $553.2 million cost-plus-fixed-fee, ID/IQ contract (W900KK-19-D-0006) for Unmanned Aircraft Systems (UAS) Instruction and Mission Support (IMS) in support of the U.S. Army Training and Doctrine Command (TRADOC), Aviation Center of Excellence (USAACE).

NAVSEA Contracts With General Dynamics NASSCO for CVN 68/CVN 78 Class Aircraft Carriers Private Sector Maintenance (PSM)
The U.S. Naval Sea Systems Command (NAVSEA) (Washington, DC) awarded General Dynamics NASSCO-Norfolk (Bremerton, WA) a maximum $465.2 million cost-cost-plus-incentive-fee, cost-plus-fixed-fee, ID/IQ contract (N00024-19-D-4310) for CVN 68 Class and CVN 78 Class Aircraft Carriers Private Sector Maintenance (PSM).

Army ACC-APG Awards RS3 Task Order to Engineering Solutions & Products for Distributed Common Ground System-Army (DCGS-A) Field Office Fort Hood (FOFH) Training and Fielding Support
The U.S. Army Contracting Command – Aberdeen Proving Ground (ACC-APG), Edgewood (Aberdeen Proving Ground, MD) awarded Engineering Solutions & Products, Inc. (ESP) (Chantilly, VA) a $175.0 million task order under the company’s Responsive Strategic Sourcing for Services (RS3) contract (W15P7T-17-D-0147) for Distributed Common Ground System-Army (DCGS-A) Field Office Fort Hood (FOFH) training and fielding support for the U.S. Army PEO for Intelligence, Electronic Warfare & Sensors (PEO IEW&S) Project Manager, DCGS-A (PM DCGS-A).

AFLCMC Hill Contracts with L3 for the Cockpit-Selectable Height-Of-Burst Sensor (C-HOBS)
On behalf of the U.S. Air Force PEO for Weapons (Eglin AFB, FL), the Air Force Life Cycle Management Center (AFLCMC), Ogden Air Logistics Complex (OO-ALC) (Hill AFB, UT) awarded L3 Fuzing & Ordnance Systems, Inc. (L3 FOS) (Cincinnati, OH) a $131.8 million cost-plus-fixed-fee, ID/IQ contract (FA8213-19-D-0006) for the Cockpit-Selectable Height-Of-Burst Sensor (C-HOBS).

AFLCMC Wright-Patterson Mods Contract With General Atomics for MQ-9 Block 5 UAS Production for FMS to the Netherlands
On behalf of the the U.S. Air Force PEO Intelligence Surveillance and Reconnaissance & Special Operations Forces (PEO ISR & SOF) (Wright-Patterson AFB, OH), the U.S. Air Force Life Cycle Management Center (AFLCMC) (Wright-Patterson AFB, OH) awarded General Atomics Aeronautical Systems, Inc. (GA-ASI) – Aircraft Systems (Poway, CA) a $123.3 million undefinitized contract action (FA8620-19-F-2310) under a previously issued basic ordering agreement (FA8620-15-G-4040) for MQ-9 Reaper Block 5 Unmanned Aerial System (UAS) production.

M&A

Shorehill Capital Portfolio Company Tribus Aerospace, LLC Acquires Midwest Precision, LLC
The company specializes in close tolerance CNC machining of all types of stainless steels, nickel alloys, titanium, aluminum, steel, brass and plastics in complex configurations.

Greenbriar Equity Group, L.P. and First Aviation Services, Inc. to Acquire DART Aerospace Ltd From Eagle Copters Ltd. and Era Group, Inc.
DART Aerospace is a provider of mission equipment and aftermarket components for the helicopter and fixed-wing industries. With over 900 STC’s and 4,500 products, DART offers a comprehensive portfolio of mission equipment and related services, replacement parts and tooling for civil and military operators, all major rotorcraft OEMs, completion centers and MRO facilities.

TransDigm Group, Inc. Completes Acquisition of Esterline Technologies Corp.
Esterline is an industry leader in specialized manufacturing with anticipated fiscal year 2018 revenue of approximately $2.0 billion. The company consists of 28 business units organized across eight platforms to deliver specialty aerospace, defense and industrial products. The company employs over 12,500 employees in more than 50 operating locations throughout the world.

CAE, Inc. Completes Acquisition of Bombardier, Inc.’s Business Aircraft Training (BAT) Business
The Bombardier BAT business includes a modern fleet of 12 full-flight simulators (FFSs) (including one deployment already planned for CAE’s fiscal year 2021) and training devices covering the Learjet, Challenger and Global product lines, including the latest large cabin Global 5500, 6500 and 7500 business jets.

DFW Capital Partners Acquires Controlling Equity Stake in Sev1Tech, LLC
Sev1Tech provides information technology, cybersecurity, cloud, and program management services and solutions to U.S. government agencies and major commercial organizations. Founded in 2010, Sev1Tech supports critical mission challenges across the defense, intelligence, homeland security, space, and health markets.

Cubic Corp. Acquires Nuvotronics, Inc.
Durham, N.C.-based Nuvotronics, Inc. is a disruptive technology provider of microfabricated radio frequency (RF) products. The cornerstone of Nuvotronics’ innovation platform is their patented PolyStrata® technology, which was developed under DARPA and enables the company to design and produce uniquely packaged RF devices, such as antennas, filters and combiners, all of which are components in Cubic’s advanced technology product offerings.

Novume Solutions, Inc. Completes Acquisition of OpenALPR Technology, Inc.
Mass.-based OpenALPR Technology, Inc. is a provider of automated license plate reader (LPR) technology used by both law enforcement and commercial clients.

NEWS

United Launch Alliance Successfully Launches WGS-10 Mission
A United Launch Alliance (ULA) Delta IV rocket carrying the tenth Wideband Global SATCOM (WGS) satellite for the U.S. Air Force lifted off from Space Launch Complex-37 on March 15 at 8:26 p.m. EDT. ULA has been the exclusive launch provider for all ten WGS satellites. The WGS-10 satellite, built by the Boeing Company, is an important element of the new high-capacity satellite communications system. Each WGS satellite provides more wideband communications capacity than the entire Defense Satellite Communications System.

Huntington Ingalls Industries Completes Installation of USS George Washington (CVN 73) Main Mast
Huntington Ingalls Industries’ (NYSE:HII) Newport News Shipbuilding division has reached new heights in the refueling and complex overhaul (RCOH) of the aircraft carrier USS George Washington (CVN 73). The shipyard installed the final piece of the ship’s new main mast—the 34-foot upper mast section—that raises the ship’s distinctive profile 123 feet above the flight deck. The RCOH now is 50 percent complete.

DSCA Notifies Congress of Possible Sale of AIM-120C-7 Advanced Medium-Range Air-to-Air Missiles to Australia
The State Department has made a determination approving a possible Foreign Military Sale to Australia of AIM-120C-7 Advanced Medium-Range Air-to-Air Missiles (AMRAAM) and related equipment for an estimated cost of $240.5 million. The Defense Security Cooperation Agency delivered the required certification notifying Congress of this possible sale on March 12, 2019.

Hensoldt Announces Framework Agreement with Airbus Helicopters
At the end of 2018, Hensoldt and Airbus Helicopters signed a framework agreement for the delivery of the Airborne Missile Protection System (AMPS). Initially, the agreement will have a term of ten years without any minimum purchase requirement being set. Now the first order has already been placed. Hensoldt will deliver a total of 20 complete AMPS systems for the military multirole helicopter H145M in 2019/2020.

China and Pakistan to Upgrade Their JF-17 Fighter Jet – Pakistan Claims it Carried out an Attack Along the Line Of Control (LOC)
The Pakistan media claimed that JF-17 aircraft was used to carry out an attack along the Line Of Control (LOC) [with India] on February 27 2018.
China and Pakistan plan to upgrade their jointly- produced JF-17 Thunder fighter jet to enhance the its “informatised warfare” capability and weapons which experts says could effectively defend against strong opponents like India.

Lockheed Martin Names New Leaders for Mobility and Fighter Programs
Lockheed Martin (NYSE: LMT) announced Roderick McLean as vice president and general manager for the company’s Air Mobility & Maritime Missions organization, succeeding George Shultz, who will retire later this year. Additionally, Bridget Lauderdale will become vice president and general manager for the Integrated Fighter Group organization, succeeding McLean. Both appointments are effective April 15.

C Series Aircraft Limited Partnership (“CSALP”) to Become Airbus Canada Limited Partnership
CSALP is pleased to announce it will soon change its name to Airbus Canada Limited Partnership. The new name reflects the majority interest of Airbus in the limited partnership since July 1, 2018. The organisation will adopt the Airbus logo as its single visual identity.

Rolls-Royce Takes Major Step Towards Electrifying Flight with Successful Hybrid Aero Propulsion Tests
Rolls-Royce has taken a significant step towards realising our ambition to provide hybrid-electric propulsion systems for the next generation of aviation, with successful ground tests of a hybrid system using our M250 gas turbine – a highly successful engine usually powering helicopters. The tests are part of one of the world’s most comprehensive hybrid aerospace turbine engine development and integration programmes and pave the way for experimental flights on aircraft in 2021.

Cadence Aerospace Names Nick Guerra as Company’s Chief Technology Officer
Cadence Aerospace, a provider of highly complex aerospace components and assemblies to commercial and defense customers, has named Nick Guerra as the Company’s Chief Technology Officer (CTO). With Centers of Excellence based in the U.S. and Mexico, Cadence Aerospace serves the world’s leading manufacturers of aircraft, aerostructures, aeroequipment and other defense platforms.
Reporting to Thomas C. Hutton, Chief Executive Officer of Cadence Aerospace, Mr. Guerra will be responsible for developing and implementing transformational technologies that will enable step change improvements in productivity, quality and process standardization.

KAL Capital Markets Announces its 10th Aerospace and Defense Investment Banking Transaction
KAL Capital Markets LLC (KAL Capital), an aerospace and defense investment bank, is pleased to announce that it has completed its 10th transaction since the firm was launched in 2017.
“We’re extremely proud of reaching our tenth closed transaction since launching the firm two years ago and feel privileged to serve the firm’s diverse set of Aerospace and Defense clients”, commented Ryan Murphy when asked about this significant milestone. “We’ve continue to create record valuations for our clients in the $25 to $250 million valuation range and expect that part of the market to remain very supportive in 2019.”

Trevor Bohn shared, “In seven of our ten transactions we advised business founders as they completed change of control transactions with public companies, international buyers or private equity funds. Additionally, we completed a divestiture for Triumph Group Inc. (TGI: NYSE) as well as transactions for portfolio companies of private equity investors. We believe that level of client mix fosters the most real-time information on trends, priorities and goals of the universe of buyers which helps the firm deliver differentiated advice to our core sell-side clientele.”

KAL Capital’s 10 aerospace and defense investment banking transactions included advising All Metals Processing

Air Transport Components
Beaver Aerospace and Defense
California Brazing
Dallas Aeronautical Services
Florida Turbine Technologies
Mountain Secure Systems
Triumph Group
PrimeFlight Aviation Services
STS Aviation GroupFor additional information on these transactions, please visit KAL Capital’s website at https://kalcapital.wpengine.com

SAIC Announces CEO Transition
Science Applications International Corp. (NYSE: SAIC) announced today that Tony Moraco will retire as chief executive officer effective July 31, 2019, and that its Board of Directors has elected Nazzic S. Keene, currently the corporation’s chief operating officer, to succeed him.

Sciaky Joins the Alliance for the Development of Additive Processing Technologies (ADAPT) to Expand Adoption of its Electron Beam Additive Manufacturing (EBAM®) in Aerospace and Other Sectors
Sciaky, Inc., a subsidiary of Phillips Service Industries, Inc. (PSI), and leading provider of metal additive manufacturing (AM) solutions, announced today that it has joined the Alliance for the Development of Additive Processing Technologies (ADAPT) to expand adoption of its Electron Beam Additive Manufacturing (EBAM®) technology in aerospace and other sectors. Headquartered at Colorado School of Mines in Golden, CO, ADAPT is an industry-academia consortium that advances data informatics and characterization technologies to Optimize processes, materials, and parts for Additive. A barrier to AM process qualification that ADAPT is excited to work on, in collaboration with Sciaky, is the lack of fundamental understanding about how the process variables effect material microstructure and final part properties.

Contracts

Deutsche Lufthansa Contracts With Airbus SAS for Additional A350-900 Wide-Body Airliners
Deutsche Lufthansa AG (Frankfurt, Germany) awarded Airbus SAS, Airbus (Toulouse Blagnac, France) a USD $6.5 billion contract based upon list prices for twenty (20) additional A350-900 Wide-Body airliners.

Deutsche Lufthansa AG Contracts With Boeing Commercial Airplanes Group for Boeing 787-9 Dreamliner Airliners
Deutsche Lufthansa AG (Frankfurt, Germany) awarded Boeing Commercial Airplanes Group, Manufacturing (Renton, WA) a USD $5.8 billion contract for twenty (20) Boeing 787-9 Dreamliner Airliners.

Army PEO STRI Awards Jacobs Technology the Huachuca Training and Support Contract (HTASC)
The U.S. Army Program Executive Office of Simulation, Training & Instrumentation (PEO STRI) (Orlando, FL) awarded Jacobs Technology – Unified and Special Operations Group (USOG) (Tampa, FL) a $785.0 million cost-plus-fixed-fee, ID/IQ contract (W900KK-19-D-0004) for the Huachuca Training and Support Contract (HTASC) in support of the U.S. Army Intelligence Center of Excellence (ICoE), located at Fort Huachuca, AZ

Army ACC-RSA Contracts With Northrop Grumman for Four Complete Battery Sets of IAMD Battle Command System (IBCS) Production Hardware/Software for FMS to Poland
The U.S. Army Contracting Command – Redstone (ACC-RSA) (Redstone Arsenal, AL) awarded Northrop Grumman Missile Defense and Protective Systems Division (Huntsville, AL) a $713.0 million firm-fixed-price contract (W31P4Q-19-C-0003) for the procurement of four complete battery sets of Integrated Air and Missile Defense (IAMD) Battle Command System (IBCS) production hardware and software for the government of Poland under the Foreign Military Sales (FMS) program.

NAVFAC Southwest Awards Five Contracts for New Construction, Renovation, and Repair of Airfield Paving Construction at Various Government Installations in AoR
The U.S. Naval Facilities Engineering Command, Southwest (NAVFAC Southwest) Capital Improvement Contract Core (San Diego, CA) award five, five-year, multiple award, ID/IQ contracts, with a maximum value of $495.0 million, for new construction, renovation, and repair of airfield paving construction at various government installations in CA, AZ, NV, UT, CO, and NM.

NAVSEA Mods Contract With Raytheon for Additional LRIP Air and Missile Defense Radars (AMDRs)
The U.S. Naval Sea Systems Command (NAVSEA) (Washington, DC) awarded Raytheon SAS – Integrated Communication Systems (Marlborough, MA) a $402.7 million fixed-price-incentive-firm modification under a previously awarded contract (N00024-14-C-5315) to exercise options for three low-rate initial production (LRIP) Air and Missile Defense Radars (AMDRs) to be deployed on DDG 51 Flight III-class ships.

Navy SSP Contracts With Northrop Grumman for Common Missile Compartment (CMC) Underwater Launcher Hardware Production
The U.S. Navy Strategic Systems Programs (SSP) (Washington Navy Yard, DC) awarded Northrop Grumman Maritime Systems (Sunnyvale, CA) a $273.1 million cost-plus incentive-fee, cost-plus-fixed-fee, firm-fixed-price contract (N00030-19-C-0015) for Common Missile Compartment (CMC) underwater launcher hardware production.

AFLCMC Eglin Contracts With Boeing for B-52H Long Range Stand-Off (LRSO) Cruise Missile Weapon System Integration
On behalf of the U.S. Air Force PEO for Weapons (Eglin AFB, FL), the Air Force Life Cycle Management Center (AFLCMC), Air Armament Center (AAC) (Eglin AFB, FL) awarded Boeing Global Services Government – Engineering, Modifications & Maintenance (Oklahoma City, OK) a $250.0 million ID/IQ contract (FA2103-19-D-3000) for B-52H Long Range Stand-Off (LRSO) Cruise Missile weapon system integration.

Army CENAE Contracts With Sevenson Environmental Services for Raymark Superfund Site Operable Units (OUs) 3/4/6 Remedial Action
The U.S. Army Engineer District, New England (CENAE) (Concord, MA) awarded Sevenson Environmental Services, Inc. (Niagara Falls, NY) a $99.0 million firm-fixed-price, ID/IQ contract (W912WJ-19-D-0012) for remedial action for Operable Units (OUs) 3, 4 and 6 of the Raymark Superfund Site in Stamford, CT.

NAVFAC Southeast Contracts With NCS/EML SB JV for NAS Whiting Field Base Operating Support (BOS) Services
The U.S. Naval Facilities Engineering Command, Southeast (NAVFAC Southeast) (Jacksonville, FL) awarded NCS/EML SB Joint Venture, LLC (Louisville, KY) a $96.7 million firm-fixed-price, ID/IQ contract (N69450-19-D-1740) for base operations support (BOS) services at Naval Air Station (NAS) Whiting Field and outlying areas.

NAVAIR HQ Contracts With Northrop Grumman for MQ-4C Triton Sustaining Engineering and Logistics Support
The U.S. Naval Air Systems Command, Headquarters (NAVAIR HQ) (Patuxent River, MD) awarded Northrop Grumman Autonomous Systems Development Center (San Diego, CA) an $89.5 million cost-plus-fixed-fee contract (N00019-19-C-1020) for sustaining engineering and logistics support for the U.S. Navy MQ-4C Triton Unmanned Aircraft System (UAS) Early Operating Capability (EOC) in support of the Persistent Maritime Unmanned Aircraft Systems Program Office (PMA 262).

NAWCWD Contracts With Lockheed Martin for Advanced Insertion and Integration RDT&E of Lockheed Martin Baseline Systems
The U.S. Naval Air Warfare Center Weapons Div. (NAWCWD) (China Lake, CA) awarded Lockheed Martin Missiles and Fire Control (MFC) – Orlando (Orlando, FL) an $84.1 million cost-plus-fixed-fee, ID/IQ contract (N68936-19-D-0020) for research, development, test and evaluation (RDT&E) for advanced insertion and integration of Lockheed Martin baseline systems.

Army ACC-RI Awards EAGLE – 2018 BOA Delivery Order to Synergy Logistics Services for Logistics Support Services at Fort Gordon, GA
The U.S. Army Contracting Command – Rock Island (ACC-RI) (Rock Island, IL) awarded Synergy Logistics Services, LLC (North Kansas City, MO) an $81.5 million delivery order (W52P1J-19-F-0173) under the company’s Enhanced Army Global Logistics Enterprise (EAGLE) – 2018 basic ordering agreement (BOA) (W52P1J-17-G-0100) for logistics support services, including maintenance, supply, and transportation support, at Fort Gordon, GA.

USSOCOM SOF AT&L Contracts With Barrett Firearms Manufacturing for Advanced Sniper Rifles (ASRs)
The U.S. SOCOM Special Operations Forces Acquisition, Technology and Logistics (USSOCOM SOF AT&L) (Tampa, FL) awarded Barrett Firearms Mfg, Inc. (Christiana, TN) an estimated $49.9 million firm-fixed-price, ID/IQ contract (H92403-19-D-0002) for the purchase of Advanced Sniper Rifles (ASRs) in support of U.S. Special Operations Command (USSOCOM), Program Executive Office Special Operations Forces Warrior (PEO-SW).