Raven's Aerostar Wins T-11 Contract

Aerostar International, Inc., a wholly owned subsidiary of Raven Industries, Inc. (RAVN - Analyst Report), has been awarded $12.2 million under a five-year, IDIQ (indefinite delivery indefinite quantity) contract for the production of US Army T-11 personnel parachutes. 

The company expects the shipment of parachutes under this first order during the fiscal year beginning February 2010. The contract is expected to have annual releases that will continue through 2014. Despite securing an order for the first year and expected annual reorders, the company is not certain about the magnitude of the entire contract as it is an indefinite delivery and indefinite quantity contract. 

Management stated that this contract came at a good time for Aerostar as the MC-6 contract is expected to complete during the fourth quarter of the current fiscal year ending January 2010. Aerostar believes that the common components between the T-11 and the MC-6 will help it in controlling start up costs on the new contract. The $12 million produced over the next year from T-11 will replace the MC-6 revenue and help Aerostar's operating income, margins and overall profitability. 

Given the continued shipments under the two-year $20.7 million MC-6 Army parachute contract, sales of high-altitude airships and aerostats, and now the T-11 contract, Raven believes that of all its operations, Aerostar is in the best position to weather the recession. 

Aerostar International, Inc. provides aerospace products, military parachutes, tethered aerostats, protective wear and custom-shaped inflatable products for public and commercial research to public agencies, such as the NASA.

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