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Textron Gets Order for More MSFV's

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Textron Marine & Land Systems, a unit of Textron Inc. (TXT - Analyst Report), has received a third option contract with value not exceeding $79.2 million for 71 Mobile Strike Force Vehicles (“MSFV”) from the U.S. Army Contracting Command, Warren, Michigan for the Afghanistan National Army (“ANA”).

Per the third option contract, three variants of MSFV will be manufactured. These include MSFV with enclosed turret; MSFV with objective gunner protection kit; and an MSFV ambulance.

Mobile Strike Force Vehicles had begun arriving into Afghanistan in February. For the current third option contract, the company expects work to be performed in the New Orleans area, with vehicle deliveries through October 2013. The contract is an addition to the contract received in May 2011 for full-rate production of 240 MSFVs and associated support equipment, spare parts, field service representatives, training and training aids.

Till date the company received orders for 499 vehicles. Apart from the 240 vehicles in the initial full-rate production order, the option contracts (including the 71 in the third option) add 200 more vehicles. Besides, the company has already manufactured 18 test MSFVs and 41 low-rate initial production vehicles in 2011.

All MSFVs are derived from the combat-proven M1117 Armored Security Vehicle (“ASV”) and are configured with Enhanced Survivability (“ES”) capability that improves blast protection to mine-resistant ambush-protected (“MRAP”) levels. Besides having innovative protection design features that enable to meet MRAP blast protection standards, the Enhanced Survivability Vehicles have the features of ASV's original V-shaped hull design.

Textron Inc. is a global multi-industry company that manufactures aircraft, automotive engine components, and industrial tools. It is also a provider of solutions and services for aircraft, fastening systems, and industrial products and components. The company has until now delivered approximately 3,900 M1117 ASVs and related configurations to the U.S. Army and other military forces that include Afghanistan, Iraq, Colombia and Bulgaria. These vehicles have constantly achieved exceptional operational promptness on the basis of their proven capability.

Textron’s geographically diverse network of aircraft, defense & intelligence, industrial and finance businesses negates any specific business risk. Currently, it is also increasingly focusing on its core manufacturing business and is gradually exiting from its commercial finance business.

However, we remain concerned about the lower backlog at Cessna, the rate of recovery of the business jet market, and defense spending cutbacks. Like its peers, General Electric Company (GE - Analyst Report) and United Technologies Corporation (UTX - Analyst Report), the company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.

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