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Northrop (NOC) Unit Wins $150M Navy Contract for LAIRCM


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Falls Church, VA-based Northrop Grumman Corp.’s (NOC - Analyst Report) unit, Systems Corp., has won a contract from the U.S. Navy to provide the required hardware, production test stations and technical support to incorporate the Large Aircraft Infrared Countermeasures (“LAIRCM”) on combat aircraft that will be used by the Navy, Army, Marine Corps and Special Operations Command. It will also be sold to the government of Australia.

Details of the Deal

The contract is valued at $149.7 million and the contract is awarded by the Naval Air Systems Command, Patuxent River, MD.

Per the contract, hardware to be procured includes weapon replaceable assemblies and support equipment such as 492 advanced threat warning (ATW) sensors, 14 LAIRCM signal processor replacements, 27 control indicator units, 49’ 2103 signal processors, 12 infrared missile warning system sensors, 77 Guardian laser transmitter assemblies (GLTAs), 51 GLTA shipping containers, 20 multi-role electro-optical end-to-end test sets, 10 smart connector assemblies, and one ATW acceptance test station to fulfill fielding requirements.

Work is scheduled to be complete by Sep 2018 and the majority of the work will be performed in Rolling Meadows, IL. The contract will use fiscal 2014, 2015 and 2016 aircraft procurement (Navy, Army) funds; fiscal 2015 research, development, test and evaluation (Army) funds; and International Partner funds (Australia) funds.

What’s LAIRCM?

The LAIRCM system is essential and critical for the safety of onboard troops in a hostile situation. It is an active countermeasure that can automatically detect a missile launch. On identifying a missile, LAIRCM determines if it is a threat and activates a high-intensity, laser-based countermeasure system to track and destroy the missile on its own, with no action required by the crew. The primary purpose of the LAIRCM program is to protect large aircraft from man-portable missiles.

Of late, terrorist groups have been increasingly using cheap yet deadly man-portable missiles. Thus, an effective anti-missile solution for the protection against such threats is the need of the hour and a well-equipped, developed nation like the U.S. will always want to be well prepared for any sudden assault.

Why Northrop Grumman?

Currently, Northrop Grumman’s AN/AAQ-24(V) Directional Infrared Countermeasure (DIRCM) system is the only DIRCM system in production that can protect an aircraft from infrared-guided missiles. LAIRCM is one variant of such a DIRCM.

Northrop Grumman’s LAIRCM system will be reinforced with new technologies to neutralize increasing threats and lower the overall handling costs for the U.S. Department of Defense (DoD).

It is the fourth-largest U.S. defense contractor. The company supplies a broad array of products and services to the DoD including defense electronics, unmanned aircraft and missile defense. Such contract wins stand proof of the quality of Northrop Grumman’s military offerings.

Zacks Rank & Key Picks

Northrop Grumman currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in the aerospace and defense space include Engility Holdings, Inc. (EGL - Snapshot Report) , General Dynamics Corporation (GD - Analyst Report) and Leidos Holdings, Inc. (LDOS - Snapshot Report) .

Engility’s shares witnessed an 8.3% increase over the last five trading sessions. On an average, the company has delivered a positive earnings surprise of 12.09% in the trailing four quarters. Engility sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

General Dynamics carries a Zacks Rank #2 (Buy). The stock has gained 2.03% in its last five trading sessions. Over the last 60 days, the company’s earnings estimates for 2016 witnessed a 2.1% increase.

Leidos Holdings, a Zacks Rank #2 stock, saw a 3.4% rise in its share price over the last five days. For 2016, earnings estimates for the company moved 9.6% higher over the last 60 days.

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