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Lockheed Wins $166M Navy Deal for Production of 36 eCASS
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Defense prime Lockheed Martin Corp.’s (LMT - Free Report) business unit Rotary and Mission Systems (RMS) has secured a contract from the U.S. Navy for the full-rate production of 36 electronic Consolidated Automated Support Systems (eCASS). Work for this deal is scheduled to be over by Jan 2021.
Details of the deal
Valued at $166 million, this contract was awarded by the Naval Air Warfare Center Aircraft Division, Lakehurst, NJ. The company will utilize fiscal 2015, 2016 and 2017 aircraft procurement (Navy) funds to complete this deal.
Per the terms of the contract, Lockheed Martin will offer sustaining logistics and engineering support, apart from facilitating the manufacturing procedure. Majority of the work pertaining to the contract will be carried out in Orlando, FL; Hunt Valley, MD; North Reading, PA; and several other locations within the continental U.S.
A Brief Note on eCASS
Per Lockheed Martin’s management, eCASS is the workhorse for avionics repair across the Naval Aviation Enterprise. It was essentially designed to help sailors and marines to troubleshoot and repair aircraft assemblies at sea or ashore, and return the avionics to operational service quickly. Based on Lockheed Martin’s LM-STAR commercial automated testing system, eCASS facilitates technology insertion and long-term supportability, while maximizing interoperability and portability among external systems.
eCASS preserves the Navy’s investment in test programs, extending the value of the legacy CASS program which consolidated 30 test equipment systems and leading to savings of $3.9 billion. All along, Lockheed Martin’s focus has been on providing reliable and capable avionics support through eCASS.
What’s Favoring Lockheed?
With a platform-centric focus that guarantees a regular inflow of follow-on orders from a leveraged presence in the U.S. Army, Air Force, Navy and IT programs, Lockheed Martin enjoys the position of the largest U.S. defense contractor. The company has witnessed significant growth throughout 2016, with its RMS business segment being the second largest contributor.
Going forward, management expects to witness consistent sequential growth in this business segment in 2017. While integration of Sikorsky, manufacturer of the well-known Black Hawk helicopters, primarily drove sales in this segment, valuable contract wins for other products have the potential to boost sales growth in the days ahead.
Price Movement
Lockheed Martin’s stock has improved about 19.7% in the last one year, underperforming the Zacks categorized Aerospace/Defense industry’s gain of 26%.This could be because the prior defense budget cuts have dampened the company’s top line even though the present defense budget is more in favor of the sector. Budget deficits and political uncertainty make defense budgets vulnerable to cutbacks. As a result, Lockheed Martin’s performance lagged behind the likes of General Dynamics Corp. (GD - Free Report) , Textron, Inc. (TXT - Free Report) and Huntington Ingalls Industries, Inc. (HII - Free Report) , who have all outperformed the industry.
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Lockheed Wins $166M Navy Deal for Production of 36 eCASS
Defense prime Lockheed Martin Corp.’s (LMT - Free Report) business unit Rotary and Mission Systems (RMS) has secured a contract from the U.S. Navy for the full-rate production of 36 electronic Consolidated Automated Support Systems (eCASS). Work for this deal is scheduled to be over by Jan 2021.
Details of the deal
Valued at $166 million, this contract was awarded by the Naval Air Warfare Center Aircraft Division, Lakehurst, NJ. The company will utilize fiscal 2015, 2016 and 2017 aircraft procurement (Navy) funds to complete this deal.
Per the terms of the contract, Lockheed Martin will offer sustaining logistics and engineering support, apart from facilitating the manufacturing procedure. Majority of the work pertaining to the contract will be carried out in Orlando, FL; Hunt Valley, MD; North Reading, PA; and several other locations within the continental U.S.
A Brief Note on eCASS
Per Lockheed Martin’s management, eCASS is the workhorse for avionics repair across the Naval Aviation Enterprise. It was essentially designed to help sailors and marines to troubleshoot and repair aircraft assemblies at sea or ashore, and return the avionics to operational service quickly. Based on Lockheed Martin’s LM-STAR commercial automated testing system, eCASS facilitates technology insertion and long-term supportability, while maximizing interoperability and portability among external systems.
eCASS preserves the Navy’s investment in test programs, extending the value of the legacy CASS program which consolidated 30 test equipment systems and leading to savings of $3.9 billion. All along, Lockheed Martin’s focus has been on providing reliable and capable avionics support through eCASS.
What’s Favoring Lockheed?
With a platform-centric focus that guarantees a regular inflow of follow-on orders from a leveraged presence in the U.S. Army, Air Force, Navy and IT programs, Lockheed Martin enjoys the position of the largest U.S. defense contractor. The company has witnessed significant growth throughout 2016, with its RMS business segment being the second largest contributor.
Going forward, management expects to witness consistent sequential growth in this business segment in 2017. While integration of Sikorsky, manufacturer of the well-known Black Hawk helicopters, primarily drove sales in this segment, valuable contract wins for other products have the potential to boost sales growth in the days ahead.
Price Movement
Lockheed Martin’s stock has improved about 19.7% in the last one year, underperforming the Zacks categorized Aerospace/Defense industry’s gain of 26%.This could be because the prior defense budget cuts have dampened the company’s top line even though the present defense budget is more in favor of the sector. Budget deficits and political uncertainty make defense budgets vulnerable to cutbacks. As a result, Lockheed Martin’s performance lagged behind the likes of General Dynamics Corp. (GD - Free Report) , Textron, Inc. (TXT - Free Report) and Huntington Ingalls Industries, Inc. (HII - Free Report) , who have all outperformed the industry.
Zacks Rank
Lockheed Martin currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Today, you are invited to download the full list of 220 Zacks Rank #1 """"Strong Buy"""" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 """"Strong Sells"""" and other private research. See these stocks free >>