ITT Corporation (ITT) received contract of about $260 million for the enhanced night vision goggle (ENVG) system from the U.S. Army Research, Development & Engineering Command Acquisition Center. This is the second contract received by the company from the U.S. Army. ITT Corporation is among the three companies selected to design, develop and manufacture ENVG, the first sensor fused goggle.
The ENVG system fuses image-intensifying and thermal-imaging technologies, which enables vision even in low light. These two methods can be used simultaneously or individually.
The first contract for ENVG was received by ITT Corporation in 2005 and the US Army started deploying the system from 2008. The company delivered above 2,400 goggles under the initial contract and will be delivering about 6,500 goggles under the existing contract, supporting the soldiers of the US army through a durable and dependable solution.
ITT Corporation’s enhanced version of the ENVG system is called the Spiral Enhanced Night Vision Goggle (SENVG). The updated system is designed to meet high volume production rates and the serious performance needs of the soldiers based at the ground level. The upgraded digital system of the goggles allows transmission of fused images through networks on the battlefield.
The company plays an important role in vital markets, including water and fluids management, global defense and security, and motion and flow control. It possesses industry-leading brands in its Fluid Technology and Motion & Flow Control businesses.
The company is well diversified and serves attractive end markets with a broad geographic footprint. We are particularly bullish about two segments: a) water equipment (primarily pumps), which should benefit from the replacement and upgrading of aging networks in developed markets and the build out of infrastructure in the emerging markets, and b) ITT’s defense business, with the bulk of sales derived from electronic and network-centric warfare.
However, the Defense Electronics & Services business segment is subject to a number of risks, including defense budgets and government contract requirements and regulations, which could have an adverse impact on the results of its operations. The company develops proprietary technology in the industries in which it operates, and relies on intellectual property laws and a number of patents to protect such technology. In doing so, it incurs ongoing costs to enforce and defend its intellectual property. An inability to protect intellectual property could hurt its business. In addition, third parties may claim that it infringes on their intellectual property, and the company could suffer significant litigation or licensing expense as a result.
Headquartered in New York City, ITT Corporation is a global multi-industry leader in high-technology engineering and manufacturing. It is engaged in the design, manufacture, and sale of a wide range of engineered products and services. ITT Geospatial Systems, a part of ITT Corporation, offers innovative night vision, remote sensing and navigation solutions. These solutions provide sight and situational awareness at the space, airborne, ground and soldier levels. Major competitors of ITT are Lockheed Martin Corporation (LMT) and Raytheon Co. (RTN).
We currently maintain our Neutral rating on ITT Corporation, with a Zacks #3 Rank (Hold recommendation) over the next one-to-three months.
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