AAI Unmanned Aircraft Systems, a unit of Textron Inc. (TXT), has received the U.S. Navy’s Intelligence, Surveillance and Reconnaissance (“ISR”) Services multiple-award contract with tenure of over five years. The contract with the maximum value of $874 million is awarded to three companies. Textron Inc. numbers among them.
The company’s multi-mission capable Aerosonde Small Unmanned Aircraft System (“SUAS”) is the key reason for this award win. Per the contract, the company will provide the Navy, Marine Corps and Air Force with both land and sea-based unmanned aircraft systems operations.
Besides having Expeditionary Ground Control Station for portable command and control operations, the Aerosonde system uses one-piece Launch and Recovery Trailer designed by AAI that helps in efficient takeoff and landing. These features make it most suitable for expeditionary land- and sea-based operations. Also, this Aircraft System has a heavy-fuel engine that provides reliable performance and has long survival capability that helps it in delivering electro-optic/infrared ISR persistently.
Textron Inc. is a global multi-industry company that manufactures aircraft, automotive engine components, and industrial tools. It also provides solutions and services for aircraft, fastening systems, and industrial products and components. It is also a commercial finance company in select markets.
We believe that the company’s diversified presence across commercial, manufacturing and industrial products as well as financing operations insulates it from specific business risk. Going forward, we expect growth to be driven by strong performance at Bell and at its industrial business. Also, its focus on the core manufacturing business in tandem with a gradual exit from its commercial finance business would aid profitability.
However, we are concerned about the lower backlog at Cessna, the rate of recovery of the business jet market, and defense spending cutbacks. The company presently retains a short-term Zacks #1 Rank (Strong Buy). We have a long-term Neutral recommendation on the stock.
The company mainly competes with General Electric Company (GE) and United Technologies Corporation (UTX).
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