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Business Insider
26-07-2025
- Business
- Business Insider
Sector Spotlight: Demand, backlog expansion drive Q2 results in defense sector
Welcome to the latest edition of 'Sector Spotlight,' where The Fly looks at a new industry every week and highlights its happenings. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. DEFENSE SECTOR NEWS: Booz Allen (BAH) was awarded a $315M contract with a maximum performance period of up to five years to deliver the Advanced Battle Management System Distributed Battle Management Node Phase II Tactical Operations Center-Light prototype for the Department of the Air Force Program Executive Office for Command, Control, Communications, and Battle Management. Booz Allen is partnering with L3Harris Technologies (LHX) for this rapid prototyping effort aimed at enabling Combined Joint All-Domain Command and Control. Lockheed Martin was awarded a $999M indefinite-delivery/indefinite-quantity contract for Joint Air to Surface Standoff Missile and Long-Range Anti-Ship Missile production support. This contract provides for lifecycle support for all efforts related to JASSM, LRASM and all their variants in the areas of system upgrades, integration, production, sustainment, management and logistical support. Work will be performed at Orlando, Florida, and is expected to be complete by July 17, 2030. This contract was a sole source acquisition. No funds are being obligated at the time of award. The Air Force Life Cycle Management Center is the contracting activity. EARNINGS RECAP: L3Harris Technologies delivered a beat and raise quarter in Q2, posting a record book to bill ratio. 'We delivered impressive second-quarter results, led by a record book-to-bill of 1.5x, solid organic growth, and year-over-year adjusted segment operating margin expansion for the seventh consecutive quarter. This marks a clear inflection point, with our strongest top-line growth in six quarters and meaningful progress towards our 2026 Financial Framework. Our Trusted Disruptor strategy continues to drive differentiated, mission-critical solutions that meet our customers' evolving needs while creating value for shareholders,' said Christopher Kubasik, Chair and CEO. Kubasik added, 'Defense is entering a generational investment cycle, as U.S. and allied budgets grow rapidly. Demand is accelerating, and our portfolio is aligned with key growth areas – Golden Dome, space, missiles, shipbuilding, autonomy, and resilient communications. With the flexibility of our business-model agnostic approach – able to win as a prime, sub, or merchant supplier – a focused national security portfolio, and competitive momentum from LHX NeXt, we're confident in our path to sustained profitable growth and long-term value creation.' Susquehanna raised the firm's price target on L3Harris to $320 from $300 and maintained a Positive rating on the shares. The firm updated its model following the Q2 results while noting concurrent with earnings, certain 2025 guidance items and 2026 target items were increased. Susquehanna believes the company is well positioned to benefit from domestic defense spending priorities, including Golden Dome, missile capabilities, and resilient communications. Textron (TXT) also beat expectations in the second quarter and maintained its full-year 2025 EPS guidance. 'In the quarter, we saw revenue growth in both our commercial aircraft and helicopter businesses, as well as in Bell's FLRAA program, now known as the MV-75,' said CEO Scott Donnelly. 'At Textron Aviation, operations continued to improve as production ramped.' Susquehanna increased its price target on Textron to $95 from $90 and reiterated a Positive rating on the shares. The firm said 2Q25 results beat estimates with revenue of $3.72bn and EPS of $1.55 and noted the company continues to see broad-based demand across the Aviation portfolio. General Dynamics (GD) noted that Q2 results exceeded their expectations, The company surpassed analyst expectations as well. 'During the first half of the year, each of our four segments achieved growth in revenue and earnings, with margins on a companywide basis expanding 50 basis points over the same period last year,' said Phebe Novakovic, chairman and chief executive officer. 'Our strong cash flow and healthy backlog position us well to have a good second half.' Wolfe Research upgraded General Dynamics to Outperform from Perform with a $360 price target. The firm cited the company's Q2 beat with an improved free cash flow and order outlook for the upgrade. The quarter 'should be the beginning and not the end,' the analyst told investors in a research note. Wolfe sees an additional 14% upside in the shares. Lockheed Martin (LMT), on the other hand, fell short of consensus in Q2, citing the negative impact of pre-tax losses on programs of $1.6B and other charges of $169M. While the company did cut FY25 EPS guidance, it maintained its FY25 revenue outlook. Lockheed Martin chairman, president and CEO Jim Taiclet commented, 'Based in part on this record of performance as well as the promise of several advanced technologies in development, our U.S. and allied customers are asking us to elevate and accelerate many key programs. For example, several allied nations have recently announced additional F-35 purchases, the U.S. Army has awarded more than $1 billion in missile-related contracts so far, and the U.S. Space Force is ordering additional GPS IIIF satellites. At the same time, our ongoing program review process identified new developments that caused us to re-evaluate the financial position on a set of major legacy programs. As a result, we are taking a number of charges this quarter to address these newly identified risks. We remain committed to delivering these critical capabilities that our customers are counting on and are fully focused on the growth inflection we expect as the result of heightened interest and demand for Lockheed Martin's products and technologies.' RBC Capital lowered the firm's price target on Lockheed Martin to $440 from $480 and kept a Sector Perform rating on the shares. Lockheed Martin's Q2 results were 'soft,' with $1.6B of program losses driving a 78% miss in EPS, the analyst noted. The path to free cash flow growth over the next few years is challenged, the firm said. RTX (RTX) beat Q2 expectations, cut its FY25 EPS view and raised its FY25 revenue outlook. 'We continued our momentum in the second quarter with organic sales and profit growth* across all three segments, including 16 percent commercial aftermarket growth,' said RTX chairman and CEO Chris Calio. 'Our backlog grew to $236 billion, up 15 percent versus prior year, and we secured major awards for our geared turbofan engines and integrated air and missile defense capabilities in the quarter.' Morgan Stanley elevated its price target on RTX to $180 from $165 and keeps an Overweight rating on the shares. The firm named the stock its 'Top Pick in Aerospace' after the company reported a Q2 beat. Given its strong underlying fundamentals and demand across its end markets, RTX should be able to narrow the valuation gap to premium peers, the analyst argued. Northrop Grumman (NOC) exceeded street expectations in Q2, noting its EPS included a $1.04 benefit from the training services divestiture completed in the quarter. 'The Northrop Grumman team delivered a strong second quarter, with increased sales and outstanding operating performance,' said Kathy Warden, chair, chief executive officer and president. 'We continue to see growing demand globally for our broad range of product offerings, which resulted in 18% international sales growth in the quarter. With confidence in our team and our ability to deliver for our customers, we are increasing our full-year guidance for segment operating income, EPS and free cash flow.' BTIG boosted the firm's price target on Northrop Grumman to $630 from $575 and backed a Buy rating on the shares following the quarterly results. Northrop Grumman remains one of the best ways to play the growth in international defense spending at the large-cap level, the analyst contended.
Axios
12-03-2025
- Business
- Axios
Palantir's AI-fueled TITAN trucks are rolling into U.S. Army hands
The U.S. Army now has in hand a few Tactical Intelligence Targeting Access Nodes, state-of-the-art trucks that promise to streamline the battlefield process of spotting, tracking and blasting. Why it matters: The program — years in the making, but also on time and budget — is critical to the Defense Department's connect-everything-everywhere dream of Combined Joint All-Domain Command and Control. It also supports two of the Army's biggest ambitions: deep sensing and long-range precision fires, or the ability to find, shoot and kill more accurately from farther away. Driving the news: Axios visited "Tower House" in Southern California to inspect a pair of TITANs that Palantir Technologies and its partners (including Anduril Industries, Northrop Grumman and L3Harris Technologies) are delivering. The package included one basic variant and one advanced variant. The former is built on a Joint Light Tactical Vehicle. The latter, on the Family of Medium Tactical Vehicles. TITAN consumes data from air, land and space and employs artificial intelligence to parse it, giving troops quicker, sharper insights. The latest: Palantir has now handed over three systems, with the first going to the 1st Multi-Domain Task Force at Joint Base Lewis-McChord last year. Another delivery is slated for early summer. The company declined to confirm the location or purpose, citing Army guidance. TITAN has so far avoided typical Pentagon pitfalls like laggard timelines and drip-feed budgeting, according to Akash Jain, Palantir's president of U.S. government business. He spoke with reporters at the California factory. "This is, really, a live system that is going to continue to get better, and that is different for the Army and for this type of technology," he said. "It is very much a software-centric acquisition, where hardware has been built around the software." "At the end of the day," he added, "Palantir does not bend metal." Zoom out: The defense and intelligence communities are betting big on AI. More than 685 AI projects were underway at the Pentagon as of early 2021, according to a watchdog. (The Army led the pack with 232.) Before that, in 2018, an official strategy warned the tech would "transform every industry" and influence all facets of national security. The havoc caused by DeepSeek's arrival underlines how seriously Washington takes its rivalry with China. Catch up quick: Palantir this time last year beat RTX for the $178 million TITAN production contract. The Army pick followed a yearslong design and prototyping face-off. Palantir's win was seen as a major shakeup. There were certainly doubters: Could a software specialist really pump out hardened battlefield vehicles? RTX is the third-largest contractor in the world when ranked by defense-related revenue, according to Defense News. "As we came together, there's been a bit of learning from each other," said Aaron Dann, Northrop's vice president for payload and ground systems. "We can pull from where we do welding of space tanks and take a look at welds on TITAN and say, 'Hey, are we doing this, right?'" What's next: TITAN production will continue in California for the foreseeable future. Its place at Arsenal-1, Anduril's planned Ohio megafactory, is unclear. Should the Army go full steam ahead, it is expected to buy 100-150 units.
Zawya
20-02-2025
- Business
- Zawya
GAL partners with CAE to enhance operator readiness through integrated simulation training solutions
Abu Dhabi, United Arab Emirates: During the second day of IDEX 2025, Global Aerospace Logistics (GAL) announced a partnership with CAE, a global leading flight training provider, to develop tech-based simulation training solutions to improve mission readiness and enable operational success for defense forces. The partnership will see both parties cooperate to offer a range of defense sector clients with seamless and innovative learning and development solutions that span assets, operations, and programs. These solutions maximize the quality of live training, while simultaneously driving efficiency and mitigating costs. Bringing together two industry leaders for collaboration under this agreement will solve a common challenge that various armed forces face due to operational silos, standalone learning strategies and geographic disparity with a lack of interconnectivity. The solutions will provide Joint All-Domain Operations (JADO) and Mission and Operations Support (M&OS) training via flexible scenarios using multiple and varied systems networked together across the ecosystem. Commenting on the partnership, Mahmood Alhay Alhameli, Chief Executive Officer at GAL said: 'Amalgamating classroom training, virtual reality, simulation, and live training together creates a first-of-its-kind solution in the Middle East. We are thrilled to be collaborating with CAE to offer these solutions and see this partnership as another strategic step in the dynamic transformation of aerospace training within the region. "Our agreement with Global Aerospace Logistics (GAL) strengthens our mutual commitment to supporting our partners in the UAE and regionally, transforming the training and simulation landscape to enhance operator mission readiness,' said Marc-Olivier Sabourin, Division President, CAE Defense & Security, International. 'We look forward to working with GAL to leverage CAE's extensive expertise and innovative solutions to enhance local capabilities in support of joint synthetic training." Leveraging GAL's depth of expertise, the partnership with CAE will enable future scaling to offer specialized training to naval, air, land, sea, space, and cyber domains. These offerings will further solidify GAL's positioning as a leading provider of integrated defense and aerospace solutions. About GAL Global Aerospace Logistics (GAL) is a leading provider of integrated aerospace and defense services, headquartered in Abu Dhabi, UAE. Established in 2007 and 100% UAE-owned, GAL is the core service provider for the UAE Ministry of Defense and hold several maintenance and service contracts across the region. With a team of over 5,000 employees from 71 nationalities, GAL offers a wide range of military-specific support services including maintenance, overhaul, and inspections to ensure the operator's assets are at peak mission readiness.
