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Textron Wins $22M Deal to Offer Logistics Support for 407GX

Zacks

Textron Inc. TXT recently announced that its Bell business segment has secured a modification contract for providing contractor logistics support (CLS) to the fleet of Bell 407GX helicopters of Iraq for one additional year. Work related to this deal is scheduled to be over by Aug 2017.

Valued at $22.1 million, this foreign military sales (FMS) contract was awarded by the U.S. Army Contracting Command, Redstone Arsenal, AL. Per the terms, Textron will also provide spare parts for performing repair works on the 407GX model of helicopters.

The contract will utilize fiscal 2017 other funds to complete the work, which will be carried out in Fort Worth, TX.

A Brief Note on 407GX


Built on the proven performance and reliability of the Bell 407 platform, the Bell 407GX incorporates the Garmin G1000H flight deck, which offers critical flight information at a glance for greater situational awareness and increased safety.

Moreover, the flight deck's high resolution LCD screens provide primary flight and multi-function display information, including Helicopter Terrain Avoidance Warning System, Helicopter Synthetic Vision Technology, Traffic Information Systems and more. The 407GX also features a tail rotor camera that enables the pilot to have a clear view of the tail during take-offs and landings.

Our View

For both its military and commercial products, Textron’s Bell segment provides post-sale support and service for an installed base of approximately 13,000 helicopters. The company is able to do so through a network of six Bell-operated service centers, four global parts distribution centers and over 100 independent service centers located in 32 countries. Collectively, these service sites offer a complete range of logistics support. This includes parts, support equipment, technical data, training devices, pilot and maintenance training, component repair and overhaul, engine repair and overhaul, aircraft modifications, aircraft customizing, accessory manufacturing, contractor maintenance, field service, and product support engineering.

However, in the first quarter of 2017, the segment reported revenues of $697 million, down from the year-ago level of $814 million. Though there was a drop in the revenue, the segment managed to deliver a profit of approximately $1 million.

Nevertheless, although the Bell segment remains a drag to Textron’s top line, the company’s geographically diverse network of aircraft, defense & intelligence, industrial and finance businesses keep adding to its growth.

Price Movement

Textron has outperformed the Zacks categorized Aerospace/Defense industry over the last 12 months. The company’s current rate of return is 27.6% compared with the industry’s average gain of 27.1%.

The stock’s outperformance could have been spurred by Textron’s systematic inorganic growth strategy, along with its focus on strengthening international presence. Also, the stock offers stiff competition to peers like The Boeing Company BA, Lockheed Martin Corp. LMT and General Dynamics Corp. GD.

Zacks Rank

Textron 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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