1
Third Quarter 2014
% Change
Q3
2014
First Half
2014
YTD
2014
Defense Prime Index
6.8% 2.5% 9.5%
Defense Systems Index
(5.5%)
7.4% 1.5%
Diversified Government Services Index
(1.5%)
1.3%
(0.2%)
Middle Market Government Services Index
(5.5%)
6.7% 0.8%
Large Cap Aerospace Index
(4.3%)
(2.0%)
(6.2%)
Mid Cap Aerospace Index
(1.3%)
(4.7%)
(5.9%)
Small Cap Aerospace Index
(8.6%)
4.8%
(4.2%)
International Aerospace Index
(7.0%)
(9.1%)
(15.5%)
S&P 500
0.6% 6.1% 6.7%
Notable Quarterly M&A Activity
Capital Markets
AECOM acquired URS Corporation for $6 billion
TriMas Corporation will acquire Allfast Fastening
Systems for $357 million
Veritas Capital will acquire EMCORE’s Space
Photovoltaics business for $150 million
Dassault Systemes acquired Quintiq from LLR Partners
Teledyne will acquire Bolt Technology for $92 million
XPO Logistics acquired New Breed for $615 million
Industry News Quarterly Summary
Boeing and Airbus set new aircraft backlog records in Q3. The combined OEM backlogs grew another 6% over the quarter to more
than 11,000 aircraft. The McLean Group’s John Stack sat down with former Boeing Company EVP and Boeing Commercial Airplanes
CEO, Jim Albaugh, to discuss factors differentiating this aerospace cycle, market risks and M&A opportunity.
The US and coalition partners – most notably Saudi Arabia and UAE – began launching airstrikes against ISIS targets in Iraq.
Additionally, US F-22 Raptors flew their first ever combat missions targeting ISIS positions in Syria including a command and control
facility in Raqqah. At Q3 close, estimates suggested US military spent $10 million a day and had already spent $780 million.
The World Health Organization declared the Ebola outbreak in West Africa (the largest in history) to be an international public health
emergency requiring an extraordinary response to stop its spread. President Obama designated the outbreak a “national security
priority,” naming former Vice President Chief of Staff, Ron Klain, Ebola Czar and committing 3,000 troops and more than $500 million
in defense spending. Additionally, the CDC has sent its largest deployment in response to an epidemic—more than 100 officials from
the agency are currently on the ground and $175 million has been allocated to West Africa to combat the spread of Ebola.
The House and the Senate passed a Continuing Resolution (CR) to fund the government based on FY 2014 appropriations levels. For
the past decade, not once has Congress passed all 12 appropriations bills on time, relying heavily on emergency CR budgeting.
Exelis completed the spin-off of part of its IT Services segment, formerly known as Exelis Mission Systems, into an independent public
company Vectrus. As a pure-play services provider, Vectrus provides infrastructure asset management, IT and network
communication services, and logistics and supply chain management. Vectrus employs 5,600 workers in 18 countries and is expected
to generate more than $1.1 billion in revenue in its first year as an independent entity. The McLean Group has added Vectrus to its
Middle Market Defense & Government Services index.
Quarterly Industry Snapshot
Source: Public Filings; Capital IQ as of 09/30/14
