Replies to Post #15620 onCirque Energy Inc. (fka CRQE)

Replies to #15620 on Cirque Energy Inc. (fka CRQE)

02/20/14 2:22 PM

#15621 RE: Serpico2005 #15620

The DGU's are part of Northrop's strategy to capture more market share from the military.... I truely believe Northrop is counting on the DGU's just as Cirque is....

http://tbrnewscommentary.wordpress.com/2014/01/31/northrop-grumman-ists-contracting-revenue-and-strong-profitability-in-4q13-were-consistent-with-year-to-date-performance/

Northrop Grumman IS&TS’ contracting revenue and strong profitability in 4Q13 were consistent with year-to-date performance
Posted on January 31, 2014 by tbrnh By Sebastian Lagana, Analyst

Below is TBR’s commentary on Northrop Grumman IS&TS’ 4Q13 earnings. Please feel free to use the below content, or call or email Sebastian Lagana at 603.758.1857 or sebastian.lagana@tbri.com for additional commentary.

IS&TS’ profitability continues to outpace that of its peers despite persistent revenue pressure

Northrop Grumman Information Systems & Technical Services’ (IS&TS) 2013 ended much the way it began, as 4Q13 delivered another quarter of revenue contraction, exceeding the majority of its peer group at -12% year-to-year. IS was most impacted by market conditions, down 14.1% year-to-year on a revenue base roughly 2.3 times larger than that of TS, while TS declined 6.6% year-to-year. The aggregate contraction was largely related to volume reduction on ongoing contracts that were impacted by budget constraints among major defense agencies. Northrop indicated its expectations for a continuation of difficult market conditions through its aggregate 2014 guidance of $8.85 billion, a 6.2% reduction from 2013 full-year revenues.

Despite its revenue contraction, IS&TS remained a margin leader among major federal IT contractors, at 9.5% during 4Q13, consistent with the company’s historical performance in the mid-to-high 9% range. Northrop maintained this expectation for 2014 through aggregate guidance of 9.4% for IS&TS’ 2014 operating margin, a figure TBR expects the company to exceed on the strength of IS&TS’ contract performance management.

Analytics will remain a key component of Northrop Grumman’s healthcare IT portfolio development

Northrop Grumman is expanding its healthcare business by targeting opportunities in the genomics and proteomics space, leveraging core analytics and cybersecurity solutions. Amy Caro, VP of health IT programs at Northrop Grumman says the genomics and proteomics market will “usher in a new era of personalized medicine, resulting in more accurate diagnoses and targeted treatments that work more effective[ly]” and that Northrop Grumman plans to be a “value-added facilitator” in the market. TBR believes medical researchers will increasingly demand analytics solutions to provide insights to genomics, the study of a person’s DNA, and proteomics, the study of the structure and function of proteins. Market analysts currently project the genomics and proteomics IT market to reach an estimated $50 billion and $55 billion by 2019, representing a CAGR of 11% to 13%.

To support the build out of its analytics capabilities, Northrop Grumman engaged in the DreamIt Health Baltimore initiative to provide startup companies with $50,000 in funding and access to technology that for the development of healthcare-related solutions. We believe Northrop Grumman is investing in the program to increase its access to healthcare-related IP capable of enhancing its existing healthcare solutions, such as the iHAP analytics platform. Additionally, Northrop Grumman has the opportunity to expand its small and medium business partner network, enhancing the company’s supply chain and go-to-market business partners.

Northrop Grumman is developing cost takeout solutions to capture demand from its core defense customers

Federally focused vendors are increasing their value proposition by appealing to demand for cost takeout solutions, through either the repurposing of existing capabilities for new applications or through the development of new solutions that tackle unique problems. To this end, IS has partnered with Cirque Energy Inc. to develop a Deployable Gasification Unit (DGU), which takes on-site waste produced by military and industrial operations and converts it to electricity and recoverable heat.

Northrop Grumman is also developing solutions to decrease the cost related to military training exercises, with IS collaborating with the Air Force Air Mobility Command to perform its first demonstration of the Mobility Air Forces Distributed Mission Operations test network, which enables geographically separate flight simulations to collaborate for air-to-air refueling training. By allowing C-17, KC-135 and Boom Operator Weapon System Trainer simulators to network and perform a refueling training mission, we believe Northrop will immediately drive savings through reduced logistical expenses and fewer high-cost live flights, while also laying the groundwork for a new training and simulation model for other branches of the U.S. military.