Revenues in Defense Technology Companies Surge in 2016

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Sep 23, 2016, 09:00 ET

NEW YORK, September 23, 2016 /PRNewswire/ --

In 2015, defense technology companies have been going through an unstable period of time. The top six defense contractors reported a fall in revenue, and flat profits. Research by PWC indicates that 2016 is expected to be a year of recovery. The report explains that, a major issue for contractors has been the pressure to reduce Pentagon's budget, and to come up with better ways to control its spending. This year the outlook for defense technology companies are stabilizing, so a relief from large budget cuts is expected through 2017. Optex Systems Holdings, Inc. (OTCQB: OPXS), Lockheed Martin Corporation (NYSE: LMT), Raytheon Company (NYSE: RTN), Honeywell International Inc. (NYSE: HON), Textron Inc. (NYSE: TXT)

While the government, in particular the Pentagon, continues to debate about appropriate financials, several major deals have been signed. Small companies like Optex Systems Holdings, Inc. (OTCQB: OPXS) enjoyed new contracts this year. The company is focusing on manufacturing optical sighting systems and assemblies for the United States Department of Defense, foreign military applications as well as commercial markets. Last month the company announced it has won a 5-year Indefinite Delivery, Indefinite Quantity (IDIQ) contract worth $5.99 million to supply its laser protected periscopes to the Defense Logistics Agency. Optex provides a variety of glass and plastic periscopes with and without laser protection used on various vehicle platforms. The Company's current footprint in the periscopes & vision block market is an estimated 75% market share in the U.S. ($8-$10 M) and 20-30% worldwide ($40-$50 M).

"One of our priorities has been to increase our margins by securing more commercial contracts while maintaining our established footprint in the armored vehicle platforms," said Danny Schoening, Optex's CEO. "Winning the bid on this multi-year agreement demonstrates our capability to execute on this strategy. Given our strong IP, our excellent proven military products and a pipeline of new commercial products, we anticipate many more exciting contracts in the coming months."

Optex Systems Holdings, Inc. (OPXS) this month then announced, it has received a new Purchase Order from Defense Logistics Agency for $450,000 to supply collimators for the Abrams Main Battle Tank. "We are pleased to support the Defense Logistics Agency by providing this critical weapon sighting system for the Abrams Tank. This precision optical-mechanical system supports the main gun sighting system, so we are excited to provide Optex's capability to meet this demand," said Danny Schoening, Optex's CEO.

One of the biggest and most popular defense contractors in the U.S, Lockheed Martin Corporation (NYSE: LMT), scored a major win this September. The company received an $87.6 million contract from the U.S. Air Force for follow-on production of Paveway II Plus Laser Guided Bomb (LGB) kits. This contract represents the majority share of fiscal year 2016 funding and the 8th consecutive majority win for Lockheed Martin in the annual Air Force competition.

Raytheon Company (NYSE: RTN) has been awarded a $37,723,774 firm-fixed-price, fixed-price-incentive, cost and cost-plus-fixed-fee contract for the purchase of MK 54 lightweight torpedo common parts kits; MK 54 Mod 0 lightweight torpedo kits; and MK 54 exercise fuel tanks, spares, production support material, engineering support, and hardware repair support.

Honeywell International Inc. (NYSE: HON) earlier this August came to an agreement with the U.S Army according to which the Advanced Turbine Engine Company (ATEC), a joint venture of Honeywell and Pratt & Whitney, has been awarded a contract for preliminary design review of a new engine for the Army's fleet of Black Hawk and Apache helicopters. This is a two-year contract and is part of the Army's Improved Turbine Engine (ITE) program.

Textron Inc. (NYSE: TXT) received an order this May from the U.S Air Force. The company has received two separate delivery orders worth $11.5 million on an existing four-year, indefinite delivery, indefinite quantity contract. The orders are for 15 AN/USM-670A Joint Service Electronic Combat Systems Testers (JSECST^™) and 95 AN/USM-670A Retrofit Kits. This a continuation of the four-year IDIQ contract from the U.S. Air Force valued at up to $43.6 million.

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