Thursday, August 1, 2019

Albany International Corp. (AIN)

Woah… Why were aerospace margins so strong this quarter?

Albany International Corp. is a textiles and materials processing company. The Company operates through two segments: Machine Clothing (MC) and Albany Engineered Composites (AEC). Its MC segment supplies permeable and impermeable belts used in the manufacture of paper, paperboard, nonwovens, fiber cement and various other industrial applications.

Christian Herbosa, Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• Q2 Earnings Beat. Second quarter sales of $273.9 million came in slightly higher than our estimate of $270 million and was a 7.3% increase over the same period last year. Consolidated earnings of $34.1 million, however, delivered a substantial beat to our estimate of $26.8 million.
• AEC Drives Margin Enhancement. The earnings beat this quarter was primarily driven by the AEC Segment. AEC adjusted EBITDA margins of 24% were meaningfully higher than past performance, our estimates, and company guidance. These results, however, may…
  
  
  

  
  

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Thursday, June 18, 2019

Orion Group Holdings (ORN)

Another Project Award Boosts Record Backlog and Reinforces Positive Outlook.

Orion Group Holdings Inc is a US-based company which provides solutions in marine construction, design and specialty services both on and off the water in the continental US, Alaska, Canada, and the Caribbean Basin.

Poe Fratt, Senior Research Analyst, Noble Capital Markets, Inc.

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• Another large Marine award. Dredging work of $52 million on a crude oil export terminal should begin in 4Q2019 and run into 3Q2020. Dredging will allow Very Large Crude Carriers (VLCCs) to load at South Texas Gateway Terminal project. Design and demo work could expand the scope of the project for ORN and validate the emerging industrial strategy.
• Award should push 2Q2019 backlog into $650 million range, another record. Combined with the large Terminal 5 project in Seattle that should begin this …
  
  
  

  
  

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Wednesday, July 10, 2019

DLH Holdings Corp. (DLHC)

An Early Look at the Combined DLH and Social & Scientific Systems

DLH Holdings Corp is a provider of technology-enabled business process outsourcing and program management solutions in the United States. The company offer services to several government agencies which include the Department of veteran affairs, Department of health and human services, Department of defense and other government agencies.    

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• Management Call. DLH management recently held a conference call to provide additional detail of the June 10th announcement of the Social & Scientific Systems (SSS) acquisition. The $70 million purchase, $63 million net of tax benefits, valued SSS at roughly 1x sales and 11x EBITDA. These multiples are in-line with industry metrics.
• Acquisition Begins VA COMP De-Risking.. SSS significantly de-risks the potential loss of the VA-COMP business, in our view. SSS provides diversification for DLH, both on a revenue and end customer basis, and will broaden and… 

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Tuesday, July 9, 2019

One Stop Systems (OSS)

What Impact Will the $60 Million OEM Agreement Have?

One Stop Systems Inc is US-based company which is principally engaged in designing, manufacturing, marketing high-end systems for high performance computing (HPC) applications. The company offers custom servers, compute accelerators, solid-state storage arrays and system expansion systems.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• OEM Agreement. OSS signed an exclusive five-year OEM and supply agreement with major customer Disguise Systems for media and entertainment servers. The agreement solidifies the relationship between the firms, in our view.
• $60 Million Minimum Level. The agreement calls for a minimum $60 million of purchases over the five-year term, with the minimums rising from $10 million to…

  
  

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Tuesday, July 9, 2019

Vectrus (VEC)

What does Advantor Systems add to Vectrus?

Vectrus Inc is a U.S.-based company that provides services to the U.S. government. The company generates nearly all its revenue from the United States Department of Defense. The company offerings are categorized into three types; infrastructure asset management services, logistics and supply-chain management services, and information technology and network communication services.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• Advantor Systems Acquisition. Yesterday, Vectrus announced the acquisition of Advantor Systems Corporation, a leading provider of integrated electronic security systems to the federal government. Vectrus acquired the $35 million revenue company for $44 million, using cash on hand and the Company’s credit facility.
• Market Leader. Deployed at over 2,000 client sites worldwide, Advantor is the only vertically integrated and accredited C3 networked security technology platform. Advantor clients include…

  
  

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Tuesday, July 2, 2019

Vectrus (VEC)

Solid 2018 performance; on track for five year goal of $2.5B revenue and 7% EBITDA margin.

Vectrus Inc is a
U.S.-based company that provides services to the U.S. government. The company
generates nearly all its revenue from the United States Department of Defense.
The company offerings are categorized into three types; infrastructure
asset management services, logistics and supply-chain management
services, and information technology and
network communication services.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

RATING: OUTPERFORM

• Named to Another Contract. In early June, Vectrus was named as one of 11 firms by the Department of State to the ID/IQ Diplomatic Platform Support Services (DiPSS) contract. With a ceiling value of $6 billion, DiPSS provides a full range of services for life support services, logistical services, and operations and maintenance services to the State Department across the globe.
• A New Client, Playing to VEC’s Strengths. While it is a ID/IQ contract, the State Department further expands Vectrus’ client base and plays…  




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Thursday, June 13, 2019

KeyW Holding Corporation (KEYW)

Does First Quarter Miss Matter?

KEYW Holding is a provider of mission-critical cybersecurity, cybersuperiority, and geospatial intelligence solutions to U.S. government defense, intelligence, and national security agencies. Its solution includes collection, processing, analysis, and dissemination of intelligence information in cyberspace and geospace domains. 

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• Tender Offer Complete. On Wednesday, Jacobs announced that it had completed the previously announced tender offer for the outstanding shares of KeyW at a price of $11.25 per share. An aggregate of 39,928,947 KeyW shares, representing approximately 80% of the outstanding, were tendered.
• Short-Form Merger. Following the tender, Jacobs owns a sufficient number of KeyW shares to complete a…
  
  

  
  
  

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Thursday, June 13, 2019

DLH Holdings Corp. (DLHC)

How Transformative Will Social and Scientific Systems Be?

DLH Holdings Corp is a provider of technology-enabled business process outsourcing and program management solutions in the United States. The company offer services to several government agencies which include the Department of veteran affairs, Department of health and human services, Department of defense and other government agencies.    

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• Acquisition. On Monday, DLH announced the acquisition of Social & Scientific Systems (SSS) for $70 million. Privately-held SSS is a nationally recognized technology-enabled health research organization that collects, manages, and analyzes large-scale health data in support of critical public initiatives.
• Transformative.. SSS will immediately provide diversification for DLH, both on a revenue and end customer basis, and will broaden and deepen DLH’s… 

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Wednesday June 5, 2019

Kratos Defense & Security Solutions (KTOS)

Lowering Rating to Market Perform from Outperform on Price Appreciation

Kratos Defense & Security Solutions, Inc. provides engineering, information technology (IT) services, and warfighter solutions primarily in the United States. It operates in two segments, Kratos Government Solutions (KGS) and Public Safety and Security (PSS).     

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

Downgrading to Market Perform.We are lowering our rating to Market Perform from our previous Outperform as KTOS shares have topped our $20.00 12-month price target. We continue to believe in the long run potential of the Company but believe the shares may have gotten ahead of actual operating performance.

Significant Price Appreciation YTD. Since the beginning of the year, KTOS shares have appreciated 63.1%, well in excess of the Russ…

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Friday, May 17, 2019

One Stop Systems (OSS)

Files $100 Million Shelf, What This Means Moving Forward.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• Shelf Filing. Late Wednesday, One Stop Systems filed a S-3 “Shelf” registration with the SEC. The Shelf is for up to $100 million using any of common stock, preferred stock, debt, warrants, etc.
• Will Help With Liquidity, If Needed. While management is confident existing available loans and cash flows should be sufficient for the next twelve months, the Shelf provides the Company with additional funding options if business increases faster than anticip… 

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Monday, May 13, 2019

Ducommun Incorporated (DCO)

Markets Respond to a Surprisingly a Good Quarter.

Ducommun Inc is a leading global provider of engineering & manufacturing services for high-performance products & high-cost-of failure applications used primarily in the aerospace and defense, industrial, medical & other industries.   

Christian Herbosa, Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• Meaningful Upside Surprise. Markets responded positively to the surprisingly strong revenue growth and margin expansion reported in the Q1 earnings release last week. Revenue and diluted EPS for the quarter were $172.6 million and $0.64 representing an upside surprise of 8.65% and 44.8% above consensus estimates, respectively. 
• We’ve Come a Long Way. On a year-over-year basis first quarter revenue grew 14.7%. This top line growth reflects the strong execution of organic and inorganic growth initiatives in an expansionary industry environment. Gross, adjusted EBITDA, and operating profit margins of 20.7%, 12.6%, and 7.4% were also an improvement over last year’s Q1 margins of 17.8%, 9.6%, and 3.5%, respectively. This enhanced…
  
  

  
  
  

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Monday, May 13, 2019

Information Services Group (III)

Are Brighter Days Ahead?

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• 1Q19 Results. 1Q19 results were negatively impacted by a number of items, including currency headwinds and a push out of certain business. As a results, revenues came in at $64.8 million, down 6% year-over-year, and the GAAP loss was $0.02 per share, versus breakeven a year ago. Adjusted EPS came in at $0.03, versus $0.05.
• Digital Still the Growth Driver. III continued to grow its digital services business, which represented more than 40% of 1Q19 revenue.  ISG Automation was up…
  

  
  
  

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Thursday, May 9, 2019

Kratos Defense & Security Solutions (KTOS)

Can the Beat Go On?

Kratos Defense & Security Solutions, Inc. provides engineering, information technology (IT) services, and warfighter solutions primarily in the United States. It operates in two segments, Kratos Government Solutions (KGS) and Public Safety and Security (PSS). 

   

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• 1Q19 Above Expectations.  Revenue came in at $160.4 million above our $150 million estimate and management’s upper end $157 million guidance. Adjusted EBITDA totaled $17.5 million, compared to our $11.5 million estimate and management’s $11 million upper end. EPS totaled $0.03, versus our estimate of $0.01.
• Hitting on all Cylinders. Every Kratos business unit exceeded its financial forecast in the quarter. Unmanned Systems had a very successful quarter culminating in the initial Valkyrie flight. The Target drone business continu… 

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