GR Goodrich Corp. (The)

Goodrich Corporation’s (GR) Sensors and Integrated Systems business in Plymouth, UK has received a follow-on order from Saab Bofors Dynamics AB for additional inertial measurement units (IMUs) for its Next-generation Light Anti-tank Weapon (NLAW) system. The contract covers additional NLAW units intended for export; deliveries are expected to complete in 2012.

The IMUs are Goodrich model SiIMU01, a rugged MEMS-based IMU that provides missile navigation and guidance. The Plymouth team was first selected in 2001 to design and develop the NLAW's IMU; deliveries of the SiIMU01 unit commenced in 2005. The current order brings total SilMU01 requirements for NLAW to 20,000 units, including past, current and future delivery orders.

NLAW is a lightweight, portable fire-and-forget anti-tank weapon. Its guidance electronics helps record the soldier's aiming capacity, then calculates and predicts a flight path to the target. NLAW was introduced into service by the British, Finnish and Swedish armed forces to meet the demanding requirements of their anti-tank weapons.

Goodrich inertial measurement products have become the preferred choice of modern precision guidance and navigation, offering the ability to sense and accurately measure rotational and linear movement. The company is a market leader in MEMS-based inertial systems, with more than 25,000 MEMS units in use today on a wide range of military platforms.

Goodrich is a global supplier of components and systems for communications and avionics. Most of the company’s products are sold to government and commercial customers that will lead to higher volume sales and will create economies of scale, thus helping win cost-sensitive government contracts. The company also provides niche equipment, which enjoys a captive market until the retirement of the specific model.

Goodrich presently retains a short-term Zacks #2 Rank (Buy), which compares favorably to its peer United Technologies Corporation (UTX) with a Zacks #3 Rank (Hold). The bullish outlook for Goodrich is supported by its geographically-diverse customer mix, its diverse presence in both commercial and business jets, resurgence in commercial aftermarket sales, a strong balance sheet, an incremental dividend and an ongoing share repurchase program.

This is, however, offset by uncertainty in the recovery of the large commercial airplane original equipment market, along with possible defense cutbacks, dependence on international sales, high research and development overheads and regulatory risks. We maintain our long-term Neutral recommendation on the stock.

Based in Charlotte, North Carolina, Goodrich Corporation supplies components, systems and services to the commercial, regional, business and general aviation markets in the U.S. and in other parts of the world. Goodrich also supplies aircraft and satellite systems to the global military and space markets. Goodrich’s products and services are principally sold to customers in North America, Europe and Asia.

 
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