GR Goodrich Corp. (The)

Goodrich Corporation (GR) has been selected by privately-owned commercial aviation company Mesa Air Group, Inc. to provide landing gear maintenance services for its fleet of Bombardier CRJ700 and CRJ900 aircraft. The multi-year agreement will cover all scheduled repair and overhaul services including the use of Goodrich-owned rotable landing gear assets.

Goodrich is the original equipment manufacturer (“OEM”) of the Bombardier CRJ700 and CRJ900 landing gear. It is also one of the largest landing gear overhaul maintenance suppliers in the industry. Mesa currently operates 77 aircraft with over 453 daily system departures to U.S., Canada, and Mexico.

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 give way to higher volume sales and create economies of scale, thus helping in winning more cost-sensitive government contracts. The company also provides equipment for the niche market.

The bullish outlook for Goodrich is supported by its geographically-diverse customer mix, its diverse presence in the market for commercial and business jets, resurgence in commercial aftermarket sales, a strong balance sheet, an incremental dividend and an ongoing share repurchase program.

Last week United Technologies Corp. (UTX) announced that it would acquire Goodrich for $18.4 billion, including the assumption of $1.9 billion in debt. The deal is expected to close in mid-2012.

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.

Goodrich presently retains a short-term Zacks #3 Rank (Hold). We have a long-term Neutral recommendation on the stock. The cautious stance stems from the 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.

 
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