L3 Communications Wins $160M U.S. Navy Contract for T-45

L3 Communications Holdings Inc. LLL unit, L-3 Communications Vertex Aerospace LLC, has won a modification contract worth $160.2 million from the U.S. Navy for the maintenance and logistic services of T-45 jets.

The contract involves organizational, intermediate and depot-level maintenance and logistics services for about 200 T-45 jets based at the Naval Air Station ("NAS"). Contract work, expected to be over by Sep 2016, will be performed mainly in Kingsville, TX and Meridian, MS. Remaining work will be carried out in Pensacola, FL and Patuxent River, MD.

The logistics services comprise sustaining engineering, supply and government property management, and procurement of connected parts and materials.

Contracting activity is the Naval Air Systems Command, Patuxent River.

Manufactured jointly by the Boeing Company BA and BAE Systems plc BAESY, T-45 is the U.S. Navy's advanced jet trainer with twin-seating capacity. The U.S. Navy has selected this aircraft as a replacement of the TA-4J Skyhawk and T-2C Buckeye in order to meet its requirement for an undergraduate jet pilot trainer. In Jan 1992, T-45 entered into service with the Navy.

L-3 Communications is one of the prime system contractors for aircraft modernization and maintenance; Intelligence, Surveillance & Reconnaissance ("ISR") collection platforms; simulation and training; and government systems support services.

The company is transforming its business portfolio to focus better on the defense electronics, communications and ISR markets, in which it already enjoys a leading position.

However, a shrinking contract flow is affecting its performance. The company posted weak second-quarter results with earnings declining 8% year over year due to lower sales at each of its segments. Cost overruns in the Platform Integration business also impacted its bottom line. The company consequently lowered its full-year earnings expectation.

Although the company witnessed moderate growth in the second quarter, regular contract wins will help the company to boost its top line.

Zacks Rank

L3 Communications currently has a Zacks Rank #3(Hold). A better-ranked stock in the broader aerospace and defense sector is LMI Aerospace Inc. LMIA sporting a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>