Systems Field Support (SFS), a division of L-3 Communications Holdings Inc. (LLL), has received a contract worth $32.9 million from the U.S. Navy (USN) and U.S. Air Force (USAF) to provide full Contractor Logistics Support (CLS) for their respective fleets of C-12 aircraft. The contract is spread over a span of five years with a total potential value of more than $300 million.
Under the contract, the company will provide full maintenance and logistics support for 65 Navy C-12 aircrafts assigned worldwide at 21 locations, and 28 Air Force C-12 aircraft assigned worldwide at 19 locations.
In 2010, L-3 SFS was awarded a five-year contract worth $440.0 million for Life-Cycle Contractor Support of C-12, RC-12 and UC-35 aircraft operated by the U.S. Army, Army Reserves and Army National Guard.
USN and USAF C-12 aircrafts operate from worldwide locations to provide operational support for rapid, time-sensitive or high-priority movement of personnel and cargo. The C-12 aircraft is responsible for range clearance, courier flights, medical evacuation and humanitarian rescue or assistance.
The SFS division is an aerospace and defense support services contractor that specializes in the delivery of integrated contractor logistics support for aircraft, ground vehicles and other defense systems. Based in Madison, Mississippi, the division has been providing maintenance and logistics support to USN and USAF C-12 aircraft and their associated equipment support for over 30 years.
L-3 Communications is one of the best-positioned pure defense players based on its non-platform focus, broad diversification of programs, strong order bookings and order backlog, strong cash flow generation and its focus on shareholder value.
However, this is offset by the loss of key contracts, a backlog skewed towards fixed price contracts and apprehensions over defense spending under the Obama administration. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock. In the near term, we would advise investors to accumulate its short-term Zacks #2 Rank (Buy rating) peer like Honeywell International Inc. (HON).
Based in New York City, L-3 Communications is a prime contractor in Command, Control, Communications, Intelligence, Surveillance and Reconnaissance systems, aircraft modernization and maintenance, and government services. L-3 is also a leading provider of a broad range of electronic systems used on military and commercial platforms.
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