Demand for armored vehicles quadruples local company's sales
By Michael Buettner The Post and Courier
Force Protection Inc.'s sales nearly quadrupled in 2006, and the Ladson company posted its first full-year profit ever, as demand for its armored vehicles soared amid the continuing strife in Iraq and Afghanistan.
In its annual report filed Friday with the Securities and Exchange Commission, Force Protection also released its restatement of earnings for 2004 and 2005, which the company previously said needed to be adjusted because of past accounting errors, including how it calculated the value of stock given to executives as compensation.
Force Protection said it earned $18.2 million in 2006, or 39 cents a share, on sales of $196 million. Those results compare with restated losses of $13.5 million, or 42 cents a share, in 2005 and $12 million, or 62 cents a share, in 2004.
Previously, the company reported a 2005 loss of $16.6 million, or 49 cents a share, and a 2004 loss of $10.2 million, or 53 cents a share. Sales in 2005 and 2004, which were not affected by the restatement, totaled $49.7 million and $10.3 million, respectively.
The 2006 sales total was up 294 percent from the year before, "a result of strong demand for blast protected vehicles, increased ability to meet this demand and acceptance of our vehicles by customers," the company said in its SEC filing.
Other measures also showed strong growth during the year. Total assets jumped almost sevenfold to $274 million from $39.8 million at the end of 2005, while cash and equivalents skyrocketed from just $1.2 million at year-end 2005 to $156.3 million at the end of 2006.
Force Protection filed its SEC report after the close of the market Friday. In trading on the Nasdaq before the report, the company's shares lost 31 cents, or 1.9 percent, to close at $15.96.
Earlier in the week, Force Protection said it received a follow-up order from the British military for 22 of its Mastiff vehicles, which are modified versions of the company's Cougar blast-protected truck. The order will raise Force Protection's Mastiff production to 108 vehicles with a value of about $70.1 million.
Also, the company disclosed Thursday that it paid $5.5 million for a research and development facility in Edgefield it bought from Newtec Services Group Inc., a munitions maker and consulting company.
Reach Michael Buettner at 937-5553 or mbuettner*postandcourier.com.
This article was printed via the web on 3/17/2007 8:54:04 AM . This article appeared in The Post and Courier and updated online at Charleston.net on Saturday, March 17, 2007
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Force Protection Posts Q4 EPS Of $0.32 - Stock To Watch
(RTTNews) - Friday after the closing bell, Force Protection Inc. (FRPT) reported its fourth quarter of 2006 net income of $17.0 million or $0.32 per share. In the fourth quarter of 2006, the company's net sales totaled $62.9 million. Analysts expected EPS of $0.06 on revenues of $61.12 million.
FRPT closed Friday's regular trading at $15.96, down 31 cents or 1.91%. However, in the extended session, the stock gained $1.54 or 9.65%, and was at $17.50.
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posted
Unbelieveable! Yet another Melissa article.
Force Protection (FRPT - Cramer's Take - Stockpickr - Rating) sure takes care of its own. Just look at the company's payouts to CEO Gordon McGilton. At the beginning of 2006, the defense contractor issued McGilton 300,000 shares when Force Protection was trading at 72 cents a share. That stock, which vested immediately, now fetches around $17 a share, making it worth more than $5 million.
Paul Meeks, a fund manager in Force Protection's home base of South Carolina, calls the stock grant "a bit odd" and, given some unevenness in the company's generally impressive 2006 financial performance, wonders if McGilton really deserves it.
"Usually, stock grants like that vest over a period of years," Meeks says. "This was not even an option grant. It was basically a check."
Force Protection didn't comment. McGilton's regular paychecks, totaling about $350,000 annually, look almost modest in comparison. But his leadership training firm, known as APT, helps out.
With McGilton in charge, APT keeps securing more and more business from Force Protection. In 2004, before McGilton joined the company, Force Protection paid APT just $21,000 for its services. That bill jumped to $225,000 in 2005 and then rocketed to $600,000 in 2006 -- McGilton's first full year at the helm.
Meanwhile, 2007 could prove even more lucrative for McGilton. During a three-day stretch this January, McGilton sold 1 million shares for nearly $20 million. He now has just 11,560 shares left.
Based on McGilton's public comments, however, Force Protection's future has never looked brighter. Just last week, in fact, McGilton was bragging about Force Protection's record 2006 results and hinting at even better days ahead. To be fair, Force Protection made some major progress in 2006 and ended the year with a bang. Impressively, Force Protection beat revenue targets and toppled profit estimates for the fourth quarter.
But roughly two-thirds of the company's quarterly profits came from a deferred tax benefit rather than from regular operations. Moreover, the company continues to burn through cash whether it reports a profit or not.
Force Protection blamed last year's negative cash flow, in part, on rising accounts receivable (A/R). Meeks, for one, is concerned.
"Look at the difference between 2005 and 2006," Meeks says. "Sales were up 294% -- but A/R was up 882%. Ideally, you would want A/R to grow at the same rate as sales or even at a lesser rate. But their A/R just exploded."
Indeed, Meeks notes, Force Protection weathered a huge surge in A/R even as it factored some $44.7 million worth of receivables. Thus, he says, A/R could have looked even worse than it did.
Force Protection should see improvements elsewhere, however.
Back in November of 2005, an investment fund issued Force Protection $7.5 million worth of promissory notes carrying an interest rate of 24%. Three months later, a fund operated by Force Protection Chairman Frank Kavanaugh got a piece of that action by taking over $2.5 million worth of those high-interest notes for itself.
Kavanaugh's fund would go on to collect $50,000 in bonus payments for extending the maturity date on those notes by just a month or two at a time. The company paid Kavanaugh's fund off in full less than six months after it entered the picture. "Mr. Kavanaugh's relationship to (the fund) was fully disclosed to the company," Force Protection assured in its recent 10-K filing. "And Mr. Kavanaugh did not participate in the negotiations or decision process" that brought his fund into the game.
Of course, Kavanaugh has scored even bigger returns by selling Force Protection stock. During the final quarter of 2006, Kavanaugh executed a series of stock sales that generated more than $20 million in proceeds.
This year could bring a new threat to Force Protection's bottom line. Notably, Protected Vehicles -- a competitor run by two Force Protection alums -- has partnered with heavyweight truck maker Oshkosh (OSK - Cramer's Take - Stockpickr - Rating) to sell cheap vehicles under the Mine-Resistant Ambush-Protected military vehicle program.
Specifically, analysts note, Oshkosh is selling so-called Category I vehicles for $300,000 apiece, while Force Protection is still seeking nearly $450,000 for Category I vehicles of its own.
"We continue to believe MRAP production will be split between two or maybe three teams, with FRPT's team and BAE Systems as the primary suppliers," SunTrust Robinson Humphrey analyst Chris Donaghey wrote on Monday. But "if Oshkosh Truck's Alpha (made by Protected Vehicles) passes testing ... it, too, may see larger production contracts -- if only for the aggressive pricing."
Donaghey, like most mainstream analysts, is bullish about Force Protection's prospects nonetheless. He has a buy rating and a $31 price target on the company's stock. His firm has investment banking ties to the company. Not so long ago, with the stock above $20 a share, Meeks felt that investors should sell Force Protection short in anticipation of a decline instead. His call proved correct. But with the share price now lower -- and contract awards looming -- Meeks has since backed away from that call despite his ongoing concerns about the company.
"It's not 'shortable' right now," says Meeks, who has no position in the stock himself. To its credit, "the company is showing some improvement in gross margins, and its operating expense as a percentage of sales is getting a little better.
"But sooner or later, they have to show cash flow. The bottom line is: Does this company generate cash?"
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Wow, digging up old bones is about all she did. What's her deal? She slants everything. Does thestreet disclose what stocks she holds? It didn't surprise me at all to see another negative article from her. Positive news gives birth to a bashing article from her within a week.
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In my humble but accurate opinion , today is a good day to buy. The stock usually takes a minor hit from Melissa's slander and then continues on.
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quote:Originally posted by cspaude: In my humble but accurate opinion , today is a good day to buy. The stock usually takes a minor hit from Melissa's slander and then continues on.
Libel
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posted
Force Protection, Inc. Plans to Significantly Expand Vehicle Production Levels by Year End 2007 Thursday March 22, 6:47 pm ET
LADSON, S.C.--(BUSINESS WIRE)--Force Protection, Inc. (NASDAQ:FRPT - News) updated investors yesterday on its production expansion and developments as the company concluded its strongest year-end performance to date.
ADVERTISEMENT [AD] Force Protection COO Ray Pollard noted that, based on receipt of vehicle contracts, the company is on target to reach per-month vehicle production levels of more than 400 vehicles per month by the end of 2007, compared to 50 vehicles per month at the end of 2006. Through Force Dynamics--Force Protection's joint venture with General Dynamics Land Systems, a business unit of General Dynamics Corporation (NYSE:GD - News)--this projected capacity will represent the highest capability available among armored vehicle manufacturers.
"We have had a tremendous track record in 2006 with over 300 vehicles thus far produced and in the field," said Pollard. "Our total award opportunities as of December 31, 2006 were in excess of 900 vehicles, of which we have delivered 380 vehicles. In December 2006, we signed a joint venture with General Dynamics which we hope will further allow us to meet the needs and execute the contracts of the MRAP program."
Force Protection further noted an aggressive 2007 manufacturing and expansion plan that will increase production space by more than 60 percent. The plan includes the start-up of its recently purchased blast and ballistic test range in Edgefield, SC, a 60,000 square foot facility for research and development, the continued construction of a 90,500 square foot warehouse at its current site, and plans to lease an additional 120,000 square foot production facility at an alternate location in the state of South Carolina to accommodate production of its newest vehicle series, Cheetah.
Pollard added, "With these 2007 initiatives underway, Force Protection expects vehicle production levels to increase to 200 per month by the end of summer, and to more than 400 per month under the combined effort of the company and its partners by the end of the year.
"Our year-end production capacity should enable us to effectively satisfy MRAP vehicle requirements," said Pollard. Force Dynamics has been awarded 329 out of the 595 MRAP vehicle contracts thus far awarded.
The audio replay of Force Protection's 2006 earnings conference call is available by dialing 800-405-2236 (U.S. domestic) or 303-590-3000 (international) and entering the replay pass code 11086707.
posted
FPI in USA Today Blast-resistant vehicles slated for Iraq
By Tom Vanden Brook, USA TODAY CHARLESTON, S.C. — The Pentagon is scrambling to build and ship armored vehicles to Iraq that are four times more resistant to bomb blasts than a Humvee, military officials say. The military wants 6,700 armored vehicles with V-shaped hulls that deflect the blasts from the top killer of U.S. troops — homemade bombs, or improvised explosive devices (IEDs). Marine Corps Assistant Commandant Robert Magnus recently told Congress the Marines want at least 3,700 of the vehicles, while the Army wants 2,500 by year's end. Other services would get them as well.
The vehicles could cut the rate of U.S. casualties by two-thirds, Magnus said.
That's why "the Army needs to change course immediately" and buy more of the vehicles, said Rep. Gene Taylor, a Mississippi Democrat and member of the House Armed Services Committee. "To not do it is a scandal. It will lead to needless loss of life."
IEDs cause 70% of all U.S. casualties in Iraq, Pentagon records show. IED blasts killed six U.S. troops during the past week.
The Army may order more of the vehicles, but it doesn't intend for them to replace its 16,000 armored Humvees in Iraq, Brig. Gen. Charles Anderson said. The new vehicles are too heavy and hard to maneuver in urban areas such as Baghdad, said Anderson, the Army's director of force development.
"The Humvee is still a viable option in the theater," he said. The Army is committed to add-on armor kits for the Humvees, which cost almost $29,000 apiece. Each of the new vehicles costs at least $700,000, according to Army budget documents.
Taylor's not convinced: "I don't want to go to the funeral for the soldier or Marine who happens to be the last one in a Humvee over there who dies needlessly."
Humvees ride closer to the ground and have flat, less protected bottoms. That makes them vulnerable to buried bombs.
"You can up-armor a Humvee, but you'll never get the protection right," said Vernon Joynt, chief scientist at Force Protection, which builds the new vehicles. "They may get the sides protected. Not the bottom."
The vehicles aren't bomb-proof. They've been breached by a new type of IED called the explosively formed projectile, which fires a high-speed chunk of metal that can penetrate armor. Capt. Jeff Landis, a Marine spokesman, said no Marines have died in a mine-protected vehicle. But such an attack killed three soldiers in a Force Protection vehicle in December, company Vice President Mike Aldrich said.
Armor has been added to the outside of the vehicles that makes them resistant to most projectiles, Joynt said.
Rush to build
To meet the growing demand for the mine-protected vehicles, the Pentagon has contracted with nine companies, including Force Protection and Protected Vehicles, both in Charleston, S.C.
Four years ago, a dozen people worked on Force Protection's small assembly line making an armored truck. Today, 850 workers on two shifts churn out the vehicles, some of which are flown from a nearby Air Force base directly to a battlefield in Iraq. Down the road at Protected Vehicles, which didn't exist two years ago, 235 workers make similar vehicles.
So far, there isn't enough money to buy them. The military is $4.45 billion short of the $7 billion needed for the vehicles, Landis said. The Pentagon will try to make up the shortfall with emergency funding and by shifting money from other programs, Landis said.
Last week, the House Appropriations Committee approved spending $1.4 billion — $311 million more than the White House sought — for the vehicles.
Force Protection has had some growing pains. Last year, it agreed to pay $1.9 million to the federal government and two former employees to settle a complaint brought by the workers. Force Protection's latest annual report showed it made its first profit in 2006. There's also an ongoing audit by the Pentagon's inspector general into the company's ability to deliver on the contract, records show.
Pentagon planners consider the mine-protected vehicle a bridge to the ultimate Humvee replacement, the Joint Light Tactical Vehicle. The Pentagon recently challenged corporate leaders to develop the vehicle. It would need to protect troops from IEDs and be easily transportable unlike the heavier mine-protected vehicles, Landis said.
The Pentagon plans to request proposals for the joint vehicle as soon as next month and award the contract for the vehicle next year, Maj. Gen. Jeffrey Sorenson said. Production is scheduled for 2012, but the Army will push to get it sooner, he said.
Why wait? asked James Livingston, a retired Marine general who's a consultant for Protected Vehicles. The Pentagon is wasting time looking for the perfect replacement for the Humvee, he said.
"Let's get something in the field that works," said Livingston, who received the Medal of Honor for heroism in Vietnam.
Economic boon
For communities such as Charleston, the military's urgent need is an opportunity. A Navy base and shipyard closed in 1995, and 22,000 military and civilian jobs vanished. Protective Vehicles and Force Protection anticipate hiring more workers. Force Protection makes about 70 vehicles per month but could increase its output to 400 if it receives large enough contracts.
The starting wage for a welder at Force Protection is $16.50. Tim Scott, Charleston County Council chairman, said those wages can be particularly important for young African-American men who have an 18% unemployment rate.
"You can save a family with wages like that," Scott said.
Workers say the job has more than financial rewards.
"It makes you proud to be part of something that's saving lives," welder Carrie Reavenell said. "We're building something that works."
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Monday, March 26, 2007 Force Protection on Discovery Channel From their company email:
Force Protection Industries, Inc.'s armored vehicles will be featured tonight during Discovery Channel's Future Weapons program. The segment, entitled "Immediate Action," will premier at 9 PM E/P. To watch a preview, please click on the headline below.
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Financial Columnists When to Take a Shot Jim Oberweis 04.09.07
Prudence and diligence are held up as virtues for investors. If you bought Enron without reading all the footnotes, you have only yourself to blame. While that sounds good, there is often a high price to pay for waiting for every last detail. Time can be very costly, and making money is hard when situations are clear to everyone. The better course: Process what information is available a little faster than others, even without complete certainty, and then act.
On a practical level, this means we are often better served by quick analysis that is 80% right than by slow analysis that is 95% right. Of course, eventually we need to go back to understand the details. However, it should not be a precondition for action. Stock prices reflect what everybody thinks, and we try to bet on realities that differ from those assumptions.
Suppose all investors waited for all the facts before trading. If we were right 80% of the time and moved before the hesitant crowd, we would without question come out ahead. In reality, not everybody does wait, but enough people are slow enough that there is often a time lag between the release of corporate information and its full reflection in stock prices.
This is especially true for small companies, which often are not followed by analysts and get little or no news coverage. If you shoot out of the blocks with a small company, you likely will get it cheap before others discover the bargain. And occasionally a bargain can be had when some bad news arises that may mask the underlying favorable long-term picture.
Institutions like pension and mutual funds cannot react quickly because their orders are so big that they move the stock price on the basis of their size. Also, to move up the corporate ladder professional investors take great pains to have all the details in order before acting. Analysts are punished more for being wrong than they are rewarded for being right. Thus, they tend to be slow and not to deviate too far from peers.
Oceaneering International (39, OII) makes remote-controlled submarines that oil producers use to repair and maintain oil drilling platforms in the deep sea. On Aug. 25, 2005 Hurricane Katrina hit. Those who know the company well would conclude that Oceaneering was in a good spot to get lots of work cleaning up the damage. But the day after the hurricane, Oceaneering's shares traded down 1%, in line with those of many oil companies. The market took a while to digest the effects of a hurricane on this oil services company, then the stock reversed direction. Since then it has nearly doubled.
Note that the Katrina cleanup is still in progress, so demand for Oceaneering's vessels has stayed strong. It would have obviously been better to buy in 2005, but at 17 times trailing earnings this remains a good stock to buy now.
More recently a couple of very good companies have suffered some ill fortune that has hurt their stock price--temporarily. To me they look like good buys. Admittedly, these are high-growth companies with above-average risks.
Force Protection (16, FRPT) has a good wind behind it. On May 3, 2006 this little-known armored vehicle manufacturer reported that the Pentagon had awarded it a $50 million contract. The following day the stock rose 5.1% to $2.47. The award marked the beginning of a huge run. In the following week shares gained an additional 63% as the magnitude of the opportunity became clear. Today Force Protection is partnering with defense industry titan General Dynamics for a big program with the Marines.
But the stock is off its January high of $21, giving you an opportunity to buy it cheaper than before. The company's former chief technology officer started a competing firm down the street. Force Protection, which is just coming out of the red, has had to restate its 2005 financials. It was slated to report its fourth-quarter 2006 performance after our press time. Regardless, Force Protection still has enough business to propel itself into the black.
Also, you can take advantage of the recent shakeout in China via a Shanghai advertising firm called Focus Media (73, FMCN). It fell 15% from its high, in good company with many Chinese equities. Focus Media operates a network of flat-panel TVs that play ads. The displays are located in elevator lobbies of office buildings and hotels in Beijing and Shanghai, with excellent access to China's newly rich.
This stock, which can be bought as an American Depositary Receipt, changes hands for a pricey 47 times earnings. Still, its growth rate more than offsets this--revenue and earnings tripled in 2006. With the Beijing Olympics next year, business will be even better.
Jim Oberweis is president of Oberweis Asset Management and editor of the Oberweis Report. For more information visit www.forbes.com/oberweis.
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-------------------- Good judgment comes from experience. Unfortunately, experience usually comes from bad judgment. Posts: 205 | Registered: Mar 2006
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I'm putting money on another M. Davis article within 5 business days.
-------------------- Good judgment comes from experience. Unfortunately, experience usually comes from bad judgment. Posts: 205 | Registered: Mar 2006
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COLUMBIA, S.C. (AP) -- A South Carolina company that makes mine-resistant military vehicles expects to win more work from the Pentagon and is buying land to expand research and training. Force Protection Inc., which makes the vehicles along with Virginia-based General Dynamics Corp., told shareholders in a Securities and Exchange Commission filing this week that it is spending $4.1 million to buy land, buildings and equipment about 30 miles northeast of Charleston for research, development and training.
"We see an enormous need to do our own independent testing," Force Protection spokesman Mike Aldrich said Friday. "To do that, we have to move to a secure site off of the manufacturing plant."
At the same time, he said, the company needs to train technicians to put into the field to help maintain the equipment.
The company also is expecting a surge in vehicle production. On Thursday, the U.S. Senate approved a $1.5 billion proposal to accelerate production of mine-resistant and ambush-protected vehicles.
That plan would cut six months from a production schedule, essentially providing 2,500 vehicles to the military faster.
However, the proposal is tied to a bill calling for a troop withdrawal from Iraq, which President Bush has threatened to veto. Senate and House Democrats lack the votes needed to override a veto.
Force Protection Inc. already planned to increase production sharply to 400 vehicles a month.
"We've shown the government a plan to get well over 400 a month," Aldrich said.
By the end of May, the company will concentrate solely on making the mine-resistant and ambush-protected vehicles the Pentagon wants.
"Getting the MRAP into Al Anbar province is my number one unfilled war-fighting requirement at this time," Gen. James Conway, the Marine Corps. commandant, wrote in a memo earlier this month to Marine Corps Gen. Peter Pace, chairman of the Joint Chiefs of Staff.
The letter was provided by U.S. Sen. Joe Biden's office.
The Delaware Democrat pushed the provision to speed up vehicle production and it easily passed. Biden said the vehicles help prevent deaths and injuries, and the legislation should be passed separately.
"We've got to get these things built," Biden said Friday. "It's a matter of life and death. These things work."
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Force Protection Industries, Inc.*, Ladson, S.C., is being awarded $6,896,896 for firm-fixed-priced modification to existing delivery order #0002 under previously awarded contract (M67854-07-D-5031) for Mine Resistant Ambush Protected (MRAP) Low Rate Initial Production vehicle sustainment Integrated Logistic Support. The sustainment ILS will consist of 90 day consumables, forward deployment blocks, maintenance workshop blocks, field service representatives, operator and maintenance training, and contract data requirements lists. Work will be performed in Ladson, S.C., and work is expected to be completed by April 2008. Contract funds in the amount of $6,896,896 will expire at the end of the current fiscal year. This contract was competitively procured. The Marine Corps Systems Command, Quantico, Va., is the contracting activity.
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SeekingAlpha Force Protection Likely To See More Upside Following Conference Presentation Wednesday April 4, 5:36 am ET
Ant & Sons submits: In early January, we highlighted shares of Force Protection Inc. (NasdaqCM: FRPT), a protective vehicle manufacturer after the company made the move from the Over the Counter Bulletin Board to being listed on the NASDAQ Stock Market. The key ingredient to making such a move was the company's success story, benefiting from nearly four years of combat operations in Iraq and Afghanistan. The highlight of Force Protection's rise from obscurity came late last year when the company was awarded a $214 million from the Marine Corps Systems Command for approximately 280 mine-protected clearance vehicles.
Moving along in time, Force Protection reported fourth quarter and fiscal year results in March that included some impressive numbers. For the year ended 2006, the company's net sales totaled $196.0 million. Net income was $18.2 million or $0.39 per diluted share. In the fourth quarter alone, the company's net sales totaled $62.9 million, with net income of $17.0 million or $0.32 per diluted share during the fourth quarter of 2006. To ensure continued growth, the company recently announced it would increase its production level to more than 400 vehicles per month by the end of 2007, compared to the 50 vehicles per month that were being produced at the end of 2006. Force Protection also has invested in a building to keep up with its research and laboratory testing of its armored vehicle technology.
Although Force Protection shares have already seen a dramatic increase in price, the company could likely get a major boost ahead of its presentation at the SunTrust Robinson Humphrey 36th Annual Institutional Conference on April 10. Being a recent addition to the NASDAQ Capital Market, the company is likely still trying to attract larger institutions and further analyst coverage. If the presentation is positive, it would especially not be surprising to see an update from analysts at Sun Trust Robinson Humphrey who initiated Force Protection shares with a "buy" rating earlier this year, or others who could initiate coverage and spur additional demand for the stock.
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Well, Cramer had a whole segment about Spartan Motors and how their big product was supplying for the Cougar, and we all know who makes that. He talked about how much money it's going to bring SPAR but ain't it odd that he barely mentions FRPT. Matter of fact, I'll have to read the transcripts cause I didn't hear him mention it at all.
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posted
Looks like this got it moving in afterhours.
DoD Armored Vehicle Plan Expands, Aims At Short-Term Needs
Last update: 4/5/2007 7:00:16 PM
By Rebecca Christie Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--The Defense Department's new armored vehicle program has nearly doubled in size but is still aimed at short-term combat needs, U.S. Marine Corps officials said Thursday. Over the next 18 months, the Marines and the Army want to buy 7,774 Mine-Resistant Ambush-Protected vehicles, which they expect will cost $8.4 billion.
The Marines have the lead on the acquisition program, which previously had estimated a 4,000-vehicle, one-year effort. Funding looks certain, said Brig. Gen. Michael Brogan, head of Marine Corps Systems Command. He said Sen. Joseph Biden, D-Del., has already submitted amendments to Pentagon budget legislation, augmenting existing plans to fund the MRAP program as needed.
"Given that amount of money, I won't have financial restrictions on how fast we can produce the vehicles," Brogan said. "I will need industry to deliver on the promises."
The Marines will buy vehicles from any company that can meet their blastproof standards, Brogan said. Already, many companies are on contract to provide test vehicles, and some have received extra orders based on existing information. Big contracts will come soon, once the evaluations wrap up.
Long-term maintenance isn't a big worry, Brogan said. In the short run, the Marines plan to hire contractors for maintenance and spare parts. If the vehicles stay in the arsenal, the Marines will work with the contractors to keep spare parts and trained mechanics on hand. Brogan said the vehicles share many common components, such as engines and suspensions. "Fundamentally, these are trucks," Brogan said. The MRAP vehicles could have a life span of up to 10 years if they survive their deployment, Brogan said. That means they'll phase out as the Pentagon's next-generation all-purpose vehicle phases in, Brogan said. That next project is called the Joint Light Tactical Vehicle; a contractor has not yet been selected.
Companies with MRAP contracts so far include General Dynamics Corp. (GD), Force Protection Inc. (FRPT), Armor Holdings Inc. (AH), Textron Inc. (TXT), BAE Systems PLC (BAESY), Oshkosh Truck Corp. (OSK), Protected Vehicles Inc., Navistar International Corp.'s (NAVZ) International Military and Government LLC, and General Purpose Vehicles LLC.
The MRAP program will face more oversight as it expands. Defense Department Under Secretary Kenneth Krieg, the Pentagon's chief weapons buyer, is preparing to convert MRAP into the top tier of acquisition programs, invoking additional senior supervision.
Force Protection Boosts Capacity Capacity has been one of the biggest limitations on the MRAP program. U.S. industry had little capacity for churning out heavily armored vehicles because it was considered a "boutique" item, Brogan said.
One company making the sought-after vehicles has turned to outsourcing and new joint ventures to boost capacity. South Carolina-based Force Protection has new agreements with General Dynamics Corp. and Armor Holdings Inc. to help the company increase its production.
Force Protection is the sole provider in the MRAP category three, with its heavily armored Buffalo mine clearer. It also has contracts for the smaller Cougar models in categories one and two, along with the other MRAP contenders. The Buffalo costs around $850,000 per copy. The Cougar has a sticker price of around $500,000 each, depending on configuration. Since its Buffalo and Cougar entered the Pentagon inventory, Force Protection has struggled to keep up with demand. Defense Department officials have said their capacity limitations was one of the motivations for launching the broad-based MRAP effort.
With the joint ventures, Force Protection will get the engineering and manufacturing support it needs to dramatically boost output, said Mike Aldrich, Force Protection's vice president for marketing and government relations. "For the past year, we have been focused on proving to the government that we've settled down our production lines, that we can deliver on time or ahead of schedule, that we can produce more vehicles next month than we had the month before," Aldrich said in a telephone interview. Force Protection made 300 vehicles in all of 2006. It began 2007 with a 700-vehicle backlog, and Aldrich said the company expects it will be able to keep up with the year's demand. He declined to provide updated forecasts, saying the Defense Department had asked the company to be more reserved in its production comments so that enemy insurgents wouldn't know exactly how many new vehicles had made it to Iraq and Afghanistan.
Force Protection investors have had a dramatic ride over the past year. The company's stock rose steadily in the fourth quarter of 2006, but it has dropped sharply in the first months of 2007. It's been trading recently around $19, off its recent high of $22.95 on Jan. 18. In addition to all the new business, the company also has survived a management split that saw one of its founders leave to start Protected Vehicles, a new competitor. Aldrich said Force Protection, which recently gained a NASDAQ listing, aims to provide steadier returns in the future. "Overall, what we are trying to build is a growth stock that is value-based," Aldrich said. "We believe that the value of protecting and saving lives is very significant." -By Rebecca Christie, Dow Jones Newswires; 202-862-9243; rebecca.christie*dowjones.com (END) Dow Jones NewswiresApril 05, 2007 19:00 ET (23
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posted
The publicity is really rocking lately: President George Bush gathers with soldiers at a buffalo, an IED clearing device at Fort Irwin in Barstow on Wednesday. Bush watched demonstrations of latest anti-IED technology for fighting the war in Iraq.
NAVAL OFFICIALS CONFIDENT NEW MRAP PROGRAM WILL STAY ON TRACK
Date: April 9, 2007
Naval officials are predicting a program to rapidly buy thousands of Mine Resistant Ambush Protected vehicles for troops in Iraq will not face cost and schedule woes like those plaguing the Littoral Combat Ship effort.
Navy Secretary Donald Winter said he expects the MRAP program will stay on track.
“It is probably one of the most watched programs we have in the department, particularly with regard to the schedule aspects of that program,” Winter told reporters at the Navy League’s annual conference last week. “And we’ve got some pretty good flexibility there. I’m actually very optimistic with that program.”
Army weapons testers in Aberdeen, MD, are evaluating candidate MRAP vehicles produced by multiple contractors. After tests wrap up in the near future recommendations will be made to Navy acquisition czar Dolores Etter for official delivery of the vehicles, said Brig. Gen. Michael Brogan, head of Marine Corps Systems Command.
Brogan said he has “become more confident over time” that the MRAP program -- which could include more than 7,000 vehicles worth more than $8 billion -- will not face cost overruns or delays.
He cited the recent delivery of extra MRAP vehicles by Force Protection Industries of Ladson, SC, which has a sole-source contract with the Marine Corps for up to 282 MRAP vehicles. Force Protection Industries delivered 19 vehicles in March, two more than required, Brogan said.
“That’s only two more, but it’s two out of 17, that if we can continue that sort of ramp and acceleration, then I believe we can do it,” Brogan told reporters at the conference.
The services want 7,774 MRAP vehicles, a number that has grown several times, Brogan said. Not all of the desired 7,774 vehicles would be produced and sent overseas this year, Brogan said.
At the same event, Etter said the MRAP contract was written so there are incentives for contractors to be ahead of schedule.
“So using incentives that drive the right behavior is very important here,” Etter told reporters.
Etter acknowledged there are challenges with speedy acquisition programs, but said the MRAP effort is different that the LCS shipbuilding program that is under scrutiny for cost overruns.
The MRAP program has more “transparency” than the LCS effort, she said.
“I think if you put speed and transparency together then I think we understand what the challenges are and then we’re better able to better address them,” Etter said. “That was one of the problems with LCS. We did not have the transparency in to the program.”
Etter said she holds “MRAP synchronization” meetings on Fridays with various parties to ensure the program stays on track, including after the vehicles get out of the production facility and before they are sent to Iraq.
Vice Adm. Paul Sullivan, commander of Naval Sea Systems Command, said a littoral warship is more technologically complicated than a MRAP vehicle.
“It’s an armored truck with a good communication system,” Sullivan told reporters at the Navy League’s conference. “The technical risk is lower, so you can go faster and still need to asses risk and put the proper mechanisms in place to assess that.”
Rear Adm. Michael Bachmann, commander of Space and Naval Warfare Systems Command, said he believes appropriate risk mitigation steps are being taken with the MRAP process.
“Speed can be achieved at the same time if you make sure you put the mechanisms in place to minimize or completely eliminate your risk, and I see that in this program,” Bachmann told reporters at the conference.
Of the desired 7,774 MRAP vehicles, most would go to the Marine Corps (3,700) and Army (2,500). The Navy wants 544, Air Force is requesting 697 and U.S. Special Operations Command wants 333 MRAP vehicles, InsideDefense.com recently reported.
The Marine Corps launched an unusual procurement process for the MRAP vehicles last year, because no one company could deliver the number of vehicles needed in a short period of time, Brogan said. Officials issued a sole-source contract to Force Protection Industries while also kicking off a competitive process last November. Nine contractors were awarded indefinite-duration-and-indefinite-quantity contracts by the Marine Corps in January and were to send four MRAP vehicles each to Aberdeen by last month, Brogan said. Yet at least four contractors did not send the vehicles by the March 27 deadline, InsideDefense.com reported.
Brogan said the Marine Corps has delivery orders with five companies and has approximately 639 vehicles on contract. He said the results of the current MRAP tests will help determine if the production schedule laid out by the contractors can be met.
The Office of the Secretary of Defense is reviewing a request to designate the MRAP effort an acquisition category-1D, a designation for big-ticket programs overseen by the OSD. The MRAP effort now is an acquisition category-2 program under the Navy’s purview.
The companies awarded contracts in January are BAE Systems, Ground Systems Division, of Santa Clara, CA; Oshkosh Truck Corp. of Oshkosh, WI; Protected Vehicles of North Charleston, SC; General Dynamics Land Systems-Canada Corp. based in Ontario; Force Protection Industries of Ladson, SC; Armor Holdings of Sealy, TX; Textron Marine and Land Systems in New Orleans, LA; General Purpose Vehicles of New Haven, MI; and International Military and Government of Warrenville, IL.
Some of the funding for the MRAP program is spelled out in supplemental appropriation bills passed by the House and Senate that each also include a timetable on the war in Iraq. President Bush has vowed to veto any final version of that bill that includes the timetable language.
Andrew Feickert, a specialist in national defense at the Congressional Research Service, said there appears to be strong support for the MRAP program in Congress. He said he is not aware of any major budgetary or productions constraints. Versions of the MRAP vehicle have been used in combat and thus it is a “known quantity,” he said.
“So the resources appear to be there as does the ability to produce them,” Feickert said. -- Emelie Rutherford
-------------------- "Great Day for Up!"....Dr. Seuss Posts: 3387 | Registered: Mar 2006
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quote:Originally posted by cspaude: I'm putting money on another M. Davis article within 5 business days.
Glad to see I was wrong. It's good to see these slower daily climbs. Keeps FRPT under the radar. Any rumor on announcement of the big contracts?
Posts: 205 | Registered: Mar 2006
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posted
Anyone listen to the Suntrust presentation yet? I'm too busy with other stuff right now to listen through it.
Posts: 252 | From: WestCoast | Registered: Oct 2006
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posted
I haven't listened yet, but from what they are saying at IV, it sounded good! I think this dip is temporary and we are ready to take off.
Here's a post from fromany2k over on IV:
quote: Presentation Summary
Think we did get some really good pieces of information here:
• COO, CFO, Public Relations: Presenting • Current production: 100/month • Stock outstanding: 67 million • Warrant and options: Under 900,000 • First mover advantage and proven technology • Increase in foreign military demand • Blast range purchase: Replicate new technologies used by the enemy and test against vehicles. • Relationships: • GD – True joint venture (non populated). Split requests between the two companies. Joint Marketing. Have an office in Virginia next to pentagon. • AH: Dedicated to MRAP. Integration and automotive. • Spartan: Contracts only. Good relationship. Replicated Spartan lines in AH as well as in the Ladson plant. Able to work without Spartan eventually. • BAE: Tacom deal for ILAV. FRPT and BAE split production only. No revenues for field support or spares goes to BAE. • 3 classes of vehicles • Buffalo – first developed vehicle • Cougar – Many variants. MRAP variant production is being ramped up. Orders for MRAP should come in last Q2.
• Cheetah – Currently in 2nd generation. 24 of them. Complete validation and move into production in late summer. No current contracts. Expect to receive contracts for JLTV and MRAP Cat I. Also receiving foreign military interest. Additional production capacity should be available for late summer. CAT I buyer has requested production capacity for this vehicle. Intention to put Cheetah into production immediately after verification and validation has been completed that systems in the vehicle work. MMPV solicitation 3rd or 4th week of April. Gets all the attention as the Cheetah is a replacement for the Humvee. “This vehicle will meet this requirement head on.” Did extremely well in the rodeo. This vehicle can handle many applications. Believe that initial production will be 200 vehicles per month, which FPRT expects to be purchased. Expect to ramp up to 400 vehicles for month, with demand still exceeding that supply.
• Mastiff: Additional orders expected. • ILAV: Additional orders expected. • Buffalos: Sole sourced. More contracts expected. • Missed employee numbers (?????) • 82,000 sq. ft. warehouse for received, distribution and storage of materials. Will store spares. Will free up production space. Should be completed in June. • Bought 60,000 sq. ft. facility in Summerville for R&D. Space currently used for R&D will be added to production of Buffalos. • “The darn things work” • Will be applying for additional patents. • Expected 2007 revenue: Should easily reach $600-700 million. • Did not need the strategic alliances for reputation of those companies. Not technology and not capacity (don’t believe that FRPT did not need their capacity). • Anything FRPT can do to get their vehicles into the hands into the soldiers hands, they will do it, without being stupid. • Sale of the company: Will not do anything stupid. • MRAP competition: Supply base saw a spike. Do not know what the real demand is. There is a 6 month lag between the order and the delivery. FRPT has placed orders for the long lag material items. FRPT has had to fight for supply of materials. With GD, who has a mature materials organizations, FRPT is able to obtain better performance terms and pricing, especially for high price tag items. Meeting with GD today in Ladson to go through risk items and remove some of the waste in their purchases. • IP: What FRPT has and if the government will take the design? FRPT has not asked for developmental monies. Therefore, FRPT owns all of its own technology. As long as FRPT continues to increase its capacity, they do not expect the government to take their technology. The IP portfolio that FRPT owns is defendable. The IP from South Africa has not historically been patented. IP portfolio is growing. • Question regarding expectations given Iraq war: Pollard does not have concern with an ending war. He believes this conflict will continue. He believes orders will continue whether or not troops are recalled from Iraq. At minimum, Pollard believes vehicles will need to be replaced if troops return from Iraq. JLTV platform will go on whether or not Iraq war ends. Of the 5 categories, the 3 FRPT product offerings meet the requirements very well. • First vehicles to testing by roughly 5 weeks. The vehicles have already passed the testing. Pollard have not heard good reports about the other vehicles. FRPT will not be deterred by what the other vehicles do. FRPT believes the military needs vehicles with Common (missed the rest – COTS). Brogan has increased requirements significantly. FRPT can not meet 7,700 vehicles by the end of the year. • Logistics: About Spartan. It is probably not bad to have the military leader have his home state in the same state as Spartan. As a percentage, Spartan will not handle 100% of services they offer. AH is better because vehicles can be sold right out of Sealy, TX. Spartan does have another facility in the Carolinas in discussions for dedicated FRPT production
-------------------- "Great Day for Up!"....Dr. Seuss Posts: 3387 | Registered: Mar 2006
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posted
Great close at $20.31. I guess the conference was well recieved. I look for more of the same over the next few days as analysts process the information.
Jo
-------------------- "Great Day for Up!"....Dr. Seuss Posts: 3387 | Registered: Mar 2006
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, today is a good day to buy. The stock usually takes a minor hit from Melissa's slander and then continues on.![[Wink]](wink.gif)
