A report by consulting firm McAleese & Associates says BAE Systems™ U.S. electronic systems sector saw its 2018 sales rise 14 percent to $5.3B with 15.3 percent sector operating margin and operating profit of $809M.
Jim McAleese, founder and principal at McAleese & Associates and a 2019 Wash100 winner, wrote BAE™s U.S. arm attributed the figures to the F-35 electronic warfare program, the U.S. Navy™s Advanced Precision Kill Weapon System and increasing classified activity.
The U.S. electronic systems sector™s 2018 capital expenditure reached $200M and the company plans to invest a similar amount into the segment in 2019.
The U.K.-based contractor recorded a 25 percent growth in 2018 backlog to $65B driven by several programs such as the U.S. Marine Corps™ Amphibious Combat Vehicle 1.1 program and the U.S. Army™s Mobile Protected Firepower initiative.
BAE™s U.S. platforms and services business posted $4B in 2018 sales, up 5 percent from previous year.
Jerry DeMuro, president and CEO of BAE™s U.S. arm, responded to a question about combat vehicles within the platforms and services business during the company’s earnings call Thursday, according to the report.
œI have been asked before, when we will hit double-digit [margin]. I think it is still a couple of years away for us. ¦ Most people are aware of the M109 Paladin being behind schedule, but there are about a half dozen other programs. I think we are hitting the quality statistics that we want. We are delivering defect-free vehicles on a regular basis now. ¦ We are a couple of years from that [double-digit operating margin target], said DeMuro, a 2019 Wash100 winner.
McAleese noted the defense contractor expects the final defense funding for fiscal 2020 to be at least $733B.
œIn terms of the U.S. budget, our planning assumptions are basically somewhere above the [$716B] floor that was established in 2019, adjusted for inflation¦[W]e think that the pressure of the 2020 elections also provides a lot of leverage for a [2020-2021 BBA] two-year agreement under the budget-caps, DeMuro noted.
