This article is a follow up on “If You Must Speculate: Force Protection” (FRPT) published on April 15th, 2011, and is intended as a closer examination of the YTD 2011 FRPT order book, along with some additional speculation on the future growth prospects in 2011 and 2012.
In the above article we pointed out that the total worth of the company to a prospective acquirer was about 150 mln. as of April 15th (share price $4.54). The stock has risen to $4.80 per share as of close of market on May 4th, 2011, a gain of some 5.7% in just under three weeks.
The following comment is taken from the April 15th article:
“U.S. contracts for spares, sustainment and upgrades for the existing fleet of vehicles already in service make it likely that FRPT will grow its revenue over 2010, even without winning these new contracts. With improved gross margins, and no lawsuits to settle, it seems reasonable that earnings will be higher for 2011 (albeit recognized in the back half of the year).”
The company made the following comments on May 2nd:
The combination of today's announcement, other awards previously secured in 2011, and the portion of funded backlog at December 31, 2010, that is anticipated for delivery this year, results in solid visibility for the company's previously disclosed outlook for 2011. As such, the company reiterates its expectation of year-over-year growth in total revenue and earnings, with the majority of its 2011 full year financial results anticipated to be recorded in the second half of the year.
An Update on the Numbers
So far in 2011, the company has announced five awards worth 211 mln. This averages to a 42 mln. award every 24 days. At this rate, there would be 15 awards announced in 2011 with a value of 631 mln. (see below)
As indicated in the April 15th article, we also believe a second follow-on U.K. MoD order is all but a foregone conclusion. Since FRPT’s Ocelot(a light protected patrol vehicle, or LPPV) is scheduled to replace the U.K. military's Snatch Land Rover, and the Snatch Land Rover fleet consists of some 991 built vehicles, we think it is reasonable to further estimate that the U.K. indeed is interested in more than 200 of the Ocelot’s that comprised the initial order. We further believe an award for an additional 200 vehicles will be announced during 2011 for the following reasons:.
a) The vehicle is currently in production.
b) The U.K. MoD has indicated that the procurement is operationally “urgent” with initial delivery required in 2011.
For this reason, we have included an additional $280 million award to the annualized award rate referenced above in the following chart:
Here are the numbers:
Contracts: Value Date Days 1/1/2011 2011 $11,400,000.00 3/30/2011 88 $46,600,000.00 4/6/2011 7 $27,400,000.00 4/21/2011 15 $18,800,000.00 5/2/2011 11 $106,900,000.00 5/3/2011 1 Total $211,100,000.00 Avg. Avg. $42,220,000.00 24.4 4.87 pts. $2,056,114.00 Annualized orders 15 Annualized Rev. $631,569,672.13 4.87 pts. $30,757,443.03 UK MoD 2nd order $280,000,000.00 Tot. w/ An. Rev. $911,569,672.13 4.87 pts. $44,393,443.03
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