Aerospace & Defense Industry
Does anyone here work in this industry. I have an interview coming up with a BB investment bank in their M&A department. Any help would be fantastic. Thanks
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I work in the industry... as in, for a major aerospace company as an engineer.
You're probably looking for a banker focusing on the sector?
aerospace and defense at a BB? and specifically aerospace and defense M&A at a bb? does this even exist? isn't this part of industrials?
why would you be asked about A&D specifically in an M&A interview?
what do you want to know about A&D specifically?
If you want to learn some basics about the industry read some research... if you don't have access then go read the MD&A section of some filings on the primes and guys like boeing... know something about production rates (recently hiked at boeing and airbus) and know something about OEM versus aftermarket suppliers and shit like that
^^^^ Dipset is a little more sophisticated than that bro. I am sure he has covered those bases. I was actually put in contact with a dude who does A&D at a middle market firm. Im not going to be able to get in contact with him in time to help. Sorry man.
You should prob look into the changes in the defense budget... from what I've heard, it's shifting from heavy weaponry and into more surveillance, recon, and intelligence... so that might be a good point to mention, the most recent S&P industry report was also a good source of background information
I would not quote James in an interview. That is a grossly uninformed comment. The defense budget is complex and there are no sweeping summary comments you can really make about the budget.
Dipset may be "sophisticated" but his question seemed basic which is why he got a basic answer.
You know what, go ahead and walk in there and say what James told you, LOL. (what about aerospace, the question was about A and D, why are you just going to make an innacurate statement about D and not answer half of the question)?
If you want some tips on what to read up in A&D you can PM me.
There have been some transactions in Aero lately and those investor presentations have great info on the space. Since you are so sophisticated then you won't need me to point you to the transaction (public buyer, you probably already know it).
I don't know much about aero M&A, but here's my aero insight anyways. You're dealing with government contracts, private contracts, or both. Here's how the (aviation) industry works: Private: Commercial and general aviation. Commercial is all the big names, Boeing, Bombardier, Embraer, Airbus... General aviation: Cessna, Cirrus, Beechcraft, Pilatus... For the most part, the commercial guys make half their stuff, and contract a bunch of their stuff out to other companies - either general aviation trying to fill voids in their production capacity, or an "aerostructures" company - mainly specializing in composites, or some other "specialty" design/manufacture. General aviation tends to make everything in-house. Government contracts: This is the interesting part. You have "prime" contractors - Boeing, Northrop, Lockheed. You also have non-primes that will bid for some of the same projects. When the government awards a contract, they will specify a prime as well as contractors that must be given contracts to make parts. This is akin to a 363 auction, where the stalking horse gets a payment for their due diligence if they don't win. Since a lot of these contracts are research and proof of concept (DARPA or AFRL), there's economies of scale, since parts tend to be made in quantities of one to a dozen. For these smaller aerostructures contractors, location is key. Having a location out in middle of nowhere, middle America, where there isn't much industry will funnel tax dollars from the congressmen representing these areas.
^^^^^^what the fuck?
this explanation made me lol
GD is also a prime, right? (answer=yes)
How in the world is that akin to a 363 auction? The A&D suppliers out there win contracts from the primes while the prime typically integrate large programs/platforms. Not always that way, but thats a better explanation on the whole than that crap you just wrote above.
A better way to think about Aero is OEM versus aftermarket. Thats typically how most people classify what goes on in aero instead of bigger guys who make half their stuff (lol)
General Dynamics and General Atomics are both considered primes. Many of the contracts that they "win" are actually mandated by the group writing the contract (congress). These are often, but not always given to those who bid on the initial contract - this is my 363 reference.
is nothing like 363
general atomics is not a prime
Sorry, I'd consider the aerospace side of General Atomics a prime.
there is only one prime -robert stevens
yeah, and its in my pants
hmmm, would working in this industry group hurt your chances of working at a HF after your two years since A+D stocks are usually stable?
you build transferable skill sets.
I wouldn't think working in A&D is the best for HF...
However, it just depends on how you pitch the experience you are getting. But I would say there are probably better places to leverage your resume up with stuff that's attractive to HF's
Aerospace/Space/Defense Info for interview (Originally Posted: 09/04/2017)
I have an interview coming up with a aerospace/space/defense boutique. I've been reading some industry outlook reports but was wondering if anyone has any suggestions for further reading materials. Already went through the A&D threads on WSO. One poster said
"I would not quote James in an interview. That is a grossly uninformed comment. The defense budget is complex and there are no sweeping summary comments you can really make about the budget.
Dipset may be "sophisticated" but his question seemed basic which is why he got a basic answer.
You know what, go ahead and walk in there and say what James told you, LOL. (what about aerospace, the question was about A and D, why are you just going to make an innacurate statement about D and not answer half of the question)?
If you want some tips on what to read up in A&D you can PM me.
There have been some transactions in Aero lately and those investor presentations have great info on the space. Since you are so sophisticated then you won't need me to point you to the transaction (public buyer, you probably already know it)."
This was from 2011 but could anyone point me in the right direction to find some current investor presentations summarizing the spaces?
Thanks
Interview is Thursday. Any help is appreciated
I heard space banking is out of this world!
.
Last bump
Idk shit about space banking. But if you want some insights on A&D, check out KippsDeSanto's page. I've built models using their insight pages.
Very helpful, thanks! I knew they were a major player but didn't think the site would have as much info as it does
Career in Defense Industry ER (Originally Posted: 05/30/2011)
Hello everyone, I recently joined the forum, and I'm looking for some guidance on the next phase of my career preparation.
My plan is to apply for internships next summer in the DC area (where I live) in equity research for defense companies (this would include Lockheed Martin, Northrop Grumman, General Dynamics, Raytheon, etc), and I am looking for some advice as to how I should spend the rest of 2011 and winter/spring of 2012 as far as studying for certs, building my skills, etc. before applying to internships in order to make the strongest case possible for myself.
To preface, I have work experience in the defense industry already, which includes defense contracting (the "micro" picture), analyzing defense budgets of other countries (the "macro" picture), and two other internships in market forecasting and industry analysis for high-tech manufacturing of IT and defense capital goods.
I have a B.S. in an unrelated field from '06, but I am finishing up two graduate certificates (economics and accounting) through the USDA Graduate School here in Washington DC (it's a school that barely anyone has heard of outside the federal government, and is run by the Department of Education). So far, I've taken the following classes:
Microeconomics
Macroeconomics
Business, Government, & Society
Economic Indicators
corporate finance
Econometrics I
Natural Resource Economics
Accounting I: Introductory accounting Accounting II: Financial accounting Precalculus
Int'l Trade Policy
Statistics I
Accounting III: Management accounting
Intermediate accounting I
Intermediate accounting II
Congressional Budget Process
Financial Accounting
Statistics II
Econometrics II
Financial Statement Analysis (summer 2011 - calc I, calc II) (fall / winter 2011 / 2012 - mathematics for economists I and II)
I have a 3.6 GPA as of right now.
Basically, every project or report I have completed throughout these classes have been related to my area of interest (defense companies).
I am spending the summer studying for the GMAT, and plan to apply to MSF (MS in finance) programs in the DC area (Hopkins, Maryland, George Washington U, and American U).
Beginning in the fall (after I'm finished with the GMAT), I think I should start studying for CFA level 1.
My plan is to apply for internship positions for summer of 2012 in the dc area, so if anyone has advice on what skills I should also be learning (financial modeling?) or research projects on defense companies I should be working on within the next year, that would be much appreciated.
Thanks! Soccerguy728
It looks like you laid out the whole plan - is there a question in there somewhere? You've got your shit together regarding the role you want.
But.
Do you realize that the vast majority of people working in the organizations you are interested in have horrid bureaucratic jobs and eventually come to hate this government and or country? My landlord works for Raytheon and hates them. I have friends at LM, NG, and a few smaller contractors. They all hate the defense agencies and everything about them. Be careful that you REALLY know how they operate, and how you will be able to tolerate it for the long term.
Could be a cushy job with good pay and a logical career progression though!
Missing, just curious, but why do they all hate those comapanies / the govt so much?
Apparently, everything is redundant to the point of frustration (more than one person does the same job or thing, often differently and time is wasted picking one option) there is a ton of bureaucracy and I hear stories about people just being paid to sit there all day and burn through budget, etc. It sounds awful and most people I know in the industry (many, because I am in the DC area too) are really frustrated with the work system.
My new underling analyst quit a well paying govt consulting job because it takes them so much time to implement and idea or act on a piece of analysis that it is well outdated and a waste of money by the time it is implemented.
Aerospace & Defense Divison: Anyone willing to answer a couple questions regarding the industry? (Originally Posted: 05/18/2016)
Here are some of the questions I have: I was wondering to what extent do you get to interact with aerospace & defense companies while working in the A & D division of banking. I love the industry, but I feel that I could excel greater in a financial environment. As a result of this, I chose to major in finance as opposed to engineering. Would this put me at a disadvantage? Or is a engineering degree not required to excel in the A & D division? Furthermore, I was wondering how difficult it is to enter into the A & D sector of banking immediately after college. If not, what do you feel would be the optimal way to lateral into the A & D industry of banking?
I am an incoming A&D banking analyst at a large boutique (think William Blair, HL, Harris Williams, etc.) that also interned in the sector. Most of our work revolves around selling $200M - $1B companies to large aerospace companies / defense contractors and financial sponsors. My path, as well as most of the other analysts' paths, seemed to be pretty typical of other investment banking analysts (finance oriented education). When you apply to internships just make sure to indicate your interest in the A&D group (although not all banks have one).
Ok cool. Thanks for the input.
D&A for Aerospace/Defense Companies (Originally Posted: 05/15/2016)
Hi guys,
Was trying to teach myself some merger modeling and picked Lockheed Martin and Northrop Grumman as two random companies to model a hypothetical merger. Looking through their 10-k's, I noticed neither of them listed D&A on their income statements, but it does appear on their cash flow. I noticed Boeing does this as well. Is there a particular industry-specific reason for this?
Thanks, jjizzle
Haven't looked at it, but could it be that their D&A is hidden within another line item? Doubt they don't have any.
D&A is tacked on with COGS through most industries
D&A will almost always be lumped in partially with SG&A and/or COGS depending on the source (for example, depreciation of a company jet to fly management around will be lumped in with SG&A, while depreciation of a factory used to create the company's products will be lumped in with COGS). That having been said, ALL companies will include the full D&A expense amount in the cash flow from operations section of the Cash Flow Statement. This is the number that you want to use 100% of the time, even if D&A is broken out in the income statement, as that may not be the full amount of some of it is also lumped in with COGS or SG&A.
Thanks for the help so far. So how do I model a situation where D&A is lumped in with COGS? Obviously I link the depreciation schedule to cash flow and the balance sheet, but for income statement, do I try to modify my COGS projection or do I just not show EBITDA?
For example, if Revenue is 200, COGS is 100, SG&A is 50, and D&A is 10 Do I do this... Revenue 200 - COGS 100 - SG&A 50 =EBIT 50 Or do I do this... Revenue 200 - COGS 90 - SG&A 50 = EBITDA 60 - D&A 10 = EBIT 50
Note that I'm talking about projected periods, not changing historicals to fit my desired format. Thanks in advance.
Imo the more you can break it down, the better because it gives you slightly more accuracy rather than just lumping it together.
I would also change the historical numbers just to give you an idea of a ballpark expected range.
Boutiques with Aerospace & Defense focus? (Originally Posted: 08/17/2008)
Can anyone shed some light into boutique IBs with large a&d divisions?
Canaccord adams
Specifically,Jeffries Quarterdeck. Used to be a A&D focused boutique until Jeffries bought it out. Had some of the senior team members leave, but they recently picked up some of Bear's A&D guys that did some fairly large deals a few years ago, so they are poised for some decent action.
Quick search for "Aerospace" on WSO led me to this thread:
http://www.wallstreetoasis.com/forums/best-banks-for-aerospace-and-defe…
Anyone work in aerospace & defense? (Originally Posted: 12/18/2008)
^^
Curious as to what publications are most commonly read in the industry. Free resources for just the industry?
Boeing's market outlook reports. I currently have the 2008 edition--very informative.
Sorry to dig up old post.
Aviation Week(paid, but pretty critical) Aerospace Manufacturing and Design Space News(paid, but free online I think) NASA Tech Briefs MilSat Magazine(online)
Defense industry HF's (Originally Posted: 12/23/2011)
Is anyone aware of any HF's that do a lot of investing in the aerospace/defense industry?
Thanks.
http://seekingalpha.com/article/271071-top-aerospace-defense-picks-by-f…
Take in the middle.
thanks, very helpful!
Aerospace & Defense Sector (Originally Posted: 09/04/2012)
anyone know any good blogs or other free resources that give up-to-date details on the status of individual contracts/programs for the big defense guys?
interested
http://bx.businessweek.com/defense-industry/blogs/
Defense News, Military & Aerospace Electronics, Defense Systems. Three major web publications that also send out emails on a weekly basis.
1st Year Analyst - Government Defense & Space (Originally Posted: 07/22/2013)
Figured id introduce myself here, ive been reading for a few years throughout undergrad and decided to join now that ive landed my first real world job.
I was recently hired as one of eight new Financial Analysts out of the 105 people that applied for the position almost 11 months ago at this point. After two rounds of interviews and, background check and a heavy session of drug testing I was given the nod and i'm excited about it to say the least. Its been a little over one year since graduation from undergrad and I am excited about this opportunity to learn and grow professionally.
Besides the common denominators we all inevitably share, I enjoy saltwater fishing, cruising, photography, discovering new music and hanging out with my friends etc. WSO has been a great reading resource and I look forward to learning more as I go on as well as contributing where I can.
How is Moscow?
Oppressive
You are in Moscow?
No, I am in Connecticut and have never given Moscow any thought. Assumed OKComputer was making a Snowden reference and was playing along.
Oh, I didn't catch that. My bad
Depreciation/Amortization related Question for Aerospace/Defence Sector (Originally Posted: 08/05/2014)
I wanted to know how would a manufacturing/services related company in Aerospace sector in USA, depreciate its assets and amortize its IP assets? any specific method they follow, Straight line, Double declining? Can someone please explain
We usually model straight line depreciation.
Regarding technology for aerospace, usually you'll see relatively low amortization year to year because useful lives are so long - planes fly 20+ years in some cases before being replaced for new technology, so that IP contributes for a long time.
ISO: Information on Aerospace & Defense M&A/ECM/DCM? (Originally Posted: 11/11/2014)
Currently a REIT analyst but have an interview tomorrow for an analyst position at a bank working in the aerospace & defense group. I just found out about this today so this is a last ditch effort. I realize that I'm not going to get grilled on industry specific questions in general as I have no industry experience but I at least want some sort of commentary to mention in passing.
How do government contracts come into play? Does a company get a contract to supply X ships then goes and tries to raise equity and/or debt to fund the production of those ships? Do [smaller] companies that get contracts at that point become targets for acquisitions? Do smaller companies live/die by contracts? What nuances are there in working with this specific sector vs other sectors? Any major trends going on right now?
I'm reading some industry outlook reports but WSO is always helpful. Thanks in advance.
bump
I have no idea but take a look at this - JPM Aerospace and Defense Business Jet Monthly - http://www.nbaa.org/news/2014/Bizjet_monthly_April_2014.pdf
DoD Finance exit opportunities? (Originally Posted: 04/01/2016)
I may have an offer coming up for DoD ($4B~). Job entails developing proposals/bidding to win contracts. I would be under Finance department. What would be a good exit opportunity under this route? Will there any possibility of going to Booz Allen as an consultant?
bump
Contractor side or government side?
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