ITT Exelis stays upbeat as it pursue a diverse set of projects across multiple markets.
Like other major government contractors, ITT Exelis is facing a murky federal market, especially on the Defense side, where spending priorities are undergoing significant changes. But ITT Exelis executives believel their company is fortified against whatever happens in the market by its diverse set of capabilities, customers and lines of business.
“We’re probably the most diversified, mid-cap defense company out there,” said John Shephard, senior vice president and chief strategy and corporate development officer at ITT Exelis. “We have a portfolio that has the diversity of a prime as opposed to most of the companies that are in our size range, which tend to be more concentrated.”
ITT Exelis, an aerospace, defense and information technology firm, was spun out of ITT Corp. last year, becoming a separate, publicly traded company in October. It ranks No. 15 on the 2012 Top 100 with $2.4 billion in prime contract revenue in fiscal 2011.
With lines of business in electronic, geospatial, information and mission systems, Exelis concentrates its expertise on networked communications, sensing and surveillance, electronic warfare, air traffic solutions and information systems.
“We’re built around C4ISR electronics and systems and technical services and we’re also platform agnostic, so that makes us different than the primes,” Shephard said. “We put equipment on most platforms.” He noted that Exelis has “a good deal of content” on the Defense Department’s Joint Strike Fighter aircraft and on aircraft carriers, submarines and about 120 different types of ground vehicles.
Shephard said the company’s diversity and platform agnostic technology puts Exelis in a “fairly good position” in a defense market characterized by shifting priorities, declining expenditures and program cuts.
“We don’t have any more than 8 percent of our revenues coming from any single program,” he said. “Because we are diversified, we’re not overly concentrated in a way that puts us at disproportionate risk.”
As an example, Shephard said that although ITT Exelis will feel the impact of expected delays in purchases of the F-35 Joint Strike Fighter jet, the company recently won a $238 million contract from the Navy to begin production of the AN/ALQ-214 on-board jammer system for the F/A-18 aircraft.
Although ITT Exelis continues to win contracts in the defense sector, including recent classified awards in electronic warfare systems, the company is “building out” its non-DOD, international and commercial business, Shephard said.
On the civilian agency side, for example, ITT Exelis and its partner GE’s Naverus in May captured a $2.77 million contract from the Federal Aviation Administration to help accelerate satellite-based procedures that will let planes fly more directly to their destinations.
Shephard emphasized, however, that ITT Exelis has no plans to become a “multi-industrial” company. “That’s not our intent,” he said. “The commercial things we’re doing are adjacent to the technologies that we have on defense.”
Moving forward, ITT Exelis is focusing its technology spending on anticipated areas of growth and “strategically sustainable technologies, including “sensing to decisions,” Shephard said. “We provide not only sensors in space, on aerial platforms and in night goggles, but we also have strong expertise in the information processing around that—all the elements of sensing decision-making.”
The company also is investing research and development funds in new electronic warfare technologies such as affordable, ready-now communications systems. “The Army in particular is looking for more affordable ways of upgrading its communications networks,” Shephard said.
To nurture its business strategy, ITT Exelis officials engage in “scenario planning,” he added.
“As we think about our strategy going forward, we’re actually developing a set of scenarios around the current president’s five-year defense plan, which [involves] a $5 billion cut scenario over 10 years,” he said. “Our strategy is built around what our alternatives are, where we place our bets in that kind of environment. So we’re pretty bullish on our prospects.”