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Huntington Ingalls makes another deal to expand services work

Shipbuilder Huntington Ingalls Industries is continuing to build its government services business by acquiring Fulcrum IT Services, a Northern Virginia company.

This latest deal comes on the heels of Huntington Ingalls' December acquisition of G2 Inc., which brought added cybersecurity capabilities.

Terms of both the G2 and Fulcrum deals were not disclosed. The Fulcrum acquisition is expected to close in February.

With Fulcrum, Huntington Ingalls is picking up software development, data analytics, cyber and advanced engineering skills. Fulcrum will expand Huntington Ingalls' capabilities in enhanced situational awareness and predictive threat analytics.

“The company’s unique experience and capabilities across the C5ISR domain grow our reach and support in the intelligence and special operations communities,” said Andy Green, president of Huntington Ingalls' technical solutions business.

Best known for being the country’s largest military shipbuilder, Huntington Ingalls has been building a substantial services business since its acquisition of Camber Corp. in 2016. After that deal, it took Camber and pulled together the other services work it already had to form Green’s technical solutions business.

That business should hit nearly $1 billion in annual revenue for 2018. Huntington Ingalls will report its 2018 financial results on Feb. 14. For the nine months ended Sept. 30, the technical solutions business recorded $721 million in revenue, up slightly from the same period the year before.

The shipbuilding businesses are both larger -- $1.9 billion for Ingalls Shipbuilding and $3.4 billion for Newport News Shipbuilding through the third quarter. But Huntington Ingalls sees the services business as highly complementary as the services can augment how the company supports the lifecycle of the platforms it builds.

“Fulcrum’s capabilities in software development, data analytics, cyber security and advanced engineering are strongly aligned with national security priorities and complement our priority practice areas,” Green said.

Fulcrum works with a variety of military customers including the U.S. Special Operations Command, Central Command, and Africa Command as well as the Defense Intelligence Agency, the Air Force and other defense and intelligence organizations.

Fulcrum also has a civilian business that supports customers with software and systems engineering, cybersecurity and IT infrastructure services. Fulcrum also has a health care business that supports scientific research and analysis, programmatic support and operational support.

Investment bank Houlihan Lokey advised Fulcrum on the deal.

Fulcrum's roots go back to the early 1990s and a value-added reseller known as Government Micro Resources. In 2006, the product business was sold to PC Mall and the remaining professional services business was renamed Fulcrum IT Services.

In 2010, Boyne Capital Partners and Grindstone Partners joined Fulcrum’s management team to buy out the previous owners. With Boyne’s support Fulcrum made four acquisitions over the last eight years: Dataline’s IT group in 2011, Corbrin in 2012, Forgentum Inc. in 2014, and the PTR Group in February 2018.

So one consolidator is taking out another one, but that is a common theme in the government market especially these days.

Posted by Nick Wakeman on Jan 18, 2019 at 10:25 AM


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