Triumph to Acquire UTX's Unit

Zacks

Triumph Group Inc. (TGI), a leader in aerospace markets, plans to acquire Goodrich Pump & Engine Control Systems (:GPECS) business from United Technologies Corporation (UTX).

GPECS supports the helicopters, business jets, commercial, military markets with the supply of aerospace fuel systems. The strategic deal will help Triumph to diversify in its offerings to the existing clientele with the proprietary offerings of GPECS as well as set foot in newer markets, where GPECS has a good hold already.

The acquisition is expected to close by March 2013, subject to regulatory approvals. Subsequent to the acquisition, the acquired unit will be included in the Aerospace Systems Group of Triumph and will operate as Triumph Engine Control Systems, LLC. GPECS is expected to contribute roughly $195 million to Triumph’s annual revenue starting from the day of completion.

Triumph seems to be on an acquisition spree; in December last year it announced the acquisition of Embee Incorporated. Revenue contribution from this acquisition will also be included under Triumph’s Aerospace Systems Group.

The quarterly results for the company are due by the end of this month. As per Zacks Consensus Estimate earnings per share of $1.41 are expected. Triumph currently has an average quarterly earnings surprise of 17.2% over the last four quarters, much lower than its competitor Lockheed Martin Corporation (LMT), with an average quarterly surprise of 23.2%, over the same timeframe.

Triumph designs, engineers, manufactures, repairs and overhauls aircraft components. The company also processes, distributes and fabricates metal products. The stock currently holds a Zacks Rank #1 (Strong Buy), whereas Lockheed holds a Zacks Rank #2 (Buy). Also, the company’s competitor, Teledyne Technologies Inc. (TDY), with an average quarterly earnings surprise of 10.5% over the last four quarters, holds a Zacks Rank #2 (Buy).

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