American Industrial Partners closed the deal last June. The sale included Vertex, which has been a pure-play services business for decades; Crestview Aerospace, which is an MRO, parts manufacture and major assembly company; and TCS, an engineering company that does rapid prototyping of special mission engineering work in Georgia. We combined the three companies. For the first six months, we were carving out of L-3 and realigning the company. A big part of that realignment was the Crestview Aerospace piece that has three legs: parts manufacturing (about 1.5 million parts); major assemblies, such as the CH-47 fuselages and major panels that we build; and maintenance and modifications capabilities. Then we took the rapid prototyping capability of TCS and combined those two over the last year into an aviation sustainment and integration group at Crestview. The services piece, the core part of legacy Vertex, remains intact in Mississippi. The long pole in that realignment was carving out the enterprise system, SAP, which we recently finished so that we no longer have any ties to L-3 in the services agreements.
We did win $370 million in new contracts during that period too.
John “Ed” Boyington Jr., Vertex Aerospace’s CEO, talks about the company’s first year in operation since L-3 Technologies sold it to American Industrial Partners—integrating with Crestview and TCS, expanding internationally and becoming a full services aftermarket sustainment company with more than $1 billion in revenues. Before the sale, he was president of L-3 Vertex Aerospace. He retired from the U.S. Navy as rear admiral.
Now that the integration and realignment is done, and the ERP system is functioning, what are your aspirations for the company over the next five years?
Our services business will continue to grow organically, and probably expand to some adjacent markets, as well as combining services and field service teams as we penetrate some of the international markets. There are lots of synergies between the services side and the MRO businesses, as well. We’re platform agnostic and we’re also black box agnostic, so we can develop a capability by looking for the best-of-breed and developing that into a B kit (the systems that fulfill the requirement). Then we take that B kit and design it for installation as an A kit, followed by building the A kit in Crestview and transitioning it to full-rate production. That capability lends itself very well to special mission and classified programs. That opens the aperture quite well as we go forward.
Vertex opened an office in the UAE earlier this year. How difficult is it to garner military contracts abroad?
We were constrained in global growth under the previous ownership and we didn’t have the additional engineering and MRO capabilities that we have now, so now we can go to market with a broader offering. We opened an office in Abu Dhabi, for both commercial direct sales and foreign military sales (FMS) opportunities—focused on the Middle East and North Africa. We’ll open others. It’s very competitive and you’ve got to be present in the country and region to develop relationships. Most countries are trying to bring more military capabilities inhouse, so they are going through a transition. We can work with them as partners to establish those depot capabilities, so they will eventually do the work themselves and we work ourselves out of a job. We currently have the S-92 helicopter fleet for the Emir in Kuwait, which is a direct commercial contract, and we have an FMS contract for C-130J maintenance for the Kuwaitis, so we have an office there as well.
I am but I think we can do more work on the commercial platform side–the fabrication of major subassemblies and manufacturing of parts, in our Crestview operation. I see that as a growth area. On the platform side, we primarily work on government agency aircraft, from pure government aircraft such as attack fighters and then we have commercial derivative aircraft that we maintain to FAA standards. It’s a nice mix—we’ve touched about 90 different types of aircraft over our history: fixed wing, helicopters and unmanned aerial vehicles (UAVs) such as the Global Hawk and Predator.
Are drones, or UAVs, a growing part of your business?
If you’re in aviation and don’t have that in your scope, you won’t be in aviation in the long term. So yes, it absolutely is, particularly for the bigger UAVs and the UUVs (unmanned undersea vehicles), for service and maintenance.
Crestview previously was very underserved in MRO. It has 500,000 sq. ft. of covered space and 100 acres right on the airport, which has an 8,000 ft. runway. Crestview has done more than 400 C-130 aircraft mods. So energizing that business is a focus, too.
In summary, I’d say special mission, classified programs, rapid prototyping offerings as well as international markets are our thrust as we go forward with our restructured company.