Parker Hannifin Corporation
's (
PH
) aerospace segment, Parker Aerospace, has entered into a
public-private partnership (
PPP
) agreement with the U.S. Navy's Fleet Readiness Center-Southwest
(FRC-SW) in San Diego.
Through this public-private partnership, the Parker Aerospace
Customer Support Operations will be able to expand its offering of
logistic services by facilitating the Navy to directly enter into
workloads contract with Parker. Earlier, the contract was directed
to the depot without any participation of Parker.
Initial signing of the agreement was done on September 27 and a
formal signing ceremony will be held on October 6. With the formal
signing, the Parker/FRCSW partnership was established, covering all
Parker bills of material on F/A-18A through G aircraft
platforms.
As per the agreement, Parker will be supporting the experienced
team at FRCSW while supplying all of its parts necessary to perform
the repairs with the mutual objective of ensuring service readiness
of the worldwide fleet.
The Navy had wanted to enter directly into a contract with
Parker on all the F/A-18, E-2, and V-22 Parker parts, with annual
revenue generation capacity of $10 million. A resource to manage
the business on-site at FRCSW will be hired by Parker. For Parker's
inventory and kitting of bills of material, an on-site office and
area has been provided.
We believe Parker Hannifin is a high-quality company that is
showing good execution. The company is witnessing a recovery in
aerospace demand, which positively favors its future growth. MRO
(Maintenance, Repair, and Overhaul) is expected to get a boost from
continued deferral of capital investment in new machines. Parker
Hannifin's strong exposure to MRO-type products and ability to
convert net income into free cash flow will benefit future
earnings.
However, the company's domestic and foreign operations are
subject to significant competitive pressures. To compete
successfully, the company's Industrial Segment and Climate &
Industrial Controls Segment must excel in terms of product quality
and innovation, customer service, manufacturing and distribution
capability and price competitiveness. Meanwhile, the Aerospace
Segment must excel on the basis of technological and engineering
capability, quality, delivery and service, and price
competitiveness. Major competitors of Parker are
Eaton Corporation
(
ETN
) and
Honeywell International Inc.
(
HON
)
Parker-Hannifin Corporation is a leading worldwide full-line
diversified manufacturer of motion and control technologies and
systems, including fluid power systems, electromechanical controls
and related components. In addition to motion and control products,
the company is also a leading worldwide producer of fluid
purification, fluid and fuel control, process instrumentation, air
conditioning, refrigeration, electromagnetic shielding and thermal
management products and systems.
Currently, we are maintaining a Zacks #2 Rank (short-term Buy
recommendation) on Parker-Hannifin.
EATON CORP (
ETN
): Free Stock Analysis Report
HONEYWELL INTL (
HON
): Free Stock Analysis Report
PARKER HANNIFIN (
PH
): Free Stock Analysis Report
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