Tuesday, November 25, 2008

More House Cat than Cougar in Force Protection's Future?

Force Protection (FRPT-$3.47), a manufacturer of ballistic- and blast-protected wheeled vehicles for the U.S. military, reported a profit of $19.9 million for the third quarter of 2008 ended September 30, compared to a net loss of $(799,000) in the prior-year quarter. Chief Executive Officer Michael Moody credited the earnings’ turnaround, in part, to growth in spare parts and services revenues. Nonetheless, as the company lost out in its bid to build the Pentagon’s next-generation, mine-resistant Humvee, forward growth visibility is somewhat hazy. The Cougar series remains its top ‘Mine Resistant Ambush Protected’ (MRAP) vehicle, representing 95 percent, or $882 million, of total MRAP vehicles it sold to the U.S. military for the nine-months ended September 2008.

A key challenge to future growth will be lessening its dependence on the Department of Defense for virtually all of its business, especially when President-elect Obama campaigned on withdrawing substantially all troops from Iraq in 2010. [
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Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

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