We are an innovative technology-based manufacturer of aerospace and defense
products and systems, with a real estate segment that includes activities related
to the entitlement, sale, and leasing of our excess real estate assets. Our
operations are organized into two segments:
Aerospace and Defense — includes the operations of our wholly-owned subsidiary
Aerojet Rocketdyne, Inc. (“Aerojet Rocketdyne”), a leading technology-based
designer, developer and manufacturer of aerospace and defense products and systems
for the U.S. government, including the Department of Defense (“DoD”),
the National Aeronautics and Space Administration (“NASA”), major
aerospace and defense prime contractors as well as portions of the commercial
sector.
Real Estate — includes the activities of our wholly-owned subsidiary Easton
Development Company, LLC (“Easton”) related to the re-zoning, entitlement,
sale, and leasing of our excess real estate assets. We are currently in the
process of seeking zoning changes and other governmental approvals on our excess
real estate assets to optimize its value.
Our primary aerospace and defense customers include the DoD and its agencies,
NASA, and the prime contractors that supply products to these customers. We
rely on U.S. government spending on propulsion systems for defense, space and
armament systems, precision tactical weapon systems and munitions applications,
and our backlog depends, in large part, on continued funding by the U.S. government
for the programs in which we are involved. These funding levels are not generally
correlated with any specific economic cycle, but rather follow the cycle of
general public policy and political support for this type of funding. Moreover,
although our contracts often contemplate that our services will be performed
over a period of several years, the U.S. Congress must appropriate funds for
a given program and the U.S. President must sign government budget legislation
each government fiscal year (“GFY”) and may significantly increase,
decrease or eliminate, funding for a program. A decrease in DoD and/or NASA
expenditures, the elimination or curtailment of a material program in which
we are or hope to be involved, or changes in payment patterns of our customers
as a result of changes in U.S. government outlays, could have a material adverse
effect on our operating results, financial condition, and/or cash flows.
Even with overall budget levels set for GFY 2017, Congress was not able to pass
a full year appropriation for either the DoD or NASA prior to the start of GFY
2017 on October 1, 2016. As a result, Congress passed a short-term Continuing
Resolution (“CR”) to fund the U.S. government until December 9,
2016. After the November U.S. presidential election, at the request of the Trump
Administration, Congress passed another CR through April 28, 2017 to allow the
new Administration to shape federal spending. Although details of the plans
to address perceived shortfalls in DoD readiness and modernization remain unsettled,
the Trump Administration has signaled strong support for nuclear modernization
and missile defense.
The SLS appears to remain a top Congressional priority as the CR included a
provision to allow NASA the funding flexibility for SLS and deep exploration
to remain on track. The SLS program also has enjoyed wide, bipartisan support
in both chambers of Congress. We maintain a strong relationship with NASA and
our propulsion systems have been powering NASA launch vehicles and spacecraft
since the inception of the U.S. space program. Our booster, upper stage and
Orion vehicle propulsion systems are currently baselined on the new SLS vehicle
and both upper stage and booster engines are in development for future SLS variants.
Due to the retirement of the space shuttle fleet, U.S. astronauts have been
dependent on Russian Soyuz flights for access to and from the ISS for the better
part of this decade. NASA has been working to re-establish U.S. manned space
capability as soon as possible through development of a new “space taxi”
to ferry astronauts and cargo to the ISS. In 2014, Boeing’s CST-100 Starliner
capsule, powered by Aerojet Rocketdyne propulsion, was selected by NASA to transport
astronauts to and from the ISS. As Boeing’s teammate, Aerojet Rocketdyne
will be providing the propulsion system for this new capsule, thereby supplementing
its work for NASA on the SLS designed for manned deep space exploration. In
both instances, we have significant propulsion content and we look forward to
supporting these generational programs for NASA.
Major Customers
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8.35%