Daily Business Report-Feb. 26, 2016
Cubic Corp.’s global defense business that represents roughly 60 percent of its estimated $1.5 billion in revenue.
Cubic Corp. Moves Aggressively
To Bolster Global Defense Business
In a one-year span that featured announcements of three acquisitions, Cubic Corp. unveiled a nearly $400 million bet that the C4ISR market will spur long-term growth in the San Diego-based contractor’s global defense business that represents roughly 60 percent of its estimated $1.5 billion in revenue. C4ISR is military speak for command, control, communications, computers, intelligence, surveillance and reconnaissance.
Cubic made its first move of that C4ISR expansion effort in December 2014 with the $114.5 million acquisition of DTECH Labs, a Sterling, Va.-based manufacturer of ruggedized communications equipment and modular networking tools for use in portable, vehicle, airborne and dismounted settings.
The company then disclosed the second and third steps of its shift one year later through the $232.5 million purchase of tactical communications equipment maker GATR Technologies and in conjunction the $39 million buy of TeraLogics, which designs full-motion video analysis and distribution platforms for customers in the defense, intelligence and commercial arenas.
Altogether, Cubic put $386 million toward the acquisitions in a strategy CEO Brad Feldmann described to ExecutiveBiz as one aimed in part at building a “mission chain” for soldiers and other personnel that use surveillance and communications equipment in missions while on the ground.
“The idea is to be a full lifecycle provider and provide a full subsystem capability for people on the ground,” Feldmann told ExecutiveBiz in an interview conducted at DTECH’s headquarters.
The triple-play of acquisitions positions Cubic as an original equipment manufacturer and a primary source for work on the upgrade cycles, he said.
“We felt by getting all these pieces, we could bid larger opportunities and gain revenue growth with these new sub-capabilities.”
Cubic also added new work with customers such as Special Operations Command and the Defense Information Systems Agency through the deals, plus an added footprint with the U.S. Army through a contract GATR holds with the branch’s Communications-Electronics Command.
Both the series of acquisitions and the company’s OneCubic initiative to realign its defense business affected first quarter results, Feldmann said.
“The first quarter is historically not great for us and there are the investments in our business on top of that. We have a lot of shipments in the latter half that have good margins and see FY 2016 being a good year,” he added.
“We see us hitting it out of the park in 2017.”
Survey: San Diego Small Business Owners
Pessimistic About National Economy
Union Bank’s annual Small Business Economic Survey shows San Diego County small business owners are more pessimistic about the national economy in 2016 than last year, yet remain hopeful about the future of their own businesses.
Overall, more than two-thirds of San Diego small business owners (68 percent) report that the national economy is headed in the wrong direction, a 23 percentage point increase over 2015. Nearly two-thirds also believe the state and local economies have worsened, a 20-point increase. However, when asked about their own businesses, 87 percent said they believe they are headed in the right direction.
San Diego small business owners are generally negative about the business climate for small businesses in 2016: 40 percent said the business climate has worsened, 31 percent said it has stayed the same, and 29 percent said it has improved, the 2016 survey showed.
Forty-five of San Diego County business owners reported that they are either unprepared or admittedly do not know if they are prepared enough for interest rate changes. A plurality of small business owners said they are working the same number of hours in early 2016 as they did during the same time last year. Forty-four percent said they were working the same number of hours per week, 42 percent said they were working “somewhat or a lot more” and 14 percent said they were working “somewhat or a lot less,” the data showed.
“The feelings of uncertainty about the national economy reflected in the survey results are somewhat consistent with what we’re seeing among small business owners who are encouraged about the future of their businesses and cautiously expanding and increasing staffing,” said Union Bank Managing Director Todd Hollander, head of Business Banking. “Our clients are working smarter to sustain their businesses and many continue to seek capital, but they are closely monitoring interest rates and are concerned about interest rate changes and other government implications during this election year.”
San Diego Regional Chamber
Selects New Board Chairman
Ernesto Arredondo Jr., San Diego area vice president of Wells Fargo Bank, will assume the chairmanship of the San Diego Regional Chamber of Commerce board of directors in April, replacing John Reilly, who left to become chief parks operations officer for SeaWorld Entertainment in Orlando, Fla.
Arredondo was vice chairman of the board.
“Ernesto has been a strong supporter of the chamber and our mission, and I appreciate him stepping into the chairman role,” said Jerry Sanders, chamber president and CEO. “Under Ernesto’s leadership, the Chamber will continue our progress toward making San Diego the best place in California to do business and bringing more jobs to the region.”
Reilly will oversee all of SeaWorld Entertainment’s theme parks. He had led SeaWorld San Diego’s park operations since 2010.
Assuming the role of vice chair will be Sam Attisha, vice president of business development and public affairs for Cox Communications.
Water Authority Selects San Diego
Attorney As General Counsel
The San Diego County Water Authority named Mark J. Hattam, a partner in the law office of Allen Matkins, as general counsel, effective March 14. The water board approved Hattam’s selection on Thursday at its regular monthly meeting.
Hattam’s practice consists of litigation in state and federal courts regarding water rights, commercial disputes, real property, insurance, environmental regulations and other issues, as well as administrative hearing practice.
He has represented major institutional and public-sector clients in complex civil litigation, including water transfers and water rates. In 2015, Hattam served as outside counsel for the Water Authority, successfully defending the agency against a claim that it failed to account for the environmental impacts of its long-term water supply plan.
As general counsel, Hattam will advise the Water Authority’s board and executive staff on a range of legal matters, including the agency’s high-profile litigation over the legality of rates set by the Metropolitan Water District of Southern California.
General Atomics Reports Successful Flight
Of Predator B UAV with Longer Wings
General Atomics Aeronautical Systems Inc. announced the successful first flight of Predator B/MQ-9 Reaper retrofitted with long-endurance wings and greater fuel capacity.
The flight occurred on Feb.18 at GA-ASI’s Gray Butte Flight Test Facility in Palmdale, Calif., on a test aircraft.
“Predator B ER’s new 79-foot wing span not only boosts the RPA’s endurance and range, but also serves as proof-of-concept for the next-generation Predator B aircraft that will be designed for Type-Certification and airspace integration,” said Linden Blue, CEO.
During the flight, Predator B demonstrated its ability to launch, climb to 7,500 feet, complete basic airworthiness maneuvers, and land without incident. A subsequent test program will be conducted to verify full operational capability.
Developed on Internal Research and Development (IRAD) funds, the new wing span is 13-feet longer, increasing the aircraft’s endurance from 27 hours to over 40 hours. Additional improvements include short-field takeoff and landing performance and spoilers on the wings which enable precision automatic landings.
The long wings are the first components to be produced as part of GA-ASI’s Certifiable Predator B development project, which will lead to a certifiable production aircraft in early 2018.
USD Launches $300 Million Campaign
The University of San Diego launched a $300 million fundraising campaign on Thursday to finance five areas of concern — capital projects, scholarships, program and faculty support and the endowment. The campaign is titled “Leading Change: The Campaign for USD.”
“USD is a community on an adventurous mission of light and enlightenment,” said President James Harris. “Our university began, quite literally, with little more than a hope and a prayer. Less than 70 years later, USD is the youngest institution to be ranked among the nation’s top 100 doctoral universities by U.S. News &World Report. USD is a university where passion so perfectly meets purpose.”
Water Conservation Garden
Has New Executive Director
The Water Conservation Garden, a six-acre conservation demonstration garden in El Cajon, has selected Elyssa Robertson as the organization’s new executive director. Robertson succeeds John Bolthouse at the helm of the East County nonprofit.
Robertson has an extensive background in environmental and civil engineering. As president and founder of REC Consultants, an environmental and civil engineering firm she formed and led with her husband since 1992, Robertson has championed numerous development projects that incorporated open space, conservation of resources and sustainability.
“As a San Diego native, I am acutely aware of the importance of water in our arid environment and the need for continuing education and understanding by the public regarding water conservation,” said Robertson, who had been serving as interim executive director.
Super STEM Saturday Gets
Students Excited about Science
Build and launch a robot, play Frisbee with a robot, or become a DNA detective. These are just a few of the nearly 100 hands-on, interactive activities and demonstrations that will engage thousands of attendees on Saturday, March 12, at the annual science festival Super STEM Saturday.
Held from 10 a.m. to 4 p.m. at California State University San Marcos, the event is free and open to the public. Children of all ages are invited to attend. Super STEM Saturday closes the ten-day San Diego Festival of Science and Engineering, the largest celebration of innovation and science education in Southern California.
Held in partnership by The Classical Academies and CSUSM, Super STEM Saturday has grown into a popular North County event that draws 6,000 science enthusiasts each year to the university campus.
“We share the value with The Classical Academies that it’s not the job of teachers but it’s everyone’s job to develop that sustained excitement in science that drives our students into career paths in science, technology, engineering and math,” said Katherine Kantardjieff, dean of the College of Science and Mathematics.
“What we take away from our childhood is really meaningful to what we decide to do as adults,” said Simon Kuo, vice president of quality management at ViaSat. “That’s why we believe it’s really important to expose kids to science and technology so that it can help them better appreciate it and perhaps even choose a career in STEM.”
Women’s Week Made Possible Through Sharp Partnership
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Women’s Week would not be possible without the support of partners Sharp Health Plan and Sharp Rees-Stealy. These two partners have made their support with Women’s Week a priority. Because of their partnership, ticket prices have remained low, allowing everyone to attend an event throughout the week without breaking their budget.
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