L3 Technologies’ [LLL] Security & Detection Systems business will generate more than $500 million in sales this year and the company is “aspirationally” targeting $1 billion in sales for the business within a few years, company officials say.
The rosy outlook is being driven by demand for airport security technology, the officials say on L3’s recent second quarter earnings call.
“More travelers, more airports, more security threat and desire for an expedited process to get through security and get on the plane,” Chris Kubasik, L3 president and chief operating officer, tells investors. He says the aspirational target for doubling the Security & Detection Systems business in three to five years. Kubasik is set to become L3’s president and CEO on Jan. 1, 2018.
Later, through a company spokeswoman, Kubasik put the potential to double the Security & Detection business over the next five years.
One of the key technology efforts L3 has ongoing is its ClearScan explosives detection system for checkpoint screening, which the company is currently testing with the U.S. Transportation Security Administration (TSA) at one airport and the company is working with another airline to have the system undergo testing at a checkpoint at another airport.
The ClearScan system is based on computed tomography (CT) and offers higher resolution than the current Advanced Technology X-Ray systems used for screening carry-on bags at U.S. airports. The higher resolution enables Transportation Security Officer to better see potential threats, and combined with threat algorithms, offers the potential to eventually allow liquids and electronic devices like laptop computers to remain inside a carry-on bag, helping to expedite a traveller’s transition through the checkpoint.
Michael Strianese, L3’s current chairman and CEO, says that ClearScan systems have also been deployed to airports in Turkey, the Netherlands, Singapore and South Africa.
“We are one of the leaders in this area, and we are responding proactively to be in step with or ahead of our customers’ needs and the security issues that they are confronting,” Strianese says on the earnings call. “ClearScan is a good example of this approach and represents a long-term growth area for L3.”
Ralph D’Ambrosio, L3’s chief financial officer, tells investors that this year sales of ClearScan and a more mature aviation security product, the high-speed MV3D EDS for checked baggage screening, will do a combined $45 million in sales worldwide, up 50 percent from 2016.
“Those sales could easily double, triple, if not more than that over the next couple of years as TSA and other airport authorities around the world begin to introduce new, more capable security equipment,” D’Ambrosio said.
Analogic [ALOG] and Integrated Defense & Security Solutions (IDSS) are also offering CT-based EDS systems for use at aviation security checkpoints. Analogic recently received a contract from American Airlines for the purchase of its ConneCT checkpoint EDS system and TSA is testing a system developed by IDSS at a checkpoint at Boston Logan International airport.
Kubasik says that ClearScan has been certified in Europe to let passengers keep their electronic systems in their carry-on bags.
“Now we are well on our way to receive an additional certification to allow liquids to stay in our bags, further expediting the security process,” Kubasik says. He adds that former Homeland Security Secretary John Kelly, now the White House Chief of Staff, made encouraging comments in late July about the CT at the checkpoint technology, noting though that “the funding plan for it needs to be worked out in the near-term.”
In its second quarter earnings release, L3 said sales at Security & Detection Systems were down $28 million from a year ago due to timing of deliveries of cargo screening systems to international customers and lower deliveries of airport screening devices to the TSA.