Leidos [LDOS] is forecasting about 6 percent annual growth in the addressable market for its Dynetics business unit, up from about 4 percent projected a year ago, driven by accelerating customer demand for advanced technologies and weapon systems, the head of the group said on Thursday.
“Right now, the customer is saying, ‘I don’t want the elegant solution. I need the 80 percent solution. And I need it in a couple of years, whether that be a Wide Field of View sensor two years from start, whether that be the first hypersonic glide body in the field in four years,’” said Steve Cook, president of the Dynetics Group. “Those are the kinds of speeds that we’re having to move at.”
The approximately 6 percent compound annual growth in the addressable market extends from 2022 out to 2027, according to a slide presented by Cook during an investor day that was webcast from the business unit’s headquarters in Huntsville, Ala. In 2022, the addressable market stands at $37 billion and is expected to reach $49 billion in 2027.
Market drivers include great power competition with China and Russia, defense modernization, and the need for rapid, innovative solutions with key program areas being hypersonics, and national security space solutions, air defense and integrated force protection, and airborne autonomy.
Dynetics does about $1.5 billion in annual sales.
Since Leidos acquired Dynetics in January 2020, the business unit has grown from about 2,300 employees to about 4,100 currently, with about 2,500 working in Huntsville and the rest at a number of locations throughout the U.S., Cook said. When he joined the company in 2009, Dynetics did about 90 percent of its business in high-end engineering services, now those services account for about 20 percent of sales and products 80 percent, he said.
Roger Krone, chairman and CEO of Leidos, said at the outset of the investor day that the purchase of Dynetics so far has led to $1.6 billion in new program wins that neither Leidos nor Dynetics would have even bid on had the acquisition not occurred. Those wins include the Space Development Agency’s missile warning and tracking space sensor on which Dynetics is subcontracting to Northrop Grumman [NOC] for the Wide Field of View sensor, round one of NASA’s Human Landing System preliminary design, the Navy’s MACH Test Bed for hypersonics, thermal protection systems for the Army’s and Navy’s Hypersonic Glide Body, and the Army’s Enduring Indirect Fires Protection prototype.
Dynetics operates in four market areas: weapons technology, hypersonics and space solutions, intelligence and electronic warfare, and avionics and unmanned solutions.