Driven by its commercial aerospace and security markets, France’s Thales sees strong growth in the United States in 2015 continuing through 2016, head of the company’s business in the United States said on Feb. 29.
Thales the week of Feb. 22 posted overall group sales of $15.5 billion in 2015, up 8 percent from $14.3 billion a year ago, with U.S. operations accounting for $2.1 billion of the total, up nearly 12 percent from 2014.
The most rapid growth areas for the company in the United States are in-flight entertainment (IFE) systems for airlines and cyber security products and services, Alan Pellegrini, president and CEO of Thales USA, told reporters during a briefing to outline the strategy and financial performance and expectations of company’s U.S. business.
The growth in IFE and cyber “reflects the strength of the commercial aerospace business and the corresponding strength of our products and services in that area, and reflects the strength and need for cyber-based security, for which Thales is very well positioned here,” Pellegrini said.
In March, Thales expects to close on a $400 million acquisition of Silicon Valley-based Vormetric, a provider of data protection solutions, which is expected to have about $75 million in sales in 2016, Pellegrini said. Thales announced the deal October 2015.
With Thales existing cyber business in the United States combined with Vormetric, Pellegrini sees the company’s U.S. operations generating $175 million in sales in 2016 growing to more than $200 million in 2017. Vormetric is growing at 50 percent annually, he said.
Overall, Thales’ cyber business worldwide is about $350 million annually. In the United States, about 90 percent of the company’s cyber business is for commercial markets and the rest for federal agencies.
In 2015, 77 percent of sales from Thales’ U.S. operations were in the Aerospace market, 20 percent from defense and security, and 3 percent from its ground transportation business, which largely serves mass transit and urban rail systems. Going forward, Pellegrini expects the security business to grow a bit as a percentage of the company’s overall sales with Aerospace also continuing to grow nicely, driven by demand for IFE and connectivity solutions.
Pellegrini expects overall growth in the U.S. operations in 2016 to be comparable to gains in 2015. Thales USA’s orders were up 37 percent in 2015 and the company sees additional order growth in 2016, according to briefing slides used by Pellegrini.
Mergers and acquisitions will continue to be part of the growth strategy for Thales USA. In 2014, the company bought Live TV, a Florida-based provider of broadband connectivity for aircraft. Pellegrini said that future candidates for acquisitions would be in markets the company is “bullish” on, which would include cyber, commercial aviation, space, and the larger area of digital transformation.
Digital transformation is a core strategic focus area for Thales, which is being led by the U.S. operations, Pellegrini said. This includes artificial intelligence and machine learning, big data analytics, cloud computing, connectivity, mobility and social media.
These transformational technologies are “changing how our customers do business,” which “means Thales must change how it approaches the market,” according to one of Pellegrini’s briefing slides.
In summer 2015 Thales USA launched xPlor, which is a partnership with the media labs of Massachusetts Institute of Technology and is aimed at forming relationships with the high-tech innovation sector in the United States, particularly Silicon Valley and around Boston. The focus of xPlor is to help the company leverage transformational technologies such as big data, artificial intelligence and cloud computing.
xPlor is the “heart” of Thales’ digital transformation strategy, Pellegrini said.