{ "docId": "019dd923-622c-750b-8b98-9d969fe4e5f7", "docSlug": "cd566ab57f86", "documentTitle": "Aerojet Rocketdyne Holdings, Inc. (AJRD)", "authorId": "54_Spruce_Point_Capital", "authorName": "Ben Axler", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2019-04-09 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 17, "pageCount": 57, "prevPage": 16, "nextPage": 18, "slideType": "villain_critique", "function": "name_villain", "density": "overcrowded", "nDataPoints": 2, "notes": "The slide uses quotes from Space News to build a case against the competitive viability of Aerojet Rocketdyne.", "elementsJson": [ "headline_text", "callout_box", "paragraph", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-9d969fe4e5f7/17", "deckHref": "/decks/019dd923-622c-750b-8b98-9d969fe4e5f7", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-9d969fe4e5f7.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-9d969fe4e5f7#slide-17", "components": [ { "bbox": { "h": 0.08, "w": 0.96, "x": 0.02, "y": 0.18 }, "kind": "callout", "text": "According to Space News, the Northrop Grumman / Orbital ATK deal will put Aerojet at a competitive disadvantage for competing on cost for large solid rockets. The sole rationale for keeping Aerojet in the business could be to prevent a monopoly, despite its challenges to compete on price.", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3ea48da4-6a50-405b-9663-dd7a7810fa4e", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.96, "x": 0.02, "y": 0.36 }, "kind": "paragraph", "text": "There are now technically two companies that still manufacture large solid rockets for military ICBMs — Aerojet Rocketdyne and Northrop Grumman Innovation Systems, which absorbed Orbital ATK in a deal that closed June 6. The industry is poised to become a monopoly, however, as Aerojet's large solid rocket motor business is on not-so-solid ground", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "28bb46f4-95bd-4cef-9b22-145886c64fb3", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.96, "x": 0.02, "y": 0.67 }, "kind": "paragraph", "text": "By any measure, Northrop Grumman will have an overwhelming advantage. It now operates Orbital ATK's four facilities: two in Utah that make large SRMs, one in West Virginia that produces tactical rocket motors, and one in Maryland that specializes in solid rockets for anti-missile interceptors.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "2ab5272c-6111-4ee9-a80d-4f16770c2bd4", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.96, "x": 0.02, "y": 0.47 }, "kind": "paragraph", "text": "While both companies have healthy production lines for solid rockets for tactical missiles, unless Aerojet gets new orders, Northrop could end up as the Pentagon's sole supplier of large solid rocket motors — generally defined as those greater than 1 meter in diameter.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "62fe2746-4630-44fa-8911-1c9448399288", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.96, "x": 0.02, "y": 0.56 }, "kind": "paragraph", "text": "Aerojet's bottom line is that it needs 30 percent of the GBSD work to remain a viable supplier. The entire program will require 650 first-stage engines alone. Each missile will have three stages. \"GBSD will drive demand for SRMs for at least the next dozen years,\" Thompson said. \"If Aerojet has no role, it is out of the business.\"", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "af2e680f-6056-4e8d-92aa-633881581df7", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.96, "x": 0.02, "y": 0.76 }, "kind": "paragraph", "text": "The situation got more complicated when Northrop Grumman last fall announced its intent to acquire Orbital ATK. Aerojet officials became alarmed by the prospect of one of the GBSD prime contractors also being the nation's dominant supplier of large solid rocket motors, therefore having no incentive to compete the work.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e2360934-1291-4f59-8c64-eaa539fa1227", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.96, "x": 0.02, "y": 0.31 }, "kind": "paragraph", "text": "In the wake of Northrop-Orbital merger, Aerojet's solid rocket engine business teetering on the brink", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e830bb84-ced7-4245-bfa8-a54667c0c61e", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "\"There are now technically two companies that still manufacture large solid rockets for military ICBMs — Aerojet Rocketdyne and Northrop Grumman Innovation Systems, which absorbed Orbital ATK in a deal that closed June 6. The industry is poised to become a monopoly, however, as Aerojet's large solid rocket motor business is on not-so-solid ground\" — Space News", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-3f3d-76db-b32b-c5582516af79", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.25, "x": 0.02, "y": 0.96 }, "kind": "source-note", "text": "Source: Space News, June 27, 2018", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "9af5a45c-fac0-4366-bae8-0937cc138811", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.65, "x": 0.32, "y": 0.03 }, "kind": "title", "text": "Industry Consolidation An Overhang On AJRD's Rocket Business", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "9472b796-ef26-4997-93ab-abd5d6c0abd0", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [ { "name": "Cognitive bias", "slug": "cognitive-bias", "agent": null, "layer": "slide", "matchId": "995b615a-ea01-41ed-92e0-99a7635b0c59", "evidence": "paragraph/paragraph: Aerojet's bottom line is that it needs 30 percent of the GBSD work to remain a viable supplier.", "confidence": 0.5 } ], "frameworks": [], "arcBeats": [ { "to": 40, "from": 13, "beatId": "873c53fb-104b-433f-8de2-ed94336be1f4", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "The Struggle", "beatSlug": "overcoming-monster-the-struggle", "evidence": "The deck details the struggles and challenges faced by AJRD, including management departures, competitive pressures, and financial issues", "position": 2, "confidence": 0.8, "parentBeatName": "Development", "parentBeatSlug": "development" } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }