The Colorado Springs Business Journal: By Cameron Moix-October 2, 2014–There’s a new defense contractor in town — one with history in Colorado Springs and potential to be the region’s most-profitable publicly traded company.
Virginia-based defense contractor Exelis Inc. officially completed the spinoff of its Mission Systems government services division at midnight Friday, Sept. 26, creating Vectrus Inc. President and CEO Kenneth Hunzeker estimates that Vectrus will generate between $1.1 billion and $1.2 billion in its first year of business.
“This is an incredible company with an incredible history, and we look forward to staying in Colorado Springs and working with the community,” Hunzeker said.
The name of the new company, headquartered in the former Exelis building at 655 Space Center Drive, is a mashup of two concepts — “vector,” indicating a strong sense of direction, and “trust,” which the company works to instill in its clients.
“We want to be the trusted partner of choice,” Hunzeker said. “The name epitomizes what we do — and what we want to continue to be.”
Vectrus will continue to offer U.S. government clients services in infrastructure asset management, logistics and supply chain management, and information technology and network communications, while Exelis will continue to focus on manufacturing and serving its commercial clients.
The company currently employs 5,600 people, including around 300 in the Springs, and Hunzeker said recent U.S. Air Force contracts in Spain and Turkey are just two examples of the company’s success amid the split.
“Those contracts are really great for us as we spin,” he said. “We also plan to increase our footprint in every state.”
‘The nature of what we do’
Though Vectrus maintains offices across this country and 17 others, its home is in the Pikes Peak region.
The Mission Systems branch of Exelis had been based in the city since the company’s birth in 2011, and Hunzeker said there was no need to look for a new base when time came to create Vectrus.
“We understand the responsibility [of being the city’s largest-grossing publicly traded company] and we love to be part of the Colorado Springs community,” he said.
Vectrus not only maintains contracts with the U.S. Department of Defense, NASA and the Federal Aviation Administration (all with a major presence in the region), but works often with area businesses and nonprofits. Most recently, the company employed the expertise of downtown-Colorado Springs design firm Do More Good to create branding, including a green, Nike-like Vectrus emblem Hunzeker refers to as the “Voosh.” Do More Good also designed Vectrus.com, which went live at 3 p.m. last Friday.
But despite the excitement surrounding the spinoff and what it might mean for the region’s economic development, Hunzeker doesn’t anticipate any “radical change” in the scope of its local operations. He said the company’s local employment should remain around 300.
About 30 percent of the company’s staff have military backgrounds, including Hunzeker, a retired Army lieutenant general, and other corporate leaders.
Executives who work under Hunzeker include: Theodore Wright, executive vice president and chief operating officer; Matthew Klein, senior vice president and chief financial officer; Michele Tyler, senior vice president, chief legal officer and corporate secretary; Frank Peloso, senior vice president and chief human resources officer; Janet Oliver, senior vice president, business development; Charles Anderson, senior vice president, programs; Kelvin Coppock, senior vice president, contracts; George Rhynedance, vice president and chief communications officer; and Richard Hanley, vice president, estimating and pricing.
Past informs future
Three years before Vectrus there was Exelis, which itself was produced by a spinoff.
“We learned a ton in that process,” said Hunzeker, who previously served as Mission Systems president and general manager for Exelis.
Since it split from parent company ITT Corp. in 2011, Exelis grew to employ 10,000 workers worldwide and gross nearly $5 billion in annual revenue (2013). But due to reduced government spending and the drawdown of U.S. military operations in Afghanistan, the company reviewed its structure in search of more effective ways to compete for contracts.
Last year, the Exelis board of directors voted unanimously to separate Mission Systems from the company to focus on government jobs, while Exelis would retain manufacturing operations and work with commercial clients. The decision was announced in December.
“We pride ourselves in performance and operational excellence,” Hunzeker said. “So this is a win-win for both companies.”
Vectrus officially started the filing of its Form 10-K with the U.S. Securities and Exchange Commission on March 10 and completed the process Sept. 8.
The division’s independence was also positive for shareholders, who received one share in Vectrus (VEC) for every 18 shares of Exelis stock (XLS) when NYSE “when-issued” trading began Sept. 16. According to that 1:18 ratio, 10 million shares of Vectrus stock were distributed for the 188 million Exelis shares, according to a report by Forbes. “Regular-way” trading began Monday morning at $21.75, closing at $19.51.
“It’s been an incredible process to learn this and go through this,” Hunzeker said. “Our whole goal is to increase shareholder value.”