BAE Systems PLC

Well-established market position as the world's third largest global defense contractor. Order backlog of £39.7 billion (as of June 30, 2018)--equivalent to about 2.1x 2017 revenues. Active across diverse and long-term air, sea, and land military programs, but geographically concentrated on the U.S., U.K., and Saudi Arabia. Balanced range of business activities, with services and support the largest activity by revenues (45% of 2017 revenues). Supportive market environment, with global defense spending increasing by around 3% annually, with growth above this level in the U.S., BAE's largest market. Reliance on government defense spending and the outcome of government procurement decisions. Inherent project execution risks and price competition, but well managed as shown by low volatility in S&P Global Ratings-adjusted EBITDA

...Business Risk: Strong Financial Risk: Significant + Well-established market position as the world's third largest global defense contractor. + Order backlog of ú39.7 billion (as of June 30, 2018)--equivalent to about 2.1x 2017 revenues. + Active across diverse and long-term air, sea, and land military programs, but geographically concentrated on the U.S., U.K., and Saudi Arabia. + Balanced range of business activities, with services and support the largest activity by revenues (45% of 2017 revenues). + Supportive market environment, with global defense spending increasing by around 3% annually, with growth above this level in the U.S., BAE's largest market. + Reliance on government defense spending and the outcome of government procurement decisions. + Inherent project execution risks and price competition, but well managed as shown by low volatility in S&P Global Ratings-adjusted EBITDA margin of 13%-14%. + Track record of positive free operating cash flow (FOCF) generation, which we expect...

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