CIBC 2They have a $55.00 target. GLTA
EQUITY RESEARCH
March 17, 2022 Flash Research
AIRBOSS OF AMERICA CORP.
Update On The Pipeline Of Opportunities
Key Takeaways: This week, the U.S. government released updates on
programs that we expect BOS to bid on, namely a solicitation for Level 2
isolation gowns and a U.S. Department of Defense request for information
(RFI) on next-generation chemical, biological, radiological and nuclear
(CBRN) respirators. We believe the company is well-positioned to secure
sizeable contract wins over the coming year given its track record of
executing on large PPE contracts over the past couple of years and its
domestic manufacturing capabilities. These updates point to positive
progress on BOS’ opportunity pipeline and we view upcoming contract wins
as a positive near-term catalyst for its share price.
Solicitation For Level 2 Isolation Gowns: On March 16, the U.S.
government issued a solicitation from the Division of Strategic National
Stockpile (DSNS) for the U.S. Department of Health and Human Services
(HHS) to procure of up to 225.6MM Level 2 isolation gowns to be delivered
between May 2022 – May 2025. The procurement requires a base level of
75.2MM Level 2 isolation gowns to be delivered between May 2022 – May
2023 and an optional 150.4MM to be delivered between May 2022 – May
2025. Offers are due no later than April 4, 2022 on or before 3:00 p.m. ET.
We expect a quick turnaround on this bid given that offers are due April 4
and the anticipated delivery starts May 23.
Will Level 3 And 4 Gown Bid Be Announced Shortly Too?: Back in
November 2021, BOS was short-listed for the Level 3 and Level 4 surgical
gowns contract for up to 397.5MM gowns. We could see an announcement
on this bid in the coming months given the Level 2 gown contract should be
announced shortly. This size of this contract will be larger and could be a
game changer for BOS given the potential size of the award.
Why We Think BOS Is Well-positioned On These Gown Bids: We see
BOS as well-positioned to secure a portion of these gown bids for the
following reasons:
1. BOS has U.S. manufacturing capabilities. Looking at the Level 2 gown
proposal, offerors must provide domestic end product and will be
evaluated on their ability to provide items manufactured in the U.S. or its
outlaying areas. The cost of domestic components must exceed 55% of
the cost of all the components and domestic components that
significantly exceed 55% will be taken into account in the evaluations. In
other words, more production in the U.S. will be viewed more favourably.
And given the current U.S. administration’s focus on domestic
manufacturing, that puts BOS in a good position.
2. BOS has proven to be a trusted supplier to HHS having been awarded
the PAPR contract back in 2020 and the nitrile gloves contract in 2021.
They key is that BOS was able to deliver on these contracts despite the
short turnaround. On the Level 2 gown contract, it appears HHS will look
for companies that can immediately begin to deliver versus those that
need time to ramp up production