AS&E sells its first gantry security scanner to Pentagon

Published 7 April 2009

AS&E’s proprietary Z Backscatter technology is popular with customers, and the company announces yet another contract, this time with the Pentagon — but: complaint from scanning rival Rapiscan lead the U.S. government to half an earlier order for AS&E’s ZBV Military Trailers, from 68 units to 34 units

Scanning cargo of all types — containers, baggage, luggage — for security threat is a big segment of homeland security, and it is growing bigger. Of the $2.8 billion the administration’s stimulus package added to DHS budget, nearly one-third will go toward improving baggage and luggage scanning at airports.

We note that security technology company American Science and Engineering Inc. (AS&E) has landed a contract from the U.S. Department of Defense for its cargo and vehicle screening system. AS&E (NASDAQ: ASEI) said the order is the first for its Z Gantry multi-view Z Backscatter cargo and vehicle screening system. Financial terms of the deal were not disclosed. The system’s scanner moves on rails past stationary vehicles and cargo to produce images from three sides — left, right, and top-down, the company said.

This is not the first order for scanning devices which are based on the company’s proprietary Z Backscatter technology. Last week, Billerica-based AS&E won a $6.3 million follow-on order from an unnamed client in the Middle East for an unspecified number of its Z Portal cargo and vehicle screening systems.

Last month, AS&E had its most recent contract for bomb-detecting ZBV Military Trailers cut nearly in half by the U.S. government (see note below). The company received a Partial Termination for Convenience that cut a $67.1 million contract procurement of ZBV Military Trailers to $39.3 million.

Note: Research notes from analyst Steve Levenson, of Stifel Nicolaus & Co., pointed to protests from a contract competitor, Rapiscan Systems, a division of AS&E competitor OSI Systems Inc. of California, as a reason for the Department of Defense cutting the 68 planned ZBV units to 34 units.

AS&E reported a fiscal 2008 net income of $17.5 million on revenue of $166.7 million.