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07 Feb 25. Investors are growing increasingly concerned about the finances of two of Europe’s largest satellite operators as the rapid rise of Elon Musk’s Starlink deepens the pressure on the continent’s ailing incumbents. The cost of buying insurance against France’s Eutelsat and SES of Luxembourg defaulting on their bonds has soared to record highs, as investors fear the two will struggle to repay their debts, which together amount to about €7bn. Legacy satellite operators have struggled to adapt to the rise of new communication services from low Earth orbit, as their traditional, higher- orbit broadcasting businesses decline. In just five years Musk has expanded Starlink to more than 6,000 satellites, more than 60 per cent of the spacecraft in orbit, serving some 130 countries. His company is also increasingly taking market share in the lucrative market for in-flight connectivity with airlines, including beating Eutelsat to win a contract with Air France. Pressure on Eutelsat and SES is expected to intensify when Amazon’s Project Kuiper launches its broadband satellite service, expected later this year. “Europe’s incumbents are in danger of being left behind,” said one high-yield credit investor who has recently sold out of Eutelsat’s bonds, citing Starlink’s technological advances. Musk’s relentless expansion of Starlink, alongside with the European duo’s sluggish response to the new low Earth orbit challenge, have driven down their share prices to record lows. In response to the emerging competition, Eutelsat and SES have sought to consolidate, with Eutelsat snapping up the UK’s OneWeb in 2022 and SES buying Intelsat for $3.1bn last year. Credit investors have bought credit default swaps, derivatives that act like insurance contracts that pay out if a company reneges on its debts. Spreads on five-year CDS on Eutelsat, which has debts of almost €2bn, have climbed more than 800 basis points to 1,220bp in the past six months. That implies that investors now give Eutelsat a 65 per cent chance of defaulting on its bonds. The equivalent CDS spreads for SES, which has about €5bn worth of debt made up mostly of euro-denominated bonds, has also hit an all-time high in recent weeks. On Thursday it touched 309bp compared with 100bp at the start of 2024, giving it a probability of default of 22 per cent. Eutelsat said its low Earth orbit product “is a highly competitive global offering” and said it was “uniquely positioned” in the market. SES did not respond to a request for comment. (Source: FT.com)

 

07 Feb 25. Unusual Machines to Acquire Aloft Technologies for $14.5m. Unusual Machines has announced the signing of a binding agreement to acquire of Aloft Technologies, Inc., an FAA-approved provider of unmanned aerial system (UAS) services to enterprise, public safety, and government customers. The acquisition is almost all in stock, valued at $14.5m. The proposed acquisition brings together companies that share commitment to strengthening the U.S. drone industry. Aloft Technologies has long been recognized as the leader in the drone fleet and airspace management sector, powering more than 70% of all FAA-approved Low Altitude Authorization and Notification Capability (LAANC) airspace authorizations in the United States. Aloft has provided more than more than 1.6 million authorizations in total, with 400,000 authorizations provided in 2024. Aloft has been able to leverage the data collected through millions of safe flights and airspace interactions to launch Air Boss, their new real-time UAS air traffic management (UTM) software. With the FAA forecasting more than 3 million drones in the airspace by 2028, outnumbering traditional aircraft more than 10-to-1, the coordination and integration of all aircraft is critical to national security and the national economy. The closing of the acquisition is contingent on satisfaction of customary closing conditions by the parties including Aloft obtaining stockholder approval, the delivery by Aloft of its audited financials acceptable to Unusual Machines, the receipt of certain third party consents and the holders of no more than 10% of Aloft common stock have asserted appraisal rights.

“With the transition away from China, we need to care as much about our drone data as we do our drone parts. Aloft is the market leader and the answer to how we provide American software to complement our hardware,” said Allan Evans, CEO of Unusual Machines. “Air Boss is the culmination of their years of work in fleet and airspace management. It will unlock airspace collaboration between governments, business, and consumers in a way that could prevent the confusion of what happened in New Jersey from ever being an issue again.”

“Aloft’s mission has always been to enable flight through better technology and data-driven insights,” said Jonathan Hegranes, CEO and Co-Founder of Aloft. “Joining Unusual Machines will accelerate our ability to achieve this mission at a larger scale while continuing to prioritize cybersecurity and American-made software solutions.”

The acquisition is expected to close in the coming months, with both companies working closely to ensure a seamless transition for customers and stakeholders.

About Aloft Technologies: Founded by Jon Hegranes and Joshua Ziering in 2015, Aloft Technologies is the leading provider of drone airspace and fleet management solutions in the United States. Powering millions of safe flights through its proprietary software, Aloft is trusted and beloved by government, public safety, enterprise, and recreational pilots alike. Aloft’s focus on cybersecurity, data intelligence, and American-made software has positioned it as a critical player in the evolving drone ecosystem.

About Unusual Machines: Unusual Machines manufactures and sells drone components and drones across a diversified brand portfolio, which includes Fat Shark, the leader in FPV (first-person view) ultra-low latency video goggles for drone pilots. The Company also retails small, acrobatic FPV drones and equipment directly to consumers through the curated Rotor Riot e-commerce store. With a changing regulatory environment, Unusual Machines seeks to be a dominant Tier-1 parts supplier to the fast-growing multi-billion-dollar U.S. drone industry. According to Fact.MR, the global drone accessories market is currently valued at $17.5 billion and is set to top $115 billion by 2032. (Source: UAS VISION)

 

06 Feb 25.  COPT Defense Properties (“COPT Defense” or the “Company”) (NYSE: CDP) announced results for the fourth quarter and full year ended December 31, 2024.

Management Comments

Stephen E. Budorick, COPT Defense’s President & Chief Executive Officer, commented, “Our Defense/IT investment strategy, which concentrates our portfolio near priority U.S. defense installations, continued to generate excellent results in 2024. The success of our differentiated strategy is evident in our occupancy rate of 93.6%, which is roughly 700 basis points higher than the Office sector, while occupancy in our Defense/IT Portfolio is even higher at 95.6%. We generated FFO per share growth of 6.2%, our second highest annual growth rate since 2015, which was driven by record performance in our Same Property portfolio, placing highly leased developments into service, and achieving our highest tenant retention rate in over 20 years of 86%.

We achieved a milestone in 2024 as we executed on our first acquisitions since 2015. We leveraged our investment-grade rated balance sheet to execute on several strategic and opportunistic investments, which serve to strengthen our relationship with the U.S. Government and top defense contractors, and will be accretive to shareholder value. The operating assets were acquired at significant discounts to replacement cost and provide strong going-in cash yields, while the development land provides an opportunity to expand our data center shell portfolio over the medium to long term.

We have generated FFO per share growth in each of the past six years, which amounts to a compound annual growth rate of 4.8% between 2019 to 2024. Looking forward, our guidance implies continued growth in 2025, with FFO per share growth of 3.5% at the midpoint, generated by continued strong performance of our portfolio.”

Financial Highlights

4th Quarter Financial Results:

> Diluted earnings per share (“EPS”) was $0.31 for the quarter ended December 31, 2024, compared to $0.30 for the quarter ended December 31, 2023.

> Diluted funds from operations per share (“FFOPS”), as calculated in accordance with Nareit’s definition was $0.64 for the quarter ended December 31, 2024, compared to $0.62 for the quarter ended December 31, 2023.

> FFOPS, as adjusted for comparability, was $0.65 for the quarter ended December 31, 2024, compared to $0.62 for the quarter ended December 31, 2023.

Full Year 2024 Financial Results:

> EPS for the year ended December 31, 2024 was $1.23 as compared to $(0.67) for 2023.

> Per Nareit’s definition, FFOPS for 2024 was $2.57 as compared to $2.41 for 2023.

> FFOPS, as adjusted for comparability, for 2024 was $2.57 as compared to $2.42 for 2023.

Operating Performance Highlights

Operating Portfolio Summary:

> At December 31, 2024, the Company’s 24.5 m square foot total portfolio was 93.6% occupied and 95.1% leased, which includes the 22.4 m square foot Defense/IT Portfolio that was 95.6% occupied and 96.8% leased.

> During the quarter and year ended December 31, 2024, the Company placed into service 225,000 and 399,000 square feet, respectively, of developments that were 100% and 83% leased, respectively, as of year end.

Same Property Performance:

> At December 31, 2024, the Company’s 22.2 m square foot Same Property portfolio was 94.1% occupied and 95.4% leased.

> The Company’s Same Property cash NOI increased 10.0% and 9.1% for the three months and year ended December 31, 2024, respectively, compared to the same periods in 2023.

Leasing:

> Total Square Feet Leased: For the quarter ended December 31, 2024, the Company leased 709,000 square feet, including 561,000 square feet of renewals, 114,000 square feet of vacancy leasing, and 34,000 square feet of investment leasing. For the year ended December 31, 2024, the Company executed 3.2 m square feet of total leasing, including 2.6 m square feet of renewals, 500,000 square feet of vacancy leasing, and 124,000 square feet of investment leasing.

> Tenant Retention Rates: During the quarter and year ended December 31, 2024, the Company renewed 93.0% and 86.0%, respectively, of expiring square feet in its total portfolio and renewed 95.9% and 88.6%, respectively, of expiring square feet in its Defense/IT Portfolio.

> Rent Spreads and Average Escalations on Renewing Leases: For the quarter and year ended December 31, 2024, straight-line rents on renewals increased 5.5% and 8.6%, respectively, and cash rents on renewed space decreased 0.2% and increased 0.6%, respectively, while annual escalations on renewing leases averaged 2.7% and 2.4%, respectively.

> Lease Terms: In the quarter ended December 31, 2024, lease terms averaged 3.5 years on renewing leases, 7.4 years on vacancy leasing, and 5.9 years on investment leasing. For the year ended December 31, 2024, lease terms averaged 3.9 years on renewing leases, 7.7 years on vacancy leasing, and 8.2 years on investment leasing.

Investment Activity Highlights

> Development Pipeline: The Company’s development pipeline consists of four properties totaling 606,000 square feet that were 75% leased as of December 31, 2024. These projects represent a total estimated investment of $252.9 m, of which $67.4 m was spent.

Balance Sheet and Capital Transaction Highlights

> For the quarter ended December 31, 2024, the Company’s adjusted EBITDA fixed charge coverage ratio was 4.7x.

> At December 31, 2024, the Company’s net debt to in-place adjusted EBITDA ratio was 6.0x and its net debt adjusted for fully-leased investment properties to in-place adjusted EBITDA ratio was 5.9x.

> At December 31, 2024, and including the effect of interest rate swaps, the Company’s weighted average effective interest rate on its consolidated debt portfolio was 3.3% with a weighted average maturity of 4.7 years, and 100% of the Company’s debt was subject to fixed interest rates. (Source: BUSINESS WIRE)

 

06 Feb 25. Applied Intuition acquires AI software firm EpiSci. Software company Applied Intuition announced Thursday it acquired Silicon Valley autonomy firm EpiSci, whose technology has supported a slew of Pentagon programs aimed at integrating AI with military platforms. The move positions Applied, which has until now focused largely on dual-use autonomous technology for land systems, to expand its portfolio into other domains.

“We’ve done a lot of on-the-ground, land autonomy,” Applied’s CEO Qasar Younis told Defense News. “And we thought one area we could augment its portfolio is in other domains — in the air and on the sea … and space as well.”

EpiSci, founded in 2012, builds AI software for a number of defense applications, including surface warfare, maritime tracking, space-based missile tracking satellites and uncrewed aircraft. Last year, the Air Force used the company’s software to stage the first-ever dogfights between an F-16 and an experimental fighter jet, the X-62A VISTA.

Meanwhile, Applied has developed a suite of simulation, validation and data management software. The firm’s technology is used by a range of industries — from automotive, trucking and agriculture to defense. In 2022, the Army and the Defense Innovation Unit selected the firm to provide a platform to develop and test autonomous software for the Robotic Combat Vehicle program.

And last month, the Pentagon’s Chief Digital and AI Office awarded the company a production contract worth up to $171 million for its software development and testing platform.

Jason Brown, general manager of Applied’s defense business, said the Defense Department’s focus on uncrewed systems — specifically through the Replicator initiative to field thousands of low-cost expendable drones — is driving significant growth in the autonomy market. That growth means more opportunities not only for drone manufacturing firms, but for companies like Applied and EpiSci, that can equip both new and legacy systems with autonomy software.

“We want to be a part of that,” Brown said in the same interview with Younis. “This is potentially retrofitting a lot of existing legacy systems. This is a big market that is about to explode. We’re going to be able to take advantage of all of it.”

(Source: Defense News)

 

06 Feb 25. Honeywell International has announced plans to break up, heralding the end of one of America’s last big industrial conglomerates and handing a victory to US activist investor Elliott Management. The company, which makes everything from aeroplane engines to warehouse robots and has a market valuation of $145bn, said on Thursday it would spin off its aerospace division from its automation business and progress plans to separate its advanced-materials operations.   Honeywell shares reversed pre-market gains on Thursday after the company separately announced a worse than expected outlook for the year. Shares in the company were down 5.6 per cent at $209.82. Vimal Kapur, chief executive of the 119-year-old conglomerate since June 2023, said the decision was the culmination of a comprehensive review of the businesses, one that would “unlock significant value for shareholders and customers”. Kapur said it had become clear during the review process that the strategies for the automotive and aerospace businesses were “diverging”. While aerospace required attention on capacity expansion, supply chain changes electrification, the automotive business needed to focus on AI, digital transformation and energy security, he told investors.

“We are aiming here for higher value by earnings growth and by delivering a more compelling proposition,” Kapur added. Honeywell had been on a dealmaking spree under Kapur, signing off on more than $9bn worth of acquisitions last year. It had also shed assets that were not focused on three “megatrends” identified by Kapur: automation, aviation and the transition to green energy. The group had already announced plans to spin off its advanced materials division in October. The decision to split into three is nevertheless a victory for Elliott, which had called on Honeywell to end its conglomerate structure and split itself into two. Shares in the company had been underperforming the broader market and it emerged in November that the activist investor had taken a $5bn stake in Honeywell. It argued that the group should follow the examples of General Electric, 3M and Johnson Controls, which had split into separate businesses, unlocking value for shareholders. Honeywell subsequently announced in December that it was exploring a spin-off of its aerospace business, adding that it was also “evaluating more transformational changes”.   Elliott welcomed the announcement on Thursday, saying that the separation would lead to “enhanced focus, alignment and strategic agility”, and would allow Honeywell to improve its operations and achieve a better valuation for the businesses. The company’s high-margin aerospace business, which counts Boeing and Airbus among its customers and generated $15bn in revenues in 2024, makes up 40 per cent of the group’s annual revenues but has traded at a discount to pure aerospace competitors such as TransDigm.  Analysts have pointed to the re-rating of GE’s aerospace business since it listed as a standalone company. Honeywell, which employs some 95,000 people, said the separation of the aerospace and automation businesses should be completed by the second half of 2026 and would not result in a tax bill for its shareholders. It has yet to announce who will lead the different businesses or whether any will be led by Kapur. The company’s automation business reported revenues of $18bn last year. The smaller advanced materials division notched up about $4bn in revenues. Honeywell’s break-up will cap an eventful two decades during which it twice held merger talks with another former conglomerate, United Technologies. A bid by General Electric to take over Honeywell in 2001 was blocked by the European Commission on competition grounds. Honeywell on Thursday separately forecast adjusted earnings of $10.10 to $10.50 a share for 2025, up 2 per cent to 6 per cent, but falling short of analyst estimates. Its organic sales growth and free cash flow guidance also missed expectations. (Source: FT.com)

 

07 Feb 25. Patria Group’s Financial Review for 2024 – preliminary data

Patria’s growth continued in 2024: net sales grew significantly and order stock developed strongly

Financial review of 2024

• Patria Group’s operating profit was EUR 81.8m (EUR 68.9m) and net sales EUR 825.7m (EUR 733.8m).
• Value of new orders received was EUR 1,258.2m (EUR 948.4m).
• Equity ratio was 33.9% (40.0%) and net gearing 104.3% (67.5%).
• Equity ratio and net gearing were affected by investments in production capacity as well as net working capital tied up in the production ramp-up.
• Patria’s growth continued in 2024. Patria’s net sales grew and order stock developed strongly driven especially by vehicle programmes. Profitability was at the expected level.
• A major part of operational focus has been on building production capacity for the new vehicle orders as well as developing and enhancing productivity of internal operating model. Production growth was impacted by some ramp-up phase hick-ups during the year, but the performance improved towards the year-end.
• Millog and Nammo performed in line with the expectations.

Highlights of 2024

• The development of customer-centricity, operational efficiency and productivity and joint ways of working continued in 2024, according to Patria’s Horizon 2025 strategy.
• Patria’s renewed operating model came into force in the beginning of 2024.The focus of the development has been on Patria’s Operations unit, responsible for company’s production and supply chains, and Portfolio unit, responsible for Patria’s products and services and their development.
• Patria’s success in 6×6 and 8×8 vehicle programmes has continued, which supports the development of other business operations and Group’s internationalization. By the end of the year, Patria had received orders for over 800 Patria 6×6 vehicles through Common Armoured Vehicle System (CAVS) programme, led by Finland and joined by Latvia, Sweden and Germany.
• In January 2024, the strategic partnership agreement between Patria and the Finnish Defence Forces was updated.
• Announced also in January, the Finnish Defence Forces purchased 40 Patria 6×6 armoured vehicles more by redeeming the additional purchase option as part of CAVS agreement.
• Patria published two agreements in February 2024 on supplying Patria ARIS electronic intelligence systems (ELINT) to European NATO member countries.
• Kicked off in early 2024, Patria-led eALLIANCE programme, partly funded by Business Finland, will amplify collaboration with the Finnish civilian and defence sector companies. The aim is to develop disruptive digital capabilities for enhanced data sharing and prosessing as well as building a holistic metaverse.
• In February Patria, DSL (part of KNDS group) and FFG announced that they are teaming up to offer the German design, production, and sustainment of variants of Patria’s 6×6 armoured personnel carrier, which could replace the German FUCHS-fleet.
• In March the Swedish Defence Procurement Agency (FMV) signed a contract to buy 321 Patria 6×6 vehicles.
• In March Patria signed a contract with Kongsberg Defence & Aerospace (‘Kongsberg’) for the delivery of PROTECTOR remote weapon stations to more than 300 Sweden’s and Finland’s Patria 6×6 vehicles within the CAVS programme.
• It was announced in March that Patria and Lockheed Martin signed their second Memorandum of Agreement (MoA) for direct work within Finland´s F-35 industrial participation programme. This MoA provides the contractual framework for the stand-up and qualification of a landing gear doors production line at Patria’s Halli facility in Jämsä, Finland.
• Change negotiations were held in Patria’s Pilot Training operations during the second quarter on the possible termination of the function during 2025. Alternatively, efforts were being made to find an external successor for the business or part of it. The plan will not have an impact on Patria’s military pilot training activities.
• Patria’s Valmiera armoured vehicle production facility was opened in May. This marked the start of full-cycle production of Patria 6×6 armoured vehicles in Latvia.
• It was announced in May that Germany proceeded to the research and development agreement phase of the CAVS programme.
• In June, it was announced that Patria and Pratt & Whitney, an RTX business, signed a Memorandum of Agreement (MoA) that covers the contractual framework for Pratt & Whitney F135 engine production and sustainment projects in Finland by Patria.
• Patria signed in June a bill of sale for the acquisition of the entire share capital of Nordic Drones Oy (‘Nordic Drones’), a Finnish leading drone pilot trainer and manufacturer of drones designed for professional use.
• In June at Eurosatory in Paris, All Terrain Vehicle (ATV) concept vehicle developed within European Future Highly Mobile Augmented Armoured Systems (FAMOUS) programme was revealed in Patria’s stand.
• In August, Patria, Finland and Latvia signed a Life Cycle Management (LCM) contract related to the CAVS programme.
• In September, Patria announced that it acquired an open-source data collection product and business related to its cyber business area from WithSecure. As a result of the transaction, Patria has opened an office in Oulu, Finland.
• In September, the Finnish Defence Forces redeemed the last 29 Patria 6×6 vehicles that were part of the additional procurement reservation, which were already included in the previously signed series agreement as part of the CAVS programme.
• Patria launched Patria TREMOS in October, the robust and cost-effective mortar system that increases the mobility and accuracy of trusted, traditional high firepower mortars. The Finnish Defence Forces acquired a modular 120 mm mortar system from Patria. The procurement involves a pre-series of the new mortar system, set for delivery in 2025.
• In November, Patria and Latvia agreed on the manufacturing and delivery of 56 additional armoured Patria 6×6 vehicles, on top of the already ongoing deliveries as part of joint CAVS programme.

Events after the period

• In early January 2025 it was announced that Patria had signed an agreement with Airways Aviation Group (‘Airways Aviation’) on them acquiring the entire share capital of its subsidiary Patria Pilot Training Oy (‘Patria’s Pilot Training’). As of 1 February, 2025, all employees, operations and ongoing training courses of Patria’s Pilot Training were transferred to Airways Aviation.
• Announced on 21 January, Patria will deliver an operational border security information system to the Finnish Border Guard together with Solita.
• Announced on 22 January, Patria and Babcock had agreed partnership on 6×6 vehicle for the UK armed forces.
• It was announced on 29 January that Patria acquires the cutting-edge Belgium-based digital defence platform provider ILIAS Solutions. With the acquisition of the number-one digital defence platform for fleet management, Patria enhances its standard of digital services.
• On 30 January it was announced that Germany took final step to full member of CAVS programme.
• Related to this, on 31 January it was announced that Germany and Patria had signed work package for CAVS Patria 6×6 programme-related mortar variants development.

Operational focus areas for 2025

Patria continues to strengthen its operational efficiency and productivity and seeks profitable growth in line with its Horizon 2025 strategy in the fourth year of the strategy period. Patria’s reliable and cost-effective lifecycle support services and top-notch products have a key role also in the future in maintaining required performance of customer fleets in all conditions. The development of digitalization of lifecycle support services will be strengthened in 2025

Following Finland’s decision in December 2021 to acquire F-35 fighter jets, negotiations concerning industrial participation of the selected aircraft will continue also in 2024. Preparations to kick off production in 2026 are under way, the resourcing needs are being analysed and the relevant recruiting has commenced.

The multinational joint CAVS programme of the Patria 6×6 vehicle is proceeding as planned. The deliveries of Latvian, Finnish and Swedish vehicles are ongoing and the vehicles are in operational use. Also Germany is a full member of the programme. The development of production capacity for new vehicle orders will continue in 2025. The joint programme has raised interest and is open also for other countries to join by mutual consent of the participating countries.

In 2023, Patria and Japan Steel Works Ltd. signed a relating license agreement on manufacturing Patria AMV XP 8×8 vehicles in Japan and the preparations for kicking off manufacturing are ongoing. The start of serial production of Japan’s and Slovakia’s 8×8 vehicle projects has been slower than expected, which may affect the outlook for the rest of the year.

Outlook for 2025

Patria expects continued growth in 2025 which is supported by strong order stock. Majority of the growth is expected to come from vehicle business, but the outlook for other business areas is also positive.

 

06 Feb 25. Saab year-end report 2024: Making steady progress on our profitable growth journey. Saab presents the full-year results for 2024.

“I am pleased to report that Saab ended 2024 in a strong way. We delivered a better-than-expected organic sales growth, improved our operational performance and generated a positive cash flow. We achieved all this while investing significantly in expansion to meet higher customer demand and strengthening our market position.  In the wake of the global geopolitical uncertainty, Saab is committed to being a reliable partner, supporting countries in building their defence capabilities and contributing to increased European defence capacity,” says Micael Johansson, President and CEO, Saab.

Key highlights Q4 2024

• Order bookings for the fourth quarter amounted to SEK 17,556m (31,501), driven by small and medium-sized orders, resulting in an order backlog amounting to SEK 187bn (153).
• Sales in the quarter amounted to SEK 20,850m (16,122) with an organic growth of 29%, driven by all business areas.
• Sales and sales growth for the quarter and the full year was in line with the Q4 update provided on January 17, 2025.
• EBITDA increased to SEK 2,734m (2,032) with an EBITDA margin of 13.1% (12.6) in the quarter.
• EBIT increased 38% and amounted to SEK 1,953m (1,420), corresponding to a margin of 9.4% (8.8).
• Net income increased to SEK 1,442m (1,254) and earnings per share amounted to SEK 2.66 (2.27), an increase of 17%.
• Operational cash flow amounted to SEK 3,558m (3,691) and was driven by large customer payments in the quarter.
• Net liquidity position at the end of the period was SEK 2,211m compared to SEK 2,343m at year-end 2023.
• The Board proposes a dividend for 2024 of SEK 2.00 (1.60).
• Outlook for 2025: an organic sales growth between 12-16%, an EBIT growth higher than the organic sales growth and a positive operational cash flow.
• Updated medium-term targets 2023-2027: an organic sales growth of around 18% (CAGR), an EBIT growth higher than the organic sales growth and a cumulative cash conversion of minimum 60%.

 

05 Feb 25. Embraer reached an all-time US$ 26.3bn backlog record in the last quarter of 2024.

• The company wide backlog value expanded 40%+ year-on-year in 4Q24
•  Commercial Aviation finished 2024 with a US$10.2bn backlog (15% year-on-year) and a strong 1.6x book-to-bill ratio
• Executive Jets recorded a new US$7.4bn all-time high backlog (65%+ quarter-on-quarter) supported by a marquee deal with Flexjet
• Services & Support posted a new all-time high US$4.6bn backlog during the quarter, up 50%+ compared to 4Q23
• Defense & Security registered a 67% year-on-year backlog increase to US$4.2bn, with a record share from global clients

Embraer (NYSE: ERJ / B3: EMBR3), one of the global leaders in the aerospace industry, reports that its organization-wide backlog reached US$26.3bn in 4Q24. The value is the largest ever recorded by the company in its history, and more than 40% higher year-on-year and 16% higher quarter-on-quarter. Embraer finished 2024 with an industry leading 2.2 book-to-bill ratio based on financial values1.

Embraer delivered 75 aircraft in the last quarter of the year, 27% more than the 59 aircraft in the previous quarter (3Q24), and equal to the number in the same period a year ago (4Q23). Meanwhile, the company delivered a total of 206 aircraft in 2024 – a 14% increase compared to the 181 aircraft in 2023.

1 Calculated as the (delta in Embraer backlog plus Embraer revenues) divided by Embraer revenues.

In Commercial Aviation, the backlog reached US$10.2bn in 4Q24 – 15% higher year-on-year but 8% lower quarter-on-quarter – because of the seasonally strong period of aircraft deliveries. The business unit delivered 31 new aircraft in the last quarter of 2024 and 73 in the full year (at the ceiling of revised estimates of 70-73 for the year and within the original estimates of 72-80). Consequently, Commercial Aviation finished 2024 with a strong 1.6 book-to-bill ratio based on financial values2.

Luxair formalized an order for 2 E195-E2s, which will complement the airline’s fleet of larger aircraft already requested. By exercising 2 secured options on its 2023 firm order for 4 aircraft, Luxair now has a total of 6 E195-E2 jets requested. Thus, Embraer currently has 179 firm orders for the E2 Jets family and 164 for the E1-175 Jet aircraft.

Finally, it is important to highlight the company’s production leveling initiative, which the company wants to make progress in 2025.

2 Calculated as the (delta in Com. Av. backlog plus Com. Av. revenues) divided by Com. Av. revenues.

In Executive Aviation, the backlog soared to US$ 7.4bn in 4Q24 – 70% higher year-on-year and 67% higher quarter-on-quarter – and a new all-time high for the business unit supported by a marquee contract with Flexjet. The deal includes 182 firm orders for Phenom 300E, Praetor 500, and Praetor 600 aircraft with deliveries from 2026 to 2030, and up to 30 additional Praetor options.

The division delivered 44 jets in the last quarter of 2024, and a total of 130 for the year (at the midpoint of the original guidance for 2024, and a 14-year high). Consequently, Executive Aviation finished 2024 with an industry leading 2.7 book-to-bill ratio based on financial values3.

The mid and super-mid-sized Praetor 500 and Praetor 600 represented half of the segment deliveries (22 jets) during the quarter, supported by the solid thrust forward of the aircraft family. Meanwhile, the Phenom 300, the best-selling aircraft in its category for 12 consecutive years worldwide, was the top performer (19 jets) over the period.

It is important to highlight the progress observed in the company’s production leveling initiative in 2024. Management managed to reduce how deliveries were skewed towards Q4 and better distribute them throughout the quarters. In 2024, Q4 deliveries accounted for 34% of the yearly total while that number was 45% on average for the previous five years. The company achieved significant results during the year and expects additional gains supported by supply chain improvements in the near future.

3 Calculated as the (delta in Exec. Av. backlog plus Exec. Av. revenues) divided by Exec. Av. revenues.

In Services & Support, the backlog rose to US$4.6bn in 4Q24 – 50% higher year-on-year and more than 30% higher quarter-on-quarter – propped by long-term contracts with Flexjet in Executive Aviation, and Air Serbia, LOT Polish Airlines and CommuteAir in Commercial Aviation. These contracts for the latter group are for the Pool and Part Exchange Plus Programs whose objectives are to support these companies’ fleet of E-Jets with a wide range of repair components, services and customized inventory. Additionally, contributions from spares/exchange parts, technical publications, technical services, training, and modifications have played a key role in this result. Services & Support finished 2024 with an industry leading 1.9 book-to-bill ratio based on financial values4.

In Defense & Security, the backlog climbed to US$4.2bn in 4Q24 – 67% higher year-on-year and 15% higher quarter-on-quarter – supported by new orders for the C-390 Millennium (4) and the A-29 Super Tucano (10). Embraer currently has 32 firm orders for our military transport and 17 for our light attack aircraft. Meanwhile, Defense & Security continued to ramp up production with the delivery of 3 new C-390 Millennium jets in 2024 versus 2 in 2023. Consequently, the business unit finished 2024 with an industry leading 3.3 book-to-bill ratio based on financial values5.

The division signed firm contracts in the last quarter of 2024 with the Czech Ministry of Defense and an undisclosed client for 2 C-390 Millennium aircraft each – these aircraft entered the backlog. Moreover, this military transport plane was selected by Slovakia (3) and Sweden (undisclosed) during the period – no contracts were signed yet and thus not recorded in the backlog.

The business unit also signed a firm contract with an undisclosed client for 6 A-29 Super Tucano aircraft in the last quarter of 2024, and another with an undisclosed client from Africa for 4 additional planes. Meanwhile, the Portuguese Air Force became the launch customer for the NATO version of the light attack aircraft (12) – but its contract was not effective at the end of 2024 – and the Uruguayan Air Force firmed their options (5) in early 2025. Therefore, these 17 aircraft were not recorded in the backlog yet.

 

06 Feb 25. Avibras in talks with Saudi firm as it seeks financial recovery.  Brazilian missiles and rockets specialist Avibras Indústria Aeroespacial is working on a new deal for its financial recovery. On 31 January the company announced that it is in advanced discussions with Black Storm Military Industries of the Kingdom of Saudi Arabia (KSA) to facilitate a potential investment aimed at the financial recovery of Avibras. The terms and conditions of the investment are being finalised, according to Avibras. This partnership aims to maintain Avibras’ manufacturing facilities in Brazil, enabling them to resume operations as soon as possible, and ensuring the fulfilment of the company’s obligations with the Brazilian government and other clients, its creditors, and its workforce, the company said. Avibras declined to comment further, citing a non-disclosure agreement, the company told Janes on 4 February. Little is known about Black Storm. The company’s website said it is active in the defence, environment, energy, and industrial solutions markets. In 2024 Avibras held talks with Australian company DefendTex and a national investor, but no deal was reached. Chinese state-owned defence conglomerate China North Industries Corporation (Norinco) has reportedly submitted a proposal to Brazilian authorities to acquire a 49% stake in Avibras. The financial situation of Avibras remains a concern for the Brazilian Army as the company is jointly developing the MTC-300 (Míssil Tático de Cruzeiro) tactical cruise missile with the Army Technological Centre for the Avibras Astros II Mk 3M and Mk 6 multiple launch rocket systems (MLRSs) of Army Artillery Command. The missile has a maximum range of 300 km. (Source: Janes)

 

05 Feb 25. TCFIII Spaceco Holdings LLC (d/b/a) Karman Space and Defense (“Karman” or the “Company”), a company specializing in the upfront design, testing, manufacturing, and sale of mission-critical systems for existing and emerging missile and defense, and space programs, today announced the commencement of its initial public offering of 21,052,632 shares of its common stock (the “Common Stock”). The offering consists of 8,421,053 shares of Common Stock being offered by Karman and 12,631,579 shares of Common Stock being offered by certain selling stockholders. The selling stockholders also expect to grant the underwriters a 30-day option to purchase up to an additional 3,157,894 shares (solely to cover over-allotments, if any) of Common Stock at the initial public offering price, less underwriting discounts and commissions. Karman will not receive any proceeds from any sale of shares by the selling stockholders.

The initial public offering price is expected to be between $18.00 and $20.00 per share. Karman currently intends to use the net proceeds it receives from this offering, together with its existing cash, cash equivalents and short-term investments, for general corporate purposes, including additional development efforts, working capital and operating expenses.

Karman has applied to list its Common Stock on the New York Stock Exchange under the ticker symbol “KRMN.”

Citigroup and Evercore ISI are acting as book-running managers for the proposed offering and as representatives of the underwriters for the proposed offering. RBC Capital Markets and William Blair are acting as joint bookrunners for the proposed offering. Baird is acting as co-manager for the proposed offering.

The proposed offering will be made only by means of a prospectus. Copies of the preliminary prospectus relating to the proposed offering may be obtained from: Citigroup, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, by telephone: (800) 831-9146 and Evercore Group L.L.C., Attention: Equity Capital Markets, 55 East 52nd Street, 35th Floor, New York, New York 10055, by telephone: (888) 474-0200, or by email: .

A registration statement on Form S-1, including a prospectus, relating to the proposed offering of Common Stock has been filed with the U.S. Securities and Exchange Commission but has not yet become effective. Accordingly, the Common Stock may not be sold, nor may offers to buy be accepted, prior to the time the registration statement becomes effective. This press release shall not constitute an offer to sell or a solicitation of an offer to buy the Common Stock, nor shall there be any sale of the Common Stock in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Karman

We specialize in the upfront design, testing, manufacturing, and sale of mission-critical systems for existing and emerging missile and defense, and space programs. Our integrated payload protection, propulsion, and interstage system solutions are deployed across a wide variety of existing and emerging programs supporting important Department of Defense and space sector initiatives.  (Source: PR Newswire)

 

05 Feb 25. Standex International Corporation (NYSE:SXI) today announced that it has acquired privately-held, California-based McStarlite Co., a leading provider of complex sheet metal aerospace components, for approximately $56.5m in cash, financed from Standex’s existing revolver. In its first year of ownership, the Company expects the acquisition to be accretive to its earnings. McStarlite Co. will be reported as part of Standex’s Engineering Technologies Group business segment. In calendar year 2024, McStarlite revenue was approximately $33 m with an adjusted EBITDA margin above 20%.

“We are very pleased to have acquired McStarlite, a great strategic fit, expanding our product breadth and forming capabilities in commercial aviation, space and defense applications. Its customer base, product line and technologies are highly complementary to our existing Spincraft business with the potential to capitalize on technical exchanges and cross selling opportunities. McStarlite also brings a strong engineering and customer-focused team that aligns with Standex’s commitment to customer intimacy,” commented President and Chief Executive Officer David Dunbar.

With four facilities in Harbor City, CA, McStarlite is a premier sheet metal specialist in the forming of some of the largest, most complex sheet metal components. It designs and manufactures cold deep draw and bulge-formed aviation components, including segmented and single piece lipskins, nozzles, complex sheet metal assemblies, and tooling to support production hardware. Commenting on the transaction, John Basso, President, Chairman and CEO of McStarlite Co., stated “We are excited to join a global leader that provides a strong foundation for our continued growth. Standex’s ownership offers us the opportunity to leverage a much broader geographical and industry presence, additional engineering expertise, complementary product offerings, and enhanced customer relationships.”

“With today’s announcement, we have strengthened our competitive advantage by adding both scale and additional capabilities to our Engineering Technologies platform. The addition of McStarlite furthers our portfolio strategy of building our growth business segments into more significant platforms. We look forward to welcoming the entire McStarlite team to our company,” concluded Dunbar.

McStarlite was advised by investment banking firm Janes Capital Partners and Procopio, Cory, Hargreaves & Savitch LLP as legal counsel.

About Standex

Standex International Corporation is a global multi-industry manufacturer in five broad business segments: Electronics, Engraving, Scientific, Engineering Technologies, and Specialty Solutions with operations in the United States, Europe, Canada, Japan, Singapore, Mexico, Turkey, India, and China.  For additional information, visit the Company’s website standex.com.

About McStarlite

Basmat, Inc. d/b/a McStarlite Co. (“McStarlite Co.”), founded in 1955, designs and manufactures segmented and single piece lipskins, nozzles, complex sheet metal assemblies, and tooling to support production hardware for products focused on commercial aviation and military end markets. For additional information, visit the Company’s website at http://www.mcstarlite.com. (Source: PR Newswire)

 

05 Feb 25. Canadian shipyard in talks to buy US shipbuilder amid trade war talk. Davie, a Quebec shipbuilder set to play a key role in a joint icebreaker production agreement between Canada, the United States and Finland, is moving forward with plans to expand its operations south of the border despite a looming trade war threatening the continent. As part of the expansion, the Canada-based multinational shipbuilder has set out to acquire an American shipyard, which would secure an initial and important footprint in the U.S. for the company.

“Right now it’s business as usual with our U.S. entry plans. … We are also making progress with the acquisition of an established U.S. shipbuilder – if we are successful, we plan to upgrade as we are at the Quebec site,” Davie spokesman Paul Barrett told Defense News.

Davie has envisioned transforming its Lévis, Quebec, shipyard into North America’s largest, most versatile shipbuilding center.

In 2024, it signed two contracts to this end, one with the American firm Pearlson & Pearlson Inc., and another with the Canadian construction leader Dinamo, to modernize the site in order to deliver seven heavy icebreakers and two hybrid ferries under Canada’s National Shipbuilding Strategy.

The project is supported by nearly CAD $519 m in investments from the Quebec government and will deliver in part six new buildings and machinery, a new assembly hall and launch pad, and waterfront upgrades.

Davie has positioned itself as a crucial industry partner in the trilateral Icebreaker Collaboration Effort, or ICE Pact. The agreement, signed last summer, seeks to bring together Finnish, Canadian and U.S. know-how, resources and expertise to build best-in-class ice boats capable of operating year-round in the Arctic.

Recent remarks made by U.S. President Donald Trump suggesting that Canada and Greenland could become American states as well as the imposition of 25% tariffs on Canadian imports – tabled, for now – have casted doubts on the future of partnerships like the ICE Pact.

However, both the Canadian and Finnish government have told Defense News that the tense climate witnessed as of late between the two neighboring countries has not compromised cooperation amongst the parties involved.

“We continue implementing it as planned and look forward to cooperating with our allies and partners, the U.S. and Canada – we believe all parties are committed to Ice Pact efforts, as there is a need to strengthen the capabilities,” Reko-Antti Suojanen, senior ministerial adviser and ICE Pact coordinator at the Ministry of Economic Affairs and Employment of Finland, said.

All three countries are in relatively urgent need of bolstering their icebreaker fleets, as many are outdated or will soon be, while China and Russia have ramped up their shipbuilding efforts.

“The West’s competitors and adversaries are rapidly expanding Arctic ice breaking fleets to exert control in the region – despite ambitious shipbuilding programs, the U.S. and its allies remain far behind,” Barrett, the Davie spokesman, said.

Through the acquisition of Helsinki Shipyard in 2023, Davie gained access to Finland’s leading icebreaker intellectual property, having produced much of the world’s ice boat fleet. It is not yet clear to what extent the knowledge will be shared with the U.S. under the agreement. Barrett noted that Davie company expects to play a lead role in discussions on how their IP will be properly protected and applied within this framework. Once the Canadian manufacturer finalizes the purchase of the American shipbuilder, which the company declined to name, it will become the only one in the ICE Pact with a footprint in all three member nations. (Source: Defense News)

 

06 Feb 25. Babcock International Group PLC (“Babcock” or “the Group”) provides an update on trading for the nine months of the financial year ending 31 March 2025 and upgrade of full year expectations. The strong trading performance reported at HY25 continued throughout the third quarter of the year, and the preliminary view of performance in the month of January is also encouraging. The majority of revenue for the year is now under contract and, having reviewed the delivery forecast for the remainder of the year, the Board now expects both revenue and underlying operating profit to exceed the top end of the range of analyst expectations1. Accordingly, we are upgrading our expectations for FY25 to c.£4.9bn of revenue, with the expected overperformance due to double-digit organic growth in Nuclear and strong growth in Marine. In Nuclear, growth is driven by increased new build and decommissioning work in civil nuclear, as well as increased submarine support activity and higher than originally expected infrastructure revenues. In Marine, the growth is enhanced by higher LGE volumes as well as the ramp-up of the Skynet programme.

Babcock Chief Executive David Lockwood said: “Today’s announcement demonstrates that successful execution of our strategy is continuing to deliver value for all our stakeholders. Our engineering skills and know-how are in ever greater demand and with significant opportunities before us, I look forward to further profitable growth.”

Operational momentum

We continue to make good operational and strategic progress in the UK and internationally.

In January, HMS VICTORIOUS entered our 9-Dock facility in Devonport, marking a major milestone in the £560 m programme to modernise and refit the submarine. HMS VICTORIOUS is the second of the UK’s four Vanguard Class submarines, which play a vital role as part of the UK’s continuous at sea deterrent, to undergo a life extension programme. Moving the submarine into the dock enables us to deliver the work required to return this critical national defence asset back to the Royal Navy to continue operational patrols into the 2030s.

We are progressing the build of the first three ships in the Type 31 Inspiration Class frigate programme. We expect the float-off of the first ship, HMS Venturer, to be in the first half of FY26 and float-off of the second ship, HMS Active, in the second half of FY26.

In January, we were awarded a new 17-year contract (Mentor 2) by the Direction Générale de l’Armement for the provision and support of military air training solutions for the French Air and Space Force and the French Navy. The contract, worth up to c.€800 m, including c.€200 m of options, comprises the provision of aircraft, simulators and initial pilot training as well as the through-life support of the aircraft, and infrastructure2. This agreement represents a significant expansion of our military activity in France, one of our focus countries.

 

03 Feb 25. ASELSAN closed 2024 with over 1bn USD export deals. ASELSAN signed export contracts worth over 1bn USD in 2024, a record high figure in its history. The company also expanded its global footprint with the opening of new offices worldwide, steadily advancing toward its ambitious 2030 goals. ASELSAN, Türkiye’s leading defense company, achieved an outstanding performance in international sales in 2024 and exceeded 1bn dollars of export contracts. Direct exports doubled compared to the previous year, reaching 217m USD, while indirect exports through land, naval, and air platforms totaled 291m USD, leading to an overall export volume of 508m USD, demonstrating ASELSAN’s growing influence in global markets. In 2024, the company signed contracts with seven countries for the first time, bringing the total number of countries, which trust ASELSAN technology to 92. In addition, 31 products were exported for the first time, including ASELFLIR-500 camera, GÖZDE and KGK guidance kits, CENK naval radars, FERSAH anti-submarine sonar, and more. Among them, its new generation electro optical system ASELFLIR-500, notable for its superior performance on UAVs was sold to 16 countries in its first production year. New offices opened in six different countries in 2024 have expanded ASELSAN’s global presence to 20 countries, enhancing its ability to provide better services to the end-users. By supplying the Ku-Band and X-Band LOCUS communication payloads for Türkiye’s first domestic communication satellite, TÜRKSAT-6A, ASELSAN has become capable of providing communication solutions to all platforms, from the depths of the sea to the depths of space. ASELSAN President & CEO Ahmet Akyol evaluated the company’s success: “2024 had been a remarkable year for ASELSAN in terms of new orders and deliveries domestically and internationally. We achieved to become one of the 10 fastest-growing defense companies in the world, making us climbing five places in the Defense News Top 100 list. I see all these achievements as a result of the dedicated work of our young and talented workforce and want to thank each of them for being a part of this amazing team. Looking ahead to 2025, our 50th anniversary, ASELSAN has higher goals to reach in sight, with the motivation to build on the achievements of 2024. We will continue to produce the highest technologies with the most qualified capabilities and the fastest processes, and present them to the world in frame of our strategic vision for 2030, which we call aselsaneXt2030. I strongly believe we will continue to deliver innovative, mission-focused solutions for our customers, while setting new standards for operational efficiency and technological leadership in the defense industrial base.” (Source: ArabianBusiness.com)

 

04 Feb 25. James Fisher and Sons shares jump on profits beat. Shares at James Fisher and Sons (FSJ) jumped by more than 8 per cent this morning after the marine services group said 2024 profits would come in ahead of market expectations. Underlying operating profits are expected to be £29m, which would mark a return to profitability following a £18.6m loss in 2023 thanks to stronger revenues and several non-recurring items. After the sale of two business units last year, net debt at the end of the period is expected to sit within the target range of 1x and 1.5x at less than £60m, down from £144.8m at the end of September. The company will publish its full-year results on 20 March. (Source: Investors Chronicle)

 

04 Feb 25. Amentum Holdings, Inc. (“Amentum” or the “Company”) (NYSE: AMTM), a leading advanced engineering and technology company, today announced results for the first quarter ended December 27, 2024, and reaffirmed its outlook for fiscal year 2025.

“We are off to a strong start as a newly combined company,” said Amentum Chief Executive Officer John Heller. “Our first quarter results were robust and in line with our expectations across all key financial metrics, including organic growth and free cash flow. This solid start to the year, coupled with strong bid volume and growing momentum, position Amentum to meet our fiscal year 2025 commitments and drive long-term value for shareholders.”

GAAP revenues increased 72% year-over-year primarily as a result of revenues from the combination with Jacobs’ Critical Mission Solutions and Cyber & Intelligence (CMS) businesses. GAAP operating income increased as a result of the contribution from CMS, partially offset by increased intangible amortization expense. GAAP net income and diluted earnings per share improved year-over-year due to the higher operating income and lower interest expense.

Pro Forma and Non-GAAP Results

Pro forma revenues, which include the results of CMS prepared in accordance with the requirements of Article 11 of Regulation S-X, increased 2% year-over-year driven by growth in both Digital Solutions and Global Engineering Solutions. Pro Forma Adjusted EBITDA increased 3% year-over-year primarily due to the higher revenues and improved operating performance. Pro Forma Adjusted Net Income and Adjusted Diluted Earnings Per Share increased due to the higher operating profit partially offset by an increase in interest expense.

Digital Solutions revenues increased 1% year-over-year driven by new contract awards, partially offset by the expected ramp-down of other historical programs. Adjusted EBITDA also increased 1% year-over-year due to the higher revenues.

Global Engineering Solutions revenues increased 3% year-over-year driven by new contract awards and growth on existing programs. Adjusted EBITDA increased 4% year-over-year as a result of the higher revenues and improved operating performance.

Cash Flow Summary

During the quarter ended December 27, 2024, Amentum generated $110 m of net cash provided by operating activities and used $8 m and $16 m in investing and financing activities, respectively. Net cash provided by operating activities was driven by strong cash earnings, disciplined working capital management, and the timing of tax and interest payments. Investing activities included $8m in capital expenditures, which resulted in quarterly free cash flow of $102m. Financing activities consisted primarily of $13m in distributions to non-controlling interests. As of December 27, 2024, Amentum had $522m in cash and cash equivalents and $4.7bn of debt.

Backlog and Contract Awards

As of December 27, 2024, the Company had total backlog of $45.2bn, compared with $27.3bn as of December 29, 2023, an increase of $17.9bn primarily due to the acquisition of CMS. Funded backlog as of December 27, 2024 was $6.6bn.

Notable Q1 Fiscal Year 2025 Awards

• U.S. Department of Energy (DOE) West Valley Demonstration Project (WVDP) – The U.S. DOE awarded WVDP, a $3bn single-award indefinite delivery indefinite quantity contract with a ten-year ordering period, to West Valley Cleanup Alliance, LLC (WVCA). As a part of the joint venture partnership, Amentum will bring advanced environmental capabilities to safely remediate the site in western New York state.
• Air Forces Central Command Global Prepositioned Materiel Services (GPMS) – The U.S. DOD awarded Amentum a seven-year, $447 m contract to deliver smart asset management and sustainment solutions.
• Global Counter Threat Finance (GCTF) – The U.S. DOD awarded a subsidiary of Amentum an eight-year, $248 m contract to leverage mission-driven data analytics solutions to disrupt and degrade adversary financial networks that support transnational criminal organizations.
• Commercial Awards – Amentum was awarded contracts valued at over $400 m in fiscal Q1 2025 to support a variety of Fortune 500 customers in areas including the deployment and optimization of 5G networks and infrastructure modernization. (Source: BUSINESS WIRE)

 

04 Feb 25. TransDigm Group (TDG.N), raised its annual profit forecast on Tuesday, betting on strong demand for aftermarket parts and services from planemakers and carriers. The company, which supplies aircraft components such as cockpit security systems and engine sensors for commercial and military jets, also beat Wall Street estimates for quarterly profit. Demand for aircraft parts has risen as planemakers rush to fulfill expansion plans by airlines looking to cash in on the booming market for air travel. However, delayed deliveries of new planes have pushed airlines to extend the use of older aircraft, boosting orders for profitable aftermarket parts for suppliers such as TransDigm. The Cleveland, Ohio-based company expects its 2025 profit per share to be between $32.27 and $34.19, compared to the previous forecast of $31.47 to $33.39. The company, which counts planemakers Boeing (BA.N) and Airbus (AIR.PA), among its customers, reaffirmed its annual sales forecast of $8.75bn to $8.95bn. (Source: FT.com)

 

04 Feb 25. Filtronic revenues soar on SpaceX demand. The electronic equipment group swung to a profit as space orders took off. Filtronic (FTC) has had a stellar year. The electronic equipment group’s shares are up by an eye-watering 276 per cent over the past 12 months, fuelled by multiple earnings upgrades linked to a swelling order intake from Elon Musk’s Space X. The Aim-traded company supplies the E-band solid state power amplifiers (SSPA) for the ground stations powering the Starlink low earth orbit (LEO) satellite network as part of a five-year partnership agreed in April last year. Less than a year in, the deal is flowing nicely into Filtronics’ top line.  Revenues shot up 201 per cent year on year to £25.6m in the first half, with the space division more than eclipsing the 7 and 39 per cent respective falls in the defence and critical communications segments. This helped the group swing to an operating profit of £6.8m against a loss last year and drive a 30 per cent adjusted Ebitda margin.  The return to profits came despite a 62 per cent rise in the cost base to £9.1m. These were investments for long-term growth and included hiring 30 engineers, recruiting a design team and opening two new production lines to boost capacity. A healthy net cash position of £5.2m provides further firepower. Chief executive Nat Edington told Investors’ Chronicle that more visibility into SpaceX’s plans is providing the confidence to invest, but reducing the heavy revenue concentration on a single customer is becoming a big focus. Filtronic was awarded 12 design wins with nine customers in the first half, with £30m revenues still to be realised.   Of course, this kind of growth comes at a price. Having more than doubled its share price over the past year, the company now trades at 20.2 times 2025 earnings. This is far from cheap, but with the LEO satellite market soaring, the medium-term opportunity remains compelling. Hold.  (Source: Investors Chronicle)

 

03 Feb 25. The Thermal Group (“TTG” or the “Company”), a leading designer and manufacturer of mission-critical and highly engineered components for the defense, aerospace and industrial sectors and a portfolio company of Behrman Capital, today announced the acquisition of Applied Composite Technology Aerospace, LLC (“ACT”), a leading manufacturer of advanced composite structures for the aerospace and defense industry. Financial terms of the transaction were not disclosed. Headquartered in Gunnison, Utah, ACT combines technological innovation with exceptional manufacturing and design expertise, providing their customers with a comprehensive range of composite solutions for both structural and non-structural requirements. ACT’s product capabilities include laminate construction, composite compression molding, resin transfer molding and filament winding, serving a wide variety of high-reliability applications in the defense, aerospace, and business jet marketplaces. ACT also provides complementary services such as design, testing, inspection and engineering, among others.

Harley Kaplan, TTG’s Chief Executive Officer, said: “ACT augments TTG’s established expertise in thermal design and manufacturing by adding advanced composite capabilities to our product portfolio. Together with ACT, we are enhancing our ability to serve customers through a broader suite of highly-engineered solutions. Bringing together TTG’s decades of manufacturing know-how in thermal management with ACT’s engineering, design and composite manufacturing capabilities will allow for significant cross-selling opportunities, as we look to build on our strategic position and strengthen our long-term growth prospects.”

Jason Christensen, President of ACT, said: “We are proud of ACT’s 30-year history of quality and serving customers with engineered composite solutions for high-reliability, and often complex applications. Joining forces with The Thermal Group creates exciting opportunities and enables us to create superior solutions for our customers in the aerospace and defense industry. We are eager to collaborate with TTG and leverage its broader infrastructure and resources to support significant growth in the years ahead.”

Grant Behrman, Managing Partner of Behrman Capital, said: “The acquisition of ACT represents an important step in the evolution of the TTG platform and continues the Company’s track record of building a robust portfolio of high-reliability engineered solutions through strategic acquisitions. We are excited to partner with ACT management as the combined company enters its next phase of growth.”

Houlihan Lokey acted as exclusive financial advisor and Latham & Watkins LLP acted as legal counsel for TTG in connection with the transaction.

About TTG

TTG is a leading designer and manufacturer of mission-critical and highly-engineered thermal management components for defense, aerospace and industrial applications. The Thermal Group’s products are critical to the functionality of electronic systems, and include ruggedized chassis, enclosures, heat sinks, cooling systems and other thermal management products. The Company’s core manufacturing capabilities include dip brazing, vacuum brazing, CNC machining, fabricating, welding, painting, laser cutting, mil-spec finishing and mechanical assembly. For more information, please visit https://www.thethermalgrp.com.

About ACT

ACT Aerospace is an aerospace and defense manufacturing leader. With a primary focus on advanced composite structures and innovation, ACT Aerospace is well-known as a major aerospace and defense supplier to many large manufacturers and OEMs. The Company’s 150,000+ sq. ft. facility is fully integrated to handle any project from design to final product. For more information, please visit www.actaero.com.

About Behrman Capital

Based in New York City, Behrman Capital was founded in 1991 by Grant G. and Darryl G. Behrman. The firm invests in management buyouts, leveraged buildups and recapitalizations of established growth businesses. The company’s investments are focused in three industries: Defense and Aerospace, Healthcare, and Specialty Industrials. The firm has raised $4.1bn since inception and is currently investing out of its seventh fund. For more information, please visit www.behrmancap.com. (Source: PR Newswire)

 

03 Feb 25. Triumph Group, Inc. (NYSE: TGI) (“TRIUMPH” or the “Company”) today announced that it has entered into a definitive agreement under which affiliates of growth-focused private equity firms Warburg Pincus and Berkshire Partners will acquire TRIUMPH through a newly formed entity for a total enterprise value of approximately $3bn. Upon completion of the transaction, TRIUMPH will become a privately held Company, jointly controlled by Warburg Pincus and Berkshire Partners.

Under the terms of the agreement, TRIUMPH shareholders will receive $26.00 per share in cash. The purchase price represents a premium of approximately 123% over the Company’s unaffected closing stock price1 and a premium of approximately 58% over the volume weighted average price (VWAP) of TRIUMPH common stock for the 90 days prior to January 31, 2025.

“We are pleased to have reached this agreement, which reflects the culmination of the Board’s robust process and will deliver immediate, certain and premium cash value to our shareholders,” said Dan Crowley, TRIUMPH’s chairman, president and chief executive officer. “Over the last few years, TRIUMPH successfully optimized our portfolio, built around a world class team and capabilities. This transaction recognizes our Company’s position as a valued provider of mission-critical engineered systems and proprietary components for both OEM and aftermarket customers. As a privately held company in partnership with Berkshire Partners and Warburg Pincus, TRIUMPH will have an enhanced ability to meet our customers’ evolving needs and provide more opportunities for our valued employees.”

“TRIUMPH has a strong reputation as a leader in highly engineered aerospace components and systems, and we are excited about partnering with them in this next chapter of growth,” said Dan Zamlong, Managing Director at Warburg Pincus. “With our deep experience investing in and developing aerospace platforms, we look forward to working with TRIUMPH’s talented global team to increase opportunities for its portfolio and capture the growing demand for high quality aerospace components.”

“TRIUMPH plays a critical role in the aerospace and defense industry and is known for providing high quality products on key platforms. Berkshire has a long history of partnering with market-leading aerospace companies, and we look forward to helping accelerate the next phase of TRIUMPH’s growth,” added Blake Gottesman, Managing Director at Berkshire Partners.

Timing and Approvals

The transaction is expected to close in the second half of calendar year 2025 and is subject to customary closing conditions, including approval by TRIUMPH shareholders and receipt of required regulatory approvals. TRIUMPH’s Board of Directors unanimously approved the definitive agreement. The transaction is not contingent upon financing. Upon completion of the transaction, TRIUMPH will no longer be traded on the New York Stock Exchange.

Third Quarter Fiscal 2025 Earnings

In connection with its pending transaction, TRIUMPH will release its third quarter fiscal 2025 earnings and file its Form 10-Q by February 10, 2025, as planned, and is cancelling its previously scheduled earnings conference call and webcast.

Advisors

Goldman Sachs & Co. LLC is serving as exclusive financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel to TRIUMPH. Lazard is serving as financial advisor and Kirkland & Ellis LLP and Covington & Burling LLP are acting as legal counsel to Berkshire Partners and Warburg Pincus.

About TRIUMPH

Founded in 1993 and headquartered in Radnor, Pennsylvania, TRIUMPH designs, develops, manufactures, repairs and provides spare parts across a broad portfolio of aerospace and defense systems and components. The Company serves the global aviation industry, including original equipment manufacturers and the full spectrum of military and commercial aircraft operators.

More information about TRIUMPH can be found on the Company’s website at www.triumphgroup.com.

About Berkshire Partners

Berkshire Partners is a 100% employee-owned, multi-sector specialist investor in private and public equity. The firm’s private equity team invests in well-positioned, growing companies across business & consumer services, healthcare, industrials, and technology & communications. Berkshire is currently investing from its Fund XI, which held its final closing in 2024 with approximately $7.8 bn in commitments. Since inception, Berkshire Partners has made more than 150 private equity investments and has a strong history of collaborating with management teams to grow the companies in which it invests. For additional information, visit www.berkshirepartners.com.

About Warburg Pincus

Warburg Pincus LLC is the pioneer of private equity global growth investing. A private partnership since 1966, the firm has the flexibility and experience to focus on helping investors and management teams achieve enduring success across market cycles. Today, the firm has more than $86 bn in assets under management, and more than 230 companies in their active portfolio, diversified across stages, sectors, and geographies. Warburg Pincus has been an active investor in the aerospace & defense and industrial technology sectors with current and former investments including Accelya, Aquila Air Capital, CAMP Systems, Consolidated Precision Products, Duravant, Extant Aerospace, Infinite Electronics, Inmarsat, iNRCORE, Quest Global, Sundyne, TransDigm and Wencor Group. Warburg Pincus has invested in more than 1,000 companies across its private equity, real estate, and capital solutions strategies.

The firm is headquartered in New York with offices in Amsterdam, Beijing, Berlin, Hong Kong, Houston, London, Luxembourg, Mumbai, Mauritius, San Francisco, São Paulo, Shanghai, and Singapore. For more information, please visit www.warburgpincus.com or follow us on LinkedIn. (Source: PR Newswire)

 

03 Feb 25. Palantir Technologies Inc. (NASDAQ:PLTR) today announced financial results for the fourth quarter and fiscal year ended December 31, 2024.

“Our business results continue to astound, demonstrating our deepening position at the center of the AI revolution. Our early insights surrounding the commoditization of large language models have evolved from theory to fact,” said Alexander C. Karp, Co-Founder and Chief Executive Officer of Palantir Technologies Inc. “I would also like to congratulate Palantirians for their extraordinary contributions to our growth. They have earned every bit of the compensation from the delivery of their market-vesting stock appreciation rights (SARs).”

Q4 2024 Highlights

• U.S. revenue grew 52% year-over-year and 12% quarter-over-quarter to $558m

o U.S. commercial revenue grew 64% year-over-year and 20% quarter-over-quarter to $214m

o U.S. government revenue grew 45% year-over-year and 7% quarter-over-quarter to $343m

• Revenue grew 36% year-over-year and 14% quarter-over-quarter to $828m
• Closed 129 deals of at least $1m, 58 deals of at least $5m, and 32 deals of at least $10m
• Closed a record-setting $803 m of U.S. commercial total contract value (“TCV”), up 134% year-over-year and 170% quarter-over-quarter
• U.S. commercial remaining deal value (“RDV”) of $1.79bn, up 99% year-over-year and 47% quarter-over-quarter
• Customer count grew 43% year-over-year and 13% quarter-over-quarter
• Cash from operations of $460m, representing a 56% margin
• Adjusted free cash flow of $517m, representing a 63% margin
• GAAP net income of $79m, representing a 10% margin

o $165m of net income when excluding one-time SAR-related expenses, representing a 20% margin

• GAAP income from operations of $11m, representing a 1% margin

o $142 m of income from operations when excluding one-time SAR-related expenses, representing a 17% margin

• Adjusted income from operations of $373m, representing a 45% margin
• Rule of 40 score of 81%
• GAAP earnings per share (“EPS”) of $0.03

o $0.07 EPS when excluding one-time SAR-related expenses

• Adjusted EPS of $0.14
• Cash, cash equivalents, and short-term U.S. Treasury securities of $5.2bn

FY 2024 Highlights

• U.S. revenue grew 38% year-over-year to $1.90bn

o U.S. commercial revenue grew 54% year-over-year to $702m

o U.S. government revenue grew 30% year-over-year to $1.20bn

• Revenue grew 29% year-over-year to $2.87bn
• Cash from operations of $1.15bn, representing a 40% margin
• Adjusted free cash flow of $1.25bn, representing a 44% margin
• GAAP net income of $462m, representing a 16% margin
• GAAP income from operations of $310m, representing an 11% margin

o $442 m of income from operations when excluding one-time SAR-related expenses, representing a 15% margin

• Adjusted income from operations of $1.13bn, representing a 39% margin

For Q1 2025, we expect:

• Revenue of between $858 – $862m.
• Adjusted income from operations of between $354 – $358m.

For full year 2025, we expect:

• Revenue of between $3.741 – $3.757bn.
• U.S. commercial revenue in excess of $1.079 bn, representing a growth rate of at least 54%.
• Adjusted income from operations of between $1.551 – $1.567bn.
• Adjusted free cash flow of between $1.5 – $1.7bn.
• GAAP operating income and net income in each quarter of this year.

(Source: BUSINESS WIRE)

 

31 Jan 25. Northrop Grumman delivers reassuring results.

Free cash flow improved by a quarter

• Higher book-to-bill ratio
• Two units set for sales declines in 2025

As with US sector rivals, Northrop Grumman (US:NOC) has markedly underperformed the S&P 500 at the same time as peers in Europe have been boosted by higher defence demand after the invasion of Ukraine.

But in the aftermath of contractor peer Lockheed Martin’s (US:LMT) poorly received results, this was a reassuring set of annual figures from Northrop after it was hit in 2023 by a $1.56bn (£1.17bn) pre-tax charge on its B-21 bomber aircraft programme. In that context, no unpleasant surprises was a relief.

Agency Partners analysts said that “having been first to deliver an inflation-related cost overrun (on B-21), Northrop Grumman may be the first out of that phase”.

The book-to-bill ratio improved to 1.23, and the backlog sat at at record $91.5bn. Big awards in the fourth quarter included $4bn for restricted programmes and $3.5bn for the US military’s take charge and move out (TACAMO) communication system.

Revenue guidance for 2025 is a range of $42bn-$42.5bn, with growth driven by the aeronautics business, which delivered a 12 per cent annual sales uplift this time around.

Northrop expects revenue declines at its space systems and defence systems arms, although the agreed $327mn sale of its training services business to Serco (SRP) has been taken into account at the latter. The transaction is expected to complete around the middle of this year.

Free cash flow was guided to improve to $2.85bn-$3.25bn, after surging by 25 per cent in the year to $2.62bn.

But Northrop is not immune to the uncertainty around the traditional defence contractors as the new US administration takes a fresh look at the budget. The shares trade on 17 times forward consensus earnings, in line with the five-year average. Hold.  (Source: Investors Chronicle)

 

03 Feb 25. Albion River (“Albion”) is proud to announce the acquisition of Arotech from Greenbriar Equity Group. Headquartered in Ann Arbor, Michigan, Arotech is a recognized leader in high-fidelity training and simulation, portable power systems, and advanced electronics manufacturing, serving global defense and security customers.

Dean Krutty, CEO of Arotech, commented, “We are excited to join forces with Albion River as we embark on this next phase of growth. With Albion River’s resources and expertise, we are poised to expand our global footprint, enhance our product offerings, pursue strategic acquisitions, and continue delivering for our customers.” Arotech’s existing management team, led by Dean Krutty, will continue in their existing roles.

Bryan Cave Leighton Paisner LLP served as legal advisor to Albion on the transaction. 3Wire Partners served as financial advisor and Kirkland & Ellis LLP served as legal advisor to Greenbriar Equity Group on the transaction.

About Arotech Corporation

Arotech Corporation provides high-fidelity training & simulation, advanced electronics manufacturing, and portable power systems for defense, law enforcement, and select commercial end-markets. Its products are embedded in hundreds of defense platforms and protected by its extensive portfolio of intellectual property and decades of proprietary manufacturing and development know-how. Arotech has a proven track record across all branches of the U.S. military, numerous federal agencies, major prime contractors, foreign militaries, and state & local customers. Additional Information may be found at www.arotech.com.

About Albion River

Albion River LLC is a private direct investment firm focused on acquiring companies that produce highly technical Defense Products & Services. Albion River is led by its group of partners, supported by a team of expert advisors and an extensive network of industry and government professionals. Additional information may be found at www.albionriver.com. (Source: BUSINESS WIRE)

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SPX CommTech, part of SPX Technologies Inc, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all. Formed by TCI and ECS, SPX CommTech’s Battlespace portfolio enables defence and security teams to detect, defeat and exploit RF signals to enhance communications intelligence (COMINT) and counter unmanned aerial systems (Counter-UAS). Additionally, its Tactical Data Link portfolio allows intelligence gathering agencies, special forces, emergency response, and security teams to securely and reliably transfer video and data between enabled-aircraft and ground teams over long distances for airborne Intelligence, Surveillance, Reconnaissance (ISR).

For more information visit www.tcibr.com and www.enterprisecontrol.co.uk

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Sponsored by SPX Communication Technologies (TCI & ECS)

 

www.tcibr.com

 

www.enterprisecontrol.co.uk

 

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27 Jan 25.  SPX Technologies, Inc. (NYSE:SPXC) has completed the acquisition of Kranze Technology Solutions, Inc. (“KTS”), a leader in digital interoperability and tactical networking solutions. KTS is now a part of SPX Technologies’ Communication Technologies (“CommTech”) platform, within its Detection & Measurement segment. KTS is anticipated to be modestly accretive to adjusted earnings per share from continuing operations in 2025. Management plans to provide 2025 guidance including the impact of KTS on February 25, 2025, when SPX Technologies reports Q4 2024 results.

“We are excited to welcome the KTS team to the SPX Technologies family,” said Gene Lowe, President and CEO of SPX Technologies. “This transaction significantly scales our position in Communication Technologies and expands our value creation opportunities in highly complementary growth markets across our global customer base. KTS’s advanced digital interoperability technology and strong position in U.S. defense platforms are an excellent fit with SPX’s existing tactical datalinks, communications intelligence, and radio frequency (RF) countermeasure offerings.”

Richard Kranze, co-founder of KTS commented, “We are delighted for KTS to be joining SPX Technologies’ CommTech team. Bringing together SPX’s expertise and resources with KTS’s strong technology and customer relationships creates numerous growth opportunities for employees, customers, and shareholders. I look forward to helping the SPX Technologies team to build an even stronger, more valuable platform.”

About KTS: Founded in 2008, KTS is a leading provider of digital interoperability and tactical networking solutions that drive superior situational awareness, interoperability, and increased survivability across multiple platforms and domains.

About SPX Technologies, Inc: SPX Technologies is a supplier of highly engineered products and technologies, holding leadership positions in the HVAC and detection and measurement markets. Based in Charlotte, North Carolina, SPX Technologies has more than 4,100 employees in 15 countries. SPX Technologies is listed on the New York Stock Exchange under the ticker symbol “SPXC.” For more information, please visit www.spx.com.

 

30 Jan 25. Oshkosh Corporation (NYSE: OSK), a leading innovator of purpose-built vehicles and equipment, today reported 2024 fourth quarter net income of $153.1m, or $2.33 per diluted share, compared to net income of $150.8m, or $2.28 per diluted share, for the fourth quarter of 2023. Adjusted1 net income was $169.3m, or $2.58 per diluted share, for the fourth quarter of 2024 compared to $169.4m, or $2.56 per diluted share, for the fourth quarter of 2023. Comparisons in this news release are to the fourth quarter of 2023, unless otherwise noted.

“We delivered another strong quarter as our team grew fourth quarter adjusted earnings per share to $2.58, leading to full year 2024 adjusted earnings per share of $11.74, an increase of 17.6 percent over the prior year”

Consolidated sales in the fourth quarter of 2024 increased $156.6m, or 6.3 percent, to $2.62bn primarily due to higher volumes as well as improved pricing in the Vocational segment.

Consolidated operating income in the fourth quarter of 2024 increased 3.9 percent to $223.9 m, or 8.5 percent of sales, compared to $215.4m, or 8.7 percent of sales, in the fourth quarter of 2023. The increase in operating income was primarily due to higher sales volume and favorable price/cost dynamics, offset partially by the impact of changes in cumulative catch-up adjustments on contracts in the Defense segment. Adjusted1 operating income in the fourth quarter of 2024 increased 2.3 percent to $245.4m, or 9.4 percent of sales, compared to $239.9m, or 9.7 percent of sales, in the fourth quarter of 2023.

“We delivered another strong quarter as our team grew fourth quarter adjusted earnings per share to $2.58, leading to full year 2024 adjusted earnings per share of $11.74, an increase of 17.6 percent over the prior year,” said John Pfeifer, president and chief executive officer of Oshkosh Corporation. “Our impressive fourth quarter performance was driven in particular by revenue growth of nearly 20 percent in our Vocational segment. For the full year, we grew revenue in all three of our segments and delivered solid double-digit operating income and adjusted operating income margins in our Access and Vocational segments.

“In 2024, we began producing and delivering our revolutionary purpose-built Next Generation Delivery Vehicle (NGDV) for the US Postal Service (USPS). We are pleased with early feedback we have received from the nation’s postal carriers as they use NGDVs for daily deliveries. We look forward to ramping up this important program to full rate production this year. Our NGDV program as well as excellent visibility with strong backlogs in our Vocational segment give us confidence that Oshkosh can continue to deliver strong results.

“Our Access team delivered solid results in the fourth quarter despite moderating demand. We are confident that long-term drivers, including infrastructure buildout, mega projects and data center construction, remain strong for our Access business. We expect short-term market softness in the first half of 2025 followed by improved demand in the second half of the year, which we have factored into our expectations for the Access segment in 2025.

“We expect growth for our Vocational and Defense segments in 2025 and we are confident in our team’s ability to navigate through softer market conditions in our Access segment to position Oshkosh Corporation to continue delivering strong results. We are initiating our adjusted earnings per share expectations for 2025 of approximately $11.00. We are also announcing a quarterly cash dividend of $0.51 per share, representing a 10.9 percent increase. This marks the 11th consecutive year in which we have increased our dividend by a double digit percentage,” said Pfeifer.

Factors affecting fourth quarter results for the Company’s business segments included:

Access – Access segment sales for the fourth quarter of 2024 of $1.16 bn were relatively flat with the fourth quarter of 2023 as sales related to the acquisition of AUSA of $32.5m were offset by lower international sales volume.

Access segment operating income in the fourth quarter of 2024 decreased 11.9 percent to $142.9m, or 12.4 percent of sales, compared to $162.2 m, or 14.1 percent of sales, in the fourth quarter of 2023. The decrease was primarily due to unfavorable price/cost dynamics offset in part by favorable product mix.

Adjusted1 operating income in the fourth quarter of 2024 was $151.6m, or 13.1 percent of sales, compared to $165.6m, or 14.4 percent of sales, in the fourth quarter of 2023.

Vocational – Vocational segment sales for the fourth quarter of 2024 increased $145.3 m, or 19.8 percent, to $880.6m due to improved sales volume and improved pricing.

Vocational segment operating income in the fourth quarter of 2024 increased 149.8 percent to $110.9m, or 12.6 percent of sales, compared to $44.4 m, or 6.0 percent of sales, in the fourth quarter of 2023. The increase was primarily due to improved price/cost dynamics and higher sales volume.

Adjusted1 operating income in the fourth quarter of 2024 was $122.9m, or 14.0 percent of sales, compared to $64.2 m, or 8.7 percent of sales, in the fourth quarter of 2023.

Defense – Defense segment sales for the fourth quarter of 2024 of $559.1m were relatively flat with the fourth quarter of 2023 as NGDV production for the USPS was offset by the impact of changes in cumulative catch-up adjustments on contracts. Defense experienced unfavorable cumulative catch-up adjustments in the fourth quarter of 2024 primarily reflecting higher costs to complete units prior to delivery, whereas it experienced favorable cumulative catch-up adjustments on contract awards in the fourth quarter of 2023.

Defense segment operating income and adjusted1 operating income in the fourth quarter of 2024 decreased 75.8 percent to $15.0 m, or 2.7 percent of sales, compared to $62.1m, or 11.1 percent of sales, in the fourth quarter of 2023. The decrease was primarily the result of the impact of changes in cumulative catch-up adjustments and unfavorable product mix, partially offset by higher sales volume.

Corporate and other – Net operating costs for corporate and other in the fourth quarter of 2024 decreased $8.4m to $44.9m primarily due to lower new product development spending as well as improved Pratt Miller results.

Interest Expense Net of Interest Income – Interest expense net of interest income in the fourth quarter of 2024 increased $8.3m to $29.1m due to higher borrowings on the Company’s revolving credit facility.

Provision for Income Taxes – The Company recorded income tax expense in the fourth quarter of 2024 of $45.2m, or 22.7 percent of pre-tax income, compared to $44.2m, or 22.6 percent of pre-tax income, in the fourth quarter of 2023.

Repurchases of common stock – The Company repurchased 494,069 shares of common stock in the fourth quarter of 2024 for $50.4m.

Full-Year Results

The Company reported net sales for 2024 of $10.76bn and net income of $681.4 m, or $10.35 per diluted share. This compares with net sales of $9.66 bn and net income of $598.0m, or $9.08 per diluted share, in the prior year. The increase in net income for 2024 was primarily due to improved price/cost dynamics, higher organic sales volume and favorable mix, partially offset by higher net interest expense, intangible asset impairments, the impact of changes in cumulative catch-up adjustments on contracts in the Defense segment, higher engineering costs and higher production costs.

Adjusted1 net income for 2024 was $772.7m, or $11.74 per diluted share, compared to $657.2m, or $9.98 per diluted share, in 2023.

2025 Expectations

The Company announced its 2025 diluted earnings per share estimate of approximately $10.30 and its adjusted1 earnings per share estimate of approximately $11.00 on projected net sales of approximately $10.6 bn.

(Source: BUSINESS WIRE)

 

31 Jan 25. Cohort plc (AIM: CHRT), the independent technology group, announced that, following the announcements on 21 November 2024 and 20 January 2025, the acquisition of the entire issued share capital of EM Solutions Pty Ltd (“EM Solutions”) has now completed. EM Solutions is based in Brisbane, Australia. Its principal activity is the design, assembly, test, and support of satellite on-the move terminals for defence and government customers. It also provides high-end broadband radio transceivers and other RF subsystems including low noise receivers and solid-state high-power transmitters for defence and commercial customers. EM Solutions will operate as the seventh stand-alone business within the Group, reporting through the Communications and Intelligence Division

Andy Thomis, Cohort Chief Executive, said: “We are delighted to welcome EM Solutions to the Cohort group. This is a significant step for Cohort, broadening the Group’s strong naval systems service offering, bringing new customers and enhancing the global footprint of the combined business. Together, we look forward to serving EM Solutions’ customers, current and future, in the years to come.”

 

30 Jan 25. L3Harris forecasts upbeat annual sales on strong defense demand. L3Harris Technologies (LHX.N), opens new tab forecast 2025 sales above estimates and posted higher-than-expected fourth-quarter results on Thursday, bolstered by strong demand for weapons due to higher defense spending amid global geopolitical tensions. Demand for arms and military equipment has ballooned as a result of the Russia-Ukraine war and ongoing conflicts in the Middle East, benefiting defense contractors such as L3Harris. The company also raised its cost-saving goal to $1.2 billion by the end of 2025, a year ahead of its previously disclosed timeline. L3Harris said it had achieved $800 million in cost savings in 2024. A slower recovery in supply chain issues has led to higher costs, denting margins and leading companies in the sector to look for other ways to cut expenses. Last year, L3Harris cut 5% of its workforce, or about 2,500 employees, as part of a cost-saving measure. (Source: Reuters)

 

29 Jan 25. Searchlight Cyber (or “Searchlight”), today announced that it has acquired Assetnote, a Brisbane-based Attack Surface Management (ASM) company. The acquisition, the first by Searchlight Cyber, will integrate Assetnote’s industry-leading ASM solution with its dark web intelligence and monitoring capabilities, creating a holistic Continuous Threat Exposure Management (CTEM) platform that enables customers to zero in on the highest-priority threats and take action to prevent cyberattacks.

Founded in 2018 by some of the leading minds in offensive security, Assetnote is a pioneer in the Attack Surface Management sector. Assetnote offers customers continuous vulnerability discovery and management, providing businesses with essential insight and control over their changing threat exposure to efficiently manage their security posture. The company boasts an impressive roster of loyal customers such as Linktree, Afterpay, and Canva, as well as one of the most prolific and respected vulnerability research teams in the industry.

Attack Surface Management shifts the focus of security from an internal to an external lens, making it a natural companion to Searchlight Cyber’s existing CTEM capabilities. Assetnote’s ASM technology uses the attacker’s perspective to identify critical vulnerabilities in customers’ infrastructure early on, while Searchlight Cyber provides visibility and context of attackers targeting organisations, allowing cybersecurity teams to focus on the most pressing threats and take mitigating actions before disaster strikes.

This inaugural acquisition marks a key milestone in Searchlight’s growth journey. Following the strategic growth investment announced in January 2024 from Charlesbank Capital Partners, the company has continued to add to its headcount and global network of partners, with the Assetnote integration considerably expanding Searchlight’s customer base and reach globally.

The entire Assetnote team will be joining Searchlight, including founders CEO Michael Gianarakis and CTO Shubham Shah, who will be spearheading the ASM side of the business and the engineering and research teams in Australia.

Ben Jones, Co-Founder and CEO of Searchlight Cyber, said: “ASM was always going to be the next area of expansion for Searchlight, and when we met the Assetnote team we very quickly recognized the opportunity to incorporate one of the best solutions on the market into our company. The expertise within the Assetnote team, its industry-leading research, and its impressive customer base bring huge value to Searchlight and our customers. We are delighted to welcome the Assetnote team into the business and celebrate this critical step in our continued growth.”

Michael Gianarakis, Co-Founder and CEO of Assetnote, commented: “Having built our business from the ground up, the next phase of Assetnote’s journey is all about how we can best expand our options and proposition for our customers. With Searchlight, we found a company that is similar in terms of culture, vision, and opportunities for growth; everything naturally clicked into place. There is real excitement from across the team for the next chapter, and we can’t wait to see the benefits that our shared customers will experience as a result.”

AGC Partners served as exclusive financial advisor to Assetnote. Mintz and Corrs Chambers Westgarth served as legal advisors to Searchlight.

About Searchlight Cyber

Searchlight Cyber provides organizations with relevant and actionable threat intelligence, to help them identify and prevent criminal activity. Originally founded in 2017 with a mission to stop criminals acting with impunity on the dark web, we have been involved in some of the world’s largest dark web investigations and have the most comprehensive dataset based on proprietary techniques and ground-breaking academic research. The company has expanded and evolved, adding external threat management capabilities to create a Continuous Threat Exposure Management platform for organizations. Today we help government and law enforcement, enterprises, and managed security services providers around the world to identify threats and prevent attacks. To find out more visit slcyber.io or follow Searchlight Cyber on LinkedIn and Twitter.

About Assetnote

Founded in 2018, Assetnote was born from the collective expertise of some of the leading minds in offensive security, and has grown to reflect the values and ability of our brain trust. Pioneering the Attack Surface Management category, Assetnote’s Continuous Exposure Management platform closes the gap between the attacker’s and defender’s perspectives with industry leading real-time awareness of your evolving attack surface and the exploitable security exposure identified within. Monitoring ms of assets every hour for our customers, we are proud to be the chosen security platform for a wide array of organizations, from innovative startups to members of the Fortune 500, FTSE 100, and ASX 200. To find out more visit assetnote.io.

About Charlesbank Capital Partners

Based in Boston and New York, Charlesbank Capital Partners is a middle-market private investment firm with approximately $19 bn of assets under management as of 9/30/24. Charlesbank focuses on management-led buyouts, growth capital financings, opportunistic credit, and technology investments. The firm seeks to invest in companies with sustainable competitive advantage and excellent prospects for growth. For more information, please visit www.charlesbank.com. (Source: BUSINESS WIRE)

 

30 Jan 25. The KNDS Group announces that it has entered into exclusive negotiations for the acquisition of Texelis’ defense business. On January 29, 2025, KNDS and Texelis signed a Memorandum of Understanding (MOU) concerning the proposed acquisition by KNDS France of Texelis’ Defense business. Under this agreement, the two parties announce that they are entering into exclusive negotiations with a view to carrying out this transaction, which will require the separation of Texelis into two companies – Texelis Défense and Texelis Transport. Information and consultation of employee representative bodies on this project is scheduled to take place in the next few days. The final completion of this transaction, expected by the end of 2025, remains subject to the finalization of agreements and to the usual conditions precedent for this type of transaction. Texelis is a French company whose Defense business specializes in land mobility and design of cutting-edge solutions for armored land vehicles. Texelis is a major player in the French defense industry, producing numerous parts and mobility components for the French Army armored vehicles. Since winning the SERVAL contract with KNDS France, Texelis has been able to develop, qualify and produce complete mobility solutions for 4×4, 6×6 and 8×8 vehicles. An innovative company, Texelis is at the forefront of hybridization for armored vehicles, as well as energy management applied to mobility. Texelis’ Transport business would remain under the control of its management team, with the support of its investors. Texelis employs 350 people and generated sales of around 110m euros in 2023. In addition to its production site in Limoges, Texelis already has a branch at the KNDS France site in Roanne. This structuring project will enable us to strengthen our growth and increase our skills in the mobility field, with a high-performance French company that we know well and that is already our partner in the temporary business venture Serval,” said Nicolas Chamussy, CEO of KNDS France.

Charles-Antoine de Barbuat, Chairman of Texelis, commented: “The future integration of Texelis’ Defense business into the KNDS group would open up numerous growth prospects, beyond the initial success of the collaboration. In addition, the Transport business has all the assets needed to pursue its development independently”.

 

30 Jan 25. Ricardo shares plunge on profit warning. Shares at Ricardo (RDCO) fell more than 20 per cent this morning after the engineering and environmental consultancy warned full-year results would fall short of market expectations. The shortfall was attributed to order delays in the energy and environment division, where first-half revenue and profits were hit by a phasing of orders due to global elections and a delay in UK water asset management plan cycle spend. The rail division was also impacted by the postponement of the California High Speed project due to the Los Angeles wildfires. The firm reported a 10 per cent increase in order intake for its continuing operations, with a 2 per cent year-on-year rise in the order book. Net debt shrunk from £59.6m at the end of June to £18.5m on 31 December after the £64.3m sale of the defence division. (Source: Investors Chronicle)

 

30 Jan 25. Serco, the international provider of critical government services, has today agreed to acquire Northrop Grumman’s mission training and satellite ground network communications software business (MT&S). Adding to Serco’s existing defence capabilities, the MT&S business provides the US military with advanced mission training services, and software that makes satellite ground networks more efficient.

With expertise in training services and software engineering, and a track record of innovation, it supports programmes across the US Army, Space Force, Air Force, Navy, Combatant Commands and international partners. It has annual revenues of approximately $300m (£242m).

MT&S will add scale to Serco in North America, growing our business there to beyond $2bn of revenue and $200m of profit, and brings new capabilities and access to a broader base of customers.

Mark Irwin, Serco Group Chief Executive said:  “We have approximately doubled revenue and more than trebled profit in Serco’s North America business in recent years through a successful combination of organic growth and strategic acquisitions.  MT&S provides an excellent opportunity to continue that success.

“The acquisition increases our scale, capabilities and growth potential in US defence, the largest defence market in the world, as well as providing solutions we can offer to our customers worldwide.  The acquired capability delivers comprehensive, critical, technology-enabled services fully aligned to the US military’s focus on enhancing warfighting standards and readiness through solutions that are both efficient and effective. We look forward to welcoming nearly 1,000 new colleagues from MT&S to Serco and are excited to add their knowledge and experience to our work supporting the US Department of Defense’s enduring mission to provide the combat-credible military forces needed to protect the security of the nation.”

MT&S will provide further opportunities for Serco to grow organically in both North America and internationally through:

• Increased exposure to defence and US markets: Following the acquisition defence will be our largest sector, representing approximately 40% of Group revenue and North America overall will represent approximately 50% of Group underlying operating profit.
• Enhanced capabilities in large and attractive parts of the US defence market:  MT&S helps to ensure armed forces’ mission-readiness.  It will advance our expertise in synthetic training, exercise simulation, and satellite ground network software services.  Training represents a significant proportion of defence investment and the acquisition materially strengthens our position in this market, providing a strong platform for future growth.
• Increased scale and technology capabilities will benefit Serco’s pipeline of potential new work: MT&S has a strong track record delivering large programmes in training, space and technology services for the US Department of Defense.  The ability to reference this past performance will enhance our ability to win new work in our existing pipeline.  We also expect to be able to expand the pipeline as we explore new opportunities with our combined capabilities.
• Ability to export MT&S’s capabilities outside of the US:  Military training and satellite capability are critical services for armed forces around the world.  MT&S offers best in class solutions in these areas, which have so far been primarily limited to the US.  We see significant applicability to our other existing markets, including the UK, Australia and Europe.

The acquisition, subject to regulatory approvals, is expected to close in mid-2025, at a purchase price of $327m (£264m).

 

29 Jan 25. General Dynamics results beat estimates on defense, bizjet deliveries miss. General Dynamics beat expectations for fourth-quarter results on Wednesday, as strength in the company’s defense businesses offset persistent supply issues holding back jet deliveries.

The Russia-Ukraine war and the escalation of conflicts in the Middle East fueled demand for weapons and military vehicles during the quarter. The company’s three defense segments – combat systems, marine and technologies – posted revenue growth of 1.3%, 16.2% and 2.8%, respectively.

Revenue in the aerospace unit, which makes Gulfstream business jets, jumped 36.4%, even though supply of jet engines has been held up by longer certification times, keeping General Dynamics from completing deliveries on schedule.

The company delivered 136 aircraft during the year, lower than its revised October estimate of 150 aircraft. Its book-to-bill ratio of 0.9-to-1 for the quarter suggests billing was slightly higher than new orders received. (Source: Reuters)

 

29 Jan 25. General Dynamics (NYSE: GD) today reported quarterly net earnings of $1.1bn, up 14.2% from the year-ago quarter, on revenue of $13.3 bn, up 14.3% over the year-ago quarter. Diluted earnings per share (EPS) was $4.15, up 14% from the year-ago quarter.

For the full year, net earnings were $3.8bn, up 14.1% from 2023, on revenue of $47.7bn, up 12.9% from 2023. Diluted EPS for the full year was $13.63, up 13.4% from 2023.

• Fourth-quarter net earnings of $1.1bn, diluted EPS of $4.15, on $13.3bn in revenue
• Full-year net earnings of $3.8bn, diluted EPS of $13.63, on $47.7bn in revenue
• $2.2bn net cash provided by operating activities in the quarter, 188% of net earnings
• Ended the year with $90.6bn in backlog

“We had a solid fourth quarter, capping off a year that saw steady growth in revenue and earnings across all four segments,” said Phebe N. Novakovic, chairman and chief executive officer. “Order activity continued to be very strong, with 1-to-1 book-to-bill for the year, even as revenue grew by 13%, positioning us well for continued growth.”

Gulfstream delivered 47 aircraft in the quarter, of which 42 were large-cabin aircraft. The company delivered a total of 136 aircraft during the year, of which 118 were large-cabin aircraft.

Cash

Net cash provided by operating activities in the quarter totaled $2.2 bn, or 188% of net earnings. For the year, net cash provided by operating activities totaled $4.1bn, or 109% of net earnings.

During the year, the company invested $916 m in capital expenditures, made tax payments of $560m, repaid fixed rate notes of $500 m, and returned $3 bn to shareholders through dividends and share repurchases, ending 2024 with $1.7bn in cash and equivalents on hand.

Backlog

Orders remained strong across the company with a consolidated book-to-bill ratio, defined as orders divided by revenue, of 0.9- to-1 for the quarter and 1-to-1 for the year. The company ended the year with backlog of $90.6 bn and estimated potential contract value, representing management’s estimate of additional value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, of $53.4bn. Total estimated contract value, the sum of all backlog components, was $144bn at year end, up 9.1% from a year earlier.

In the Aerospace segment, orders in the quarter totaled $3.8 bn. Backlog at the end of the year was $19.7bn. Aerospace book-to-bill was 1-to-1 for the quarter and the year.

In the three defense segments, significant awards in the quarter include a U.S. Air Force contract with maximum potential value of $5.6 bn to modernize, integrate and operate the Department of Defense’s Mission Partner Environments (MPEs); a U.S. Space Force contract with maximum potential value of $2.2bn to provide sustainment services for the Mobile User Objective System (MUOS) satellite communications system; $1.9bn from the U.S. Navy for multiple contracts to provide services, materials and parts for Virginia-class submarines; $370 m from the U.S. Army for the production of 155mm artillery projectile metal parts; contracts for various munitions and ordnance with maximum potential value of $820 m; and several key contracts for classified customers with maximum potential value of $1.4bn.

 

30 Jan 25. Northrop posts quarterly profit vs year-ago loss on surge in military equipment demand. U.S. defense company Northrop Grumman (NOC.N), posted a quarterly profit on Thursday, from a year-ago loss, as headwinds from its B-21 Raider stealth bomber program eased and rising geopolitical tensions stoked demand for its military equipment. The ongoing conflicts in the Middle East and the Russia-Ukraine war have increased demand for arms across the world and has benefited U.S. defense contractors. However, a rise in costs owing to a slower recovery in pandemic-related supply chain snags have dented margins for companies in the sector. Northrop expects sales in 2025 to be between $42bn and $42.5bn, slightly short of analysts’ average estimate of $42.8bn according to data compiled by LSEG. It expects an adjusted per-share profit of between $27.85 and $28.25 for the year, the midpoint of which is in line with expectations. (Source: Google/Reuters)

 

30 Jan 25. Northrop Grumman Corporation (NYSE: NOC) reported fourth quarter 2024 sales of $10.7bn were comparable with the fourth quarter of 2023. Sales increased 4 percent to $41.0bn in 2024, as compared with $39.3 bn in 2023. 2024 sales reflect continued strong demand for our products and services. Fourth quarter 2024 net earnings totaled $1.3bn, or $8.66 per diluted share, and 2024 net earnings were $4.2bn, or $28.34 per diluted share.

Results

• Strong 2024 financial results that met or exceeded company-level financial guidance:

◦ Book to bill ratio of 1.23; backlog rises to new record of $91.5bn

◦ Sales increase 4.4 percent to $41.0bn

◦ Operating margin rate of 10.6 percent; segment operating margin rate1 of 11.1 percent

◦ Diluted EPS of $28.34; Mark-to-Market (MTM)-adjusted EPS1 of $26.08

◦ Operating cash flow of $4.4bn; free cash flow1 of $2.6bn

◦ Returned $3.7bn of cash to shareholders through share repurchases and dividends

• 2025 financial guidance in line with prior outlook, including continued organic sales1 growth, margin expansion, and double digit free cash flow1 growth

◦ Includes divestiture of Training Services business, expected to close mid-year

Excluding the after-tax MTM benefit of $332m, fourth quarter 2024 MTM-adjusted net earnings1 totaled $932m, or $6.39 per diluted share, and 2024 MTM-adjusted net earnings1 totaled $3.8bn, or $26.08 per diluted share. “Our team had another outstanding year equipping the U.S. and our allies with the advanced technologies they need to lead globally and maintain peace through strength,” said Kathy Warden, chair, chief executive officer and president. “Our financial results and new record backlog reflect the relevance of our products and the importance of our work. Over the last five years our sales have grown 30% organically and our free cash flow expanded 25% in 2024. Our guidance anticipates continued top line growth, margin expansion, and double digit cash flow growth. Northrop Grumman remains committed to leading the way in technology innovation for national security.”

MTM-adjusted Net Earnings and EPS1 Net earnings for the fourth quarter and full year 2024 were increased by a $332 m aftertax MTM benefit. The MTM benefit relates to pension and other post-retirement benefits (OPB) actuarial gains and losses, which the company recognizes immediately through earnings upon annual remeasurement of the assets and projected benefit obligations of our pension and OPB plans. MTM-adjusted earnings1 and EPS1 are the measures the company uses to compare performance to prior periods and for EPS guidance.

Sales

Fourth quarter 2024 sales were comparable to the prior year period and reflect higher sales at Aeronautics Systems, Defense Systems and Mission Systems, offset by lower sales at Space Systems largely driven by a reduction of $231m associated with wind-down of work on the restricted space and NGI programs, as previously disclosed. 2024 sales increased $1.7bn, or 4 percent, due to a 12 percent growth in sales at Aeronautics Systems and higher sales at Mission Systems and Defense Systems, partially offset by lower sales at Space Systems largely driven by a reduction of $595m associated with wind-down of work on the restricted space and NGI programs, as previously disclosed. Operating Income and Margin Rate Fourth quarter 2024 operating income increased $1.5bn primarily due to higher operating income at Aeronautics Systems largely driven by the prior year $1.56bn charge on the B-21 program, as well as higher operating income at Defense Systems. These increases were partially offset by $122m of higher unallocated corporate expense, largely due to a $127m increase in deferred state tax expense related to the MTM benefit (expense) and prior year B-21 charge. Fourth quarter 2024 operating margin rate increased to 10.2 percent from (3.7) percent reflecting the items above. 2024 operating income increased $1.8bn, or 72 percent, primarily due to higher operating income at Aeronautics Systems, largely driven by the prior year $1.56bn charge on the B-21 program, as well as higher operating income at Space Systems and Defense Systems. 2024 operating income also increased due to a $122m increase in the FAS/CAS operating adjustment, partially offset by $73m of higher unallocated corporate expense, largely due to a $127m increase in deferred state taxes related to the MTM benefit (expense) and prior year B-21 charge and $25m of lower intangible amortization and PP&E step-up depreciation. 2024 operating margin rate increased to 10.6 percent from 6.5 percent reflecting the items above. Segment Operating Income and Margin Rate1 Fourth quarter 2024 segment operating income1 increased $1.6bn primarily due to the prior year B-21 charge at Aeronautics Systems, as well as higher operating income at Defense Systems. Segment operating margin rate1 increased to 11.2 percent reflecting higher operating margin rates at Aeronautics Systems, Space Systems and Defense Systems. 2024 operating margin rate increased to 10.6 percent from 6.5 percent reflecting the items above.

Segment Operating Results Effective July 1, 2024, the company realigned the Strategic Deterrent Systems (SDS) division, which includes the Sentinel program, from Space Systems to Defense Systems. This realignment is reflected in the financial information contained in this report.

Effective January 1, 2025, the company realigned the Strike and Surveillance Aircraft Solutions (SSAS) business unit from Defense Systems to Aeronautics Systems. This realignment is not reflected in the financial information contained in this release (except as it pertains to the company’s 2025 guidance). The realignment will be reflected in the company’s operating results beginning in the first quarter of 2025. Recast financial information reflecting these two realignments for current and certain prior periods is presented in Schedule 6 of this release. AERONAUTICS SYSTEMS

Three Months Ended December 31

Sales

Fourth quarter 2024 sales increased $310m, or 11 percent, primarily due to the continuing transition to production on B-21 driving higher restricted volume and a $134m increase on F-35 production programs largely driven by the timing of materials. 2024 sales increased $1.2bn, or 12 percent, primarily due to the continuing transition to production on B-21 driving higher restricted volume, a $448m increase in F-35 production and sustainment volume due, in part, to the timing of materials, a $134m increase in Triton LRIP production volume, a $134 m increase in E-2 fleet sustainment and modernization work, and higher volume on Global Hawk sustainment activities. Operating Income Fourth quarter 2024 operating income increased $1.6bn due to the prior year $1.56 bn charge on the B-21 program. Operating margin rate increased to 9.1 percent principally due to the prior year B-21 charge, partially offset by sales growth on low margin restricted programs. 2024 operating income increased $1.7bn primarily due to the prior year $1.56bn charge on the B-21 program as well as higher sales. Operating margin rate increased to 9.8 percent principally due to the prior year B-21 charge.

DEFENSE SYSTEMS

Three Months Ended December 31

Sales

Fourth quarter 2024 sales increased $271m, or 3 percent, primarily due to a $182m increase on Sentinel as that program continues to ramp, a $163m increase on certain military ammunition programs, a $124m increase on Stand-in Attack Weapon (SiAW) as the program ramps and higher volume from timing of materials and increased order quantities on the Guided Multiple Launch Rocket System (GMLRS) program. These increases were partially offset by a $262m decrease due to the completion of an international training program and lower volume on the Special Electronic Mission Aircraft (SEMA) program as it nears completion. Operating Income Fourth quarter 2024 operating income increased $28m, or 13 percent, due to a higher operating margin rate and higher sales. Operating margin rate increased to 10.8 percent from 10.0 percent principally due to higher net EAC adjustments. 2024 operating income increased $37m, or 4 percent, primarily due to higher sales. Operating margin rate was comparable to the prior period. MISSION SYSTEMS

Three Months Ended December 31

Sales

Fourth quarter 2024 sales increased $81m, or 3 percent, primarily due to higher volume on restricted advanced microelectronics and technology programs, as well as higher volume on communications, electronic warfare self-protection and targeting systems programs. These increases were partially offset by lower sales on restricted airborne radar programs. 2024 sales increased $504m, or 5 percent, primarily due to higher volume on restricted advanced microelectronics and technology programs, increased marine systems sales due, in part, to the timing of materials, and higher Ground/Air Task Oriented Radar (G/ATOR) volume due to continued ramp-up on full-rate production (FRP) awards. These increases were partially offset by lower sales on restricted airborne radar programs and the Scalable Agile Beam Radar (SABR) program. Operating Income Fourth quarter 2024 operating income increased $7m, or 2 percent, primarily due to higher sales. Operating margin rate decreased to 14.9 percent from 15.1 percent principally driven by lower margin rates on certain airborne radar programs and changes in contract mix toward more cost-type content, which more than offset higher net EAC adjustments. 2024 operating income decreased $11m, or 1 percent, due to a lower operating margin rate, partially offset by higher sales. Operating margin rate decreased to 14.0 percent from 14.8 percent primarily due to lower net EAC adjustments on certain airborne radar production programs due, in part, to production inefficiencies that have driven higher labor costs, as well as changes in contract mix toward more cost-type content. These decreases were partially offset by sales growth on higher margin advanced microelectronics programs.

SPACE SYSTEMS

Sales

Fourth quarter 2024 sales decreased $388m, or 13 percent, primarily due to wind-down of work on the restricted space and NGI programs, which reduced sales by $231m, as well as lower volume on a restricted program and Next-Gen OPIR and the Glide Phase Interceptor program, largely due to timing. 2024 sales decreased $142m, or 1 percent, primarily due to wind-down of work on the restricted space and NGI programs, which reduced sales by $595 m. This reduction was partially offset by a $302m increase on Space Development Agency (SDA) satellite programs and a $130m increase on the Habitation and Logistics Outpost (HALO) program. Operating Income Fourth quarter 2024 operating income decreased $15m, or 5 percent, due to a higher operating margin rate, partially offset by lower sales. Operating margin rate increased to 10.1 percent from 9.4 percent principally due to an improvement in net EAC adjustments largely driven by the prior year including a $42m unfavorable EAC adjustment on the HALO program. 2024 operating income increased $124m, or 11 percent, primarily due to a higher operating margin rate. Operating margin rate increased to 10.7 percent from 9.5 percent primarily due to higher net EAC adjustments largely driven by the HALO program as previously disclosed.

 

29 Jan 25. RTX finishes 2024 strong, eyes continued growth in 2025. RTX saw strong performance in 2024 and anticipates further growth in 2025, Christopher Calio, president and CEO of RTX, said in an earnings call on 28 January. The company recorded USD80.8bn in adjusted sales, 11% organic growth over 2023, driven by 14% growth in commercial original equipment, 13% in commercial aftermarket, and 9% in defence, he added.

Demand remains robust, with the company recording USD112 bn in new awards in 2024 and ending the year with a backlog of more than USD218 bn, up 11% year on year, Calio said. Commercial backlog reached USD125 bn, while defence totalled a “record USD93bn”, he added.

In the fourth quarter of 2024, RTX achieved adjusted sales of USD21.6 bn or 9% adjusted growth. Growth was led by commercial aftermarket, up 15%, and defence, which was up 10% organically, Neil Mitchill Jr, chief financial officer for RTX, said during the call. Commercial original equipment saw 10% growth.

Free cash flow totalled USD492m, bringing the total for the year to USD4.5bn. The figure was affected by USD2.6bn in costs related to legal matters, powder metal issues with Pratt & Whitney engines, and a previously disclosed contract issue, Mitchill added.

Segment results

In the fourth quarter, Collins Aerospace recorded USD7.5 bn in adjusted sales for 8% growth, including 13% growth in defence, attributed to higher volume over several programmes, Nathan Ware, vice-president of investor relations at RTX, said during the call. Over 2024 Collins Aerospace generated USD28.3bn of adjusted sales. (Source: Janes)

 

28 Jan 25. RTX (NYSE: RTX) reports fourth quarter 2024 results and announces 2025 outlook.

Fourth quarter 2024

• Sales of $21.6bn, up 9 percent versus prior year, and up 11 percent organically* excluding divestitures
• GAAP EPS was $1.10 and included $0.30 of acquisition accounting adjustments and $0.14 of restructuring and other net significant and/or non-recurring charges
• Adjusted EPS* of $1.54, up 19 percent versus prior year
• Operating cash flow of $1.6bn; free cash flow* of $0.5bn
• Company backlog of $218bn; including $125bn of commercial and $93 bn of defense
• Returned $852m of capital to shareowners

Full year 2024

• Reported sales of $80.7bn
• Adjusted sales* of $80.8bn, up 9 percent versus prior year, and up 11 percent organically* excluding divestitures
• GAAP EPS was $3.55 and included $1.20 of acquisition accounting adjustments and $0.98 of restructuring and other net significant and/or non-recurring charges
• Adjusted EPS* of $5.73, up 13 percent versus prior year
• Operating cash flow of $7.2bn; free cash flow* of $4.5 bn
• Returned $3.7bn of capital to shareowners, returning over $33 bn since the merger

Outlook for full year 2025

• Adjusted sales* of $83.0 – $84.0bn, including 4 to 6 percent organic growth*
• Adjusted EPS* of $6.00 – $6.15
• Free cash flow* of $7.0 – $7.5bn

“RTX delivered a very strong year of performance in 2024 with 11 percent organic sales growth* and 13 percent adjusted EPS growth*, including segment margin expansion* in all three businesses,” said RTX President and CEO Chris Calio.

“We have strong momentum heading into 2025 with a $218bn backlog and unprecedented demand for our products and solutions. We remain focused on advancing our strategic priorities of executing on our commitments, innovating for growth and harnessing the breadth and scale of RTX, giving us confidence in our 2025 financial outlook.”

Fourth quarter 2024

RTX reported fourth quarter sales of $21.6bn, up 9 percent over the prior year. GAAP EPS of $1.10 included $0.30 of acquisition accounting adjustments, $0.05 of restructuring, and $0.09 of other net significant and/or non-recurring charges. Adjusted EPS* of $1.54 was up 19 percent versus the prior year.

The company reported net income attributable to common shareowners in the fourth quarter of $1.5bn which included $408m of acquisition accounting adjustments, $61m of restructuring, and $120m of other net significant and/or non-recurring charges. Adjusted net income* of $2.1bn was up 18 percent versus the prior year driven by growth in adjusted segment operating profit*, partially offset by higher taxes and lower pension income. Operating cash flow in the fourth quarter was $1.6bn. Capital expenditures were $1.1bn, resulting in free cash flow* of $0.5bn.

Collins Aerospace had fourth quarter 2024 reported sales of $7,537m, up 6 percent versus the prior year. The increase in sales was driven by a 13 percent increase in defense and a 12 percent increase in commercial aftermarket, partially offset by a 6 percent decrease in commercial OE. The increase in defense sales was driven by higher volume across multiple programs and platforms, including new programs awarded in 2024. The increase in commercial aftermarket sales was driven by continued growth in commercial air traffic, and the decrease in commercial OE sales was driven by lower narrow-body volume. Adjusted sales* of $7,537m, were up 8 percent versus the prior year.

Collins Aerospace reported operating profit of $1,106m, down 2 percent versus the prior year. This included a $155m charge related to the impairment of contract fulfillment costs which was partially offset by a $99m gain on the sale of the Hoist & Winch business. Q4 2023 included a benefit of $112m from a customer settlement. On an adjusted basis, operating profit* of $1,207m was up 17 percent versus the prior year. Operationally, the increase was driven by drop through on higher commercial aftermarket and defense volume, which was partially offset by lower commercial OE volume and unfavorable commercial OE mix.

Pratt & Whitney

Pratt & Whitney had fourth quarter 2024 reported and adjusted sales of $7,569m, up 18 percent versus the prior year. The increase was driven by a 31 percent increase in commercial OE, a 17 percent increase in commercial aftermarket, and an 8 percent increase in military. The increase in commercial sales was driven by increased deliveries and favorable OE mix in Large Commercial Engines, and higher commercial aftermarket volume. The increase in military sales was driven by higher volume on F135 production, the F135 Engine Core Upgrade program, and F135 sustainment, which was partially offset by lower sustainment volume across legacy platforms, including the F100 and F117.

Pratt & Whitney reported operating profit of $504m, up 32 percent versus the prior year. The increase was driven by favorable volume and mix in Large Commercial Engines OE, favorable mix in Pratt Canada aftermarket, and drop through on higher commercial aftermarket and military volume. Pratt & Whitney also benefited from an approximately $70m insurance recovery. Reported operating profit included a $157m charge related to a customer bankruptcy. On an adjusted basis, operating profit* of $717m, was up 77 percent versus the prior year.

Raytheon had fourth quarter 2024 reported and adjusted sales of $7,157m, up 4 percent versus the prior year. The increase in sales was driven by higher volume on land and air defense systems, including Global Patriot, NASAMS and counter-UAS programs, as well as higher volume from the restart of contracts with a Middle East customer. This was partially offset by the impact from the divestiture of the Cybersecurity, Intelligence and Services business completed in the first quarter of 2024 and lower volume on air and space defense systems. Excluding the impact of the divestiture, sales were up 10 percent versus the prior year*.

Raytheon reported operating profit of $824m, up 36 percent versus the prior year. The increase was driven by drop through on higher volume, improved net productivity, and favorable mix which was partially offset by the impact from the divestiture of the Cybersecurity, Intelligence and Services business. Reported operating profit included a $102 m benefit related to reserve adjustments associated with the restart of contracts with a Middle East customer. On an adjusted basis, operating profit* of $728m was up 18 percent versus the prior year.

 

30 Jan 25. Avon Protection: Will re-built order book be enough to take this stock higher?

I’m afraid you really have to hunt around for a good healthcare/defence play in the London market at the moment, but Avon Protection LON:AVON might fit the bill. The only problem is its extremely high PE ratio. This does not seem to be deterring investors however, who have driven the stock up by 55% in the last year.

The big question for investors in Avon is whether it can keep this up?

I call Avon a healthcare company, but it has a wider reach than that, providing protective equipment to the military and first responders across Europe and the US. This includes escape hoods and thermal imaging cameras, supplied air, underwater systems and even radiological protection.

Investors were pleased with the company’s last set of results, which saw growth in revenue of 15.9%. There was also a very significant increase in earnings per share at +135.2% versus the same quarter in 2023. EBITDA margins are also up and should provide some support for Avon Protection shares this year. Revenues are now up to where they were in 2022.

Record order book with big US interest

In its last set of full year results management was keen to draw attention to its FY 24 closing order book of £225.2m which it said was a record. Strong order intake is being driven by US Department of Defence helmet orders. The company also reported a lower than expected effective tax rate, driven by one-off items it does not expect to recur in 2025.

Effiectively, Avon’s order book has doubled with demand also picking up for its re-breathers from the US DoD. The order book has been “re-built” in Avon’s words.

Debt is also coming down again, which is a good sign, but it could be lower. Book value per share is 5.61 at the moment. I also note that there is a marked increase of cash on the books which makes it no surprise then to see that the company has said it is increasing dividends.

Avon has also revised its earnings guidance for fiscal year 2024, saying that overall trading has continued to be strong in the second half of FY24. Management say they are seeing good momentum across a number of their strategic and financial KPIs. Revenue growth is now forecast at around 11% for the next financial year.

Prospective investors should also note that the shareholder register is heavily institutionally dominated. A total of eight investors currently control 52% of the share ownership. Hedge funds own about 18% of the stock.

What’s not to like about Avon Protection?

There’s a lot to like about the stock. My key concern would be the relatively expensive share price. This is the one thing making me shy away from the shares unfortunately. The financials as reported in December make the company look very solid and it is not surprise to see so many fund managers holding it.

The shares are well off their ATH but volumes have been dropping as we move through January and we have seen some share price slippage as a result. Shore Capital currently has Avon as a Hold (reiteration 19 November). Jefferies issued a Buy on the stock in May last year, although at that point the shares were well south of its target price.

(Source: https://www.thearmchairtrader.com/)

 

30 Jan 25. Kromek Group plc (“Kromek” or the “Group”) Interim Results.

Multi-year agreements signed with Siemens Healthineers post period will deliver profitability in the current financial year

Kromek Group plc (AIM: KMK), a leading developer of radiation and bio-detection technology solutions for the advanced imaging and CBRN detection segments, announces its interim results for the six months ended 31 October 2024.

Multi-year Agreements with Siemens Healthineers

Post period, as also announced today, Kromek has signed agreements with Siemens Medical Solutions USA, Inc. (“Siemens Healthineers”) to enable the production of cadmium zinc telluride (“CZT”) detectors for single photon emission computed tomography (“SPECT”) application pursuant to which:

• Under the Enablement Agreement, the Group will be paid a total of $37.5m in cash in four installments over a four-year period, with the first installment of $25.0m to be received in the current financial year, of which a material amount will be recognised as revenue
• Over a four-year period, Kromek will:

o transfer 15 of its existing 174 furnaces for CZT production to Siemens Healthineers

o provide Siemens Healthineers with all know-how, IP and related services for CZT-based SPECT detector production

• All know-how and IP will be provided and licensed on a non-exclusive basis. Accordingly, Kromek is unencumbered from continuing to utilise its know-how and IP and supplying other OEMs in SPECT or other advanced imaging markets
• In addition, Kromek is expected to supply Siemens Healthineers with CZT-based detector tiles over the four-year period, which the Directors believe will make a material contribution to advanced imaging revenue from the second year of the agreement onwards

Impact on Kromek of Agreements with Siemens Healthineers

• The Group expects to become profitable from the current financial year, with profit for FY 2025 significantly ahead of market expectations
• Debt will be reduced and the balance sheet will be significantly strengthened
• Kromek intends to continue producing CZT for the SPECT and computed tomography (“CT”) markets utilising the remaining 159 furnaces it owns
• As the largest independent producer and supplier of CZT, and with a significantly strengthened balance sheet, Kromek is strategically positioned for sustained revenue growth and profitability

Financial Summary for H1 2025

• Revenue was £3.7m (H1 2024: £7.1m)
• Gross margin improved to 56.9% (H1 2024: 54.2%)
• Adjusted EBITDA loss of £2.3m (H1 2024: £0.1m loss)*
• Loss before tax was £5.7m (H1 2024: £3.5m loss)
• Cash and cash equivalents at 31 October 2024 were £0.6m (30 April 2024: £0.5m)

*A reconciliation of adjusted EBITDA can be found in the Financial Review.

Operational Summary for H1 2025

Advanced Imaging

• Sustained delivery under landmark collaboration contracts and other component supply agreements, with customers including recognised Tier 1 OEMs, Analogic and Spectrum Dynamics
• Continued to make progress under the ultra-low dose molecular breast imaging programme funded by Innovate UK

CBRN Detection

• Awarded a contract worth £2.0m from the UK Ministry of Defence for the supply of the Group’s D5 RIID along with its Alpha Beta probe attachment and ancillary products
• Selected under two new UK Government frameworks, each lasting four years, designed to enhance the UK’s systems and capabilities for ensuring public safety and security:

o Kromek’s D3M detector was named as the Personal Radiation Detector under the UK Government Resilience Framework, with a first order already received under this framework

o Selected as a supplier under the UK Government’s Radiological Nuclear Detection Framework

Biological-Threat Detection

• Continued to progress the development of biological-threat detection systems under contracts with a UK Government department and the US Department of Homeland Security

Manufacturing and IP

• Continued to execute on programmes for the expansion of production capacity and process automation, particularly at its US facility, resulting in greater manufacturing productivity and cost efficiency
• Applied for three new patents during the period

Dr Arnab Basu, CEO of Kromek, said: “As we stated at the time of the full year results in October last year, Kromek was actively engaged with OEMs to drive delivery of products and monetisation of the valuable intellectual property the Group has developed in the advanced imaging area. We also said we were confident that these initiatives would benefit the Group and drive a significant increase in both revenue and cash generation in the second half of FY 2025. Today’s announcement is an exciting moment as both Siemens Healthineers and Kromek are aligned in our vision to enhance healthcare through technological advancements.

“The initial $25.0m payment from Siemens Healthineers will be used to support the delivery of various milestones under the agreements, significantly reduce our debt and strengthen our balance sheet, ultimately enhancing our operational capabilities. These significant agreements enable us to deliver profitability in FY 2025, significantly ahead of market expectations and lay the groundwork for further growth in revenues and sustainable profitability beyond that period.

“Looking beyond FY 2025, we expect to deliver growth in revenues for the fifth year in a row in FY 2026 and remain profitable as we continue to deliver on our agreement with Siemens Healthineers and our other OEM customers as well as the CBRN contracts won with governmental agencies in UK and abroad. Consequently, the Board looks to the future with confidence.”

Kromek Signs Agreements with Siemens Healthineers

Non-exclusive IP licensing and CZT production enablement agreements to generate $37.5m

Kromek expected to become profitable for FY 2025

Kromek Group plc (AIM: KMK), a leading developer of radiation and bio-detection technology solutions for the advanced imaging and CBRN detection segments, is pleased to announce that it has entered into multi-year agreements with Siemens Medical Solutions USA, Inc. (“Siemens Healthineers”) to provide know-how and use rights of IP on a non-exclusive basis, as well as furnaces and related services, under an Enablement Agreement and Patent Licensing Agreement, and also for the Group to supply CZT-based detector tiles (the “Supply Agreement”) (together with the Enablement and Patent Licensing Agreements, the “Agreements”) to enable the production of CZT detectors for SPECT application (single-photon emission computed tomography).

Under the Enablement Agreement, the Group will be paid a total of $37.5m in cash in four installments over a four-year period, with the first installment of $25.0m to be received in the current financial year, a material amount of which will be recognised as revenue. In addition, the Directors believe the Supply Agreement will make a material contribution to Advanced Imaging revenue from the second year of the agreement onwards.

Summary

• Over a four-year period, Kromek will:

o transfer 15 of its existing 174 furnaces for CZT production to Siemens Healthineers

o provide Siemens Healthineers with all know-how, IP and related services for CZT-based SPECT detector production

• The Group has licensed to Siemens Healthineers its patents related to CZT production for SPECT applications
• All know-how and IP will be provided and licensed on a non-exclusive basis. Accordingly, Kromek is unencumbered from continuing to utilise its know-how and IP and supplying other OEMs in SPECT or other advanced imaging markets
• Kromek is expected to supply Siemens Healthineers with CZT-based detector tiles over the four-year period under the Supply Agreement
• The Group expects to report revenue growth for the current financial year and profit significantly ahead of market expectations, with a much strengthened balance sheet

Enablement and Patent Licensing Agreements

Kromek will transfer title of 15 of its furnaces (the “Transfer Furnaces”) for the production of CZT, which are currently sited in the Group’s UK facility, to Siemens Healthineers. The Group will enable the physical relocation of the Transfer Furnaces to a Siemens Healthineers facility, which is expected to occur at the end of the four-year period of the Enablement Agreement. Prior to the relocation, the Group will use the Transfer Furnaces to deliver the CZT-based detector tiles under the Supply Agreement.

Over a four-year period, commencing immediately, the Group will provide Siemens Healthineers with its know-how and IP regarding the production of CZT-based detector tiles for SPECT applications and services required to enable such production. Kromek has licensed in perpetuity its patents relevant for producing CZT-based detectors for SPECT applications on a non-exclusive basis. Kromek retains ownership of the patents. Under the terms of the Agreements, the Group is entitled to continue to exercise all its know-how and IP and to serve the global SPECT market for CZT-based detectors.

Supply Agreement

Kromek is set to supply its CZT-based detector tiles to Siemens Healthineers for the duration of the Enablement Agreement, which may be extended for an additional year at Siemens Healthineers’ discretion. This multi-year agreement is projected to significantly contribute to revenue, complementing the $37.5m to be received under the Enablement Agreement for the Advanced Imaging Division, throughout the agreement period.

Under the terms of the Supply Agreement, Kromek will manufacture the CZT-based detector tiles and will be responsible for providing all necessary capital equipment, engineering, manufacturing technology, as well as the equipment and facilities required to fulfil the agreement.

Benefit to Kromek

Kromek plans to utilise the initial $25.0m installment to support delivery under the Enablement Agreement, reduce its debt and significantly strengthen its balance sheet. As a result of the Agreements and recognising a material amount of the first installment under the Enablement Agreement as revenue in FY 2025, the Group expects to become profitable in the current year, with profit significantly ahead of market expectations. The Group also expects to achieve further revenue growth beyond FY 2025 while delivering sustainable profits.

Additionally, the Enablement Agreement does not restrict Kromek from seeking other potential collaborations, including similar ventures with other OEMs in advanced imaging markets. As the largest independent producer and supplier of CZT, Kromek intends to continue producing CZT for the SPECT and CT (computed tomography) markets, utilising the remaining 159 furnaces it owns.

Arnab Basu, Chief Executive Officer of Kromek, said: “We are delighted to have entered into these agreements with Siemens Healthineers, a move that underscores Kromek’s position as the largest independent producer of CZT and CZT-based detectors. We both have an ongoing commitment to innovation that is critical for developing superior detector solutions that play a vital role in the early detection of serious illnesses. Both Siemens Healthineers and Kromek are aligned in our vision to enhance healthcare through technological advancements, and we eagerly anticipate collaborating to bring this vision to fruition.

“The initial $25.0m payment will be used to support the delivery of various milestones under the agreements, significantly reduce our debt and strengthen our balance sheet, ultimately enhancing our operational capabilities. These significant agreements enable Kromek to report FY 2025 profit ahead of market expectations and lay the groundwork for further growth in revenues and sustainable profitability beyond that period. These agreements also enable Kromek to continue its leadership in CZT production for SPECT and CT markets, as we maintain the flexibility to explore further collaborations with other OEMs in advanced imaging.”

 

30 Jan 25. Kromek – A new tie-up will extract value from this chemical stock. A radiation detection technology specialist has signed a major agreement with the German medical giant, and one that brings the undervaluation of its IP into sharp focus

Sedgefield-based Kromek (KMK:6.75p) has signed a company transformational agreement with Siemens Medical Solutions that has propelled the radiation detection technology specialist into sustainable profit and significantly strengthened its balance sheet.

Under the four-year agreement, Kromek will transfer 15 of its 174 furnaces for cadmium zinc telluride (CZT) production to Siemens Medical. The company will also provide the German group with all know-how, IP and related services (licensed on a non-exclusive basis) for next-generation single-photon emission CZT-based SPECT-detector applications in advanced medical imaging.

Importantly, Kromek will retain ownership of the patents, so it is able to serve and enter agreements with other original equipment manufacturers (OEM) in SPECT or other advanced imaging markets. These companies are also advancing medical imaging technology that is playing a vital role in the early detection of serious illnesses.

Under the Siemens Medical agreement, Kromek will receive $37.5mn (£30.1mn) over the course of four years, of which $25mn will be received in the current financial year ending 30 April 2025. In addition, the company will manufacture and supply CZT-based detector tiles to Siemens Medical during the agreement, which will boost revenue further.

It’s undoubtedly a vote of confidence in the UK company’s technology and highlights Kromek’s unique position as the largest independent producer and supplier of CZT. The initial cash injection from the agreement prompted analysts at Cavendish to upgrade their net cash forecast to £1.1m (from net debt of £6.4m) and pencil in a full-year pre-tax profit of £4.9m on 24 per cent higher revenue to £24.1mn, thus ending years of losses. On this basis, the shares are rated on a price/earnings (PE) ratio of 9.

It represents a significant financial reset for the company and means Kromek will be able to pay down expensive borrowings including a £5.5m secured term loan due for repayment in March 2025. The company will not only make material saving on finance costs, but it should now have sufficient working capital to grow the business, which mitigates funding risk. Although Cavendish pencil in a lower pre-tax profit of £2.1m on 12 per cent higher revenue of £27.1m in the 2025-26 financial year, there is clear scope for upside.

In the chemical, biological, radiological, and nuclear (CBRN) detection segment, demand continues to be driven by global geopolitical insecurity and the need for solutions that help provide public safety and security.

For instance, Kromek has been selected as a supplier under the UK government’s radiological nuclear detection framework for the procurement of equipment and supporting services for the Home Office. The company is pre-qualified to be selected for orders in three categories, covering the supply of handheld, wearable and large volume static radiation detectors, which have a combined maximum procurement value of £84mn over the four-year term of the framework. In addition, Kromek has contracts with both UK and US government agencies to develop and supply biological detection systems, and is pursuing several other engagements in this area.

So, having last rated the shares a speculative buy, at 5.65p (‘There’s value in these volatile shares’, 28 October 2024), I continue to see multi-bagger potential in the £43m market capitalisation company as it enters deals with other medial OEMs. Analysts at Cavendish value Kromek’s shares at 26p using a discounted cash flow method, or four times the current share price. Buy. (Source: Investors Chronicle)

 

29 Jan 25. European defence stocks surge as Nato spending rises.

Disquiet about future Pentagon policy has weighed on US military contractors

• UK defence spending could be constrained
• Lockheed Martin singled out by Musk

European defence shares have outperformed their US counterparts since Trump’s election, and pressure from across the Atlantic for Nato member states to ramp up spending could push valuations sharply higher.

Since 5 November, continental defence players such as Rheinmetall (DE:RHM), Leonardo (IT:LDO) and Dassault Aviation (FR:AM) have surged at the same time as US stalwarts such as Lockheed Martin (US:LMT), Northrop Grumman (US:NOC) and General Dynamics (US:GD) have fallen amid uncertainty about the direction of policy at the Pentagon.

A new landscape for European defence spending has raised the potential for a sharp re-rating of sector valuations in the medium term. Analysts at Citi estimate that valuations would be boosted by 30 per cent if Nato states’ spending rises to 3 per cent of GDP. However, they cautioned that such a material increase is “optimistic”.

Nato spending rising

Trump has called for Nato states to spend 5 per cent of GDP on defence and reduce their reliance on the US. While only 23 out of 32 countries hit the military alliance’s 2 per cent target in 2024, that was more than double the number the year before as spending increased following Russia’s invasion of Ukraine.

Nato has also urged much higher spending under secretary general Mark Rutte, who said in a speech in Brussels before Christmas that member states are “going to need a lot more than 2 per cent” of GDP budgeted for defence. He argued that “it is time to shift to a wartime mindset and turbo-charge our defence production and defence spending”.

While Trump’s 5 per cent call should be seen as a pressuring tactic to induce movement towards a higher rate, some nations have already responded to the call. Lithuania and Estonia – which border Russia – have already confirmed they will raise spending to 5 per cent, while Poland’s spend of more than 4 per cent of GDP is the highest amongst Nato states. But fiscal and political pressures across Europe mean that, for many states, getting spending towards 3-3.5 per cent would be a huge challenge.

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In the UK, which delivers around a fifth of European defence spending, a second strategic defence review in four years is expected from the government in the first half of 2025. Investors in stocks such as BAE Systems (BAE), which was awarded a £285mn Royal Navy warship combat systems contract this week, and Babcock International (BAB) are waiting keenly for signs of greater budgetary support.

They may be disappointed. Citi “would not expect to hear significant near-term increases in defence spending” in the UK or France – where Thales (FR:HO) and Safran (FR:SAF) are key players – given fiscal challenges. Analysts at Bank of America said BAE Systems and QinetiQ (QQ.) have the weakest outlook for margin growth over the next two years of the European defence shares in their coverage. QinetiQ has blamed domestic economic conditions for softer than expected UK orders, although highlighted better performance in its UK defence unit than the UK intelligence unit, which it has had to “resize”.

European defence shares climbed quickly in the aftermath of the Ukraine invasion. Operators are set to benefit further even if there is an end to the conflict in the short term, with rearmament and restocking pressures at the fore in a new geopolitical landscape.

A new Pentagon

While the wider US market has risen since Trump’s election – the S&P 500 is up around 4 per cent – investors are unclear about the new administration’s plans for defence policy and contracts.

Bank of America analysts prefer exposure to European Union and Nato-linked defence shares rather than those in the US, where “a growing focus on budget efficiency could weigh on sentiment”.

The Elon Musk-led Department for Government Efficiency could spell big changes for the $850bn (£684bn) defence budget. Musk has described leading defence contractor Lockheed Martin’s F-35 fighter jets as “the worst military value for money in history”.

Lockheed’s shares were knocked this week by an earnings miss driven by losses on aeronautics and missile programmes. Fellow top contractor Boeing’s (US:BA) annual losses at its defence, space and security arm widened from $1.76bn to $5.41bn, year on year, as delivery numbers dropped.

Legacy operators are uncertain about new US defence secretary Pete Hegseth, with sector challengers such as Palantir Technologies (US:PLTR) well placed to benefit from a new direction on military tech. After being confirmed in a narrow vote in the Senate, Hegseth spoke of “reviving our defence industrial base, reforming our acquisition process, passing a financial audit, and rapidly fielding emerging technologies”.

Analysts at Morningstar expect the revenue share of the top eight US contractors to decline, with “upside potential for smaller contractors to capture a higher relative share of the budget” over the long term as the Pentagon moves to reduce the concentration at the top of the industry.

(Source: Investors Chronicle)

 

28 Jan 25. Onebrief, the leading software for operational planning and military staff workflows, today announced the completion of its Series C funding round. The company raised $50m, bringing its total capital raised to $103m.

“Simply put, transforming operational planning will win the war. This funding and our new partnerships unlock the ability to drive real, powerful change across our institutions.”

The Series C round was led by General Catalyst and Insight Partners, with participation from Caffeinated Capital, 9Yards Capital, and Human Capital. Human Capital also led Onebrief’s Series B round in 2024. Each investor was selected for their deep expertise in global defense markets and commitment to accelerating Onebrief’s mission.

“At General Catalyst, our mission is to help modernize our nation’s defense and industrial resilience. At the core of this resiliency is our military’s ability to make rapid operational decisions in distributed and dynamic environments. We met Grant Demaree and Onebrief over two years ago and were struck by the clarity of their approach. My partners, Lt. Gen. USAF (Ret) Scott Howell and Matt Byington have experienced the military planning process firsthand and quickly noticed the advantages that Onebrief provides at every echelon. We’re excited to partner with Onebrief and help them support warfighters and military staffs to be more efficient and effective in their profession,” said Paul Kwan, Managing Director, General Catalyst.

“At Insight Partners, we are committed to supporting companies that will create lasting impact in the sectors they serve, and Onebrief is a prime example,” said Nick Sinai, Managing Director at Insight Partners. “Their approach to operational planning lays a foundation for transforming military decision-making. Innovation in defense technology is critical for ensuring global stability and security, and Onebrief’s platform can help redefine what is possible.”

Onebrief’s Series C follows a year of consequential growth. Today, the platform is used across U.S. military headquarters worldwide to accelerate planning, provide faster command decisions, and help staffs work efficiently. As a result, Onebrief is now integral to three of the four largest operational plans (OPLANs) globally and is used for even more day-to-day operational plans. With its latest funding, Onebrief will continue that momentum by advancing the platform, expanding teams, and investing in customer development.

Company Growth

Following nearly 130% employee growth year-over-year, the company will continue to expand its product, customer success, and growth teams. This funding has also enabled Onebrief to make significant leadership appointments.

Chris C. Miller, former Acting Secretary of Defense, has agreed to join Onebrief’s Board of Directors. Miller brings 34 years of service in the Army and national security apparatus of the United States. His service culminated as the Acting Secretary of Defense where he successfully led its nearly three m service members and civilian employees. Currently, he is a business strategist and advisor within the defense industry, and the author of Soldier-Secretary: Warnings from the Battlefield & the Pentagon about America’s Most Dangerous Enemies.

“Onebrief is the capability I dreamed of in my early military career, and as a senior civilian official, it’s the tool I wanted to provide our fielded forces and supporting staff to ease their planning and wargaming burdens — work that ultimately determines who lives and dies, and what force wins or loses,” said Miller. “I’m proud to be part of Onebrief’s mission. I have said many times that the genius of America is the vibrancy of our free-market system and the talent of our entrepreneurs and brilliant technologists.”

Lieutenant General (Ret) Lewis Craparotta, USMC, has agreed to join Onebrief’s Board of Directors, having served as a Senior Advisor to Onebrief since 2021. In his military career, Craparotta commanded in the operating forces at every level, notably in Marine Forces Pacific and I Marine Expeditionary Force. He also served on the Joint Staff, at Special Operations Command Europe, and as the Director of Operations at U.S. Northern Command.

“Over the past three years I have been amazed by the vision, drive, and growth of this company as we continuously refined the platform for our customers,” noted Craparotta. “We have a novel opportunity to enable true global collaboration and integration. There is also the potential for application beyond our current scope, and I’m looking forward to continuing this important work.”

Devesh Senapati joins as the new Vice President of Product. Most recently, he served as Product Lead at Stripe, a leading financial infrastructure platform, where he led the development of Terminal, Stripe’s in-person payments product suite. Prior, Senapati worked across multiple early-stage startups and as a software investor at Bain Capital Ventures. He began his career as a consultant at McKinsey & Company. Senapati earned his MBA from Stanford Graduate School of Business and BBA from the University of Michigan’s Ross School of Business.

This raise is also a milestone event for early employees as Onebrief has executed a Tender Offer, allowing them to sell shares on the secondary market. The company aims to ensure employees benefit from the new funding.

Platform and Mission Alignment

Strategic developments within the core platform enable Onebrief to support the evolving and complex needs of tomorrow’s military staffs. These advancements include improvements in deployment solutions, delivering reliable and performant networks; impactful new features, like offline capabilities or an AI Co-planner; and longer-term development of AI-driven wargaming for course-of-action (COA) development. These developments can help redefine military decision-making.

By transforming operational planning and workflows, the opportunity to make a stronger impact with fewer resources becomes a reality. This vision aligns with the new administration’s focus on the implementation of AI to reduce resources and government spending.

“Simply put, transforming operational planning will win the war. This funding and our new partnerships unlock the ability to drive real, powerful change across our institutions,” said Grant Demaree, CEO of Onebrief.

About Onebrief

Onebrief is a transformative platform for operational planning and military staff workflows. Currently live on SIPR, NIPR, and JWICS, the software is designed to enable smarter, real-time decisions. With unparalleled collaboration features, AI-enhanced tools, and customizable workflows, Onebrief enables users to accomplish more with fewer resources. Learn more at onebrief.com. (Source: BUSINESS WIRE)

 

29 Jan 25. Patria acquires ILIAS Solutions to strengthen digital defence capabilities and readiness. Defence and technology company Patria announces acquisition of cutting-edge Belgium-based digital defence platform provider ILIAS Solutions. With the acquisition of the number-one digital defence platform for fleet management, Patria enhances its digital services.

In the complex world of defence operations, keeping fleets ready for action while managing costs effectively is crucial. The power of high-quality data enabling better and faster decision-making is increasingly felt in ‘normal’ circumstances and on the battlefield.

Patria’s strong foothold and expertise in the maintenance and sustainment of military fleets will be empowered by ILIAS’ defence platform. ILIAS’ software will feed into the Patria OPTIME service, offering multi-fleet management for optimal performance across defence forces and ensuring focus on mission success.

“High-end MRO services with data driven solutions and intelligent analytics are becoming increasingly important, if not essential, to provide optimal performance and availability across fleets. We at Patria are excited about acquiring the number-one defence platform and starting our joint journey with the ILIAS Solutions team,” says Pekka Ruutu, Executive Vice President of Patria’s Portfolio unit.

“There are clear synergies between the two companies and benefits for customers of both companies as well as for our European joint programmes when the Patria OPTIME service concept is set to be powered with ILIAS’ defence platform”, Ruutu continues.

To fully optimise depot-level maintenance, fleet management and mission deployment as well as logistics and supply chain management, there is a need for a uniform platform across defence fleets, complying with all modern digital requirements.

“Being part of Patria Group will strengthen ILIAS Solutions’ broadening position as the partner of trust for the defence market, providing our customers with the needed assurance that is essential for a mission-critical information systems provider. The seamless combination of the ILIAS Solutions software suite with Patria’s OPTIME service concept with access to our combined European and global markets provides vast potential for both companies. Furthermore, as a tri-service supplier ILIAS Solutions will especially benefit from Patria’s strong heritage in land systems, extending our solid expertise in military air operations,” says Jean-Pierre Wildschut, Chief Executive Officer of ILIAS Solutions.

Patria’s acquisition leads the way for Europe’s defence digitalization which is necessary for preparedness and the successful management of capability gaps. By harnessing data effectively, Patria OPTIME now better enables predictive maintenance, proactive planning and streamlined supply chain management, ultimately boosting fleet availability and performance.

The transaction will undergo the authority approval process in countries where ILIAS Solutions has offices, including Belgium, the Netherlands, the US, Denmark and Australia. The acquisition price is not disclosed by the parties.

 

29 Jan 25. The boards of AAM and Dowlais announced that they have reached agreement on the terms of a recommended cash and share offer to be made by AAM for the entire issued and to be issued ordinary share capital of Dowlais (the “Combination”).

• The Combined Group will be a larger, diversified global manufacturer well-positioned for long-term profitable growth, value-enhancing investments and sustainable capital returns. The boards of AAM and Dowlais believe the Combination will generate significant value for both sets of shareholders. The Combined Group will have the following characteristics:
• a leading, innovative global driveline and metal forming supplier with significant size and scale;
• an increasingly propulsion-agnostic portfolio of products across a broader range of automotive segments supporting internal combustion engine, hybrid and electric powertrains;
• a diversified customer base with expanded and balanced geographic presence;
• the opportunity to deliver significant cost synergies of $300m across the Combined Group;
• high margins, with strong earnings accretion, cash flow and balance sheet; and
• an experienced and blended management and leadership team, with a proven track record of restructuring, integration and operational excellence.

The Combination

• Under the terms of the Combination, each Dowlais Shareholder will be entitled to receive:

for each Dowlais Share held:

0.0863 New AAM Shares;

42 pence in cash; and up to 2.8 pence in the form of a final cash dividend to be paid (subject to the approval of the Dowlais Board) prior to Completion

• Pursuant to the consideration payable in connection with the Combination, each Dowlais Shareholder will be entitled to receive the payment of a final cash dividend by Dowlais of up to 2.8 pence for each Dowlais Share (the “FY24 Final Dividend”) (to be paid (subject to the approval of the Dowlais Board) in line with Dowlais’ ordinary course 2024 financial year dividend calendar) without any reduction of the consideration payable under the terms of the Combination.
• The terms of the Combination represent a total implied value of 85.2 pence per Dowlais Share, based on the Closing Price of $5.82 for each AAM Share and £/US$ exchange rate of 1.2434 on 28 January 2025 (being the close of business on the last Business Day before the date of this Announcement), and including the FY24 Final Dividend.
• Immediately following Completion, it is expected that the Dowlais Shareholders will own approximately 49 per cent., and AAM Shareholders will own approximately 51 per cent., of the issued and outstanding common stock of the Combined Group, with Dowlais Shareholders benefiting from up-front cash consideration and the opportunity to participate in the anticipated future value accretion of the Combined Group.
• The Combined Group will have an experienced and blended management and leadership team. David C. Dauch will serve as the Chairman and Chief Executive Officer of the Combined Group. In addition, Roberto Fioroni (Chief Financial Officer, Dowlais), Helen Redfern (Chief People, Sustainability and Communications Officer, Dowlais), Markus Bannert (Chief Executive Officer, GKN Automotive), and Jean-Marc Durbuis (Chief Executive Officer, GKN Powder Metallurgy) will be invited to join existing AAM executives as part of the senior executive management team of the Combined Group, in roles to be confirmed. It is also expected that Simon Mackenzie Smith (Chair, Dowlais) and Fiona MacAulay, who currently serve on the Dowlais Board, will join the Board of AAM following completion of the Combination.
• The terms of the Combination (including the FY24 Final Dividend) value the entire issued and to be issued ordinary share capital of Dowlais at approximately £1.16 bn on a fully diluted basis and represent a premium of approximately:
• 25 per cent. to the Closing Price of 68 pence for each Dowlais Share as at the close of business on 28 January 2025 (being the last Business Day before the date of this Announcement);
• 45 per cent. to the volume-weighted average price of 59 pence for each Dowlais Share for the three-month period ended on 28 January 2025 (being the last Business Day before the date of this Announcement); and
• 46 per cent. to the volume-weighted average price of 59 pence for each Dowlais Share for the six-month period ended on 28 January 2025 (being the last Business Day before the date of this Announcement).
• The terms represent an implied enterprise value multiple of approximately 4.1 times Dowlais’ adjusted EBITDA for the 12-month period ended 31 December 2023, and 3.0 times when including full run rate cost Full text: https://otp.tools.investis.com/clients/uk/dowlais_group_plc/rns/regulatory-story.aspx?cid=2849&newsid=1904565&culture=en-GB&val=638737379662119532

 

28 Jan 25. Boeing stock rallies on plane progress despite $11.bn annual loss. 

Boeing reports $11.8bn annual loss after crisis-ridden year

• Summary
• Companies
• Boeing reports largest loss since 2020
• Boeing expects 737 MAX production to reach 38 airplanes a month rate by mid-year, and go higher in second half
• Boeing 787 production rate expected to increase from 5 airplanes a month to 7, with at least 75-80 deliveries this year

Boeing said on Tuesday it was making progress on increasing plane production, and its shares jumped nearly 8%, despite the company recording its biggest annual loss in four years.

The $11.8-bn loss, due to problems at its major units, along with fallout from a crippling strike that shuttered production of most of its jets, demonstrates the challenges facing CEO Kelly Ortberg in turning around the U.S. planemaker.

Boeing has ceded ground to rival Airbus (AIR.PA) in the delivery race and entered the crosshairs of regulators and customers following a series of missteps.

CFO Brian West told analysts the planemaker had delivered 33 of its strongest-selling 737 jets so far in January. West added the company expects to be in position later this year to exceed a cap of 38 per month imposed by U.S. regulators, but would need approval of the Federal Aviation Administration. (Source: Reuters)

 

28 Jan 25. Boeing Reports Fourth Quarter Results.

Fourth Quarter 2024

• Finalized the International Association of Machinists and Aerospace Workers (IAM) agreement and resumed production across the 737, 767 and 777/777X programs
• Financials reflect previously announced impacts of the IAM work stoppage and agreement, charges for certain defense programs, and costs associated with workforce reductions announced last year
• Revenue of $15.2 bn, GAAP loss per share of ($5.46) and core (non-GAAP)* loss per share of ($5.90)
• Operating cash flow of ($3.5)bn; cash and marketable securities of $26.3bn

Full Year 2024

• Delivered 348 commercial airplanes and recorded 279 net orders
• Total company backlog grew to $521 bn, including over 5,500 commercial airplane

The Boeing Company [NYSE: BA] recorded fourth quarter revenue of $15.2bn, GAAP loss per share of ($5.46) and core loss per share (non-GAAP)* of ($5.90) primarily reflecting previously announced impacts of the IAM work stoppage and agreement, charges for certain defense programs, and costs associated with workforce reductions announced last year. Boeing reported operating cash flow of ($3.5)bn and free cash flow of ($4.1)bn (non-GAAP)*.

“We made progress on key areas to stabilize our operations during the quarter and continued to strengthen important aspects of our safety and quality plan,” said Kelly Ortberg, Boeing president and chief executive officer. “My team and I are focused on making the fundamental changes needed to fully recover our company’s performance and restore trust with our customers, employees, suppliers, investors, regulators and all others who are counting on us.”

Operating cash flow was ($3.5)bn in the quarter reflecting lower commercial deliveries, as well as unfavorable working capital timing, primarily driven by the IAM work stoppage.

Cash and investments in marketable securities totaled $26.3bn, compared to $10.5bn at the beginning of the quarter, primarily driven by a $24bn capital raise partially offset by free cash flow usage and debt repayment in the quarter. Debt was $53.9bn, down from $57.7bn at the beginning of the quarter, driven by the early repayment of a $3.5bn bond originally maturing in 2025. The company maintains access to credit facilities of $10.0bn, which remain undrawn.

Total company backlog at quarter end was $521bn.

Segment Results

Commercial Airplanes

Commercial Airplanes fourth quarter revenue of $4.8bn and operating margin of (43.9) percent reflect the previously announced impacts associated with the IAM work stoppage and agreement including lower deliveries and pre-tax charges of $1.1bn on the 777X and 767 programs (Table 4).

The 737 program resumed production in the quarter and plans to gradually increase production rate. The 787 program exited the year at a production rate of five per month and recently announced plans to expand South Carolina operations. In January, the 777X program resumed FAA certification flight testing, and the company still anticipates first delivery of the 777-9 in 2026.

Commercial Airplanes booked 204 net orders in the quarter, including 100 737-10 airplanes for Pegasus Airlines and 30 787-9 airplanes for flydubai. Commercial Airplanes delivered 57 airplanes during the quarter and backlog included over 5,500 airplanes valued at $435bn.

Defense, Space & Security

Defense, Space & Security fourth quarter revenue of $5.4bn and operating margin of (41.9) percent reflect the previously announced pre-tax charges of $1.7bn on the KC-46A, T-7A, Commercial Crew, VC-25B and MQ-25 programs.

In January, the U.S. Air Force announced an updated acquisition approach for the T-7A Red Hawk that allows the company to provide a production-ready configuration to the customer prior to low-rate initial production, which better supports the operational needs of the customer and reduces future production risk.

During the quarter, Defense, Space & Security captured an award from the U.S. Air Force for 15 KC-46A Tankers, secured an order for seven P-8A Poseidon aircraft from the U.S. Navy, and delivered the final T-7A Red Hawk engineering and manufacturing development aircraft to the U.S. Air Force. Backlog at Defense, Space & Security was $64bn, of which 29 percent represents orders from customers outside the U.S.

Global Services

Global Services fourth quarter revenue of $5.1bn and operating margin of 19.5 percent reflect higher commercial volume and mix.

During the quarter, Global Services secured awards for C-17 sustainment and a contract for F-15 Japan Super Interceptor upgrade services from the U.S. Air Force.

Unallocated items, eliminations and other primarily reflects timing of allocations.

 

28 Jan 25. Lockheed hit by $2bn in charges on 2 classified programs

The world’s largest defense contractor recorded total year end losses of $1.4bn on a classified program in its missiles and fire control (MFC) portfolio as well as $555m overrun on a program in its aeronautics division, Lockheed said in a news release.

Higher than expected engineering costs and other difficulties forced Lockheed Martin to book $2bn in losses on two classified programs in 2024, with a $1.7 bn hit occurring in the final quarter of the year, the company said in results today.

The world’s largest defense contractor recorded total year end losses of $1.4 bn on a classified program in its missiles and fire control (MFC) portfolio as well as a $555m overrun on a program in its aeronautics division, Lockheed said in a news release. Of that sum, the MFC program logged a $1.3bn charge in the fourth quarter, with the aeronautics program incurring a $410m charge during the same period.

The MFC program losses stem from a contract where Lockheed can be reimbursed for costs during the initial phase of the program, but where follow-on contract options are locked under a fixed-price deal that holds Lockheed responsible for paying costs above a certain threshold. Lockheed estimates that all options exercised over the “next several years” would be performed at a loss to the company, with the first $100 m charge occurring in the first quarter of 2024.

“During the fourth quarter of 2024, the company again assessed the likelihood that additional options may be exercised and now believe it is probable that all options will be exercised based on performance to date, future requirements of the program, discussions with the customer and suppliers, and anticipated customer funding, among other factors, resulting in the recognition of additional losses,” Lockheed said in a release.

When Lockheed executives first disclosed the hit to the MFC program in April, CEO Jim Taiclet characterized the program as a long-running franchise that will deliver a strong return on investment after going through a period of teething pains, while Chief Financial Officer Jay Malave said the effort was expected to become profitable on an annual basis around the 2028 timeframe.

Meanwhile, Lockheed described the impacted aeronautics program as a fixed-price incentive fee contract involving “highly complex design and systems integration.” The company conducted a review of the program due to undisclosed near-term milestones and trends experienced in the fourth quarter, and recorded losses based on “higher projected costs in engineering and integration activities that are necessary to achieve those forthcoming milestones,” it said.

Because of the classified program losses, Lockheed’s target earnings per share for 2024 amounted to $22.31. It recorded $5.3bn in free cash flow for 2024. Net sales increased 5% to $71bn.

“2024 was another successful and productive year for Lockheed Martin,” Taiclet said in a statement accompanying results. “Our 5% sales growth and record year-end backlog of $176 bn demonstrate the enduring global demand for our advanced defense technology and systems.”

The company expects net sales of about $73.7bn to $74.7bn in 2025, with a free cash flow target of around $6.6bn to $6.8bn. (Source: glstrade.com/Breaking Defense.com)

 

28 Jan 25. Lockheed Martin Reports Fourth Quarter and Full Year 2024 Financial Results

• 2024 net sales increased 5% to $71.0bn
• Recorded pre-tax losses of $1.7bn and $2.0 bn associated with classified programs in the fourth quarter and full year, which impacted earnings per share by $5.45 and $6.16
• Earnings per share of $2.22 in the fourth quarter and $22.31 in 2024, including impact of classified programs losses
• Cash from operations of $7.0bn and free cash flow of $5.3bn in 2024 after a pension contribution of $990m
• Returned $6.8 bn of cash to shareholders through dividends and share repurchases in 2024
• Record backlog of $176.0bn at end of 2024
• 2025 financial outlook provided

Lockheed Martin Corporation [NYSE: LMT] today reported fourth quarter 2024 net sales of $18.6bn, compared to $18.9bn in the fourth quarter of 2023. Net earnings in the fourth quarter of 2024 were $527m, or $2.22 per share, including $1.7bn ($1.3bn, or $5.45 per share, after-tax) of losses for classified programs, compared to $1.9bn, or $7.58 per share, in the fourth quarter of 2023. Cash from operations was $1.0bn in the fourth quarter of 2024, after a pension contribution of $990m, compared to $2.4bn in the fourth quarter of 2023. Free cash flow was $441m in the fourth quarter of 2024, after a pension contribution of $990m, compared to $1.7bn in the fourth quarter of 2023. Fourth quarter 2024 results included 13 weeks, compared to 14 weeks for fourth quarter 2023, which had an unfavorable impact on sales volume across the company.

Net sales in 2024 were $71.0bn, compared to $67.6bn in 2023. Net earnings in 2024 were $5.3bn, or $22.31 per share, including $2.0bn ($1.5 bn, or $6.16 per share, after-tax) of losses for classified programs, compared to $6.9bn, or $27.55 per share, in 2023. Cash from operations was $7.0bn in 2024, after a pension contribution of $990m, compared to $7.9bn in 2023. Free cash flow was $5.3bn in 2024, after a pension contribution of $990m, compared to $6.2bn in 2023.

“2024 was another successful and productive year for Lockheed Martin. Our 5% sales growth and record year-end backlog of $176bn demonstrate the enduring global demand for our advanced defense technology and systems,” said Jim Taiclet, Lockheed Martin’s Chairman, President and CEO. “In the year, we invested over $3bn in advancing our nation’s security through research and development and capital investment to support our customers’ missions, drive innovation and transform our operations with the latest digital and manufacturing technologies. Our strong and consistent performance also enabled us to again return greater than 100% of free cash flow to our shareholders in 2024.”

“We also continue to drive collaboration across government and all sectors of American industry to accelerate innovation, improve resilience and integrate emerging technologies to deter, and if necessary to win any potential armed conflict,” continued Taiclet.

“Lockheed Martin is committed to developing and delivering the best military capabilities in the world, better than any potential adversary can hope to have. One of our most critical investments in 2024 was in ensuring continued air superiority for the United States and its allies. We are fully committed to developing a combined air power solution set that integrates new 6th generation with current 5th generation and 4th generation aircraft using wingman drones, AI, advanced sensors in space and in the air, and 5G-level, cyber-hardened data links. Our leading technical and manufacturing capabilities, the innovative spirit that originated in our Skunk Works® operation, our incredibly capable workforce, along with the derisking actions we executed in the fourth quarter, position us well for strong performance in 2025. We look forward to working with the incoming administration to best serve our customers with highly reliable, theater-level mission solutions that can win wars while delivering compelling results to our shareholders.”

Earnings Impacts of Classified Program Losses and Other Items

During the fourth quarter of 2024, the company recognized losses associated with existing classified programs at its Aeronautics and Missiles and Fire Control (MFC) business segments.

The company’s Aeronautics business segment has an existing classified fixed-price incentive fee contract that involves highly complex design and systems integration. The program includes a base contract for the initial phase of the program and multiple options for additional phases. The company previously disclosed it continues to monitor the technical requirements and its performance, the remaining work and any future changes in scope or schedule, and estimated costs to complete the program, and it may have to record additional losses in future periods if further performance issues, increases in scope, or cost growth occur. As a result of performance trends experienced in the fourth quarter 2024 and in contemplation of near-term program milestones, the company performed a comprehensive review of the program requirements, technical complexities, schedule, and risks. Based on that review, the company has identified higher projected costs in engineering and integration activities that are necessary to achieve those forthcoming milestones and recognized losses across the program phases of $410m in the fourth quarter of 2024. As of December 31, 2024, losses for the year were approximately $555m, including the fourth quarter loss.

The company’s MFC business segment has an existing classified contract, which includes a cost-reimbursable base contract for the initial phase of the program and multiple fixed-price options for additional phases. The company previously disclosed the options may be exercised over the next several years and if performed expects they would each be at a loss. During the first quarter of 2024, the company concluded it was probable that the first option would be exercised and recognized a loss of approximately $100 m. During the fourth quarter of 2024, the company again assessed the likelihood that additional options may be exercised and now believe it is probable that all options will be exercised based on performance to date, future requirements of the program, discussions with the customer and suppliers, and anticipated customer funding, among other factors, resulting in the recognition of additional losses of approximately $1.3bn, which is consistent with the amount the company previously disclosed. For the year ended Dec. 31, 2024, MFC recognized losses of $1.4bn for this program, including the fourth quarter loss.

Cash Flows and Capital Deployment Activities

The decrease in operating and free cash flows in the quarter and year ended Dec. 31, 2024 compared to the same period in 2023 were primarily due to a pension contribution of $990m.

The company’s cash activities in the quarter and year ended 2024, included the following:

• paying cash dividends of $778m and $3.1bn during the quarter and year ended Dec. 31, 2024;
• paying $1.0bn to repurchase 1.8 m shares and $3.7bn to repurchase 7.5m shares during the quarter and year ended Dec. 31, 2024;
• making a pension contribution of $990 m during the quarter and year ended Dec. 31, 2024;
• making a long-term debt scheduled repayment of $168m during the year ended Dec. 31, 2024; and
• receiving net proceeds from debt issuances of approximately $1.0bn and $3.0bn during the quarter and year ended Dec. 31, 2024.

Segment Results

The company operates in four business segments organized based on the nature of products and services offered: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. The following table presents summary operating results of the company’s business segments and reconciles these amounts to the company’s consolidated financial results.

RMS’ net sales in the fourth quarter of 2024 decreased $450m, or 10%, compared to the same period in 2023. The decrease was primarily attributable to lower net sales of $170m on Sikorsky helicopter programs due to the sales impact of unfavorable profit rate adjustments and lower production volume on the Seahawk program and lower production volume on the Combat Rescue Helicopter (CRH) program; $150m for integrated warfare systems and sensors (IWSS) programs due to lower volume on Aegis; and $75m for various C6ISR programs due to lower volume.

RMS’ operating profit in the fourth quarter of 2024 decreased $66m, or 11%, compared to the same period in 2023. The decrease in operating profit was attributable to $80 m of lower profit booking rate adjustments. The decrease in profit booking rate adjustments was due to unfavorable profit rate adjustments on the Seahawk production program.

RMS’ net sales in 2024 increased $1.0bn, or 6%, compared to the same period in 2023. The increase was primarily attributable to higher net sales of $750m on IWSS programs due to higher volume on radar programs, the Canadian Surface Combatant (CSC) program and new program ramp up within the laser systems portfolio; $175m for various C6ISR programs due to higher volume; and $140m for Sikorsky helicopter programs due to higher production volume on the CH-53K program, partially offset by lower volume on the VH-92A program.

RMS’ operating profit in 2024 increased $56m, or 3%, compared to the same period in 2023. The increase in operating profit was attributable to $115m from higher volume described above and $85m from favorable contract mix and cost recoveries, partially offset by $155m of lower profit booking rate adjustments. The decrease in profit booking rate adjustments was due to unfavorable profit rate adjustments on the Seahawk production program, partially offset by the net impact in 2023 of both a $100m unfavorable profit rate adjustment on Canadian Maritime Helicopter Program (CMHP) and a $65 m favorable profit rate adjustment on an international surveillance and control program that did not recur in 2024.

Space

Space’s net sales in the fourth quarter of 2024 decreased $439m, or 13%, compared to the same period in 2023. The decrease was primarily attributable to lower net sales of $360m for national security space programs primarily due to lower volume on Next Generation Overhead Persistent Infrared (Next Gen OPIR) and classified programs; and $75m for commercial civil space due to lower volume on the Orion program.

Space’s operating profit in the fourth quarter of 2024 decreased $24m, or 8%, compared to the same period in 2023. The decrease was primarily attributable to $45m of lower profit booking rate adjustments, partially offset by $15m of higher equity earnings driven by higher launch volume from the company’s investment in United Launch Alliance (ULA). The decrease in profit booking rate adjustments was due to lower favorable profit rate adjustments on classified and hypersonics programs.

Space’s net sales in 2024 decreased $126m, or 1%, compared to the same period in 2023. The decrease was primarily attributable to lower net sales of $320m for national security space programs due to lower volume on classified programs and $145m for commercial civil space due to lower volume on the Orion program, partially offset by higher volume on other space exploration programs. These decreases were partially offset by higher net sales of $255m for strategic and missile defense programs due to higher volume on FBM and reentry programs.

Space’s operating profit in 2024 increased $68m, or 6%, compared to the same period in 2023. The increase was primarily attributable to $100 m related to favorable contract mix and cost recoveries across the portfolio, partially offset by $55m of lower profit booking rate adjustments due to lower net favorable profit rate adjustments on the Orion program and $25m of higher equity earnings driven by higher launch volume from the company’s investment in ULA.

Total equity earnings (ULA) represented approximately $15m, or 5% and $45 m, or 4% for the quarter and year ended Dec. 31, 2024. Total equity earnings for the quarter ended Dec. 31, 2023 was not significant and $20 m, or 2% for the year ended Dec. 31, 2023.

Income Taxes

The company’s effective income tax rate was (1.5)% and 13.0% for the quarters ended Dec. 31, 2024 and 2023. The lower effective income tax rate is due to lower pre-tax earnings, as a result of the classified programs losses previously described, which reduced the effective income tax rate by 18.6% for the quarter ended Dec. 31, 2024. The company’s effective income tax rate was 14.2% and 14.5% for the years ended Dec. 31, 2024 and 2023. The classified program losses previously described reduced pre-tax earnings and reduced the effective income tax rate by 2.0% for the year ended Dec. 31, 2024. The rates for all periods benefited from tax deductions for foreign derived intangible income, research and development tax credits, dividends paid to the company’s defined contribution plans with an employee stock ownership plan feature and employee equity awards.

Business segment operating profit

Business segment operating profit represents operating profit from the company’s business segments before unallocated income and expense. This measure is used by the company’s senior management in evaluating the performance of its business segments and is a performance goal in the company’s annual incentive plan. Business segment operating margin is calculated by dividing business segment operating profit by sales. The table below reconciles the non-GAAP measure business segment operating profit with the most directly comparable GAAP financial measure, consolidated operating profit.

Free cash flow is cash from operations less capital expenditures. The company’s capital expenditures are comprised of equipment and facilities infrastructure and information technology (inclusive of costs for the development or purchase of internal-use software that are capitalized). The company uses free cash flow to evaluate its business performance and overall liquidity and it is a performance goal in the company’s annual and long-term incentive plans. The company believes free cash flow is a useful measure for investors because it represents the amount of cash generated from operations after reinvesting in the business and that may be available to return to stockholders and creditors (through dividends, stock repurchases and debt repayments) or available to fund acquisitions or other investments. The entire free cash flow amount is not necessarily available for discretionary expenditures, however, because it does not account for certain mandatory expenditures, such as the repayment of maturing debt and future pension contributions.

 

27 Jan 25. Comply365, LLC (“Comply365”), a leading global provider of operational content, safety and training management solutions for the aviation, rail, defense and space industries, announced today it has executed a definitive agreement to acquire Aviation Safety & Quality Solutions S.à r.l (“ASQS”), a global provider of safety and compliance management systems (“SMS”). This acquisition marks a significant milestone in Comply365’s growth strategy, including acceleration of its investment in safety management and Comply365’s mission to create a best-in-class, integrated offering to elevate safety, training and operational performance for its worldwide aviation, rail, defense and space customers. Comply365 is a portfolio company of Insight Partners and Liberty Hall Capital Partners (“Liberty Hall”).

The acquisition of ASQS will enhance Comply365’s product capabilities, strengthen its service offering in safety management and expand its global customer base. The ASQS team have deep expertise in all areas relating to safety management, including compliance and risk management. Their sophisticated safety management solution, iQSMS, will complement Comply365’s existing SMS product, SafetyNet, positioning the combined business as a key player in the safety management space.

Ilia Kostov, CEO of Comply365 said: “We are delighted to welcome the ASQS team into the Comply365 family. They bring a wealth of talent, specialized knowledge and complementary product strengths to our organization. This acquisition demonstrates our commitment to invest in safety management, a central component of our value proposition and vision to create a best-in-class, integrated offering connecting the mission-critical functions of operational content management, safety management and training management.”

Günther Schindl, CEO of ASQS said: “I am excited to join Ilia and the Comply365 team to support their vision of delivering a safety-focused, integrated operations offering. The acquisition of ASQS by Comply365 is a significant milestone in ASQS’s journey and will allow us to better serve our customers with differentiated and connected safety management capabilities.”

Henry Frankievich, Managing Director at Insight Partners said: “The acquisition of ASQS will enhance Comply365’s position as a key player in the global safety management space. We look forward to accelerating the combined company’s strategy to deliver one interconnected offering to its worldwide customer base.”

James Black, Partner at Liberty Hall added: “With safety management at the core of Comply365’s product strategy, the acquisition of ASQS marks an important milestone in the company’s growth and vision for the future. The addition of the iQSMS solution directly complements our existing product portfolio and demonstrates our steadfast commitment to creating a best-in-class, integrated offering across operational content, safety and training. Alongside our partners at Insight Partners, we look forward to supporting Comply365’s continued growth and delivering even greater value to our customers.”

Completion of the transaction is expected in the second quarter of 2025, subject to applicable regulatory approvals.

Legal advice to Comply365 was provided by Willkie Farr & Gallagher LLP and E+H Rechtsanwälte. The shareholders of ASQS were advised by Lindner Stimmler and E.M.I. Avocat à la Cour.

About Comply365

Comply365 is a leading provider of Operational Content Management, Safety Management and Training Management in the highly regulated industries of aviation, defense, rail and space. Comply365 provides a powerful combination of expertise and products underpinned by unified best practices, empowering its customers to elevate operational excellence, transform safety management and training management, with closer integration of relevant data sets across domains. Comply365 product portfolio ensures its customers’ crews and assets are always geared for peak operational performance, unlocking unparalleled financial and operational gains through more streamlined, robust and agile operations. Comply365 is the trusted technology partner of many of the most progressive aviation, defense, rail and aerospace organizations worldwide. For more information, please visit comply365.com.

About ASQS and iQSMS®

ASQS (Advanced Safety and Quality Solutions) is a leading global provider of aviation safety, quality and risk management software, headquartered in Vienna, Austria, with offices in Bangkok, Thailand and Calgary, Canada. With its core product iQSMS, the company specializes in developing and delivering intuitive, user-friendly solutions that support aviation organizations of all types in their daily operations. Founded in 2009, ASQS has many years of experience in aviation safety and quality management, as well as extensive knowledge of the industry’s regulatory requirements. ASQS believes it is the first global provider to integrate AI technology into an SMS application. The company supports aviation organizations of all sizes worldwide, helping to streamline internal workflows through digitization and automation to maximize efficiency in day-to-day aviation operations. For more information, visit asqs.net.

About Insight Partners

Insight Partners is a global software investor partnering with high-growth technology, software, and Internet startup and ScaleUp companies that are driving transformative change in their industries. As of September 30, 2024, the firm has over $90B in regulatory assets under management. Insight Partners has invested in more than 800 companies worldwide and has seen over 55 portfolio companies achieve an IPO. Headquartered in New York City, Insight has offices in London, Tel Aviv, and the Bay Area. Insight’s mission is to find, fund, and work successfully with visionary executives, providing them with tailored, hands-on software expertise along their growth journey, from their first investment to IPO. For more information on Insight and all its investments, visit insightpartners.com or follow us on X @insightpartners.

About Liberty Hall

Liberty Hall Capital Partners is a private equity firm focused exclusively on investments in businesses serving the global aerospace and defense industry. Liberty Hall’s principals have a 25-plus year history of working together and have led the investment of over $2.5 bn in equity capital in over 25 businesses serving multiple segments of the aerospace and defense industry, including the investment of over $1.0 bn in equity capital since the formation of Liberty Hall. Liberty Hall was founded in July 2011 as the first, and remains the only, private equity firm focused solely on investments in middle market businesses serving the aerospace and defense industry. Liberty Hall executes a proven and repeatable investment strategy designed to transform middle market businesses into larger, more capable and diverse strategic assets. For more information, please visit libertyhallcapital.com.

(Source: PR Newswire)

 

27 Jan 25. OPEXUS, a leading provider of government process management software, and Casepoint, the industry leader in data discovery technology for litigation, investigations, and data compliance, today announced a merger and a majority investment from Thoma Bravo, a leading software investment firm. Casepoint shareholders and OPEXUS’s existing investor Gemspring Capital will both retain minority positions in the combined company.

OPEXUS currently serves over 100,000 government users and 200 public institutions in the U.S. and Canada, providing purpose-built solutions for Freedom of Information Act (FOIA), audit, investigations, workforce management, and procurement teams. Its solutions help customers digitize complex government processes, approvals, and reporting, modernizing their ability to respond to rapidly growing and increasingly challenging requests while adhering to the highest privacy and security standards.

Casepoint’s modern, cloud-native approach to data discovery is the gold standard for highly complex, data-responsive workflows. Casepoint has Department of Defense Impact Level 5 and 6 security certifications and is used by dozens of federal agencies. Its innovative software is widely used by enterprise customers to manage data, enhance efficiency, mitigate risk, and effectively meet reporting and compliance obligations related to litigation, investigations, and Congressional inquiries. Casepoint was established in 2008 by founder and Chief Technology Officer Vishal Rajpara and co-founder and Chief Operating Officer Vipul Rajpara.

This strategic merger and Thoma Bravo’s investment will establish a more comprehensive and innovative process management and discovery platform for government and commercial customers in North America and accelerate the combined company’s growth. The combined company will be led by CEO Howard Langsam and Vishal Rajpara will serve on the executive leadership team. It will be headquartered in Washington, D.C.

“There is a growing need for high-quality data management in the public sector, with government agencies increasingly seeking to be as efficient, transparent, and accountable as possible,” said Howard Langsam, CEO of OPEXUS. “The addition of Casepoint’s data discovery technology and Thoma Bravo’s impressive software and operational expertise will help us meet this demand and accelerate our expansion in the GovTech market, as well as expand our coverage of enterprise customers.”

“Casepoint and OPEXUS share an ambitious vision to drive sustainable, long-term growth and focus on our customers’ missions,” said Haresh Bhungalia, CEO of Casepoint. “As one firm, we are poised to enhance our offerings, scale our operations, and capture the growing demand for enterprise data software. Vishal, Vipul, and I are very grateful for the strong foundation established by our global team’s dedication to innovation and for the trust placed in us by our valued employees and customers.”

“Today, more than ever, government agencies are in need of modern technology that drives efficiency and improves transparency,” said Carl Press, a Partner at Thoma Bravo. “Both Casepoint and OPEXUS have established themselves as trusted partners to nearly all of the largest federal agencies as well as many state and local governments and regulated commercial businesses. We see immense potential in one combined, comprehensive solution provider and are thrilled to partner with the management teams of both businesses under Howard’s leadership to build a truly special franchise.”

“The combination of OPEXUS and Casepoint will create a unique company with the expanded scale and product suite required to meet the increasingly complex needs of their customers with the ultimate goal of making government and corporate workflow processes more efficient,” said Sam Yules, a Vice President at Thoma Bravo. “We are looking forward to working with their teams to reach their full potential in this next chapter.”

Kirkland & Ellis LLP served as legal advisor to Thoma Bravo. Deutsche Bank Securities Inc. served as financial advisor to Thoma Bravo on its investment in Casepoint. Cooley LLP served as legal advisor to Casepoint, and Baird served as financial advisor. McDermott Will & Emery LLP served as legal advisor to OPEXUS. Comvest Credit Partners and HarbourVest Partners provided debt financing for this transaction.

About OPEXUS

OPEXUS is the leader in FedRAMP-certified government process management software with more than 30 years of experience supporting public institutions. The company brings operational excellence to governments’ middle office so agencies can focus on the critical work of mission delivery. OPEXUS empowers 100,000 government users with exceptional technology experiences and a built-for-government product suite, including solutions for audit, investigations, correspondence, Freedom of Information Act (FOIA) requests, and employee & labor. Located in the heart of Washington, D.C., OPEXUS works with more than 200 public institutions in the US and Canada. For more information, visit opexustech.com.

About Casepoint

Casepoint is the trusted data discovery platform for government agencies and regulated corporations. Leveraging the power of AI and advanced analytics, its end-to-end platform empowers teams to seamlessly collect, preserve, and discover vast amounts of data from diverse sources, enabling secure data-responsive workflows at enterprise scale.

From legal hold and data preservation to cloud collections and eDiscovery, Casepoint streamlines everything from litigation, investigations, and compliance to Congressional Inquiries. With unmatched military-grade security, enterprises can manage their data confidently, enhance efficiency, mitigate risk, and meet reporting and compliance obligations with ease. For more information, visit casepoint.com.

About Thoma Bravo

Thoma Bravo is one of the largest software-focused investors in the world, with over $166bn in assets under management as of September 30, 2024. Through its private equity, growth equity and credit strategies, the firm invests in growth-oriented, innovative companies operating in the software and technology sectors. Leveraging Thoma Bravo’s deep sector knowledge and strategic and operational expertise, the firm collaborates with its portfolio companies to implement operating best practices and drive growth initiatives. Over the past 20+ years, the firm has acquired or invested in more than 500 companies representing approximately $265 bn in enterprise value (including control and non-control investments). The firm has offices in Chicago, Dallas, London, Miami, New York and San Francisco. For more information, visit Thoma Bravo’s website at thomabravo.com. (Source: BUSINESS WIRE)

 

28 Jan 25. Leonardo CEO meets Airbus head to discuss satellite alliance. Leonardo Chief Executive Roberto Cingolani said he had met the head of French peer Airbus on Tuesday to discuss possible alliances in the satellite industry which would allow Europe to better face up to global competition.

“We are working (on a satellite alliance) with Airbus and Thales,” Cingolani said on the sidelines of a conference at the Italian parliament after meeting the Airbus CEO early on Tuesday morning at an airport in Rome.

“It is clear that in such a competitive scenario we need European giants … it’s not something you can do in two months, it really needs a lot of work,” he told Reuters.

Cingolani last summer confirmed ongoing discussions between the Italian aerospace and defence group and France’s Airbus and Thales on space alliances to compete with rivals such as the United States and China.

Leonardo manufactures satellites, orbiting infrastructure and sensors and manages satellite services and propulsion and launching systems. It has two joint-ventures with Thales: Thales Alenia Space and Telespazio.

(Source: Reuters)

 

27 Jan 25. Quantum® Corporation (Nasdaq: QMCO) (“Quantum” or the “Company”), a leader in solutions for AI and unstructured data, today announced of its entry into a Standby Equity Purchase Agreement (the “SEPA”) an investment fund managed by Yorkville Advisors Global, LP (“Yorkville”).

Transaction Summary:

• Access to additional equity capital and liquidity with discount fees of 3% and 4%
• Limited initially to 1.15m shares, remainder requires shareholder approval
• Three years to access full amount with 100% at Company’s discretion
• Covenant relief during the process to reduce its debt

“This strategic financial partnership provides Quantum with the flexibility to support our ongoing operations and accelerate our growth initiatives,” said Jamie Lerner, CEO of Quantum. “We have solidified access to significant capital, which, over time, will be used to strengthen our balance sheet and enable us to focus on executing our vision of revolutionizing data management solutions for the AI industry.”

Mr. Lerner continues, “Quantum has made substantial efforts over the last year to improve our operational and financial health through a combination of revenue and margin improvement plans, financial and organizational restructuring, and cost reduction initiatives. In addition, we have been exploring several strategic alternatives to pay down our currently outstanding debt, which would also help to lower our cost structure, including lowering the interest expense and other fees the Company has incurred. These actions combined with improving our operating free cash flow, strengthen Quantum for its future success.”

The Company’s agreement with Yorkville is initially limited to 19.99% of outstanding shares, or no more than 1,157,139 shares of common stock of the Company under the Purchase Agreement until shareholder approval is obtained. The Company intends to strategically use the SEPA to raise capital as desired, drawing on the available amount based on market conditions and business opportunities. Pursuant to the terms of the SEPA, the Company has the right, but not the obligation, to issue up to $200 m of shares of the Company’s common stock at any time during the three-year period following the execution date of the SEPA, subject to certain customary conditions. There is no obligation to utilize any portion available under the SEPA, and the Company retains control over both timing and volume. The SEPA does not impose any material restrictions on the Company’s operational activities. The per share price Yorkville will pay for the shares will be dependent on the one- or three-day pricing period elected by the Company at a discount of either 3% or 4%, as provided for in the SEPA. The Company expects that any proceeds received from such sales to Yorkville will be used for working capital and general corporate purposes, including the repayment of debt.

The securities described herein have not been registered under the Securities Act of 1933, as amended, and may not be sold in the United States absent registration or an applicable exemption from the registration requirements. A registration statement relating to the resale of the securities to be issued under the SEPA will be filed with the Securities and Exchange Commission and these securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or other jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.

About Quantum

Quantum delivers end-to-end data management solutions designed for the AI era. With over four decades of experience, our data platform has allowed customers to extract the maximum value from their unique, unstructured data. From high-performance ingest that powers AI applications and demanding data-intensive workloads, to massive, durable data lakes to fuel AI models, Quantum delivers the most comprehensive and cost-efficient solutions. Leading organizations in life sciences, government, media and entertainment, research, and industrial technology trust Quantum with their most valuable asset – their data. Quantum is listed on Nasdaq (QMCO).

Quantum and the Quantum logo are registered trademarks of Quantum Corporation and its affiliates in the United States and/or other countries. (Source: BUSINESS WIRE)

 

27 Jan 25. Houlihan Lokey announced the successful placement of a senior secured credit facility to support Agile Defense, LLC’s (Agile) acquisition of IntelliBridge, LLC, both portfolio companies of Enlightenment Capital (Enlightenment). Proceeds from the transaction were used to refinance existing indebtedness, pay transaction-related fees, and effectuate the acquisition. The transaction closed on January 2, 2025.

Founded in 1998, Agile is a leading provider of comprehensive digital transformation, data analytics, and cybersecurity solutions for the Department of Defense and federal civilian sectors. Agile stands at the forefront of innovation, driving advanced capabilities and solutions tailored to the most critical national security and civilian missions. The company’s collaborative and multidisciplinary teams bring creativity and flexibility to developing advanced digital transformation, data analytics, and cyber solutions.

Founded in 2006, IntelliBridge is a pure-play digital transformation business delivering mission-based technology for its customers across the homeland security, federal civilian, law enforcement, and intelligence sectors. Headquartered in McLean, Virginia, with locations and staff nationwide, IntelliBridge makes its customers successful by delivering best-in-class solutions through a combination of deep domain expertise and advanced technology. Known for its customer-first approach and Technology & Innovation Group, IntelliBridge drives impactful results, making it the most trusted partner in achieving mission success.

Through the combination, Agile doubles in size, boasting more than 2,000 highly skilled professionals, and diversifies, supporting an expanding portfolio of defense, national security, and federal civilian missions. IntelliBridge’s dedication to fostering innovation and delivering value aligns with Agile’s commitment to providing its customers with enhanced capabilities and integrated solutions to meet their evolving needs.

Enlightenment, a Washington, D.C.-area-based private investment firm, makes control and strategic, noncontrol investments in middle-market companies in the aerospace, defense, government, and technology sector. The firm partners with businesses that provide vital services, protect critical infrastructure, innovate cyber and data solutions, enhance decision-making capabilities, engineer aerospace and space systems, and safeguard national security.

Houlihan Lokey’s Capital Markets Group served as the exclusive placement agent to Agile, assisting the company in arranging, structuring, and negotiating the financing. The transaction highlights Houlihan Lokey’s ability to leverage its senior relationships with capital providers to deliver favorable outcomes for its clients.

If you would like more information about Houlihan Lokey or have questions regarding the firm’s role in this transaction, please contact one of the team members listed below.

 

27 Jan 25. Airbus sees continued growth in helicopter sales in 2024 Airbus Helicopters logged 455 gross orders (net: 450) in 2024, highlighting a steady market growth with a strong performance this year for its light, light twin-engined, and heavy helicopters. The orders came from 182 customers in 42 countries. The Company delivered 361 helicopters in 2024, resulting in a preliminary 57% share of the civil and parapublic market.

“Airbus Helicopters’ order intake in 2024, with an increase bordering 10 percent in units for the second year in a row, highlights its stable growth in a complex global environment,” said Bruno Even, CEO of Airbus Helicopters. “I would like to thank our customers for continuing to place their trust in Airbus Helicopters in 2024,” he added.

The Super Puma programme performed strongly on both the civil and parapublic and military markets with 58 orders thanks to the German Bundespolizei, the Japan Coast Guard, the Ministry of Defence of the Netherlands, and the Romanian Ministry of National Defence. 2024 saw the launch of a comprehensive upgrade, known as Block 1, for the NH90 as well as the start of flight testing for France’s Special Forces Standard 2 configuration, and the delivery of the first Standard 3 configuration to the Spanish Air Force. The H145 and H145M programme welcomed many new defence and security customers such as the Brunei Air Force, the Belgian Ministry of Defence, the Indonesian Air Force, the Bahraini Police Aviation Command as well as the Irish Ministry of Defence.

“Defence and security is a strategic priority at Airbus Helicopters. We are proud to support our customers with helicopters that enable them to protect and serve their nations as we saw in 2024 with the U.S. National Guard’s Lakota supporting disaster relief efforts after Hurricane Helene and the H135 and NH90 in the flooding in Valencia, Spain. We continue to innovate and expand the mission capabilities that we offer – we integrated Flexrotor into our UAS portfolio, we demonstrated crewed – uncrewed teaming capabilities with the VSR700 and an H130, and we are laying the groundwork for the European Next Generation Rotorcraft through dedicated concept studies,” continued Even.

2024 saw the first flight of Racer and the unique compound helicopter surpassed its 407 KM an hour objective in just seven flights along with the maiden flight of CityAirbus NextGen in Donauwörth. On the civil and parapublic market, the H175 completed its de-icing flight test campaign in Canada and Norway ahead of certification this year and the H160 continued its progressive entry into service around the world with more than 30 helicopters now in service.

“Supporting our customers is essential and our global footprint is a key element to achieving that. We celebrated several milestones in 2024 that attest to that – firstly the 40 years of our facility in Fort Erie, Canada.  This proximity will be important for our landmark contract for the 19 H135s that will be delivered to our first Canadian defence customer. Secondly, we marked fifty years of presence in the UK and inaugurated a brand new facility in Oxford. We will continue to grow our international footprint with the addition of an H125 final assembly line in India in partnership with TATA,” Even continued.

The Company also ramped up the use of sustainable aviation fuel (SAF) for its own development test flights and training flights in Marignane, Albacete, and Donauwörth to nearly 20%, and added the use of SAF at its facility in Oxford, UK.

Airbus’ 2024 full year financial results will be disclosed on 20 February 2025.

 

27 Jan 25. GMB Union has reacted to the completion of Harland and Wolff’s takeover by Spanish firm Navantia, announced today [Monday]

Matt Roberts, GMB National Officer, said:

“Workers across all four yards will breathe a sigh of relief at finally being under stable ownership.

“But at GMB we will remain cautious. Without a steady drum beat of work, these yards will continue to struggle.

“That is what we will keep fighting for – a long-term future for UK sovereign manufacturing.”

 

24 Jan 25. Spain’s Indra to buy Hispasat from Redeia for $679m, El Pais reports. Spanish defence and technology company Indra (IDR.MC) was set to buy satellite operator Hispasat from Redeia (REDE.MC) for 650m euros ($679m) to expand in the space industry, daily newspaper El Pais reported on Friday, citing unnamed sources with knowledge of the situation.

Indra and Redeia are close to a deal and the transaction will be submitted to their respective boards for approval “imminently”, the newspaper said.

Indra is mainly interested in Hispasat’s military unit, according to El Pais. Redeia did not immediately respond to a Reuters request for comment. Indra declined to comment.

Indra, which is 28% owned by the Spanish government, has recently focused on its defence and aerospace businesses to benefit from European countries’ increased military budgets following heightening world tensions. ($1 = 0.9568 euros) (Source: Reuters)

 

23 Jan 25. Moody’s rating agency blames “OneWeb hurts Eutelsat.” Ratings agency Moody’s has again downgraded Eutelsat, and blames its decision on the “disappointing” contribution from Eutelsat’s OneWeb constellation of satellites.

The downgrade, from B2 to Ba3, cites the operational under performance in comparison with Eutelsat’s forecasts for revenues from OneWeb. The report didn’t help Eutelsat’s share price which fell 3.7 per cent on January 21st.

Moody’s said: “This also takes into account Eutelsat’s reduced visibility regarding its ability to return to earnings growth, but also the pressure on its cash flow due to high capital expenditure and the prospect of significant refinancing up to 2027 at a time when borrowing costs are rising significantly”.

However, on the more positive side Eutelsat’s prospects were rated as “stable” which is an improvement on the previous “negative” outlook and adding that it hopes Eutelsat’s operational performance will stabilize in 2026, before a possible turnaround in 2027. (Source: Satnews)

 

21 Jan 25. BNP Paribas Bank: Key debates for satellite sector in 2025. Investment bank BNP Paribas, in a major study of Europe’s media and media-related activity, has also looked at the wider satellite sector. Analyst Sami Kassab said that satellite operators’ shares had a mixed performance in 2024.

That comment might be seen as an understatement

“Incumbent satellite operators (Viasat, Eutelsat, SES, Iridium) have continued to see share price attrition in 2024 as investors doubted that they will be able to maintain let alone drive FCF in the age of mega constellations. New entrants such as AST Space Mobile or Planet Labs have fared much better. Press reports suggest Space X valuation doubled between December 2023 and December 2024,” Kassab suggested. “We note that while investors believe Eutelsat/SES will suffer from competitive pressure in the age of mega-constellations, they have taken a much less sanguine and more favorable view on AST, a seven year old startup in a head-on competition with Starlink in the Direct-to-Device segment.”

After almost a decade of uninterrupted EBITDA decline, the bank expects SES to return to sustainable growth from 2025 onwards as it benefits from the entry into service of its next generation mPower satellite system. The bank also assumes a sustainable return to EBITDA growth for Eutelsat from the second half of calendar year 2025 (FY26) driven by the commercial progress at OneWeb.

Kassab asked, “What impact will the new US administration have on European operators?,” and added: “Another likely key debate is on the impact of the new US administration is likely to have on European satellite operators. IRIS² is a political initiative aimed at ensuring European government communications in space is operated on European satellites. Will the Trump-administration reciprocate and push the US DoD to move away from European spacecrafts? Given the long history of the US DoD using European satellite systems, we think it is unlikely.

Kassab continued, “What impact will Elon Musk as Head of the Department of Government Efficiency have on US space regulation? We believe his role in the current administration increases the chances that the FCC changes regulation on Power Flux Density limits. Changes could result in up to an 8x increase in Starlink capacity and has been a key demand of SpaceX last year. This would mean even more supply of capacity on the US market and in the medium term possibly in other jurisdictions too. This could push prices further down.”

The report added, “Satellite operators have historically operated assets with solid FCF generation and limited volatility. This enabled the industry to sustain high levels of debt (c3x net debt to EBITDA or more). But the industry has changed. Contract length in video is shortening. Structural concerns are high. Competitive pressure is intense. Revenue pressure and high leverage have depressed equity valuations.”

Kassab summarized, “We believe balance sheet risk is now the main driver of share prices, similar to what we witnessed with other structurally challenged highly leveraged industries like yellow pages 10-15 years ago. Management actions that protect the balance sheet (ie Eutelsat disposal of a majority stake in its ground infrastructure) are likely to have a more positive impact on equity valuation than actions that put additional leverage on balance sheets. We note that SES shares are down 46 per cent despite positive EPS consensus revisions. We believe this reflects the stretching of the balance sheet in the context of the Intelsat acquisition.” (Source: Satnews)

 

24 Jan 25. Moog Inc. (NYSE: MOG.A and MOG.B), a worldwide designer, manufacturer and systems integrator of high-performance precision motion and fluid controls and control systems, today reported fiscal first quarter 2025 diluted earnings per share of $1.64 and adjusted diluted earnings per share of $1.78, which includes an out-of-period warranty expense.

“Both pricing and simplification will drive our operating margin expansion this year, while our focus on optimizing our planning and sourcing activities will contribute to our significant cash generation in the back half of the year.”

See the reconciliations of adjusted financial results and free cash flow to reported results included in the financial statements herein for the periods ended December 28, 2024 and December 30, 2023.

(1) Q1 2025 includes 80 basis points for an out-of-period warranty expense.

(2) Q1 2025 includes $0.18 for an out-of-period warranty expense.

Quarter Highlights

• Net sales increased due to growth in aerospace and defense businesses, while sales declined in the Industrial segment, in part due to divestitures.
• Operating margin increased due to benefits of simplification initiatives and improved operations, mostly offset by higher restructuring and other charges. Adjusted operating margin, excluding these charges, expanded across all of our segments.
• Commercial Aircraft operating profit includes an $8m out-of-period warranty expense.
• Diluted earnings per share increased due to the incremental operating profit from higher sales.
• Adjusted diluted earnings per share increased due to the incremental operating profit from both higher sales and margin enhancement across all of our segments.
• Free cash flow use was driven by working capital requirements.
• Bookings of $1.3bn were driven by record orders in Space and Defense and strong orders in Commercial Aircraft.
• Twelve-month backlog remained steady at $2.5 bn, as growth in Space and Defense was offset by declines in Industrial due to the impact of the divestitures and weaker foreign currencies.

“We have delivered a great quarter with strong sales growth, impressive bookings and solid margin enhancement,” said Pat Roche, CEO. “We are delivering value for our customers and are being rewarded with significant program wins. Our operational initiatives will deliver continued margin enhancement and strong free cash flow in the second half of 2025.”

Segment Results

Sales in the first quarter of 2025 increased compared to the first quarter of 2024, driven by defense growth in Space and Defense and in Military Aircraft, and by aftermarket demand in Commercial Aircraft. These increases were partially offset by a sales decline in Industrial. Space and Defense sales increased 8% to $248m, supported by broad-based demand. Military Aircraft sales increased 15% to $213m, driven by the ramp-up of activity on the FLRAA program and new production programs. Commercial Aircraft sales increased 14% to $221m, reflecting strong repair activity and initial provisioning of spares. Industrial sales decreased 7% to $228m, half due to the lost sales associated with our portfolio shaping activities.

Operating margin increased 10 basis points to 11.1% in the first quarter of 2025 compared to the first quarter of 2024. Space and Defense operating margin increased 50 basis points to 11.5% due to sales growth, partially offset by investments to prepare for upcoming major programs. Military Aircraft operating margin increased 20 basis points to 10.7%, driven by increased activity on the FLRAA program and lower research and development expenses, partially offset by an unfavorable sales mix. Commercial Aircraft operating margin increased 40 basis points to 11.0%, driven by higher levels of aftermarket sales, offset by a 340 basis-point out-of-period warranty expense. Excluding this warranty expense, Commercial Aircraft operating margin would have been 14.4% in the first quarter of 2025. Industrial operating margin decreased 60 basis points to 11.2%, due to restructuring and other charges.

Adjusted operating margin excludes $6 m and $2 m in restructuring and other charges in the first quarter of 2025 and 2024, respectively. Industrial adjusted operating margin increased 60 basis points to 13.2% in the first quarter of 2025 compared to the first quarter of 2024, driven by simplification initiatives.

Free Cash Flow Results

Free cash flow in the first quarter was a use of cash of $165m driven by working capital requirements. Physical inventories grew to support future sales growth. In addition, free cash flow was negatively impacted by the timing of collections and compensation payments.

2025 Financial Guidance

“Fiscal year 2025 is shaping up to be another strong year, with growth in sales, continued operating margin expansion and enhanced free cash flow generation,” said Jennifer Walter, CFO. “Both pricing and simplification will drive our operating margin expansion this year, while our focus on optimizing our planning and sourcing activities will contribute to our significant cash generation in the back half of the year.” (Source: BUSINESS WIRE)

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SPX CommTech, part of SPX Technologies Inc, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all. Formed by TCI and ECS, SPX CommTech’s Battlespace portfolio enables defence and security teams to detect, defeat and exploit RF signals to enhance communications intelligence (COMINT) and counter unmanned aerial systems (Counter-UAS). Additionally, its Tactical Data Link portfolio allows intelligence gathering agencies, special forces, emergency response, and security teams to securely and reliably transfer video and data between enabled-aircraft and ground teams over long distances for airborne Intelligence, Surveillance, Reconnaissance (ISR).

For more information visit www.tcibr.com and www.enterprisecontrol.co.uk

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Sponsored by SPX Communication Technologies (TCI & ECS)

 

www.tcibr.com

 

www.enterprisecontrol.co.uk

 

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16 Jan 25. Prescient Edge Corporation (PEC) announced its acquisition of Edge Analytic Solutions (EAS), significantly enhancing the company’s portfolio of intelligence analytics solutions it offers its current and future Government customers. The acquisition combines EAS’s breakthrough analytics technology with PEC’s mature RD&E and C5ISR practice.

“EAS was born out of a need for advanced intelligence tools that focus on the vast amounts of data available today,” said Alexander Granados, Prescient Edge CEO. “We are proud to have helped develop this enterprise into a trusted instrument that aids our nation’s top defenders in making informed decisions, and we are excited to expand our technology solutions as it joins us as a full member of the PEC family.”

Since its establishment in 2019 as a Small Business Administration-approved Mentor-Protégé joint venture, EAS has specialized in advancing the practice of intelligence analysis and creating advanced analytic tools that improve data quality and increase efficient use of data.  In today’s world where threats continuously evolve, EAS’s specialties have revolutionized how defense decision-makers access and utilize critical intelligence data.

Within months of its formation, EAS won a prime contract award in the restricted pool of the SIA 3 IDIQ as well as its first task order under that IDIQ. In its five years of existence, it has won 14 task orders with a total contract value of nearly $1bn, supporting vital missions at Space Command (SPACECOM), Army Intelligence (INSCOM) and the Defense Intelligence Agency (DIA), among others. EAS will continue to compete for SIA 3 task orders in the unrestricted pool and for other contract awards across the Defense Intelligence Enterprise (DIE).

The acquisition strengthens PEC’s position in defense intelligence, expanding its capabilities in data science, systems integration, and C5ISR services. PEC also offers intelligence analysis and operational support, including geospatial, scientific, and technical analysis, counterintelligence support, and special mission training.

About Prescient Edge

Prescient Edge Corporation (PEC) is a veteran-owned C5ISR technology and intelligence solutions business dedicated to developing / deploying innovative, AI-driven tools to advance critical national security missions. PEC’s team of experts specializes in full-spectrum intelligence analysis, operational support, and unmanned systems coordination to enhance U.S. government initiatives across land, air, sea, and space. (Source: PR Newswire)

 

16 Jan 25. Micross Components, Inc. (“Micross” or the “Company”), a leading provider of high-reliability microelectronic product and service solutions for aerospace, defense, space, medical and industrial applications and a portfolio company of Behrman Capital, today closed the acquisition of Integra Technologies (“Integra”). Integra is an Outsourced Semiconductor Assembly and Test (OSAT) post-processing provider focused on high-reliability applications and end markets, headquartered in Wichita, Kansas. The acquisition of Integra further positions Micross as a leader in United States-based OSAT services and further broadens Micross’ portfolio of high-reliability microelectronic services and products.

Integra Technologies is a leading U.S.-based provider of comprehensive semiconductor assembly, testing, and qualification services. With over 40 years of industry expertise, the company specializes in delivering end-to-end solutions that help customers streamline their production processes while ensuring high-quality, cost-effective products. Integra Technologies’ services include die preparation, packaging and assembly, electrical testing, reliability and qualification, and counterfeit detection, all performed in their state-of-the-art facilities located in Wichita, KS and Milpitas, CA. Their commitment to U.S.-based operations ensures faster time-to-market, greater IP security, and reduced complexities compared to offshore suppliers.

Focused on industries such as communications, military, medical, and automotive, Integra Technologies serves clients with highly specialized needs, offering customized solutions for complex semiconductor requirements. The company’s reputation for reliability and expertise has made it a leading OSAT service provider in the U.S., trusted by hundreds of customers looking to bring innovative, high-performance products to market.

Micross’ acquisition – the tenth under Behrman Capital’s ownership and sixth since consummating a continuation fund transaction in February of 2022 – continues to build on the strategic priorities for the Company, namely enhancing Micross’ semiconductor assembly, test and services capabilities. The acquisition also expands Micross’ geographic footprint in the U.S., and broadens the Company’s presence in medical and other high-reliability end markets, better positioning the Company for future growth opportunities.

Vince Buffa, Chairman and CEO of Micross, said, “We are excited to welcome Integra Technologies to the Micross family, as their proven expertise in semiconductor assembly and testing will augment our capabilities and accelerate our ability to deliver cutting-edge solutions to our customers. This acquisition aligns perfectly with our commitment to providing high-quality U.S.-based services and advancing innovation in the semiconductor industry. Together, we look forward to pursuing new business opportunities and expanding our reach in high-growth markets.”

Brett Robinson, CEO and President of Integra Technologies, said, “This is an exciting day for Integra, and we are pleased to join the Micross team because of their high-quality reputation and broad technology portfolio. This strategic development will provide additional opportunities for innovation and advancement.”

Simon Lonergan, Managing Partner of Behrman Capital, said, “Micross’ acquisition of Integra Technologies enhances the combined company’s strategic position in the high-reliability microelectronics market. Together with Integra, the Micross platform will continue to offer a growing and market-leading portfolio of solutions to customers with constantly evolving needs. With Integra’s expertise and U.S.-based capabilities, Micross can deliver even greater value through faster turnaround times, continued high quality, and more reliable solutions. We look forward to continuing to work with management to identify additional opportunities to drive growth at Micross.”

About Micross

Micross is a provider of advanced, high-reliability microelectronic products and services. With broad authorized access to die & wafer suppliers, an extensive portfolio of hi-rel power, RF, optoelectronics, memory, data bus, logic, and SMD/5962 qualified products, and comprehensive advanced packaging, assembly, modification, upscreening, and test capabilities, Micross is uniquely positioned to provide differentiated high-reliability solutions, from bare die, to fully packaged devices including hermetic ICs/MCMs, PEMs, ASICs, FPGAs, and PCBs, to complete program lifecycle sustainment. For more than 45 years, Micross has been a trusted source for the aerospace, defense, space, medical, energy, communications, and industrial markets. For more information about Micross, please visit www.micross.com and follow us on LinkedIn.

About Behrman Capital

Based in New York City, Behrman Capital was founded in 1991 by Grant G. and Darryl G. Behrman. The firm invests in management buyouts, leveraged buildups and recapitalizations of established growth businesses. The company’s investments are focused in three industries: Defense and Aerospace, Healthcare, and Specialty Industrials. The firm has raised $4.1 billion since inception and is currently investing out of its seventh fund. For more information, please visit www.behrmancap.com.

About Integra

Integra Technologies is the largest U.S. OSAT company providing semiconductor back-end services to companies worldwide. For 40 years, Integra has provided packaging, assembly, and test services to more than 500 customers with complex requirements, such as aerospace, medical, and defense. The employee-owned company’s headquarters is in Wichita, with operations in Wichita and Silicon Valley. www.integra-tech.com

(Source: PR Newswire)

 

16 Jan 25. SRT – A technology stock gaining momentum.

A global leader in technology used to track maritime vessels has returned to profit and should see earnings surge as a bumper £334m order book is delivered. First-half revenue up from £5.5mn to £25.5m

• Pre-tax profit of £2.5m, up from a loss of £4.6m
• Four new contracts signed worth £182m
• £334m active order book
• £1.2bn pipeline of contract opportunities

Aim-traded SRT Marine Systems (SRT:48.5p), a global leader in technology used to track maritime vessels, has announced a return to profit and released a strong trading outlook.

In the six months to 31 December 2024, SRT’s systems business, which provides a sophisticated marine domain awareness (MDA) integrated AI-driven maritime surveillance system to sovereign agencies such as coast guards and fishing agencies, generated revenue of £21mn. This was derived from follow-on and recurring projects with three existing customers, as well as initial milestones on a significant £170mn contract signed in October 2024 that is delivering an integrated maritime surveillance system for the Kuwait government (‘A marine technology company building momentum’, 7 October 2024).

The contract momentum continues to build, too. After the period end, SRT has been awarded a follow-on contract worth $15mn (£12.3mn) for the second phase of a three-phase $40mn project with a Middle East Border Agency. It is expected to start this month. In addition, significant progress is being made towards finalising the inter-governmental project financing for a £140m contract with Indonesian maritime security agency Bakamla. Implementation is expected to commence in the first six months of 2025.

This means that the systems business will have £334mn of active system projects (including £21m delivered in the latest results), all of which are scheduled for implementation over the coming two years. Moreover, some of the contracts have subsequent ongoing support contract periods of between five and 10 years. In addition, chief executive Simon Tucker flags up a £1.2bn pipeline of contract opportunities that should significantly improve revenue and earnings visibility in future years.

It’s worth noting that the group’s transceivers division contributed first-half revenue of £4.5m. This business provides marine navigation safety devices to a global network of more than 5,000 distribution partners who target the commercial and leisure vessel markets, as well as port and waterway authorities. Divisional revenue in the first six months of 2025 could be 50 per cent higher given seasonal demand from the US boating market, as well as the first deliveries of the group’s recently launched NEXUS VHF communications transceiver. Digitisation of waterway navigation, national automatic identification system (AIS) mandates and greater regulation are key drivers of demand.

Last autumn, SRT raised £8.5mn at 35p a share in an oversubscribed equity raise which I advised participating in. At the same time, the group entered into an arrangement with major shareholder Ocean Infinity, a marine technology company specialising in the development and deployment of robotics for large-scale, subsea data acquisition.

Specifically, Ocean Infinity provided SRT with a $21.4m guarantee to enable the group to issue a contract performance bond in support of the $213mn Kuwait contract. SRT expects to replace the guarantee through a combination of its own resources and the UKEF export guarantee programme in due course. Excluding the $21.4m cash held in escrow in support of that contract, SRT held gross cash of £4.5mn at the half-year-end and had £12.3mn outstanding on a three-year secured loan note facility which carries an interest rate of 8-12 per cent, and an equipment loan of £4mn, which has an interest rate of 4 per cent.

Although house broker Cavendish has yet to release earnings forecasts, SRT should be on course to deliver more than £100mn of revenue in the 2025-26 financial year when the Kuwait and Indonesian contracts are both up and running.

Of course, overheads will rise, too, as these huge contracts are implemented. However, a gross profit of £36n-£38m on that level of revenue seems achievable to underpin an operating profit of around £20mn. SRT has a market capitalisation of £121mn, so my financial models indicate that the group is being valued on less than seven times my operating profit estimate to enterprise valuation for the 2025-26 financial year. That’s a modest multiple for a high-growth business and one that suggests my 75p target price could prove conservative. Buy.

(Source: Investors Chronicle)

 

16 Jan 25. Rcapital sells Trac Precision Solutions following highly successful return to growth and profitability. Private investor, Rcapital, has sold Crewe-based Trac Precision Solutions Ltd (TRAC), which designs and manufactures precision engineered engine parts that maximise engine performance, efficiency and reliability for the defence and aerospace sectors, to PTC Industries Ltd, a leading player in the engineering sector based in India.  This follows a highly successful return to profitability and growth for Trac.

Rcapital acquired Trac in 2022 from its previous US corporate and private equity owners following a period of underperformance and established it as an independent entity. Rcapital worked closely with the existing management team led by Liam Bevington, Managing Director, to undertake a comprehensive reconfiguration of all aspects of its operations and introduce a new corporate identity to underline its newfound independence.

Rcapital also facilitated significant investment in innovation with major machinery upgrades.  Over the past two years, Trac has continued to serve its blue-chip client base thanks to operational excellence and best in class engineering and has secured significant new orders. As a result, the business has delivered sustainable revenue growth and profitability.

Ashley Reek, Partner at Rcapital, commented: “This has been a fantastic success story for both Trac and Rcapital.  It is also a prime example of our growing track record in successful corporate carve-outs. We saw the potential in Trac – not just in untangling the complexities of separating it from its previous owner, but in its long-term future.

“Central to this success was recognising Liam Bevington’s leadership potential within the senior team. His vision and drive to grow the business stood out, and we supported him with expert operators to navigate the challenges and deliver transformation. Today, Trac is thriving, with a clear path ahead for sustained growth.”

Liam Bevington, Managing Director of Trac Precision Solutions, said: “We are proud of what we have accomplished under Rcapital’s two-year stewardship.  The team is extremely skilled at what they do and worked with us in a collaborative way to help us turn the business around, trusting our industry expertise and knowledge.  Rcapital empowered us to make decisions that would help drive the business forward.”

“Now Trac is extremely well-placed for the future.  It is a robust, agile and sustainable business which has the full support of its new owner, PTC Industries, who are committed to taking it to the next level.”

Rcapital has a strong track record in the aerospace, defence and precision engineering sectors with its investments in FGP, Bromford Precision Solutions, Nasmyth Group and Surface Technology International.

Rcapital was advised by Browne Jacobson LLP (Legal) and Kroll (Corporate Finance).

 

15 Jan 25. Hive Systems, a leader in cybersecurity innovation, announced today the launch of its newest business line, Hive Systems Defense Solutions. This team will focus on providing expert guidance and services around Cybersecurity Maturity Model Certification (CMMC) including readiness and remediation, and upon authorization by the Cyber-AB, will conduct CMMC certification assessments as a Certified Third-Party Assessment Organization (C3PAO). To lead this strategic expansion, Hive Systems is proud to promote Katie Dodson to President of Hive Systems Defense Solutions.

This new business line demonstrates Hive Systems’ commitment to addressing the critical cybersecurity compliance needs of defense contractors and organizations working with the U.S. Department of Defense (DoD). Hive Systems Defense Solutions will empower clients to meet CMMC requirements by offering tailored services, including comprehensive readiness assessments, remediation planning, and official CMMC assessments.

Hive Systems launches Hive Systems Defense Solutions led by Katie Dodson to deliver expert CMMC services and assessments

Katie Dodson’s appointment as President brings over a decade of cybersecurity expertise to the forefront of Hive Systems Defense Solutions. Katie’s impressive career includes contributions to both the public and private sectors, including Fortune 500 companies, the Department of the Air Force, the Department of Health and Human Services (HHS), and four years of distinguished service with the Defense Cyber Crime Center (DC3) under the DoD. Through her extensive experience with cybersecurity risk assessments and compliance frameworks, as well as threat intelligence analysis for the DoD, Katie brings a unique understanding of the threats to defense contractor networks hosting government data and the cybersecurity controls implemented to protect them.

Katie holds a Master of Science in Cybersecurity from the University of Maryland Global Campus and a Bachelor of Science in Accounting from the University of Maryland. She also holds numerous certifications including Certified Information System Security Professional (CISSP), Certified Information Systems Auditor (CISA), Certified CMMC Professional (CCP), and Lead Certified CMMC Assessor (Lead CCA).

Meeting the Needs of the United States

Hive Systems Defense Solutions will provide a comprehensive suite of services aimed at ensuring defense contractors achieve and maintain compliance with CMMC standards. Once authorized as a C3PAO, the team will conduct official CMMC certification assessments, ensuring defense contractors can secure and retain valuable DoD contracts. This strategic focus complements Hive Systems’ broader mission to provide smarter cybersecurity solutions for complex industries.

“Expanding Our Impact”

“We are thrilled to launch Hive Systems Defense Solutions and have Katie at the helm of this vital initiative,” said Alex Nette, CEO and Co-Founder of Hive Systems. “The growing demand for CMMC compliance in the defense sector aligns with the expertise of Hive Systems and Katie’s unparalleled leadership in cybersecurity. This new division solidifies our position as a trusted partner for defense organizations navigating compliance challenges.”

Katie Dodson added, “I’m honored to lead Hive Systems Defense Solutions. Our mission to deliver exceptional CMMC preparation and assessment services empowers defense contractors to succeed in a highly regulated and competitive environment. I’m excited to lead our talented team to ensure our clients achieve compliance and remain resilient to evolving threats.”

More information can be found at www.hivesystems.com/cmmc

About Hive Systems

Hive Systems provides smarter cybersecurity services with their trusted experts while delivering leading cybersecurity products with Audora, Derive, and QryptoCyber. Since 2018, Hive Systems has partnered with businesses to design tailored cybersecurity strategies that enhance existing investments and mitigate risks effectively. Through Hive Helps, the company extends pro bono services to qualified non-profit organizations and communities to ensure that limited resources don’t stand in the way of social progress. Hive Systems is headquartered in Richmond, Virginia and serves clients across the globe. (Source: PR Newswire)

 

16 Jan 25. SRT MARINE SYSTEMS PLC (AIM: SRT) (“SRT” or the “Company”) Trading Update – H1 FY25.

SRT Marine Systems plc (‘SRT’), a global provider of maritime domain awareness systems and technologies for security, safety and environmental protection is pleased to provide a trading update for the 6 month financial period ending 31st December 2024 (“H1 FY25”).

* H1 FY24 refers to the six month period ending 30 September 2023

Highlights

• Four new systems contracts signed worth £182m, three from existing customers, one from a new customer
• Post-period end, formal notice to proceed on further systems contract worth £12m
• New NEXUS transceiver launched to dealers in November 2024
• Over-subscribed placing of £8.5m completed to bolster balance sheet

H1 Financial and Operational performance

Unaudited group revenues for the first half are expected to be £25.5m, generating a profit before tax of approximately £2.5m. Gross cash balances as at 31st December 2024 were approximately £4.5m, excluding $21.4m held in escrow to support the provision of a systems project performance guarantee.

Our transceivers business which provides marine navigation safety devices generated revenues of approximately £4.5m. Sales were generated from our global network of over 5,000 distribution partners who target commercial and leisure vessel markets as well as port and waterway authorities with our specialist DAS product range. In November 2024 we officially launched our new NEXUS VHF communications transceiver to our distribution network and expect to commence shipments during the second half of this financial year.

In H2 FY25 we expect increased seasonal driven demand from the retro-fit and new-build delivery leisure boat market and to commence shipments of the new NEXUS radio systems. In the commercial vessel market, existing and new regulations that require vessels to fit and operate AIS transceivers will continue to drive demand, alongside several new national scale vessel fit mandates that are expected to commence during 2025. And the growing trend to digitise waterway navigation will see the continued purchase of our DAS systems.

Our systems business which provides the sophisticated SRT-MDA integrated Ai driven C5iSR maritime surveillance system to sovereign agencies such as Coast Guards and Fishing Agencies generated revenues of approximately £21m. This was derived from four separate customers, three of which are existing customers and came from follow on and recurring projects and the fourth was a new customer for which a system project worth £170m was signed in October 2024. During the period our systems business signed a total of four new system contracts worth approximately £182m, and post-period end received a formal notice of award for a further follow on contract worth £12m which is expected to commence this month upon completion of contract formalities. This is in addition to significant progress being made towards finalising the inter-government project financing for our £140m contract with Bakamla in Indonesia, with implementation now expected to commence in H2 FY25. As such going into H2 FY25 our systems business will have £334m of active system projects (of which approximately £21m worth has already been delivered in H1 FY25) all of which are scheduled for implementation over the coming 2 years, and some of which have subsequent ongoing support contract periods of between 5 and 10 years.

In addition to these contract conversions, driven by the global macro-trend of sovereigns wanting to digitise and dramatically enhance their understanding, oversight and management of their marine domains, we have a pipeline of specific new system opportunities from existing and new customers worth up to £1.2bn. We expect to continue to convert and grow this pipeline as the market for maritime domain awareness continues to develop.

Simon Tucker, SRT CEO commented; “This is a solid start to the year. The combination of our transceivers business, a £334m active contract book from multiple sovereign customers, each with long term system development plans and a £1.2bn pipeline of further prospects gives us significantly improved visibility over future financial performance. Both of our businesses are now well established and our future is underpinned by our portfolio of sophisticated technology and products, an established market position, and a global MDA market at the beginning of its growth curve.”

 

16 Jan 25. US defence industry braces for tech shake-up under Trump. American defence executives are braced for a Donald Trump return to the White House that could be more disruptive than his first term. (Source: Google/FT.com)

 

15 Jan 25. US defense contractor tells Musk panel that Pentagon bureaucracy is the problem. The CEO of one of the world’s biggest defense contractors, L3Harris Technologies, told President-elect Donald Trump’s government efficiency panel in a letter on Wednesday that the Pentagon’s huge contracting system is too slow and bureaucratic to meet threats posed by China and Iran and needs to be reformed. The letter, which was seen by Reuters, makes Melbourne, Florida-based L3Harris (LHX.N)one of the first big U.S. corporations to directly lobby Trump’s Department of Government Efficiency, calling for reforms that could boost corporate profits and speed Pentagon action. Companies normally pay lobbyists ms of dollars to advocate on their behalf. L3Harris ranks as the 10th largest global defense firm by revenue, with more than $15bn in annual defense sales. Trump created the efficiency panel, dubbed DOGE, following his November election, naming bnaire entrepreneur and Tesla CEO Elon Musk and former Republican presidential candidate Vivek Ramaswamy as its co-heads, with the aim to dismantle bureaucracy, cut regulations and restructure agencies. (Source: Reuters)

 

14 Jan 25. Dutch VC firm Keen raising 125 m euros for European defence fund. Keen Venture Partners said on Tuesday it was raising 125 m euros ($128m) for a fund focused on providing additional capital for growth to European defence startups.

“The changed geopolitical landscape has created a crucial need for Europe to become more self-sufficient at defence and safety,” partner Alexander Ribbink of the Amsterdam-based venture capital firm said in a statement.

The new fund will offer Series B funding – larger rounds of funding typically led by venture capitalists or growth equity investors – to firms in European NATO member countries, with a focus on drone and radar technology. Keen is an investor in Avalor AI, which makes software used to oversee complex military missions involving drones and is working with the Netherlands’ Ministry of Defence. Other Keen investments include cyber-threat intelligence firm EcleticIQ and radar perception firm PercivAI. ($1 = 0.9750 euros) (Source: Reuters)

 

14 Jan 25. Fincantieri has completed the acquisition of Leonardo’s Underwater Armaments and Systems (UAS) business line, finalised through the purchase of WASS Submarine Systems S.r.l. This strategic transaction enhances Fincantieri’s leadership in the naval defence sector and underwater domain.  As outlined in the preliminary agreement with Leonardo signed on May 9, 2024, and in accordance with the disclosed terms, Fincantieri has today paid 287 m euros, representing the fixed portion of the acquisition price. The total Enterprise Value of UAS, including the fixed component already paid, could reach up to 415m euros, subject to standard price adjustment mechanisms.  The acquisition integrates advanced expertise in underwater acoustic technologies and weapon systems. It strengthens Fincantieri’s capabilities in both military and civilian applications, particularly in critical infrastructure protection and cutting-edge maritime solutions.

Pierroberto Folgiero, Fincantieri’s CEO, commented, “The acquisition of WASS Submarine Systems represents a decisive step for Fincantieri in strengthening its technological leadership in the underwater domain, a crucial sector for the future of maritime security and technology. By integrating advanced expertise in acoustic and underwater weaponry systems, we have expanded our ability to develop innovative solutions for naval defence while ensuring the protection of critical underwater infrastructure, such as submarine cables and offshore energy facilities. This confirms our goal to lead the evolution of advanced ship technologies, responding to global challenges with entrepreneurship and strategic vision.”

 

13 Jan 25. Sentient Digital, Inc. (SDi), a leading provider of defense technology and engineering services, has acquired Maritime Surveillance Associates, Inc. (MSA), a developer of signal processing and mission reconstruction software for the U.S. Navy. The acquisition enhances SDi’s capabilities in SONAR and acoustics products for the U.S. Navy and partner nations, adding to its expertise in digital signal processing, mathematical modeling, and mission-critical software for undersea warfare (USW), anti-submarine warfare (ASW), and security operations.

The acquisition positions SDi to focus on key growth areas, including cloud-based advanced analytics, maritime security, and Foreign Military Sales (FMS). “We are excited about the opportunities this acquisition brings,” said Chris Mobley, President of SDi. “MSA’s technology perfectly complements our existing capabilities, strengthening our ability to deliver innovative solutions to the U.S. government and its allies. The evolution of our applications to leverage cloud architectures marks a significant step forward in supporting next-generation platforms and providing advanced data services for downstream customers.”

About Sentient Digital, Inc. (SDi):

Sentient Digital, Inc. (SDi) is a trusted prime contractor for the U.S. Department of Defense, specializing in cutting-edge systems engineering, integration, and R&D for the U.S. and partner nations. SDi’s expertise spans C4ISR, Air ASW, acoustics, and advanced processing systems. Its mission is to contribute to a safer tomorrow by strengthening defense and security capabilities across multiple domains. Learn more at www.sdi.ai or follow us on LinkedIn.

About Maritime Surveillance Associates, Inc. (MSA):

Maritime Surveillance Associates, Inc. (MSA) is a leader in signal processing and mission reconstruction software, providing specialized acoustics processing and advanced mission capabilities to the U.S. government. (Source: PR Newswire)

 

13 Jan 25. Comtech Telecommunications Corp. (NASDAQ: CMTL) (“Comtech” or the “Company”), a global communications technology leader, today reported financial results for its first fiscal quarter ended October 31, 2024. In addition, Comtech separately announced today that its Board of Directors (the “Board”) has named Ken Traub as President and Chief Executive Officer, effective immediately, in addition to his current role as Chairman, and that the Board and management team are undertaking a series of prompt and decisive actions to address the Company’s current challenges and build a stronger company for long-term. That press release can be found on the Company’s investor relations website.

Consolidated Financial Results

• Net sales of $115.8m;
• Net bookings of $127.9m, representing a book-to-bill ratio of 1.10x;
• Gross margin of 12.5%;
• Operating loss of $129.2m, net loss of $148.4m and Adjusted EBITDA loss (a Non-GAAP measure) of $19.4m;
• Funded backlog of $811.0m; and
• Revenue visibility of approximately $1.6bn.

Business Highlights

• Awarded a sole source contract valued at over $50.0m by the U.S. Navy Information Warfare Systems Command;
• Awarded a contract renewal valued at over $30.0m for critical enhanced 911 call routing services for one of the largest U.S. wireless carriers;
• Awarded a large, multi-year location-based services maintenance and support contract valued at over $19.0m for one of the largest U.S. wireless carriers;
• Launched a new Digital Common Ground (“DCG”) portfolio of modems for U.S. government and commercial customers; and
• Subsequent to quarter end, appointed Daniel Gizinski as President of the Satellite & Space Communications (“S&S”) segment, adding deep leadership expertise in satellite communications engineering, operations and product strategy.

Mr. Traub commented, “While Comtech’s recent historical performance has been unsatisfactory, the Company has great assets, including its people, technologies, reputation, customers and relationships. Since I joined the Company as Executive Chairman about six weeks ago, I have learned a lot, which gives me confidence that we can overcome the challenges and create new opportunities to strengthen the business and drive value. We are implementing a comprehensive set of initiatives to better position Comtech for the future including improving operational discipline, streamlining operations, supporting profitable growth initiatives, undertaking a broad review of strategic alternatives and strengthening the capital structure. I am honored to expand my role as President and CEO today, and look forward to leading the Company into a stronger and brighter future.”

Consolidated Results Commentary

Consolidated net sales of $115.8m in the first fiscal quarter declined 23.8% compared to the prior year period, primarily due to the performance of the S&S segment and partially offset by growth in the Terrestrial & Wireless Networks (“T&W”) segment.

Consolidated net bookings were $127.9m in the first fiscal quarter, a decrease of 31.1% compared to the prior year period. The book-to-bill ratio in the quarter was 1.10x, as compared to 1.22x in the prior year period. This was driven by several large awards in the prior year period, including funding from the U.S. Army related to the GFSR and EDIM contracts and an order from an international customer and reseller of the Company’s troposcatter solutions.

The first fiscal quarter results also reflect Comtech’s prior decisions to divest of its high-power solid-state amplifier (“PST”) and steerable antenna (“CGC”) product lines in fiscal 2024.

Gross profit was $14.5m, or 12.5% of consolidated net sales, as compared to $47.9m, or 31.5% of consolidated net sales, in the prior year period. This was driven by a large, high-margin troposcatter sale in the prior year period; higher-than-expected costs at completion for certain nonrecurring engineering-related projects in the satellite ground infrastructure product line; and late delivery penalties related to an international MTTS troposcatter solutions order. Gross profit in the more recent period was also impacted by a non-cash charge of $11.4m related to the write-down of certain inventories in the S&S segment resulting from the Company’s review of its product portfolio, which is expected to improve the Company’s profitability in future periods.

Operating loss in the first fiscal quarter was $129.2m, as compared to operating income of $2.1m for the prior year period, and net loss in the first fiscal quarter was $148.4m, as compared to $1.4m in the prior year period. This was primarily due to a non-cash goodwill impairment charge of $79.6m in the S&S segment; $17.9m of restructuring costs (including the aforementioned inventory write down); and a non-cash charge of $17.4 m to fully reserve for an unbilled receivable contract asset related to an international customer and reseller of the Company’s troposcatter solutions, among other things.

Adjusted EBITDA loss (a non-GAAP measure) was $19.4m in the first fiscal quarter, compared to Adjusted EBITDA income of $18.4m in the prior year period.

Backlog was $811.0m as of October 31, 2024, compared to $798.9m as of July 31, 2024.

Revenue visibility, measured as the sum of funded backlog and the total unfunded value of certain multi-year contracts, was approximately $1.6bn at the end of the quarter.

Satellite and Space Communications Segment Commentary

Net sales in the S&S segment were $58.9m in the first fiscal quarter, a decrease of 42.5% compared to the prior year period. This was driven by a decline in sales of troposcatter and SATCOM solutions; the impact of the PST divestiture completed in November 2023; and the impact of the CGC divestiture initiated in the fourth quarter of fiscal 2024. The decrease also reflects the impact of late delivery penalties related to an international MTTS troposcatter solutions order.

Net bookings in the S&S segment were $58.4m in the first fiscal quarter, a decrease of 57.4% compared to the prior year period. The book-to-bill ratio in the quarter was 0.99x, as compared to 1.34x in the prior year period.

Key S&S contract awards and product launches during the first fiscal quarter included:

• Securing in excess of $16.0m of funded orders from the U.S. Army calling for the supply of VSAT equipment and related services;
• Receiving more than $8.5m in incremental funding related to the Company’s U.S. Army EDIM contract;
• Awarded over $6.0m in funded orders from a new international customer for certain frequency-type power amplifiers;
• Awarded a production order, valued in excess of $5.0 m, by an existing customer deploying a new LEO constellation (deliveries are anticipated to begin in the mid-2025 timeframe);
• Awarded a sole source contract, valued in excess of $50.0 m, by the U.S. Navy Information Warfare Systems Command (the contract has a four-year period of performance, and funded orders received to date are valued at approximately $2.0m);
• Awarded approximately $2.0m in funded orders from a new international customer of the Company’s ELEVATE™ networking platform; and
• Launched the DCG platform, based on the proven success of the Company’s previous software-defined modem platforms.

S&S segment operating loss was $118.8m in the first fiscal quarter, compared to operating income of $10.1m in the prior year period, and net loss in the first fiscal quarter was $119.4m, as compared to net income of $9.3 m for the prior year period. This was driven by a non-cash goodwill impairment charge of $79.6m; a non-cash charge of $17.4m to fully reserve for an unbilled receivable contract asset related to an international customer and reseller of the Company’s troposcatter solutions; $13.8m of restructuring costs (including the aforementioned non-cash charge related to inventory write-downs); $3.0m of amortization of intangibles; and lower net sales and gross profit in this segment.

Adjusted EBITDA loss in the S&S segment was $21.1m in the first fiscal quarter, compared to Adjusted EBITDA of $15.1m in the prior year period, driven by significantly lower net sales and gross profit, and higher selling, general and administrative expenses (due to the aforementioned $17.4m non-cash charge related to an allowance for doubtful account), offset in part by lower research and development expenses.

At quarter end, the S&S segment had $278.4m in funded backlog.

Subsequent to quarter end, Daniel Gizinski was appointed as President of the S&S segment, bringing to Comtech over 15 years of experience in satellite communications engineering, operations, product strategy and executive management. He oversees all aspects of this segment, including product development, operations and market expansion.

Terrestrial & Wireless Networks Segment Commentary

Net sales in the T&W segment were $56.9m in the first fiscal quarter, an increase of 14.9% as compared to the prior year. This growth was driven by higher net sales of call handling and Next Generation 911 (“NG-911”) services, partially offset by lower net sales of location-based solutions.

Net bookings in the T&W segment were $69.4m in the first fiscal quarter, an increase of 43.4% compared to the prior year period. The book-to-bill ratio in the quarter was 1.22x, as compared to 0.98x in the prior year period.

Key T&W contract wins and renewals during the first fiscal quarter included:

• Awarded a contract renewal by one of the largest U.S. wireless carriers, valued in excess of $30.0m, for critical enhanced 911 call routing services;
• Awarded a large, multi-year contract, valued at over $19.0m, for location-based maintenance and support services for one of the largest U.S. wireless carriers;
• Awarded a contract by a municipality located in British Columbia, Canada, valued at more than $2.0m, for an NG-911 Guardian call handling solution;
• Awarded over $1.0m in funding to continue servicing certain PSAPs in a New England state; and
• Awarded over $1.0m of funding related to an NG-911 deployment in South Carolina.

The T&W segment recorded operating income of $5.3m in the first fiscal quarter, an increase of 31.6% compared to the prior year period, and net income of $5.3m in the first quarter, an increase of 28.9% compared to the prior year period. Adjusted EBITDA was $11.0m, an increase of 14.0% compared to the prior year period. This growth reflects higher net sales, partially offset by a lower gross profit percentage in this segment.

At quarter end, the T&W segment had $532.6m in funded backlog.

Cost-Savings and Profit Improvement Initiatives

As announced separately today, the Company is conducting a thorough review of processes, product lines, staffing levels and cost structures to identify actions that are expected to meaningfully reduce costs, enable a more efficient and effective organization and improve its cash conversion cycle. To that end, the Company notes that since July 2024, it has significantly progressed with its plans to wind down its steerable antenna operations located in the U.K. (GAAP operating losses related to this product line in fiscal 2024, 2023 and 2022 were $32.3m, $8.2m and $9.9m, respectively). In addition to discontinuing approximately 70 products within the Company’s satellite ground infrastructure product line to focus on higher margin revenue opportunities, the Company has also reduced its global workforce by approximately 13% since July 31, 2024, which represents approximately $26m in annualized labor costs. Severance associated with such actions approximated $2.8m, of which $1.1 m will be expensed in the second quarter of fiscal 2025.

Liquidity

Comtech’s cash and cash equivalents were approximately $30m as of both October 31, 2024 and January 10, 2025. As previously disclosed, on June 17, 2024, the Company entered into a new $222.0m credit facility. The credit facility was subsequently amended on October 17, 2024, to, among other things, suspend financial covenant testing for the Company’s first fiscal quarter ended October 31, 2024. On October 17, 2024, the Company also entered into a $25.0m subordinated credit facility.

As of quarter end, aggregated outstanding debt under these two credit facilities was approximately $225m, before consideration of GAAP related adjustments to reflect offsetting deferred financing costs and discounts related to each facility. Over the next twelve months, commencing with its fiscal quarter ending January 31, 2025, when financial covenant testing resumes, the Company believes that it will not be able to comply with one or more of these covenants. As a result, such debt was presented as “current” on the Company’s condensed consolidated balance sheet as of October 31, 2024.

Strengthening the balance sheet is a top priority for the Company. This includes lowering investments in working capital, reducing debt levels and cash interest costs and regaining compliance with financial covenants. The Comtech Board is confident that Mr. Traub possesses the requisite skill set, track record and experience to oversee these initiatives.

As announced in a separate press release today, the Company’s Board is conducting a comprehensive review of strategic alternatives. This process will include evaluating capital-raising and de-levering opportunities.

Outlook

Comtech is not providing guidance.

 

13 Jan 25. Comtech Telecommunications Corp. (NASDAQ: CMTL) (“Comtech” or the “Company”), a global communications technology leader, today announced that its Board of Directors (the “Board”) has named Ken Traub as President and Chief Executive Officer, replacing John Ratigan effective immediately. Mr. Traub joined the Comtech Board on October 31, 2024 and became Executive Chairman on November 27, 2024.

Mr. Traub is leading a comprehensive transformation of Comtech. Some highlights of this transformation include:

• Operational Discipline and Rightsizing. Comtech is taking decisive action to improve processes, streamline product lines, optimize staffing and sharpen its organizational focus. These actions are expected to result in significant cost savings and working capital efficiencies, particularly in the Company’s Satellite & Space Communications (“S&S”) segment, and position Comtech to generate sustainable positive cash flow.
• Support and Grow Successful Business Units. The Company’s Terrestrial & Wireless Networks (“T&W”) segment is poised for continued strong growth, driven by the need for nontraditional methods to request emergency help from new devices and the segment’s new initiatives in public safety technologies. The growth of the Company’s carrier business will be supported by its latest cloud-agnostic 5G passive and emergency location, messaging and alerting services. In the S&S segment, Comtech is strong in designing, manufacturing and supporting sophisticated communications equipment for both defense and commercial users that rely on the Company to provide mission-critical communications infrastructure. Comtech will prudently invest in and support these successful businesses and capitalize on opportunities to build and monetize these valuable assets.
• Strategic Alternatives Process. The Comtech Board, under Mr. Traub’s leadership, will conduct a comprehensive review of strategic alternatives and explore a range of potential transactions to enhance Comtech’s strategic focus and strengthen the Company’s balance sheet. This process is a broadening of the previously announced review of strategic alternatives for the T&W segment and will include various alternatives for the S&S segment.
• Strengthening the Capital Structure. Comtech had available liquidity of approximately $30 m of cash and equivalents as of both October 31, 2024 and January 10, 2025. The Company is positioned to generate positive cash flow over the coming months through implementation of the initiatives described above and will consider opportunities to strengthen its capital structure.

Mr. Traub commented, “While Comtech’s recent historical performance has been unsatisfactory, the Company has great assets, including its people, technologies, reputation, customers and relationships. Since I joined the Company as Executive Chairman about six weeks ago, I have learned a lot, which gives me confidence that we can overcome the challenges and create new opportunities to strengthen the business and drive value. We are implementing a comprehensive set of initiatives to better position Comtech for the future including improving operational discipline, streamlining operations, supporting profitable growth initiatives, undertaking a broad review of strategic alternatives and strengthening the capital structure. I am honored to expand my role as President and CEO today, and look forward to leading the Company into a stronger and brighter future.”

“The Board is fully supportive of Ken’s leadership and committed to his strategy that will deliver immediate and necessary improvements for Comtech,” said former Army Chief Information Officer, Lieutenant General (Retired) Bruce T. Crawford, Lead Independent Director of the Comtech Board.

There can be no assurance that the exploration of strategic alternatives will result in a transaction or other strategic changes or outcomes. There is no timeframe for the conclusion of the process, and the Company does not intend to comment further regarding this matter unless and until further disclosure is determined to be appropriate or necessary.

About Kenneth H. Traub

Mr. Traub has served as a director on Comtech’s Board since October 2024 and was named as Executive Chairman in November 2024. He is a visionary and transformational corporate leader with a successful track record of building sustainable shareholder value. Mr. Traub has over 30 years of experience as a Chairman, CEO, director and active investor with a demonstrated record of accomplishment in driving strategic, financial, operational and governance improvements. Mr. Traub is adept at managing business challenges, executing turnarounds, optimizing capital allocation, driving operational improvements, implementing M&A and other strategic initiatives and capitalizing on strategic growth opportunities. Mr. Traub received a BA from Emory College in 1983 and an MBA from Harvard Business School in 1988.

 

10 Jan 25. XTI Aerospace, Inc. (Nasdaq: XTIA), (“XTI” or the “Company”), a pioneer in advanced aircraft design, today announced the closing of its previously announced best-efforts offering of 1,454,546 shares of common stock, priced at-the-market under Nasdaq rules at an offering price of $13.75 per share, on a post 1-for-250 reverse stock split basis. Gross proceeds from the offering were approximately $20,000,000, before deducting the placement agent’s fees and other offering expenses. All the shares in the offering were offered by the Company.

The Company intends to use the net proceeds from the offering primarily for working capital and general corporate purposes.

ThinkEquity acted as sole placement agent for the offering.

The securities were offered and sold pursuant to the Company’s currently effective shelf registration statement on Form S-3 (File No. 333-279901), including a base prospectus, filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 31, 2024 and declared effective on June 18, 2024. The offering was made by means of a prospectus supplement and prospectus which have been filed with the SEC and available on the SEC’s website at www.sec.gov. You should read the applicable prospectus supplement and prospectus for more complete information about the Company and the offering. You may obtain these documents free of charge by visiting the SEC website at www.sec.gov. Alternatively, you may obtain copies by contacting ThinkEquity, 17 State Street, 41st Floor, New York, New York 10004. (Source: PR Newswire)

 

13 Jan 25. Filtronic plc Trading Ahead of Expectations. Filtronic plc (AIM: FTC), the designer and manufacturer of products for the aerospace, defence, space and telecoms infrastructure markets, is pleased to announce that order intake for delivery in the current financial year is at a higher rate than anticipated. Consequently, the Board now expects to deliver stronger results for the full year than the recently upgraded market expectations.

 

07 Jan 25. Gilat acquires Stellar Blu—$9m in SkyEdge orders—$18+m in IFC orders. Gilat Satellite Networks Ltd. (Nasdaq: GILT, TASE: GILT) has closed their acquisition of Stellar Blu Solutions LLC, a U.S.-based provider of next-generation SATCOM terminal solution such as the Sidewinder terminal. Gilat expects the firm’s annual revenues from Stellar Blu to range from between $120 and $150m in 2025, based on Stellar Blu’s robust backlog. In addition, the acquisition is expected to be accretive on non-GAAP results for 2025. Furthermore, the Company estimates that, once Stellar Blu reaches its target manufacturing capacity, which Gilat expects will occur during the second half of 2025, Stellar Blu’s EBITDA margin is expected to be above 10%.

The acquisition’s consideration at closing was $98m in cash, as adjusted. Although the Company had over $115m in Net Cash at the end of 2024, the Company used a new secured credit line of $100m from HSBC Bank USA and Bank Hapoalim to fund $60m of the consideration paid at closing. The remaining $40m, from the secured credit line, along with the Company’s resources, is expected to be called upon and cover potential earn-out payments. The three year loan will bear interest at a rate of SOFR plus 2.6% to 3.35%.

Funding this acquisition through a combination of the Company’s resources and a secured credit line will provide Gilat with additional flexibility given the opportunities in the market.

The consideration payment in connection with the acquisition may increase by up to an additional $147m in cash, conditioned upon the acquired business achieving operational and strategic business milestones, during the first two years that follow the signing of the agreement.

“This acquisition is a pivotal step in our strategy to expand Gilat’s presence in the growing In-Flight Connectivity (IFC) market,” said Adi Sfadia, Gilat’s CEO. “We expect Stellar Blu’s cutting-edge technologies, combined with Gilat’s advanced IFC solutions to position us as a market leader for both commercial and business aviation, as well as adjacent high-end mobility markets that are ideal for Electronically Steered Antenna (ESA) applications. With the increasing demand for free, seamless, high-quality in-flight Wi-Fi and Stellar Blu’s pioneering expertise in multi-orbit LEO and GEO IFC solutions, this acquisition enhances Gilat’s ability to meet the most demanding service level agreements in the industry, opening up new growth opportunities in aviation and beyond. We expect to ship hundreds of Stellar Blu’s Sidewinder terminals during the upcoming quarters.”  (Source: Satnews)

 

11 Jan 25. Hadean to cut ties with blacklisted Chinese tech giant, urgently seeks new investors after Pentagon blocks US officials from dealings with Tencent.

A leading British defence start-up is scrambling to cut ties with a Chinese investor that was last week blacklisted by the Pentagon.

Hadean, which makes artificial intelligence (AI) and simulation tools used by the Ministry of Defence and Nato, is urgently seeking new investors to replace Tencent.

The Chinese technology giant was last week placed on a Pentagon blacklist by US defence officials, which labels Tencent a “military” company.

The US said the designation was aimed at “highlighting and countering the People’s Republic of China’s military-civil fusion strategy”.

It blocks US officials from having dealings with Tencent from next year.

Hadean said it was “in the process of replacing Tencent as a shareholder” given “the geopolitical-situation has changed since their investment”.

Tencent holds a roughly 5pc stake in the business, according to Companies House documents.

Hadean previously raised $30m (£24m) from investors including Tencent, the government’s Future Fund and In-Q-Tel, an investment firm backed by America’s CIA. (Source: Daily Telegraph)

 

10 Jan 25. Astronics Corporation Announces Preliminary Unaudited Revenue for Fourth Quarter 2024 and Initiates Revenue Guidance for 2025.

• Preliminary unaudited fourth quarter revenue was $208m to $210m
• Full year 2024 preliminary unaudited revenue was approximately $796m, an increase of 15.5% over 2023
• Initial 2025 revenue guidance established at $820m to $860m

Astronics Corporation (Nasdaq: ATRO), a leading provider of advanced technologies for global aerospace, defense and other mission critical industries, announced its fourth quarter 2024 preliminary unaudited revenue was approximately $208m to $210m which was the upper end of the Company’s guidance range. At the midpoint of this announced range, preliminary revenue was up 7.0% over the prior-year period and up 2.6% over the trailing third quarter. Full year preliminary unaudited revenue for 2024 was approximately $796m, up 15.5% over the prior year.

Preliminary bookings in the quarter were $199m, bringing orders for the full year to approximately $811m.

The Company also provided preliminary revenue expectations for 2025 of $820m to $860m representing an increase of approximately 6% over 2024 at the mid-point of the range.

Peter J. Gundermann, Chairman, President and CEO, commented, “We ended the year on a strong note despite sluggish OEM production rates and the Boeing strike. We have achieved average annual revenue growth of over 20% the last three years and have finally returned to pre-Covid revenue levels. We expect 2025 will be another year of solid growth, though more modest, which will allow us to focus on expanding margins through the year and strengthening cash flow.”

The preliminary unaudited revenue result for the fourth quarter and full year 2024 presented herein are based on information available to management as of the date of this release. These preliminary unaudited results are subject to changes, that may be material, in connection with completion of the Company’s standard year-end closing procedures and the completion of our independent registered public accounting firm’s year-end audit.

Other Updates

The damages trial judgment against the Company related to the ongoing patent infringement case in the U.K. has not yet been issued. The Company expects the judgment to be issued early this year, but does not have specific information regarding timing. In addition, depending upon the outcome, the Company expects to appeal if permitted by the U.K. High Court of Justice.

Deliveries to Boeing following the end of the strike have been slowly resuming at a relatively low rate. (Source: BUSINESS WIRE)

 

10 Jan 25. Anduril Acquires Radar and Command-and-Control Businesses of Numerica Corporation. Acquisition Brings Radar Development in House; Bolsters Anduril’s Air & Missile Defense Solutions. Anduril is acquiring the Radar and Command and Control businesses of Numerica Corporation. This transaction expands Anduril’s mission systems solutions to include advanced signal processing and tracking algorithms and software as well as advanced radar systems to bolster Anduril’s suite of air and missile defense capabilities. By integrating Numerica’s radar and battlespace awareness systems into the Anduril Lattice platform — a unified system connecting sensors, effectors, and systems — Anduril will deliver solutions designed to operate effective full force combat operations. Founded in 1996, Numerica Corporation specializes in ballistic missile defense systems, air defense sensors like compact radars, and advanced battlespace awareness and command and control software. These capabilities will now become part of Anduril’s suite of mission systems and advanced command and control solutions. Numerica’s proprietary radar technology, including its Spyglass and Spark radars, is designed for short-range air defense and vehicle protection missions and is actively deployed by the U.S. Department of Defense. Numerica’s Spyglass and Spark radars will join Anduril’s existing family of automated active and passive sensing solutions — including Wisp, Pulsar and Iris — providing warfighters with low-cost, mass-producible, autonomous sensing, imaging, and targeting capabilities for a variety of critical missions, including air defense, missile warning, and counter-intrusion. Anduril will continue to invest in radar development efforts and plans to manufacture Spyglass, Spark, and future radar products at its Arsenal-1 hyperscale factory as production scales up. Numerica’s flagship Mimir command and control enabling software will also be incorporated into Anduril’s portfolio of mission-centric software capabilities. Mimir introduces advanced tracking, track correlation and theater-wide fusion capabilities, complementing Anduril’s Lattice AI-powered platform to deliver real-time solutions that improve situational awareness, decision-making, and fire control for warfighters. Numerica’s sensor fusion software is a critical component of priority U.S. air defense programs, and Anduril will continue to deliver those mission-critical capabilities on behalf of our warfighters and our industry partners. The Numerica team brings expertise in advanced mathematical algorithms, scientific computing, and hardware engineering, which will strengthen Anduril’s focus on air defense, missile defense, and vehicle protection. This acquisition reflects the shared goal of providing warfighters with effective tools to ensure mission success in complex and dynamic environments. (Source: ASD Network)

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SPX CommTech, part of SPX Technologies Inc, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all. Formed by TCI and ECS, SPX CommTech’s Battlespace portfolio enables defence and security teams to detect, defeat and exploit RF signals to enhance communications intelligence (COMINT) and counter unmanned aerial systems (Counter-UAS). Additionally, its Tactical Data Link portfolio allows intelligence gathering agencies, special forces, emergency response, and security teams to securely and reliably transfer video and data between enabled-aircraft and ground teams over long distances for airborne Intelligence, Surveillance, Reconnaissance (ISR).

For more information visit www.tcibr.com and www.enterprisecontrol.co.uk

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Sponsored by SPX Communication Technologies (TCI & ECS)

 

www.tcibr.com

 

www.enterprisecontrol.co.uk

 

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10 Jan 25. Rheinmetall acquires majority share in blackned GmbH. Rheinmetall Electronics GmbH, based in Bremen, has acquired another 11% of the shares in the Bavarian software developer blackned GmbH by means of a share purchase agreement. With this acquisition, Rheinmetall intends to control 51% and thus the majority of blackned. The Bremen-based Rheinmetall subsidiary has so far held a 40% stake in blackned. The transaction is still subject to various conditions precedent and also requires approval by the German Federal Cartel Office. Founded in 2009 and based in Heimertingen in Bavaria, blackned specialises in software for the digitalisation of armed forces. The company currently has around 200 employees and is growing rapidly. By increasing its shares in blackned, Rheinmetall is underlining the importance of digitalisation with modern IT architectures for the defence contractor.

In December, Rheinmetall and blackned jointly secured a major order as part of the digitalisation of the Bundeswehr. The two companies are to work together in order to integrate the IT systems of all vehicle and platform systems of the land forces as part of the D-LBO project. Rheinmetall will account for around €730m of the contract volume, with blackned contributing around €470m. The new technology is to be integrated into more than 10,000 combat and support vehicles of the Bundeswehr by mid-2030.

Armin Papperger, Chairman of the Executive Board of Rheinmetall AG: “The digitalisation of the armed forces is advancing, also internationally. We want to play a leading role here and are involved in corresponding projects, for example in Australia, the United Kingdom and Hungary. The fact that we are on the right track with digitalisation and by offering convincing solutions is demonstrated by our joint success in the major D-LBO project for the Bundeswehr.”

“Pursuant to the stipulations of the European General Data Protection Regulation (GDPR), we wish to inform you that you have received this e-mail in a mailing addressed to persons and organizations on our press distribution list. In order to do this, we have entered your e-mail address, and possibly other contact data, into our data base. Protecting your data is very important to us. If you wish, we would be pleased to let you know what information we are storing. If you do not want us to use your data for press- and public relations-related purposes, please let us know.  We will then be happy to delete your data and take you off our distribution list.”

 

09 Jan 25. General Dynamics is a global aerospace and defense company that specializes in high-end design, engineering and manufacturing to deliver state-of-the-art solutions to its customers. The company offers a broad portfolio of products and services in business aviation; ship construction and repair; land combat vehicles, weapons systems and munitions; and technology products and services.

Total company revenue was $42.34bn in 2023, up 7.3% from $39.4bn in 2022 which was up 2.4% from 2021. Compared to other defense and aerospace companies, General Dynamics had a relatively modest negative impact on its financial performance due to the global pandemic. Total operating profit was $4.272 bn in 2023, up 0.8% from $4.211bn in 2022 and still down sharply from the $4.57bn achieved in 2019. The company’s operating margin has steadily declined from a high of 13.5% in 2017 to 10% in 2023. Long-term debt did rise sharply following the acquisition of CSRA in 2018, increasing to $11.4bn in that year versus only $4bn in 2017. Except for an increase during the height of the pandemic, management has reduced long-term debt to $8.8bn by the end of 2023.

The company consists of 10 business units, which are organized into four operating segments: Aerospace, Combat Systems, Marine Systems and Technologies.

The Technologies segment is organized into two business units — Information Technology (IT) and Mission Systems. IT modernizes large-scale IT enterprises and deploys the latest technologies to optimize and protect customer networks, data and information. Mission Systems offers solutions across multiple domains and produces a unique combination of products and capabilities that are built for essential C5ISR applications.By the end of 2023, the company’s total Technologies segment accounted for $12.922bn of revenues. Combining $8.459bn from information technology services and $4.463bn from C5IS solutions.

By the end of 2023, the company’s Marine Systems segment accounted for $12.461bn of revenues. Combining $8.631bn from nuclear powered submarines, $2.698bn from surface ships and $1.132bn from repair services and other. The Marine Systems segment is a leading designer and builder of nuclear-powered submarines and a leader in surface combatants and auxiliary ship design and construction for the U.S. Navy. It consists of three business units: Electric Boat, Bath Iron Works and NASSCO.

Combat Systems segment is a manufacturer and integrator of land combat solutions worldwide, including wheeled and tracked combat vehicles, weapons systems and munitions. The segment consists of three business units: Land Systems, European Land Systems (ELS), and Ordnance and Tactical Systems (OTS). By the end of 2023, the company’s Combat Systems segment accounted for $8.268bn in revenues. Combining $5.036bn from military vehicles, $2.442bn from weapons systems, armaments and munitions and $790m from engineering and other services.

The Aerospace segment consists of the Gulfstream and Jet Aviation business units. General Dynamics designs, manufactures and services an advanced line of business jets. By the end of 2023, the company’s Aerospace segment accounted for $8.621bn of revenues. Combining $5.710 bn from aircraft manufacturing and $2.911 bn from aircraft services and completions. While manufacturing has been soft for the last three years, services have grown at or just below double-digit annual rates. (Source: Teal Group)

 

08 Jan 25. Septentrio Acquired by Hexagon for Pioneering GNSS Technologies. Hexagon will acquire Septentrio for its GNSS platform, and to ensure greater accessibility to high-accuracy, high-performance positioning technology with low SWaP characteristics. Leading OEM provider of GNSS technologies Septentrio NV will be acquired by Hexagon after forming an agreement, aiming to drive innovation and expand the market reach of Resilient Assured Positioning solutions. Combining Septentrio’s pioneering GNSS platform with Hexagon’s extensive positioning portfolio, including sensor fusion, anti-jamming, correction services and perception technologies, will enable cutting-edge solutions for diverse markets and applications. This will ensure greater accessibility to high-accuracy and high-performance positioning technology with low SWaP (Size, Weight and Power) characteristics. This will accelerate the adoption of autonomous systems in existing markets and address the needs of emerging high growth segments like robotics, UAVs, autonomy and other mission-critical applications.

Septentrio has built its reputation on innovation and customer focus and will together with Hexagon continue to operate its business model of supplying state of the art GNSS technology and products to its large base of industry leading OEM customers.

Septentrio, headquartered in Leuven, Belgium, has around 150 employees, and is expected to generate revenues of over 50 MEUR in 2024, with strong growth rates and margins in line with the Hexagon Group.

Septentrio will be reported within Hexagon’s Autonomous Solutions division. Completion of the transaction is subject to regulatory approvals and other customary conditions and is expected to be finalised in the first half of 2025.

Norbert Hanke, interim President and CEO at Hexagon AB, commented, “The combination of Hexagon and Septentrio will transform the positioning industry across existing and new markets, setting new standards for the accuracy, resilience and scalability of positioning technologies, necessary to support and accelerate the journey towards full autonomy.” (Source: https://www.defenseadvancement.com/)

 

08 Jan 25. Proteus Enterprises (“Proteus”), a Maryland-based Aerospace, Defense and Government Services holding company, today announced that it acquired Ricardo Defense, Inc. (“Ricardo Defense” or the “Company”) in partnership with Gladstone Investment Corporation (NASDAQ: GAIN). Financial terms were not disclosed.

Headquartered in Troy, MI, with operations in California, Texas, Alabama, and overseas, Ricardo is an industry leader working to develop engineering and product solutions for US Army vehicle and logistics programs.

Pierre Chao and Greg Bowie, Proteus co-founders, said, “The Ricardo Defense team has done a remarkable job providing innovative technical and product solutions for US Army and DoD customers.  Ricardo Defense’s experienced leadership team has grown the Company significantly to date by developing new capabilities and customer relationships, including the ABS/ESC system for the HMMWV. In bringing US ownership and access to capital, we look forward to partnering with management to grow the company while building a business focused on solving the defense customer’s most challenging problems.”

Ricardo President, Chet Gryzcan stated, “I am proud of our employees and what our team has built over the last 10 years, and we are excited to expand upon our success as we partner with Proteus. We felt an immediate synergy with the Proteus team, and we look forward to leveraging Proteus’s knowledge and expertise as an experienced government services and technology investor to expand our capabilities and continue delivering solutions that enhance warfighter effectiveness.”

Pete Roney, Proteus co-founder and incoming CEO of Ricardo Defense added, “We are beyond excited to join the Ricardo Defense team in providing mission critical services and solutions to our Nation’s military services. I am looking forward to working with Ricardo Defense’s exceptional team to help position the business for continued growth and greater scale in the future.”

Holland & Knight served as legal counsel to Proteus; Squire Patton Boggs served as legal counsel to Ricardo Plc.; and Houlihan Lokey served as financial advisor to Ricardo Plc. (Source: PR Newswire)

European defence stocks rise after Trump’s NATO comments. European defence sector stocks rose on Wednesday after U.S. President-elect Donald Trump called for higher spending from NATO allies.

All leading European arms makers, including Rheinmetall, Dassault Aviation, Leonardo and Saab, were up by 2-3%, while the pan-European defence index, was 1% higher by 0910 GMT.

Stifel analysts highlighted Trump’s comment that European NATO members should spend 5% of their GDP on the alliance’s defence, up from the current 2% threshold.

At a Tuesday evening press conference at his Mar-a-Lago residence in Florida, Trump said allies, particularly Germany, spend too little on defence, adding that “they can all afford it”.

Friedrich Merz, leader of Germany’s opposition Christian Democrats, on Wednesday welcomed the idea of more defence spending but dismissed the wrangling over how much to specifically raise the NATO target by as “irrelevant”. (Source: Google/Reuters)

 

07 Jan 25. KBR (NYSE: KBR) today announced segment reporting updates and executive appointments focused on advancing the Company’s strategic direction. These updates include changes previously approved by KBR’s Board of Directors and disclosed in a Form 8-K filed on December 19, 2024.

“As KBR continues to scale and expand capabilities, we are realigning our portfolio to streamline operations, reduce complexity, and optimize our processes,” said Stuart Bradie, KBR President and CEO. “During 2024, we eliminated substantial costs and moved necessary support into the segments to enable greater self-sufficiency. We are already seeing the benefits of these initiatives, which have broken down historical silos, created cross-team collaboration, and opened a larger pipeline of opportunities globally. We also effected leadership changes to facilitate continued strong execution and greater value creation. These deliberate moves will ensure that our capabilities and talent are best aligned with our customers, help us remain cost competitive, and accelerate our progress toward achieving our strategic objectives, including maximizing shareholder value.”

Segment Realignment

KBR comprises two operating business segments: Government Solutions (GS) and Sustainable Technology Solutions (STS). As part of the segment realignment, GS has been renamed Mission Technology Solutions (MTS), reflecting KBR’s leading-edge mission critical capabilities spanning space, defense, national security, and its expanding commercial end markets. Sustainable Technology Solutions retains its name. The legacy GS International business unit has been eliminated and its elements integrated into both MTS and STS. Both segments will continue to operate globally, serving government and commercial customers.

The realigned organization is not effective until fiscal year 2025. For investor convenience, selected proforma financial information (under the realigned organization) for the prior 11 reported quarters will be posted on the Investor Relations section of KBR’s website at investors.kbr.com. The fourth quarter of fiscal year 2024 will be added to this supplemental schedule once it is reported in February 2025. KBR’s 2025 Forms 10-Q and Form 10-K will include comparable historical periods and reflect the realigned organization.

Executive Appointments

On December 19, 2024, KBR announced executive appointments in support of advancing its strategic direction:

* Byron Bright, currently President, Government Solutions U.S., has been appointed to serve in KBR’s newly created Chief Operating Officer (COO) role, effective May 2025. As COO, he will lead both segments with Jay Ibrahim, President, Sustainable Technology Solutions, reporting to him. Additional Mission Technology Solutions leadership appointments will be made in the coming months.

* Bright, 50, joined KBR in 2010 and has served in his current position since June 2020. Bright brings extensive operational experience and deep technical expertise, with prior roles in government services and the U.S. Air Force.

Bradie commented, “Byron has demonstrated exceptional leadership in his current role. As COO, he will provide focused operational oversight to ensure that KBR continues to win the right work and deliver value as we execute our strategic initiatives. I am extremely confident in Byron’s ability to consistently deliver results across the enterprise, and I look forward to partnering with him in his new leadership role.”

* KBR Chair, General Lester L. Lyles, notified the Board of Directors of his decision to retire from service effective post KBR’s 2025 Annual Meeting of Stockholders. General Lyles has served on the Board since 2007 and as Chair since 2019.

* The Board appointed Bradie to serve as Chair effective following the 2025 Annual Meeting.

* An Independent Lead Director will be appointed ahead of the 2025 Annual Meeting.

Bradie commented, “General Lyles has been an invaluable member of our Board and instrumental in guiding KBR’s transformation into a global, diversified technology solutions leader. We are grateful for Les’s leadership and thank him for his 18 years of dedicated service. I am honored to take on the role of Chair and thank the Board for their confidence in me. I look forward to continuing to work with our Board and leadership team to execute our strategy and deliver continued stakeholder value.”

Financial Targets

KBR is reiterating its 2027 financial targets, introduced at its May 2024 Investor Day which are based on 2023 baseline year.

Specifically, the company expects to achieve:

* KBR Consolidated: Revenues of $11.5 bn; Adj. EBITDA of $1.15+ bn; Adj. EBITDA Margin of 10% – 11%, and Operating Cash Flow of $700+ m

* MTS: Revenue CAGR of 11% – 15% and Adj. EBITDA Margin of 9% – 10%

* STS: Revenue CAGR of 11% – 15% and Adj. EBITDA Margin of ~20%

Bradie concluded, “The outlook for KBR is exciting and we are well positioned with our unique capabilities and talented teams to capture outsized demand driven by global megatrends. The structural changes communicated today provide us greater strategic flexibility as we continue to build strength and scale across the organization. We remain focused on leveraging our unique ONE KBR capabilities, enabled by our digital accelerators, to deliver best-in-class solutions to our global customers.”

 

07 Jan 25. Fujitsu’s decision to restrict bidding for UK government contracts after the Post Office Horizon scandal has wiped out the value of goodwill on the balance sheet of Fujitsu Services Holdings. (Source: FT.com)

 

07 Jan 25. Houlihan Lokey Advises Ricardo Defense. Houlihan Lokey announced that Ricardo Defense, a subsidiary of Ricardo PLC (LON:RCDO), has been acquired by Proteus Enterprises LLC (Proteus) and Gladstone Investment Corp. (NASDAQ:GAIN). The transaction closed on December 31, 2024. Houlihan Lokey served as the exclusive financial advisor to Ricardo Defense. Michigan-based Ricardo Defense is an engineering services and systems integration firm specializing in helping Department of Defense (DoD) customers overcome technical challenges in modernizing, managing, and maintaining military fleets. With an embedded presence at 20 DoD locations, Ricardo Defense provides seamless support to longstanding customers by leveraging advanced expertise in design, engineering, manufacturing, and integration. Among its comprehensive solutions, Ricardo Defense provides proprietary antilock braking and electronic stability control systems for High Mobility Multipurpose Wheeled Vehicles (HMMWVs). Proteus makes control investments in middle-market aerospace, defense, and government services companies with the strategic goal of building the next generation of mid-tier competitors in the sector. The Proteus team has spent a lifetime investing in, supporting, and operating aerospace, defense, and government services businesses and has a deep passion for the industry. Gladstone Investment Corp. is a publicly traded business development company that seeks to make equity and secured debt investments in lower-middle-market businesses in connection with acquisitions, changes in control, and recapitalizations. Houlihan Lokey served as the exclusive financial advisor to Ricardo Defense. This transaction exemplifies the continued success of Houlihan Lokey’s Aerospace, Defense & Government practice within the engineered solutions and defense services sector. Since 2020, the team has closed more than 70 transactions worth over $13bn in enterprise value. With a staff of approximately 20 financial professionals, Houlihan Lokey’s Aerospace, Defense & Government practice is among the largest dedicated industry banking groups worldwide. In 2023, Houlihan Lokey’s Industrials Group was ranked as the No. 1 M&A advisor for global industrials transactions under $1 bn, according to LSEG (formerly Refinitiv).* If you would like more information about Houlihan Lokey or have questions regarding the firm’s role in this transaction, please contact the team members listed below. *Excludes accounting firms and brokers.

 

07 Jan 25. Patria’s professional civilian pilot training subsidiary acquired by Airways Aviation. Patria has signed an agreement with Airways Aviation Group (‘Airways Aviation’) on them acquiring the entire share capital of its subsidiary Patria Pilot Training Oy (‘Patria’s Pilot Training’). As of 1 February, 2025, all employees, operations and ongoing training courses of Patria’s Pilot Training will be transferred to Airways Aviation.

Patria’s military pilot training activities will not be impacted by these changes.

Significant efforts were made to find an external successor for the operations since the change negotiations were held in Patria’s Pilot Training operations on its possible termination during 2025 in the summer of 2024. The function is mainly focused on arranging professional civilian pilot training in Pirkkala in Tampere and Vantaa, Finland and in Córdoba in Spain. These operations employ 30 people in Finland and 5 in Spain. Airways Aviation Group with over 45 years of experience is a privately owned aviation education and training organization with its headquarters in the UAE (Dubai) and active operations in more than 10 countries in Europe, Africa, Middle East and Asia-Pacific. It owns and operates one of the world’s largest fleets of training aircraft, including Europe’s largest fleet of Diamond DA40 and DA42 aircraft. The group provides high-quality education and training pathways for Airline Pilots, Military Pilots, Cabin Crew, Ground Handlers, Aircraft Maintenance Technicians, and University-qualified Administrators and Managers, boasting a proven track record in aviation training, having successfully trained over 10,000 pilots, 14,000 cabin crew and 20,000 maintenance technicians and ground staff. Patria’s Pilot Training operations will now be fully integrated into Airways Aviation’s global training network and will be rebranded as Airways Aviation Nordic, expanding the group’s footprint in the region.

 

06 Jan 25. Adelaide-based IoT firm Myriota raises $50m. Internet of things business Myriota has raised $50m, which it says will be used to add 100 jobs and enhance its technology. The funding consists of a $25m equity investment from the federal government’s National Reconstruction Fund and a cash injection from venture capital partners Main Sequence and investors, including InterValley Ventures.  Myriota products connect small devices on the ground to nanosatellites in space. It allows, for example, farmers to track their animals remotely or authorities to monitor water quality in hard-to-reach places.

“These investments in Myriota will support our hyper-growth and continued role as a leader in democratised satellite connectivity,” Myriota CEO Ben Cade said.

“We strive to enable solutions that have immediate benefit from just a single, out-of-the-box deployment on a small farm, all the way through to a large enterprise deploying tens of thousands of sensors across all their locations.”

The Australian federal government established the National Reconstruction Fund Corporation (NRFC) to invest $15 bn in seven priority areas of the economy. It’s governed by an independent board appointed by the Minister for Industry and Science and the Minister for Finance.

“South Australia is helping the country to not only rebuild its manufacturing muscle but sharpen its edge with new technologies and industries like what we’re seeing at Myriota,” Science Minister Ed Husic said.

“In a country as vast and remote as ours, communications and connectivity is absolutely crucial. Backing investments like this is pivotal to achieving that.”

Myriota’s success comes weeks after fellow Australian nanosatellite firm Fleet Space Technologies raised a further $150 m from investors. The rare “series D” funding round is a dramatic increase from the $5m, $35m and $50m brought in through its A, B and C rounds, respectively. The company’s extraordinary rise has been led by its satellites that can detect minerals underground from space. The technology effectively allows mining companies to both speed up the hunt for minerals and reduce costs by lowering the need for invasive land surveying.

“ExoSphere” has led Fleet to be named one of Australia’s fastest-growing companies, boasting clients such as Rio Tinto, Barrick Gold, and Core Lithium.

It has recently expanded its global footprint to include the US, Canada, Chile, and Luxembourg and now employs more than 130 people. Aside from mineral detection, the firm is also creating a device known as SPIDER that can detect minerals on the moon’s south pole. (Source: Space Connect)

 

07 Jan 25. Western rating agencies, banks and pension funds are being “stupid” in shunning defence investments, one of Nato’s most senior officials has warned. (Source: FT.com)

 

06 Jan 25. Ligado files Chapter 11, commences restructuring to slash debt burden. Meanwhile, the company said it has no intentions of dropping its lawsuit against the federal government over L-band spectrum use. Ligado Networks today announced it has filed for Chapter 11 bankruptcy and is putting in place a restructuring plan that the company says will reduce its current debt load of $8.6bn to approximately $1.2bn — in large part financed by a deal with satellite-to-phone company AST SpaceMobile. In addition, creditors holding some 88 percent of the firm’s debt have agreed under the restructuring plan “to provide $115m of additional incremental financing to fund Ligado during the restructuring process,” the Ligado press release explained. The bankruptcy, filed in the US Bankruptcy Court for the District of Delaware, is itself not a surprise. The company has been signaling that might be an option since last year when it sued the Defense and Commerce Departments for allegedly “seizing” its L-band spectrum license. That license was granted by the Federal Communications Commission (FCC) in 2020, but the DoD, Commerce and a number of other government agencies have been protesting the decision ever since, arguing that Ligado’s plan to use that spectrum for cellular communications rather than traditional satellite communications would dangerously interfere with GPS signals widely used by the military, commercial aviation and myriad other industries for positioning, timing and navigation. Ligado has contested that claim.  The deal with AST calls for the firm to lease 45 MHz of Ligado’s mid-band spectrum — the same spectrum at the center of the DoD controversy — for use by its satellites in low Earth orbit providing connectivity with cellular telephones. That was something of a surprise move for AST, according to veteran telecommunications consultant Tim Farrar.

“The transaction associated with [Ligado’s bankruptcy] is fairly unexpected, in terms of AST agreeing to lease their spectrum, because AST has been all about partnerships with cellular operators and using terrestrial spectrum … and building satellites to operate in lower frequencies,” he said. “It’s really a sort of 180 degree turn for AST to basically go and move to MSS [mobile satellite service] spectrum and move to these higher frequencies, where, as they had said they were much better off with the low frequencies which were going to penetrate buildings.”

According to Ligado’s press release, AST “has agreed to provide Ligado, subject to certain conditions precedent, with approximately $113 m of AST SpaceMobile warrants, and usage rights payments to fund Ligado’s payments under certain spectrum agreements. Additionally, Ligado will receive economic participation in AST SpaceMobile’s direct-to-device business in the U.S. and Canada.”

For its part, AST in a press release today said the deal would help the company expand its services.

“Adding premium lower mid-band spectrum access in the United States to the AST SpaceMobile network gives us long-term access to a large block of a scarce resource, significantly enhancing our planned space-based cellular broadband offering,” said Abel Avellan, Chairman and CEO at AST SpaceMobile.

Farrar said the likelihood is that Ligado will “hive off” this part of its business as a sub-unit while keeping its one satellite in geosynchronous orbit active in order to maintain its spectrum license in order “to continue to make their lease payments to Viasat,” which

According to the Ligado release, the company had been for the past year making an effort “to secure a comprehensive resolution with satellite communications company Viasat to restructure Ligado’s significant payment obligations to Inmarsat, which Viasat acquired in 2023.” Viasat had been planning to partner with Ligado on satellite-to-cell services.

Another Coming Twist With Trump?

Meanwhile, the company said it has no intentions of dropping its lawsuit against the federal government — which, if won, could also be a source of income to pay off debtors.

“Ligado will continue to vigorously prosecute its litigation against the U.S. government to enforce its constitutional right to just compensation for the government’s unlawful taking of Ligado’s licensed L Band spectrum,” Doug Smith, president and CEO, said in the firm’s press release.

But that effort is likely to come with a twist, said Farrar, who predicted that Ligado will also pursue an effort to come to an out-of-court settlement with the incoming Trump administration. During Trump’s first term, federal officials leaned strongly into efforts by the mobile telecom industry to take over spectrum traditionally used by government agencies and satellite firms for use by developing 5G networks. Indeed, Trump’s FCC Chair nominee, Brendon Carr, along with the rest of the FCC, in 2020 voted to support Ligado’s application, and he was a vocal supporter of opening up spectrum for economic benefits.

However, Farrar said that there are myriad complicating factors at play both with regard to the fate of the lawsuit and the conclusion of Ligado’s restructuring plan.

“The question is, is this new administration going to be willing to settle that lawsuit?” he asked. And that may depend, he added, on whether new Trump advisor Elon Musk “is going to weigh in as a example of this not being government efficiency at its finest? … The problem is if Elon Musk weighs in, because AST is obviously a competitor with Starlink, then all bets are off.”

At the moment Musk’s SpaceX, which operates the Starlink satellites, has been focusing on making alliances with terrestrial wireless providers for satellite-to-phone services, with an agreement already in play with T-Mobile. But as AST and others companies move to instead use spectrum allocated to satellite rather than wireless communications, SpaceX will need to decide whether it also wants to pivot, Farrar said.

Further, he explained that government agencies including the FCC have to approve the Ligado/AST deal. And that may be impacted by the fact that Commerce’s National Telecommunications and Information Administration (NTIA) on Dec. 17 opened a new study on potential interference from direct-to-device networks with GPS signals that has implications for the Ligado case. It is unclear when that study will be completed; industry representatives have until the end of this month to make initial comments on a series of NTIA questions.

For NTIA, which coordinates spectrum usage by federal agencies including by DoD, there is a conundrum at play with regard to the impending “direct to device” boom. On one hand, the Pentagon and other agencies are worried about GPS interference, but on the other hand, DoD in particular is itching to gain the benefits of secure satellite connections to phones and other handheld devices for use behind enemy lines.

“This is not something that is going to be solved in a few days or a few weeks. This is going to take months, if not even a year or more,” Farrar summed up. (Source: Breaking Defense.com)

 

06 Jan 25. Houlihan Lokey Advises TEKEVER. Houlihan Lokey announced that TEKEVER, Europe’s leader in AI-centric unmanned aerial systems, has successfully completed a €70m growth equity raise. The strategic growth equity round was led by Baillie Gifford and included participation from the NATO Innovation Fund, the U.K.’s National Security Strategic Investment Fund (NSSIF), and Crescent Cove Advisors LP, among others. The transaction closed on 25 October 2024. TEKEVER is Europe’s leader in AI-centric unmanned aerial systems (UAS) serving both military and commercial end markets. The company designs and produces highly differentiated unmanned aircraft and offers a managed intelligence, surveillance, and reconnaissance (ISR) service to its global customer base. TEKEVER’s vertically integrated business model, based on deep expertise in both hardware and software, enables the company to deliver unmatched results for its customers and respond to rapidly evolving mission demands. The Series B round of €70m was led by Baillie Gifford and supported by strategic investors, including the NATO Innovation Fund (NIF), the U.K.’s NSSIF, Crescent Cove Advisors LP, Iberis Capital, and Cedrus Capital. Together, the investor group brings unmatched expertise and global perspectives, helping TEKEVER drive forward its vision to redefine security and defence.

TEKEVER will use the investment to accelerate R&D focused on enhancing and developing cutting-edge UAS technologies, expanding global production, delivery, and support to meet growing demand, and strengthening its position as a trusted partner in global security and defence markets. Houlihan Lokey served as the lead financial advisor to TEKEVER on its Series B fundraising. This transaction underscores Houlihan Lokey’s expertise and leadership in the global Aerospace & Defense (A&D) sector and private capital markets, marking a significant milestone in the rapidly growing defense technology sector. It also highlights the firm’s ability to deliver exceptional outcomes through collaboration across its A&D practice, Iberian network, and Equity Private Placement capability in complex transactions.

 

06 Jan 25. Booz Allen Agrees to Pay $15.875m to Settle False Claims Act Allegations. The U.S. Department of Justice (DOJ) has announced that Booz Allen Hamilton Holding Corporation (Booz Allen) has agreed to pay the United States $15,875,000 to resolve allegations that Booz Allen Hamilton Engineering Services LLC (BES), a wholly owned subsidiary of Booz Allen, violated the False Claims Act by knowingly submitting fraudulent claims to the United States in connection with a General Services Administration (GSA) task order to supply computer military training simulators and systems to Department of Defense (DoD) agencies, including the Air Force. Booz Allen, which is headquartered in McLean, Virginia, provides a range of management, consulting and engineering services to the government. BES was an engineering services firm located in Annapolis Junction, Maryland, with offices in Dayton, Ohio, and other locations. The settlement resolves allegations that BES, through its former program managers John G. Hancock and Karen K. Paulsen, knowingly engaged in a fraudulent course of conduct with Keith A. Seguin, then a civilian Air Force employee and contracting official, and David J. Bolduc Jr., the co-owner and manager of a BES subcontractor, QuantaDyn Corporation, that resulted in GSA awarding BES a task order for training simulators. BES, in turn, awarded task orders (or “modules”) to QuantaDyn. The government alleges that Seguin improperly and illegally divulged confidential government contracting and budget information, a competitor’s confidential bid or proposal information and source selection information to Hancock and Paulsen, who used the illicit information despite knowing they were not authorized to possess it. Through this conduct, Hancock and Paulsen successfully influenced GSA to award the task order to BES. Additionally, the government alleges that, after the GSA award, Hancock, Paulsen, Seguin and Bolduc made use of confidential government budget information to formulate and submit price quotes to GSA for the individual modules that BES awarded to QuantaDyn on a sole-source basis. As a result of the conduct described above, BES, through Hancock and Paulsen, knowingly submitted fraudulent claims to GSA under the 37 modules awarded to QuantaDyn, which GSA paid. Hancock, Paulsen, Seguin and Bolduc previously resolved criminal charges related to this conduct. (Source: glstrade.com)

 

06 Jan 25. MBDA has integrated Roxel as a wholly-owned subsidiary of its European defence group, having acquired the 50% share held by Safran on 19 december 2024. This acquisition leverages Roxel’s existing and future capabilities at a time of major growth and investment. Roxel will continue to manage its activities independently, honouring all its existing contracts with other systems suppliers while developing new markets, particularly for export. This acquisition will accelerate the development of Roxel, strengthening its position as a global player in tactical propulsion and consolidating its role as a national champion in France and the UK.

MBDA CEO Éric Béranger hailed the operation: “I welcome everyone from Roxel to the MBDA Group. By reinforcing the work interactions and cooperation between the teams of the two companies,, this transaction is to support Roxel’s operational and industrial excellence. It also aims to provide an even more optimal response to the ramp-up challenges posed by the context of war economy, both in development and in production.”

Roxel CEO Sylvie Grison added: “This acquisition will enable us to further develop innovation in new solid propulsion technologies. Additionally, this integration operation will make it easier to optimise industrial cycles for faster ramp-up. I am therefore very pleased that this share acquisition has been completed.”

Roxel is a Franco-British firm formed from the merger of Celerg and Royal Ordnance Rocket Motors in 2003. As a European leader and a major global player in its field, Roxel designs, develops, manufactures and supplies solid propulsion systems and associated equipment for all types of tactical and cruise missiles and rockets for air, naval and land forces. Roxel has four production sites (one in the UK, one in the Nouvelle-Aquitaine region and two in the Centre-Val de Loire region) as well as offices in the Paris region.

 

02 Jan 25. Forrester’s Digest: SES seeks early wrap on Intelsat. SES is buying rival Intelsat for $3.1bn (€2.99bn) in a deal announced last April. The purchase had been expected to be completed in the second-half of 2025 once all regulatory hurdles had been overcome. Now, however, SES wants to wrap the agreement by June as it cites “fast-moving industry developments” and competitive threats from the likes of Elon Musk’s Starlink. On December 19th, 2024, SES CEO Adel Al-Salah met with very senior FCC staffers including Commissioner Brendan Carr (who will head the FCC after Donald Trump’s inauguration) to lobby for a speedy conclusion to the purchase, according to a report in specialist air intelligence publication Runway Girl Network. The move needs the FCC approval, as well as that of other agencies and regulators, but in particular the transfer of Intelsat’s transmission licences to SES.

“The communications industry is undergoing a period of rapid change and is becoming more competitive than ever due to the entrance of large, well-financed market disrupters and other new players; new technologies increasing spectrum capacity and efficiency; rising customer demand for ubiquitous, global connectivity; and the continued convergence of the communications ecosystem,” SES’s legal counsel (Nancy Eskenazi) wrote in a post-meeting letter to FCC secretary Marlene H. Dortch.

“In light of these developments, SES reemphasized the need to close the proposed transaction by June 2025,” she added.

The combination of SES and Intelsat is seen as being beneficial to the two (largely) geostationary satellite operators who are both being challenged especially in the aeronautical in-flight sector. Putting the two satellite giants together will allow significantly greater operational efficiencies and progress. (Source: Satnews)

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SPX CommTech, part of SPX Technologies Inc, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all. Formed by TCI and ECS, SPX CommTech’s Battlespace portfolio enables defence and security teams to detect, defeat and exploit RF signals to enhance communications intelligence (COMINT) and counter unmanned aerial systems (Counter-UAS). Additionally, its Tactical Data Link portfolio allows intelligence gathering agencies, special forces, emergency response, and security teams to securely and reliably transfer video and data between enabled-aircraft and ground teams over long distances for airborne Intelligence, Surveillance, Reconnaissance (ISR). For more information visit www.tcibr.com and www.enterprisecontrol.co.uk

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Sponsored by SPX Communication Technologies (TCI & ECS)

 

www.tcibr.com

 

www.enterprisecontrol.co.uk

 

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02 Jan 25. Avion Solutions, a leader in aerospace engineering, airworthiness, modeling and simulation, and integrated product support, is excited to announce the acquisition of Tennessee Valley Research Group (TVRG). Known for its technical and programmatic expertise in laser technology systems, tactical ballistic missile targets, and hypersonic weapon field testing, TVRG strengthens Avion’s capabilities in these critical domains. This strategic acquisition brings together two leading companies dedicated to advancing national defense. By merging Avion’s proven capabilities with TVRG’s specialized expertise, the partnership strengthens their ability to provide innovative technologies and services to the customers across the Department of Defense. The integration of TVRG’s skilled team enhances Avion’s existing portfolio, promoting innovation and improving efficiency across various projects.

“We are pleased to welcome a remarkable group of employee-owners who share our culture of technical excellence and dedication to the Warfighter,” said Evan Wagner, President and CEO of Avion Solutions. “This acquisition marks another significant milestone in our growth strategy, reinforcing our commitment to providing comprehensive solutions that meet the evolving needs of our customers.”

 

02 Jan 25. Curtiss-Wright Corporation (NYSE: CW) today announced that it has completed the acquisition of Ultra Nuclear Limited and Weed Instrument Co., Inc. (“Ultra Energy”) for $200m in cash. Ultra Energy is a leading global provider of safety-critical measurement and control systems to the Commercial Nuclear and Aerospace & Defense markets. The business designs and manufactures reactor protection systems, neutron monitoring systems, radiation monitoring systems, and temperature and pressure sensors that facilitate the safe and reliable operation of commercial nuclear reactors and other power generation plants. It also provides support to the legacy UK nuclear submarine fleet, as well as current and next-generation ship designs. In alignment with our strategic priorities highlighted at our 2024 Investor Day, the acquisition of Ultra Energy increases the breadth of Curtiss-Wright’s global commercial nuclear portfolio with highly complementary measurement and control solutions supporting plant life extensions and modernization projects of aging power plants and further expands our presence with the leading global designers of small modular reactors, both in the U.S. and Europe. The acquisition also supports Curtiss-Wright’s long-term financial objectives for profitable growth and strong free cash flow generation. Ultra Energy generated sales of approximately $65 m in 2023 and is expected to be accretive to Curtiss-Wright’s adjusted diluted earnings per share in its first full year of ownership, excluding first year purchase accounting costs, and produce a strong free cash flow conversion rate in excess of 100%. The business will operate within Curtiss-Wright’s Naval & Power segment. Through its predecessor companies, Ultra Energy’s roots date back to the mid-1950s as a specialist in neutron monitoring and the late-1960s as a manufacturer of temperature and pressure sensors. Today, its diverse portfolio includes neutron monitoring for measuring reactor power and safety management, radiation monitoring for plant safety, reactor protection systems to constantly monitor plant conditions, and highly accurate temperature and pressure sensors. Ultra Energy employs approximately 300 people and maintains primary operations in Wimborne, UK, and Round Rock, TX.

 

30 Dec 24. U.S. Global Investors, Inc. (Nasdaq: GROW) (“the Company”), a registered investment advisory firm[1] known for its thematic ETFs, announced the launch of its first actively managed exchange-traded fund, the U.S. Global Technology and Aerospace & Defense ETF (NYSE: WAR) [this will link to the WAR fund page], which begins trading today on the New York Stock Exchange (NYSE). The launch builds on the Company’s success with its bn-dollar U.S. Global Jets ETF (NYSE: JETS) and emphasizes its ability to create resilient, dynamic products. The WAR ETF is designed to address the increasing global demand for defense and protection through technological advancements. Focusing on sectors like semiconductors, artificial intelligence (AI), data centers, cybersecurity, aerospace and electronic warfare, WAR offers diversified exposure to the industries that help prevent and protect from the threat of war. Like the Company’s other ETFs, WAR applies a smart beta 2.0 investment strategy, combining quantitative and fundamental analysis to identify opportunities for long-term outperformance while managing risk​.[2]

“The WAR ETF is more than just an investment in defense,” says Frank Holmes, CEO and Chief Investment Officer of U.S. Global Investors. “From the ‘war on drugs’ to the iconic movie Star Wars, history has shown us the importance of defense against the forces that threaten peace. With advances in robotics, drones, satellites, AI and cybersecurity, the ETF aims to capture opportunities in these critical sectors that are transforming how we think about defense and security in the modern world.”

A Smart Beta 2.0 Approach to Investing in the Future of Global Security and Advanced Technologies

Global military expenditures reached a record $2.4 trillion in 2023 after increasing for nine consecutive years,[3] driven by rising geopolitical tensions and modernization efforts across the globe. That’s especially true in Europe, where European Union (EU) member states are estimated to spend a collective €326 bn ($342 bn) this year on aerospace and defense, representing a record-breaking 1.9% of the bloc’s gross domestic product (GDP)​.[4]

Additionally, the global semiconductor market is projected to surpass $1 trillion by 2030, fueled by growth in defense applications, AI integration and automotive technologies​​.[5] The value of the global AI market alone is estimated to hit approximately $826 bn by 2030, according to calculations made by Statista.[6]

Complementing Our Suite of Thematic ETFs

WAR joins the Company’s growing lineup of thematic ETFs, including:

• U.S. Global Jets ETF (NYSE: JETS), focused on airlines and air travel
• U.S. Global GO GOLD and Precious Metal Miners ETF (NYSE: GOAU), focused on gold mining
• U.S. Global Sea to Sky Cargo ETF (NYSE: SEA), focused on global shipping and logistics. (Source: Google)

 

31 Dec 24. DoD Publishes Northrop Grumman/Orbital ATK Consent Order – (89 Fed. Reg. 107128) – The U.S. Department of Defense’s Office of the Under Secretary of Defense for Acquisition and Sustainment (OUSD(A&S)) has published the Federal Trade Commission (FTC) Decision and Order (hereinafter referred to as the “Consent Order”), in the Matter of Northrop Grumman Corporation (NGC) and Orbital ATK, Inc Docket No. C-4652, dated June 5, 2018, and as modified on December 3, 2018, e to inform the Public about the Consent Order and to notify the Public of the DoD Compliance Officer point of contact for further information or inquiries. The FTC’s Complaint alleged that NGC’s 2018 acquisition of Orbital ATK would reduce competition in the market for missile systems purchased by the U.S. Government, resulting in less innovation and higher prices for taxpayers. The resulting Consent Order, as described below, preserves the procompetitive benefits of the acquisition while addressing the potential anticompetitive harms. The Consent Order: The Consent Order requires that NGC make its solid rocket motors (SRMs) and related services available on a non-discriminatory basis to all competitors for missile contracts. Covered missiles include any air, sea, and/or land-based missile propelled by one or more SRMs, including tactical missiles, missile defense interceptors and targets, and strategic missiles. The Consent Order does not cover launch vehicles for satellites and other space systems. The non-discrimination prohibitions of the Consent Order are comprehensive and apply to potential discriminatory conduct affecting price, schedule, quality, data, personnel, investment, technology, innovation, design, or risk. NGC must also establish firewalls to keep it from transferring or using any proprietary information that it receives from competing missile prime contractors or SRMs suppliers in a manner that harms competition. The Consent Order is in effect until June 5, 2038. The complete text of the Consent Order and supplementary information is located on the following FTC Website: https://www.ftc.gov/legal-library/browse/cases-proceedings/181-0005c-4652-northrop-grumman-orbital-atk-matter. For further information and inquiries, interested parties should contact the DoD Compliance Officer, Ms. Nicoletta S. Giordani, at 703-693-6613 or . (Source: glstrade.com)

 

31 Dec 24. Defence companies are primed for a surge in deal activity as many look to deploy growing cash piles to invest in technologies such as artificial intelligence, sophisticated drones and space systems.  (Source: FT.com)

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SPX CommTech, part of SPX Technologies Inc, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all. Formed by TCI and ECS, SPX CommTech’s Battlespace portfolio enables defence and security teams to detect, defeat and exploit RF signals to enhance communications intelligence (COMINT) and counter unmanned aerial systems (Counter-UAS). Additionally, its Tactical Data Link portfolio allows intelligence gathering agencies, special forces, emergency response, and security teams to securely and reliably transfer video and data between enabled-aircraft and ground teams over long distances for airborne Intelligence, Surveillance, Reconnaissance (ISR). For more information visit www.tcibr.com and www.enterprisecontrol.co.uk

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Sponsored by SPX Communication Technologies (TCI & ECS)

 

www.tcibr.com

 

www.enterprisecontrol.co.uk

 

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27 Dec 24. Baykar Technologies acquires Italian aviation giant Piaggio Aerospace. Turkish drone manufacturer Baykar Technologies has successfully acquired Italy’s Piaggio Aerospace, following approval from the Italian Ministry of Enterprises and Made in Italy. The deal marks a significant step for Baykar, the world’s largest unmanned combat aerial vehicle (UCAV) producer, which triumphed over international competitors to secure the historic aviation company. Piaggio Aerospace, established in 1884, is renowned for its P.180 Avanti business jets, known as the “Ferrari of the skies,” and its contributions to Italy’s defense sector. Baykar’s acquisition is set to preserve Piaggio’s legacy while enhancing its production capabilities, with a focus on maintaining employment opportunities in Italy. The deal was praised by Adolfo Urso, Italy’s Minister of Enterprises, who highlighted the company’s relaunch under Baykar’s leadership. He emphasised that the acquisition guarantees Piaggio’s future with a strong industrial vision, safeguarding jobs and production in Italy. Baykar, which has become a key player in the global UAV market, sees this acquisition as a strategic move to strengthen its presence in Europe. The Turkish firm plans to integrate Piaggio’s technology and workforce into its expanding portfolio, while enhancing its capacity for UAV production. (Source: Google/https://defence-industry.eu/)

 

24 Dec 24. Cohort plc (AIM: CHRT), the independent technology group, announces that, following the announcement on 21 November 2024, the acquisition of the entire issued share capital of EM Solutions Pty Ltd (“EM Solutions”), a subsidiary of Electro Optic Systems Holdings Limited, an Australian public company listed on the Australian Securities Exchange (ASX: EOS), is now expected to complete by end of February 2025. Any change in the net contribution from the acquisition of EM Solutions in the year ending 30 April 2025 is expected to be de-minimis.

 

22 Dec 24. The FT reported tonight that Palantir and Anduril, two of the largest US defence technology companies, are in talks with about a dozen competitors to form a consortium that will jointly bid for US government work. (Source: FT.com)

BATTLESPACE Comment: this is a procurement model which BATTLESPACE has been pushing for many years. It was highlighted at the recent C-UAS Conference at Chepstow in November where Denys Demko of the Ukraine gave an excellent speech highlighting that Ukraine’s weapons technology was refreshed every 6 weeks.

 

19 Dec 24. Hanwha closes $100m deal to take over Philly Shipyard. The deal is part of a series of aggressive moves Hanwha has taken to solidify its presence in the American defense industrial base this year. South Korean conglomerate Hanwha today announced it had closed its $100m deal to take a controlling stake of Philly Shipyard, capping off one of the company’s most aggressive moves this year to solidify its foot in the American defense industrial base.

“Hanwha Philly Shipyard begins an exciting new chapter today,” said David Kim, the newly appointed CEO of what is now called Hanwha Philly Shipyard. “We plan to grow and build on a long tradition of success, by expanding production using advanced technologies, and supporting the national revitalization of U.S. shipyards. Together, we begin working toward our vision for Hanwha Philly Shipyard: to be a trusted U.S. shipbuilder, challenging and redefining sustainable maritime solutions for commercial and government clients. We intend to do that by pushing the boundaries of shipbuilding by combining people with technology to build best-in-class vessels.”

A Hanwha executive told reporters in October that the company plans for Philly Shipyard to focus on securing US Navy contracts for specialty ships such as icebreakers, replenishment oilers and training vessels, but not warships such as destroyers. Hanwha made its initial offer to purchase Philly Shipyard, which until now was owned by the Norwegian industrial investment group Aker, in June. The shipyard, based in the eponymous city was once the site of a US Navy facility and has focused on producing container vessels and tankers under Aker’s ownership. In addition to acquiring Philly Shipyard, Hanwha this year also named Mike Smith to lead its American business unit, announced its first win of a repair contract for a US Navy ship and pursued, but ultimately dropped, a takeover bid submitted to Australian shipbuilder Austal, whose American subsidiary is a key contractor for the Pentagon. In the background of it all has been outgoing Navy Secretary Carlos Del Toro, who has made encouraging foreign investment into American shipyards a key element of his “Maritime Statecraft” initiative, as reported in this deep dive Breaking Defense report. He visited Hanwha and other Asian defense industrial giants early in the year and has publicly lobbied them to bring their money, technology and talents to benefit the US Navy. Those efforts have not always been welcomed by American industry. (Source: Reuters)

 

20 Dec 24. AAR CORP. (NYSE: AIR), a leading provider of aviation services to commercial and government operators, MROs, and OEMs, announced today that it has entered into a definitive agreement to divest its Landing Gear Overhaul business to GA Telesis. The transaction is valued at $51m and is expected to close in the first quarter of the 2025 calendar year, subject to customary and regulatory closing conditions. The divestiture will be immediately accretive to margins and earnings. The divestiture is part of AAR’s strategic plan to optimize its portfolio by investing in core functions that will accelerate its targeted growth and margin expansion initiatives. The transaction with GA Telesis includes AAR’s Miami, Florida, based Landing Gear Overhaul business, part of the Company’s Repair & Engineering segment, that provides full-service landing gear maintenance, repair, and overhaul services to commercial and government customers. AAR will remain prime contractor for the United States Air Force Landing Gear Performance Based Logistics contract, and the current maintenance services will be continued by GA Telesis as a subcontractor.

“This transaction will increase our operating margins, improve our cash flow and enable us to re-allocate resources to drive further growth in our core businesses,” said John M. Holmes, AAR’s Chairman, President and CEO. “We are confident GA Telesis will continue to deliver excellent service to the Landing Gear customers.”

CIBC Capital Markets served as AAR’s financial advisor, and Jones Day served as AAR’s legal advisor in this transaction.

 

19 Dec 24. VIAVI to Acquire Navigation Tech Pioneer Inertial Labs. VIAVI Solutions expands its positioning and navigation capabilities with the strategic acquisition of Inertial Labs. Viavi Solutions Inc. (VIAVI) has signed a definitive agreement to acquire Inertial Labs, Inc. for initial consideration of $150m at closing and up to $175m of contingent consideration over four years.  Headquartered in Leesburg, Virginia, Inertial Labs is a leading developer, producer, and supplier of high-performance orientation, positioning, and navigation solutions for aerospace, defense, and industrial applications.  Inertial Labs offers Inertial Measurement Units (IMU), Inertial Navigation Systems (INS), Assured Position Navigation and Timing (APNT), GNSS Tracking, LiDAR Scanning, Alternative Navigation (ALTNAV), and Visual Navigation solutions, which are highly complementary to VIAVI’s existing PNT and other aerospace and defense solutions. Additionally, Inertial Labs’ solutions include enabling utility inspection through LiDAR and photogrammetry algorithms and smart system navigation for airborne and autonomous ground vehicles to accelerate VIAVI’s entrance into industrial and autonomous delivery and transportation end markets. For the acquisition itself, VIAVI intends to fund the transaction through cash on hand, with the purchase expected to add approximately $50m to VIAVI’s Network and Service Enablement (NSE) annual revenue in calendar year 2025. It is also expected to be accretive to EPS within 12 months of closing. The acquisition has been approved by the Board of Directors of each company. It is expected to close during the first quarter of calendar year 2025, subject to certain regulatory approvals and customary closing conditions.

Jamie Marraccini, President and CEO of Inertial Labs, said, “We are excited that our expertise, precision solutions, and resources provide expansion opportunities for VIAVI in high-growth markets and applications such as drone-based LiDAR and camera systems.”

Oleg Khaykin, President and CEO of VIAVI, commented, “With a highly complementary product portfolio focused on alternate navigation solutions, this transaction supports VIAVI’s strategy to expand our presence in domestic and international aerospace and defense segments and accelerates our entry into autonomous air, land, and sea systems in the military and industrial end markets.”

This announcement comes as Inertial Labs begins its attendance at the Vietnam International Defense Expo 2024 from December 19-22 in Hanoi, at Booth B69. Here, present and future clients can explore the company’s innovative technologies for navigation, positioning, and defense applications. (Source: https://www.defenseadvancement.com/)

 

19 Dec 24. Aerospace firm AAR settles US charges over bribing foreign officials. Global aerospace company AAR Corp (AIR.N) agreed to resolve U.S. charges in connection with schemes to bribe Nepalese and South African officials, the U.S. Justice Department and the Securities and Exchange Commission said on Thursday. AAR agreed to pay more than $55m to resolve investigations by the Justice Department and the SEC into violations of the Foreign Corrupt Practices Act, which prohibits corrupt payments to foreign government officials, the Justice Department said. Deepak Sharma, a former AAR subsidiary executive, pleaded guilty in August for his role in the Nepal scheme, and Julian Aires, a third-party agent of AAR, pleaded guilty in July for his role in the South Africa scheme. AAR entered into an 18-month non-prosecution agreement with the Justice Department, the department said. The company confirmed the settlement in a statement of its own that said it had cooperated with authorities during the probe. AAR added it expects to fund these payments using a combination of cash on hand and borrowings under its revolving credit facility. (Source: Reuters)

 

20 Dec 24. VINCORION Reports Strong Growth and Projects Further Expansion in 2025. Technology company VINCORION has maintained its growth trajectory, reaching a milestone of EUR 200 m in revenue for 2024 – marking a substantial increase from the previous year. This positive development underscores the Wedel-based company’s robust position as a technology provider, with orders spanning from power generation systems for armed forces modernization, including generators for armored vehicles, to civilian aviation technology, such as the development of next-generation electric rescue hoists for helicopters.

“Our performance in 2024 demonstrates that German industry is taking its responsibility for national security seriously and is delivering the necessary capabilities,” says Managing Director Kajetan von Mentzingen. “The successful execution of key projects showcases the innovation potential and competence of Germany’s defense industry.”

Strategic Projects Gain Momentum

Notable achievements during the year included supplying critical components for the Leopard 2 main battle tank, such as observation modules for situational awareness and target acquisition, along with advancing power electronics development for the Puma infantry fighting vehicle. Of particular significance are new orders for the Leopard 2 from European nations.

For these and other tank platforms, VINCORION supplies the innovative GTD chaser modular weapon stabilization system, which the company unveiled at the Eurosatory defense exhibition in Paris in summer 2024. This system is implemented in current and future generations of the Leopard 2, as well as the PzH 2000 self-propelled howitzer and other vehicles.

The company’s Altenstadt facility in Bavaria focuses on manufacturing power generators for the Bundeswehr (German Armed Forces) and air defense systems for German and allied armed forces. The Essen facility primarily produces generators that deliver significant performance enhancement for the Boxer armored vehicle. VINCORION’s U.S. subsidiary ensures spare parts supply for the Patriot air defense system.

Growing Public Support

“Recent developments underscore the necessity to steadily advance Bundeswehr modernization,” explains von Mentzingen. “Our objective must be to substantially strengthen Germany’s defense capabilities by 2029. This requires sustained investment in modern equipment and forward-looking technologies.”

A recent representative study by the Bundeswehr Center for Military History and Social Sciences reveals a fundamental shift in public perception. “The findings are remarkable,” notes von Mentzingen. “82 percent of the 2,000 respondents expressed favorable views of the Bundeswehr, indicating increased public recognition of our armed forces’ significance.”

Particularly notable is the marked increase in support for higher defense spending: while only 41 percent favored an increase three years ago, that figure has risen to 58 percent. “This significant uptick confirms a fundamental shift in public awareness,” von Mentzingen emphasizes. “There is growing recognition that security and defense capabilities come at a cost.”

“The broad support for meeting NATO commitments is especially significant,” von Mentzingen adds. “70 percent of respondents support fulfilling financial commitments – representing a clear mandate for policymakers.” These figures also indicate the public’s realistic understanding of security policy challenges. Additional data is available in the appendix.

Future Investment Requirements

“Sustainable modernization of our armed forces will require additional investment,” von Mentzingen explains. “The previous special fund was an important first step. We now need to consider increasing defense spending to 2.5-3 percent of GDP to achieve our objectives.”

“Our international customers are seeking enhanced support from the German government for procurement of German systems,” the Managing Director reports. “The United States sets an example: their government acts as a partner, provides political backing for business, and establishes clear processes. We need a similar framework in Germany – it builds trust and enhances our attractiveness as a supplier.”

Collaborating with French or Italian industry partners presents challenges for German companies, von Mentzingen continues: “Each country maintains different regulations regarding military equipment supply. This unnecessarily complicates joint projects. We need standardized European regulations – otherwise, German companies risk exclusion from crucial future initiatives.”

Expanding Civilian Market Expertise

Beyond its core defense sector operations, VINCORION continues to strengthen its civilian market position. “Our technological expertise, particularly in power supply and drive technology, has significant civilian applications,” explains von Mentzingen. A current example is the development of next-generation helicopter rescue hoists, combining superior safety standards with cutting-edge technology.

Workforce Growth and Training Excellence

The company’s success is reflected in its expanding workforce, which grew to approximately 900 employees by 2024, with 550 based at the Wedel facility. “This growth underscores our attractiveness as an employer,” says HR Director Nina Römhild. The low turnover rate of less than three percent demonstrates high employee satisfaction.

VINCORION maintains a strong commitment to training: approximately 50 young people are currently enrolled in apprenticeships or dual-study programs. Programs range from electronics technician training for devices and systems to industrial engineering. “Training qualified specialists is central to our future strategy,” Römhild emphasizes.

“We see further growth potential for 2025,” says von Mentzingen. “Our innovative products and dedicated employees position us ideally to support armed forces modernization. We rely on close collaboration with all stakeholders.”

About VINCORION

VINCORION is a technology company headquartered in Wedel near Hamburg, with additional facilities in Germany and the United States. With approximately 900 employees, the company develops and manufactures innovative solutions in power systems, generators, power electronics, and stabilization and lifting systems.

The company brings decades of experience and unique engineering expertise, particularly in electrical power generation, conversion, storage, and management. This expertise serves both the security and defense sector and civil aviation.

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SPX CommTech, part of SPX Technologies Inc, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all. Formed by TCI and ECS, SPX CommTech’s Battlespace portfolio enables defence and security teams to detect, defeat and exploit RF signals to enhance communications intelligence (COMINT) and counter unmanned aerial systems (Counter-UAS). Additionally, its Tactical Data Link portfolio allows intelligence gathering agencies, special forces, emergency response, and security teams to securely and reliably transfer video and data between enabled-aircraft and ground teams over long distances for airborne Intelligence, Surveillance, Reconnaissance (ISR).

For more information visit www.tcibr.com and www.enterprisecontrol.co.uk

—————————————————————————————————————————————————————————————————————————————————————————————————————————————–

Sponsored by SPX Communication Technologies (TCI & ECS)

 

www.tcibr.com

 

www.enterprisecontrol.co.uk

 

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19 Dec 24. RTX aims to boost India headcount by 14% in 3 years, execs say. U.S. aerospace and defence giant RTX Corp plans to hire 1,000 more people to its 7,000-strong workforce in India by 2027, its top executives told Reuters, as it looks for more engineers and data scientists to power its global operations. The jobs will be added across RTX’s units, including around 300 engineers for aircraft engine maker Pratt & Whitney over the next 12-18 months, and 700 at the aerospace supplier Collins Aerospace over the next 3 years. Global aerospace and defence firms such as Airbus  Rolls-Royce Holdings (RR.L)  and Lockheed Martin also have technology and engineering operations in India. These units are known as global capability centres (GCCs) and support the companies in their daily operations, and research and development, among others. “India, from an RTX perspective, is not a low-cost destination. It is our talent hub. We have around 150 global roles, running their teams sitting out of India. Our biggest export is our talent,” said Collins Aerospace Vice President of Engineering Savyasachi Srinivas on Tuesday. (Source: Reuters)

 

19 Dec 24. Secretary of State Hilary Benn welcomes Harland and Wolff deal. Navantia UK agrees commercial deal to purchase Harland & Wolff. Secretary of State for Northern Ireland Hilary Benn has welcomed Navantia UK’s agreement to purchase all four Harland and Wolff shipyards, including its Belfast facility. The deal has secured 1,000 UK jobs and ensured the delivery of the Fleet Solid Support Programme to build three Royal Navy ships. In Belfast, around 500 jobs will be protected by the deal.  The deal supports delivery of the UK Government’s Plan for Change, safeguarding national security while raising living standards across the UK with good, skilled, productive jobs which foster economic growth.

The Secretary of State said: “This investment is great news for Belfast, for the Northern Ireland economy and, above all, for Harland and Wolff’s hugely skilled shipbuilding workforce.   Harland and Wolff is an iconic, internationally-renowned company with a long and proud history.  I am delighted that, with this deal, it will now have a bright future ahead.” (Source: https://www.gov.uk/)

 

17 Dec 24. Titanic shipbuilder Harland & Wolff to be saved by Spanish rival. Rescue deal worth £70 m for the historic shipyard is expected to secure more than 1,000 jobs across four sites. The historic shipbuilder that built the Titanic is on the cusp of being rescued by a Spanish state-owned rival in a £70 m deal expected to safeguard more than 1,000 British jobs. The board of Navantia is set to sign off on the rescue deal for Harland & Wolff, backed by the British government, in the coming days following several months of negotiations. As part of the deal the Spanish company will take over Harland & Wolff’s four sites in the UK, located in Belfast, Methil, Arnish in Scotland and Appledore in north Devon. Navantia will pay £70m for Harland & Wolff’s assets and is also set to agree improved terms on a contract to build three support ships for the Royal Navy. The Spanish shipbuilder is understood to have agreed to retain Harland & Wolff’s existing workforce for a set period of time, securing more than 1,000 jobs across the four shipyards, according to Sky News, which first reported the agreement. The rescue comes after months of uncertainty and financial problems for the historic shipbuilder, best known for building the Titanic. Harland & Wolff fell into administration in September after a review found it had no long-term funding available to support continuing costs. (Source: The Times)

 

18 Dec 24. GMB Union, the union for shipbuilders, has responded to a deal to save Harland and Wolff. GMB Union has reacted to the takeover of Harland and Wolff by Spanish firm Navantia, announced today [Thursday] .

Matt Roberts, GMB National Officer, said:  “Today’s announcement is a hugely positive step for retaining UK sovereign manufacturing.  But despite all four yards remaining open, GMB remains cautious.  Without a steady drum beat of work these yards will continue to struggle  GMB will continue the fight to ensure that does not happen.”

Matt Roberts, GMB National Officer, said: “This is good news for UK sovereign capability and capacity in renewables and shipbuilding, but challenges remain. GMB campaigned long and hard for all four Harland and Wolff yards to be included in any sale – so the fact they have all been saved, with the promise of all jobs retained and new jobs created is very welcome. However without proper investment into local skills and facilities at all four yards, and the onshoring of orders, the doom loop will be in danger of coming back. GMB will hold both Navantia and the Government’s feet to the fire to ensure promises are kept.”

 

18 Dec 24. ICEYE, the global leader in synthetic aperture radar (SAR) satellite operations for high-fidelity Earth Observation, persistent monitoring, and natural catastrophe solutions, today announced that it has closed a $65m extension of the company’s earlier growth funding round of $93m, announced in April 2024. The funding round extension included participation from funds managed by Solidium Oy, BlackRock, Seraphim, Plio Limited, and Christo Georgiev. The financing consists of a mix of debt and equity instruments and will increase investment in further developing ICEYE’s leading SAR satellite constellation, its intelligence, surveillance, and reconnaissance (ISR) platform, and related systems. The extension brings the total amount raised in 2024 to $158m. In total, ICEYE has raised over $500m to date. ICEYE has achieved considerable growth during the past years and the investment announced today enables ICEYE to continue expanding its ISR capabilities to serve a global customer base while further cementing its market-leading position in the new space ecosystem.

Susan Repo, CFO at ICEYE, said: “ICEYE has experienced unwavering momentum over the past few years. This extension of our growth funding round further bolsters ICEYE’s investment in its capabilities and enables us to respond even better to the growing demand for space-based technology in the global defense and ISR markets.”

Reima Rytsölä, CEO at Solidium, said: “Extending the growth funding to support ICEYE growth is well in line with our investment strategy. Our view is that ICEYE continues to have strong potential to grow to a nationally significant company and foster a completely new technology cluster in Finland.”

 

17 Dec 24. Thyssenkrupp pursuing spin-off for marine division. Thyssenkrupp (TKAG.DE) is pursuing a spin-off as the main option for divesting its defence business, a spokesperson said on Tuesday after a German newspaper reported several suitors had made offers for the unit. Carlyle (CG.O) and German state-lender KfW (KFW.UL) had been poised to take a majority stake in Thyssenkrupp Marine Systems (TKMS) but the U.S. investor dropped out in October, leaving Thyssenkrupp to pursue alternatives.

“Following the exit of Carlyle, we are sticking to our chosen path of making Thyssenkrupp Marine Systems independent. To this end, we are primarily preparing a spin-off of TKMS,” said a spokesperson when asked about a report in Handelsblatt.

Citing sources familiar with the process, the business daily reported that Thyssenkrupp had received several bids for its Marine Systems division, including from Rheinmetall (RHMG.DE) Luerssen and the German government. (Source: Reuters)

 

17 Dec 24. Filtronic – Strong Results Incoming? Although the shares of SpaceX supplier Filtronic have quadrupled in 2024, Mark Watson-Mitchell sees them rising a lot further, the shares now 76p, have broker Targets of 92p, he sees them even higher. Yesterday morning Filtronic (LON:FTC) announced its Trading Update for the six months to end-November, declaring that its Final Results for the year to end-May 2025 are now likely to exceed previous market expectations.

In response the group’s shares closed at 76p, up 5p on the day, a 7% rise following the new guidance.

The Business

The Sedgefield, Durham-based group is a designer and manufacturer of products for the aerospace, defence, space and telecoms infrastructure markets.

The group has been winning various contracts from SpaceX, for whom it is now a supplier of its E-band Solid State Power Amplifiers.

This year it has signed a major 5-year Strategic Partnership with SpaceX, a market leader in low earth orbit space communications, for the supply of Cerus solid state power amplifier products at multiple frequency bands.

It has also won contracts with the European Space Agency, BAE Maritime Services and Qinetiq, as well as continuing business with the UK Defence Science and Technology Laboratory.

 

17 Dec 24. Embraer (NYSE: ERJ/B3: EMBR3) proudly announces its new office (“Embraer Defense Europe”) focused on defense and security activities in Lisbon, Portugal, which will be linked to the Portuguese subsidiary entity of the Embraer group. With the opening of the office, the company marks a strategic milestone for its expansion in Europe, reinforcing Embraer’s commitment to strengthening its presence in the region, focusing on innovative defense and security solutions for NATO (North Atlantic Treaty Organisation) member countries and the European Union (EU). Embraer Defense Europe will meet all necessary NATO and EU requirements. It will serve as the spearhead of Embraer’s defense initiatives in Europe, with a dedicated team of highly qualified professionals specialized in program management, support, and engineering, to provide state-of-the-art solutions tailored to the needs of European armed forces and NATO partners.

“The subsidiary in Portugal is proof of Embraer’s long-term vision for Europe,” said Bosco da Costa Junior, President & CEO of Embraer Defense & Security. “We are committed to deepening our relationships with European and NATO partners, offering the most advanced and efficient capabilities to meet each customer’s operational needs.”

Several European countries already have Embraer’s support to modernize their operational capabilities with the C-390 Millennium multi-mission aircraft and the A-29N Super Tucano advanced training and light attack aircraft, including Portugal, Austria, Czech Republic, Hungary and Holland. The most recent countries to choose Embraer’s modern defense solutions are Sweden and Slovakia, which will join the C-390 Millennium program.

 

16 Dec 24. Amentum Reports Fiscal Year 2024 Results and Affirms its Fiscal Year 2025 Guidance.

Strong finish to Fiscal Year 2024 including a successful public market debut

GAAP Revenues of $8.4bn, 7% growth; GAAP Net Loss of $82m

Pro Forma Revenues of $13.9bn, 4% growth

Pro Forma Net Income of $32m; Pro Forma Adjusted EBITDA of $1,052m, up 7%

Amentum affirms its Fiscal Year 2025 Capital Markets Day financial guidance

Amentum Holdings, Inc. (“Amentum” or the “Company”) (NYSE: AMTM), a leading advanced engineering and technology company, today announced results for the fiscal year ended September 27, 2024, and affirmed its outlook for fiscal year 2025.

“We reported strong results for fiscal year 2024, delivering top-line and bottom-line growth,” commented Amentum Chief Executive Officer John Heller. “2024 was a significant year in our Company’s history, culminating in the merger of Amentum with Jacobs’ Critical Mission Solutions and Cyber & Intelligence businesses to create one of the strongest advanced engineering and technology companies in the industry. Today, over two months since the merger, we continue to be excited about the combined strength of these two historic businesses. We have transformed Amentum into a larger, more diversified company with broader customer reach and capabilities to deliver greater value to the world’s most complex challenges. In fiscal year 2025 we already see positive momentum and are confident in our outlook.”

GAAP revenues, which exclude Jacobs’ Critical Mission Solutions and Cyber & Intelligence (CMS) businesses, increased 7% year-over-year driven by new contract awards and growth on existing programs. GAAP operating income increased primarily as a result of a non-cash impairment charge that was recognized during fiscal year 2023. Operating income also benefited from reduced intangible amortization expense and the higher revenue volume. GAAP net loss and diluted loss per share improved year-over-year due to the higher operating income and a gain on the acquisition of a controlling interest, partially offset by higher interest expense and a loss on extinguishment of debt.

Pro Forma and Non-GAAP Results

Pro forma revenues, which include the results of CMS prepared in accordance with the requirements of Article 11 of Regulation S-X, increased 4% year-over-year driven by new contract awards and growth on existing programs partially offset by the expected ramp-down of other historical programs. Pro Forma Adjusted EBITDA increased 7% year-over-year primarily due to the higher revenue volume and improved operating performance. Pro Forma Adjusted Net Income and Adjusted Diluted Earnings Per Share increased due to the higher operating income partially offset by increased tax expense.

Backlog and Contract Awards

As of September 27, 2024, the Company had a total backlog of $45.0bn, compared with $26.8bn a year ago, an increase of $18.2bn primarily due the addition of backlog from CMS. Funded backlog as of September 27, 2024 was $7.6bn.

Notable Fiscal Year 2024 Awards

• U.S. Department of Energy (DOE) Hanford Integrated Tank Disposition Contract (HITDC) – The U.S DOE awarded HITDC, a ten-year $45 bn single-award indefinite delivery indefinite quantity contract, to Hanford Tank Waste Operations & Closure, LLC, a joint venture partnership which includes Amentum that will bring the most advanced environmental capabilities to safely clean up the Hanford Site near Richland, Washington.
• U.S. Naval Sea Systems Command (NAVSEA) Lifecycle and Engineering Solutions – The NAVSEA International Fleet Support Program Office awarded Amentum a five-year $592m contract to deliver life-cycle support, system upgrades, systems integration support, training, and other technical solutions to eligible allied international naval forces.
• U.K. Ministry of Defence (MOD) Hypersonic Technologies and Capability Development Framework (HTCDF) – Amentum secured a position across all lots on the HTCDF framework, which is valued at up to $1.25bn (£1bn) over seven years, and was established to accelerate development of a sovereign UK Hypersonic Capability, while bolstering AUKUS collaboration with Australia and the United States.
• U.S. Army Fixed Wing Aircraft Fleet Maintenance and Modernization – The U.S. Army’s Program Executive Office – Aviation, Fixed Wing Project Office awarded Amentum a six-year $946m contract to provide complete system maintenance and modernization solutions for the U.S. Army’s government-owned fixed wing transport aircraft fleet.
• Information Analysis Center Multiple-Award Contract (IAC-MAC) Research, Development, Test, and Evaluation (RDT&E) Solutions – Amentum was awarded multiple five-year task orders under IAC-MAC totaling over $350 m to deliver critical research and development capabilities in areas such as microelectronics, electronic warfare, and Intelligence, Surveillance, and Reconnaissance systems.
• U.K. and Australia Awards – Amentum was awarded contracts valued over $1bn in fiscal year 2024 to support the U.K. and Australian governments by providing solutions on pressing challenges, from energy transition and environmental remediation to cybersecurity and digital modernization.
• Commercial Awards – Amentum was awarded contracts valued at over $1 bn in fiscal year 2024 to support a variety of Fortune 500 customers in critical areas including: advanced product research and development; design, deployment and optimization of 5G networks, critical infrastructure management, and development of clean energy solutions.

(Source: BUSINESS WIRE)

 

17 Dec 24. Chemring, the FTSE 250 listed business specialising in the manufacture of high technology products and the provision of services to the aerospace, defence and security markets has announced its results for the year ended 31 October 2024. The business reported a record order book of £1,062m as it continues to play a vital role amidst a once in a generation shift in defence posture, driving growth over the next decade at least. In an environment of heightened geopolitical tension and increasing defence spending, Chemring has seen an unprecedented level of demand for its products. In response to increased demand, over the year Chemring was awarded £90m of grant funding support from Norway and the European Commission to increase the capacity of its Norwegian site, which produces energetics used in munitions.

The Board’s expectations for 2025 are unchanged, expecting a similar H2 weighting in FY2025.

Michael Ord, Group Chief Executive, commented: “2024 was another year of positive performance for Chemring as we continued to see heightened activity and progress across the Group amidst growing demand for our products and services. Our teams delivered on expectations despite the operational headwinds that we experienced in the first half of the year. Changing customer spending priorities in the face of increased global uncertainty and competition have resulted in the order book being at its highest level in Chemring’s history, giving us a strong and sustainable platform for future growth. The outlook for global defence markets is increasingly robust, with strong growth expected over the next decade. This growing visibility gives us the confidence to continue to invest for the future, balancing near-term performance with longer-term growth and value creation. Chemring is well placed to deliver on its many opportunities and we maintain our ambition to increase the Group’s annual revenue to c.£1bn by 2030.”

 

17 Dec 24. British defence specialist Chemring fell sharply as problems at a US factory knocked its margins and overshadowed a record high order book and forecasts of a decade of growth from increased defence spending. (Source: FT.com)

 

17 Dec 24. Chemring orders hit all-time high. The defence company sees record orders, but investors felt downbeat about the results. Defence companies have been in a sweet spot ever since Russia’s invasion of Ukraine highlighted the urgent need for NATO countries to undertake a rearmament programme after years of relative neglect. This backdrop meant that reported full-year results for defence company Chemring (CHG) were actually very good, with the company meeting or exceeding consensus forecasts, though this was hard to discern from the surprisingly negative market reaction on results day. Instead, investors chose to focus on currency headwinds and production problems at its plant in Tennessee – the defence industry is currently full of bottlenecks that need to be cleared before volume production can resume in earnest. For instance, global shortages of propellant are a problem for Chemring and all other contractors. However, it seems well on the way to addressing those problems. The company won £90m of grant funding to expand its site on Norway. Meanwhile, management has increased investment in its planned capacity expansion in the Energetics division from £120mn to £200m. In total, the company spent £70m on capital expenditure during the year to support its projects. Unfortunately, looking at capital outlay during the year meant the market ignored the record £1.03bn order book, which is up by an underlying 16 per cent on this point last year; it is now at the highest level in the company’s history. Indeed, Chemring can afford the luxury of knowing that a large proportion of its revenues are already now in the bag; the order book already covers 77 per cent of expected revenues for 2025, with coverage for individual segments such as Countermeasures up at 97 per cent. Demand for working capital was clearly a factor in investor nervousness, though this is a problem associated with success, rather than an indication of trouble ahead. Despite the demands on its capital budget, and the impact of rising inventory as Chemring stocks up to fulfil growing orders, working capital as a percentage of revenue was stable during the year at 17 per cent, with cash conversion of 102 per cent. There was also clear evidence that its government partners are more prepared to front the cash for expansion projects and to give future financial certainty by locking in longer contract times. The results were positive, and the shares are hardly priced for perfection at forward consensus earnings of just PE 15. The market may be wary of Chemring for past operational missteps, but current share price weakness is an opportunity. Buy. Last IC view: Buy, 388p, 4 Jun 2024. (Source: Investors Chronicle)

 

16 Dec 24. Lockheed Martin has announced the formation of Astris AI, a subsidiary focused on enabling the adoption of artificial intelligence (AI) solutions across the U.S. defense industrial base and commercial industry sectors that have high assurance requirements. Lockheed Martin has made significant investments in developing an industry-leading MLOps software capability, a generative AI platform tailored to high-assurance end users and building a robust team of AI experts. Through Astris AI, these resources are now available externally, creating the opportunity for the defense industrial base and commercial companies to develop and deploy secure, resilient and scalable AI solutions.

Embracing the Future: Astris AI Provides Access to Lockheed Martin’s Proven AI/ML Platforms

Astris AI’s solutions are positioned to address the rapid pace of technological advancements, costs and scaling challenges that organizations face in developing reliable, high assurance AI solutions. The foundational tools available through Astris AI include Lockheed Martin’s proven AI Factory Machine Learning Operations (MLOps) and generative AI software platforms, built with the security and compliance required for entities operating in highly regulated environments. With an open-architecture approach, these platforms offer technology and cost advantages through modularity, providing adaptable and resilient AI built to keep customers ahead of the continuously evolving technology environment.

Expert AI Engineering and Consulting Solutions: Astris AI’s Agile Approach to Secure AI Deployment

Astris AI also delivers end-to-end AI consultative engineering services, including MLOps and generative AI strategy, implementation, training and scaled model development and deployment, that will empower organizations to own and maintain their AI tools, data and solutions.

With the soaring global demand for AI specialists exceeding the available workforce, companies face strong barriers to entry to developing and deploying AI solutions at scale. Astris AI mitigates those challenges by leveraging Lockheed Martin’s talented team of AI engineers who provide domain expertise, technology and consulting solutions.

Steering Innovation: A Team of AI Pioneers

The infrastructure and experience of Lockheed Martin’s AI Factory ecosystem will serve as the backbone of the solutions being offered through Astris AI. The team of Lockheed Martin AI Center engineers supporting Astris AI is led by Mike Baylor, chief digital and AI officer, and Greg Forrest, director of AI Foundations.

“I’m proud to see the Lockheed Martin AI Center (LAIC) contributing to Astris AI’s goal of developing secure and scalable AI solutions,” said Forrest. “Lockheed Martin has made significant strides in AI/ML, and we’re excited to apply these advancements to support our customers and help strengthen the defense industrial base.”

Astris AI is led by Chief Revenue Officer Donna O’Donnell, a seasoned leader with extensive experience in AI/ML and automation, who is poised to drive the company’s growth. Previously, O’Donnell served as global vice president of AI and intelligent automation sales at Xerox, where she oversaw automation sales operations globally, delivering solutions in intelligent automation, robotic process automation, generative AI, intelligent document processing and machine learning. Prior to her time at Xerox, she held leadership roles at other leading technology firms, driving innovation and empowering teams.

“Astris AI is perfectly positioned to deliver AI/MLOps solutions across industries,” said O’Donnell. “By combining Lockheed Martin’s expertise with Astris AI’s agile approach, we’re enabling organizations to navigate the complexities of the rapidly evolving technology landscape with high assurance AI solutions that deliver secure and reliable interactions, compliance and responsible decision-making.”

The formation of Astris AI underscores Lockheed Martin’s commitment to advancing 21st Century Security®, strengthening the defense industrial base and national security, while also demonstrating its leadership in integrating commercial technologies to help keep customers ahead of the growing threat environment.

About Astris AI

Astris AI, a subsidiary of Lockheed Martin, is committed to enabling the adoption of AI solutions across the U.S. defense industrial base and other industries seeking high assurance solutions. Astris AI provides customers access to foundational AI tools, processes and talent to enable the deployment of secure AI solutions at scale, ensuring they stay ahead of rapid technological advancements. Astris AI is the latest addition to the Lockheed Martin Evolve portfolio, an organization that creates and scales new commercial and non-traditional businesses to bolster the defense industrial base. Visit AstrisAI.com to learn more.

Please follow Astris AI on LinkedIn for the latest announcements and news across the company.

 

11 Dec 24. The Israeli Ministry of Defense has significantly increased its investment in small companies and start-ups, pouring in approximately $168m over an 11-month period — five times more than the year before.

“The deepening cooperation between DDR&D [Directorate of Defense, Research & Development] and Israeli startups increases local manufacturing independence and strengthens the Israeli economy,” the ministry said in a statement, adding that it has worked with 86 Israeli startups and small companies over the last year, in addition to another 200 firms with whom DDR&D already worked.

Such a focus on startups and small firms was evident here at the Defense Tech Summit, held at Tel Aviv University last week. Over two days the auditorium was often overflowing, where officials perused the latest innovations from the Israeli tech scene — including several that focused on topics of keen interest since the war with Hamas began last October, like counter-drone systems, medical tech and artificial intelligence.

“Israeli defense tech is at an unprecedented time of growth, due to a sharp rise in global demand and defense spending as well as battle-proven momentum. We see a need for technology in many areas related to global security, in order to drive digitalization, automation and efficiency,” Ilana Sherrington, Director of Global Partnerships for an organization called Startup Nation Central, told Breaking Defense. “The number of new startups is on the rise, as well as more companies developing dual use applications — and investment is following this. With top talent and deep tech expertise, Israel is a natural hub for solutions in this area.”

The defense ministry’s focus on this subject was clear from the long list of officials who spoke, including presentations by Eyal Zamir, the Director General of the Israel Ministry of Defense; Daniel Gold, the head of Israel’s DDR&D; Avi Berger, the head of the space office at DDR&D; and Moshe Patel, the head of Israel’s Missile Defense Organization.

“We are constantly examining how to intercept drones with other drones and take down enemy drones using nets. During the war, we worked with dozens of startups in the field. We created a methodology for integrating a startup in the field — something the world is still trying to figure out,” Gold said.

On the second day of the summit, several smaller Israeli companies presented their technologies. The counter-drone firm Regulus, for example,  discussed how recent conflicts around the world have illustrated the need for counter measures against various types of unmanned systems.

Spear, which makes cannister-launched loitering munitions, also discussed its vision for using multiple loitering munitions to observe and strike targets. The trend with unmanned systems and also the need to counter them has progressed to smaller munitions and also smaller systems that can be put on vehicles. Israel’s experience in places such as Gaza and Lebanon have illustrated the need not only for drones that can be easily deployed, but also the need to be able to defend against a wide variety of drones.

Another trend in the presentations was an emphasis on medical technologies that can help in the field. For instance Xmetix showed off its “smart tourniquet.” This was designed to be deployed easily enabling the tourniquet to be placed on an arm or leg by putting it on, then pulling a pin and pressing a button.

The summit also included a discussion of a recent “hackathon” where dozens of teams had competed to solve several challenges identified during the war. One of the issues was making a system that could help carry stretchers over complex terrain. Another system addressed the need to help constrict blood flow in a wound that is not on an extremity, meaning in the neck or some other critical area, so that wounded do not bleed out.

Elsewhere, Sequoia Capital Global Partner Shaun Maguire said he sees sensors and AI as an area ripe for growth.

“Looking to the future, I expect we’ll see enormous sensors for various uses, and Israel can lead this field. Israel is also powerful in the quantum field,” he said. “I don’t think Israel missed the AI train, and the race is still ongoing. On the contrary, Israel is among the leaders in the field, and Israeli companies are among the most successful companies in the sector.”

Zamir, from the ministry, also highlighted AI’s increasing role.

“It is a revolution that brings new knowledge to every aspect of life, including defense capabilities. Whoever adapts first gets a massive advantage. If you are not all in technology, you will fall behind. This may sound visionary, but the future battlefield will allow swarms of mixed combat units – men and unmanned systems fighting together or fully autonomous units operating as one, capable of making their own decisions.” (Source: glstrade.com/Breaking Defense.com)

 

16 Dec 24. Stonepeak, a leading alternative investment firm specializing in infrastructure and real assets, today announced that it has entered into a definitive agreement to acquire Forgital Group (“Forgital” or the “Company”), a leading manufacturer of advanced forged and machine-finished components for aerospace and industrial end markets, from global investment firm Carlyle (NASDAQ: CG).

Forgital, founded in 1873, specializes in forged and laminated metallic rolled rings, with technologically advanced manufacturing capabilities across a broad portfolio of materials, including titanium, nickel-based alloys, aluminum, and steel. The Company serves a diverse range of end markets, including aerospace, defense, space, power generation, and oil & gas, and offers vertical integration across the entire forged components value chain, from process engineering to assembly, final machining, and testing. Forgital has a global workforce with an operational footprint across Europe and North America spanning nine facilities in Italy, France, and the United States.

Conor Sutherland, Managing Director at Stonepeak, said: “Forgital is an integral link in the global aerospace supply chain, and a trusted partner to leading aerospace manufacturers and industrial customers. We have high conviction in long-term aerospace end market demand and believe Forgital is positioned to benefit from these tailwinds. We admire Forgital’s strong business model, manufacturing excellence and distinguished reputation among its customers for quality and reliability. We are thrilled to make this investment and partner with Forgital’s dedicated management team and talented workforce to support Forgital’s continued success.”

Meddah Hadjar, CEO of Forgital, said: “I would like to thank the Carlyle team for their invaluable support, expertise and guidance over the last few years, which have been a significant period of change and development for Forgital. Stonepeak represents an ideal partner for the next stage of Forgital’s growth, bringing deep experience, global relationships, and operational expertise within sectors and businesses that are mission-critical to the supply chain. We are excited to leverage these resources to support our customers, and to partner with Conor and the rest of the Stonepeak team as we continue to develop Forgital’s manufacturing excellence and global capabilities.”

Marco De Benedetti, Chairman of Italy at Carlyle, said: “We are pleased to have supported Forgital through such a transformative period for the business. As a result of the investment, partnership, and the team’s sector expertise, we believe Forgital is well-placed to capitalise from long-term growth in its key end markets of aerospace & defence and industrial applications, and I have no doubt the business will continue to build upon its strong position today as a European leader in specialised forged products.”

The transaction is expected to close in the second quarter of 2025 and is subject to the satisfaction of customary regulatory approvals.

Simpson Thacher & Bartlett LLP, Legance – Avvocati Associati, Hogan Lovells International LLP, and Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal counsel to Stonepeak. J.P. Morgan Securities Plc served as financial advisor to Carlyle. Latham & Watkins LLP served as legal counsel to Carlyle.

About Stonepeak

Stonepeak is a leading alternative investment firm specializing in infrastructure and real assets with approximately $70 bn of assets under management. Through its investment in defensive, hard-asset businesses globally, Stonepeak aims to create value for its investors and portfolio companies, with a focus on downside protection and strong risk-adjusted returns. Stonepeak, as sponsor of private equity and credit investment vehicles, provides capital, operational support, and committed partnership to grow investments in its target sectors, which include digital infrastructure, energy and energy transition, transport and logistics, and real estate. Stonepeak is headquartered in New York with offices in Houston, London, Hong Kong, Seoul, Singapore, Sydney, Tokyo, and Abu Dhabi. For more information, please visit www.stonepeak.com.

About Forgital

Forgital is a leading, vertically integrated Group focused on the manufacturing of seamless rolled rings in rectangular or profiled sections, as well as assembled fan modules, covering the largest range of sizes. Forgital specializes in forging rolled rings, with technologically advanced capabilities across a broad range of materials, including titanium, nickel and cobalt alloys, carbon steel, alloy steel, stainless steel and aluminium. Forgital’s Compact Supply Chain simplifies the production process of its customers through an integrated system of technologies and services which encompasses all the steps of the project: from the pre-processing to the post-processing phase (including finishing, welding and macroetching).

About Carlyle

Carlyle (NASDAQ: CG) is a global investment firm with deep industry expertise that deploys private capital across its business and conducts its operations through three business segments: Global Private Equity, Global Credit and Global Investment Solutions. With $447 bn of assets under management as of September 30, 2024, Carlyle’s purpose is to invest wisely and create value on behalf of its investors, portfolio companies and the communities in which we live and invest. Carlyle employs more than 2,300 people in 29 offices across four continents. Further information is available at www.carlyle.com.

 

16 Dec 24. Honeywell explores separation of aerospace business. US industrial conglomerate Honeywell is exploring a separation of its aerospace business.  (Source: FT.com)

 

16 Dec 24. Ricardo has announced the conditional sale of its defence business, which makes integrated vehicle parts for the US army, to Proteus Enterprises and Gladstone Investment Corporation for $85m. Ricardo is also buying 85 per cent of Australian infrastructure advisory firm E3 Advisory for about A$101.4m (£51m), with completion conditional on the sale of Ricardo Defense. It expects to buy the remaining 15 per cent of E3 by January 2028. (Source: The Times)

 

15 Dec 24. Israel Aerospace ready for IPO, awaits government approval, CEO says. State-run Israel Aerospace Industries (ISRAI.UL) is ready for an initial public offering in Tel Aviv but awaits the go-ahead from the government, IAI chief executive Boaz Levy said on Sunday. A ministerial privatisation committee in November 2020 had approved a plan where Israel could sell up to 49% of IAI, the country’s largest defence firm, on the Tel Aviv Stock Exchange, bringing in bns of shekels.

“We are moving towards an IPO,” Levy said at an investor conference at the TASE. “In the past year our business results have continued IAI’s growth trend. We are currently experiencing phenomenal performance.”

He said that according to the government’s decision that has already been approved, there will be an IPO of a minority stake in IAI as soon as the finance and defence ministries “reach a decision that it is time to do it.” (Source: Google/Reuters)

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SPX CommTech, part of SPX Technologies Inc, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all. Formed by TCI and ECS, SPX CommTech’s Battlespace portfolio enables defence and security teams to detect, defeat and exploit RF signals to enhance communications intelligence (COMINT) and counter unmanned aerial systems (Counter-UAS). Additionally, its Tactical Data Link portfolio allows intelligence gathering agencies, special forces, emergency response, and security teams to securely and reliably transfer video and data between enabled-aircraft and ground teams over long distances for airborne Intelligence, Surveillance, Reconnaissance (ISR). For more information visit www.tcibr.com and www.enterprisecontrol.co.uk

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Sponsored by SPX Communication Technologies (TCI & ECS)

 

www.tcibr.com

 

www.enterprisecontrol.co.uk

 

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12 Dec 24. Solid State sees tentative signs of cyclical improvement.

Solid State LON:SOLI, the Redditch-based electronic components distribution and manufacturing company, has published its interims for the six-months to end-September.

Management for the company warned that the last six-month’s results were impacted by depressed trading conditions, with Nigel Rogers, chairman, saying: “These results reflect difficult trading conditions in the first half of the year due to a combination of factors, mostly cyclical in nature but some unforeseen.  Management have taken steps to mitigate their effect, and the board is confident that ongoing investment in facilities and people will build a strong platform for strategic growth.”

• Invinity launches next-gen battery pack
• Brave Bison bets on Engage Digital
• Cropper partners with Oxford Uni for battery research

One of the significant issues was that a GBP10m order, which would have brought GBP3m of profit into the business, that was anticipated in in the current financial year was actually delivered in the last financial year ending in March, and had this been delivered post-March, revenues and profits would have hit GBP72m and GBP5.5m.

Revenues and profits behind expectations

As it was, however, Solid State reported revenues for 1H24/25 of GBP61.8m, which was down nearly 30% year-on-year from GBP88.1m. Profit-before-tax came in at GBP1.2m, again well-behind the GBP6.1m from the same period a year ago, some 80% behind.  Debt fell by GBP1.9m y-o-y to GBP2m.

Rogers was hopeful that sunnier fields were ahead. He said: “Leading indicators, including the rate of design activity, suggests that the electronics market appears to have reached the bottom of the cycle, and this is reinforced by the improvement in order books since the period end.  The delay in revenues from the most recent tranche of Communications products was unexpected, and there are good grounds to be optimistic that these programmes will be resumed after due process.”

Solid State recently won two significant contracts in the US worth USD5.1m (GBP3.8m) to supply battery packs to two American defence contractors, with deliveries beginning early next year, and the contracts fulfilled by the end of 2025. The company said that both programmes have the potential for multi-year framework agreements.

These deals align with Solid State’s stated strategy to develop its business through the delivery of multi-year, multi-product programmes as a valued partner to international blue-chip customers.

Solid State confident of a return to growth

Rogers explained: “[We] are confident of a return to a growth trajectory, whilst taking a cautious approach to short term earnings guidance and dividend policy to recognise some uncertainty on timing.”

(Source: https://www.thearmchairtrader.com/)

 

12 Dec 24. Fleet raises $150m in enormous investment round. Fleet Space Technology has cemented its position as one of Australia’s most valuable space companies after it raised a further $150m from investors. The rare ‘series D’ funding round is a dramatic increase from the $5m, $35m and $50m brought in through its A, B and C rounds, respectively. The latest cash injection was led by a Canadian teachers pension fund alongside previous investors such as such as Blackbird Ventures, Hostplus and Horizons Ventures.

“This funding is not just a testament to Fleet Space’s growth, strong investor confidence, and sustained innovation in core technologies needed to address dual challenges of climate change and mineral exploration,” said Federico Tata Nardini, Fleet’s CFO.

The company’s extraordinary rise has been led by its satellites that can detect minerals underground from space. The technology effectively allows mining companies to both speed up the hunt for minerals and reduce costs by lowering the need for invasive land surveying.

‘ExoSphere’ has led Fleet to be named one of Australia’s fastest-growing companies, boasting clients such as Rio Tinto, Barrick Gold, and Core Lithium.

It has recently expanded its global footprint to include the US, Canada, Chile, and Luxembourg and now employs more than 130 people.

“Current mineral exploration methods are inadequate for efficient discovery and production,” said Rick Prostko, from investor Teachers’ Venture Growth.

“Fleet Space addresses this with advanced 3D subsurface imaging and AI analysis tools, which have the potential to sustainably transform the industry.”

The news comes after Fleet in April blasted off a next generation Centauri-6 satellite that uses advanced sensors to scan beneath the Earth’s surface.

Fleet co-founder Flavia Tata Nardini hailed it as a “portal into a future of efficient, mass-scale satellite manufacturing”.

“Humanity’s expanding satellite infrastructure is rapidly unlocking new capabilities that can help to address some of the most pressing challenges facing our planet,” she said.

“At current rates of mineral discoveries and production, our net-zero goals and clean energy future are unattainable in the coming decades.”

Aside from mineral detecting, the firm, which specialises in nanosatellites, is also creating a device known as SPIDER that could detect minerals on the moon’s south pole.

The SPIDER project — Seismic Payload for Interplanetary Discovery, Exploration and Research — will see Fleet build a three-component seismic station that can record continuous seismic data for up to 14 days. It’s set to be deployed in 2026.

“The convergence of innovation in space, AI, and 3D subsurface imaging represents a foundational pillar of the core technology set that will enable humanity to build permanent research stations on the Moon, Mars, and beyond,” said Matt Pearson, Fleet’s chief exploration officer.

“The flywheel we’ve created by continuously enhancing the subsurface understanding of Earth through the global deployment of ExoSphere simultaneously drives advances in the technology needed to build highly scalable, data-driven exploration systems for new worlds.”

(Source: Space Connect)

 

12 Dec 24. Capital Markets Day: HENSOLDT raises medium-term EBITDA target and presents new growth strategy

• Book-to-bill ratio (ratio of order intake to revenues): forecast for 2024 specified as around 1.2x; significantly faster growth in order intake than in revenues expected in the medium term
• Revenue growth: revenues of around EUR 2,300m expected in 2024; medium-term target of 10% average annual growth
• Adjusted EBITDA margin: 18-19% in 2024 before pass-through business; medium-term target raised to ~20%
• Adjusted free cash flow: Cash conversion of adjusted EBITDA of around 50% expected for 2024 and 50-60% in the medium term
• Dividend distribution: stable at 30-40% of adjusted net income
• ‘North Star’: New corporate strategy for sustainable growth presented

The HENSOLDT Group (‘HENSOLDT’) confirmed its outlook for the 2024 financial year and raised parts of its medium-term target at its Capital Markets Day in London. While the company continues to expect an adjusted EBITDA margin before pass through business of ~18-19% in 2024, it is expected to increase to ~20% in the medium term. HENSOLDT continues to successfully convert its high order backlog into profitable revenues – this year expected to be around EUR 2.3bn. For 2025, the company is targeting a low double-digit percentage revenue growth rate, with a mid-term annual average growth rate of 10%.

Due to the tense security situation in the world, HENSOLDT expects a strong growth in defence spending in the future as well. The demand for defence electronics is likely to increase at an above-average rate in the medium term. With a market growth of around 10% in Germany and around 7% in Europe and the international markets, there is great potential for orders.

Oliver Dörre, CEO of HENSOLDT, said: “We will continue to benefit from significant and sustained market growth driven by the high demand for defence solutions in Germany, Europe and worldwide. As a technology and innovation leader in the field of defence electronics, we are strongly positioned in the market and can count on strong political support with the German government as our anchor shareholder. With our new ‘North Star’ strategic vision, we have a clear plan for transforming our company and making it fit for the future. Our goal is to achieve revenues of around 5 bn euros by 2030 – primarily through organic growth.”

Christian Ladurner, CFO of HENSOLDT, said: “I am confident that we will achieve our guidance for fiscal year 2024 and our medium-term targets. A key factor here is our excellent revenue visibility from existing orders. This gives us planning security and allows us to consistently invest in future-oriented technologies while implementing a sustainable dividend policy. The synergies from the ESG acquisition – around EUR 19 m each in costs and revenues by 2028 – are a further factor supporting our growth and profitability. With this strong financial foundation, we will continuously improve our strategic positioning in the rapidly changing defence environment.”

The forecast for the book-to-bill ratio for the 2024 financial year was already specified at around 1.2x as part of the 9M reporting in November, while the previous assumption was 1.1x-1.2x. In the mid-term, HENSOLDT expects order intake to grow significantly faster than revenues. For adjusted free cash flow, an average cash conversion of adjusted EBITDA of approx. 50% is forecast for 2024 and 50-60% in the mid-term. The company expects net debt to be lower than 2x EBITDA in 2024, with a further decline in the medium term. HENSOLDT continues to target a dividend payout ratio of 30-40% of adjusted net income, both for 2024 and in the medium term.

High revenue visibility for the next years

In the first nine months of fiscal year 2024, the order backlog amounted to EUR 6.5bn, which is equivalent to a very high level of revenue visibility. For 2025, 86% of the forecast revenues are already covered by the existing order backlog. This includes confirmed orders as well as short-cycle and aftermarket business.

North Star: Strategic vision for sustainable growth

At its Capital Markets Day, HENSOLDT presented its new ‘North Star’ strategy for the first time, which will ensure continuous and robust growth and further strengthen the company’s market position as a leading provider of defence and security solutions. North Star forms the basis for the company’s transformation into HENSOLDT 2.0 and combines all of the company’s initiatives and investments. The overarching goal is to establish a robust growth model that combines innovation, operational excellence and global reach. ‘North Star’ is based on four axes:

• Grow with focus

In order to grow sustainably and purposefully, HENSOLDT is selectively expanding its international presence. The goal is to generate around 50% of revenues in Germany, 30% in Europe and 20% in strategically important global markets by 2030. This will be achieved by setting clear priorities in business development, implementing focused key account management and improving the integration of sales and business development. By investing in regional structures and partnerships, HENSOLDT will tap into new market and customer potential without neglecting its strengths in its home market.

• Deliver at scale

Another central aspect of North Star is the ability to efficiently meet increasing demand. HENSOLDT is focusing on expanding its production capacities, industrial manufacturing of core products and optimising supply chains. At the same time, the internal organisation is being made more agile and efficient, for example by introducing digital tools such as SAP S/4HANA or outsourcing more engineering services. These measures will enable the company to increase its production and delivery capacity, ensure quality and adherence to delivery dates, and guarantee strong margin development in the long term.

• Pioneer Software-defined defence (SDD)

SDD is a decisive factor for the Western alliance in countering the huge number of potential opponents on the battlefield with a new class of networked systems and consistent digitalisation. SDD decouples hardware and software, thereby allowing the rapid and cost-effective adaptation of sensor technology. In addition, SDD increases the scalability and resilience of defence systems and improves their interoperability. To achieve this, data from different platforms must be collected, processed and analysed in real time. As a sensor specialist and system integrator, HENSOLDT has unique capabilities in this area and is ideally positioned to play a key role in the development towards SDD. In doing so, the company will expand its offering to include services based on SaaS subscription fees and expand its portfolio of multi-domain solutions. This will strengthen its market position, broaden its business model and open up new revenue streams.

• Lead our team into the future

Employees are at the heart of the company and the basis for any growth strategy. In order to position HENSOLDT as the employer of choice in the defence industry, the company promotes a culture of innovation and collaboration, offers targeted training programmes and invests in modern working environments. These measures ensure that HENSOLDT will continue to have a highly qualified, motivated team that can achieve its ambitious goals.

With the clear direction of the ‘North Star’ strategy and a strong financial foundation, HENSOLDT is ideally positioned to consistently exploit the opportunities offered by a growing defence market. Through technological innovation, a strong market position and the targeted development of new business areas, the company will achieve sustainable growth and create long-term added value for customers, partners and investors. HENSOLDT remains a key player in the defence sector and a convincing partner for the security challenges of tomorrow.

The Capital Markets Day presentation in London is available on the Investor Relations website of HENSOLDT AG. The preliminary results for the full year 2024 are expected to be published on 27 February 2025.

 

11 Dec 24. Allient Inc. (Nasdaq: ALNT) (“Allient” or the “Company”), a global designer and manufacturer of precision and specialty Motion, Controls and Power products and solutions for targeted industries and applications, today announced the launch of its Allient Defense Solutions (ADS) Business Unit (BU). This exciting vertical market initiative underscores Allient’s commitment to expanding its presence in high-growth markets and driving long-term value for customers and stakeholders. With a newly structured, specialized sales and support team, ADS will integrate Allient’s comprehensive technology offerings to streamline processes and foster innovation.

Dick Warzala, Chairman and CEO, commented, “The launch of Allient Defense Solutions is a pivotal milestone in our vertical market strategy, highlighting our dedication to delivering compact, lightweight, high-performance system solutions to the defense industry. By strategically aligning our talent, technology, and resources, we are positioned to create transformative value across Land, Air, and Sea Defense applications. I am confident this focused approach will simplify processes for our customers while setting new performance standards in the industry.”

This marks the Company’s first vertical market-focused initiative, aligning with the rebranding and vertical market strategy announced at its 2023 Investor Day. The launch was initiated during the Association of the United States Army (AUSA) event in October 2024, where Allient introduced this new focus to industry leaders.

To support this initiative, the Company implemented an internal restructuring within its various functional units to ensure success:

• Steve Warzala has been appointed President of the Allient Defense Solutions BU and will assume the role of Corporate Vice President.
• Ken May, Allied Motion CTO and Corporate Vice President, will lead ADS systems engineering and program support services.
• Dave MacMillan, Senior Director of Business Development, will lead the expanded ADS business development efforts and the dedicated ADS sales team.
• Brandon Hunter has been named General Manager for Allient – London, Ontario (formerly FPH), Allient’s structural and lightweighting composites Technology Unit.
• Jesse Dowd is the new General Manager for Allient – Rochester (formerly Ormec), the Technology Unit responsible for leading Servo Control Solutions development for all markets and Custom Critical Solutions development for the Aerospace & Defense markets.

The restructuring includes Allient’s Global Engineering Team (GET), led by Ken May, to accelerate decision making and product development efforts and ensure they are more closely aligned with Allient’s customers and markets. GET resources will be redeployed and aligned with ADS or other Allient BUs. A streamlined Corporate GET Team will uphold the discipline of using common development tools, processes, training, standards, and quality control measures, fostering a cohesive, “One Team” approach throughout the Company.

About Allient Inc.

Allient (Nasdaq: ALNT) is a global engineering and manufacturing enterprise that develops solutions to drive the future of market-moving industries, including medical, life sciences, aerospace and defense, industrial automation, robotics, semi-conductor, transportation, agriculture, construction and facility infrastructure. A family of globally responsible companies, Allient takes a One-Team approach to “Connect What Matters” and provides the most robust, reliable, and high-value products and systems by utilizing its core Motion, Controls, and Power technologies and platforms.

Headquartered in Buffalo, N.Y., Allient employs more than 2,500 team members around the world. To learn more, visit www.allient.com. (Source: BUSINESS WIRE)

 

10 Dec 24. J.F. Lehman & Company Raises $2.2bn for Oversubscribed Fund VI. J.F. Lehman & Company (“JFLCO”), a leading middle-market private equity firm focused exclusively on the aerospace, defense, maritime, government and environmental sectors, today announced the successful closing of its latest flagship fund, JFL Equity Investors VI, L.P. and affiliated investments vehicles (“Fund VI”).  At $2.23bn, the offering marks the largest in the firm’s 33-year history and was meaningfully oversubscribed relative to its $1.6bn target. Fund VI will enable JFLCO to continue to execute its long-standing investment strategy leveraging over three decades of specialized industry knowledge and demonstrated operational capabilities to help companies reach their full potential.  The new fund increases the firm’s total assets under management to $7bn as of November 30, 2024.

“The highly successful outcome of this marketing effort reflects our demonstrated ability to source intrinsically valuable companies, drive tangible improvements across our portfolio and the substantial confidence placed in our team,” said Louis N. Mintz, Partner.  “We are determined to continue to generate attractive risk-adjusted returns as we continue to deploy and manage Fund VI.”

“We are grateful for the support from our longstanding partners, many of which endorsed our efforts early in the process with increased conviction,” added Karina Perelmuter, Managing Director, Investor Relations & Marketing.  “We are equally appreciative of the trust and confidence placed in our team by the many new partners backing our sector-focused strategy.”

UBS Securities LLC acted as placement agent for Fund VI and Davis Polk & Wardwell LLP served as legal adviser.

 

10 Dec 24. COHORT PLC Announces half Year Results. Record first half performance; strong growth in adjusted* operating

Cohort plc, the independent technology group, today announces its half year results for the six months ended 31 October 2024.

Financial highlights

• Revenue, adjusted* operating profit and net funds all ahead of recent guidance.
• Revenue up 25% to £118.2m (2023: £94.3m).
• Adjusted* operating profit up 69% to £10.1m (2023: £6.0m). A net margin of 8.5% (2023: 6.4%).
• Adjusted* earnings per share of 20.00 pence (2023: 10.36 pence) reflecting the marked improvement in performance.
• Order intake of £139.2m (2023: £119.1m), 1.2x the period’s revenue (2023: 1.3x).
• Record closing order book of £541.1m (30 April 2024: £518.7m).
• Interim dividend increased by over 10% to 5.25 pence per share (2023: 4.70 pence per share) continuing the Group’s long standing track record of progressive dividend growth.
• Net funds of £37.9m at 31 October 2024 (31 October 2023: £13.3m net funds; 30 April 2024: £23.1m net funds), well ahead of expectations due to working capital flows that included strong customer advances.

Operational highlights

• Increased revenue was driven by higher UK MOD sales within both divisions but particularly from within the Communications and Intelligence division.
• Both divisions achieved strong growth in adjusted* operating profit with the Sensors and Effectors division more than doubling last year’s reported result.
• Order intake benefited from a strong performance within the Communications and Intelligence division, with significant orders being received at EID.

Looking forward

• The order book of £541.1m includes over £120m of revenue deliverable in the second half:

o  Taking into account revenue recognised in the first half, this covers over 99% of consensus forecast revenue for the full financial year.

o  Revenue deliverable in future years from committed orders continues to grow, with the duration of the order book extending to the mid-2030’s.

• The current year outlook for the Group remains unchanged:

o  In line with previous experience, we anticipate a stronger Group performance in the second half.

o  Increased delivery in the Sensors and Effectors division is expected to drive the expected full-year growth in Group profit performance.

• We continue to see a positive outlook for organic growth in the medium term.

*  Adjusted figures exclude the effects of marking forward exchange contracts to market value (£100k charge; 2023: £6k charge), amortisation of other intangible assets (£1.0m; 2023: £1.6m) and acquisition costs (£199k; 2023: £nil).

Acquisitions

• The Group announced the conditional agreement to acquire the entire issued share capital of EM Solutions Pty Ltd on 21 November 2024, post reporting date. This acquisition is expected to complete shortly and be materially accretive to adjusted EPS in the first full financial year of ownership (2025/26) and thereafter.
• The Group also completed the acquisition of Interactive Technical Solutions Limited which has been integrated within the C&I division where it will continue to provide technical support and services both externally and to other members of the Group.

Commenting on the results, Nick Prest CBE, Chairman of Cohort, said: “Cohort delivered a much stronger performance in the first half compared to the same period last year, with growth in both revenue and adjusted operating profit. Continued strong order intake has driven a record closing order book which underpins most of the second half of this financial year. In line with previous experience we anticipate a stronger performance in the second half and we remain on track to achieve our expectations for the full year. The continued expansion of the order book is a strong indicator that we are offering competitive products in a growing market. On-order revenue is now deliverable out to the mid-2030’s. The pipeline of order opportunities for the remainder of the year also looks strong. Demand for our solutions and services continues to be driven by heightened international tensions in the Asia-Pacific region as well as conflict in Europe and the Middle East. This backdrop is driving increased spending on defence and security. Overall, we continue to see a positive outlook for organic growth in the years ahead.”

 

11 Dec 24. Cohort continues to impress. The defence and security specialist’s prospects have been boosted further by a material acquisition. There have been some recent jitters amongst defence stocks after US president-elect Donald Trump called for an “immediate ceasefire” in Ukraine. But the war has highlighted long-term underinvestment in defence and security in Europe, as has the incoming US administration’s more antagonistic view of Nato. Aim-traded mini-defence conglomerate Cohort (CHRT) is navigating this demand context well, and is benefiting from heightened tensions in the Asia-Pacific and Middle East, evidenced by the company’s disclosure of a record order book and revenue growth of a quarter in its first half.

Sales to the UK Ministry of Defence (MOD), which contributed an increased 56 per cent of total revenue in the half, drove the revenue and profit performance. Both the communications and intelligence and sensors and effectors units delivered robust adjusted operating profit growth, as profit jumped 69 per cent to £10.1m. The net margin improved from 6.4 per cent to 8.5 per cent, with progress being made towards management’s medium-term mid-teen target.

Encouragingly, management expects its Portuguese communications systems business EID, which has been loss-making over the past couple of years, to return to profit over the full year on the back of “long-awaited” naval orders.

The order book sat at £541m at the period-end, up from £519m in April. and representing an order cover of 99 per cent of the analyst consensus for annual revenue. Order intake of £139m was 1.2 times revenue in the half.

Meanwhile, the £74m acquisition of high-margin naval defence communications business EM Solutions (the transaction is expected to complete imminently) provides a tasty long-term opportunity. Clients include the Australian navy, Norwegian navy and Dutch defence department. The deal was part-funded through a £41mn share placing and retail offer.

Chief executive Andy Thomas said the company was in discussions with more “big potential customers” for EM Solutions.

Net funds improved by £15m to £37.9m, although a net cash outflow is anticipated in the second half, given capex, working capital movements and the EM Solutions purchase.

Cohort trades on 20 times forward consensus earnings, a higher rating than at Chemring (CHG), as well as bigger sector beasts BAE Systems (BA.) and Lockheed Martin (US:LMT). The share price has more than doubled over the past year. But, as analysts at Shore Capital argued, Cohort is “visibly becoming a strategic supplier with clients, justifying a premium valuation”, and there is an expectation of “strong news flow continuing for shareholders”. We remain bullish on the outlook. Buy. Last IC view: Buy, 860p, 17 Jul 2024. (Source: Investors Chronicle)

 

09 Dec 24. Raytheon Launches New Business Segment for Capturing Sustainment Defense Contracts. Raytheon has launched a team dedicated to providing sustainment services to defense programs. The new Aftermarket Sustainment and Services group will capture business opportunities within the aftermarket segment, RTX said Thursday.

Raytheon Giving More Attention to Sustainment

In an RTX press release, Joe DeAntona, vice president of requirements and capabilities for land and air defense systems at Raytheon, pointed out that sustainment is often an afterthought among customers. He also noted that customers do not allot the same funding to sustainment compared to acquisition.

However, the executive explained that sustainment is critical, especially in times of conflict.

“It is the biggest discriminator on the battlefield,” DeAntona commented. “The force that sustains on the battlefield will win.”

Tony Walters, director of sales and business development for land and air defense systems at the Arlington, Virginia-headquartered company, gave the company’s work on the National Advanced Surface-to-Air Missile System, which is being used by Ukrainian forces against Russian troops. According to him, a Raytheon team has previously provided tele-maintenance support to Ukraine’s NASAMS system.

The air defense platform is equipped with technologies developed by Raytheon and Norway’s Kongsberg Defence & Aerospace.

Raytheon’s Sustainment Market Prediction

Although sustainment contracts are often worth less than procurement for new technology, RTX expects the new Aftermarket Sustainment and Services segment to deliver steady revenue.

Kevin McCarthy, associate director of sales and business development for land and air defense systems at Raytheon, shared that the team’s goal is to provide additional value to customers.

He stated that sustainment has the potential to increase customer satisfaction and even boost the defense contractor’s chances of winning future projects. (Source: Google/https://executivebiz.com/)

 

09 Dec 24. EDGE Group Marks Five Years of Innovation, Growth and Global Success. EDGE Group marks its five-year anniversary, celebrating its emergence as a global powerhouse in advanced technology and defence. Since its establishment in November 2019, EDGE has charted a transformative path defined by unprecedented growth, strategic partnerships, and breakthrough innovations. The group has redefined the landscape of advanced technologies and sovereign defence capabilities, establishing the UAE as a driving force for innovation and technological excellence.

Since its inception in 2019, EDGE has expanded its product portfolio from 30 to 201 cutting-edge solutions across air, land, sea, and cyber domains – a rapid growth of more than 550% in just five years. During this time, EDGE has also significantly scaled its global footprint, with its solutions now reaching customers in 91 countries. International orders have surged from USD 18.5 m in 2019 to over USD 2.1 bn in 2024, underscoring the group’s expanding influence in global markets. Additionally, annual revenue has reached USD 4.9 bn in 2024, reflecting the remarkable financial growth driven by its strategic investments and innovation.

H.E Faisal Al Bannai, EDGE Group Chairman, said: “In a constantly evolving and highly competitive international defence landscape, it was almost inconceivable that a new disruptor from the UAE could, in just five years, rise so rapidly to become a global industry player punching way above its weight across multiple domains. This is a testament to the vision and tenacity of the UAE Government, and is largely thanks to our highly skilled and diverse workforce, whose dedication and drive for excellence has ensured that EDGE is in a position to move boldly into a new era of international growth.

“This remarkable progress, driven by multi-bn-dollar investments in research and development, has resulted in ground-breaking advancements covering the spheres of air, land, sea, cyber, and space, with a focus on autonomous solutions, smart systems, and electronic warfare – all areas where we have an ambition to lead. EDGE continues to set new benchmarks, to forge mutually beneficial partnerships worldwide, and to build upon the progress we have made as a national vanguard of future technologies.”

EDGE’s swift ascent has been underscored by a series of landmark contracts. As of September 2024, EDGE Group-managed companies have secured contracts with an order backlog totalling USD 12.8 bn, ensuring sustained future revenue growth through the delivery of strategic defence solutions to end-users. In 2023, the group secured over 200 major contracts, with 25% of these representing international agreements. By September 2024, international contracts accounted for 42% of its order intake. Among its notable achievements, EDGE secured a EUR 1 bn contract to supply corvette vessels to the Angolan Navy, marking a significant milestone in its naval capabilities. Strategic agreements with the UAE Armed Forces include USD 1.62 bn for DESERT STING precision-guided munitions and USD 582 m for THUNDER, illustrating its pivotal role in addressing the unique needs of both local and international clients. EDGE’s leadership in precision-guided munitions was further acknowledged by JANES in 2024, naming EDGE among the top three global manufacturers in this field.

EDGE’s footprint is reinforced by a total of 13 international acquisitions and strategic investments, including stakes in key companies such as Estonia’s MILREM Robotics, Swiss unmanned helicopter manufacturer ANAVIA, Brazil’s non-lethal tech leader Condor, and Brazil’s smart weapons specialist SIATT. These acquisitions, along with nine others, have enhanced EDGE’s capabilities across land, sea, air, and cyber domains, unlocking opportunities in cutting-edge sectors and strengthening its competitive edge globally.

Established a strong network of 23 joint ventures has also played a central role in the group’s success, enhancing its expertise and extending its competitive edge across key domains. In May 2024, EDGE and shipbuilding giant Fincantieri formalised the launch of MAESTRAL, a strategic shipbuilding joint venture in Abu Dhabi. In the same month, EDGE signed an agreement to launch a joint venture with Spain’s Indra Sistemas to develop and manufacture radar systems within the UAE, reinforcing EDGE’s market presence and technological strength.

A hugely significant strategic partnership has flourished with Brazil, marking EDGE’s expansion in South America. In April 2023, EDGE opened a regional office in Brasília and soon after signed an agreement with the Brazilian Navy to co-develop MANSUP anti-ship and supersonic missiles. This collaboration was followed by a broader strategic partnership that positions EDGE as a long-term partner to the Brazilian Navy, co-investing in advanced solutions, including UAE-developed anti-jamming technology. Most recently, EDGE and the Brazilian Navy agreed to cooperate on anti-drone systems, fostering an even stronger relationship.

EDGE’s success would not have been possible without a focus on attracting and retaining local and global talent. With over 14,100 employees representing 95 nationalities, the group has made significant investments in developing a highly skilled workforce. Emiratisation remains a key priority, with UAE nationals making up 23.5% of the workforce. The EDGE Learning & Innovation Factory, launched in 2022, has been pivotal in upskilling employees and fostering a culture of innovation. To date, over 3,600 EDGE employees have received advanced training, positioning the group as a leader in the adoption of 4IR technologies.

EDGE is recognised as a Great Place to Work®, earning certification in 2024 for its outstanding workplace culture and employee engagement. This accolade complements its excellence in innovation and operational efficiency, exemplified by the ROI-EFESO INDUSTRIE 4.0 Award received in November 2022 in Munich, Germany, for ‘SMART WORKFORCE’ leadership in Industry 4.0 solutions. Further bolstering its reputation, EDGE was honoured with the ‘Treasury Transformation’ award at the ACT Middle East 2024, highlighting its achievements in financial innovation and strategic management.

As EDGE enters its sixth year, the group remains firmly committed to its founding mission: to be agile, bold, and disruptive in the pursuit of technological excellence. Through its relentless focus on partnerships, innovation, and talent, EDGE is poised to continue blazing a trail in shaping the future of advanced technologies, both in the UAE and globally. (Source: Defense Arabia)

 

01 Dec 24. Mitsubishi Electric’s ME Innovation Fund + Global Brain + ANA Holdings invest in Zenno Astronautics Ltd. Mitsubishi Electric Corporation (TOKYO: 6503) has revealed that the firm’s ME Innovation Fund has invested in Zenno Astronautics Ltd., a New Zealand-based startup company that develops superconducting technology for space applications — this is the ninth investment that the fund has made to date. As satellites have become smaller and less expensive and the number of satellite launches is increasing rapidly, the importance of attitude control, a vital technology for the operation of artificial satellites, has also increased. Attitude control plays a crucial role in the success of a satellite’s mission, such as communication, observation, and data collection by adjusting and maintaining the satellite’s attitude, allowing for precise positioning of communication antennas, cameras, and sensors. Zenno Astronautics, led by a CEO who has been studying space applications of superconducting technology for many years, is a developer of an innovative satellite attitude control component that uses superconducting technology to efficiently generate a magnetic field with small energy loss. In addition to being smaller than conventional components, this component has advantages in many areas including generation of high-efficiency torque with lower power consumption. By investing in Zenno Astronautics, the goal of Mitsubishi Electric is to boost the company’s competitiveness in the space business by studying and evaluating the technology of Zenno Astronautics’ satellite attitude control component with the vision of applying it to the company’s satellites. (Source: Satnews)

 

01 Dec 24. SatVu secures £20m cash injection to expand high-resolution thermal imaging. SatVu has secured £20m in strategic funding, comprising a £10 m landmark equity round co-led by European venture capital firm Adara Ventures and existing investor Molten Ventures, and an insurance payout. This investment is the first from the newly established Adara Ventures Energy Fund, which is committed to fueling groundbreaking technologies that drive the energy transition across Europe. SatVu’s thermal imaging capabilities have already made waves in the EO sector. The company’s HotSat constellation, led by the launch of HotSat-1 in June of 2023, has redefined how Earth is monitored by capturing 3.5 meter resolution thermal data, unlocking new levels of insight into global carbon emissions and energy activity.  The £20m injection will accelerate the build and launch of HotSat-2 and HotSat-3, both of which are expected to ship for launch in 2025. These satellites will provide critical, near real-time thermal data, essential for understanding energy transition, monitoring infrastructure and economic activity, and driving targeted action towards climate mitigation and resilience, contributing to vital decision-making as the world progresses toward net-zero. The funding will empower SatVu to continue pushing boundaries, with applications ranging from economic activity monitoring and national security to urban heat mapping and climate resilience. SatVu’s infrared technology provides a new dimension of data, enhancing our understanding of the world and driving urgent action toward a more sustainable future.

Anthony Baker, CEO & Co-founder, SatVu, said, “With the invaluable new support from Adara Ventures, alongside the continued backing of our existing investor network, we’re accelerating our mission to deliver unparalleled thermal insights that empower industries and governments to take decisive climate action. The launch of HotSat-2 and HotSat-3 will bring us closer to a net-zero future by providing the data needed to address the most pressing environmental and energy challenges of our time.”

“We are thrilled to embark on this journey with CEO Anthony Baker and the SatVu team,” said Alberto Gómez, Founding Partner at Adara Ventures. “By harnessing high-resolution thermal imaging technology to unlock previously inaccessible data, we believe SatVu is well-positioned to fuel a new generation of data applications across multiple use cases that monitor energy efficiency, economic activity, renewable generation, and beyond.”

Patrick McCall, Venture Partner, Seraphim, said, “At Seraphim, we’re proud to support SatVu as they redefine Earth observation with their groundbreaking thermal imaging technology. Building upon the insights gained from HotSat-1, the launches of HotSat-2 and HotSat-3 will offer extraordinary high-resolution thermal data. This advancement will redefine our understanding of energy production, infrastructure activity, and emission dynamics – informing critical decisions as the world strives towards net-zero. To achieve transformative climate action, we must be guided by the data. SatVu’s technology provides the essential intelligence our planet requires, paving the way for a sustainable future.” (Source: Satnews)

 

09 Dec 24. Thoma Bravo selling CyberArk stake for $370m. The US investment firm became a party-at-interest in the Israeli cybersecurity company earlier this year when it sold Venfai to it for $1.54bn in a cash and share deal. The share price of CyberArk (Nasdaq: CYBR) fell 1.3% on Friday after US investment fund Thoma Bravo put over 1.14m shares up for sale. Thoma Bravo became a party-at-interest in the Israeli cybersecurity company earlier this year when it sold Venfai to it for $1.54bn in a cash and share deal. At CyberArk’s current share price, Thoma Bravo is selling shares for $370m. Bank of America is acting as underwriter in the offering. CyberArk, led by CEO Matt Cohen, was founded by executive chairman Udi Mokady and Alon Cohen in 1999, and held its Nasdaq IPO in 2014. The company manages privileged accounts and identity management in organizations, and expanded the market in which it operates through the recent acquisition of Venafi, which is engaged in machine identity management. CyberArk’s share price has risen 47.6% in 2024 giving a market cap of $14.1bn, making it the fourth most valuable Israeli company traded on Wall Street after Check Point, Teva, and monday.com. (Source: News Now/en.globes.co.i)

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SPX CommTech, part of SPX Technologies Inc, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all. Formed by TCI and ECS, SPX CommTech’s Battlespace portfolio enables defence and security teams to detect, defeat and exploit RF signals to enhance communications intelligence (COMINT) and counter unmanned aerial systems (Counter-UAS). Additionally, its Tactical Data Link portfolio allows intelligence gathering agencies, special forces, emergency response, and security teams to securely and reliably transfer video and data between enabled-aircraft and ground teams over long distances for airborne Intelligence, Surveillance, Reconnaissance (ISR).

For more information visit www.tcibr.com and www.enterprisecontrol.co.uk

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Sponsored by SPX Communication Technologies (TCI & ECS)

 

www.tcibr.com

 

www.enterprisecontrol.co.uk

 

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05 Dec 24. Safran plans significant US expansion of defense and space business. French technology company Safran is significantly expanding its defense and space business in the United States, including investments in manufacturing across several states. Newly branded Safran Defense & Space Inc. will focus on bringing its high-tech solutions in satellite propulsion and communication, geospatial artificial intelligence and GPS-denied navigation to the U.S. in a more robust way, Joe Bogosian, Safran president and CEO, told Defense News in a recent interview. Safran is also well known for its best-selling commercial jet engine it developed in a joint venture with General Electric.

While the company’s technology has been integrated into many U.S.-based weapon systems, such as the commander’s site on the Army’s new M10 Booker armored fighting vehicle, Bogosian said, the U.S. expansion will enable even better collaboration with the U.S. military and defense industry and foster continued innovation with American engineers and developers.

“I think it meshes well with kind of a new thinking in the U.S.,” Bogosian said.

“What is the best available technology or the asymmetric warfare to give our guys an unfair advantage? If that unfair advantage comes with a technology that’s five years ahead of its time compared to anything else in the U.S. and just happens to come from France, we can bring it from France,” he said, “and we can put it here and put further design, further engineering and manufacturing, all in the U.S. and you start to morph that technology into a U.S. variety.”

The company will soon open its new headquarters in Arlington, Virginia. Colocated at the headquarters will be the company’s new geospatial artificial intelligence business grown from a recently purchased French AI company with the ability to crunch a massive amount of data very quickly. The newly acquired technology surprised everyone in the room during a demonstration for Special Operations Command in Florida meant to show how the technology can rapidly count cars and boats in an area. It suddenly flagged the presence of a Russian MiG fighter jet, according to Bogosian. The system was not mistaken; it turned out there was a MiG on display outside of an aviation museum in Miami. Expansions to current Safran facilities include its electro-optics and infrared systems facility in Bedford, New Hampshire, and the Safran Federal Systems facility for Assured Positioning, Navigation and Timing in Rochester, New York. The company is also setting up its newest facility for small satellite propulsion in Denver, Colorado. Once established, Bogosian sees the potential for expansion beyond producing plasma propulsion systems for satellites to include other capabilities, such as Safran’s Hemispherical Resonator Gyroscope, which has been tested by the U.S. military.

“We feel the demand for HRG is going to double, and so clearly, it just opens the door for another capability to be brought into the U.S.,” he said.

Additional investment will be made in testing and telemetry operations in Norcross, Georgia. (Source: Defense News Early Bird/Defense News)

 

05 Dec 24. US Navy sub builder acquires advanced steel manufacturer to support expansion of AUKUS sub construction capacity. Key US Navy ship and submarine builder Huntington Ingalls Industries has entered into a definitive agreement to acquire South Carolina-based complex metal fabricator W International and Vivid Empire, specialising in the manufacture of shipbuilding structures, modules and assemblies, including nuclear-powered submarines. Upon completion of the transaction, the manufacturing facility in Goose Creek, South Carolina, will operate within Huntington Ingalls Industries’ (HII) Newport News Shipbuilding (NNS) division, with the site to support the construction of nuclear-powered submarine and aircraft carrier modules and structures for US Navy programs and will help support the US delivery of conventionally armed, nuclear-powered submarines to the Royal Australian Navy under the trilateral AUKUS agreement.

As part of this acquisition, all current employees will be offered positions with HII to continue to work on site.

HII president and CEO Chris Kastner highlighted the pivotal role this acquisition will play in expanding the US submarine production capacity and its impact on AUKUS timelines, saying, “It lets us efficiently add trained talent and state-of-the-art manufacturing capabilities to the urgent job of building ships, making it a unique opportunity to accelerate throughput at Newport News Shipbuilding in support of the Navy and AUKUS.” The acquired assets include advanced production facilities with state-of-the-art equipment, tooling and infrastructure used to fabricate complex metal modules and structures, and are located on a leased 45-acre site with more than 480,000 square feet of manufacturing space.

The site has barge and rail access, and is strategically located near Charleston, in a region with a rapidly growing shipbuilding ecosystem and highly skilled trades workforce.

Kastner added, “HII is committed to increasing build rates for our Navy customer, and this investment in capacity alongside the Navy will help us do that.”

The facility in Goose Creek will be known as Newport News Shipbuilding – Charleston Operations, operating within HII’s Newport News Shipbuilding division. Current NNS vice president and chief transformation officer Matt Needy will become general manager of the site. (Source: Defence Connect)

 

06 Dec 24. Denel turnaround hits obstacles. Unreleased funding and the non-sale of assets and properties are some of the challenges threatening Denel’s turnaround strategy. In a recent presentation to Parliament’s Portfolio Committee on Planning, Monitoring and Evaluation, Denel provided an update on its turnaround, which is aimed at making the company more efficient, reducing debt, providing working capital, improving morale, regaining market share, and regaining strategic capabilities, amongst others. Achievements include Section 189 retrenchments as part of restructuring, appointing new leadership, reducing ICT and infrastructure costs (R112m per annum), reducing staff costs (R433m per annum), and partially settling legacy debt. Still on the to do list is settling remaining legacy debt; improving skills, leadership, and employee morale; upgrading equipment, including ICT infrastructure; and improving on programme delivery.

Turnaround has been hampered by a number of issues, including R900 million of recapitalization funds being held back due to certain turnaround conditions not being met, and the sale of non-core assets not being approved. This includes resistance from the Department of Defence (DoD) to selling shares in Hensoldt South Africa.

Denel’s latest turnaround was supposed to raise R5.2 billion to achieve sustainability, with Denel raising R1.8 billion by exiting/selling non-core assets, and government providing the remaining R3.3 billion. This was boosted by R1 billion coming from the Denel Medical Benefit Trust, allowing production to restart and salaries to be paid.

The R3.3 billion from government was only made partially available from the end of March 2023, with the balance conditional on the sale of non-core assets. “The sale of non-core assets has met with resistance from the DoD and so far not been realised, with the balance of legacy debt, trade creditors and critical capex funding still ring-fenced and not released by the National Treasury,” Denel stated. This leaves it “in a cash constrained vulnerable position.”

Denel is meeting with National Treasury and the Department of Defence on releasing ringfenced funding.

On the positive side, Denel told the committee that it has stabilised and secured some critical skills as well as brought operations online and is delivering on key programmes: for the South African Army’s G5 and G6 upgrade programmes (Projects Muhali and Topstar), initial deliveries were made in November 2023. Progress was also reported on development of the Badger infantry fighting vehicle for the South African Army under Project Hoefyster, and the completion of the Malaysian AV8 programme, for which Denel supplied turrets and missiles.

Denel has also restarted the supply of barrels, spares and product support, and restarted the A-Darter air-to-air missile programme: trainer missiles are due for delivery to the SA Air Force this month, and production missiles next year.

Upgrades to Umkhonto surface-to-air missiles for Finland were demonstrated, and Denel is supporting Seeker unmanned aerial vehicle (UAV) systems of the South African National Defence Force and the United Arab Emirates (UAE). Also for the SANDF, Denel is working on the next phase of the SA Army’s Ground-Based Air Defence System (GBADS).

On the negative side, Denel Pretoria Metal Pressings (PMP) “continues to battle with production constraints by equipment and infrastructure failures and requires immediate critical capex to continue operating, but substantial external investment, technology and leadership to take a step-up to true sustainability. A strategic partner that can provide funding as well as leadership knowledge is to be considered to exploit the opportunity to grow PMP again,” the company said in its presentation.

Denel said it is pursuing business worth R26 billion and to this end between August and October 2023 carried out live firing demonstrations of its truck-mounted T5 155 mm 52 calibre howitzer and G6 155 mm self-propelled howitzersat the Alkantpan test range. Representatives from eleven countries attended.

“R3.9bn of new orders contributing to Denel’s sustainability have been secured over the last year. The SANDF being the greater share,” the company reported. Denel hopes to achieve R3.5 billion revenue in 2026/27 and operating profit of R342 million. It recorded an operating loss of R500 million before interest and tax for March 2024.

(Source: https://www.defenceweb.co.za/)

 

05 Dec 24. Safran CEO says French crisis creates uncertainty, defence budget at risk.

• Summary
• Companies
• Says possible budget rollover adds pressure on defence
• Safran looking at France, US or Canada for carbon brakes plant
• Safran sets up proxy structure to expand US defence role

The fall of the French government has created political and economic uncertainty that can sap investor confidence, the head of partially state-owned Safran (SAF.PA), opens new tab said on Thursday.

“Obviously it creates political and economic uncertainty, that’s clear. It’s a situation that investors – whether financial, economic or industrial – don’t like,” CEO Olivier Andries told reporters, adding that a possible rollover of the 2024 budget into next year could harm the defence sector.

Jet engine maker Safran, 11% owned by the French government, is one of the world’s largest aerospace suppliers and its activities include strategic sectors such as defence and space.

Andries was among the first high-profile French CEOs and the first leader of a privatised group to address the fallout of France’s growing political crisis.

The euro zone’s second-largest economy faces uncertainty over its 2025 budget after far-right and leftist lawmakers toppled Michel Barnier’s minority government on Wednesday.

If parliament has not passed a budget by Dec. 20, a caretaker administration could propose emergency legislation that would roll over spending limits from 2024, pending the installation of a new government and a new 2025 budget bill.

Andries noted that this was the most probable scenario.

“In defence, that will create pressure,” he told reporters during a briefing on the group’s latest financial targets.

“Beyond that, where the pressure will land and how the defence ministry will manage that, I can’t say,” he said, adding: “The pressure is already there; we are feeling it”.

FACTORY SHORTLIST

Political and economic stability are among factors in a long-awaited decision on where to place a new carbon brakes factory, with France, the United States and Canada shortlisted, Andries said, adding that stable energy prices would be most critical.

Safran announced plans in 2019 to open a new factory for energy-intensive carbon brake production in Lyon, France.

The idea fell victim to the pandemic in 2020 and in 2022, plans to take advantage of a rebound in air travel by renewing the project were postponed for another 18-24 months as European energy prices soared following Russia’s invasion of Ukraine.

Safran is now looking at other options in addition to France for the plant, with a decision due in the first half of 2025.

Andries said Safran would look at three main criteria: competitive energy prices, stable and clean supplies based on nuclear or hydraulic power and a 10-year visibility on prices.

“After that, there are other criteria of economic and political stability,” he said.

“The first option is obviously France,” he said. Others included Quebec, where hydroelectric power is among the most competitive, and Oregon where energy prices are regulated.

European manufacturing firms are bracing for possible U.S. tariffs announced by the incoming Trump administration.

Safran is among Boeing’s (BA.N), opens new tab largest suppliers via a joint venture with GE Aerospace (GE.N), opens new tab to produce engines.

The French company is also the latest European supplier to try to target the world’s largest defence and space market by setting up a secure proxy structure in the United States. (Source: Reuters)

 

04 Dec 24. D-Fend Solutions, the leader in field-proven radio frequency (RF) cyber-based, non-kinetic, non-jamming, counter-drone – takeover technology, announced today that it has secured $31m in the initial closing of a new investment round. The round was led by Israel Growth Partners (IGP), with participation from existing investor Vertex Ventures and new investor Vertex Growth. This funding underscores the critical role of D-Fend’s proven innovations in enabling full control, safety, and continuity for security agencies in multiple sectors, while acting against continually rising rogue drone incidents across complex and sensitive environments. With this investment round, IGP General Partner Uri Erde join’s D-Fend’s Board of Directors, joining existing investor board members Yoram Oron of Vertex Ventures and Rami Hadar of Claridge Israel.

The funding will enable D-Fend to solidify its technological leadership and capabilities, expand its market reach into new territories and sectors, and advance its ability to tackle new and evolving drone risks. The funding round comes on the heels of strong continuous year-over-year revenue growth of over 60% and diverse and balanced expansion across geographies, sectors, and use cases. D-Fend’s global installed base has now reached nearly 30 countries, including Five Eyes (FVEY) alliance, G7 and major NATO member states. This investment will further support efforts to address constantly changing threats, penetrate additional market segments, integrate with more partners and technologies, and establish a stronger global presence for the company.

“This funding is a testament to the trust our investors have in our vision, technology, growth, brand, and customer base,” said Zohar Halachmi, CEO and Chairman of D-Fend Solutions. “The growing size, scope, and complexity of rogue drone threats demands advanced, precise, and reliable solutions. This investment will enable us to continue innovating and expanding our capabilities, ensuring we remain at the forefront of counter-drone technology, while delivering unparalleled control, safety and, uniquely, operational continuity to our global defense, homeland security, law enforcement, airport, and critical infrastructure customers.”

The investment follows an in-depth evaluation by IGP, who had previously been the sole institutional investor in Cellebrite (NASDAQ: CLBT), the global leader in digital investigation solutions for public safety and security agencies, prior to its IPO. IGP views D-Fend as a pioneering disruptor operating alongside some of the world’s largest aerospace and defense companies.  By providing its solution to the most demanding security agencies, D-Fend stands out for its groundbreaking RF cyber-takeover technology, and its ability to deliver unparalleled safety and operational continuity.

“D-Fend Solutions fits the profile and model which we find very attractive—a category creating company that develops and deploys deep and defensible technology to address threats posed by the mass proliferation of beneficial but also potentially dangerous devices and products, in this case drones,” said Uri Erde, General Partner of Israel Growth Partners. “Their innovative approach to counter-drone security, drawing upon a multi-disciplinary approach crossing air defense, electronic warfare and cybersecurity domains, combined with their reputation and proven ability to deliver and meet the needs of militaries, homeland security, and law enforcement agencies, positions them as a market leader in safeguarding sensitive environments against rapidly rising drone threats.”

D-Fend’s flagship technology, EnforceAir, employs RF cyber-takeover techniques to safely neutralize rogue drones without collateral damage or operational disruption in a highly controlled and surgical manner. Recognized by Booz Allen Hamilton as an innovator for its cyber takeover effector within the top emerging defense and security technology of non-kinetic counter-UAS, D-Fend Solutions has led cyber-takeover as a distinct and essential technology category within this space. Deployed on a massive scale and hailed by defense establishments as a success, EnforceAir protects sensitive environments—including military zones, airports, critical infrastructure, prisons, and public events—ensuring operational continuity and safety in even the most challenging scenarios.

About D-Fend Solutions

D-Fend Solutions is the leading counter-drone, cyber-takeover technology provider, enabling full control, safety, and continuity during rogue drone incidents across complex and sensitive environments to overcome both current and emerging drone threats. With thousands of successful deployments performed worldwide, in the most challenging real-life scenarios and for the most demanding end users, EnforceAir, the company’s core offering, focuses on the most dangerous drone threats in military, public safety, airport, prison, major event, critical infrastructure, and other environments. D-Fend Solutions’ technology has been chosen as best-in-class and is deployed by top-tier U.S. government agencies – including with U.S. military, federal law enforcement, and homeland security – as well as major international airports globally. EnforceAir autonomously executes RF cyber-takeovers of rogue drones for safe landings and controlled outcomes, ensuring the smooth flow of communications, commerce, transportation, and everyday life.

About Israel Growth Partners:

Israel Growth Partners (IGP) is a technology growth fund, empowering exceptional tech companies at growth stage and supporting strong management teams as they strive to build large global companies and become category leaders. We provide our companies with growth capital, strategic guidance, and firsthand experience – all aimed towards accelerated growth and successful partnership. (Source: PR Newswire)

 

04 Dec 24. Gogo Inc. (NASDAQ: GOGO) (“Gogo” or the “Company”) today announced the completion of its acquisition of Satcom Direct (“SD”), creating the only multi-orbit, multi-band, in-flight connectivity provider serving the needs of every segment of the global business aviation (“BA”) and military/government mobility markets.

Gogo paid $375m in cash and issued five million shares of Gogo stock to SD ownership at close and could pay up to an additional $225m tied to realizing performance thresholds over the next four years. The transaction, including fees, was funded with $250m of debt and $150m of cash from the Gogo balance sheet.

The interest rate on Gogo’s incremental debt is SOFR plus 6%, and the Company’s annual interest expense will increase by an estimated $25m to $27m. Gogo’s net leverage ratio at yearend 2024 is estimated to increase to 3.6x, and the Company expects to be back inside its target leverage range of 2.5x-3.5x within one to two years.

The transaction is immediately accretive, with $18m of annual recurring cost savings achieved immediately after closing, and a total expected $25m to $30m in annual run-rate cost synergies to be achieved in the two years after close.

The acquisition is expected to accelerate sales of Gogo’s soon-to-launch Galileo Low Earth Satellite (“LEO”) connectivity product, by:

• selling Gogo Galileo to SD’s 1,300 premium global broadband customers,
• selling new Galileo installs through the SD international sales force to the 12,000 medium and smaller business aircraft outside North America that have no broadband solution available today, and
• leveraging SD’s strong presence in the Mil/Gov market where there is strong demand for LEO connectivity in combination with SD’s GEO connectivity.

Combining with SD cements our position as the only in-flight connectivity provider able to satisfy the performance and cost needs of every segment of the global BA market,” said Oakleigh Thorne, Gogo Executive Chair. “With the launches of our next-generation LEO and 5G technologies, Gogo and SD are uniquely positioned to drive growth and future value creation.”

Gogo’s principal shareholders, GTCR, a leading private equity firm, and Thorndale Farm Inc., have expressed strong support for the acquisition and did not sell any shares in the transaction, reflecting their confidence in the long-term value creation potential of the combined company.

Leadership Transitions

In connection with the completion of the combination, Chris Moore, President of SD, has been appointed Gogo’s Chief Executive Officer and will lead the combined company, bringing years of satellite and telecommunications experience and success to his new role. He succeeds Thorne, who transitions to Executive Chair of the Gogo Board of Directors.

Moore said, “Uniting the complementary strengths of Gogo and SD marks an exciting new chapter for us as one company. Together, we are uniquely positioned to deliver unparalleled in-flight connectivity solutions across the underpenetrated global BA and military/government mobility markets. I am excited to expand Gogo’s reach and continue its legacy of exceptional service and cutting-edge technology.”

In addition, Zachary Cotner, Chief Financial Officer of SD, has been appointed Chief Financial Officer of the combined company, succeeding Jessi Betjemann. Mike Begler, who previously served as Senior Vice President of Gogo Production Operations, has been appointed Executive Vice President, Chief Operating Officer of the combined company.

Thorne continued, “I want to thank Jessi for her years of commitment and financial leadership at Gogo and wish her the best in her next chapter. As I transition to the Executive Chair role, I remain deeply committed to Gogo as a leader and an investor and look forward to working closely with Chris, Zach, Mike and our world-class team.”

Reiterates 2024 Guidance and Product Launch Timelines

Gogo reiterates the following standalone 2024 financial guidance previously provided on Tuesday, November 5, 2024:

• Total revenue in the range of $400m to $410m,
• Adjusted EBITDA in the range of $120m to $130m, which includes legal expenses from ongoing legal proceedings and approximately $20 m of operating expenses for strategic and operational initiatives including Gogo 5G and Gogo Galileo,
• Free Cash Flow in the range of $55m to $65m, which includes $35m in reimbursements tied to the FCC Reimbursement Program, and
• Capital expenditures of approximately $30m, which includes approximately $20m for strategic initiatives.

As previously disclosed upon announcement of the transaction, the combined company is expected to generate pro forma 2024 revenue of approximately $890m, Adjusted EBITDA Margin of approximately 24% and Free Cash Flow of more than $100m. Including the anticipated launch of Gogo Galileo, the combined company is expected to deliver long-term annual revenue growth in the 10% range, Adjusted EBITDA Margins in the mid-20% range and significant Free Cash Flow accretion, which will support strategic investments, de-levering and return of capital to shareholders. See “Non-GAAP Financial Measures” below.

Additionally, Gogo reiterates that its small-form-factor Galileo HDX LEO service remains on track to begin shipping to customers by the end of 2024, and it expects to launch its large form factor Galileo FDX, and its Gogo 5G network, late in the second quarter of 2025.

About Gogo

Gogo is a leading provider of inflight connectivity services able to satisfy the performance and cost needs of every segment of the global business aviation and government markets. We offer a customizable suite of smart cabin systems for highly integrated connectivity, inflight entertainment, and voice solutions. Gogo’s products and services are installed on thousands of business aircraft of all sizes and mission types from turboprops to the largest global jets, and are utilized by the largest fractional ownership operators, charter operators, corporate flight departments and individuals. In addition, Gogo delivers consistent, reliable connectivity globally to military and government customers that utilize heavy jets.

As of September 30, 2024, Gogo reported 7,016 business aircraft flying with its broadband ATG systems onboard, 4,379 of which are flying with a Gogo AVANCE L5 or L3 system; and 4,180 aircraft with narrowband satellite connectivity installed. Connect with us at www.gogoair.com.

 

04 Dec 24. AeroVironment Announces Fiscal 2025 Second Quarter Results.

AeroVironment, Inc. (“AeroVironment” or the “Company”) reported today financial results for the fiscal second quarter ended October 26, 2024.

Second Quarter Highlights:

• Record second quarter revenue of $188.5m up 4% year-over-year
• Second quarter net income of $7.5m and non-GAAP adjusted EBITDA of $25.9m
• Funded backlog of $467.1m as of October 26, 2024
• Announced its entry into an agreement for the acquisition of BlueHalo in an all-stock transaction with an enterprise value of approximately $4.1bn

“AeroVironment continues to deliver strong results, including record second-quarter revenue along with a healthy funded backlog that is 25% higher than the prior quarter,” said Wahid Nawabi, AeroVironment chairman, president and chief executive officer. “Key wins from our Loitering Munition Systems segment continue to drive growth for the company.

“We expect our proposed acquisition of BlueHalo to further advance our growth opportunities with a highly complementary portfolio of products, customers and capabilities in key defense space and intelligence sectors and establish AeroVironment as the next generation defense technology company for our customers. We look forward to continued momentum beyond fiscal year 2025.”

FISCAL 2025 SECOND QUARTER RESULTS

Revenue for the second quarter of fiscal 2025 was $188.5m, an increase of 4% as compared to $180.8m for the second quarter of fiscal 2024, reflecting higher product sales and service revenue of $5.5m and $2.2m, respectively. From a segment standpoint, the year-over-year increase was due to revenue growth in Loitering Munitions Systems (“LMS”) of 157% and MacCready Works (“MW”) of 42%, partially offset by a decrease in UnCrewed Systems (“UxS”) of 35%.

Gross margin for the second quarter of fiscal 2025 was $73.6m, a decrease of 2% as compared to $75.4m for the second quarter of fiscal 2024, reflecting lower product gross margin of $2.6m, partially offset by higher service margin of $0.9m. As a percentage of revenue, gross margin decreased to 39% from 42%, primarily due to an increase in the proportion of LMS product revenue and an increase of $0.5m of intangible amortization expense, partially offset by favorable LMS contract definitizations.

Income from operations for the second quarter of fiscal 2025 was $7.0 m as compared to $25.2m for the second quarter of last fiscal year. The decrease year-over-year was due to an increase in selling, general and administrative (“SG&A”) expense of $9.8m, which includes an increase of $2.5m of acquisition related expenses, an increase in research and development (“R&D”) expense of $6.7m and a decrease in gross margin of $1.7m.

Other loss, net, for the second quarter of fiscal 2025 was $0.7m, as compared to $4.8m for the second quarter of last fiscal year. The decrease in other loss, net was primarily due to a decrease in net interest expense and a decrease in net unrealized losses on investment holdings.

Benefit from income taxes for the second quarter of fiscal 2025 was $(0.2)m, as compared to provision for income taxes of $1.1m for the second quarter of last fiscal year.

Net income for the second quarter of fiscal 2025 was $7.5m, or $0.27 per diluted share, as compared to $17.8m, or $0.66 per diluted share, in the prior-year period, respectively.

Non-GAAP adjusted EBITDA for the second quarter of fiscal 2025 was $25.9m and non-GAAP earnings per diluted share were $0.47, as compared to $39.5m and $0.97, respectively, for the second quarter of fiscal 2024.

BACKLOG

As of October 26, 2024, funded backlog (defined as remaining performance obligations under firm orders for which funding is currently appropriated to us under a customer contract) was $467.1 m, as compared to $400.2 m as of April 30, 2024.

FISCAL 2025 — OUTLOOK FOR THE FULL YEAR

For fiscal year 2025, the Company continues to expect revenue of between $790m and $820m, non-GAAP adjusted EBITDA of between $143 m and $153 m and non-GAAP earnings per diluted share of between $3.18 and $3.49.

This guidance does not include the forecasted financial results associated with the anticipated acquisition of BlueHalo or certain acquisition related expenses which are contingent upon the consummation of the acquisition. The Company cannot provide guidance for or reconciliation to GAAP net income or earnings per diluted share without unreasonable efforts due to the inherent difficulty of forecasting the timing and/or amount of the acquisition related expenses that have not yet occurred (and have been excluded from the adjusted measures). Acquisition related expenses for the fiscal year ending April 30, 2025, which are expected to be significant, will be materially impacted by the timing of the close of the acquisition and, amongst other factors, shareholder approval, required regulatory approval processes including Hart Scott Rodino and certain other international regulatory approvals, which are, in part, outside the control of the Company. As the Company cannot predict the amount or timing of acquisition related expenses with a reasonable degree of accuracy, the Company believes such reconciliation could imply a degree of precision that might be confusing or misleading to investors.

The foregoing estimates are forward-looking and reflect management’s view of current and future market conditions, subject to certain risks and uncertainties, including certain assumptions with respect to our ability to efficiently and on a timely basis integrate acquisitions, obtain and retain government contracts, changes in the timing and/or amount of government spending, react to changes in the demand for our products and services, activities of competitors, changes in the regulatory environment, and general economic and business conditions in the United States and elsewhere in the world. Investors are reminded that actual results may differ materially from these estimates and investors should review all risks related to achievement of the guidance reflected under “forward-looking statements” below and in the Company’s filings with the Securities and Exchange Commission. (Source: BUSINESS WIRE)

 

04 Dec 24. Euro Manganese Inc. (TSX-V and ASX: EMN; OTCQX: EUMNF; Frankfurt: E06) (“Euro Manganese” or the “Company”) announced today that it has amended the US$100 m funding package (the “Funding Package”) with OMRF (BK) LLC (“Orion”), which is managed by the Orion Resource Partners. The Funding Package, originally announced on November 28, 2023, supports the development of the Chvaletice Manganese Project (the “Project”) in the Czech Republic, and consists of a US$50m Convertible Loan Royalty Agreement (the “CLRA”), of which US$20m has been advanced to the Company, and a US$50m royalty on Project revenues (the “Royalty Financing”), subject to the Company meeting certain milestones related to the development of the Project.

Highlights of the Amendment to the Funding Package

• The current CLRA requires the Company pay cash interest to Orion. Based on the amendment to the CLRA, interest amounts accruing with effect from January 1, 2025 will be deferred and added to the principal balance of the convertible loan, conserving US$2.8m per annum of cash for the advancement of the Project. The CLRA amendment interest rate is 14.00%.
• The dates for certain milestone obligations under the amendments to the CLRA and Royalty Agreement (the “CLRA and Royalty Amendment”) have been extended to allow for advancement of the Project.
• Euro Manganese has been granted the right to repay the convertible loan at par at any time prior to conversion, including all accrued and unpaid interest, and may cancel the second tranche of the CLRA without penalty.
• Euro Manganese has been granted the right to terminate the Royalty Financing at any time prior to the satisfaction of the conditions precedent for the Royalty Financing for a fee of US$1m, provided that the outstanding convertible loan amounts under the CLRA (and all accrued and unpaid interest) have been repaid in full at such time.
• Euro Manganese will, subject to TSX Venture Exchange approval, and in the event certain conditions precedent are met with respect to future equity fundraising activities, issue warrants to purchase common shares of the Company to Orion.

Further details are available in Table 1 of this news release. All other material terms and conditions of the CLRA and Royalty Agreement, remain unchanged. Copies of the CLRA and Royalty Agreement are available on SEDAR+ and a copy of the CLRA and Royalty Amendment will be filed under the Company’s profile on SEDAR+.

Martina Blahova, Interim CEO of Euro Manganese, commented:

“We have maintained a strong and collaborative relationship with Orion and are pleased to have amended the Funding Package, accommodating the more gradual pace of development within the EV industry. Our team remains focused on progressing offtake discussions with potential customers and strategic partners and managing our resources for the next phase of growth.”

About Euro Manganese

Euro Manganese is a battery materials company focused on becoming a leading producer of high-purity manganese for the electric vehicle industry. The Company is advancing development of the Chvaletice Manganese Project in the Czech Republic and exploring an early-stage opportunity to produce battery-grade manganese products in Bécancour, Québec.

The Chvaletice Manganese Project is a unique waste-to-value recycling and remediation opportunity involving reprocessing old tailings from a decommissioned mine. It is also the only sizable resource of manganese in the European Union, strategically positioning the Company to provide battery supply chains with critical raw materials to support the global shift to a circular, low-carbon economy.

Euro Manganese is dual listed on the TSXV and the ASX and is also traded on the OTCQX.

 

04 Dec 24. AeroVironment may be classified as a small defense company, but it is a giant in mini-UAS. The company repeatedly beats larger companies in small UAV competitions. Those victories make it the company to beat in competitions for U.S. military small UAS. The company reported $717m in revenue for fiscal 2024 (ending April 30, 2024). This represented year-over-year growth of 33%, reflecting recent acquisitions and strong organic growth. Since 2017 revenue has grown at a 17.4% compound annual growth rate. Net income in fiscal 2024 was 59.7m, a sharp reversal from the 2023 net loss of $176.2m, which was primarily due to a goodwill impairment charge of $156m resulting from a long-term revaluation of the company’s MUAS segment. The company ended its fiscal 2024 year with a backlog of $400m, down somewhat from its backlog high of $424m at the end of fiscal 2023. AeroVironment’s UAV business remains heavily dependent on the U.S. government with 76% of sales coming from the U.S. government in fiscal 2024. Effective May 1, 2023 (the start of fiscal 2024), AeroVironment reorganized from four segments into three segments. The new segments are UnCrewed Systems (UxS), Loitering Munitions Systems (LMS) and McCready Works (MW). (Source: Teal Group)

 

04 Dec 24. Gooch & Housego battles industrial market headwinds.

A demand recovery is now forecast in the second half of the new financial year.

• Aerospace and defence revenue rises by a quarter
• Net debt down 19 per cent

Photonic components manufacturer Gooch & Housego’s (GHH) struggles with demand weakness in its industrial and medical laser markets was apparent in its annual flat revenue performance, but a 15 per cent sales improvement in the second half (on an organic, constant currency basis) highlighted progress in tough trading conditions as the company pointed to expectations of a “sustained recovery in demand” in subdued markets in the second half of 2025.

The company’s key industrial segment – which delivered half of total revenue in the year – is where the sales performance went backwards. While management noted that “the destocking patterns we saw in the first half of the year now appear to be behind us”, revenue still fell 9 per cent on laser and semiconductor market weakness.

Meanwhile, the loss-making aerospace and defence (A&D) segment grew revenue by 26 per cent on volume growth despite production yield softness, and life sciences revenue nudged up 2 per cent. A year-end order book of £105mn covers around 70 per cent of the consensus sales forecast for 2025.

Gooch is aiming for a mid-teen return on sales over the medium term under chief executive Charlie Peppiatt, who joined the company in 2022 and is implementing the results of a strategic review. The adjusted operating margin fell 130 basis points in the year to 7.7 per cent on a 13 per cent drop in profit to £10.5m, meaning that the company needs an uplift of around 750 basis points to hit its target. The statutory operating margin of 5 per cent compares to double-digit level seen for most of the 2010s.

Getting the portfolio right is a key part of the growth strategy and Gooch has taken steps to rightsize. It sold the underperforming manufacturer of optoelectronic components and laser modules EM4 during the year, and acquired precision optics company Phoenix for its A&D business in October.

The balance sheet position provides the necessary flexibility. Net debt fell £6m to £25.8m, and the leverage ratio of 0.9 times is undemanding.

Analysts at Investec are “encouraged that management has not opted to aggressively cut costs to mitigate near-term headwinds”. They forecast a 42 per cent improvement in operating profit in 2025.

The shares trade on 11 times forward consensus earnings, almost half the level of the 5-year average. A PEG ratio of 0.8 times is also attractive, given the City anticipates EPS growth of 56 per cent and 22 per cent, respectively, in the next two financial years as the backdrop improves. Buy.  Last IC view: Buy, 550p, 04 Jun 2024. (Source: Investors Chronicle)

 

04 Dec 24. Houlihan Lokey announced that TEKEVER, Europe’s leader in AI-centric unmanned aerial systems, has successfully completed a €70 m growth equity raise. The strategic growth equity round was led by Baillie Gifford and included participation from the NATO Innovation Fund, the U.K.’s National Security Strategic Investment Fund (NSSIF), and Crescent Cove Advisors LP, among others. The transaction closed on 25 October 2024.

TEKEVER is Europe’s leader in AI-centric unmanned aerial systems (UAS) serving both military and commercial end markets. The company designs and produces highly differentiated unmanned aircraft and offers a managed intelligence, surveillance, and reconnaissance (ISR) service to its global customer base. TEKEVER’s vertically integrated business model, based on deep expertise in both hardware and software, enables the company to deliver unmatched results for its customers and respond to rapidly evolving mission demands.

The Series B round of €70 m was led by Baillie Gifford and supported by strategic investors, including the NATO Innovation Fund (NIF), the U.K.’s NSSIF, Crescent Cove Advisors LP, Iberis Capital, and Cedrus Capital. Together, the investor group brings unmatched expertise and global perspectives, helping TEKEVER drive forward its vision to redefine security and defence.

TEKEVER will use the investment to accelerate R&D focused on enhancing and developing cutting-edge UAS technologies, expanding global production, delivery, and support to meet growing demand, and strengthening its position as a trusted partner in global security and defence markets.

Houlihan Lokey served as the lead financial advisor to TEKEVER on its Series B fundraising. This transaction underscores Houlihan Lokey’s expertise and leadership in the global Aerospace & Defense (A&D) sector and private capital markets, marking a significant milestone in the rapidly growing defense technology sector. It also highlights the firm’s ability to deliver exceptional outcomes through collaboration across its A&D practice, Iberian network, and Equity Private Placement capability in complex transactions.

 

03 Dec 24. Italy’s small defense firms ride high amid military spending boon. Italy’s small, family-owned defense companies are more profitable and are growing faster than the country’s massive state-run firms or the foreign players in the Italian market, a new report has revealed. Family-run firms have long been the backbone of Italian capitalism, pushing the country to become the eighth biggest manufacturing power in the world, and the report by Italy’s Mediobanca shows they are outperforming in the defense sector. While accounting for a relatively small chunk of Italy’s defense industry – €6.3 bn ($6.6 bn), or 15.6 percent of sector revenue – medium-sized family firms boasted an Earnings Before Interest and Taxes (EBIT) margin last year of 12.2 percent, almost double the national average of 6.2 percent, the report said. Top of the table for EBIT margin, which is a measure of profitability, was small cyber firm DEAS – Difesa e Analisi Sistemi, with a margin of 54 percent. Boasting a margin of 44.5 percent, second place was taken by GEM Elettronica, a family-controlled company which has operated in the naval electronics sector since 1977 and became the exception that proves the rule when it was taken over by defense giant Leonardo in September.

“Italian family-owned medium-sized enterprises outperformed all the other categories, on the back of their leaner and more flexible operating structures,” the authors of the report claimed.

Family firms also outperformed state firms and foreign-owned firms when it came to growth, notching up 29.2 percent growth in 2023.

“They have bigger margins of growth and by forming part of the supply chain for the bigger firms they allow those firms to have greater flexibility,” said Carlo Festucci, the general secretary of Italian defense industry association AIAD.

“The big firms meanwhile help them secure financing from banks,” he added.

Small firms apart, the Mediobanca report revealed a series of other illuminating stats about the Italian defense industry, including how 36 of the top 100 firms in Italy are foreign owned and make up 25.1 percent of turnover in the sector, while the big, state-owned firms like Leonardo and shipyard Fincantieri contribute 59.3 percent of turnover. Italy’s top 100 firms are dual use, in that they handle both civil and defense contracts, with only 49 percent of their total €40.7 bn turnover specifically derived from defense contracts – approximately €20 bn. That figure was up 6.6 percent on 2022 the report noted. Of the 181,000 employed by the firms, 54,000 are exclusively involved in defense work, it added. Leonardo generates 75 percent of its turnover from defense while for Fincantieri the figure is 27 percent. Licenses issued for arms imports by Italy in 2023 totaled €1.25bn, 40.5 percent of which came from the United States, while licenses for exports reached €6 bn, with France the chief destination on €465.4 m followed by Ukraine on €417m then the United States on €390 m. (Source: glstrade.com/Defense News)

 

03 Dec 24. Leonardo has no plans to change its stake in Germany’s Hensoldt. Leonardo (LDOF.MI) has no intention to change its stake in Germany’s Hensoldt (HAGG.DE) the Italian defence and aerospace group’s chief executive said on Tuesday.

“Our stake is good as it is. For fair play we will wait for a decision by the German government, to make any change,” CEO Roberto Cingolani told reporters ahead of a conference in Rome. Leonardo holds a 23.8% stake in Hensoldt. (Source: Google/Reuters)

 

02 Dec 24. Veteran Ventures Capital (VVC), a venture capital firm investing in dual-use national security technology businesses led by veteran entrepreneurs and leaders, today announced a strategic investment in Turion Space (Turion). Turion is at the forefront of solving two of space’s most pressing capability gaps: space domain awareness and non-earth imaging, both critical to maintaining space operations and expanding in-space mobility. Turion solves this through their first-of-its-kind Droid micro-satellites, equipped with advanced sensors to improve space situational awareness and mitigate debris at a fraction of the cost of its competitors. The Droid.001 is currently operational with flight heritage, capturing non-earth images for government and commercial clients. These satellites, in 2024 alone, will have accomplished over 100 imaging missions. The capital raised in this round will be used to expand Turion’s satellite fleet as they prepare to launch their Droid.002, a larger satellite with enhanced imaging capabilities, and the further development of autonomous docking and maneuvering systems that can deorbit defunct satellites and perform in-orbit repairs and inspections.

Veteran Ventures Capital invested in Turion’s recently closed and oversubscribed Series A funding round.

Turion’s DROID.002 satellite build completed in November 2024. Another critical step in building the foundation of their orbital infrastructure.

Turion’s engineering team proudly standing beside their DROID.002 satellite ahead of launch vehicle integration.

Veteran Ventures Capital invested in Turion’s recently closed and oversubscribed Series A funding round.  Turion has raised nearly $20 m in venture capital to date. Its veteran-led team, growing to over 70 employees, including former engineers from SpaceX and other aerospace leaders, is leveraging decades of experience to tackle space’s most pressing challenges.

Turion’s technologies have gained significant traction across national security customers, including a recently awarded $15m Strategic Financing Increase (STRATFI) program contract from the U.S. Space Force’s SpaceWERX, U.S. Space Force’s innovation arm, in addition to securing a $1.9m Tactical Funding Increase (TACFI) program contract from SpaceWERX to develop systems capable of engaging uncooperative space objects. Their Droid.001 satellite, launched in June 2023, is a 32-kilogram spacecraft designed to improve space situational awareness, with its data now integrated into the U.S. Space Force’s Unified Data Library. Turion is developing a range of satellites that will perform critical satellite services, including the micro-Droid, set for a demonstration in 2026, which will be equipped with grapplers to capture space debris. Co-funded by NASA, this spacecraft is an essential step toward Turion’s vision of mitigating space debris and ensuring safe satellite operations for its customers.

“Turion Space is developing the google earth for space observation and situational awareness. The capabilities they are building for national security and commercial customers represent the kind of high-impact, dual-use technologies that aligns perfectly with VVC’s mission,” said Derren Burrell, Managing Partner of Veteran Ventures Capital. “Their work in advanced space domain awareness, through a specialization in non-earth imaging, addresses a growing concern for both national security and commercial operators. Their technologies have the potential to transform how we manage space safety, particularly with space becoming more of a contested warfighting domain, making this a critical addition to our portfolio.”

With plans to produce 45 satellites annually by 2027, including the upcoming launch of their Droid Alpha satellite in early 2025, Turion is poised for rapid growth. Their enhanced mobility satellites offer advanced in-orbit capabilities for non-earth imaging, satellite servicing, and debris removal. These developments place Turion at the forefront of the emerging satellite non-earth imaging and servicing markets, projected to grow substantially in the coming years as space becomes increasingly crowded.

“We are excited to partner with Veteran Ventures Capital, precisely because their team and advisors have significant expertise in new space technology and the national security opportunities surrounding it,” said Ryan Westerdahl, Co-founder and CEO of Turion Space. “With their investment, we will further enhance our capabilities and provide innovative solutions for non-earth imaging, space debris removal, and satellite servicing, addressing a critical need for both government and commercial operators.”

About Veteran Ventures Capital

Veteran Ventures Capital invests in dual-use national security technologies, focusing on companies led by veteran entrepreneurs and leaders. Committed to advancing U.S. technological superiority, Veteran Ventures Capital provides capital, mentorship, and strategic guidance to high-growth companies serving critical government and commercial markets. VVC’s portfolio includes leading companies in defense, aerospace, cybersecurity, and other sectors essential to national security.

About Turion Space

Turion Space is a leader in non-earth imaging, space debris removal, and satellite servicing solutions. The company develops autonomous spacecraft designed to provide high resolution space domain awareness capabilities, deorbit defunct satellites, perform in-orbit inspections, and repair essential assets. Based in Irvine, California, Turion Space is committed to making space safer and more sustainable through advanced technologies that support the future of space exploration and national security. (Source: PR Newswire)

 

02 Dec 24. BMT, a global leader in maritime design, technical consultancy, and engineering, has acquired Australian Maritime Technologies (AMT), an independent, wholly Australian-owned naval design and marine engineering consultancy based in Melbourne. Specialising in engineering, design, and consulting services for marine projects, AMT has built a strong reputation for high-quality service delivery, which strengthens BMT’s capabilities in ship design and engineering for defence and commercial maritime customers. The synergies between BMT and AMT position them to deliver advanced solutions, combining BMT’s global reach with AMT’s depth of Australian expertise.

Founded in 1987, AMT has earned a strong reputation as an innovative naval engineering consultancy, delivering high-impact design and engineering solutions to clients such as the Royal Australian Navy and leading defence primes like Luerssen and BAE Systems. Through its strategic partnership with Luerssen Australia, AMT has played a key role in establishing in-country design capability for the Arafura Class Offshore Patrol Vessel (OPV) programme, supporting a smooth transition to through-life OPV design and engineering. This collaboration supports the growth of Luerssen Australia’s sovereign design expertise, including the transfer of Design Authority for the OPV programme.

AMT’s experience in naval ship design spans a wide range of combatants, auxiliary, and specialist vessels. It played a key role as the ship designer in the mid-life combat and platform systems upgrades for the Royal New Zealand Navy’s ANZAC Class Frigates, a programme it was initially part of 35 years ago.

With a team of around 60 highly skilled professionals, AMT is known for its customer-centric approach, supporting the Royal Australian Navy and a host of other customers in the APAC region. Their expertise has made a lasting impact on defence initiatives, including the ANZAC Frigates and OPV programmes, solidifying AMT’s position as a trusted partner in the defence sector. Now, joining forces with BMT, AMT is poised to leverage BMT’s global resources while continuing to deliver world-class naval engineering expertise in Australia and beyond.

Graeme Nayler, Regional Business Director, APAC, at BMT, said: “We are thrilled to welcome AMT into the BMT family. Their extensive expertise in multidisciplinary naval ship design, mechanical systems, and combat systems integration aligns seamlessly with BMT’s vision to deliver innovative, comprehensive solutions to clients worldwide. This acquisition strengthens our maritime engineering and design capabilities and expands our commercial reach, driving growth across the Asia-Pacific region.”

Rob Dunbar, Managing Director of AMT, added: “Joining BMT offers an exciting opportunity for AMT. Our shared values and BMT’s focus on innovation will enable us to further advance our sovereign Australian naval design and maritime engineering capabilities while creating new growth opportunities for our expanded team.”

Sarah Kenny OBE, Chief Executive of BMT, commented: “This acquisition is a key step in our strategy to enhance our capabilities and expand our presence in the defence and maritime sectors across the Asia-Pacific. BMT’s extensive experience in naval programmes – including the Fleet Solid Support (FSS) Ships, Queen Elizabeth-class carriers, Tide Class, Norwegian Logistics Support Vessel, and Type 31 Frigate – complements AMT’s specialised local expertise. By combining BMT’s global reach with AMT’s Australian capabilities, we are well-positioned to deliver innovative solutions that meet our clients’ evolving needs. This partnership not only strengthens our support for the Royal Australian Navy but also opens new avenues for growth and innovation in the regional market.”

Both BMT and AMT are committed to employee ownership, with BMT operating as an Employee Benefit Trust and AMT as a staff-owned company. This approach ensures that AMT, as a wholly Australian and staff-owned entity, will maintain its independence and core values while leveraging BMT’s global resources. This creates an environment where employees are empowered to drive continued success.

 

02 Dec 24. SIXGEN, a full-spectrum solutions provider across the digital battlespace to U.S. national security and critical infrastructure sectors, announced today the acquisition of Kyrus Tech (“Kyrus” or the “Company”), a specialized software development firm for mission-critical cyber solutions to the Intelligence and Defense Communities, including data science, reverse engineering, and other advanced capabilities. This strategic combination enhances SIXGEN’s mission to deliver advanced products and platforms and provide scalable, tailored solutions that address today’s increasingly complex digital threat landscape through a novel approach to innovation and IP-enabled services.

Kyrus is the third company to join SIXGEN within the past six months, following the recent acquisitions of Boldend and Secure Enterprise Engineering, with a purpose to collectively solve for and to build the next generation of integrated mission solutions to counter near-peer digital adversaries. This latest acquisition represents Washington Harbour Partners’ continued enablement of intentional strategic investment in full-spectrum cyber as part of its ongoing commitment to national defense and protection of critical infrastructure.

“Kyrus brings highly specialized capabilities that align with SIXGEN’s vision of building a formidable ecosystem of solutions for the modern digital warrior,” said Jack Wilmer, CEO of SIXGEN. “Grounded in the thoughtful integration of the expertise of Kyrus, Boldend, and Secure EE, SIXGEN is ushering in a new era of technology in key areas, unifying Full-spectrum Cyber, Electronic Warfare, Secure Radio Frequency Communications, and other multi-domain digital operations. This consolidated strength enables us to double down in our support of the nation’s most critical, mission-oriented agencies and accelerate our priorities.” Kyrus adds approximately eighty highly talented engineers and subject matter experts to SIXGEN’s already impressive pool of engineers, software developers and solutions architects.

Specializing in reverse engineering and secure development of both advanced software and tailored hardware systems, Kyrus has built a reputation for being the company of choice to deliver robust, innovative solutions and deep technical expertise. The integration of Kyrus’ highly specialized engineering talent with SIXGEN’s advanced offerings and cyber operators further amplifies our ability to address the complex needs of our customers across multiple fronts of the digital domain. This powerful combination of expertise and market momentum will create a unique and unified force multiplier for operators and our national mission sets.

“SIXGEN is the perfect fit for Kyrus, its customers, and employees – driven by mission, culture, innovation – all values that are critical to serving our nation,” said Dan Hall, CEO of Kyrus. “I am thrilled to combine our specialized software development and reverse engineering expertise with SIXGEN’s growing portfolio of highly differentiated capabilities, enabling us to accelerate our mission impact and continue delivering solutions to tackle today’s rapidly shifting cyber challenges – both protecting critical infrastructure and supporting our national mission sets across the DoD and IC communities. SIXGEN’s recent acquisitions of Boldend and Secure Enterprise Engineering were incredibly purposeful, and the entire Kyrus team is excited to join SIXGEN on their continued differentiated trajectory.” The combination positions SIXGEN for large-scale opportunities and reinforces its standing as the top destination for exceptional talent in the digital domain. Dan Hall will be joining SIXGEN as a Board Director and an Executive Vice President, focused on continuing the combined company’s positive customer impacts.

“The addition of Kyrus is a powerful step toward achieving our vision for a fully-integrated and robust cyber and multi-domain platform,” said Mina Faltas, Founder & Chief Investment Officer at Washington Harbour Partners. “SIXGEN, with Kyrus onboard, is now even better positioned to make an outsized impact on safeguarding our national security and critical infrastructure.” Washington Harbour Partners reaffirms its support for SIXGEN’s expansion and long-term vision for creating a top-tier solutions provider across the digital battlespace, uniquely positioned to defend the nation against the most advanced cyber threats and serving the most sensitive mission operations.

Washington Harbour was advised by Holland & Knight on legal matters and PwC on financial. Morse Law served as legal advisor to Kyrus Tech.

About SIXGEN

SIXGEN is a mission-driven leader in cyber, dedicated to supporting the U.S. Department of Defense, intelligence community, other federal agencies, and U.S. critical infrastructure. With a focus on operational excellence and innovative solutions, SIXGEN ensures operational mission success in the digital domain across the full spectrum of cyber.

For more information, please visit www.sixgen.io

About Kyrus Tech

Kyrus is a mission-focused leader in cyber, committed to advancing national defense and securing critical infrastructure. Headquartered in Sterling, VA, with an additional location in Denver, CO, Kyrus continuously pushes boundaries to solve the most complex challenges, earning a reputation for delivering exceptional results and cutting-edge cyber solutions to federal clients through expertise in research, development, and reverse engineering.

For more information, please visit www.kyrus-tech.com

About Washington Harbour Partners

Washington Harbour Partners LP, based in Washington DC, is a private investment firm that brings a fresh approach to investors and founders, providing flexibility and deep operational expertise at all stages of the investment cycle – from growth equity to control buyouts to public markets. The firm has deep domain expertise in the areas of software, defense technologies, cyber, government & business services, and technology-enabled consumer services. (Source: BUSINESS WIRE)

 

02 Dec 24. Crane Company (NYSE:CR) (“Crane” or the “Company”), a premier industrial manufacturing and technology company, announced that it has entered into a definitive agreement to sell its Engineered Materials business to KPS Capital Partners, LP (“KPS”) for $227m. Max Mitchell, Chairman of the Board, President and Chief Executive Officer of Crane Company said, “This divestiture reflects yet another important step forward following the numerous actions we have taken over the last few years to simplify our portfolio and focus our resources on our two strategic growth platforms: Aerospace & Electronics and Process Flow Technologies. Those simplification actions have included the divestiture of non-core assets including Crane Supply and the defeasement of legacy liabilities in 2022, followed by our 2023 separation transaction. Since the separation, we have continued to invest in our strategic growth platforms organically, and further strengthened those businesses with four strategic acquisitions: Baum Lined Piping, Vian Enterprises, CryoWorks, and Technifab Products. We will continue to actively manage our portfolio to drive sustainable, profitable growth for all our stakeholders.”

Mr. Mitchell concluded: “Engineered Materials is a great business with leadership positions in the markets in which it operates with dedicated Crane associates that I am very proud of, and we look forward to watching its continued growth under the ownership of KPS. I wish to thank our Engineered Materials team for their support and understanding regarding this decision.”

Crane Company and KPS anticipate closing the transaction in the first quarter of fiscal year 2025 subject to customary closing conditions, including receipt of regulatory approvals.

Engineered Materials will be presented as discontinued operations beginning with results for the fourth quarter of 2024, and retrospectively for prior periods. Our last full-year 2024 adjusted earnings per diluted share (EPS) guidance published on October 28, 2024 was a range of $5.05 to $5.20. We are now updating that guidance solely to reflect Engineered Materials’ presentation as discontinued operations, and our revised adjusted EPS from continuing operations guidance is $4.71 to $4.86. For the fourth quarter of 2024, we expect adjusted EPS from continuing operations of $1.10 to $1.25.

About Crane Company

Crane Company has delivered innovation and technology-led solutions to its customers since its founding in 1855. Today, Crane is a leading manufacturer of highly engineered components for challenging, mission-critical applications focused on the aerospace, defense, space and process industry end markets. The Company has two strategic growth platforms, Aerospace & Electronics and Process Flow Technologies. Crane has approximately 7,500 employees in the Americas, Europe, the Middle East, Asia and Australia. For more information, visit www.craneco.com.

About KPS Capital Partners

KPS, through its affiliated management entities, is the manager of the KPS Special Situations Funds, a family of investment funds with approximately $21.4bn of assets under management (as of September 30, 2024). For over three decades, the Partners of KPS have worked exclusively to realize significant capital appreciation by making controlling equity investments in manufacturing and industrial companies across a diverse array of industries, including basic materials, branded consumer, healthcare and luxury products, automotive parts, capital equipment, and general manufacturing. KPS creates value for its investors by working constructively with talented management teams to make businesses better and generates investment returns by structurally improving the strategic position, competitiveness, and profitability of its portfolio companies, rather than primarily relying on financial leverage. The KPS Funds’ portfolio companies currently generate aggregate annual revenues of approximately $23.7bn, operate 251 manufacturing facilities in 30 countries, and have approximately 65,000 employees, directly and through joint ventures worldwide (as of September 30, 2024, pro forma for recent acquisitions). The KPS investment strategy and portfolio companies are described in detail at www.kpsfund.com.

KPS Mid-Cap focuses on investments in the lower end of the middle market that require up to $200m of initial equity capital. KPS Mid-Cap targets the same type of investment opportunities and utilizes the same investment strategy that KPS’ flagship funds have for over three decades. KPS Mid-Cap leverages and benefits from KPS’ global platform, reputation, track record, infrastructure, best practices, knowledge and experience. The KPS Mid-Cap investment team is managed by Partners Pierre de Villeméjane and Ryan Harrison, who lead a team of experienced and talented professionals. (Source: BUSINESS WIRE)

 

02 Dec 24. Honeywell lowers sales, profit forecasts after Bombardier agreement. Honeywell (HON.O) on Monday cut its profit and sales forecasts for the fourth quarter and the full year to take into account investments associated with an agreement to provide aviation-related technology for Bombardier’s (BBDb.TO) aircraft. Honeywell’s shares fell about 2% to $226 after the bell. The agreement will provide Honeywell’s avionics, propulsion and satellite communication technologies for Bombardier’s aircraft. Honeywell said it expects the agreement to have a near-term impact on its financials, given the investments for research and development. The company added that it estimates revenue potential of up to $17bn over the duration of the agreement. Honeywell lowered its fourth-quarter sales forecast to between $9.8bn and $10.0bn, from its prior forecast range of $10.2bn to $10.4bn. (Source: Reuters)

 

29 Nov 24. Chemring is well placed as warfare evolves. Last week, the UK defence secretary, John Healey, announced that five Royal Navy warships were to be mothballed as part of a £500mn cost-cutting drive. The ‘senior service’ hasn’t seen those sort of losses in a single day since the Battle of Jutland, but matters weren’t quite as dire as appearances would have us believe. It turns out that all the vessels have been inactive for an extended period and have played no part in deliberations over the disposition of ships ready for combat.

One of their number, HMS Bulwark, had been undergoing a major refit. Its status had been uncertain for some time, and a shortage of recruits reportedly didn’t help either. With budgetary constraints to the fore, the situation isn’t likely to improve in the near-term, unless Healey is considering the reintroduction of impressment.

In addition to the warships, the decision was taken to pull the plug on a drone system and retire some largely obsolete helicopters. There’s always a hue and cry whenever ministers take out the pruning shears, but we might realistically expect further rationalisation measures ahead of next year’s strategic defence review. Despite the government’s somewhat vague commitment to increasing defence spending to 2.5 per cent of GDP (no timetable given), the “do more with less” mantra currently holds sway in Whitehall.

For investors considering a foray into the aerospace/defence sector, it’s worth remembering that the war in Ukraine has forced a strategic rethink as to how armaments can be effectively employed on the 21st-century battlefield. The widespread use of unmanned aerial vehicles (UAVs) in the conflict provides a case in point.

Because they have proved to be highly effective, the proliferation of drone technologies has sparked a race to develop effective counter-measures (c-UAV). According to National Defense University Press, the US military may have forked out around $700mn (£555mn) to develop these measures in FY2023. The Washington-based publishing house estimates the worth of the global c-UAV market will rise to around $5bn by 2029.

The military use of UAVs falls within the realm of asymmetrical warfare, and it does provide opportunities for smaller defence contractors who can’t go toe-to-toe with the likes of BAE Systems (BA.) on big-ticket capital projects. Chemring (CHG) provides a case in point. Amongst other things, the contractor’s Roke subsidiary has developed a range of AI-powered technologies to detect, confirm, and neutralise UAV threats.

In November, it was announced that a Norwegian subsidiary of Chemring had signed a 12-year framework agreement with Diehl Defence for the supply of MCX energetic material – for use in military applications such as explosives, propellants, and pyrotechnics.

The Hampshire-based contractor also revealed that its US business was handed an order for critical components for use in an undisclosed US missile programme. Together the contracts are worth around £278mn, boosting the countermeasures & energetics division’s order book by around a third. Broker Jefferies maintains that its “investment thesis on the stock is that this medium-term revenue/profit growth is undervalued by the market”. Certainly, the recent deals have improved the sales mix, with all the attendant implications for unit profitability. Even prior to the announcements, analysts at Shore Capital were pointing to a 240-basis point increase in the cash margin to 16.7 per cent by 2027.

It wouldn’t be fanciful to suggest that the nature of the conflict in Ukraine, regardless of its eventual outcome, will have a profound impact on defence procurement considerations. The country’s capacity for innovation under pressure, and its ability to maximise its resources to counter Russia by leveraging asymmetrical warfare, provides a template for large-scale drone warfare.

There are means of assessing the probable direction of UK procurement. In October, the House of Lords international relations and defence committee published the Ukraine: a wake-up call report. The paper outlines the central lessons of the Ukraine conflict for UK defence policy. The report falls in line with analysis from the European Defence Agency, which calls for an increase in resources, but in a more coordinated way. So, the ongoing conflict, dreadful as it may be, is likely to give rise to enhanced opportunities for smaller contractors.

Even after the recent new business wins, Chemring has a 23 per cent upside potential, based on analysts’ average price target, together with a FactSet consensus recommendation of ‘buy’ based on six separate ratings. (Source: Investors Chronicle)

 

02 Dec 24. Rheinmetall completes strategic acquisition of U.S. vehicle specialist Loc Performance Products, LLC.

Market position in North America in the competition for high-volume major orders in the USA is strengthened.

Rheinmetall AG has now completed the takeover of the U.S. company Loc Performance Products, LLC. The Düsseldorf-based technology group announced the purchase of the renowned vehicle specialist based in Plymouth, Michigan, in August 2024. Following approval by competent supervisory authorities, the transaction was closed on November 29, 2024. In future, the company will operate under the name American Rhein¬metall Vehicles. The agreed purchase price is based on an enterprise value of USD 950 m.

With this strategic acquisition in the USA, Rheinmetall is expanding its position in the world’s largest defense market and strengthening its core business in the field of land vehicles for military customers worldwide.

The investment follows Rheinmetall’s drive for growth in the United States, which will be an important domestic market for the Group in the future. Rheinmetall expects the acquisition to bring considerable benefits not only for its American business, but also for its global activities. With this acquisition, Rheinmetall is expanding its industrial base in the USA and creating further access for its technologies in North America.

The acquisition strengthens Rheinmetall’s production capacities in the USA in particular, with a view to targeted high-volume major orders for U.S. Army vehicle programs with a total potential of over USD 60 bn. Rheinmetall is one of two remaining participants in the current prototype phase of the XM30 program. This serves to introduce a new generation of infantry fighting vehicles. The volume is estimated at around USD 45 bn for around 4,000 infantry fighting vehicles. At the same time, Rheinmetall is applying for the Common Tactical Truck (CTT) program, which has a volume of around USD 16 bn for around 40,000 trucks.

Armin Papperger, Chairman of the Executive Board of Rheinmetall AG: “We are making this investment because we have a clear strategy for growth and the United States will be an important core market for us in the coming years. I would like to extend a warm welcome to the approximately one thousand employees at Loc Performance Products to the Rheinmetall Group. We greatly appreciate your expertise and look forward to our joint successes.”

Armin Papperger continues: “The acquisition of Loc Performance Products proves that we are consistently focusing on success in the USA and want to expand our share of the large market volume. We have a promising position in two major military projects, both in the XM30 infantry fighting vehicle program and in the CTT project. Everything therefore speaks in favor of this acquisition: Loc Performance Products is already pursuing a sustainable business model with robust organic growth, has a highly qualified workforce and offers us ample capacity reserves for the targeted orders in the USA. We can thus realize 100% local value creation in the USA.”

With the purchase, American Rheinmetall Vehicles is acquiring a modern, efficient production area of 160,000 square meters with considerable capacity for future expansion. The company’s broad-based activities will contribute directly to the Rheinmetall Group’s fast-growing U.S. military vehicle business, which is managed by American Rheinmetall Vehicles, based in Sterling Heights, MI.

Loc Performance Products, LLC was founded in 1971 in Plymouth, MI and is a diversified full-service provider for both military and commercial customers. In addition to its headquarters in Plymouth, MI, the company has additional locations in Lansing, MI and Lapeer, MI as well as in St. Marys, OH.

The vehicle specialist is a high-performance full-service provider of driveline, suspension, track systems, rubber products, armor products and fabricated structures for vehicle platforms. The company is an established supplier to the U.S. Government and, in particular, OEM for most military ground vehicle track systems in the USA. The company’s products are also used by well-known vehicle manufacturers in the agriculture, construction, mining, locomotive, mass transportation and oil and gas industries.

The production capacities of Loc Performance Products include, in particular, modernized manufacturing, machining and welding technologies that can meet the critical manufacturing requirements of the U.S. Army’s XM30 and CTT programs.

With more than 1,000 highly qualified employees, Loc Performance Products has an experienced workforce with a high level of technical expertise – including in the maintenance, repair and combat enhancement of military combat vehicles – whose services will now be integrated into Rheinmetall’s internal supply chains.

American Rheinmetall Vehicles, LLC offers U.S. customers next-generation tracked and wheeled combat vehicles and tactical wheeled vehicle platforms. The company is actively supporting the U.S. Army on two high priority modernization programs: the XM30 combat vehicle program, where the Lynx XM30 has reached Phases 3 and 4, and the Common Tactical Truck (CTT) program, where the HX3 CTT recently completed evaluation by the U.S. Army.

The American Rheinmetall family includes American Rheinmetall Vehicles in Sterling Heights (MI) and Troy (MI), American Rheinmetall Munitions in Stafford (VA), Windham (ME) and Camden (AR), American Rheinmetall Systems in Biddeford (ME) and the American parent company American Rheinmetall Defense in Reston (VA). www.rheinmetall-us.com

 

05 Dec 24. EM&E Group, a leader in innovation and technology in the defense and security sectors, has raised its stake in Indra to 14.3% of the IBEX 35 listed company. The company, which was already Indra’s leading industrial partner and second largest shareholder only behind SEPI, has now increased its stake by 6%, strengthening its position in the company.

In the current geopolitical context, EM&E thereby demonstrates its firm commitment to the growth and development of the technology industry and consolidates its presence in the strategic sectors of defense, aerospace and security, strengthening synergies with Indra, a key player in these sectors.

EM&E, with an estimated turnover of more than 300m euros in 2024, more than 60% of which will come from the international market, is thus expanding its influence and responding to the high global demand for remote weapon stations, ammunition guidance systems, anti-drone solutions, robots and border surveillance systems, solutions in which it is a European and international reference.

With an order book of more than 1bn euros, EM&E has recently renewed its BBB rating, a recognition that accredits its solvency to undertake corporate operations and which only 8% of audited companies achieve.

Founded in 1989, EM&E has based its growth on a strategy of vertical integration of capabilities and technologies and a strong commitment to investment in R&D, which has enabled it to position itself at the technological forefront in the development of complex defense systems with high reliability and added value.

With a workforce of almost 1,300 professionals and a clear commitment to territorial cohesion, with centers in Madrid, Huesca, Cordoba, Asturias, Cadiz and Valencia, the Group is consolidating the various investments it has made this year. These include the acquisition of new infrastructures, the creation of the new electronics subsidiary EM&E Electronics and the companies it will integrate, as well as the incorporation of new strategic capabilities such as robotics and photonics.

With its 14.3% stake in Indra, the EM&E Group consolidates its commitment to strengthening the Spanish industrial fabric and contributing to improving Spain’s competitiveness in the global defense and security sector.

 

29 Nov 24. Drone Accessory Maker Unusual Machines Shares Surge After Donald Trump Jr. Joins Advisory Board. Florida-based Unusual Machines, Inc., a drone and drone components manufacturer, announced on November 27th that Donald Trump Jr., an investor in the Company, has joined the Company’s advisory board.

“Don Jr. joining our board of advisors provides us unique expertise we need as we bring drone component manufacturing back to America,” said Allan Evans, Unusual Machines CEO. “He brings a wealth of experience and I look forward to his advice and role within the Company as we continue to build our business.”

“The need for drones is obvious. It is also obvious that we must stop buying Chinese drones and Chinese drone parts,” said Don Jr. “I love what Unusual Machines is doing to bring drone manufacturing jobs back to the USA and am excited to take on a bigger role in the movement”.

Don Jr.’s appointment comes at a pivotal moment for Unusual Machines, following the recent release of our Brave F7 FPV Flight Controller. This achievement underscores the Company’s commitment to onshoring U.S. drone component manufacturing. By reducing reliance on foreign-made products and strengthening domestic supply chains, Unusual Machines is helping to safeguard U.S. technological leadership in the drone industry. Don Jr.’s expertise will be invaluable in accelerating this mission as the Company continues to expand its product line.

The president-elect’s eldest son’s appointment comes two days after his father threatened to slap China with “an additional 10% tariff, above any additional tariffs” unless the country is able to stop the trafficking of chemicals used to make fentanyl through the US. Trump had previously threatened tariffs of 60% on import goods from China during his campaign.

The company has denied claims that Don Jr. might help Unusual Machines secure government approvals.

“I would never ask him to do anything or facilitate anything like that,” Evans told The Wall Street Journal.

He said the president-elect’s son’s business network would help Unusual Machines meet demand for drone parts made outside of China.

Trump Jr. had previously owned 331,580 shares of Unusual Machines before a share offering and currently owns no shares, the company disclosed in the filing on Wednesday. It is unclear how much he paid for the shares or what price he sold them at.

Don Jr. joined venture capital firm 1789 Capital as a partner earlier this month and said he would recuse himself from business involving the government and has no interest in joining his father’s administration.

Department of Defense officials earlier this year approved an Unusual Machines flight controller for use in the military – the company’s first such rubber stamp, according to the Journal.

Earlier this month, the company reported $1.5m in sales in the third quarter, mostly from selling drones directly to consumers. Unusual Machines reported $3.6 m in revenue for the nine months ended Sept. 30 and a net loss of $4.9 m in the same period. In February, Unusual Machines went public and acquired the drone brands Fat Shark and Rotor Riot.

Unusual Machines is looking to move into sales of Pentagon-compliant drones and drone parts to businesses, the report said.

Evans told the Journal he thinks the incoming president’s more protectionist policies will help the drone industry flourish in the US.

Trump Jr.’s involvement with Unusual Machines was announced just a few days after Trump ally Elon Musk, who founded Tesla and SpaceX, slammed the Pentagon’s F-35 fighter jet program and argued in favor of the use of autonomous drones in warfare.

About Unusual Machines

Unusual Machines manufactures and sells drone components and drones across a diversified brand portfolio, which includes Fat Shark, the leader in FPV (first-person view) ultra-low latency video goggles for drone pilots. The Company also retails small, acrobatic FPV drones and equipment directly to consumers through the curated Rotor Riot e-commerce store. With a changing regulatory environment, Unusual Machines seeks to be a dominant Tier-1 parts supplier to the fast-growing multi-bn-dollar U.S. drone industry.

According to Fact.MR, the global drone accessories market is currently valued at $17.5 bn and is set to top $115 bn by 2032.

Sources: Unusual Machines; yahoo!tech; New York Post

For Information:

Chief Executive Officer Dr. Allan Evans, who previously served as Chief Operating Officer at Red Cat and CEO of Fat Shark owns 1.5% of the stock.

Chief Operating Officer Drew Camden was President of Rotor Riot from 2018, until Rotor Riot’s acquisition by Red Cat Holdings in 2020 and holds 1.6%. Jeff Thompson CEO of Red Cat owns 5.9%. (Source: UAS VISION)

 

03 Dec 24. SRT Marine Systems confident of 2025 outlook despite short-term challenges. SRT Marine Systems LON:SRT, the AIM-listed engineering firm that builds maritime surveillance, security, management and safety products, and integrated systems, has been charting a course to less stormy waters in 2024.

The marine security company published its final results for the 15-months to end-June today (2nd December) and at least in the first six months of the calendar year, the company was still in firmly in recovery.

SRT published 15-month results as in March the company decided to change its year-end from end-March to end-June in order to: “[…] tender for certain pending new system contracts.” What this means is that SRT will now report its six-month interim results for end-December by end-March, and its full-year final results to end-June by end-December.

The rationale for the change in accounting periods is that SRT is tendering for a piece of business in a certain part of the world where the potential client requires bidders to have a specific minimum financial ratio criterion in relation to the size of the target new project, in order to bid for the contract. Under its current financial year some of its existing system project deliveries, which were expected to complete in March, will now slip into the next quarter because SRT’s government clients are taking more time than expected to sign-off, something compounded by Ramadan and Eid.

Kevin Finn, SRT’s chairman explained: “We had expected some of the GBP320m of new contracts to commence during the current financial period, and therefore took action to prepare. This has entailed the forward purchase of certain equipment ready to ship against early contractual milestone, and the build-up of additional implementation capacity.   However, due to unexpected extended customer contract administrative processes the commencement of these contracts was delayed into the new financial year.”

SRT’s reporting date change could be net-positive for SRT

This would mean that SRT’s financial ratios – with regards to this specific tender – would be less than they should be (had the contracts agreed already gone through on schedule) and would have affected SRT’s ability to bid for this new contract. As an investor this change in reporting dates should be seen as a good thing, as it is a big thing for a listed company to change its accountancy period, and if SRT believes that it needs to take this measure, its management must feel that it is in a very strong position to win the contact, which could be very positive for the company’s bottom-line

So, in this unique 15-month period, the company reported revenues of GBP14.8m. This was a long way behind the revenue of GBP30.5m that SRT reported for the 12-months to end-March 2023. The company saw gross profit of GBP4.2m, and although not a comparative period in the 12-months to end-March 2023 the company reported gross profit of GBP11m.

However, administrative costs and FX ballooned to GBP17.2m by the end of the 15-month period. For the year to end-March, admin and FX costs were GBP10.9m, which saw SRT’s loss before tax of GBP14.4m. Again, although isn’t a direct comparison loss before tax for the period to end-March 2023 was GBP646,172.

Finn commented: “[…] Whilst the combination of increased overheads and delayed revenues has resulted in a significant loss for the period, these extensive preparations have placed us in a good position to successfully implement […] multiple system projects within the expected two-year time frame.”

SRT paying off loans and debts

In terms of debt, SRT’s bank debt at the end of June was GBP1.5m and was drawn-down in September 2023 as part of the UK Government’s Recovery Loan Scheme and was at an interest rate of 3.5% above base rate with repayments starting in September of this year. SRT pushed the final repayment of GBP0.5m to this month.

SRT also has GBP8.32m in loan notes which have a three-year tenor and interest rates of between 8% and 12%. As well as bank debt and bonds, SRT has, as noted above, equipment loans of GBP4.15m for components of a systems project. This is being paid back quarterly at a 4% interest rate and a three-year term.

The company secured GBP320m of system contracts and had a pipeline of around GBP1.2bn which Kevin Finn, SRT’s chairman said the company expects to convert into contracts in 2025.

As previously reported, SRT Marine Systems is a global leader in maritime domain awareness technologies, products and systems. The company develops and provides integrated maritime surveillance, monitoring, management and safety systems which are used by coastguards and fishery authorities for the purposes of managing and controlling their maritime domain. The SRT Vessel Monitoring Systems (VMS) system enables governments and national authorities to be able to reliably track, monitor and manage fishing vessels of any size and type in real time, without range limitation, at optimal cost.

Confident outlook for 2025

To give SRT credit, their current underperformance is due to factors outside its control, namely its clients delaying on rubber-stamping contracts already agreed. Now if this situation were to extend, it could blow up into a real issue for the defence and security contractor, however, management has confidence that the necessary documentation will imminently be secured, making the next reporting period a great deal rosier. Moreover, with GBP1.2bn of contracts in the pipeline, and the strong possibility of winning a big deal, signalled by management taking evasive action and changing the company’s reporting date to give it a good chance of winning what must be significant new business, the outlook looks favourable.

SRT’s CEO, Simon Tucker said: “I had hoped for, and expected, a much better financial result for the financial period ending June 2024. We under-estimated the time it would take for the final administrative processes to complete for contracts worth approximately GBP320m, resulting in significantly lower revenues and profit contribution during the period. However, this time, and the investment received during the period, has given a critical advantage in that we have been enabled […] to prepare and build up our capacity to execute on multiple system contracts simultaneously.”

The company still seems to have the backing of existing and new investors, evidenced by successful fundraising in the last year, raising GBP10.5m this time last year, and another GBP8.5m (before expenses) in November.

The company’s shares opened the week at 39.675p, down 5.5% from one-year ago. The company has a market capitalisation of GBP93m. (Source: https://www.thearmchairtrader.com/)

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SPX CommTech, part of SPX Technologies Inc, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all. Formed by TCI and ECS, SPX CommTech’s Battlespace portfolio enables defence and security teams to detect, defeat and exploit RF signals to enhance communications intelligence (COMINT) and counter unmanned aerial systems (Counter-UAS). Additionally, its Tactical Data Link portfolio allows intelligence gathering agencies, special forces, emergency response, and security teams to securely and reliably transfer video and data between enabled-aircraft and ground teams over long distances for airborne Intelligence, Surveillance, Reconnaissance (ISR). For more information visit www.tcibr.com and www.enterprisecontrol.co.uk

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05 Dec 24. Safran plans significant US expansion of defense and space business. French technology company Safran is significantly expanding its defense and space business in the United States, including investments in manufacturing across several states.  Newly branded Safran Defense & Space Inc. will focus on bringing its high-tech solutions in satellite propulsion and communication, geospatial artificial intelligence and GPS-denied navigation to the U.S. in a more robust way, Joe Bogosian, Safran president and CEO, told Defense News in a recent interview. Safran is also well known for its best-selling commercial jet engine it developed in a joint venture with General Electric. While the company’s technology has been integrated into many U.S.-based weapon systems, such as the commander’s site on the Army’s new M10 Booker armored fighting vehicle, Bogosian said, the U.S. expansion will enable even better collaboration with the U.S. military and defense industry and foster continued innovation with American engineers and developers.

“I think it meshes well with kind of a new thinking in the U.S.,” Bogosian said.

“What is the best available technology or the asymmetric warfare to give our guys an unfair advantage? If that unfair advantage comes with a technology that’s five years ahead of its time compared to anything else in the U.S. and just happens to come from France, we can bring it from France,” he said, “and we can put it here and put further design, further engineering and manufacturing, all in the U.S. and you start to morph that technology into a U.S. variety.”

The company will soon open its new headquarters in Arlington, Virginia. Colocated at the headquarters will be the company’s new geospatial artificial intelligence business grown from a recently purchased French AI company with the ability to crunch a massive amount of data very quickly.

The newly acquired technology surprised everyone in the room during a demonstration for Special Operations Command in Florida meant to show how the technology can rapidly count cars and boats in an area. It suddenly flagged the presence of a Russian MiG fighter jet, according to Bogosian. The system was not mistaken; it turned out there was a MiG on display outside of an aviation museum in Miami.

Expansions to current Safran facilities include its electro-optics and infrared systems facility in Bedford, New Hampshire, and the Safran Federal Systems facility for Assured Positioning, Navigation and Timing in Rochester, New York.

The company is also setting up its newest facility for small satellite propulsion in Denver, Colorado. Once established, Bogosian sees the potential for expansion beyond producing plasma propulsion systems for satellites to include other capabilities, such as Safran’s Hemispherical Resonator Gyroscope, which has been tested by the U.S. military.

“We feel the demand for HRG is going to double, and so clearly, it just opens the door for another capability to be brought into the U.S.,” he said.

Additional investment will be made in testing and telemetry operations in Norcross, Georgia. (Source: Defense News Early Bird/Defense News)

 

05 Dec 24. US Navy sub builder acquires advanced steel manufacturer to support expansion of AUKUS sub construction capacity. Key US Navy ship and submarine builder Huntington Ingalls Industries has entered into a definitive agreement to acquire South Carolina-based complex metal fabricator W International and Vivid Empire, specialising in the manufacture of shipbuilding structures, modules and assemblies, including nuclear-powered submarines. Upon completion of the transaction, the manufacturing facility in Goose Creek, South Carolina, will operate within Huntington Ingalls Industries’ (HII) Newport News Shipbuilding (NNS) division, with the site to support the construction of nuclear-powered submarine and aircraft carrier modules and structures for US Navy programs and will help support the US delivery of conventionally armed, nuclear-powered submarines to the Royal Australian Navy under the trilateral AUKUS agreement. As part of this acquisition, all current employees will be offered positions with HII to continue to work on site.

HII president and CEO Chris Kastner highlighted the pivotal role this acquisition will play in expanding the US submarine production capacity and its impact on AUKUS timelines, saying, “It lets us efficiently add trained talent and state-of-the-art manufacturing capabilities to the urgent job of building ships, making it a unique opportunity to accelerate throughput at Newport News Shipbuilding in support of the Navy and AUKUS.” The acquired assets include advanced production facilities with state-of-the-art equipment, tooling and infrastructure used to fabricate complex metal modules and structures, and are located on a leased 45-acre site with more than 480,000 square feet of manufacturing space.

The site has barge and rail access, and is strategically located near Charleston, in a region with a rapidly growing shipbuilding ecosystem and highly skilled trades workforce.

Kastner added, “HII is committed to increasing build rates for our Navy customer, and this investment in capacity alongside the Navy will help us do that.”

The facility in Goose Creek will be known as Newport News Shipbuilding – Charleston Operations, operating within HII’s Newport News Shipbuilding division. Current NNS vice president and chief transformation officer Matt Needy will become general manager of the site. (Source: Defence Connect)

 

06 Dec 24. Denel turnaround hits obstacles. Unreleased funding and the non-sale of assets and properties are some of the challenges threatening Denel’s turnaround strategy. In a recent presentation to Parliament’s Portfolio Committee on Planning, Monitoring and Evaluation, Denel provided an update on its turnaround, which is aimed at making the company more efficient, reducing debt, providing working capital, improving morale, regaining market share, and regaining strategic capabilities, amongst others. Achievements include Section 189 retrenchments as part of restructuring, appointing new leadership, reducing ICT and infrastructure costs (R112 million per annum), reducing staff costs (R433 million per annum), and partially settling legacy debt. Still on the to do list is settling remaining legacy debt; improving skills, leadership, and employee morale; upgrading equipment, including ICT infrastructure; and improving on programme delivery. Turnaround has been hampered by a number of issues, including R900 million of recapitalization funds being held back due to certain turnaround conditions not being met, and the sale of non-core assets not being approved. This includes resistance from the Department of Defence (DoD) to selling shares in Hensoldt South Africa. Denel’s latest turnaround was supposed to raise R5.2 billion to achieve sustainability, with Denel raising R1.8bn by exiting/selling non-core assets, and government providing the remaining R3.3 billion. This was boosted by R1 billion coming from the Denel Medical Benefit Trust, allowing production to restart and salaries to be paid. The R3.3bn from government was only made partially available from the end of March 2023, with the balance conditional on the sale of non-core assets. “The sale of non-core assets has met with resistance from the DoD and so far not been realised, with the balance of legacy debt, trade creditors and critical capex funding still ring-fenced and not released by the National Treasury,” Denel stated. This leaves it “in a cash constrained vulnerable position.”

Denel is meeting with National Treasury and the Department of Defence on releasing ringfenced funding. On the positive side, Denel told the committee that it has stabilised and secured some critical skills as well as brought operations online and is delivering on key programmes: for the South African Army’s G5 and G6 upgrade programmes (Projects Muhali and Topstar), initial deliveries were made in November 2023. Progress was also reported on development of the Badger infantry fighting vehicle for the South African Army under Project Hoefyster, and the completion of the Malaysian AV8 programme, for which Denel supplied turrets and missiles. Denel has also restarted the supply of barrels, spares and product support, and restarted the A-Darter air-to-air missile programme: trainer missiles are due for delivery to the SA Air Force this month, and production missiles next year. Upgrades to Umkhonto surface-to-air missiles for Finland were demonstrated, and Denel is supporting Seeker unmanned aerial vehicle (UAV) systems of the South African National Defence Force and the United Arab Emirates (UAE). Also for the SANDF, Denel is working on the next phase of the SA Army’s Ground-Based Air Defence System (GBADS).

On the negative side, Denel Pretoria Metal Pressings (PMP) “continues to battle with production constraints by equipment and infrastructure failures and requires immediate critical capex to continue operating, but substantial external investment, technology and leadership to take a step-up to true sustainability. A strategic partner that can provide funding as well as leadership knowledge is to be considered to exploit the opportunity to grow PMP again,” the company said in its presentation.

Denel said it is pursuing business worth R26 billion and to this end between August and October 2023 carried out live firing demonstrations of its truck-mounted T5 155 mm 52 calibre howitzer and G6 155 mm self-propelled howitzersat the Alkantpan test range. Representatives from eleven countries attended.

“R3.9bn of new orders contributing to Denel’s sustainability have been secured over the last year. The SANDF being the greater share,” the company reported. Denel hopes to achieve R3.5 billion revenue in 2026/27 and operating profit of R342 million. It recorded an operating loss of R500 million before interest and tax for March 2024.

(Source: https://www.defenceweb.co.za/)

 

05 Dec 24. Safran CEO says French crisis creates uncertainty, defence budget at risk.

• Summary
• Companies
• Says possible budget rollover adds pressure on defence
• Safran looking at France, US or Canada for carbon brakes plant
• Safran sets up proxy structure to expand US defence role

The fall of the French government has created political and economic uncertainty that can sap investor confidence, the head of partially state-owned Safran (SAF.PA), opens new tab said on Thursday.

“Obviously it creates political and economic uncertainty, that’s clear. It’s a situation that investors – whether financial, economic or industrial – don’t like,” CEO Olivier Andries told reporters, adding that a possible rollover of the 2024 budget into next year could harm the defence sector.

Jet engine maker Safran, 11% owned by the French government, is one of the world’s largest aerospace suppliers and its activities include strategic sectors such as defence and space.

Andries was among the first high-profile French CEOs and the first leader of a privatised group to address the fallout of France’s growing political crisis.

The euro zone’s second-largest economy faces uncertainty over its 2025 budget after far-right and leftist lawmakers toppled Michel Barnier’s minority government on Wednesday.

If parliament has not passed a budget by Dec. 20, a caretaker administration could propose emergency legislation that would roll over spending limits from 2024, pending the installation of a new government and a new 2025 budget bill.

Andries noted that this was the most probable scenario.

“In defence, that will create pressure,” he told reporters during a briefing on the group’s latest financial targets.

“Beyond that, where the pressure will land and how the defence ministry will manage that, I can’t say,” he said, adding: “The pressure is already there; we are feeling it”.

FACTORY SHORTLIST

Political and economic stability are among factors in a long-awaited decision on where to place a new carbon brakes factory, with France, the United States and Canada shortlisted, Andries said, adding that stable energy prices would be most critical.

Safran announced plans in 2019 to open a new factory for energy-intensive carbon brake production in Lyon, France.

The idea fell victim to the pandemic in 2020 and in 2022, plans to take advantage of a rebound in air travel by renewing the project were postponed for another 18-24 months as European energy prices soared following Russia’s invasion of Ukraine.

Safran is now looking at other options in addition to France for the plant, with a decision due in the first half of 2025.

Andries said Safran would look at three main criteria: competitive energy prices, stable and clean supplies based on nuclear or hydraulic power and a 10-year visibility on prices.

“After that, there are other criteria of economic and political stability,” he said.

“The first option is obviously France,” he said. Others included Quebec, where hydroelectric power is among the most competitive, and Oregon where energy prices are regulated.

European manufacturing firms are bracing for possible U.S. tariffs announced by the incoming Trump administration.

Safran is among Boeing’s (BA.N), opens new tab largest suppliers via a joint venture with GE Aerospace (GE.N), opens new tab to produce engines.

The French company is also the latest European supplier to try to target the world’s largest defence and space market by setting up a secure proxy structure in the United States. (Source: Reuters)

 

04 Dec 24. D-Fend Solutions, the leader in field-proven radio frequency (RF) cyber-based, non-kinetic, non-jamming, counter-drone – takeover technology, announced today that it has secured $31m in the initial closing of a new investment round. The round was led by Israel Growth Partners (IGP), with participation from existing investor Vertex Ventures and new investor Vertex Growth. This funding underscores the critical role of D-Fend’s proven innovations in enabling full control, safety, and continuity for security agencies in multiple sectors, while acting against continually rising rogue drone incidents across complex and sensitive environments. With this investment round, IGP General Partner Uri Erde join’s D-Fend’s Board of Directors, joining existing investor board members Yoram Oron of Vertex Ventures and Rami Hadar of Claridge Israel.

The funding will enable D-Fend to solidify its technological leadership and capabilities, expand its market reach into new territories and sectors, and advance its ability to tackle new and evolving drone risks. The funding round comes on the heels of strong continuous year-over-year revenue growth of over 60% and diverse and balanced expansion across geographies, sectors, and use cases. D-Fend’s global installed base has now reached nearly 30 countries, including Five Eyes (FVEY) alliance, G7 and major NATO member states. This investment will further support efforts to address constantly changing threats, penetrate additional market segments, integrate with more partners and technologies, and establish a stronger global presence for the company.

“This funding is a testament to the trust our investors have in our vision, technology, growth, brand, and customer base,” said Zohar Halachmi, CEO and Chairman of D-Fend Solutions. “The growing size, scope, and complexity of rogue drone threats demands advanced, precise, and reliable solutions. This investment will enable us to continue innovating and expanding our capabilities, ensuring we remain at the forefront of counter-drone technology, while delivering unparalleled control, safety and, uniquely, operational continuity to our global defense, homeland security, law enforcement, airport, and critical infrastructure customers.”

The investment follows an in-depth evaluation by IGP, who had previously been the sole institutional investor in Cellebrite (NASDAQ: CLBT), the global leader in digital investigation solutions for public safety and security agencies, prior to its IPO. IGP views D-Fend as a pioneering disruptor operating alongside some of the world’s largest aerospace and defense companies.  By providing its solution to the most demanding security agencies, D-Fend stands out for its groundbreaking RF cyber-takeover technology, and its ability to deliver unparalleled safety and operational continuity.

“D-Fend Solutions fits the profile and model which we find very attractive—a category creating company that develops and deploys deep and defensible technology to address threats posed by the mass proliferation of beneficial but also potentially dangerous devices and products, in this case drones,” said Uri Erde, General Partner of Israel Growth Partners. “Their innovative approach to counter-drone security, drawing upon a multi-disciplinary approach crossing air defense, electronic warfare and cybersecurity domains, combined with their reputation and proven ability to deliver and meet the needs of militaries, homeland security, and law enforcement agencies, positions them as a market leader in safeguarding sensitive environments against rapidly rising drone threats.”

D-Fend’s flagship technology, EnforceAir, employs RF cyber-takeover techniques to safely neutralize rogue drones without collateral damage or operational disruption in a highly controlled and surgical manner. Recognized by Booz Allen Hamilton as an innovator for its cyber takeover effector within the top emerging defense and security technology of non-kinetic counter-UAS, D-Fend Solutions has led cyber-takeover as a distinct and essential technology category within this space. Deployed on a massive scale and hailed by defense establishments as a success, EnforceAir protects sensitive environments—including military zones, airports, critical infrastructure, prisons, and public events—ensuring operational continuity and safety in even the most challenging scenarios.

About D-Fend Solutions

D-Fend Solutions is the leading counter-drone, cyber-takeover technology provider, enabling full control, safety, and continuity during rogue drone incidents across complex and sensitive environments to overcome both current and emerging drone threats. With thousands of successful deployments performed worldwide, in the most challenging real-life scenarios and for the most demanding end users, EnforceAir, the company’s core offering, focuses on the most dangerous drone threats in military, public safety, airport, prison, major event, critical infrastructure, and other environments. D-Fend Solutions’ technology has been chosen as best-in-class and is deployed by top-tier U.S. government agencies – including with U.S. military, federal law enforcement, and homeland security – as well as major international airports globally. EnforceAir autonomously executes RF cyber-takeovers of rogue drones for safe landings and controlled outcomes, ensuring the smooth flow of communications, commerce, transportation, and everyday life.

About Israel Growth Partners:

Israel Growth Partners (IGP) is a technology growth fund, empowering exceptional tech companies at growth stage and supporting strong management teams as they strive to build large global companies and become category leaders. We provide our companies with growth capital, strategic guidance, and firsthand experience – all aimed towards accelerated growth and successful partnership. (Source: PR Newswire)

 

04 Dec 24. Gogo Inc. (NASDAQ: GOGO) (“Gogo” or the “Company”) today announced the completion of its acquisition of Satcom Direct (“SD”), creating the only multi-orbit, multi-band, in-flight connectivity provider serving the needs of every segment of the global business aviation (“BA”) and military/government mobility markets. Gogo paid $375m in cash and issued five million shares of Gogo stock to SD ownership at close and could pay up to an additional $225m tied to realizing performance thresholds over the next four years. The transaction, including fees, was funded with $250m of debt and $150m of cash from the Gogo balance sheet. The interest rate on Gogo’s incremental debt is SOFR plus 6%, and the Company’s annual interest expense will increase by an estimated $25m to $27m. Gogo’s net leverage ratio at yearend 2024 is estimated to increase to 3.6x, and the Company expects to be back inside its target leverage range of 2.5x-3.5x within one to two years. The transaction is immediately accretive, with $18m of annual recurring cost savings achieved immediately after closing, and a total expected $25m to $30m in annual run-rate cost synergies to be achieved in the two years after close. The acquisition is expected to accelerate sales of Gogo’s soon-to-launch Galileo Low Earth Satellite (“LEO”) connectivity product, by:

• selling Gogo Galileo to SD’s 1,300 premium global broadband customers,
• selling new Galileo installs through the SD international sales force to the 12,000 medium and smaller business aircraft outside North America that have no broadband solution available today, and
• leveraging SD’s strong presence in the Mil/Gov market where there is strong demand for LEO connectivity in combination with SD’s GEO connectivity.

Combining with SD cements our position as the only in-flight connectivity provider able to satisfy the performance and cost needs of every segment of the global BA market,” said Oakleigh Thorne, Gogo Executive Chair. “With the launches of our next-generation LEO and 5G technologies, Gogo and SD are uniquely positioned to drive growth and future value creation.”

Gogo’s principal shareholders, GTCR, a leading private equity firm, and Thorndale Farm Inc., have expressed strong support for the acquisition and did not sell any shares in the transaction, reflecting their confidence in the long-term value creation potential of the combined company.

Leadership Transitions

In connection with the completion of the combination, Chris Moore, President of SD, has been appointed Gogo’s Chief Executive Officer and will lead the combined company, bringing years of satellite and telecommunications experience and success to his new role. He succeeds Thorne, who transitions to Executive Chair of the Gogo Board of Directors.

Moore said, “Uniting the complementary strengths of Gogo and SD marks an exciting new chapter for us as one company. Together, we are uniquely positioned to deliver unparalleled in-flight connectivity solutions across the underpenetrated global BA and military/government mobility markets. I am excited to expand Gogo’s reach and continue its legacy of exceptional service and cutting-edge technology.”

In addition, Zachary Cotner, Chief Financial Officer of SD, has been appointed Chief Financial Officer of the combined company, succeeding Jessi Betjemann. Mike Begler, who previously served as Senior Vice President of Gogo Production Operations, has been appointed Executive Vice President, Chief Operating Officer of the combined company.

Thorne continued, “I want to thank Jessi for her years of commitment and financial leadership at Gogo and wish her the best in her next chapter. As I transition to the Executive Chair role, I remain deeply committed to Gogo as a leader and an investor and look forward to working closely with Chris, Zach, Mike and our world-class team.”

Reiterates 2024 Guidance and Product Launch Timelines

Gogo reiterates the following standalone 2024 financial guidance previously provided on Tuesday, November 5, 2024:

• Total revenue in the range of $400m to $410m,
• Adjusted EBITDA in the range of $120m to $130m, which includes legal expenses from ongoing legal proceedings and approximately $20 m of operating expenses for strategic and operational initiatives including Gogo 5G and Gogo Galileo,
• Free Cash Flow in the range of $55m to $65m, which includes $35m in reimbursements tied to the FCC Reimbursement Program, and
• Capital expenditures of approximately $30m, which includes approximately $20m for strategic initiatives.

As previously disclosed upon announcement of the transaction, the combined company is expected to generate pro forma 2024 revenue of approximately $890m, Adjusted EBITDA Margin of approximately 24% and Free Cash Flow of more than $100m. Including the anticipated launch of Gogo Galileo, the combined company is expected to deliver long-term annual revenue growth in the 10% range, Adjusted EBITDA Margins in the mid-20% range and significant Free Cash Flow accretion, which will support strategic investments, de-levering and return of capital to shareholders. See “Non-GAAP Financial Measures” below.

Additionally, Gogo reiterates that its small-form-factor Galileo HDX LEO service remains on track to begin shipping to customers by the end of 2024, and it expects to launch its large form factor Galileo FDX, and its Gogo 5G network, late in the second quarter of 2025.

About Gogo

Gogo is a leading provider of inflight connectivity services able to satisfy the performance and cost needs of every segment of the global business aviation and government markets. We offer a customizable suite of smart cabin systems for highly integrated connectivity, inflight entertainment, and voice solutions. Gogo’s products and services are installed on thousands of business aircraft of all sizes and mission types from turboprops to the largest global jets, and are utilized by the largest fractional ownership operators, charter operators, corporate flight departments and individuals. In addition, Gogo delivers consistent, reliable connectivity globally to military and government customers that utilize heavy jets.

As of September 30, 2024, Gogo reported 7,016 business aircraft flying with its broadband ATG systems onboard, 4,379 of which are flying with a Gogo AVANCE L5 or L3 system; and 4,180 aircraft with narrowband satellite connectivity installed. Connect with us at www.gogoair.com.

 

04 Dec 24. AeroVironment Announces Fiscal 2025 Second Quarter Results.

AeroVironment, Inc. (“AeroVironment” or the “Company”) reported today financial results for the fiscal second quarter ended October 26, 2024.

Second Quarter Highlights:

• Record second quarter revenue of $188.5m up 4% year-over-year
• Second quarter net income of $7.5m and non-GAAP adjusted EBITDA of $25.9m
• Funded backlog of $467.1m as of October 26, 2024
• Announced its entry into an agreement for the acquisition of BlueHalo in an all-stock transaction with an enterprise value of approximately $4.1bn

“AeroVironment continues to deliver strong results, including record second-quarter revenue along with a healthy funded backlog that is 25% higher than the prior quarter,” said Wahid Nawabi, AeroVironment chairman, president and chief executive officer. “Key wins from our Loitering Munition Systems segment continue to drive growth for the company.

“We expect our proposed acquisition of BlueHalo to further advance our growth opportunities with a highly complementary portfolio of products, customers and capabilities in key defense space and intelligence sectors and establish AeroVironment as the next generation defense technology company for our customers. We look forward to continued momentum beyond fiscal year 2025.”

FISCAL 2025 SECOND QUARTER RESULTS

Revenue for the second quarter of fiscal 2025 was $188.5m, an increase of 4% as compared to $180.8m for the second quarter of fiscal 2024, reflecting higher product sales and service revenue of $5.5m and $2.2m, respectively. From a segment standpoint, the year-over-year increase was due to revenue growth in Loitering Munitions Systems (“LMS”) of 157% and MacCready Works (“MW”) of 42%, partially offset by a decrease in UnCrewed Systems (“UxS”) of 35%.

Gross margin for the second quarter of fiscal 2025 was $73.6m, a decrease of 2% as compared to $75.4m for the second quarter of fiscal 2024, reflecting lower product gross margin of $2.6m, partially offset by higher service margin of $0.9m. As a percentage of revenue, gross margin decreased to 39% from 42%, primarily due to an increase in the proportion of LMS product revenue and an increase of $0.5m of intangible amortization expense, partially offset by favorable LMS contract definitizations.

Income from operations for the second quarter of fiscal 2025 was $7.0 m as compared to $25.2m for the second quarter of last fiscal year. The decrease year-over-year was due to an increase in selling, general and administrative (“SG&A”) expense of $9.8m, which includes an increase of $2.5m of acquisition related expenses, an increase in research and development (“R&D”) expense of $6.7m and a decrease in gross margin of $1.7m.

Other loss, net, for the second quarter of fiscal 2025 was $0.7m, as compared to $4.8m for the second quarter of last fiscal year. The decrease in other loss, net was primarily due to a decrease in net interest expense and a decrease in net unrealized losses on investment holdings.

Benefit from income taxes for the second quarter of fiscal 2025 was $(0.2)m, as compared to provision for income taxes of $1.1m for the second quarter of last fiscal year.

Net income for the second quarter of fiscal 2025 was $7.5m, or $0.27 per diluted share, as compared to $17.8m, or $0.66 per diluted share, in the prior-year period, respectively.

Non-GAAP adjusted EBITDA for the second quarter of fiscal 2025 was $25.9m and non-GAAP earnings per diluted share were $0.47, as compared to $39.5m and $0.97, respectively, for the second quarter of fiscal 2024.

BACKLOG

As of October 26, 2024, funded backlog (defined as remaining performance obligations under firm orders for which funding is currently appropriated to us under a customer contract) was $467.1 m, as compared to $400.2 m as of April 30, 2024.

FISCAL 2025 — OUTLOOK FOR THE FULL YEAR

For fiscal year 2025, the Company continues to expect revenue of between $790m and $820m, non-GAAP adjusted EBITDA of between $143 m and $153 m and non-GAAP earnings per diluted share of between $3.18 and $3.49.

This guidance does not include the forecasted financial results associated with the anticipated acquisition of BlueHalo or certain acquisition related expenses which are contingent upon the consummation of the acquisition. The Company cannot provide guidance for or reconciliation to GAAP net income or earnings per diluted share without unreasonable efforts due to the inherent difficulty of forecasting the timing and/or amount of the acquisition related expenses that have not yet occurred (and have been excluded from the adjusted measures). Acquisition related expenses for the fiscal year ending April 30, 2025, which are expected to be significant, will be materially impacted by the timing of the close of the acquisition and, amongst other factors, shareholder approval, required regulatory approval processes including Hart Scott Rodino and certain other international regulatory approvals, which are, in part, outside the control of the Company. As the Company cannot predict the amount or timing of acquisition related expenses with a reasonable degree of accuracy, the Company believes such reconciliation could imply a degree of precision that might be confusing or misleading to investors.

The foregoing estimates are forward-looking and reflect management’s view of current and future market conditions, subject to certain risks and uncertainties, including certain assumptions with respect to our ability to efficiently and on a timely basis integrate acquisitions, obtain and retain government contracts, changes in the timing and/or amount of government spending, react to changes in the demand for our products and services, activities of competitors, changes in the regulatory environment, and general economic and business conditions in the United States and elsewhere in the world. Investors are reminded that actual results may differ materially from these estimates and investors should review all risks related to achievement of the guidance reflected under “forward-looking statements” below and in the Company’s filings with the Securities and Exchange Commission. (Source: BUSINESS WIRE)

 

04 Dec 24. Euro Manganese Inc. (TSX-V and ASX: EMN; OTCQX: EUMNF; Frankfurt: E06) (“Euro Manganese” or the “Company”) announced today that it has amended the US$100m funding package (the “Funding Package”) with OMRF (BK) LLC (“Orion”), which is managed by the Orion Resource Partners. The Funding Package, originally announced on November 28, 2023, supports the development of the Chvaletice Manganese Project (the “Project”) in the Czech Republic, and consists of a US$50m Convertible Loan Royalty Agreement (the “CLRA”), of which US$20m has been advanced to the Company, and a US$50m royalty on Project revenues (the “Royalty Financing”), subject to the Company meeting certain milestones related to the development of the Project.

Highlights of the Amendment to the Funding Package

• The current CLRA requires the Company pay cash interest to Orion. Based on the amendment to the CLRA, interest amounts accruing with effect from January 1, 2025 will be deferred and added to the principal balance of the convertible loan, conserving US$2.8m per annum of cash for the advancement of the Project. The CLRA amendment interest rate is 14.00%.
• The dates for certain milestone obligations under the amendments to the CLRA and Royalty Agreement (the “CLRA and Royalty Amendment”) have been extended to allow for advancement of the Project.
• Euro Manganese has been granted the right to repay the convertible loan at par at any time prior to conversion, including all accrued and unpaid interest, and may cancel the second tranche of the CLRA without penalty.
• Euro Manganese has been granted the right to terminate the Royalty Financing at any time prior to the satisfaction of the conditions precedent for the Royalty Financing for a fee of US$1m, provided that the outstanding convertible loan amounts under the CLRA (and all accrued and unpaid interest) have been repaid in full at such time.
• Euro Manganese will, subject to TSX Venture Exchange approval, and in the event certain conditions precedent are met with respect to future equity fundraising activities, issue warrants to purchase common shares of the Company to Orion.

Further details are available in Table 1 of this news release. All other material terms and conditions of the CLRA and Royalty Agreement, remain unchanged. Copies of the CLRA and Royalty Agreement are available on SEDAR+ and a copy of the CLRA and Royalty Amendment will be filed under the Company’s profile on SEDAR+.

Martina Blahova, Interim CEO of Euro Manganese, commented:

“We have maintained a strong and collaborative relationship with Orion and are pleased to have amended the Funding Package, accommodating the more gradual pace of development within the EV industry. Our team remains focused on progressing offtake discussions with potential customers and strategic partners and managing our resources for the next phase of growth.”

About Euro Manganese

Euro Manganese is a battery materials company focused on becoming a leading producer of high-purity manganese for the electric vehicle industry. The Company is advancing development of the Chvaletice Manganese Project in the Czech Republic and exploring an early-stage opportunity to produce battery-grade manganese products in Bécancour, Québec.

The Chvaletice Manganese Project is a unique waste-to-value recycling and remediation opportunity involving reprocessing old tailings from a decommissioned mine. It is also the only sizable resource of manganese in the European Union, strategically positioning the Company to provide battery supply chains with critical raw materials to support the global shift to a circular, low-carbon economy.

Euro Manganese is dual listed on the TSXV and the ASX and is also traded on the OTCQX.

 

04 Dec 24. AeroVironment may be classified as a small defense company, but it is a giant in mini-UAS. The company repeatedly beats larger companies in small UAV competitions. Those victories make it the company to beat in competitions for U.S. military small UAS. The company reported $717m in revenue for fiscal 2024 (ending April 30, 2024). This represented year-over-year growth of 33%, reflecting recent acquisitions and strong organic growth. Since 2017 revenue has grown at a 17.4% compound annual growth rate. Net income in fiscal 2024 was 59.7m, a sharp reversal from the 2023 net loss of $176.2m, which was primarily due to a goodwill impairment charge of $156m resulting from a long-term revaluation of the company’s MUAS segment. The company ended its fiscal 2024 year with a backlog of $400m, down somewhat from its backlog high of $424m at the end of fiscal 2023. AeroVironment’s UAV business remains heavily dependent on the U.S. government with 76% of sales coming from the U.S. government in fiscal 2024. Effective May 1, 2023 (the start of fiscal 2024), AeroVironment reorganized from four segments into three segments. The new segments are UnCrewed Systems (UxS), Loitering Munitions Systems (LMS) and McCready Works (MW). (Source: Teal Group)

 

04 Dec 24. Gooch & Housego battles industrial market headwinds.

A demand recovery is now forecast in the second half of the new financial year.

• Aerospace and defence revenue rises by a quarter
• Net debt down 19 per cent

Photonic components manufacturer Gooch & Housego’s (GHH) struggles with demand weakness in its industrial and medical laser markets was apparent in its annual flat revenue performance, but a 15 per cent sales improvement in the second half (on an organic, constant currency basis) highlighted progress in tough trading conditions as the company pointed to expectations of a “sustained recovery in demand” in subdued markets in the second half of 2025.

The company’s key industrial segment – which delivered half of total revenue in the year – is where the sales performance went backwards. While management noted that “the destocking patterns we saw in the first half of the year now appear to be behind us”, revenue still fell 9 per cent on laser and semiconductor market weakness.

Meanwhile, the loss-making aerospace and defence (A&D) segment grew revenue by 26 per cent on volume growth despite production yield softness, and life sciences revenue nudged up 2 per cent. A year-end order book of £105mn covers around 70 per cent of the consensus sales forecast for 2025.

Gooch is aiming for a mid-teen return on sales over the medium term under chief executive Charlie Peppiatt, who joined the company in 2022 and is implementing the results of a strategic review. The adjusted operating margin fell 130 basis points in the year to 7.7 per cent on a 13 per cent drop in profit to £10.5m, meaning that the company needs an uplift of around 750 basis points to hit its target. The statutory operating margin of 5 per cent compares to double-digit level seen for most of the 2010s.

Getting the portfolio right is a key part of the growth strategy and Gooch has taken steps to rightsize. It sold the underperforming manufacturer of optoelectronic components and laser modules EM4 during the year, and acquired precision optics company Phoenix for its A&D business in October.

The balance sheet position provides the necessary flexibility. Net debt fell £6m to £25.8m, and the leverage ratio of 0.9 times is undemanding.

Analysts at Investec are “encouraged that management has not opted to aggressively cut costs to mitigate near-term headwinds”. They forecast a 42 per cent improvement in operating profit in 2025.

The shares trade on 11 times forward consensus earnings, almost half the level of the 5-year average. A PEG ratio of 0.8 times is also attractive, given the City anticipates EPS growth of 56 per cent and 22 per cent, respectively, in the next two financial years as the backdrop improves. Buy.  Last IC view: Buy, 550p, 04 Jun 2024. (Source: Investors Chronicle)

 

04 Dec 24. Houlihan Lokey is pleased to announce that TEKEVER, Europe’s leader in AI-centric unmanned aerial systems, has successfully completed a €70 m growth equity raise. The strategic growth equity round was led by Baillie Gifford and included participation from the NATO Innovation Fund, the U.K.’s National Security Strategic Investment Fund (NSSIF), and Crescent Cove Advisors LP, among others. The transaction closed on 25 October 2024. TEKEVER is Europe’s leader in AI-centric unmanned aerial systems (UAS) serving both military and commercial end markets. The company designs and produces highly differentiated unmanned aircraft and offers a managed intelligence, surveillance, and reconnaissance (ISR) service to its global customer base. TEKEVER’s vertically integrated business model, based on deep expertise in both hardware and software, enables the company to deliver unmatched results for its customers and respond to rapidly evolving mission demands. The Series B round of €70 m was led by Baillie Gifford and supported by strategic investors, including the NATO Innovation Fund (NIF), the U.K.’s NSSIF, Crescent Cove Advisors LP, Iberis Capital, and Cedrus Capital. Together, the investor group brings unmatched expertise and global perspectives, helping TEKEVER drive forward its vision to redefine security and defence.  TEKEVER will use the investment to accelerate R&D focused on enhancing and developing cutting-edge UAS technologies, expanding global production, delivery, and support to meet growing demand, and strengthening its position as a trusted partner in global security and defence markets.  Houlihan Lokey served as the lead financial advisor to TEKEVER on its Series B fundraising. This transaction underscores Houlihan Lokey’s expertise and leadership in the global Aerospace & Defense (A&D) sector and private capital markets, marking a significant milestone in the rapidly growing defense technology sector. It also highlights the firm’s ability to deliver exceptional outcomes through collaboration across its A&D practice, Iberian network, and Equity Private Placement capability in complex transactions.

 

03 Dec 24. Italy’s small defense firms ride high amid military spending boon. Italy’s small, family-owned defense companies are more profitable and are growing faster than the country’s massive state-run firms or the foreign players in the Italian market, a new report has revealed. Family-run firms have long been the backbone of Italian capitalism, pushing the country to become the eighth biggest manufacturing power in the world, and the report by Italy’s Mediobanca shows they are outperforming in the defense sector. While accounting for a relatively small chunk of Italy’s defense industry – €6.3 bn ($6.6 bn), or 15.6 percent of sector revenue – medium-sized family firms boasted an Earnings Before Interest and Taxes (EBIT) margin last year of 12.2 percent, almost double the national average of 6.2 percent, the report said. Top of the table for EBIT margin, which is a measure of profitability, was small cyber firm DEAS – Difesa e Analisi Sistemi, with a margin of 54 percent. Boasting a margin of 44.5 percent, second place was taken by GEM Elettronica, a family-controlled company which has operated in the naval electronics sector since 1977 and became the exception that proves the rule when it was taken over by defense giant Leonardo in September.

“Italian family-owned medium-sized enterprises outperformed all the other categories, on the back of their leaner and more flexible operating structures,” the authors of the report claimed.

Family firms also outperformed state firms and foreign-owned firms when it came to growth, notching up 29.2 percent growth in 2023.

“They have bigger margins of growth and by forming part of the supply chain for the bigger firms they allow those firms to have greater flexibility,” said Carlo Festucci, the general secretary of Italian defense industry association AIAD.

“The big firms meanwhile help them secure financing from banks,” he added.

Small firms apart, the Mediobanca report revealed a series of other illuminating stats about the Italian defense industry, including how 36 of the top 100 firms in Italy are foreign owned and make up 25.1 percent of turnover in the sector, while the big, state-owned firms like Leonardo and shipyard Fincantieri contribute 59.3 percent of turnover.

Italy’s top 100 firms are dual use, in that they handle both civil and defense contracts, with only 49 percent of their total €40.7 bn turnover specifically derived from defense contracts – approximately €20 bn.

That figure was up 6.6 percent on 2022 the report noted.

Of the 181,000 employed by the firms, 54,000 are exclusively involved in defense work, it added.

Leonardo generates 75 percent of its turnover from defense while for Fincantieri the figure is 27 percent.

Licenses issued for arms imports by Italy in 2023 totaled €1.25 bn, 40.5 percent of which came from the United States, while licenses for exports reached €6 bn, with France the chief destination on €465.4 m followed by Ukraine on €417m then the United States on €390 m. (Source: glstrade.com/Defense News)

 

03 Dec 24. Leonardo has no plans to change its stake in Germany’s Hensoldt. Leonardo (LDOF.MI) has no intention to change its stake in Germany’s Hensoldt (HAGG.DE) the Italian defence and aerospace group’s chief executive said on Tuesday.

“Our stake is good as it is. For fair play we will wait for a decision by the German government, to make any change,” CEO Roberto Cingolani told reporters ahead of a conference in Rome. Leonardo holds a 23.8% stake in Hensoldt. (Source: Google/Reuters)

 

02 Dec 24. Veteran Ventures Capital (VVC), a venture capital firm investing in dual-use national security technology businesses led by veteran entrepreneurs and leaders, today announced a strategic investment in Turion Space (Turion). Turion is at the forefront of solving two of space’s most pressing capability gaps: space domain awareness and non-earth imaging, both critical to maintaining space operations and expanding in-space mobility. Turion solves this through their first-of-its-kind Droid micro-satellites, equipped with advanced sensors to improve space situational awareness and mitigate debris at a fraction of the cost of its competitors. The Droid.001 is currently operational with flight heritage, capturing non-earth images for government and commercial clients. These satellites, in 2024 alone, will have accomplished over 100 imaging missions. The capital raised in this round will be used to expand Turion’s satellite fleet as they prepare to launch their Droid.002, a larger satellite with enhanced imaging capabilities, and the further development of autonomous docking and maneuvering systems that can deorbit defunct satellites and perform in-orbit repairs and inspections.

Veteran Ventures Capital invested in Turion’s recently closed and oversubscribed Series A funding round.

Turion’s DROID.002 satellite build completed in November 2024. Another critical step in building the foundation of their orbital infrastructure.

Turion’s engineering team proudly standing beside their DROID.002 satellite ahead of launch vehicle integration.

Veteran Ventures Capital invested in Turion’s recently closed and oversubscribed Series A funding round.  Turion has raised nearly $20 m in venture capital to date. Its veteran-led team, growing to over 70 employees, including former engineers from SpaceX and other aerospace leaders, is leveraging decades of experience to tackle space’s most pressing challenges.

Turion’s technologies have gained significant traction across national security customers, including a recently awarded $15m Strategic Financing Increase (STRATFI) program contract from the U.S. Space Force’s SpaceWERX, U.S. Space Force’s innovation arm, in addition to securing a $1.9m Tactical Funding Increase (TACFI) program contract from SpaceWERX to develop systems capable of engaging uncooperative space objects. Their Droid.001 satellite, launched in June 2023, is a 32-kilogram spacecraft designed to improve space situational awareness, with its data now integrated into the U.S. Space Force’s Unified Data Library. Turion is developing a range of satellites that will perform critical satellite services, including the micro-Droid, set for a demonstration in 2026, which will be equipped with grapplers to capture space debris. Co-funded by NASA, this spacecraft is an essential step toward Turion’s vision of mitigating space debris and ensuring safe satellite operations for its customers.

“Turion Space is developing the google earth for space observation and situational awareness. The capabilities they are building for national security and commercial customers represent the kind of high-impact, dual-use technologies that aligns perfectly with VVC’s mission,” said Derren Burrell, Managing Partner of Veteran Ventures Capital. “Their work in advanced space domain awareness, through a specialization in non-earth imaging, addresses a growing concern for both national security and commercial operators. Their technologies have the potential to transform how we manage space safety, particularly with space becoming more of a contested warfighting domain, making this a critical addition to our portfolio.”

With plans to produce 45 satellites annually by 2027, including the upcoming launch of their Droid Alpha satellite in early 2025, Turion is poised for rapid growth. Their enhanced mobility satellites offer advanced in-orbit capabilities for non-earth imaging, satellite servicing, and debris removal. These developments place Turion at the forefront of the emerging satellite non-earth imaging and servicing markets, projected to grow substantially in the coming years as space becomes increasingly crowded.

“We are excited to partner with Veteran Ventures Capital, precisely because their team and advisors have significant expertise in new space technology and the national security opportunities surrounding it,” said Ryan Westerdahl, Co-founder and CEO of Turion Space. “With their investment, we will further enhance our capabilities and provide innovative solutions for non-earth imaging, space debris removal, and satellite servicing, addressing a critical need for both government and commercial operators.”

About Veteran Ventures Capital

Veteran Ventures Capital invests in dual-use national security technologies, focusing on companies led by veteran entrepreneurs and leaders. Committed to advancing U.S. technological superiority, Veteran Ventures Capital provides capital, mentorship, and strategic guidance to high-growth companies serving critical government and commercial markets. VVC’s portfolio includes leading companies in defense, aerospace, cybersecurity, and other sectors essential to national security.

About Turion Space

Turion Space is a leader in non-earth imaging, space debris removal, and satellite servicing solutions. The company develops autonomous spacecraft designed to provide high resolution space domain awareness capabilities, deorbit defunct satellites, perform in-orbit inspections, and repair essential assets. Based in Irvine, California, Turion Space is committed to making space safer and more sustainable through advanced technologies that support the future of space exploration and national security. (Source: PR Newswire)

 

02 Dec 24. BMT, a global leader in maritime design, technical consultancy, and engineering, has acquired Australian Maritime Technologies (AMT), an independent, wholly Australian-owned naval design and marine engineering consultancy based in Melbourne. Specialising in engineering, design, and consulting services for marine projects, AMT has built a strong reputation for high-quality service delivery, which strengthens BMT’s capabilities in ship design and engineering for defence and commercial maritime customers. The synergies between BMT and AMT position them to deliver advanced solutions, combining BMT’s global reach with AMT’s depth of Australian expertise.

Founded in 1987, AMT has earned a strong reputation as an innovative naval engineering consultancy, delivering high-impact design and engineering solutions to clients such as the Royal Australian Navy and leading defence primes like Luerssen and BAE Systems. Through its strategic partnership with Luerssen Australia, AMT has played a key role in establishing in-country design capability for the Arafura Class Offshore Patrol Vessel (OPV) programme, supporting a smooth transition to through-life OPV design and engineering. This collaboration supports the growth of Luerssen Australia’s sovereign design expertise, including the transfer of Design Authority for the OPV programme.

AMT’s experience in naval ship design spans a wide range of combatants, auxiliary, and specialist vessels. It played a key role as the ship designer in the mid-life combat and platform systems upgrades for the Royal New Zealand Navy’s ANZAC Class Frigates, a programme it was initially part of 35 years ago.

With a team of around 60 highly skilled professionals, AMT is known for its customer-centric approach, supporting the Royal Australian Navy and a host of other customers in the APAC region. Their expertise has made a lasting impact on defence initiatives, including the ANZAC Frigates and OPV programmes, solidifying AMT’s position as a trusted partner in the defence sector. Now, joining forces with BMT, AMT is poised to leverage BMT’s global resources while continuing to deliver world-class naval engineering expertise in Australia and beyond.

Graeme Nayler, Regional Business Director, APAC, at BMT, said: “We are thrilled to welcome AMT into the BMT family. Their extensive expertise in multidisciplinary naval ship design, mechanical systems, and combat systems integration aligns seamlessly with BMT’s vision to deliver innovative, comprehensive solutions to clients worldwide. This acquisition strengthens our maritime engineering and design capabilities and expands our commercial reach, driving growth across the Asia-Pacific region.”

Rob Dunbar, Managing Director of AMT, added: “Joining BMT offers an exciting opportunity for AMT. Our shared values and BMT’s focus on innovation will enable us to further advance our sovereign Australian naval design and maritime engineering capabilities while creating new growth opportunities for our expanded team.”

Sarah Kenny OBE, Chief Executive of BMT, commented: “This acquisition is a key step in our strategy to enhance our capabilities and expand our presence in the defence and maritime sectors across the Asia-Pacific. BMT’s extensive experience in naval programmes – including the Fleet Solid Support (FSS) Ships, Queen Elizabeth-class carriers, Tide Class, Norwegian Logistics Support Vessel, and Type 31 Frigate – complements AMT’s specialised local expertise. By combining BMT’s global reach with AMT’s Australian capabilities, we are well-positioned to deliver innovative solutions that meet our clients’ evolving needs. This partnership not only strengthens our support for the Royal Australian Navy but also opens new avenues for growth and innovation in the regional market.”

Both BMT and AMT are committed to employee ownership, with BMT operating as an Employee Benefit Trust and AMT as a staff-owned company. This approach ensures that AMT, as a wholly Australian and staff-owned entity, will maintain its independence and core values while leveraging BMT’s global resources. This creates an environment where employees are empowered to drive continued success.

 

02 Dec 24. SIXGEN, a full-spectrum solutions provider across the digital battlespace to U.S. national security and critical infrastructure sectors, announced today the acquisition of Kyrus Tech (“Kyrus” or the “Company”), a specialized software development firm for mission-critical cyber solutions to the Intelligence and Defense Communities, including data science, reverse engineering, and other advanced capabilities. This strategic combination enhances SIXGEN’s mission to deliver advanced products and platforms and provide scalable, tailored solutions that address today’s increasingly complex digital threat landscape through a novel approach to innovation and IP-enabled services.

Kyrus is the third company to join SIXGEN within the past six months, following the recent acquisitions of Boldend and Secure Enterprise Engineering, with a purpose to collectively solve for and to build the next generation of integrated mission solutions to counter near-peer digital adversaries. This latest acquisition represents Washington Harbour Partners’ continued enablement of intentional strategic investment in full-spectrum cyber as part of its ongoing commitment to national defense and protection of critical infrastructure.

“Kyrus brings highly specialized capabilities that align with SIXGEN’s vision of building a formidable ecosystem of solutions for the modern digital warrior,” said Jack Wilmer, CEO of SIXGEN. “Grounded in the thoughtful integration of the expertise of Kyrus, Boldend, and Secure EE, SIXGEN is ushering in a new era of technology in key areas, unifying Full-spectrum Cyber, Electronic Warfare, Secure Radio Frequency Communications, and other multi-domain digital operations. This consolidated strength enables us to double down in our support of the nation’s most critical, mission-oriented agencies and accelerate our priorities.” Kyrus adds approximately eighty highly talented engineers and subject matter experts to SIXGEN’s already impressive pool of engineers, software developers and solutions architects.

Specializing in reverse engineering and secure development of both advanced software and tailored hardware systems, Kyrus has built a reputation for being the company of choice to deliver robust, innovative solutions and deep technical expertise. The integration of Kyrus’ highly specialized engineering talent with SIXGEN’s advanced offerings and cyber operators further amplifies our ability to address the complex needs of our customers across multiple fronts of the digital domain. This powerful combination of expertise and market momentum will create a unique and unified force multiplier for operators and our national mission sets.

“SIXGEN is the perfect fit for Kyrus, its customers, and employees – driven by mission, culture, innovation – all values that are critical to serving our nation,” said Dan Hall, CEO of Kyrus. “I am thrilled to combine our specialized software development and reverse engineering expertise with SIXGEN’s growing portfolio of highly differentiated capabilities, enabling us to accelerate our mission impact and continue delivering solutions to tackle today’s rapidly shifting cyber challenges – both protecting critical infrastructure and supporting our national mission sets across the DoD and IC communities. SIXGEN’s recent acquisitions of Boldend and Secure Enterprise Engineering were incredibly purposeful, and the entire Kyrus team is excited to join SIXGEN on their continued differentiated trajectory.” The combination positions SIXGEN for large-scale opportunities and reinforces its standing as the top destination for exceptional talent in the digital domain. Dan Hall will be joining SIXGEN as a Board Director and an Executive Vice President, focused on continuing the combined company’s positive customer impacts.

“The addition of Kyrus is a powerful step toward achieving our vision for a fully-integrated and robust cyber and multi-domain platform,” said Mina Faltas, Founder & Chief Investment Officer at Washington Harbour Partners. “SIXGEN, with Kyrus onboard, is now even better positioned to make an outsized impact on safeguarding our national security and critical infrastructure.” Washington Harbour Partners reaffirms its support for SIXGEN’s expansion and long-term vision for creating a top-tier solutions provider across the digital battlespace, uniquely positioned to defend the nation against the most advanced cyber threats and serving the most sensitive mission operations.

Washington Harbour was advised by Holland & Knight on legal matters and PwC on financial. Morse Law served as legal advisor to Kyrus Tech.

About SIXGEN

SIXGEN is a mission-driven leader in cyber, dedicated to supporting the U.S. Department of Defense, intelligence community, other federal agencies, and U.S. critical infrastructure. With a focus on operational excellence and innovative solutions, SIXGEN ensures operational mission success in the digital domain across the full spectrum of cyber.

For more information, please visit www.sixgen.io

About Kyrus Tech

Kyrus is a mission-focused leader in cyber, committed to advancing national defense and securing critical infrastructure. Headquartered in Sterling, VA, with an additional location in Denver, CO, Kyrus continuously pushes boundaries to solve the most complex challenges, earning a reputation for delivering exceptional results and cutting-edge cyber solutions to federal clients through expertise in research, development, and reverse engineering.

For more information, please visit www.kyrus-tech.com

About Washington Harbour Partners

Washington Harbour Partners LP, based in Washington DC, is a private investment firm that brings a fresh approach to investors and founders, providing flexibility and deep operational expertise at all stages of the investment cycle – from growth equity to control buyouts to public markets. The firm has deep domain expertise in the areas of software, defense technologies, cyber, government & business services, and technology-enabled consumer services. (Source: BUSINESS WIRE)

 

02 Dec 24. Crane Company (NYSE:CR) (“Crane” or the “Company”), a premier industrial manufacturing and technology company, announced that it has entered into a definitive agreement to sell its Engineered Materials business to KPS Capital Partners, LP (“KPS”) for $227m. Max Mitchell, Chairman of the Board, President and Chief Executive Officer of Crane Company said, “This divestiture reflects yet another important step forward following the numerous actions we have taken over the last few years to simplify our portfolio and focus our resources on our two strategic growth platforms: Aerospace & Electronics and Process Flow Technologies. Those simplification actions have included the divestiture of non-core assets including Crane Supply and the defeasement of legacy liabilities in 2022, followed by our 2023 separation transaction. Since the separation, we have continued to invest in our strategic growth platforms organically, and further strengthened those businesses with four strategic acquisitions: Baum Lined Piping, Vian Enterprises, CryoWorks, and Technifab Products. We will continue to actively manage our portfolio to drive sustainable, profitable growth for all our stakeholders.”

Mr. Mitchell concluded: “Engineered Materials is a great business with leadership positions in the markets in which it operates with dedicated Crane associates that I am very proud of, and we look forward to watching its continued growth under the ownership of KPS. I wish to thank our Engineered Materials team for their support and understanding regarding this decision.”

Crane Company and KPS anticipate closing the transaction in the first quarter of fiscal year 2025 subject to customary closing conditions, including receipt of regulatory approvals.

Engineered Materials will be presented as discontinued operations beginning with results for the fourth quarter of 2024, and retrospectively for prior periods. Our last full-year 2024 adjusted earnings per diluted share (EPS) guidance published on October 28, 2024 was a range of $5.05 to $5.20. We are now updating that guidance solely to reflect Engineered Materials’ presentation as discontinued operations, and our revised adjusted EPS from continuing operations guidance is $4.71 to $4.86. For the fourth quarter of 2024, we expect adjusted EPS from continuing operations of $1.10 to $1.25.

About Crane Company

Crane Company has delivered innovation and technology-led solutions to its customers since its founding in 1855. Today, Crane is a leading manufacturer of highly engineered components for challenging, mission-critical applications focused on the aerospace, defense, space and process industry end markets. The Company has two strategic growth platforms, Aerospace & Electronics and Process Flow Technologies. Crane has approximately 7,500 employees in the Americas, Europe, the Middle East, Asia and Australia. For more information, visit www.craneco.com.

About KPS Capital Partners

KPS, through its affiliated management entities, is the manager of the KPS Special Situations Funds, a family of investment funds with approximately $21.4bn of assets under management (as of September 30, 2024). For over three decades, the Partners of KPS have worked exclusively to realize significant capital appreciation by making controlling equity investments in manufacturing and industrial companies across a diverse array of industries, including basic materials, branded consumer, healthcare and luxury products, automotive parts, capital equipment, and general manufacturing. KPS creates value for its investors by working constructively with talented management teams to make businesses better and generates investment returns by structurally improving the strategic position, competitiveness, and profitability of its portfolio companies, rather than primarily relying on financial leverage. The KPS Funds’ portfolio companies currently generate aggregate annual revenues of approximately $23.7bn, operate 251 manufacturing facilities in 30 countries, and have approximately 65,000 employees, directly and through joint ventures worldwide (as of September 30, 2024, pro forma for recent acquisitions). The KPS investment strategy and portfolio companies are described in detail at www.kpsfund.com.

KPS Mid-Cap focuses on investments in the lower end of the middle market that require up to $200m of initial equity capital. KPS Mid-Cap targets the same type of investment opportunities and utilizes the same investment strategy that KPS’ flagship funds have for over three decades. KPS Mid-Cap leverages and benefits from KPS’ global platform, reputation, track record, infrastructure, best practices, knowledge and experience. The KPS Mid-Cap investment team is managed by Partners Pierre de Villeméjane and Ryan Harrison, who lead a team of experienced and talented professionals. (Source: BUSINESS WIRE)

 

02 Dec 24. Honeywell lowers sales, profit forecasts after Bombardier agreement. Honeywell (HON.O) on Monday cut its profit and sales forecasts for the fourth quarter and the full year to take into account investments associated with an agreement to provide aviation-related technology for Bombardier’s (BBDb.TO) aircraft. Honeywell’s shares fell about 2% to $226 after the bell. The agreement will provide Honeywell’s avionics, propulsion and satellite communication technologies for Bombardier’s aircraft. Honeywell said it expects the agreement to have a near-term impact on its financials, given the investments for research and development. The company added that it estimates revenue potential of up to $17bn over the duration of the agreement. Honeywell lowered its fourth-quarter sales forecast to between $9.8bn and $10.0bn, from its prior forecast range of $10.2bn to $10.4bn. (Source: Reuters)

 

29 Nov 24. Chemring is well placed as warfare evolves. Last week, the UK defence secretary, John Healey, announced that five Royal Navy warships were to be mothballed as part of a £500mn cost-cutting drive. The ‘senior service’ hasn’t seen those sort of losses in a single day since the Battle of Jutland, but matters weren’t quite as dire as appearances would have us believe. It turns out that all the vessels have been inactive for an extended period and have played no part in deliberations over the disposition of ships ready for combat.

One of their number, HMS Bulwark, had been undergoing a major refit. Its status had been uncertain for some time, and a shortage of recruits reportedly didn’t help either. With budgetary constraints to the fore, the situation isn’t likely to improve in the near-term, unless Healey is considering the reintroduction of impressment.

In addition to the warships, the decision was taken to pull the plug on a drone system and retire some largely obsolete helicopters. There’s always a hue and cry whenever ministers take out the pruning shears, but we might realistically expect further rationalisation measures ahead of next year’s strategic defence review. Despite the government’s somewhat vague commitment to increasing defence spending to 2.5 per cent of GDP (no timetable given), the “do more with less” mantra currently holds sway in Whitehall.

For investors considering a foray into the aerospace/defence sector, it’s worth remembering that the war in Ukraine has forced a strategic rethink as to how armaments can be effectively employed on the 21st-century battlefield. The widespread use of unmanned aerial vehicles (UAVs) in the conflict provides a case in point.

Because they have proved to be highly effective, the proliferation of drone technologies has sparked a race to develop effective counter-measures (c-UAV). According to National Defense University Press, the US military may have forked out around $700mn (£555mn) to develop these measures in FY2023. The Washington-based publishing house estimates the worth of the global c-UAV market will rise to around $5bn by 2029.

The military use of UAVs falls within the realm of asymmetrical warfare, and it does provide opportunities for smaller defence contractors who can’t go toe-to-toe with the likes of BAE Systems (BA.) on big-ticket capital projects. Chemring (CHG) provides a case in point. Amongst other things, the contractor’s Roke subsidiary has developed a range of AI-powered technologies to detect, confirm, and neutralise UAV threats.

In November, it was announced that a Norwegian subsidiary of Chemring had signed a 12-year framework agreement with Diehl Defence for the supply of MCX energetic material – for use in military applications such as explosives, propellants, and pyrotechnics.

The Hampshire-based contractor also revealed that its US business was handed an order for critical components for use in an undisclosed US missile programme. Together the contracts are worth around £278mn, boosting the countermeasures & energetics division’s order book by around a third. Broker Jefferies maintains that its “investment thesis on the stock is that this medium-term revenue/profit growth is undervalued by the market”. Certainly, the recent deals have improved the sales mix, with all the attendant implications for unit profitability. Even prior to the announcements, analysts at Shore Capital were pointing to a 240-basis point increase in the cash margin to 16.7 per cent by 2027.

It wouldn’t be fanciful to suggest that the nature of the conflict in Ukraine, regardless of its eventual outcome, will have a profound impact on defence procurement considerations. The country’s capacity for innovation under pressure, and its ability to maximise its resources to counter Russia by leveraging asymmetrical warfare, provides a template for large-scale drone warfare.

There are means of assessing the probable direction of UK procurement. In October, the House of Lords international relations and defence committee published the Ukraine: a wake-up call report. The paper outlines the central lessons of the Ukraine conflict for UK defence policy. The report falls in line with analysis from the European Defence Agency, which calls for an increase in resources, but in a more coordinated way. So, the ongoing conflict, dreadful as it may be, is likely to give rise to enhanced opportunities for smaller contractors.

Even after the recent new business wins, Chemring has a 23 per cent upside potential, based on analysts’ average price target, together with a FactSet consensus recommendation of ‘buy’ based on six separate ratings. (Source: Investors Chronicle)

 

02 Dec 24. Rheinmetall completes strategic acquisition of U.S. vehicle specialist Loc Performance Products, LLC.

Market position in North America in the competition for high-volume major orders in the USA is strengthened.

Rheinmetall AG has now completed the takeover of the U.S. company Loc Performance Products, LLC. The Düsseldorf-based technology group announced the purchase of the renowned vehicle specialist based in Plymouth, Michigan, in August 2024. Following approval by competent supervisory authorities, the transaction was closed on November 29, 2024. In future, the company will operate under the name American Rhein¬metall Vehicles. The agreed purchase price is based on an enterprise value of USD 950m.

With this strategic acquisition in the USA, Rheinmetall is expanding its position in the world’s largest defense market and strengthening its core business in the field of land vehicles for military customers worldwide.

The investment follows Rheinmetall’s drive for growth in the United States, which will be an important domestic market for the Group in the future. Rheinmetall expects the acquisition to bring considerable benefits not only for its American business, but also for its global activities. With this acquisition, Rheinmetall is expanding its industrial base in the USA and creating further access for its technologies in North America.

The acquisition strengthens Rheinmetall’s production capacities in the USA in particular, with a view to targeted high-volume major orders for U.S. Army vehicle programs with a total potential of over USD 60 bn. Rheinmetall is one of two remaining participants in the current prototype phase of the XM30 program. This serves to introduce a new generation of infantry fighting vehicles. The volume is estimated at around USD 45 bn for around 4,000 infantry fighting vehicles. At the same time, Rheinmetall is applying for the Common Tactical Truck (CTT) program, which has a volume of around USD 16 bn for around 40,000 trucks.

Armin Papperger, Chairman of the Executive Board of Rheinmetall AG: “We are making this investment because we have a clear strategy for growth and the United States will be an important core market for us in the coming years. I would like to extend a warm welcome to the approximately one thousand employees at Loc Performance Products to the Rheinmetall Group. We greatly appreciate your expertise and look forward to our joint successes.”

Armin Papperger continues: “The acquisition of Loc Performance Products proves that we are consistently focusing on success in the USA and want to expand our share of the large market volume. We have a promising position in two major military projects, both in the XM30 infantry fighting vehicle program and in the CTT project. Everything therefore speaks in favor of this acquisition: Loc Performance Products is already pursuing a sustainable business model with robust organic growth, has a highly qualified workforce and offers us ample capacity reserves for the targeted orders in the USA. We can thus realize 100% local value creation in the USA.”

With the purchase, American Rheinmetall Vehicles is acquiring a modern, efficient production area of 160,000 square meters with considerable capacity for future expansion. The company’s broad-based activities will contribute directly to the Rheinmetall Group’s fast-growing U.S. military vehicle business, which is managed by American Rheinmetall Vehicles, based in Sterling Heights, MI.

Loc Performance Products, LLC was founded in 1971 in Plymouth, MI and is a diversified full-service provider for both military and commercial customers. In addition to its headquarters in Plymouth, MI, the company has additional locations in Lansing, MI and Lapeer, MI as well as in St. Marys, OH.

The vehicle specialist is a high-performance full-service provider of driveline, suspension, track systems, rubber products, armor products and fabricated structures for vehicle platforms. The company is an established supplier to the U.S. Government and, in particular, OEM for most military ground vehicle track systems in the USA. The company’s products are also used by well-known vehicle manufacturers in the agriculture, construction, mining, locomotive, mass transportation and oil and gas industries.

The production capacities of Loc Performance Products include, in particular, modernized manufacturing, machining and welding technologies that can meet the critical manufacturing requirements of the U.S. Army’s XM30 and CTT programs.

With more than 1,000 highly qualified employees, Loc Performance Products has an experienced workforce with a high level of technical expertise – including in the maintenance, repair and combat enhancement of military combat vehicles – whose services will now be integrated into Rheinmetall’s internal supply chains.

American Rheinmetall Vehicles, LLC offers U.S. customers next-generation tracked and wheeled combat vehicles and tactical wheeled vehicle platforms. The company is actively supporting the U.S. Army on two high priority modernization programs: the XM30 combat vehicle program, where the Lynx XM30 has reached Phases 3 and 4, and the Common Tactical Truck (CTT) program, where the HX3 CTT recently completed evaluation by the U.S. Army.

The American Rheinmetall family includes American Rheinmetall Vehicles in Sterling Heights (MI) and Troy (MI), American Rheinmetall Munitions in Stafford (VA), Windham (ME) and Camden (AR), American Rheinmetall Systems in Biddeford (ME) and the American parent company American Rheinmetall Defense in Reston (VA). www.rheinmetall-us.com

 

05 Dec 24. EM&E Group, a leader in innovation and technology in the defense and security sectors, has raised its stake in Indra to 14.3% of the IBEX 35 listed company. The company, which was already Indra’s leading industrial partner and second largest shareholder only behind SEPI, has now increased its stake by 6%, strengthening its position in the company. In the current geopolitical context, EM&E thereby demonstrates its firm commitment to the growth and development of the technology industry and consolidates its presence in the strategic sectors of defense, aerospace and security, strengthening synergies with Indra, a key player in these sectors. EM&E, with an estimated turnover of more than 300m euros in 2024, more than 60% of which will come from the international market, is thus expanding its influence and responding to the high global demand for remote weapon stations, ammunition guidance systems, anti-drone solutions, robots and border surveillance systems, solutions in which it is a European and international reference. With an order book of more than 1bn euros, EM&E has recently renewed its BBB rating, a recognition that accredits its solvency to undertake corporate operations and which only 8% of audited companies achieve. Founded in 1989, EM&E has based its growth on a strategy of vertical integration of capabilities and technologies and a strong commitment to investment in R&D, which has enabled it to position itself at the technological forefront in the development of complex defense systems with high reliability and added value. With a workforce of almost 1,300 professionals and a clear commitment to territorial cohesion, with centers in Madrid, Huesca, Cordoba, Asturias, Cadiz and Valencia, the Group is consolidating the various investments it has made this year. These include the acquisition of new infrastructures, the creation of the new electronics subsidiary EM&E Electronics and the companies it will integrate, as well as the incorporation of new strategic capabilities such as robotics and photonics. With its 14.3% stake in Indra, the EM&E Group consolidates its commitment to strengthening the Spanish industrial fabric and contributing to improving Spain’s competitiveness in the global defense and security sector.

 

29 Nov 24. Drone Accessory Maker Unusual Machines Shares Surge After Donald Trump Jr. Joins Advisory Board. Florida-based Unusual Machines, Inc., a drone and drone components manufacturer, announced on November 27th that Donald Trump Jr., an investor in the Company, has joined the Company’s advisory board.

“Don Jr. joining our board of advisors provides us unique expertise we need as we bring drone component manufacturing back to America,” said Allan Evans, Unusual Machines CEO. “He brings a wealth of experience and I look forward to his advice and role within the Company as we continue to build our business.”

“The need for drones is obvious. It is also obvious that we must stop buying Chinese drones and Chinese drone parts,” said Don Jr. “I love what Unusual Machines is doing to bring drone manufacturing jobs back to the USA and am excited to take on a bigger role in the movement”.

Don Jr.’s appointment comes at a pivotal moment for Unusual Machines, following the recent release of our Brave F7 FPV Flight Controller. This achievement underscores the Company’s commitment to onshoring U.S. drone component manufacturing. By reducing reliance on foreign-made products and strengthening domestic supply chains, Unusual Machines is helping to safeguard U.S. technological leadership in the drone industry. Don Jr.’s expertise will be invaluable in accelerating this mission as the Company continues to expand its product line.

The president-elect’s eldest son’s appointment comes two days after his father threatened to slap China with “an additional 10% tariff, above any additional tariffs” unless the country is able to stop the trafficking of chemicals used to make fentanyl through the US. Trump had previously threatened tariffs of 60% on import goods from China during his campaign.

The company has denied claims that Don Jr. might help Unusual Machines secure government approvals.

“I would never ask him to do anything or facilitate anything like that,”

Evans told The Wall Street Journal.

He said the president-elect’s son’s business network would help Unusual Machines meet demand for drone parts made outside of China.

Trump Jr. had previously owned 331,580 shares of Unusual Machines before a share offering and currently owns no shares, the company disclosed in the filing on Wednesday. It is unclear how much he paid for the shares or what price he sold them at.

Don Jr. joined venture capital firm 1789 Capital as a partner earlier this month and said he would recuse himself from business involving the government and has no interest in joining his father’s administration.

Department of Defense officials earlier this year approved an Unusual Machines flight controller for use in the military – the company’s first such rubber stamp, according to the Journal.

Earlier this month, the company reported $1.5m in sales in the third quarter, mostly from selling drones directly to consumers. Unusual Machines reported $3.6 m in revenue for the nine months ended Sept. 30 and a net loss of $4.9 m in the same period. In February, Unusual Machines went public and acquired the drone brands Fat Shark and Rotor Riot.

Unusual Machines is looking to move into sales of Pentagon-compliant drones and drone parts to businesses, the report said.

Evans told the Journal he thinks the incoming president’s more protectionist policies will help the drone industry flourish in the US.

Trump Jr.’s involvement with Unusual Machines was announced just a few days after Trump ally Elon Musk, who founded Tesla and SpaceX, slammed the Pentagon’s F-35 fighter jet program and argued in favor of the use of autonomous drones in warfare.

About Unusual Machines

Unusual Machines manufactures and sells drone components and drones across a diversified brand portfolio, which includes Fat Shark, the leader in FPV (first-person view) ultra-low latency video goggles for drone pilots. The Company also retails small, acrobatic FPV drones and equipment directly to consumers through the curated Rotor Riot e-commerce store. With a changing regulatory environment, Unusual Machines seeks to be a dominant Tier-1 parts supplier to the fast-growing multi-bn-dollar U.S. drone industry.

According to Fact.MR, the global drone accessories market is currently valued at $17.5 bn and is set to top $115 bn by 2032.

Sources: Unusual Machines; yahoo!tech; New York Post

For Information:

Chief Executive Officer Dr. Allan Evans, who previously served as Chief Operating Officer at Red Cat and CEO of Fat Shark owns 1.5% of the stock.

Chief Operating Officer Drew Camden was President of Rotor Riot from 2018, until Rotor Riot’s acquisition by Red Cat Holdings in 2020 and holds 1.6%. Jeff Thompson CEO of Red Cat owns 5.9%. (Source: UAS VISION)

 

03 Dec 24. SRT Marine Systems confident of 2025 outlook despite short-term challenges. SRT Marine Systems LON:SRT, the AIM-listed engineering firm that builds maritime surveillance, security, management and safety products, and integrated systems, has been charting a course to less stormy waters in 2024. The marine security company published its final results for the 15-months to end-June today (2nd December) and at least in the first six months of the calendar year, the company was still in firmly in recovery. SRT published 15-month results as in March the company decided to change its year-end from end-March to end-June in order to: “[…] tender for certain pending new system contracts.” What this means is that SRT will now report its six-month interim results for end-December by end-March, and its full-year final results to end-June by end-December. The rationale for the change in accounting periods is that SRT is tendering for a piece of business in a certain part of the world where the potential client requires bidders to have a specific minimum financial ratio criterion in relation to the size of the target new project, in order to bid for the contract. Under its current financial year some of its existing system project deliveries, which were expected to complete in March, will now slip into the next quarter because SRT’s government clients are taking more time than expected to sign-off, something compounded by Ramadan and Eid.

Kevin Finn, SRT’s chairman explained: “We had expected some of the GBP320m of new contracts to commence during the current financial period, and therefore took action to prepare. This has entailed the forward purchase of certain equipment ready to ship against early contractual milestone, and the build-up of additional implementation capacity.   However, due to unexpected extended customer contract administrative processes the commencement of these contracts was delayed into the new financial year.”

SRT’s reporting date change could be net-positive for SRT

This would mean that SRT’s financial ratios – with regards to this specific tender – would be less than they should be (had the contracts agreed already gone through on schedule) and would have affected SRT’s ability to bid for this new contract. As an investor this change in reporting dates should be seen as a good thing, as it is a big thing for a listed company to change its accountancy period, and if SRT believes that it needs to take this measure, its management must feel that it is in a very strong position to win the contact, which could be very positive for the company’s bottom-line

So, in this unique 15-month period, the company reported revenues of GBP14.8m. This was a long way behind the revenue of GBP30.5m that SRT reported for the 12-months to end-March 2023. The company saw gross profit of GBP4.2m, and although not a comparative period in the 12-months to end-March 2023 the company reported gross profit of GBP11m.

However, administrative costs and FX ballooned to GBP17.2m by the end of the 15-month period. For the year to end-March, admin and FX costs were GBP10.9m, which saw SRT’s loss before tax of GBP14.4m. Again, although isn’t a direct comparison loss before tax for the period to end-March 2023 was GBP646,172.

Finn commented: “[…] Whilst the combination of increased overheads and delayed revenues has resulted in a significant loss for the period, these extensive preparations have placed us in a good position to successfully implement […] multiple system projects within the expected two-year time frame.”

SRT paying off loans and debts

In terms of debt, SRT’s bank debt at the end of June was GBP1.5m and was drawn-down in September 2023 as part of the UK Government’s Recovery Loan Scheme and was at an interest rate of 3.5% above base rate with repayments starting in September of this year. SRT pushed the final repayment of GBP0.5m to this month.

SRT also has GBP8.32m in loan notes which have a three-year tenor and interest rates of between 8% and 12%. As well as bank debt and bonds, SRT has, as noted above, equipment loans of GBP4.15m for components of a systems project. This is being paid back quarterly at a 4% interest rate and a three-year term.

The company secured GBP320m of system contracts and had a pipeline of around GBP1.2bn which Kevin Finn, SRT’s chairman said the company expects to convert into contracts in 2025.

As previously reported, SRT Marine Systems is a global leader in maritime domain awareness technologies, products and systems. The company develops and provides integrated maritime surveillance, monitoring, management and safety systems which are used by coastguards and fishery authorities for the purposes of managing and controlling their maritime domain. The SRT Vessel Monitoring Systems (VMS) system enables governments and national authorities to be able to reliably track, monitor and manage fishing vessels of any size and type in real time, without range limitation, at optimal cost.

Confident outlook for 2025

To give SRT credit, their current underperformance is due to factors outside its control, namely its clients delaying on rubber-stamping contracts already agreed. Now if this situation were to extend, it could blow up into a real issue for the defence and security contractor, however, management has confidence that the necessary documentation will imminently be secured, making the next reporting period a great deal rosier. Moreover, with GBP1.2bn of contracts in the pipeline, and the strong possibility of winning a big deal, signalled by management taking evasive action and changing the company’s reporting date to give it a good chance of winning what must be significant new business, the outlook looks favourable.

SRT’s CEO, Simon Tucker said: “I had hoped for, and expected, a much better financial result for the financial period ending June 2024. We under-estimated the time it would take for the final administrative processes to complete for contracts worth approximately GBP320m, resulting in significantly lower revenues and profit contribution during the period. However, this time, and the investment received during the period, has given a critical advantage in that we have been enabled […] to prepare and build up our capacity to execute on multiple system contracts simultaneously.”

The company still seems to have the backing of existing and new investors, evidenced by successful fundraising in the last year, raising GBP10.5m this time last year, and another GBP8.5m (before expenses) in November.

The company’s shares opened the week at 39.675p, down 5.5% from one-year ago. The company has a market capitalisation of GBP93m. (Source: https://www.thearmchairtrader.com/)

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SPX CommTech, part of SPX Technologies Inc, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all. Formed by TCI and ECS, SPX CommTech’s Battlespace portfolio enables defence and security teams to detect, defeat and exploit RF signals to enhance communications intelligence (COMINT) and counter unmanned aerial systems (Counter-UAS). Additionally, its Tactical Data Link portfolio allows intelligence gathering agencies, special forces, emergency response, and security teams to securely and reliably transfer video and data between enabled-aircraft and ground teams over long distances for airborne Intelligence, Surveillance, Reconnaissance (ISR). For more information visit www.tcibr.com and www.enterprisecontrol.co.uk

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Sponsored by SPX Communication Technologies (TCI & ECS)

 

www.tcibr.com

 

www.enterprisecontrol.co.uk

 

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26 Nov 24. Atomic-6 was recently awarded a Tactical Funding Increase (TACFI) to further develop its revolutionary Space Armor™ shielding tiles and complete testing qualification for first flight. Designed to minimize shielding mass, stowage space, post-impact ejecta, and mission risk, Space Armor™ provides vital protection for space assets against space debris and kinetic energy weapons while offering optional radio frequency permeable capabilities. This innovative technology is essential for maintaining the United States’ competitive edge in space operations, a concern that has been increasingly emphasized by Pentagon officials and lawmakers.

In NASA’s recent study on the economic advantages of safeguarding satellites from orbital debris, the findings suggest potential net benefits exceeding $50 bn over the next 30 years.

To meet this demand, Space Armor™ offers two levels of protection: Lite and Max. “Space Armor™ Lite” is designed to withstand impacts from debris up to 3mm, which accounts for over 90% of debris in low earth orbit, while “Space Armor™ Max” is designed to withstand impacts from debris up to 12.5mm. This productized approach allows for tailored protection strategies, ensuring both cost-effectiveness and critical defense against varying sizes of debris.

The TACFI award, along with matching funds from outside investors, paves the way for Atomic-6 to take Space Armor™ from prototype to full product line with added variations and capabilities to meet market and customer demand.

Atomic-6 is committed to the safety, sustainability, performance and affordability of future space endeavors. Space Armor™ is the latest of several Atomic-6 innovations to reinforce their mission and provide the US military, Allies, and commercial space operators with the strategic edge necessary to reduce mission risk and protect space assets.

Contact Us for RFPs

To learn more about Space Armor™, other Atomic-6 innovations, and/or submit a Request for Proposal (RFP), please contact our team at .

About Atomic-6

Atomic-6 is revolutionizing mobility in space, air, land, and sea by rapidly designing and manufacturing the world’s finest composite solutions. Everything we touch gets lighter, stronger, and smarter. Visit our website atomic-6.com or contact us directly to learn more.

(Source: PR Newswire)

 

26 Nov 24. Lafayette Square announced today that it has provided debt capital to support the NewSpring Holdings, LLC (“NewSpring”) acquisition of C Speed, LLC (“C Speed”), a leading provider of advanced radar systems and engineering solutions for civilian and military use globally.  Founded in 1996 and headquartered in Liverpool, New York, C Speed manufactures radars, provides surveillance products as well as surveillance-as-a-service offerings through its software defined radio IP, and supports the modernization of legacy ground-based radars. With this acquisition, NewSpring intends to provide C Speed with strategic guidance, greater resources and human capital to meet the advanced needs of the U.S. Government.

“With increasing demand for innovative, cost-effective security and surveillance solutions, C Speed’s expertise in radar systems and technology integration presents a unique investment opportunity,” said Tom Mullin, Director, Lafayette Square. “C Speed understands the value of partnering with government, given its long-standing relationships in the federal services sector. We look forward to partnering with NewSpring to help drive the company’s future growth.”

“We are excited to embark on this next chapter with support from NewSpring and Lafayette Square,” said David Lysack, President & CEO of C Speed. “By partnering with NewSpring and Lafayette Square, we can continue to advance our technology and expand into markets that truly need our solutions.”

“C Speed’s proven expertise in radar systems and solutions is aligned with our strategic growth within the government services sector,” said Lee Garber, General Partner, NewSpring. “With funding from Lafayette Square and a shared commitment to supporting and empowering C Speed’s talented workforce, we are well-positioned to enhance our technological offerings, drive innovation, and broaden our impact across key sectors.”

In addition to financing, Lafayette Square offers its portfolio companies access to Worker Solutions™, a custom-built platform that seeks to measurably improve employee retention, well-being, and productivity by connecting management teams to a curated list of third-party service providers that offer nontraditional benefits for their employees. By delivering these solutions, Lafayette Square aims to reduce operational risk for its portfolio companies, help them attract and retain talent, and improve job quality.

About C Speed, LLC

C Speed is a leading provider of advanced radar systems and engineering solutions for both civilian and military applications. The company specializes in the design, prototyping, and manufacturing of state-of-the-art radar systems, with a particular focus on radar receivers, exciters, and signal processors. C Speed has built a strong reputation through its collaborations with major defense contractors and government agencies, including the U.S. Air Force, U.S. Army, U.S. Navy, Department of Homeland Security (DHS) and NATO. Their product portfolio includes the “LightWave Software Defined Radar Platform,” designed as a cost-effective, software-based, alternative for legacy radar modernization while also providing new surveillance radars to their customers. With over 30 years of experience in the radar industry, C Speed continues to innovate, providing essential support to national and international defense initiatives.

About NewSpring

NewSpring is a lower-middle market focused private equity firm that partners with the innovators, makers, and operators of high-performing companies in dynamic industries to catalyze new growth and seize compelling opportunities. The Firm manages approximately $3.5 bn across five distinct strategies covering the spectrum from growth equity and control buyouts to mezzanine debt. Having completed over 250 investments, NewSpring brings a wealth of knowledge, experience, and resources to take growing companies to the next level and beyond. Partnering with management teams to help develop their businesses into market leaders, NewSpring identifies opportunities and builds relationships using its network of industry leaders and influencers across a wide array of operational areas and industries. To learn more, visit www.newspringcapital.com (Source: PR Newswire)

 

26 Nov 24. Houlihan Lokey announced that VideoRay has been acquired by BlueHalo, a portfolio company of Arlington Capital Partners (Arlington). The transaction closed in November 2024.

Founded in 1999, VideoRay is a leading provider of subsea robotics technologies and solutions for defense and commercial end-market applications. The company leverages decades of technology leadership and proprietary IP to deliver best-in-class robotics solutions that operate in the most demanding subsea conditions. With more than 4,000 remotely operated vehicles (ROV) fielded worldwide, VideoRay has set the standard for reliability and performance. The company’s flagship ROV, Mission Specialist Defender, is the preeminent expeditionary underwater platform for explosive ordnance disposal and mine countermeasures operations, underscoring its unmatched capabilities in demanding military marine environments. As a result, VideoRay is the sole source provider of ROVs to the U.S. Navy for its Maritime Expeditionary Standoff Response Program of Record.

BlueHalo is purpose-built to provide industry-leading capabilities in the areas of Space, C-UAS and Autonomous Systems, Electronic Warfare and Cyber, and AI/ML. The company develops and brings to market next-generation capabilities to support customers’ critical missions and national security.

Arlington Capital Partners is a Washington, D.C.-area private investment firm specializing in government-regulated industries. The firm partners with founders and management teams to build strategically important businesses in the government services and technology, aerospace and defense, and healthcare sectors. Since its inception in 1999, Arlington has invested in over 175 companies and is currently investing out of its $3.8 bn Fund VI.

Houlihan Lokey served as the exclusive financial advisor to VideoRay and assisted in structuring and negotiating the transaction on its behalf. This transaction underscores the firm’s continued global leadership and deep expertise in the defense technology sector. Since 2020, Houlihan Lokey’s Aerospace & Defense practice has closed more than 70 transactions worth over $13 bn in enterprise value. With a staff of approximately 20 financial professionals, Houlihan Lokey’s Aerospace & Defense practice is among the largest dedicated industry banking teams worldwide.

If you would like more information about Houlihan Lokey or have questions regarding the firm’s role in this transaction, please contact one of the team members listed below.

 

26 Nov 24. Volex turns up the heat on TT Electronics takeover. The current premium is too low for a potential bid to succeed, TT board has warned. Volex (VLX) chair Lord Rothschild has turned the heat up on TT Electronics (TTG) to get its board to engage with his takeover approach.

Volex has thus far submitted two potential cash-and-share offers to TT’s board, both of which were dismissed as “fundamentally undervaluing TT Electronics and its long-term prospects”. TT’s board also said they had previously rebuffed a higher all-cash offer.

Undeterred, Rothschild took his plea directly to TT’s shareholders, citing “compelling strategic and financial merits” to a merger. He continued his broadside against TT’s current and former management, stating that since 2018 they had presided over “a share price erosion of over 65 per cent prior to Volex’s interest being made public”.

TT Electronics has underperformed in recent years. The FactSet consensus forecast for the current year is for sales to fall by 12 per cent and operating profit to plummet by 40 per cent. The group’s adjusted operating margin has also remained stubbornly below management’s 10 per cent target and Volex’s presentation pointed to more than £125mn of one-off charges over the past four years, including £56mn of asset writedowns, £44mn of restructuring costs and £26mn of M&A costs. Rothschild described TT’s recent record of acquisitions as having “very disappointing outcomes”.

Volex compared this with its track record, where its adjusted operating margin has grown from 2.1 per cent when Rothschild took over as executive chairman in 2015 to 9.8 per cent last year. It also pointed to a track record of successfully integrating deals.

Its pitch to TT’s shareholders is that they would enjoy greater upside from a combined operation. Although there is some overlap between the companies – both offer contract manufacturing of electrical components used in medical and industrial technologies – they produce largely different products, serving different sectors.

A combination would therefore allow the merged business to “remove duplicate facilities and plc functions”, with the greater scale of the business also potentially offering procurement savings. From a revenue point of view, it would allow the businesses to cross-sell to each other’s customer bases and bring scale to TT’s aerospace and defence business.

Show me the money

There will undoubtedly be TT shareholders who are sympathetic to Rothschild’s criticism of management’s recent performance, but it seems he may have more difficulty in convincing them that his current offer is a fair one. The latest offer of 62.9p in cash and 0.223 Volex shares per TT share was worth 135.5p, or a 77 per cent premium based on the previous day’s closing price. Although this sounds impressive, TT’s share price had fallen by 32 per cent in a single day in September on the back of a profit warning. The shares had been trading as high as 170p as recently as August.

Moreover, the decline in Volex’s share price (and the subsequent jump in TT’s share price) has narrowed that premium to just 18 per cent, based on Friday’s closing prices.

Although Berenberg analysts lack faith in TT’s management’s ability to deliver their double-digit adjusted operating margin within the next 18 months, they said that a 135.5p offer valued TT at an enterprise value of just 6.5-times forecast cash profit for 2025, falling to 4.7-times for 2026. This compares with a five-year average of 10.9 times, according to FactSet.

Others also place faith in TT’s recovery, with Mark Fielding of RBC Capital Markets describing the group’s current woes as more cyclical than structural. Although it has operational issues, it has been battling with a weakness in end markets that has affected the broader industrial sector, he argued.

“We expect a cyclical uplift as we move through 2025 and there are plans in place to resolve the operational issues,” he said.

Yet the one-day capitulation in TT’s share price in September was a sign that the market “seemed to give up on TT”, dashing hopes that its fortunes were turning around under its new chief executive Peter France, said Stifel analyst Mark Davies Jones.

“We still think TTG is vulnerable,” he added. Although he has a fair value estimate of 190p on the shares, he thinks a “reasonable compromise” could be reached if the two sides can agree a deal at a price closer to 160p-170p. (Source: Investors Chronicle)

 

26 Nov 24. Comtech Telecommunications Corp. (NASDAQ: CMTL) (“Comtech” or the “Company”), a global technology leader, today released its Fiscal Year 2024 (“FY24”) Corporate Social Responsibility (“CSR”) Report. The report highlights the Company’s progress in environmental impact, workforce development, community investment, and more.

“With FY24 serving as a transformational year for us, I am pleased to share our FY24 CSR Report as it presents a great opportunity to outline what Comtech stands for, and how our investments in our team and responsible business practices drive momentum,” said John Ratigan, President and CEO of Comtech. “We recognize the value in driving CSR within our organization, throughout our supplier network, and in our communities.”

The report details progress and new initiatives in critical areas for FY24, including:

• Health and Safety: In FY24, Comtech developed a comprehensive Environmental, Health, and Safety Management System to better engage with employees at all levels of the organization to further prevent work-related injuries and illnesses, environmental impacts, and foster a culture of continuous improvement.
• Professional Growth: In FY24, the Company launched Comtech University, to foster the professional development and continuous learning paths for our employees. This system serves two purposes: managers can identify growth opportunities for their talent and employees have the ability to self-select training to promote their own professional learning development.
• Environmental Impact: As part of Comtech’s sustainability strategy, the Company prioritized completing its first company-wide greenhouse gas emissions inventory. In FY24, Comtech partnered with a solutions provider for carbon accounting software and services, allowing the Company to more thoroughly quantify, monitor, and manage its operational carbon footprint.

Additionally, Comtech completed its first climate change report to CDP, which includes a baseline greenhouse gas inventory for company-wide Scope 1 and 2 emissions. This inventory enables data-based decision-making to develop targeted carbon reduction projects and establish emissions reduction goals.

• Community Investment: With the move of Comtech’s global headquarters to Chandler, Arizona, the Company sponsored and participated in the annual Chandler Innovation Fair, which offers unique opportunities for attendees to explore the discoveries and importance of science by showcasing local engineering projects as well as concepts that are taught in Chandler Unified schools.

Beyond community initiatives in Arizona, Comtech created new opportunities for employees to support a number of local nonprofits and implement new employee-driven volunteer initiatives.

 

25 Nov 24. Mobix Labs, Inc. (Nasdaq: MOBX), a global innovator in advanced connectivity solutions, today announced it has agreed to acquire Spacecraft Components Corp., a Nevada-based leader in high-precision, mission-critical components for aerospace, defense, and commercial applications. The acquisition, which is expected to close in the first quarter of 2025, represents a significant strategic milestone for Mobix Labs as it expands its presence into new markets and strengthens its leadership in key industries.

“by combining our manufacturing expertise with Mobix Labs’ advanced technologies, we are poised to deliver even greater value to our customers across the aerospace, defense, and transportation sectors.”

Post this

Spacecraft Components is recognized for its cutting-edge engineering and manufacturing capabilities. Spacecraft delivers electrical connector components and accessories that are vital to mission critical missile technology, submarines, naval ships, oil rigs, railcars, military and commercial jet aircraft, and many other applications. Notably, its components are utilized in the Patriot Missile—the U.S. Army’s primary missile defense system—and tactical manned and autonomous vehicles. Additionally, Spacecraft supplies key components for railcar systems in major metropolitan areas such as Chicago and New York.

Strategic Fit and Market Expansion

As a long-standing supplier to Mobix Labs, Spacecraft Components Corp. has provided high-quality components for Mobix Labs’ products. This acquisition is a natural fit, allowing Mobix Labs to integrate Spacecraft’s expertise and expand into the aerospace, military, and defense sectors; while also entering the transportation market as a new revenue stream.

“This acquisition is transformative for Mobix Labs, aligning with our strategy to diversify our markets and strengthen our position in mission-critical industries,” said Fabian Battaglia, CEO of Mobix Labs. “Spacecraft’s exceptional reputation and product offerings, combined with Mobix Labs’ innovation and expertise, will drive significant growth opportunities for both companies. We are thrilled to welcome their talented team to Mobix Labs as we shape a stronger future together.”

Operational and Financial Impact

The acquisition is expected to increase Mobix Labs’ workforce by approximately 150 employees, primarily based in Nevada. Spacecraft Components reported unaudited revenues of $18.1 m in 2023, with forecasted growth for the next two years. Spacecraft’s compiled unaudited non-GAAP financials represent it has positive earnings and cash flow. The acquisition is expected to be accretive to Mobix Labs’ earnings. If the transaction closes as anticipated, it will materially increase Mobix Labs’ revenue in fiscal year 2025.

“This partnership provides an exciting opportunity for Spacecraft to grow alongside Mobix Labs,” said Craig Wiseman, President of Spacecraft Components. Wiseman also stated that “by combining our manufacturing expertise with Mobix Labs’ advanced technologies, we are poised to deliver even greater value to our customers across the aerospace, defense, and transportation sectors.”

Transaction Details and Closing Conditions

The terms of the transaction include a purchase price ranging from $18 m to $24 m, with consideration to be paid in a combination of cash and equity, subject to earnout provisions, all of which will be finalized subject to completion of due diligence. The deal remains subject to final due diligence and the approval of the boards of directors of both companies.

About Mobix Labs, Inc.

Based in Irvine, California, Mobix Labs designs, develops and sells components and systems for advanced wireless and wired connectivity, radio frequency (“RF”), switching and filtering technologies. The Company’s solutions are used in aerospace, defense, 5G, medical, industrial and other high-reliability markets. The Company’s True Xero active optical cables are designed to meet customer needs for high-quality active optical cable solutions at an affordable price. The Company’s electromagnetic filtering products are used in military and aerospace applications. These technologies are designed for large and rapidly growing markets where there are increasing demands for higher-performance communication and filtering systems that utilize an expanding mix of both wireless and connectivity technologies. More information on the company can be found by visiting http://www.mobixlabs.com or by following us on X @MobixLabsInc and LinkedIn.

About Spacecraft Components Corp.

Spacecraft Components Corp., founded in 1962, is a leader in manufacturing and distributing specialized connectors. The company serves various industries, including transportation, military, aerospace, and industrial sectors. The company produces a wide range of connectors and related accessories, designed to meet strict industry standards, including MIL-SPEC qualifications. Spacecraft Components Corp. is known for its ability to provide custom solutions to meet unique customer needs. With its facility in Nevada and a team of skilled professionals, Spacecraft Components Corp. remains a trusted name in the connector industry, delivering quality products and excellent service to its clients. (Source: BUSINESS WIRE)

 

25 Nov 24. BlueHalo Acquires VideoRay, Adds Unmanned Maritime to All-Domain Defense Technologies. BlueHalo, the company transforming the future of global defense by bringing to market next-generation all-domain capabilities to support customers’ critical missions and national security, today announced that it has acquired VideoRay, a global leader in underwater robotic systems. Founded in 1999, the Pottstown, Pennsylvania-based company is a technological leader in small form-factor Remotely Operated Vehicles (ROV) for use in mission-critical spaces, including explosive ordinance disposal, mine counter measures, mobile diving, salvage and commercial applications.

“VideoRay gives BlueHalo an immediate leading presence in the autonomous maritime systems market.  This is a strategic expansion for us as we strive to become an all-domain provider of innovative defense technologies,” Jonathan Moneymaker, chief executive officer of BlueHalo. “We are incredibly excited to bring VideoRay into BlueHalo and provide an expanded set of solution offerings to our customers as we seek to continue innovating at mission speed.”

VideoRay’s Mission Specialist Defender and other unmanned underwater robots set the performance standard for the most challenging, mission-critical applications in mine countermeasures and other man-portable unmanned undersea applications. With the backing of BlueHalo, the development of these vehicles and supporting technology will continue and accelerate.

“VideoRay’s underwater robots are already deployed across various key domestic and international defense end-users,” said Moneymaker. “VideoRay’s proprietary hardware and software, coupled with our existing technology, will allow our enterprise to deliver a superior suite of products to support the warfighter in the ever-evolving next generation battlefield.” (Source: ASD Network)

 

25 Nov 24. Saab Grintek Defence poised for continued growth. Jan Widerström, Managing Director at Saab Grintek Defence, says that there is a growing global demand for advanced defence technologies amid increasing geopolitical tensions and security challenges. Countries across the world are bolstering their defence budgets to address these evolving threats, with Saab Grintek playing a significant role in this international landscape. The company operates from its main facility in Centurion’s Technopark, with additional locations in Capricorn Park and at the Naval Base in Simon’s Town, where it supports the South African Navy’s submarines and frigates. Saab Grintek employs over 420 people, a number that has been steadily growing.

“We are on a growth path, and we see continuous growth due to the strong global need for our electronic warfare self-protection systems,” Widerström said.

Widerström shared that the company has seen remarkable growth, particularly in the export of its electronic warfare and self-protection systems, with more than 90% of its products going to international markets.

“We are truly global in that aspect,” Widerström said, noting that Saab Grintek’s systems are integrated into vehicles, helicopters and aircraft by major original equipment manufacturers (OEMs) like Airbus and Rheinmetall. However, the company remains deeply rooted in South Africa.

“We see ourselves as a South African company,” Widerström explained. “We do development, research and production out of our facilities here.”

The company’s contribution to South Africa’s defence capabilities extends across air, land and sea domains, providing advanced systems to support platforms such as the South African Navy’s submarines and frigates, as well as the Air Force’s helicopters and transport aircraft. Saab Grintek is also working on the development of the Land Electronic Defence System (LEDS) Mk 4 system, a laser warning system that boasts world-leading accuracy. Trials are currently underway, with Widerström optimistic about securing firm orders by early next year. Despite its global focus, Saab Grintek Defence remains committed to the South African market, actively engaging with the local defence force to explore opportunities for upgrades and modernisation. Widerström noted a growing interest from the South African armed forces in maintaining and upgrading platforms, especially in light of obsolescence management challenges.

“We see an increased interest from the armed forces to improve maintenance and also on the upgrade side,” he said, acknowledging the need for cost-effective solutions that enhance capabilities without overwhelming budgets.

As the defence industry continues to expand, Saab Grintek Defence is positioning itself as a leader both locally and globally. “We’re on a growth path,” Widerström concluded, emphasising the importance of close collaboration between industry and government to meet the rising demand for cutting-edge defence technologies. (Source: https://www.defenceweb.co.za/)

 

22 Nov 24. Bridge Defense, a defense-technology company, has made a strategic investment in Federated IT, a trusted provider of mission-critical services to the U.S. government. Founded in 2002, Federated IT has built a reputation as a trusted partner to the U.S. Intelligence Community and the Department of Defense. With expertise optimizing cloud computing, data center operations and migration, enterprise architecture, scientific research and analyses, and cybersecurity solutions, Federated IT consistently delivers technically excellent, secure, and reliable solutions that empower national security clients to achieve their objectives.

“This investment represents a pivotal step in Bridge Defense’s mission to create the next-generation systems integrator,” said Jack Kilcoyne, co-founder of Bridge Defense. “We will combine the critical services Federated IT provides with in-house software development capabilities to build a hybrid organization capable of delivering exceptional services and developing innovative solutions that address our customers’ most pressing challenges.”

Kyle von Bucholz, CEO of Federated IT, added: “For over 20 years, Federated IT has focused on solving our clients’ most complex challenges with integrity and technical excellence. Partnering with Bridge Defense will enable us to take that commitment to the next level by leveraging cutting-edge development capabilities and delivering an even greater impact for the federal agencies we serve.”

About Bridge Defense

Bridge Defense is focused on delivering mission-critical services and innovative software solutions to national security customers. A hybrid systems integrator, Bridge Defense combines excellence in technical services with native development capabilities to deliver comprehensive and transformative solutions to address the rapidly evolving needs of national security customers. Bridge Defense is led by a team of Special Operations veterans with deep expertise in technology and government services. The company is headquartered in the Northeast, with a growing presence in Washington, D.C. For more information, visit Bridge-Defense.com.

About Federated IT

Federated IT is a leading provider of mission-critical IT and cybersecurity services to the U.S. government. Federated IT enables defense, national security, and federal law enforcement clients to expand, improve, and strengthen critical IT infrastructure and mission system capabilities within the Tier Ill – IV Enterprise IT Operations and Cyber Security domains. Federated IT’s project portfolio includes the customization and delivery of optimized cloud computing, data center operations and migration, enterprise architecture, scientific research and analyses, and cybersecurity solutions. Federated IT is headquartered in Washington, D.C. For more information, visit FederatedIT.com. (Source: PR Newswire)

 

24 Nov 24. Thales denies wrongdoing as Anglo-French bribery probe hits shares.

• Summary
• Companies
• Britain’s SFO and France’s PNF have launched bribery probe
• Thales says it denies allegations that it is aware of
• Thales confirms probe focuses on contract in Asia
• Sources say probe involves business deal in Indonesia
• Shares in the French defence firm fall as much as 7%

French defence and technology firm Thales said on Friday it was denying allegations brought to its attention after Britain’s Serious Fraud Office announced a joint investigation with French authorities into suspected bribery and corruption.

Thales, Europe’s largest defence technology firm, said the probe by the SFO and France’s PNF financial prosecutor concerned a contract in Asia and focused on four entities in France and the UK, without giving further details.

“Thales denies the allegations brought to its knowledge,” the company said in a statement.

It did not give any further details of the allegations or say when it first learned of them, or how. It also did not say whether it was conducting its own internal probe. The company said in a recent corporate report that it has “zero tolerance” of corruption.

Shares in partially state-owned Thales fell as much as 7% but recovered most of the losses to end the day down 2.9%. (Source: Reuters)

 

22 Nov 24. Cuashub.com said today that TEKEVER Raises $74m (70m Euros) Funding round led by Baillie Gifford and backed by the NATO Innovation Fund. New strategic investors will support sustainable growth plan and facilitate geographic expansion into priority markets  Investment will fund continued product innovation and scaling of production capacity.

TEKEVER, the European market leader in AI-centric Unmanned Aerial Systems (UAS), announces that it has raised 70 M Euros in a funding round led by Baillie Gifford, the investment manager and early backer of Airbnb, Spotify and SpaceX, and the NATO Innovation Fund (NIF), a standalone venture capital fund, backed by 24 NATO allies, that deploys €1 bn in deep tech to advance defence, security and resilience.

Other participants in the funding round include the National Security Strategic Investment Fund (NSSIF), a UK government–owned fund supporting advanced technologies related to national security, Crescent Cove Advisors LP, an investment firm based in Silicon Valley with expertise in the defence sector, and existing investors Iberis Semper and Cedrus Capital. TEKEVER was advised by The Growth Stage and Houlihan Lokey during the process.

The new investors bring strategic expertise that will fuel the next phase of TEKEVER’s growth. They provide significant sector experience and pathways to access priority markets, as well as boasting a strong track record of sustainably scaling pioneering, fast-growing companies over the long-term. Their experience will be critical in helping TEKEVER prepare for the next phases of its multinational growth strategy.

As part of its growth plan, TEKEVER, which is already profitable, will accelerate investment in R&D to support product innovation, both enhancing current UAS and developing new product lines to ensure its technology stays ahead of curve in the rapidly evolving technical landscape and its products continue to exceed customer expectations. TEKEVER will also expand its global production, delivery and support footprint to meet the ever-increasing demand for its products and services.

Ricardo Mendes, CEO of TEKEVER, commented: “We’re living in a highly volatile world, experiencing exponential change and the transformative power of software, AI and robotics. TEKEVER was built to embrace and leverage this reality, providing its customers with future-proofed, AI-centric hardware- enabled systems that are produced at scale and effectively delivered and sustained globally. For our Series B, more than investment, we wanted to find partners that shared these beliefs and could help us execute on our vision. We’re thrilled to have Baillie Gifford as a lead investor – an incredible organization with extremely long–term views, and an extensive track record of backing companies that have profoundly transformed our society. NIF, NSSIF and Crescent Cove bring profound knowledge and experience on the Global Security and Defence market to the table, both from a European and a US perspective, which will be important in helping us, and our customers, navigate the challenges ahead.”

Chris Evdaimon, Investment Manager, Private Companies at Baillie Gifford, commented:

“TEKEVER is a rapidly growing and already profitable company, a rare combination in defence, national security and space start-ups. We were attracted by its approach to building drones – with a software-centric and vertically integrated model – along with the real-life experience TEKEVER has accumulated from operations in Ukraine and its work with the UK Home Office and European Maritime Safety Agency.”

Patrick Schneider-Sikorsky, Partner at the NATO Investment Fund, commented:

“Unmanned Aerial System technologies are critical to advancing defence, security and resilience. We are thrilled to support TEKEVER – whose technology is revolutionising the defence and commercial intelligence, surveillance, and reconnaissance sectors – and look forward to collaborating with the company on identifying pathways to use its technology in order to support more governments and businesses across the Alliance”

TEKEVER provides drone-based Intelligence-as-a-Service, surveying ultra-wide areas and sharing real- time data that allows customers to act in a timely and efficient manner to avoid threats to human life, the environment and economy. Its technology is dual-use, deployed by civilian and military organisations as well as private companies, with applications ranging from detecting environmental threats such as oil spills, wildfires or flash flooding to gathering intelligence and conducting search and rescue missions for defence and security purposes.

Unlike traditional aerospace companies, TEKEVER is vertically integrated and has full control of every aspect of its subsystems and value chain, from airframe design and manufacturing to payloads, avionics, software, data and AI, which enables the company to rapidly adapt its products based on evolving customer needs and shifts in the global economic and political landscape.

Customers include the European Maritime Safety Agency and the UK Home Office, as well as multiple defence and security forces and corporations throughout Europe, North America and Southeast Asia. TEKEVER systems have been deployed to Ukraine to enable some of the most complex and demanding long range intelligence, surveillance and reconnaissance missions, performed under the most extreme operational and technical conditions. (Source: UAS VISION)

 

25 Nov 24. Sagewind Capital LLC (“Sagewind”), a government technology-focused U.S. private equity firm with offices in New York City and the Washington, DC area, announced today a majority investment in Aechelon Technology, Inc. (“Aechelon” or the “Company”). Aechelon is a premier provider of image generation software and complex databases enabling live-virtual-constructive training, mission rehearsal, sensor exploitation and command and control for full-flight aircraft simulators that train pilots across the U.S. Department of Defense (“DoD”).

Founded in 1998 and based in San Francisco, Aechelon is a trusted partner for government agencies, defense prime contractors, and DoD agencies. The Company aims to set a new standard in immersive visualization, enhancing training and safety outcomes through exceptional image quality and industry-leading system performance. Aechelon leverages cutting-edge hardware, software technologies, machine learning and computer vision to build advanced visual solutions.

Raj Kanodia, Managing Director of Sagewind Capital, said, “In today’s environment, the importance of training and readiness is at an all-time high. As the demand for immersive simulation products grows, Aechelon is uniquely positioned to lead the way with its visualization capabilities. We are proud to partner with Nacho and his team to support mission-critical military training.”

Ignacio (Nacho) Sanz-Pastor, CEO of Aechelon, said, “We are thrilled to join forces with the Sagewind team, one of the leading investors in the defense industry. Their expertise will enable us to scale our operations and achieve transformative growth. This is an exciting new chapter for our company, employees, and customers.”

Aechelon is Sagewind’s eighth platform investment in the government technology sector.

About Aechelon Technology

Aechelon Technology, Inc. is focused on image and data generation products for visual simulation and visualization, and is a leading provider of real-time computer graphics solutions for training, simulation and visualization for defense and commercial applications. The Company specializes in COTS-based, high-resolution, multi-channel, geo-specific image generators, out-the-window (OTW) displays, and correlated worldwide sensor databases, along with comprehensive integration services. Aechelon Technology is headquartered in South San Francisco, CA. Please visit www.aechelon.com for more information.

About Sagewind Capital

Sagewind Capital LLC, a U.S. company, is a government technology focused private equity firm with offices in both New York City and the Washington, DC area. Sagewind seeks to partner with exceptional management teams and focuses on significant capital appreciation by helping businesses grow organically and through strategic acquisitions. The firm is focused on long-term capital appreciation and has the flexibility to own businesses for extended periods. For more information please visit www.sagewindcapital.com. (Source: BUSINESS WIRE)

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SPX CommTech, part of SPX Technologies Inc, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all. Formed by TCI and ECS, SPX CommTech’s Battlespace portfolio enables defence and security teams to detect, defeat and exploit RF signals to enhance communications intelligence (COMINT) and counter unmanned aerial systems (Counter-UAS). Additionally, its Tactical Data Link portfolio allows intelligence gathering agencies, special forces, emergency response, and security teams to securely and reliably transfer video and data between enabled-aircraft and ground teams over long distances for airborne Intelligence, Surveillance, Reconnaissance (ISR).

For more information visit www.tcibr.com and www.enterprisecontrol.co.uk

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Sponsored by SPX Communication Technologies (TCI & ECS)

www.tcibr.com

www.enterprisecontrol.co.uk

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21 Nov 24. Geospace Technologies Corporation (NASDAQ: GEOS) (“the “Company”) today announced a net loss of $6.6m after fourth quarter non-cash charges of $17.3m on revenue of $135.6m, for its fiscal year ended September 30, 2024. This compares with net income of $12.2m on revenue of $124.5m for the comparable year-ago period. Excluding the non-cash charges, fiscal year 2024 adjusted net income is $10.7m. This compares with adjusted net income of $12.2m for the comparable year-ago period.
For the fourth quarter ended September 30, 2024, the Company reported a net loss of $12.9 on revenue of $35.4m. This compares with net income of $4.4m on revenue of $29.3m for the comparable year-ago period. Excluding the non-cash charges, adjusted net income is $4.4m for the fourth quarter ended September 30, 2024. This compares with adjusted net income of $4.4m for the comparable year-ago period.
During fourth quarter ended September 30, 2024, the Company recorded a non-cash charge of $14.5m from the divestiture of its Russian legal entity and a $2.8m charge from an impairment of intangible assets. The divestiture of the Russian legal entity has virtually no effect on the Company’s net assets as most of the charge came from cumulative unrealized foreign currency translation losses previously recorded within shareholders’ equity.
Management’s Comments
Richard J. (“Rich”) Kelley, President and CEO of the Company said, “We started the fourth quarter of fiscal year 2024 strongly with significant contributions from our Oil and Gas Markets segment with more than $20m in sales and rental announcements for our OBX seabed nodes in August. This followed a trend for the fiscal year of multi-million-dollar contracts for this product line and contributed to an overall increase in revenue from the prior fiscal year.
In our Adjacent Markets segment, we enjoyed a record-setting year for our Hydroconn® line of smart water meter cables. The market continues to recognize our leading technology and resulting growth outpaces the industry. We also had our first successful international sale of our Aquana products. The Aquana product line generates further traction in smart water markets, for both municipal and multi-family residential applications. We believe that our focus on Smart Water going forward will continue to drive growth for the organization.
While the financials indicate a net loss for the year due to two non-cash charges, we are pleased to have 24-months of consecutive adjusted net income, indicating our core business remains profitable. While examining the increasing conflict in Ukraine and potential complications with Russian sanctioned entities, management and the board of directors determined the most prudent action would be to divest of our Russian entity. This divestment resulted in a loss which had minimal effect on the value of the net assets of the Company. Additionally, our fiscal year financial reporting reflects another one-time charge related to a non-cash intangible asset impairment related to our subsidiary, Quantum Technology Sciences.
This announcement will be the last time we will report earnings with these business segments of Oil and Gas Markets, Adjacent Markets and Emerging Markets. Beginning with our release in early February, we will provide financial information using our three new business segments announced in September – Smart Water, Energy Solutions, and Intelligent Industrial.
Other highlights of note this year included the Company’s addition in the Russell stock indexes, the Russell 2000®, Russell 3000®, and Russell Micro-Cap® Index.
Lastly, we would like to thank Rick Wheeler, our outgoing CEO. Rick dedicated almost 30 years to Geospace, leading the company through successful and tumultuous times in the industry. His guidance and foresight provided stability and opportunities for growth through diversification. His management and leadership allowed Geospace to remain a strong presence in the seismic equipment market while taking advantage of their Engineering and manufacturing capabilities to explore new opportunities in adjacent markets. Rick will remain as a member of the board of directors and we wish him all the best in his retirement.”
Oil and Gas Markets Segment
Revenue from the Company’s Oil and Gas Markets segment totaled $17.5m for the three months ended September 30, 2024. This compares to $17.8m in revenue for the same period a year ago. For the fiscal year, revenue from this segment totaled $77.5m versus $74.0m for the same prior year period for an increase of 5%. The insignificant decrease for the three-month period is due to increased sales of our OBX nodal products from our rental fleet offset by lower utilization of our ocean bottom node rental fleet. The twelve-month increase in revenue is due to increased sales of ocean bottom nodal products like the Mariner and from our rental fleet, offset by lower utilization of our ocean bottom node rental fleet and lower demand for seismic sensors and marine products.
Adjacent Markets Segment
For the 3-month period ended September 30, 2024, revenue from the Company’s Adjacent Markets segment totaled $17.6m for an increase of 65% when compared to $10.6m from the same prior year period. Revenue from the twelve-month period was $55.6m an increase of 13%, when compared to revenue from the same prior year period of $49m. The increase for the three-month period is due to strong sales of Hydroconn®, the Company’s smart water meter cable and connector products and initial sales from the Aquana product line. The increase in the 12-months period is the result of increased sales of the Company’s smart water meter cable and connector products. The fourth quarter of fiscal year 2024 was the highest level of quarterly revenue for Hydroconn® as well as fiscal year 2024 produced the highest annual revenue for the product line.
Emerging Markets Segment
The Company’s Emerging Markets segment generated revenue of $0.2 m and $2.2m for the three-month and full year periods ended September 30, 2024. This compares with $0.8m and $1.2m for the similar three- and twelve-month periods of the previous year. (Source: BUSINESS WIRE)

 

21 Nov 24. IAI North America Selects Three Startups for the Second Cohort of Their IAI CATALYST Accelerator Program. IAI North America, a U.S. subsidiary of Israel Aerospace Industries, has selected the next three startup companies for the second cohort of its IAI CATALYST program, powered by Starburst: Dalus, Lola Vision Systems, and Nefeli Air. Operating out of IAI North America’s Innovation Center in Herndon, VA, IAI CATALYST initiated by IAI CTO’s office, is an accelerator program designed to help startups further develop their technology and gain success in the U.S. market.
About the IAI CATALYST Cohort 2 Startups:
Dalus: Dalus is building next-generation model-based systems engineering (MBSE) software to empower mission-critical industries like aerospace and defense to integrate complex hardware systems seamlessly. (dalus.io)
Lola Vision Systems: Lola Vision Systems is a fabless semiconductor company focused on AI silicon for autonomous machines, whose mission-critical computer vision and generative AI solutions target the automotive, aerospace, and defense sectors. (lolavisionsystems.com)
Nefeli Air: Nefeli Air is driving the development of fully autonomous aircraft by leveraging AI technology to create software that enables the identification of aerial obstacles, serving both commercial and defense clients. (nefeliair.com)
“Cohort 1 of the IAI CATALYST accelerator set a high standard of success for future cohorts. IAI’s goal for a U.S. innovation center is to foster cutting-edge technological growth in the aerospace and defense industries by investing in startups trying to break into the market. The startups chosen for Cohort 2 will bring game-changing technology to the U.S. market. We look forward to seeing how these three startups grow with our mentorship.” – Eytan Eshel, Bg (Res.) Executive VP, CTO Israel Aerospace Industries
“IAI North America’s innovation center is important because it fosters innovative development in the aerospace industry from companies who might not have the support to break into the market otherwise. We hope to expand upon the success of Cohort 1 and position these startups to surpass their goals and be successful in this competitive market.” – Stephen A. Elliott, President and CEO of IAI North America
Learn more about IAI CATALYST and apply for future cohorts of the program at: https://catalyst.iainorthamerica.com
Israel Aerospace Industries (IAI):
Israel Aerospace Industries (IAI) is a world-class aerospace and defense company innovating and delivering state-of-the-art technologies in space, air, land, naval, cyber & homeland security for defense and commercial markets. Combining the “Start-up Nation” spirit of innovation with decades of combat-proven experience, IAI provides customers with tailor-made, cutting-edge solutions to the unique challenges they face including satellites, UAVs, missiles, intelligence solutions, weapon systems, air defense systems, robotic systems, radars, business jets, aerostructures, and more. Established in 1953, IAI is one of Israel’s largest technology employers with offices and R&D centers in Israel and abroad.
IAI North America:
IAI North America is the U.S. subsidiary of Israel Aerospace Industries Ltd. (IAI), Israel’s largest aerospace and defense company. IAI is a global leader in space and defense for government, military and commercial applications with battle-tested systems and technology. For over 70 years, IAI has developed and manufactured state-of-the-art systems for air, space, sea, land, cyber, and homeland security. IAI North America leverages IAI’s innovative solutions to create cutting-edge Americanized solutions for our customers and industry partners.
Starburst:
Founded in 2012, Starburst is an innovation catalyst in the global Aerospace and Defense (A&D) industry. Combining three complementary activities – startup accelerators, strategy consulting, and venture investments – they help A&D stakeholders innovate, navigate and invest in the dynamic ecosystem. With offices in Los Angeles, Paris, Munich, Singapore, Seoul, Tel Aviv, Madrid, and Washington DC, the team has built a robust community with 60+ partners and a portfolio of 150 startups. Starburst’s leading Flagship Accelerator program helps startups scale their business in aviation, space, and defense, as well as enabling technologies, with access to one of the largest groups of corporate representatives, government stakeholders, and private investors in the world to help startups win their first contracts.
(Source: BUSINESS WIRE)

 

21 Nov 24. IAI declares the most profitable period in its history. Publishing its financial statement for the third quarter (Q3) of 2024 on 21 November, Israel Aerospace Industries (IAI) has declared itself to be marking the most profitable period in the company’s history.
IAI reported a 74% increase in net income in the nine months ending on 30 September 2024 (the reporting period) to about USD 416m (EUR 395) compared with about USD 239m for Q3 2023: the most profitable nine-month period in its history. An increase in net income to about USD 122 m in Q3 2024 compared with about USD 74m in Q3 2023.
Quoted in a company press release, IAI Chairman of the Board Amir Peretz stated, “It is with great satisfaction that I report on the three best years at Israel Aerospace Industries since company’s establishment. Building on outstanding performance in 2022 and 2023, today we conclude another three quarters of exceptional business activity. I am also proud to reflect upon my three years in office, years in which we strengthened IAI’s position as a national and international leader in defense technology and civilian aviation. During this period, IAI achieved an unprecedented order pipeline valued at some USD 25bn, with breakthrough projects in strategic markets worldwide.”
The order backlog at the end of 2023 was about USD 18bn, meaning there has been an increase of around USD 7bn.
IAI saw a 33% growth in EBITDA in the reporting period to about USD 646m compared with about USD 487m in the corresponding period of last year, while operating income grew in the reporting period to about USD 431m (about 9.8% of sales) compared with operating income of about USD 292m (about 7.5% of sales) in the corresponding period of last year.
Gross profit growth in the reporting period to about USD 836m (about 19% of sales) compared with about USD 682m (about 18% of sales) in the corresponding period of 2023.
Boaz Levy, IAI’s president and CEO, stated, “At this challenging time, as the State of Israel faces a war on multiple fronts and IAI systems play a critical role defending the country, these business results reflect an additional layer of the state’s economy.”
The operating income of the military groups within IAI for the nine months to the end of September 2024 was about USD 367m compared with about USD 272m for the corresponding period of 2023. The operating income of IAI’s Aviation Group for the same period amounted to about USD 49m compared with operating income of about USD 32m in the corresponding period of 2023.
Levy added, “The large-scale contracts we have signed with our overseas customers illustrate the deep business relations we have cultivated and a recognition of Israel’s technological superiority. We have achieved this despite this period of national crisis, maintaining supply chain continuity and expanding our international relations.”
Originally founded in 1953 as Bedek Aviation Company, state-owned IAI is Israel’s largest aerospace and defence enterprise. (Source: Google/ESD)

 

21 Nov 24. Denel still facing financial and operational challenges in spite of bailouts – Auditor General.
In spite of recent bailouts, Denel is making slow progress on implementing its turnaround strategy, something compounded by going concern and financial sustainability challenges.
This is according to the Auditor General of South Africa (AGSA), which on 19 November briefed the Standing Committee on Public Accounts (SCOPA) on audit outcomes of the Departments of Defence and Military Veterans, and Denel.
In its presentation to SCOPA, the AGSA found that Denel is experiencing significant challenges relating to liquidity constraints and cash flow challenges resulting to the entity being unable to pay its debts as they become due.
It added that Denel is experiencing net operating losses and operational difficulties including “significant challenges in implementation of major revenue projects including loss of considerable market share to its international competitors and with some major customers cancelling their contracts with the entity, others imposed significant penalties.”
Skills and capacitation constraints are affecting the state-owned company as it has lost skilled staff due to a lack of job security, and implementation of Section 189 retrenchments.
On the information technology (IT) side, Denel “has not been able to do any capital infrastructure investments in the recent years. The entity operates on ageing IT infrastructure and inadequate IT environment which continues to negatively impact its operations,” the Auditor General found.
This is in spite of recent bailouts, including a R3.4bn cash injection in the 2022/23 financial year, with a total of R2.4bn (70% of the total bail-out money) utilised by the end of the 2023/24 financial year.
However, as at 31 March 2024, Denel had not been able to access roughly R900 million of the bailout funds due to unmet bailout conditions.
Of the R2.4bn utilised, 5% was used towards the restructuring turnaround implementation plan and the rest was utilised to pay legacy debts including SARS.
“With majority of the bailout spent on legacy creditors, no alternative funding models/strategies have been identified by management to fund the successful implementation of the turnaround plan,” the Auditor General warned, adding that Denel “does not have sufficient funds available to fund the turnaround strategy. A portion of the recapitalisation is still locked due to conditions not met.”
Furthermore, Denel has not been able to continue with the sale of non-core assets to unlock the funds needed to implement the turnaround strategy.
“The entity’s financial and operational challenges are posing a threat on the entity’s financial sustainability and its ability to continue as a going concern and risk an additional pressure to the fiscus,” the AGSA said.
It gave a list of recommendations, including accountability and commitment by the board, more efficient execution of initiatives, rebuilding internal workforce capacity, preserving institutional knowledge, and timeous submission of annual financial statements.
The Auditor General said the Denel 2023/24 audit is outstanding as Denel has not yet submitted its 2023/24 annual financial statements – these are only expected on 30 November.
To SCOPA, the Auditor General recommended Denel fall under a sustainable state-owned enterprises funding model that does not rely on additional recapitalisation. It encouraged the Department of Defence and National Treasury to monitor the progress made on implementation of the turnaround strategy, and the fast-tracking of the rationalisation of state-owned entities. (Source: https://www.defenceweb.co.za/)

 

20 Nov 24. Booz Allen Hamilton (NYSE: BAH) today announced that its corporate venture capital arm, Booz Allen Ventures, LLC, has made a strategic investment in Reality Defender, a cybersecurity company specializing in deepfake and synthetic media detection that leverages advanced AI to identify and combat AI-generated threats ensuring the integrity of digital content in today’s software-defined world.
“Sophisticated AI models are increasingly being used to manipulate and deceive, posing a real risk ranging from the battlefield and research labs to financial systems and communities nationwide”
Post this
This investment enhances critical AI and cyber efforts at Booz Allen, recently recognized by GovWin from Deltek as the leading provider of both AI and cybersecurity for the U.S. federal government, and reflects the firm’s commitment to fostering responsible, secure, and trustworthy AI solutions that protect citizens, government, and commercial clients from evolving digital threats, misinformation, and deepfakes in real time.
“Sophisticated AI models are increasingly being used to manipulate and deceive, posing a real risk ranging from the battlefield and research labs to financial systems and communities nationwide,” said Matt Keating, head of AI security at Booz Allen. “To combat these threats, we need tools to validate and secure multimodal content, such as videos, images, audio recordings, and phone calls. Reality Defender meets this need, offering a proven solution for verifying data integrity and using AI to actively counter disinformation, ensuring AI systems remain responsible, secure, and trustworthy.”
Reality Defender, named “Most Innovative Startup” at the 2024 RSA Conference, offers a purpose-built detection platform delivering real-time protection against synthetic media threats and impersonations, offering scalable and customizable solutions for government, enterprise, and institutional clients. Using advanced AI tools, the platform effectively combats identity-based fraud and ensures media authenticity across multiple modalities. Designed to meet the rigorous demands of mission-critical applications, Reality Defender helps safeguard against evolving risks posed by AI-generated content.
“Booz Allen’s leadership in AI security and deep expertise in supporting critical missions will enable Reality Defender to expand our impact at a time when securing communications against deepfakes is paramount,” said Ben Colman, co-founder and CEO of Reality Defender. “Together, we are positioned to counter emerging AI-driven threats and secure communications from the growing risks of synthetic media.”
Since launching in 2022, Booz Allen’s $100m corporate venture capital arm has made strategic investments in early-stage companies developing dual-use commercial technologies and Reality Defender joins a strong stable of past AI-related investments: Credo AI, (responsible AI); HiddenLayer (secure AI); LatentAI (AI data compression); Reveal Technologies (real-time route planning/mapping); RAIC Labs (previously Synthetaic, synthetic data generation and testing) and more, resulting a comprehensive suite aimed at fostering ethical AI adoption across sectors in support of our clients’ mission of national importance. Additional Ventures investments include Hidden Level, Shift5, Hidden Layer, Second Front (2F), Albedo, Quindar and Starfish.
“This investment reinforces our mission to identify, field, and deploy dual-use technologies for good, leading to technological advantage for the U.S. and our partners. There is so much promise in AI, but we need to ensure it’s deployed responsibly and securely, and that it’s trustworthy—it can’t be tech for tech’s sake, but rather tech to enhance citizens’ everyday lives—not put them at jeopardy,” said Wes Blackwell, managing director of Booz Allen Ventures. “With Reality Defender’s industry-leading deepfake detection capabilities, we are further enhancing our AI and cyber portfolios, and are able to provide our clients the assurance that digital interactions remain trustworthy and secure, safeguarding public and commercial interests against misinformation and fraud.”
(Source: BUSINESS WIRE)

 

20 Nov 24. Palladyne AI Corp. (NASDAQ: PDYN and PDYNW) (“Palladyne AI”), a developer of artificial intelligence software for robotic platforms in the commercial and defense sectors, today announced an expanded partnership with Red Cat Holdings, Inc. (NASDAQ: RCAT) (“Red Cat”) and its Teal Drones subsidiary (“Teal”), a drone technology company integrating robotic hardware and software for military, government, and commercial operations. The broadened relationship includes joint go-to-market activities to be coordinated between the companies.
“Furthermore, we congratulate them on their selection as the winner of the U.S. Army’s SRR Program of Record. This contract is extremely well-deserved as Teal sUAS systems exhibit superior capabilities across the board and particularly for complex military operations.”
Post this
In early October, Palladyne AI and Red Cat announced that they had partnered to embed Palladyne AI’s artificial intelligence software into Teal drones, including those already in the field, to enable autonomous operation and expand drone system capabilities to facilitate the creation of a network of collaborating drones and sensors that self-orchestrate to provide superior intelligence, surveillance, and reconnaissance capabilities. Palladyne AI and Teal’s expanded partnership will include joint sales and marketing for Palladyne AI’s artificial intelligence software on Teal drones. Palladyne Pilot is expected to be available on all Teal drones and will be included in new drones shipped to customers who desire the features and functionality provided by the platform.
Red Cat recently announced it was selected as the winner of the U.S. Army’s Short Range Reconnaissance (SRR) Program of Record after a rigorous test and evaluation process for its Teal next generation sUAS, designated as the Black Widow and WEB. The testing and evaluation were completed by the Army Project Management Office for Uncrewed Aircraft Systems, Army Maneuver Battle Lab, and Army Test and Evaluation Command, and the award was based on soldier feedback, technical performance, volume manufacturability, and system cost. The production contract anticipates deliveries beginning in 2025. Palladyne Pilot is expected to be available for all sUAS systems delivered to the Army.
“We are extremely proud to be working with Teal on integrating our Palladyne Pilot artificial intelligence software into Teal’s drones and look forward to this expanded relationship to help deliver a best-in-class experience for their defense, public safety, and commercial customers,” said Ben Wolff, CEO, Palladyne AI. “Furthermore, we congratulate them on their selection as the winner of the U.S. Army’s SRR Program of Record. This contract is extremely well-deserved as Teal sUAS systems exhibit superior capabilities across the board and particularly for complex military operations.”
For more information about Palladyne AI, please visit www.palladyneai.com or connect with us on LinkedIn at www.linkedin.com/company/palladyneaicorp. For more information about Red Cat and its Teal drone program, please visit https://redcat.red.
About Palladyne AI Corp.
Palladyne AI Corp. (NASDAQ: PDYN) has developed an advanced artificial intelligence (AI) and machine learning (ML) software platform poised to revolutionize the capabilities of robots, enabling them to observe, learn, reason, and act in a manner akin to human intelligence. Our AI and ML software platform empowers robots to perceive variations or changes in the real-world environment, enabling them to autonomously maneuver and manipulate objects accurately in response.
The Palladyne AI software solution operates on the edge and dramatically reduces the significant effort required to program and deploy robots enabling industrial robots and collaborative robots (cobots) to quickly achieve autonomous capabilities even in dynamic and or complex environments. Designed to achieve precise results with minimal training time, limited data sets, and lower power requirements, compared to current solutions, Palladyne AI believes its software has wide application, including in industries such as automotive, aviation, construction, defense, general manufacturing, infrastructure inspection, logistics and warehousing. Its applicability extends beyond traditional robotics to include Unmanned Aerial Vehicles (UAVs), Unmanned Ground Vehicles (UGVs), and Remotely Operated Vehicles (ROVs). Palladyne AI’s approach is expected to elevate the return on investment associated with a diverse range of machines that are fixed, fly, float, or roll.
By enabling autonomy, reducing programming complexity, and enhancing efficiency, we are paving the way for a future where machines can excel in tasks that were once considered beyond their reach.
For more information, please visit www.palladyneai.com and connect with us on LinkedIn at www.linkedin.com/company/palladyneaicorp.
About Red Cat, Inc.
Red Cat (Nasdaq: RCAT) is a drone technology company integrating robotic hardware and software for military, government, and commercial operations. Through two wholly owned subsidiaries, Teal Drones and Flightwave Aerospace, Red Cat has developed a bleeding-edge Family of ISR and Precision Strike Systems including the Teal 2, a small unmanned system offering the highest-resolution thermal imaging in its class, the Edge 130 Blue Tricopter for extended endurance and range, and FANG™, the industry’s first line of NDAA compliant FPV drones optimized for military operations with precision strike capabilities. Learn more at www.redcat.red. (Source: BUSINESS WIRE)

 

21 Nov 24. Cohort plc (AIM: CHRT), the independent technology group, has entered into a conditional sale and purchase agreement to acquire the entire issued share capital of EM Solutions Pty Ltd which holds all of the issued share capital in EM Solutions (Europe) B.V. (together “EM Solutions”) from Electro Optic Systems Holdings Limited, an Australian public company which is listed on the Australian Securities Exchange (ASX: EOS) (the “Seller” or “EOS”), for an enterprise value of AUD$144.0m (c.£75.0m), subject to customary post-completion adjustments (the “Acquisition”).
Acquisition highlights
• Proposed acquisition of EM Solutions, a leading Australia-based developer and producer of high-end SATCOM terminals for global naval and defence customers
• Acquisition consideration is to be satisfied from Cohort’s existing cash resources and debt facility and a placing of new ordinary shares (see separate announcement)
• EM Solutions will operate as the seventh stand-alone business within the Group, reporting through the Communications and Intelligence Division
• Completion of Acquisition expected by calendar year end
Acquisition rationale
• Enhance and diversify the Group’s proposition with a complementary defence communication offering
• Gain exposure to naval surface vessel SATCOM market which has strong structural growth drivers
• Further broaden the Group’s naval systems offering
• Accelerate EM Solutions’ growth with enhanced position in UK, NATO Europe, Asia and South America
• Strengthen Cohort’s presence in Australia, a key growing strategic region for the Group
Financial highlights of the Acquisition and Placing
• Materially accretive to adjusted EPS in first full financial year of ownership (2025/26) and onwards
• Tax adjusted Return on Invested Capital (“ROIC”) is expected to exceed WACC in the third full financial year post Completion (2027/28)
• EM Solutions achieved revenues of AUD$43.1m1 and EBIT of AUD$11.5m in the year ended 31 December 2023
• EM Solutions adds an order book of AUD$175.4m (£91.4m)2, as at 30 September 2024, taking Group pro forma order book to over £650m 2
Following Completion, Cohort’s pro forma net debt/EBITDA for the financial year ending 30 April 2025 is expected to be less than 1.0x, maintaining a strong balance sheet and liquidity
1EM Solutions CY23A financials normalised to remove the contribution of the non-core Documentation services under the SEA1442 contract which generated c.AUD$14.1m in revenue in CY23A2; Assumed GBP/AUD of 1.92
Placing and Retail Offer (as separately announced)
• Cohort separately today announces a fully underwritten non-pre-emptive placing to institutional investors to raise gross proceeds of £40 m (the “Placing”), the net proceeds of which will be used to partially fund the Acquisition
• Additional offer up to £1m via PrimaryBid to facilitate retail participation (the “Retail Offer”) (together with the Placing the “Fundraise”)
Andy Thomis, Chief Executive of Cohort plc, commented: “The proposed acquisition of EM Solutions in Australia is highly complementary and is in line with our stated strategy to accelerate growth by making targeted acquisitions in the UK and overseas. Australia is an increasingly important strategic region, reflecting the increased security challenges in the Indo Pacific, and the creation of the AUKUS alliance.
EM Solutions represents a compelling opportunity to access the fast growing satellite communications market, further broadening the Group’s strong existing naval systems service offering, whilst bringing new customers and enhancing our combined position in the UK, NATO Europe, Asia and South America.
This is our largest acquisition to date, adding Cohort’s seventh standalone business and creating a materially larger Group. With the strong momentum being reported by Cohort and EM Solutions, together with the substantial combined orderbook, the Acquisition is expected to be materially enhancing to adjusted EPS in the first full financial year (2025/26) and onwards.
We are looking forward to welcoming the EM Solutions team to Cohort and working together to realise the multiple growth opportunities that this transaction affords.”
Andreas Schwer, Chief Executive Officer and Managing Director of EOS, commented:
“Given the strengthening AUKUS partnership, we believe that Cohort is the ideal owner for EM Solutions and are confident the business will continue to strengthen under their stewardship.”

 

21 Nov 24. TT Electronics: Hidden gem or value trap? TT Electronics LON:TTG, must have been doing something right since The Armchair Trader last reported on the Woking-based electronics and defence contractor as it has batted-away three prospective take-overs in the last month. As we previously reported, TT Group has a long history, being able to trace its origins back to 1867 as the W. Tyzack Sons & Turner, a Sheffield-based toolmaker. The firm listed on the London Stock Exchange in 1948 and got out of the tool-making business in the late 1980s, focussing on the digital-age’s new tools, electronics. As reported, the company today operates in four divisions: Healthcare, Aerospace and Defence, Automation and Electrification, and Distribution.
But that storied history looked under threat earlier this month, as AIM-listed power and data component manufacturer, Volex LON:VLX, submitted not just one, but two offers to snap-up its Surrey-based rival. The first offer was 62.9p a share in cash and 0.203 new Volex shares for each TT Electronics share.
Volex offer significantly undervalues company
TT rejected this, saying Volex’s offer significantly undervalued the future value of TTG. But not to be dissuaded, Basingstoke-based Volex pushed the dial a bit further, offering 62.9 pence in cash and 0.223 new Volex shares. Based on Volex’s closing price of 325p per ordinary share as at 31st October 2024, the Volex Proposal valued each TT Electronics share at 135.5p.
However, this improved offer also left TT Electronics feeling unfulfilled, saying the Volex was still undervaluing the future potential of the group and arguing that the Volex approach would short-change long-term shareholders.
One could see the rationale behind Volex’s desire to bring TT Electronics under its umbrella, as TT’s product suite, especially in power and connectivity, would fit well with Volex’s plugs, cords and EV equipment, and all the other toys and tricks that TT Electronics manufactures would significantly expand Volex’s product suite. Volex was most interested in using TT Electronics to springboard into the medical and industrial technology sectors, and into the defence sector.
Business Description
TT Electronics provides design-led advanced electronics technologies for performance critical applications in the healthcare, aerospace and defense, and automation and electrification markets in the United Kingdom, Rest of Europe, North America, Asia, and internationally. The company operates through three segments: Power and Connectivity, Global Manufacturing Solutions, and Sensors and Specialist Components. The Power and Connectivity segment designs and manufactures power application products and connectivity devices, which enable the capture and wireless transfer of data to optimize electronic systems. The Global Manufacturing Solutions segment provides manufacturing services and engineering solutions for its product divisions and to customers that require a lower volume and higher mix of various products. This segment manufactures integrated product assemblies, as well as provides engineering services, including designing testing solutions and value-engineering. The Sensors and Specialist Components segment develops standard and customized solutions, including sensors and power management devices. Its solutions enhance the precision, speed, and reliability of critical aspects of its customers applications. It offers its products and services under the AB Connectors, Aero Stanrew, BI Technologies, Ferranti, IRC, Optek Technology, Precision, Power Partners, PowerPax, Roxspur Measurement and Control, Semelab, Stontronics, Torotel, and Welwyn brands. The company was formerly known as TT Group plc and changed its name to TT Electronics in 2000. The company was incorporated in 1906 and is headquartered in Woking, the United Kingdom.
Volex argued that TT Electronics, despite having a great suite of products, has been historically underperforming – something that TT Electronics refutes – which Volex attributes to TT Electronic’s management being weak and having a lack of the necessary financial muscle, which Volex said a merger would offer TT Electronics.
Continued share price disappointment
Arguably, Volex’s chiefs could have a point. TT Electronics opened trading in November at 78.8p down 48% compared to 1st November 2023. Five years ago, TT Electronics was trading at 232p. Obviously, given Volex’s bid, TT Electronics’ shares had a bit of a rally, hitting 120p at its peak on 15th November. TT’s shares opened the week (18th November) at 109.76p but had fallen to 105p by Monday lunchtime. TT Electronics has a market cap of around GBP200m.
Shareholders might be feeling a bit underwhelmed and may have wanted to realise some of their investment today, as opposed to getting jam tomorrow. However, on rejection of the Volex offer, TT Electronics said that it had also recently received and rejected an all-cash indicative proposal from another party at a significantly higher value than the Volex deal. And although management stated that there are no ongoing discussions with this mystery suitor, they argue that the bid itself proves that TT Electronics is a lot more valuable than the offers and current share price implies.
In its last update, for the four-months to end-October, TT Electronics said revenue was down 1% year-on-year, but was up 10% in Europe and 11% in Asia. The downside was primarily in North America, where revenue was down 16% which may have been a reaction to elections season in the US and also TT’s issues with getting its product mix right in the market.
Cautious progress at lower-end of range
However, the issues in North America will see, as TT Electronics management said, FY24 operating profit be at the lower end of its predicted range of GBP37m and GBP42m, with leverage at the higher end of its predicted range of 1x to 2x. That said, said the company, the changes it is making to its operations in North America will feed through to improved profitability in 2025, which will also be positively impacted by the group seeing an overall uptake in orders which were up 2% y-o-y and for the ten-months to end-October up 10% y-o-y. The company has also been cutting costs, reducing its workforce to account for the slowdown in its workflow.
Maybe Volex was right, in that TT Electronics management might have made a few mistakes in the past few years; one such with the operation performance of North America and the TT just is too small to become big. However, TT Electronics might also be right, as in the future – especially given the increasing strategic importance of the industries in which it operates – it may well become a very valuable company, and given the current share price creates a compelling buying opportunity.
(Source: https://www.thearmchairtrader.com/)

 

19 Nov 24. AeroVironment, Inc. and BlueHalo LLC have announced the execution of a definitive agreement under which AV will acquire BlueHalo in an all-stock transaction with an enterprise value of approximately $4.1bn, creating a more diversified global leader in all-domain defense technologies. The combined company will bring together complementary capabilities to offer a comprehensive portfolio of high-growth franchises, powered by cutting-edge technology and focused on addressing the most important priorities and needs of our nation and allies around the globe. BlueHalo, an Arlington Capital Partners portfolio company, was founded as a purpose-built platform providing industry-leading capabilities in several key mission areas: Space Technologies, Counter-Uncrewed Aircraft Systems (cUAS), Directed Energy, Electronic Warfare, Cyber, Artificial Intelligence and other Emerging Technologies including Uncrewed Underwater Vehicles (UUVs).
Since its founding in 2019, BlueHalo’s notable accomplishments include being the first to successfully operationally field directed energy (DE) laser weapon systems (LWS) with its LOCUST LWS, being awarded Space Force’s multi-bn dollar program to transform space operations with BADGER, its adaptive phased array product and serving as a leader in Radio Frequency Counter-Unmanned Aerial Systems (RF C-UAS), delivering its 1000th system last year with its Titan and Titan-SV systems. BlueHalo has focused on cutting-edge research and development allowing for the development of products and services to transform the future of global defense.
BlueHalo estimates that it will achieve more than $900m in revenues for 2024, in addition to funded backlog of nearly $600m and a pipeline of multiple billion-dollar opportunities and programs of record. BlueHalo generated approximately $886 m of revenue in 2023, compared to $759m and $660m in 2022 and 2021, respectively.
The acquisition of BlueHalo will create a diversified Defense Tech company with a highly complementary and differentiated portfolio of solutions in Uncrewed Systems, short and long range Loitering Munitions, Counter UAS, Space Technologies, Electronic Warfare and Cyber, powered by AI and Autonomy. This combination will drive innovation, expand manufacturing capacity and enable us to better support our customers and their critical missions.
AV expects that BlueHalo’s portfolio of 10 flagship solution families and more than 100 patents will seamlessly integrate with AV’s complementary existing expertise in the design, development, manufacturing, training and servicing of Uncrewed Systems, Loitering Munitions and Advanced Technologies.
AV and BlueHalo believe that these synergies will primarily be identified as administrative and operational cost savings and sharing best practices from each company. The companies’ shared culture of agile innovation and mission expertise will enable the combined entity to develop and deliver next-generation technologies that will have significant military value and redefine the next era of Defense Technology. On a pro forma basis, the combined company is expected to deliver more than $1.7bn in revenue.
“For over 50 years, AV has pioneered innovative solutions on the battlefield, and today we are poised to usher in the next era of defense technology through our combination with BlueHalo,” said Wahid Nawabi, AV chairman, president and chief executive officer. “BlueHalo not only brings key franchises and complementary capabilities, but also a wealth of technologies, diverse customers and exceptional talent to AV. Together, we will drive agile innovation and deliver comprehensive, next-generation solutions designed to redefine the future of defense. We are thrilled to welcome the talented BlueHalo team as we unite our strengths, expand our global impact and accelerate growth and value creation for AV shareholders.”
Jonathan Moneymaker, chief executive officer of BlueHalo, said, “BlueHalo was founded to address the most pressing challenges confronting the defense and national security community, from unconventional threats to near-peer adversaries. We have pioneered solutions for drone warfare, distributed autonomy, and the need for more robust and assured access to space in an increasingly contested, crowded and competitive domain. Through these efforts, we have earned our reputation as a trusted partner in defense innovation. By uniting with AV, we are building an organization equipped to meet emerging defense priorities and deliver purpose-driven, state-of-the-art solutions with unmatched speed. Together, we remain committed to protecting those who defend us while driving the next generation of transformational advancements in defense technology.”
Strategic and Financial Benefits:
• Creates a diversified industry leader. This transaction brings together AV’s established portfolio of cutting-edge defense solutions with BlueHalo’s emerging and industry-defining technologies. This union will provide customers with a comprehensive suite of solutions across multiple domains—including air, land, sea, space and cyber. Together, AV and BlueHalo will create a leader in integrated defense technologies with a global footprint capable of addressing the full spectrum of modern defense.
• Increases agility and speed, with enhanced infrastructure, manufacturing capabilities and geographic footprint. The combined company will benefit from greater resources, enabling faster innovation and more efficient deployment of critical defense systems.
• Supports AV’s entry into additional key defense segments and builds on the Company’s strong track record of providing essential solutions. With BlueHalo’s portfolio, AV will enter into new segments that will significantly increase the Company’s total addressable market, including Counter-UAS, Directed Energy, Electronic Warfare, Cyber and Space technologies. The acquisition will bring with it BlueHalo’s key programs of record, deep customer relationships and strong backlog and pipeline, positioning the future company as a more robust and sustainable prime defense solution provider. This partnership will enhance AV’s ability to meet the evolving needs of the Department of Defense (DoD) and allied nations with a robust suite of innovative solutions.
• Diversifies mix of customers, products and revenue. The combined company is expected to achieve a more balanced and diversified customer base, product and revenue mix, benefiting from BlueHalo’s established presence in key emerging defense markets. The combined company will benefit from expanded geographical reach, with the ability to provide BlueHalo’s solutions to AV’s larger international customer base. By integrating complementary capabilities, AV will be well-positioned to generate sustained long-term value for shareholders.
• Generates attractive returns. AV expects the transaction to be accretive to revenue, adjusted EBITDA and non-GAAP EPS in the first full fiscal year post-close.
Transaction Details
The transaction, which has been unanimously approved by both companies’ board of directors or managers, is expected to close in the first half of calendar 2025, subject to regulatory and AV shareholder approvals, as well as other customary closing conditions.
Per the terms of the merger agreement, AV will issue approximately 18.5 m shares of AV common stock to BlueHalo.
Following the close of the transaction and based on AV’s shares outstanding as of November 18, 2024, AV’s shareholders will own approximately 60.5% of the combined company and BlueHalo’s equity holders will own approximately 39.5%, subject to closing adjustments. Arlington Capital Partners, an investment firm that is the majority owner of BlueHalo, will retain a significant ownership stake in the combined company.
We expect substantially all of the BlueHalo holders to enter lock-up agreements with respect to their transaction consideration, with 40% releasing 12 months post close and the remaining 60% to be released in equal tranches 18 and 24 months after the close.
Leadership, Governance and Headquarters
Following the completion of the transaction, AV Chairman, President and CEO Wahid Nawabi will be Chairman, President and CEO of the combined company. Jonathan Moneymaker, CEO of BlueHalo, will serve as a strategic advisor to Mr. Nawabi and the combined company Management Team.
Upon closing, the AV Board of Directors will be expanded to comprise 10 members. Arlington Capital Partners will have the right to appoint two directors to the Board, subject to minimum ownership thresholds.
The combined company will be at headquartered in Arlington, Virginia, at AV’s corporate headquarters.
(Source: AeroVironment, Inc.)
BATTLESPACE Comment: This takeover of a major and comparatively new company specialising in C-UAS and EW systems proves the stratospheric and continuing demand for C-UAS systems. Since its founding in 2019, BlueHalo’s notable accomplishments include being the first to successfully operationally field directed energy (DE) laser weapon systems (LWS) with its LOCUST LWS, being awarded Space Force’s multi-bn dollar program to transform space operations with BADGER, its adaptive phased array. The Editor has been following Blue Halo with interest and emailed Trip Ferguson as a possible candidate for BBOY 25. Now we know why he did not reply!

 

19 Nov 24. Tax hikes and risky rebids: what next for Serco? Outsourcer faces lower revenue and higher costs after a tough couple of months.
Given the nature of government outsourcing, Serco (SRP) shareholders are used to a bit of volatility. Things took a particularly dramatic turn this month, however, when the company reported two pieces of bad news in a single, unscheduled update. Shares are now 5 per cent lower than they were in January and flat year-on-year. The question for investors is whether this is a short-term blip or a prelude to bigger problems.
On 8 November, Serco revealed that it had lost its long-running, lucrative contract with the Australian government. It has provided detention facilities and detainee services in Australia since 2009, and its work in the region was expected to deliver £165mn of revenue and £18mn of underlying operating profit in 2025. This represented approximately 6 per cent of consensus forecasts for next year. However, an unsuccessful rebid means the contract will end on 10 December 2024 and to add salt to the wound Serco will incur £20mn of end-of-contract cash costs.
The announcement was “clearly a disappointment”, according to one analyst, but many are still upbeat. Investec analyst Michael Donnelly added: “Contract businesses always lose contracts, and then they win them. That’s why they shouldn’t trade on a 20 times price/earnings ratio. But equally, they should not trade on 10 times.” Serco’s forward PE ratio currently sits at 9.8 times.
Why Serco lost out has not been disclosed. Some feedback may be provided in a full-year trading update on 19 December but – for now, at least – this means it is difficult to gauge whether it was the result of natural churn or indicative of a deeper problem.
Donnelly is bullish, noting that Serco recently won a contract with the US Space Force to supply a base in the Arctic Circle in Greenland with power. “You wouldn’t get an agency like that giving work to Serco if they had any concern about their ability to deliver on it,” he said.
At the same time, however, Serco’s book-to-bill ratio, which shows the relationship between orders received and revenue recognised, was just 82 per cent in the first half of 2024, compared with an average of 107 per cent since 2017. The UK and Europe book-to-bill ratio was particularly low at 70 per cent, which spooked the market on results day as it suggested a weakening of demand.
The fact that Serco’s contract win rate has bounced around in recent years adds to uncertainty. The next few months could prove illuminating. The annual value of rebids is approximately £700mn next year and £500mn in 2026, but chief financial officer Nigel Crossley told analysts in August that the “really big contracts” would be “determined in early 2025”.
Profit pressure
The market will always react to news that a contractor has won or lost a major project. Arguably, however, this was not the most important piece of information in Serco’s November trading update. The group also told the market that Rachel Reeves’ national insurance hike in April would increase its direct labour costs by around £20mn per year.
Shore Capital downgraded the group from a ‘buy’ to a ‘hold’ on the back of this, predicting that margins would suffer.
Until contracts end or rollover, the broker argued, these higher costs will have to be borne, which could reduce Serco’s UK margin from roughly 4 per cent to 3 per cent. “As contracts reach renewal, without price increases to reflect additional costs, business with [the] UK government will be unattractive,” said analyst Robin Speakman.
Other analysts have suggested it could take two years or more for the burden to be fully shifted onto clients.
Outsourcers have been caught out by government-imposed cost hikes in the past. Facilities management group Mitie (MTO), for example, was originally unfazed by the increase in the national living wage in 2016, saying it would “not have a material impact on our future earnings”. Just months later, it issued a profit warning.
Those who invest in the outsourcing sector need to be comfortable with this sort of uncertainty. Order books are opaque, the profitability of individual contracts is rarely disclosed, and failed rebids do happen.
On the other side of the equation, though, there is plenty of scope for positive surprises, accounting practices have been cleaned up, and structural tailwinds are blowing in the sector’s favour. Indeed, Investec argues Serco is a “Trump winner” given its high level of exposure to “hot markets” such as defence and immigration.
Recent developments at Serco may have tilted the scales slightly. The impact of the national insurance hike should not be underestimated by investors, and it remains unclear whether the loss of the Australian contract was an unfortunate one-off, or the start of something significant. (Source: Investors Chronicle)

 

19 Nov 24. FTSE 100 drops as investors flee European stock markets over Russia-Ukraine fears. Investors are fleeing the FTSE 100 and wider European stock markets for safe haven assets today amid fears of a fresh escalation in Russia’s war in Ukraine. Markets have been spooked by Vladimir Putin’s move to approve an updated Russian nuclear doctrine, which could pave the way for the Kremlin to consider using nuclear weapons if it is subject to a missile attack supported by a nuclear power.
While the doctrine has reportedly been in the works for some months, the decision to finalise the plans followed the first attack on Russian territory by Ukraine with US-made missiles.
The developments have triggered a flight toward assets like gold and sparked falls across global markets.
The FTSE 100 has tumbled 0.4 per cent this morning while the more domestically focused FTSE 250 slid around 0.3 per cent. The Eurostoxx 600, made up of Europe’s biggest companies, slid nearly 0.9 per cent in the morning session.
Gold, typically seen as a haven for investors amid times of volatility, climbed to a two-week high of £2,085 per ounce.
“News of Ukraine utilising its new ability to hit Russia with US missiles has prompted a sharp turn lower for stocks, while the dollar and gold have both risen on safe haven buying,” said Chris Beauchamp, chief market analyst at online trading platform IG.
“While likely more sabre rattling from the Kremlin, it does take the world closer to a terrifying miscalculation.
“Gains in indices have been wiped out, and investors are once again turning cautious on fears of further escalation” he added.
Andrea Tueni, head of sales trading at Saxo Banque France, told Bloomberg the market reaction is “logical” after days of tension.
“For the moment the market reaction is contained, some are still in a wait-and see-mode,” he added.
The jitters have pushed European stocks to fresh lows after weeks of fears over Donald Trump’s trade policy.
Potentially punitive US tariffs for European firms have fuelled a slide in stocks in recent weeks, with the Eurostoxx 600 down around 1.7 per cent since Trump’s victory. (Source: City AM)

 

18 Nov 24. GKN Aerospace owner Melrose’s revenue rises 7% on aftermarket service demand. Melrose Industries (MRON.L),  the owner of aerospace parts maker GKN Aerospace, reported a 7% rise in revenue for the four-month period ended Oct. 31, helped by strength in its aftermarket business. Prolonged production delays at crisis-stricken Boeing have hurt the pace of commercial jet production sector-wide, burdening an already strained supply chain. The delays have also pushed airlines to extend the usage of older planes, boosting demand for aftermarket services and parts, a business that Melrose considers its most profitable one. Melrose, which spun off its auto and other businesses last year to become a pure-play aerospace supplier, kept its full-year expectations unchanged, with adjusted operating profit at 550 m pounds to 570 m pounds ($694.76 m-$720.02 m).
The company said its adjusted operating profit continued to grow year-on-year in the four-month period, in line with its expectations.
($1 = 0.7916 pounds) (Source: Reuters)

 

19 Nov 24. TactoTek, the global leader in In-Mold Structural Electronics (IMSE®) technology, today announced the completion of a $60m funding round led by Nidoco AB, part of Virala Group. The financing attracted significant investments from a premier consortium of financial and strategic investors including Cornes Technologies, Elo Mutual Pension Insurance Company, European Investment Bank, Finnish Industry Investment Ltd, 3M Ventures, Ingman Group, VTT Technical Research Centre of Finland, Conor Venture Partners, and Turret Oy Ab and several private investors & employees.
“This investment marks a significant milestone for TactoTek,” said Jussi Harvela, CEO of TactoTek. “Our collaborations with industry leaders such as Kyocera, Gentex, Polestar, Valeo, LS Automotive, Yanfeng, and most German Premium Automotive OEMs, validate the transformative potential of our IMSE technology. IMSE is being used to improve products and concurrently decarbonize manufacturing at scale across multiple industries. With this funding TactoTek will accelerate the adoption of IMSE globally by expanding customer-facing operations and streamlining IMSE solution design by augmenting our software-based delivery system with AI elements and plug-ins for CAD and simulation packages.”
Pioneering the Future of Electronics
TactoTek develops and validates IMSE technology that is taken to market by a global network of licensees. IMSE solutions integrate electronic functions — such as lighting, touch controls, and antennas — within 3D injection-molded structures. This innovative approach results in lightweight, thin, and durable smart surfaces that provide greater design freedom and sustainability than traditional electronics in practically any industrial vertical, including medical, consumer products, defense, automotive, and aerospace.
TactoTek leads the industry in continuous IMSE technology innovation and supports industry standardization. The company has an unparalleled intellectual property portfolio exceeding 280 granted patents in 48 patent families.
Expanding into Key Industries
• Automotive: Enhancing vehicle interiors with integrated control panels, ambient lighting, and smart surfaces that reduce weight and assembly complexity;
• Consumer Electronics: Enabling sleek, functional designs with embedded touch controls and illuminated branding features in devices like audio equipment and wearables;
• Home Appliances: Offering seamless user interfaces and smart functionality integrated directly into appliance surfaces;
• Industrial Applications: Providing durable, efficient solutions for control systems and interfaces in challenging environments;
• Defense: Developing ruggedized electronic components that meet stringent military standards for performance and reliability;
• Medical: Seamless, elegant consumer medical product designs that are easily sterilized; and
• Aerospace: Thin, light weight passenger controls and lighting.
Large Scale Investment in Finnish Deep Tech
“This USD60m funding round is among the largest private financings in the Finnish and European deep tech space during 2024 and the family controlled Virala Group was honored to lead the round with a significant investment,” said Anders Dahlblom, incoming Chairman of TactoTek, and COO of Virala Group. “Our investment reflects the market traction of TactoTek’s IMSE technology across multiple industries, including the defense sector, and its secure, highly-protected, intellectual property foundation. TactoTek and their IMSE technology are poised for rapid growth.”
Fulfilling Customer Needs and Improving Sustainability
“In today’s business climate growing businesses that succeed over time must combine capability to meet market needs, with strong environmental performance,” stated Kari Lehtonen, Portfolio Manager at Elo Mutual Pension Insurance Company. “TactoTek is delivering on both of these dimensions: TactoTek has identified compelling solutions spanning different markets; and IMSE solutions are produced using clean, additive processes and can reduce carbon emissions significantly relative to conventional electronics.”
Advisors
TactoTek was advised by MP Corporate Finance on financial matters and Bird & Bird on legal aspects during the funding round.
About TactoTek
TactoTek, Oy (Oulu, Finland), is the world leader in developing and licensing in-mold structural electronics (IMSE®) technologies. Automotive, aviation, connected home, industrial control and medical brands use TactoTek innovations to create next-generation user experiences that are compelling, differentiated, and more sustainable. Designers use TactoTek IP to integrate circuits and components directly into plastic parts, transforming conventional structures into smart interactive surfaces. TactoTek licenses its intellectual property, including over 280 patents and critical know-how developed over a decade of intensive R&D and quality testing, to global manufacturers who use reliable, standardized manufacturing processes to produce curved-shape and conformal electronics. Learn more at www.tactotek.com.

 

19 Nov 24. ELBIT SYSTEMS Reports Results. Order backlog at $22.1bn; Revenues of $1.7bn; Non-GAAP net income of $99m; GAAP net income of $79m; Non-GAAP net EPS of $2.21; GAAP net EPS of $1.77
Elbit Systems Ltd. (“Elbit Systems” or the “Company”) (NASDAQ and TASE: ESLT), the international high technology defense company, reported today its consolidated results for the third quarter ended September 30, 2024.
In this release, the Company is providing US-GAAP results as well as non-GAAP financial data, which are intended to provide investors a more comprehensive view of the Company’s business results and trends. Management Comment: Bezhalel (Butzi) Machlis, President and CEO of Elbit Systems, commented: “Elbit Systems reports a strong quarter, with substantial growth across key performance measures exceeding our internal goals, while meeting our customers’ needs in Israel and worldwide. The Company’s order backlog, which hit a record high of over $22bn, provides stability and resilience for the Company for years to come, as our investments in R&D create strong foundations for long-term growth and development. Our highly regarded solutions and products are experiencing high demand. This consistent growth reflects the quality and excellence driven by our dedicated and outstanding employees in Israel and in our subsidiaries around the world.”
Third quarter 2024 results:
Revenues in the third quarter of 2024 were $1,717.5m, as compared to $1,501.6m in the third quarter of 2023.
Aerospace revenues increased by 7% in the third quarter of 2024, as compared to the third quarter of 2023 mainly due to increased UAS sales in Israel. C4I and Cyber revenues increased by 13% in the third quarter of 2024 mainly due to radio systems and command and control systems sales. ISTAR and EW revenues increased by 13% mainly due to Electronic Warfare and Electro-Optic systems sales. Land revenues increased by 24% due to the increase in ammunition and munition sales in Israel. Elbit Systems of America revenues increased by 17% due to the increase in night-vision systems and medical instrumentation sales.
Non-GAAP(*) gross profit amounted to $419.4m (24.4% of revenues) in the third quarter of 2024, as compared to $374.2m (24.9% of revenues) in the third quarter of 2023. GAAP gross profit in the third quarter of 2024 was $412.8m (24.0% of revenues), as compared to $367.2m (24.5% of revenues) in the third quarter of 2023.
Research and development expenses, net were $119.9m (7.0% of revenues) in the third quarter of 2024, as compared to $103.3m (6.9% of revenues) in the third quarter of 2023.
Marketing and selling expenses, net were $91.3m (5.3% of revenues) in the third quarter of 2024, as compared to $86.0m (5.7% of revenues) in the third quarter of 2023.
General and administrative expenses, net were $75.7m (4.4% of revenues) in the third quarter of 2024, as compared to $71.8m (4.8% of revenues) in the third quarter of 2023.
Non-GAAP(*) operating income was $140.7m (8.2% of revenues) in the third quarter of 2024, as compared to $120.0m (8.0% of revenues) in the third quarter of 2023. GAAP operating income in the third quarter of 2024 was $125.8m (7.3% of revenues), as compared to $106.1m (7.1% of revenues) in the third quarter of 2023.
Financial expenses, net were $45.0m in the third quarter of 2024, as compared to $35.7m in the third quarter of 2023.
Taxes on income were $12.8 m in the third quarter of 2024, as compared to $10.0m in the third quarter of 2023.
Non-GAAP(*) net income attributable to the Company’s shareholders in the third quarter of 2024 was $98.8m (5.8% of revenues), as compared to $76.5m (5.1% of revenues) in the third quarter of 2023. GAAP net income attributable to the Company’s shareholders in the third quarter of 2024 was $79.1m (4.6% of revenues), as compared to $60.7 m (4.0% of revenues) in the third quarter of 2023.
Non-GAAP(*) diluted net earnings per share attributable to the Company’s shareholders were $2.21 for the third quarter of 2024, as compared to $1.71 for the third quarter of 2023. GAAP diluted earnings per share attributable to the Company’s shareholders in the third quarter of 2024 were $1.77, as compared to $1.36 in the third quarter of 2023.
The Company’s order backlog as of September 30, 2024 totaled $22.1 bn. Approximately 66% of the current backlog is attributable to orders from outside Israel. Approximately 37% of the backlog is scheduled to be performed during the remainder of 2024 and 2025.
Cash flow provided by operating activities in the nine months ended September 30, 2024 was $82.5 m, as compared to cash flow used in operating activities of $200.0 m in the nine months ended September 30, 2023. The cash flow in the nine months ended September 30, 2024 was affected mainly by the increase in contract liabilities, which was offset by the increase in inventories and trade receivables. *
Impact of the “Swords of Iron” War on the Company:
On October 7, 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of brutal attacks on civilian and military targets. Hamas also launched extensive rocket attacks on the Israeli population and industrial centers located along Israel’s border with the Gaza Strip and on many other parts of the country. Israel has also been attacked by other terrorist organizations on different fronts, including from Lebanon, which have prompted military responses from Israel on these fronts. Following the attacks, the State of Israel declared a state of war, which is ongoing.
Since the commencement of hostilities, Elbit Systems has experienced a material increased demand for its products and solutions from the Israel Ministry of Defense (IMOD) compared to the demand levels prior to the war. The Company has also increased its support to the IMOD, mainly through deliveries of its systems and the dedicated efforts of our employees. At the same time, the Company continues its activities in the international markets with the support of its local subsidiaries. Subject to further developments, which are difficult to predict, the IMOD’s increased demand for the Company’s products and solutions may continue and could generate material additional orders for the Company.
While the vast majority of the facilities in Israel continue to operate uninterrupted, some operations have experienced disruptions due to supply chain and operational constraints, including among others due to limitations on exports to Israel, increase of transportation costs and delays, material and component shortages, attacks by anti-Israeli organizations, the relocation of certain production lines, evacuation of employees and employee recruitment for reserve duty. The number of employees recruited was approximately 8% as of September 30, 2024, and could fluctuate depending on future developments.
Elbit Systems has taken a number of steps to protect the safety and the security of its employees in Israel and abroad, to support its increased production, to mitigate existing and potential supply chain disruptions and to maintain business continuity, including the relocation of production lines from facilities in evacuated areas to alternative facilities; recruitment of additional employees; increased monitoring of global supply chains to identify delays, shortages and bottlenecks; rescheduling of deliveries to certain customers as necessary; and an increase of inventories.
The extent of the effects of the war on the Company’s performance will depend on future developments of the war that are difficult to predict at this time, including its duration and scope. We continue to monitor the situation closely.

 

19 Nov 24. AVON TECHNOLOGIES Plc Releases Results.
*Strong financial performance
o Significant growth in revenue, operating margin, ROIC and free cash flow
o Leverage now below 1x
*Continuous Improvement (“CI”) delivering
o All factories now implementing CI programmes
o Significant operational KPI improvements
o Consolidation of helmet manufacturing sites on track
o Additional CI opportunities with strong payback potential identified o Transformation operational expenditure expected to be self-funded through CI improvements Orderbook and pipeline expanding
o Record order book of $225m gives confidence for FY25 and beyond:
 Up to £38m UK MOD General Service Respirator and filter contract win
 New respirator contract win with Australian Defence Force
 US DOD delivery orders totalling $34m for ACH (Advanced Combat Helmet) GEN II
 $42m Next Generation Integrated Head Protection System (NG IHPS) delivery orders from US Army
 New Zealand and German Navy rebreather orders
o 3 new ‘Programs of Record’ with US DOD for Hood Mask Interface development programme Faster progress towards medium-term goals o Expect continued growth and consistent returns in FY25 as we implement our footprint and manufacturing optimisation programmes o Potential to reach medium-term operating margin and ROIC target ranges in FY26 (previously FY27) o Confidence in delivering further sustained growth and improved returns over the long term Jos Sclater, Chief Executive Officer, commented: “It is now 18 months since we launched the STAR strategy and we are making good progress. This is demonstrated by our much stronger financial performance, improving operating metrics and a fast-growing order book. I am however most excited by the ability of the organisation to change and translate strategy into action. We have built a culture where improving processes is becoming the Avon way of life, we have much more capable people and the pace of change is accelerating. As a result of the progress made during the year, we see the potential to reach our medium-term operating margin and ROIC guidance target ranges a year early, in 2026. We also expect the transformation programme to be largely complete by then, with an accompanying significant decrease in transformation cash costs providing the platform for a broader capital allocation strategy.” For further enquiries, please contact:
Shore Capital has published an initiation note on Avon Technologies’ Preliminary Results this morning.
Jamie Murray, Equity Analyst, said: “Avon Technologies has reported strongFY24A results, which reveal a 3% beat to our EBITA expectations. The outlook is excellent with strong growth in order intake and an acceleration of the medium-term strategy expected. Following the earnings beat and positive outlook, we anticipate the shares will trade ahead of the market this morning”
Financial performance:
• Sales rose by 13% yoy to $275m(12% constant currency), which reflectsa3% beat against our forecasts (2% beat against Bloomberg consensus of $270m).
• EBITA rose by 49% yoy to $32mandmargins rose by 280 bps yoy to 11.5%,which reflects a3%beat against our forecasts (17% beat against Bloomberg consensus of $27m).
• EPS rose by 73% yoy to 69.9c, which reflectsa16% beat against our forecasts (18% beat against Bloomberg consensus of $59.3c).
• DPS fell by 21% to 23.3p, which reflectsa12% beat against our forecasts (16% miss against Bloomberg consensus of 27.7c).
• Net debt (excluding leases) fell by $21m yoy to $43.5m, which reflects a 13%beat against our forecast.
Valuation: After translating from USD into GBP, Avon trades on an FY25F/FY26FEV/EBITA of 18.6x/14.9x and a PER of 23.9x/18.2x. Following the earnings beat and positive outlook, we anticipate the shares will trade ahead of the market this morning. We will update our FV in due course and reassess our recommendation.

 

18 Nov 24. Avon Technologies’ defence orders surge.
Companies either adapt or die and Avon Technologies looks an increasingly successful example of the former after an upgraded performance
• Orders 64 per cent rocket as defence spending climbs
• Operational improvements drive cash performance
Having started the decade as a company that included rubber milking teats in its product portfolio, there was ample evidence in these preliminary results that the sometimes-painful move into defence and security products is starting to pay off for Avon Technologies (AVON), as a mix of higher defence spending and operational efficiency restored profitability and led to market upgrades.
Management explained how operational improvements have helped the company. Chief financial officer Rich Cashin said: “We have always had a big September for orders, with people rushing to push things through.” The overall order book was $225m, or 64 per cent higher. “However, with our improvements the receivables are now more balanced across the year.” The results showed receivables of $36.9m (£29m), compared with $58.3m, in 2023. “This meant our 12 per cent revenue growth was done without really increasing inventory,” Cashin said.
This operational improvement also showed up in better cash performance, as cash flows from operations surged to $63.7m, with less cash tied up in warehousing goods. Overall, along with better operating profits, the return on invested capital was 13.7 per cent. Management said that forecasts for a mid-teens return on capital for 2026 was now a year ahead of schedule.
Broker Peel Hunt said 2026 now looks like the key “earnings inflection point” for Avon and the shares currently trade at 15 times that year’s earnings.
In the near term, the share price is closer to a price/earnings (PE) ratio of 23.4, which is roughly in line with the peer group after a rapid recovery. While attractive, it may be worth waiting to see how quickly the dividend grows before getting involved. Hold.
Last IC view: Hold, 1,355p, 21 May 2024. (Source: Investors Chronicle)

 

18 Nov 24. Melrose Industries PLC (“Melrose” or “the Group”) announces the following trading update for the four months from 1 July 2024 to 31 October 2024 (“the Period”). All numbers are calculated at constant currency1.
Revenue was up 7%2 on the same period in 2023, with Engines, up 17%3, showing strong progress driven by aftermarket revenues, and Structures growing at 1%2,3, impacted by well-publicised OE volume reductions and previously announced customer destocking. We continue to partner closely with our major customers to execute efficiently on production schedules, whilst our internal business improvement actions progress as planned. As a result, adjusted4 operating profit continues to grow on the prior year, in line with our expectations.
End market demand continues to be positive, and our full year expectations remain unchanged.
Engines
The Engines division’s revenue performance continues to be driven by our aftermarket business, which is up 32% versus prior year with a particularly strong contribution from defence. OE volume growth remains constrained by industry-wide supply chain issues. Looking ahead, the division is well placed to meet the ongoing industry ramp-up from its established positions as well as through new technologies.
Structures
Revenue in Structures, as previously highlighted, continues to reflect the planned exit of non-core work, customer destocking and industry-wide supply chain challenges affecting OE production rates. Defence repricing and business improvement actions, which are focused on this division, are coming through as planned. Restructuring programmes are on track and are nearing completion, which will result in a significant reduction in associated cash spend in 2025.
Outlook
As we progress through the second half, the Group’s full year expectations are unchanged with adjusted4 operating profit at £550 m to £570 m. Net debt4 is also anticipated to end the year in line with current expectations.
In 2025, despite continued supply chain challenges, we expect to make strong trading progress and we are on track to deliver our adjusted4 operating profit target of £700 m1. This performance is expected to be led by the strong aftermarket performance in our Engines division offsetting OE volume constraints.
Importantly, the Group expects its cash flow position to improve significantly next year and to deliver substantial free cash flow in 2025 (post interest and tax).
The Group’s cash flow is poised to grow materially beyond this as a result of the completion of our restructuring programmes, the resolution of the GTF powder metal issue, all RRSPs6 generating cash and the continuing growth of the Group’s profits.
The Group will provide longer term financial targets for the period beyond 2025 at its full year results on 6 March 2025.
Peter Dilnot, Chief Executive Officer of Melrose said: “It’s encouraging that we remain on track to deliver on our full year expectations, despite the industry-wide supply chain challenges. This reflects the strength of our businesses and the balanced position we have with our aftermarket offsetting original equipment headwinds. As we move into 2025, we enter a period of significant and sustained growth in our cash flow for many years ahead. I am confident that Melrose’s established capabilities, technology leadership, and unique position on the world’s leading aircraft and engines will create substantial value in the future.”

15 Nov 24. Volex results: Strong performance overshadowed by TT Electronics rejection.
Total revenue growth of 30 per cent was driven by the acquisition of Turkish wire harnesses manufacturer Murat Ticaret last year
• Operating margin within target range for fifth year in a row
• Net capex up 65 per cent to $26.4m
The big news on Volex’s (VLX) half-year results day was that the cable maker had two potential bids rejected by TT Electronics (TTG), a disclosure that sent the shares tumbling by double digits as investors fretted over the implications of an acquisition.
The second proposal valued TT Electronics at a 77 per cent premium to the closing share price on the day before the approach. Volex accused the electronic components business’s board of “execution mis-steps” and pointed to chunky restructuring charges and margin underperformance as evidence that shareholders would benefit from being part of a “larger group with stronger performance”.
Analysts at Investec said there is a “strong rationale” for a deal given contract manufacturing overlaps, but in their view “the price proposed looks highly opportunistic”.
The underlying performance in Volex’s first half was encouraging. Organic revenue growth of 10 per cent was driven by a 40 per cent uplift for the electric vehicles business, which benefited from a new project with a North American auto manufacturer, and volume-driven 8 per cent growth for consumer electricals after destocking hit it last year.
Elsewhere, the fledgling off-highway business (which contains Murat Ticaret) delivered growth of 21 per cent. The complex industrial technology unit grew by 4 per cent on AI-boosted demand from data centre customers. And organic medical revenue declined 4 per cent against a challenging comparative.
Underlying operating profit rose 27 per cent to $47.6m, while the margin came in at 9.2 per cent.
Volex is on track to hit full-year market expectations, and is targeting annual revenue of $1.2bn by the end of 2027. We await further news on a potential TT Electronics deal, but the underlying performance and a valuation of 12 times forward consensus earnings keep us bullish in the meantime. Buy. Last IC view: Buy, 333p, 26 Jun 2024. (Source: Investors Chronicle)

 

15 Nov 24. FN Browning Group and Sofisport enter into exclusive negotiations to create a world-class European supplier of small arms and ammunition FI\I Browning Group, whose subsidiaries include FI\I Herstal and Browning, announces that it has entered into exclusive negotiations
to acquire the French group Sofisport world leader in the manufacture of shotshells and shotshell components for hunting and sport. The proposed acquisition is based on the strong industrial, geographical and cultural
complementarity between Sofisport, a French family-owned company, and FN Browning Group, which is owned by the Walloon Region, part of the Belgian federal state. In addition, Sofisport’s products perfectly complement all the ranges and brands marketed by FN Browning Group.
With their world-renowned expertise and strong local industrial base, the two groups are leaders in their respective fields. Their combination represents a unique opportunity to create a world-class European
manufacturer, fully integrated in the field of small arms and ammunition.
In a complex international context characterised by increased competition from large integrated players, the combination of the two groups would strengthen their competitive development effects on
continuity. position, performance and capabilities, with positive
employment and business. The acquisition is subject to the satisfaction
of customary conditions precedent for this type of transaction, including antitrust and regulatory matters. Pierre-Yves Jeholet, Vice-President of the Walloon Government and Minister for the Economy: “The competitiveness of European industry is a fundamental challenge for the future of the Union and our countries. Consolidating and building
European groups that are leaders in their fields is one of the keys to
meeting this challenge. The future of employment and the industrial
base of our regions and territories depend on it. The acquisition of Sofisport by FN Browning Group is a concrete and relevant step in this international context and is in line with our commitment to the reindustrialisation of Wallonia. For the Walloon Government, defence is a strategic sector.”

 

18 Nov 24. The Exploration Company raises $160m Series B led by Balderton and Plural to build the first European space capsule.
World-class team raises Europe’s largest-ever space Series B
● The Exploration Company launched in 2021 to develop reusable and refillable spaceship, Nyx, to serve the growing logistical needs of space stations and space exploration
● Nyx is designed to be launched from any heavy launcher in the world – making it the most affordable and launcher agnostic space cargo vehicle
● Led by ex-Airbus and ArianeGroup space engineers, TEC was the first
The Exploration Company (TEC), a leading European space tech, announces it has raised $160m in Series B funding co-led by Balderton Capital and Plural, with participation from Bessemer Venture Partners, NGP Capital, French Tech Souveraineté, DeepTech & Climate Fonds (DTCF) and Bayern Kapital. The round also included significant follow-on investment from historical investors, including EQT Ventures, Red River West, Cherry Ventures, Promus Ventures and Omnes Real Tech Fund. This is the first time two European sovereign funds, French Tech Souveraineté managed by Bpifrance and DTCF, have invested together, demonstrating TEC’s strategic European DNA. The funding brings TEC’s total raised to nearly $230 m and will be used to develop and test Nyx, expand the 200-strong team, and scale capacity.
Founded in 2021 by Hélène Huby, former VP Orion-ESM at Airbus, and an experienced team from Airbus and ArianeGroup, TEC develops, manufactures, and operates spaceships to serve the logistical needs of space stations and space exploration. With a focus on reusable and refillable spacecraft, TEC aims to make space exploration affordable, modular, and sustainable.
Hélène Huby, co-founder and CEO of The Exploration Company, said: “This significant raise is a reflection of not only the talent and commitment of the team at TEC but also that building global companies with European roots can only be done through fostering trust and cooperation between European countries. 98% of our shareholders are European, demonstrating that the continent can finance bold entrepreneurs. Space will play a critical role in shaping humanity’s future, and I want to contribute to building a future which is peaceful and cooperative and our European DNA fits perfectly with this mission.
“Over the past 12 months, we have hit major operational and financial milestones and signed significant service contracts with both space agencies and commercial clients. This new funding is the next step in scaling up our ambitions and I’m delighted to welcome Plural, Balderton Capital, NGP Capital and Bessemer to our journey, alongside our previous investors. Their support and ambition will be critical as we take another important step closer to our Nyx Earth launch and build a European space leader.”
Powering Europe’s space sovereignty
TEC is powering a new era in European space sovereignty, providing the continent with reusable and refillable space vehicles, which will be critical as space exploration escalates in the next decades. TEC estimates the addressable space logistics market in Low Earth Orbit and around the Moon to be over $300B over the next decade, partly driven by the growing number of space stations being constructed including Axiom, StarLab, Vast, Orbital Reef and the Lunar Gateway, as well as the exploration race to the Moon and Mars. As transportation capabilities are currently concentrated amongst a few players in the US, China and Russia, there is a drive within Europe to enable its own space exploration capacities.
The company is developing Nyx, a reusable and in-orbit refillable spacecraft that can be launched from any heavy launcher and fly to any space station. It will be able to return to Earth with up to 3,000 kg of cargo – the largest down-mass available worldwide – and subsequently refurbished for its next mission. The cost of this service will be 25% to 50% less than other vehicles.
TEC, the first European company to sign a Space Act Agreement with NASA, reached a major milestone this year when it signed its first major contract with the European Space Agency (ESA), ranking number one in the European space capsule competition. The company is on track to launch its mid-size capsule, Mission Possible, in 2025 carrying 300kg of customer payloads. Nyx Earth’s maiden flight is set for 2028, to carry cargo for ESA to the International Space Station.
David Thévenon, Partner at Balderton Capital, said: “The planets aligned for this investment and we’re delighted to be supporting Hélène and the team with this new funding round. With their unparalleled expertise and visionary approach, The Exploration Company is poised to redefine European leadership in space exploration. Their mission to make space exploration more accessible and sustainable promises to unlock unprecedented opportunities not just for Europe, but for humanity’s future in space. We’re thrilled to fuel this journey toward a new era of European space leadership – one that will reshape our understanding of what’s possible beyond Earth.”
Khaled Helioui, Partner at Plural, said: “TEC is a company that I believe is sitting on the kind of tinder box that you don’t see often as an investor. It’s operating in a huge market where demand for launches and delivering cargo dramatically outstrips supply, in a region which has received decades-worth of institutional investment, in a political climate where policy-makers know they need to take urgent action if they want to safeguard our critical assets. When you add in a founder who you believe can emulate the kind of value creation we’ve seen in commercialising space in the US, you have a near-perfect set of ingredients for success.”

 

18 Nov 24. Comtech Announces Amicable Resolution With the Porcelain/Kornberg/Timoshenko Group. Comtech Telecommunications Corp. (NASDAQ: CMTL) (the “Company”), a global technology leader, today announced that its Board of Directors entered into a cooperation agreement with Michael Porcelain, Fred Kornberg, and Oleg Timoshenko (the “Investor Group”). Pursuant to the agreement:
• Comtech has appointed Michael Hildebrandt, Senior Investment Professional at Freshford Capital Management, to the Board, effective immediately;
• The Board will appoint an additional new independent director mutually acceptable to both Comtech and the Investor Group (the “Additional Director”);
• Two of Comtech’s current directors will not stand for reelection at the Company’s Fiscal 2024 Annual Meeting of Stockholders;
• The Investor Group will support Comtech’s slate of directors for election at the 2024 Annual Meeting and will withdraw its nomination of eight directors for election at the meeting;
• The Investor Group has agreed to customary standstill restrictions and voting commitments until the nomination deadline for Comtech’s Fiscal 2025 Annual Meeting, or until the nomination deadline for Comtech’s Fiscal 2026 Annual Meeting if the Company nominates Michael Hildebrandt and the Additional Director for reelection at the Fiscal 2025 Annual Meeting.
The Company and the Investor Group made the following statement: “We are pleased to have reached this agreement which adds Michael Hildebrandt to the Board. Together with the future additional independent director and the recent appointment of Ken Traub, the Comtech Board is being significantly refreshed.”
With these changes, upon the appointment of the Additional Director, four new directors will have been appointed to the Board since October 28, 2024.
The full agreement between Comtech and the Investor Group will be filed on a Form 8-K with the SEC.
About Michael Hildebrandt
Michael Hildebrandt, age 52, currently serves as a Senior Investment Professional at Freshford Capital, an advisory firm providing investment advice and management services to clients, since February 2011. At Freshford Capital, Mr. Hildebrandt invests in industry verticals, including government and construction services, energy, space and satellite, telecom, media and special situations. Prior to joining Freshford Capital, Mr. Hildebrandt held senior investment roles at Silver Capital Management LLC, a multi-strategy investment fund, and GAMCO Investors, Inc., a global investment management company, where he focused on special situations and private equity initiatives. Earlier in his career, he served as a Private Equity Associate at Aurora Capital and as an Investment Banking Analyst at Salomon Brothers, specializing in mergers and acquisitions within the industrial sector.

 

18 Nov 24. Serendipity Capital today announces the appointment of two senior advisers, Professor Douglas Paul and Gabriela Styf Sjöman, who will support the growth of the firm and the expansion of its ecosystem in the UK.
Professor Douglas Paul is an expert in quantum technologies and semiconductors. He holds the Royal Academy of Engineering Research Chair and led the UK Quantum Technology Programme as an Engineering and Physical Sciences Research Council (EPSRC) Fellow. As founding Director of the James Watt Nanofabrication Centre, he advanced the UK’s quantum capabilities in national security and aerospace. Douglas has advised multiple UK Government Departments including the Home Office. He is a Fellow of the Royal Society of Edinburgh and recipient of the Institute of Physics Medal.
Gabriela Styf Sjöman has extensive expertise in telecommunications and network strategy. As Managing Director of Research and Networks Strategy at BT Group, she leads network modelling and strategic programs. Gabriela also serves on the boards of TDC Net and Global Legal Entity Identifier Foundation (GLEIF). She has held senior roles at Nokia, Telia, and Ericsson, focusing on 5G, cybersecurity, and infrastructure. Gabriela holds degrees in Power Engineering, Business, and International Affairs with a specialization in Cybersecurity from King’s College London.
The appointments deepen the firm’s operational experience, which will inform its approach to deal origination and portfolio company management, particularly in the UK. This announcement follows the recent appointments to the board of Ruth Cairnie, the chair of defence contractor Babcock, and Colin Bell, the HSBC executive.
Serendipity Capital is a venture capital investor focused on addressing the investment gap in critical technologies. These include artificial intelligence, semiconductors, cyber security, advanced manufacturing and quantum computing, with a particular focus on companies in Five Eyes and strategically aligned countries.
The firm was launched by experienced financial services executives, Rob Jesudason, Anton Jerga and Sean Harpur, to target investment opportunities emerging from geopolitical uncertainty, and the broader disruption of the global economy. The firm, chaired by veteran banker Ewen Stevenson, has established a global network of experts from across the technology, defence and finance industries to source investment opportunities. Serendipity Capital has generated an IRR of 21.2% from its existing portfolio since inception – and more than 44% from investments made in the UK.
These two appointments bring additional experience to support the growth of the firm’s expanded focus on the UK – where Serendipity Capital sees an increasing number of deal opportunities emerging from Russell Group universities.
Rob Jesudason, founder and chief executive officer, said, “Douglas and Gabriela’s experience and expertise will enhance our ability to identify and support transformative critical technologies that are essential to economic resilience and security. Both have an impressive track record of driving meaningful advancements in their fields, and their insights will be instrumental as we expand our ecosystem in the UK.”
Douglas Paul said, “Serendipity Capital’s commitment to addressing the investment gap in quantum and infrastructure technology is essential for countries like the UK. With the firm’s strategic vision and global reach, we have a unique opportunity to drive impactful change in these essential sectors. I look forward to contributing my experience to help advance these critical technologies and support the development of resilient systems that are vital to future economic growth, prosperity and security.”
Gabriela Styf Sjöman said, “I have seen throughout my career the importance of resilient and secure digital infrastructure which will be the backbone of future innovation. Serendipity Capital’s vision aligns with my commitment to enabling the progress of critical technologies in the UK and beyond. I look forward to bringing my experience in global telecoms to support the firm’s mission as we address emerging challenges in connectivity, security, and infrastructure.”
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SPX CommTech, part of SPX Technologies Inc, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all. Formed by TCI and ECS, SPX CommTech’s Battlespace portfolio enables defence and security teams to detect, defeat and exploit RF signals to enhance communications intelligence (COMINT) and counter unmanned aerial systems (Counter-UAS). Additionally, its Tactical Data Link portfolio allows intelligence gathering agencies, special forces, emergency response, and security teams to securely and reliably transfer video and data between enabled-aircraft and ground teams over long distances for airborne Intelligence, Surveillance, Reconnaissance (ISR).

For more information visit www.tcibr.com and www.enterprisecontrol.co.uk
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Sponsored by SPX Communication Technologies (TCI & ECS)

 

www.tcibr.com

 

www.enterprisecontrol.co.uk

 

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15 Nov 24. Solid State order delay sends shares crashing – but it’s not time to bail out. The value-added electronics group’s profit warning comes only a week after the directors reiterated earnings guidance and has prompted a savage markdown in the share price

• Share price falls 27 per cent
• EPS downgraded by 60 per cent (2025) and 46 per cent (2026)

Redditch-based value-added electronics group Solid State (SOLI:155p) has announced delays in potential defence orders only a week after highlighting good visibility over the recurring requirement for communications equipment in the security and defence sector (‘Expect a strong second half from this defence winner’, 7 November 2024).

Specifically, a prominent defence order programme has been paused pending completion of the UK government’s strategic defence review in the summer of 2025. Although the directors are “confident that this is a temporary delay and that expected orders will still be received in due course, they will fall outside of the current financial period”. Also, the timing of the strategic defence review means it’s uncertain whether these delays will also affect orders and deliveries originally expected in the 2025-26 financial year.

Analysts at Zeus Capital had expected a £20mn contribution from these orders in the 12 months to 31 March 2025, and a slightly lower level the following year. The broker has removed them from its forecasts and reduced its gross profit estimate by 18 per cent for both years to £39.5mn and £41.5mn, respectively, based on annual revenue of £123mn (2025) and £130mn (2026). The gross profit shortfall has an accentuated impact on pre-tax profit forecasts, which have been slashed by 60 per cent to £5.3mn (2025) and 46 per cent to £6mn (2026). There are similar percentage reductions in adjusted earnings per share (EPS) estimates to 4.3p and 7.9p, respectively.

The potential deferral of these orders hasn’t impacted the group’s cash position as Zeus Capital now expects a slightly better closing net debt of £4.8mn on 31 March 2025, improving to £2.3mn a year later. Dividend estimates have been edged down slightly to 4.3p per share for both financial years, which supports a dividend yield of 2.8 per cent.

The scale of the downgrades explains the savage markdown in the share price, which hit a four-year low of 104p before rallying this morning. The shares now trade on forward price/earnings (PE) ratios of 29 (2025) and 19 (2026), albeit earnings forecasts could be upgraded sharply if the delayed defence orders contribute to next year’s result.

So, although the earnings downgrade is incredibly frustrating for shareholders given that last week the directors reported a growing order book, a significant near-term unconverted visible pipeline (mainly security and defence orders) and maintained full-year earnings guidance, I would not be bailing out at this low point. Solid State expects to announce interim results in the first half of December and will provide a further trading update at that time. Hold.

(Source: Investors Chronicle)

 

15 Nov 24. VOLEX: Alongside interim results the electronics company has announced that it has made two unsolicited cash and share bids for rival TT Electronics. The latest offer valued TT Electronics at £248.6m. “The board of TT Electronics has declined to engage with Volex and rejected each of the Volex proposals,” the company said. (Source: The Times)

 

14 Nov 24. QinetiQ sticks with guidance and boosts buyback. Defence technology specialist QinetiQ (QQ.) reiterated annual guidance and raised its share buyback programme from £100m to £150m, after its half year results benefited from what chief executive Steve Wadey referred to as “a backdrop of political change and an evolving threat environment”. For the six months to 30 September, revenue was up 7 per cent to £947mn on growth at the company’s EMEA services division as global solutions unit sales came in flat. Underlying operating profit rose 6 per cent to £107m, while the margin stayed at 11.3 per cent. Annual guidance is still for high single digit organic revenue growth and a stable operating margin. Management said QinetiQ is on track to deliver organic revenue of £2.4bn and a margin of 12 per cent by 2027. (Source: Investors Chronicle)

 

13 Nov 24. CHAOS Industries Raises $145m Series B to Accelerate Defense and National Security Technology Development. Series B was led by Accel, with participation from 8VC, as well as Overmatch Ventures, Lerner Enterprises, and existing insiders, bringing total funds raised to $215m since inception.

Proceeds will be used to accelerate the development of innovative sensor, detection, and communications technology solutions. CHAOS Industries, a technology company building the next generation of defense and critical industry technologies, today announces that the company has raised $145m in Series B funding to support the next phase of its commercial growth and development.

The Series B was led by Accel, with participation from 8VC, as well as Overmatch Ventures, Lerner Enterprises, and existing insiders.

Proceeds will be used to spur the development of CHAOS Industries’ advanced detection, monitoring, and communication solutions to the defense, government, and commercial sectors, as well as to accelerate the company’s product development, hiring plans, and high-volume manufacturing.

“U.S. national security is at an inflection point,” said CHAOS Industries Founder and Co-CEO John Tenet. “As our adversaries become more sophisticated, America must embrace next-generation technological innovation to combat more complex national security threats. This funding will accelerate CHAOS Industries’ ability to provide the cutting-edge technological solutions the U.S. and its allies need to remain secure.”

“CHAOS Industries is in a prime position to emerge as a premier developer of defense technology,” said CHAOS Industries Founder and Co-CEO Dr. Bo Marr. “With this latest funding round, we will be able to innovate our existing products and develop new solutions. This is an investment not just in our company, but in the security of our nation.”

The Accel-led Series B round brings total funding raised by the company to $215 m since inception.

“It’s going to take a new generation of defense technologies to address the complex national security challenges we face today,” said Steve Loughlin, partner at Accel. “We’ve been impressed by CHAOS Industries’ sophistication and execution, and think they’re well-positioned to deliver new solutions that the U.S. is looking for.”

The company also recently announced the appointment of former U.S. Congressman and Central Intelligence Agency veteran Will Hurd as its Chief Strategy Officer. Mr. Hurd’s decades of experience and deep understanding of defense technology make him uniquely positioned to support CHAOS Industries’ mission-driven engineering strategy and guide the company as it allocates these new resources.

“The urgency to enhance America’s defense and security capabilities with modern technologies has never been greater,” said CHAOS Industries Chief Strategy Officer Will Hurd. “It is the exact mission of CHAOS Industries to bring these capabilities to market, which is why I decided to join the company. This funding round will be critical to following through on that mission.”

Today, CHAOS Industries is actively developing a suite of products known as Coherent Distributed Networks™, a paradigm-shifting technology category, which enables unprecedented performance for sensors and effectors. The first product in this category, Vanquish™, is a dual-use, multistatic commercial radar that provides early warning and tracking capabilities against unmanned aerial systems (UAS), missiles, and aircraft. (Source: BUSINESS WIRE)

 

13 Nov 24. Booz Allen Ventures Invests in Starfish Space to Enhance Satellite Servicing Technology. Booz Allen Hamilton (NYSE: BAH) today announced that its corporate venture capital arm, Booz Allen Ventures, LLC, has made a strategic investment in Starfish Space, an emerging leader in satellite servicing, inclusive of satellite life extension and end-of-life disposal. This investment aims to strengthen the resilience and sustainability of space infrastructure through innovative offerings for both government and commercial mission sets. This is the third space-focused investment by Booz Allen Ventures and reflects the growing criticality and varied mission needs of the space domain.

“As dynamic space operations become increasingly critical to the Department of Defense, NASA, the intelligence community, as well as commercial entities, advancements in satellite servicing and orbital logistics are imperative to safeguarding space assets and enabling long-term mission success,” said Chris Bogdan, executive vice president at Booz Allen and leader of the firm’s space business. “Continued strategic investments in companies like Starfish Space are critical to help drive the development of vital technologies for sustainable operations and strengthen the nation’s ability to navigate and secure an increasingly congested space environment.”

Founded by former engineers from Blue Origin and NASA, Starfish Space specializes in on-orbit satellite servicing with a focus on satellite life extension and end-of-life disposal. The company’s first-of-its-kind autonomous satellite servicing vehicle, Otter, can provide scalable and customizable options for managing satellites and maintaining critical infrastructure, ensuring viability in increasingly congested orbital paths. Most recently, Starfish Space executed its Otter Pup demonstration mission, secured a $37.5 m Strategic Funding Increase contract (STRATFI) with the U.S. Space Force, signed a contract with Intelsat for a life extension mission, and partnered with NASA for a debris inspection mission in low Earth orbit.

“Booz Allen’s investment will help us accelerate towards the launch of the first Otters, changing the paradigm of how humanity operates in orbit,” said Austin Link, co-founder and CEO of Starfish Space. “We look forward to working with Booz Allen to address the pressing needs of space operators, supporting life extension safe disposal, and many missions beyond.”

Previous space-focused investments by Booz Allen Ventures include Albedo and Quindar earlier this year, with Starfish Space marking the 11th overall investment since the fund’s inception in 2022. These efforts reflect Booz Allen’s continued commitment to fostering innovation in automation, operational efficiency, and decision-making in space operations through the use of AI and data analytics to meet mission needs for clients and the industry.

“With commercial and government demand accelerating for flexible in-orbit servicing, it’s clear that new capabilities are essential for safe space operations,” said Alex Bock, Booz Allen Ventures. “Starfish Space’s innovative approach will be a key enabler, and we look forward to partnering with them to shape the future of in-space servicing.”

Since launching, Booz Allen’s $100 m corporate venture capital arm has made strategic investments in early-stage companies developing dual-use commercial technologies, including Latent AI, RAIC Labs (Synthetaic), Reveal Technology, Credo AI, Hidden Level, Shift5, Hidden Layer, and Second Front (2F). (Source: BUSINESS WIRE)

 

13 Nov 24. M-tron Industries, Inc. Reports Strong Third Quarter 2024 Results with Revenue and Earnings per Share Above Expectations.

• Revenues increased 21.4%, or $2,326,000, to $13,214,000 for the three months ended September 30, 2024 from $10,888,000 for the three months ended September 30, 2023
• Gross margin increased 500 basis points to 47.8% for the three months ended September 30, 2024 from 42.8% for the three months ended September 30, 2023
• Net income per diluted share increased 42.1%, or $0.24, to $0.81 for the three months ended September 30, 2024 from $0.57 for the three months ended September 30, 2023
• MtronPTI anticipates a strong performance in Q4 2024 and expects to exceed its prior guidance for FY 2024

M-tron Industries, Inc. (NYSE American: MPTI) (“MtronPTI” or the “Company”), a designer and manufacturer of highly-engineered electronic components and solutions used to control the frequency or timing of signals in electronic circuits, announced strong financial results for the three and nine months ended September 30, 2024.

“Our revenues continue to be driven by defense-related orders. With improved operating efficiencies, we have been able to make strategic investments in research and development to help drive future growth and still produce superior earnings per share.”

“We are pleased to report continued strength in MtronPTI’s sales and strong financial performance for Q3 2024,” said Michael J. Ferrantino, Jr., MtronPTI Chief Executive Officer. “Our revenues continue to be driven by defense-related orders. With improved operating efficiencies, we have been able to make strategic investments in research and development to help drive future growth and still produce superior earnings per share.”

“We expect revenues, new orders and earnings to remain strong and believe the Company will exceed expectations for FY 2024,” continued Mr. Ferrantino.

Results from Operations

Third Quarter 2024

Net income was $2,267,000, or $0.81 per diluted share, for the three months ended September 30, 2024 compared with $1,586,000, or $0.57 per diluted share, for the three months ended September 30, 2023. The increase was primarily due to continued strong defense program product and solution shipments. Manufacturing cost of sales grew consistent with the growth in revenues. Higher Engineering, selling and administrative expenses resulted from increased investment in research and development, higher sales commissions related to an increase in revenues, and an increase in administrative and corporate expenses consistent with the overall growth in the business.

Gross margin was 47.8% for the three months ended September 30, 2024 compared with 42.8% for the three months ended September 30, 2023. The increase was primarily due to higher revenues, improved production efficiencies due to previous investments, and an improved product mix to higher margin products.

Adjusted EBITDA was $3,300,000 for the three months ended September 30, 2024 compared with $2,336,000 for the three months ended September 30, 2023. The increase was primarily due to improved gross margins; continued containment of operating expenses other than strategic investments in research and development, resulting in higher income before taxes; higher depreciation; and higher stock-based compensation partially offset by higher interest income.

Fiscal Year to Date 2024

Net income was $5,497,000, or $1.97 per diluted share, for the nine months ended September 30, 2024 compared with $3,416,000, or $1.25 per diluted share, for the nine months ended September 30, 2023. The increase was primarily due to higher sales related to strong defense program product shipments partially offset by higher Manufacturing cost of sales consistent with the growth in revenues as well as higher Engineering, selling and administrative expenses related to increased investment in research and development, higher sales commissions related to an increase in revenues, and an increase in administrative and corporate expenses to support the growth in revenues.

Gross margin was 45.8% for the nine months ended September 30, 2024 compared with 39.7% for the nine months ended September 30, 2023. The increase was primarily due to higher revenues, improved production efficiencies, and a higher margin product mix.

Adjusted EBITDA was $8,085,000 for the nine months ended September 30, 2024 compared with $5,295,000 for the nine months ended September 30, 2023. The increase was primarily due to higher gross margins and continued containment of operating expenses, resulting in higher income before income taxes; higher depreciation; and higher stock-based compensation partially offset by higher interest income.

Backlog

Backlog was $39,763,000 as of September 30, 2024 compared to $47,831,000 as of December 31, 2023 and $50,280,000 as of September 30, 2023. The decrease in Backlog from December 31, 2023 reflects the continued strategy and focus on securing large, long duration program-centric business, which can materially affect backlog due to the timing and size of these orders.

Improved 2024 Outlook

With the continued momentum in defense-related sales, and the acceleration in production and shipments during the first half of 2024, MtronPTI management raised the outlook for fiscal year 2024, increasing revenues to a range of $46.0 m to $48.0 m from a previous range of $43.0 m to $45.0 m. MtronPTI has good visibility for the remaining quarter of 2024 and expects to exceed the prior revenue guidance and achieve an EBITDA margin in the 19% to 21% range.

(Source: BUSINESS WIRE)

 

14 Nov 24. Fincanteri 9M 2024 Results.

▪ Revenues grow to euro 5,583m (+4% vs 9M 2023)

▪ EBITDA increases by 19% to euro 328m (euro 276m in 9M 2023), mainly driven by the strong performance of the Offshore and Specialized Vessels segment (+47%) and Equipment, System and Infrastructure segment (EBITDA 3 times higher than 9M 2023)

▪ EBITDA margin at 5.9%, materially increasing from 5.1% in 9M 2023 and 5.2% of FY 2023, underpinned by operational efficiency in Shipbuilding and Offshore and driven by turnaround in the Infrastructure segment of the business Equipment, System and Infrastructure

▪ Net financial position (NFP) negative at euro 2,059 m, with further improvement, partially driven by the temporary effect of the capital increase completed in July 2024. Excluding this effect, Net financial position is negative at euro 2,440m, improving vs 9M 2023 (euro 2,705m)

COMMERCIAL PERFORMANCE

▪ Total backlog at euro 40.1bn, approximately 5.2 times 2023 revenues

▪ Order intake at euro 8.5bn, more than 2 times 9M 2023 orders (euro 4.0bn), with a book to bill of 1.5x

▪ Significant boost from cruise and defense segments, thanks to a major order by Norwegian Cruise Line Holding Ltd. for 6 cruise ships, the contract awarded for the fifth and sixth Constellation-class frigates for the U.S. Navy and the options exercised for the fourth U212 Near Future Submarine and the fourth Offshore Patrol Vessels (OPV) for the Italian Navy

▪ In the third quarter 2024, Fincantieri signed a contract for 2 FREMM EVO frigates for the Italian Navy and an agreement with Carnival Corporation for 3 cruise ships, the largest ever built in Italy. Both contracts are not yet effective and hence not included in the backlog as of September 30, 2024. In addition, the euro 1.2 bn contract for 2 PPA units with the Indonesian Ministry of Defence is expected to come into force in Q4

▪ 12 ships delivered in 9M 2024 and 95 ships in portfolio with deliveries scheduled up to 2032

2024 GUIDANCE

▪ 2024 guidance raised for revenues and leverage ratio; EBITDA margin confirmed:

Revenues in excess of euro 8bn

EBITDA margin at around 6%

Leverage ratio (NFP/EBITDA) between 4.5x and 5.0x, excluding the rights issue temporary effect, further improving previous revised guidance between 4.5x and 5.5x

 

14 Nov 24. Thales has successfully reinforced its business portfolio and delivered on its operational commitments over the last 5 years

• Defence reinforced as a core market
• Aerospace strengthened both organically and through M&A
• Cyber & Digital scaled as a new core technology segment
• Ground Transportation divested
• Robust commercial performance
• Solid increase in profitability
• Outstanding cash flow performance

Building on its unique technological platform, the Group will implement the following strategic priorities

• Leverage premium portfolio to deliver profitable growth
• Reinforce premium positioning
• Differentiate through disruptive technology
• Enhance employer attractiveness
• Strengthen its ESG leadership

Thales is setting new financial targets for the 2024-28 period

• Organic sales growth rate (CAGR over 2024-2028, base year 2023) of +5-7%1
• EBIT margin improvement to 13-14% in 20282
• Average FOCF3 conversion of 95-105%

Thales (Euronext Paris: HO) is hosting today its 2024 Capital Markets Day with investors and financial analysts, in-person and through a live webcast accessible via the following link.

Following the acquisitions of Gemalto, Imperva and Cobham AeroComms, Thales has successfully transformed its business portfolio into a unique global technology enabled Defence, Aerospace, and Cyber & Digital company, with strong and differentiated leadership positions across businesses.

Patrice Caine, Chairman and Chief Executive Officer, Pascal Bouchiat, Senior Executive Vice-President, Chief Financial Officer, and members of the Executive Committee of Thales will provide details of the Group’s key new strategic priorities, medium-term financial objectives and the characteristics that make Thales’ unique positioning, able to deliver accelerated long-term profitable growth.

“Since our last Capital Markets Day in 2019, Thales has successfully navigated an unprecedented and challenging geopolitical environment. I would like to thank all our teams for their continuous commitment and our customers for their trust. Through these times, we have improved the quality of our businesses with active portfolio management, strengthening our core Defence and Aerospace portfolio while transforming and scaling up our Cyber & Digital business.

​The strong platform we have built with unique leadership positions across our three markets, our ability to innovate and anticipate technological disruptions and our strong pipeline of new premium products & services enable us to look forward to the next chapter of accelerated and sustainable growth with confidence.

​I am delighted to be today with investors and financial analysts and set out our roadmap to deliver attractive, profitable growth over the next five years, with our strengthened portfolio. I look forward to interacting with our key stakeholders.”

​Patrice Caine, Chairman & Chief Executive Officer

Strategic priorities

Looking ahead, Thales will implement the following strategic priorities:

1. Leverage premium portfolio to deliver profitable growth, building on our leadership position in fast growing segments. 80-90% of Thales’ revenues are exposed to fast growing markets. Thales’ long-term visibility on these market segments along with a diversified customer base provides confidence in Thales’ ability to execute on its growth ambition.
2. Reinforce premium positioning, combining notably delivery excellence, operational superior performance, customer driven innovation, user-friendly design and experience and best in class after-sales’ support. Thales will continue to differentiate itself through innovation in these fields that deliver higher value to customers driving growth in our market share and better pricing.
3. Differentiate through disruptive technology, embracing technology disruptions and staying ahead of the competition, with ~€4bn allocated to research and development (€5bn by 2028). This critical mass enables the Group to work on a wide spectrum of technology and projects, such as trustworthy AI, 6G, and quantum technology. This will enable Thales to strengthen its undisputed technological leadership in the future.
4. Reinforce employer attractiveness, by investing in attracting and retaining the best talents everywhere and becoming a Learning Company. The Group’s purpose, thorough leadership, and partnerships with top universities, academies, and renowned scientists set it apart. Its contribution to major societal challenges makes it the destination of choice for the brightest minds.
5. Strengthen its ESG leadership, delivering on its ambition to become an ESG leader and protecting our societies, people, and the planet. Thales unique portfolio of solutions can help solve some of the major societal issues and build a future we can all trust. Thales has joined the CAC 40 ESG Index in September 2024 and will unveil its new 2030 flagship ESG objectives in 2025.

A clear roadmap for each business

Relying on 1) the execution of each of the above strategic priorities, 2) the unprecedented visibility Thales is currently benefiting from across its portfolio and 3) solid growth prospects, the Group has set up a clear and ambitious 2028 roadmap for each of its businesses:

• In Defence: Thales intends to leverage its extended delivery capabilities to capture high market growth. Sales organic growth CAGR4 over 2024-2028 should reach +6 to 7% and EBIT margin 13%.
• In Avionics: the Group will grasp the advantage of an enhanced state of art product portfolio to address strong market demand. Sales organic growth CAGR4 over 2024-2028 should reach +5 to 7% and EBIT margin 13 to 14% in 2028.
• In Space: Thales is focused on restoring the business profitability to exceed the Group’s WACC, while considering selective business opportunities. Sales organic growth CAGR4 over 2024-2028 should reach +2% and EBIT margin 7%+ in 2028.
• In Cyber & Digital: the Group intends to leverage the unique product offering with best-in-class solutions to reinforce Thales leadership on this fast-growing market. Sales organic growth CAGR4 over 2024-2028 should reach +6 to 7% and EBIT margin 16 to 17% in 2028.

2024-2028 Group financial targets

Over the last five years, Thales has built a stronger and clearer portfolio, while delivering on its operational commitments, leading to higher profitability and further cash generation. Strong commercial performance has led to a record backlog, which should represent close to four years of revenue at the end of 2024 in Defence, providing unequalled visibility into the future. The business portfolio provides a solid base to address the next decade of market growth, deliver on our full potential and maximize value creation thanks to higher added value, technology driven businesses.

Based on this current view and assuming no major changes in the macro-economic and geopolitical environment, and stability of tax regulation in its key geographies, Thales announces today its medium-term financial targets as follows:

• Organic sales growth of +5-7% per year on average over the 2024-28 period, driven by broad-based growth across businesses. Thales’ strong market position, increased production capacity and premium positioning, will enable the Group to meet the growing market demand and accelerate organic growth in Defence, leverage market demand in Avionics and benefit from the structural growth opportunities in Cyber & Digital.
• EBIT margin improvement to 13-14% in 2028. EBIT margin improvement will be driven by multiple levers, including volume growth, premiumization of products & services, and cost efficiency, while increasing R&D investments to drive innovation. This will be spread across business segments, meaning maintaining best in class profitability within Defence, margin improvement in Aerospace, primarily driven by recovery in Space margins to 7%+ in 2028, and further margin development within Cyber & Digital, including Imperva.

Thales will pursue the integration of Imperva and Cobham AeroComms, to deliver the expected synergies, revenue and profitability.

The above will drive adjusted EPS growth of 50-60% over the 2024-2028 period.

Thales will maintain a high cash conversion rate, which should stand between 95 and 105% on average over the 2024-2028 period.

Thales will continue to operate with an active capital allocation strategy to maximize shareholder value, prioritizing organic growth and deleveraging, maintaining a dividend payout of ~40%5 and strengthening the Group portfolio with selective acquisitions that meet high business and financial thresholds. The company will consider share buy back to prevent excessive deleveraging and if the Group’s valuation suggest it.

 

13 Nov 24. Babcock delivers strong first half on nuclear growth.

An increasingly uncertain geopolitical backdrop supports growth prospects

• Free cash flow up 41 per cent
• Further net debt reduction

Babcock International (BAB) delivered half-year results ahead of consensus forecasts, with a robust performance at the defence company’s nuclear arm driving revenue up by double digits.

Nuclear revenue rose 22 per cent against the same period last year, supported by 30 per cent growth in civil nuclear and 25 per cent growth at the company’s major infrastructure programme (MIP) at Devonport. The MIP involves critical infrastructure upgrades to support the UK’s naval and nuclear defence capabilities.

Land revenue growth of 8 per cent was aided by government contracts and Ukraine support, while the first year of the Skynet contract to upgrade and operate the UK government’s military satellite and space operations helped marine revenue rise 5 per cent. Revenue at the smaller aviation unit contracted 5 per cent.

Underlying operating profit rose 9 per cent to £169mn despite the high-margin Polish Miecznik frigate licence fees received in the prior year, while free cash flow improved from £67mn to £95mn.

The balance sheet has been deleveraged over recent years, and there was a further reduction in net debt in the period. Excluding leases, debt was down £142mn to £146mn year on year, while the leverage ratio moved from 1.1 times to 0.6 times.

With around 90 per cent of expected full-year revenue under contract at the start of October, management kept annual forecasts unchanged. Chief executive David Lockwood said “a backdrop of geopolitical instability” is boosting demand.

Based on recent trading and growth prospects, medium-term guidance for an underlying operating margin of at least 8 per cent looks achievable. A rating of 11 times forward consensus earnings is undemanding. Buy.

Last IC view: Buy, 528p, 26 Jul 2024. (Source: Investors Chronicle)

 

13 Nov 24. MilDef significantly expands its presence in Central Europe – enters into agreement for a transformative acquisition of roda computer GmbH. MilDef Group AB (publ) (”MilDef”) has, through its wholly owned subsidiary MilDef Germany Holding GmbH, entered into a binding agreement to acquire all shares in roda computer GmbH (“roda”), a well-established provider of military IT solutions with a strong market presence in Central Europe, primarily in the DACH region. Through the acquisition, MilDef becomes one of Europe’s leading players in tactical and rugged IT for the defence and security sector. The acquisition provides MilDef with access to key market channels, long-standing customer relationships, and existing framework agreements in attractive and growing markets in Central Europe.

The acquisition in brief

• MilDef has, through its wholly owned subsidiary MilDef Germany Holding GmbH, entered into a binding agreement to acquire roda for an initial consideration of EUR 70 m (approximately SEK 808 m[1]) in cash, and 1 374 047 newly issued shares in MilDef[2] (the “Issue In Kind”) on a cash and debt free basis (Enterprise Value). The initial consideration could increase through a potential earn-out of up to EUR 4 m (approximately SEK 46 m[3]) dependent on agreed financial performance targets for 2024.
• The initial consideration of the acquisition implies an EV/EBITDA multiple of approximately 8x based on the EBITDA for the FY2023 for roda GmbH, the Group’s main entity.
• Roda, based in Germany, is a well-established provider of tactical IT solutions for the defence domain, with long-standing customer relationships and existing framework agreements. The acquisition will significantly strengthen MilDef’s presence in the attractive and growing Central European market and enable cross-selling of MilDef’s products through roda’s market channels.
• The acquisition is expected to be accretive to MilDef’s earnings per share from completion of the acquisition (excluding any non-cash amortization impacts from the transaction).
• The combination of MilDef and roda had annual sales exceeding SEK 1,900m in the FY2023, with an adjusted EBITA margin of approximately 13 percent.
• The acquisition will be financed with a combination of new debt and issue of new shares, consisting of a long-term facility and a directed share issue of approximately SEK 450m conducted through an accelerated bookbuilding procedure (the “Directed Share Issue”). MilDef will publish a separate press release regarding the details of the Directed Share Issue.
• Three of MilDef’s largest shareholders, Svolder AB, Andra AP-fonden and Tredje AP-fonden support the acquisition and have expressed interest to participate in the Directed Share Issue.
• Svolder AB, Andra AP-fonden and Tredje AP-fonden have entered into binding agreements to vote in favour of any relevant proposal at the Extraordinary General Meeting intended to be held on or around 9 December, 2024. Further, MilDef’s CEO Daniel Ljunggren, MilDef’s Chairperson Björn Karlsson and MilDef’s Board representatives Marianne Trolle and Jan Andersson together with other employees have entered into binding agreements to vote in favour of relevant proposals at the Extraordinary General Meeting. In total, existing shareholders representing approximately 44 percent of the share capital and voting rights in MilDef have entered into binding agreements to vote in favour of relevant proposal at the Extraordinary General Meeting.
• The acquisition is expected to close during the first quarter of 2025, subject to customary regulatory approvals and closing conditions, inter alia. Roda will be consolidated in MilDef’s consolidated accounts from the closing of the acquisition.

”We are very pleased to welcome roda to MilDef. The acquisition of roda accelerates MilDef’s expansion in the strategically important defence market in Europe. Roda’s long-standing customer relationships, existing framework agreements, and strong reputation in the Central European market create a great opportunity for cross-selling of MilDef’s existing offerings. The acquisition strengthens MilDef’s role as a significant player in the European effort to enhance defence and security capabilities. We look forward to taking the next step in MilDef’s growth journey once the transaction is completed”, says Daniel Ljunggren, President & CEO of MilDef Group.

“The main criteria when finding a new owner of roda was to find a partner that truly wanted to continue the successful growth journey of our company. For the management of roda this was extremely important, and we are convinced that MilDef is the perfect fit for continued development. Now two of Europe’s leading defense technology companies will join forces to present a very attractive and trustworthy offering”, says Martin Bertsch, CEO and Founder roda.

Strategic rationale

For MilDef, it is of strategic importance to increase its presence and strengthen its market channels in the attractive Central European market. Further, MilDef unlocks access to significant framework agreements with countries that have announced substantial increases in defence budgets and enhanced defence capabilities. Through the acquisition, MilDef becomes one of Europe’s leading players in tactical and rugged IT for the defence domain.

The acquisition is also expected to enable several cross-selling synergies for MilDef, primarily by leveraging roda’s existing market channels. With the main share of its revenue in the DACH region, roda holds a strong position in Central Europe, providing MilDef with the opportunity to increase sales of its own developed products and expand the Group’s customer base. Many global platform manufacturers are present in the German market and MilDef also sees an opportunity for increased sales to these parties through the acquisition of roda.

Further, the acquisition is expected to create synergies in procurement of parts for both MilDef’s and roda’s offerings, which will be further evaluated after the transaction has been completed.

The combination of the two companies’ resources and competencies provides a strong platform for continued growth. Both organisations emphasize delivering value to customers through high-quality solutions. Through the acquisition, MilDef get access to a capable management team with extensive experience from operating in the Central European markets.

Roda in brief

Roda computer GmbH, headquartered in Lichtenau (Germany), was founded in 1987 and has approximately 115 employees and two production facilities. Since the start, the company has specialised in the sale of mobile and rugged computers primarily within Europe (excluding the Nordics). Customers are mainly active in the defence sector and include government agencies such as national defence authorities and procurement organisations as well as companies in the defence industry. A majority of sales are made through framework agreements. In addition to the headquarter in Lichtenau, Germany, roda is also present in France and the United Kingdom. Roda is the exclusive reseller of laptops and tablets from MilDef Crete Inc. in several Central European markets.

Financial overview and effect on MilDef’s financials

During the twelve-month period that ended on 31 December, 2023, roda[4] reported revenue of approximately SEK 800 m and adjusted EBITA of approximately SEK 130 m, which corresponds to an adjusted EBITA margin of approximately 16 percent. During the same period, roda reported a gross margin of approximately 29 percent.

During the twelve-month period that ended on the 31 December, 2023, MilDef reported sales for the preceding twelve months of SEK 1,151m and an EBITA of SEK 140m, which corresponds to an EBITA margin of 12 percent. If roda had been a part of MilDef during the same period, the combined revenue, pro forma, based on certain assumptions, would have amounted to approximately SEK 1,900 m and the adjusted EBITA to approximately SEK 254m, corresponding to an EBITA margin of approximately 13 percent.

The acquisition is expected to have an accretive effect on MilDef’s earnings per share from the time of acquisition closing (excluding potential non-cash amortisation from the acquisition).

One-off integration costs are expected to amount to approximately SEK 5-10 m over three years.

MilDef has a financial target to maintain net debt/adjusted EBITDA below 2.5x over time. On 30 September 2024 MilDef reported net debt of SEK 224m, corresponding to a net debt/adjusted EBITDA of 1.4x (on a post-IFRS 16-basis).

After closing of the acquisition and the Directed Share Issue, net debt/adjusted EBITDA on a post-IFRS 16-basis, excluding transaction and integration costs, is expected to amount to approximately 2,2x, which is below MilDef’s target level of 2.5x.

Financing and support from MilDef’s shareholders

The acquisition will be financed through a combination of new debt and issue of new shares. 1 374 047 new shares will be issued to the sellers as part of the consideration in the acquisition, through the Issue In Kind, corresponding to 3.3 percent of the shares outstanding prior to the Directed Share Issue. The sellers have undertaken towards MilDef to not sell their shares received via the transaction within 24 months after the closing of the acquisition (lock-up) with certain exceptions. The Issue In Kind is subject to a resolution by an Extraordinary General Meeting authorising the Board to resolve on share issues. The Extraordinary General Meeting is intended to be held on or around 9 December, 2024.

The rest of the consideration is paid in cash. To finance the cash consideration, MilDef has received a new credit facility of EUR 45 m from Skandinaviska Enskilda Banken (“SEB”).

To cover long-term financing of the acquisition, MilDef intends to raise approximately SEK 450 m through the Directed Share Issue to Swedish and International institutional investors through an accelerated bookbuilding procedure, as will be announced separately by MilDef later today. The Directed Share Issue is intended to be carried out with deviation from the shareholders’ pre-emptive rights, and to be resolved upon by the Board of Directors of MilDef, partly on the basis of the authorisation granted by the Annual General Meeting held on 23 May, 2024, and partly subject to the subsequent approval by an Extraordinary General Meeting intended to be held on or around 9 December, 2024.

Three of MilDef’s largest shareholders, Svolder AB, Andra AP-fonden and Tredje AP-fonden support the acquisition and have expressed interest to participate in the Directed Share Issue. Svolder AB, Andra AP-fonden and Tredje AP-fonden have entered into binding agreements to vote in favour of any relevant proposal at the Extraordinary General Meeting. Further, MilDef’s CEO Daniel Ljunggren, MilDef’s Chairperson Björn Karlsson as well as MilDef’s Board representatives Marianne Trolle and Jan Andersson together with other employees have entered into binding agreements to vote in favour of relevant proposal at the Extraordinary General Meeting. In total, existing shareholders representing 44 percent of the share capital and voting rights in MilDef have entered into binding agreements to vote in favour of relevant proposal at the Extraordinary General Meeting.

Regulatory approvals and closing

Closing of the acquisition is expected to take place during the first quarter 2025, given that customary regulatory approvals and closing conditions are met, including submission to and approval from relevant authorities according to FDI-regulation in France, Germany and United Kingdom. The completion of the Issue in Kind is subject to a resolution by an Extraordinary General Meeting authorising the Board to resolve on share issues.

Advisors

SEB provides debt financing and is Sole Global Coordinator and Bookrunner to MilDef in relation to the Directed Share Issue. HWF Advokater AB is primary legal counsel to MilDef in relation to the acquisition of roda and the Directed Share Issue. EY is advisor to MilDef in relation to tax and financial topics in the acquisition.

 

13 Nov 24. SRT’s retail offer is worth subscribing to.  The navigation surveillance systems technology group is raising new funds to support recent contract wins – the offer closes at 6pm today

• £8.5m total equity raise at 35p a share
• £2m retail offer of 5.7m shares open today

Aim-traded SRT Marine Systems (SRT: 38p), a global leader in technology used to track maritime vessels, has announced a £8.5m conditional equity raise to strengthen the company’s balance sheet and facilitate growth of its surveillance systems and navigation transceivers businesses.

It forms part of a larger £31m package that will support the recently announced $213m (£167m) contract to deliver an integrated maritime surveillance system for the Kuwait government, as well as three other contracts worth $210m (‘A marine technology company building momentum’, 7 October 2024). The first contract will deliver a state-of-the-art national maritime surveillance system for the Kuwait Coast Guard and other relevant agencies. It will incorporate a broad range of sophisticated sensor systems, artificial intelligence (AI) analytics and integrated command and control systems. Implementation is expected to take up to two years, followed by 10 years of support, training and maintenance.

The fundraising is underwritten in full by Ocean Infinity, a marine technology company specialising in the development and deployment of robotics for large-scale, subsea data acquisition. Ocean Infinity currently holds 19.8m shares, having invested almost £7m for a strategic stake in a £10.5m equity raise at 35p a share in January 2024. SRT is issuing 24.3m new shares, representing 10.9 per cent of the 222.6mn shares in issue, through a placing of 3.2m shares to certain existing shareholders, 15.3mn shares through a subscription agreement with Ocean Infinity, and 5.7m shares through a retail offer to other existing shareholders.

Ocean Infinity has also provided SRT with a $21.4m guarantee to enable the company to issue a contract performance bond in support of the $213m Kuwait contract. SRT expects to replace the guarantee within the next six months through a combination of its own resources and the UKEF export guarantee programme. In return, Ocean Infinity has been granted 20mn warrants with a strike price of 35p and three-year exercise period. If the Ocean Infinity guarantee is not replaced within eight months, SRT is obligated to issue a further 4mn warrants to the shareholder at a strike price 15 per cent below the share price at the time.

In connection with the fundraising, SRT has agreed to redeem £1mn of the £13.3m loan notes drawn down under its loan note programme by issuing 2.9m redemption shares to the loan note holders. So, assuming the retail offer is fully subscribed, Ocean Infinity will hold 14 per cent of the 249.8m shares in issue. If the 20mn warrants are exercised at a cost of £7m, Ocean Infinity’s holding would rise to 20.4 per cent. It’s a big vote of confidence in the company’s prospects, but more importantly the equity investment and provision of a valuable guarantee are enabling SRT to make an early start on the Kuwait contract to drive a step change in revenue and profits.

Ahead of annual results on 2 December, house broker Cavendish has its forecasts under review, but clearly SRT is moving in the right direction. I would be surprised if the company doesn’t deliver pre-tax profit of more than £10m in the 2025-26 financial year, a level of profitability that warrants existing shareholders in the £85m market capitalisation company participating in the retail offer, which closes at 6pm today. Hold. (Source: Investors Chronicle)

 

12 Nov 24. CAE reports second quarter fiscal 2025 results.

• Revenue of $1,136.6m vs. $1,050.0m in prior year
• Earnings per share (EPS) from continuing operations of $0.16 vs. $0.17 in prior year
• Adjusted EPS(1) of $0.24 vs. $0.26 in prior year
• Operating income of $118.1m vs. $97.7m in prior year
• Adjusted segment operating income(1) of $149.0m vs. $135.6m in prior year
• Free cash flow(1) of $140.0m vs. $147.4m in prior year
• Adjusted order intake(1) of $3.0bn for a record $18.0bn adjusted backlog(1)
• Successfully concludes AirCentre integration and enterprise-wide restructuring program
• Post quarter, CAE purchased a majority stake in SIMCOM for US$230 m and extend an exclusive business aviation training agreement with Flexjet and its affiliates to 15 years
• Company also announces CEO succession plan

(NYSE: CAE) (TSX: CAE) – CAE Inc. (CAE or the Company) today reported its financial results for the fiscal second quarter ended September 30, 2024. The Company also announced the conclusion of its integration of Sabre’s AirCentre airline operations portfolio (AirCentre) and its enterprise-wide restructuring program to streamline CAE’s operating model and portfolio, optimize its cost structure and create efficiencies.

“I am very pleased with our progress this quarter, which underscores our strong execution and the robust market demand for our Civil Aviation and Defense and Security solutions. In Defense, by leveraging our structural improvements and streamlined organization, we achieved notable growth and margin improvements,” said Marc Parent, CAE’s President and Chief Executive Officer. “We also made significant strides to retire risk by completing a Legacy Contract from our Defense backlog and to secure future growth with a $1.7bn transformative award under Canada’s Future Aircrew Training Program.

“Despite the near-term supply chain challenges that have been impacting the airline industry, the long-term growth outlook for Civil remains strong, underscoring CAE’s compelling investment thesis. The important organic investment we announced last week to increase our stake in SIMCOM will strengthen our presence in the core business aviation training market, increase recurring revenue, and further our commitment to delivering world-class training solutions to an essential customer segment. Backed by $3.0bn in consolidated adjusted order intake and a record $18.0 bn adjusted backlog this quarter, CAE’s future is exceptionally bright.”

Consolidated results

Second quarter fiscal 2025 revenue was $1,136.6m, compared with $1,050.0 m in the second quarter last year. Second quarter EPS from continuing operations was $0.16 compared to $0.17 last year. Adjusted EPS in the second quarter was $0.24 compared to $0.26 last year.

Operating income this quarter was $118.1m (10.4% of revenue(1)), compared to $97.7m (9.3% of revenue) last year. Second quarter adjusted segment operating income was $149.0m (13.1% of revenue(1)) compared to $135.6 m (12.9% of revenue) last year. All financial information is in Canadian dollars and results are presented on a continuing operations basis, unless otherwise indicated. Comparative figures have been reclassified to reflect discontinued operations.

Civil Aviation (Civil)

Second quarter Civil revenue was $640.7m vs. $572.6m in the second quarter last year. Operating income was $94.7m (14.8% of revenue) compared to $88.4 m (15.4% of revenue) in the same quarter last year. Adjusted segment operating income was $115.9m (18.1% of revenue) compared to $114.3m (20.0% of revenue) in the second quarter last year. During the quarter, Civil delivered 18 full-flight simulators (FFSs) to customers and second quarter Civil training centre utilization was 70%.

During the quarter, Civil signed training solutions contracts valued at $693.3m, including a range of long-term commercial and business aviation training agreements, digital flight services contracts, and 16 FFS sales, including four involving the COMAC C919 narrow-body airliner.

The Civil book-to-sales ratio(1) was a 1.08 times for the quarter and 1.23 times for the last 12 months. The Civil adjusted backlog at the end of the quarter was $6.7bn.

After the end of the quarter, CAE announced that it increased its ownership stake in its existing SIMCOM Aviation Training (SIMCOM) joint venture by purchasing a majority of SIMCOM shares from Volo Sicuro for US$230 m, subject to customary adjustments, to be financed with CAE’s existing credit facility and cash on hand. As part of the transaction, Flexjet, LLC, a related party of Volo Sicuro, has retained a minority stake in SIMCOM. Additionally, CAE and SIMCOM have each extended their respective exclusive business aviation training services agreement with Flexjet and its affiliates by 5 years, resulting in a remaining exclusivity period of 15 years for both agreements.

Defense and Security (Defense)

Second quarter Defense revenue was $495.9m vs. $477.4m in the second quarter last year. Operating income was $23.4m (4.7% of revenue) compared to $9.3m (1.9% of revenue) in the same quarter last year. Adjusted segment operating income was $33.1m (6.7% of revenue), compared to $21.3m (4.5% of revenue) in the second quarter last year.

Defense booked orders for $2.3bn this quarter for a book-to-sales ratio of 4.56 times. The ratio for the last 12 months was 2.04 times. The Defense adjusted backlog, including unfunded contract awards and CAE’s interest in joint ventures, at the end of the quarter was $11.4bn, up from $10.4bn at the end of the first quarter of fiscal 2025. During the second quarter of fiscal 2025, $1.7 bn was added to adjusted order intake following CAE’s award of a 25-year subcontract from SkyAlyne to support Canada’s Future Aircrew Training (FAcT) program. As part of this subcontract, CAE will initially develop and deliver a range of simulators and training devices for the various aircraft fleets being procured under the FAcT program. These training devices are expected to be delivered over the next 5 years. As announced, in addition to this initial approximately $1.7 bn sub-contract, CAE is also expected to sign a follow-on order in the near-term involving sustainment-related in-service support services. Notably for the Defense segment overall, the pipeline remains strong with some $7.2bn of bids and proposals pending.

Additional financial highlights

CAE incurred $5.1m of costs related to the integration of AirCentre, which was completed this quarter, and $25.8m in connection with its restructuring program to streamline CAE’s operating model and portfolio, optimize its cost structure and create efficiencies. This restructuring program was completed in the second quarter of fiscal 2025 and no further restructuring expenses are expected. CAE expects to fully achieve annual run rate cost savings of approximately $20 m by the end of the next fiscal year.

Net finance expense this quarter amounted to $52.9m, compared to $49.5m in the preceding quarter and $47.1m in the second quarter last year.

Income tax expense this quarter amounted to $10.4m, representing an effective tax rate of 16%, compared to negative 16% for the second quarter last year. The adjusted effective tax rate(1), which is the income tax rate used to determine adjusted net income and adjusted EPS, was 18% this quarter as compared to 1% in the second quarter of last year. The increase in the adjusted effective tax rate was mainly attributable to the recognition, last year, of previously unrecognized deferred tax assets and the current year mix of income from various jurisdictions.

Net cash provided by operating activities was $162.1m for the quarter, compared to $180.2m in the second quarter last year. Free cash flow(1) was $140.0m for the quarter compared to $147.4 m in the second quarter last year. The decrease was mainly due to a lower contribution from non-cash working capital.

Growth and maintenance capital expenditures(1) totaled $57.0m this quarter.

Net debt(1) at the end of the quarter was $3,064.9m for a net debt-to-adjusted EBITDA(1) of 3.25 times (2.97 times excluding Legacy Contracts(1)(2)). This compares to net debt of $3,129.7m and a net debt-to-adjusted EBITDA of 3.41 times (3.11 times excluding Legacy Contracts) at the end of the preceding quarter.

Adjusted return on capital employed(1) was 5.5% this quarter compared to 5.7% last quarter and 7.1% in the second quarter last year.

During the quarter, CAE repurchased and cancelled a total of 392,730 common shares under its normal course issuer bid (NCIB), which began on May 30, 2024, at a weighted average price of $24.43 per common share, for a total consideration of $9.6m.

Sustainability

This quarter, CAE received approval from the Science Based Targets initiative (SBTi) for its decarbonization targets, committing to reduce Scope 1 and 2 emissions by 85.7% and Scope 3 emissions by 32.5% by FY33. This achievement underscores CAE’s commitment to sustainability and environmental stewardship. Central to this success is CAE’s engagement with its value chain on its sustainability journey through the International Aerospace Environment Group (IAEG) and as one of the launch partners of Decarbone+, a non-profit aimed at accelerating decarbonization efforts of organizations across Quebec. These collaborative initiatives highlight CAE’s leadership in fostering sustainable practices and change across its value chain.

Additionally, CAE was honored with the 2024 Altitude Award by the Black Aviation Professionals Network, recognizing its contributions and leadership in advancing diversity and inclusion within the Aerospace sector.

Management outlook

Civil

The secular demand picture for aviation training solutions remains compelling and the Company continues to be well positioned. Aircraft OEM supply issues have affected airline training demand forecasts and remain a near-term headwind for a portion of CAE’s commercial training business. Notwithstanding the delays this causes to expected revenue from initial training of commercial pilots, Management still targets approximately 10 percent annual growth in Civil adjusted segment operating income, with stronger performance anticipated in the second half of the fiscal year. The positive elements that Management expects to help offset the impact of OEM supply issues, include accretion from its now larger stake in SIMCOM, the benefits of its cost savings initiatives, and positive seasonality in the second half of the fiscal year, which is customary for both commercial and business aviation. Also expected to drive stronger second-half performance are higher profitability in Flight Operations Solutions, and higher volume and profitability from full-flight simulator (FFS) deliveries. Annual Civil adjusted segment operating income margin is expected to be in the range of 22 to 23 percent, with ample room to grow beyond the current year on volume, efficiencies and mix.

Defense

Management believes CAE is well positioned for long-term growth and increased profitability in Defense, as the sector moves into a prolonged up-cycle with increased budgets across NATO and allied nations. Rising geopolitical tensions are driving a focus on near-peer threats, defence modernization, and readiness, fueling demand for the training and simulation solutions that CAE offers. Demand for CAE’s Defense training solutions remains strong, driven by a global shortage of uniformed personnel, prompting militaries to partner with CAE to support readiness. Having recently re-baselined the Defense business and substantially accounted for the previously identified programmatic risk, Management expects Defense annual revenue growth in the low- to mid-single-digit percentage range and annual Defense adjusted segment operating income margin to increase to the 6- to 7-percent range in fiscal 2025, also with room to grow beyond the current year. Similarly, Management expects annual Defense performance to be more heavily weighted to the second half. Furthermore, having successfully completed one of its Defense Legacy Contacts in the second quarter, Management expects to complete another two such contracts by the end of the fiscal year.

For CAE overall, Management continues to target three-year EPS growth (FY22-25) in the low- to mid-teens-percentage range.

Finance expense and tax expense

Management expects annual finance expense to be similar to fiscal 2024. The run-rate effective income tax rate is expected to be approximately 25%, considering the income expected from various jurisdictions and the implementation of global minimum tax policies.

Balanced capital allocation priorities, accretive growth investments

CAE now expects total CAPEX for fiscal 2025 to be slightly below Management’s prior estimated range of $50 to $100m higher than the fiscal 2024 amount, which was $329.8m. Commensurate with CAE’s ongoing success to capture market opportunities in training, approximately three-quarters of this relates to organic growth investments in simulator capacity to be deployed to CAE’s global network of aviation-related training centres and backed by multiyear customer contracts.

Solid financial position

A tenet of CAE’s capital management priorities includes the maintenance of a solid financial position, and it expects to continue to bolster its balance sheet through ongoing deleveraging, commensurate with its investment grade profile. CAE is targeting a leverage ratio of net-debt to adjusted EBITDA of below three-times (3x) by the end of the current fiscal year.

Current returns to shareholders

Given CAE’s progress over the last year to strengthen its financial position, an NCIB was established as part of its capital management strategy and is currently intended to be used opportunistically over time with excess free cash flow. Given the Company’s outlook and cash generative nature of its highly recurring business, CAE’s Board of Directors will also continue to evaluate the possibility of reintroducing a shareholder dividend. (Source: PR Newswire)

 

12 Nov 24. Triumph Group, Inc. (NYSE: TGI) (“TRIUMPH” or the “Company”) today reported financial results for its second quarter of fiscal 2025, which ended September 30, 2024.

Second Quarter Fiscal 2025

• Net sales of $287.5 m; sales growth of 1%
• Operating income of $32.4m with operating margin of 11%; adjusted operating income of $36.0m with adjusted operating margin of 13%
• Net income from continuing operations of $11.9m, or $0.15 per diluted share; adjusted net income from continuing operations of $15.4m, or $0.20 per share
• Adjusted EBITDAP of $42.6m with Adjusted EBITDAP margin of 15%
• Cash used in operations of ($38.4)m and free cash use of ($44.7)m. Cash and available liquidity was $148m at September 30th.

Fiscal 2025 Guidance

• Net sales of approximately $1.2bn
• Increasing operating income to a range of $140.5m to $145.5m, reflecting operating margin of 12%
• Increasing Adjusted EBITDAP to a range of $190.0m to $195.0m, reflecting Adjusted EBITDAP margin of 16%
• Increasing earnings per diluted share to a range of $0.47 to $0.53, and adjusted earnings per diluted share to a range of $0.70 – $0.76
• Increasing cash flow from operations to a range of $40.0m to $55.0m, and free cash flow to a range of $20.0 m to $30.0m

“TRIUMPH achieved its tenth consecutive quarter of year-over-year sales growth as commercial aftermarket sales from our IP-based business grew by more than 34%, more than offsetting temporary commercial OEM and supply chain headwinds,” said Dan Crowley, TRIUMPH’s chairman, president and chief executive officer.  “We exceeded our cash targets in the quarter through strong operational performance across all our businesses including Interiors where we turned around the business in Q2 through substantial cost reductions and a commercial resolution to bring its profit and cash flow in line with full year expectations.”

Mr. Crowley continued, “TRIUMPH is raising its fiscal 2025 earnings and cash flow guidance on strong aftermarket demand and the improvement in Interiors, while maintaining sales guidance despite lower short-term OEM production rates which we expect to recover in our fourth quarter.  Our strong aftermarket growth and operating performance, and historical seasonality will accelerate our free cash flow generation in the second half of FY25.   We expect to deliver top and bottom-line growth rates at or above the market as we benefit from continuing strong aftermarket demand.”

Commercial OEM sales decreased ($11.6)m, or (8.9%) primarily due to decreased sales volume on the Boeing 737, 767, 777 programs, which were partially offset by increased sales on Boeing 787 program and a favorable settlement in Interiors across multiple programs.

Commercial Aftermarket sales increased $10.4m, or 26.2%, primarily due to a combination of increased spares sales and repair sales volume across several platforms including the Boeing 787 program.

Military OEM sales increased $3.0m, or 4.9%, as increased sales volumes on the CH-47 and AH-64 helped offset expected decreases on the V-22 program.

Military aftermarket sales increased $0.2m, or 0.5%, as increased repairs on the CH-47 platform and a spare parts intellectual property transaction of approximately $5.0 m were partially offset by decreased repair and overhaul sales on the V-22 program.

TRIUMPH’s results included the following:

The number of shares used in computing earnings per share for the second quarter of 2025 was 77.7m.

Backlog, which represents the next 24 months of actual purchase orders with firm delivery dates or contract requirements, was $1.90bn, an increase from prior fiscal year end. Our backlog includes increases across all end markets, partially offset by reductions due to the changes in timing of deliveries primarily under the Boeing 737MAX program.

For the second quarter of fiscal 2025, cash flow used in operations was ($38.4)m, which was better than expectations previously provided due to lower than expected working capital and strong aftermarket demand. (Source: PR Newswire)

 

12 Nov 24. Paramount Industrial Holdings goes into business rescue.  Paramount Industrial Holdings (PIH), part of the Paramount group of companies, has entered into business rescue amid legal disputes in another Paramount business division. Other subsidiary companies in South Africa are expected to continue operating as usual.

The PIH board made the decision on 11 November, News24 reported, and quoted documents submitted to the Companies and Intellectual Property Commission (CIPC) as saying South African operations were experiencing “significant financial distress”, which posed a “serious risk to its ongoing sustainability”.

News24 added that the financial stress is due to a dispute between the parent company in the United Arab Emirates – Paramount Group Limited ADGM (Abu Dhabi Global Market) – and unmanned vehicle manufacturer Abu Dhabi Autonomous Systems Investments (ADASI). In August, Paramount ADGM filed for Chapter 11 bankruptcy protection in Delaware, United States, over the dispute.

Paramount said that a limited number of its non-operating entities voluntarily filed for Chapter 11 protection in the United States after an arbitration award issued in August 2024, stemming from a dispute initiated by ADASI in 2022.

Chapter 11 proceedings mean funding has been cut off to South African operations. Paramount Industrial Holdings director Willem van Biljon said in his CIPC filing that Paramount’s South African holding company and subsidiaries usually received funding via a loan facility from Paramount Group Limited in the UAE. However, the parent company could no longer lend money to the South African companies, as the funds were inaccessible due to the bankruptcy filing.

Paramount Industrial Holdings now has to rely “solely on its own revenue to manage the liquidity of the company and its subsidiaries”, News24 reported. “The company remains committed to supporting its subsidiaries and to retaining the PIH group’s workforce to the extent possible. However, without immediate intervention, the company’s cash reserves will be insufficient to cover ongoing operational and administrative expenses as well as its payments due to existing creditors,” he said.

Paramount Industrial Holdings is now looking to reorganize and provide for operational expenses and working capital.

“By undertaking business rescue, PIH is acting responsibly to safeguard long-term stability.  Importantly, the business rescue process will also unlock cash for the subsidiary companies through post-commencement funding, which will support ongoing operations and growth,” the company told defenceWeb.

“This process affects only the holding company and has no impact on the operational structure, roles, or day-to-day work within the subsidiary companies.  The subsidiary companies remain strong, and will continue to operate as usual.”

The CIPC lists Paramount Industrial Holdings as being in Business Rescue, whereas other South African Paramount companies are listed as being In Business, and these include: Paramount Aeronautical Solutions; Paramount Aerospace Holdings; Paramount Aerospace Industries; Paramount Aerospace Innovations; Paramount Aerospace Systems; and Paramount International.

(Source: https://www.defenceweb.co.za/)

 

13 Nov 24. Babcock Successfully delivering performance and growth.

David Lockwood, Chief Executive Officer, said: “This is another strong set of results, with continued positive momentum across the Group. Our operational and financial performance in the first half of the year underpins my confidence that we will deliver our expectations for the full year, as we progress towards our medium-term guidance.

We continue to focus on driving performance and sustainable growth. Working closely with our customers, we are consistently delivering key programmes and contracts, with enhanced standards of execution. Meanwhile, a backdrop of geopolitical instability means demand for what we do continues to increase, resulting in an expanding and attractive long-term opportunity set. We are selecting the right opportunities and are being disciplined in how we deploy capital to deliver growth which maximises shareholder value.”

Financial highlights

Contract backlog £9.5bn flat vs HY24, or down 8% vs FY24 driven by execution on long-term contracts. Key contracts expected in H2

Revenue of £2,409m increased 11% on an organic basis, driven by strong growth in Nuclear and Land

Underlying operating profit up 10% (at constant FX) to £169m, driven by growth and margin improvement in Nuclear and Land

Underlying operating margin was 7.0% (HY24: 7.1%). The prior period included high margin AH140 frigate license sale

Underlying EPS up 14% to 23.5 pence

Underlying operating cash conversion was 80% (HY24: 82%)

Underlying free cash flow increased 41% to £95 m reflecting the profit performance and working capital timing

Net debt to EBITDA reduced to 0.6x on a covenant basis. Net debt excluding leases reduced to £146m

Interim dividend of 2.0 pence per share (HY24: 1.7 pence)

Outlook

Our expectations for FY25 remain unchanged, noting that full year underlying free cash flow will be significantly H1 weighted.

With around 90% of FY25 expected revenue under contract at 1 October 2024, we commence the second half with good momentum and are confident of making further progress against our medium-term guidance: to deliver mid-single digit average annual revenue growth and achieve underlying operating margins of at least 8% and underlying operating cash conversion of at least 80%.

Strategic highlights

Launched H&B Defence, a JV with HII to support AUKUS focusing on building Australia’s sovereign nuclear capabilities

Opened a new Engineering and Nuclear Skills building at City College Plymouth to enhance our workforce’s nuclear capabilities

Partnered with ST Engineering to launch a 120mm Ground Deployed Advanced Mortar System

Launched the General Logistics Vehicle (GLV) medium wheelbase variant targeted at UK and international opportunities

DSG contract extension under negotiation following notification of UK MOD of its intention to exercise up to five option years

Operational highlights

Marine

Awarded contract extension in Poland to support Miecznik frigate programme for three ships to 2031

Type 31 – good progress with ship 1 superstructure largely complete, ship 2 progressing, ship 3 steel cut

First six months of in-service delivery of the Skynet contract to manage the UK’s military satellite and space operations

LGE record intake of more than £300m

Completed successful docking period for the HMS Queen Elizabeth aircraft carrier

Nuclear

Reopened our Devonport 9-Dock, following a significant regeneration project, critical for the future support of the UK’s CASD

Significant ramp up at Hinkley Point C as we begin to install mechanical and electrical services

Land

Strong operational performance on DSG contract

Awarded an additional contract to build 53 High Mobility Transporter Jackal 3 six-wheeled ‘Extendas’ for the British Army

Awarded several UK military training contract extensions during the period

Launched the new Babcock Immersive Training Experience (BITE) to support individual and collective training

Successfully delivered the transition phases of two new French military land contracts

Aviation

Preferred bidder on MENTOR2, a c.€800m 15-year contract to provide initial pilot training to the French Air Force, Navy and Army

Commenced the 12-year contract to deliver the in-service support of 48 Sécurité Civile and police EC145C2 helicopters

RAF Hades contract extended by two years to provide technical airbase support services across the Armed Forces

Partnered with the RAF to deliver Elementary Flying Training to the Ukrainian Pilot Force as it prepares to fly F-16 jets

Awarded a 10-year renewal with UK Midlands Air Ambulance Charity

1. Alternative Performance Measures (APMs) – notes to statutory and underlying results on page 1:

The Group provides APMs, including underlying operating profit, underlying margin, underlying earnings per share, underlying operating cash flow, underlying free cash flow, net debt, net debt excluding leases and contract backlog to enable users to have a more consistent view of the performance and earnings trends of the Group. These measures are considered to provide a consistent measure of business performance from year to year. They are used by management to assess operating performance and as a basis for forecasting and decision-making, as well as the planning and allocation of capital resources. They are also understood to be used by investors in analysing business performance.

 

12 Nov 24. Elliott Management has built a $5bn stake in Honeywell International, placing its largest ever bet as it looks to break up the $164bn industrial conglomerate. The US activist investor, which revealed its position on Tuesday, wants North Carolina-based Honeywell to split into two businesses: its aerospace division, which supplies aircraft equipment, and automation, which sells tools for warehouses and other plants.  The investment underlines Elliott’s growing number of concentrated bets; it has drawn on its $69bn in assets to take multibn-dollar stakes this year, ranging from $2.5bn in chipmaker Texas Instruments and a $2bn stake in Southwest Airlines. Honeywell’s board and management “acknowledge and appreciate the perspectives of all our shareholders,” a spokesperson said: “Although Elliott had not made us aware of their views prior to today, we look forward to engaging with the firm to obtain their input.” Honeywell’s chief executive, Vimal Kapur, has signed off on $9bn worth of acquisitions since his appointment last year. At the same time, he has moved to divest one of Honeywell’s largest units, the chemical and materials maker Advanced Materials, saying the group would continue to simplify its portfolio to focus on “three compelling megatrends”: automation, the future of aviation and the energy transition. Elliott is seeking to speed up that transformation. “The conglomerate structure that once suited Honeywell no longer does, and the time has come to embrace simplification,” Elliott’s Jesse Cohn and Marc Steinberg said in a letter on Wednesday.  Industry analysts said Honeywell was the last remaining holdout among a group of industrial conglomerates that have already broken up, boosting their valuations. A break-up would follow moves to split other leading industrial groups, including GE’s spin-off of its power and renewable energy business and 3M’s spin-off of its healthcare business.   “Independent businesses come with focused management teams and boards,” said Julian Mitchell, an equity analyst at Barclays. “It’s easier for investors to track trends in those businesses and invest in those stocks.” Honeywell’s shares were up about 4 per cent after news of Elliott’s investment. The stock has lagged the wider market this year, rising 12 per cent since the start of this year while the S&P 500 has risen 26 per cent. (Source: FT.com)

 

12 Nov 24. BAE Systems plc – Market Update.

Highlights:

• Operational and financial performance underpin Group full-year guidance, in line with upgrade at half year
• Solid order intake sustained, with around £25bn booked year-to-date
• Integration of the Space & Mission Systems (SMS) business is progressing as planned with sales accelerating in the second half of the year at Group accretive margins
• Strong visibility in the order backlog and pipeline of incumbent positions supports our long-term growth outlook

Charles Woodburn, BAE Systems Chief Executive, said:

“Our operational and financial performance so far in 2024 reaffirms our confidence in achieving the upgraded full year guidance we issued at the half year. Focusing on operational excellence, contracting discipline and growing our workforce is enabling us to consistently deliver critical capabilities and technologies for our customers worldwide. At the same time, we continue to invest in our business for the long term, which together with our broad geographic and domain diversity, positions us well for continued growth in the years ahead.”

Guidance

The full year 2024 guidance across all metrics is unchanged from the upgraded guidance we provided at the half year results in August.

Guidance is provided on a constant currency basis using an exchange rate of $1.24: £1, which is in line with the actual 2023 exchange rate. The Group operates in a number of currencies, the most significant of which is the US dollar, which is running at an average of approximately $1.29: £1 for the year. As a guide, a 5 cent movement in the £/$ exchange rate impacts sales by c.£500m, underlying EBIT by c.£70m and underlying earnings per share by c.1.3p.

The weighted average number of ordinary shares to calculate full year underlying earnings per share is expected to be 3.01bn.

Order flow

The order intake reflects our government customers’ confidence in our ability to deliver important capabilities to help protect their countries and citizens, with around £25bn of orders secured in the year to date. Notable contract awards in the second half of the year so far include:

• M109 Self-Propelled Howitzers and M992A3 Ammunition Carriers – $493m to continue production, with delivery expected from the second half of 2025 to mid-2026
• Armored Multi-Purpose Vehicles – $184m contract award for 48 additional vehicles for the US Army
• Bradley Fighting Vehicles – contract modification in excess of $440m for additional production, including more than 200 A4 variants
• Multi-mode Aviation Radio Set – five year IDIQ contract with a ceiling value of $460m for US Army rotary aircraft
• USS Halsey modernisation – $178m award for sustainment work on the Arleigh Burke-class guided-missile destroyer in our San Diego shipyard
• Guided weapon components – A$270m to boost production in Australia
• Order intake of around €2.5bn from the Group’s share of our MBDA joint venture

Delivering for our customers

We have maintained our focus on operational performance, with our highly skilled employees continuing to work with partners to deliver critical equipment and services. Maritime and Platforms & Services have continued to account for a higher proportion of growth relative to the other areas of the business.  Key milestones in the second half of the year so far include:

• The successful launch of NASA’s Europa Clipper spacecraft, which will orbit Jupiter and conduct detailed observations of one of its moons using the Europa Thermal Emission Imaging System (E-THEMIS) instrument the SMS team helped to develop
• Testing completed on the primary scientific instrument for the Nancy Grace Roman Space Telescope shipped to NASA’s Goddard Space Flight Center
• Substantial progress made with our Japanese and Italian industry partners towards reaching an agreement on a proposed joint venture to deliver the Global Combat Air Programme (GCAP)
• The sixth Astute Class submarine for the Royal Navy, Agamemnon, launched from our submarines site in Barrow-in-Furness, Cumbria
• A prototype of the European Common Radar System Mark 2 (ECRS Mk) flown on a UK Typhoon aircraft for the first time, supported by our partner Leonardo UK
• The second Type 26 frigate for the Royal Navy, HMS Cardiff, entering the water for the first time in Glasgow

Increasing exposure to major defence growth markets

Defence spending in our major markets remains supportive of our existing programmes and provides a robust pipeline of opportunities across all our sectors. We continue to support our government customers in addressing increasingly varied and complex threats.

Our global footprint, diverse product portfolio, incumbent positions and strong opportunity pipelines on strategically important international programmes, like AUKUS and GCAP, are key competitive advantages.

In the UK, the newly elected government has clearly stated its commitment to strengthening the armed forces and increasing defence spending to 2.5% of GDP. We are actively engaged with the Government on its ongoing Strategic Defence Review, which is due to make recommendations on the nation’s future defence plan in the first half of next year. It has also identified defence as one of eight growth-driving sectors in its upcoming industrial strategy.

In the US, we continue to see bipartisan support for defence and national security.  Our portfolio remains well-aligned with the key priorities outlined in the US National Defense Strategy and US Intelligence Strategy and we continue to see growth opportunities in this market across the medium term.

Beyond the US and UK, our geographic footprint is a differentiator as we support government customers across Europe, the Middle East and Asia Pacific.  Our key markets in these regions are poised for higher defence spending which will provide a platform for diversified growth into the future for the Group.

SMS integration and performance

We have made excellent progress in integrating the SMS business into our US operations.  The business is realising cost synergies, meeting scheduled workforce integration milestones, and holding a series of “synergy summits” which have identified numerous areas for collaboration to drive future revenue opportunities.

SMS second half sales are progressing in line with our expectations as set out at the half year.  The business is delivering group-accretive margins and the order backlog and pipeline support achieving our target of 10% annual sales growth in the medium term.

Investing in our business for the long term

In support of our growth outlook, and to help our customers stay ahead of evolving threats, we continue to invest in our people, facilities and technology.

By the end of October 2024, our global workforce increased by approximately 7,500 employees, including 1,260 apprentices and 1,000 graduates and undergraduates recruited in the UK, together with more than 5,000 employees who joined the Group as a result of the Ball Aerospace acquisition.

We expect self-funded Research & Development to increase compared to 2023 and have acquired UK cyber and electromagnetic activities company, Kirintec, since the half year, as we continue to complement our portfolio to deliver technology-enabled products to meet our customers’ current and emerging operational challenges.

In Glasgow, our new Applied Shipbuilding Academy has opened to develop and train our Maritime workforce, and the new Janet Harvey shipbuild assembly hall is on schedule to be fully operational in 2025.

We have also announced our intention to invest £220m to establish a new state-of-the-art advanced technology factory in Rochester, UK, which will increase the capacity of our Electronic Systems business and create 300 new jobs over the next five years.

Balance sheet and capital allocation

The Group’s balance sheet remains strong. The 2024 interim dividend of 12.4 pence per share will be paid on 2 December 2024 and we are maintaining a good cadence on the up to £1.5bn share buyback programme announced in August 2023, which commenced on 25 July 2024. Total cash returned to shareholders this year (including the 2023 final dividend) is expected to be c.£1.4bn.

2024 Preliminary Results

BAE Systems will announce its preliminary results for the year ending 31 December 2024 on 19 February 2025.

Shore Capital has published a research note on BAE Systems’ Trading Update this morning. See a summary of the key points below and the full note attached.

Jamie Murray, Equity Analyst, said: “BAE has published a trading update ahead of its results scheduled for 19 Feb-23 Financial information about ytd trading was limited, but management states  that performance underpins the full year outlook, which was unchanged. Looking to outer years, the defence market remains supportive, however, BAE’s order intake of £25bn looks a little light, which may cause downward pressure on the shares this morning. We reiterate our HOLD recommendation”

• No material financial information was provided about ytd trading

Outlook and guidance: BAE says “operational and financial performance underpins Group full year guidance,” which is unchanged from the half year. Sales and EBIT are expected to increase by 12-14%, EPS is expected to increase by 7-9% and free cash flow is expected to be over £1.5bn. Order intake of £25bn exceeds our pro-rated ytd sales estimate (c£24bn), which indicates a book-to-bill narrowly above the 1x threshold. Whilst this reflects increasing demand for its products, it is slightly light given BAE’s leading position in the defence market. That said, the threat environment remains supportive for BAE, with the Labour government committed to spending 2.5% GDP on defence and Trump winning the Presidential election. The weakness of USD vs GBP, however, is expected to be a headwind given BAE’s significant exposure to the US market. We do not anticipate material changes to our forecast given we are just below the lower end of the guidance range

Valuation: BAE Systems is a well-managed company with exposure to global defence markets, which have structural tailwinds. That said, this update reflects order intake slightly lower than we would expect, which might disappoint some investors. As a result, we expect the shares to trade flat or modestly down following today’s update. We reiterate our HOLD.

 

11 Nov 24. Trump’s ‘isolation’ stance boosts European defence stocks. Rheinmetall’s shares have increased five-fold since Russia’s invasion of Ukraine.  European defence shares rallied following the election of Donald Trump as US president, as investors bet that his more isolationist stance would force governments on this side of the Atlantic to beef up their security.

Shares in BAE Systems (BA) closed up 4 per cent on the day the result was announced, while Italy’s Leonardo (IT:LDO) and Germany’s Rheinmetall (DE:RHM) were up 3 per cent.

Trump “has repeatedly said that he could settle Russia’s invasion of Ukraine in his first day”, said Axa Investment Institute’s head of macro research, David Page. “We fear that this risks forcing a settlement on Ukraine by removing military support,” he added.

Such a move would face stiff opposition from European leaders but Trump’s animosity to Nato could lead to him “once again threaten to abandon the alliance to get Europeans to sign up to a deal with Putin,” said Stefan Wolff, professor of international security at the University of Birmingham.

If European nations decided to continue backing Ukraine, compensating for the reduction of US military support “could cost the EU an additional 0.5 per cent of GDP per year”, according to Goldman Sachs. European defence shares have substantially re-rated following Russia’s invasion of Ukraine in February 2022. BAE Systems shares have doubled in value, Leonardo shares have quadrupled and Rheinmetall’s shares have increased five-fold.

Analysts at Citi moved the sector to neutral earlier this year. Charles Armitage, director for European aerospace and defence at the bank, told the IC that some of the” very high growth” companies in the sector – those making land-based systems, air defences and radar – had begun to look fully priced. Valuations have weakened in recent months, though, and following Trump’s election, he expects “significant volatility’ in European defence shares in the coming months. Even in a scenario where the Ukraine war does end quickly, other drivers for defence stocks won’t go away.

“The wider threat environment is significantly higher than it was pre-Ukraine, and it’s not going to stop with a ceasefire,” said Shore Capital analyst Jamie Murray.  (Source: Investors Chronicle)

 

11 Nov 24. Nmi Group announces the acquisition of ExVeritas. NMi Group, internationally recognised for mission-critical Testing, Inspection, Certification, and Calibration (TICC) services for product market acceptance, announced the strategic acquisition of ExVeritas. This move substantially strengthens NMi’s Market Access capabilities, particularly in the specialised field of product safety certification for hazardous environments. This mandatory certification needs to be obtained for products used in areas where gas, vapor or dust explosions can occur and applicable in various end markets where many of NMi’s clients operate, such as Energy & Utilities, Food & Agri and Industrial & Manufacturing. The acquisition aligns with NMi’s commitment to enhancing safety worldwide.

Founded in 2005, ExVeritas plays an essential role in the certification landscape with subsidiaries in the United Kingdom, Denmark, and the United States. ExVeritas is a designated UKCA Approved Body (2585) and European Notified Body (2804), holding accreditations for UKCA (Ex) and ATEX in Europe. It is also recognised under the global IECEx scheme, and its US operations are accredited as an Associated Test Lab and accepted as an Independent Laboratory by the United States Coast Guard (USCG). These comprehensive certifications enable ExVeritas to facilitate global market access. Led by founders Sean Clarke and Stephen D’Henin, along with regional co-founders Luke Ricks in the US and Peter Lauritzen in Denmark—who will continue guiding ExVeritas post-acquisition—the company provides specialised services, including ATEX/IECEx type approval, management audits, training, and inspection.

This acquisition marks a significant advancement in NMi’s strategy to enhance service offerings and expand its geographical footprint. Importantly, it simplifies the certification process for our shared client base. By uniting NMi and ExVeritas, we can offer clients a streamlined approach to securing essential product safety certifications, accredited and certified to UKCA, DANAK, ATEX, IECEx, and USCG standards, making market access more efficient and straightforward.

Yvo Jansen, CEO of NMi, stated: “Partnering with ExVeritas and their solid global expertise is a landmark development in our efforts to enlarge our reach and capabilities in our market access services. The expertise of ExVeritas directly enhances our portfolio, addressing a specific market need for rigorous safety certifications required by OEMs, Installers, and End-Users to access the global market and drive product safety. Following our earlier expansion into Cybersecurity with the acquisition of TrustCB, this new collaboration further broadens NMi’s service offerings, now covering Metrology, Cybersecurity, and Product Safety.”

Sean Clarke, co-founder of ExVeritas, commented: “Joining NMi Group opens significant avenues for ExVeritas to scale our operations more effectively. Powered by NMi means joining a team with a proven strategic vision and ambition, leveraging their international reputation and technical expertise, thereby allowing us to focus on ExVeritas’ continued growth. This collaboration will enhance our ability to deliver expanded services and meet the complex safety standards our clients require in hazardous environments.”

The acquisition is a key component of NMi’s buy-and-build strategy and aligns seamlessly with our mission in ‘Measuring Tomorrow.’ This approach emphasises forward-thinking solutions to global market challenges, focusing on sectors that demand robust safety certifications. ExVeritas’s strong market presence and its reputation as a trusted certification body are crucial for advancing NMi’s objectives in both new and existing markets, enabling us to further expand our valued and flexible service offerings to meet our clients’ evolving needs.

 

05 Nov 24. GlobalData: Apple’s billion$ deal with Globalstar will change the D2D satellite game.

Following the news that Apple plans to invest $1.1bn in satellite communications company Globalstar alongside a further $400m for a 20% equity stake in the business, Emma Mohr-McClune, the Chief Analyst, Technology, at GlobalData, offers her view…

“According to GlobalData, this prospective deal packs a competitive punch for virtually all corners of the connectivity market ecosystem, from carriers to OEMs. This is arguably the largest and most significant consumer OEM low Earth orbit (LEO) deal to date, and the arrangement puts Apple in a clear leading position among western OEMs for extended direct and mass-market voice satellite texting and even calling services for both emergency and remote use cases.

“In addition to continuing to allocate 85% of its network capacity to Apple, Globalstar will use the $1.1bn in preservice payments to deliver a new satellite service constellation, expanded ground infrastructure, and increased global mobile satellite services (MSS) licensing. The new arrangement represents a significant expansion of an earlier 2022 deal, which first gave iPhone 14 users access to Globalstar’s 31 L-band satellites for emergency text services – a service which has since been extended to remote or off-grid use cases with iOS 18.

“The Apple-Globalstar arrangement also lowers the incentive for mobile network operators to strike their own deals with satellite providers for connectivity. There is now no doubt that Apple iPhone users are likely to have faster, readier access to more sophisticated and extended D2D use case services regardless of their wireless connectivity provider.

“It can no longer be claimed that Apple has no interest in the connectivity business. On the downside, Apple’s B2C direct monetization plans for this investment are still hazy, and premium plans are likely still several quarters out. The OEM will probably continue to offer free satellite communications services with iPhone hardware in the short term, or at least until the end of 2025 for iPhone 14 users under the terms of the recent one-year extension on the original two-year free inclusive offer.”  (Source: Satnews)

 

03 Nov 24. Airbus Space, “Merger with Thales-Alenia possible” as rivals combine expertise. Aerospace giant Airbus Defence & Space CEO Guillaume Faury told analysts that he would prefer to merge all of its Space Division with rival satellite specialist Thales Alenia Space’s similar activity. However, he added that if Europe’s anti-trust and political regulators found that difficult to approve, then Airbus would slice merger transactions into small pieces to make a combination more palatable.

“There are many ways of skinning the cat,” he told analysts. “Our space activity, when it comes to satellites, is a diverse one. We have telecoms, military satcoms, exploration, science, Earth observation. “Ideally we find solutions that could cover all the segments, but we could find solutions that are a bit subscale.”

Faury, speaking at the company’s 9-month results announcement, said that the space industry in Europe was undergoing major challenges and needed to transform itself.

Airbus’s Space division reported a 7.2 per cent fall in revenues when compared to a year previous to €1.445bn. (Source: Satnews)

 

08 Nov 24. Cicor acquires NEP, in talks to acquire German EMS firm. The acquisition of Nordic Engineering Partner gives Cicor a presence in Sweden, one of Europe’s leading markets for advanced electronics in healthcare tech, industrial and aerospace & defence sectors.

Cicor Group has acquired the Swedish development company Nordic Engineering Partner AB, establishing a significant presence in the Nordics. Additionally, Cicor is in advanced negotiations to acquire another German EMS provider, according to a media release.

The acquisition of Nordic Engineering Partner (NEP) AB gives Cicor a presence in Sweden, one of Europe’s leading markets for advanced electronics in the healthcare technology, industrial, and aerospace and defence sectors. The four engineering offices in the Stockholm area offer customized development services and prototype production for complex electronic systems.

NEP has an attractive customer base in Cicor’s target markets which, together with Cicor’s existing customers, provides a strong platform for further growth, Cicor said in a media release. NEP has 45 employees and generated sales of SEK 52 m with an attractive operating margin in the last financial year ended 30 June 2024.

Cicor aims to become the leading pan-European electronics developer and manufacturer in key sectors like healthcare technology, aerospace/defence and industrial, the company announced in its ‘Strategy 2028’ this week.

Following the acquisition of Evolution Medtech (Bucharest, Romania) earlier in 2024, the acquisition of NEP again doubles Cicor’s product development capacity and significantly broadens the portfolio of capabilities.

The shareholders and management of NEP will stay part of the team to support further development in alignment with Cicor’s growth strategy, the media release said. As part of the Cicor Group, NEP will continue to operate all sites in Sweden unchanged and with the existing staff, maintaining a clear focus on growth in Sweden, Norway and Finland.

The target company in Germany is a service provider for the development and manufacturing of electronic assemblies and systems. Its long-standing customers include medium-sized companies and leading corporations, mainly in the industrial electronics and medical technology sectors.

With its state-of-the-art machinery, excellent infrastructure, and further expansion reserves, this acquisition is an ideal next step in Cicor’s growth strategy in Germany, Europe’s largest electronics market. In the last financial year, the German company generated sales between EUR 20-30 m with an operating margin at the level of the Cicor Group. The transaction is expected to be signed in the coming weeks, subject to the usual regulatory and other closing conditions and is expected to be completed in early 2025.  (Source: Google/https://evertiq.com/news/56724)

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SPX CommTech, part of SPX Technologies Inc, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all. Formed by TCI and ECS, SPX CommTech’s Battlespace portfolio enables defence and security teams to detect, defeat and exploit RF signals to enhance communications intelligence (COMINT) and counter unmanned aerial systems (Counter-UAS). Additionally, its Tactical Data Link portfolio allows intelligence gathering agencies, special forces, emergency response, and security teams to securely and reliably transfer video and data between enabled-aircraft and ground teams over long distances for airborne Intelligence, Surveillance, Reconnaissance (ISR).

For more information visit www.tcibr.com and www.enterprisecontrol.co.uk

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Sponsored by SPX Communication Technologies (TCI & ECS)

 

www.tcibr.com

 

www.enterprisecontrol.co.uk

 

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07 Nov 24. TransDigm Group Reports Fiscal 2024 Fourth Quarter and Year-End Results

TransDigm Group Incorporated (NYSE: TDG), a leading global designer, producer and supplier of highly engineered aircraft components, today reported results for the fourth quarter ended September 30, 2024.

Fourth quarter highlights include:

• Net sales of $2,185m, up 18% from $1,852m in the prior year’s quarter;
• Net income of $468m, up 13% from the prior year’s quarter;
• Earnings per share of $5.80;
• EBITDA As Defined of $1,149m, up 19% from $963m in the prior year’s quarter;
• EBITDA As Defined margin of 52.6%; and
• Adjusted earnings per share of $9.83, up 22% from $8.03 in the prior year’s quarter.

Fiscal 2024 highlights include:

• Net sales of $7,940m, up 21% from $6,585m in the prior fiscal year;
• Net income of $1,715m, up 32% from the prior fiscal year;
• Earnings per share of $25.62, up 16% from the prior fiscal year;
• EBITDA As Defined of $4,173m, up 23% from $3,395m in the prior fiscal year;
• EBITDA As Defined margin of 52.6%; and
• Adjusted earnings per share of $33.99, up 32% from $25.84 in the prior fiscal year.

Quarter-to-Date Results

Net sales for the quarter increased 18.0%, or $333m, to $2,185m from $1,852m in the comparable quarter a year ago. Organic sales growth as a percentage of net sales was 12.2%.

Net income for the quarter increased $54m, or 13.0%, to $468m from $414m in the comparable quarter a year ago. The increase in net income primarily reflects the increase in net sales described above and the application of our value-driven operating strategy. The increase was partially offset by higher interest expense, non-cash stock and deferred compensation expense, and acquisition transaction and integration-related expenses.

GAAP earnings per share were reduced in the quarter by $2.27 per share as a result of dividend equivalent payments accrued in the fourth quarter related to the $75.00 per share dividend declared on September 19, 2024 and paid on October 18, 2024. No dividend equivalent payments were made during the fourth quarter of fiscal 2023.

Adjusted net income for the quarter increased 23.9% to $570 m, or $9.83 per share, from $460 m, or $8.03 per share, in the comparable quarter a year ago.

EBITDA for the quarter increased 14.3% to $1,041 m from $911 m for the comparable quarter a year ago. EBITDA As Defined for the quarter increased 19.3% to $1,149 m compared with $963 m in the comparable quarter a year ago. EBITDA As Defined as a percentage of net sales for the quarter was 52.6% compared with 52.0% in the comparable quarter a year ago.

Acquisition Activity

As previously reported on July 31, 2024, TransDigm completed the acquisition of Raptor Scientific. Raptor Scientific is a leading global manufacturer of complex test and measurement solutions primarily serving the aerospace and defense end markets.

Financing Activity

On September 19, 2024, the Company completed the issuance of $3,000 m in new senior secured debt. The new senior secured debt issued included $1,500m in 6.00% senior secured notes maturing January 15, 2033 and $1,500m in Tranche L term loans maturing January 19, 2032. The Tranche L terms loans bear interest at Term Secured Overnight Financing Rate (“SOFR”) plus 2.50%.

Special Dividend Activity

During the quarter, on September 19, 2024, concurrently with the $3,000m issuance of new senior secured debt (described above), the Company’s Board of Directors authorized and declared a special cash dividend of $75.00 on each outstanding share of common stock and cash dividend equivalent payments on eligible vested options outstanding under its stock option plans. Total cash payments, funded by the combination of the $3,000 m in new senior secured debt and existing cash on hand, related to the special dividend and dividend equivalents were approximately $4,348 m. These payments were made on October 18, 2024.

Year-to-Date Results

Fiscal 2024 net sales increased 20.6%, or $1,355m, to $7,940m from $6,585m in fiscal 2023. Organic sales growth as a percentage of net sales for fiscal 2024 was 16.2%.

Fiscal 2024 net income increased $416m, or 32.0%, to $1,715 m from $1,299m in fiscal 2023. The increase in net income primarily reflects the increase in net sales described above and the application of our value-driven operating strategy. The increase was partially offset by higher interest expense, income tax expense, non-cash stock and deferred compensation expense, and acquisition transaction and integration-related expenses.

GAAP earnings per share were reduced in fiscal 2024 and 2023 by $4.02 per share and $0.67 per share, respectively, as a result of dividend equivalent payments accrued or made during each year. As a reminder, GAAP earnings per share are reduced when TransDigm makes dividend equivalent payments pursuant to its stock option plans. These dividend equivalent payments are made during TransDigm’s first fiscal quarter each year and also upon payment of any special dividends.

Fiscal 2024 adjusted net income increased 33.1% to $1,966m, or $33.99 per share, from $1,477m, or $25.84 per share, in fiscal 2023.

Fiscal 2024 EBITDA increased 21.1% to $3,813 m from $3,148m in fiscal 2023. EBITDA As Defined for fiscal 2024 increased 22.9% to $4,173 m compared with $3,395m in fiscal 2023. EBITDA As Defined as a percentage of net sales for fiscal 2024 was 52.6% compared with 51.6% in fiscal 2023.

“I am very pleased with our team’s performance and the overall operating results for the fourth quarter and full year of fiscal 2024,” stated Kevin Stein, TransDigm Group’s President and Chief Executive Officer. “The strong fourth quarter performance resulted in surpassing the high end of our most recently issued fiscal 2024 revenue guidance and EBITDA As Defined margin guidance. Our EBITDA As Defined margin for the quarter was 52.6%, up approximately 60 basis points from the comparable prior year period. Excluding the results related to the 2024 acquisitions of SEI Industries, the CPI Electron Device Business and Raptor Scientific, our fourth quarter EBITDA As Defined margin was approximately 53.7%.

During the course of the past six months, we have deployed approximately $6.5bn of capital across three acquisitions – SEI Industries, the CPI Electron Device Business and Raptor Scientific, and a special dividend of $75 per share. The payout of this dividend in October 2024 still leaves us with significant liquidity and financial flexibility to address any likely range of capital requirements or other opportunities. As you know, we are continuously evaluating our capital allocation options and we were pleased to return this capital to our shareholders.

As always, we remain committed to our operating strategy, value drivers and the effective management of our cost structure. We look forward to the opportunity to continue creating value for our shareholders as we move into our fiscal 2025.”

Please see the attached tables for a reconciliation of net income to EBITDA, EBITDA As Defined, and adjusted net income; a reconciliation of net cash provided by operating activities to EBITDA and EBITDA As Defined; and a reconciliation of earnings per share to adjusted earnings per share for the periods discussed in this press release.

Fiscal 2025 Outlook

Mr. Stein stated, “We are issuing full year fiscal 2025 guidance today, which reflects our current expectations for the year. We were very pleased to see the further recovery of our commercial markets in our fiscal 2024, alongside strong growth in the defense market. We expect continued growth in each of our primary end markets – commercial OEM, commercial aftermarket and defense – in our fiscal 2025.” The commercial OEM guidance contains an appropriate level of risk around the expected OEM production build rates for fiscal 2025.

TransDigm now expects fiscal 2025 financial guidance to be as follows:

• Net sales are anticipated to be in the range of $8,750m to $8,950 m compared with $7,940m in fiscal 2024, an increase of 11.5% at the midpoint;
• Net income is anticipated to be in the range of $1,887m to $1,999 m compared with $1,715m in fiscal 2024, an increase of 13.3% at the midpoint;
• Earnings per share is expected to be in the range of $31.47 to $33.39 per share based upon weighted average shares outstanding of 58.4m shares, compared with $25.62 per share in fiscal 2024, which is an increase of 26.6% at the midpoint;
• EBITDA As Defined is anticipated to be in the range of $4,615 m to $4,755 m compared with $4,173m in fiscal 2024, an increase of 12.3% at the midpoint (corresponding to an EBITDA As Defined margin guide of approximately 52.9% for fiscal 2025);
• Adjusted earnings per share is expected to be in the range of $35.36 to $37.28 per share compared with $33.99 per share in fiscal 2024, an increase of 6.9% at the midpoint; and
• Fiscal 2025 outlook is based on the following market growth assumptions:
• Commercial OEM revenue growth in the mid single-digit percentage range;
• Commercial aftermarket revenue growth in the high single-digit to low double-digit percentage range; and
• Defense revenue growth in the high single-digit percentage range.

(Source: PR Newswire)

 

08 Nov 24. Embraer 2024 Guidance updated: Management believes prior guidance no longer represents evenly balanced opportunities and risks for full-year operations. From an operations point of view, we estimate Commercial Aviation deliveries between 70 and 73 aircraft (down from 72 and 80), and Executive Aviation deliveries between 125 and 135 (unchanged). From a finance point of view, we forecast Revenues in the US$6.0-6.4bn range (unchanged), Adjusted EBIT margin between 9.0% and 10.0% (up from 6.5% and 7.5%), and Adjusted Free Cash Flow of US$300m or higher (up from US$220m or higher).

• Fitch Ratings upgraded our credit rating from “BB+” to “BBB-” with a stable outlook in late September. Consequently, both S&P and Fitch currently rate the company Investment Grade (IG). Moody’s rating remains Ba1 (i.e. one-notch below IG) but it recently revised the company’s outlook to positive.
• Embraer delivered 59 jets in 3Q24 of which 41 were executive jets (22 light and 19 medium), 16 were commercial jets and 2 multi-mission C-390 Millennium in Defense & Security; +26% versus the 47 aircraft delivered quarter over quarter (qoq) and +37% versus the 43 aircraft delivered year over year (yoy).
• Firm order backlog of US$22.7bn in 3Q24 – a new record, at a 9-year high level, more than 25% higher yoy and almost 10% higher qoq. For more information please see our 3Q24 Backlog and Deliveries release.
• Revenues totaled US$1,692m in the period; +32% yoy. Highlight for Executive Aviation and Defense & Security revenues +65% yoy growth each.
• Adjusted EBIT reached US$297.5m with a 17.6% margin in 3Q24 (US$147.5m and 8.7% ex-Boeing arbitration; US$100.1m and 7.8% in 3Q23).
• Adjusted free cash flow w/o Eve was US$241.1 m during the quarter because of higher number of aircraft delivered.

 

07 Nov 24. nLIGHT, Inc. Announces Third Quarter 2024 Results.

Revenues of $56.1m for the third quarter of 2024

nLIGHT, Inc. (Nasdaq: LASR), a leading provider of high-power semiconductor and fiber lasers used in the industrial, microfabrication, and aerospace and defense markets, today reported financial results for the third quarter of 2024.

“Strong execution across multiple programs in both directed energy and laser sensing resulted in record Aerospace & Defense product revenue during the quarter, and we remain well-positioned for near- and long-term growth in the Aerospace & Defense market.”

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“Driven by record results in Aerospace & Defense, third quarter revenue of $56.1m was above the midpoint of our guidance range and increased 11% compared to the third quarter of 2023,” commented Scott Keeney, nLIGHT’s President & Chief Executive Officer. “Strong execution across multiple programs in both directed energy and laser sensing resulted in record Aerospace & Defense product revenue during the quarter, and we remain well-positioned for near- and long-term growth in the Aerospace & Defense market.”

Mr. Keeney continued, “A strong growth quarter in Microfabrication coupled with higher A&D products revenue enabled us to increase products gross margin to 29%, an improvement of approximately 500 basis points compared to the third quarter of 2023. Our balance sheet remains strong as we ended the quarter with approximately $107m in cash and investments with no debt.”

Revenues of $56.1m for the third quarter of 2024 were up 10.9% compared to $50.6m for the third quarter of 2023. Gross margin was 22.4% for the third quarter of 2024 compared to 19.6% for the third quarter of 2023. GAAP net loss for the third quarter of 2024 was $10.3m, or $0.21 per diluted share, compared to net loss of $11.9m, or $0.26 per diluted share, for the third quarter of 2023. Non-GAAP net loss for the third quarter of 2024 was $3.7m, or $0.08 per diluted share, compared to non-GAAP net loss of $4.9m, or $0.10 per diluted share, for the third quarter of 2023. Reconciliations of the non-GAAP metrics presented here to the most directly comparable GAAP metric have been provided in the tables included at the end of this release.

Outlook

For the fourth quarter of 2024, nLIGHT expects revenues to be in the range of $49m to $54m. The midpoint of $51.5m includes Laser Products revenue of approximately $36.5m and Advanced Development revenue of approximately $15m. nLIGHT expects overall gross margin to be in the range of 17% to 21%, with Laser Products gross margin in the range of 21% to 25% and Advanced Development gross margin of approximately 8%. nLIGHT expects Adjusted EBITDA to be in the range of ($5)m to ($2)m.

We have not reconciled our outlook for Adjusted EBITDA because unrealized and realized foreign exchange gains and losses cannot be reasonably calculated or predicted nor can the probable significance be determined at this time. Accordingly, a reconciliation is not available without unreasonable effort. (Source: BUSINESS WIRE)

 

07 Nov 24. MACOM Reports Fiscal Fourth Quarter and Fiscal Year 2024 Financial Results.

MACOM Technology Solutions Holdings, Inc. (“MACOM”) (Nasdaq: MTSI), a leading supplier of semiconductor products, today announced its financial results for its fiscal fourth quarter and fiscal year ended September 27, 2024.

“Our team continues to identify opportunities to expand our customer base and gain share with our leading products and technologies”

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Fourth Quarter Fiscal Year 2024 GAAP Results

• Revenue was $200.7m, an increase of 33.5%, compared to $150.4 m in the previous year fiscal fourth quarter and an increase of 5.4% compared to $190.5m in the prior fiscal quarter;
• Gross margin was 54.7%, compared to 57.6% in the previous year fiscal fourth quarter and 53.2% in the prior fiscal quarter;
• Income from operations was $27.5m, or 13.7% of revenue, compared to income from operations of $15.6m, or 10.4% of revenue, in the previous year fiscal fourth quarter and income from operations of $19.7m, or 10.4% of revenue, in the prior fiscal quarter; and
• Net income was $29.4m, or $0.39 per diluted share, compared to net income of $24.5m, or $0.34 per diluted share, in the previous year fiscal fourth quarter and net income of $19.9m, or $0.27 per diluted share, in the prior fiscal quarter.

Fourth Quarter Fiscal Year 2024 Adjusted Non-GAAP Results

• Adjusted gross margin was 58.1%, compared to 60.1% in the previous year fiscal fourth quarter and 57.5% in the prior fiscal quarter;
• Adjusted income from operations was $50.7m, or 25.2% of revenue, compared to adjusted income from operations of $37.2m, or 24.7% of revenue, in the previous year fiscal fourth quarter and adjusted income from operations of $45.6m, or 24.0% of revenue, in the prior fiscal quarter; and
• Adjusted net income was $54.2m, or $0.73 per diluted share, compared to adjusted net income of $40.1m, or $0.56 per diluted share, in the previous year fiscal fourth quarter and adjusted net income of $48.9m, or $0.66 per diluted share, in the prior fiscal quarter.

Fiscal Year 2024 GAAP Results

• Revenue was $729.6m, an increase of 12.5%, compared to $648.4m in fiscal year 2023;
• Gross margin was 54.0%, compared to 59.5% in fiscal year 2023;
• Income from operations was $73.7 m, compared to $107.4 m in fiscal year 2023; and
• Net income was $76.9m, or $1.04 per diluted share, compared to a net income of $91.6m, or $1.28 income per diluted share in fiscal year 2023.

Fiscal Year 2024 Adjusted Non-GAAP Results

• Adjusted gross margin was 57.9%, compared to 61.3% in fiscal year 2023;
• Adjusted income from operations was $175.0m, or 24.0% of revenue, compared to $189.6m, or 29.2% of revenue, in fiscal year 2023; and
• Adjusted net income was $188.2m, or $2.56 per diluted share, compared to adjusted net income of $193.3m, or $2.70 per diluted share in fiscal year 2023.

Management Commentary

“Our team continues to identify opportunities to expand our customer base and gain share with our leading products and technologies,” said Stephen G. Daly, President and Chief Executive Officer.

Business Outlook

For the fiscal first quarter ending January 3, 2025, MACOM expects revenue to be in the range of $212m to $218m. Adjusted gross margin is expected to be between 57% and 59%, and adjusted earnings per diluted share is expected to be between $0.75 and $0.81 utilizing an anticipated non-GAAP income tax rate of 3% and 75.0m fully diluted shares outstanding. (Source: BUSINESS WIRE)

 

07 Nov 24. BlackSky Reports Third Quarter 2024 Results.

Company Receives New Awards Valued up to $780m

YTD Revenue Growth of 22%; Company Reaffirms Full Year 2024 Guidance

First Gen-3 Satellite Completing Final Pre-Ship Testing

BlackSky Technology Inc. (“BlackSky” or the “Company”) (NYSE: BKSY) announced results for the third quarter ended September 30, 2024.

“We delivered a strong quarter of multi-year contract bookings valued up to $780m, continuing to demonstrate growing demand for our high-frequency monitoring and AI-enabled analytic services”

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Third Quarter Financial Highlights:

• Revenue of $22.5m, up 6% from the prior year quarter
• Imagery & software analytical services revenue grew 13% over the prior year quarter
• Imagery & software analytical services cost of sales(1), as a percent of revenue, improved to 21% from 23% in the prior year quarter

“We delivered a strong quarter of multi-year contract bookings valued up to $780m, continuing to demonstrate growing demand for our high-frequency monitoring and AI-enabled analytic services,” said Brian E. O’Toole, BlackSky CEO. “We successfully raised over $45m, which has strengthened our balance sheet and provides the capital, which we believe will fully fund our baseline Gen-3 constellation plan. We are excited to be in the final phases of pre-ship testing of our first Gen-3 satellite as we ready for launch. Looking ahead, we expect to start a regular deployment cadence of Gen-3 satellites in 2025, which will start to unlock our next phase of growth delivering transformative space-based intelligence solutions to customers around the world.”

Recent Highlights

• Won a multi-year contract valued up to $290m with the National Geospatial-Intelligence Agency to monitor global economic activity and military capability
• Awarded a multi-year contract with NASA valued up to $476m to deliver time-diverse, rapid-revisit satellite imagery to support Earth and applied science research
• Signed a $6m contract expansion with an existing international defense sector customer to extend access to BlackSky’s Gen-2 satellite imagery services
• Expanded product offering to provide non-Earth imaging services and captured multiple seven-figure contracts in support of growing space domain awareness missions worldwide
• Awarded a U.S. Navy research contract to explore applications for advanced optical intersatellite link terminals to provide real-time access to imagery during time-sensitive military operations worldwide
• Successfully raised over $45m which is expected to fully fund the Company’s baseline Gen-3 constellation
• First Gen-3 satellite in final testing phase and expected to ship to launch site in the next few weeks with a launch window anticipated to open three to four weeks after shipment
• BlackSky wins 2024 Novaspace, formerly Euroconsult, Leading Earth Observation Business Award at World Space Business Week in Paris, an event that recognizes companies shaping the future of the global space sector

Cost of sales is defined as imagery and software analytical services costs and professional and engineering services cost, less depreciation and amortization expense.

Financial Results

Revenues

Total revenue for the third quarter of 2024 was $22.5m, up $1.3m, or 6%, from the third quarter of 2023. Imagery and software analytical services revenue was $17.3m in the third quarter of 2024, up 13% over the prior year period, primarily driven by incremental customer orders for BlackSky’s imagery services. Professional and engineering services revenue was $5.3m in the third quarter of 2024, compared to $6.0m in the prior year period. Professional and engineering services contracts are milestone-based contracts that may have quarter-over-quarter revenue variability, in contrast to the imagery and software analytical services, which are typically recurring subscription-based revenues.

Cost of Sales(

Total cost of sales as a percentage of revenue improved to 29% for the third quarter of 2024, compared to 32% in the third quarter of 2023. Imagery and software analytical service costs as a percentage of revenue improved to 21% in the third quarter of 2024, compared to 23% in the third quarter of 2023, primarily driven by greater volumes of revenue that inherently have a low fixed-cost structure as a percentage of revenue.

Operating Expenses

Operating expenses for the third quarter of 2024 were $29.1m, which included $2.4m of non-cash stock-based compensation expense and $11.1m in depreciation and amortization expenses. Operating expenses for the third quarter of 2023 were $29.0m, which included $2.3m in non-cash stock-based compensation expense and $11.3m in depreciation and amortization expenses. Excluding the non-cash stock-based compensation and depreciation and amortization expenses from both years, cash operating expenses(2) for the third quarter of 2024 were $15.6m, flat compared to cash operating expenses of $15.4 m for the third quarter of 2023.

Net Loss/Income

Net loss for the third quarter of 2024 was $12.6m, compared to a net income of $0.7m in the third quarter of 2023. The year-over-year decrease of $13.3m was primarily driven by fluctuations in the Company’s equity warrants and other equity instruments that are measured at fair value and driven by the Company’s common stock price, which resulted in changes in the gain on derivatives.

Adjusted EBITDA

Adjusted EBITDA for the third quarter of 2024 was $0.7m, compared to an adjusted EBITDA loss of $0.4m in the third quarter of 2023. The $1.1m year-over-year improvement was primarily driven by strong operating leverage achieved through higher revenues and improved gross margins.

Balance Sheet & Capital Expenditures

As of September 30, 2024, cash and cash equivalents, restricted cash, and short-term investments totaled $64.4m. This balance includes net equity proceeds of approximately $44.6m raised in the quarter, less a $10.0m debt repayment on the commercial bank line, which remains available to the Company should it choose to draw on it. In addition, the Company anticipates receiving approximately $26.7 m in payments over the next 12 months as interim milestones on a few major customer contracts are met and expected to be billed, further enhancing the Company’s liquidity. Capital expenditures for the third quarter of 2024 were $13.1m, bringing the year-to-date total capital expenditures to $40.7m.

2024 Outlook

BlackSky is starting to ramp up revenues from recent contract awards and continues to work on a number of sizable new and expansion contracts which have some degree of uncertainty surrounding the timing of close and start of revenue recognition. As such, the Company maintains its outlook for full year 2024 revenue of between $102m and $118m, and full year 2024 adjusted EBITDA of between $8m and $16m. In addition, the Company maintains its expectations for full year 2024 capital expenditures of between $55m and $65m, primarily driven by investments in its Gen-3 satellites. (Source: BUSINESS WIRE)

 

07 Nov 24. Expect a strong second half from Solid State.

Simon Thompson: Order delays subdued first-half trading, but Donald Trump’s election win has shifted the dial

• First-half revenue down 30 per cent to £62m
• Pre-tax profit falls from £7.3m to £2.5m
• Order intake improving and earnings guidance maintained
• Forward price/earnings (PE) ratios of 16 (2025) and 13.8 (2026)

A first-half trading update from Redditch-based value-added electronics group Solid State (SOLI: 210p) prompted a 14 per cent reversal in its share price.

The main issue was that political uncertainty in both the UK and US led to delays in several programmes in the group’s systems division, which in turn contributed to weaker first-half order intake. Since the half-year-end, the US business has seen some improvement while the UK operations has remained sluggish.

The group’s systems division was already up against a tough comparator. That’s because an exceptional defence order from Nato contributed £23.4m to divisional revenue and bumper earnings in the first half of the prior year. Excluding these shipments, management reports 7 per cent growth in divisional revenue to £35m on a constant currency basis. The directors also note that there are “similar significant opportunities for material projects and revenues to be secured in future periods as the technology is adopted by a growing security and defence user base across the Nato alliance.”

Moreover, Solid State’s £77m order book at the start of the second half has since increased to £84m, of which £50m is expected to be billed by the 31 March 2025 financial year-end. Based on the improving order intake, and the near-term unconverted visible pipeline (mainly security and defence orders), the directors are maintaining full-year pre-tax profit guidance of £10.1m on annual revenue of £144m, in line with consensus forecasts.

Trump win catalyst for higher European defence spending

Of course, there is a risk that Solid State fails to convert all the orders needed to hit market expectations. That said, the Republican Party’s win in the US Presidential Election has shifted the dial given the strong views voiced by Donald Trump on the future role the country will play in defending Europe.

According to the well-respected Ifo Institute, defence spending above the Nato target of 2 per cent of gross domestic product (GDP) would be necessary for Europe to be able to defend itself without the protective umbrella of the US. “European countries would have to significantly increase their efforts because budgets have been too low for years to build up an adequate defence capability,” says Ifo Institute researcher Florian Dorn in a newly published research paper (“Defense Spending for Europe’s Security – How Much Is Enough?,” EconPol Policy Brief 66, 7 November 2024).

Solid State should be a major beneficiary as a UK-based systems provider, having direct exposure to Nato agencies and relationships with Tier 1 suppliers such as BAE Systems (BA.), which has seen its share price rally hard since the US presidential election result. Furthermore, the bespoke requirements on these contracts means that work on defence programmes can extend for multi-year periods, too.

So, with Solid State’s shares de-rated to modest forward price/earnings (PE) ratios of 16 (2025) and 13.8 (2026) since the group reported record annual results (‘A solid way to play the defence boom’, 9 July 2024), there is scope for a share price recovery as the trading environment improves and the pipeline of orders are secured. Hold. (Source: Investors Chronicle)

 

07 Nov 24. Leonardo, the BOD approves 9 months results. Growth performance across all kpis: orders € 14.8bn (+7.8%*), revenues €12.1bn (+12.4%*), ebita €766m (+15%*). Focf €-550m, up 13.7%*.

FY 2024 guidance confirmed.

• Backlog at record level > €43bn with a book to bill at 1,2x
• Effective delivery of backlog, especially across in Electronics and Helicopters
• EBITA improvement driven by growing volumes, mainly in Electronics
• Continuous improvement of FOCF
• Group Net Debt at €3.1bn (-19%1)
• Establishingof the JV with Rheinmetall strengthens the positioning in the international context
• Net Results at €730m, including a one-off benefit of € 366 m for the fair value measurement of the Telespazio Group

* – vs 9M23 pro-forma

Leonardo’s Board of Directors, convened today under the Chairmanship of Stefano Pontecorvo, examined and unanimously approved the 2024 first nine months results.

“The economic-financial performance of the period, together with the development of the business and the strengthening of the financial indicators, plus the implementation of the existing efficiency program, is all confirming the validity of the path undertaken in pursuing the objectives indicated in the Industrial Plan.” – Roberto Cingolani, Leonardo CEO and GM, stated.

“The consolidation and strengthening of our core defense business is proceeding in line with the objectives we have set thanks to the acceleration of the digitalisation process and the rationalization of the portfolio. After the creation of the new Space Division, aimed at positioning in new business segments with higher added value, the sale of Underwater Armaments & Systems to Fincantieri, and the exit from non-core businesses such as Industria Italiana Autobus and Skydweller, Leonardo has finalized the acquisition, in the radar sector, of control of GEM Elettronica. The path of international alliances has seen the establishment of the Joint Venture with Rheinmetall, which allows the company to play a key international role in the programs of the new Main Battle Tank (MBT) and the new Lynx platform for the Armored Infantry program Combat System (AICS). This achievement, achieved in less than six months, demonstrates the strategic importance of moving with agility and determination in the international competitive scenario. We have defined, together with our customers and partners, the main elements of the GCAP program which will become definitive with the formal signing of an industrial agreement by the end of the year. These elements provide strategic activities in the development of systems of systems for Leonardo. The evaluation of growth and development opportunities in the cyber and space sector also continues”. Roberto Cingolani, Leonardo CEO and GM, concluded.

9M 2024 financial results

In order to make the Group’s operating performance more comparable, the indicators for the comparative period are also provided on a pro-forma basis, including the contribution of the Telespazio group, consolidated on a line-by-line basis starting from 1 January 2024.

In the first nine months of 2024, New Orders and Revenues increased by 11.1% (+7.8% compared to the pro-forma figure of September 2023) and by 17.6% (+12.4% compared to the pro-forma figure) respectively, driven in particular by the Defence Electronics & Security and Helicopters businesses. The growth of Revenues was accompanied by an increase in EBITA of 18.9% (+15.0% compared to the pro-forma figure), with a ROS for the period equal to 6.3% (in line with that at 30 September 2023, increasing compared to the pro-forma figure, equal to 6.2%).

Free Operating Cash Flow for the period also improved (+8.9%, +13.7% compared to the pro-forma figure), whose performance, together with the sale of the minority stake in Leonardo DRS, which occurred in the last quarter of 2023, resulted in a consequent positive impact on the Group’s net debt, which decreased by 18.2% compared to the comparative period (19.0% compared to the pro-forma figure).

Key Performance Indicators

The Key Performance Indicators for the comparative period are provided also on a pro-forma basis, including the effects of the line-by-line consolidation of Telespazio:

2024 Guidance

In view of the results achieved in the first nine months of 2024 and the expectations for the coming periods, we confirm the guidance for the full year 2024 as disclosed in March 2024.

Below is the summary table:

contracts, strategic investments, and other minor transactions.

Commercial Performance

• New Orders, amounted to EUR 14,753m significantly increasing (+11.1%, +7.8% on the pro-forma figure) compared to the first nine months of 2023, with a particular positive performance of the Defence Electronics and Security (DES) business, both of the European DES component and of the subsidiary Leonardo DRS, as well as of Helicopters in the government and commercial fields. We also note an increase in the Cyber & Security Solutions and Aerostructures. The level of New orders is equal to a book to bill (the ratio of New orders to Revenues for the period) of about 1.2
• Backlog, amounted to EUR 43,618m ensures a coverage in terms of production exceeding 2.5 years

Economic Performance

• Revenues, amounted to EUR 12,076m, increased compared to the first nine months of 2023 (+17.6%, +12.4% on the pro-forma figure) in almost all business sectors, with a significant contribution from the Defence Electronics and Security and Helicopters sectors
• EBITA, amounted to EUR766m, reflected the solid performance of the Group’s businesses, showing an increase compared to the first nine months of 2023 (+18.9%, +15.0% on the pro-forma figure), mainly as a result of the increase in the activity volumes. The period was particularly affected by the performance of the Defence Electronics and Security, sharply improving compared to the same period of the prior year, while the Space sector was affected by the expected difficulties in the manufacturing segment
• EBIT, amounted to EUR636m, reported a growth (+18.4%, +15.2% on the pro-forma figure) despite being affected by an increase in non-recurring one-off charges, mainly due to the effects deriving from the positive termination and settlement of contracts entered into in previous years. Additionally, EBIT was also affected by the amortisation of the Purchase Price Allocation connected with the first-time consolidation of the Telespazio group starting from 1 January 2024. The above-said charges were partially offset by lower restructuring costs compared to the comparative period
• Net Result before extraordinary transactions, amounted to EUR364m, (€m. 290 in the comparative period, €m. 298 on the pro-forma figure), benefitted from the improvement of EBIT and from lower finance costs, partially offset by the higher taxation for the period
• Net Result, equal to EUR730m (€m. 301 in the comparative period, €mil. 309 on the pro-forma figure) included, in addition to the Net Result before extraordinary transactions, the capital gain (€mil. 366) recognised after the fair value measurement of the Telespazio group, carried out for the purposes of its line-by-line consolidation

Financial performance

• Free Operating Cash Flow (FOCF), negative for EUR550m, improving compared to the performance at 30 September 2023 (negative for €mil. 604, negative for €m. 637 in the pro-forma figure), confirmed the positive results reached thanks to initiatives to strengthen the operational performance and the collection cycle, a careful investment policy in a period of business growth and an efficient financial strategy. The figure however highlighted the usual interim trend that is characterised by significant cash absorptions during the first part of the year
• Group Net Debt, of EUR3,120m, reduced significantly (about €bn. 0.7) against September 2023, thanks to the strengthening of the Group’s cash generation and to the sale of the minority stake in Leonardo DRS, occurred in the last quarter of 2023. Compared to 31 December 2023 (€m. 2,323) the value increased mainly as a result of the FOCF performance, in addition to the payment of dividends for an amount equal to €m. 177 (of which €mil. 160 relating to Leonardo S.p.a.) and to the signing of new lease agreements in the period, for a value of €m. 39

SECTOR PERFORMANCE

The Key Performance Indicators of the business Sectors are reported below while pointing out that – starting from 1 January 2024 – the contribution from the line-by-line basis consolidation of the Telespazio group is included in the Space sector. Furthermore, with the purpose of providing a representation mode increasingly in line with the Group’s corporate strategies and the underlying business trends, the Defence Electronics & Security and Cyber & Security Solutions sectors, which were aggregated until the 2023 Financial Statements within the Defence Electronics & Security only. The Sectors’ performance will be therefore represented and commented on with reference to the following operating sectors: Helicopters, Defence Electronics & Security, Cyber & Security Solutions, Aircraft, Aerostructures and Space (Helicopters, Defence Electronics & Security, Aircraft, Aerostructures and Space in the 2023 financial statements).

In order to make operating performance comparable, the indicators for the comparative period have been restated in this section for ease of comparison. With reference to the Space sector, the comparative period is presented on a pro-forma basis, including the contribution of the Telespazio group.

 

06 Nov 24. Astronics Corporation Reports 25% Growth in Sales in 2024 Third Quarter

• Sales increased $40.8m to $203.7m, highest quarterly level since the first quarter of 2019
• Higher sales drove Aerospace operating income of $14.3m, or 8.0%; Adjusted Aerospace operating income1 was $25.3m, or 14.2% of sales
• Net loss for the quarter of $11.7m, or $0.34 per diluted share, included impact of $7.0m in refinancing costs; Adjusted net income1 was $12.2m, or $0.35 per diluted share
• Adjusted EBITDA1 grew 207% to $27.1m, or 13.3% of sales, up $18.2m over the prior-year period and up $6.8m over trailing second quarter
• Generated $8.5m in cash from operations in the quarter
• Bookings in the quarter were $189.2m, driving backlog of $611.9m with book to bill ratio of 0.93x
• Revised 2024 revenue guidance to a new range of $777m to $797m

Astronics Corporation (Nasdaq: ATRO) (“Astronics” or the “Company”), a leading supplier of advanced technologies and products to the global aerospace, defense, and other mission-critical industries, today reported financial results for the three and nine months ended September 28, 2024.

Peter J. Gundermann, Chairman, President and Chief Executive Officer, commented, “We delivered a solid third quarter operationally. Revenue was at the high end of our range, up 25% over the comparator quarter. Adjusted EBITDA was $27.1m for the quarter and $91m for the trailing twelve months. Operating margins improved from both volume and the initiatives we have executed to drive profitability. Our Aerospace segment adjusted operating margin was 14.2%. We are clearly making progress towards our operational goals, though our results include the impact of expenses related to our July refinancing, a customer bankruptcy and a warranty reserve. All in all, we feel it was another quarter of progress as we continue to recover from the disruption of the past few years.”

1 Adjusted gross profit, adjusted gross margin, adjusted operating income, adjusted operating margin, adjusted segment operating profit, adjusted segment operating margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income and adjusted diluted earnings per share (“EPS”) are Non-GAAP Performance Measures. Please see the reconciliation of GAAP to non-GAAP performance measures in the tables that accompany this release.

Consolidated sales were up $40.8m, or 25.0%. Aerospace sales increased $35.5m and Test Systems sales increased $5.3m.

Gross profit increased $22.1m to $42.7m, or 21.0% of sales. Adjusted gross profit1 for the 2024 third quarter was $47.2m, or 23.2% of sales. Third quarter gross profit was negatively impacted by a $3.5 m atypical warranty reserve related to a new product launch that requires a field modification, and a $0.9m inventory reserve related to a bankruptcy filing for an Aerospace customer. The comparator quarter of 2023 included a $3.6m write-down of inventory related to a separate customer bankruptcy.

Third quarter 2024 selling, general and administrative expenses (“SG&A”) included $1.3m in reserves for outstanding receivables and fixed asset impairment related to the bankruptcy filing of an Aerospace customer compared to a separate bankruptcy reserve of $7.5m against outstanding receivables in the prior year.

Despite the unusual impacts to gross profit and operating income, consolidated operating income increased $22.9m to $8.4m, or 4.1% of sales, compared with operating loss of $14.5m in the prior-year period. Adjusted operating income1 for the 2024 third quarter was $19.6 m, or 9.6% of sales.

Improved operating income reflects the operating leverage gained on higher sales volume, partially offset by $4.5m for resumed incentive programs, an increase of $1.9m in litigation-related legal expenses and reserve adjustments in 2024 and a $3.2m increase in non-bankruptcy related inventory reserves.

Third quarter 2024 expenses included a $3.2m call premium on the previous term loan and the write-off of $3.8m of associated deferred financing costs. The $7.0 m total has been reflected as Loss on Extinguishment of Debt.

Tax expense in the quarter was $6.6m, primarily due to a valuation allowance applied against the deferred tax asset associated with research and development costs that are required to be capitalized for tax purposes.

Consolidated net loss was $11.7m, or $0.34 per diluted share, measurably improved compared with the net loss of $17.0m, or $0.51 per diluted share, in the prior year. Adjusted net income1 for the 2024 third quarter was $12.2m, or $0.35 per diluted share.

Consolidated adjusted EBITDA1 increased to $27. m, or 13.3% of consolidated sales, compared with adjusted EBITDA1 of $8.8m, or 5.4% of consolidated sales, in the prior-year period primarily as a result of increased profitability from higher sales.

Bookings were $189.2 m in the quarter resulting in a book-to-bill ratio of 0.93:1. For the trailing twelve months, bookings totaled $795.5m and the book-to-bill ratio was 1.02:1.

Aerospace Segment Review

Aerospace Third Quarter 2024 Results (compared with the prior-year period, unless noted otherwise)

Aerospace segment sales increased $35.5m, or 24.9%, to $177.6m. The improvement was driven by a 31.6% increase, or $32.1m, in Commercial Transport sales. Sales to this market were $133.9m, or 65.8% of consolidated sales in the quarter, compared with $101.7m, or 62.5% of consolidated sales in the third quarter of 2023. Growth was primarily related to increased demand by airlines for inflight entertainment & connectivity (“IFEC”) products which are in Electrical Power & Motion and Avionics product groups.

Military Aircraft sales increased $5.0m, or 30.0%, to $21.7m, driven by progress on the FLRAA program. General Aviation sales increased $1.9 m, or 11.6%, to $18.1 m due to higher VVIP sales. Other sales decreased $3.6m as the Company is winding down its non-core contract manufacturing arrangements.

Aerospace segment operating profit of $14.3m was up $21.7m compared with operating loss of $7.5m in the same period last year. Operating margin was 8.0%. Adjusted Aerospace operating profit1 was $25.3m, an increase of $20.3m, or over five times the prior-year period. Adjusted Aerospace operating margin1 expanded 10.7 points to 14.2% reflecting the leverage gained on higher volume and improving production efficiencies.

The segment’s operating profit in the third quarter of 2024 was impacted by $3.5m in warranty expense related to the previously-mentioned field modification, $5.1m in litigation-related legal expenses and reserve adjustments related to an ongoing patent dispute, $3.9m in inventory reserves, $3.2m in compensation expense related to the resumption of the Company’s incentive programs, and a non-cash reserve associated with a customer bankruptcy of $2.2m.

Aerospace bookings were $173.6m for a book-to-bill ratio of 0.98:1. Backlog for the Aerospace segment was $543.6m at quarter end and excludes $9.3m of backlog that was associated with the customer bankruptcy referred to previously.

Mr. Gundermann commented, “Our Aerospace business had a strong quarter, with sales up 24.9% over the comparator quarter and adjusted operating income1 achieving our targeted mid-teens level of 14.2%. We achieved this despite the Boeing strike, which hurt revenue in the quarter by about $2m, with bookings impacted by approximately $7m to $8m. Given the measurably improved profitability, we are pleased with our Aerospace performance during the quarter.”

Test Systems Segment Review

Test Systems Third Quarter 2024 Results (compared with the prior-year period, unless noted otherwise)

Test Systems segment sales were $26.1m, up $5.3m. The improvement was driven by the U.S. Marine Corps’ Handheld Radio Test Sets (“HHRTS”) and the U.S. Army’s TS-4549/T programs, which contributed $5.3m and $1.2m, respectively, in sales during the quarter.

Test Systems segment operating loss was near break-even, compared with operating loss of $1.8m in the third quarter of 2023. The improvement was the result of lower litigation-related legal expenses, partially offset by additional compensation expense from the resumption of the Company’s incentive programs. Test Systems continues to be negatively affected by mix and under absorption of fixed costs at current volume levels.

Additional restructuring initiatives were implemented in the 2024 fourth quarter. In October 2024, the Company offered a voluntary separation program which is currently expected to provide annualized savings of approximately $2m, beginning in the first quarter of 2025. The Company expects to record severance expense of approximately $1m in the fourth quarter of 2024 related to this initiative.

Bookings for the Test Systems segment in the quarter were $15.6m. The book-to-bill ratio was 0.60:1 for the quarter. Backlog for the Test Systems segment was $68.2m at quarter end.

Mr. Gundermann commented, “Our Test business had some success in the third quarter, with revenue up 25.6%. The business has initiated further restructuring to focus on the most critical initiatives going forward, including the radio test program for the U.S. Army, which is now expected to enter volume production in the second half of 2025.”

Liquidity and Financing

Cash provided by operations in the third quarter of 2024 was $8.5m, primarily the result of increased net income, after adjusted for non-cash expenses.

Capital expenditures in the quarter were $1.9m and $5.2m year-to-date. Net debt was $174.6m, up from $161.2m at December 31, 2023.

On July 11, 2024, the Company announced it had amended and expanded its revolving line of credit and refinanced its term loan. The refinancing provided improved liquidity, lower cash costs, and greater financial flexibility for the Company. The refinancing was comprised of an expanded asset-based line of credit and a reduced, lower-cost term loan. Both mature in July 2027.

Legal Proceedings

Since 2010, the Company has been defending itself in a long-running series of patent infringement cases brought by a single plaintiff. Cases were filed in the United States, France, Germany, and the United Kingdom (UK).

The United States case was resolved in 2017, when the court found that the patent was not novel and was therefore invalid.

The French case similarly found that the subject patent was invalid, though the plaintiff is seeking to appeal that decision.

The German court dismissed some claims of the patent but upheld others and found that Astronics had been infringing. The Company has paid $3.5m in penalties and interest to date and has taken a reserve of $17.3m to cover estimated damages and associated interest. Damages proceedings in this case are likely to conclude in 2026.

Unlike in the US, French, and German proceedings, the UK court fully upheld the subject patent and found that the Company was infringing. A damages hearing was conducted in October 2024 and a ruling is expected later this year or early in 2025. Astronics reserved $7.4 m to cover anticipated damages, but the plaintiff is seeking damages of up to approximately $105 m, excluding interest. Based on UK legal practices, the Company expects that some amount of damages may be due in early 2025. The Company is engaged with its lenders to seek to arrange financing to cover the wide range of possible outcomes and satisfy any potential damages award as required.

The Company believes that permission will be granted to either or both of the parties to appeal the judgement to a higher court subsequently.

All patents related to the infringement cases have expired years ago and the lawsuits do not restrict the Company’s current business activities.

2024 Outlook

The Company expects fourth quarter sales of $190m to $210m and is adjusting its 2024 revenue guidance to $777m to $797m. The midpoint of this range would be a 14.2% increase over 2023 sales. Astronics considered the broad range of factors affecting the business, including the work stoppage at Boeing, in issuing its guidance.

Backlog at the end of the third quarter was $611.9m. Planned capital expenditures in 2024 are expected to be in the range of $9m to $11m.

Mr. Gundermann commented, “We are closing in on another year of strong double-digit growth. Assuming we attain the mid-point of the range for 2024, we will have averaged 21% growth over each of the last three years. Our profitability has benefited from the growth and the many improvement initiatives we have implemented over the last several years, and we believe 2025 will see a continuation of these trends.”

(Source: BUSINESS WIRE)

 

05 Nov 24. BigBear.ai Announces Third Quarter 2024 Results.

• Awarded 5-year production contract valued at $165m, beginning in Q4 2024, to deliver the U.S. Army’s Global Force Information Management – Objective Environment (GFIM-OE).
• Demonstrated ConductorOS, the Company’s distributed AI orchestration platform, in a live environment at the U.S. Department of Defense’s (DoD’s) Rapid Defense Experimentation Reserve Technology Readiness Experimentation (RDER T-REX)24-2 event and is showcasing capabilities of ConductorOS in the U.S. Navy’s Mission Autonomy Proving Ground (MAPG) series of exercises through the rest of 2024.
• Revenue increased 22.1% to $41.5m compared to $34.0m in 2023.
• Gross margin increased to 25.9% in the third quarter of 2024 compared to 24.7% in 2023.
• Net loss of $12.2m and non-GAAP Adjusted EBITDA* of positive $0.9m.
• Cash balance of $65.6m as of September 30, 2024; $1.9m net cash used in operating activities in the third quarter.
• Affirming full-year 2024 revenue guidance between $165m and $180m.

BigBear.ai Holdings, Inc. (NYSE: BBAI) (“BigBear.ai” or the “Company”), a leader in AI-powered decision intelligence solutions, today announced financial results for the third quarter of 2024 and issued an investor letter that has been posted to the Investor Relations section of the Company’s website.

“Our third quarter financials show that we are continuing to build a long-term sustainable business, with good cash reserves and steady progress. The headwinds we face as a business are unchanged: the cautious approach of governments and regulators towards artificial intelligence means our business will remain lumpy, and we understand these challenges and are navigating them thoughtfully,” said Mandy Long, CEO of BigBear.ai.

“The route to the long-term success of BigBear.ai lies in both the expertise of our team members and the quality and relevancy of our technology. You can read more details in our letter to investors published today,” she continued.

Financial Highlights

• Revenue increased 22.1% to $41.5m for the third quarter of 2024, compared to $34.0m for the third quarter of 2023.
• Gross margin increased to 25.9% in the third quarter of 2024 as compared to 24.7% in the third quarter of 2023, partially driven by higher margin commercial solutions in the third quarter of 2024 compared to the third quarter of 2023.
• Net loss of $12.2m for the third quarter of 2024, compared to net income of $4.0m for the third quarter of 2023. The increase in net loss was primarily driven by a decreased benefit from the changes in fair value of warrants. The benefit of the change of the fair value of derivatives was $1.3m in the third quarter of 2024 compared to $15.7m in the third quarter of 2023.
• Non-GAAP Adjusted EBITDA* of positive $0.9m for the third quarter of 2024 compared to $0.2m for the third quarter of 2023, primarily driven by improved gross margins and continued focus on cost management.
• SG&A of $17.5m for the third quarter of 2024 compared to $15.5m for the third quarter of 2023, partially due to increased headcount, as well as higher costs related to non-recurring integration, strategic initiatives, and non-recurring litigation.
• Ending backlog was $437m as of September 30, 2024.
• The consolidated year-to-date results include results from Pangiam from the acquisition date of February 29th, 2024 to the end of September 2024.

Momentum

• BigBear.ai awarded production contract to deliver the U.S. Army’s GFIM-OE — The U.S. Army awarded BigBear.ai a five-year, $165.15m sole source prime contract for GFIM production services. Since 2021, BigBear.ai has been working with the Army to transform 15 legacy systems into an enterprise-wide intelligent automation platform, supporting the Secretary of the Army’s vision for data-centric force management. Building on the contributions through Phase 1 and Phase 2, this contract will support the continued development and transition of GFIM-OE capabilities to production.
• BigBear.ai and Concept Solutions team awarded shared IDIQ contract with Federal Aviation Administration (FAA) — BigBear.ai received an award as a subcontractor to Concept Solutions, LLC (CS). CS is one of 14 companies awarded a FAA Information Technology Innovative Procurement Strategic Sourcing (ITIPSS) contract supporting the Office of Information Technology (AIT). This multiple-award IDIQ contract, with a $2.4bn shared ceiling over ten years, will enable the FAA to acquire a full range of IT capabilities, solutions, and emerging technologies, offering state-of-the-art IT-related service solutions.
• BigBear.ai implemented biometric boarding solutions for Denver International Airport (DEN) — BigBear.ai announced a successful installation of veriScan, BigBear.ai’s biometric verification solution, at DEN. veriScan is now deployed at 14 international departure gates at DEN, impacting the boarding process for over 46,600 international departing passengers.
• ConductorOS excellence at RDER T-REX24-2 — BigBear.ai demonstrated ConductorOS, BigBear.ai’s AI orchestration platform, at the DoD Office of the Under Secretary of Defense for RDER T-REX24-2 event highlighting its capabilities in edge AI orchestration. ConductorOS was recognized as a Tier 1 technology.
• BigBear.ai participates in U.S. Navy MAPG exercises — BigBear.ai announced its participation in previous and upcoming showcases with the U.S. Navy’s MAPG series of exercises in the second half of 2024, providing maritime domain awareness and edge AI orchestration. In collaboration with the U.S. Navy, BigBear.ai will continue to showcase ConductorOS, BigBear.ai’s AI, data and sensor orchestration platform, to demonstrate multi-vendor interoperability and AI deployment for the maritime domain.
• BigBear.ai announced the promotion of Carl Napoletano to Chief Operating Officer — Napoletano will continue to report directly to CEO Mandy Long. Napoletano has held a number of senior leadership positions at BigBear.ai, most recently serving as Vice President of Special Projects, where he oversaw the strategic integration of major acquisitions, including Pangiam.
• BigBear.ai receives additional “Awardable” status for DoD’s work in the Chief Digital and Artificial Intelligence Office’s (CDAO) Tradewinds Solutions Marketplace – BigBear.ai announced additional “Awardable” status through the CDAO Tradewinds Solutions Marketplace. The Tradewinds Solutions Marketplace is the premier offering of Tradewinds, the DoD’s suite of tools and services designed to accelerate the procurement and adoption of Artificial Intelligence (AI)/Machine Learning (ML), data, and analytics capabilities. Available capabilities include Trueface, BigBear.ai’s proprietary facial recognition software, and support for the U.S. DoD Joint Staff J3’s ORION, a technology-enabled decision-making platform. (Source: BUSINESS WIRE)

 

06 Nov 24. IonQ (NYSE: IONQ) announced that it has reached a definitive agreement to acquire substantially all of the operating assets of Qubitekk, Inc., a leading Vista, CA-based quantum networking company. As part of the transaction, the Qubitekk team will join IonQ to further enhance IonQ’s leading position in the quantum networking industry. IonQ anticipates closing the acquisition within the next six months, subject to the satisfaction of certain closing conditions.

“The combination of Qubitekk and IonQ will allow us to continue our momentum in quantum networking. Quantum networking and quantum computing are highly synergistic for IonQ. I expect that the quantum networking part of IonQ could be the first division to be cash flow positive.”

From the start, IonQ has prioritized quantum networking as a key strategy for scaling its quantum computers. Specifically, IonQ’s architecture plans to use photonic interconnects to link multiple quantum computers together, creating a more powerful cluster. The years that IonQ has dedicated to developing this technology for its computing efforts have allowed IonQ to quickly advance its offerings in the quantum networking industry.

Once closed, the Qubitekk acquisition will represent a major addition to IonQ’s quantum networking capabilities and customer set. IonQ believes the transaction will contribute to near-term bookings and revenue opportunities, extending IonQ’s commercial leadership in quantum networking.

“Our acquisition of Qubitekk will mark a significant step in IonQ’s expansion into the quantum networking market, where IonQ will be a clear leader in both quantum networking and quantum computing,” said Peter Chapman, President and CEO of IonQ. “The combination of Qubitekk and IonQ will allow us to continue our momentum in quantum networking. Quantum networking and quantum computing are highly synergistic for IonQ. I expect that the quantum networking part of IonQ could be the first division to be cash flow positive.”

Qubitekk’s executive team and employee base including physicists, engineers, software developers, and others will join IonQ to further drive quantum networking efforts. The Qubitekk team joining IonQ includes Co-Founder and CEO Stan Ellis, Co-Founder and CTO Dr. Duncan Earl, Chief Revenue Officer Corey McClelland, and President Keith Clark.

The deal will also significantly expand IonQ’s quantum networking expertise and technology portfolio with 118 U.S. and international patents in the areas of quantum networking hardware and quantum network security and protection.

“Qubitekk is thrilled to be joining IonQ to capitalize on our early advantage in the quantum networking space,” said Stan Ellis, Co-Founder and CEO of Qubitekk. “We have admired IonQ as the pioneering quantum company, with powerful computing systems and a demonstrated commitment to quantum networking as critical infrastructure. Uniting Qubitekk with IonQ will allow us to pursue the quantum-enabled internet as a near-term reality.”

IonQ’s acquisition of Qubitekk follows closely on the heels of a series of recent quantum networking announcements from IonQ. In September, IonQ announced the largest known 2024 U.S. Quantum Contract Award of $54.5 m with United States Air Force Research Lab (AFRL) to design, develop and deliver quantum networking technology. Recently, IonQ demonstrated remote ion-ion entanglement as a key milestone towards scaling its compute across multiple quantum processors using photonic interconnects. Earlier this year, IonQ announced that it was selected by the Applied Research Laboratory for Intelligence and Security (ARLIS) for a quantum networking contract to design a first-of-its-kind, networked system for blind quantum computing. Blind quantum computing enables quantum computers to operate while remaining ‘blind’ to what information is being processed through them.

Advisor

Wilson Sonsini Goodrich & Rosati is serving as legal counsel to IonQ.

About IonQ

IonQ, Inc. is a leader in quantum computing that delivers high-performance systems capable of solving the world’s largest and most complex commercial and research use cases. IonQ’s current generation quantum computer, IonQ Forte, is the latest in a line of cutting-edge systems, boasting 36 algorithmic qubits. The company’s innovative technology and rapid growth were recognized in Fast Company’s 2023 Next Big Things in Tech List and Deloitte’s 2023 Technology Fast 500™ List, respectively. Available through all major cloud providers, IonQ is making quantum computing more accessible and impactful than ever before. Learn more at IonQ.com. (Source: BUSINESS WIRE)

 

06 Nov 24. Capital LLC (“Sagewind”), a government technology-focused U.S. private equity firm with offices in New York City and the Washington, DC area, announced today a majority investment in Sabel Systems Technology Solutions LLC (“Sabel” or the “Company”). Sabel is a leading provider of digital R&D, acquisition and sustainment solutions to the U.S. Department of Defense (“DoD”) and other government agencies.

Founded in 2001 and headquartered in Dayton, Ohio, Sabel unlocks the power of digital engineering for the DoD. The Company’s Digital Engineering Cloud (“DEC”) allows the DoD to accelerate R&D, and enhance agility, scalability and connectivity needed to work more effectively and efficiently. The DEC harmonizes commercial software and gives users access to many powerful engineering and business systems applications in one virtual environment. When it comes to building the operational systems of the future, DEC users have access to the computing power and Sabel tradecraft that enable mission success every day. Today, Sabel and the DEC are serving on missions ranging from modeling and simulation, product lifecycle management, the development of cutting-edge manned/unmanned platforms, and enterprise-wide compliance.

Chris Sharbaugh and Doug Kinyon, Managing Principals of Sabel Systems, said, “Sabel is excited to partner with Sagewind in charting the next chapter of our growth in the digital engineering and cyber solutions marketplace. Sagewind has a strong track record of backing management teams to help them grow their businesses through internal investment and acquisitions, which is exactly what we need to best support our customers’ growing requirements. We are excited about the opportunity to expand our offerings, accelerate our growth, and provide greater opportunities for our employees.”

Steven Lefkowitz, Managing Partner of Sagewind Capital, said, “Sabel is executing on critical digital transformation initiatives for its customers. These initiatives enable the use of better technology that ultimately strengthens teams within and outside the government. The work that Chris and Doug undertake – together with Principals Mike Magnusson, Matthew Cho and Jeff Aldrich, and the entire Sabel team – makes our government more effective. We are excited to partner with the Sabel team and continue building together for the future.”

Sabel Systems is Sagewind’s eighth platform investment in the government technology sector. Including Sabel, Sagewind has six active government technology platform investments.

KippsDeSanto & Co. served as financial advisor to Sabel Systems and Protorae Law PLLC provided legal counsel. Paul, Weiss, Rifkind, Wharton & Garrison LLP provided M&A legal counsel to Sagewind Capital and Morrison & Foerster LLP provided counsel on government matters.

About Sabel Systems

Sabel Systems specializes in delivering innovative solutions to drive digital transformation for Government and private sector clients. With expertise in Industry 4.0, Digital Engineering, IIoT, and RPA, Sabel helps clients leverage technology to streamline operations. The company’s more than 200 employees serve the Air Force, Army, Space Force, Marine Corps and other key defense and commercial customers. Sabel Systems is headquartered in Dayton, Ohio near Wright Patterson Air Force Base. For more information, please visit www.sabelsystems.com.

About Sagewind Capital

Sagewind Capital LLC, a U.S. company, is a government technology-focused private equity firm with offices in both New York City and the Washington, DC area. Sagewind seeks to partner with exceptional management teams and focuses on significant capital appreciation by helping businesses grow organically and through strategic acquisitions. The firm is focused on long-term capital appreciation and has the flexibility to own businesses for extended periods. For more information please visit www.sagewindcapital.com.

(Source: BUSINESS WIRE)

 

06 Nov 24. Howmet Aerospace Reports Third Quarter 2024 Results

Revenue Up 11% Year Over Year; Strong Profit and Cash from Operations

$282m Debt Reduction; $100 M Deployed for Common Stock Repurchases

2025 Preliminary Revenue Guidance: Up Approximately 7.5% Year over Year

Howmet Aerospace (NYSE:HWM):

Third Quarter 2024 GAAP Financial Results

• Revenue of $1.84bn, up 11% year over year, driven by commercial aerospace, up 17%, partially offset by commercial transportation, down 12%
• Net income of $332m versus $188m in the third quarter 2023; earnings per share of $0.81 versus $0.45 in the third quarter 2023
• Operating income margin of 22.9%
• Generated $244m of cash from operations; $441m of cash used for financing activities; and $80m of cash used for investing activities
• Share repurchases of $100m; $0.08 per share dividend on common stock

Third Quarter 2024 Adjusted Financial Results

• Adjusted EBITDA excluding special items of $487m, up 27% year over year
• Adjusted EBITDA margin excluding special items of 26.5%
• Adjusted operating income margin excluding special items of 22.8%
• Adjusted earnings per share excluding special items of $0.71, up 54% year over year
• Generated $162m of free cash flow

Third Quarter Key Announcements

• Redeemed the remaining outstanding principal amount of $205 m of its 5.125% Notes due October 2024 with cash on hand
• Issued $500m aggregate principal amount of notes due 2031 (the “2031 Notes”)
• Redeemed the remaining outstanding principal amount of $577m of its 6.875% Notes due May 2025 with proceeds from the 2031 Notes plus cash on hand
• All combined debt actions year to date through the third quarter 2024 will reduce annualized interest expense by approximately $33m
• Repurchased $100m of common stock at an average price of $94.22 per share
• Increased the common stock dividend by 60% to $0.08 per share
• Raised full year 2024 guidance for Adjusted EBITDA*1 and Adjusted earnings per share*1 above the third quarter 2024 outperformance despite industry challenges

Third Quarter 2024 Segment Performance

Engine Products reported revenue of $945m, an increase of 18% year over year, due to growth in the commercial aerospace, defense aerospace, industrial gas turbine and oil & gas markets. Segment Adjusted EBITDA was a record $307m, up 40% year over year, driven by growth in the commercial aerospace, defense aerospace, industrial gas turbine and oil & gas markets. The Segment absorbed approximately 235 net headcount in the quarter and 985 year to date through the third quarter 2024 in support of expected revenue increases. Segment Adjusted EBITDA margin increased approximately 510 basis points year over year to a record 32.5%.

Fastening Systems

Fastening Systems reported revenue of $392m, an increase of 13% year over year due to growth in the commercial aerospace market, including wide body aircraft recovery. Segment Adjusted EBITDA was $102m, up 34% year over year, driven by growth in the commercial aerospace market. Segment Adjusted EBITDA margin increased approximately 420 basis points year over year to 26.0%.

Engineered Structures

Engineered Structures reported revenue of $253m, an increase of 11% year over year due to growth in the commercial aerospace and defense aerospace markets. Segment Adjusted EBITDA was $38m, up 27% year over year, driven by growth in the commercial aerospace and defense aerospace markets. Segment Adjusted EBITDA margin increased approximately 180 basis points year over year to 15.0%.

Forged Wheels

Forged Wheels reported revenue of $245m, a decrease of 14% year over year due to lower volumes in the commercial transportation market as well as a decrease in aluminum cost pass through. Segment Adjusted EBITDA was $64m, a decrease of approximately 17% year over year. Segment Adjusted EBITDA margin decreased approximately 90 basis points year over year to 26.1%.

Redeemed Remaining $205m of 5.125% Notes due October 2024 on July 1, 2024

On July 1, 2024, Howmet Aerospace completed the redemption of the remaining outstanding principal amount of $205 m of its 5.125% Notes due October 2024 (the “2024 Notes”). The 2024 Notes were redeemed with cash on hand at an aggregate redemption price of approximately $208m, including accrued interest of approximately $3m.

Issued $500m of 2031 Notes at an Effective Rate of 3.72% in August 2024; Redeemed Remaining $577m of 6.875% Notes due May 2025

On August 22, 2024 the Company issued $500 m aggregate principal amount of 4.850% Notes due October 2031 (the “2031 Notes”). The Company entered into a cross-currency swap to synthetically convert the 2031 Notes into a Euro liability of approximately €458m with a fixed annual interest rate of 3.72%.

On August 23, 2024 the Company redeemed the remaining outstanding principal amount of $577m of its 6.875% Notes due May 2025 (the “2025 Notes”). The 2025 Notes were redeemed with proceeds from the 2031 Notes plus cash on hand at an aggregate redemption price of approximately $594m, including accrued interest of approximately $12m.

All combined debt actions year to date through the third quarter 2024 will reduce annualized interest expense by approximately $33m.

All of the Company’s outstanding debt is unsecured and at fixed interest rates. The Company’s next debt maturity is in November 2026.

Repurchased $100m of Common Stock in Third Quarter 2024, $90m in October 2024

In the third quarter 2024, Howmet Aerospace repurchased $100m of common stock at an average price of $94.22 per share, retiring approximately 1.1m shares. Through the third quarter 2024, the Company has repurchased $310m of common stock at an average price of $76.75 per share, retiring approximately 4m shares. In October 2024, the Company repurchased an additional $90m of common stock at an average price of $103.15 per share, retiring approximately 0.9 m shares. As of October 31, 2024, total share repurchase authorization available was $2,297m. (Source: BUSINESS WIRE)

 

06 Nov 24. VSE Corporation (NASDAQ: VSEC, “VSE”, or the “Company”), a leading provider of aftermarket distribution and repair services, announced today results for the third quarter 2024.

THIRD QUARTER 2024 RESULTS(1)

(As compared to the Third Quarter 2023)

• Total Revenues of $273.6m increased 18.3%
• GAAP Net Income of $11.7m decreased 3.8%
• GAAP EPS (Diluted) of $0.63 decreased 21.3%
• Adjusted EBITDA(2) of $33.2m increased 2.6%
• Adjusted Net Income(2) of $13.1m decreased 5.3%
• Adjusted EPS (Diluted)(2) of $0.71 decreased 22.8%

MANAGEMENT COMMENTARY

“We are very pleased to announce our third quarter 2024 results, marked by the strongest quarterly performance in our Aviation segment’s history, achieving a revenue milestone of over $200 m,” stated John Cuomo, President and CEO of VSE Corporation. “The 34% year-over-year revenue growth, combined with record profitability, reflects balanced contributions across our Aviation business units. The key drivers to our growth include the successful execution of new distribution awards, the expansion of our maintenance, repair, and overhaul (“MRO”) capabilities, the launch of our new OEM-licensed manufacturing program, and contributions from our recent acquisition of Turbine Controls (“TCI”).”

Mr. Cuomo continued, “Additionally, during the quarter, we completed the integration of Desser Aerospace’s U.S. distribution business, launched a new Aviation e-commerce platform, made substantial progress in establishing our OEM-licensed manufacturing capabilities, and began distributing new products through our European Distribution Center of Excellence in Hamburg, Germany. The Aviation segment continues to perform successfully during a year of repositioning and focused execution.

“In our Fleet segment, we continue to advance our customer diversification strategy, with our commercial customers representing 64% of segment revenue as of the third quarter. Following a temporary reduction in activity with the United States Postal Service (“USPS”) due to their system integration, activity levels have stabilized at the quarter’s end, positioning us for improved revenue and profitability in the fourth quarter as compared to the third quarter,” Mr. Cuomo concluded.

“Our third quarter 2024 results reflect our commitment to financial discipline,” stated Adam Cohn, Chief Financial Officer of VSE Corporation. “During the quarter, we generated positive free cash flow, reduced our debt, and maintained an adjusted net leverage ratio within our target range of 3.0 to 3.5 times. Following our successful October 2024 equity offering, the Company has ample financial liquidity and flexibility to complete the acquisition of Kellstrom Aerospace in the fourth quarter and capitalize on the significant growth opportunities that lie ahead. As we look out to the fourth quarter, we expect to drive stronger free cash flow supported by ongoing operational execution on the strategic inventory investments made earlier this year. As I step into my role as CFO, I am excited to join such a dynamic team and look forward to building on VSE’s impressive track record. In the months ahead, I am committed to enhancing shareholder value as we continue to execute on our strategic priorities.”

STRATEGIC UPDATE

KELLSTROM AEROSPACE ACQUISITION:

• On October 15, 2024, VSE announced it signed a definitive agreement to acquire Kellstrom Aerospace Group, Inc. (“Kellstrom Aerospace”), a leading full-service aftermarket solutions provider of value-added distribution and technical services for the commercial aerospace aftermarket. Kellstrom’s portfolio of engine-focused products and MRO services, coupled with its technical advisory capabilities, expands VSE Aviation’s portfolio of product and service solutions in the high-growth commercial aftermarket.
• Kellstrom generated approximately $175m of revenue for the trailing-twelve-month period ended September 2024. The Company expects to generate run-rate synergies of approximately $4m within 18 months of close. The total consideration for the acquisition is approximately $200m, comprised of approximately $185m in cash and approximately $15m of common shares of the Company, subject to working capital adjustments. The acquisition is expected to close in the fourth quarter of 2024, pending customary closing conditions, including regulatory review.

AVIATION NEW PROGRAM EXECUTION AND INTEGRATION UPDATE:

• The Aviation segment continues to scale the new European distribution Center of Excellence in Hamburg, Germany, supporting the Pratt & Whitney Canada Europe, Middle East and Africa (“EMEA”) aftermarket product support program. The program is expected to be at a full year run-rate by the end of the fourth quarter of 2024.
• The OEM-licensed manufacturing fuel control program continues to outpace expectations and contribute to the segment’s profitability. The Kansas facility expansion supporting the fuel control program is expected to be operational in the first quarter of 2025.
• The integration of Desser Aerospace’s U.S. distribution business was completed in the third quarter of 2024. Desser Aerospace’s tire, tube, brake and battery product lines are now being sold under the VSE Aviation name, and tires are now being sold in Europe through the Company’s new distribution facility in Hamburg, Germany.
• VSE Aviation’s new e-commerce site was successfully launched in the third quarter of 2024, focused on initial offerings including legacy Desser Aerospace products.

FLEET UPDATE:

• The USPS transition to a new Fleet Management Information System (“FMIS”) platform was completed in the third quarter of 2024. Post-implementation, the Company expects an increase in repair activity, and subsequently, an increase in the usage of parts.
• The e-commerce fulfillment distribution center continues to scale and support above-market growth and additional market share opportunities.
• The Fleet segment strategic review remains in process, and the Company expects to provide an update in the coming months.

CORPORATE UPDATE:

• In October 2024, VSE completed a follow-on equity offering of 1,982,757 shares of common stock at $87.00 per share, resulting in net cash proceeds of approximately $163.8m.
• The net proceeds from the offering will be used to finance a portion of the Kellstrom Aerospace acquisition.

THIRD QUARTER SEGMENT RESULTS

Aviation segment revenue increased 34% year-over-year to a record $203.6m in the third quarter of 2024. The year-over-year revenue improvement was attributable to strong program execution of new and existing distribution awards, an expanded portfolio of MRO capabilities, and contributions from the TCI acquisition. Aviation distribution and MRO revenue increased 12% and 86%, respectively, in the third quarter of 2024, versus the prior-year period. The Aviation segment reported operating income of $25.4m in the third quarter, compared to $21.0m in the same period of 2023. Segment Adjusted EBITDA increased by 29% in the third quarter to $32.6m, versus $25.3m in the prior-year period. Adjusted EBITDA margin was 16.0%, a decline of approximately 60 basis points versus the prior-year period, driven by lower margin contributions from the TCI acquisition.

Fleet segment revenue decreased 11% year-over-year to $70.0m in the third quarter of 2024. Revenue from the USPS declined approximately 40% on a year-over-year basis. This revenue decline was primarily driven by USPS’ transition to a new Fleet Management Information System (“FMIS”) platform, which has resulted in a temporary reduction in maintenance related activities and reduced part requirements. The FMIS conversion was completed in the third quarter of 2024, supporting a modest recovery beginning in the fourth quarter of 2024. Revenue from commercial customers increased 20% on a year-over-year basis, driven by growth in e-commerce fulfillment and commercial fleet sales. Commercial, or non-USPS, revenue represented 64% of total Fleet segment revenue in the period. The Fleet segment reported operating income of $2.5m in the third quarter, compared to $8.5 m in the same period of 2023. Segment Adjusted EBITDA decreased 59% year-over-year to $3.8m, and Adjusted EBITDA margin declined approximately 620 basis points to 5.4%, primarily driven by the decline in USPS revenue.

FINANCIAL RESOURCES AND LIQUIDITY

As of September 30, 2024, the Company had $189m in cash and unused commitment availability under its $350m revolving credit facility maturing in 2026. The Company generated approximately $4m of free cash flow in the third quarter of 2024. As of September 30, 2024, VSE had a total net debt outstanding of $442m. Adjusted net leverage was approximately 3.3 times trailing-twelve-month Adjusted EBITDA as of the end of the third quarter.

GUIDANCE

VSE is increasing its full-year 2024 revenue growth and maintaining Adjusted EBITDA margin percentage guidance for its Aviation segment. The guidance is as follows:

• Aviation segment full-year 2024 revenue guidance is increasing from 34% to 38% growth to 39% to 41%, as compared to the prior year revenue. Revenue contributions from the Kellstrom acquisition, which is expected to close in the in the fourth quarter of 2024, are not included in our updated guidance.
• Aviation segment maintains full-year 2024 Adjusted EBITDA margin guidance of 15.5% to 16.5%.

VSE is revising its full-year 2024 revenue and maintaining Adjusted EBITDA margin guidance for its Fleet segment. The guidance is as follows:

• Fleet segment full-year 2024 revenue guidance is decreasing from 0% to 5% to (5)% to (10)%, as compared to the prior year revenue.
• Fleet segment maintains full-year 2024 Adjusted EBITDA margin guidance of 6% to 8%. (Source: BUSINESS WIRE)

 

06 Nov 24. Teledyne Technologies Incorporated (NYSE:TDY) (“Teledyne”) announced today that it has entered into an agreement to acquire select aerospace and defense electronics businesses from Excelitas Technologies Corp. (“Excelitas”) for $710m in cash. The acquisition includes the Optical Systems (OS) business known under the Qioptiq® brand based in Northern Wales, UK, as well as the U.S.-based Advanced Electronic Systems (AES) business.

“Our journey providing electro-optical solutions designed to keep troops and high-value assets safe continues with an industry leader.”

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The UK-based OS business provides advanced optics for heads-up and helmet-mounted displays, dismounted tactical night vision systems and proprietary glass used in space and satellite applications. In the U.S., the AES business provides custom energetics, including electronic safe & arm devices, high-voltage semiconductor switches and rubidium frequency standards for defense and space applications.

“We are excited to announce this pending acquisition, which will bring us new technology in markets well-understood by Teledyne. Our respective products are highly complementary and not competitive, and we generally serve customers in complementary geographies,” said Robert Mehrabian, Executive Chairman. “We look forward to welcoming these businesses and their employees to Teledyne.”

“We will be pleased to add these businesses to our aerospace and defense electronics segment, which has performed exceptionally well in recent years,” said George Bobb, President and Chief Operating Officer. “Furthermore, we believe the businesses’ operations, personnel and culture are very compatible with our U.S. and UK defense electronics organizations.”

“We are excited about the new opportunities this acquisition will bring and look forward to a seamless integration that will benefit our customers, employees and Teledyne stakeholders,” said Doug Benner, EVP Excelitas and President Defense and Aerospace Segment. “Our journey providing electro-optical solutions designed to keep troops and high-value assets safe continues with an industry leader.”

The transaction is anticipated to be completed in early 2025 and is subject to customary closing conditions, including regulatory approvals. Teledyne management expects the transaction to be accretive to GAAP and non-GAAP earnings per share, excluding transaction costs.

Evercore and Harris Williams are acting as financial advisors, and Fried, Frank, Harris, Shriver & Jacobson LLP is acting as legal advisor to Excelitas in connection with the transaction. McGuireWoods LLP is acting as legal advisor to Teledyne.

About Teledyne

Teledyne is a leading provider of sophisticated instrumentation, digital imaging products and software, aerospace and defense electronics, and engineered systems. Teledyne’s operations are primarily located in the United States, Canada, the United Kingdom, and Western and Northern Europe. For more information, visit Teledyne’s website at www.teledyne.com.

About Excelitas

Excelitas is the leading provider of advanced, life-enriching technologies that make a difference, serving global market leaders in the life sciences, advanced industrial, next-generation semiconductor, aerospace, and defense end markets. Headquartered in Pittsburgh, Pennsylvania, Excelitas is an essential partner in the design, development, and manufacture of advanced technologies, offering leading-edge innovation in sensing, detection, imaging, optics, and specialty illumination for customers worldwide. Excelitas is at the forefront of addressing many of the relevant megatrends impacting the world today, including precision medicine, industrial automation, artificial intelligence, connected devices (IoT), and military modernization. (Source: BUSINESS WIRE)

 

06 Nov 24. HENSOLDT reports revenue growth and significantly higher order intake in third quarter of 2024.

• Order intake increases to EUR 1,865m in the first nine months of 2024
• Revenue grows by 21.3% to EUR 1,377m
• Adjusted EBITDA improves by 24.1% to EUR 187m
• Adjusted EBITDA margin increases to 13.6%
• Integration of ESG Group largely completed 200 days after closing
• Book-to-bill ratio for the 2024 financial year specified at the upper end at around 1.2x
• Guidance for the 2024 financial year confirmed

The HENSOLDT Group (“HENSOLDT”) continued its positive business performance in the first nine months of the 2024 financial year. The company was able to further strengthen its position as a leading platform-independent European provider of seamlessly integrated defence solutions. In the first nine months of 2024, order intake increased to EUR 1,856m (previous year: EUR 1,281m). As a result, the order backlog has grown by almost one bn euros year-on-year to EUR 6,513m (previous year: EUR 5,472m euros).

Revenue for the first nine months increased by 21.3% to EUR1,377m (previous year: EUR1,136m). Adjusted EBITDA improved by 24.1% to EUR 187m (previous year: EUR151m). This development was mainly driven by significant revenue growth in the core business as well as the first-time consolidation of the ESG Group. The adjusted EBITDA margin improved to 13.6% (previous year: 13.3%).

Oliver Dörre, CEO of the HENSOLDT Group, says: “The strong first nine months of 2024 underscore the positive development – particularly in the area of operational excellence – as well as the growth potential of HENSOLDT. After just 200 days we have largely completed the post-merger integration of ESG: central functions are fully integrated, and the relevant processes are implemented. This means that there is nothing to stop the full operational integration of ESG being completed at the turn of the year! We consistently expand HENSOLDT’s position as a reliable partner to our customers, both nationally and internationally, and we keep our promises.”

Christian Ladurner, CFO of the HENSOLDT Group, says: “The significant increase in revenues and the rise in adjusted EBITDA underline our operational strength in realizing economies of scale in our core business. We are particularly pleased with the strong order intakes, which once again significantly exceeded the previous year’s period. This success enabled us to specify the guidance of our book-to-bill ratio at the upper end of our expectations. HENSOLDT will continue to consistently pursue this profitable growth trajectory in the future.”

Continued strong development in order intake

With an order intake of EUR 1,865m (previous year: EUR 1,281m) in the first nine months of the current financial year, HENSOLDT was able to exceed the already high level of the previous year by 44.9%.

A key driver of this development was the strong performance of the Sensors segment. The main drivers were orders for the short-range and very short-range air defence system (Luftverteidigungssystem Nah- und Nächstbereichsschutz; LVS NNbS) commissioned for the German Bundeswehr. In addition, orders were received for further TRML-4D radars, firstly in support of Ukraine and secondly for Latvia and Slovenia as part of the European Sky Shield Initiative (ESSI). The segment was able to conclude orders for Spexer radars for the Skyranger air defence system. From the second quarter of 2024, the order intake of the ESG Group amounting to EUR305m was included for the first time within the Sensors segment for six months. The largely integrated ESG Group has been managed as a separate division within the Sensors segment since the second quarter of 2024. The orders already include a successfully signed contract to provide logistics services to the German Bundeswehr (ZEBEL).

HENSOLDT has also been contracted to deliver radar systems for the Space Centre Australia. The contract includes the delivery of two high-performance Air Surveillance Radar – Next Generation systems (ASR-NG), along with a 20-year sustainment plan to bolster Australia’s critical air surveillance capabilities.

At the beginning of October, HENSOLDT entered into an agreement with Deutsche Flugsicherung GmbH (DFS; German air navigation service provider) to enable the use of the Twinvis passive radar for civil air traffic control.

In the Optronics segment, the order intake of EUR297m in the first nine months of the 2024 financial year was slightly below the strong order intake in the same period of the previous year. The first nine months of 2024 included in particular orders related to the Final Focus Metrology (FFM), orders for the laser rangefinder for the M1 Abrams main battle tank and an order related to the LVS NNbS project.

Continued strong development in revenue, earnings and free cash flow

Compared to the previous year, HENSOLDT’s revenues increased by 21.3% to EUR1,377m (previous year: EUR1,136m). Revenues contained significantly less pass-through business (revenue with a low value-added share) than in the first nine months of 2023. A major growth driver was the ESG Group, which has now been largely integrated and contributed EUR172m. At the same time, the core business – adjusted for the business activities of the ESG Group – grew by 10% compared to the prior-year period, particularly due to the TRML-4D radars.

The two major projects PEGASUS (airborne electronic signals intelligence system) and the Eurofighter radars developed as expected. Hence, the first flight of the PEGASUS aircraft in Wichita, USA; at the end of October, marked an important project milestone. With the modernization of the Norwegian ULA class submarines, HENSOLDT reached another milestone. The technical planning and execution were successfully validated in a critical design review in Bergen, Norway.

The adjusted EBITDA increased by 24.1% to EUR187m (previous year: EUR 151m). This development mainly resulted from an increased revenue volume, corresponding economies of scale and the first-time inclusion of the ESG Group. At 13.6%, adjusted EBITDA margin was in line with expectations and on a par with the previous year (13.3%). The adjusted free cash flow of EUR-157m was higher than in the same period of the previous year (EUR 162m).

Outlook for the 2024 financial year confirmed – Book-to-bill ratio specified at upper end

For the 2024 financial year, HENSOLDT expects business to continue to develop positively and confirms its guidance. The Group continues to benefit from the high demand in Germany, Europe and NATO member states, as well as the continuing high international demand for defence solutions. For the current financial year, HENSOLDT expects consolidated revenues of approx. EUR 2.3 bn and a moderate increase in adjusted EBITDA with an adjusted EBITDA margin before revenues with a low value-added share of between 18% and 19%. In view of the high order backlog, HENSOLDT is specifying its forecast for the book-to-bill ratio at the upper end at around 1.2x (previously 1.1x – 1.2x).

 

07 Nov 24. Rheinmetall presents record figures: Sales are rising by more than a third, earnings increase by more than 70%.

• Very dynamic military business: Group sales up in the first nine months by 36% to €6.3bn
• Operating result jumps from €410m to €705m by 72%
• Operating margin in the Group climbs to 11.3%
• Orders increased significantly: Rheinmetall Nomination rose 48% to over €21bn
• New record high for order backlog: Rheinmetall Backlog grows significantly to €52bn
• Operating free cash flow improves by €527m to €99m
• Guidance for 2024 is confirmed

Düsseldorf-based Rheinmetall AG closes the third quarter of 2024 with new record highs both in terms of sales and earnings. The very dynamic market situation in the military business sees continued high demand by the armed forces of Germany and partner nations in the EU and NATO, as well as the ongoing aid for Ukraine. However, the civilian sector of the Group remained slightly below the previous year.

The Group achieved a significant improvement in operating free cash flow with large-volume customer advance payments.

Due to the expected business development in the fourth quarter of 2024, the Group management confirms its sales and earnings guidance for fiscal year 2024 in the Group. Rheinmetall is now aiming for an operating result margin at the upper end of the guidance.

Armin Papperger, CEO of Rheinmetall AG, on the company development: “Rheinmetall is needed, as demonstrated by our numerous successful orders. We are experiencing growth like we have never seen before in the Group. We have entered into pioneering collaborations and have promising projects in many countries – for example in the USA, Great Britain, Italy and Ukraine. We have major orders in our pipeline, which will ensure further growth in sales in the years to come. In addition, we are building new production facilities, expanding our capacities massively and making strategic acquisitions. This will bring us closer to our goal of becoming a global champion in the defence industry.”

Rheinmetall Group: Profitable sales growth of 36% – Rheinmetall Nomination increased  by half

After nine months, Group sales increased noticeably by €1,650m or 36% to €6,268m compared to the previous year (previous year: €4,618m). The share of sales generated by the German customer increased by 6 percentage points to 30% in the first three quarters of 2024 compared to the same period of the previous year, while the foreign share was 70%.

As of September 30, 2024, the operating result amounted to €705m up by €295m or 72% compared to €410 m in the previous year. In addition to sales growth, the improvement in the operating result was driven among others by earnings contribution from Rheinmetall Expal Munitions, which was acquired in August 2023 in Spain. By the end of the third quarter of 2024, the Group’s operating margin improved to 11.3% (previous year: 8.9%).

Earnings per share from continuing operations improved compared to the same period of the previous year from €4.88 to €7.32 in the first nine months of the 2024 fiscal year.

The operating free cash flow advanced significantly compared to the previous year by €527m to €99m, after having stood at -€428m in the same period of the previous year. The main driver for the positive development of operating free cash flow is the increase in customer advance payments received. The positive effect is mitigated by the multiple capex projects and the further build-up of inventories for the anticipated sales development in the fourth quarter.

The value of Rheinmetall Nomination increased significantly by 48% compared to the same period of the previous year. It increased in the first nine months to €21.4bn (previous year: €14.5bn). The main reasons for this were among other things, orders from Germany – here primarily from the special fund of the Bundeswehr – and orders to aid Ukraine. Rheinmetall Nomination comprises traditional incoming orders as well as the volume from future call-offs under new framework agreements entered into with military customers and new contracts with civilian clients (nominations).

As a result, the Rheinmetall Backlog increased significantly by 41% from €36.7bn to €51.9bn (September 30, 2024) compared to the previous year. In addition to orders on hand, Rheinmetall Backlog also includes the call-offs expected from framework agreements in place with military customers and the potential from contracts with civilian clients.

Vehicle Systems: Rheinmetall Backlog rises by 37% compared to the previous year

Sales at Vehicle Systems, with activities primarily in the field of military wheeled and tracked vehicles amounted to €2,537m after nine months of the fiscal year of 2024, up €865m or 52% year-on-year. This increase is mainly due to the delivery of pre-produced swap body systems (trucks) and the start of tactical vehicle programs.

Rheinmetall Nomination – the total of order intake and the volume of newly concluded framework agreements with military customers – increased by €1.9bn to around €6.8bn compared to the previous year. The largest orders in 2024 are thus far a new framework agreement to supply UTF category military trucks to the Bundeswehr in the amount of €2.9 bn, the order for the manufacture and supply of the German armed forces’ heavy weapon carrier based on the Boxer wheeled vehicle, with a volume of over €1.6bn, as well as the associated service contract with around €630m.

Rheinmetall Backlog – the total of orders on hand and the call-offs expected from framework agreements in place with military customers – was with €20.6bn as at September 30, 2024, €5.6bn or 37% higher compared to the previous year. The operating result improved from €182m to €281m. With 11.1%, the operating result margin was above the prior year’s margin of 10.9%.

Weapon and Ammunition: Backlog once again increased significantly to around €20bn

Weapon and Ammunition achieved record sales of €1,554m with its weapon systems and ammunition activities in the first nine months of 2024 exceeding the previous year’s sales by €608m or 64%. The increase compared to the same period of the previous year is attributable in particular to higher ammunition deliveries. Key projects included artillery orders for Germany and Ukraine. With sales of €352 m, Rheinmetall Expal Munitions, acquired on July 31, 2023, contributed significantly to this growth.

At €10.2bn, the Rheinmetall Nomination is significantly higher than the previous year’s figure after nine months of the 2024 fiscal year (previous year: €7bn). An essential driver is a framework agreement in the gross amount of €8.5bn for artillery ammunition by the German customer. Further growth was generated in Germany and the countries in West Asia for indirect fire and medium calibre products.

As of September 30, 2024, the Rheinmetall Backlog reached around €20bn. Compared to the previous year’s figure (September 30, 2023: €11.3bn), the increase was more than €8bn or 73%. The drivers for this were the conclusion of two multi-year ammunition framework agreements in the second half of 2023 and the subsequent increase in the artillery framework agreement by the German customer in June 2024.

The operating result almost doubled by the end of the third quarter of 2024 with an increase of €163m or 93% to €339m (previous year: €175 m). This includes an earnings contribution of €117m from Rheinmetall Expal Munitions. Despite higher staff and material, the operating result margin improved significantly from 18.5% to 21.8%.

Electronic Solutions: Rheinmetall Nomination tripled – Air defence as a driving force

Electronic Solutions, with products in the field of armed forces digitalization, infantry equipment, air defence and simulation, increased its sales after nine months of the 2024 fiscal year by €218m to €1,038m (previous year: €820m); this corresponds to an increase of 27%. The sales upswing is essentially the result of an order by the German Bundeswehr for the Skyranger 30 mobile air defence system and the NNBS short range air defence system, additional deliveries for the Puma infantry fighting vehicle and the modernization of an existing air defence system for a European customer.

Compared to the same period of the previous year, Rheinmetall Nomination more than tripled from €1 bn to €3.5bn. A development contract for the short- and very short-range air defence system and a supply contract for the mobile Skyranger 30 air defence system were the key order intakes received by the German customer. Furthermore, the conclusion of a framework agreement for the delivery of communication and hearing protection headsets as well as a portion in the commissioning for the manufacture and supply of the Boxer armoured vehicle as infantry heavy weapons carrier for the German armed forces should be named. The Rheinmetall Backlog was at €6.7bn on September 30, 2024. Therefore, it is significantly higher than the previous year’s figure by almost €3bn (previous year: €3.7bn).

The operating result strengthened by the end of the third quarter of 2024 to €96m, after €56m in the previous year. Due to a favourable product mix, the operating margin increased to 9.2% (previous year: 6.9%).

Power Systems: Sales slightly below the previous year, backlog still at a high level

At €1,543m, sales at Power Systems, which bundles technological expertise in civilian markets, are slightly below the previous year’s figure in the period under review (previous year: €1,551m). After the past nine months of the 2024 fiscal year, the booked business was slightly

below the previous year at €2.1bn (previous year: €2.4bn). The nominated backlog as of September 30, 2024 fell by 9.2% to €8.1bn (previous year: EUR 8.9bn).

The operating result fell by 4% to €74m compared to the previous year (previous year: €77m). The operating margin dropped slightly to 4.8% (previous year: 5%).

Outlook: Current guidance for 2024 confirmed

Rheinmetall confirms its sales and earnings guidance for full year 2024 after the first nine months of fiscal year 2024 based on the expected business performance in the fourth quarter. Including acquisitions in the current fiscal year 2024 – including holding costs – the Group expects to achieve group revenue of around €10 bn. The Group now expects the operating margin to be around 15%, at the upper end of the guidance (2023: 12.8%).

 

04 Nov 24. V2X Reports Strong Third Quarter Results with Record Revenue, Net Income, and Adjusted EBITDA.

Third Quarter Highlights

• Record revenue of $1.08 bn, up 8% y/y
• Indo-Pacific revenue growth of 31% y/y driven by increased demand
• Operating income of $49.9 m; Adjusted operating income1 of $76.9m
• Record net income of $15.1m, up $21.5m y/y; Adjusted net income1 of $41.3m, up 76% y/y
• Record adjusted EBITDA1 of $82.7m, up 28% y/y with a margin of 7.6%
• Diluted EPS of $0.47; Adjusted diluted EPS1 of $1.29, up 77% y/y

2024 Guidance:

• Raising full-year revenue and adjusted EPS1 guidance midpoint and reaffirming adjusted EBITDA and operating cash flow1

V2X, Inc. (NYSE:VVX) announced third quarter 2024 financial results.

“V2X reported strong third quarter results with record revenue, net income, and adjusted EBITDA1, driven by our continued alignment to well-funded critical missions and the ability to deliver capabilities at scale across the globe,” said Jeremy Wensinger, President and Chief Executive Officer of V2X. “Revenue increased 8% year-over-year and adjusted EBITDA1 increased 28% year-over-year, reflecting strong program performance. Adjusted net income1 increased 76% year-over-year and adjusted diluted EPS1 increased 77% year-over-year.”

Mr. Wensinger continued, “During the third quarter we demonstrated continued growth in the Indo-Pacific region with revenue increasing 31% year-over-year. This performance was tied to the DoD’s continued focus on enhancing U.S. readiness in the region. We are seeing additional opportunities for growth in the region that align to improving the capacity and capabilities of U.S. allies and our partners.”

“Our full spectrum capabilities across the mission lifecycle serve as a differentiator.  The fact that we are with our customers across the globe at every phase of mission execution, gives us prodigious knowledge, allowing us to deliver best of breed cost effective solutions that are enhancing outcomes. This unique position is yielding results with V2X securing approximately $5bn of awards in the third quarter. This includes the $3.7bn Warfighter-Training Readiness Solutions (W-TRS) award that represents a milestone win for V2X. We delivered a technology enabled solution that was compelling and will ensure every Army soldier has the tools necessary to conduct accurate training preparing them for whenever called upon to deploy. These wins validate our strong positioning in the marketplace and are expected to contribute to our financial performance for years to come.”

Mr. Wensinger concluded, “I believe there is additional opportunity to build on our momentum through further optimization of our business. This includes enhancing the breadth and depth of our pipeline as a result of the collective capabilities.  W-TRS is a great example of a solution that leveraged the collective capabilities.  We are building on that success to expand our addressable markets in all areas of the company.  We are investing in this expanded pipeline to ensure we address opportunities with talent and solutions that will differentiate V2X offerings.”

Third Quarter 2024 Results

“V2X reported record revenue of $1.08bn in the quarter, which represents 8% year-over-year growth,” said Shawn Mural, Senior Vice President and Chief Financial Officer. “We continued to deliver double digit revenue growth in the Indo-Pacific (31% year-over-year) and Middle East (13% year-over-year) regions, which was achieved through continued expansion of existing business as well as new programs.

“For the quarter, the Company reported operating income of $49.9m and adjusted operating income1 of $76.9m. V2X delivered record adjusted EBITDA1, increasing 28% year-over-year to $82.7m, with a margin of 7.6%, reflecting our expected second half program performance. Third quarter GAAP diluted EPS was $0.47. Adjusted diluted EPS1 for the quarter increased 77% year-over-year to $1.29.”

“Third quarter net cash provided by operating activities was $62.7 m. Adjusted net cash provided by operating activities1 increased 35% year-over-year to $130.1 m. On a year-to-date basis, net cash provided by operating activities was $31.1m. Adjusted net cash used by operating activities1 was $7.2m.”

“At the end of the quarter, net debt for V2X was $1,089m.  Net leverage ratio1 was 3.27x, improving 0.29x sequentially. We continue to demonstrate progress on debt paydown and remain on track to be at or below a net leverage ratio of 3.0x, by the end of 2024.”

“Total backlog as of September 27, 2024, was $12.2bn. Funded backlog was $3.0bn. Book-to-bill in the quarter was approximately 1.0x. Backlog does not include the full contract value associated with recent awards.”

2024 Guidance

Mr. Mural concluded, “Given our strong performance through the first nine-months of the year we are updating our total year guidance.” (Source: PR Newswire)

 

04 Nov 24. Palantir Reports Revenue Growth of 30% Y/Y, U.S. Revenue Growth of 44% Y/Y, GAAP EPS of $0.06; Raises Full Year Guidance on Revenue, U.S. Comm Revenue, Adj. Free Cash Flow, Adj. Op. Income Above Consensus Estimates on “AI Demand that Won’t Slow Down”

Palantir Technologies Inc. (NYSE:PLTR) today announced financial results for the third quarter ended September 30, 2024.

“We absolutely eviscerated this quarter, driven by unrelenting AI demand that won’t slow down. This is a U.S.-driven AI revolution that has taken full hold. The world will be divided between AI haves and have-nots. At Palantir, we plan to power the winners,” said Alexander C. Karp, Co-Founder and Chief Executive Officer of Palantir Technologies Inc.

Q3 2024 Highlights

• U.S. revenue grew 44% year-over-year and 14% quarter-over-quarter to $499m

o U.S. commercial revenue grew 54% year-over-year and 13% quarter-over-quarter to $179m

o U.S. government revenue grew 40% year-over-year and 15% quarter-over-quarter to $320m

• Revenue grew 30% year-over-year and 7% quarter-over-quarter to $726m
• Closed 104 deals over $1m
• Customer count grew 39% year-over-year and 6% quarter-over-quarter
• GAAP net income of $144m, representing a 20% margin
• GAAP income from operations of $113m, representing a 16% margin
• Adjusted income from operations of $276m, representing a 38% margin
• Rule of 40 score of 68%
• GAAP earnings per share (“EPS”) grew 100% year-over-year to $0.06
• Adjusted EPS grew 43% year-over-year to $0.10
• Cash, cash equivalents, and short-term U.S. Treasury securities of $4.6bn
• Cash from operations of $420m, representing a 58% margin and $995 m on a trailing twelve month basis
• Adjusted free cash flow of $435m, representing a 60% margin and over $1bn on a trailing twelve month basis

Outlook

For Q4 2024, we expect:

• Revenue of between $767 – $771m.
• Adjusted income from operations of between $298 – $302m.

For full year 2024:

• We are raising our revenue guidance to between $2.805 – $2.809bn.
• We are raising our U.S. commercial revenue guidance to in excess of $687 m, representing a growth rate of at least 50%.
• We are raising our adjusted income from operations guidance to between $1.054 – $1.058bn.
• We are raising our adjusted free cash flow guidance to in excess of $1bn.
• And we continue to expect GAAP operating income and net income in each quarter of this year. (Source: BUSINESS WIRE)

 

04 Nov 24. BWXT to Acquire L3Harris’ A.O.T. Business to Expand Special Materials Portfolio. BWX Technologies, Inc. (NYSE: BWXT) and L3Harris Technologies, Inc. (NYSE: LHX) today announced the signing of a purchase agreement for BWXT to acquire L3Harris’ Aerojet Ordnance Tennessee, Inc. (A.O.T.) business for approximately $100m.

“With decades of experience in specialized materials and metallurgy, A.O.T. brings exciting resources and expertise to BWXT,” said Rex Geveden, president and chief executive officer of BWXT. “This acquisition marks a significant step in our growth strategy, allowing us to leverage A.O.T.’s unique competencies and assets to better serve our customers. The combination of technical expertise and talent at this dynamic organization makes us confident that this acquisition will create greater opportunities for our company and will further enhance our value to BWXT’s customers.”

“This transaction reflects L3Harris’ multi-year strategy to optimize our portfolio and deliver on our commitments to customers and shareholders,” said Ken Bedingfield, chief financial officer, L3Harris.

L3Harris’ A.O.T. business has generated revenue of approximately $40m over the trailing-twelve-month period. It is the sole provider of depleted uranium to the U.S. government and produces other specialized materials, including tungsten, molybdenum, tantalum, rhenium, titanium, nickel, aluminum, copper, metal-matrix composites, metal polymer composites, reactive materials and custom alloys. The acquisition is targeted to close by year-end and is expected to be slightly accretive to BWXT’s earnings, excluding purchase accounting and other one-time costs, within 12-18 months. The acquired business will operate within BWXT’s government operations segment.

The transaction is subject to required approvals and clearances and other customary closing conditions. (Source: BUSINESS WIRE)

 

04 Nov 24. BWX Technologies Reports Third Quarter 2024 Results.

• 3Q24 revenues of $672.0m
• 3Q24 net income of $69.6m, adjusted EBITDA(1) of $127.0m
• 3Q24 diluted GAAP EPS of $0.76, non-GAAP(1) EPS of $0.83
• Expanding special materials portfolio with announced acquisition of A.O.T., a sole source provider of depleted uranium and finished specialty metals for mission critical defense applications; targeting close by year-end
• 2024 non-GAAP EPS(1) guidance raised to ~$3.20
• Preliminary 2025 guidance for revenue, non-GAAP EPS(1) and adjusted EBITDA(1) to grow mid-to-high-single-digits; free cash flow(1) growth to be sustained at 10% or higher

BWX Technologies, Inc. (NYSE: BWXT) (“BWXT”, “we”, “us” or the “Company”) reported third quarter 2024 results. A reconciliation of non-GAAP results are detailed in Exhibit 1.

“Our strong third quarter performance underscores the momentum BWXT has built throughout 2024,” said Rex D. Geveden, president and chief executive officer. “The combination of recent key contract wins enabled by focused business development efforts, and quarterly and year-to-date double-digit revenue and earnings growth highlight our strategic and operational strengths.”

“The nuclear industry is enjoying unprecedented customer and market interest with tangible investments in nuclear solutions by end-users across our key defense, commercial power, and medical markets,” continued Geveden. “As demand from BWXT’s customers accelerates, we remain focused on operational excellence and investment in our world-class workforce and infrastructure to sustain our unique position in the nuclear value chain.”

“Given our year-to-date results and visibility into the remainder of the year, we now expect 2024 non-GAAP EPS to be at the high-end of the previous guidance range. Looking into 2025, we expect modest organic growth in our Government Operations segment complemented by a slight contribution from the A.O.T. acquisition we announced today, and robust double-digit organic growth in Commercial Operations in both commercial power and medical. The foregoing combined with our ongoing focus on operational excellence, lead us to forecast mid-to-high-single-digit revenue, EBITDA and Earnings Per Share growth in 2025, with improving free cash flow conversion.”

Revenues

Third quarter revenue increased in both operating segments. The Government Operations increase was driven by higher naval nuclear component production and microreactors, partially offset by slightly lower special materials processing. The Commercial Operations increase was driven by higher revenue associated with commercial nuclear components and fuel as well as higher medical sales.

Operating Income and Adjusted EBITDA(1)

Third quarter operating income increased, driven by higher operating income in Government Operations and lower corporate expense that was partially offset by lower operating income in Commercial Operations. The Government Operations increase was driven by higher revenue and solid operational performance. The Commercial Operations decrease was mainly due to a shift in product and services mix and other non-recurring expenses.

Third quarter adjusted EBITDA(1) increased for the reasons noted above.

EPS

Third quarter GAAP EPS increased due to higher operating income and lower interest expense, which were partially offset by slightly lower other income and a modestly higher tax rate. Non-GAAP EPS(1) increased driven by the items noted above. (Source: BUSINESS WIRE)

 

04 Nov 24. Trident Maritime Systems Announces Strategic Divestiture of Hoffman Engineering. Trident Maritime Systems (“Trident”), a leading maritime systems and solutions provider and portfolio company of investment affiliates of J.F. Lehman & Company (“JFLCO”), announced the divestiture of Hoffman Engineering (“Hoffman”) to Branford Castle Partners, a North American-focused private equity firm.  Hoffman is a premier provider of situational awareness solutions, including LED lighting products and night vision imaging systems for mission-critical aerospace, defense and commercial applications. Hoffman has forged a deep technical heritage and reputation for excellence in the lighting and night vision sectors since its inception in 1955.

Tom Eccles, Chief Executive Officer of Trident, commented, “We thank the Hoffman team for all their efforts and are excited to see Hoffman build on its current trajectory under new ownership.  This decision to divest Hoffman enables Trident to streamline our solution offerings and focus on driving continued growth in our core maritime end markets.”

Hoffman CEO, Ron Hayward, commented, “We are extremely grateful for the support of our previous owner, Trident, and look forward to continuing to deliver on future growth opportunities with our new partners at Branford Castle Partners.”

Headquartered in Arlington, VA, Trident is a systems and solutions provider to government and commercial shipbuilders and ship operators across the globe with a comprehensive suite of complex, integrated maritime systems and service offerings.  The company maintains operating locations strategically positioned near major naval and commercial shipbuilders across the U.S. and internationally.

Philpott Ball & Werner, LLC served as financial advisor to Trident on the transaction, and Blank Rome provided legal counsel. Branford Castle was advised by its legal counsel, Akerman LLP, and RSM served as its accounting/tax advisor.

 

02 Nov 24. South Korean defence firms report strong Q3 earnings. South Korea’s major defence firms have posted robust revenues and profits for the third quarter, led by massive arms export deals, industry data showed on Sunday.

The combined operating profits of four major South Korean defence firms — Hanwha Aerospace Co., Korea Aerospace Industries (KAI), Hyundai Rotem Co. and LIG Nex1 Co. — were estimated at 753.8 bn won ($546 m) for the July-September period, according to the data from regulatory filings and financial reports.

The figure more than trebled from 233.3 bn won recorded in the same period last year. Their combined revenues totalled an estimated 5.4trn won, up 30.9 percent on-year from 4.1trn won, reports Yonhap news agency.

Industry leader Hanwha Aerospace posted 477.2bn won in operating profit for the third quarter, up sharply from 85.6bn won a year ago. Its sales soared 61.9 percent on-year to 2.6trn won.

The strong bottom line is attributable to its exports of K9 howitzers and Chunmoo rocket launchers to Poland.

The company secured a deal, valued at 8.2trn won, to supply Poland with hundreds of K9 howitzers and Chunmoo rocket launchers in 2022. This was followed by another contract last year, worth 5.6trn won.

It has an order backlog of nearly 30trn won.

Hanwha Aerospace expected strong results to continue in the coming quarters thanks to new contracts including one with Romania worth 1.3 trillion won.

Hyundai Rotem reported 1.1trn won in sales for the third quarter, up 18 percent from a year ago, while its operating profit more than tripled to 137.5bn won.

The robust performance came as the company clinched a deal to export 1,000 K2 main battle tanks to Poland two years ago.

Its order backlog came to 19trn won.

KAI’s third-quarter sales fell 9.9 percent on-year to 907.2bn won, but its operating profit rose 16.7 percent to 76.3bn won.

Several successful arms deal, including the planned supply of the FA-50PL light fighters to Poland and the FA-50M light combat aircraft to Malaysia, contributed to the company’s solid earnings.

KAI’s order backlog reached 22.4trn won.

LIG Nex1 is forecast to see its sales jump 35.9 percent on-year to 728.3 bn won and its operating profit soar 52.8 percent to 62.8 bn won, with an order backlog of 19trn won. (Source: Google/https://www.socialnews.xyz/)

 

04 Nov 24. Synetics keeps on delivering.

• £2.2m additional contract wins with National Grid
• EPS set to double over three-year forecast period
• Cash-adjusted ratio set to fall to 9.5 within 12 months

Sheffield-based Synectics (SNX:265p), a leader in advanced security and surveillance systems to customers operating in technically and logistically demanding environments, has won further contracts with National Grid to protect its critical infrastructure across 12 sites.

In January 2024, the energy group awarded Synectics £4mn of additional contracts to deliver security improvement work across 13 new sites. The latest contract win means that Synectics’ technology is now deployed across 32 sites throughout National Grid’s estate. The company has a 30 November financial year-end, so the contract awards help underpin house broker Shore Capital’s expectations for the 2024-25 financial year, when analysts expect annual revenue to increase by 8 per cent to £60m.

Furthermore, as I noted when I rated the shares a buy, at 233p, at the interim results (‘Another upgrade for this cash-generative tech stock’, 16 September 2024), order intake is underpinned by a raft of contracts for the installation of security and surveillance systems at casino resorts in Asia and further contract wins with oil and gas giant Saudi Aramco. Synectics has deployed more than 10,000 specialist COEX camera stations to safeguard oil and gas refineries, pipelines, offshore vessels, and platforms for industry giants including Saudi Aramco and Shell. The gaming and global oil and gas market account for a fifth and a quarter of annual revenue, respectively.

Accelerated earnings growth

It’s worth noting, too, that a leaner cost base following a restructuring programme, the natural operational leverage of the business and a tailwind from the recovering oil and gas market mean that the operating margin will expand in a positive revenue cycle. In fact, analysts expect pre-tax profit and earning per share (EPS) to increase by 28 per cent to £5mn and 23.9p, respectively, in the new financial year, or more than three times the growth rate of revenue. On this basis, the shares are trading on a modest forward price/earnings (PE) ratio of 11.

In addition, the business is highly cash generative, so much so that Shore Capital forecasts a doubling of annual free cash flow (FCF) to £4.8m (27p), which underpins a bumper FCF yield of 10.3 per cent. It means that even if the board hike the dividend per share by 44 per cent to 6.5p at a cost of £1.2m, as analysts predict, net cash will continue to build. Indeed, the house broker pencils in a near-50 per cent increase to £7m (39p) in closing net cash in the 12 months to 30 November 2025, rising to £9.3m (52p) a year later. On this basis, the cash-adjusted PE ratio could drop to 9.5 by this time next year, falling to 7.3 in November 2026.

That’s a modest rating for a company targeting end markets with high barriers to entry and in sectors that are often challenging to penetrate. For instance, Synectics’ proprietary security and surveillance software manages and records more than 250,000 channels across 270 locations worldwide, including high-security environments such as town and city centres, stadiums, tourist attractions and critical infrastructure sites.

Synectics’ share price hit a seven-year high of 299p earlier this month after I suggested buying the shares in the summer, at 188p Buy. (Source: Investors Chronicle)

 

01 Nov 24. Moog Inc. Reports Strong Performance for Fourth Quarter 2024 and Issues Positive Guidance for Fiscal 2025 Moog Inc. (NYSE: MOG.A and MOG.B), a worldwide designer, manufacturer and systems integrator of high-performance precision motion and fluid controls and control systems, today reported strong fiscal fourth quarter 2024 results that marked another record year.

“Our performance reflects the success in pricing and simplification initiatives that continue to build momentum into 2025, with stronger sales, expanded margin and improved cash flow generation.”

Post this

“Our fourth quarter was strong, bringing to a close an exceptional year with record sales and expanded margins,” said Pat Roche, CEO. “Our performance reflects the success in pricing and simplification initiatives that continue to build momentum into 2025, with stronger sales, expanded margin and improved cash flow generation.”

Quarter Highlights

• Net sales increased driven by growth in defense businesses.
• Operating margin declined due to higher levels of charges related to simplification initiatives.
• Adjusted operating margin improved within Military Aircraft, Industrial and Space and Defense, while Commercial Aircraft declined from a strong quarter a year ago.
• Diluted net earnings per share increased due to improved operational performance, partially offset by the net of prior and current year one-time charges and benefits.
• Adjusted diluted net earnings per share increased due to incremental profit from higher sales and the benefit of capitalizing interest, partially offset by the absence of last year’s favorable litigation settlement.
• Twelve-month backlog increased 3%, reaching a record level of $2.5 bn.

Year Highlights

• Net sales increased due to higher demand across our aerospace and defense businesses.
• Operating margin increased within Space and Defense and Military Aircraft, while Industrial and Commercial Aircraft declined.
• Adjusted operating margin expanded in Military Aircraft, Space and Defense and Industrial reflecting the benefits of pricing and simplification initiatives, while Commercial Aircraft declined from a strong prior year.
• Diluted net earnings per share increased due to largely the same factors as the fourth quarter.
• Adjusted diluted net earnings per share increased driven by operating margin expansion and incremental profit from higher sales.

Quarter Results

“We had a great quarter,” said Jennifer Walter, CFO. “Sales were very strong, adjusted operating margin was robust and on plan, and adjusted earnings per share exceeded the high end of our guidance range. In addition, we generated a substantial amount of free cash flow.”

Sales in the fourth quarter of 2024 increased compared to the fourth quarter of 2023, with notable growth in Military Aircraft and Space and Defense. Military Aircraft sales increased 17% to $216m due to the ramp of the FLRAA and other production programs. Space and Defense sales increased 9% to $263 m driven by strong European defense demand and launch vehicle activity. Commercial Aircraft sales increased 2% to $197 m due to increased production volume, muted by the absence of last year’s retroactive pricing benefit and inventory sale from exiting a mature product line. Industrial segment sales decreased 5% to $242 m due to a slowdown in orders for industrial automation applications, partially offset by higher medical product and automotive test business demand.

Operating margin decreased 100 basis points to 9.1% in the fourth quarter of 2024 compared to the fourth quarter of 2023. Commercial Aircraft operating margin declined 680 basis points to 11.0%, driven by the absence of last year’s benefits. Operating margins in Space and Defense and in Industrial declined 200 basis points and 130 basis points, respectively, due to incremental charges related to simplification initiatives. Military Aircraft operating margin improved 590 basis points to 11.8%, driven by reduced research and development expense, improved sales mix and cost absorption on the FLRAA program.

Adjusted operating margin in the fourth quarter of 2024 was unchanged at 12.5% compared to the fourth quarter of 2023. We incurred charges primarily in Industrial and in Space and Defense. Adjusted operating margin in Industrial increased 90 basis points to 12.8% as the benefits of pricing more than offset an unfavorable sales mix and planned product transfers. Adjusted operating margin in Space and Defense increased 70 basis points to 13.5% associated with improved performance across the business.

Non-operating expenses in the fourth quarter of 2024 declined compared to the fourth quarter of 2023. The fourth quarter of 2024 included a $10 m adjustment to capitalize interest for 2023 and 2024. Non-operating expenses in the fourth quarter of 2023 included a pension settlement charge and a favorable litigation settlement.

Free cash flow in the fourth quarter was driven by strong customer collections and by timing of vendor payments.

Year Results

Sales in 2024 increased compared to 2023 with notable growth in Commercial Aircraft, Military Aircraft and Space and Defense. Commercial Aircraft sales increased 18% to $788m due to increased production ramps on widebody, narrowbody and business jet programs. Military Aircraft sales increased 13% to $812m due largely to having a full year’s worth FLRAA sales. Space and Defense sales increased 7% to $1bn due to strong, broad-based, defense demand. Industrial sales increased slightly at 1% to $991m, as softening industrial automation sales were compensated by growth in other sub-markets.

Operating margin in 2024 increased compared to 2023, reflecting the benefits of pricing and simplification efforts, partially offset by higher amounts of charges related to simplifying our operations. Operating margin increased in Space and Defense and Military Aircraft, while Commercial Aircraft operating margin decreased, all due to the same factors as the fourth quarter. Also, Industrial operating margin decreased due to higher amounts of simplification charges.

Adjusted operating margin increased in 2024 compared to 2023, inclusive of a 40 basis-point contribution from the Employee Retention Credit, and increased in all of our segments except for Commercial Aircraft. Adjusted operating margin in Military Aircraft increased 300 basis points to 12.0% due to cost absorption on the FLRAA program and due to lower research and development expense. Adjusted operating margin in Space and Defense increased 290 basis points to 13.4% due to strong operational performance, including improved performance on space vehicle programs. Adjusted operating margin in Industrial increased 90 basis points to 12.4% due largely to pricing initiatives. Adjusted operating margin in Commercial Aircraft decreased 90 basis points to 11.8% due to the absence of the prior year’s one-time benefits, partially offset by efficiencies from the current year’s higher production sales volume. (Source: BUSINESS WIRE)

 

01 Nov 24. UK: Alleged defence firm divestment will highly likely embolden radical pro-Palestinian activists. On 31 October, the radical pro-Palestinian activist group Palestine Action (PA) claimed that the multinational bank Barclays had divested from the Israeli defence company Elbit Systems as a result of PA activism. PA has repeatedly vandalised high street branches of Barclays over the past year, once targeting 20 sites in a single day. If the divestment has taken place (we cannot confirm this), it will be regarded as a major success for PA and will highly likely incentivise the group to continue conducting highly disruptive protests against other targets. The group has the capability and intent to target any UK-based company that is part of Elbit Systems’ supply chain. Although there are PA offshoots in countries such as France and Italy, the UK group is by far the most disruptive. We assess that PA will almost certainly continue to prosecute its campaign at least as long as the Israel-Hamas war persists, driving activism risks to any company with links to Elbit Systems. (Source: Sibylline)

 

01 Nov 24. Denel annual financial statements expected by end-November. Denel has added a rotary-wing UAV to its product line-up.

The demise of government’s Department of Public Enterprises (DPE) saw Denel, along with other State-owned enterprises (SOEs), moved to “line function ministries”.

This meant Defence and Military Veterans Minister Angie Motshekga, in terms of an August Presidential proclamation, is now tasked with the “administration, powers and functions entrusted by specific legislation” for Denel from the defunct DPE.

Viewing this development dispassionately in the light of the still coming State Asset Management Company (SAMC), which will oversee SOEs previously the responsibility of the DPE, is Democratic Alliance (DA) defence and military veterans spokesman Chris Hattingh.

“As it stands now Denel is an SOE reporting to Motshekga. If logic is applied it means the Parliamentary oversight function for Denel resorts under the Portfolio Committee on Defence and Military Veterans (PCDMV). If this status quo is retained or will change will depend entirely on the legislation relating to the yet-to-be constituted SAMC he told defenceWeb adding “it’s clear Denel has to be subjected to vigorous oversight”.

Hattingh will keep a close eye on SAMC developments, including publication – for comment – of a draft bill.

“Whether the SAMC and its as yet unknown mechanisms will provide for this level of oversight remains to be seen,” he said, pointing to the past where “many years of oversight did not prevent many SOEs, including Denel, becoming the mess they are”.

Hattingh further told this publication the PCDMV was informed by the Auditor-General (AG) Denel’s audit for the 2023/24 financial year was outstanding due to non-submission of annual financial statements for the same period. The “anticipated” submission date for the Denel 2023/24 annual financial statements is 30 November, the committee heard.

In April this year the Companies Tribunal, an agency of the Department of Trade, Industry and Competition (DTIC), reprieved the defence and technology conglomerate for not “timeously” holding annual general meeting (AGMs), where annual reports and financial statements are tabled. The reprieve was reported by Johannesburg-based financial daily Business Day, which noted the Centurion-headquartered SOE last held an AGM in January 2021. The Companies Tribunal has it, in terms of the Companies Act, that AGMs must be held annually and no more than 15 months after the date of the previous AGM.

Business Day reported the SOE had finalised its financials “but the AG was unable to conclude the audits within the stipulated time”. This “forced” Denel to request further extensions for the 2021, 2022 and 2023 financial years by no later than the end of May this year. The request was granted by the Companies Tribunal, the paper reported.

(Source: https://www.defenceweb.co.za/)

 

31 Oct 24. HII slashes financial outlook for 2024 due to contract delays, supply chain issues.

In a note to investors, J.P. Morgan analyst Seth Seifman said the Supply chain problems, COVID-era contract terms and lagging contract negotiations with the Navy hampered shipbuilding giant HII during the third quarter, forcing the company to lower its financial guidance for the year, the company announced today.

Free cash flow for the year is now expected to top out at $100m, a drastic reduction from a previous estimate of between $600m and $700m. HII also withdrew its five-year cash flow outlook, which spanned from 2024 to 2028. Shares of the company plummeted 23 percent today as the company failed to meet Wall Street expectations.

“The long-term value equation for HII has not changed. There’s unprecedented demand for our products and services,” CEO Chris Kastner told investors during an earnings call. “We remain confident in our mid- to long-term guidance of nine to 10 percent shipbuilding margins, and we firmly believe the actions we are taking will enable us to stabilize performance as we continue to work through these shifts.”

The company’s Newport News Shipbuilding division — which builds aircraft carriers and submarines — took a total $78 m in charges, including $34 m related to design changes for Block IV Virginia-class submarines, with the rest of the impact spread between two Ford-class carriers and the refueling and overhaul of the John C. Stennis (CVN-74), said Chief Financial Officer Tom Stiehle.

Executives broke down the company’s challenges into two buckets. First, it is unclear whether HII will wrap up contract negotiations with the Navy for 17 Virginia-class Block V and Block VI and Columbia-class submarines by the end of the year, which could alter the company’s profitability and cash flow for the year and beyond.

Second, HII’s shipyards have underperformed due to late deliveries from its supply chain and a lowered experience level among its own workforce, which has led to greater than expected rework.

“It bears repeating that nearly all of the ships currently under construction were negotiated prior to COVID, and since those contracts were signed, we have seen a significant loss of shipbuilding experience in our yards,” Kastner said in a statement accompanying the results.”Those ship contracts, which we are still operating under at Newport News, did not anticipate in their cost targets and risk limiting clauses the significant disruption of our workforce and supply chain, or extended periods of heightened cost inflation.”

On the ongoing negotiations with the Navy, Kastner said the discussions were a chance to “reset” contract terms to reflect those post-COVID realities.

“We’ve been working very hard with the customer to try to get those 17 ships right. It’s a broad-based sort of contract that we’re working on that really unlocks investment in in labor and infrastructure and technology across the portfolio,” he said. “We thought we were pretty close to getting it done. It’s in review still, and alternatives are being reviewed, and we’re supporting that conversation, but it’s just created some unpredictability.” (Source: Google/Breaking Defense.com)

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SPX CommTech, part of SPX Technologies Inc, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all. Formed by TCI and ECS, SPX CommTech’s Battlespace portfolio enables defence and security teams to detect, defeat and exploit RF signals to enhance communications intelligence (COMINT) and counter unmanned aerial systems (Counter-UAS). Additionally, its Tactical Data Link portfolio allows intelligence gathering agencies, special forces, emergency response, and security teams to securely and reliably transfer video and data between enabled-aircraft and ground teams over long distances for airborne Intelligence, Surveillance, Reconnaissance (ISR).

For more information visit www.tcibr.com and www.enterprisecontrol.co.uk

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Sponsored by SPX Communication Technologies (TCI & ECS)

 

www.tcibr.com

 

www.enterprisecontrol.co.uk

 

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31 Oct 24. Reaction Engines, a UK-based aerospace company and developer of high-speed propulsion and cooling technologies, has collapsed after failing to secure a financial rescue deal. The company’s downfall poses a significant challenge to the UK’s efforts to develop reusable Mach 5 aircraft under the Hypersonic Air Vehicle Experimental (HVX) program. In response, the UK Ministry of Defence (MoD) has stated it will “closely monitor all our supply chains” to mitigate any impact on national defense projects.

The aerospace firm was integral to the £1bn ($1.3bn) Hypersonic Technologies & Capability Development Framework (HTCDF), which aims to deliver the UK’s first hypersonic missile. Reaction Engines’ cutting-edge Synergetic Air Breathing Rocket Engine (SABRE) and patented cooling technologies were critical components in these initiatives.

After weeks of negotiations with potential investors—including an unsuccessful bid for £20 million from the United Arab Emirates’ Strategic Development Fund—the company entered administration. Accountancy firm PricewaterhouseCoopers (PwC) has taken over its administration duties. Analysts are concerned about how the absence of Reaction Engines will affect ongoing hypersonic projects, as few companies possess the specialized expertise to replace its role.

A Timeline of 3D Printing Innovations and Troubles

In 2018, Reaction Engines secured a significant financial boost when aerospace giants Boeing and Rolls-Royce invested £26.5 million, reflecting substantial industry confidence in SABRE’s potential. This funding allowed the company to enhance core components, including its pioneering precooler technology capable of rapidly cooling incoming air from over 1,000°C to ambient temperatures—an essential feature for hypersonic flight without overheating.

By early 2023, the company had raised an additional £40 million, bringing total funding to around £150 million. These funds supported the refinement of SABRE’s dual-mode operation, enabling it to function both within the atmosphere and in space, positioning Reaction Engines at the forefront of hypersonic propulsion technology. The propellant injector system, a critical component produced using 3D printing, was instrumental in preventing ice formation during flight and enhancing overall engine performance.

Despite these advancements, financial pressures began to mount. In August 2024, major investors like Artemis and Schroders significantly reduced the valuations of their stakes in the company, citing slower-than-anticipated revenue growth and prolonged development timelines. Artemis cut its valuation by 75%, while Schroders reduced its stake value from £10.6 million to £1.4m, signaling waning confidence in Reaction Engines’ financial stability.

An attempted £20m rescue deal with the United Arab Emirates’ Strategic Development Fund in September 2024 offered a glimmer of hope. The deal required approval from the UK government under the National Security and Investment Act, introducing regulatory delays that the cash-strapped company could ill afford. When negotiations ultimately stalled, Reaction Engines was left without the necessary funds to continue operations. On entering administration, 173 of the company’s 208 employees were laid off, marking a significant setback for the UK’s hypersonic and space sectors. (Source: News Now/https://3dprintingindustry.com/)

 

31 Oct 24. Huge debts at Titanic shipbuilder Harland & Wolff revealed. Titanic shipbuilder Harland & Wolff owed more than £160m when it collapsed into administration last month, it has been revealed.

Teneo was appointed to oversee the process at the 162-year-old holding company in September while its subsidiary firms, including its prized Belfast shipyard, will continue to trade under the control of the directors.

Now a newly-filed document with Companies House has set out how the business fell into administration and how much it owed its creditors.

Teneo said that when it was appointed, no long-term funding was available from the group or its lender to support the company’s ongoing costs.

It added: “The [Harland & Wolff] sites were largely acquired by the group from insolvency processes and their success was predicted on securing significant revenue growth t support a large overhead base.

“Whilst the group delivered revenue growth, it was slower than required and a recent large contract win was not expected to become profitable in the near term.

“As a result, during 2024 the group had an increasing short-term liquidity requirement alongside a significant level of creditor arrears.”

Why did Harland & Wolff enter administration?

Harland & Wolff sought funding from the Department of Business and Trade and UK Export Finance as well as from its secured creditor.

The funding was required by 1 July, 2024, to tackle its liquidity shortfall and allow statutory accounts to be signed off and filed on time.

However, the government declined the application for funding support and the accounts remained outstanding as its shares were suspended from AIM.

Harland & Wolff then appointed Rothchild & Co to lead a sales process.

Teneo said: “Liquidity pressure in the company was increasing with an imminent threat of a winding up petition being presented by a creditor.

“Furthermore, the company’s cost base was considered to be unsustainable.

“Given the absence of any new funding, the directors of the company concluded that they had no alternative but to appoint Gavin Park and Matthew Cowlishaw as joint administrators of the company.”

(Source: City AM)

 

30 Oct 24. Rohde & Schwarz technology group closes fiscal year successfully in dynamic market environment.

Rohde & Schwarz has closed the 2023/2024 fiscal year successfully in a market environment that remains highly dynamic. The company again achieved year-on-year increases in both revenue and incoming orders. With its three divisions Test & Measurement, Technology Systems and Networks & Cybersecurity, the group addressed the current challenges. The extensive product portfolio supports customers in maintaining their technological and digital sovereignty.

The 2023/2024 fiscal year (July to June) was characterized by divergent and dynamic market developments. With its focus on connectivity and security, the technology group proved to be well positioned in relevant growth markets. Revenue increased by 5.3 percent to EUR 2.93 bn, while incoming orders exceeded expectations with a 22.77 percent increase to EUR 3.87 bn. The operating result was positive. Thanks to a healthy sales pipeline, Rohde & Schwarz has started the new fiscal year with optimism.

Major investments ensure that the group maintains its leading market position. It invests between 15 and 20 percent of its revenue in research and development every year, emphasizing its innovation leadership in the technology sector. The number of employees worldwide increased to over 14,400 as of June 30, 2024. Further investments in the group’s own centers of competence and production plants ensure customer proximity, flexibility and reliable supply capability. Especially given the challenging economic and geopolitical situation, investments in the group’s vertical integration ensure the necessary resilience against external influences.

Technical expertise in test and measurement for customers in diverse markets

In a challenging market environment, the test and measurement business was generally stable thanks to its diversified product portfolio. In the wireless communications segment, demand was down compared to the preceding years. However, research and development customers demonstrated their continued reliance on the group’s test and measurement equipment to drive forward trending future technologies. These include the next mobile communications generations Beyond 5G and 6G, artificial intelligence and the integration of sensor technology and communications. Increased demand for test and measurement equipment for research into quantum technologies also had a positive impact on incoming orders.

Broad portfolio supports automotive customers in technology transition

As a leading global supplier of test and measurement equipment, Rohde & Schwarz provides well-engineered test and measurement solutions for the automotive industry and its technological transition. This includes radar sensors for environmental sensing, which play an important role in the ongoing development of driver assistance systems. Rohde & Schwarz test systems for radar sensors cover test and measurement requirements from development and production to functional testing during maintenance. Within the vehicle, connectivity ensures the smooth interaction of all devices and services. Although sluggish investment activity on the part of OEMs and their suppliers affected business over the past fiscal year, the group is well positioned for the future with its broad product portfolio.

Innovative solutions for future-proof critical infrastructures

Rohde & Schwarz is playing a key role in shaping the future of aviation safety. As air traffic recovers to pre-pandemic levels, investments in communications technology are also increasing. The group has benefitted substantially from this positive trend. In the past fiscal year, for example, Rohde & Schwarz successfully put three nationwide communications systems into operation in Australia, New Zealand and the UK.

In the security scanner segment, Rohde & Schwarz built considerably on its status as an innovation leader and demand increased in markets around the world. The group sees further market potential – especially in the European and North American markets, where its scanners are already well established.

Rohde & Schwarz successfully maintained its position in the broadcast & media segment. The group reinforced its leading position in the supply of equipment for transmitter networks with the market launch of highly energy-efficient TV transmitters. This also makes it possible to use such new technologies as Next Gen TV and 5G Broadcast today. Leading radio broadcasters worldwide rely on broadcast & media solutions from Rohde & Schwarz.

Aerospace & defense market demands advanced solutions

In the aerospace & defense market, demand was strong for test solutions for radar and satellite applications. For the increasing interlinking of the traditional satellite business with terrestrial mobile communications, Rohde & Schwarz offers a broad portfolio owing to its expertise in both areas. With strong demand in Europe and North America, incoming orders exceeded expectations.

Trust in Rohde & Schwarz as a reliable security partner drives growth

The Technology Systems Division closed the fiscal year with above-average growth. Against the backdrop of geopolitical tensions and armed conflicts, security is a major concern in politics and society. Another major factor behind the extraordinary performance of the division is the German procurement program Digitalization of Land Based Operations (D-LBO), in which the supply of the German armed forces with state-of-the-art radiocommunications plays a central role.

In the avionics field, Rohde & Schwarz has established itself as one of several industry partners of the European defense project Future Combat Air System. The group is participating in the project with its communications solutions and is a development partner of the AI based software platform.

Complete solutions for the navy

The navy plays a decisive role in protecting maritime routes for passenger travel as well as international seaborne trade. The increasing challenges in the maritime sector in recent years have led to growing demand for Rohde & Schwarz solutions in this area. The group successfully won a number of strategically important projects. This included supplying German, Australian and Polish naval forces with radiocommunications and reconnaissance systems. In this context, the group has invested in the establishment of a new naval center of competence in Hamburg and Kiel (Germany) for proximity to customers when implementing major national and international projects.

Ensuring data security and the availability of communications systems

The Networks and Cybersecurity Division achieved a significant year-on-year increase in incoming orders. Steady advances in digitalization are leading to a heightened public awareness of the need for digital sovereignty. Individuals, companies and the public sector want autonomy and security when operating in the digital world. As a key supplier in Germany, the group subsidiary LANCOM Systems met the growing demand with its products and solutions for site networking, network security and network management. An outstanding example was the provision of the group’s high-performance WLAN solutions for the 2024 Biathlon World Cup in Oberhof, Germany.

In addition, the persistently high cyberattack threat level continues to fuel demand for secure encryption. A specially developed communications platform for the encrypted transmission of information such as telephony, video and messaging services offers the highest possible confidentiality levels. Authorities and the military can rely on interruption-free end-to-end encryption of their data.

All three divisions are set for growth in the 2024/2025 fiscal year. Rohde & Schwarz is confident that it can further expand its position as a leading technology group despite the geopolitical and economic conditions, which are expected to remain challenging. (Source: PR Newswire)

 

30 Oct 24. Leonardo DRS Announces Financial Results for Third Quarter 2024

• Revenue: $812m, up 16% year-over-year
• Net Earnings: $57m, up 21% year-over-year
• Adjusted EBITDA: $100m, up 22% year-over-year
• Diluted EPS: $0.21, up 17% year-over-year
• Adjusted Diluted EPS: $0.24, up 20% year-over-year
• Bookings: $1.1bn (book-to-bill ratio of 1.3x)
• Backlog: $8.3bn, up 75% year-over-year
• Raises 2024 guidance across all metrics
• Initiates preliminary 2025 guidance framework

Leonardo DRS, Inc. (Nasdaq: DRS), a leading provider of advanced defense technologies, today reported financial results for the third quarter 2024, which ended September 30, 2024.

“We delivered strong third quarter results, highlighted by robust bookings, mid-teens organic revenue growth, increases to all of our key profit metrics and healthy free cash flow generation. Our strategy, execution focus and steadfast commitment to our customers are driving outcomes that continue to exceed our expectations” Chairman and CEO of Leonardo DRS.

Year-over-year revenue growth reflected strong continued momentum and was 16% for the third quarter 2024. In the quarter, our programs related to advanced infrared sensing, force protection and tactical radars were the primary catalysts for the solid revenue growth.

Higher volume was the primary driver for the year-over-year adjusted EBITDA growth and margin expansion in the quarter. Our volume expansion coupled with crisp operational performance translated to increases in our bottom-line metrics with quarterly net earnings, adjusted net earnings, diluted EPS and adjusted diluted EPS all higher compared to the prior year, despite a higher tax rate and expense.

Cash Flow and Balance Sheet

Net cash flow provided by operating activities was $59m for the third quarter. The company’s free cash flow generation was $48m in the quarter. Operating and free cash flow were both up significantly compared to last year primarily as a result of increased profitability and better working capital efficiency, which was aided by favorable timing of cash receipts from customers. At quarter end, the balance sheet had $198 m of cash and $205m of outstanding borrowings under the company’s credit facility, which provides the company with sufficient financial capacity to deploy capital for growth, while maintaining a healthy balance sheet.

Bookings and Backlog

The company recorded $1.1bn in new funded bookings in the quarter. Steady customer demand for our naval network computing, electric power and propulsion, force protection and advanced infrared sensing technologies drove our quarterly bookings. Total backlog at quarter end reached a new company record of $8.3bn, which represents a 75% increase year-over-year and was also up sequentially.

Segment Results

Advanced Sensing and Computing (“ASC”) Segment

While ASC bookings for the third quarter were lower than the prior year, Q3 bookings continued to reflect solid customer demand for our naval network computing, advanced infrared sensing and tactical communications technologies. Revenue growth on advanced infrared sensing and tactical radar programs remained as the major contributors for the year-over-year increase in the segment. Favorable program mix, improved program execution and higher volume drove the adjusted EBITDA growth and margin expansion for the quarter.

Integrated Mission Systems (“IMS”) Segment

Demand for our capabilities in electric power and propulsion and force protection drove quarterly bookings in the segment. The modest revenue growth in the segment reflects increases from our force protection programs. Adjusted EBITDA increased as a result of higher volume and slightly improved net program execution in Q3. (Source: BUSINESS WIRE)

 

30 Oct 24. Curtiss-Wright Corporation (NYSE: CW) reports financial results for the third quarter ended September 30, 2024.

Third Quarter 2024 Highlights:

• Reported sales of $799m, up 10%;
• Reported operating income of $145m, operating margin of 18.1%, and diluted earnings per share (EPS) of $2.89;
• Adjusted operating income of $149m, up 11%;
• Adjusted operating margin of 18.7%, up 20 basis points;
• Adjusted diluted EPS of $2.97, up 17%;
• New orders of $860m, up 2%, reflected a book-to-bill of 1.1x driven by solid demand within our Aerospace & Defense (A&D) markets;
• Backlog of $3.3bn, up 16% year-to-date; and
• Free cash flow (FCF) of $163m, generating 142% Adjusted FCF conversion.

Raised Full-Year 2024 Adjusted Financial Guidance:

• Sales increased to new range of 7% to 9% growth (previously 6% to 8%), principally driven by strong growth in our A&D markets;
• Operating income increased to new range of 7% to 10% growth (previously 6% to 9%);
• Maintained operating margin range of 17.4% to 17.6%, flat to up 20 basis points compared with the prior year;
• Diluted EPS increased to new range of $10.55 to $10.75, up 12% to 15% (previously $10.40 to $10.65, up 11% to 14%); and
• Free cash flow increased to new range of $430 to $450 m, up 4% to 9% (previously $425 to $445 m, up 3% to 8%), and continues to reflect greater than 105% FCF conversion.

“Curtiss-Wright achieved strong third quarter results, highlighted by mid-teens revenue growth in our A&D end markets, a better-than-expected operational performance in our Defense Electronics segment and a 17% year-over-year increase in Adjusted diluted EPS,” said Lynn M. Bamford, Chair and CEO of Curtiss-Wright Corporation. “We continue to demonstrate solid order activity, yielding an overall book-to-bill of 1.1x in the quarter, highlighted by record quarterly orders within our Defense Electronics segment. We also delivered solid cash generation, resulting in an exceptional free cash flow conversion of 142%. Based on the strong year-to-date performance and our continued momentum in executing on our Pivot to Growth strategy, we once again raised our full-year 2024 outlook for sales, diluted EPS and free cash flow.”

“We continue to leverage our strong balance sheet in support of our disciplined capital allocation strategy. This includes delivering on our commitment to drive solid returns to our shareholders as we completed the recently announced $100 m expansion of our 2024 share repurchase program during the quarter. Additionally, we remain focused on supplementing our organic growth with high quality, strategic acquisitions that meet our stringent financial criteria to drive long-term shareholder value.”

Third Quarter 2024 Operating Results

• Sales of $799 m increased 10% compared with the prior year;
• Total A&D market sales increased 15%, as we experienced strong growth in the defense markets principally driven by increased demand for our defense electronics products and higher submarine and aircraft carrier revenues in naval defense, as well as higher OEM sales in the commercial aerospace market;
• Total Commercial market sales were flat, reflecting solid growth in the power & process market, principally driven by higher sales of our commercial nuclear products, which was offset by lower sales in the general industrial market; and
• Adjusted operating income of $149m increased 11%, while Adjusted operating margin increased 20 basis points to 18.7%, principally driven by favorable overhead absorption on higher revenues in all three segments and partially offset by an unfavorable mix of products.

Third Quarter 2024 Segment Performance

Aerospace & Industrial

• Sales of $229m, up $8m, or 4%;
• Commercial aerospace market revenue increases reflected strong demand and higher OEM sales of sensors products and surface treatment services on narrowbody and widebody platforms;
• Higher revenue in the aerospace defense market reflected the timing of sales for our actuation equipment on various fighter jet programs;
• Lower general industrial market revenue was principally driven by reduced sales of industrial vehicle products to off-highway vehicle platforms and lower sales of industrial automation and services; and
• Adjusted operating income was $39m, up 1% from the prior year, while Adjusted operating margin decreased 50 basis points to 17.2%, as favorable absorption on higher sales as well as the benefits of our restructuring initiatives were offset by unfavorable mix of products.

Defense Electronics

• Sales of $243m, up $27m, or 12%;
• Higher revenue in the aerospace defense market was principally driven by increased sales of our embedded computing equipment on various domestic and international helicopter programs, partially offset by the timing of flight test equipment sales;
• Strong revenue growth in the ground defense market primarily reflected higher sales of tactical battlefield communications equipment;
• Higher commercial aerospace market revenue principally reflected increased OEM sales of avionics and electronics on various platforms; and
• Adjusted operating income was $64m, up 15% from the prior year, while Adjusted operating margin increased 50 basis points to 26.5%, primarily due to favorable absorption on higher A&D revenues.

Naval & Power

• Sales of $327m, up $39m, or 14%;
• Strong revenue growth in the naval defense market principally reflected higher demand on the Virginia-class submarine, Columbia-class submarine and CVN-81 aircraft carrier programs, as well as higher growth on various next-generation submarine development programs;
• Higher power & process market revenues mainly reflected increased commercial nuclear aftermarket sales supporting the maintenance of U.S. operating reactors; and
• Adjusted operating income was $54 m, up 10% from the prior year, while Adjusted operating margin decreased 60 basis points to 16.4%, as favorable absorption on higher revenues was partially offset by an unfavorable mix of products and the timing of development programs.

Free Cash Flow

• Reported free cash flow of $163 m increased $26 m year over year, primarily driven by higher cash earnings and lower working capital;
• Adjusted free cash flow of $163 m; and
• Capital expenditures increased $5 m compared with the prior year period, due to growth investments within the Aerospace & Industrial and Defense Electronics segments.

New Orders and Backlog

• New orders of $860 m increased 2% compared with the prior year and generated an overall book-to-bill of approximately 1.1x, principally driven by continued strong demand for defense electronics products within our A&D markets; and
• Backlog of $3.3bn, up 16% from December 31, 2023, reflecting higher demand in both our A&D and Commercial markets.

Share Repurchase and Dividends

• During the third quarter, the Company repurchased 355,578 shares of its common stock for approximately $113m and remains on track to repurchase a total of $150 m in shares in 2024; and
• The Company declared a quarterly dividend of $0.21 a share.

 

31 Oct 24. Europe’s small arms companies struggle for cash despite military spending boom.

• Summary
• Cash crunch hampers smaller European defence companies
• Firms face estimated 1 to 2bn-euro debt financing gap
• Funding gap crimps innovation, EU report finds

Europe’s small and medium-sized defence companies are struggling to access finance needed to drive innovation and grow production lines even as demand soars due to the war in Ukraine and other conflicts, government officials, firms and experts say.

A lack of access to public funding, red tape and banks’ reluctance to lend on fears of falling foul of environmental, social and governance regulations (ESG) are all hindering growth for smaller players in Europe’s defence sector, they say.

This as global military expenditure hit an all time high of $2.44 trillion in 2023, up 6.8% from the prior year and the most since 2009, according to the Stockholm International Peace Research Institute.

“Most of the problems that have existed in recent times for the defence and security industry have continued or deepened,” Defence and Security Industry Association of the Czech Republic Managing Director Jiri Hynek told Reuters. (Source: Reuters)

 

30 Oct 24. Airbus reports Nine-Month (9m) 2024 results.

• 497 commercial aircraft delivered
• Revenues €44.5bn; EBIT Adjusted €2.8bn
• EBIT (reported) €2.7bn; EPS (reported) €2.29
• Free cash flow before customer financing €-0.8bn
• Guidance maintained

Airbus SE (stock exchange symbol: AIR) reported consolidated financial results for the nine months ended 30 September 2024.

“We saw strong demand across our product range in the first nine months of the year. The nine-month earnings reflect the level of commercial aircraft deliveries, a solid performance in helicopters and the charges in our space business recorded in the first half,” said Guillaume Faury, Airbus Chief Executive Officer. “We are constantly adapting to a complex and fast-changing operating environment marked by geopolitical uncertainties and specific supply chain challenges that have materialised in the course of 2024. We remain focused on our priorities, including ramping up commercial aircraft deliveries and transforming our Defence and Space division.”

Gross commercial aircraft orders totalled 667 (9m 2023: 1,280 aircraft) with net orders of 648 aircraft after cancellations (9m 2023: 1,241 aircraft). The order backlog amounted to 8,749 commercial aircraft at the end of September 2024. Airbus Helicopters registered 308 net orders (9m 2023: 191 units), including 43 heavy helicopters from the Super Puma Family. Airbus Defence and Space’s order intake by value increased to €11.0bn (9m 2023: €8.5bn), reflecting good momentum across the division.

Consolidated revenues increased 5 percent year-on-year to €44.5bn (9m 2023: €42.6bn). A total of 497 commercial aircraft were delivered (9m 2023: 488 aircraft), comprising 45 A220s, 396 A320 Family, 20 A330s and 36 A350s. Revenues generated by Airbus’ commercial aircraft activities increased 4 percent, mainly reflecting the higher number of deliveries. Airbus Helicopters’ deliveries totalled 190 units (9m 2023: 197 units) with revenues rising 5 percent, reflecting a more favourable mix in programmes and a solid performance in services. Revenues at Airbus Defence and Space increased 7 percent year-on-year, mainly driven by the Air Power business, partly offset by the previous Estimate at Completion updates in Space Systems. Five A400M military airlifters were delivered (9m 2023: 4 aircraft).

Consolidated EBIT Adjusted – an alternative performance measure and key indicator capturing the underlying business margin by excluding material charges or profits caused by movements in provisions related to programmes, restructuring or foreign exchange impacts as well as capital gains/losses from the disposal and acquisition of businesses – totalled €2,798m (9m 2023: €3,631m).

EBIT Adjusted related to Airbus’ commercial aircraft activities decreased to €3,028m (9m 2023: €3,216m), with the increase in deliveries being reduced by investments for preparing the future.

The A220 programme continues towards a monthly production rate of 14 aircraft in 2026, with a focus on financial performance. The A320 Family programme continues to ramp up towards a rate of 75 aircraft per month in 2027. In late October, the first A321XLR was delivered. On widebody aircraft, the Company is now stabilising monthly A330 production at around rate 4. On the A350, the Company continues to target rate 12 in 2028 and is actively managing specific supply chain challenges that may have an impact on the programme’s ramp-up trajectory, in particular in 2025.

Airbus Helicopters’ EBIT Adjusted totalled €420m (9m 2023: €417m), reflecting services and the programmes mix despite lower deliveries.

EBIT Adjusted at Airbus Defence and Space was €-661m (9m 2023: €-1 m), reflecting the charges of €989m in Space Systems, as announced in the H1 2024 financial results. 9m 2023 included €0.4bn of charges recorded on certain satellite development programmes.

On the A400M programme, development activities continue towards achieving the revised capability roadmap. Retrofit activities are progressing in close alignment with the customer. No further net material impact was recognised in the first nine months of 2024. Risks remain on the qualification of technical capabilities and associated costs, on aircraft operational reliability, on cost reductions and on securing overall volume as per the revised baseline.

Consolidated self-financed R&D expenses totalled €2,351m (9m 2023: €2,167m).

Consolidated EBIT (reported) amounted to €2,690m (9m 2023: € 2,712 m), including net Adjustments of €-108m.

These Adjustments comprised:

• €-146m related to the dollar working capital mismatch and balance sheet revaluation, of which €-165m were in Q3. This mainly reflects the phasing impact arising from the difference between transaction date and delivery date;
• €+51m related to the gain on Airbus OneWeb Satellites, linked to the acquisition of the remaining 50% of the joint venture in Q1;
• €-13m of other costs including compliance costs, of which €-8m were in Q3

The financial result was €-92m (9m 2023: €231m), mainly reflecting negative impacts from the interest result and revaluation of financial instruments, partially offset by the positive impact from the revaluation of certain equity investments. Consolidated net income(1) was €1,808m (9m 2023: €2,332m) with consolidated reported earnings per share of € 2.29 (9m 2023: €2.96).

Consolidated free cash flow before customer financing was €-845m (9m 2023: €1,10 m), mainly reflecting the change in working capital, notably the inventory build-up that supports fourth quarter deliveries and the ramp-up across programmes. Consolidated free cash flow was € -877m (9m 2023: €843m). The gross cash position stood at €21.1bn at the end of September 2024 (year-end 2023: €25.3bn), with a consolidated net cash position of €7.2bn (year-end 2023: €10.7bn).

Outlook

As the basis for its 2024 guidance, the Company assumes no additional disruptions to the world economy, air traffic, the supply chain, the Company’s internal operations, and its ability to deliver products and services.

The Company’s 2024 guidance is before M&A.

On that basis, the Company targets to achieve in 2024:

• Around 770 commercial aircraft deliveries;
• EBIT Adjusted of around € 5.5bn;
• Free Cash Flow before Customer Financing of around € 3.5bn.

 

30 Oct 24. Indra Acquires a Majority Stake in TESS Defence and Becomes the Spanish Flagship Firm for Land Defence Programmes

• Indra’s Board of Directors has approved the increase in its stake in TESS Defence to secure a majority position (51.001%) by means of an agreement to acquire an additional 26.33% of the company from the other partners (GDELS-Santa Barbara Sistemas, SAPA and Escribano)
• The current configuration of TESS will shift towards an entrepreneurial model with a balance sheet, program management capability and responsibility, engineering, industrial property, manufacturing and delivery responsibility. TESS will have a new governance model and a Board made up of seven members, four of whom will be from Indra and the others from each of the other three shareholder companies
• This change will convert TESS Defence into the benchmark for the Ministry of Defence’s armoured land vehicle programs, including the 8×8 WCV and TSV programmes. It will also have natural responsibility for European armoured vehicle programmes such as the future Main Ground Combat System
• With this operation Indra will substantially reinforce its operations in the land defence industry, a market worth over 120bn euros per year worldwide. Indra will thus continue to implement the lines defined in its Leading the Future Strategic Plan

On 30 September, Indra’s Board of Directors approved the acquisition of a 51.001% majority stake in TESS Defence (TESS).  This operation and the signing, in a single act, of a new shareholders’ agreement with a new governance model will enable Indra to exert majority control over the company and consolidate its financial results.

The deal is a strategic acquisition for Indra that will position TESS as the prime contractor for the Army’s current and future armoured vehicle programmes, including the 8×8 WCV (Wheeled Combat Vehicle), the TSV (Tracked Support Vehicle) and their derivatives and subsequent phases. This opportunity will be reflected in access to a potential portfolio in Spain amounting to over 10 bn euros in armoured land vehicles over the next 15 years, with more than 700 vehicles with firm orders and additional opportunities for over a thousand vehicles. It also includes modernizations and new platforms, as well as maintenance and sustainment throughout the life cycle. In total, in global terms, taking into account exports and including recurrent maintenance, the potential portfolio that TESS is seeking will exceed 30 bn euros over the next twenty years.

Moreover, the assumption of a majority stake in TESS will reinforce Indra’s presence in the land defence industry, which has been limited to the field of mission systems until now. The operation will reinforce Indra’s capacity to lead and manage large domestic and international programmes, boost its export potential and allow it to act as the national coordinator in major European terrestrial programmes. This responsibility will contribute to the creation and integration of Spanish technological capabilities into the development of advanced European solutions. (Source: ASD Network)

 

30 Oct 24. Lockheed Martin Advances Space Capabilities through Strategic Terran Orbital Acquisition. Lockheed Martin (NYSE: LMT) has completed its previously announced acquisition of Terran Orbital, a leading manufacturer of innovative modular spacecraft serving the global aerospace and defense industries, and its subsidiary, Tyvak International. Lockheed Martin has worked with Terran Orbital on projects including Space Development Agency programs and Lockheed Martin’s technology demonstrations.

“The addition of Terran Orbital’s spirit of entrepreneurship to the scale of Lockheed Martin means there is a great deal of opportunity to keep pushing the boundaries of technology and space solutions together,” said Robert Lightfoot, President, Lockheed Martin Space. “We welcome their ingenuity and dedication to ensuring mission success and we’ve always valued those aspects of our working relationship. Together, we can deliver our combined innovation and services with a greater sense of urgency to support our customers’ commercial, civil and national security needs.”

Terran Orbital offers a unique lineup of customizable spacecraft platforms, which include interchangeable components, and mission services. When these are combined with Lockheed Martin’s mission system integration and payload expertise, the result includes more robust space capabilities. This is in addition to bolstered manufacturing practices, driven by automation and robotics for increased capacity and speed, and advanced testing techniques.

Reporting through Lockheed Martin’s Space business area, the company will be recognized as Terran Orbital, a Lockheed Martin Company. It will remain a merchant supplier to the industry and bring holistic solutions by coalescing satellite design, production, launch planning, mission operations, and in-orbit support to meet the needs of the most demanding military, civil, and commercial customers’ missions.

Terran Orbital, a Lockheed Martin Company, maintains locations in Boca Raton and Melbourne, Florida, Irvine and Santa Maria, California, Atlanta, Georgia, Tysons Corner, Virginia, and Torino, Italy.

The acquisition was first announced August 15, 2024. More information on Terran Orbital can be found at www.terranorbital.com.

 

30 Oct 24. DELAIR Acquires SQUADRONE SYSTEM. DELAIR has announced the acquisition of Grenoble-based drone manufacturer SQUADRONE SYSTEM, a specialist in drone swarms and industrial inspection. The Toulouse drone manufacturer confirms its dual development strategy (civil & defense) and accelerates the deployment of its technological roadmap.

Founded in 2014 in Grenoble, SQUADRONE SYSTEM., with a workforce of 22 and estimated turnover of €2m in 2024, specializes in the design of multi-copter drones for complex use cases:

• UAV swarming: through the TAMOS (Tactical Multi-Objectives Swarming UAVs) project of the Agence Innovation Défense (AID – Defense Innovation Agency) and the Direction Générale de l’Armement (DGA – French Armament General Directorate).
• Anti-drone combat: RapidEagle project
• Automated industrial inspections: in the civil sector, with UAVs for warehouse inventories, radio spectrum monitoring or aircraft inspection on the ground.

SQUADRONE SYSTEM has also proved its ability to mass-produce UAVs in significant volumes with the HEXO+ drone, which was produced in France at a rate of 600 UAVs/week, and to form partnerships for the dissemination of its key technologies (swarms, anti-drone systems) with major defense players such as Thalès and Safran Electronics & Defense.

With this acquisition, aerial and underwater drone manufacturer DELAIR positions itself as a player in the strengthening of the drone sector in France, and reaches a new milestone in its growth, with a workforce of 150 and a projected turnover of over 30m euros by 2024.

DELAIR Confirms its Dual Development Strategy

“While DELAIR’s Security/Defense business has been particularly dynamic over the past 2 years, our positioning is resolutely dual, with the aim of balancing our civil and military activities at mid-term. The acquisition of SQUADRONE SYSTEM enables us not only to acquire directly the technological backbone of drone swarms, but also to develop our civil industrial inspection activity”, explains Bastien MANCINI, CEO of DELAIR.

Technological Differentiation

“The acquisition of SQUADRONE SYSTEM is perfectly aligned with our technological roadmap, which is built around 5 major technological building blocks (energy, image processing, electronic warfare, swarms and certification). The synergies generated will enable us to gain precious time in an increasingly intense European and global competitive field” adds Bastien MANCINI.

A New Site in a World-Class Technological Hub: Grenoble

After Toulouse, the world’s leading aeronautics center, and Marseille, home to its marine and submarine activities, Delair confirms its local presence by opening a third site in Grenoble, the historic hub of microelectronics in France. At the heart of a world-beating micro and nanotechnology innovation ecosystem.

“This industrial and territorial vision of our development will enable us, step by step, to create a European leader in robotics, based on the technological, academic and industrial specialties specific to each territory and necessary for our complex systems. This will enable us to confront global competition with great ambition,” concludes Bastien MANCINI. (Source: UAS VISION/Delair)

 

29 Oct 24. SKF is committed to creating a more focused and resilient company to serve its customers even better and accelerate profitable growth. As part of the decision from the Group’s strategic review of its aerospace business, communicated on 27 October 2023, to focus on core aerospace business and to exit areas that are non-strategic, SKF has signed an agreement to divest its ring and seal operation in Hanover, Pennsylvania, USA.

The Hanover ring and seal operation is divested to Carco PRP Group, through its US aerospace subsidiary, PCTI, for a total enterprise value of USD 220m, corresponding to approximately SEK 2.3bn. The Hanover facility manufactures mechanical seals and rings, representing 2023 annual sales of approximately SEK 700m.

“I’m pleased that we have been able to deliver on our prior promises and successfully reached an agreement to divest this successful but non-core business at accretive multiples. With a new owner, I’m confident that Hanover will continue to provide customers with top quality solutions. Aerospace will remain one of our largest customer industries and we will continue to invest and strengthen our position in core Aerospace segments”, says Rickard Gustafson, President and CEO.

SKF will continue to focus its aerospace business around high growth core areas related to aeroengine and aerostructure bearing offers, representing annual sales of approximately SEK 6 bn. The customer offering in these core areas will be further strengthened through investments in product development, customer service and state of the art manufacturing.

As previously announced, SKF is exploring options to exit the precision elastomeric device (PED) aerospace operation in Elgin, Illinois, USA. The PED business is also non-strategic but smaller than Hanover and the exit process is proceeding according to plan.

The Hanover divestment is expected to close during the first quarter of 2025, subject to authorities’ approval

(Source: PR Newswire)

 

29 Oct 24. ATI Announces Third Quarter 2024 Results.

Ninth consecutive quarter with sales in excess of $1bn

• Q3 2024 sales of $1.05bn
• Q3 2024 net income attributable to ATI of $82.7m, or $0.57 per share
• Aerospace & defense represent 62% of Q3 2024 sales
• Full year 2024 guidance updated
• Non-GAAP Information*
• Q3 adjusted net income attributable to ATI of $85.9m, or $0.60 per share
• Q3 2024 ATI adjusted EBITDA of $185.7m, or 17.7% of sales, up 100 basis points sequentially

ATI Inc. (NYSE: ATI) reported third quarter 2024 results, with sales of $1.05 bn and net income attributable to ATI of $82.7m, or $0.57 per share.

Adjusted earnings per share* for Q3 2024 were $0.60, and ATI adjusted EBITDA* was $185.7m, or 17.7% of sales.  Q3 2024 adjusted results exclude pre-tax charges of $4.3m consisting primarily of $2.5m of start-up costs and $1.7m for transaction related costs.  Q2 2024 adjusted results exclude pre-tax charges of $5.4m consisting of $5.5m of inventory write-downs related to our ongoing European restructuring and $1.8m of start-up costs. These pre-tax charges were partially offset by credits of $1.9m due to lower severance reserves primarily for our ongoing European restructuring.  Q3 2023 adjusted results exclude $4.2 m in pre-tax charges related to start-up costs and costs for an unplanned outage, partially offset by restructuring credits.

“Our third quarter results reflected year-over-year growth in sales and EBITDA, yet this rate of growth fell short of our expectations,” said Kimberly A. Fields, President and CEO. “We remain confident in both long-term demand and our ability to deliver for our customers and shareholders. We’re actively addressing uncertainty across our aerospace customer base due to an industry-wide slowing of the aircraft production ramp, exacerbated by a work stoppage in the supply chain. These impacts, along with unplanned outages and transportation issues related to Hurricane Helene, delayed certain shipments during the third quarter,” she said.

“As we proactively address these challenges in demand and production, we are focusing on those areas within our control, targeting improved performance for the remainder of 2024 and beyond,” said Fields. “In terms of operating efficiency, we were pleased to see consolidated adjusted EBITDA margin, as a percentage of sales, increase 100 basis points over the second quarter.  We also announced the early redemption of our 2025 Convertible Notes and a new $700m share repurchase authorization, delivering on our commitment to deleverage our balance sheet and return cash to shareholders,” she said.

Operating Results by Segment

• HPMC’s third quarter 2024 sales decreased $10m, or 2%, compared to the second quarter 2024, primarily due to lower sales to medical and general industrial markets. Further, lower sales for commercial airframe products were offset by increased demand for next generation commercial jet engine products. Overall aerospace & defense sales represented 86% of total HPMC sales in the third quarter 2024, an increase from 85% in the second quarter of 2024.  Third quarter 2024 sales improved 2% compared to third quarter 2023, with total aerospace & defense related sales increasing 4% compared to the prior year period, primarily due to next generation commercial jet engine demand, which offset a decline in sales of commercial airframe products.
• HPMC third quarter 2024 segment EBITDA was $123.2 m, or 22.3% of sales.  Continued growth in sales for next generation commercial jet engines drove sequential margin growth.
• Third quarter 2024 and second quarter 2024 results included benefits of $2.9m and $3.5m, respectively, from the recognition of previously deferred employee retention credits.
• AA&S third quarter 2024 sales decreased $35m, or 7%, compared to the second quarter 2024, due to lower aerospace & defense, primarily for commercial airframe products, and specialty energy sales. These decreases were partially offset by higher sales to the electronics end market. Overall aerospace & defense sales were 36% of total AA&S sales in the third quarter 2024.  Third quarter 2024 sales increased 3% compared to the third quarter 2023. Higher year-over-year sales to aerospace & defense, medical, and electronics end markets were partially offset by lower conventional energy and general industrial markets sales.
• AA&S third quarter 2024 segment EBITDA was $73.6m, or 14.8% of sales. The sequential decline in margins was primarily due to lower deliveries of titanium and exotic alloys.
• Third quarter 2024 and second quarter 2024 results included benefits of $1.9 m and $5.1 m, respectively, from the recognition of previously deferred employee retention credits.

Corporate Items and Cash

• Restructuring and other charges:
• Third quarter 2024: $4.3m includes pre-tax charges consisting primarily of $2.5m of start-up costs and $1.7m of transaction related costs.
• Second quarter 2024: $5.4m includes pre-tax charges of $5.5m of inventory write-downs related to our ongoing European restructuring and $1.8m of start-up costs. These pre-tax charges were partially offset by credits of $1.9m due to lower severance reserves primarily for our ongoing European restructuring.
• Third quarter 2023: $4.2m includes pre-tax charges of $2.8m of start-up costs and $1.9m of costs associated with an unplanned outage at our Lockport, NY melt facility, partially offset by $0.5m pre-tax credit for restructuring charges, primarily related to lowered severance-related reserves based on changes in planned operating rates and revised workforce reduction estimates.
• Corporate expenses in the third quarter 2024 were $13.4m, compared to $19.4m in the second quarter 2024, and $12.5m in the prior year quarter. The decrease in corporate expenses in third quarter 2024 compared to second quarter 2024, was primarily due to lower incentive compensation costs.
• Closed operations and other income/expense was income of $2.3m in the third quarter 2024, compared to income of $0.7m in the second quarter 2024, and expense of $3.6m in the prior year quarter. The third quarter 2024 included a $3.7m gain from the sale of oil & gas rights. The second quarter 2024 included a $2.3m gain from the sale of our previously idled Houston, PA facility.
• Third quarter 2024 results include a $28.3m income tax provision, or an effective tax rate of 24.6%. Second quarter 2024 results include a $25.3m income tax provision, or an effective tax rate of 22.8%. Third quarter 2023 results include a tax provision of $4.9m, or an effective tax rate of 4.9%. The effective tax rate for the third quarter 2024 increased compared to the second quarter 2024 primarily due to lower discrete tax benefits. The Company’s effective tax rate for third quarter 2023 was lower than the third quarter 2024 due to the net valuation allowance position in the U.S.
• Cash provided by operating activities was $24m and $26m for the third quarter and year-to-date 2024, respectively. Third quarter 2024 managed working capital as a percent of sales was 40.0%, which increased from 35.5% in the second quarter 2024. Capital expenditures for the third quarter 2024 were $66m.
• During the third quarter of 2024, the Company redeemed for shares of its common stock the $291.4m outstanding principal of ATI’s 3.5% Convertible Senior Notes due 2025 by issuing 18.8m shares of ATI stock. In addition, the Company received cash proceeds of $76m to settle the capped call associated with these notes.
• Cash on hand at September 29, 2024 was $407m, and available additional liquidity under the asset-based lending (ABL) credit facility was approximately $551m. As of September 29, 2024, we had no outstanding borrowings on the ABL credit facility. ATI has no significant debt maturities until the fourth quarter 2025.
• During the third quarter 2024, ATI’s Board of Directors authorized the repurchase of $700m of ATI common stock. In the third quarter 2024, the company repurchased $40m of common stock at an average price of $59.37, retiring approximately 0.7m shares. As of September 29, 2024, total share repurchase authorization remaining was $660m.

Outlook

“The third quarter presented challenges and we expect to continue to see uncertainty with our most critical customers through the remainder of 2024 and first part of 2025. That said, the demand in our end markets remains very strong and our strategy of leading in aerospace & defense and ‘aero-like’ markets will deliver growth and continued margin expansion,” said Fields. “We remain committed to creating lasting shareholder value.”

The company is updating its full year 2024 guidance. The table below includes the current and prior guidance. (Source: PR Newswire)

 

29 Oct 24. Oceaneering Acquires Global Design Innovation Ltd. Oceaneering International, Inc. (NYSE: OII) announced today that it has acquired Global Design Innovation Ltd. (GDi), a UK-based provider of digital and software services. This acquisition is a key step in Oceaneering’s strategy to advance its digital capabilities and broaden the solutions available to its global clients.

As the only provider certified by the United Kingdom Accreditation Service (UKAS) to perform remote visual inspection using point cloud data and photographic images, GDi brings advanced algorithms and data solutions that, when combined with Oceaneering’s engineering expertise, will strengthen Oceaneering’s ability to optimize asset management for clients in industries including oil and gas, utilities, and power generation. GDi’s suite of solutions, including its Vision software, complements Oceaneering’s portfolio by supporting enhanced safety, data quality and integrity, and cost efficiency for customers worldwide.

Roderick A. Larson, President and Chief Executive Officer of Oceaneering, stated, “We look forward to deepening our partnership with GDi through this acquisition, which aligns with our strategic plan to expand our digital and software solutions.”

Karl Green, director of GDi, stated: “We are excited to join the Oceaneering team, which will allow GDi to leverage Oceaneering’s global network and resources, while continuing to deliver the high-quality digital services that our customers expect.”

GDi will continue to operate under its existing brand identity. Oceaneering intends to report GDi’s future financial results through its Integrity Management and Digital Solutions (IMDS) segment. (Source: BUSINESS WIRE)

 

30 Oct 24. L3Harris unit making rocket motors used in Ukraine says business has surged. L3Harris Technologies’ (LHX.N) business unit Aerojet Rocketdyne has doubled its monthly production of motors for GMLRS rockets that are heavily used in Ukraine, a company executive said on Tuesday, as global demand surges to supply Kyiv and to rebuild shrinking U.S. stockpiles.

Demand for rocket motors is soaring worldwide because of wars in Ukraine and the Middle East. Other militaries are also realizing that future conflicts will likely require many more rockets and missiles – as a part of a new warfighting doctrine dubbed “affordable mass” to describe the sheer volume of firepower involved.

This is good news for L3Harris. In December 2022 the U.S. defense contractor offered to purchase Aerojet, which produces about half of all the rocket motors propelling U.S. military missiles, rockets and other projectiles. But at that time no one knew how long the Ukraine war would last and the Pentagon had signed few contracts to restock its shelves.

Guided Multiple Launch Rocket System rockets, also known as GMLRS, travel about 45 miles (72 km). Their widespread use and success in Ukraine has driven demand from new customers.

“GMLRS was a program that we have kind of unbounded demand for. In the most recent quarter, we’ve doubled the production that we averaged per month from 2023,” said Ross Niebergall, president of Aerojet Rocketdyne.

Since closing on the deal to buy Aerojet, Niebergall said L3Harris has increased capital spending for the rocket motor unit by 84%. The company said it works with more than 70 sub-tier suppliers in Alabama, and spent $25 m to help increase productivity across a network of more than 300 suppliers.

Aerojet did not provide GMLRS motor production figures. But Lockheed Martin (LMT.N) the main contractor for GMLRS, was making about 4,600 per year before ramping up production in 2022. Lockheed’s GMLRS production is scheduled to rise from 10,000 deliveries in 2024 to 14,000 deliveries in 2025.

The strong demand has spurred new entrants into the U.S. rocket motor manufacturing business, but they do not have mass production capabilities.

Aerojet’s facilities around Huntsville, Alabama, have been built out with investments in large carbon-fiber winding devices to make advanced cases, new more automated presses for nozzles and fittings, and better quality control technology under L3Harris’ ownership since the deal closed just over a year ago.

The newly fitted-out building produces the critical casings for the most in-demand solid fuel rocket motors, like Javelin antitank weapons and GMLRS rockets as well as much larger rocket motors. (Source: Reuters)

 

30 Oct 24. IFS, the leading provider of enterprise cloud and Industrial AI software for the hardcore businesses that make, service, and power our planet, announces record growth for the third quarter, ending September 30, 2024. Global organic growth, supported by a strong partner community, underpins IFS’s strategy and robust financial performance.

IFS Q3 Headline Results:

• Annual Recurring Revenue (ARR) increased by 30% YoY, further cementing the IFS position as a leader in industrial software solutions
• Software revenue showed a strong 20% YoY growth
• Customers adopting IFS Cloud in Q3 2024 grew 71% YoY helping to drive 46% YoY growth in Cloud Revenue

Strategic acquisitions

Q3 included the successful completion of two significant acquisitions: the CAN$1bn acquisition of Copperleaf Technologies Inc., a global leader in strategic asset management and asset investment planning (AIP); and the acquisition of EmpowerMX, an AI-powered aviation maintenance software provider, specialising in Airframe Maintenance Repair and Overhaul (MRO) solutions. These two acquisitions only contributed nominally to the Q3 results, given their closing dates.

Growth across all regions and industries

IFS saw increasing demand from all regions for its AI-powered and sustainability enhancing, industry-specific solutions. These include not only IFS Cloud, but also the broader IFS portfolio such as Ultimo, Poka, and recent acquisitions EmpowerMX and Copperleaf.

Over 90 new organisations became IFS customers in Q3, including: Ahrend, Avia Prime, Comcast, DCC Plc, Drayton Aerospace, General Dynamics Ordnance and Tactical Systems-Canada, HomeServe, ista SE, Quanta Services Australia, Rolls Royce Power Systems, Sureserve, Stertil Group, TDC NET, SNCF Gares & Connexions.

IFS CEO Mark Moffat said: “Our Q3 results reflect the IFS commitment to solving critical industry challenges through Industrial AI. IFS.ai is driving the next industrial revolution, and our continued growth is testament to the value we’re delivering to customers and partners alike.

“IFS’s clear vision is to become the undisputed category leader in industrial software. This latest financial performance shows we are on the right track to make this vision a reality.”

IFS Chief Financial Officer, Matthias Heiden, added: “The 30% growth in ARR demonstrates our success in driving predictable, profitable growth. We continue to lead with customer-focused solutions, strongly supported by our innovative global partner network.”

Recent Highlights:

• IFS Cloud 24R2 was unveiled at IFS Unleashed, including IFS.ai-powered features and over 60 AI use cases to help customers drive Industrial AI adoption at scale
• IFS and PwC partnered to create the new IFS Cloud Sustainability Management Module, to solve customer ESG disclosure challenges including CSRD
• IFS was named a Customers’ Choice in the 2024 Gartner® Peer Insights™ Voice of the Customer for Cloud ERP for Product-Centric Enterprises
• IFS Ultimo named a Leader in the Verdantix Green Quadrant®: Enterprise Asset Management Software 2024
• IFS assyst recognised as a Leader and Fast Mover in the GigaOm Radar for IT Service Management

 

30 Oct 24. Fincantieri open to “any form” of collaboration with Thyssenkrupp marine arm. Fincantieri (FCT.MI)  is open to all types of collaboration with the warship division of conglomerate Thyssenkrupp (TKAG.DE) but it is up to Germany to decide on a strategy for the unit, the CEO of the Italian shipbuilder said on Wednesday.

“Now is time for German institutions to understand what the best strategy is to give more value and strengthen (Thyssenkrupp Marine Systems). We are at their disposal for any possible forms of collaboration,” Fincantieri Chief Executive Pierroberto Folgiero told Bloomberg television.

Last week private equity firm Carlyle (CG.O) dropped out of a bidding process for Thyssenkrupp Marine Systems (TKMS), in a major blow to the German group’s restructuring.

The company did not say why Carlyle pulled out, but said it would now focus on a spin-off of the division, which builds submarines and frigates, and that it remained open to industrial partnerships.

Folgiero said the group would be interested in widening the existing commercial collaboration with TKMS or “creating new ones to be instrumental to their strategies”. (Source: Google/Reuters)

 

29 Oct 24. Leidos Reports Strong Third Quarter 2024 Results and Raises Full-Year Guidance.

• Revenues of $4.2bn, up 7% year-over-year
• Net income of $362m or $2.68 per diluted share
• Adjusted EBITDA (non-GAAP) of $596m (14.2% margin)
• Non-GAAP Diluted Earnings per Share of $2.93, up 44% year-over-year
• Cash Flows from Operations of $656m; Free Cash Flow (non-GAAP) of $633m
• Net Bookings of $8.1bn (book-to-bill ratio of 1.9 for the quarter and 1.1 for trailing twelve months)

Leidos Holdings, Inc. (NYSE: LDOS) today reported financial results for the third quarter of fiscal year 2024.

“Continued improvement in operating performance across all segments drove excellent revenue growth, record margins for net income and adjusted EBITDA, substantial earnings growth, strong cash flow, and robust bookings,” said Leidos Chief Executive Officer Tom Bell. “These results demonstrate clearly how our collaborative and innovative workforce is focused on consistent execution for our customers and shareholders. With a healthy balance sheet, improving business development performance, and emerging ‘North Star’ strategy, Leidos is well positioned to deliver robust and sustainable returns as we move forward.”

Summary Operating Results

With a net income margin of 8.6%, net income for the third quarter was $362m, or $2.68 per diluted share.  Comparisons to the year ago period are not meaningful as the result of the $699m pre-tax, non-cash impairment and restructuring charge primarily associated with the Security Enterprise Solutions (SES) reporting unit recorded in the third quarter of 2023.

Adjusted EBITDA was $596 m for the third quarter, up 32% year-over-year. Record adjusted EBITDA margin of 14.2% increased from 11.5% in the third quarter of 2023. Non-GAAP net income was $396 m for the third quarter, up 40% year-over-year, and non-GAAP diluted EPS for the quarter was $2.93, up 44% year-over-year. The primary drivers of increased profitability were increased volumes on managed health services programs and improved program execution and cost control across the company.

Cash Flow Summary

In the third quarter, Leidos generated $656m of net cash provided by operating activities and used $23m and $257m in investing and financing activities, respectively. Net cash provided by operating activities was driven by strong EBITDA and collections performance. Days Sales Outstanding (DSO) for the quarter was 59.

Investing activities consisted primarily of $23m in property, equipment and software payments, which resulted in quarterly free cash flow of $633m. Leidos returned $254m to shareholders in the third quarter, including $203m in share repurchases and $51m as part of its regular quarterly cash dividend program. As of September 27, 2024, Leidos had $1,185m in cash and cash equivalents and $4.7bn of debt.

On October 25, 2024, the Leidos Board of Directors declared a cash dividend of $0.40 per share, which represents an increase of 5.3% over the prior quarter’s dividend amount. The dividend will be payable on December 31, 2024, to stockholders of record at the close of business on December 16, 2024.

Business Development

Net bookings totaled $8.1bn in the quarter, representing a book-to-bill ratio of 1.9. As a result, backlog at the end of the quarter was $40.6 bn, of which $9.1bn was funded. Included in the quarterly bookings were several notable awards:

• Veterans Benefits Administration (VBA) Medical Disability Examinations (MDE) Regions 1-4 Option Year. The VBA MDE Office awarded Leidos the next option year on the existing indefinite delivery, indefinite quantity (IDIQ), firm-fixed price contracts that were originally awarded in November 2018. Leidos QTC Health Services will continue to provide MDE to meet Department of Veterans Affairs (VA) and Department of Defense (DOD) requirements for separating and retired service members.
• Army Global Unified Network (AGUN). The Army Program Executive Office for Command, Control, and Communications-Tactical Global Enterprise Network Modernization (PEO C3T GENM-O) awarded Leidos a five-year, $331 m contract to modernize the U.S Army’s network in alignment with the Army’s Network Modernization Strategy and Army Unified Network Plan. Leidos will deploy AGUN to individual Army sites to deliver a standardized, orchestrated modern network architecture that supports the transition to a Zero Trust Architecture and aims to make applications, data, and enterprise services are accessible, trusted and interoperable across the globe.
• Advanced Battle Management System-Digital Infrastructure (ABMS-DI) Network. The Department of the Air Force’s (DAF) Program Executive Officer Command, Control, Communications and Battle Management (PEO C3BM) awarded Leidos a five-year, $303 m contract to oversee the planning, analysis, and operations for the DAF ABMS-DI network. This contract extends Leidos’ collaborative role with the DAF to design, develop, and deploy modern Combined Joint-All Domain Command and Control (CJADC2) capabilities for the Air Force and Space Force.
• Automated Installation Entry (AIE) Next Generation Support. The Army Program Executive Office for Intelligence, Electronic Warfare & Sensors (PEO IEW&S) awarded Leidos the AIE Next Generation contract to enhance security at 92 additional Army and select joint-service installation access control points located around the world. Under the six-year, $249 m contract, Leidos will continue to transform the Army’s enterprise physical access control system to a fully extensible, cloud-based solution with advanced biometrics modalities.

 

28 Oct 24. Godspeed Capital-Backed Special Aerospace Services (SAS) Announces Acquisition of Concordia Technologies. Special Aerospace Services (“SAS”), a Godspeed Capital Management LP (“Godspeed Capital”) backed platform, and a leader in space and defense engineering, hardware, and mission critical communications technology, today announced the acquisition of Concordia Technologies, an Alabama-based company renowned for its expertise in missile and hypersonic weapons defense, sensor design and evaluation, and modeling and simulation technologies. This strategic acquisition underscores SAS’s continued commitment to advancing national security space initiatives and bolstering its position at the forefront of cutting-edge defense technologies.

Concordia Technologies has a distinguished history in supporting missile and hypersonic weapon systems defense programs for the U.S. Department of Defense and other key government agencies including the Missile Defense Agency (“MDA”). The company’s specialized knowledge in modeling and simulation has been instrumental in developing systems critical to the nation’s defense.

Heather Bulk, CEO of SAS, emphasized the strategic importance of the acquisition: “Incorporating Concordia Technologies’ extensive experience in hypersonic systems and missile defense aligns with SAS’s mission to support and enhance national security space capabilities. The future of our defense strategy lies in the continued funding and development of advanced technologies such as hypersonics, which will play a pivotal role in ensuring our nation’s security in the coming decades. With this acquisition, SAS is better positioned to contribute to these vital efforts.”

Tim Johnson, Co-founder and CEO of Concordia Technologies, spoke about the potential that will be unlocked by this new partnership: “We are excited to join forces with SAS, a company that shares our deep commitment to supporting national defense missions. With SAS’s renowned dedication to national security & space initiatives and our expertise in hypersonics and missile defense, we look forward to advancing the collaboration and development of critical technologies that will shape the future of defense.”

Brad Vick, Co-founder and President of Concordia Technologies remarked, “Together with SAS, we will now be in a lead position to support our missile defense customers and their critical national security space missions.”

Nat Fogg, Partner, Godspeed Capital, said, “We are thrilled that the sophisticated team at Concordia Technologies has chosen to partner with SAS to help support them in this next phase of their growth trajectory. Together with SAS, we are excited by the opportunity to further invest in the platform and to have Tim and Brad as our partners.”

This acquisition further solidifies SAS’s position as a leader in missile and hypersonic weapons systems defense technologies and solutions, supporting U.S. space and defense related agencies in their efforts to maintain global superiority in missile defense and space-based security systems.

Latham & Wakins served as legal advisor to Godspeed Capital and SAS. Concordia Technologies was advised by Generational Equity.

About SAS

SAS provides engineering services, missile defense solutions, hypersonic weapons systems, mission critical communications technologies, and manufacturing support to NASA, the Department of Defense and related agencies, and the commercial space sector. The SAS team is committed to furthering humankind’s dreams and endeavors in space and strengthening our national security space and missile defense initiatives. SAS is headquartered in Huntsville, AL, with offices in Colorado and California. To learn more about SAS, please visit: https://sasaerospace.com.

About Concordia Technologies

Concordia Technologies, based in Huntsville, Alabama, is a leader in hypersonic weapons and missile defense systems technology and solutions. The company provides advanced engineering, modeling and simulation, and rapid prototyping services, delivering innovative solutions that support national defense and aerospace missions.

About Godspeed Capital

Godspeed Capital is a lower middle-market Defense & Government services, solutions, and technology focused private equity firm investing alongside forward-thinking management teams that seek an experienced and innovative investment partner with unique sector expertise, operational insight, and flexible capital for growth. While a typical investment will involve companies generating approximately $3m to $30m of EBITDA, Godspeed Capital has significant resources to complete larger transactions through strategic co-invest relationships. The firm focuses on control buyouts, buy-and-builds, corporate carve-outs, and special situations. For more information, please visit the Godspeed Capital website at www.godspeedcm.com. (Source: PR Newswire)

 

28 Oct 24. The Boeing Company [NYSE: BA] (“Boeing” or the “Company”) announced today the pricing of its previously announced separate underwritten public offerings of (i) 112,500,000 shares of common stock, par value $5.00 per share (“Common Stock”), of the Company at a public offering price of $143.00 per share (the “Common Stock Offering”) and (ii) $5 bn of depositary shares (“Depositary Shares”), each representing a 1/20th interest in a share of newly issued 6.00% Series A Mandatory Convertible Preferred Stock, par value $1.00 per share (“Preferred Stock”) at a public offering price of $50.00 per Depositary Share (the “Depositary Shares Offering” and, together, the “Offerings”). Boeing has granted the underwriters in each respective offering a 30-day option to purchase up to an additional (i) 16,875,000 shares of Common Stock and (ii) $750 m of Depositary Shares, solely to cover over-allotments, if any, in each case at the public offering price less the applicable underwriting discount. The Common Stock Offering is expected to close on October 30, 2024 and the Depositary Shares Offering is expected to close on October 31, 2024, subject to customary closing conditions.

The net proceeds from the Common Stock Offering will be approximately $15.81 bn (assuming the underwriters do not exercise the option to purchase additional shares of Common Stock) and the net proceeds from the Depositary Shares Offering will be approximately $4.91 bn (assuming the underwriters do not exercise the over-allotment option to purchase additional Depositary Shares), in each case after deducting the applicable underwriting discount and estimated offering expenses payable by Boeing. Boeing intends to use the net proceeds from the Offerings for general corporate purposes, which may include, among other things, repayment of debt, additions to working capital, capital expenditures, and funding and investments in the Company’s subsidiaries.

Holders of the Depositary Shares will be entitled to a proportional fractional interest in the rights and preferences of the Preferred Stock, including conversion, dividend, liquidation and voting rights, subject to the provisions of a deposit agreement. The Preferred Stock will accumulate dividends (which may be paid in cash or, subject to certain limitations, in shares of Common Stock or in any combination of cash and Common Stock) at a rate per annum equal to 6.00% on the liquidation preference thereof, which is $1,000 per share, payable when, as and if declared by Boeing’s board of directors (or an authorized committee thereof), on January 15, April 15, July 15 and October 15 of each year, beginning on January 15, 2025 and ending on, and including, October 15, 2027. Unless earlier converted, each outstanding share of Preferred Stock will automatically convert for settlement on or about October 15, 2027, into between 5.8280 and 6.9940 shares of Common Stock (and, correspondingly, each Depositary Share will automatically convert into between 0.2914 and 0.3497 shares of Common Stock), subject to customary anti-dilution adjustments, determined based on the volume-weighted average price of the Common Stock over the 20 consecutive trading day period beginning on, and including, the 21st scheduled trading day prior to October 15, 2027. Other than during a fundamental change conversion period (as defined in the prospectus supplement relating to the Depositary Shares Offering), at any time prior to the mandatory conversion settlement date, a holder of 20 Depositary Shares may cause the bank depositary to convert one share of Preferred Stock, on such holder’s behalf, into a number of shares of Common Stock equal to the minimum conversion rate of 5.8280, subject to certain anti-dilution and other adjustments. Currently, there is no public market for the Depositary Shares or the Preferred Stock. Boeing has applied to list the Depositary Shares on the New York Stock Exchange under the symbol “BA-PRA.”

Goldman Sachs & Co. LLC, BofA Securities, Citigroup and J.P. Morgan are acting as lead joint bookrunning managers for the Offerings. Wells Fargo Securities, BNP PARIBAS, Deutsche Bank Securities, Mizuho, Morgan Stanley, RBC Capital Markets and SMBC Nikko are also acting as joint bookrunning managers for the Offerings. Credit Agricole CIB, MUFG, COMMERZBANK, Santander, Academy Securities, Loop Capital Markets, Raymond James and Siebert Williams Shank are acting as co-managers for the Offerings. BTIG is acting as a co-manager for the Common Stock Offering and US Bancorp is acting as a co-manager for the Depositary Shares Offering. PJT Partners is acting as Boeing’s financial advisor for the Offerings.

A registration statement on Form S-3 relating to these securities has been filed with the Securities and Exchange Commission (the “SEC”) and has become effective. Each Offering may be made only by means of a prospectus supplement and accompanying prospectus. When available, copies of the final prospectus supplements and accompanying prospectuses related to the Offerings can be obtained by visiting the SEC’s website at http://www.sec.gov or by contacting Goldman Sachs & Co. LLC, Attention: Prospectus Department, 200 West Street, New York, NY 10282, by telephone at 1-866-471-2526 or by email at ; BofA Securities, NC1-022-02-25, 201 North Tryon Street, Charlotte, NC 28255-0001, Attention: Prospectus Department, or by email at ; Citigroup, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717 or by telephone at 1-800-831-9146; or J.P. Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, or by email at and .

This release does not constitute an offer to sell or a solicitation of an offer to buy these securities, nor does it constitute an offer, solicitation or sale of these securities, in any jurisdiction in which such offer, solicitation or sale is unlawful.

 

28 Oct 24. Boeing has announced plans to raise about $19bn, as it seeks to bolster its balance sheet, which has been strained by a strike by its largest labour union. The company on Monday said that it would sell 90mn common shares, which total just under $14bn based on the stock’s Friday closing price of $155.01. Boeing also plans to sell $5bn of other securities that would convert into preferred shares. It did not say how much it hoped to raise in total from the offering. It said the money would be used for “for general corporate purposes”. Boeing this month announced plans to raise up to $25bn in new capital and agreed a $10bn credit facility. (Source: FT.com)

 

28 Oct 24. Kromek – There’s value in these volatile shares.

It will turn cash flow positive in the current financial year and is also a takeover candidate

• Full-year revenue up 12 per cent to £19.4m
• Cash profit of £3.1m well ahead of £1.2m market estimate
• Underlying operating loss slashed from £6m to £1.4m
• Forecast positive cash flow in 2024/25 financial year
• New secured loan provides additional working capital

Sedgefield-based Kromek (KMK:5.65p), a radiation detection technology group, materially outperformed house broker Cavendish’s full-year cash profit estimate even though revenue of £19.4m was £1.6m shy of expectations due to timing issues.

Buoyed by the contribution from its higher-margin chemical, biological, radiological and nuclear (CBRN) detection business (revenue up 16 per cent to £7.1mn) and research and development activities (revenue up a fifth to £3mn), group gross margin of 55.2 per cent was seven percentage points higher than analysts had predicted and meant that gross profit increased 20 per cent to £10.7m, well ahead of £10mn forecast. A focus on cost control contributed to the result, too. Total operating expenses decreased by £2.6m to £12.6m, or £1.3mn lower than Cavendish had predicted, hence a £2m outperformance at the cash profit level and material reduction in operating loss.

Although a second-half cash outflow of £3.2m explains why net debt of £7.5m was £2.3mn higher than forecast, it’s a timing issue as receivables, which doubled from £5.5m to £13m, should be slashed to £9.7m by the 30 April 2025 year-end. Alongside the results, Kromek secured an additional £4.9m loan with an investment vehicle controlled by a major shareholder on the same terms as its exiting £5.5m secured loan. Both loans carry an interest rate of 9.5 per cent and are due for repayment on 27 March 2025, but they can be extended for a further 12 months.

Importantly, a raft of contract wins support expectations of another step change in revenue to £25.5m in the new financial year. They include more than £6mn of orders to supply Kromek’s cadmium zinc telluride (CZT)-based detector dirty-bomb detectors, which protect buildings and critical infrastructure against nuclear threat, to the European Commission, US federal entity and UK Ministry of Defence. The group also has multi-year contracts worth £10mn in revenue with both UK and US government agencies to develop biological threat detection systems. The two contracts should deliver cumulative milestone payments of more than £2.5m in the current financial year, says chief executive Arnab Basu.

In addition, having been selected as an approved supplier under UK government framework agreements for the procurement of £84m of radiological nuclear detection equipment (handheld, wearable and large volume static detectors), Basu expects Kromek to start delivering orders in the current financial year. He also highlights that Kromek has received its first orders from blue light operators in the UK (fire, police, ambulance and first responders) for its radiation detectors under another new UK government framework agreement. The uncertain geopolitical environment and heightened threat of terrorism both in home and overseas countries can only support higher demand for Kromek’s products.

Moreover, greater adoption of CZT-based detector modules for use in next-generation single-photon emission CT (SPECT)-based scanners is driving demand in the advanced medical imaging segment. Kromek has agreements in place with tier 1 original equipment manufacturers (OEM) customers. This part of the business also supplies key explosive detector components for security screening systems, a segment that is seeing increasing demand. New contract wins here include a $2.1m order with an existing US-based OEM customer in the homeland security market.

Value in the volatile shares

Shares in the £36.2m market capitalisation company remain as volatile as ever. Having rallied 46 per cent following my buy recommendation at 5.8p at the start of the year (‘Contract momentum builds at Kromek’, 30 January 2024), Kromek’s share price dipped back to that level post results.

It’s a harsh reaction given that the business is fundamentally stronger now than nine months ago, and there is the potential for margin gains to drive outperformance of Cavendish’s flat cash profit estimate for the current financial year. That’s not reflected in an enterprise valuation to cash profit multiple of 14 times, nor is the takeover potential given Kromek’s strategic value as the last independent supplier of CZT.

Cavendish’s target price of 28p may seem overly bullish at five times the current share price, but it is supported by its discounted cash flow valuation and values the equity at £179mn, or 14 per cent less than Canon paid for rival Redlen Technologies three years ago. Speculative buy.

(Source: Investors Chronicle)

 

28 Oct 24. Kromek Group plc (“Kromek” or the “Company” or the “Group”)Final Results and Publication of Annual Report.

Kromek (AIM: KMK), a leading developer of radiation and bio-detection technology solutions for the advanced imaging and CBRN detection segments, announces its final results and gives notice of the publication of its annual report for the year ended 30 April 2024.

Financial Summary

• Revenue increased 12% to £19.4m (2023: £17.3m)
• Gross margin improved to 55.2% (2023: 51.6%) due to further efficiencies and sales mix
• Achieved positive adjusted EBITDA of £3.1m (2023: £1.0m loss)* ahead of market expectations
• Loss before tax was reduced to £3.5m (2023: £7.3m loss)
• Debt facility refinanced with new £5.5m secured term loan
• Cash and cash equivalents at 30 April 2024 were £0.5m (30 April 2023: £1.1m)

*A reconciliation of adjusted EBITDA can be found in the Financial Review.

Operational Highlights

Advanced Imaging

• Strong revenue growth with delivery under landmark contracts and other component supply agreements
• Significant progress in medical imaging:

o Entered a collaboration agreement with a blue-chip technology solutions provider to develop detectors based on cadmium zinc telluride (“CZT”) for photon counting computed tomography (“PCCT”) applications in the medical imaging sector

o Commenced work under the landmark collaboration agreements with a recognised tier 1 OEM and with Analogic that were signed at the end of the prior year

o Received and largely delivered an order worth $1.4m from a new OEM customer that is an established player in the medical imaging sector in Asia

o Spectrum Dynamics Medical has launched the latest addition to its next-generation digital single photon emission computed tomography (“SPECT”)/computed tomography (“CT”) imaging portfolio, the VERITON-CT 300, which uses Kromek’s digital detectors

o Continued to make progress under the ultra-low dose molecular breast imaging programme funded by Innovate UK

• Secured a new $2.1m order to supply detector components for the security screening systems of an existing US-based OEM customer in the homeland security marketplace

CBRN Detection

• Geopolitical insecurity continued to drive strong demand in nuclear security with the winning and delivery of new and repeat orders, including:

o A £1.4m order to supply D3M detectors and associated networkable solutions for use in the rescEU stockpile being developed by the European Commission

o A contract, worth up to $2.9m, from a US federal entity for the provision of Kromek’s D5 RIID, D3M and D3S-ID detectors

o An order from a substantial global defence corporation, which the Group believes represents a significant opportunity for further sales

o Post year end, awarded a contract worth £2.0m from the Ministry of Defence for the supply of the Group’s D5 RIID along with its Alpha Beta probe attachment and ancillary products

o The majority of the above will be delivered in year ending 30 April 2025, giving the Group good visibility into the new financial year

• Selected under two new UK government frameworks, each lasting four years, designed to enhance the UK’s systems and capabilities for ensuring public safety and security

Biological-Threat Detection

• Continued to progress the development of a biological-threat detection system under a contract that had been awarded in the previous financial year by a UK government department
• Awarded Kromek’s first contract in biosecurity from the US Department of Homeland Security, worth $5.9m, for the development of technologies focusing on an agent agnostic bio-detection system, under a four-year programme

Manufacturing and IP

• Continued to execute on programmes for the expansion of production capacity and process automation, resulting in greater manufacturing productivity and cost efficiency
• Applied for 3 new patents and had 7 patents granted across 6 patent families, with the total number of patents held being in excess of 210

Dr Arnab Basu, CEO of Kromek, said: “This has been a pivotal 12 months for Kromek where we recorded a third consecutive year of revenue growth and delivered on all our KPIs. We achieved record revenues, more than halved our losses and our positive adjusted EBITDA exceeded market expectations. We have actively enhanced our operational efficiencies and seen excellent progress in both advanced imaging and CBRN detection where demand remains strong across both market segments. We expect to be broadly cash neutral in H1 and are comfortable that we have sufficient capital to deliver further growth in 2025.

“Looking ahead, we anticipate demand for our CBRN products will continue to be driven by global geopolitical insecurity and the persistence of nuclear threats. Also, an acceleration in the development and commercialisation of SPECT, CT and BMD utilising CZT by major OEMs is expected to translate into increased collaborations, strategic partnerships and more contracts for the advanced imaging segment. Consequently, Kromek is well positioned to deliver future growth and value for shareholders.”

Kromek Group plc

Kromek Group plc is a leading developer of radiation detection and bio-detection technology solutions for the advanced imaging and CBRN detection segments. Headquartered in County Durham, UK, Kromek has manufacturing operations in the UK and US, delivering on the vision of enhancing the quality of life through innovative detection technology solutions.

The advanced imaging segment comprises the medical, security and industrial markets. Kromek provides its OEM customers with detector components, based on its core cadmium zinc telluride (CZT) platform, to enable better detection of diseases such as cancer and Alzheimer’s, contamination in industrial manufacture and explosives in aviation settings.

In CBRN detection, the Group provides nuclear radiation detection solutions to the global homeland defense and security market. Kromek’s compact, handheld, high-performance radiation detectors, based on advanced scintillation technology, are primarily used to protect critical infrastructure and urban environments from the threat of ‘dirty bombs’.

The Group is also developing bio-security solutions in the CBRN detection segment. These consist of fully automated and autonomous systems to detect a wide range of airborne pathogens.

Kromek is listed on AIM, a market of the London Stock Exchange, under the trading symbol ‘KMK’.

Further information is available at www.kromek.com.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

Operational Review

This has been a pivotal year for Kromek. The Group delivered record revenue, which increased by 12% year-on-year to £19.4m (2023: £17.3m), but more importantly, Kromek has enhanced its operations and has signed milestone agreements that position the Group for strong, sustainable growth moving forwards. The Group continued to drive through operational efficiencies, particularly within the advanced imaging manufacturing process, which, combined with tight cost control, contributed to the Group delivering adjusted EBITDA ahead of market expectations at £3.1m (2023: £1.0m loss). In both advanced imaging and CBRN detection, Kromek has executed on its strategy and entered agreements with significant customers, including with a global blue-chip technology solutions provider operating in the medical imaging sector and, post year end, both the Ministry of Defence and Home Office in the UK. As the Group’s advanced imaging and CBRN detection segments continue to grow and mature, Kromek is working towards reporting on the basis of these two business segments rather than the current geographic segments.

Advanced Imaging

In advanced imaging, Kromek primarily operates in the medical imaging market with some opportunities in the security screening and industrial screening sectors. Kromek provides OEM customers with detector components, based on Kromek’s core CZT platform, to enhance imaging quality and enable better detection of diseases such as cancer and Alzheimer’s, contamination in industrial manufacture and explosives in aviation settings. During the year, the Group delivered strong revenue growth in this segment and, being the only independent commercial producer of CZT at scale, Kromek is well-positioned going forward.

Medical Imaging

This year, the Group achieved another important milestone in advanced imaging in entering a collaboration agreement with a blue-chip technology solutions provider that has over 100,000 customers globally for a range of applications, including healthcare. Under the agreement, Kromek will develop CZT-based detectors for PCCT applications in the medical imaging sector and will ensure production capability is available to support commercial demand ramp-up.

Kromek commenced work under the landmark collaboration agreements that it signed at the end of the prior year with a recognised tier 1 OEM and with Analogic to develop CZT-based detectors for use in their advanced imaging scanners. The agreement with the tier 1 OEM, which is a leading health-technology company, comprises a short development phase to integrate Kromek’s CZT-based detectors into the customer’s medical imaging scanners, with the agreement then transitioning to a longer commercial supply phase. With Analogic, who have been global leaders in CT detector technology for over 50 years, the Group is developing CZT-based detector solutions for PCCT applications in both the medical imaging and security screening sectors. The work under these collaborations is progressing well with key deliverables being achieved during the year.

These collaboration agreements, which are with significant global organisations, are both excellent validations of the Group’s technology and its strategy, and will be significant drivers of growth in this segment.

Kromek received and largely delivered an order worth $1.4m from a new OEM customer that is an established player in the medical imaging sector in Asia. This was for the provision of the Group’s CZT-based detector modules to be used in the customer’s next-generation SPECT systems in niche applications.

In addition to securing new customers and advancing Kromek’s relationships with OEMs, the Group continued to receive orders in its regular repeat business, deliver under supply agreements and progress development programmes. In particular, Spectrum Dynamics Medical, a long-standing customer, introduced the latest addition to its next-generation digital SPECT/CT imaging portfolio, the VERITON-CT 300, which uses Kromek’s digital detectors.

The ultra-low dose molecular breast imaging programme funded by Innovate UK, which is being undertaken in collaboration with Newcastle Upon Tyne Hospital and University College London, continues to deliver on all its objectives. This technology is aimed at paving the way for a new screening and diagnostic capability for the detection of cancer for women with dense breast tissue for whom mammography is not effective. Legislative changes that are in motion in the USA will be a key driving force behind wide-scale adoption of this technology, which will have a vital impact on the significant proportion of women who currently do not have a viable option for screening for breast cancer.

Security & Industrial Screening

In security screening, Kromek’s technologies are used in travel, primarily aviation, settings to enable the Group’s customers to meet the high-performance standards they require, and as demanded by regulatory bodies, to ensure passenger safety while increasing the convenience and efficiency of the security process. Kromek provides OEM and government customers with components and systems for cabin and hold luggage scanning. In industrial screening, Kromek provides OEM customers with detector components for incorporating into scanning systems used during manufacturing processes to identify potential contaminants.

During the year, Kromek continued to deliver under its existing component supply agreements and development programmes. The Group also secured a new $2.1m order from an existing US-based OEM customer in the homeland security marketplace. This was for the supply of key detector components for incorporation into the customer’s advanced security screening system for the detection of explosives. In addition, the Group’s collaboration agreement with Analogic, as noted above, will be for security applications as well as medical applications.

Harnessing Artificial Intelligence

For several years Kromek has been exploring the application of machine learning across its technologies, and has generated some significant IP and capabilities. During the year, Kromek entered a collaboration to enhance its expertise in this area and was awarded a grant of £1.3m under the UK Research and Innovation Horizon Europe guarantee scheme to participate in the Intelligent Radiation Sensor Readout System (“i-RASE”) project to develop a new class of radiation sensor powered by artificial intelligence (“AI”). The i-RASE project, to be led by DTU Space, is a collaboration between industrial and academic partners in Denmark, Germany, Norway and Italy to design, build and test a new class of radiation sensor based on CZT and other advanced technologies that leverages the latest developments in AI to facilitate the retrieval of comprehensive information on incident radiation to improve measurement accuracy and speed, while increasing energy efficiency.

CBRN DETECTION

In CBRN detection, Kromek provides nuclear radiation detection solutions to the global homeland defence and security market, which are primarily used to protect critical infrastructure, events and urban environments from the threat of ‘dirty bombs’. Kromek’s portfolio also includes a range of high-resolution detectors and measurement systems used for civil nuclear applications, primarily in nuclear power plants and research establishments. The Group’s revenue in this segment grew significantly over the previous year, driven by demand for its nuclear security products.

Nuclear Security

Geopolitical insecurity drove strong global demand for the Group’s products that contribute to ensuring public safety and security, and which are selected by governments and their agencies for their best-of-breed features and Kromek’s ability to deploy rapidly. This enabled the Group to enter, during the year and subsequently, several milestone agreements that represent significant strategic execution in nuclear security, receiving orders from customers in the UK, the US, Europe and Asia – from both public and private organisations – and most notably, from the UK Ministry of Defence.

In particular, during the year the Group received a £1.4m order to supply its D3M detectors and associated networkable solutions for use in the rescEU stockpile being developed by the European Commission to help safeguard citizens from disasters and manage emerging risks. Kromek was awarded a contract, worth up to $2.9m, from a US federal entity for the provision of Kromek’s D5 RIID, D3M and D3S-ID detectors. Another notable order during the year was one received from a new customer that is a substantial global defence corporation, which management believe represents a significant opportunity for further sales.

Since year end, the Group has made significant progress in nuclear security – building on its achievements of the year. Kromek was awarded a contract worth £2.0m from the Ministry of Defence for the supply of its D5 RIID along with Alpha Beta probe attachment and ancillary products. The Alpha Beta probe, that was launched at the end of the year, connects to the D5 to enable alpha and beta radiation to also be detected, allowing the single, small form factor upgraded device to detect all types of radioactive material. This contract was awarded after a rigorous tender process, providing excellent endorsement of the strength of Kromek’s solution as well as great validation of the new probe so soon after its launch.

Kromek has been selected under two new UK government frameworks, each lasting four years, designed to enhance the UK’s systems and capabilities for ensuring public safety and security. This includes being approved as a supplier under the Radiological Nuclear Detection Framework for the procurement of radiological nuclear detection equipment and supporting services for the Home Office. Kromek applied for three of the four framework categories, covering the supply of handheld, wearable and large volume static radiation detectors, and was successfully approved thereby becoming qualified to receive orders in these categories under the framework, which have a combined maximum procurement value of £84m.

Alongside this, Kromek’s D3M was selected for the UK Government Resilience Framework, being the only personal radiation detector to be named under the framework. This means that all blue light service operators in the UK, such as fire, police, ambulance and first responders, can purchase the D3M detector for projects under the framework. The Group has already received its first orders under this framework.

Civil Nuclear

Business in the civil nuclear market continued as expected, with regular sales through Kromek’s distributor network and direct to customer. In this sector, Kromek’s products are used by over 500 customers around the globe.

During the year, the Group was awarded a $1.5m contract by one of its distribution partners in Asia, which is for the supply of a new product that it had developed based on its existing technology. The development of this new product was funded by the partner.

Kromek launched Raymon, a new product that provides spectroscopic detection and identification capability in a wide range of civil nuclear applications. This product is a variation of the existing Raymon10, with two additional probes based on large volume scintillators and for the detection of alpha and beta particles. The product has already seen early adoption in international markets and has been well received within the distribution network.

BIOLOGICAL-THREAT DETECTION

Kromek is developing biosecurity solutions that consist of fully automated and autonomous systems to detect a wide range of airborne pathogens for the purposes of national security and protecting public health.

Major governments have continued to show a sustained focus on developing stronger and more resilient biosecurity and biodefence strategies, both in the wake of the pandemic and in the face of the reality that bio-threats pose a significant risk in a modern, geopolitically unstable environment. Both the UK and US have released updated national biosecurity plans since 2022. This was then further underscored by the announcement of a new transatlantic strategic dialogue on biological security released in January 2024. The solutions the Group is developing in this area have a vital role to play in supporting these initiatives as governments improve their readiness against these emerging threats.

During the year, Kromek continued to progress the development of a biological-threat detection system under a contract that had been awarded in the previous financial year by a UK government department. Under the three-year programme, which is worth a total of £4.9m, the Group will develop and supply the system, with the contract also including an option for extended maintenance services after the initial term. A significant advancement was made when the Group was awarded its first contract in biosecurity from the US Department of Homeland Security, worth $5.9m. The contract is for the development of technologies focusing on an agent agnostic bio-detection system, under a four-year programme. These programmes are continuing to deliver milestones and meet customer expectations. The Group is also pursuing several other customer engagements in this area.

MANUFACTURING AND IP

Kromek continued to execute on its programmes for the expansion of production capacity and increased process automation, with particular progress being made at its CZT manufacturing facility in the US. These programmes are resulting in greater manufacturing productivity and cost efficiencies, which made an important contribution to the Group’s EBITDA performance. Kromek has dedicated teams that are focussed on targeted improvements for every step in the manufacturing process, which directly contributes to yield and cost improvement.

In FY 2024, Kromek applied for three new patents and had seven patents granted across six patent families, with the total number of patents held being in excess of 210.

Financial Review

Revenue

Revenue for the year was £19.4m (2023: £17.3m), a 12% increase over the prior year and reflecting the highest ever revenue in both the advanced imaging and CBRN detection segments.

Gross Margin

Gross profit at £10.7m (2023: £8.9m) represented a margin of 55.2% (2023: 51.6%). The increase in gross margin, particularly in the second half of 2024, is attributable to the higher volume of products shipped in the year and a favourable change in product mix.

Distribution and Administrative Expenses

Distribution and administrative expenses decreased by £2.6m to £12.6m (2023: £15.2m). This decrease is substantially the net result of:

• a credit of £1.0m relating to a US IRS Employee Retention Credit, which is netted off staff costs and is presented within other receivables at 30 April 2024;
• a reduction of £1.0m in bad debt expense compared with 2023;
• lower depreciation and amortisation of £0.3m due to assets coming to the end of their depreciable life;
• a £0.2m Research and Development Expenditure Credit; and
• a net decrease of £0.1m relating to all other expense items, which includes a favourable foreign exchange impact from translating USD denominated expenses to Pounds.

Adjusted EBITDA* and Result from Operations

Adjusted EBITDA was £3.1m for 2024 compared with a loss of £1.0m for the prior year as set out in the table below:

The significant improvement in the loss before tax for the year and adjusted EBITDA compared with the prior year, largely reflects the higher revenue and gross margin, and the £2.6m reduction in distribution and administrative expenses as outlined above.

During H1 2024, the Group recognised an exceptional charge of £0.2m relating to the cost of refinancing a £5.0m revolving credit facility with HSBC. That loan was repaid from the proceeds of a new secured £5.5m term loan facility provided by Polymer N2 Ltd, a significant shareholder in the Company.

Tax

The Group recorded a net tax credit to the income statement of £0.2m for the year (2023: £1.2m credit). The tax benefit in 2024 represented the net of a £0.4m R&D tax credit less a deferred tax charge in the year of £0.2m. In 2023, the tax benefit of £1.2m represented the R&D tax credit only as there was no deferred tax recognised in the prior year.

The Group benefits from the UK Research and Development Tax Credit regime as it continues to invest in developments of technology and exercises the option of surrendering tax losses in the years that qualify for cash credit, rather than carrying forward the tax losses to set against future taxable profits. The significant reduction in the R&D credit year-on-year is predominantly due to the UK Government’s changes to the R&D regime, effective from 1 April 2023. The changes meant that businesses claiming under the R&D SME scheme now receive a lower rate of tax relief, while larger, non-SME businesses, claiming R&D Expenditure Credit (“RDEC”) secure more generous rates. The Group mainly benefited in previous years from the R&D SME scheme rather than the RDEC scheme.

The Group’s deferred tax provision for the year was £0.2m (2023: £nil). The £0.2m charge reflects a deferred tax provision of £0.5m in respect of accelerated capital allowances and tax losses less the recognition of a deferred tax asset of £0.3m in respect of short-term timing differences and share-based payments.

Earnings per Share (“EPS”)

Due to the reduction in loss after tax, EPS for the year on a basic and diluted basis was 0.6p loss per share compared with 1.4p loss per share (after excluding exceptional items) in 2023.

R&D

The Group invested £4.6m in the year (2023: £4.8m) in technology and product developments that were capitalised on the balance sheet, reflecting the continuing investment in new products, applications and platforms for the future growth of the business. This expenditure was capitalised in accordance with IAS38 to the extent that it related to projects in the later stage (development phase) of the project life cycle.

During the year, the Group undertook expenditure on patents and trademarks of £0.3m (2023: £0.2m).

Other Income

The Group generated total other operating income of £nil (2023: £0.1m). The income recognised in the prior year related to a retrospective Customs Duty claim granted by HMRC.

Capital Expenditure

Capital expenditure in the year, comprising property, plant and equipment and investments in patents and trademarks, amounted to £0.4m (2023: £0.5m). The expenditure primarily relates to modest capital expenditure across lab and computer equipment, IT and manufacturing projects.

Financing Activities

The Group issued £2.8m of convertible loan notes (“CLNs”), largely to existing shareholders, in H2 2023. The loan notes had a term of 18 months, carried a coupon of 8% per annum and had conversion dates in January and February 2024. In H1 2024, three noteholders, holding £1.7m of the notes, each converted 15% of their holding to equity together with accrued interest to the date of conversion; the total amount converted being £0.4m, including £0.1m of interest. In H2 2024, four noteholders converted all of their residual holding, together with accrued interest to the date of conversion; the total amount converted being £2.7m, including £0.2m of interest. There was a remaining loan note liability of £34k at 30 April 2024, which, post year-end in H1 2025, was converted to equity, together with accrued interest to the date of conversion. As a consequence, the Group now has no CLNs outstanding.

At 30 April 2024, the Group had a £5.5m secured term loan provided by Polymer N2 Ltd. The facility has a repayment date for the principal sum of 27 March 2025, with an option by the lender to extend for a further period of 12 months. The lender has confirmed to the Group that it will take up its option of extending the period of the term loan for a further 12 months from March 2025 if the Group is not able to repay the loan at that time. The loan carries a fixed interest rate of 9.5%, which is payable quarterly, and Kromek has the option to pay the interest through the issue of new ordinary shares of 1p each in the Company at the trailing 10-day volume weighted average price of the Company’s ordinary shares on the date that payment falls due. As also announced today, Polymer N2 Ltd has provided the Group an additional £4.9m secured term loan that carries the same terms as the initial loan facility described above.

Cash Balance

Cash and cash equivalents were £0.5m as of 30 April 2024 (30 April 2023: £1.1m). The £0.6m decrease in cash during 2024 was due to the combination of the following cash inflows and outflows:

• Cash used in operations, including changes in working capital, of £(3.9)m
• R&D tax receipts of £1.1m
• Investment in product development and other intangible assets, with capitalised development costs of £(4.6)m and IP additions of £(0.3)m
• Capital expenditure of £(0.1)m
• Net cash generated from financing activities of £7.2m (including £7.5m proceeds from the issue of shares, £1.2m net proceeds of new borrowings after repayment of the HSBC term loan, less £1.5m lease repayments and loan interest payments)

Outlook

With a number of key contracts won in FY 2024, its leading market position and the continued delivery of long-term contracts previously signed, Kromek expects to deliver another year of significant revenue growth and positive EBITDA in FY 2025.

Geopolitically, the world remains in turmoil and there is a real and pressing need for Kromek’s CBRN solutions. The award of the UK Ministry of Defence contract, being selected under two significant UK Government framework programmes as well as the completion of orders received from the US, Europe and Asia are expected to be the key drivers of growth in the CBRN detection segment throughout FY 2025.

Kromek is the only independent commercial supplier of CZT at scale, which is recognised as the enabling technology for next-generation medical imaging. In FY 2025, the Group expects revenue growth in the advanced imaging segment to come from continued delivery of its contracts previously signed with Spectrum Dynamics and a tier 1 OEM. Also, Kromek is actively engaged with OEMs to drive delivery of products and monetisation of the valuable intellectual property the Group has developed in this area. The Board is confident that these initiatives will benefit the Group and drive a significant increase in both revenue and cash generation in the second half of FY 2025.

Kromek remains very focussed on controlling costs across the Group and in increasing efficiency, particularly within the advanced imaging manufacturing process. This, combined with the collaborative opportunities being explored that are anticipated to accelerate growth in the second half of the year, is expected to result in Kromek becoming cash flow positive for H2 2025 and enable the Group to report a positive cash flow across FY 2025. The move towards cash generation, coupled with the continued support from Polymer N2 Ltd, means that Kromek is very well funded to drive further growth from what is a strong and growing revenue base.

As a result, the Board looks to the future with confidence.

BATTLESPACE Comment: The Stock market reacted to this delayed news with a whopping 14.5% markdown of the shares, the shares have since recovered. These results show three key facts:

1. CZT is now a proven technology for CBRN and military uses but the medical sector is taking longer to adopt the technology, hence the lack of large orders and more capital spend.
2. The company is not generating enough cash to another cash call is expected.
3. The share price will never reach the lofty heights predicted by Dr Basu and the Board on floatation and during Covid where some very lofty projections were made at a SP of 12p. Thus, there are a lot of disgruntled shareholders who bought the dream at 90p.
4. All the good news is in these Results so there is a limitation to a SP rise in the short and medium term.

Clearly Kromek’s Board and management are cash and resources stretched to manage expectations in the medical and defence/Police/CBRN markets, without even a dedicated Marketing Director and top heavy in technologists. This is reminiscent as BATTLESPACE has said before when Graseby succumbed to a bid from Smiths. So, the Bord should consider a trade sale of the proven defence/Police/CBRN segment to the likes of Teledyne FLIR and concentrate on the medical division. At the moment, the stretched finances cannot grow both divisions without a further cash injection and another share dilution.

 

21 Oct 24. ETL Systems acquires SpacePath Communications to Strengthen Global Satellite Communications Offerings. ETL Systems has acquired SpacePath Communications, a strategic move that enhances ETL’s position in the global SATCOM market. SpacePath’s team brings invaluable experience and a customer-centric approach that aligns closely with ETL’s mission. This collaboration will enrich the ETL team and the significant overlap in client bases and mutual commitment to innovation will also ensure a seamless integration.

The integration of SpacePath’s HPA product line into ETL’s portfolio positions the company to better meet the evolving needs of its customers. Furthermore, SpacePath’s clients will continue to receive dedicated support from ETL Systems as both teams work closely to ensure a smooth transition.

“By acquiring SpacePath Communications, we are thrilled to enhance our offerings and provide their customers with innovative solutions and new functionalities,” said Kevin Dunne, CEO at ETL Systems. “We are dedicated to maintaining the high standards of service that both our organisations value. This merger not only fortifies our leading position in the UK but also creates new opportunities for career progression for both SpacePath and ETL employees, expanding the organization for personal development.”

Newton Burnet, co-founder and Chief Technical Officer of SpacePath, said, “This acquisition represents a major milestone for SpacePath and ETL. It provides us with the additional resources and infrastructure necessary to access new high-value mm-wave transmitter markets, while still providing existing product lines and maintaining our core values of technical innovation, quality products and customer support.”

Colin Bolton, co-founder and Director of Business Development of SpacePath, said, “We are excited to join forces with ETL Systems, a company that shares our commitment to innovation and customer service. This acquisition presents a tremendous opportunity for our team and clients alike, as we combine our strengths to deliver even greater value in the satellite communications market.” (Source: Satnews)

 

28 Oct 24. Kromek Group plc (“Kromek” or the “Company”) Financing Update.. Kromek (AIM: KMK), a leading developer of radiation and bio-detection technology solutions for the advanced imaging and CBRN detection segments, is pleased to announce that it has agreed an additional £4.9m secured term loan (the “Additional Loan”). The Additional Loan is being provided by Polymer N2 Ltd (“Polymer”), an investment vehicle controlled by Dr Graeme Speirs, a significant shareholder and a current finance provider to the Company.

The Additional Loan carries the same terms as the loan facility previously announced on 28 September 2023 and has a repayment date for the principal sum of 27 March 2025, with an option to extend for a further 12 months. It carries a fixed interest rate of 9.5%, which is payable quarterly, and Kromek has the option to pay the interest through the issue of new ordinary shares of 1p each in the Company (“Ordinary Shares”) at the trailing 10-day volume weighted average price of the Company’s Ordinary Shares on the date that payment falls due.

Polymer and Dr Speirs hold an aggregate of 86,686,849 Ordinary Shares in Kromek, representing 13.51% of the issued share capital of the Company.

The Additional Loan with Polymer is a related party transaction for the purposes of Rule 13 of the AIM Rules. The Directors, having consulted with the Company’s Nominated Adviser, Cavendish Capital Markets, consider that the terms of the Additional Loan are fair and reasonable insofar as the Company’s shareholders are concerned.

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SPX CommTech, part of SPX Technologies Inc, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all. Formed by TCI and ECS, SPX CommTech’s Battlespace portfolio enables defence and security teams to detect, defeat and exploit RF signals to enhance communications intelligence (COMINT) and counter unmanned aerial systems (Counter-UAS). Additionally, its Tactical Data Link portfolio allows intelligence gathering agencies, special forces, emergency response, and security teams to securely and reliably transfer video and data between enabled-aircraft and ground teams over long distances for airborne Intelligence, Surveillance, Reconnaissance (ISR). For more information visit www.tcibr.com and www.enterprisecontrol.co.uk

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Sponsored by SPX Communication Technologies (TCI & ECS)

 

www.tcibr.com

 

www.enterprisecontrol.co.uk

 

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24 Oct 24. Honeywell sales projections fall short due to ongoing supply-chain disruptions. Honeywell projected annual sales below Wall Street expectations and missed quarterly revenue estimates on Thursday as the industrial giant struggles with persistent supply-chain disruptions and weakness in its industrial automation business.

The automation segment, which helps factories and plants mechanize their manufacturing processes, reported a 5% decline in organic sales for the third quarter, mainly due to soft demand from warehouses.

“Industrial automation has struggled for some time now due to prolonged headwinds in the Intelligrated warehouse automation business,” said Jake Levinson, an analyst at Melius Research.

“They rode the pandemic-driven boom in warehouse construction, notably as it relates to Amazon. But the overhang from that cycle has been painful,” he said.

The company’s shares fell nearly 5% in afternoon trade.

In a post-earnings call with analysts, executives said some “discrete” supply-chain snags in aerospace prodded the company to reconsider its expectations for the year, while Hurricane Helene disrupted some manufacturing. (Source: Reuters)

 

24 Oct 24. L3Harris lifts lower end of 2024 results forecast amid global tensions. L3Harris (LHX.N), opens new tab raised the lower end of its annual profit and revenue forecasts on Thursday, betting on sustained weapons demand and robust defense spending amid escalating global security concerns.

Shares rose 3.6% after the bell.

Geopolitical tensions have benefited arms manufacturers such as Lockheed Martin , RTX , and Northrop Grumman  all of which also raised their 2024 earnings forecasts.

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The company now expects 2024 adjusted profit to range between $12.95 to $13.15 per share, up from its previous estimate ranging $12.85 – $13.15 per share.

Revenue for the year is now expected to range between $21.1bn to $21.3bn, up from its previous forecast range of $21.0bn to $21.3bn.

The ongoing war in Ukraine has fueled strong demand for U.S. weaponry globally, with nations actively negotiating and striking deals to acquire arms and seeking to expedite ongoing contracts. (Source: Reuters)

 

24 Oct 24. L3Harris Technologies Reports Strong Third Quarter 2024 Results, Increases 2024 Guidance.

Highlights*

• Orders of $7.2bn; book-to-bill of 1.4x
• Revenue of $5.3bn, up 8%, and 5% organically
• Operating margin of 9.4%; adjusted segment operating margin of 15.7%
• Diluted earnings per share (EPS) of $2.10; non-GAAP diluted EPS of $3.34
• 2024 revenue guidance range increased to $21.1bn – $21.3bn
• 2024 adjusted segment operating margin guidance increased to ~15.5%
• 2024 non-GAAP diluted EPS guidance range increased to $12.95 – $13.15

L3Harris Technologies (NYSE: LHX) reported third quarter 2024 diluted EPS of $2.10, an increase of 4% from third quarter 2023, on third quarter 2024 revenue of $5.3bn, an increase of 8%. Third quarter 2024 non-GAAP diluted EPS was $3.34, a 5% increase from third quarter 2023. A reconciliation of non-GAAP results are detailed in tables beginning on page 11.

“We delivered strong third-quarter results, highlighted by outstanding book-to-bill of 1.4x, solid organic growth, and while continuing to improve margins as we make progress toward the financial framework announced at our 2023 Investor Day. These results reaffirm that our Trusted Disruptor strategy is working, driving value for our customers, shareholders and employees,” said Christopher E. Kubasik, Chair and CEO.

Kubasik added, “We are making impressive progress on our LHX NeXt initiative and expect to exceed the 2024 cost savings target of $400 m. As a result, we are updating our 2024 savings target to at least $600 m and now expect to reach the overall target of $1 bn a year early. Our pipeline provides opportunity for additional cost savings opportunities to exceed the $1bn target. All of this gives us confidence to deliver 2026 segment operating margins of at least 16%.”

Revenue: Third quarter revenue increased 8%, primarily driven by the acquisition of Aerojet Rocketdyne (AR) and 5% total organic growth, primarily from continued robust demand for our resilient communication products and night vision devices in our Communication Systems (CS) segment. Organic growth was also driven by our Integrated Mission Systems (IMS) segment, with higher aircraft missionization volumes, increased volumes for advanced electronics related to space and munitions programs, and higher volumes in our Commercial Aviation business, the divestiture of which is pending closure.

* Adjusted segment operating income and margin, effective tax rate on non-GAAP income, non-GAAP diluted EPS, pension adjusted non-GAAP diluted EPS, organic revenue and adjusted free cash flow are non-GAAP financial measures defined on page 17. A reconciliation of adjusted segment operating income and margin, effective tax rate on non-GAAP income, non-GAAP diluted EPS and adjusted free cash flow on a forward-looking basis to GAAP is not available without unreasonable effort due to the unavailability of items for exclusion from the GAAP measure. We are unable to address the probable significance of this information, the variability of which may have a significant impact on future GAAP results. See Non-GAAP Financial Measures on page 7 for more information.

Operating Margin:

GAAP: Third quarter operating margin decreased 30 bps to 9.4% primarily driven by an increase in unallocated items, including an increase in valuation allowance related to the pending Commercial Aviation Solutions business divestiture and increases in fair value of non-qualified retirement plan liabilities. This was partially offset by improved segment performance and a full quarter of contribution from AR.

Adjusted segment operating margin: Expanded 70 bps to 15.7%, with solid contribution from LHX NeXt cost savings, strong performance from higher volume and favorable mix in our CS segment, and improved program performance in our IMS segment. This was partially offset by the absence of a non-recurring license sale that positively impacted 2023 and challenges on classified space development programs, both in our SAS segment.

Diluted EPS:

GAAP: Third quarter diluted EPS increased 4% to $2.10 due to an increase in operating income and lower FAS/CAS operating adjustment, partially offset by higher interest expense.

Non-GAAP: Increased 5% to $3.34 driven by higher adjusted segment operating income, partially offset by higher interest expense.

Pension Adjusted Non-GAAP: Increased 8% to $2.94 driven by higher adjusted segment operating income, partially offset by higher interest expense. We believe this represents the best economic measure of our EPS as it reflects the operational performance of our segments without non-cash impacts of pension accounting, primarily FAS/CAS operating adjustment.

The largest differences between GAAP and Non-GAAP diluted EPS are attributable to amortization of acquisition-related intangibles and LHX NeXt implementation costs.

Cash Flows:

Cash from Operations: Third quarter cash from operations increased 44% to $780m driven by net income growth and decreases in transaction costs related to the AJRD acquisition, partially offset by timing of working capital.

Adjusted free cash flow: Increased 18% to $728m driven by net income growth and decreases in capital expenditures, partially offset by timing of working capital.

SEGMENT RESULTS AND GUIDANCE*

SAS

Revenue: Third quarter revenue was flat, reflecting the divestiture of the antenna business in the second quarter. Excluding the divestiture impact, organic revenue increased 2%, primarily from growth of classified programs in Intel and Cyber, and increased volume in our FAA mission-critical safety of flight networks business. Organic revenue was partially offset by lower F-35 related volumes as TR-3 development ramps down in our Airborne Combat Systems business. Growth was also impacted by challenges on classified development programs, LHX NeXt cost savings and the absence of a non-recurring license sale that positively impacted 2023.

Operating Margin: Third quarter operating margin decreased 90 bps, primarily due to the absence of an $18m non-recurring license sale that positively impacted 2023 and challenges on classified development programs, partially offset by growth in Intel and Cyber and FAA mission-critical safety of flight networks businesses, and LHX NeXt cost savings.

IMS

Revenue: Third quarter revenue increased primarily from higher aircraft missionization volumes, increased advanced electronics demand for space and munitions programs, and higher volumes in our Commercial Aviation Solutions business, the divestiture of which is pending closure.

Operating Margin: Third quarter operating margin increased 30 bps, primarily from improved program performance across the segment, LHX NeXt cost savings and higher volume and favorable mix in Commercial Aviation Solutions, partially offset by unfavorable mix impact in our aircraft missionization business.

CS

Revenue: Third quarter revenue increased 10%, primarily driven by robust demand for our resilient communication equipment, related waveforms, and night vision devices. Growth for software defined tactical radios was especially strong across international markets, in particular from NATO countries, reflecting demand for our superior capabilities for critical battlefield communications equipment and waveforms.

Operating Margin: Third quarter operating margin increased 350 bps as a result of strong performance from higher volumes, favorable high margin international mix, proprietary waveform license sales, and LHX NeXt cost savings.

AR

Revenue and Operating Margin: Third quarter results are attributed to program execution across both sectors, Missile Solutions and Space Propulsion and Power Systems, reflecting a full quarter of contribution for 2024 and a partial quarter for 2023, from the July 28, 2023 acquisition date. Operating margins include the positive impact of amortization related to purchase price adjustments.

 

24 Oct 24. Northrop Grumman Reports Third Quarter 2024 Financial Results

• Net awards of $11.7bn; record backlog of $85bn
• Q3 sales of $10.0bn; year to date sales up 6 percent
• Operating margin rate of 11.2 percent; segment operating margin rate1 of 11.5 percent
• Diluted earnings per share increase 13 percent to $7.00
• Company raises lower end of 2024 segment operating income1 guidance and increases MTM-adjusted EPS1 guidance by 75 cents to $25.65 – $26.05. Northrop Grumman Corporation (NYSE: NOC) reported third quarter 2024 sales increased 2 percent to $10.0bn, as compared with $9.8bn in the third quarter of 2023. Third quarter 2024 sales reflect continued strong demand for our products and services. Third quarter 2024 net earnings totaled $1.0bn, or $7.00 per diluted share, as compared with $937m, or $6.18 per diluted share, in the third quarter of 2023.

“Based on the strength of our year-to-date results and our positive outlook for the future, we are once again raising our 2024 guidance. Sales remain on target for 5% growth this year and the deliberate actions we are taking to improve margin rates have resulted in further expansion this quarter,” said Kathy Warden, chair, chief executive officer and president. “With our investments to create capacity and focus on performance, we continue to deliver value for our customers and our shareholders. As we look toward 2025, our outlook includes continued top line growth, margin rate expansion and greater than 20% free cash flow growth.”

Sales Third quarter 2024 sales increased $221m, or 2 percent, due to higher sales at Mission Systems, Aeronautics Systems and Defense Systems, partially offset by lower sales at Space Systems largely driven by a reduction of $224m associated with wind-down of our work on the restricted space and NGI programs, as previously disclosed.

Third quarter 2024 sales reflect continued strong demand for our products and services. Operating Income and Margin Rate Third quarter 2024 operating income increased $104m, or 10 percent, primarily due to $57 m of higher segment operating income1 and a $40m increase in the FAS/CAS operating adjustment.

Operating margin rate increased to 11.2 percent from 10.4 percent primarily due to benefits associated with the FAS/CAS operating adjustment and a higher segment operating margin rate. Segment Operating Income and Margin Rate Third quarter 2024 segment operating income increased $57m, or 5 percent, primarily due to a higher segment operating margin rate and higher sales. Segment operating margin rate1 increased to 11.5 percent and reflects higher operating margin rates at Space Systems and Aeronautics Systems, partially offset by lower operating margin rates at Mission Systems and Defense Systems. Federal and Foreign Income Taxes

The company’s third quarter 2024 effective tax rate (ETR) decreased to 13.6 percent from 16.2 percent in the prior year period principally driven by a net reduction in tax reserves largely due to a recent federal court decision, partially offset by higher interest expense on unrecognized tax benefits.

Net Earnings and Diluted EPS Third quarter 2024 net earnings increased $89 m, or 9 percent, primarily due to $104 m of higher operating income, a $36 m increase in the non-operating FAS pension benefit and a lower effective tax rate, partially offset by a $97m gain recognized in the prior year upon the sale of a minority investment. Third quarter 2024 diluted earnings per share increased 13 percent, reflecting a 9 percent increase in net earnings and a 3 percent reduction in weighted-average diluted shares outstanding.

Cash Flows Third quarter 2024 cash provided by operating activities decreased $137 m and third quarter 2024 free cash flow1 decreased $139m principally due to higher net federal tax payments. Awards and Backlog Third quarter 2024 net awards totaled $11.7bn and backlog totaled $84.8bn.

Significant third quarter new awards include $2.7bn for restricted programs (primarily at Mission Systems, Aeronautics Systems, and Space Systems), $1.6bn for E-2 and $0.7bn for certain military ammunition programs.

Segment Operating Results Effective July 1, 2024, the company realigned the Strategic Deterrent Systems (SDS) division, which includes the Sentinel program, from Space Systems to Defense Systems. This realignment is reflected in the accompanying financial information. Recast financial information for certain prior periods is presented in Schedule 6 of this release.

AERONAUTICS SYSTEMS

Three Months Ended September 30

Sales

Third quarter 2024 sales increased $112m, or 4 percent, primarily due to higher F-35 production volume largely driven by the timing of materials, increased E-2 fleet sustainment and modernization work, higher Triton LRIP production volume and an increase in Global Hawk sustainment activities. These increases were partially offset by lower restricted sales.

Operating Income Third quarter 2024 operating income increased $15m, or 5 percent, due to higher sales and a higher operating margin rate. Operating margin rate increased to 10.4 percent from 10.2 percent principally due to higher net EAC adjustments, largely driven by improved performance and cost efficiencies on certain mature production programs.

DEFENSE SYSTEMS

Three Months Ended September 30

Third quarter 2024 sales increased $34m, or 2 percent, primarily due to higher volume on the Sentinel program, ramp-up on the Stand-in Attack Weapon (SiAW) program and higher volume on certain military ammunition programs. These increases were partially offset by lower volume due to the completion of an international training program and lower volume on the Special Electronic Mission Aircraft (SEMA) program as that program nears completion.

Operating Income Third quarter 2024 operating income decreased $5m, or 2 percent, due to a lower operating margin rate, partially offset by higher sales. Operating margin rate decreased to 9.4 percent from 9.8 percent principally due to lower net EAC adjustments and changes in contract mix.

Northrop Grumman Reports Third Quarter 2024

Financial Results

MISSION SYSTEMS

Third quarter 2024 sales increased $195m, or 7 percent, primarily due to higher volume on restricted advanced microelectronics and technology programs, increased marine systems sales due, in part, to the timing of materials, and higher Ground/Air Task Oriented Radar (G/ ATOR) volume due to continued ramp-up on full-rate production (FRP) awards.

Operating Income Third quarter 2024 operating income increased $4m, or 1 percent, due to higher sales, partially offset by a lower operating margin rate. Operating margin rate decreased to 13.8 percent from 14.7 percent primarily due to lower net EAC adjustments and changes in contract mix toward more cost-type content.

SPACE SYSTEMS

Sales

Third quarter 2024 sales decreased $83m, or 3 percent, primarily due to wind-down of our work on the restricted space and NGI programs, which reduced sales by $224 m. This reduction was partially offset by a $129m increase on Space Development Agency (SDA) satellite programs and higher sales across our remaining restricted space portfolio.

Operating Income Third quarter 2024 operating income increased $43m, or 14 percent, due to a higher operating margin rate, which more than offset lower sales. Operating margin rate increased to 12.0 percent from 10.2 percent principally due to an improvement in net EAC adjustments, partially offset by a $16m benefit in the prior year from insurance recoveries in our commercial space business. (Source: BUSINESS WIRE)

 

24 Oct 24. Textron Reports Third Quarter 2024 Results.

• EPS of $1.18; adjusted EPS of $1.40, down from $1.49 in the prior year
• Net cash from operating activities of $208m in the third quarter of 2024
• $215m returned to shareholders through share repurchases in the third quarter
• Textron Aviation segment revenue and profit impacted by IAM strike

Textron Inc. (NYSE: TXT) today reported third quarter 2024 income from continuing operations of $1.18 per share, as compared to $1.35 per share in the third quarter of 2023. Adjusted income from continuing operations, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, was $1.40 per share for the third quarter of 2024, compared to $1.49 per share in the third quarter of 2023.

“The labor disruption adversely impacted our third quarter results and we expect it to negatively affect fourth quarter financials.”

Post this

“In the third quarter, Textron Aviation experienced a strike upon the expiration of its existing labor agreement with bargaining unit employees that was recently settled with the ratification of a new five-year contract,” said Textron Chairman and CEO Scott C. Donnelly. “The labor disruption adversely impacted our third quarter results and we expect it to negatively affect fourth quarter financials.”

“In the quarter, Bell achieved a key milestone on the FLRAA program with the U.S. Army’s approval of Milestone B establishing FLRAA as a program of record,” said Donnelly. “In addition, at Textron Aviation, the ongoing investment in new products continued to drive demand, achieving over $1.0 bn of new orders.”

Cash Flow

Net cash provided by operating activities of the manufacturing group for the third quarter was $208 m, compared to $270m last year. Manufacturing cash flow before pension contributions, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, totaled $147 m for the third quarter, compared to $205m last year.

In the quarter, Textron returned $215m to shareholders through share repurchases. Year to date, Textron has returned $890m to shareholders through share repurchases.

Outlook

On October 20th, the International Association of Machinists and Aerospace Workers (IAM) District 70, Local Lodge 774 representing the Wichita-based direct labor workforce, ratified a new five-year labor contract, after engaging in a four-week strike. While it has been resolved, we expect revenue and segment profit to be unfavorably impacted in the fourth quarter of 2024 related to the labor disruption and the recovery of production and delivery activities as our employees return to work.

Textron now expects 2024 adjusted earnings per share from continuing operations to be in a range of $5.40 to $5.60, down from its previous outlook of $6.20 to $6.40. Manufacturing cash flow before pension contributions is now expected to be in a range of $650 m to $750 m, as compared to its previous outlook of $0.9 bn to $1.0 bn, with planned pension contributions of about $50 m.

Third Quarter Segment Results

Textron Aviation

Delayed aircraft deliveries along with unfavorable performance from manufacturing inefficiencies associated with the labor disruption resulting from the IAM strike lowered Textron Aviation’s third quarter revenues by approximately $50m and segment profit by approximately $30m.

Textron Aviation’s revenues were $1.3bn, essentially unchanged from last year’s third quarter, with higher pricing of $36 m mostly offset by lower volume and mix of $35m.

Textron Aviation delivered 41 jets in the quarter, up from 39 in the third quarter of 2023, and 25 commercial turboprops, down from 38 in last year’s third quarter.

Segment profit was $128m in the third quarter, down $32m from a year ago, reflecting lower volume and mix of $29m.

Textron Aviation backlog at the end of the third quarter was $7.6bn, up $162 m from the second quarter.

Bell

Bell revenues were $929 m, up $175m from the third quarter of 2023, largely reflecting higher volume and mix of $148m. Volume and mix included higher military volume of $81m, primarily related to the FLRAA program, partially offset by lower volume on the V-22 program, and higher commercial volume and mix of $67m, reflecting an increase in deliveries.

Bell delivered 44 commercial helicopters in the quarter, up from 23 in last year’s third quarter.

Segment profit of $98m was up $21m from last year’s third quarter, largely due to a favorable impact from performance of $17m, and a favorable impact from pricing, net of inflation, of $12m.

Bell backlog at the end of the third quarter was $6.5bn, up $2.3bn from the second quarter, largely reflecting approval of Milestone B for FLRAA and the resulting transition into the Engineering and Manufacturing Development phase of the program.

Textron Systems

Revenues at Textron Systems were $301m, down $8m from last year’s third quarter, largely due to lower volume.

Segment profit of $39m was down $2m, compared with the third quarter of 2023.

Textron Systems’ backlog at the end of the third quarter was $1.9bn.

Industrial

Industrial revenues were $840m, down $82m from last year’s third quarter, mainly due to lower volume and mix of $86m, principally in the Specialized Vehicles product line.

Segment profit of $32m was down $19m from the third quarter of 2023, primarily due to lower volume and mix.

Textron eAviation

Textron eAviation segment revenues were $6m and segment loss was $18m in the third quarter of 2024, compared with a segment loss of $19m in the third quarter of 2023.

Finance

Finance segment revenues were $12m, and profit was $5m.

(Source: BUSINESS WIRE)

 

23 Oct 24. Branford Castle Partners, a North American-focused private equity firm, today announced that it has acquired Hoffman Engineering, a leading provider of proprietary situational awareness solutions for mission-critical aerospace and defense applications, from Trident Maritime Systems (“Trident”). Terms of the transaction were not disclosed.

Hoffman marks the sixth platform investment and eleventh acquisition overall for Branford Castle’s Fund II, which closed in 2021. Over the last few months, Branford Castle has also announced the successful exits of its investments in Clean Solutions Group, the first exit from Fund II, and Earthlite Massage Tables, the fourth exit from Fund I.

Based in Stamford, CT, Hoffman is a global leader in the development and manufacturing of night vision test equipment, night vision imaging lighting systems and commercial aviation LED specialty lighting products. Since its inception in 1955, the Company has developed a strong brand reputation within the night vision sector and its products are utilized by the U.S. military, aerospace and defense OEMs, as well as by commercial airlines. Hoffman CEO Ron Hayward and the rest of the existing management team will remain with the Company going forward.

Ceon Francis, Managing Director at Branford Castle, said, “We are excited to partner with Ron and the entire Hoffman team. We see attractive opportunities in this market as the aerospace and defense industry continues to expand, creating increased demand for the most advanced, mission-critical products available. The Company’s leading position in the night vision market, along with its proprietary capabilities, makes it a terrific platform for growth.”

Eric Korsten, Senior Managing Director at Branford Castle, said, “This important transaction would not have been possible without our long-time financing partners, O2 Sponsor Finance and Brookside Capital Partners, whose continued support of our growing portfolio is greatly valued.”

Mr. Hayward added, “Today’s milestone is a validation of the trusted innovative solutions and customer-focused culture that we have worked tirelessly to achieve. We are extremely grateful for the support of our previous owner, Trident, and look forward to continuing to deliver on future growth opportunities with our new partners at Branford Castle Partners.”

Branford Castle was advised by its legal counsel, Akerman LLP, and RSM served as its accounting/tax advisor.  Hoffman was advised on the sell-side by Philpott Ball & Werner, LLC. O2 Sponsor Finance is providing senior debt financing and Brookside Capital Partners is providing mezzanine debt financing for the transaction.

ABOUT BRANFORD CASTLE PARTNERS

Branford Castle is a private market investor focused on lower middle-market investments, with more than 35 years of helping to grow businesses. The Firm typically makes control investments in companies with up to $15 m of EBITDA and a leadership position in a niche industry. Branford Castle is particularly keen on the strong relationships it develops with its portfolio company managers. Branford Castle has particular expertise in industrials/specialty manufacturing, consumer products, business services and logistics. For more information, please visit branfordcastle.com. (Source: PR Newswire)

 

24 Oct 24. Patria Group’s Interim Report for 1 January – 30 September 2024.

Patria’s net sales and order stock development were at a good level in the third quarter.

The third quarter of 2024

• Patria Group’s net sales for the for the three quarters was EUR 538.1m (EUR 487.9m in the comparison period).
• Operating profit was EUR 30.0m (EUR 36.9m).
• Equity ratio was 33.4% (41.5%) and net gearing 110.8% (80.5%).
• The third year of Patria’s Horizon 2025 strategy commenced according to expectations. Patria’s net sales and the development of order stock are at a good level and profitability at the expected level.
• The development of customer-centricity, operational efficiency and productivity and new ways of working continued in the third quarter according to the strategy. The focus of the development has been on Patria’s Operations unit, responsible for company’s production and supply chains, and Portfolio unit, responsible for Patria’s products and services and their development. Patria’s renewed operating model came into force on 1 January, 2024.
• Patria’s success in 6×6 and 8×8 vehicle programmes has continued, which supports the development of other business operations and Group’s internationalization.
• The first locally produced Patria 6×6 armoured personnel carrier was handed over to the Latvian National Armed Forces in August. Patria’s Valmiera production facility was opened in May. In August, Patria, Finland and Latvia also signed a Life Cycle Management (LCM) contract related to the Common Armored Vehicle System (CAVS) programme. In September, the Finnish Defence Forces redeemed the last 29 Patria 6×6 vehicles that were part of the additional procurement reservation, which were already included in the previously signed series agreement as part of the CAVS programme.
• In September, it was announced that Patria will provide modification design (Supplemental Type Certificate) for Norwegian Armed Forces Bell 412 helicopters.
• In September, Patria announced that it acquires an open source data collection product and business related to its cyber business area from WithSecure. As a result of the transaction, Patria will open an office in Oulu, Finland and 10 WithSecure experts working in the business area will join Patria.
• The multi-year cooperation between the U.S. Army and Patria reached a major milestone at the Maneuver Warfighter Conference in Fort Moore, Georgia in September where several successful fire missions were conducted using Patria NEMO 120 mm Turreted Mortar System, integrated onto a U.S. made Armoured Multi-Purpose Vehicle (AMPV) and Fire Direction System (FCD).
• In September, Patria and Rheinmetall unveiled first UK prototype Boxer Armoured Mortar Variant at Defence Vehicle Dynamics exhibition.

Events after the period

• Patria received authority approval for the Nordic Drones acquisition and transaction of open source data collection product and business from WithSecure and the businesses were transferred to Patria on 1 October, 2024.

Outlook for the rest of the year

Patria continues to strengthen its operational efficiency and productivity and seeks profitable growth in line with its Horizon 2025 strategy in the third year of the strategy period. Patria’s reliable and cost-effective lifecycle support services and top-notch products have a key role also in the future in maintaining required performance of customer fleets in all conditions.

Following Finland’s decision in December 2021 to acquire F-35 fighter jets, negotiations concerning industrial participation of the selected aircraft will continue also in 2024. Preparations to kick off the production are under way, and the resourcing needs are being analysed and the relevant recruiting has commenced.

The multinational joint CAVS programme of the Patria 6×6 vehicle is proceeding as planned. The serial production of the Finnish and Latvian vehicles is ongoing and the first batch of vehicles to Sweden has been delivered. Germany has officially joined the programme by signing the Technical Arrangement. The joint programme has raised interest and is open also for other countries to join by mutual consent of the participating countries.

In 2023, Patria and Japan Steel Works Ltd. signed a relating license agreement on manufacturing Patria AMV XP 8×8 vehicles in Japan and the preparations for kicking off manufacturing are ongoing. The start of serial production of Slovakia’s 8×8 vehicle project has been slower than expected, which may affect the outlook for the rest of the year.

The impact of long-term development of the current geopolitical situation, general economic uncertainty, inflation and increasing costs for the rest of the year are difficult to evaluate reliably. At the same time Patria’s delivery capability is expected to stay at a good level. The outlook for net sales and profitability for the rest of the year remains strong. In the mid and long term, Patria and the defence industry in general are likely to see an increase in demand as defence spends are increasing in the majority of European countries.

 

22 Oct 24. MTU Aero Engines Q3 beats market expectations. German engine manufacturer MTU Aero Engines (MTXGn.DE) beat third-quarter profit expectations on Thursday buoyed by commercial original equipment manufacturing and its spare parts business.

Adjusted earnings before interest and taxes (EBIT) rose by 42% to 273m euros ($295m), in line with preliminary results published in October and above the 235 m euros expected by analysts in a company-provided consensus.

“Earnings in the OEM business reflect the profitable revenue mix, with a high proportion of spare and lease engines, the high demand for spare parts and the increase in the military business,” Peter Kameritsch, CFO of the Airbus (AIR.PA), and Boeing (BA.N) supplier, said.

Airbus, one of MTU’s main clients, cut its delivery target for 2024 in June. This led to increased demand for spare parts, of which sales are usually highly profitable. (Source: Reuters)

 

23 Oct 24. General Dynamics’ revenue rise on defense, but profits hit by bizjet deliveries.

• Summary
• Companies
• Defense unit revenue driven by global conflicts
• Bizjet deliveries fall short due to engine delays
• Marine Systems profit margins revised down by Novakovic

General Dynamics reported a more than 10% rise in third-quarter revenue on Wednesday, driven by strength in its defense unit, but fewer business jet deliveries hurt company profits.

Shares of the Reston, Virginia-based company were flat in early trading after reporting quarterly revenue of nearly $11.67bn, up from $10.57bn a year ago.

The ongoing conflicts in Ukraine and the Middle East and the United States’ efforts to replenish its inventory are driving increased global demand for munitions, vehicles and other military equipment.

For the quarter ended Sept. 29, the company’s aerospace segment which makes Gulfstream business jets saw revenue rise to $2.4bn, up 22.1% from a year ago. But profit margins were 12.3%, lower by nearly a percentage point compared to the same period a year ago.

Total deliveries in the company’s aerospace segment rose to 24 jets, including four G700s, from 22 a year ago. But the company said it delivered 11 fewer G700 business jets than expected due to engines arriving later than hoped due to an elongated certification timeline.

(Source: Reuters)

 

23 Oct 24. General Dynamics Reports Third-Quarter 2024 Financial Results.

• Revenue of $11.7bn, up 10.4% from year-ago quarter
• Operating earnings of $1.2bn, up 11.7% from year-ago quarter
• Diluted EPS of $3.35, up 10.2% from year-ago quarter
• Operating margin of 10.1%, a 10-basis-point expansion from year-ago quarter

General Dynamics (NYSE: GD) today reported third-quarter 2024 revenue of $11.7bn, up 10.4% from the third quarter of 2023. Operating earnings of $1.2bn were up 11.7% from the year-ago quarter. Diluted earnings per share (EPS) were $3.35, up 10.2% from the year-ago quarter. Operating margin for the quarter was 10.1%, a 10-basis-point expansion from the year-ago quarter.

“The company continues to see strong growth and steady improvement in operating performance,” said Phebe Novakovic, chairman and chief executive officer. “Demand across the portfolio also remains strong in the current environment.”

Gulfstream delivered 28 aircraft in the quarter, of which 24 were large-cabin aircraft, including four G700s. This compares with 27 aircraft delivered in the year-ago quarter, of which 22 were large cabin.

Cash and Capital Deployment

Net cash provided by operating activities in the quarter was $1.4bn, or 152% of net earnings. During the quarter, the company paid $390m in dividends, invested $201m in capital expenditures, and used $44m to repurchase shares, ending the quarter with $2.1bn in cash and equivalents on hand.

Orders and Backlog

The consolidated book-to-bill ratio, defined as orders divided by revenue, was 1.1-to-1 for the quarter. Company-wide backlog was $92.6bn. Estimated potential contract value, representing management’s estimate of additional value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $45bn. Total estimated contract value, the sum of all backlog components, was $137.6bn.

In the Aerospace segment, orders in the quarter totaled $2.4bn. The segment ended the quarter with backlog of $19.8bn.

In the defense segments, orders in the quarter totaled $10.5bn, with particular strength in the Combat Systems and Technologies segments. Significant awards in the defense segments included $885 m for various munitions and ordnance, with maximum potential value of $1.7bn; $465m, with maximum potential value of $1.7 bn, for two U.S. Army contracts for production of 155mm artillery projectile metal parts; $780m, with maximum potential contract value of more than $6.7bn including options, for the construction of additional John Lewis-class (T-AO-205) fleet replenishment oilers; $1.5bn for long-lead materials for Block VI Virginia-class submarines; $840m, with maximum potential value of $1bn, for several key contracts for classified customers; and $605m for multiple awards from the U.S. Space Development Agency to develop and integrate ground systems for the low-Earth orbit satellite network.

 

23 Oct 24. Luerssen, Rheinmetall among potential suitors for Thyssenkrupp marine unit, sources say. German shipbuilder Luerssen and defence group Rheinmetall (RHMG.DE) could emerge as potential suitors for the warship division of conglomerate Thyssenkrupp (TKAG.DE) two people familiar with the matter said.

It comes a day after news that private equity firm Carlyle (CG.O) had dropped out of the process for Thyssenkrupp Marine Systems (TKMS), in what was a blow to Thyssenkrupp’s ongoing restructuring and had weighed on shares.

Rheinmetall and Luerssen declined comment.

Thyssenkrupp referred to comments made on Tuesday, when it said it would intensify efforts to find a standalone solution for TKMS, including a possible spin-off, adding that it also remained open to industrial partnerships.

Handelsblatt reported earlier, citing industry sources, that Luerssen had expressed interest in TKMS and that talks were also being held with Rheinmetall about a potential deal. (Source: Reuters)

 

23 Oct 24. Sophos acquires Secureworks in $1.3bn deal. Major British cyber security software firm Sophos has announced its acquisition of US cyber security company Secureworks in an US$859m (A$1.3bn) deal. Now formerly Dell-owned, Secureworks is best known for its Taegis cloud-native security platform, which makes use of analytics and machine learning to identify hidden threats as well as prioritise higher-risk threats. Sophos said the acquisition of Secureworks will see it integrate solutions from both firms and deliver its customers a stronger security portfolio, which is currently made up of its identity detection and response (ITDR), next-gen SIEM capabilities, operation technology (OT) and enhanced vulnerability risk prioritisation.

“Secureworks offers an innovative, market-leading solution with [its] Taegis XDR platform. Combined with our security solutions and industry leadership in MDR, we will strengthen our collective position in the market and provide better outcomes for organisations of all sizes globally,” said Sophos CEO Joe Levy.

“Secureworks’ renowned expertise in cyber security perfectly aligns with our mission to protect businesses from cyber crime by delivering powerful and intuitive products and services. This acquisition represents a significant step forward in our commitment to building a safer digital future for all.”

The Sophos-Secureworks deal will be a US$859m all-cash transaction, with Sophos backed by software investment firm Thoma Bravo. (Source: https://www.cybersecurityconnect.com.au/)

 

22 Oct 24. RTX (RTX.N) on Tuesday raised its 2024 adjusted profit and sales forecasts for the second time, citing strong demand for aircraft repairs and defense systems, and reported better-than-expected quarterly earnings.

Shares of the Arlington, Virginia-based company were up 2.1% before the opening bell.

The aerospace and defense giant expects full-year adjusted profit per share to be between $5.50 and $5.58, compared with its prior forecast range of $5.35 to $5.45.

The company raised its revenue forecast range to $79.25bn to $79.75bn, from $78.75 to $79.5bn.

With a surge in air travel demand, airlines had to extend the service life of aircraft amid the limited availability of new commercial planes, creating a bustling aftermarket business. (Source: Reuters)

 

22 Oct 24. RTX Reports Third Quarter 2024 Results. RTX delivers strong operational performance; Increases 2024 outlook for adjusted sales* and adjusted EPS*

RTX (NYSE: RTX) reported third quarter 2024 results.

Third quarter 2024

• Reported sales of $20.1bn
• Adjusted sales* of $20.1bn, up 6 percent versus prior year, and up 8 percent organically* excluding the divestiture of the Cybersecurity, Intelligence and Services business
• GAAP EPS was $1.09 and included $0.31 of acquisition accounting adjustments and $0.05 of restructuring and other net significant and/or non-recurring charges
• Adjusted EPS* of $1.45, up 16 percent versus prior year
• Operating cash flow of $2.5bn; Free cash flow* of $2.0bn
• Company backlog of $221bn; including $131 bn of commercial and $90bn of defense
• Returned $1.1bn of capital to shareowners, returning over $32bn since the merger
• Realized $90m of incremental RTX gross cost synergies, achieving the $2bn post-merger target

Updates outlook for full year 2024

• Adjusted sales* of $79.25 – $79.75bn, up from $78.75 – $79.5bn
• Adjusted EPS* of $5.50 – $5.58, up from $5.35 – $5.45
• Confirms free cash flow* of approximately $4.7bn

“RTX delivered another strong quarter of organic sales* growth, adjusted segment margin* expansion, and free cash flow*,” said RTX President and CEO Chris Calio. “Demand across our portfolio, particularly within commercial aftermarket and defense, remains robust and gives us the confidence to again raise our full year outlook for adjusted sales* and adjusted EPS*.”

“With a record $221bn backlog, we are focused on executing our strategic priorities to drive best-in-class performance, deliver for our customers and create long-term shareowner value.”

Third quarter 2024

RTX reported third quarter sales of $20.1bn. Adjusted sales* were $20.1bn, up 6 percent over the prior year. GAAP EPS of $1.09 included $0.31 of acquisition accounting adjustments, and $0.05 of restructuring and other net significant and/or non-recurring charges. Adjusted EPS* of $1.45 was up 16 percent versus the prior year.

The company reported net income attributable to common shareowners in the third quarter of $1.5bn which included $418m of acquisition accounting adjustments, and $58m of restructuring and other net significant and/or non-recurring charges. Adjusted net income* of $1.9bn was up 7 percent versus the prior year driven by growth in adjusted segment operating profit* and a lower effective tax rate. This increase was partially offset by higher interest expense and lower pension income. Operating cash flow in the third quarter was $2.5bn. Capital expenditures were $552m, resulting in free cash flow* of $2.0bn.

The prior year reported results included a charge related to the previously disclosed Pratt powder metal matter which reduced sales by $5.4 bn, net income by $2.2bn, and GAAP EPS by $1.53.

Summary Financial Results – Operations Attributable to Common Shareowners

Segment Results

Collins Aerospace

Collins Aerospace had third quarter 2024 reported sales of $7,075m, up 7 percent versus the prior year. The increase in sales was driven by a 14 percent increase in defense and a 9 percent increase in commercial aftermarket, partially offset by an 8 percent decrease in commercial OE. The increase in defense sales was driven by higher volume across multiple programs, and the increase in commercial aftermarket sales was driven by continued growth in commercial air traffic, including higher flight hours. The decrease in commercial OE sales was driven by lower narrowbody volume. Adjusted sales* of $7,075m, were up 6 percent versus the prior year.

Collins Aerospace reported operating profit of $1,062m, up 18 percent versus the prior year. The increase in operating profit was driven by drop through on higher commercial aftermarket and defense volume. This increase was partially offset by lower commercial OE volume, unfavorable commercial OE mix, and higher R&D expense. Q3 2024 benefited from the absence of a $57 m charge related to a litigation matter in the prior year, as well as lower restructuring costs. On an adjusted basis, operating profit* of $1,096m was up 5 percent versus the prior year.

Pratt & Whitney

Pratt & Whitney had third quarter 2024 reported sales of $7,239m. Adjusted sales* of $7,239m, were up 14 percent versus the prior year driven by a 13 percent increase in commercial aftermarket, a 20 percent increase in military, and a 9 percent increase in commercial OE. The increase in commercial sales was driven by higher aftermarket volume, as well as favorable OE mix in Large Commercial Engines. The increase in military sales was driven by higher sustainment volume across the F135 and F117 platforms, as well as higher development volume driven by the F135 Engine Core Upgrade program.

Pratt & Whitney reported operating profit of $557m, up versus the prior year. Operationally, the increase was driven by drop through on higher commercial aftermarket and military volume. Favorable mix and lower OE delivery volume in Large Commercial Engines were offset by higher production costs. On an adjusted basis, operating profit* of $597 m, was up 45 percent versus the prior year.

The prior year reported results included a charge related to the previously disclosed powder metal matter which reduced sales by $5,401m and operating profit by $2,888m.

Raytheon

Raytheon had third quarter 2024 reported sales of $6,386m, down 1 percent versus prior year. Higher volume on land and air defense systems, including Global Patriot, NASAMS and counter-UAS programs, as well as higher volume on advanced technology programs was more than offset by the impact from the divestiture of the Cybersecurity, Intelligence and Services business completed in the first quarter of 2024 and lower volume on air and space defense systems. Excluding the impact of the divestiture, sales were up 5 percent versus prior year*.

Raytheon reported operating profit of $647m, up 16 percent versus the prior year. Favorable mix, improved net productivity, and drop through on higher volume was partially offset by the impact from the divestiture of the Cybersecurity, Intelligence and Services business. On an adjusted basis, operating profit of $661m was up 16 percent versus the prior year. (Source: PR Newswire)

 

23 Oct 24. Boeing CEO Message on Third Quarter Results. Boeing President and CEO Kelly Ortberg shared the following message with all employees today, including his prepared remarks for the third quarter financial results webcast:

Team,

As we report our third-quarter 2024 results today, I want to take this opportunity to share my perspective on the challenges we face and, more importantly, my focus for how we will move Boeing forward, together.

I am sharing my remarks directly with you this morning, because when it comes to our future the only way to be successful is by working together.

It will take time to return Boeing to its former legacy but, with the right focus and culture, we can be an iconic company and aerospace leader once again. We will be focused on fundamentally changing the culture, stabilizing the business and improving program execution, while setting the foundation for the future of Boeing.

To define that future, we will stay true to our roots and the values that defined our legacy.

Be on the lookout for an invitation to an all-employee meeting in the coming weeks where we will share more about our path ahead and answer your questions. Thanks for all you do.

Kelly

Boeing Reports Third Quarter Results

Third Quarter 2024

• Financials reflect impacts of the International Association of Machinists and Aerospace Workers (IAM) work stoppage and previously announced charges on commercial and defense programs
• Revenue of $17.8bn, GAAP loss per share of ($9.97) and core (non-GAAP)* loss per share of ($10.44)
• Operating cash flow of ($1.3)bn and free cash flow of ($2.0)bn (non-GAAP)*
• Total company backlog of $511bn, including over 5,400 commercial airplanes

The Boeing Company [NYSE: BA] recorded third quarter revenue of $17.8bn, GAAP loss per share of ($9.97) and core loss per share (non-GAAP)* of ($10.44) primarily reflecting impacts of the IAM work stoppage and previously announced charges on commercial and defense programs. Boeing reported operating cash flow of ($1.3)bn and free cash flow of ($2.0)bn (non-GAAP)*.

“It will take time to return Boeing to its former legacy, but with the right focus and culture, we can be an iconic company and aerospace leader once again,” said Kelly Ortberg, Boeing President and Chief Executive Officer. “Going forward, we will be focused on fundamentally changing the culture, stabilizing the business, and improving program execution, while setting the foundation for the future of Boeing.”

Operating cash flow was ($1.3)bn in the quarter reflecting lower commercial widebody deliveries, as well as unfavorable working capital timing, including the impact of the IAM work stoppage.

Cash and investments in marketable securities totaled $10.5bn, compared to $12.6bn at the beginning of the quarter driven by free cash flow usage in the quarter. In October, the company entered into a new $10.0bn short-term credit facility and now has access to total credit facilities of $20.0bn, which remain undrawn.

Total company backlog at quarter end was $511bn.

Segment Results

Commercial Airplanes

Commercial Airplanes third quarter revenue of $7.4bn and operating margin of (54.0) percent reflect previously announced pre-tax charges of $3.0bn on the 777X and 767 programs as well as the IAM work stoppage and higher period expense, including research and development.

The 787 program is currently producing at 4 per month and maintains plans to return to 5 per month by year end. In the quarter, Commercial Airplanes booked 49 net orders and delivered 116 airplanes, with backlog of over 5,400 airplanes valued at $428bn.

Defense, Space & Security

Defense, Space & Security third quarter revenue of $5.5bn and operating margin of (43.1) percent reflect the previously announced pre-tax charges of $2.0bn on the T-7A, KC-46A Tanker, Commercial Crew, and MQ-25 programs. Results also reflect unfavorable performance on other programs.

During the quarter, Defense, Space & Security delivered the first production MH-139A to the U.S. Air Force and definitized a contract for two E-7A Wedgetails from the U.S. Air Force. Backlog at Defense, Space & Security was $62bn, of which 28 percent represents orders from customers outside the U.S.

Global Services

Global Services third quarter revenue of $4.9bn and operating margin of 17.0 percent reflect higher commercial volume and mix.

During the quarter, Global Services secured agreements for Landing Gear Exchange Program and Integrated Material Management with All Nippon Airways and a KC-135 spares contract from the U.S. Air Force.

 

23 Oct 24. KBR, Inc. (NYSE: KBR) today announced its third quarter fiscal 2024 financial results.

“KBR’s exceptional team has once again exceeded expectations with outstanding third-quarter results,” stated Stuart Bradie, KBR’s President and CEO. “Our team’s dedication to our customers has resulted in year-over-year growth across all financial metrics, including Revenues, Adjusted EBITDA2, Adjusted EPS2, and notably, Operating Cash Flows. The bookings and awards this quarter align well with our focus areas of energy security and transition, national defense, and sustainability, and bolster our confidence for the rest of 2024 and heading into 2025.”

“During the quarter, we strategically shaped our portfolio and allocated capital in a thoughtful, balanced way,” Bradie continued. “Our acquisition of LinQuest, a leader in advanced engineering, data analytics, and digital integration, enhances our capabilities in space, air dominance, and connected battle space missions and introduces KBR to new U.S. government customers and contract vehicles. With strong performance across KBR and the integration of LinQuest progressing well, I am pleased to announce an increase in Revenue, Adjusted EBITDA2, and Adjusted EPS2 guidance for 2024. We welcome our new colleagues to the KBR family and look forward to the opportunities to shape the future together.”

New Business Awards

Backlog and options as of September 27, 2024 totaled $22.1bn. Delivered 1.2x quarter-to-date (QTD) and 1.1x trailing-twelve-months (TTM) book-to-bill1 as of September 27, 2024. Awarded $3.3bn of bookings and options1 in the quarter.

Sustainable Technology Solutions (STS) delivered 1.0x QTD and 1.1x TTM book-to-bill1 as of September 27, 2024, including awards and achievements in the quarter as follows:

• Announced that KTJV, a KBR and Technip Energies joint venture, has been selected by Lake Charles LNG Export Company, a subsidiary of Energy Transfer LP, for its Lake Charles LNG transformation project that includes the delivery of three liquefaction trains and modifications to existing storage and dock facilities designed to enable the export of 16.45 metric tons per annum of LNG. Under the terms of the agreement, KTJV will provide high-end engineering, procurement, construction management, construction, commissioning, startup and other related services, subject to Lake Charles LNG’s decision to issue a notice to proceed for the project.
• Awarded an engineering and procurement services contract for the Beachfield Manatee upgrade, the onshore portion of Shell’s Manatee gas field project located in the East Coast Marine Area of Trinidad and Tobago. The Manatee gas field supports global energy security and natural gas production, providing gas for the country’s Atlantic LNG facility.
• PureSAF℠ technology, which is exclusively licensed by KBR worldwide, was selected by Avina Clean Hydrogen Inc. for its project in the U.S. Under the terms of the contract, KBR will provide technology licensing, proprietary engineering design, and front-end engineering design for Avina’s facility to produce 120m gallons of sustainable aviation fuel per year.
• Awarded a conceptual study contract for floating blue ammonia production from Samsung Heavy Industries (SHI), one of the world’s largest shipbuilders in South Korea. The study will utilize KBR’s innovative blue ammonia technology, suitable for offshore production, and leverage SHI’s expertise in the design of mega floating vessels.
• Awarded engineering contracts by Seatrium Group to develop topsides facilities for two new high-production, energy-efficient floating production storage and offloading units. The units are being designed for Petrobras’ Atapu and Sepia fields in the Santos Basin, Brazil.
• KBR’s ROSE® supercritical Solvent De-Asphalting (SDA) technology was selected by Zhejiang Petroleum & Chemical Co. Ltd., the operator of China’s largest refinery. KBR is a global leader in SDA technology with the largest installed base and has been involved in the licensing, design, engineering, and commissioning of 72 ROSE units worldwide with a combined licensed capacity of nearly 1.66m barrels per day.
• Awarded an advisory consulting contract by Kuwait Oil Company for the development of a country wide masterplan for the production of 17GW of renewables and 25GW of green hydrogen by 2050.
• KBR’s blue ammonia technology selected by Shell for its Blue Horizons low-carbon hydrogen and ammonia project in Duqm, Oman. The facility will utilize KBR’s leading ammonia synthesis loop technology to deliver cost-competitive and low-carbon intensity ammonia.

Government Solutions (GS) delivered 1.3x QTD and 1.1x TTM book-to-bill1 as of September 27, 2024, including awards and achievements in the quarter as follows:

• Awarded an estimated $199m cost-plus-fixed-fee contract supporting the Naval Information Warfare Center Pacific Program Executive Office Digital and Enterprise Services Technical Director’s Office. KBR was awarded this contract under the Department of Defense Information Analysis Center’s multiple-award contract vehicle.
• Awarded the follow-on Space Science Instruments and Experimental Payloads (SSIEP) 3 contract by the U.S. Navy for continued development of space science instrument systems at the Naval Research Lab (NRL) in Washington, D.C. This award maintains KBR’s presence at NRL where it has supported SSIEP 1 and 2 since 2015.
• Awarded an estimated $153m cost-plus-fixed-fee recompete contract to support Naval Test Wings Atlantic and Pacific Aircrew Services over a five-year period. This strategic win builds on KBR’s 45 years of aircrew services and flight test support for the U.S. Navy.
• Awarded a 60-month cost-plus-fixed-fee recompete IAC MAC task order with an estimated value of $140m to provide operational safety, suitability, and effectiveness engineering tasks supporting the Air Force Life Cycle Management Center. As the U.S. Air Force’s trusted partner, KBR will continue to perform research and analyses at Hill Air Force Base in Clearfield, Utah, and other U.S. Air Force locations.
• Awarded an estimated $230m cost-plus-fixed-fee recompete IAC MAC contract by the U.S. Air Force’s 774th Enterprise Sourcing Squadron to develop and create new knowledge for the enhancement of the DTIC repository and the R&D and S&T community. The work will be primarily performed at Naval Air Station Patuxent River, Maryland and Huntsville, Alabama over a period of five years.
• Awarded an estimated $113m IAC MAC task order to perform aeronautical systems research, development, test and evaluation for the Air Force Life Cycle Management Center Mobility Directorate at Wright-Patterson Air Force Base, Ohio over a period of five years.
• Awarded a contract to continue to deliver technical design services at HMAS Stirling by the Security and Estate Group and the Australian Submarine Agency. This work will support the sovereign nuclear-powered submarines facilities and infrastructure program, enabling the Submarine Rotational Force – West, and accelerating Australia’s ability to safely own, operate, maintain and sustain its own future nuclear powered submarine fleet.
• In the month since the acquisition closed, LinQuest secured over $60 m of new orders under a unique contract vehicle that KBR does not currently utilize — SBIR Phase III, which allows for the commercialization of technologies designed by small businesses.
• Selected as NASA’s Agency-Level Large Business Prime Contractor of the Year. This win underscores KBR’s ongoing commitment to critical programs at Goddard Space Flight Center, where it holds three prime contracts, including Ground Systems and Missions Operations III, as well as multiple subcontracts and joint ventures.

KBR recently published its 2023 Sustainability Report and received the following awards and achievements in the quarter:

• Received an AAA designation in MSCI’s 2024 ESG (environmental, social and governance) Ratings. The AAA rating is MSCI’s highest and is given to companies that are leading their industries in managing the most significant ESG risks and opportunities. This is KBR’s second consecutive year receiving this designation.
• Earned a Gold Rating from EcoVadis, one of the world’s largest and most trusted providers of business sustainability ratings for global supply chains. The Gold Rating places KBR in the top 5% of assessed companies.
• Recognized by USA Today as one of America’s Climate Leaders for 2023. This data-driven recognition ranks U.S.-based companies that have cut their carbon footprint in recent years.
• Achieved an industry leading 93% Zero Harm days in 2023 and delivered 37% of KBR’s 2023 revenues from sustainability focused projects.

Financial Highlights for the Three Months Ended September 27, 2024

• Revenue of $1.9bn, up 10% on a year-over-year-basis
• Net income attributable to KBR of $100m; Adjusted EBITDA2 of $219 m, up 18% on a year-over-year basis (11.2% Adjusted EBITDA2 margin)
• Diluted EPS of $0.75; Adjusted EPS2 of $0.84, up 12% on a year-over-year basis
• Operating cash flows of $161m
• Bookings and options1 of $3.3bn during the quarter with 1.2x QTD book-to-bill1

Financial Highlights for the Nine Months Ended September 27, 2024

• Revenue of $5.6bn, up 8% on a year-over-year-basis
• Net income attributable to KBR of $299 m; Adjusted EBITDA2 of $642 m, up 15% on a year-over-year basis (11.4% Adjusted EBITDA2 margin)
• Diluted EPS of $2.22; Adjusted EPS2 of $2.44, up 12% on a year-over-year basis
• Operating cash flows of $422m
• Bookings and options1 of $6.7bn during the year to date period with 1.1x TTM book-to-bill1

Commentary on the Three Months Ended September 27, 2024

Revenues were $1.9bn, up 10% compared to 3Q’23, primarily due to on-contract growth across all of the Government Solutions business units, the acquisition of LinQuest, and growing demand in Sustainable Technology Solutions from engineering and professional services and technology licensing.

Net income attributable to KBR was $100m, up $121m compared to 3Q’23, primarily due to a non-cash charge of $114m in 3Q’23 in connection with the election of cash as the settlement method for our Convertible Notes that did not recur in the current year.

Adjusted EBITDA2 was $219m, up $33m compared to 3Q’23, with Adjusted EBITDA2 margins of 11.2%, up 74 bps year-over-year.

Diluted earnings per share was $0.75, up $0.91 compared to 3Q’23, primarily due to the increase in Net income attributable to KBR noted above and the decrease in diluted weighted average common shares outstanding in the current year. Adjusted earnings per share2 was $0.84, up $0.09 compared to 3Q’23, due to increases in gross profit, partially offset by higher selling, general and administrative expenses, interest expense, and provision for income taxes.

Operating cash flows were $161m, up $201m compared to 3Q’23, primarily due to a $132 m after-tax outflow in connection with the settlement of a legacy legal matter in the prior year and strong customer collections in the current year. Adjusted operating cash flows were $161 m, up $69 m compared to 3Q’23, primarily due to cash from strong collections in the current year.

Capital returned to shareholders totaled $29m during the quarter, consisting of $9m in share repurchases, inclusive of $8m of open market repurchases and $1m of repurchases to satisfy requirements of equity compensation plans, and $20m in regular dividends.

Commentary on the Nine Months Ended September 27, 2024

Revenues were $5.6bn, up 8% compared to YTD 3Q’23, primarily due to growth across Sustainable Technology Solutions; and within Government Solutions, new and on-contract growth across International, Defense & Intel, and Science & Space, partially offset by decline in Ukraine activity in Readiness & Sustainment.

Net income attributable to KBR was $299m, up $585m compared to YTD 3Q’23, primarily due to a  $132m settlement of a legacy legal matter in the prior year, as well as a non-cash charge of $428m recorded in connection with the election of cash as the settlement method for our Convertible Notes and the repurchase of a portion of our Convertible Notes in the prior year that did not recur in the current year.

Adjusted EBITDA2 was $642m, up $83m compared to YTD 3Q’23, with Adjusted EBITDA2 margins of 11.4%, up 73 bps year-over-year.

Diluted earnings per share was $2.22, up $4.32 compared to YTD 3Q’23, primarily due to the increase in Net income attributable to KBR noted above and the decrease in diluted weighted average common shares outstanding in the current year. Adjusted earnings per share2 was $2.44, up $0.26 compared to YTD 3Q’23, due to increases in gross profit and equity in earnings of unconsolidated affiliates, partially offset by higher selling, general and administrative expenses, interest expense, other non-operating expenses, and provision for income taxes.

Operating cash flows were $422m, up $174m compared to YTD 3Q’23, primarily due to a $13m after-tax outflow in connection with the settlement of a legacy legal matter in the prior year and strong customer collections in the current year. Adjusted operating cash flows were $422m, up $42m compared to YTD 3Q’23, primarily due to strong collections in the current year.

Capital returned to shareholders totaled $226m during the year to date period, consisting of $167m in share repurchases, inclusive of $154m of open market repurchases and $13m of repurchases to satisfy requirements of equity compensation plans, and $59m in regular dividends.

Updated Fiscal 2024 Guidance

The table below summarizes updated Fiscal 2024 guidance and represents our views as of October 23, 2024. Updated guidance reflects KBR’s strong operational performance and the acquisition of LinQuest.

 

22 Oct 24. Dutch Ministry of Defense invests 100m euros in fund to increase innovation power of Dutch startups.

– Defense, the provinces, Economic Affairs, regional development corporations and industry are joining forces for national security, innovation power and economic growth.

The Ministry of Defense is creating a 100 m euro investment fund, the SecFund, to provide financing to Dutch startups, scale-ups, and innovative SMEs that meet Defense’s innovation needs. The fund will invest up to a maximum of 5m euros per company.

Thus, the Ministry of Defense, the provinces, the Ministry of Economic Affairs, regional development companies, and industry are joining forces to promote national security, innovative strength, and economic growth.

According to research by the European Union, innovative companies in the defense sector more often experience a barrier in obtaining financing. Raising venture capital poses a major challenge not only because these companies’ capital needs are very high but also because financiers are reluctant to invest in the defense industry. The SecFund should bridge this gap.

Dual-use

The SecFund will focus on dual-use products. These products can be used in civilian and security sectors, such as technology that can make installations silent. Another example is LiFi, a new generation of data transmission that is faster than WiFi and can transfer more data per second. Or consider advanced radio technology. “With the SecFund, we support start-ups and scale-ups in a crucial phase to come up with innovations together for a safer Netherlands,” said Gijs Tuinman, State Secretary of Defense.

The SecFund is a collaboration of the Ministries of Defense and Economic Affairs and the nine regional development companies (ROMs). It is a fund with national coverage. Implementation is invested in the Brabant Development Company (BOM) in cooperation with the other ROMs. The fund is expected to open in January 2025. From then on, interested companies can apply.

“Business can make an unprecedented contribution to the innovation power of defense and vice versa,” said Brigit van Dijk-Van de Reijt, general director of the Brabant Development Corporation (BOM) on behalf of the nine regional development companies. “The SecFund thus strengthens strategic autonomy and economic security in the Netherlands and contributes to long-term earning power.” (Source: Paulo Dominonni via LinkedIn)

 

23 Oct 24. France’s Thales reports higher nine-month sales and orders. France’s Thales reaffirmed full-year targets as it posted nine-month sales up 6.2% on an underlying basis, with its new order intake rising 23% led by defence and security demand.

Sales for the first nine months reached 14.07bn euros ($15.20bn) and new orders rose to a better-than-expected 15.55bn, Europe’s largest defence electronics supplier said.

Analysts were on average expecting nine-month revenues of 14.04bn euros and new orders of 15.26bn, according to a company-compiled consensus.

New orders included a 40% rise in orders for the Defence and Security division, including systems for the French Army’s SCORPION armoured vehicles programme and lightweight LMM precision missiles ordered by Britain on behalf of both Ukraine and the replenishment of its own stocks. Thales said it had also won an order to renew the air traffic control system of a European nation it did not identify.

Chief Financial Officer Pascal Bouchiat said roughly stable third-quarter sales in Digital Identity and Security had fallen short of the company’s hopes for growth, citing lower banking demand especially in the United States. (Source: Reuters)

 

23 Oct 24. Lockheed Martin shares slide 5% on F-35 headwinds despite lifting profit and sales forecast. Defense contractor Lockheed Martin (LMT.N) lifted its annual profit and sales forecasts on Tuesday, but shares slid 5% because the company’s F-35 fighter jet program faced payment headwinds stemming from the government contracting process.

The Bethesda, Maryland-based company now expects per-share profit of $26.65 for 2024, above its earlier forecast of $26.10 to $26.60.

Still, shares slid 5.2% in early trading in New York to $582.71.

Lockheed’s flagship F-35 program has been facing challenges, particularly due to delays in rolling out an upgrade intended to enhance the fighter jet’s processing capabilities.

But drawn-out contract negotiations have meant Lockheed is having to incur procurement costs for the F-35 jets in lots 18 and 19, set to be delivered in 2026 and 2027.

The absence of a contract means Lockheed is having to pay suppliers for long-lead materials such as sensors, radars and other electronics for the jets without being reimbursed by the government. This impacted sales and profit at both the business and company level. (Source: Reuters)

 

22 Oct 24. Lockheed Martin Reports Third Quarter 2024 Financial Results

• Net sales of $17.1bn, an increase of 1% year over year
• Net earnings of $1.6bn, or $6.80 per share
• Cash from operations of $2.4bn and free cash flow of $2.1bn
• $1.6bn of cash returned to shareholders through dividends and share repurchases
• Increased share repurchase authority by $3.0bn to a total authorization of $10.3 bn
• Increased quarterly dividend 5% to $3.30 per share
• 2024 financial outlook increased

Lockheed Martin Corporation [NYSE: LMT] today reported third quarter 2024 net sales of $17.1 bn, compared to $16.9bn in the third quarter of 2023. Net earnings in the third quarter of 2024 were $1.6bn, or $6.80 per share, compared to $1.7bn, or $6.73 per share, in the third quarter of 2023. Cash from operations was $2.4 bn in the third quarter of 2024, compared to $2.9bn in the third quarter of 2023. Free cash flow was $2.1bn in the third quarter of 2024, compared to $2.5 bn in the third quarter of 2023.

“In the third quarter, we advanced our strategic, operational and financial priorities, as demonstrated by our record backlog of more than $165 bn, 48 F-35 deliveries, increased production on missile programs, and $2.1 bn of free cash flow generation,” said Lockheed Martin Chairman, President and CEO Jim Taiclet.

“As a result of our strong year-to-date results and confidence in our near-term performance, we are raising the outlook for full year 2024 sales, segment operating profit, EPS and free cash flow. Looking forward, we continue to make progress on the three key initiatives of our 21st Century Security® strategy of strengthening the resiliency and scalability of our production system, accelerating cutting edge digital and physical technologies into all our mission solutions and our internal operations, and expanding international partnerships to broaden our production capacity and drive more international sales. We are making substantial investments in these areas, while continuing to focus on our fundamental financial objective of driving free cash flow per share growth to generate returns for shareholders. Given our confidence in the company’s ability to deliver on these objectives, our Board has also approved a five percent increase in our quarterly dividend, the 22nd F-35 Lots 18-19 Contract Update

The company remains in negotiations with the U.S. Government on the Lots 18-19 production contract. Although negotiations for this contract are in process, the company has been performing work on Lots 18-19 production under initial customer authorization and funding to begin work pursuant to an advance acquisition contract received in the fourth quarter of 2023. The company and its industry team continue work in an effort to meet the customer’s desired aircraft delivery dates for the Lots 18-19 aircraft. The company’s costs began to exceed the advanced acquisition contract value in the third quarter of 2024. As a result, the company was unable to recognize revenue and profit on approximately $400m of costs incurred on the program in the third quarter of 2024, with at least an additional $300m of impacts across the supply chain. Additionally, the company was prevented from invoicing and receiving cash of approximately $450m through the third quarter of 2024. At the end of the third quarter of 2024, the company also had approximately $2bn in potential termination liability exposure to third parties related to Lots 18-19 (some of which would be recoverable in the unlikely event of a termination). Currently, the company expects to receive contractual authorization and funding on the Lots 18-19 production contract with the U.S. Government and resume invoicing costs incurred and recover sales, profit, and cash in the fourth quarter of 2024. However, until a final agreement is reached, or the U.S. Government otherwise provides additional contractual authorization and funding, the company’s results of operations, cash flows, and financial condition will continue to be negatively impacted, and the impacts could be material and differ from the company’s current 2024 outlook.

2024 Financial Outlook

The following table and other sections of this news release contain forward-looking statements, which are based on the company’s current expectations. Actual results may differ materially from those projected. It is the company’s practice not to incorporate adjustments into its financial outlook for proposed or potential acquisitions, divestitures, ventures, pension risk transfer transactions or discretionary contributions, financing transactions, changes in law, or new accounting standards until such items have been consummated, enacted or adopted. For additional factors that may impact the company’s actual results, refer to the “Forward-Looking Statements” section in this news release.

Cash Flows and Capital Deployment Activities

The decrease in operating and free cash flows in the third quarter of 2024 compared to the same period in 2023 was primarily due to a decrease in working capital (defined as receivables, contract assets, and inventories less accounts payable and contract liabilities), which includes the cash impacts for the lack of additional contractual authorization and funding from the U.S. Government prior to the end of the third quarter of 2024 on the Lots 18-19 contract of the F-35 program.

The company’s cash activities in the third quarter of 2024, included the following:

• paying cash dividends of $749m; and
• paying $850m to repurchase 1.5m shares.

As previously announced on Oct. 2, 2024, the company’s board authorized the repurchase of its common stock up to an additional $3.0bn, increasing the total authorization for potential future common stock repurchases to $10.3bn. The stock repurchase program does not have an expiration date and may be amended or terminated by the board of directors at any time. The amount of shares ultimately purchased and the timing of purchases are at the discretion of management and subject to compliance with applicable law and regulation.

Additionally, on Oct. 2, 2024, the company authorized a fourth quarter dividend payment of $3.30 per share, representing an increase of $0.15 per share over the prior quarterly dividend payment.

Segment Results

The company operates in four business segments organized based on the nature of products and services offered: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. The following table presents summary operating results of the company’s business segments and reconciles these amounts to the company’s consolidated financial results.

The company’s consolidated net favorable profit booking rate adjustments represented approximately 20% and 19% of total segment operating profit in the quarters ended Sept. 29, 2024 and Sept. 24, 2023. During the quarter ended Sept. 29, 2024, the company recognized losses of $80 m on a classified program at the company’s Aeronautics business segment due to higher than anticipated costs to achieve program objectives.

Aeronautics

Aeronautics’ net sales in the third quarter of 2024 decreased $230m, or 3%, compared to the same period in 2023. The decrease was primarily attributable to lower net sales of $480m on the F-35 program due to lower volume on production contracts as a result of delays in receiving additional contractual authorization and funding under the Lots 18-19 contract. This decrease was partially offset by higher net sales of $120 m on the C-130 program primarily due to higher volume on production and sustainment contracts; and $85 m on the F-16 program due to the ramp up on production.

Aeronautics’ operating profit in the third quarter of 2024 decreased $12 m, or 2%, compared to the same period in 2023. The decrease in operating profit was attributable to $25m from lower volume described above and $20 m from unfavorable contract mix, partially offset by $30 m of higher profit booking rate adjustments. The increase in profit booking rate adjustments included an $85m favorable profit rate adjustment for a claim associated with a contract to modernize and install new engines in C-5 Galaxy aircraft, partially offset by $80m of unfavorable profit rate adjustments on a classified program due to higher than anticipated costs to achieve program objectives.

Missiles and Fire Control

MFC’s net sales in the third quarter of 2024 increased $236m, or 8%, compared to the same period in 2023. The increase was primarily attributable to higher net sales of $285 m for tactical and strike missile programs due to production ramp up on Guided Multiple Launch Rocket Systems (GMLRS) and Long Range Anti-Ship Missile (LRASM) programs. This increase was partially offset by lower net sales of $90m for integrated air and missile defense programs due to lower volume on Patriot Advanced Capability-3 (PAC-3) and Terminal High Altitude Area Defense (THAAD).

MFC’s operating profit in the third quarter of 2024 increased $58m, or 15%, compared to the same period in 2023. The increase in operating profit was attributable to $35m of higher profit booking rate adjustments and $20m from volume described above. The increase in profit booking rate adjustments was primarily due to higher favorable profit rate adjustments on PAC-3 as a result of better than anticipated cost performance.

Rotary and Mission Systems

RMS’ net sales in the third quarter of 2024 increased $246m, or 6%, compared to the same period in 2023. The increase was primarily attributable to higher net sales of $185m on integrated warfare systems and sensors (IWSS) programs due to higher volume on radar programs and the Canadian Surface Combatant (CSC) program; and $50m for Sikorsky helicopter programs due to higher production volume on CH-53K, Seahawk and Black Hawk programs.

RMS’ operating profit in the third quarter of 2024 was comparable to the same period in 2023 as a $25m increase due to the higher volume described above was offset by $25m of lower profit booking rate adjustments. The decrease in profit booking rate adjustments was primarily due to a reach-forward loss recognized on a radar program as a result of additional quantity ordering risk identified on fixed-price options.

Space

Space’s net sales in the third quarter of 2024 decreased $26m, or 1%, compared to the same period in 2023. The decrease was primarily attributable to lower net sales of $50m for commercial civil space due to lower volume on the Orion program, partially offset by higher volume on other space exploration programs. This decrease was partially offset by higher net sales of $25m for strategic and missile defense programs due to higher volume on reentry programs.

Space’s operating profit in the third quarter of 2024 increased $13m, or 5%, compared to the same period in 2023. The increase in operating profit was attributable to $25m related to favorable contract mix across the portfolio, partially offset by $10m of lower equity earnings driven by lower launch volume from the company’s investment in United Launch Alliance (ULA). Profit booking rate adjustments were comparable.

Total equity earnings (ULA) represented approximately $5m, or 2% of Space’s operating profit in the third quarter of 2024, compared to approximately $15m, or 6% for the same period in 2023.

 

21 Oct 24. Hexcel Reports 2024 Third Quarter Results.

Hexcel Corporation (NYSE: HXL):

• Q3 2024 Sales were $457 m, an increase of 8.8% over Q3 2023 sales of $420 m (8.3% increase in constant currency).
• Q3 2024 GAAP diluted EPS of $0.49 compared to Q3 2023 GAAP diluted EPS of $0.45.
• Q3 2024 adjusted diluted EPS of $0.47, compared to Q3 2023 adjusted diluted EPS of $0.38.
• Full year 2024 results expected to be at the lower end of guidance ranges and to benefit from lower tax rates.

See Table C for reconciliation of GAAP and non-GAAP operating income, net income, earnings per share and operating cash flow to free cash flow. Free cash flow is cash from operations less capital expenditures.

Hexcel Corporation (NYSE: HXL) today reported third quarter 2024 results including net sales of $457 m and adjusted diluted EPS of $0.47 per share.

CEO and President Tom Gentile said, “Hexcel saw 9% growth in total revenue year over year, driven by a robust 17% growth in commercial aerospace. Year-to-date commercial aerospace is now up 14%. Air traffic continues to grow post pandemic leading to record demand for aircraft that use Hexcel lightweight materials, but supply chain challenges in the global aerospace industry continue to delay planned production rate increases at our major customers. Our customers are currently indicating that production rates will increase in 2025. We will continue to monitor our cost and labor training position to meet those projected production rate increases as schedules firm.”

Mr. Gentile continued, “Whereas the overall aerospace supply chain seemed to be recovering in late-2023, new challenges and shortages have developed as 2024 has progressed. As our business is impacted by the near-term slowing of previously planned production rate ramps by our key customers, we now expect FY 2024 sales and adjusted EPS to be at the lower end of our 2024 guidance ranges and will benefit from lower tax rates. Further, given recent developments, the assumptions for future production rates that were the basis for our mid-term guidance for the three-year period 2024-2026 provided in February 2024 are no longer valid. We are therefore withdrawing our previously issued mid-term guidance and will provide guidance for 2025, with our Q4 earnings in January.”

Mr. Gentile concluded: “Our longer-term growth outlook remains robust, driven by the ongoing recovery of commercial aerospace production to meet historically strong backlogs. Hexcel lightweight materials are also in demand for military aerospace and next generation commercial aircraft that seek composite lightweighting to reduce fuel consumption, increase range, and decrease carbon emissions. We are continuing to focus on execution and cash generation. We see compelling value in our business and repurchased another $50 m of Hexcel common stock in the third quarter bringing the year-to-date total to $252m.”

Markets

Sales in the third quarter of 2024 were $456.5m compared to $419.5m in the third quarter of 2023.

Commercial Aerospace

• Commercial Aerospace sales of $295.9m for the third quarter of 2024 increased 17.5% (17.0% in constant currency) compared to the third quarter of 2023. Airbus programs, which represent the largest portion of Hexcel sales, drove the sales growth including the A350 and A320neo. Boeing 787 sales, which represent about half of Hexcel’s sales to Boeing, also increased, whereas 737 MAX sales decreased modestly. Other Commercial Aerospace increased 9.1% for the third quarter of 2024 compared to the third quarter of 2023 led by latest-generation business jet sales.

Space & Defense

• Space & Defense sales of $128.2m were relatively unchanged (0.9% lower in constant currency) for the quarter as compared to the third quarter of 2023. Strength in Sikorsky CH-53K and Black Hawk was offset by lower Bell V-22 sales and softer Space sales, with launchers, satellites, and rocket motors all lower.

Industrial

• Total Industrial sales of $32.4m in the third quarter of 2024 decreased 16.5% (17.3% in constant currency) compared to the third quarter of 2023 due to declines in all sub-markets.

Consolidated Operations

Gross margin for the third quarter of 2024 was 23.3% compared to 21.8% in the third quarter of 2023. As a percentage of sales, selling, general and administrative expenses for the third quarter of 2024 was 8.7% compared to 8.4% for the third quarter of 2023. R&T expenses as a percentage of sales was 3.0% for the third quarter of 2024 compared to 3.2% for the third quarter of 2023. Adjusted operating income in the third quarter of 2024 was $52.9m or 11.6% of sales, compared to $42.8 m, or 10.2% of sales in 2023. The impact of exchange rates on operating income as a percent of sales was favorable by approximately 10 basis points in the third quarter of 2024 compared to the third quarter of 2023.

Year-to-Date 2024 Results

Sales for the first nine months of 2024 were $1,429.2m compared to $1,331.5m, a 7.3% increase from the same period in 2023.

Commercial Aerospace (64% of YTD sales)

• Commercial Aerospace sales of $915.9m increased 14.4% (14.3% in constant currency) for the first nine months of 2024 compared to the first nine months of 2023. Growth was led by both the A350 and 787, and the A320neo. Sales were down nominally for the 737 MAX. Other Commercial Aerospace increased 5.8% for the first nine months of 2024 compared to the same period in 2023, supported by latest-generation business jet sales.

Space & Defense (28% of YTD sales)

• Space & Defense sales of $406.2m increased 3.5% (3.4% in constant currency) for the first nine months of 2024 as compared to the first nine months of 2023. Key program growth including F-35, CH-53K, Black Hawk and European military helicopter programs was partially offset by the winding down of V-22 production and lower satellite and civilian helicopter sales.

Industrial (8% of YTD sales)

• Total Industrial sales of $107.1m in the first nine months of 2024 decreased 22.6% (22.8% in constant currency) compared to the first nine months of 2023 as all sub-markets declined.

Consolidated Operations

Gross margin for the first nine months of 2024 was 24.6% compared to 24.8% in the prior year period. As a percentage of sales, selling, general and administrative for the first nine months of 2024 was 9.0% compared to 9.2% for the first nine months of 2023. R&T expenses as a percentage of sales for the first nine months of 2024 was 3.1% compared to 3.0% for the first nine months of 2023. Adjusted operating income for the first nine months of 2024 was $179.0 m or 12.5% of sales, compared to $167.6 m or 12.6% of sales in 2023. Other operating expense (income) for the first nine months of 2024 and 2023 included restructuring costs and the first nine months of 2023 also included a pre-tax net gain of $0.8 m from the sale of a facility in Windsor, Colorado. The impact of exchange rates on operating income as a percent of sales was favorable by approximately 30 basis points in the first nine months of 2024 compared to the first nine months of 2023.

Cash and other

• Net cash provided by operating activities in the first nine months of 2024 was $127.3m, compared to $98.1m for the first nine months of 2023. Working capital was a cash use of $93.1m for the first nine months of 2024 and a use of $112.1m for the comparable period in 2023. Capital expenditures on a cash basis were $68.4m for the first nine months of 2024 compared to $94.4m for the same period in 2023, which included approximately $38m for the purchase of the land and building at the Hexcel Amesbury, Massachusetts facility. Net cash used for investing activities for the nine months ended September 30, 2023 included net proceeds of $10.3m received from the sale of a facility in Windsor, Colorado. Free cash flow was $58.9m in the first nine months of 2024 compared to $3.7m in the first nine months of 2023. Free cash flow is defined as cash generated from operating activities less cash paid for capital expenditures. Capital expenditures on an accrual basis were $59.6m and $88.7m for the first nine months of 2024 and 2023, respectively.
• The Company used $50.4m to repurchase shares of its common stock during the third quarter of 2024 and $252.2m during the first nine months of 2024. The aggregate remaining authorization under the share repurchase program as of September 30, 2024 was $234.9m.
• As announced today, the Board of Directors declared a quarterly dividend of $0.15 per share payable to stockholders of record as of November 1, 2024, with a payment date of November 8, 2024.

2024 Guidance

• Sales of $1.90 bn to $1.98bn (unchanged)
• Adjusted diluted earnings per share of $2.02 to $2.18 (unchanged)
• Free cash flow of around $200m (unchanged)
• Capital expenditures less than $100m (unchanged)
• Effective tax rate approximately 19% (reduced from 22.0%)

(Source: BUSINESS WIRE)

 

22 Oct 24. Saab profit rises, sees sales growth at upper end of forecast range.

• Summary
• Companies
• Saab Q3 op profit 1.19bn SEK vs forecast 1.14bn
• Order intake rises 41% yr/yr in quarter
• Sees 2024 organic sales growth at upper end of 15-20% range

Swedish defence material maker Saab (SAABb.ST) on Tuesday reported a slightly bigger-than-expected rise in third-quarter operating earnings and affirmed its outlook for surging sales and profits this year as countries scramble to re-arm.

The company reported quarterly operating earnings of 1.19bn Swedish crowns ($112.8m) versus a year-ago 859 m and analyst expectations of 1.14bn, according to a LSEG mean forecast based on three estimates.

The maker of military hardware such as missiles, advanced electronics, submarines and the Gripen fighter jet repeated its forecast for sales to grow organically by 15-20% in 2024 while operating earnings were seen rising even more. However, it added that it expected organic sales growth to come in at the upper end of the range. (Source: Reuters)

 

22 Oct 24. Saab Q3 2024 results: Strong sales growth and cash flow.

Saab presents the results for January-September 2024.

“We continue to see increasing demand as European nations need to replenish their defence stocks, which will require long-term efforts. This is reflected in our strong order intake in the third quarter. We are growing to meet this increasing demand, for example by investing in capacity, automating our production and building new plants. At the same time, we are delivering strong growth and improving our profitability,” says Micael Johansson, President and CEO, Saab.

Key highlights Q3 2024

• Order bookings increased 41% and amounted to SEK 21,173m (14,977), driven by strong growth in Dynamics.
• Organic growth was 17% and sales amounted to SEK 13,546m (11,527), with growth from all business areas.
• Operating income increased 38% and amounted to SEK 1,187m (859), corresponding to an EBIT margin of 8.8% (7.5).
• Net income increased to SEK 972m (656) and earnings per share amounted to SEK 1.79 (1.21).
• Operational cash flow improved in the quarter and amounted to SEK 3,188m (-2,058), driven by large customer payments.
• Net debt position was SEK 0.5bn (-1.4) at the end of the period.
• The full year 2024 outlook on organic sales growth, EBIT growth and positive operational cash flow is reiterated.

 

21 Oct 24. Ricardo plans sale of defence arm. Engineering consultancy Ricardo (RCDO) plans to sell off its defence business as it continues its shift towards becoming an environmental and energy transformation specialist.

The defence arm, which retrofits various systems to land vehicles, has been a significant contributor to Ricardo’s bottom line, generating 26 per cent of the group’s revenue but 60 per cent of underlying operating profit in the financial year that ended in June.

The company therefore warned that a sale “is expected to be dilutive” to earnings per share in the short term. However, depending on the amount a sale brings in, it could reinvest “some or all” of the proceeds in businesses that would be earnings accretive.

The shares climbed by 2 per cent but are down 13 per cent year-to-date.

(Source: Investors Chronicle)

Shore Capital has published a research note on Ricardo this morning, following their Strategy Update earlier this week. See a summary of the key points below and the full note attached.

Jamie Murray, Equity Analyst, said: “Ricardo’s decision to sell Defense is unsurprising but interesting. It has been the key driver of growth over the past five years, but is facing a cliff edge when the ABS/EBC contract ends.  As a result, management are expected to sell the business at a low multiple, which could reveal that the rest of the business is overvalued. Whilst the impact on forecasts will be material, the merits of the sale will depend on the proceeds and the subsequent capital allocation process. We conclude that the current Group ex Defense is likely overvalued and therefore would reiterate our recommendation to SELL the shares.”

Rationalising the sale: The division has been viewed as a non-core business unit since the Capital Markets Day in May-22 as it does not align with the future direction of the Group. It is also facing a revenue cliff edge as the end of the ABS/EBC contract approaches. By announcing its intention to sell, Ricardo is ripping the Band-Aid off and accelerating the sale.

Valuing Defense: We believe the division is worth $75m-$105m, which equates to a FY26F EV/EBIT multiple of 4-5x. This is the sum of (1) the ABS/ESC programme ($30m), (2) Defense ex ABS/ESC ($30m-$60m) and the optionality of new programmes ($15m).

Use of proceeds:  It is likely the proceeds will be used to pay down debt and/or to acquire a business. Ricardo’s borrowing costs are high given gross debt is over £10m, so  it  would  be sensible to deleverage. In addition, we believe Ricardo will attempt to buy a fast growing, high margin business, exposed to Energy and Environmental Transition markets.

Impact on valuation: Ricardo is expected to sell its best performing division at a low multiple. The result is that the remaining Group will be placed on a high multiple, which will imply it is overvalued. For shareholders, the outcome depends largely on the size of the proceeds. Our most likely scenario is that management sells the business for c$60m, a discount to our FV estimate, which places the rest of the business on 10.5x EV/EBIT. We would argue this is too high given the limited growth, modest margins and uncertainty across its core markets  (i.e.  automotive and Energy and Environmental Transition). We reiterate our SELL recommendation.

BATTLESPACE Comment: BATTLESPACE understands that Ricardo is still retaining its UK defence division.

 

20 Oct 24. Boeing exploring asset sales to boost finances, WSJ reports. Boeing (BA.N) is exploring asset sales in a bid to boost its fragile finances by shedding its non-core or underperforming units, the Wall Street Journal reported on Sunday.

The planemaker last week reached an agreement to offload a small defense unit that makes surveillance equipment for the U.S. military, the paper reported, citing people familiar with the deal.

Boeing has lurched from crisis to crisis this year, ever since Jan. 5 when a door panel blew off a 737 MAX jet in mid-air. Since then, its CEO has departed, its production has been slowed as regulators investigate its safety culture, and in September, 33,000 union workers went on strike.

The Journal reported that in recent financial-performance meetings, new CEO Kelly Ortberg asked the heads of the company’s units to lay out the value of those units to the company.

Boeing’s board recently met to discuss the next steps for the company, where directors questioned division heads and combed through reports to examine the state of each unit, the report said. Boeing declined to comment on the report. (Source: Reuters)

 

20 Oct 24. Boeing (BA.N) closed a deal this month to sell a small defense subsidiary that makes surveillance equipment for the U.S. military, the company said on Sunday, as the planemaker looks to shore up its struggling finances.

Boeing said in a statement that Digital Receiver Technology, which makes wireless equipment used by intelligence services, will be sold to Thales Defense & Security, an arm of Europe’s largest defence electronics firm, Thales SA (TCFP.PA). (Source: Reuters)

 

17 Oct 24. Nurol Holding acquires full ownership of FNSS from BAE Systems. Turkish defense company FNSS announced a major shift in its ownership structure as Nurol Holding has agreed to acquire the remaining shares of FNSS from BAE Systems. The deal, currently pending approval from Turkiye’s Competition Authority, will see Nurol Holding, which already holds a 51% majority stake, become the sole owner of FNSS. The acquisition is expected to significantly boost FNSS’s capacity for innovation and expansion into new markets. As part of the Nurol Group, FNSS will continue its operations with a strong focus on sustainability and maintaining its leadership in the defense sector.

FNSS CEO Kadir Nail Kurt commented on the development, stating, “With the comprehensive support of Nurol Holding and the synergy created within the group, FNSS will continue to achieve new milestones in innovation and sustainability. Under the 100% ownership of Nurol Holding, FNSS remains fully committed to fulfilling all legal, contractual, and financial obligations.”

This change marks a significant step for FNSS, which has been a key player in the defense industry, known for producing armored combat vehicles and advanced defense systems, serving both domestic and international markets. (Source: Defense Arabia)

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SPX CommTech, part of SPX Technologies Inc, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all. Formed by TCI and ECS, SPX CommTech’s Battlespace portfolio enables defence and security teams to detect, defeat and exploit RF signals to enhance communications intelligence (COMINT) and counter unmanned aerial systems (Counter-UAS). Additionally, its Tactical Data Link portfolio allows intelligence gathering agencies, special forces, emergency response, and security teams to securely and reliably transfer video and data between enabled-aircraft and ground teams over long distances for airborne Intelligence, Surveillance, Reconnaissance (ISR).

For more information visit www.tcibr.com and www.enterprisecontrol.co.uk

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Sponsored by SPX Communication Technologies (TCI & ECS)

 

www.tcibr.com

 

www.enterprisecontrol.co.uk

 

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16 Oct 24. Civmec to acquire Luerssen Australia in major shipbuilder agreement.  Civmec Limited and Naval Vessels Lürssen of Bremen, Germany, have entered into a non-binding heads of agreement, detailing the framework for the transfer of ownership of Luerssen Australia to Civmec Limited.

Luerssen Australia’s sole business is the building of six Arafura Class offshore patrol vessels for the Royal Australian Navy under the existing SEA 1180 contract with the Australian Department of Defence.

Upon completion of the potential transaction, Naval Vessels Lürssen (NVL) will transfer all its shareholding in Luerssen Australia to Civmec Limited, including all assets, employees, and licences.

This ensures the uninterrupted design and build of the Arafura Class offshore patrol vessels at the Osborne South shipyard in South Australia and the Civmec-owned facility in Henderson, Western Australia.

The proposed change of ownership and control of Luerssen Australia is subject to the Commonwealth granting its consent.

In order to obtain such consent as soon as is possible, Luerssen Australia and Civmec will immediately begin engaging with the Commonwealth in the required administrative approval process, with the parties working towards a target date of 31 December 2024.

“The acquisition of Luerssen Australia is a natural step for Civmec as a sovereign Australian shipbuilder with world-class shipbuilding facilities and an experienced shipbuilding workforce,” Civmec executive chairman Jim Fitzgerald said.

“Having worked on the project since 2018, we’re confident in our ability to execute the remaining work scope and ensure a smooth transition for all stakeholders.”

The non-binding heads of agreement is subject to satisfactory due diligence and meeting conditions precedent.

In parallel with the Commonwealth consent process, an effective date in the coming months will allow the parties to conduct necessary due diligence and detailed planning.

The immediate priority is to agree on a framework for the interim period in which Luerssen Australia and Civmec will closely cooperate in managing the SEA 1180 project, ensuring that Defence, the Royal Australian Navy and industry all benefit from the efficiencies and advantages of the agreement.

“We’re very confident in Civmec’s ability to finish the remaining works on the SEA 1180 project and NVL will ensure they are supported by us until Civmec’s successful completion of the project,” said Tim Wagner, Luerssen Australia chairman and CEO of NVL.

“We appreciate there are many details to work through and we look forward to engaging with all stakeholders, including the Commonwealth, Luerssen Australia employees and suppliers to ensure a smooth and successful transition.” (Source: Defence Connect)

 

09 Oct 24. Kromek demonstrates UK success during September. Kromek, a leading developer of radiation and bio-detection technology solutions for the advanced imaging and CBRN detection segments, has, following three major competitive successes, attended three major events over the last month, where they demonstrated some of the equipment that won these contracts and talked to international customers. Following selection to the UK National Fire Chief’s Council Resilience DIMS framework, Kromek has received an order from the UK Ministry of Defence (MoD) and has been selected as a supplier under the UK Government’s Radiological Nuclear Detection Framework for the procurement of radiological nuclear (“RN”) detection equipment and supporting services for the Home Office.

The month began with an invitation to the Public Security Exhibition (PSE) hosted by the British Embassy in Brussels and the UK trade association ADS in Brussels. Head of Sales  (EMEA and APAC) Mari Tuomela demonstrated the D3M, D3S ID and D5 RIID to Kromek’s Belgian and other European security customers. The exhibition focused on innovative UK solutions designed to address current security challenges in Belgium and worldwide, including key areas such as border control, vehicle forensics, and cybersecurity.

Kromek then exhibited at the Emergency Services Show in Birmingham, where the D5 RIID, recently chosen by the UK MoD, was on display. Kromek Product Designer John Atkins also demonstrated the capability of the D3M detector and how it can be networked to a control centre to enable quicker and more accurate decisions.

The following week, coinciding with the news that Kromek had been selected for the Home Office RN Detection Framework, the company exhibited its range of hand-held and static detectors at the International Security Expo at London Olympia. In the Counter-Threat Pavilion, Commercial Director Craig Duff led a live demonstration of how the D5 RIID can precisely locate and identify radioactive sources. Also on the Kromek stand were the Static Node and the D3M with its upgraded networked capability, which was the detector selected by the Merseyside Fire and Rescue Service under the Detection, Identification and Monitoring (DIM) Equipment Uplift contract on the UK’s National Resilience Framework.

Commenting on the events of the past month, Craig Duff said: “It has been a busy time meeting with our domestic and international customers, alongside receiving the excellent news from the Ministry of Defence and the Home Office. Our customers have been keen to see how the networked capability offered as standard in our products leads to quicker and more accurate decision-making: in a potential radiological situation, speed is of the essence.”

 

17 Oct 24. Comtech Announces Transformation Strategy and Capital Structure Update. Board of Directors Discloses Strategic Alternatives Process for Terrestrial & Wireless Networks Segment; Comtech to Become a Pure-Play Satellite and Space Communications Company

Company Amends Credit Facility and Enters into New Subordinated Unsecured Term Loan Facility

Comtech (NASDAQ: CMTL) (the “Company”), a global technology leader, today announced that its Board of Directors and management team are executing a strategy to transform Comtech into a pure-play satellite and space communications company and provided a capital structure update.

Ongoing and future actions supporting Comtech’s transformation strategy include:

• An exploration of strategic alternatives for the Company’s Terrestrial & Wireless Networks (“T&W”) segment, which is well underway;
• The pursuit of further portfolio-shaping opportunities to enhance profitability, efficiency and focus; and
• The implementation of additional operational initiatives to align Comtech’s go-forward cost structure with a pure-play focus on satellite and space communications.

Comtech’s Board of Directors noted, “Comtech is in the midst of a transformational journey. Earlier this year, we enhanced our T&W segment with a new management team to drive growth and improved profitability. Given the strength and value we see in our T&W segment, we initiated a process to explore strategic alternatives for this business to unlock value for Comtech shareholders. We believe the best path forward for shareholders is the creation of a pure-play satellite and space communications company with a simplified capital structure, streamlined operations and strong balance sheet. This strategy is the product of months of careful evaluation conducted with the assistance of management and independent advisors. We look forward to providing an update on the strategic alternatives process and broader strategy at key milestones.”

Strategic Alternatives Process for the T&W Segment

Comtech’s T&W business is a leading provider of next-generation 911 (“NG911”) infrastructure and solutions for state and local governments and telecom carriers across North America. Enhanced by the leadership of new executive management, in fiscal 2024, the T&W segment has more than doubled its bookings of orders for next-generation solutions. Additionally, as a result of a more refined strategic focus and the achievement of certain cost-containment and operational efficiency measures, T&W is on track to delivering strong year-over-year bottom line performance.

Comtech’s recent T&W wins and milestones include a long-term competitive contract renewal for NG911 solutions in the Commonwealth of Massachusetts; the buildout of Pennsylvania’s NG911 statewide network; a mandate for the Toronto Police Service’s NG911 solution; a long-term NG911 renewal with the North Central Texas Emergency Communications District; a statewide NG911 solution in the Northeast U.S. in partnership with Consolidated Communications; and multi-province NG911 deployments in Canada. Demand for these solutions is expected to continue growing following a July 2024 ruling by the U.S. Federal Communications Commission to advance the nationwide transition to NG911.

The Board had previously retained independent financial advisors to assist in its strategic review earlier this year and, in recent months, commenced a strategic alternatives process for the T&W business.

The Board added, “Comtech deeply values its T&W customers, who put their trust in our best-in-class public safety solutions to keep their communities and people connected in their most critical moments. We expect to move forward with a partner who will focus on this attractive business and its customers, talented team members and valued service providers.”

There can be no assurance that the exploration of strategic alternatives will result in a transaction or other strategic changes or outcomes. There is no timeframe for the conclusion of the process, and the Company does not intend to comment further regarding this matter unless and until further disclosure is determined to be appropriate or necessary.

Pure-Play Satellite and Space Communications Company

Comtech’s Satellite & Space Communications (“S&S”) segment is a U.S.-based, leading provider of advanced modems and high-power amplifier technologies, and a market leader in troposcatter technologies. The S&S segment has an innovative portfolio of these mission-critical technologies and serves some of the world’s largest defense contractors and allied foreign governments, as well as multiple U.S. government agencies, including branches of the U.S. Armed Forces, U.S. Department of Defense (“DoD”) and U.S. Space Force (“USSF”), among others.

The S&S business operates in large and growing end markets that benefit from multiple tailwinds and demand-drivers, including growing global geopolitical tensions, rising global defense spending, and high barriers to entry. Further, these end markets are undergoing technology upgrade cycles and modernization initiatives that are expected to underpin demand for years to come. Fueling these cycles are the USSF’s Commercial Space Strategy and the DoD’s Joint All Domain Command and Control approach, which are expected to generate strong demand for the S&S business’ next-generation digital solutions. Today, only a limited number of companies, including Comtech, can serve the complex needs of the U.S. and other governments and meet this demand.

Proceeds from the potential divestiture of T&W would enable Comtech to substantially simplify its capital structure and strengthen its balance sheet. Paired with additional targeted portfolio optimization and a singular focus on satellite and space communications, the go-forward company would be well-positioned to capitalize on growth opportunities.

Portfolio-Shaping and Operational Initiatives

In connection with the Board’s transformative strategy, the Company has undertaken a detailed evaluation of its S&S portfolio to identify opportunities to divest, separate and/or rationalize businesses or facilities that are not core to Comtech’s go-forward focus.

Consistent with this effort, in its fourth fiscal quarter, Comtech made the decision to exit its subsidiary operations in Basingstoke, United Kingdom. The U.K. operations were established in connection with the prior management team’s 2020 acquisition of CGC Technology Limited, which primarily served customers in Europe. Following the acquisition, Comtech continued to invest in the Basingstoke facility to advance LEO constellation-based antenna technologies in anticipation of a significant production order. Taking into consideration the significant ongoing investment as well as unfavorable contract terms on prospective antenna sales, the Board concluded the U.K. business would not generate an attractive return on invested capital and made the decision to exit these operations. After anticipated restructuring charges associated with the exit of the Basingstoke operations, Comtech expects to realize approximately $10m of annual cash savings.

In addition to its ongoing efforts to improve the cash conversion cycle and manage the balance sheet, Comtech has been working with independent advisors to identify opportunities to align the Company’s cost structure with its go-forward focus on satellite and space communications.

Furthermore, over the past several months, Comtech has conducted an intensive review of its product portfolio to focus future investment on the Company’s most strategic, high-margin revenue opportunities within its S&S portfolio. While anticipated to improve the Company’s profitability in future periods, such actions may result in near-term restructuring charges.

Amended Credit Agreement and New Subordinated Term Loan Facility

On October 16, 2024, Comtech filed a Form 12b-25 with the Securities and Exchange Commission (“SEC”) noting that it is unable to file its Annual Report on Form 10-K for the period ended July 31, 2024 within the prescribed time period without unreasonable effort or expense, and that the Company anticipates reporting significantly lower-than-expected performance, primarily in its S&S segment, in the fourth fiscal quarter.

In light of this, the Company entered into an amendment to its existing credit facility dated June 17, 2024. Among other things, the amendment waives defaults or events of default in connection with the Company’s Net Leverage Ratio and Fixed Charge Coverage Ratio covenants for the fourth fiscal quarter. To cure defaults, maintain appropriate liquidity and support the Company’s transformation initiatives, Comtech entered into a new $25.0m subordinated unsecured term loan facility with the existing holders of the Company’s convertible preferred stock. Within the terms of the amended credit facility, this new subordinated unsecured term loan allows the Company to maintain a consistent level of borrowing capacity.

Additional information related to the Company’s credit facilities can be found in a Form 8-K that will be filed with the SEC.

Advisors

Imperial Capital, LLC is acting as financial advisor for the T&W strategic alternatives process. Sidley Austin LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP are serving as legal counsel.

 

11 Oct 24. The Boeing Company [NYSE: BA] announced today it will recognize impacts to its financial results related to charges for certain programs across the Commercial Airplanes and Defense, Space & Security segments and the IAM work stoppage when it reports third quarter results on October 23. The company expects to report third quarter revenue of $17.8bn, GAAP loss per share of ($9.97), and operating cash flow of ($1.3)bn. Cash and investments in marketable securities totaled $10.5 bn at the end of the quarter.

“While our business is facing near-term challenges, we are making important strategic decisions for our future and have a clear view on the work we must do to restore our company,” said Kelly Ortberg, Boeing president and chief executive officer. “These decisive actions, along with key structural changes to our business, are necessary to remain competitive over the long term. We are also focusing on areas that are critical to our future and will ensure we have the balance sheet necessary to invest, support our people and deliver for our customers.”

Commercial Airplanes expects to recognize pre-tax earnings charges of $3.0 bn on the 777X and 767 programs. The company now anticipates first delivery of the 777-9 in 2026 and the 777-8 freighter in 2028, resulting in a pre-tax earnings charge of $2.6bn. This schedule and resulting financial impact are based on an updated assessment of the certification timelines to address the delays in flight testing of the 777-9, as well as anticipated delays associated with the IAM work stoppage. Commercial Airplanes also plans to conclude production of the 767 freighter and recognize a $0.4 bn pre-tax charge on the program, which also reflects impacts from the IAM work stoppage. Beginning in 2027, the company will solely produce 767-2C aircraft in support of the KC-46A Tanker program. Commercial Airplanes expects to report third quarter revenue of $7.4bn and operating margin of (54.0) percent.

Defense, Space & Security expects to recognize pre-tax earnings charges of $2.0bn on the T-7A, KC-46A, Commercial Crew, and MQ-25 programs. The T-7A program pre-tax charge of $0.9 bn was driven by higher estimated costs on production contracts in 2026 and beyond. The KC-46A program pre-tax charge of $0.7 bn reflects the decision to conclude production on the 767 freighter and impacts of the IAM work stoppage. Results also include unfavorable performance on other programs. Defense, Space & Security expects to report third quarter revenue $5.5 bn and operating margin of (43.1) percent.

 

11 Oct 24. Boeing Message to Employees on Positioning for the Future. Boeing [NYSE: BA] President and CEO Kelly Ortberg shared the following message with all employees today: Team, Our business is in a difficult position, and it is hard to overstate the challenges we face together. Beyond navigating our current environment, restoring our company requires tough decisions and we will have to make structural changes to ensure we can stay competitive and deliver for our customers over the long term.

We need to be clear-eyed about the work we face and realistic about the time it will take to achieve key milestones on the path to recovery. We also need to focus our resources on performing and innovating in the areas that are core to who we are, rather than spreading ourselves across too many efforts that can often result in underperformance and underinvestment.

With that in mind, today I am sharing some difficult decisions and several program updates:

• On the 777X program, the challenges we have faced in development, as well as from the flight test pause and ongoing work stoppage, will delay our program timeline. We have notified customers that we now expect first delivery in 2026.
• We plan to build and deliver the remaining 767 Freighters ordered by our customers and then conclude production of the commercial program in 2027. Production for the KC-46A Tanker will continue.
• In BDS, our performance on fixed-price development programs is simply not where it needs to be. We expect substantial new losses in BDS this quarter, driven by the work stoppage on commercial derivatives, continued program challenges and our decision to complete production on the 767 freighter. I will be providing additional oversight of this business and these programs.

Along with the above actions, we must also reset our workforce levels to align with our financial reality and to a more focused set of priorities. Over the coming months, we are planning to reduce the size of our total workforce by roughly 10 percent. These reductions will include executives, managers and employees. Next week, your leadership team will share more tailored information about what this means for your organization. Based on this decision, we will not proceed with the next cycle of furloughs.

As we move through this process, we will maintain our steadfast focus on safety, quality and delivering for our customers.  We know these decisions will cause difficulty for you, your families and our team, and I sincerely wish we could avoid taking them. However, the state of our business and our future recovery require tough actions.

We will be transparent with you regarding the timing and impact of these steps, and we will be professional and supportive to everyone along the way.

Thank you for all that you are doing through this very challenging time at Boeing. We will navigate through this moment. We will re-focus our company, and we will restore trust with all those who depend on us.

Kelly.

 

16 Oct 24. Defence contractor RTX has agreed to pay more than $950m over claims it bribed a Qatari official to facilitate weapons sales to the country and defrauded the Pentagon into overpaying for weapons including Patriot missile systems. The company, formerly known as Raytheon, was accused of defrauding the US defence department into paying an extra $111mn for the missile system and the operation of a radar system between 2012 and 2018. RTX also entered into a deferred prosecution agreement with US federal prosecutors for conspiring to bribe a Qatari official and failing to disclose those bribes in export licensing agreements. Prosecutors said the company paid $30m to a member of Qatar’s council of the ruling family and a cousin of the Qatari emir, Tamim bin Hamad al-Thani, in an attempt to sell its Patriot system to the Gulf state, which is a crucial US ally in the Middle East. Officials at the Qatar embassy in Washington did not immediately respond to requests for comment. Breon Peace, US attorney the eastern district of New York, said: “Over the course of several years, Raytheon employees bribed a high-level Qatari military official to obtain lucrative defence contracts and concealed the bribe payments by falsifying documents to the government, in violation of laws including those designed to protect our national security.” “We will continue to pursue justice against corruption . . . to ensure this misconduct is not repeated,” he added. As part of the agreement, the company will install an independent compliance monitor for a three-year period. RTX also settled a claim from the Securities and Exchange Commission, which alleged it had violated anti-bribery and accounting laws. (Source: Google/FT.com)

 

11 Oct 24. Axon Completes Acquisition of Dedrone. Dedrone is now officially part of Axon. The acquisition unites two companies with a shared mission to improve public safety and national security by staying ahead of persistent and escalating threats, enabling faster, more effective responses and ultimately protecting more lives in more places.

Dedrone’s smart airspace security technology integrates with Axon’s public safety platform to enable true drone as first responder (DFR) programs and protect against unauthorized drone threats. With Dedrone’s technology now part of the Axon ecosystem, we’re advancing how we leverage and protect against drones to keep everyone safe with a greater ability to prevent incidents before they escalate.

Enhancing Axon’s Drone as First Responder (DFR) Offering

DFR is transforming how public safety agencies respond to emergencies. Drones are dispatched immediately after an emergency call, providing real-time intelligence to help officers assess the scene before arriving. With Axon DFR, Dedrone’s airspace awareness technology, DedroneBeyond, extends this capability, enabling drones to fly beyond visual line of sight (BVLOS) without the need for human visual observers. This innovation allows drones to fly farther, faster and operate in more challenging conditions and areas previously difficult to access, reducing response times and improving situational awareness.

Protecting Public Spaces and National Security

Dedrone’s AI-powered airspace security systems are essential for safeguarding large-scale events, airports, critical infrastructure and even military bases and defense operations from unauthorized drone activity. As drone usage rises, so does the risk of airspace incursions that could disrupt operations or pose serious safety risks. With Dedrone, public safety and defense teams can detect, track, and, when necessary, neutralize rogue drones in real time, ensuring both public spaces and sensitive areas remain secure. Additionally, Dedrone’s battle-tested technology is actively serving governments and defense agencies worldwide, offering critical protection against evolving threats.

(Source: UAS VISION)

 

15 Oct 24. Boeing lines up $35bn in funds as strike hammers finances.

• Summary
• Companies
• Files to raise up to $25bn via stock and debt offerings
• S&P, Fitch say offerings could help preserve credit rating
• Company also enters $10bn credit agreement
• Offering may imply short-term liquidity worse than thought, analyst says

Boeing (BA.N) set out to shore up its sagging finances on Tuesday, announcing plans to raise up to $25bn through stock and debt offerings and a $10bn credit agreement with major lenders amid a production and regulatory crisis.

It was not clear when and how much the planemaker would eventually raise, but analysts estimate Boeing needs somewhere between $10bn and $15bn to maintain its credit ratings, which are now just one notch above junk.

Boeing has lurched from crisis to crisis this year, kicking off on Jan. 5 when a door panel blew off a 737 MAX jet in mid-air. Since then, its CEO departed, its production has been slowed as regulators investigate its safety culture, and in September, 33,000 union workers went on strike.

The company is looking to shore up its finances with a cash-and-debt raise as it faces the possibility that its credit rating will be lowered after three straight quarters of burning through cash.

The strike is costing roughly $1 bn a month according to one analyst estimate, and to reduce costs the planemaker has also said it would cut 17,000 jobs.

The company’s shares were up 2.1% on Tuesday.

S&P Global and Fitch warned of a downgrade last month. The ratings agencies said on Tuesday that the stock and debt sales could help preserve Boeing’s investment-grade rating.

“The supplemental credit facility also seems like a sensible precaution,” S&P Global’s Ben Tsocanos said.

However, some analysts were not convinced.

“We take the vagueness and breadth of the shelf announcement and the need for the temporary financing as implying that the banks are struggling to sell this issue to potential investors or lenders,” said Agency Partners analyst Nick Cunningham, who suspended his recommendation and price target for Boeing’s shares.

Boeing said on Tuesday it had not drawn on the new $10 bn credit facility, arranged by BofA, Citibank, Goldman Sachs and JPMorgan, or its existing revolving credit facility.

Item 1 of 4 Boeing workers from the International Association of Machinists and Aerospace Workers District 751 hold a march during an ongoing strike in Seattle, Washington, U.S. October 15, 2024.

“These are two prudent steps to support the company’s access to liquidity,” Boeing said, adding that the potential stock and debt offerings will provide options to support its balance sheet over a three-year period.

On Monday, Emirates Airlines President Tim Clark became the first senior industry figure to articulate fears over Boeing’s ability to tackle its worst-ever crisis intact.

“Unless the company is able to raise funds through a rights issue, I see an imminent investment downgrade with Chapter 11 looming on the horizon,” Clark told the Air Current, an aviation industry publication.

Boeing will use the funds for general corporate purposes, according to paperwork filed with the U.S. markets regulator on Tuesday.

The planemaker had cash and cash equivalents of $10.89bn as of June 30.

 

17 Oct 24. Chemring Group PLC (“Chemring” or “the Group”) today issues a scheduled trading update for the period to 30September 2024.

Current trading and outlook

Trading in the period has progressed as planned, with continued strong order intake a notable highlight. The outturn for the year ending 31 October 2024 is in line with the current range of analyst expectations*, despite current foreign exchange headwinds, and is fully covered by orders.

The Group has received a number of significant orders during the period. As at 30 September 2024, order intake for the year to date was £638m (30 September 2023: £604m) and the order book was £1,108m (30 September 2023:£869m). Order cover for expected FY25 revenue is building well, with Countermeasures & Energetics having 95%(2023: 87%) order cover of expected revenue and the shorter cycle Sensors & Information sector having 47% (2023:54%) cover. In Countermeasures & Energetics order cover for expected FY26 and FY27 revenues are currently 75% and45% respectively, again demonstrating the long-term nature of demand.

Countermeasures & Energetics

Energetics

In Energetics we continue to see increased levels of activity and demand in the propellants and energetic material smarkets as customers re‐evaluate their operational usage and stockpile requirements associated with traditional defence capabilities.

Our Norwegian business, Chemring Nobel, continues to work with a number of its customers on establishing long-term supply agreements and is expected to end the financial year with another record order book, providing significant visibility over the medium term.

In March 2024 we announced that Chemring Nobel had been awarded grant funding of c.£90m in support of its capacity expansion projects. Chemring is pleased to confirm that detailed work packages have been approved by the European Commission, and to date it has received £19.5m. Further amounts are expected to be received annually on completion of work packages.

On 10 October 2024 the Norwegian Government announced that, in partnership with Chemring Nobel, it had launched a feasibility study into the establishment of a new production facility to further increase the production of military explosives, as they view Chemring Nobel as the producer in Europe and North America that can establish increased production the fastest. This co-funded feasibility study, which is expected to be concluded by the end of 2024, will investigate the geographic location, infrastructure requirements and environmental considerations of building a new production facility. The study will also consider the role and the levels of any financial contribution made by the Norwegian Government.

In the US, our Chicago business has received multiple orders in the period including an order from the United Launch Alliance to develop initiators and an order from Boeing in relation to the Harpoon missile program, with the combined value of these two orders totalling over $20m.

Our three niche Energetics businesses, which design and manufacture high precision engineered devices and specialist materials, continue to see strong customer demand with order intake up 32% to £319m (30 September 2023: £242m).This strong performance demonstrates the value that our customers place on Chemring’s niche products and reinforces our decision to invest in expanding capacity at our energetic sites.

Countermeasures

In Countermeasures we have continued to see robust customer demand as we have maintained our position as a world leader in the design, development and manufacture of advanced expendable countermeasures. In the year to date the Group’s countermeasures businesses received orders totalling £172m (30 September 2023: £159m).

In the period since 30 April 2024 our UK Countermeasures business (“CCM UK”) has seen strong order intake with notable awards including a £36m order for Typhoon countermeasures, a £16m order from the UK MOD, and a £8morder from MBDA USA for a new naval infra-red decoy. This was the first US production order that CCM UK has received in over 10 years and will contribute to the business having a record order book at year end.

Contract awards – Sensors & Information

Roke

In the Sensors & Information sector our technology business, Roke, has continued to make good progress with further contract wins in the area of Electronic Warfare (“EW”). Orders totalling £10.5m were received from Lithuania, Latvia and the UAE for the supply of Roke’s Resolve 3 man-portable EW system.

Roke’s expertise in the field of EW was further demonstrated in September 2024 when Roke was announced as one off our UK organisations to have been selected for research funding in the first AUKUS Innovation Challenge. The trilateral AUKUS Pillar 2 EW Challenge called for proposals to identify electromagnetic spectrum technology solutions to help give the AUKUS nations a strategic edge in targeting and to provide protection against adversarial electromagnetic-targeting capabilities.

US Sensors

In the US, deliveries of systems under the Joint Biological Tactical Detection System (“JBTDS”) Low Rate Initial Production contract awarded in September 2023 have all been completed, and we continue to make good progress onthe Enhanced Maritime Biological Detector (“EMBD”) Program of Record. On JBTDS we continue to support the customer as they progress through testing and acceptance, with the expectation of a Full Rate Production contract being awarded in FY2026.

Full year results date

The results for the year ending 31 October 2024 will be released on 17 December 2024.

Michael Ord, Chemring Group Chief Executive, commented:

“The business has continued to perform as expected, and with FY24 revenue fully covered by the order book, we remain on track to deliver FY24 performance in line with the current range of analyst expectations despite current foreign exchange headwinds.

The growth in order intake demonstrates both our customer’s needs to rebuild their defence deterrent for the long term and their confidence in Chemring to develop and supply highly effective solutions. These awards strengthen our order cover over the near to medium term, and position the Group well to meet our ambition to increase annual revenue to c.£1bn by 2030.”

17/10/2024, 07:02 Trading Update – 07:00:05 17 Oct 2024 – CHG News article | London Stock Exchange https://www.londonstockexchange.com/news-article/CHG/trading-update/16718638 2/4

* The Group believes analyst forecasts for adjusted operating profit for the year ended 31 October 2024 are in the range of£70.8m to £73.6m.

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SPX CommTech, part of SPX Technologies Inc, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all. Formed by TCI and ECS, SPX CommTech’s Battlespace portfolio enables defence and security teams to detect, defeat and exploit RF signals to enhance communications intelligence (COMINT) and counter unmanned aerial systems (Counter-UAS). Additionally, its Tactical Data Link portfolio allows intelligence gathering agencies, special forces, emergency response, and security teams to securely and reliably transfer video and data between enabled-aircraft and ground teams over long distances for airborne Intelligence, Surveillance, Reconnaissance (ISR). For more information visit www.tcibr.com and www.enterprisecontrol.co.uk

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Sponsored by SPX Communication Technologies (TCI & ECS)

www.tcibr.com

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09 Oct 24. Aurizn Group announces McR Defence acquisition and leadership changes. Australian defence technology provider Aurizn Group has set the stage for global expansion with the acquisition of McR Defence and new leadership changes. Following the strategic acquisition of McR Defence from national independent law firm McCullough Robertson in August, Brett Sangster has been appointed as the CEO of Aurizn Group, with Andrew Tymms appointed as board chair.
Sangster and Tymms bring a unique balance of operational and strategic experience to drive Aurizn’s ambitious vision to deliver state-of-the-art solutions and expand its influence both in Australia and internationally.
Aurizn co-founders Ganen Ganeswaran and Bjorn Wharf have stepped into non-executive director roles to support Aurizn’s next exciting chapter of growth as a leading provider of cutting-edge technology solutions to the defence as well as science and technology industries.
“By merging Aurizn’s advanced STEM, simulation and technology expertise with McR Defence’s commercial consulting, program management and cyber security assurance and advisory services, we diversify our capability sets and position ourselves to become a trusted supplier to Defence, government, defence industry and critical infrastructure clients,” group chief executive officer Brett Sangster said.
“We’re excited to partner with Pemba Capital Partners to pursue an ambitious vision for growth that includes supporting major initiatives such as taking critical technologies into AUKUS and allied nations.
“The defence sector, both in Australia and internationally, presents enormous opportunities for innovation and strategic growth. With ever-evolving advances in speed-to-capability technologies, Aurizn is responding with cutting-edge solutions combining our scientific and engineering know-how to integrate simulation, advance sensing and AI.”
Sangster’s impressive track record includes founding McR Defence as a partner at McCullough Robertson and holding senior leadership positions including managing director at Downer Defence, where he spearheaded its defence professional services, engineering, construction and maintenance business.
His 14 years of military experience, spanning the Australian Army and Special Operations communities, will be key in shaping Aurizn’s trajectory and driving its future success domestically and internationally.
Newly appointed board chair Andrew Tymms said he was invested in helping Aurizn grow “by delivering tangible results, innovation and high-impact outcomes for Defence, government and enterprise clients”.
Tymms, a partner in Bain & Company’s private equity and M&A practices, has more than two decades’ experience supporting private equity and alternative investment firms globally, bringing extensive expertise and insight to his new role at Aurizn. (Source: Defence Connect)

 

10 Oct 24. Solid State secures two significant US defence contracts.
Solid State LON:SOLI, the Redditch-based electronic components distribution and manufacturing company has announced that it has secured, through its subsidiary Custom Power USA, two “significant” contracts with a combined value of USD5.1m (GBP3.8m) from two prime defence contractors to supply battery packs.
As previously reported, Solid State operates through two divisions, its Systems Division, which encompasses the operating companies Steatite, Active Silicon and Custom Power; and its Components Division which includes the operational units Solsta (formerly Solid State Supplies) and Pacer. The company has been in business for 53-years, has been a component of AIM for 27-years and employs around 400 people. Its subsidiary Steatite, which Solid State acquired in 2002, was founded in 1938.
Close working relationship with industry
The new contracts are through Solid State’s Systems Division, which through its American subsidiary worked at length with the US defence contractors to integrate the company’s products into the contractors’ equipment. Solid State will provide ruggedised battery packs designed for use in harsh environments and deployed in marine and aerospace applications.
Solid State said that deliveries will begin early next year, and the contracts will be fulfilled by the end of 2025. The company said that both programmes have the potential for multi-year framework agreements.
Solid State announced record revenues of GBP163.3m and record profits of GBP12.2m in its last set of results for the year to end-March 2025, and these contracts have helped maintain the electronic component’s forward momentum.
Solid State playing to Custom Power’s key strengths
Matthew Richards, managing director of subsidiary Custom Power said in a statement: “Whilst diverse in operating environments, these two contracts respectively required solutions that optimised size, weight and power for operation in harsh environments, which are key strengths for Custom Power.”
The contract wins come on the back of news of the GBP1.4m acquisition of Cheshire-based Gateway Electronic Components, a private firm that specialises in ferrite and magnetic components and solutions. Solid State already manufactures its own brand of machined ferrite products, so Gateway’s range will complement the products that Solid State already sells and Gateway will join Solsta. The AIM-listed manufacturer will pay a net asset cash adjustment of GBP100,000 on completion and GBP500,000 final settlement.
Solid State’s shares opened trading on 8th October at 253.4p, up 11.6% over one-year and down 10.5% over the year-to-date with its shares ranging between 202p and 308p over a 52-week period. The company has a market cap of GBP145m and is expecting to announce a trading update for the six months to end-September next month. (Source: https://www.thearmchairtrader.com/)

 

08 Oct 24. Sandock Austral Shipyards expands global reach with strategic partnerships. Durban-based Sandock Austral Shipyards (SAS) is rapidly expanding its footprint in the global shipbuilding industry, positioning itself as a key player in the African market. The company has recently entered into strategic partnerships with leading international firms, invested in infrastructure upgrades and secured significant contracts.
One of the most notable developments for SAS is its exclusive product partnership with Italian shipbuilding powerhouse Fincantieri and its Canadian subsidiary Vard Marine. This tripartite alliance focuses on the development and production of the 53 metre Afrika Offshore Patrol Vessel, based on the Vard 7 055 design and designed specifically to meet the unique needs of African nations. The partnership combines the global experience and naval architecture and design capabilities of Fincantieri and Vard Marine with SAS’s regional expertise and manufacturing capabilities.
Another significant milestone for SAS is its recently announced technology partnership across all projects with Vera Navis, the largest firm of Naval Architects and Marine Engineers in Portugal, supporting its collaboration with South African marine architects Icarus Marine.
“The intention behind the partnership is to bring European design and manufacturing technology, driven by artificial intelligence that will substantially increase South Africa’s productivity and efficiency,” said SAS CEO Prasheen Maharaj.
“As a result of the company’s partnership with Vera Navis, we gained the confidence of BRS Shipbrokers, the second largest Ship Broking company in the world based in Geneva, Switzerland, who have placed a serious inquiry on us to build what could potentially be an order for six CSOVs (Commissioning Service Operation Vessels)”, Maharaj said. This contract value is approximately R8.5bn.
“We are thrilled to partner with Sandock Austral Shipyards and bring our expertise in European technology to the table,” said Pedro Antunes and Luis Batista, Joint CEOs of Vera Navis. “Together, we will create a highly efficient and competitive shipyard that can cater to the growing demands of the global market.”
SAS is also making significant investments in its physical infrastructure at its Durban facility to support the construction of larger vessels, with SAS investing R150 m in a new slipway and acquiring advanced high-tech equipment which will significantly enhance its shipbuilding capabilities. The company is also seeking a long-term lease from Transnet to secure its future operations.
As SAS continues to grow and diversify its operations, it is poised to become a major force in the global shipbuilding industry. Its strategic partnerships, infrastructure investments and focus on innovation position the company for long-term success, Maharaj said.
SAS’s current flagship project, the construction of the South African Navy’s new hydrographic survey vessel, the future SAS Nelson Mandela, is progressing well despite several challenges. Being built under Project Hotel, this contract is based on Vard Marine’s VARD 9 105 design. It aims to replace the ageing SAS Protea, which has served in the hydrographic survey role for 52 years. Although the timeline for the vessel’s completion has been extended due to floods, riots, and a steel strike, SAS is confident that the SAS Nelson Mandela will begin harbour trials next year.
Looking ahead, SAS is eyeing even larger projects, including the replacement of the South African Navy’s replenishment vessel, SAS Drakensberg. SAS is interested in this potential project, which is expected to come after the Navy completes its refit programme.
The Drakensberg replacement is seen as a major opportunity for SAS to further establish itself as a leading shipbuilder for defence-related vessels in South Africa.
With alliances with Vera Navis, Fincantieri and Vard Marine, together with infrastructure improvements, SAS is bringing advanced European technology and expertise to South Africa, enhancing its capacity to meet both local and international demand. (Source: https://www.defenceweb.co.za/)

 

07 Oct 24. Apollo Funds to take Barnes Group private in $3.6bn deal. Barnes Group (B.N) said on Monday that private equity Apollo Funds would acquire the aerospace parts maker in an about $3.6bn deal, sending its shares up nearly 3% in premarket trade.
As part of the deal, Barnes shareholders will receive $47.50 per share in cash, representing about a 5% premium to the last close. The transaction is expected to close before the end of the first quarter of 2025.
Reuters on Friday reported that Apollo Global Management would acquire the aerospace components manufacturer, citing people familiar with the matter. Apollo’s offer represents a near 18.5% premium to Barnes’ close on Thursday.
Apollo has been expanding its portfolio with more industrial companies to take advantage of the growing demand in the manufacturing sector.
Last year, the private equity firm struck an $8.1 bn deal to acquire chemical company Univar Solutions and agreed to buy industrial components maker Arconic for about $3 bn.
Apollo said it expected Barnes’ businesses to benefit from long-term aerospace trends at a time when travel demand is surging.
Barnes, founded in 1857, makes components for companies across sectors such as packaging, healthcare, aerospace, consumer and electronics.
In the quarter ended June 30, the company reported a net loss of $46.8 m and revenue growth of 12% to $382.2 m, which fell short of analysts’ expectations.
The company has around 5,700 employees and operates 43 manufacturing locations, according to its website.
Barnes has also been under pressure from activist investor Irenic Capital, which acquired a stake in the company in 2022, and has pushed it to shake up its board and explore a strategic review.
(Source: Reuters)

 

07 Oct 24. Lynred acquires New Imaging Technologies to consolidate leadership in infrared sensors. Acquisition of Paris-based SWIR imaging provider expands Lynred’s product portfolio to include coveted large format shortwave sensors with small pixel pitch.
Lynred, a leading global provider of high-quality infrared sensors for the aerospace, defense and commercial markets, today announces its acquisition of New Imaging Technologies, a Paris-based shortwave infrared (SWIR) imaging modules and sensors provider. In a strategic move to consolidate its leadership in infrared sensors, Lynred’s product portfolio will expand to include high-definition large array SWIR sensors in small pixel pitch, bolstering its product offering across all wavelength bands (short to very longwave). The transaction is expected to close in Q4, 2024 and is subject to customary conditions.
The deal includes New Imaging Technologies’ large and innovative portfolio of SWIR products (imaging sensors and modules) and a portfolio of wide dynamic range patents. This enables Lynred to offer global customers large format SWIR sensors with advanced capabilities for applications in markets where AI, deep learning and multispectral imaging are driving growth.
New Imaging Technologies (NIT) is the only European firm to manufacture and market a SWIR HD1080p array and associated module at a pixel size of 8µm, a key asset for several applications that Lynred will now leverage.
“Lynred’s acquisition of NIT is a growth accelerator. We will shorten time to market and leverage synergies in offering state-of-the-art SWIR products. The global market for SWIR infrared imaging for machine vision is growing fast, as well as for defense applications, such as laser detection and in new space,” said Hervé Bouaziz, executive president at Lynred. “NIT brings to Lynred the agility of a small, innovative organization, with an extensive product offering able to cater to our large customer base. As we share complementary industrial supply chains and technical skills, we can deliver highly competitive SWIR imaging sensors and modules to customers.”
This strategic acquisition is yet another significant investment Lynred is making in order to strengthen its leadership in infrared, a critical technology for a growing range of commercial applications and sovereign activities. In parallel, Lynred is investing significantly in its ongoing Campus project. Campus includes the construction of state-of-the-art clean rooms that will double Lynred’s current capacity.
Lynred and NIT will attend Vision Stuttgart in Germany (October 8-10), booth #8C46, and AUSA (October 14-16), in Washington DC, booth #8015, showcasing products based on the companies’ latest technological achievements. These two important trade shows will give them the opportunity to share further information and answer any questions about the acquisition.
About New Imaging Technologies
NIT is a vertically integrated company with around 25 employees, designing and manufacturing SWIR imaging sensors and modules based upon InGaAs focal plane arrays, within the growing and dynamic market of SWIR imaging. NIT has developed a line of products dedicated to SWIR applications which over the years has proven to be a growing success. NIT is the only European company to offer a SWIR HD1080p array and module at a pixel size of 8µm. Moreover, NIT has developed and invested in a manufacturing line of InGaAs sensors using its unique proprietary technology. Located at the heart of the French technological center of Paris Saclay, NIT sells its products to a variety of customers worldwide.
www.new-imaging-technologies.com
About Lynred
Lynred, alongside its subsidiaries, Lynred USA and Lynred Asia-Pacific, is a global leader in designing and manufacturing high quality infrared technologies for aerospace, defense and commercial markets. It has a vast portfolio of infrared detectors that covers the entire electromagnetic spectrum from near to very far infrared. The Group’s products are at the center of multiple military programs and applications and are key components in many top brands in commercial thermal imaging equipment sold across Europe, Asia and North America. Lynred is the leading European manufacturer for IR detectors deployed in space.

 

07 Oct 24. SRT building momentum. Simon Thompson: It has won a huge contract that should underpin a transformational year for the company’s earnings
• $213m contract award
• $1.5bn validated sales pipeline
• Share price up 25 per cent
Aim-traded SRT Marine Systems (SRT: 45p), a global leader in technology used to track maritime vessels, has won a massive $213mn (£162mn) contract to deliver an integrated maritime surveillance system for a sovereign government. The award is subject to completion of the formal contract and associated performance bond, both of which are under way and expected to be completed prior to the end of November, with implementation commencing immediately thereafter.
SRT will provide the government’s national coastguard with a new state-of-the-art national maritime surveillance system, which integrates multi-sensor surveillance platforms, both fixed and mobile, with several integrated command centres located across the country. Listed as one of two $200mn potential projects in a trading update in June 2024, the contract includes the turn-key delivery of the system within two years, followed by a 10-year support and maintenance package.
In May 2023, SRT won a $180m contract to supply an integrated maritime surveillance and intelligence system to a Southeast Asian national coastguard, which also includes long-term multi-year support components. The project is being financed by an inter-government loan between UK Export Finance and the country in question. Finalising the documentation has been a drawn-out process, completely outside SRT’s control, and has pushed back the contract start date. However, the first milestones, worth around £45m, and significant associated revenues and cash collection via the project loan mechanism should now fall into the current financial year to 30 June 2025.
Improving contract momentum
In addition, SRT should book £9m of milestones on the second phase (gross value of £12.5m) of a Middle East Border Agency contract in the current financial year, too. The start date of the second phase was delayed due to a combination of the customer amending the exact scope of the project on several occasions, along with the required redrafting and internal verification of formal project documentation. The third phase of the contract, worth £11.5mn, should start in 2025.
In an investor call on 30 September 2024, SRT’s management highlighted ongoing positive momentum across the business, so the latest awards are a clear vindication of their confidence. Moreover, they highlight other contracts at an advanced stage in the company’s $1.5bn validated sales pipeline, so there is scope for further positive newsflow in the coming months.
True, the aforementioned project delays mean that SRT will only report annual revenue of around £14m (mainly from its transceiver business) and a disappointing loss in the financial year to 30 June 2024. Analysts at house broker Cavendish are awaiting further details on project implementation periods and revenue guidance before releasing their updated estimates, so forecasts for both the 2024 and 2025 financial years are currently under review.
However, it’s reasonable to assume that SRT should be able to deliver a pre-tax profit margin of 10 per cent on revenue once both the two huge contracts are up and running. It’s not beyond the realms of possibility that SRT could deliver £75mn of revenue in the 2024-25 financial year, of which £15m would be derived from its transceiver business. Expect updated guidance from management when SRT releases its 2024 annual results in the coming weeks.
Importantly, SRT completed an equity cash raise of £10.5m at 35p a share in January 2024. It placed the £100m market capitalisation company on a strong cash footing to withstand the variances that come with its strategy of becoming a large global maritime systems business. In addition, SRT retains an undrawn capacity of £16.7m on a secured loan note programme at the recent 2024 financial year-end.
Volatile share price
Shares in SRT have been incredibly volatile since I last rated them a buy at 38.5p (‘Get on board for a profitable voyage’, 20 November 2023). Projects delays are only one of the reasons why.
The other being that a complaint was filed earlier this year against the company, chief executive Simon Tucker and chief finance officer Richard Hurd in the Philippines in relation to the award of a fisheries management contract. The board’s position is that the complaint is entirely baseless and without merit and it has been fully co-operating with the due process. The complaint against both Hurd and the company has now been formally dismissed by the Ombudsman and I would anticipate the same outcome for the one against Tucker in due course.
So, with the Aim-traded shares rising 25 per cent to 45p following today’s announcement, I rate them a firm hold at the current level ahead of the next trading update at the annual results. However, I see upgrade potential if earnings guidance for the 2024-25 financial year is better than I anticipate. Hold. (Source: Investors Chronicle)

 

04 Oct 24. C5 Capital Partners with Ukraine’s Brave1 Accelerator to Advance Ukraine’s Defense Innovation. C5 Capital, a specialist venture capital firm based in Washington DC and London announces a strategic partnership with Brave1, Ukraine’s premier defense technology accelerator. This collaboration will support Ukraine’s innovative tech startups, accelerating the development and application of critical technologies for the defense of Ukraine against Russian aggression.
Brave1 leads Ukraine’s defense innovation ecosystem. Since its launch, the accelerator has evaluated more than 2,600 cutting-edge defense-focused innovations. This remarkable achievement has established Ukraine as emerging global leader in defense technology and innovation.
C5 Capital’s partnership will provide investment capital and strategic expertise needed to help Ukrainian founders grow and scale their defense startups, whose innovations are already being tested and deployed in battlefield conditions.
“C5 Capital’s strategic partnership with Brave1 is focused on empowering Ukraine’s courageous founders, who are building innovative companies in defense of Ukraine and all of us. Today there is nothing more important than fighting with allies,” said Andre Pienaar, the Founder of C5 Capital.
“Ukraine is emerging as a global leader in defense innovation and a powerhouse of research and development. Its defense tech startups showcase a relentless drive born from defending their homeland. We intend to bring our expertise developing and investing in innovative technologies for national defense to support victory for Ukraine,” said Rear Admiral Michael Hewitt, Co-Founder and CEO of IP3.
Ukraine: The New Hub of Defense Innovation
The conflict in Ukraine has sparked a wave of technological breakthroughs, especially in artificial intelligence (AI) and autonomous systems. Often referred to as the “algorithm war,” AI-driven tools have played a pivotal role in processing vast amounts of battlefield data, enabling Ukraine to respond faster and more effectively.
Brave1 plays a crucial role in fast-tracking the development and deployment of such technologies. By connecting startups with essential resources, the accelerator transforms concepts into operational systems at an accelerated pace.
The Need for Private Investment
Brave1 issued $7.5m in grants for startups and aims to scale funding in 2024. Over the first two years of the war, Ukrainian startups have attracted more than $20m of global investment.
“Private investment is essential for sustaining innovation in defense technology,” said Natalia Kushnerska, Brave1 Project Lead. “Our partnership with C5 is a crucial step toward building a resilient and innovative ecosystem. The technologies developed in Ukraine today will define the future of global defense.”
For more information on this strategic alliance, please visit the full article and interview published by National Security News: Ukraine Boosts Military Innovation to Confront Russian Hostilities Independently.
About C5 Capital:
C5 Capital (C5) is a specialist venture capital firm that invests in cybersecurity, space and energy security. C5’s investment strategy is focused on building long-term relationships with resilient founders that share in our mission to enhance national security and build a secure digital future. C5 Capital is based in Washington, DC and London. For more information, visit: www.C5Capital.com.
About Brave1:
Brave1 is a cluster for the defense tech development in Ukraine, established by the Ministry of Digital Transformation, the Ministry of Defense, the General Staff of the Armed Forces of Ukraine, the National Security and Defense Council, the Ministry for Strategic Industries, and the Ministry of Economy. For more information, visit: https://brave1.gov.ua/en/ (Source: BUSINESS WIRE)
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SPX CommTech, part of SPX Technologies Inc, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all. Formed by TCI and ECS, SPX CommTech’s Battlespace portfolio enables defence and security teams to detect, defeat and exploit RF signals to enhance communications intelligence (COMINT) and counter unmanned aerial systems (Counter-UAS). Additionally, its Tactical Data Link portfolio allows intelligence gathering agencies, special forces, emergency response, and security teams to securely and reliably transfer video and data between enabled-aircraft and ground teams over long distances for airborne Intelligence, Surveillance, Reconnaissance (ISR). For more information visit www.tcibr.com and www.enterprisecontrol.co.uk
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Sponsored by SPX Communication Technologies (TCI & ECS)

 

www.tcibr.com

 

www.enterprisecontrol.co.uk

 

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30 Sept 24. Codan Group Strengthens Tactical Communications Portfolio.

The Codan Group has strengthened its tactical communications capabilities by acquiring Kägwerks, a leader in dismounted soldier systems.

This acquisition bolsters Codan’s position in the tactical communications sector by integrating Kägwerks’ radio-agnostic dismounted soldier systems, widely recognized for their performance in contested environments.

Kägwerks’ proprietary DOCK™ hardware and software will enhance Codan’s offerings, positioning the company as a comprehensive solutions provider for military and law enforcement communications.

DOCK™ solutions provide soldiers with a lightweight network hub integrating disparate equipment into a single compact communications solution. This technology provides superior situational awareness and strategic advantage in field operations by optimising real-time battlefield intelligence.

Complementary Technologies

The acquisition of Kägwerks brings complementary capabilities to Codan’s Tactical Communications business unit and enables the company to broaden its portfolio of solutions. Notably, Kägwerks brings industry-leading intellectual property, technology, and products to the Codan Group.

This includes Kägwerks’ battle-proven, radio-agnostic dismounted soldier systems which will continue to be part of its systems portfolio of proprietary DOCK™ branded hardware and software solutions, supporting high-powered, third-party soldier communications in contested battlefield conditions.

These technologies will also position Codan Tactical Communications as a US soldier communications solutions provider delivering more comprehensive, full-spectrum tactical military connectivity solutions to customers.

Paul Sangster, Tactical Communications President and Executive General Manager, commented “We are excited to welcome the Kägwerks’ team to our Tactical Communications division and its technology suite to our solutions offering. Kägwerks’ intellectual property has been field-tested and accepted into U.S Department of Defence, and its proven pedigree enables us to participate in additional tenders for other Programs. A key strategic objective is to improve our revenue predictability, and by participating in Programs of Record this will increase predictability by securing stable, long-term multi-year contracts.

“The compatibility of DTC’s mesh radio with Kägwerks’ technology is highly complementary for our existing business. Together Tactical Communications and Kägwerks represent a full solutions provider that will increase opportunities across key military and law enforcement markets. The combined business also positions us to leverage international distribution channels, opening new growth and collaboration opportunities in global markets.”

Niko Hughes, Kägwerks’ President, said “We are excited to announce that Kägwerks’ has officially joined the Tactical Communications division of the Codan Group, a global leader in communications technology. By partnering with Codan’s world-class manufacturing capabilities and top-tier suppliers, we are positioned to scale our operations, delivering even greater quality, value, and service to support the needs of our customers.

“This relationship empowers Kägwerks’ to expand our global presence and reach new markets, enhancing our ability to serve customers worldwide. We remain fully committed to providing cutting-edge, radio agnostic dismounted soldier systems.”

This acquisition highlights Codan’s strategic focus on delivering mission-critical communication solutions and reinforces its commitment to global market expansion. (Source: https://www.defenseadvancement.com/)

 

03 Oct 24. ALL.SPACE announces $44m Raise boosting defence and space capabilities.

• UK – ALL.SPACE, a leading provider of advanced communications technology, has announced $44m in funding to fuel the commercial launch of its first-generation terminal.
• The raise was led by the BOKA Group, with additional participation from existing investors AE Ventures, the venture capital platform of AE Industrial Partners, LP, Seraphim Space, Promus Ventures, and other key investors.

ALL.SPACE develops advanced simultaneous multi-orbit, multi-network connectivity solutions designed to provide seamless, high-speed communications across air, land, sea, and space.

Their technology focuses on enabling satellite and terrestrial network convergence, allowing users to switch between communication systems without losing critical connectivity. This is vital for industries like defence, aerospace, and government operations that require reliable and resilient communication in remote or dynamic environments. By integrating satellite and ground-based networks, ALL.SPACE ensures continuous coverage and high bandwidth, supporting applications from secure communications to real-time data transfer, no matter where the user is located.

Paul McCarter, CEO of ALL.SPACE, commented on the raise, “This investment, led by the BOKA Group is a validation of ALL.SPACE’s vision and the progress we’ve made in transforming global communications.

All of our investors’ confidence reflects the critical role our technology plays in addressing the growing demand for resilient and seamless connectivity across defence and space industries. We are laser-focused on executing our strategy and delivering the cutting-edge solutions our partners and customers rely on, ensuring critical communications in the most challenging environments.”

John James, Managing Partner of BOKA Group, the lead investor, said, “Innovations in communication technologies within industries like defence and aerospace do more than just transmit information more efficiently; they are crucial for mission success, enhancing operational effectiveness, and ultimately safeguarding lives through seamless connectivity.

“ALL.SPACE has consistently demonstrated its leadership in this sector, with the potential to transform global networks. Our investment underscores our confidence in their vision to redefine global communication and our confidence in their leadership to bring cutting-edge solutions to the forefront of the market.”

 

01 Oct 24. Impulse Space Secures $150m In Series B Funding To Support Ongoing Company Momentum. The round, led by Founders Fund, is the latest in a series of recent milestones that include Impulse’s selection for STRATFI and SBIR awards by SpaceWERX, the unveiling of a new GEO Rideshare Program, and the successful completion of the LEO Express-1 mission. Impulse Space, a leader in the development of in-space transportation services, today announced a $150m Series B funding round, led by Founders Fund. The round also included participation from other returning investors like Lux Capital and Spring Tide, as well as attracting new investors, such as DCVC. Other participants in the funding round included Airbus Ventures, Alumni Ventures, Balerion Space Ventures, RTX Ventures, Tamarack Global, 137 Ventures, Elysium, First Principles Group, Island Green, Overmatch, and Trousdale Ventures. The funding, which follows a series of recent milestone moments for the company, will be used to further grow the Impulse team and to support the ongoing production of both the Helios and Mira vehicles. The Series B round brings Impulse’s total funding to date to $225m.

“The satellite market is demanding enhanced maneuverability and rapid on-orbit responsiveness, which requires Impulse Space’s powerful, high delta-v vehicles,” said Scott Nolan, Partner at Founders Fund. “Tom has built a team with deep expertise innovating on mission-critical technologies, positioning the company to reliably deliver while driving the future of in-space transportation.”

The Series B funding continues the strong momentum for Impulse. This year alone, the company has been selected by SpaceWERX for a Strategic Funding Increase (STRATFI) award, two Small Business Innovation Research Program (SBIR) awards, announced a new GEO Rideshare Program, and completed the record-setting LEO Express-1 mission. The team is currently preparing for the upcoming launch of the LEO Express-2 mission, which will see a Mira vehicle support deployment and hosting services for multiple customers.

Operations are based out of Impulse’s 60,000-square-foot headquarters in Redondo Beach, Calif., where the company handles the majority of vehicle design, manufacturing, testing, and assembly under one roof. Impulse also operates facilities at the Mojave Air and Space Port, where additional testing work is underway for the Helios Deneb engine.

Impulse Space’s vehicles, Helios and Mira, stand out in two key ways from other market entrants. Each features predominantly in-house components, from thrusters and valves to star trackers and avionics. This vertically-integrated approach enables the team to advance innovation and improve reliability while staying on time and on budget. Second, both vehicles offer a high delta-v capability due to their chemical propulsion systems, which also feature nontoxic propellants, simplifying mission operations. Helios, a high-performance kick stage, uses liquid oxygen and liquid methane to transport more than 5 tons of payload from LEO to GEO in less than 24 hours. Mira, designed for payload hosting, deployment, and movement within orbits, uses a storable nitrous oxide and ethane bipropellant to offer up to 900 m/s of delta-v for a 100 kg payload. Together, the two vehicles address a critical need in the in-space transportation infrastructure by supporting rapid maneuverability within and between orbits.

“This funding is not only a testament to our team’s achievements over the past year but also a validation of our vision for the in-space transportation industry,” said Tom Mueller, founder and CEO of Impulse Space. “We’re proud to have so many partners who understand and support the importance of our work to accelerate humanity’s future in space by unlocking reliable, affordable, and efficient access to any orbit.”

With this latest funding, Impulse will continue growing its team of more than 140 employees and working to execute against an upcoming roadmap that includes the first mission for the upgraded Mira design in late 2025 and the inaugural launch of Helios in 2026.

About Impulse Space

Impulse Space, the in-space transportation company founded by Tom Mueller, is opening access beyond Low Earth Orbit (LEO) with its fleet of in-space transportation vehicles. The flight-proven Mira vehicle uses a nontoxic, high-impulse chemical propulsion system to offer orbital transport, constellation deployment, and precision reentry services to customers from LEO to GEO. The high-energy Helios vehicle unlocks orbits beyond LEO with its powerful Deneb engine, dropping off payloads in MEO, GEO, heliocentric, lunar, and other planetary orbits. Led by a team that delivered the most reliable rockets in history, Impulse provides economical and efficient in-space transportation by reliably and rapidly getting customers where they want to go. For more information, visit www.impulsespace.com. (Source: BUSINESS WIRE)

 

01 Oct 24. CACI Acquires Applied Insight. CACI International Inc (NYSE: CACI) announced today that it has acquired Applied Insight, a Northern Virginia-based portfolio company of Acacia Group, in an all-cash transaction. In alignment with CACI’s mission to deliver distinctive expertise and differentiated technology to meet its customers’ greatest national security challenges, Applied Insight delivers proven cloud migration, adoption, and transformation capabilities, coupled with intimate customer relationships across the Department of Defense (DoD) and Intelligence Communities (IC).

“With the close of this acquisition, CACI further establishes its unparalleled reputation for delivering expertise and technology to modernize our customers’ enterprise IT infrastructure,” said John Mengucci, CACI President and Chief Executive Officer. “The combined business of CACI and Applied Insight will enhance enterprise-wide cloud, cyber, and user productivity for secure networks in the IC, thus accelerating decision-making and optimizing mission outcomes for analysts and warfighters around the globe.”

Both CACI and Applied Insight share strengths in their deep technical expertise, empirical customer knowledge, and employee-centric cultures rooted in national security.

“The cultural fit of our two companies will enable our mutual success going forward,” said Mengucci. “I am pleased to welcome the talented Applied Insight employees to our team and am confident they will thrive at CACI.” (Source: BUSINESS WIRE)

 

01 Oct 24. Element Announces Strategic Acquisition of ISS Inspection Services. Element Materials Technology (Element), a global leader in testing, inspection, and certification (TIC) services for highly regulated end markets, has acquired ISS Inspection Services, a leading provider of non-destructive testing (NDT), inspection, and other special process services supporting the aerospace, space, energy and defense industries.

Previously part of Industrial Service Solutions, ISS Inspection Services is comprised of four customer-facing brands: NIC Inspection Services, PTI Industries (both accredited by the Federal Aviation Administration), PRO Inspection Services and CTS Inspection Services. Together, these entities serve almost 1,000 customers operating in the aerospace, space, defense, and energy industries and provide advanced capabilities in NDT, inspection, and special process services such as precision cleaning and coatings. The company’s team of around 300 highly skilled employees work from one of its five facilities in the U.S., or directly at customers’ sites.

Through this acquisition, Element will be able to offer its customers more touch points in the fast-growing NDT ecosystem, particularly in the after-market (AM) and maintenance, repair, and overhaul (MRO) subsectors, as well as new services through ISS Inspection Services’ special process services offering.

Jo Wetz, CEO of Element, commented on the acquisition: “ISS Inspection Services is a fantastic business with a loyal customer base. This acquisition is fully aligned with our growth strategy of increasing scale, reach, and expertise in targeted end markets such as aerospace, energy and defense where our customers see us as their partner of choice.”

Bob Vigne, CEO of ISS Inspection Services, added: “By joining forces with Element, we can tap into huge opportunities for our employees and customers alike. We wholeheartedly believe that by combining our strengths, we are well positioned to deliver an unparalleled range of safety-critical services to our customers.”

The acquisition of ISS Inspection Services builds on other recent investments by Element in the U.S. including its acquisition of NTS in September 2022.

Wetz added: “We continue to see significant growth opportunities in the U.S. which now represents over 60% of our global operations.”

Element was advised on the deal by Faegre Drinker Biddle & Reath LLP, A&O Shearman, and Skadden; and Industrial Services Solutions was advised by Houlihan Lokey, Alantra, and Vedder Price.

About Element

The Element Materials Technology Group is one of the world’s leading global providers of testing, inspection, and certification services for a diverse range of products, materials, and technologies in advanced industrial supply chains where failure in use is not an option. Headquartered in London, UK, Element’s c.9,000 scientists, engineers, and technologists, work across a global network of over 270+ laboratories, support customers from early R&D, through complex regulatory approvals, and into production ensuring their products are safe and sustainable and achieve market access.

For more information about Element, please visit our website, connect with us on LinkedIn, Twitter, Instagram and subscribe to our YouTube channel.

About ISS Inspection Services

ISS Inspection Services is comprised of four entities – NIC Inspection Services, PTI Industries, PRO Inspection Services and CTS Inspection Services. Together, these companies offer three lines of business: non-destructible testing (NDT); Inspection; and Special Processes which provides ancillary services such as precision cleaning, adhesive bonding, and coatings.

With almost 1,000 customers in the fast-growing aerospace, space, defense, and nuclear power generation industries in the U.S., ISS Inspection Services employs a team of ~300 who work in one of the company’s five laboratories in Florida, Texas and Connecticut, or directly at customers’ sites across the country.

Headed up by President and CEO, Bob Vigne, the company’s roots date back to the 1970’s since which time it has expanded rapidly through both organic and inorganic growth. (Source: BUSINESS WIRE)

 

01 Oct 24. Salient Motion Raises $12m to Scale Motion Control Business.

• Hardtech Startup Aims to Cut Down Development and Certification Time for Critical Aerospace and Defense Components
• The Company will Tackle Aerospace Industry Procurement Challenges with Proprietary Modular Design System and Streamlined Certification Process
• Salient Motion is Reimagining the OEM-Supplier Relationship in a $350bn Industry
• Building Modular Technology To Accelerate Military & Industrial Readiness With Rapid Deployment of Critical Components

Salient Motion, an aerospace and defense component supplier, today announced it has closed $12m in total funding, preseed and seed rounds, to transform the design and manufacturing of critical motion control components. The funding was led by Cantos Ventures, with participation from Andreessen Horowitz, AE Ventures, Hummingbird Ventures, and BoxGroup.

Founded in 2022, Salient Motion is reimagining motion control design, focusing on building and certifying modular actuation systems for highly regulated industries such as aerospace, military defense, and advanced manufacturing. The team was built with an initial focus on building flight certifiable systems for commercial aviation that can be reused across multiple component categories. Since the initial inception, Salient Motion has expanded its product portfolio to serve a multitude of industries including military, aviation, and the industrial sector. This expansion leverages the company’s core expertise in stringent regulatory environments to address similar challenges in adjacent markets. Underpinning every Salient Motion product is a proprietary motion control library driving electrical efficiency and cost improvements across a wide variety of electromechanical components.

Electromechanical systems are essential to aircraft operations, heavy industrial equipment, and military programs. Salient Motion’s innovative technology aims to address longstanding challenges across these industries, driven by stringent, but often necessary regulatory processes, that result in high costs, supply chain vulnerabilities, and lengthy certification timelines.

“The aerospace and defense industrial base has been plagued by single-source components designed and certified decades ago,” said Vishaal Mali, CEO of Salient Motion. “Suppliers have shifted into a margin first mentality, driving growth with price increases and anti competitive tactics instead of innovative engineering. Our approach isn’t just recreating parts – it’s about fundamentally rethinking the OEM-supplier relationship. This funding accelerates our mission, bringing much-needed innovation to the aerospace and defense supply chain.”

Salient Motion’s core innovation is its modular motion control platform, from software to hardware. The company is leveraging best-in-class silicon to push complexity in airborne systems from hardware to software. Certifying this software to FAA standards across multiple functions and Design Assurance Levels (DALs) creates a library of certifiable “building blocks.” Salient Motion customers – OEMs and defense Primes – can leverage these building blocks to dramatically reduce development time and cost for new components.

Key features of the Motion Control Platform include:

1. Modular design architecture enabling significant reusability across different components and DALs.
2. Increased reliance on software for functionality traditionally managed by hardware.
3. A streamlined approach to FAA certification, with the goal of reducing approval times by 50%.
4. Enhanced reliability and maintainability, extending component lifespans and decreasing time and cost dedicated to maintenance.
5. Focus on partnership, not purchase orders, with OEMs. Customers benefit from zero NRE and aftermarket revenue shares.

Salient Motion’s journey began in a two-car garage in Irvine, California where a team of aerospace engineers, frustrated by their experiences working with legacy suppliers, decided to take a deep dive into understanding why so many critical components were single-sourced by incumbents who were slow to update and improve products.

The $350bn aerospace component market faces some of the highest barriers for entry, with decade-long certification processes and entrenched incumbents discouraging competition. With over 3 m discrete components in modern aircraft, many single-sourced, Salient Motion aims to disrupt this landscape.

The most recent funding will be used to scale Salient Motion’s engineering team, accelerate product development, and expand its manufacturing footprint in Southern California with a new lease in Torrance. The funding allows the company to expand the executive and engineering team with key hires to continue overall momentum. Salient Motion is currently pursuing its first FAA certified component, with a portion of the funding earmarked for development and certification of the next components.

Salient Motion has a robust customer base and has already secured a partnership with a leading commercial aircraft manufacturer, marking a significant milestone in the company’s growth and validation of its innovative approach.

“Salient Motion represents exactly the kind of transformative thinking we look for in our investments,” said Ian Rountree, General Partner at Cantos Ventures. “The company’s approach to modular, software-driven component development has the potential to reshape Aerospace and Defense, driving down costs and improving reliability across the board. We’re excited to support their growth and vision for the future of aircraft manufacturing.”

Salient Motion’s target market includes major aircraft manufacturers, Tier 1 suppliers and systems integrators across commercial aviation, unmanned aerial vehicles and maritime applications. (Source: BUSINESS WIRE)

 

01 Oct 24. Patria announced on 13 June, 2024 about the acquisition of a leading manufacturer of drone systems Nordic Drones Oy and on 4 September, 2024 about the acquisition of an open source data collection product and business related to its cyber business area from WithSecure.   The completion of both acquisitions required the approval of the Finnish Ministry of Employment and the Economy (‘TEM’) and the authority process has now been completed. The acquisitions will not affect customer commitments, employment relationships or other commitments made by the company or business area. The businesses will be transferred to Patria on 1 October, 2024.

 

30 Sept 24. Mobix Labs Submits All Cash Offer to Acquire EMCORE Corporation.

Synergistic Acquisition would enhance Mobix Labs’ competitive strength in aerospace and defense sector

Scales operations and cash flow

Mobix Labs, Inc. (Nasdaq: MOBX) (“Mobix Labs”, “Mobix” or the “Company”), a leader in advanced wireless and connectivity solutions for the military and defense sector, today announced it has submitted a compelling non-binding proposal to the Board of Directors of EMCORE Corporation (Nasdaq: EMKR) (“Emcore”), the world’s largest independent provider of inertial navigation solutions to the aerospace and defense industry, to acquire all of EMCORE’s outstanding shares for $3.80 per share in cash.

Mobix Labs’ all cash proposed offer to the EMCORE Board represents a more than 200% premium over EMCORE’s current stock price as of September 27, 2024. Based upon its 2022 and 2023 10-K filings, EMCORE’s revenue in its fiscal year ending 9/30/23 grew 115% to $97m from the prior year.

EMCORE is a leading supplier of inertial sensors and systems for land, sea, air, and space applications in the aerospace and defense market. “We believe this proposal presents an exceptional opportunity for EMCORE shareholders to realize immediate and significant value for their investment,” said Fabian Battaglia, CEO of Mobix Labs. “Our recent strategic acquisitions, including EMI Solutions and RaGE Systems, have significantly strengthened our position in the military, defense, and high-reliability electronics sector,” Battaglia added. “We believe integrating EMCORE’s products would further accelerate our growth and innovation in critical markets.”

Mobix Labs is led by seasoned industry veterans, including Board of Directors members James Peterson, former CEO and Chairman of Microsemi, and David Aldrich, former CEO and Chairman of Skyworks Solutions.

Transaction Details

Mobix Labs’ proposal has the support of its Board of Directors. Mobix Labs’ all cash offer is subject to the approval of the EMCORE Board of Directors, the execution of a definitive agreement between Mobix Labs and EMCORE, and any shareholder approval that may be required by law.

About Mobix Labs, Inc.

At Mobix Labs, we’re committed to transforming connectivity by partnering closely with our customers to deliver advanced semiconductor and wireless systems solutions tailored to their needs. Based in Irvine, California, we specialize in four key areas; EMI Interconnect Solutions for secure aerospace and GPS systems, Active Optical Cables (AOC) for high-speed AI datacenter interconnects, 5G IC Solutions for mmWave communications, and Wireless Systems Solutions, including joint design and manufacturing services for RF technologies, serving customers in 5G, radar, and imaging sensors. Through deep collaboration and innovation, we’re shaping the future of connectivity. Visit mobixlabs.com and follow us on LinkedIn.

Mobix Labs, the logo, and SMART™ Edge Device are among the trademarks of Mobix Labs. Other trademarks are the property of their respective owners. (Source: BUSINESS WIRE)

 

30 Sept 24. Bluestone Investment Partners, a private equity firm focused on the defense and government technology sector, announced the successful acquisition of Tucson Embedded Systems, LLC (TES) by its portfolio company, Precise Systems. This strategic acquisition represents a key step in expanding Precise Systems’ capabilities in advanced engineering, particularly within Model Based Systems Engineering (MBSE), and underscores Bluestone’s ongoing commitment to fostering growth and innovation within its portfolio.

TES, based in Tucson, Arizona, is renowned for its expertise in Model-based Modular Open Systems Approach (MMOSA™), Future Airborne Capability Environment (FACE®), and Sensor Open Systems Architecture (SOSA). Its proprietary software, AWESUM® (AirWorthy Engineering Systems Unified Modeling), offers an end-to-end systems development lifecycle tool suite, enabling rapid design, verification, and certification of embedded mission-critical systems. TES’s innovative solutions for customers such as NAVAIR and PEO Aviation align with Precise Systems’ mission to deliver advanced, mission-critical technologies.

“We are excited to welcome TES employees into Precise as our third add-on acquisition in the last year,” said Scott Pfister, Chief Executive Officer and President of Precise Systems. “TES brings significant capability in the advanced engineering domain and specifically within open architecture software development standards. These capabilities are increasingly in demand across Precise Systems’ existing client base and the overall sector. This acquisition deepens our expertise in this area, and we look forward to bringing these solutions and expertise to current and new customers.”

Dennis Kenman, co-founder of TES, commented: “This partnership with Precise not only enables us to continue supporting our existing customers but also expands our ability to bring our expertise to a broader range of commercial and Department of Defense clients, on a larger scale.”

Mike Ivey, Partner at Bluestone Investment Partners, added: “Our acquisition strategy at Bluestone continues to complement and accelerate the growth of our portfolio companies. TES brings valuable expertise that will support Precise Systems’ continued expansion through both organic growth and strategic acquisitions.”

The collaboration between Precise Systems and TES reinforces Bluestone’s strategic vision of providing value-added capital and support to portfolio companies. Bluestone and Precise Systems remain actively engaged in seeking additional add-on acquisition opportunities, particularly for companies specializing in next-generation engineering solutions for Department of Defense and national security customers.

For further information, please reach out to Zack Hester, Director of M&A Strategy and Deal Generation at Bluestone (contact information below).

 

30 Sept 24. Kromek Group plc (“Kromek” or the “Group”) Update on Full Year Results. Kromek (AIM: KMK), a leading developer of radiation and bio-detection technology solutions for the advanced imaging and CBRN detection segments, gives notice that, further to the Group’s trading update of 29 May 2024 (the “Trading Update”) in which it stated it expected to release its full year results in September 2024, the Group now expects to announce its final results for the year ended 30 April 2024 during the second half of October.

The Group is experiencing increasing commercial and strategic momentum and continues to pursue further initiatives across the business. As noted in the Trading Update, Kromek expects to report positive EBITDA for FY 2024, ahead of market expectations. This reflects an anticipated improvement in gross margin due to the product mix sold combined with the Group exerting continued tight cost control whilst driving operational efficiencies, particularly within its advanced imaging manufacturing process.

Equity Development note: Encouraging H2 supports a positive outlook

For the year to 30 April 2023 Kromek reported revenue of £17.3m, +44%YoY, and an EBITDA (adj.) loss of £1.0m. The salient feature was the reversal of the H1 (adj.) EBITDA loss of £2.61m to a H2 (adj.) EBITDA profit of £1.63m. Gross profitability also improved, from a 46.8% margin in FY22 to 51.6%, again with a strong H2 improvement at a 59.3% margin. The year-end cash position was £1.1m then post year-end the Group raised £8.0m to fund growth prospects.

We estimate FY23 revenue in the Advanced Imaging division of £7.6m +65%YoY, and in the CBRN segment, £7.4m, +38%YoY. Importantly the balance of revenue generation continued to shift towards Products, comprising 85% of total (FY22: 82%), rather than R&D-related projects.

On 18 April Kromek announced a major 7 year agreement with a Tier 1 OEM to develop and incorporate its CZT-based detectors in advanced medical imaging scanners. We base our outlook on the assumption that the Tier 1 OEM agreement addresses the CT scanner market estimated to be worth c.US$10bn by 20291; and see Kromek potentially adding over £100m to revenue by 2029.

We make no changes to our FY24 outlook, and introduce FY25 forecasts: with estimated revenue of £25.1m and EBITDA of £2.6m indicative of an EV/EBITDA multiple 6x

Our Fair Value is also maintained at 26p/share.

Equity est. for this year being £21m

Yr to 30 Apr (£’000) 2020 2021 2022 2023 2024E 2025E

 

25 Sept 24. EchoStar fails to find extra cash. EchoStar, the Charlie Ergen-backed business that owns the Dish US pay-TV operator, says that negotiations which have taken place over the past weeks with certain debt-holders and which would have led to a financial reconstruction have failed to reach agreement.

The negotiations were primarily with members of a group represented by Milbank. Despite this setback, EchoStar says it remains active in discussions with various parties to explore possible financing transactions. The company is seeking new financial avenues to secure the financial stability and enable future growth

However, there is some good news for the business. The FCC on September 23rd approved EchoStar’s application for more time to extend its 5G ‘Boost Mobile’ network. The extension means that Boost Mobile has until the end of the year to cover 80 per cent of the US population with its 5G service.

According to EchoStar, the updated framework will allow the company to “optimize and enhance its coast-to-coast buildout of the world’s first cloud-native Open RAN 5G Boost Mobile network”.

Additionally, the company said that smaller wireless carriers and Indian Tribal nations will also be able to lease EchoStar spectrum licenses in extension areas where the company has not yet deployed.

EchoStar’s rumored merger plans with rival DirecTV have yet to materialize, yet its share price has remained solid. On September 24th its shares closed at $25.33, up 7.7 per cent and a 43.4 per cent rise over the past year. (Source: Satnews)

 

17 Sept 24. Merger: iKO Media Group + STN STORITVE (STN).

iKO Media Group (iKOMG) and STN STORITVE (STN) have merged — they will operate under the banner “Strength in Fusion, Excellence in Broadcasting Solutions.”

The merger fuses iKOMG’s tailored media solutions with STN’s advanced, satellite teleport capabilities, expanding the range of services offered to both companies’ valued clients. This union assures an extended suite of solutions, encompassing satellite broadcasting, cloud services, playout management, disaster recovery, OTT platforms, fiber, IP delivery, sports and events and new age solutions for channel monitoring, streaming to social media and monetization. Through seamless execution and advanced technology, the new group is committed to delivering excellence that exceeds expectations.

The iKOMG-STN merger sets a new precedent in broadcasting solutions which remains dedicated to customer success. Clients can expect enhanced services, innovative offerings, and a steadfast assurance to deliver solutions that empower growth. Operational excellence will remain the merged group’s priority with the 24/7 Network Operations Centers (NOCs) situated in Dob, Slovenia and Rome, Italy ensuring uninterrupted content delivery across IP, Fiber and satellite connections; the dual locations and will provide network resilience, back-up, diverse routing and redundancy. The merged company is committed to partner privacy, confidentiality and safeguarding data.

“We assure our existing customers that the exceptional service you have come to rely on will not only continue but be enhanced. We value their trust and look forward to extending the same commitment to new customers. This merger enables us to personally tailor solutions that best suit networks and content owners’ evolving needs while maintaining the highest standards of professionalism.” — Shmulik Koren and Shlomi Izkovitz, Co-Founders and Co-Owners, iKOMG

“Following several years of successful and close collaboration between both companies, this merger was the next logical and key step to combine our strengths, resources, and shared vision. We are now even better equipped to build on our trusted quality services and deliver next-generation solutions, that will elevate our customers’ business today and beyond. Together, we are stronger, more agile, and poised to lead the company and our clients into a prosperous future.” — Mitja Lovsin, Co-founder of STN and Co-Owner of iKOMG

“This merger creates a powerful new client centric organization that is dedicated to market leading solutions for channels, broadcasters and content owners across the sector. It combines the strengths of two highly successful companies and brings about the marriage of innovation and bespoke, tailored services with strength of infrastructure and technology.” — David Treadway, Chairman of the merged group. (Source: Satnews)

 

27 Sept 24. Amentum Completes Transformational Combination with Jacobs’ Critical Mission Solutions and Cyber and Intelligence Units. Amentum (the “Company”), today announced the completion of its merger with Jacobs Solutions Inc.’s (“Jacobs”) Critical Mission Solutions and Cyber and Intelligence businesses. The combination creates a global leader in advanced engineering and innovative technology solutions, well positioned to address its customers’ most significant and complex challenges. Amentum will begin regular-way trading on the New York Stock Exchange (“NYSE”) on Monday, September 30, under the ticker symbol “AMTM.” The executive team of the Company is also scheduled to ring the Opening Bell at NYSE the following day, Tuesday, October 1.

Headquartered in Chantilly, Virginia, Amentum is a leading global engineering and technology services business serving the U.S. Government and its allied partners. The Company provides full lifecycle, advanced engineering and technology solutions across five key markets: environment, space, intelligence, defense and civilian. Amentum has extensive scale and global reach, supported by a highly skilled and diverse workforce of more than 53,000 people in approximately 80 countries.

“The completion of this transformational combination creates a global leader that advances the future, with the trusted track record of superior performance, outstanding engineering expertise, and leading-edge technologies required to meet our customers’ most significant challenges,” said Amentum CEO John Heller. “After a century of success delivering trusted solutions to our customers, Amentum enters the public markets well-positioned for long-term growth, with a healthy financial profile, strong balance sheet, and robust cash generation. This is a milestone day for our business, and our employees are excited about the future and to continue our success delivering value for all our stakeholders as a public company.”

Amentum is strategically positioned to serve a $320bn total addressable market and will look to accelerate its growth in high-margin, technology-enabled segments. The Company will execute against an industry-leading $47bn backlog (as of fiscal year 2023), providing excellent visibility into profitable revenue growth, and expects to generate an estimated $14bn in revenue in fiscal year 2025.

“With a legacy of over a century, Amentum has built a strong foundation of trust as a longstanding partner of choice to the U.S. Government and its allied partners around the world,” said Steve Demetriou, Executive Chair of Amentum. “We are thrilled to bring together two deeply experienced, skilled and complementary teams with shared cultures of collaboration and innovation to drive growth in a highly attractive industry. I look forward to working with John and the Board to shepherd the next phase of Amentum’s journey.”

The new executive leadership team will be led by John Heller, who will serve as Chief Executive Officer and on the Company’s Board. Dr. Steve Arnette will serve as Chief Operating Officer, Travis Johnson as Chief Financial Officer and Jill Bruning as Chief Technology Officer of Amentum. Steve Demetriou will serve as Executive Chair of the Company’s Board. The Company has also appointed a highly qualified and diverse board of directors, who bring significant public company leadership and government sector experience, as well as extensive operational, financial and capital markets experience.

Upon the closing of the transaction, Jacobs’ shareholders will own 51.0% and Jacobs will own 7.5% of the Company’s common shares. An additional 4.5% of the Company’s common shares (the “contingent consideration”) will be placed in escrow and released in the future depending on the achievement of certain fiscal year 2024 operating profit targets by Jacobs’ Critical Mission Solutions and Cyber & Intelligence government services businesses. To the extent Jacobs becomes entitled to contingent consideration, the first 0.5% of the outstanding and issued shares of Amentum will be released from escrow and delivered to Jacobs. Any further contingent consideration to which Jacobs may become entitled will be distributed on a pro rata basis to Jacobs’ shareholders as of a record date to be determined in the future. Any shares of contingent consideration which Jacobs does not become entitled to receive will be released from escrow and delivered to the former equity holder of Amentum.

Advisors

J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC served as financial advisors and Cravath, Swaine & Moore LLP and Arnold & Porter Kaye Scholer LLP served as legal advisors to Amentum. Centerview Partners LLC and Perella Weinberg Partners LP served as financial advisors and Wachtell, Lipton, Rosen & Katz served as legal advisor to Jacobs.

(Source: BUSINESS WIRE)

 

27 Sept 24. Shareholders to be wiped out as Titanic shipbuilder sinks into administration.  Harland & Wolff has confirmed that shareholders in the troubled Titanic shipbuilder will be wiped out after bosses formally appointed administrators.

The London-listed company, which suspended trading of its shares at the start of July, said on Friday that investors should not expect “any returns” at the end of a review of the business.

It came as Gavin Park and Matt Cowlishaw, of Teneo, officially took over as joint administrators of the group, Harland & Wolff Plc.

The company had announced last week that it was expecting to appoint them imminently. At that point shareholders had also been warned that there was “no return likely” based on a review of the business by advisers at Rothschild.

Subsidiaries for each of Harland’s four yards – in Belfast; Appledore, Devon; Methil, Fife; and Arnish on the Isle of Lewis – have not been placed into administration and continue to trade.

When shares in the holding company were suspended in July, they were worth 8.4p each valuing the business at £14.5m. That compares to a share price of around 50p five years earlier.

The shareholder wipe-out has triggered anger, with investors last week questioning whether the move to call in administrators was premature.

In a question and answer session with Russell Downs, a restructuring expert who was parachuted in following the departure of chief executive John Wood in July, one shareholder asked: “As directors, you have a fiduciary duty to act in the best interests of the company.

“Bearing this in mind, why did you not wait for Rothschild to complete their strategic review before moving towards administration?”

Mr Downs replied: “We thought long and hard about the decision we had to take and, ultimately, it became the inevitable conclusion that, given the company’s insolvency on both a balance sheet and a cash flow basis, it was the right thing to do.

“Whilst that brings about the end, in all likelihood, of the company’s trading shares, it does not preclude the fact that shareholders still own the company and the administrator, in due course, will provide a full account of the value realised and how that is ultimately attributed.

“For my part, we tried. We kept the business going as long as we can [sic].”

Later when asked if investors may benefit from the potential sale of the company’s yards in future, he said: “As and when the underlying businesses are sold, then value will flow through the group in accordance with its relevant priorities – dealing with the secured creditor, dealing with any other creditors, and ultimately, potentially arriving up at the Plc entity.

“We will have to wait and see. It will fall to the administrators to give you an answer to that question in due course.”

He added that he continued to believe “that holding the group together is the way to drive the best value for all stakeholders”, rather than selling off individual yards.

Last week the company also confirmed it had begun an investigation into alleged misuse of customer payments worth more than £25m under former boss Mr Wood.

The former chief executive has dismissed the allegations as “ridiculous”.

Mr Downs told shareholders he could not comment on the investigation, which is expected to be continued by administrators.

Harland’s most valuable remaining asset is arguably its share of a £1.6bn contract to build three support ships for the Royal Navy.

Harland was recently awarded a £1.6bn contract to build naval support ships in cooperation with Spanish shipbuilder Navantia

Large chunks of the ships were due to be fabricated at Appledore, with the rest of the work done by fellow contractor Navantia, the Spanish state-owned shipbuilder, in Cadiz.

The vessels would have then been assembled at Harland’s historic shipyard in Belfast.

However, the company’s financial troubles have plunged the project into crisis.

In recent weeks, bosses at Harland – assisted by Rothschild – have initiated talks with potential buyers who could take the business on, with Navantia emerging as the frontrunner. (Source: Daily Telegraph)

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26 Sept 24. Dassault Aviation forms company to support IAF Mirage 2000 fleet. Established under the ‘Made in India’ policy, the new company will contribute to the self-reliance of India’s growing defence industry.

Dassault Aviation, a French aircraft manufacturer, will create a new company for the Maintenance, Repair and Overhaul (MRO) of the group’s military activities.

Based in Noida (Uttar Pradesh), the new company – Dassault Aviation MRO India (DAMROI) – is particularly committed to supporting Mirage 2000 fighter jets in the Indian Air Force (IAF).

Established under the “Atmanirbhar Bharat” (“Made in India”) policy to contribute to the country’s self-reliance and promote indigenous value-added services.

DAMROI will benefit from Dassault Aviation’s technological expertise and offer new opportunities for cooperation and collaboration with the aim of becoming a key player in participating to a full-fledged aerospace and defence ecosystem in India.

IAF fleet

Currently, the IAF operate a range of multi-role aircraft. The largest type of fighter they operate is the Su-30 MKI – with 222 aircraft made domestically by Hindustan Aeronautics and 72 Russian made units.

The Russian units were acquired between 1997 and 2008, though India signed an memorandum of understanding with Russia in October 2000 to start the licence production at Hindustan’s plant.

Since 2020, the service has begun acquiring Rafale fighters, of which Dassault have delivered 36 jets.

Meanwhile, the Mirage 2000 has become a longstanding staple of the IAF from as early as 1985. Two Mirage 2000TH units were inducted in 1985, 35 Mirage 2000H units between 1985 and 2005, and two more Mirage 2000Csbetween 2021-22.

Mirage 2000

The Mirage 2000 is a multi-role combat fighter that has been oeprational in the French Air Force since 1984.

It has also been selected by Abu Dhabi, Egypt, Greece, India, Peru, Qatar, Taiwan and the United Arab Emirates. Ukraine will become the latest operator, with France announcing their intention to donate five fighters in June 2024.

The platform has nine hard points for carrying weapon system payloads: five on the fuselage and two on each wing. The single-seat version is armed with two internally mounted, high-firing-rate 30mm guns.

Mirage 2000 is also equipped to carry a range of air-to-surface missiles and weapons, including laser-guided bombs.

(Source: Google/airforce-technology.com)

 

27 Sept 24. Invisible prime steps from the shadows: Raytheon Australia announces new collaborative, communicative strategy. Raytheon Australia is launching a re-energised collaborative and communicative corporate strategy as it seeks to shake off the unwanted title of the invisible prime, according to the company’s new managing director, Ohad Katz.

The senior leader, who previously served as the interim managing director, spoke exclusively with Defence Connect during the recent Land Forces 2024 expo held in Melbourne earlier this month.

During a 23-year tenure in the business, Ohad Katz contributed to cornerstone defence programs run by Raytheon Australia, including those involved with the Australian Defence Force’s Collins Class submarines and Hobart Class destroyers.

Katz recently served as the chief of contracts and supply chain and has been a long-serving board director in Australia.

“I want to spend a lot of time making sure that the organisation, as a whole, is the right structure that we have. I want to make sure that the people we have feel that we’re invested in them as a leadership team,” he said.

“Making sure that we openly communicate with our own people about where the company is going, what our focus is. That’s one [immediate priority].

“Two. It’s really re-establishing a lot of the relationships with the customer – more re-energising. I think we tend to focus on the programs that we’ve got, and we’ve got good relationships at working levels. We’ve got multiple relationships across the top level; my focus is to make sure that we’ve got really good connectivity across all of the defence leadership, that we’ve got really good connectivity as you go down that leadership structure.

“I think people say previously were an ’invisible prime’. But you know, we tend to downplay ourselves. We are the quiet achievers … we don’t advertise our success as much as we should have. We don’t celebrate our successes as much as we should have. So I think I want to do that.

“It’s making people aware of the good news stories like the LAND 19 program (short-range air defence missile system program). We’ve just delivered a significant capability to Defence that is cutting edge technology. It’s the best National Advanced Surface-to-Air Missile System that’s available. We did that locally, partners from the US, partners from Norway. But fundamentally, we did a lot of integration and other activities and Australians designed really our product. So we need to advertise that.

“Between us and ASC working collaboratively, we’ve kept the boats in the water; I want people to be aware of that, because it not only gives us publicity but it also gives the people who work for us visibility, because the teams who are working on those programs aren’t getting enough credit. It’s not just the internal, it’s not just me saying, ’Congratulations, well done’. There’s nothing better than seeing your program highlighted [publicly] as a success story, it makes you feel proud about what you do every day.”

Earlier this year, Defence Connect reported on an internal email that confirmed the exit of four of Raytheon Australia’s then nine-person strong executive leadership team, including long-term managing director Michael Ward.

The internal email on 30 May, confirmed the departure of Gerard Foley, chief of growth; Des McNicholas, chief of people & culture; Sarah Valentine, chief of corporate services; and Carly Habils, head of corporate services.

When asked about the circumstances that required Raytheon Australia to make such significant changes this year, Katz said the company had been laying low in the defence industry ecosystem for too long.

“I think we were being too quiet; I think that’s what necessitated the change. We were too understated,” Katz said.

“It’s just about presenting our face better … To our customers, to the industry; I think we need to communicate more effectively.

“It’s not a criticism that we did something wrong previously and it’s not suggesting that we were in the wrong place. It’s just suggesting that the new mindset is: ’Let’s get out there a little bit more. Let’s be more strategic.’

“I’ve been in the company for a while, so I’ve been there since we started as 100 people to now 1,500 and I’ve seen a lot of change. I’ve seen a lot of different approaches. I personally am trying to bring the best of what I’ve seen over the last 25 years and mold it into something that we can project forward for the next 25 years.

“We could do better … so let’s go do that, because that would be a benefit to us and our customers.”

Katz confirmed that he will be bringing some new objectives to the revamped corporate strategy, including a lift in industry collaboration and constant communication.

“One of my key themes is; ’If you don’t communicate, you’re not going to achieve the objectives that you want to achieve’. You’re probably setting yourself up to fail or to have issues,” he said.

“As long as you’re communicating good news, bad news, and you’re constantly communicating, then you’ve got a relationship that allows you to work through the issues that you need to because you’ve got a good relationship with the customer.

“They want to talk to you because they want your input. They want to talk to you because they’re interested in hearing your views. So I’m doing that, I’m reaching out to industry, to my peers, small and medium-sized enterprises, we’ve got a Capability Plus program where we promote SME capability development.

“Constant rhythm of open communications with our peers so that we can look at how we can collaboratively work together on programs, how we can share information that might be a benefit to all of us … we’re not doing that at the moment. Collectively, as an industry, it’s an opportunity for us to be more collaborative, more inclusive and look at how do we work collaboratively to give the government a better outcome without necessarily having to go head-to-head on everything.

“If you go head-to-head on everything, then one’s a winner, one’s a loser. You look at a more collaborative environment, maybe you’ve got multiple winners and government will definitely get a better outcome. If you collaborate, you can look at how to combine the best and a number of different capabilities to get the optimal outcome.” (Source: Defence Connect)

 

10 Sep 24. THEON Announces the Acquisition of Harder Digital. THEON INTERNATIONAL PLC (THEON), is pleased to announce the acquisition of a 60% controlling stake in Harder Digital group (Harder Digital), a specialised manufacturer of Image Intensifier Tubes (IIT) mainly operative in Germany, through a cash injection of €34m. This is the first step in THEON’s efforts to secure its supply chain with THEON also working on longer-term commercial agreements with its key suppliers.

This acquisition, in line with the strategic priorities communicated during the IPO process, comes at a critical time as global geopolitical conflicts and emerging threats have put the supply and demand for Night Vision technology in a delicate balance, and will bring multiple benefits to THEON, including:

• Enabling THEON to vertically integrate by insourcing a critical component of the Night Vision value chain, enhancing operational security and flexibility.
• Giving THEON access to niche technologies, supporting the development of new products through additional in-house R&D capabilities.

Notably, this expansion is not expected to compete with IIT produced and procured by THEON’s existing suppliers, ensuring continued strong partnerships. THEON will also continue and expand its cooperation with the other European and US IIT manufacturers.

The acquisition will be performed through a cash injection of €34m, implying a mid-single digit multiple of the expected EBITDA for 2026. The majority of the funds will be deployed to upgrade Harder Digital production facilities and increase the capacity of 3rd generation IIT manufacturing lines in Germany mainly and Latvia. The remaining funds will be used to financially restructure the company.

Harder Digital, which is currently operating well below its full capacity, is targeting €17m sales with 10% EBITDA margin in 2024. In the medium term, it is expected to approximately triple sales by 2028, reaching a mid-twenties EBITDA margin at the time, after restoring capacity and achieving economies of scale. This is also in line with the anticipated increase in global demand which necessitates that THEON will be continuing its long-term cooperation with the other tube manufacturers. THEON currently purchases almost 50% of Harder Digital’s output, and this is envisaged to continue. The remaining production will continue to be sold to third parties.

The transaction is subject to customary approvals from relevant regulatory authorities and expected to close during the fourth quarter of 2024. The transaction is foreseen to be fully financed with available cash that will be deployed over a two-year period.

Christian Hadjiminas, founder and CEO of THEON commented on the acquisition: “We are delighted to announce the signing of our first sizeable M&A transaction which first and foremost is a financially attractive acquisition. We have been partnering with Harder Digital and its current management team for many years and we are pleased to welcome them to the THEON family. This is the first step in implementing our inorganic growth strategy communicated during the IPO process earlier this year. This acquisition would allow us to achieve partial vertical integration in our core Night Vision business segment and strengthen THEON’s presence in Germany and the Baltic region, some of our key markets. The realization of our global expansion is expected to continue with a good pipeline of other potential acquisition targets already identified, including a number of companies in Germany.”

Harder Digital was established in 1999, having its HQ in Woltersdorf, Germany and operating subsidiaries in Germany, Serbia and Latvia. Harder Digital has become one of the few companies in the field of Image Intensification, covering a range of Gen I, Gen II and Gen III as well as custom made IIT and components. Harder Digital exports its products to over 30 countries globally. (Source: ASD Network)

 

25 Sept 24. Leonardo raises its share in naval systems supplier, GEM Elettronica.

The European defence prime has raised its stake in the company, a manufacturer of navigation and sensor systems, from 30% to 65%.

GEM acted as a supplier to Leonardo for several years on numerous projects. Credit: GEM Elettronica.

One of Italy’s leading defence primes, Leonardo, has raised its stake in GEM Elettronica, a manufacturer of critical maritime systems, from 30% to 65%.

This decision was announced in Rome on 23 September 2024, when Leonardo finalised the acquisition of control in the company for €16m ($17.8m).

With revenue exceeding €30m in 2023, GEM develops and produces navigation systems, situational awareness, radar sensors, optronic and inertial sensors used in naval domain and coastal surveillance settings.

Brief history between the companies

Leonardo had initially placed a 30% stake in the supplier, based on the Eastern coast of Italy along the Adriatic Sea, in April 2021. The move was made to strengthen Leonardo’s position in the naval sector, particularly in the field of short and medium-range sensors.

As part of the original agreement, Leonardo was able to increase its stake in GEM’s capital share and acquire control of the company via a purchase option to be exercised in 2024.

Prior to this deal, GEM acted as a supplier to Leonardo for years on numerous projects, including collaborations on the FREMM programme and the Italian Navy fleet modernisation programme.

Europe’s defence industry ambitions

Leonardo introduced a four-year ‘Industrial Plan’ in March this year that aims to increase organic growth through digitalisation, improve efficiency through changes to product and portfolio for group-wide savings and, finally, cultivating international alliances and inorganic growth.

The decision to acquire control of GEM fits into the latter driver, as the company says it will “play a proactive role in the evolution of the European Defence industry.”

Europe also reoriented a month after Leonardo’s new Industrial Plan when the European Commission and the European Defence Agency unveiled their inaugural defence industrial strategy. This is a new legislative initiative that will bridge the short-term emergency measures, adopted in 2023 and ending in 2025, to a more structural and longer-term approach to achieve defence industrial readiness.

This EU strategy will ensure that ensure that, by 2030, the value of intra-EU defence trade represents at least 35% of the value of the EU defence market.

Leonardo’s consolidation of GEM will support this new European industrial footing by enhancing its supply chain resilience as it leverages the company’s 40 years of experience in the naval sector.

(Source: naval-technology.com)

 

25 Sept 24. No deal! Hanwha withdraws from billion-dollar Austal acquisition plan. South Korean conglomerate Hanwha has reportedly withdrawn its bn-dollar bid for Western Australian shipbuilder Austal in a surprise move.

Defence Connect can tonight confirm that the South Korean-based industry conglomerate has withdrawn its bn-dollar bid for ASX-listed naval and commercial shipbuilder Austal.

This decision comes following Hanwha’s approach to Austal in September 2023 and a series of three subsequent non-binding (NBIO) approaches and preliminary approvals were provided by both the United States and Australia.

In a formal piece of correspondence from Hanwha chief executive Kwon Hyek-woong, the company said, “Since submitting its first NBIO on 15 September 2023, Hanwha has sought to constructively engage with the Austal Board. We have submitted three revised NBIOs, agreed to a 12-month standstill, and conducted preliminary US and Australian regulatory approval reviews, which have clearly conveyed to you has only increased our confidence.”

Kwon’s letter went further, saying, “More recently, the Austal Board has indicated openness to granting us commercial due diligence, on the condition that Hanwha pays a termination fee if either the US or Australian regulatory authorities reject Hanwha’s acquisition of Austal.”

This allegedly comes following a series of failed attempts by the South Korean company to access Austal’s operations following over 12 months of engagement, which were then subsequently cancelled by the Australian shipbuilder.

Kwon’s letter added, “Discussions have stalled due to Austal’s insistence on Hanwha paying the US$5m ($7.3m) fee at any time in the transaction process if Austal forms the opinion that regulatory approval will not be obtained.

“This is unprecedented in the context of a public markets transaction, and is a wholly unreasonable condition on due diligence access,” Kwon’s letter stated.

“It is hard to arrive at any other conclusion than that the Austal Board has no desire to determine whether an offer that is capable of being recommended to shareholders could be concluded,” the letter stated.

This parting collapse in South Korea’s bid for Austal comes despite a seeming vote of confidence by Deputy Prime Minister and Defence Minister Richard Marles during his meeting with South Korean Defence Minister Shin Won-sik at the 2+2 meetings on 1 May 2024, where he said, “They [Hanwha] are a private company. From the government’s perspective, we don’t have any concern about Hanwha moving in this direction. We have identified Austal as a strategic shipbuilder for Australia in WA.”

The Deputy Prime Minister’s comments were reinforced by US Navy Secretary Carlos Del Toro, who, in March this year, reinforced the high level of comfort within the US for South Korean defence industry like Hanwha to play a greater role in helping to strengthen the industrial bases of the US and its Indo-Pacific allies more broadly.

Secretary Del Toro said at the time, “As I saw firsthand during my shipyard visits in Korea this week, Hanwha and Hyundai set the global industry standard. I could not be more excited at the prospect of these companies bringing their expertise, their technology, and their cutting-edge best practices to American shores.

“As world-class leaders in the global shipbuilding business, they are poised to energise the US shipbuilding marketplace with fresh competition, renowned innovation, and unrivalled industrial capacity,” Secretary Del Toro said of the South Korean shipbuilders.

This approach has its foundations in Secretary Del Toro’s calls for a novel approach to maritime statecraft set out in a speech to the Harvard Kennedy School in September 2023, where he laid the foundation for this approach, saying, “[the US maritime industry] is ripe with opportunity to partner with a greater number of shipbuilders here in the US and with our closest allies overseas, including Japan and South Korea”.

An Austal spokesperson said, “When Austal informed its shareholders in April that it had received an indicative, conditional, non-binding offer from Hanwha, the Company was very clear that the Austal board and advisers were not satisfied that mandatory approvals for the transaction to proceed could be secured by Hanwha. Hanwha’s letter effectively confirms this evaluation.” (Source: Defence Connect)

 

24 Sept 24. HavocAI Ushers in a New Era of Unmanned Naval Warfare: Trousdale and Scout Ventures Lead $11m Investment Round to Combat Global Maritime Threats. In a move that exemplifies a significant shift in maritime defense, Trousdale Ventures and Scout Ventures have co-led a $11m investment round in HavocAI, a trailblazing developer of low-cost, collaborative, autonomous surface vessels. HavocAI’s fleet of uncrewed boats represents a game-changing solution, with cutting-edge capabilities delivered at incredibly low costs in an era where threats to global shipping and security intensify daily.

HavocAI’s vessels are the first line of defense against increasingly sophisticated maritime threats, such as those posed to commercial shipping in the Red Sea. These revolutionary boats are the ultimate maritime security system—an advanced, coordinated fleet optionally armed with explosive and electronic warfare warheads and with proven capability to launch both subsurface and airborne drones. Electronic warheads disable enemy drones, allowing them to be captured or destroyed with surgical precision.

“HavocAI is at the forefront of what will define the next generation of warfare—massive, low-cost autonomous fleets that can be deployed rapidly and operated with minimal manpower,” said Michael Potiker, Partner at Trousdale Ventures. “The company’s technology has the potential to not only protect vital shipping lanes but also to reshape how global navies defend themselves in an increasingly volatile world.

The Silent Swarm: A Defining Moment for HavocAI

The future of naval dominance is already unfolding. HavocAI demonstrated its visionary technology at the US Navy’s Silent Swarm exercise, where one sailor successfully controlled numerous autonomous vessels in a coordinated attack-and-defend scenario. Havoc’s solutions don’t aim to replace sailors or existing ships but to create an entirely new kind of naval warfare where human operators can unleash fleets of autonomous assets, responding to threats in real-time at a scale never before possible.

As global conflicts escalate and commercial shipping becomes a bigger target for hostile actors, HavocAI’s technology is primed to fill a critical gap. Its naval drones can neutralize enemy combatants and surface threats, operate in denied-communication zones, and work with air and sub-surface autonomous systems, creating a holistic defense web.

“At HavocAI, we’re not just building boats—we’re building an autonomous fleet that can outthink, outmaneuver, and outlast any adversary while empowering individual sailors to defend against a wide array of threats,” said Paul Lwin, CEO of HavocAI. “Our goal is simple: to make the oceans a no-go zone for any hostile entity.”

A Rapidly Growing Threat, A Powerful Response

With rebel groups threatening the safety of shipping lanes and the specter of near-peer conflicts looming large, the demand for unmanned maritime solutions has never been more urgent. HavocAI’s ability to launch aerial vehicles equipped with electronic warfare warheads that neutralize enemy drones gives it a unique edge in the fight to protect global commerce.

And it’s not just the defense industry that’s taking notice. HavocAI’s powerful software platform is gaining attention from commercial sectors, including shipping, port security, and offshore logistics, opening up multi-bn-dollar markets worldwide.

“Investing in dual-use frontier tech like HavocAI allows us to make a tangible difference. They are solving today’s toughest defense challenges while creating opportunities for commercial expansion—exactly the kind of innovation that transforms industries,” said Brad Harrison, Founder, Scout VC.

“HavocAI’s fleet is adaptable, resilient, and can be deployed on a scale that most operators could only dream of,” added Potiker. “This investment is just the beginning. We’re backing a future where one sailor can safely command an entire fleet of autonomous vessels. By efficiently deploying technology, we can create the most effective deterrent to the asymmetric threats we face today, thereby ensuring regional stability.”

A Game-Changing Investment

With this round of funding, HavocAI is positioned to ramp up production and deploy its game-changing fleet across global waters. Trousdale Ventures and Scout Ventures are backing HavocAI’s ability to solve today’s maritime challenges and anticipate the demands of future conflicts. www.havocai.com

 

23 Sept. 24. Italy approves BlackRock holding more than 3% in Leonardo. Italy has approved BlackRock the world’s biggest asset manager, holding a stake of more than 3% in Italian defence and aerospace group Leonardo a document seen by Reuters showed on Monday.

The document, sent by Italian Prime Minister Giorgia Meloni’s office to parliament, deals with so-called “golden power” decisions.

Rome has “golden powers” to block or set conditions on foreign and domestic investments, as well as governance changes, involving companies that operate in strategic sectors such as energy, telecoms, defence and banking.

“I am happy for the interest of BlackRock. It is an important recognition,” Leonardo chief executive Roberto Cingolani told Reuters.

The cabinet granted the authorisation to BlackRock on Sept. 18 while also imposing some unspecified conditions, according to the document.

Under Italian legislation, Meloni’s office must approve share ownership in any strategic firm which is also listed on the Milan stock exchange when the stake crosses thresholds set at 3%, 5%, 10%, and various other intervals up to 50%.

However, a source familiar with the matter told Reuters BlackRock was expected to trim its stake in a short time, as Leonardo’s bylaws stipulate that no investor outside the public administration can own more than 3% of capital.

Italy’s economy ministry owns 30.2% of Leonardo, the country’s leading defence group as well as a manufacturer of satellites and orbiting infrastructure.

BlackRock is also a leading investor in Italy’s financial sector, holding 7% of UniCredit (CRDI.MI) and 5% of Intesa Sanpaolo (ISP.MI) the country’s top two banks. (Source: Google/Reuters)

 

23 Sept. 24. Pennant trades at 50% discount as it repositions as a software business. A provider of software plans to increase recurring revenue from high-margin software sales and reduce the volatility in profit

• First-half revenue up 4 per cent to £7.4m
• Flat underlying operating profit of £0.6m
• Net debt (ex lease liabilities) falls a fifth to £1.6m

Pennant International (PEN:23.5p) has announced a major restructuring alongside its interim results that will see the business pivot to a pure-play software and services company.

Pennant provides software and integrated product support solutions to a blue-chip client list of original equipment manufacturers and governments. The company also supplies complex training products to a global client base, the majority of which work in the world’s defence ecosystem.

Although global defence spending increased by 9 per cent to a record $2.2tn in 2023, and the market is forecast to grow to $2.8tn by 2028, the business is exposed to lengthy procurement timeframes in its home market. In particular, the recently announced Strategic Defence Review in the UK has led to contract awards being deferred pending the outcome of the review (expected mid-2025). It includes prospective programmes for which Pennant is a potential supplier.

In light of the protracted timelines and imminent conclusion of the company’s work on the UK Apache programme, Pennant’s management has undertaken a comprehensive review of its UK training systems business. It will now be restructured to reflect the much-reduced workflow while retaining the skills, intellectual property and expertise to deliver future programmes, training software and associated services contracts both in the UK and overseas.

Staff redundancies are expected to generate annualised cost savings of £1.2m and freehold properties in Cheltenham will be sold given the reduced focus on space-intensive equipment programmes. The £0.4m cash cost of implementing this plan will be funded through a short-term debt facility with the company’s bankers.

Pennant pivots to a software pure-play and services company

At the same time, Pennant is accelerating the development of its new Auxilium software suite. It will redeploy software engineers from other parts of the business to support the roll-out and deployment of the suite to customers. In addition, management plans to release the company’s fully integrated suite of data-driven enterprise software solutions in the first quarter of 2025. Specifically, the software will provide its customers in defence and other sectors with a toolset to manage, model and utilise vast amounts of complex equipment data.

The benefit of the restructuring is that it will materially lower the business’s fixed overheads, increase the proportion of recurring revenue generated from software sales and reduce the volatility in profitability. At the same time, Pennant has beefed up its board by appointing a highly experienced chair and two non-executive directors. It’s reassuring that the directors backed a £1.3mn placing and subscription offer at 25p a share earlier this year to fund investment in the software offering.

In the short term, profits will take a hit. This explains why analysts at Zeus Capital expect full-year underlying operating profit to fall by 11 per cent to £1.6m and placed their 2025 forecasts under review until there is greater clarity. Having dipped slightly below the 25p placing price post results, Pennant is rated on a 50 per cent-plus discount to software peers on an enterprise valuation to cash profit multiple. That’s about right for now as the business transitions, so we maintain our hold recommendation (‘Pennant disappoints – but there are reasons to stick around’, 14 May 2024). Hold. (Source: Investors Chronicle)

 

24 Sept. 24. Cohort (CHRT.L) Company Research. Momentum continues The AGM update flags strong progress in H1, following record FY24 results. YTD, the order book has risen 11% to £575m and provides >90% FY25 revenue cover. FY guidance is ‘a little ahead’ of previous expectations. We upgrade FY25E adj. EPS by 3% to 45p. Moreover, our FY net cash estimate improves by £5m to £20m on better w/c assumptions. The shares are now on a CY25E P/E of 17.2x and EV/EBITDA of 9.4x. Buy, TP 980p reiterated. Strong progress in H1: Following strong activity last year, momentum has continued. The start to FY25 has been encouraging with contract wins of over £120m, including a recent £25m contract award for air defence tracking systems. FY25 cover stands at >90% of revenue. The order book on 20 September stood at >£575m, driven by Sensors and Effectors. This compares to £519m at y/e and stretches out to 2037. H1 performance is expected to be significantly ahead y-o-y, albeit with a continued H2 bias. FY25 outlook: Management now guide revenue and profit will be a little ahead of prior expectations and are optimistic about prospects from both domestic and export customers. With net funds, the Group is well positioned to grow organically and via carefully targeted acquisitions. r Estimates: We upgrade FY25E adj. EPS by 3% to 45p, driven by higher Communications and Intelligence revenue as we understand MCL has been busier than expected. This mix drives a slightly lower margin. Given a strong H1, we estimate a c.66% H2 EBIT bias vs. 72% last year. We upgrade FY25E net cash from £15m to £20m, driven by better working capital assumptions in SEA and EID. Our outer year estimates are unchanged at this stage. 0 Our view: Momentum continues and the potential for further progress remains strong. We believe the Group is capable of mid-teen margins by FY27, implying >25% upside to existing assumptions, largely driven by EID orders positively inflecting and export orders for SEA naval systems, MCL counter drone systems and CHESS ground-based air defence. The shares are on a CY25E EV/EBITDA of 9.4x, which compares to the NTM 5-year average of 10.1x, and looks attractive for improved prospects. h Next scheduled event: Interim results in December. Source: Company accounts, Investec Equities estimates Financials and valuation Y

 

23 Sept. 24. Rolls-Royce to sell naval propulsion business to FMD.

The sale comprises the naval propulsion units in Pascagoula, Mississippi and Walpole, Massachusetts, in the US, and the naval handling systems unit in Ontario, Canada.  Rolls-Royce has entered an agreement to sell its Naval propulsors and Handling business to Fairbanks Morse Defense (FMD), according to an update from 19 September 2024.

The deal will comprise several units across North America, including a marine propeller and waterjet manufacturing base in Pascagoula, Mississippi; a critical ship propulsor systems hub in Massachusetts; as well as a centre for excellence in naval handling in Peterborough, Ontario.

Notably, Rolls-Royce will retain its Naval Gas Turbines and Generator Sets operations, which provide power dense solutions for naval propulsion and onboard power needs.

Both naval suppliers offer their services to the rapidly expanding US Navy. Though, the potential purchase, which is currently undisclosed, will mark one of those “distinctive moments that completely transform this company,” commented George Whittier, chief executive, FMD.

“The way that our products and services complement each other is unmatched in the defence industrial base.”

Complementary portfolios

Rolls-Royce supports more than 70 navies around the world. The company provides propulsion equipment – including controllable-pitch propellers, fixed-pitch propellers and waterjets – for a range of US Navy platforms, including frigates, destroyers, combatants, submarines, aircraft carriers, amphibious ships, fleet support and auxiliary ships as well as US Coast Guard cutters.

Likewise, the fast-growing US naval supplier, FMD, has built and maintained naval power and propulsion systems for more than a century. It has developed a diverse portfolio that now includes engines, electrical hardware, motors, valves, cranes, davit systems, fans, fittings, and water treatment solutions.

Naval handling systems

Rolls-Royce is a global leader in specialised naval handling systems though its Canadian centre of excellence in Ontario. Their systems have provided solutions for more than 35 years.

Particularly, the Mission Bay Handling System (MBHS) – the company’s latest handling system – offers an integrated solution for handling and stowing cargo, munitions, crewed and uncrewed offboard craft. The most recent customer is the UK Royal Navy, a service whose eight Type-26 City-class frigates will benefit from the new handling system well into the 2060s.

FMD strategic acquisitions

FMD is expanding its presence more widely in the US naval industry in response to global supply chain disruptures – overcoming the enduring effects of the COVID-19 pandemic and the more prescient geopolitical tensions to come.

Though FMD is known primarily as an engine manufacturer, the company has acquired 11 companies since the end of 2020, adding domestically produced motors, valves, water filtration equipment, fans, blowers, electrical system hardware and more to its product portfolio.

The US and its allies are forming unprecedented defence industrial ties. At the start of September, Hanwha Ocean, a ballooning Korean shipbuilder, was trusted to maintain a US Navy ship for the first time; an “historic moment,” the supplier remarked.

Despite the positive interchange, these efforts are prompted by an increasingly divided world in which the military aggression of China in the Pacific, and the layered crises in the Middle East, call for industrial unity and strength. This, of course, has negative effects on the global supply chain that Western industry had come to rely on during more than 20 years of globalisation. (Source: naval-technology.com)

 

15 Sept. 24. Telesat completes billions in funding agreements for their Lightspeed satellite constellation. Telesat (NASDAQ and TSX: TSAT) has completed funding agreements with the Government of Canada and the Government of Quebec for their highly advanced Telesat Lightspeed LEO broadband satellite constellation.

With this milestone completed, Telesat now has all financing sources in place to fund the global Telesat Lightspeed network, including the satellites, launch vehicles to deploy them, an integrated terrestrial network of landing stations and points of presence throughout the world, and the business and operational support systems for the network. All amounts are in Canadian dollars unless otherwise noted.

As previously disclosed, the Government of Canada loan is for $2.14bn and will carry a floating interest rate that is 4.75% above the Canadian Overnight Repo Rate Average (CORRA) with a 15-year maturity. Interest is payable in-kind during the Telesat Lightspeed construction period, followed by a 10-year sculpted amortization. Furthermore, the Government of Canada is receiving warrants for 10% of the common shares of Telesat LEO based upon an equity valuation for Telesat LEO of US$3bn. The Government of Quebec loan is for $400m and has terms that largely mirror the Government of Canada loan but with warrants for 1.87%, in proportion to the smaller loan amount. The borrower under each loan, Telesat LEO Inc. (Telesat LEO), is a subsidiary of Telesat.

The Telesat Lightspeed network is expected to play a critical role in bridging the digital divide by expanding the reach of internet and 5G networks in unserved and underserved communities in Canada and throughout the world, with affordable, high-speed broadband connectivity. In addition, the Telesat Lightspeed network is expected to help governments – including the Government of Canada – modernize their satellite communications technology and make meaningful contributions to North Atlantic Treaty Organization (NATO) and North American Aerospace Defense Command (NORAD) modernization to bolster defence for Canada and its allies.

Telesat has increased its Canadian workforce by approximately 33% in the last 12 months and expects 2024 capital expenditures for the program to be in the range of $1bn to $1.4bn. Telesat plans to launch the first Telesat Lightspeed satellites in mid-2026. Since Telesat’s announcement of MDA Space as its prime satellite manufacturer in August 2023, MDA has selected and onboarded over 90 percent of the suppliers for the Telesat Lightspeed program.

“We are pleased to conclude these funding arrangements with the governments of Canada and Quebec as we make strong progress on the build-out of the revolutionary Telesat Lightspeed constellation, the largest space program in Canada’s history,” said Dan Goldberg, President and CEO of Telesat. “Telesat Lightspeed will help bridge the digital divide in Canada and throughout the world, create and sustain thousands of high-quality jobs in Canada, deliver billions of dollars of investment in the Canadian economy, spur domestic innovation and exports, and ensure that Canada and Quebec are at the forefront of the rapidly growing New Space Economy.

“Our government is focused on Canadians and today’s announcement with Telesat and MDA is our commitment in action. Designed, manufactured, and operated in Canada – the Telesat Lightspeed satellite network will be the largest in Canadian history – creating thousands of jobs, growing our economy, and getting high-speed internet to Canadians. We’re putting Canada at the forefront of opportunity, with a fair chance for everyone to succeed,” said the Rt. Hon. Justin Trudeau, the Prime Minister of Canada. (Source: Satnews)

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