Business News

BUSINESS NEWS

September 20, 2024 by

Sponsored by SPX Communication Technologies (TCI & ECS)

www.tcibr.com

www.enterprisecontrol.co.uk

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19 Sept 24. Babcock International Group PLC (“Babcock” or “the Group”) provides a trading update for the first five months of the financial year ahead of its Annual General Meeting to be held at 10.30 am today.

Trading update

Trading for the five-month period to 31 August 2024 has been encouraging and in line with the Board’s expectations.

Positive momentum has continued into H1, and the Group has delivered good organic revenue growth, particularly in civil and naval Nuclear, and in the Land Sector. Group underlying operating profit also increased compared to the same period last year, despite last year including the license fees from the Polish MIECZNIK programme.

Our expectations for the full year are unchanged and we continue to progress toward our medium-term guidance.

Business developments

Demand in our core defence market remains positive and we continue to make good strategic progress. We have:

Launched H&B Defence, a joint venture with HII (NYSE: HII) to accelerate the development of critical sovereign capability for Australia’s AUKUS nuclear-powered submarine programme, including workforce, nuclear infrastructure design and build, submarine defueling and decommissioning, nuclear waste and future sustainment.

Reopened 9 Dock in Devonport on 12 September, following the completion of an extensive regeneration project. The dry dock will deliver the £560 m maintenance programme to extend the operational life of HMS Victorious, currently underway, and is critical for the future support of the UK’s Continuous At Sea Deterrent.

Inaugurated the Babcock Engineering & Nuclear Skills building at City College Plymouth. Opened by the Minister of State for Defence Procurement and Industry, the new facility will enhance our growing workforce’s capabilities in the UK’s nuclear programmes.

Signed a contract extension with PGZ SA, the Polish Armaments Group, to continue our support to Poland’s Miecznik frigate programme until the delivery of ship three in 2031.

The Group’s HY25 results will be published on 13 November 2024.

16 Sept 24. Intel Awarded up to $3bn by the Biden-Harris Administration for Secure Enclave.

Secure Enclave award builds on Intel’s programmatic engagement across strategic U.S. government defense programs, including SHIP and RAMP-C.

The Biden-Harris Administration announced today that Intel Corporation has been awarded up to $3bn in direct funding under the CHIPS and Science Act for the Secure Enclave program. The program is designed to expand the trusted manufacturing of leading-edge semiconductors for the U.S. government.

The Secure Enclave program builds on previous projects between Intel and the Department of Defense (DoD) such as Rapid Assured Microelectronics Prototypes – Commercial (RAMP-C) and State-of-the-Art Heterogeneous Integration Prototype (SHIP). As the only American company that both designs and manufactures leading-edge logic chips, Intel will help secure the domestic chip supply chain and collaborate with the DoD to help enhance the resilience of U.S. technological systems by advancing secure, cutting-edge solutions.

The Secure Enclave award is separate from the proposed funding agreement that Intel reached with the Biden-Harris Administration in March of this year to support the construction and modernization of semiconductor commercial fabrication facilities under the CHIPS and Science Act.

“Intel is proud of our ongoing collaboration with the U.S. Department of Defense to help strengthen America’s defense and national security systems,” said Chris George, president and general manager of Intel Federal. “Today’s announcement highlights our joint commitment with the U.S. government to fortify the domestic semiconductor supply chain and to ensure the United States maintains its leadership in advanced manufacturing, microelectronics systems, and process technology.”

Today’s announcement reflects the continued progress of Intel Foundry, which brings together all the components customers need to design and manufacture chips at the leading edge. Intel Foundry is nearing completion of a historic pace of design and process technology innovation with its most advanced technology – Intel 18A – on track for production in 2025. The company, which develops and produces many of the world’s most advanced chips and semiconductor packaging technologies, is advancing critical semiconductor manufacturing and research and development projects at its sites in Arizona, New Mexico, Ohio and Oregon.

Intel has a long-standing history of working closely with the Department of Defense. In 2020, Intel was awarded the second phase of the SHIP program, allowing the U.S. government to access Intel’s advanced semiconductor packaging capabilities in Arizona and Oregon and leverage Intel’s substantial annual R&D and manufacturing investments. In 2023, Intel successfully delivered the first multi-chip package prototypes under the SHIP program, a major achievement in ensuring access to cutting-edge microelectronics packaging and paving the way for modernization for the DoD.

In 2021, Intel was awarded an agreement to provide commercial foundry services for multiple phases of the DoD’s RAMP-C program, which aims to leverage U.S.-based commercial semiconductor foundries to produce custom and integrated circuits for critical DoD systems. Since then, Intel has successfully onboarded several defense industrial base (DIB) customers, including Boeing, Northrop Grumman, Microsoft, IBM, Nvidia and others, and has made progress in developing early DIB product prototypes. This progress showcases the readiness of Intel’s 18A process technology, intellectual property and ecosystem solutions for high-volume manufacturing. (Source: BUSINESS WIRE)

16 Sept 24. Sheffield-based Synectics (SNX:233p), a leader in advanced security and surveillance systems, has upgraded profit guidance following a raft of contract wins.

Ongoing strong earnings momentum
11 per cent earnings upgrade
PE ratio of 12.5 (2024) and 9.7 (2025)
Forecast dividend yield of 2.7 per cent (2025)

Synectics specialises in delivering tailored security and surveillance solutions to a high-profile, global customer base, operating in environments that are often both technically and logistically demanding. The technology solutions are specially designed for markets with high barriers to entry, so presenting lucrative opportunities in sectors that are often challenging to penetrate. Its proprietary security and surveillance software, Synergy, manages and records over 250,000 channels across 270 locations worldwide, including high-security environments such as casinos (a fifth of annual revenue), town and city centres, stadiums, tourist attractions and critical infrastructure sites.

For instance, 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 global oil and gas market accounts for a quarter of annual revenue. In the transport sector, Synectics delivers market-leading solutions to major national and international transport providers – including leading providers such as Deutsche Bahn, Stagecoach and Irish Rail – to safeguard over five bn passenger journeys each year.

In the third quarter, order intake includes a $1.2m (£1mn) contract for the installation of a new security and surveillance system at a casino resort in the Philippines, further contract wins with oil and gas giant Saudi Aramco, and a strategically important $10mn order for the installation of a new security and surveillance system for a casino resort in Singapore. The Southeast Asian casino customer has been using the company’s Synergy proprietary software platform for the past decade and is now expanding and upgrading its existing system to the latest version. Moreover, the same customer awarded Synectics an additional $3.2m contract last week.

Earnings on the upgrade – again

Analysts at house broker Shore Capital have taken note, upgrading their full-year pre-tax profit and earnings per share (EPS) estimates by 11 per cent to £3.9m and 18.6p, respectively, on 13 per cent higher revenue of £55.4m, implying 30 per cent year-on-year earnings growth. The company is developing a habit of outperforming, having delivered an eye-catching performance in the 2023 financial year when underlying pre-tax profit trebled to £3mn. Key drivers were a leaner cost base following a restructuring programme, the operational leverage of the business and a tailwind from the recovering oil and gas market.

It’s well worth noting that Synectics is a highly cash-generative business. Net cash increased 60 per cent to £6.4m (36p) year-on-year at the latest half-year end and analysts estimate the business will deliver free cash flow (FCF) of £4.8m in the 2024-25 financial year, implying shares in the £41.5m market capitalisation company offer a bumper FCF yield of 11.7 per cent. The robust FCF generation is supportive of a forecast 50 per cent hike in the dividend per share to 4.5p in the 12 months to 30 November 2024, and a further 44 per cent increase to 6.5p in 2025. Ongoing earnings momentum underpins the step-change in the pay-out, too, as Shore Capital predict 29 per cent growth in pre-tax profit and EPS to £5m and 23.9p, respectively, in 2025. On this basis, the shares are rated on a modest forward price/earnings (PE) ratio of 9.7 (only 8.2 times cash-adjusted) and offer a prospective dividend yield of 2.8 per cent. Synectics’ share price has risen 24 per cent since I suggested buying the shares, at 188p (Alpha Research: ‘Spying a small-cap profit opportunity’, 12 July 2024), and I maintain my 280p fair valuation. Buy. (Source: Investors Chronicle)

17 Sept 24. Summary of MilDef’s Capital Markets Day 17/9. At the Capital Markets Day, held at At Six in Stockholm today, MilDef presents the strength of its business model and how the markets are expected to develop going forward, with a focus on the ongoing defense and security rearmament. The updated financial profitability target of EBITA over time of at least 15% per year is reiterated as well as strategies for continued high growth.

The program will be opened by President and CEO Daniel Ljunggren, who will present MilDef’s growth journey, from a pure reseller of tactical IT in 1997 to today’s international and leading player in hardware, software and services for defense and security.

“The Capital Markets Day deepens and broadens investors’ knowledge of our development and strategies for continued growth, under market conditions that have never before been as strong. In addition to presenting MilDef’s upgraded profitability targets, we focus in particular on explaining our customer offering and marketing and sales strategy,” says Daniel Ljunggren, President and CEO of MilDef Group.

Furthermore, the following comment is made on MilDef’s future prospects.

“For the coming years, we expect an accelerated growth, as we predict that the increased defense spendings will have full impact on MilDef from 2025 onwards,” says Daniel Ljunggren, President and CEO MilDef Group.

Fredrik Persson, CTO and Deputy CEO, presents the offering, which covers all components of an IT system, from servers and computers to network equipment and screens, as well as software and services. In addition, products for soldier-borne digitization are presented.

Fredrik Jacobsson, VP Europe and North America, presents marketing and sales strategy, how the sales organization is structured, different paths to the end customer, customer promises and he gives examples of national and international customer collaborations.

Karin Svalander, CLCO, presents strategies for responsible relationships with customers, suppliers and partners. Furthermore, she describes MilDef’s ethical council, framework for customer knowledge (KYC) and MilDef’s Green List regarding nations MilDef chooses to do business with.

Robert Limmergård, Secretary General of the Swedish Security and Defense Industry Association (SOFF), presents the industry organization’s view of the market’s increased needs and trends in defense procurement.

Viveca Johnsson, CFO, presents MilDef’s financial situation and growth journey after the IPO in 2021. She also presents MilDef’s new financial profitability targets.

Martina Karlsson, CPO, presents how MilDef works with competence enhancement in growth, leadership and employeeship as well as a corporate culture that attracts and inspires committed employees.

16 Sept 24. GMB Union has responded to Harland and Wolff’s administration announcement. Matt Roberts, GMB National Officer, said: “Workers, their families and whole communities now face their lives being thrown into chaos due to chronic failures in industrial strategy and corporate mismanagement.

“All the four Harland & Wolff yards are needed for our future sovereign capabilities in sectors like renewables and shipbuilding.

“The Government must now act to ensure no private company is allowed to cherry pick what parts are retained, in terms of which yards or contracts they wish to save.

“Leaving these vital yards – and the crucial FSS contract with all its promises for UK shipbuilding – to the mercy of the market is not good enough. The Government must provide support and oversight to get the market to the solution we need.”

16 Sept 24. TT Electronics profit warning sends shares down a third.

Turnaround stories don’t happen overnight. TT Electronics (TTG), which makes components for the aerospace and defence industries, said on Monday a poor operational performance and weaker orders would mean its operating profit for the full year would be down around £15mn from the consensus forecast of £55mn.

The shares fell 32 per cent in response, to 97p, a 10-year-low for the company.

“Trading results in August have been weak as a result of operational efficiency issues in two North American sites which are impacting both revenue and profitability,” the company said. TT operates in Europe, Asia and North America, with an even split in sales between regions. Management had reiterated guidance as recently as last month. AH (Source: Investors Chronicle)

16 Sept 24. Harland & Wolff to meet with shareholders as administration risk looms

Harland and Wolff’s Aim-listed shares have been suspended since July after accounting issues forced it to delay publishing its annual report.

Troubled shipbuilder Harland & Wolff is planning to meet with shareholders this Thursday following reports that the firm could fall into administration as soon as this week, City A.M. understands.

Interim chairman Russell Downs intends to inform investors of the group’s financial position at the meeting following weeks of turmoil and uncertainty.

Shareholders have repeatedly had requests for an extraordinary general meeting (EGM) shunned in recent months, and it is understood no vote will be held on Thursday.

They are particularly concerned over the prospect of a pre-pack administration, a move that would allow operations to continue but see their investments wiped out. One source familiar with the company told City A.M. that as many as 400 employees in the business are shareholders.

News that the firm could potentially fall into administration comes after a string of revelations at the embattled shipbuilder.

Chief finance officer Arun Raman departed on Wednesday, and the company has since confirmed the launch of an investigation into the “misapplication” of some £25m in corporate funds.

Sky News reported on Saturday the FTSE 250 defence contractor Babcock is weighing a possible bid for the firm, with a host of other suitors also lining up.

Harland & Wolff, the Aim-listed company best known for building the Titanic, was plunged into crisis in in July after the Labour government refused to guarantee a £200m UKEF loan seen as critical to its continued operation.

The troubles have seen the departure of a host of top-level executives, including CEO John Wood, chairman Malcolm Groat and two non-executive directors.

It has also placed the future of a £1.6bn Ministry of Defence contract to build warships for the Royal Navy, and more than 1,000 jobs, in doubt.

Harland & Wolff was approached for comment. (Source: City AM)

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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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BUSINESS NEWS

September 13, 2024 by

Sponsored by SPX Communication Technologies (TCI & ECS)

www.tcibr.com

www.enterprisecontrol.co.uk

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11 Sept 24. Circuitwise buys Kiwi rival after private equity investment.

Sydney-based Circuitwise Electronics has agreed to buy New Zealand rival Nautech Electronics in a deal that will be completed by the end of this month. The purchase, made possible after the Australian firm received private equity investment last year, will see both companies continue as separate brands and the Kiwi firm’s management team remain in place.

“Nautech extends Circuitwise’s offering, with advanced testing facilities and a team of production engineers and electronics designers,” said Circuitwise in a statement.

“The testing facilities include clean rooms and environmental test chambers to recreate extreme temperatures and vibration. Clean rooms are typically required for space and medical applications.

“The production engineers support the quality process by ensuring all products meet requirements. The design team focuses on providing customers with a complete service to ensure higher reliability of their designs, including design for manufacture.

“Similarly, Circuitwise has capabilities that complement Nautech, having developed a sophisticated enterprise manufacturing system in-house, supported by custom hardware solutions, which provides the group with a clear competitive advantage.”

Circuitwise provides electronic manufacturing services for the medical, aerospace, defence, industrial, mining and lighting industries. It holds ISO 9001, AS 9100D and ISO 13485 medical-grade and aerospace quality certifications.

Circuitwise CEO Serena Ross said quality was Nautech’s “number one priority”.

“Nautech has a strong position in the aerospace industry, which supports our strategy of servicing mission-critical sectors with a high requirement for quality assurance,” said Ross. (Source: Space Connect)

13 Sept 24. Lockheed could see $1bn financial ‘impact’ this quarter as F-35 negotiations drag on. “Given where we are in that negotiation, we don’t expect to be completed by the end of this quarter, and that will cause an impact in the quarter — up to about $500m in sales, and potentially about $500m of cash flow in the quarter,” Lockheed’s Chief Financial Officer Jay Malave said.

Lockheed Martin and the Pentagon are unlikely to reach a deal on the next lot of F-35 stealth fighters by the end of this month, potentially leading to a $1bn cost “impact” for the defense giant this quarter, a top Lockheed executive said today.

“Given where we are in that negotiation, we don’t expect to be completed by the end of this quarter, and that will cause an impact in the quarter — up to about $500m in sales, and potentially about $500 m of cash flow in the quarter,” Chief Financial Officer Jay Malave said during the Morgan Stanley Laguna conference.

The Pentagon’s F-35 Joint Program Office (JPO) and Lockheed have been engaged in talks over F-35 Lots 18 and 19 for more than a year, and had initially hoped to wrap up contract negotiations by the end of 2023. However, there are still “key terms that are yet to be negotiated” by the parties, which will drag discussions out into the fourth quarter, Malave said.

Lockheed is currently seeking a cash injection, as the department’s initial funding for Lot 18 has “pretty much been exhausted,” and the company has already invested some of its own funds to keep F-35 production running smoothly ahead of the contract, he said.

“We’re working with our Joint Program Office partners as well as with congressional constituents so that we can get some funding in so that we don’t really disrupt the production system,” Malave said, adding that the money could come in the form of reprogrammed funds approved by Congress.

Overall, Lockheed’s latest financial guidance estimates sales between $70.5bn and $71.5bn this year, with free cash flow for 2024 between $6bn and $6.3bn.

As part of the latest round of F-35 contract negotiations, the department is currently reviewing pricing information submitted by Lockheed that breaks down the costs borne by the aerospace prime and its supply chain, said Malave, who acknowledged that the company is still struggling with inflation, high labor costs and extended lead times. The Joint Program Office did not immediately respond to an off-hours request for comment.

“They have to go through that, get comfortable with that, make sure the data supports what we provide to them,” he said.

Greg Ulmer, the top executive at Lockheed’s aeronautics unit, previously told Breaking Defense that unit costs for the upcoming batch of F-35s could continue to be negatively influenced by inflation as well as a lower annual buy rate from the US military.

On top of the costs associated with contract negotiations, Lockheed expects up to $300m in impact this year due to financial withholdings the Pentagon is making as it accepts F-35s that are being delivered without a full hardware and software upgrade known as Technology Refresh 3, or TR-3.

In August, the Pentagon acknowledged it was withholding about $5 m per jet. However, Malave said that number will be reduced as Lockheed achieves specific targets.

“We expect to complete some of those milestones this year,” he said, adding the withholdings will determine where Lockheed lands on free cash flow. (Source: Breaking Defense.com)

11 Sept 24. RTX CEO does not see ‘transformative’ deals, open to pruning business. RTX is open to pruning and pairing its existing businesses rather than pursuing “transformative” mergers and acquisitions, the aerospace giant’s CEO said on Wednesday.

Speaking at a conference organized by Morgan Stanley, CEO Christopher Calio pointed to the second-quarter divestment of its Goodrich Hoist and Winch business as an example of the deals the company might do.

RTX emerged from a $121bn combination of United Technologies Corp and Raytheon Co in 2020 and now houses businesses such as civil aircraft engine maker Pratt & Whitney and aerospace supplier Collins Aerospace.

The company counts planemakers Boeing (BA.N), opens new tab and Airbus (AIR.PA), opens new tab as customers.

Calio said on Wednesday RTX was working with Boeing on calbirating its production rates for 2025 and beyond as the U.S. planemaker is currently producing its best-selling 737 MAX aircraft at a lower rate due to an ongoing crisis.

“Obviously we’ve got a lot of capacity above and beyond what those rates are today. So making sure that we’re calibrated to where that’s going and that we’ve got the right level of inventory to support that,” he said.

Defense demand continues to be strong, with RTX’s weapons business Raytheon garnering $8bn in bookings so far in the third quarter, Calio added.

RTX is also working on a hybrid-electric technology demonstrator that combines a thermal engine with an electric motor, aiming to improve fuel efficiency by 30%.

Calio said RTX was focused on the durability of the engine, having learned lessons from recent quality issues surrounding its GTF engines. He sees the next generation propulsion penetrating the small aircraft market first. RTX shares were down 1.1% in afternoon trade. (Source: Reuters)

11 Sept 24. Ricardo’s move back into profit driven by defence division.

Market conditions improved as the year progressed.

Defence segment the standout performer
Emerging automotive & industrial disappoints

You wouldn’t necessarily describe Ricardo’s (RCDO) interim report as a “return to form” given the 5 per cent fall in the order intake. But there were enough positives within the half-year figures to suggest that the transformation of the engineering consultancy’s operating model is having a positive impact on profitability, at least judging by the group’s improved second-half showing.

Revenue from continuing operations increased by 9 per cent on a constant currency basis, while the 14 per cent increase in underlying operating profit to £38.8mn was largely due to a bigger contribution from the defence segment. Orders here were up by 54 per cent, bucking the overall trend, while financial performance was aided by rising consultancy work.

Perhaps the greatest concern was the performance of the emerging automotive and industrial segment, where order intake, revenue and operating profit declined year on year. Although the long-term growth narrative underpinning this corner of the business remains intact, there is little doubt that the speed of transition to emerging technologies is grinding up against market realities. So segmental performance is likely to be erratic as original equipment manufacturers adapt to market flux.

Management continues to drive efficiencies and prioritise working capital management, a point borne out by the 119 per cent underlying cash conversion rate and a reduction in net debt, bringing the adjusted leverage multiple to 1.25 times cash profits.

Analysts at Panmure Liberum foresee sales of £483m this financial year, rising to £504m in 2026, with trading profits at £43.8m and £48.8m, respectively, on a pronounced increase in the underlying margin. A forward price/earnings (PE) ratio of 13 times earnings is broadly in line with ratings over the past year, but the asking price is 25 per cent adrift of the consensus target rate. Buy. Last IC view: Buy, 493p, 29 Aug 2024. (Source: Investors Chronicle)

11 Sept 24. Red Cat Closes Acquisition of FlightWave Aerospace. Red Cat Holdings, Inc. , a drone technology company integrating robotic hardware and software for military, government, and commercial operations, announced the closing of its acquisition of FlightWave Aerospace Systems Corporation, a provider of VTOL drone, sensor and software solutions.

The acquisition officially brings the Edge 130, FlightWave’s Blue UAS approved military-grade tricopter, into Red Cat’s family of low-cost, portable unmanned reconnaissance and precision lethal strike systems.

“Today marks a transformative milestone for Red Cat and our goal to provide warfighters with a diverse set of rucksack portable drones required for mission effectiveness on today’s evolving battlefield,” said Jeff Thompson, Red Cat CEO. “The acquisition of FlightWave broadens our range of drone products and opens up an entirely new revenue stream. The FlightWave Edge 130 Blue completes our Family of Systems and we will begin ramping manufacturing this quarter.”

Red Cat’s mission is to redefine the role of sUAS for defense applications by combining the capabilities of ISR drones with precision strike payloads. The company is an established leader in the sUAS (Group 1) space with its flagship Teal 2 aircraft. Red Cat is adding FlightWave’s Edge 130 to its larger family of systems, alongside a new line of FANG First-Person View (FPV) drones with precision strike payload capabilities that are all deployable in air, land, sea, and sub-sea environments.

Weighing in at only 1200g, the Edge 130 has been flown for up to 2 hours in certain configurations in forward flight mode, an industry-leading endurance among all other Blue UAS-approved drones available.

(Source: UAS VISION)

10 Sept 24. Bluestone Seeks Add-on Acquisitions for Its Recently Announced Investment in Qualis Corporation. Bluestone Investment Partners, a private equity firm focused on the defense and government technology sector, is pleased to announce a strategic investment in Qualis Corporation, a missile defense and space systems technology company based in Huntsville, Alabama. This investment underscores Bluestone’s commitment to supporting high-tech companies that advance national defense and space capabilities.

Qualis Corporation is recognized for its expertise in developing next-generation missile defense and satellite communication systems, with a strong focus on advanced modeling, simulation, and testing services. The company is known for enabling resilient communications and navigation in GPS-denied environments and contested operational spaces, including its work in RF waveform simulation. Qualis’ primary customers include U.S. Army Space and Missile Defense Command, U.S. Air Force Test Center, U.S. Space Force, the Missile Defense Agency, and NASA.

Rod Duke, President and CEO of Qualis, said: “Qualis is well-positioned in critical technology areas that are important to the DoD’s national security mission. This has helped fuel significant growth for us in recent years. Our partnership with Bluestone will allow Qualis to pursue strategic acquisitions that will enhance our technology footprint and sustain our strong record of growth.”

John Allen, Managing Partner at Bluestone, stated: “We have great admiration for the performance and innovation demonstrated by the Qualis team. It is an honor to partner with such a capable organization, and we are excited to support their continued development of critical technologies for national security.”

Bluestone’s investment in Qualis was executed through its recently established Small Business Investment Company (SBIC) vehicle. In June, the U.S. Small Business Administration announced Bluestone as the first recipient of an SBIC Critical Technologies (SBICCT) Initiative license, which aims to drive private capital investment in Department of Defense Critical Technology Areas. Qualis is well-positioned to benefit from this initiative, particularly with its work in satellite communications path diversity.

Founded in 1993, Qualis Corporation employs 310 professionals, primarily scientists and engineers, who serve U.S. government customers across major test sites in the U.S. and Asia-Pacific regions. With Bluestone’s backing, Qualis will continue to provide dedicated support to its defense and space customers while pursuing opportunities for growth and expansion in missile defense and satellite communications markets.

Bluestone Investment Partners remains committed to fostering growth in the defense and government technology sector and is actively seeking additional opportunities for strategic investments and partnerships. For further information, please contact Zack Hester, Director of M&A Strategy and Deal Generation at Bluestone (contact information below).

About Bluestone Investment Partners

Bluestone is a private equity firm investing exclusively in lower middle-market companies in the defense and government technology arena. Bluestone’s principals have a long and successful track record of owning, operating, investing in, and advising companies in the defense and government services sector.

10 Sept 24. James Fisher jettisons ballast and improves balance sheet.

Business sales help group to cut borrowings

Net debt expected to fall to £65m by year-end
Refinancing talks at a ‘very advanced’ stage

The half-year numbers for marine services group James Fisher and Sons (FSJ) tell only part of the story; that of a company that chief executive Jean Vernet says is now “halfway through” its turnaround.

A 12 per cent decline in revenue was expected given the closure of its lossmaking Subtech Europe business (which contributed £40mn of revenue) and the sale of its Swordfish dive support vessel in the second half of last year.

Other big sales have now been completed as the company gets to grip with its debt. Since the half-year closed it has completed the £82.8m sale of the RMSpumptools business and finalised the £12.1m sale of Martek Holdings. Proceeds from these mean that although the scary auditor’s “material uncertainty” warning about the company’s ability to continue as a going concern remains, the balance sheet should soon look much healthier. Net debt (excluding leases) of £145m at the end of June is expected to fall to £65m by year-end.

Getting the RMSpumptools deal done was significant. James Fisher’s existing bank facility is due to expire in March (hence the warning) but once the sale completed, talks began about arranging new debt. These are now at a “very advanced” stage, said chief financial officer Karen Hayzen-Smith.

Although the company reported a fourfold increase in first-half operating profit to £12.7n, finance and exceptional costs are expected to eat up most of this by the year-end, with the FactSet consensus forecast indicating a reported loss per share for 2024. Even on 2025 estimates, the shares trade at 22 times reported earnings and there’s a lot to do to get there. We move our call to hold in recognition of the improving balance sheet but can’t yet get any more excited than that.

Last IC view: Sell, 294p, 16 Apr 2024. (Source: Investors Chronicle)

09 Sept 24. Eyeing more special forces business, GDIT acquires AI, tech firm Iron EagleX.

General Dynamics Information Technology (GDIT) announced today it is acquiring Iron EagleX, Inc., a Silicon Valley company that provides artificial intelligence, cybersecurity capabilities and software solutions specifically designed to support special forces.

GDIT, a unit of General Dynamics, said in a press release today that this acquisition is “a key part of the company’s technology investment strategy launched last year, which includes investments in technologies such as AI, cyber, software development and quantum.”

“As part of this acquisition, hundreds of highly technical and cleared employees from 18 locations will join GDIT’s workforce of 28,00,” GDIT said. A spokesperson for GDIT said the company could not disclose how much it acquired Iron EagleX for.

Iron EagleX, which is led by retired special ops combat veterans, previously won a nearly $30 m SOCOM contract in March to provide the SOF Digital Applications Program Executive Office with support such as data scientists and data integration specialists. The company also won a max-ceiling $430 m contract in 2022 to provide US Special Operations Command (SOCOM) software solution requirements over 10 years.

“The combination of Iron EagleX and GDIT represents a new chapter in our company’s stated goal of having a ‘generational impact on national security,’” said Michael Grochol, Iron EagleX’s CEO in the press release. “Our team has always focused on delivering positive disruptive change in national security, and as part of GDIT, Iron EagleX will gain access to a tremendous amount of new customers and opportunities to expand on that mission and help make our nation a safer place.”

GDIT said this acquisition “further expands” its work with special forces, specifically SOCOM. The company was awarded a $493 m task order to supply tech support to SOCOM in February.

The acquisition also comes after SOCOM and other special operations officials have made clear their interest in cutting edge tech like AI. Previously, the former top SOCOM acquisition official emphasized how engrained AI will be in everything from acquisitions to operations.

“I think artificial intelligence is a tide that lifts all boats,” Jim Smith, then-acquisition executive for SOCOM, said during SOF Week last year.

However, he added that while developing AI and large language models, industry and the military must also be wary of AI, warning that it won’t be a blanket solution to software modernization.

“I think artificial intelligence is going to be part of our material solution in our software solution approach. I think that’s true. But it’s not a wholesale adoption of generative AI that goes forward,” he said. “Here’s what I worry the most about from an acquisition standpoint: You have to understand the algorithms that are behind AI and we have to understand… the pedagogy, where the information came from and why AI allows that solution.” (Source: Breaking Defense.com)

05 Sep 24. ATLAS Space Operations raises m$$ in growth investment round. ATLAS Space Operations has raised $15 m in the firm’s latest growth investment round.

ATLAS, a Ground Station as a Service (GaaS) and Ground Software as a Service (GSaaS) provider, operates the largest U.S. owned and operated global federated ground network, enabling seamless data transmission and reception for spacecraft operators. Its services support a wide range of missions across the commercial, civil, and defense sectors, facilitating secure, scalable, and real-time access to space-based data.

The ATLAS network is comprised of more than 50 antennas across more than 34 ground stations and provides for LEO, MEO, and GEO orbits. Operating through the company’s proprietary Freedom® Software, the ATLAS federated network integrates intricate and diverse antenna networks into a unified solution for commercial and government clients.

Freedom software simplifies spacecraft communication, from single satellites to constellation management, making it faster and more economical for customers. Freedom offers customers a secure, singular access point to the entire ATLAS network, featuring rapid onboarding capabilities. This software enables customers to manage their spacecraft with automated communications, dynamic flex scheduling, ms of data points, and near real-time troubleshooting capabilities.

Since ATLAS was founded in 2015, it has become a central part of the global space ecosystem. The company boasts a 100 percent contract renewal rate with its customers, who rely on its effective ground station services as critical infrastructure for their space missions. This success underscores ATLAS’s vital role in ensuring mission success and the deep trust it has cultivated among customers.

The $15m investment led by NewSpace Capital will enable ATLAS to meet industry demand and manage the rapid growth it is experiencing. The investment demonstrates strong confidence in ATLAS’ GSaaS approach as a vital solution for the space economy. It will be able to call on NewSpace Capital’s extensive experience in the space sector, and a leadership team that includes seasoned industry and financial professionals as well as globally renowned space scientists.

John Williams, CEO at ATLAS, said, “We are thrilled to have NewSpace Capital’s support. Their exceptional expertise in the space industry will strongly bolster ATLAS in executing and expanding in the U.S., as well its international growth strategy in the European, Middle Eastern, and African (EMEA) markets. It’s a very exciting time to be working in space. And it’s a very exciting time for our company.”

Martin Halliwell, Partner at NewSpace Capital, who will be joining the board of ATLAS, said, “We look for companies that really change the playing field. ATLAS stood out to us because of the critical importance of what they do for the sector as a whole, the intelligence and industry that was plain to see in their team, and their ambition to grow. ATLAS solves the problem of fragmented ground communication in the space industry. They provide a smoother, more reliable, faster, and more cost-effective solution. We were confident that with our support, they will really flourish. Our investment also reflects our commitment to the US market, which remains very important to us. We are delighted that ATLAS has chosen NewSpace Capital to lead this round.“

Existing investors, including Michigan Capital Network, Beringea, Wakestream Ventures and Boomerang Catapult, as well as new investors Michigan Rise and Red Cedar Ventures, also participated in the round. ATLAS was advised throughout the process by GH Partners and Cooley LLP. (Source: Satnews)

09 Sept 24. Houlihan Lokey announced that Parry Labs, LLC, has successfully completed an $80m growth equity raise, the company’s first institutional investment round. The strategic growth equity round was led by Capitol Meridian Partners and included participation from True Ventures, as well as 3Wire Partners and Teamworthy Ventures. The transaction closed on August 28, 2024.

Founded in 2016 and headquartered in Washington, D.C., Parry Labs is a digital systems integrator uniquely capable of modernizing legacy military platforms and accelerating new platform development. The company offers an open architecture software stack known as Stratia, which serves as the digital backbone of its edge compute solutions, as well as electronic warfare products that enable defense customers to advance key national priorities. Parry Labs has redefined the edge for the modern battlespace with digital systems integration that delivers rapid capability deployment and decisive combat advantage. The growth capital will primarily be used to accelerate investments in the company’s core technologies and to bring new, advanced edge capabilities to the warfighter—including command and control, mission-critical software, interoperability, and advanced AI computing.

Capitol Meridian Partners was formed in 2021 to invest at the nexus of government and commercial markets, targeting opportunities where the firm can invest and drive value creation through active engagement with management. The firm draws upon the deep network of industry veterans curated with more than 27 years of principals’ experience in the sector to bring thoughtful strategic resources to each investment opportunity.

Houlihan Lokey served as the exclusive placement agent to Parry Labs and assisted in structuring and negotiating the transaction on its behalf. This transaction underscores the firm’s continued global leadership and deep experience in the defense technology sector.

Since 2020, Houlihan Lokey’s Aerospace, Defense & Government practice has closed more than 70 transactions worth over $12 bn 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 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.

04 Sept 24. ATLAS Space Operations, a world leading provider of ground station services for satellite communications, has raised $15 m in its latest growth investment round.

The ATLAS network comprises over 50 antennas across more than 34 ground stations and provides for LEO, MEO, and GEO orbits. Operating through the company’s proprietary Freedom® Software, the ATLAS federated network integrates intricate and diverse antenna networks into a unified solution for commercial and government clients.

Freedom software simplifies spacecraft communication, from single satellites to constellation management, making it faster and more economical for customers. Freedom offers customers a secure, singular access point to the entire ATLAS network, featuring rapid onboarding capabilities. This software enables customers to manage their spacecraft with automated communications, dynamic flex scheduling, millions of data points, and near real-time troubleshooting capabilities.

The $15m investment led by NewSpace Capital will enable ATLAS to meet industry demand and manage the rapid growth it is experiencing. The investment demonstrates strong confidence in ATLAS’ Ground Software as a Service (GSaaS) approach as a vital solution for the space economy. It will be able to call on NewSpace Capital’s extensive experience in the space sector, and a leadership team that includes seasoned industry and financial professionals as well as globally renowned space scientists.

John Williams, CEO at ATLAS, thanked the company’s investors for their support.

‘We are thrilled to have NewSpace Capital’s support,” he said.

‘Their exceptional expertise in the space industry will strongly bolster ATLAS in executing and expanding in the U.S., as well its international growth strategy in the European, Middle Eastern, and African (EMEA) markets.’

‘It’s a very exciting time to be working in space. And it’s a very exciting time for our company.’

Martin Halliwell, Partner at NewSpace Capital, who will be joining the board of ATLAS said: “We look for companies that really change the playing field. ATLAS stood out to us because of the critical importance of what they do for the sector as a whole, the intelligence and industry that was plain to see in their team, and their ambition to grow. ATLAS solves the problem of fragmented ground communication in the space industry. They provide a smoother, more reliable, faster, and more cost-effective solution.”

“We were confident that with our support, they will really flourish. Our investment also reflects our commitment to the US market, which remains very important to us. We are delighted that ATLAS has chosen NewSpace Capital to lead this round.”£

ATLAS Space Operations was launched in California, moved its headquarters to Traverse City, Michigan in 2017 and has an office in Colorado Springs, Colorado. The leadership team of four has over 130+ years of commercial and government experience between them.

14 Aug 24. Tank gearbox maker Renk slips as largest business disappoints.

Summary
Companies
Q2 core profit at Vehicle Mobility Solutions misses forecast
Company sees FY revenues, core profit at top end of range
Shares fall as much as 6.8%

Shares in German tank gearbox maker Renk (R3NK.DE)fell as much as 6.8% on Tuesday after its largest business missed profit expectations, overshadowing a strong performance elsewhere.

European defence companies including Renk are seeing a boom in demand as Western nations buy supplies to help Ukraine fight Russia’s invasion and strengthen their own capabilities.

Renk, which has been revamping operations at its Augsburg plant to meet increased demand, reported a record order intake of 419m euros ($458m) in the second quarter, beating analysts’ average forecast of 376m euros in a Vara poll.

However, core profit at its Vehicle Mobility Solutions (VMS) business, whose products are used by over 70 militaries worldwide, came in at 26m euros in the quarter, missing analysts’ average forecast of 28.3m.

“The rest is fine, but the focus was really on this division”, said ODDO BHF analyst Yan Derocles.

“I think most investors were maybe expecting something better because management has been discussing the past few months’ progress they have seen in Augsburg.”

CEO Susanne Wiegand told Reuters in May that Renk was hiring 20 to 30 people per month at the plant.

Renk, which makes the transmission used in the Leopard 2 tank that is produced by KNDS, also said it expected revenue and core profit – or adjusted earnings before interest and taxes – for the year to be at the upper end of its forecast ranges.

It has forecast 1.0-1.1bn euros of revenues and core profit of 160-190m euros. The company also increased its mid-term annual revenue growth target to about 15% from about 10%. Renk’s shares, which were floated at 15 euros apiece in February, were last down 2.6% at 24.975 euros.

($1 = 0.9149 euros) (Source: Reuters)

14 Aug 24. Rheinmetall agrees takeover of vehicle specialist Loc Performance. Acquisition expands and strengthens Rheinmetall’s position in North America and the competition for high-volume major orders in the USA

With a strategic acquisition in the USA, the Düsseldorf-based Rheinmetall Group 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.

On 13 August 2024 Rheinmetall has signed an agreement to acquire all equity interests in Loc Performance Products, LLC, a renowned vehicle specialist based in Plymouth, Michigan.

The acquisition expands the Group’s business with the US military, increases its industrial base in the USA and creates further access for its technologies in North America. Furthermore, Rheinmetall is strengthening its production capacities in the USA with a view to targeted high-volume major orders for U.S. Army vehicle programs with a total potential of over USD 60bn. Rheinmetall is one of two remaining participants in the current prototype phase of the XM30 program. This program serves to introduce a new generation of infantry fighting vehicles. The volume is estimated at around USD 45bn for around 4,000 infantry fighting vehicles. Furthermore, Rheinmetall is participating in the CTT (Common Tactical Truck) program, which has a volume of around USD 16bn for around 40,000 trucks.

In addition, Rheinmetall expects the acquisition of Loc Performance to bring considerable benefits for both its American and for its global business. For example, an experienced workforce with a high level of technical expertise – including in the maintenance, repair and combat enhancement of military combat vehicles – will be integrated into Rheinmetall’s internal supply chains.

The purchase price agreed for Loc Performance, which will become due upon closing, is based on an enterprise value of USD 950 m. Closing of the transaction is subject to regulatory approvals.

With its skilled workforce of around 1,000 employes, Loc Performance generated significant and growing sales revenues. With its broad-based activities, the company will make a direct contribution to the Rheinmetall Group’s fast-growing US military vehicle business, which is managed by American Rheinmetall Vehicles based in Sterling Heights, MI.

The acquisition provides the Rheinmetall Group with key capabilities in the US and enables American Rheinmetall Vehicles to more effectively and comprehensively supply the US Department of Defense by expanding the company’s product portfolio and domestic manufacturing capabilities.

The investment follows Rheinmetall’s clear strategy for growth in the United States, which will be an important core business for the Group in the future. Loc Performance is already pursuing a sustainable business model with robust organic growth, has a highly skilled workforce and offers the Rheinmetall Group ample capacity reserves for the targeted orders in the USA.

Loc Performance Products, LLC was founded in 1971 in Plymouth, MI and is a diversified full-service provider for both military and civilian customers. In addition to its headquarters in Plymouth, MI, the company has further locations in Lansing, MI and Lapeer, MI as well as in St. Marys, OH.

The vehicle specialist is a high-performance full-line supplier of drivetrains, suspensions, track systems, rubber products, armour products and fabricated structures for vehicle platforms. The company is an established supplier to the US government and, in particular, OEM for most military ground vehicle track systems in the USA. In addition, the company’s products are used by major vehicle manufacturers in the agricultural, construction, mining, locomotive, transportation and oil and gas industries. Loc Performance’s current manufacturing capabilities include modernised fabrication, machining and welding technologies capable of meeting the critical manufacturing requirements of the US Army’s XM30 and CTT programs. An available manufacturing footprint of 1.7 m square feet provides significant capacity for future expansion.

Armin Papperger, CEO 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. The acquisition of Loc Performance proves that we are consistently focussing on success in the USA and want to expand our share of the large market volume. Everything speaks in favour of this acquisition: Loc Performance is already pursuing a sustainable business model there with robust organic growth, has a highly qualified workforce and offers us significant capacity reserves for the orders we are targeting in the USA.”

Matthew Warnick, CEO of American Rheinmetall Vehicles: “In the USA, we have a promising position in two major military projects, both in the XM30 infantry fighting vehicle program and in the CTT project. The acquisition of Loc Performance gives us the manufacturing readiness that will enable us to realise the major orders we are aiming for. This puts us in a position to realise 100% local value creation in the USA.”

Jason Atkinson, CEO of Loc Performance: “The significant engineering capabilities of American Rheinmetall Vehicles and the next-generation technologies that are part of the exceptional global Rheinmetall Group are a great fit with Loc Performance’s 53 years of manufacturing experience in the United States. I am excited about this combination, which represents a powerful end-to-end solution that will bring even better products to our customers and even more growth to our combined company.”

American Rheinmetall Vehicles provides US customers with next-generation tracked and wheeled combat vehicles and tactical wheeled vehicle platforms. American Rheinmetall Vehicles supports the U.S. Army in two major modernisation programs, the XM30 Combat Vehicle program, and the CTT program.

The acquisition of Loc Performance will be of great benefit to American Rheinmetall Vehicles as the company further expands and strengthens its presence in the United States. With the purchase, American Rheinmetall Vehicles acquires 1.7 m square feet of modern, efficient manufacturing space with significant capacity for future expansion.

American Rheinmetall is supporting the Department of Defense in key modernisation programs of national significance that directly improve the effectiveness, mobility and situational awareness of soldiers on the battlefield. This includes developing and delivering next-generation products and capabilities, including advanced direct and long-range precision fire weapons, innovative tracked and wheeled combat vehicle platforms, and intelligent mission systems.

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 parent company American Rheinmetall Defense in Reston (VA).

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BUSINESS NEWS

September 6, 2024 by

Sponsored by SPX Communication Technologies (TCI & ECS)

www.tcibr.com

www.enterprisecontrol.co.uk

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06 Sept 24. EHang Strongly Refutes Allegations Causing Stock Volatility. EHang Holdings Limited, an urban air mobility technology platform company, strongly refuted recent rumours circulating in retail investor communities. “These baseless allegations have no foundation in truth and have unfairly impacted the Company’s stock price.“

The rumour claims that EHang is related to an investigation on Chris Hu by the U.S. government. EHang unequivocally denies this.

The Company’s management team, including Huazhi Hu, EHang’s Founder, Chairman and CEO, has no relatives or any personal connections involved in the incident mentioned in the rumors, and any suggestion otherwise is completely fabricated. EHang categorically denies any involvement in activities that could harm its reputation or standing with regulatory bodies.

EHang has always maintained the highest standards of transparency and compliance in all its operations to ensure that it meets legal and ethical obligations in both China and the U.S.

The Company remains focused on its mission to develop and commercialize cutting-edge autonomous aerial vehicle technology. It will continue working diligently to bring innovative solutions to market and drive long-term value for its shareholders.

EHang urges investors and the public to rely on official communications from the Company for accurate and up-to-date information. The Company will reserve the right to take appropriate legal action against those who propagate false and misleading information to protect its reputation and the interests of its shareholders. (Source: UAS VISION)

05 Sept 24. Astrion Completes Acquisition of Axient, Aims to Set Industry Standard in Innovation and Customer Value. Astrion, a leading provider of mission support and advanced engineering services to the U.S. government, today announced the completion of its acquisition of Axient, a highly regarded provider of specialized engineering and solutions. Astrion is a portfolio company of Brightstar Capital Partners (“Brightstar”), a middle-market private equity firm.

The acquisition enhances Astrion’s suite of services, addressing critical challenges across cybersecurity, mission support, systems engineering, and digital solutions. Customers can expect more robust and versatile solutions designed to meet the dynamic needs of today’s global environment.

“We are thrilled to welcome Axient’s talented team to Astrion,” said Dave Zolet, CEO of Astrion. “The dedication and expertise of our combined workforce are fundamental to our success and mission to Be the Difference. Together, we will leverage our collective strengths to drive innovation and deliver results with impact for our customers.”

“We are excited about the value and benefits of scale this acquisition will create for Astrion and its customers,” said Michael Singer, Partner at Brightstar. “We believe Astrion is positioned to drive substantial growth and deliver exceptional outcomes for its customers across the federal government.”

The transaction was announced on July 24, 2024. JP Morgan Securities LLC and Jefferies LLC served as financial advisors to Astrion and Brightstar Capital partners, and Kirkland & Ellis LLP served as legal counsel. KippsDeSanto & Co. and Stone Key Partners LLC served as exclusive financial advisors to Axient and Sagewind Capital, and Paul, Weiss, Rifkind, Wharton & Garrison LLP and Morrison & Foerster LLP served as legal counsel.

About Astrion

Astrion delivers the difference that empowers its customers and nation to take on what’s next. Astrion stands as a partner for progress, providing cutting-edge services that boost preparedness, optimize performance, and ensure mission success. Astrion embraces a forward-thinking spirit to tackle critical challenges across cybersecurity, digital solutions, mission support, science & engineering, and test & evaluation to support the Air Force, Army, Civilian Agencies, Navy, and Space. For more information, please visit www.astrion.us. (Source: BUSINESS WIRE)

06 Sept 24. Boeing’s history with Nasa’s space programme stretches back to the Apollo missions of the 1960s that cemented US dominance among the stars. Now, a shifting competitive landscape and a black eye from stranding two astronauts at the International Space Station are raising a once-unthinkable question: should the company exit the business? Nasa officials announced last month that astronauts Barry “Butch” Wilmore and Sunita “Suni” Williams would be returning to Earth aboard a SpaceX spacecraft next year rather than the Boeing CST-100 Starliner that carried them to the space station in June, their planned eight-day mission lengthening to eight months. Nasa administrator Bill Nelson said he had talked to Boeing’s new chief executive Kelly Ortberg, and was “100 per cent” sure that the company would fly Nasa missions again. But Ortberg has walked into a company in crisis, and his first priority is to turn around Boeing’s commercial planes business. Space is “a bit of a distraction in the portfolio” of commercial and military aircraft, said Todd Harrison, a senior fellow at the American Enterprise Institute. The company may not be ready to sell yet, but “it’s not out of the realm of possibility”. (Source: FT.com)

04 Sept 24. AeroVironment Announces Fiscal 2025 First Quarter Results. AeroVironment, Inc. (“AeroVironment” or the “Company”) reported today financial results for the fiscal first quarter ended July 27, 2024.

“With a growing pipeline and solid operating performance, AeroVironment is working toward achieving another record fiscal year, and we are confident that our success will carry forward into future years.”

Post this

First Quarter Highlights:

Record first quarter revenue of $189.5m up 24% year-over-year
First quarter net income of $21.2m and adjusted EBITDA of $37.2m
In August 2024 awarded U.S. Army Lethal Unmanned Systems Indefinite Delivery, Indefinite Quantity (“IDIQ”) with a record contract ceiling value of $990m and initial funding of $128m

“AeroVironment has once again delivered excellent results, including record first-quarter revenue that’s 24% higher than the same period last fiscal year,” said Wahid Nawabi, AeroVironment chairman, president and chief executive officer. “Our Loitering Munition Systems segment continues to be the highest growth driver for the company posting first-quarter revenue, 68% higher than the same quarter last year.

FISCAL 2025 FIRST QUARTER RESULTS

Revenue for the first quarter of fiscal 2025 was $189.5m, an increase of 24% as compared to $152.3m for the first quarter of fiscal 2024, reflecting higher product sales of $40.0m, partially offset by a decrease in service revenue of $2.9m. From a segment standpoint, the year-over-year increase was due to revenue growth in Loitering Munitions Systems (“LMS”) of 68% and UnCrewed Systems (“UxS”) of 22%, partially offset by a decrease in MacCready Works (“MW”) of 24%.

Gross margin for the first quarter of fiscal 2025 was $81.5m, an increase of 24% as compared to $65.7m for the first quarter of fiscal 2024, reflecting higher product gross margin of $16.1m, partially offset by lower service margin of $0.3m. As a percentage of revenue, gross margin remained consistent at 43%. Gross margin was negatively impacted by an increase of $1.3m of intangible amortization expense and other related non-cash purchase accounting expenses.

Income from operations for the first quarter of fiscal 2025 was $23.1m as compared to $26.4m for the first quarter of last fiscal year. The decrease year-over-year was due to an increase in selling, general and administrative (“SG&A”) expense of $10.0m and an increase in research and development (“R&D”) expense of $9.1m, partially offset by higher gross margin of $15.8m.

Other loss, net, for the first quarter of fiscal 2025 was $0.5m, as compared to $3.1m for the first 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.

Provision for income taxes for the first quarter of fiscal 2025 was $1.5m, as compared to $1.3m for the first quarter of last fiscal year.

Net income for the first quarter of fiscal 2025 was $21.2 m, or $0.75 per diluted share, as compared to $21.9m, or $0.84 per diluted share, in the prior-year period, respectively.

Non-GAAP adjusted EBITDA for the first quarter of fiscal 2025 was $37.2m and non-GAAP earnings per diluted share were $0.89, as compared to $37.3m and $1.00, respectively, for the first quarter of fiscal 2024.

BACKLOG

As of July 27, 2024, funded backlog (defined as remaining performance obligations under firm orders for which funding is currently appropriated to us under a customer contract) was $372.9m, as compared to $400.2m as of April 30, 2024. Funded backlog as of July 27, 2024 includes only initial funding for Switchblade 300 and 600s for the recently announced program wins such as the Low Altitude Stalking and Strike Ordnance or “LASSO” program, Organic Precision Fires-Light or “OPF-L” program, the Replicator Initiative, Ukraine Aid Initiative and our first Lithuanian order. Funded backlog does not include $128 m of initial funding under the recently announced IDIQ contract to deliver LMS systems for the U.S. Army’s Directed Requirement for Lethal Unmanned Systems with a contract ceiling value of $990m. Additional funding for each of these programs is anticipated in our full year plan.

FISCAL 2025 — OUTLOOK FOR THE FULL YEAR

For fiscal year 2025, the Company continues to expect revenue of between $790m and $820m, net income of between $74m and $83m, Non-GAAP adjusted EBITDA of between $143m and $153m, earnings per diluted share of between $2.61 and $2.92 and non-GAAP earnings per diluted share, which excludes amortization of intangible assets, other non-cash purchase accounting expenses and equity securities investments gains or losses, of between $3.18 and $3.49.

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. (Source: BUSINESS WIRE)

03 Sep 24. Boeing’s (BA.N) annual free cash flow target of $10bn may be delayed by about two years to 2027-28 and it would have to raise $30bn before developing a new aircraft, Wells Fargo said and downgraded the stock. Shares of the Dow component fell more than 7% after the bell, amid broad market declines to a near one and a half year low on Tuesday, after lead analyst Matthew Akers pushed Boeing to “underweight” and cut the target price to $119, a 32% downside to the last closing price.

“Boeing carries about $45bn net debt and (it) must address this before it kicks off the next aircraft development cycle,” Akers said, adding that cutting the debt would consume its cash flow through 2030.

The planemaker is working to recover from a crisis sparked by a mid-air accident in January that led to regulatory curbs on its 737 MAX production, which has pressured its free cash flow.

“Given a likely new aircraft launch in the next few years, Boeing will need to shore up the balance sheet sooner,” said Akers, who is rated three out of five stars for estimate accuracy on LSEG Workspace.

“We estimate a roughly $30bn equity raise to get back to zero net debt by 2027.”

In its response, Boeing referred to CFO Brian West’s July earnings call in which he said the planemaker would manage its balance sheet in a prudent manner and would supplement liquidity as needed.

The company had in 2022 outlined annual cash flow target of $10bn by 2025 or 2026.

Boeing’s free cash flow per share could grow to about $20 this decade if it were to delay new planes for “several more years” and just pay down debt, Akers said, but that would risk ceding market share to rival Airbus SE (AIR.PA) in the long run. (Source: Reuters)

04 Sept 24. BlackSky Announces 1-for-8 Reverse Stock Split of Class A Common Stock. Class A Common Stock Expected to Begin Trading on Reverse Split-Adjusted Basis on September 9, 2024. BlackSky Technology Inc. (“BlackSky”) (NYSE: BKSY), today announced that its Board of Directors has approved a 1-for-8 reverse stock split (the “Reverse Stock Split”) of BlackSky’s Class A common stock, par value $0.0001 per share (the “Class A Common Stock”). The Reverse Stock Split was approved by BlackSky’s stockholders at BlackSky’s annual meeting of stockholders held virtually earlier today. The Reverse Stock Split will be effective at 4:15 p.m. Eastern Time on September 6, 2024, and the Class A Common Stock will open for trading on the New York Stock Exchange (the “NYSE”) on a reverse split-adjusted basis on September 9, 2024, under the existing trading symbol “BKSY.”

The new CUSIP number of the Class A Common Stock following the Reverse Stock Split will be 09263B 207. BlackSky’s publicly traded warrants will continue to be traded on the NYSE under the symbol “BKSY.W,” and the CUSIP number for the publicly traded warrants will remain unchanged.

At the effective time of the Reverse Stock Split, every eight shares of issued Class A Common Stock will be automatically reclassified into one new share of Class A Common Stock. The Reverse Stock Split will not change the number of authorized shares of Class A Common Stock or BlackSky’s preferred stock. The par value per share of the Class A Common Stock will also remain unchanged at $0.0001.

As a result of the Reverse Stock Split, proportionate adjustments will be made to the per share exercise price and the number of shares issuable upon the exercise or settlement of all outstanding BlackSky options and restricted stock units to purchase shares of Class A Common Stock, and the number of shares reserved for issuance pursuant to BlackSky’s equity incentive plans will be reduced proportionately. In addition, proportionate adjustments will be made to BlackSky’s outstanding warrants, resulting in each publicly traded warrant becoming exercisable for 1/8th of a share of Class A Common Stock at an exercise price of $92.00 per whole share.

No fractional shares will be issued in connection with the Reverse Stock Split. Stockholders who would otherwise be entitled to receive fractional shares as a result of the Reverse Stock Split will be entitled to a cash payment (without interest) in lieu thereof at a price equal to the number of shares of Class A Common Stock held by such stockholder before the Reverse Stock Split that would otherwise have been exchanged for such fractional share interest multiplied by the closing price per share of the Class A Common Stock on the NYSE on September 6, 2024, the date of the effective time of the Reverse Stock Split.

Continental Stock Transfer & Trust Company is acting as transfer and exchange agent for the Reverse Stock Split. Registered stockholders who hold shares of Class A Common Stock are not required to take any action to receive post-reverse split shares. Stockholders owning shares via a broker, bank, trust or other nominee will have their positions automatically adjusted to reflect the Reverse Stock Split, subject to such broker’s particular processes, and will not be required to take any action in connection with the Reverse Stock Split.

Additional information about the Reverse Stock Split can be found in BlackSky’s definitive proxy statement filed with the Securities and Exchange Commission (the “SEC”) on July 25, 2024, which is available free of charge at the SEC’s website, www.sec.gov, and on BlackSky’s website at: https://ir.blacksky.com.

About BlackSky

BlackSky is a real-time, space-based intelligence company that delivers on-demand, high-frequency imagery, analytics, and high-frequency monitoring of the most critical and strategic locations, economic assets, and events in the world. BlackSky owns and operates one of the industry’s most advanced, purpose-built commercial, real-time intelligence systems that combines the power of the BlackSky Spectra® tasking and analytics software platform and our proprietary low earth orbit satellite constellation.

With BlackSky, customers can see, understand and anticipate changes for a decisive strategic advantage at the tactical edge, and act not just fast, but first. BlackSky is trusted by some of the most demanding U.S. and international government agencies, commercial businesses, and organizations around the world. BlackSky is headquartered in Herndon, VA, and is publicly traded on the New York Stock Exchange as BKSY. To learn more, visit www.blacksky.com and follow us on X (Twitter). (Source: BUSINESS WIRE)

05 Sept 24. Palo Alto Networks Acquires IBM’s QRadar in $500m Deal. Palo Alto Networks, the global cybersecurity leader, has announced the completion of its acquisition of IBM’s QRadar Software as a Service (SaaS) assets. This strategic move, revealed on September 4, 2024, marks a significant milestone in the company’s mission to enhance cybersecurity solutions for its customers.

The acquisition underscores a strengthened partnership between Palo Alto Networks and IBM, aimed at providing customers with best-in-class threat prevention capabilities. This collaboration will address the ever-expanding attack surfaces through a comprehensive platform approach, simplifying security operations for organizations worldwide.

Palo Alto Networks’ Cortex XSIAM platform, powered by Precision AI, will now integrate QRadar’s capabilities, offering a centralized solution that combines SIEM, SOAR, ASM, and XDR functionalities. This integration is expected to streamline security operations and enhance threat prevention at scale.

“We are on a mission to help organizations transform their security operations and harness the potential of Precision AI-powered platforms to better protect their businesses. Our partnership with IBM reinforces our commitment to innovation and our conviction in the tremendous benefit of QRadar customers adopting Cortex XSIAM for a robust, data-driven security platform that offers transformative efficiency and effectiveness in defending against evolving cyber threats,” Nikesh Arora, Chairman and CEO, Palo Alto Networks said.

Benefits for Customers With Migration

Eligible customers will receive free migration services from IBM Consulting, ensuring a smooth transition to the Cortex XSIAM platform. The enhanced platform offers several key advantages:

Seamless migration with retained best practices
Comprehensive SOC functionality beyond traditional SIEM capabilities
Advanced analytics and automation powered by Precision AI
Reduced manual workload for security operations centers

As part of this deal, IBM has furthered its internal deployment of Palo Alto Networks’ security platforms. The tech giant will utilize Cortex XSIAM for its next-gen security operations and Prisma SASE 3.0 for zero-trust network security, protecting over 250,000 of its global workforce.

IBM will continue to support QRadar on-premises clients with features, security updates, and bug fixes. QRadar SaaS customers will maintain their current deployment until they are ready to transition to Cortex XSIAM.

“Together, IBM and Palo Alto Networks are shaping the future of cybersecurity for our customers and the industry at large. Working with Palo Alto Networks will be a strategic advantage for IBM as our two companies partner on advanced threat protection, response, and security operations using Cortex XSIAM and watsonx, backed by IBM Consulting. At the same time, IBM will continue innovating to help secure organizations’ hybrid cloud environments and AI initiatives, focusing our investments on data security and identity and access management technologies,” Arvind Krishna, Chairman and CEO of IBM, said.

This acquisition is expected to shape the future of cybersecurity, combining Palo Alto Networks’ innovative solutions with IBM’s consulting expertise. The partnership aims to accelerate the adoption of advanced threat protection and response capabilities across various industries.

As cyber threats continue to evolve, this strategic move positions Palo Alto Networks to offer more robust, AI-powered security solutions to its global customer base. The integration of QRadar’s assets into the Cortex XSIAM platform represents a significant step towards more efficient and effective cybersecurity operations in an increasingly complex digital landscape. (Source: News Now/https://cybersecuritynews.com/)

04 Sept 24. Prince Industries, a HCPI Portfolio Company, Further Expands Its Aerospace and Defense Capabilities With Acquisition of Keystone Precision & Engineering. Prince Industries (“Prince”), a leading precision machining and sheet metal fabrication company and HC Private Investments (“HCPI”) portfolio company, announced the successful acquisition of Keystone Precision & Engineering (“Keystone”). This transaction will expand Prince’s capabilities and further its market reach into aerospace, defense and medical end-markets. Terms of the transaction were not disclosed.

Based in Pepperell, MA, Keystone collaborates with its defense and medical customers from product design through assembly, ensuring the delivery of high-quality, reliable components for essential end-products.

Mark Miller, Chief Executive Officer of Prince, said, “The acquisition of Keystone further enhances our production capabilities, bolsters our East Coast presence, and expands our market penetration in the defense and medical markets. Keystone’s expertise in producing complex, critical parts, combined with their commitment to quality and reliability, aligns well with the Prince model.”

“Since 2007, we have dedicated ourselves to providing our customers with the highest quality workmanship, meticulous attention to detail, and reliable on-time delivery,” stated Anthony Serino and Rob Stanieich, Keystone’s Owners. “We look forward to partnering with Prince for the next chapter of growth for the business.” Mr. Stanieich will remain with the business, joining Prince as VP of Engineering.

Winston & Strawn LLP served as legal counsel to Prince Industries and HCPI. Wintrust Financial Corporation, Signature Bank, and Midwest Mezzanine Funds provided debt financing for the transaction. Veteran business advisor, Steve Lane helped advise Keystone on the transaction.

ABOUT PRINCE INDUSTRIES

Prince Industries is a precision machining and sheet metal fabrication company focused on the industrial, aerospace, and medical end-markets. Prince provides its customers with a full suite of services from engineering and product design to material selection, process mapping, welding, powder coating and assembly. Originally acquired by HCPI in 2022 and still led by its founding family member, Mark Miller, Prince has 500 employees across seven manufacturing facilities globally. For more information, please visit https://www.princeind.com.

ABOUT HC PRIVATE INVESTMENTS

HC Private Investments is a private equity investment firm focused on investing in manufacturing businesses within the consumer and industrial markets. The firm will also bring select family offices and individuals to participate in its transactions providing HCPI with a flexible and patient capital base. With a focus of being the first professional investor in a business, HCPI seeks to partner with business owners, executives and management teams to identify opportunities to remove impediments to growth enabling companies to maximize their full value potential. For more information, please visit www.hcprivateinvest.com. (Source: BUSINESS WIRE)

05 Sep 24. Airbus Defence and Space has finalised the acquisition of infodas, a German company that provides cybersecurity and IT solutions in the public sector including for defence and critical infrastructures, and which is now becoming an Airbus subsidiary. This follows receipt of the required regulatory approvals.

“This acquisition supports Airbus’ strategic ambition to strengthen its cybersecurity portfolio for the benefit of its European and global customers,” said Karen Florschuetz, Executive Vice President of Connected Intelligence at Airbus Defence and Space.

With the exponential growth of cyber threats, along with the increasing digitalisation and connectivity of defence and aerospace products and systems, cybersecurity is an important component of Airbus’ development. Over the last years, the company has continuously developed its cybersecurity capabilities and expertise, ensuring the best possible protection for its products, operations, customers, and ecosystem, including in the perspective of major military programmes such as the Future Combat Air System (FCAS).

Infodas with around 250 employees and annual revenues of about 50 m euros is headquartered in Cologne, it has additional offices in Germany in Berlin, Bonn, Hamburg, Munich and Mainz. The company has been certified by the Federal Office for Information Security (BSI) as an IT security service provider in the areas of information system auditing, consulting and penetration tests. The infodas Secure Domain Transition (SDoT) Security Gateway product family is approved for classification levels up to secret. The products are also certified in accordance with the Common Criteria (CC) and have other country-specific certificates.

03 Sep 24. BAE Systems has acquired Kirintec, an innovative UK cyber and electromagnetic activities (CEMA) company, which specialises in counter-Improvised Explosive Devices (IED), counter-Uncrewed Air Systems (UAS) and electronic warfare products and solutions.

Kirintec’s battle-proven technology protects military platforms and personnel from cyber and electromagnetic attacks. The open architecture of the products enables them to work together across all domains and a range of military platforms.

The acquisition brings together complementary capabilities in CEMA and multi-domain integration and will enable BAE Systems to support growing customer requirements and address increasing demand for these capabilities. Kirintec will form part of BAE Systems’ Digital Intelligence business, providing new products to broaden the Company’s portfolio across electronic warfare and force protection.

Andrea Thompson, Group Managing Director, BAE Systems’ Digital Intelligence business, said: “The nature of warfare is changing for our military customers and adversaries are increasingly using offensive and defensive cyber and electronic warfare capabilities so Kirintec is a welcome addition to our business. Together, our complementary capabilities will help our armed forces secure electromagnetic spectrum dominance and conduct operations with a reduced risk of casualties or operational setbacks.”

Nick Watts, CEO, Kirintec, said: “The opportunity for CEMA expansion is significant amidst today’s increasingly digitally-driven battlespace. In order to address the demand and grow to the level our customers require, we are delighted to join BAE Systems and combine our heritage in CEMA with BAE Systems’ global pedigree in delivering multi-domain solutions.”

The deal supports BAE Systems’ strategy to develop breakthrough technologies, pursuing bolt-on acquisitions with technology-rich companies that complement the Company’s existing portfolio.

Kirintec’s approximately 50 strong workforce will continue to operate from its site in Herefordshire, supporting its existing customers. BAE Systems will help the business to increase investment in product development and bring these innovative solutions to a wider range of customers across the UK and allied nations.

03 Sept 24. T2S Solutions Acquires Flexitech Aerospace, Expanding Its Footprint into Spaceflight Product Offerings for Earth Orbit and Lunar Operations. T2S Solutions (“T2S”), a founder-led, mission-focused provider of product and solutions in support of U.S. Defense and Intelligence Missions, today announced that it has acquired Flexitech Aerospace, a leading radio-frequency (RF) engineering company that provides analysis, design and manufacturing of spaceflight RF communications systems and components. This transaction supports T2S’ broader strategy to accelerate growth and innovations in the space technology sector by incorporating Flexitech Aerospace’s complimentary RF capabilities, spaceflight heritage, and extensive customer relationships with T2S’ existing government portfolio and space mission systems expertise.

Kevin Jackson, CTO and Founder at Flexitech Aerospace, said: “It’s truly gratifying to see our journey culminate in this exciting new chapter with T2S. This transition marks a significant milestone for our entire team, and I’m confident that joining forces with such an innovative and dynamic partner will unlock vast opportunities for growth and success. I’m proud of what we have built and am excited about the role current and future Flexitech Aerospace product offerings will play as T2S continues to bolster its spaceflight heritage platform for valued existing and new customers.”

Founded in 2015 and located in Orlando, FL, Flexitech Aerospace brings expertise in spaceflight technology trends for earth orbit, lunar orbit, and cislunar space as well as human spaceflight RF expertise. Flexitech Aerospace has successfully developed and manufactured a wide range of RF systems and components, including a variety of antennas that have been deployed in earth orbit and supported lunar landers, spaceflight avionics and ground test equipment and ground stations. They have delivered deployable and non-deployable solutions over the years through the Company’s patents on certain deployable antenna technologies. Flexitech Aerospace excels in market analysis informing spaceflight performance analysis, system design, integration, and testing at all stages of the communications system development and spacecraft operations. Their team, renowned for its RF design leadership, delivers technical solutions for the most demanding spaceflight applications. Surpassing its competitors, Flexitech Aerospace has flown over 150 products in space and continues to adapt existing designs and develop new solutions that meet or exceed customer requests. T2S intends to scale existing Flexitech Aerospace operations and their shared spaceflight engineering expertise to further elevate their RF capabilities, product designs, and manufacturing.

Tim Gay, Co-Founder & Chief Executive Officer of T2S, said: “We are thrilled to welcome Flexitech Aerospace into the T2S family. This acquisition represents a significant step forward in our commitment to expanding our capabilities and strengthening our presence in the rapidly growing satellite and space industry. We take pride in our innovative and mission-driven culture, unique customer relationships, and expertise in high-demand domains and believe Flexitech Aerospace fosters that same mentality. Flexitech Aerospace has an exceptionally qualified team with a successful reputation for on-time delivery, and with such a unique skill set, they are bound to continue to stand out and execute in this industry. Building upon Flexitech Aerospace’s success, we will continue to push the boundaries of spacecraft and human spaceflight and expand our commercial offerings to accelerate our overall growth. Ultimately, this transaction is a key part of our strategic vision, and with increased R&D resources and funding, now is the ideal time to advance that vision and widen our space capabilities.”

About T2S Solutions

T2S Solutions is an innovative, agile, mission-focused product and solutions provider specializing in Rapid Prototyping and Experimentation, Systems Development, Integration, Test and Sustainment for the U.S. Department of Defense, Mission Partners and the U.S. Intelligence Community, Industry Partners, and other U.S. Government Agencies. Its domain expertise spans Space, High Altitude, Positioning, Navigation, and Timing (PNT), AI / ML, C5ISR, Chemical Biological Radiological Nuclear (CBRN) Detection, and Electronic Warfare (EW). T2S has 250 employees and is headquartered in Belcamp, MD, near Aberdeen Proving Ground, with a large integration facility in Huntsville, AL that serves as the Tactical Space Layer Integration Lab. Madison Dearborn Partners, LLC (“MDP”) invested in T2S in 2023. Learn more at www.t2s-solutions.com.

About Flexitech Aerospace

Flexitech Aerospace is a space communications system design and RF engineering company located and headquartered in Orlando, FL that provides analysis, design and manufacturing of RF systems and components to support satellite development, manufacturing and in-orbit operations. Their in-house test and verification lab permits comprehensive capabilities to test up to 40GHz over a wide range of thermal conditions. For more information, please visit www.flexitechaerospace.com. (Source: BUSINESS WIRE)

04 Sept 24. Black Sky Aerospace rebrands into Black Sky Industries.

Industry. Australian rocket propellant and solid rocket motor developer Black Sky Aerospace has rebranded into Black Sky Industries.

Defence industry and technology company Black Sky Industries has formally launched in Australia, announcing the establishment of its multi-m-dollar headquarters in Logan, in South East Queensland as well as launch, test and manufacturing facilities throughout Western Queensland.

Black Sky aims to greatly accelerate the production capability of sovereign scaled rocket motor and defence systems.

Black Sky Industries was founded by aerospace, defence and manufacturing industry veterans Blake Nikolic and Karl Hemphill, and Dr Vu Tran, who co-founded $3bn-plus technology start-up Go1.

Black Sky has ambitions of creating hundreds of advanced manufacturing and defence industry jobs over the next decade. Recent key hires at the company include former L3Harris Technologies director David Johnson as general manager and enterprise development and defence innovation veteran Stephen Delo.

Black Sky is reimagining how rockets are designed, developed and manufactured at scale. As a local producer of ammonium perchlorate (AP) – crucial to conventional solid rocket motors used in aerospace and defence industries – Black Sky produces solid rocket propellant and motors, and offers its homegrown, proprietary Wagtail Rocket Assisted Take-Off (RATO) technology for unmanned aerial vehicles (UAV) and drones.

Cortex1, Black Sky’s proprietary software platform, underpins all aspects of its operations, from research and development and manufacturing to powering products and platforms, including launch control, tracking and mapping through data-driven propellant formulation and characterisation technology using artificial intelligence.

Black Sky’s rapid-fire pace to innovate is in line with a key tenet of the federal government’s 2024 National Defence Strategy, to better integrate existing and emerging technologies, and to deliver defence effectiveness in the coming decade.

“At Black Sky, complex rocket manufacturing is done with a high degree of innovation, security and safety but at much lower cost than others. This has the potential to save Australia and our allies bns of dollars and ensure taxpayer funds can be utilised in other areas,” Nikolic said.

“We innovate, move quickly, and deliver results. We achieve what others won’t even attempt and we imagine the unimaginable and bring it to life. Like traditional technology and software companies, we have a strong focus on product velocity, a concept we think will be essential in future defence technology development.”

Dr Tran said Black Sky will help secure and strengthen local defence supply chains and reduce Australia’s dependence on external jurisdictions.

“Australia spends $50–$55bn on defence each year yet we’re lucky to have just one company in the top 100 list of defence suppliers. Black Sky aims to change that,” Dr Tran said.

“Having sovereign defence capability will help Australia achieve greater efficiency and resilience in the delivery of defence technologies, and in our ability to protect the nation.”

“There are myriad benefits to manufacturing locally, including lower geopolitical risks, increased operational transparency, regulatory compliance alignment, intellectual property protection, enhanced ability to customise products, less dependence on international suppliers, reduced exposure to global supply chain disruptions, faster time to market and quality control – with a predictable cost structure.

“It also encourages the growth of local businesses while building a skilled workforce to develop a consistent pipeline of local talent with proximity and access to local R&D institutions,” Dr Tran said. (Source: Google/Defence Connect)

03 Sept 24. KBR Completes LinQuest Acquisition, Expanding Digital, National Security Space and Intelligence Capabilities. KBR (NYSE: KBR) announced today it has completed the acquisition of LinQuest Corporation, a leading provider of advanced engineering, data analytics and digital integration with a strong history of solving complex technical challenges for national security space missions.

The acquisition strengthens KBR’s capabilities across space, air dominance and connected battlespace missions. LinQuest also has a heritage of serving important U.S. government customers including the U.S. Space Force, U.S. Air Force and other U.S. Department of Defense and intelligence agencies.

“LinQuest’s portfolio of capabilities significantly expands KBR’s ability to meet growing customer demands and continues KBR’s goal of transforming and enhancing key high-end digital solutions,” said Stuart Bradie, KBR President and Chief Executive Officer. “We have been continually impressed with their people-first culture and amazing expertise, so it’s a thrilling day to be able to officially welcome them to the KBR family.”

KBR will immediately begin integrating LinQuest into KBR’s Government Solutions segment and Defense and Intel business unit.

Given the closing date, LinQuest’s financial results are not expected to be material to KBR’s Q3 2024 financial results. Therefore, impacts of the acquisition to KBR’s full year guidance will be discussed on the Q3 earnings call.

KBR has decades of experience providing mission-critical solutions for customers across the national security and space domains including customers ranging from the Department of Defense, NASA and various intelligence agencies.

04 Sept 24. Patria strengthens its cyber business area by acquiring a product and business related to open source data collection from WithSecure. Patria 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 and 10 WithSecure experts currently working in the business area will join the company. The parties do not disclose the value of the acquisition.

Patria plans to continue developing the acquired product as part of its Battlefield and critical systems offering. Its product range includes Patria CRAWLR, a system designed for collecting and analysing open-source data.

“Implementation of Patria’s growth strategy requires significant investment in product development, know-how and services. What Patria offers in its cyber business solutions and services is constantly being developed. Operational reliability and information security in all conditions are particularly essential when developing intelligence, monitoring and command systems to security-critical customers,” says Jussi Järvinen, Executive Vice President of Patria’s Finland Division.

“Oulu, on the other hand, has a significant concentration of the defense industry and the necessary engineering expertise. Expanding to Oulu also offers an opportunity for a wider talent base for Patria’s current and future needs, where Patria has already been present through its group’s subsidiary Senop,” Järvinen continues.

Patria does a lot of research and product development in cyber technologies related to warfare. Patria’s specialty is the systems that safety-critical authorities need to organize operational activities.

The acquisition has received the approval of the Finnish Ministry of Employment and the Economy (TEM). The transaction will not affect current customer commitments, employment relationships or other commitments in the business area. The business will be transferred to Patria on 1 October, 2024.

03 Sept 24. Exosens (Euronext FR001400Q9V2 – EXENS), a high-tech company focused on providing mission and performance-critical amplification, detection and imaging technology, today announces its results for the half-year ended 30 June 2024.

Strong revenue growth of +50% to €186.9m, driven by organic growth (+35% on a like for like basis) and successful integration of strategic acquisitions
Adjusted gross margin of €91.1m in H1 2024, 48.8% of revenue (+350bps vs. H1 2023)
Significant increase of the profitability, with the adjusted EBITDA reaching €56.1m in H1 2024 (vs. €34.0m in H1 2023), or 30.0% of revenue (vs 27.2% in H1 2023)
Strong deleveraging with a net leverage of 1.3x as of 30 June 2024, following Exosens’ successful IPO
Fully on track to deliver full-year guidance for 2024

“The first six months of the year marked a turning point for Exosens, highlighted by a €180m capital increase during our successful IPO in June 2024. Our revenues have grown by c.+50% versus last year, with both our segments growing strongly. This performance, accompanied by further increase in profitability, is the result of our successful operational and M&A strategies. Thanks to these achievements, we are fully on track to deliver our guidance for 2024. We are well-positioned to capitalize on future opportunities and to continue pursuing a highly profitable growth trajectory while achieving our mission to provide innovative components for a safer world”, said Jérôme Cerisier, Chief Executive Officer.

Continued growth momentum, revenues up 50%

Exosens experienced a strong start to the year with consolidated revenues reaching €186.9m for H1 2024, marking a significant growth of +50% (+€61.9m).

This robust performance was driven by substantial organic growth of +35%, which was bolstered by significant traction in group sales volume and favourable product mix.

Additionally, the successful integrations of Telops, El-Mul, and ProxiVision, acquired in October 2023, July 2023, and June 2023 respectively, have been key contributors. Sales and R&D teams are now collaborating effectively, showcasing Exosens’ ability to cross-fertilize technology and expand its commercial reach globally.

Amplification revenue totalled €138.5m, up +46.8% on a reported basis. This growth was driven by the positive impact of favourable product mix, alongside strong volume performance and flawless execution.

Detection & Imaging revenue totalled €50.4m in the first half, up +60.2% on a reported basis. This performance was led by the positive effect of price evolution and controlled costs, coupled with improved yields and synergies extraction. The successful integrations of El-Mul and Telops have also supported the robust commercial performance of the segment.

Key financials

Profitability increases significantly at group level and across both segments

Exosens recorded a significant increase of its profitability at group level and across both segments during H1 2024. This increase in profitability was driven by favorable product mix effects, volume increases resulting in better absorption of fixed costs, and the ongoing implementation of operational excellence measures.

Adjusted gross margin amounted to €91.1m in H1 2024 (48.8% of revenue) compared to €56.6m in H1 2023 (45.3% of revenue), representing an increase of 61% on a reported basis (+42.8% on a like for like basis).

By segment, adjusted gross margin breaks down as follows: for Amplification, adjusted gross margin reached €65.2m (vs €42.1m in H1 2023) representing a margin of 47.1% (vs 44.6% in H1 2023). For Detection & Imaging, adjusted gross margin totalled €25.8m (vs €14.4m in H1 2023), representing a margin of 51.1% (vs 45.8% in H1 2023).

Adjusted EBITDA grew by +64.8% reaching €56.1m in H1 2024, compared to €34.0m in H1 2023. This represents an adjusted EBITDA margin of 30.0% (vs 27.2% in H1 2023), an improvement of 278 basis points over H1 2023.

At group level, adjusted EBIT reached €46.1m in H1 2024, up from €24.7m in H1 2023, representing an adjusted margin of 24.7%, an improvement of 291 basis points compared to 21.8 % in H1 2023.

Solid cash flow generation during H1 2024

Exosens generated a robust free cash flow (FCF) of €23.6m during the first half of 2024, of which €22.0m is coming from organic growth and €1.6 m from the scope effect. This strong cash generation represents a significant increase from €1.8m recorded in H1 2023 despite the one-time expenses related to the consulting fees related to the IPO.

With controlled capex, Exosens achieved a cash conversion rate of 75%, in line with the full year guidance of 75-80%.

Continued investment in R&D to remain at the edge of technology

During H1 2024, R&D expenses amounted to €14.7m, representing 7.9% of sales, compared to €10.0m (8.0% of sales) in H1 2023. This increase includes €1.9m related to the scope effect from recent acquisitions and €1.6m directed towards innovative projects at early stage of development. The company also benefited from an increase of €1.2m in tax credits and customer funding, reflecting successful efforts to secure customer co-investments.

Capex optimization plan under way, now at 7% of sales

Exosens continues to optimize its capital expenditure, with Capex now representing 7.0% of sales in H1 2024, down from 8.8% in H1 2023. The company has increased its maintenance Capex to €5.9m in H1 2024, up from €3.0m in H1 2023, focusing on projects aimed at improving productivity and enhancing IT infrastructure. Growth Capex, totaling €7.2m, has been directed towards facilities modifications to accommodate new equipment and investments in tools to secure the capacity plan and support new product development.

Our capital structure fully supports our growth strategy

Following Exosens’ successful IPO, which included a capital increase of approximately €180m, the Group has significantly deleveraged, reaching a total net debt to adjusted EBITDA ratio of 1. 3x as of 30 June 2024. This marks a strong reduction from the net debt of €302.3m and a leverage ratio of 3.3x recorded as of 31 December 2023 and provides us ample capacity to pursue our investments in growth.

Key developments post H1 2024

Exosens successfully completed two synergistic bolt-on acquisitions following the close of the H1 2024 period. The acquisition of Centronics, a leader in radiation detection solutions, closed on 31 July 2024. This acquisition will further consolidate Exosens’ position in the field of nuclear instrumentation, contributing to the development of product offering in the Nuclear field.

Additionally, on 1 September 2024, Exosens successfully completed the acquisition of LR Tech, which specializes in Fourier transform infrared spectroscopy applied in research, gas detection, and environmental monitoring. This acquisition is aimed at complementing Exosens’ product portfolio in cooled infrared technology.

In August 2024, Exosens was awarded the EcoVadis Silver Medal, placing the company in the top 15% worldwide for its strategic CSR commitments.

Outlook for 2024

Exosens is fully on track to deliver its 2024 guidance communicated at IPO, notably expecting:

High-teens organic revenue growth and around 30% total revenue growth including 2024 acquisitions.
Adjusted EBITDA of at least €115m (excluding 2024 acquisitions) and adjusted EBITDA margin slightly above the 2023 level.
Adjusted EBIT margin between 24-25%, with an organic cash conversion rate of 75-80%.
Net leverage around 1.6x by year-end, including recent and planned acquisitions.

Financial Calendar

28 October 2024 (before markets open): Third quarter revenue and gross margin 2024

ABOUT EXOSENS:

Exosens is a high-tech company, with more than 85 years of experience in the innovation, development, manufacturing and sale of high-end electro-optical technologies in the field of amplification, detection and imaging. Today, it offers its customers detection components and solutions such as travelling wave tubes, advanced cameras, neutron & gamma detectors, instrument detectors and light intensifier tubes. This allows Exosens to respond to complex issues in extremely demanding environments by offering tailor-made solutions to its customers. Thanks to its sustained investments, Exosens is internationally recognized as a major innovator in optoelectronics, with production and R&D carried out on 10 sites, in Europe and North America and with over 1,600 employees.

Exosens is listed on compartment A of the regulated market of Euronext Paris (Ticker: EXENS – ISIN: FR001400Q9V2) and is a member of Euronext Tech Leaders segment.

02 Sept 24. MTI Wireless Edge. Analysts were right to expect more from this defence stock. Prospects for the Israel-based technology group are supported by increasing demand for communications equipment from the military.

First-half pre-tax profit up 10 per cent to $2.3m
Flat revenue of $22.3m
Share buyback programme expanded

Israel-based technology group MTI Wireless Edge (MWE:42p) delivered a solid first-half trading performance that underpins analysts’ expectations of slightly higher full-year pre-tax profit of $4.9m on revenue of $48.2m.

Chief executive Moni Borovitz highlights that MTI is seeing strong enquiry levels, most notably in the defence sector, for the group’s range of communication and radio technology solutions. The antennae business sells ‘off the shelf’ flat and parabolic antennas as well as custom-developed antenna solutions to a range of commercial and military customers.

Shortly after the results, MTI landed a €2.6m (£2.2m) order for the delivery of radio frequency components to its biggest customer in the defence sector. Expect many more. That’s because although defence spending has risen across the world following the outbreak of multiple conflicts, orders for military antennas, while critical to all defence operations, tend to lag orders for other types of military equipment. MTI is now experiencing a strong flow of orders and new contract opportunities. So, expect the antenna division, which increased first operating profit and revenue 16 per cent to $0.32m and $6.7m, respectively, to continue performing well.

Profits surge in water control management

The majority of the first-half profit growth came from the group’s water control business, which provides wireless control systems to manage irrigation and water distribution for agriculture, municipal authorities and commercial entities.

A combination of improved gross margin, lower marketing spend, positive currency exchange movements and successive price rises propelled divisional operating profit up almost a third to $1.26m. This was despite an 11 per cent decline in revenue to $7.7m caused by sluggish markets in Europe and North America and disruption in Israel due to the ongoing conflict. Importantly, demand from local municipalities has now normalised and Borovitz reports that orders in Europe and North America have improved, too. That augurs well for the future, as does demand for a recently launched new solution.

The strength in the water control business offset a shortfall in the MTI Summit Electronics brand, which exclusively represents 40 international suppliers of radio frequency/microwave components and sells these products to Israeli customers. The core business continues to perform well, but subsidiary PSK, an Israeli developer and integrator of communication and monitoring systems for the defence market, was lossmaking. This explains why divisional operating profit halved to $0.4m on flat revenue of $8.1m. Costs have been cut to address the issue, although Borovitz does report that PSK’s bid pipeline includes some material contract opportunities, which could accelerate its recovery.

Forecasts

MTI is unusual for a technology company in that it pays an attractive dividend. The shares offer a prospective dividend yield of 6 per cent and the board has also expanded the earnings-accretive share buyback programme from £0.7m to £1m. MTI certainly has surplus funds to deploy. Buoyed by estimated free cash flow (FCF) of $4.4m (£3.4m), MTI’s net cash is forecast to swell to $9.3m by the year-end, a sum that equates to a fifth of the group’s market capitalisation of £36.5m.

The high-yielding shares have delivered an 11 per cent total return since the annual results (‘MTI is a smart play on the defence spending boom’, 11 March 2024) and remain attractively priced on a prospective price/earnings (PE) ratio of 12 and underpinned by a FCF yield of 9.2 per cent. Buy. (Source: Investors Chronicle)

02 Sept 24. Exosens, (Euronext FR001400Q9V2 – EXENS) a high-tech company focused on providing mission and performance-critical amplification, detection and imaging technology, today announces the acquisition of Quebec-based company LR Tech, a specialist developer and manufacturer of FTIR (Fourier Transform Infra-Red) devices.

Exosens announces the completion of the acquisition of Quebec-based LR Tech, a specialist in FTIR (Fourier Transform Infra-Red) spectroradiometers.
This acquisition will enable Exosens to complete its instruments offering for high-end detectors and imagers, targeting science and environmental markets for major players. It will further strengthen Exosens’ position in the field of high-performance instrumentation with proven experience with the world’s main research labs.
Following the recent acquisition of Centronic, this new milestone marks another strategic step in establishing Exosens’ position as a Tech platform accelerating growth and as one of the leaders in the Detection and Imaging markets the Company targets.

“With the acquisition of LR Tech, we are consolidating our position in instrumentation, adding FTIR products to our portfolio. Complementarities between TELOPS and LR Tech are a great opportunity to leverage our capabilities to become a major player in high demanding spectroscopy instruments. This new transaction is another key milestone for Exosens furthering its accretive bolt-on strategy by acquisition of skilled companies to accelerate growth.” commented Jérôme Cerisier, CEO of Exosens.

LR Tech, located in Quebec City, is a leading player in the FTIR spectrometry field, providing cutting-edge products with unparalleled performance in resolution, speed, and accuracy, due to deep industry knowhow and long-standing expertise in end markets, such as Defense&Aerospace, Environmental and Meteorology.

“Today marks the beginning of an exciting new chapter for LR Tech’s history. We founded LR Tech in 2003 and it has since become a market leading designer and manufacturer of high performance spectroradiometers for trusted long-term customers such as NASA or DoE (US department of energy). We are recognized for our skills to build instruments with features that need to fulfil stringent quality standards. Joining Exosens is an incredibly fruitful step for our company as this transaction will allow us to strengthen our current market position through the crosspollination of sales forces, R&D and manufacturing support and expertise with TELOPS.” stated Luc Rochette, CEO of LR Tech.

ABOUT EXOSENS:

Exosens is a high‐tech company, with more than 85 years of experience in the innovation, development, manufacturing and sale of high‐end electro‐optical technologies in the field of amplification, detection and imaging. Today, it offers its customers detection components and solutions such as travelling wave tubes, advanced cameras, neutron & gamma detectors, instrument detectors and light intensifier tubes. This allows Exosens to respond to complex issues in extremely demanding environments by offering tailor‐made solutions to its customers. Thanks to its sustained investments, Exosens is internationally recognized as a major innovator in optoelectronics, with production and R&D carried out on 10 sites, in Europe and North America and with over 1,600 employees.

Exosens is listed on compartment A of the regulated market of Euronext Paris ﴾Ticker: EXENS – ISIN: FR001400Q9V2﴿ and is a member of Euronext Tech Leaders segment.

30 Aug 24. Austal turns profitable in FY2024, faces execution challenges.

AUSTAL’s FY2024 end of year results show a turnaround on previous losses, with a EBIT of $56.5m this year.

Austal Limited secured a contract worth A$157m to build two more Evolved Cape-class patrol boats for the Royal Australian Navy, which will enhance the country’s maritime capabilities and strengthen its naval shipbuilding sector. Source: Austal Australia

Austal Limited has announced on 30 August its financial results for the fiscal year ending June 2024, reporting a notable improvement in earnings despite a slight decline in revenue.

The company announced on an Earnings Before Interest and Tax (EBIT) for 2024 of $56.5m, a significant turnaround from the $4.8m loss in the previous financial year.

This improvement was achieved on a revenue of $1.47bn, which was down by 7% from the $1.59bn reported in FY2023. Those low revenues wer largely due to reduced contributions from shipbuilding activities as the company transitioned between programmes, particularly in the USA.

The turnaround is a positive indicator of Austal’s ability to adapt to a changing market and material conditions, and suggests the company was successful in optimising costs and improving margins in key areas. However, the influence of exceptional items on the EBIT figure demands proper examination from investors.

Breaking down the EBIT turnaround

The positive EBIT result of 2024 was driven by new contributions from Austal’s operations in the United States, where the company saw a resurgence in shipbuilding profitability, particularly from advanced programmes like the Littoral Combat Ships (LCS) and Expeditionary Fast Transports (EPF).

However, the EBIT figure also included significant exceptional items, such as $57m in legal costs related to the resolution of a longstanding US regulatory investigation and a $54m profit from the sale of land in Mobile, Alabama. After accounting for these items, Austal reported a Net Profit After Tax (NPAT) of $14.9m, a reversal from the net loss of $13.8m in FY2023.

Austal’s financial position remains robust, with cash at bank totalling $173.5m as of 30 June 2024, slightly down from $179.2m the previous year. The company ended the year with a net cash position of $3.9m, down from $49.7m, reflecting a net operating cash outflow of $13m. This was in contrast to the $86.7m inflow reported in FY2023, largely influenced by the timing of milestone payments.

The reduction in net cash and the shift to a cash outflow position indicates potential liquidity pressures, especially in light of the upcoming capital expenditure program to expand shipbuilding capacity in the US. The decision to withhold dividends for FY2024, while prudent in maintaining balance sheet strength, may be a disappointment to shareholders expecting returns. (Source: naval-technology.com)

02 Sept 24. The value of European sustainable investment funds’ exposure to defence stocks has more than doubled since Russia’s invasion of Ukraine, as policymakers push the need for a strong defence industrial base. About a third of funds in Europe and the UK focused on environmental, social and governance issues now have €7.7bn invested in the sector, compared with €3.2bn in the first quarter of 2022, according to an analysis for the Financial Times by Morningstar Direct. Although the rise in value is in part due to the share prices of defence companies soaring since Moscow’s full-scale attack on Ukraine in February 2022, many investors have also bought into the argument from governments that backing arms makers, long the subject of boycotts and student protests, should carry positive social connotations rather than exclusively downside risk. “The situation in Ukraine has very much brought to the fore this idea of, ‘Can we actually defend ourselves?’,” said Sonja Laud, chief investment officer at Legal and General Investment Management. The fighting in Ukraine sparked a debate about whether military contractors can be viewed as an ESG investment. While investment in controversial weapons such as cluster bombs and landmines as defined in international treaties is banned — a status that is well-established in the asset management industry — Laud believes defence can be seen as sustainable. Companies would still need to be assessed individually, as would the weapons they make and which countries these were sold to, “but we would not exclude defence as a principle”. Morningstar’s analysis also shows the number of European ESG funds holding more than 5 per cent in aerospace and defence companies tripled, going from 22 to 66 in the past two years. BNP Paribas ETFs, including its Easy CAC 40® ESG UCITS ETF, have breached 10 per cent of holdings in aerospace and defence, as has Paris-based Amundi’s Index Solutions CAC 40 ESG. Amundi declined to comment. Michael Field, Morningstar’s European Equity Strategist, said the sector had “always been an ESG minefield, but this too is shifting in investors’ minds” with managers viewing it more “with an open mind” in the wake of the conflict in Ukraine. The value of the funds’ aerospace and defence sector holdings are still small relative to their overall assets, accounting for less than 1 per cent of the €1.5tn held. However, the sector has gone from a “relatively uninteresting sector in a lot of investors’ minds” to one that many now “feel they need to be invested in, otherwise they may get left behind”, Field said. The MSCI Europe aerospace and defence index has risen by 1.8 times since the start of 2022 as shares in leading contractors have soared. In the wider investment market, holdings in defence-themed mutual funds and exchange traded funds more than tripled from $5.8bn in Jan 2022 to $17.6bn July 2024, according to data from LSEG Lipper. (Source: FT.com)

02 Sept 24. Safran buys AI firm Preligens for 220m euros. French jet engine maker Safran (SAF.PA) said on Monday it had struck a deal to buy AI firm Preligens for 220m euros ($243.3m). Preligens, which specialises in artificial intelligence for aerospace and defense, will be renamed Safran.AI and will become a part of the Safran Electronics & Defense business area. It develops complex algorithms and software to analyse and automatically detect and identify objects of military interest using commercial and government satellite imagery, Safran said.

“By combining our strengths, we’re determined not only to support the development of Preligens’ AI solutions, but also to jointly open up entirely new areas of AI application in aviation, defense and space,” CEO of Safran Electronics & Defense, Franck Saudo, said in a press release. ($1 = 0.9042 euros) (Source: Reuters)

02 Sept 24. Czech Drone Maker Primoco UAV Sees Record Profits. Czech drone manufacturer Primoco UAV has reported record-breaking financial results for the first half of 2024, driven by growing demand for its advanced unmanned aerial systems. The company, which is listed on the Prague Stock Exchange, saw its revenue increase by 81% year-over-year to 331m CZK ($14.6m), while net profit surged by the same percentage to 121m CZK ($5.3m).

Ladislav Semetkovský, the CEO and founder of Primoco UAV, attributes the company’s success to the superior quality and durability of its drones, which have proven their capabilities in missions across four continents.

“Customers appreciate not only the quality of our machines but also our ability to respond flexibly to their individual needs and deliver quickly,”

said Semetkovský. He emphasized that the company’s focus on investing in innovative technologies, manufacturing capacity, and global partnerships has allowed it to maintain an operating margin above 40%.

Primoco UAV has also secured new contracts worth over 500 m CZK ($22 m) in the first half of the year, involving the delivery of 26 UAVs. This aligns with the company’s annual forecast to secure orders for 50 to 60 drones, valued at approximately 1bn CZK ($44m). Last year, the company delivered 33 of its Primoco UAV One 150 aircraft.

The rising demand for Primoco UAV systems is partly due to the current geopolitical situation, as governments and security forces increasingly recognize the importance of UAVs in national defense. Additionally, the company’s drones are finding new applications in the civil sector. For instance, a recent contract with an Asian customer involves using Primoco UAVs for airport navigation system calibration and evaluation missions.

The company is also expanding its production, service, and training facilities, having acquired 303,000 square meters of land in Písek for this purpose. “

We have already invested 125m CZK in this crucial project from our own resources,” said Semetkovský, noting that construction could begin as early as next year. The new facility is expected to increase annual production capacity from 100 to 250 UAVs, with project completion targeted for 2027. (Source: UAS VISION/Defence Blog)

02 Sept 24. Concurrent Technologies’ revenues surge. Shares climbed 6 per cent following the announcement. A fragile international situation has led to a massive cumulative increase in defence spending as Nato countries adjust to the implications of Russia’s aggression. This is starting to benefit companies outside the prime contractors as interim results for Colchester-based Concurrent Technologies (CNC) proved. The company has reported an impressive 39 per cent year-on-year increase in revenues in the first half of the year.

The business secured eight major design wins in the period, including a $6mn (£4.6mn) contract with a major US defence and aerospace prime contractor. These wins equalled the number secured over the entirety of last year.

Revenue is expected to be weighted to the second half. “It’s quite normal for us to do a little bit more in the second half of the year, just by how things work in defence,” said chief financial officer Kim Garrod.

Order intake also increased by 23 per cent to £17.8m. Chief executive Miles Adcock noted that the “record financial performance” followed the transformation of the company over the past three years.

Defence remains the company’s strongest market, accounting for 82 per cent of sales. Adcock sees this as an advantage. “Defence is driven by having better kit than the competition and so we see the demand in defence growing. Our competitors are largely very big American corporates… and we’re competing on a pretty level playing field with them, not least because the US is driving towards open standards, ie not getting locked into proprietary solutions.”

Concurrent currently trades at 24 times FactSet consensus earnings for 2024, suggesting that analysts are forecasting an increase in profitability. However, given the current expansionary phase, we will monitor the balance sheet to see how effectively the group manages working capital. Hold. (Source: Investors Chronicle)

30 Aug 24. Embraer taps Oliver Wyman to help it in US defense market, eyeing C-390. Embraer (EMBR3.SA) has hired consultancy firm Oliver Wyman to help it explore the U.S. defense market, the head of the Brazilian planemaker’s defense unit said, as it eyes selling its C-390 military cargo aircraft to the world’s No. 1 economy.

Expanding its presence abroad with more sales of the C-390 – a competitor of Lockheed Martin’s (LMT.N) C-130 Hercules – has been a key goal of Embraer’s defense division, which had already designated the United States as a key market in the sector.

Embraer kicked off the project with Oliver Wyman roughly a month ago and is “fully engaged” in building a strategy to penetrate the U.S. market with its defense portfolio, the firm’s defense CEO Bosco da Costa Jr. told Reuters.

“We looked at several consultancies as part of a careful selection process, evaluating their capacity in the defense field, and concluded that Oliver Wyman is the company that will help us,” Costa said in an interview on Thursday.

Oliver Wyman is owned by Marsh & McLennan (MMC.N).

Exploring merger and acquisition possibilities could be a way for Embraer to access the U.S. market, the executive emphasized.

“We have studied this and Oliver Wyman showed us that one of the ways that several industries found to penetrate the U.S. was M&A. So this is one of the possibilities. Embraer will evaluate it,” Costa said.

Embraer Defense already has a footprint in the U.S., which, for example, flies the Super Tucano light attack aircraft. The company has a production line for the turboprop in Jacksonville, Florida. But clinching C-390 sales there would be a game changer.

Speaking at an event earlier on Thursday, Costa said he sees room for the U.S. to have a mixed fleet of larger strategic tankers and smaller tactical tankers such as the C-390, which has already been bought by some NATO countries.

In addition to Embraer’s home country Brazil, nations such as the Netherlands, Portugal, Hungary, Austria, the Czech Republic and South Korea have tapped the aircraft for their fleets.

“Any defense player in the world cannot be out of that market,” Costa said of the U.S., noting the C-390 has enough U.S. content to meet local requirements. “It is a strategic project that the company’s board has been following.” (Source: Reuters)

30 Aug 24. RTX fined $200m for exports to China and others, US says. RTX Corp (RTX.N) will pay a $200m fine to settle allegations that the aerospace and defense company violated export laws by exchanging data and products with prohibited countries, including China, U.S. State Department records dated Thursday said.

The fine stems from failure to abide by the International Traffic in Arms Regulations by poorly classifying and controlling exports of defense articles, including classified ones, the State Department said.

RTX voluntarily disclosed its mistakes and told investors on its July 25 earnings call that the company had set aside about $1 bn to resolve three separate legal matters “primarily identified during the integration of Rockwell Collins and Raytheon Co. into RTX.”

The State Department notification released on Friday was the first of the three legal matters and included mistakenly providing intellectual property and technology to China.

One of the instances involved providing Chinese citizens information about “an aluminum display housing component of the F-22 Raptor Fighter Aircraft” in Shanghai. The information was determined to be more sensitive than the RTX employees initially believed.

“As part of the resolution of each of these three matters, we will be required to retain independent compliance monitors over the three-year term of the agreements,” the company said on the earnings call. Half of the fine will be spent to fund the compliance program. (Source: Reuters)

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BUSINESS NEWS

August 30, 2024 by

Sponsored by SPX Communication Technologies (TCI & ECS)

www.tcibr.com

www.enterprisecontrol.co.uk

29 Aug 24. More than £200m wiped off Britain’s struggling Concorde successor. Schroders cuts value of stake in Reaction Engines by 87pc amid slow revenue growth. A British plane engine company – dubbed the heir to Concorde – has seen more than £200m wiped off its value by a major investor as it struggles to raise funding.

Schroders cut the value of its stake in Reaction Engines by 87pc, the fund manager said. It suggested that slow revenue growth meant the Oxfordshire company would need more time to break even. Reaction Engines has secured investment from Rolls-Royce, BAE Systems and the Government.

It is developing a hybrid jet and rocket engine, known as Sabre, which could lead to hypersonic space planes travelling at speeds of up to 19,000mph and offer flights from Britain to Australia in four hours.

The company’s groundbreaking pre-cooling technology prevents its engines from overheating as they get up to speed before activating the rocket portion of a flight.

Reaction Engines has sought to raise new funds after missing financial forecasts.

Schroders, which took part in a £40m funding round last year, owns a 4.1pc stake in the company, according to Companies House records. The group said it had revalued its stake from £10.6m in December 2023 to £1.4m at the end of June 2024.

On that basis, the company’s total value has fallen from £256m to £33.8m.

The company has raised more than £150m to date and has secured research and development grants from the British and American governments. Other investors include a United Arab Emirates’ sovereign wealth fund.

“Despite steps to commercialise its heat-exchanger technology and recent contract awards, revenue growth at Reaction Engines has been slower than management anticipated, and the company will require further investment and time to become cash positive,” Schroders said.

“Reaction Engines has appointed advisers to raise additional funds from new and existing investors.”

Rolls-Royce has said it was among the companies involved in the fundraising talks.

Philip Dunne, the Reaction Engines chairman and a former defence minister, has said that financing conditions were more difficult than when the company last raised funds in 2022. (Source: Daily Telegraph)

29 Aug 24. IMCO Group reported financial results for the first half of 2024, showcasing exceptional growth in order backlog and profitability. At a record NIS 799m, the backlog has more than doubled compared to NIS 299m in H1 2023. This robust backlog, comprised of long-term multi-year contracts, is expected to fuel the company’s continued growth as these contracts materialize in future financial results.

IMCO Group’s financial performance in H1 2024 reflects significant improvements across key metrics. Revenue increased to NIS 128.1 m, representing a 2.6% growth compared to the same period last year. This growth is resulting from the groups’ operational efficiencies and organizational restructuring, which led to an impressive jump in gross profit to NIS 25.7m, pushing the gross margin above 20% for the first time and to a net profit soaring to NIS 5.3m, indicating a staggering 179% year-over-year increase.

The combination of improved profitability and a substantial order backlog positions IMCO Group for sustained expansion in the coming years, reflecting its strengthened market position in both defense and civilian sectors.

Ariel Kendel, CEO of IMCO Group, commented on the financial results: “The results of the first half of 2024 reflect IMCO Group’s significant progress. The increase in gross profit margin, which led to a surge in net profit, highlights our operational efficiency. The dramatic growth in our order backlog to a record of 799m NIS ensures business continuity and provides a solid foundation for continued growth in future revenues and a basis for expansion in the global defense and civilian markets.”

Yoav Ben Shem, Chief Business Officer at IMCO Group, added: “The significant order we received in the U.S. is a testament to our global expansion strategy and the quality of solutions we offer. The American market is a strategic target for us, and our success there highlights our ability to meet the highest standards of the global defense industry. We see significant growth potential in this market and intend to continue investing in developing innovative products and strengthening relationships as long-term partners to leading integrators in the market.”

IMCO Group and ADTI will present their latest technology and solutions at the AUSA exhibition – Booth 1342.

27 Aug 24. Motorola Solutions acquires military radio provider Barrett Communications. The man-portable communications market is the second largest segment in the wider tactical communications market, which is forecast for strong growth.

Motorola Solutions has moved to acquire Barrett Communications, a provider of specialised and tactical radio communications operated by users in the security, coast guard, government, and private sectors, with the terms of the deal not disclosed.

Announcing the move on 15 August, Motorola said that the deal “reaffirms [the company’s] commitment” to expanding its portfolio in mission-critical communications, further extending into the Asia-Pacific sector with the acquisition of Australia-based Barrett Communications.

Barrett Communications designs high frequency (HF) and very high frequency (VHF) radio systems, intended to provide immediate communications capability without the need for infrastructure, lending it to support roles in security and peacekeeping operations, as well as humanitarian assistance and disaster recovery, so-called HADR, operations.

“Barrett brings us a new portfolio of communications capabilities beyond traditional land mobile radio, allowing us to support highly specialised operations,” said Mark Schmidl, senior vice president, International Sales, Motorola Solutions.

Andrew Burt, CEO of Barrett Communications, said the deal would help extend “critical voice communications to support essential operations, humanitarian work and disaster response and recovery”.

Man-portable tactical communications growth positive

According to a GlobalData report into the global tactical communications market, which was valued at $16.7bn in 2023, the sector was projected to grow at a compound annual growth rate of 4.2% from 2023-2033. The sector was expected to reach a value of $25.2bn by 2033 and cumulatively value $221.0bn over the forecast period.

The tactical communications market consists of three categories: man-portable, platform-based, and stationary. GlobalData analysis states that the market is expected to be dominated by the platform-based segment, which accounts for 74.2% of the market, followed by man-portable segment with 16.7% share.

Among geographic segments, North America is projected to dominate the sector with a share of 40.9%, followed by Europe and Asia-Pacific, with shares of 28.9% and 22.5%, respectively. (Source: army-technology.com)

26 Aug 24. TECHWAY joins the group NCS SYSTEMS. We announce the acquisition of TECHWAY by NCS SYSTEMS. This alliance is a key step in our customer-care strategy by offering the state-of-art technologies and top-level services to demanding markets.

About NCS SYSTEMS

Founded in 1989 in Amsterdam by NIJKERK HOLDING and taken over in 2022 by its management with the support of Isatis Capital, NCS SYSTEMS is an expert of IT solutions for the most demanding markets such as Defence, Aerospace, Transportation, Industry, Medical and more.

A constantly evolving company, the group is recognized for its strong value-added offer, and is distinguished by its research office, which responds to the specific needs of its customers in:

the eco-conception
the certified solutions (UL, CE, Tempest, MIL-STD, EN50155, …)
the embedded monitors
the development of customer applications (connected and smart solutions for real-time data acquisition, predictive analysis and advanced automation)

NCS SYSTEMS has two production sites in France and Belgium, and now integrate over 5000 industrial PCs per year and approximately 150 equipped cabinets on their sites, combine with obsolescence and project management services.

About TECHWAY

Founded in 2003, TECHWAY aims to develop advanced electronic solutions for signal and video acquisition and processing in real-time applications. TECHWAY has unique skills in the use of complex technologies, such as FPGA or high-speed optical communications, to design innovative solutions.

TECHWAY has become a pionneer company of Embedded Electronics market in Europe and all around the world.

We simplify the use of these technologies by designing “ready-to-use” embedded solutions to reduce their cost to system integrators.

TECHWAY’s product range is the result of our defense engineering activities and our R&D efforts in close collaboration with key-player customers. The TECHWAY products are modular and versatile. They meet international standards and are designed to adapt to the widest range of industrial environments. The goal of TECHWAY team is to provide the industrial sectors with high-end solutions at a competitive cost.

Mr. Patrick Méchin, founder and CEO of TECHWAY says “The Customer Satisfaction is the driving force of TECHWAY growth strategy since 20 years. We offer ever more innovative solutions thanks to our team’s expertise based on ongoing training and customers’ feedbacks. The merger of our compagnies is new story between two experts which are sharing the same business culture and know-how.”

A Key Alliance for a Bright Future

“I congratulate Patrick Méchin for the exceptional work, he did over the last 20 years. I thank him for the trust he gave to us.

Thank you to all the TECHWAY team and our Advices for their hard work during this process.

We are pleased to announce the new alliance between our companies and we look forward to start working together.

Thanks to our join goal, NCS SYSTEMS and TECHWAY will still offer high value-added solutions together with an outstanding service.

This acquisition will strengthen our technological skills and broaden our range of solutions to fit our customers needs with high-quality innovations. We look forward to start this new story together and still be innovative for our customers.”

27 Aug 24. The leading 15 defence contractors are forecast to see free cash flow of $52bn by the end of 2026. The world’s largest aerospace and defence companies are set to rake in record levels of cash over the next three years as they benefit from a surge in government orders for new weapons amid rising geopolitical tensions. The leading 15 defence contractors are forecast to log free cash flow of $52bn in 2026, according to analysis by Vertical Research Partners for the Financial Times — almost double their combined cash flow at the end of 2021. Five top US defence contractors are forecast to generate cash flow of $26bn by the end of 2026, more than double the amount in 2021. The figures exclude Boeing, given its recent problems and heavy weighting towards civil aerospace. In Europe, national champions BAE Systems, Rheinmetall and Sweden’s Saab, which have benefited from new contracts for ammunition and missiles, are expected to see combined cash flow jump by more than 40 per cent. The industry is benefiting from a sharp increase in military spending as governments increase their budgets in response to Russia’s full-scale invasion of Ukraine and escalating tensions in the Middle East and Asia. In the US, recent aid bills for Ukraine, Taiwan and Israel allocated nearly $13bn for weapons production at America’s five biggest defence groups — Lockheed Martin, RTX, Northrop Grumman, Boeing and General Dynamics — and their suppliers. In the UK, the Ministry of Defence has committed £7.6bn for military aid to Ukraine over the past three years, including for stockpile replenishment. The government spending surge has already propelled order books to near record highs. It typically takes several years for new contracts to translate into higher sales — defence companies book the majority of their sales once weapons are delivered — but the growing cash flows are already prompting debate about how the industry will spend the money. “It’s the bn-dollar question for the industry: companies typically don’t like holding large amounts of cash on their balance sheets, so what do they do with all that money if acquisitions are not that straightforward? Share buybacks and dividends are one way,” said Robert Stallard, analyst at Vertical Research. Companies had already directed bns of dollars into share buybacks before the recent flood of new orders; some took on extra leverage to do so. Last year was the strongest for buybacks by aerospace and defence companies in both the US and Europe for the past five years, according to data from the Bank of America, although levels remain far below those of other sectors. Lockheed Martin and RTX bought back close to $19bn in stock between them last year. In Europe, BAE Systems this summer concluded a three-year £1.5bn buyback programme and immediately started a further £1.5bn buyback. The large repurchases using taxpayers’ money by US contractors have prompted criticism among some lawmakers who have questioned whether companies are investing enough in new facilities and production. Executives have insisted they are boosting capital spending even as they return money to investors. Companies will also be looking for more deals, said analysts, while cautioning that big purchases would be restricted by regulatory concerns about competition. (Source: FT.com)

18 Aug 24. Redwire to acquire spacecraft developer Hera Systems. Redwire Corporation (NYSE: RDW) has signed a definitive agreement to acquire Hera Systems, Inc., a spacecraft developer focused on specialized missions for national security space customers.

With the addition of Hera Systems’ cutting-edge platform, Redwire expects to strengthen its spacecraft portfolio and be well-equipped to support specialized National Security Space missions in GEO.

Founded in 2013, Hera Systems is a privately held company headquartered in San Jose, California, that focuses on developing a new class of high-performance spacecraft to support the evolving requirements for national security missions operating in contested space. Hera Systems’ advanced platform incorporates cyber-secure communications, resilient power systems, highly accurate pointing, extensive maneuverability and massive on-board computing power supporting mission- and payload-specific machine learning. In 2022, Hera Systems was contracted by Orion Space Solutions to develop three satellites for U.S. Space Force’s Tetra-5 mission—an on-orbit servicing demonstration in GEO.

Redwire has significantly increased its national security space business, recently announcing it was awarded a prime contract to develop and demonstrate a Very Low Earth Orbit (VLEO) spacecraft for DARPA’s Otter program. Redwire continues to support the warfighter as an antenna supplier for the Space Development Agency’s Transport Layer program dating back to Tranche 0 in 2020.

Hera Systems has experienced profitable topline growth, and for the year ended December 31, 2023, Hera recorded $15 m of revenue. Redwire will finance this acquisition with balance sheet liquidity and expects Hera Systems to add meaningfully to future growth and profitability. As part of this acquisition, which is expected to close in the third quarter, Redwire is adjusting its full-year 2024 guidance from $300 m in revenue to $310 m in revenue.

“Hera Systems’ platform is highly complementary with Redwire’s suite of national security space solutions,” said Peter Cannito, Chairman and CEO of Redwire. “Similar to our focus on VLEO platforms, we see increasing opportunities to unlock and deliver new solutions in MEO, GEO and other domains to support the warfighter and address critical needs in National Security Space. This transaction fits squarely within our growth strategy by adding significant capabilities to move up the value chain in select areas of emerging hybrid architectures.” (Source: Satnews)

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BUSINESS NEWS

August 23, 2024 by

Sponsored by SPX Communication Technologies (TCI & ECS)

www.tcibr.com

www.enterprisecontrol.co.uk

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22 Aug 24. Trump anxiety spurs investment in European defence startups.

Summary
Europe hedging against a Trump return with defence investments, investors say
Former president previously said he would not aid NATO allies under attack
Defence spending in Europe rose to 552bn euros in 2023, up 16% in one year

Donald Trump’s potential White House return has helped spur a flurry of investment in defence-technology startups across Europe, according to eight prominent industry executives and investors.

The Republican presidential candidate has threatened U.S. withdrawal from NATO and said he would not defend allies that did not increase their defence budgets. He’s locked in a tight-run race with Vice President Kamala Harris in the Nov. 5 election.

Trump’s unpredictability, combined with the war in Ukraine and tensions in the Middle East, has contributed to global military spending reaching a record high of $2.4trn in 2023, according to the Stockholm International Peace Research Institute (SIPRI).

In June, the $1.1bn NATO Innovation Fund (NIF) announced partnerships with venture capital firms and defence startups across Europe, aiming to bolster security on the continent.

Meanwhile, the European Union earlier this year unveiled its first ever defence industrial strategy, committing more than $1bn towards military innovation.

While the prospect of a Trump presidency was not the only factor behind those initiatives, it has been a significant driver of subsequent investments made by governments and venture capitalists alike in manufacturers of drones, robotics and quantum computing, the eight executives said.

Operating out of Munich, Vsquared Ventures is one of Europe’s leading deep-tech investors, having recently raised a 214m euro ($237.99m) fund to invest in space, robotics, and other technologies.

“Trump’s threats have made European states think very differently about investing in their own capabilities and giving contracts out, often to startups,” said Herbert Mangesius, founding partner at Vsquared, which has partnered with the NATO fund.

“We want to see faster cycles, broader experimentation, and better capabilities. The planning in a ministry is so slow, and the VC world is one potential answer to this problem,” he added.

Vsquared’s portfolio includes IQM, one of Europe’s leading quantum computing companies, and Isar Aerospace, a rocket manufacturer which has itself raised more than 400m euros of private capital.

At present, the NIF is backed by 24 NATO countries, with eight remaining countries – including Canada and the U.S. – not involved. “My ambition is to eventually have all NATO allies join the fund,” Andrea Traversone, the organisation’s managing partner, told Reuters in an interview.

Asked if Trump’s potential return had influenced the NIF’s activities, he said: “I don’t think it will make a difference to our mission. This matters to anyone who is interested in our mission of protecting citizens of allied partners.”

STRUCTURAL CHANGE

While Russia’s invasion of Ukraine has been the primary reason for higher spending, some defence industry investors say Trump’s approach towards U.S. allies has shaken leaders in NATO and across Europe. That has resulted in governments increasing their defence spending, investing in, and partnering with new technology companies.

Ricardo Mendes, CEO of Lisbon-based drone manufacturer Tekever, which has contracts with Britain, Ukraine, the EU and others, said: “The potential of a second term for President Trump brings various implications for both American and European defence enterprises.”

“Discussions are ongoing regarding the overhaul of procurement procedures, with a focus on more flexibility and introducing agility, which would favour smaller and midsize tech companies,” he added.

As of 2023, defence and security spending across Europe had risen 16% to 552bn euros since 2022, according to data collated by SIPRI.

ARX Robotics, a German startup which recently raised a 9m euro funding round backed by the NIF, builds autonomous robots that can be deployed on the battlefield.

Asked if the potential for a Trump victory in November was influencing defence investment, CEO Stefan Roebel said: “Absolutely. That’s something everybody has in the back of their heads. Europe needs to up its investment in defence, and you’re seeing a shift in momentum now.”

RESILIENCE

Around the world, VC funding faced a major downturn in 2023 as investors waited to see how their pandemic-era ventures would play out against a backdrop of rising interest rates and public market volatility. In Europe, overall startup investment fell 44%, from $103bn to just $57bn, according to Pitchbook data.

By comparison, investment in local defence technology startups remained relatively resilient, falling 21% in the same period, from $2.6bn to around $2bn.

Germany is easing red tape for investments into defence companies, Finance Minister Christian Lindner told Reuters in February, as Berlin ramps up its military spending.

Mangesius cited Quantum Systems, a German drone manufacturer which has recently signed deals with its home government, as a company that has directly benefited from Germany planning for a Trump return.

“It was a direct consequence of what Trump said. That made the German state react and put money into this because European countries need to be self-sufficient,” he said. “You can’t outsource your own security to another country.”

Bulent Altan, founding partner at Alpine Space Ventures, also based in Munich, told Reuters that Europe had been investing in defence-tech in order to be a better partner to the U.S.

He said: “And if that partnership should have hiccups along the way, you’re not standing there with nothing in your hand.” ($1 = 0.8992 euros)

(Source: Reuters)

19 Aug 24. High-flying European defence stocks are taking a knock. Shares in German arms manufacturer Rheinmetall tumbled 5 per cent in early trading on Monday, while the UK’s BAE Systems lost 2.5 per cent. Investors took fright at reports that Germany’s finance minister planned to veto new military aid to Ukraine. Perspective is in order. The Euro Stoxx Aerospace and Defense index has roughly doubled since Russia invaded Ukraine in February 2022, putting it in a different league to the 7 per cent rise notched up by the broader Stoxx 600 benchmark. Swelling sales, order books and profits justify much of that. Valuations for the likes of Rheinmetall and BAE have roughly doubled as a multiple of total enterprise value to ebit, based on S&P Capital IQ data. Monday’s jitters look like little more than an excuse. Germany had already hinted at reducing spending in Ukraine. If victorious in the US presidential election, Donald Trump could well do likewise. Of course, at some point there will be no more requirement for spending. Ultimately, wars end, albeit not always with a formal declaration of peace. Yet that does not leave the world a less bellicose place. There are 110 armed conflicts under way today, including seven in Europe, according to monitor Geneva Academy. Virtually all Nato members are on a mission to increase military spending. The proportion of spend going on kit has more than doubled in the past decade. European defence companies’ latest numbers reflect that. Scale, both via increased sales and acquisitions or expansion, is boosting profitability. Rheinmetall, which bought Rheinmetall Expal Munitions last year, lifted operating margins to 10.6 per cent at the half-year, more than 3 percentage points up on the year-ago level. Earlier this month, it added to its arsenal with the $950mn purchase of US military vehicle parts maker Loc Performance. For sure, there are some caveats to this seeming super cycle. Constraints on growth include supply-chain reconfiguration and financing. The latter is of less immediate concern to the big listed groups, but highly relevant to the sprawling web of SMEs upon which they depend. That in turn hobbles plans — both at state and corporate level — to beef up use of SMEs and strengthen domestic supply chains. European governments are taking piecemeal steps towards helping on this score. Technology should provide another spur, such as using 3D printing to save labour and time. There will inevitably be wobbles as governments across the globe seek to make savings. But demand suggests the defence sector’s rally is not over yet. (Source: FT.com)

20 Aug 24. Defense Tech Startup DEFCON AI Raises $44m in Seed Financing. DEFCON AI, an insights company that’s building a next-generation modeling, simulation, and analysis (MS&A) toolset for the modern military environment, today announced that it has raised $44m in Seed funding. The round was led by Bessemer Venture Partners with participation from Fifth Growth Fund and Red Cell Partners, among others. As part of the financing, Christopher Wan of Bessemer joins DEFCON AI’s Board of Directors, alongside independent board member Dr. Ray O. Johnson, former CTO of Lockheed Martin and Bessemer Operating Partner.

“At DEFCON AI, we are developing powerful solutions to reshape response planning in contested and disrupted environments,” said DEFCON AI Co-Founder and CEO Yisroel Brumer. “We bring to the DoD our capacity to very quickly field transformational software innovation so that defense leaders and planners have the tools they need to effectively coordinate operations and plan around disruptions. Our ability to do this dramatically improves the odds of materiel and manpower making it to their destinations without delay. At a time when near-peer competitors are stepping up their investments in intelligent military technology, such capabilities could mean the difference between winning and losing wars within the next decade.”

A Red Cell Partners’ incubation, DEFCON AI has achieved remarkable growth since its inception in 2022. It previously closed millions of dollars in Department of the Air Force Phase II and Phase III Small Business Innovation Research contracts and delivered its first product to strong customer feedback.

“Few organizations can take high-end software engineering and artificial intelligence expertise and combine it with a deep understanding of battlefield and defense operational requirements to rapidly deliver the kinds of technology that the DoD needs, the way we can at DEFCON AI,” said Gen. (Retired) Paul Selva, a DEFCON AI Co-Founder and its Chief Strategy Officer. “With algorithms that are built to allow planners to immediately respond to disruptions, we have already established ourselves as a valuable partner to the DoD.”

DEFCON AI will use the funds raised to grow its team, enhance its R&D program to expand its dual-use offerings, and extend its core capabilities across an array of Defense missions as well as the commercial sector to allow public and private entities to swiftly and efficiently predict and respond to disruptions.

“The security of the U.S. increasingly depends upon innovative software that delivers speed, intelligence, and resilience, which is why Bessemer is proud to fund defense tech startups like DEFCON AI,” said David Cowan, partner, Bessemer Venture Partners. “DEFCON AI’s extraordinary team of career public servants and military leaders is uniquely positioned to partner with the Defense Department to build smarter, more nimble logistics capabilities.”

Hon. Mark T. Esper, Chairman of Red Cell’s National Security Practice and former Secretary of Defense said, “In an era of great power competition marked by increasing complexity, unpredictability, turmoil, and danger, DEFCON AI works to reduce these factors and empower decision makers at all levels when it comes to conducting mobility and logistics operations across a full range of scenarios. With this latest round of funding, DEFCON AI is positioned to not only continue to support the Defense Department, but to enable commercial enterprises to get products where they need to be in a faster, better, and more economical manner.”

About DEFCON AI:

DEFCON AI is an insights company that is building a next-generation modeling, simulation, and analysis (MS&A) toolset for transportation and logistics operations within the modern military environment. Leveraging expertise in artificial intelligence, mathematical optimization, simulation, analytics, and software engineering, DEFCON AI’s tools empower planners and leaders to formulate strategies for transportation modality, sustainment, and logistics operations in the face of disruptions. DEFCON AI is a Red Cell Partners company. Visit us at defconai.com and follow us on social media (LinkedIn, X, Instagram).

(Source: BUSINESS WIRE)

20 Aug 24. Quickstep proposes divestment of MRO business. Quickstep Holdings has proposed the divestment of Quickstep Aerospace Services, the company’s maintenance, repair, and overhaul (MRO) arm, cauterising ongoing operational losses from the business unit.

According to a recent filing with the ASX, the aerospace engineering, manufacturing, and aftermarket services provider outlined it was looking to “sell all or a majority” share of the business unit to a global entity with a focus on the MRO market.

The proposal comes following ongoing operational losses and negative cashflows stemming from Quickstep Aerospace Services (QAS) arising from poor market conditions within the commercial airline MRO market.

Quickstep Aerospace Services will continue to trade despite the announcement, the company has confirmed.

QAS provides maintenance, repair, and overhaul work to Defence and commercial aircraft, having acquired the assets of Boeing Australia Component Repairs in February 2021.

Quickstep defended the original acquisition, noting it was aligned with their objective of growing their defence sustainment business and grasping new opportunities in the commercial market following the pandemic.

The announcement comes months after the company informed the ASX it would reduce headcount in their direct production and operational support units by 20 per cent each as demand for F-35 components slowed.

Meanwhile, the aerospace composite business is also expected to reduce staff within its corporate support teams by 35 per cent.

(Source: Google/Defence Connect)

19 Aug 24. BATM starts to deliver on new strategic focus. The technology group’s change should drive a step change in profits and a re-rating.

First-half results from technology group BATM Advanced Communications (BVC:20.3p) mask the underlying progress the board has been making to restructure non-core activities and prioritise its core cyber security, network solutions and diagnostics activities.

For instance, the cyber division moved from break-even in the first half of 2023 to a cash profit of $2.6m on a fivefold rise in revenue to $8.3mn as it delivered on a strong backlog of orders. The business continues to win new contracts, too, including one worth $2.3m from a long-standing government defence department for a next-generation encryption solution.

However, the most significant development was the signing of a strategic partnership and cooperation agreement with a global technology, engineering and defence group to deliver BATM’s advanced cyber security solution to commercial markets. The partner generates annual revenue of more than $10bn and serves customers in 100-plus countries across Asia, Europe, the Middle East and North America. House broker Shore Capital believes that “it sets the scene on a new wave of growth for cyber activities commencing in 2025”.

Although the group’s networking division reported a first-half cash loss of $0.9m on revenue of $6m, this reflected the investment in BATM’s high-margin edge computing and network function virtualisation software product suite, Edgility. Excluding this activity, the division would have been profitable.

Bearing this in mind, management expects that “a number of proof of concepts and trials with potential customers will come to a successful conclusion in the second half.” Post the half-year end, BATM became an Amazon Web Services (AWS) qualified software partner solution for AWS IoT Greengrass, an open-source edge runtime and cloud service, so is well placed to expand the business into the technology giant’s huge customer base.

In addition, the directors anticipate receiving new orders for the unit’s carrier ethernet products as customers and distributors commence restocking as inventory built up during the Covid-19 pandemic starts to dissipate. As a result, guidance is for a much improved second-half performance from the networking division.

New products set to drive growth in Diagnostics

Although the group’s diagnostics division delivered 7 per cent higher revenue of $17m, its cash profit of $1.2m was unchanged due to a higher mix of lower-margin instrument hardware sales. However, the expansion of the customer base will drive sales of associated reagents that are higher margin.

Moreover, the unit is now generating revenue from its new MDXlab molecular diagnostics instrument. Based on the real-time polymerase chain reaction (PCR) method, it offers laboratories a compact single effective solution that undertakes the different steps within the PCR process. In the coming months, BATM also expects to launch a diagnostic instrument that automates the manual library preparation process for an advanced technology used for DNA and RNA sequencing and variant/mutation detection.

Forecasts point to a step change in profit

Importantly, the directors are maintaining full-year guidance in line with Shore Capital’s estimates. Analysts expect adjusted pre-tax profit to increase from $1.5m to $2.8m on 16 per cent higher revenue of $143mn. Furthermore, the operational leverage of the business underpins a step change in profitability in the 2025 financial year, assuming BATM can hit its 10 per cent revenue growth target. On this basis, analysts forecast a rise in 2025 pre-tax profit from $2.8m to $6.5m to drive up earnings per share (EPS) by 167 per cent to 0.8¢. There is scope for earnings-accretive acquisitions, too, as the board looks to deploy net cash of $27.6m (5p) and recycle likely proceeds from non-core disposals. If the board can achieve next year’s estimates, then the shares are likely to re-rate. That’s because BATM is currently valued at book value parity and on a modest multiple of 6.5 times 2025 cash profit estimates of $13.4m to enterprise valuation of $87m. Hold. (Source: Investors Chronicle)

19 Aug 24. German defence stocks down after report of freeze on new Ukraine military aid. German defence stocks fell on Monday, after the Frankfurter Allgemeine Sonntagszeitung (FAS) newspaper on Saturday said the finance ministry would not approve additional applications for Ukraine military aid due to budget constraints.

Shares in weapons maker Rheinmetall (RHMG.DE), were down 3% at 0923 GMT, the biggest losers in the German blue chip index Dax (.GDAXI. Hensoldt (HAGG.DE) a maker of radars for IRIS-T air defence system and tank gearbox maker Renk (R3NK.DE) were down 6% and 4%, respectively.

No new requests for money for Ukraine will be approved at the request of Chancellor Olaf Scholz, FAS reported on Saturday, citing a finance ministry letter from Aug. 5. The German chancellery and the finance ministry did not immediate reply to requests for comments.

Around 8bn euros ($8.8bn) is already earmarked for Ukraine’s military in 2024, and the budgeted 4bn euros for 2025 is already overbooked, according to the weekly. “The pot is empty,” FAS quoted a government source as saying.

The 2024 and 2025 budget plans have not changed, German government sources told Reuters. The planned financial aid for Ukraine would be halved to around 4 bn euros in 2025 because additional funds from the G7’s $50 bn loan plan should be available from November, the sources said.

A spokesperson for Hensoldt said the FAS report was “blown out of proportion” and that the firm did not see any backlash from it for its business.

The German government has said that instead of spending taxpayers’ money, it wants to use proceeds from frozen Russian assets for further Ukraine aid, in coordination with its Group of Seven (G7) partners.

Budget negotiations between Germany’s three-party coalition were difficult and protracted as large spending requirements for climate, social measures and infrastructure clashed with constitutionally enshrined limits for new debt. (Source: Google/Reuters)

15 Aug 24. Paramount ADGM files for Chapter 11 over arbitration dispute in the Middle East but global operations unaffected. UAE-based Paramount ADGM (Abu Dhabi Global Market) has filed for Chapter 11 bankruptcy protection in Delaware, United States, over a dispute initiated by a Middle Eastern defence company. Global aerospace and defence company Paramount has operations worldwide, but operations in South Africa and elsewhere will not be affected, the company has said.

Bloomberg reported that the company filed for bankruptcy on Thursday 15 August, listing assets of between $500m and $1bn and liabilities of between $100m and $500m.

Chapter 11 bankruptcy allows a company to keep operating while it works out a plan to repay creditors. It appears the Chapter 11 filing relates to a solvent debt restructuring process.

Paramount Group Limited, a non-operating company licensed in the Abu Dhabi Global Market (ADGM) in the United Arab Emirates, said in a statement on Thursday 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 an unnamed Middle Eastern company in 2022.

“The company believes the outcome of the arbitration to be incorrect, but the arbitration process means that the decision cannot be appealed. Additionally, Paramount was not permitted to pursue its counterclaims against the Middle Eastern company during the arbitration. These claims far exceed the amount awarded and can now be actively and aggressively pursued,” the company said in a statement.

“Paramount’s shareholders and management believe that the value of Paramount ADGM is significantly higher than the arbitration award. The decision to file for Chapter 11 is a critical step in protecting the substantial goodwill and value of Paramount, while allowing the company to pursue its legitimate claims against the Middle Eastern company in the US Federal Courts,” Paramount added.

It said the Chapter 11 filing in the United States will not in any way impact other Paramount operations around the world, including South Africa. “Paramount remains fully committed to its customers, vendors, and employees. Business will continue as usual, with all projects and services proceeding without interruption.”

The aerospace and defence company said relationships with its global vendors remain robust, and payments for goods and services from the operating entities outside of Chapter 11 will continue as normal. The company’s employees, recognised as its greatest asset, will experience no changes to their jobs, salaries, or benefits during this process, it said.

South African company ADG Mobility (‘ADGM’), part of the OTT Group of Companies, has clarified that it is not associated with Paramount. According to Dr Stefan Nell, Group Managing Director of the OTT Group of Companies and co-founder and CEO of ADG Mobility, ADGM has no association whatsoever with Paramount and did not file for bankruptcy. The term ADGM refers to ‘Abu Dhabi Global Market’ Free Zone where Paramount is located in the UAE, he stated. (Source: https://www.defenceweb.co.za/)

16 Aug 24. US: California AI bill will likely increase state-level regulatory framework risks for technology firms. On 15 August, California’s State Assembly Appropriations Committee endorsed an amended bill to regulate AI systems in the state. The bill empowers California’s attorney general to sue technology firms if their AI systems cause significant harm, such as property damage. The technology industry, especially startups, has criticised the bill for potentially stifling innovation. In response, several Democratic members of Congress urged Governor Gavin Newsom to veto the regulation, claiming that the bill will elevate the risks facing California’s economy with ‘minimal public safety benefits.’ The Democratic-majority Legislature is expected to pass the bill by 31 August. While it remains unclear whether Newsom will support the bill, we assess that lawmakers are likely to continue to push for increasing regulation of the AI industry in California in the coming months. Furthermore, a patchwork of state-level legislation is likely in the medium-to-long term as other states propose AI regulations, increasing regulatory framework and compliance risks for technology firms as a result. (Source: Sibylline)

16 Aug 24. Boeing, Lockheed Martin in talks to sell rocket-launch firm ULA to Sierra Space. Boeing (BA.N) and Lockheed Martin (LMT.N), are in talks to sell their rocket-launching joint venture United Launch Alliance to Sierra Space, two people familiar with the discussions said.

A deal could value ULA at around $2bn to $3bn, the sources said.

A deal to sell ULA, a major provider of launch services to the U.S. government and a top rival to Elon Musk’s SpaceX, would mark a significant shift in the U.S. space launch industry as ULA separates from two of the largest defense contractors to a smaller, privately held firm.

The potential sale comes after years of speculation about ULA’s future and failed attempts to divest the joint venture over the past decade. In 2019, Boeing and Lockheed Martin reportedly explored selling ULA but couldn’t agree on terms with potential buyers.

The negotiations could end without a deal, the sources said.

ULA referred Reuters to Boeing and Lockheed for comment. The two companies said they do not comment on market speculation. Sierra did not immediately return a request for comment.

Jeff Bezos’ Blue Origin and Cerberus Capital Management had placed bids in early 2023 for the company, according to people familiar with the negotiations. Rocket Lab had also expressed interest, two people said. None of those discussions led to a deal. Rocket Lab could not be immediately reached.

A potential deal would be an ambitious move for Sierra Space, spun off from Sierra Nevada Corp in 2021 to focus on bringing to market its long-delayed Dream Chaser spaceplane and building a private space station habitat with Blue Origin. Sierra Space has weighed a public offering.

A potential deal could accelerate deployment of its crewed spaceflight business, analysts said. A ULA acquisition, they said, would give the company in-house access to launch vehicles that could send its spaceplane and space-station components into Earth’s orbit, rather than spending hundreds of millions of dollars for those launches as a customer.

For Boeing, the potential sale of ULA represents a strategic move under new CEO Kelly Ortberg, who took the helm in August. A deal would allow Boeing to concentrate on its core aerospace and defense businesses while reaping some cash from ULA’s sale.

ULA was formed in 2006 as a consolidation of Boeing’s and Lockheed’s dueling rocket businesses, ending years of competition between the two and cementing their grip on government launch services – the primary mission of the joint venture’s founding charter.

The rise of SpaceX and its reusable Falcon 9, which galvanized a satellite industry seeking cheaper access to space, forced ULA to phase out its decades-old Atlas and Delta rockets for its new, cheaper Vulcan rocket that made its debut launch in 2023.

But ULA has faced challenges in scaling Vulcan production and upping its launch rate to meet commercial demand and fulfill contract obligations with the Space Force, which in 2021 picked Vulcan for a sizable chunk of national security missions alongside SpaceX’s Falcon fleet.

A sale of ULA would unshackle the company from Boeing and Lockheed, whose boards have long resisted ideas from ULA to expand the business beyond rockets and into new competitive markets such as lunar habitats or maneuverable spacecraft, according to former executives. (Source: Reuters)

16 Aug 24. Defence companies’ expansion plans are being hobbled by wary lenders. Regulation, ethics and reputation are big stumbling blocks, depriving the industry of the cash it needs to expand production. Two-fifths of small and medium-sized enterprises in defence have found it difficult or very difficult to access finance, according to a survey carried out by the directorate-general for Defence Industry and Space, which leads the European Commission’s activities in the sector. Half of these companies refrained from seeking bank loans in 2021/22, massively more than the 6.6 per cent average across all SMEs in the region. True, there is plenty to make lenders queasy. These are not companies that skip through risk profiling checklists. Many are over-leveraged at this point in the cycle, after rushing to add capacity after Russia invaded Ukraine following years of minimal investment. They operate on long-term contracts: at eight to 10 years or more, these stretch beyond most lenders’ preferred timeframes. End customers, usually governments, may face budget squeezes or are subject to their own geopolitical risks. Banks’ usual anti-money laundering, know-your-customer and anti-terrorism checks are more rigorous when applied to an industry that makes weapons and exports to far-flung parts of the globe. But unwillingness to lend peaks when it comes to SMEs, a key artery of the sector. These inevitably have less robust balance sheets than their big, listed peers. In the UK many are also still repaying funds from the Coronavirus Business Interruption Loan Scheme (CBILS). The sector was a big recipient of pandemic-era government support loans. Rising insurance premiums further erode cash flow. Given the preponderance of SMEs, many long-established and family-owned, affordable bank loans remain the preferred source of funding. Banks’ reluctance to lend is not just at odds with a sector keen to increase production to meet swelling order books, but also with government aims to muscle up on defence. The EU wants to increase defence spending; the UK’s freshly minted government has yet to detail its plans but has signalled more spending in pre-election campaigning. (A disconnect between government policy ambitions and funding availability is not limited to defence, of course: processors of critical minerals find themselves similarly kiboshed.) Europe’s DIS “conservatively” puts the debt financing gap at an average €1bn-€2bn for SMEs in the defence sector. Closing that gap — thus enabling the industry to beef up capacity — will entail governments and banks’ co-operation. Depriving an in-demand industry of cash makes little sense. (Source: Google/FT.com)

19 Aug 24. Dover (NYSE: DOV) today announced that it has acquired Criteria Labs, Inc. (“Criteria Labs”), a leader in radio frequency “RF” device and microelectronic engineering solutions tailored for high-reliability applications in the space, aerospace, defense, commercial semiconductor, automotive, and medical industries. Criteria Labs is now part of the Microwave Products Group (MPG) within Dover’s Engineered Products segment.

The company’s primary location in Austin, Texas, includes a large clean room dedicated to space test engineering, assembly, and packaging, and its Penrose, Colorado, facility specializes in electronic component tape and reel packaging services.

The acquisition of Criteria Labs will enhance MPG’s ability to meet exacting Size, Weight, and Power (SWaP) requirements which are crucial for electronic warfare and communication systems. The integration of Criteria Labs’ advanced technology will allow MPG to innovate with more compact and lighter designs without compromising on performance and reliability.

About Dover:

Dover is a diversified global manufacturer and solutions provider with an annual revenue of over $8 bn. We deliver innovative equipment and components, consumable supplies, aftermarket parts, software and digital solutions, and support services through five operating segments: Engineered Products, Clean Energy & Fueling, Imaging & Identification, Pumps & Process Solutions and Climate & Sustainability Technologies. Dover combines global scale with operational agility to lead the markets we serve. Recognized for our entrepreneurial approach for over 65 years, our team of approximately 25,000 employees takes an ownership mindset, collaborating with customers to redefine what’s possible. Headquartered in Downers Grove, Illinois, Dover trades on the New York Stock Exchange under “DOV.” Additional information is available at dovercorporation.com. (Source: PR Newswire)

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BUSINESS NEWS

August 16, 2024 by

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15 Aug 24. LeaseWorks and Portside Join Forces. LeaseWorks®, a leading provider of innovative software and digital solutions for the aviation industry, announced that it had been acquired by Portside, a leading innovator in technology and software solutions for business and government aviation.

“Our customers’ view of profitability will be greatly enhanced with the full visibility of aircraft lifecycle management, and we are excited to have LeaseWorks in the Portside family.”

Post this

The acquisition extends Portside’s suite of integrated, cloud-based software solutions for business aviation operators with LeaseWorks’ cloud-based products and services, including the AerisTM suite of software solutions, designed specifically for aircraft lessors and airlines. The transaction also signifies Portside’s first venture into the aircraft leasing space.

“Portside shares LeaseWorks’ vision for the aircraft leasing market – to build a software company of scale that will be a transformational force in the industry,” commented Haseem Vazhayil, LeaseWorks CEO. “With Portside’s investment, we’ll be able to further enhance our market-leading position as an enterprise software powerhouse, meeting the diverse needs of clients across the full spectrum of the aviation community.”

”LeaseWorks’ cutting-edge technologies and best-in-class customer service for aircraft lessors significantly advances our goal of providing a single system of record to aircraft owners and operators,” said Alek Vernitsky, Portside CEO. “Our customers’ view of profitability will be greatly enhanced with the full visibility of aircraft lifecycle management, and we are excited to have LeaseWorks in the Portside family.”

Portside is backed by Vista Equity and Insight Venture Partners, two preeminent U.S. private equity firms that specialize in software investing. The backing of these institutions is expected to generate significant opportunities to scale LeaseWorks’ business, enabling both organic and inorganic investments as well as benefiting the company’s operations through the added expertise and support from Portside.

“This transaction is a testament to the hard work, dedication, and trust our team has been privileged to bring over the years to both our customers and the industry. Together with Portside, we will continue to deliver the utmost dedication, unmatched expertise, and highest quality of service to our customers, while leveraging growth opportunities to scale mutual operations,” concluded Vazhayil.

About LeaseWorks

LeaseWorks® provides cloud-based products and services to the aviation leasing community, with solutions for both lessors and airlines. Aeris MATCH™ helps lessors more quickly and effectively deploy their aviation assets with airlines around the globe. Aeris ASSET™ allows both lessors and airlines to manage the intricate details of aviation leases. These are the first two of a suite of products that will constitute a full-life-cycle portal for managing leased aviation assets. www.leaseworks.aero

About Portside

Portside, Inc. is a premier provider of modern software solutions for the aviation industry. Portside’s cloud-based suite of products is designed to support all aspects of flight operations, including scheduling and record keeping (Avianis, Takeflite, BART and PFM product lines), safety management (Baldwin), fleet and crew optimization (Portside Optimizer), data sharing, reporting and analytics (Portside Owner Portal / Budget & Planning Dashboard), crew recruiting (Staffing Marketplace), and trip planning (Portside Trip Assist). Portside supports over 1,000 customers in 40+ countries, including passenger and cargo airlines, aircraft lessors, operators of business aircraft and helicopters, medevac, industrial and government fleets, as well as fractional ownership programs. www.portside.aero. (Source: BUSINESS WIRE)

15 Aug 24. Lockheed Martin [NYSE: LMT] today announced the signing of a definitive agreement to acquire Terran Orbital [NYSE: LLAP], a global leader of satellite-based solutions primarily supporting the aerospace and defense industries.

Terran Orbital brings a high throughput, robotic manufacturing capacity and high-performing modular space vehicle designs. Combined with Lockheed Martin’s record of performance and innovation, this transaction will usher in an even broader range of capabilities and value for customers. Lockheed Martin uses Terran Orbital’s satellites for its work, most notably with the Space Development Agency’s Transport and Tracking Layer programs, and in several of its self-funded technology demonstrations.

“We’ve worked with Terran Orbital for more than seven years on a variety of successful missions,” said Robert Lightfoot, president, Lockheed Martin Space. “Their capabilities, talent and business momentum align with Lockheed Martin Space’s strategic plans – and we’re looking forward to welcoming them to our team. Our customers require advanced technology and even faster product development, and that’s what we can achieve together.”

The transaction stands to pave a path for further advancement, as Lockheed Martin continues to invest in technology, people, and capacity to support future customer needs.

“This transaction combines our strengths and expertise,” said Marc Bell, chairman, CEO, and co-founder of Terran Orbital. “This move will open new opportunities for growth and innovation, and we couldn’t be more excited about the future. Access to Lockheed Martin’s incredible engineers and world class facilities will only accelerate our business plan to provide low-cost, high-value solutions to our ever-growing customer base.”

Transaction Details

The enterprise value of the transaction is approximately $450 m. Lockheed Martin will acquire Terran Orbital for $0.25 in cash for each outstanding share of common stock and retire its existing debt. This transaction also provides for Lockheed Martin and other current Terran Orbital creditors establishing a new, $30m working capital facility that has been put in place as of signing.

The transaction is expected to close in fourth quarter of 2024 and is subject to the satisfaction of customary closing conditions, including regulatory and Terran Orbital stockholder approvals. Upon closing, Terran Orbital will remain a commercial merchant supplier to industry.

Proven Spacecraft Portfolio and Technology

Terran Orbital has a track record of supporting more than 80 missions over the past decade for government and commercial customers with complex mission requirements, from low earth orbit to the Moon and beyond. As of today, Lockheed Martin is Terran Orbital’s largest customer. This longstanding working relationship between the companies underpins a strong cultural alignment and ability to recognize synergies between the two businesses.

Terran Orbital joined the Lockheed Martin Ventures (LM Ventures) portfolio – a fund that makes investments in technology innovations to drive growth in existing, adjacent and new segments for the company – with an initial investment in 2017. LM Ventures has since made two additional investments in Terran Orbital in 2020 and 2022. This marks the first LM Ventures company that Lockheed Martin has sought to acquire since founding the fund in 2007.

15 Aug 24. Rating Action: Moody’s Ratings upgrades Rolls Royce to Baa3 from Ba1 on continued strong financial performance; maintains positive outlook

“Rolls-Royce’s return to investment grade ratings reflects the substantial improvement in its profitability, cash flows and financial leverage, underpinned by strong demand and the very successful execution of its transformation programme so far, leading to sustainably better performance” says Frederic Duranson, a Moody’s Ratings Vice President – Senior Analyst and lead analyst for Rolls-Royce. “The company’s conservative financial policy, including excellent liquidity, also supports its investment grade rating.” Mr Duranson adds.

15 Aug 24. Gooch & Housego warns delivery delays will hit profits.

Photonics specialist Gooch & Housego (GHH) warned that profits for the year to September will be lower than expected due to “supplier and delivery delays”.

The company had said at the half-year stage that trading would be “more heavily weighted” to the second half due to destocking by industrial and medical laser customers. Although output has picked up, some of its expected sales are likely to creep into next year and adjusted pre-tax profit will likely be £1.5mn lower than anticipated.

Investec analysts cut their adjusted pre-tax profit forecast to £8mn and the shares fell by 3 per cent. (Source: Investors Chronicle)

14 Aug 24. Global high-assurance cybersecurity leader, Everfox, formerly Forcepoint Federal, today announced the completed acquisition of Garrison Technology Ltd. The acquisition integrates Garrison’s hardware-enforced security (hardsec) and software capabilities into Everfox’s software portfolio of cross domain, threat protection and insider risk solutions to deliver comprehensive cybersecurity to enterprise customers in government and regulated industries.

“Garrison’s solutions are highly complementary to our existing portfolio and have immense value for customers. These synergies and our track record of collaboration opened the door for a more permanent partnership,” said Sean Berg, CEO of Everfox. “This acquisition reinforces our dedication to securing the world’s most critical organizations and our ongoing commitment to ensuring that the Everfox portfolio is as comprehensive, secure and impactful as it can be.”

As the cyber threat landscape continues to evolve, global governments, critical infrastructure organizations and regulated industries are reinforcing their approach to cybersecurity. The National Institute of Standards and Technology (NIST) and other major cybersecurity entities recognize the benefits of a hardsec approach to security. Hardsec combines the reliable, physical security of hardware with the flexibility of software to deliver layered security.

Pairing Everfox’s cross domain solutions with Garrison’s field-programmable gate array (FPGA) security technology offers a strong example of how the companies’ combined capabilities can deliver the nation-state level security necessary for governments and regulated industries. Garrison’s recently announced Trust Qualified Browsing (TQB) offering will apply the hardware-enforced cybersecurity customers know and trust to remote web browsing, removing risks associated with malicious web code.

“For nearly a decade, we’ve worked to build hardsec security solutions that integrate seamlessly with existing software offerings,” said David Garfield, co-founder and CEO of Garrison Technology Ltd. “By layering our high-end isolation solutions on top of the Everfox portfolio, our customers will stay one step ahead of their adversaries.”

“As Everfox continues to carve out its place as an industry trailblazer, strategic acquisitions such as this will not only enable the company to grow its robust product portfolio, but will also expand its global footprint,” said Tim Millikin, partner at TPG. “The combination of Everfox’s offerings with Garrison’s hardsec and software solutions will bolster global cyber resilience for the world’s most critical organizations.”

Everfox is headquartered in Herndon, Virginia, with offices also located in Champaign, Illinois; Richardson, Texas; Salt Lake City, Utah; as well as London and Malvern, United Kingdom.

Citi served as financial advisor to Everfox, and Piper Sandler served as financial advisor to Garrison.

14 Aug 24. Air Industries Group Reports Three and Six Months 2024 Financial Results and Reaffirms Fiscal 2024 Business Outlook. Air Industries Group (“Air Industries”) (NYSE American: AIRI), a leading manufacturer of precision components and assemblies for large aerospace and defense prime contractors, today reported earnings results for the second quarter and six months 2024 along with an update of its 2024 business outlook.

“Our second quarter reflected strength across our business,” said Lou Melluzzo, CEO of Air Industries Group. “For the three months, revenues increased by 2.8% compared to the prior year, but gross profit and gross margin on sales improved dramatically. Gross profit for the second quarter increased by $474,000 or nearly 22% compared to 2023. With two quarters under our belt, 2024 is on track to be a year of significant growth.

“Net income for the second quarter was $298,000, or $0.09 a share, an improvement of nearly $700,000 from a loss of ($0.12) per share in 2023.

“Adjusted EBITDA (as defined below) for the three months was $1,413,000, an increase of $452,000, or more than 47% compared to 2023.”

Six Months 2024 Financial Results

Lou Melluzzo, CEO of Air Industries Group continued, “For the six months, revenues increased by 7.3% compared to the prior year, and the increase in gross profit outpaced the growth in sales. Gross profit for the six months increased by nearly $500,000, or 12.3% compared to 2023.

“Operating Income for the six months was $493,000 compared to a loss in 2023.

“Net loss for the first half of 2024 was ($408,000) an improvement of more than $600,000 compared to 2023.

“Adjusted EBITDA (as defined below) for the six months was $1,775,000 an increase of $236,000 or more than 15% compared to 2023”.

2024 Business Outlook and Items of Note:

Although it remains difficult to predict the timing of orders, raw materials, and delivery times for finished products, the Company reaffirms a target of net sales for fiscal 2024 to be at least $50.0 m, with Adjusted EBITDA in 2024 being significantly better than in 2023. Revenues for the second half of 2024 are expected to equal or exceed the amounts achieved in the first half of 2024.
Backlog, which represents the value of all undelivered funded orders received, increased from March 31, 2024 to just over $100 m as of June 30, 2024.
The book-to-bill ratio, which is bookings divided by net sales was greater than 1.20 to 1.00 for the trailing twelve months ended June 30, 2024.
We continue to invest to increase production efficiency, and to expand our manufacturing capabilities. To this end, we have completed the rebuild and modernization of three major pieces of equipment at a cost of approximately $1,000,000.
As of June 30, 2024, total indebtedness was $24,939,000, increasing $1,629,000 or 7.0% from December 31, 2023. The increase resulted from:

o An increase of $507,000 for a bank loan covering the installation of solar panels at Sterling Engineering.

o Total increases of $898,000 in the Webster Bank term and revolving loans coincident with the recent amendment of June 3, 2024.

o A new capital lease for $225,000 for a new Coordinate Measuring Machine (CMM).

Air Industries is in compliance with all Webster Bank covenants as of June 30, 2024 and expects to remain in compliance for the balance of the year. (Source: BUSINESS WIRE)

14 Aug 24. M-tron Industries, Inc. Reports Strong Second Quarter 2024 Results with Further Margin Expansion. M-tron Industries, Inc. (NYSE American: MPTI) (the “Company” or “MPTI”), a designer and manufacturer of highly-engineered electronic components used to control the frequency or timing of signals in electronic circuits, announced strong financial results for the three and six months ended June 30, 2024 with net income increasing 36.6% to $1,744,000, or $0.63 per diluted share, in Q2 2024 compared to $1,277,000, or $0.47 per diluted share, in Q2 2023.

“We delivered a solid performance in the quarter, with significant improvements in our financial results”

Post this

MPTI’s Chief Executive Officer, Michael J. Ferrantino, said, “Our strategy is working; our business has been trending up since the Company’s listing in 2022, and are pleased to report results that continue to be very positive. We expect revenues, new orders and earnings to remain strong and trend higher. In addition, our order backlog trend since listing is positive and anticipated to continue to grow.”

The Company will hold an Investor call on Thursday, August 15, 2024, to discuss the Company’s second quarter 2024 results and to respond to investor questions (see details below). An archive of the call will be available on MPTI’s website at https://ir.mtronpti.com/events-and-presentations.

Strong Results from Operations Continue Since 2022 Listing

Strategic investments in the defense sector, several new products moving into volume production, and operating efficiencies have resulted in the Company achieving significant improvements since its IPO in October 2022. Importantly, the company made a significant investment in its employees with a broad option incentive grant earlier this year aligning the strength of its platform with its team.

Since MPTI’s October 2022 IPO, the business has grown significantly as highlighted below:

Revenues increased 67.2% to $11,808,000 in Q2 2024 compared to $7,064,000 in Q2 2022
Net income increased 258.8% to $1,744,000 in Q2 2024 compared to $486,000 in Q2 2022
Gross margin improved to 46.6% in Q2 2024 compared to 37.5% in Q2 2022
Adjusted EBITDA increased 200.0% to $2,523,000 in Q2 2024 compared to $841,000 in Q2 2022

The opportunities with new engineering and designs continues to drive future growth, while manufacturing throughput improvement is helping increase margin expansion. Further, we are pleased to have initiated a stock option program earlier this year allowing the professionals at MPTI an opportunity to share in the business’s growth.

Mr. Ferrantino added, “As we report strong results, our team’s pursuit of excellence accelerates as reflected in the value creation since IPO. This continued growth and success are a testament to our dedicated professional staff and their unwavering commitment to delivering exceptional value to our customers. We remain steadfast in our mission to innovate, adapt, and lead in our industry, driving sustainable growth and creating long-term value for all stakeholders.”

“MPTI is a uniquely positioned American-made Defense product platform and presents an improved outlook for the business moving forward,” continued Mr. Ferrantino.

Second Quarter 2024

Net income was $1,744,000, or $0.63 per diluted share, for the three months ended June 30, 2024 compared with $1,277,000, or $0.47 per diluted share, for the three months ended June 30, 2023. The increase was primarily due to continued strong defense program product and solution shipments partially offset by higher Manufacturing cost of sales consistent with the growth in revenues as well as higher Engineering, selling and administrative expenses 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 46.6% for the three months ended June 30, 2024 compared with 41.6% for the three months ended June 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 $2,523,000, or $0.91 per diluted share, for the three months ended June 30, 2024 compared with $1,931,000, or $0.71 per diluted share, for the three months ended June 30, 2023. The increase was primarily due to increased 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.

Results in Second Quarter 2024 and Since Second Quarter 2022

Revenues increased 16.4% to $11,808,000 in Q2 2024 compared to $10,140,000 in Q2 2023, driven by strong defense program shipments, and increased 67.2% from $7,064,000 in Q2 2022 as the mix shifts developed
Net income increased 36.6% to $1,744,000, or $0.63 per diluted share, in Q2 2024 compared to $1,277,000, or $0.47 per diluted share, in Q2 2023 and increased 258.8% from $486,000 in Q2 2022
Gross margin improved to 46.6% in Q2 2024, an increase of 12.0% from Q2 2023, and an increase of 24.3% from Q2 2022, reflecting improved production efficiencies and product mix
Adjusted EBITDA increased 30.7% to $2,523,000 in Q2 2024 compared to $1,931,000 in Q2 2023 and increased 200.0% from $841,000 in Q2 2022

Improved 2024 Outlook

With the continued momentum in defense-related sales, and the acceleration in production and shipments during the first half of 2024, MPTI management has raised the outlook for fiscal year 2024, increasing revenues to a range of $46.0m to $48.0m from a previous range of $43.0m to $45.0m. MPTI has good visibility for the remaining two quarters of 2024 and expects EBITDA to continue to be in the 19% to 21% range.

The foregoing statements represent the Company’s current estimates of MPTI’s 2024 consolidated revenues as of the date of this release. Actual results may differ materially depending on a number of factors. Investors are urged to read the Cautionary Note Concerning Forward Looking Statements included in this release. Management does not assume any obligation to these estimates.

Fiscal Year to Date 2024

Net income was $3,230,000, or $1.16 per diluted share, for the six months ended June 30, 2024 compared with $1,830,000, or $0.68 per diluted share, for the six months ended June 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 consistent with the overall growth in the business.

Gross margin was 44.7% for the six months ended June 30, 2024 compared with 38.0% for the six months ended June 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 $4,785,000, or $1.72 per diluted share, for the six months ended June 30, 2024 compared with $2,959,000, or $1.09 per diluted share, for the six months ended June 30, 2023. The increase was primarily due to increased gross margins; a continued containment of operating expenses other than strategic investments in research and development, resulting higher income before income taxes; higher depreciation; and higher stock-based compensation partially offset by higher interest income.

Backlog

Backlog was $45,322,000 as of June 30, 2024 compared to $47,831,000 as of December 31, 2023 and $51,591,000 as of June 30, 2023. The decrease in Backlog from December 31, 2023 reflects the increase in revenues along with the variability of our order intake due to the size and timing of large program-related orders.

Strategic Direction Continues

“We delivered a solid performance in the quarter, with significant improvements in our financial results,” said Bel Lazar, Chairman. “Our teams continue to execute well, driving both top-line growth and margin expansion across our businesses. Our commitment to achieving our Investor Day targets remains strong, with clear progress in our new products, pricing and efficiency initiatives. With this momentum we are confident in our continued success and growth.”

Mr. Lazar continued regarding the Company’s strategy, “Our organic strategy continues to be providing complex, integrated assemblies. This will begin to surface in revenue growth. The dollar value of some of these projects can be substantial.

“As for our external strategy, we have increased our acquisition bandwidth to include companies that are inside and outside of our current space. We will look outside of our sub sector for undervalued companies much like ours where we can rapidly drive top and bottom-line growth. Our motivation continues to be increasing shareholder value as quickly as we can,” added Mr. Lazar.

We see the ongoing development along several new and exciting growth verticals for the period ahead such as:

Space and Satellite: MPTI has over 125 design wins across satellite platforms and manned spacecraft. With expertise supporting LEO, MEO and GEO applications, the Company has a well-established team and a proven track record to meet demanding space requirements. With the evolving need for high-power space-level transmitters, high-power handling space-level RF components and sub-assemblies are instrumental for mission success. The performance of these devices used in orbiting satellites are significantly different compared to how they perform at sea level due to phenomena like multipaction. Some space-level applications require both continuous operation performance in outer space as well as performance during the assent to space while undergoing a pressure change.

Radar: Our latest line of timing solutions designed to meet the stringent requirements of modern radar applications is expect to further growth. For example, our e-Vibe™ series of Electronically Compensated OCXOs are designed to maintain exceptional phase-noise under dynamic conditions, meeting the rigorous demands of radar systems on the move or experiencing shock or vibration. Our radar integrated timing solutions: custom timing solutions integrating precision timing sources with additional components with maximum reliability and performance. Our systems offer excellent Phase-noise: output frequencies with extremely low phase-noise, guaranteeing reliable operation over extended periods, temperatures, and environments. Also, our systems offer Ruggedized Design and Flexible Configurations for durability and longevity, with both standard and custom output frequencies.

Electronic Warfare: As demand increased for frequencies above 2 GHz, we developed the ability to design and manufacture planar filters utilizing interdigital, combline, hairpin, edge coupled and end coupled topologies. MPTI introduced our new Planar Filter Product Line to complement our over 59 years MPTI of designing and manufacturing various topology filters for our Industrial, Commercial, Space, Aerospace and Defense customers. With Extremely Small Size and Low Height and Stable Over a Wide Temperature Range, MPTI’s planar filters support the demands of rugged, high-performance applications needs growing with the development of Electronic Warfare. (Source: BUSINESS WIRE)

14 Aug 24. Redwire to Acquire Spacecraft Developer Hera Systems. Redwire Corporation (NYSE: RDW), a leader in space infrastructure for the next generation space economy, today announced that it has signed a definitive agreement to acquire Hera Systems, Inc., a spacecraft developer focused on specialized missions for national security space customers. With the addition of Hera Systems’ cutting-edge platform, Redwire expects to strengthen its spacecraft portfolio and be well-equipped to support specialized National Security Space missions in geostationary orbit (GEO).

Founded in 2013, Hera Systems is a privately held company headquartered in San Jose, California that focuses on developing a new class of high-performance spacecraft to support the evolving requirements for national security missions operating in contested space. Hera Systems’ advanced platform incorporates cyber-secure communications, resilient power systems, highly accurate pointing, extensive maneuverability and massive on-board computing power supporting mission- and payload-specific machine learning. In 2022, Hera Systems was contracted by Orion Space Solutions to develop three satellites for U.S. Space Force’s Tetra-5 mission—an on-orbit servicing demonstration in GEO.

Hera Systems has experienced profitable topline growth, and for the year ended December 31, 2023, Hera recorded $15m of revenue. Redwire will finance this acquisition with balance sheet liquidity and expects Hera Systems to add meaningfully to future growth and profitability. As part of this acquisition, which is expected to close in the third quarter, Redwire is adjusting its full-year 2024 guidance from $300m in revenue to $310m in revenue.

GH Partners LLC is serving as financial advisor and Hogan Lovells is serving as legal advisor to Redwire.

About Redwire

Redwire Corporation (NYSE:RDW) is a global space infrastructure and innovation company enabling civil, commercial, and national security programs. Redwire’s proven and reliable capabilities include avionics, sensors, power solutions, critical structures, mechanisms, radio frequency systems, platforms, missions, and microgravity payloads. Redwire combines decades of flight heritage and proven experience with an agile and innovative culture. Redwire’s approximately 700 employees working from 14 facilities located throughout the United States and Europe are committed to building a bold future in space for humanity, pushing the envelope of discovery and science while creating a better world on Earth. For more information, please visit redwirespace.com (Source: BUSINESS WIRE)

14 Aug 24. Tank gearbox maker Renk slips as largest business disappoints.

Summary
Q2 core profit at Vehicle Mobility Solutions misses forecast
Company sees FY revenues, core profit at top end of range
Shares fall as much as 6.8%

Shares in German tank gearbox maker Renk (R3NK.DE) fell as much as 6.8% on Tuesday after its largest business missed profit expectations, overshadowing a strong performance elsewhere.

European defence companies including Renk are seeing a boom in demand as Western nations buy supplies to help Ukraine fight Russia’s invasion and strengthen their own capabilities.

“The rest is fine, but the focus was really on this division”, said ODDO BHF analyst Yan Derocles.

“I think most investors were maybe expecting something better because management has been discussing the past few months’ progress they have seen in Augsburg.”

CEO Susanne Wiegand told Reuters in May that Renk was hiring 20 to 30 people per month at the plant.

It has forecast 1.0-1.1bn euros of revenues and core profit of 160-190m euros.

The company also increased its mid-term annual revenue growth target to about 15% from about 10%.

Renk’s shares, which were floated at 15 euros apiece in February, were last down 2.6% at 24.975 euros. ($1 = 0.9149 euros) (Source: Reuters)

13 Aug 24. Quantum Reports Fiscal First Quarter 2025 Financial Results. Quantum Corporation (Nasdaq: QMCO) (“Quantum” or the “Company”), a leader in solutions for AI and unstructured data, announced today financial results for its fiscal first quarter 2025 ended June 30, 2024.

Fiscal First Quarter 2025 Financial Summary

Revenue was $71.3m
GAAP gross profit was $26.1m, or 36.6% of revenue
GAAP net loss was $20.8m, or ($0.22) per share
Subscription ARR was up 29% year-over-year at $18.8m
Adjusted non-GAAP net loss was $8.4m, or ($0.09) per share
Adjusted EBITDA was ($3.1)m

“Results for the quarter were largely in-line with our expectations, reflecting further rotation of our business toward our long-term initiatives,” stated Jamie Lerner, Chairman and CEO of Quantum. “We are also seeing improving traction for Myriad and ActiveScale products. However, during the quarter we experienced a temporary headwind to gross margin caused by product mix and supply constraints of certain hardware that prevented us from shipping a portion of our higher margin deals. This also resulted in an increase to our current order backlog to above normal levels.”

“As part of our ongoing strategic and financial initiatives, we have reached an agreement with our current lenders that significantly improves our liquidity, allows us to take action on improving our operational initiatives and focus on driving Myriad, ActiveScale and the rest of our businesses to the next level. With this newly restructured financing in place, we have improved our overall capital structure and balance sheet. Additionally, we continue to maintain strong cost and discretionary spending controls as we execute toward profitable growth.”

“We are fully dedicated to executing on our business initiatives toward achieving sustainable operating performance that is driven by tangible proof points, including accelerated growth of new products, divestment of non-core products and assets, and restructuring our organization to become a more focused and operationally efficient business.”

Fiscal First Quarter 2025 vs. Prior Year Quarter

Revenue for the fiscal first quarter of 2025 was $71.3m, compared to $92.5 m in the fiscal first quarter of 2024, primarily reflecting lower revenue contribution from hyperscale customers combined with lower tape media and royalty business. GAAP gross profit in the first quarter of 2025 was $26.1m, or 36.6% of revenue, compared to $35.6m, or 38.5% of revenue, in the prior fiscal year quarter. Non-GAAP gross profit in the first quarter 2025 was $26.3m, or 36.9% of revenue, compared to $35.9m, or 38.8% of revenue, in the first quarter of fiscal 2024.

Total GAAP operating expenses in the fiscal first quarter of 2025 were $43.9m, or 61.5% of revenue, compared to $40.8m, or 44.1% of revenue, in the fiscal first quarter of 2024. Selling, general and administrative expenses were $34.4m, compared to $28.5m in the prior fiscal year. Research and development expenses in the fiscal first quarter of 2025 were $8.3m, compared to $10.9m in the prior fiscal year quarter. Non-GAAP operating expenses in the first quarter of 2025 were $30.8m, compared to $35.5m in the fiscal first quarter of 2024.

GAAP net loss in the first quarter of fiscal 2025 was $20.8m, or ($0.22) per share, compared to a net loss of $9.1m, or ($0.10) per share in the prior fiscal year quarter. Excluding the income statement impact of the warrants, stock compensation, restructuring charges, and other non-recurring costs, non-GAAP adjusted net loss in the quarter was $8.4m, or ($0.09) per share, compared to an adjusted net loss of $4.1m, or ($0.04) per share in the fiscal first quarter of 2024.

Adjusted EBITDA in fiscal first quarter 2025 was ($3.1)m, compared to $1.5 m in the first quarter of fiscal year 2024.

For a reconciliation of GAAP to non-GAAP financial results, please see the financial reconciliation tables below.

Liquidity and Debt (as of June 30, 2024)

Cash, cash equivalents and restricted cash were $17.5m, compared to $25.7 m as of June 30, 2023.
Total interest expense for the first quarter was $3.8m, compared to $3.2 m for the same period a year ago.
Outstanding term loan debt, excluding debt issuance costs, was $75.8m, compared to $88.6m as of June 30, 2023. Outstanding borrowings on revolving credit facility was $35.8m, compared to $17.8m as of June 30, 2023.

o During the quarter, the Company paid down $12.3m of term loan debt through improved working capital by outsourcing service inventory logistics and management.

Guidance

For the fiscal second quarter of 2025, the Company expects the following guidance:

Revenues of $73.0m, plus or minus $2.0m
Non-GAAP adjusted basic net loss per share of ($0.06), plus or minus $0.02
Adjusted EBITDA of approximately breakeven

This assumes an effective annual tax rate of negative 14%; non-GAAP adjusted net loss per share assumes an average basic share count of approximately 96m in the fiscal second quarter of 2025.

(Source: BUSINESS WIRE)

On 13 August 2024 Rheinmetall has signed an agreement to acquire all equity interests in Loc Performance Products, LLC, a renowned vehicle specialist based in Plymouth, Michigan.

The purchase price agreed for Loc Performance, which will become due upon closing, is based on an enterprise value of USD 950m. Closing of the transaction is subject to regulatory approvals.

With its skilled workforce of around 1,000 employees, Loc Performance generated significant and growing sales revenues. With its broad-based activities, the company will make a direct contribution to the Rheinmetall Group’s fast-growing US military vehicle business, which is managed by American Rheinmetall Vehicles based in Sterling Heights, MI.

The acquisition of Loc Performance will be of great benefit to American Rheinmetall Vehicles as the company further expands and strengthens its presence in the United States. With the purchase, American Rheinmetall Vehicles acquires 1.7m square feet of modern, efficient manufacturing space with significant capacity for future expansion.

13 Aug 24. Sypris Reports Second Quarter Results

Gross Profit up 21%; Backlog Exceeds $115m

Sypris Solutions, Inc. (Nasdaq/GM: SYPR) today reported financial results for its second quarter ended June 30, 2024.

HIGHLIGHTS

The Company’s second quarter 2024 consolidated revenue was even with the prior year at $35.5m, reflecting a rotation in mix driven by continued growth at Sypris Electronics and reduced shipments for Sypris Technologies. Orders are up 15.8% year-to-date, reflecting positive growth for both businesses.
Gross profit for the Company increased 20.8% from the prior-year period and increased 95.6% sequentially, while gross margin expanded 280 basis points and 780 basis points, respectively.
Revenue for Sypris Electronics increased 13.6%, reflecting the positive impact of recently announced contracts with customers serving the markets for electronic warfare, aircraft and missile avionics, and subsea communications. Gross profit increased 9.7% from the prior year and 250.8% sequentially. Orders are up 16.6% year-to-date.
Gross profit for Sypris Technologies increased 35.5% year-over-year and 32.6% sequentially, while gross margin expanded 520 basis points and 400 basis points, respectively. Orders for energy products are up 13.6% year-to-date.
During the quarter, Sypris Electronics announced that it received releases for an additional four systems under a multi-year production contract that was first announced in 2022. The modules to be produced by Sypris will be integrated into an electronic warfare improvement program for the U.S. Navy. Deliveries are expected to begin in 2024.
Subsequent to quarter end, Sypris Technologies announced that it entered into a long-term sole-source extension to its current supply agreement with one of the world’s largest commercial vehicle manufacturers. The agreement provides for a continuation of Sypris’ Ultra® Axle Shafts for use in the assemblies of the customer’s branded drive axles for medium and heavy-duty trucks.
The Company reaffirmed its full-year outlook for 2024, maintaining the expected increase in revenue at 10-15% year-over-year. Gross profit is expected to increase 20-25%, while gross margins are expected to expand 100-125 basis points year-over-year.

“We were pleased with the year-over-year revenue growth at Sypris Electronics,” commented Jeffrey T. Gill, President and Chief Executive Officer. “The backlog at Sypris Electronics exceeds $100m and is expected to support growth through the remainder of 2024 and beyond. Customer funding has already been secured for a portion of these key programs, which enables us to procure inventory under multi-year purchase orders to mitigate future supply chain issues.

“Demand from Sypris Technologies customers serving the automotive, commercial vehicle, sport utility and off-highway markets has remained relatively stable, with new product line shipments offsetting the anticipated cyclical decline for the commercial vehicle market. We believe that the market diversification Sypris Technologies has accomplished over recent years by adding new programs in the automotive, sport-utility and off-highway markets will help offset some of this decline.

“Orders for our energy products increased during the period, with open quotes yet to be closed still outstanding on several large projects. Additional opportunities for growth may exist with new global projects in support of increasing LNG demand. We are also actively pursuing applications for our products in adjacent markets to further diversify our industry and customer portfolios.”

Second Quarter Results

The Company reported revenue of $35.5m for the second quarter of 2024, compared to $35.6m for the prior-year comparable period. Additionally, the Company reported breakeven net income compared with net income of $0.2m, or $0.01 per diluted share, for the prior-year period.

For the six months ended June 30, 2024, the Company reported revenue of $71.1 m compared to $67.9m for the first half of 2023. The Company reported a net loss of $2.2m compared with breakeven for the prior-year period.

Sypris Technologies

Revenue for Sypris Technologies was $17.8m in the second quarter of 2024 compared to $20.1 m for the prior-year period, reflecting the short-term timing delay of certain energy shipments and the anticipated cyclical decline in the commercial vehicle market. Gross profit for the second quarter of 2024 was $2.7m, or 15.2% of revenue, compared to $2.0m, or 10.0% of revenue, for the same period in 2023. Gross profit for the second quarter of 2024 benefited from a favorable mix and higher absorption.

Sypris Electronics

Revenue for Sypris Electronics was $17.7m in the second quarter of 2024 compared to $15.6m for the prior-year period. Increased shipments for a follow-on program contributed to the growth over the prior-year comparable period. Gross profit for the second quarter of 2024 was $2.9m, or 16.5% of revenue, compared to $2.7m, or 17.1% of revenue, for the same period in 2023 primarily due to higher revenue and favorable material costs, partially offset by additional labor and overhead costs incurred on programs that recently ramped production.

Outlook

Commenting on the future, Mr. Gill added, “Demand from customers serving the markets for electronic warfare, aircraft and missile avionics, secure and subsea communications, and ground-based radar remain robust, while the outlook for the energy market continues to move in the right direction. Similarly, demand from customers serving the automotive, commercial vehicle and sport utility markets remains healthy despite the anticipated cyclical decline in the commercial vehicle market.

“With a strong backlog, new program wins, and long-term contract extensions in place, we are confident that the second half of 2024 has the potential to be very positive for Sypris. As a result, we continue to expect revenue to increase 10-15% year-over-year. We expect to achieve gross margin expansion in the range of 100 to 125 basis points with gross profit forecast to increase 20-25% in 2024.” (Source: BUSINESS WIRE)

14 Aug 24. Israel’s Elbit sees conflicts driving strong weapons demand.

Defence firm Elbit Systems reported higher second-quarter profit on Wednesday, continuing to benefit from supplying Israel in its war against Hamas militants in Gaza and strong demand more generally.

One of Israel’s largest defence contractors, Elbit earned $2.08 per diluted share excluding one-time items in the quarter, versus $1.65 a year earlier.

Revenue rose to $1.63bn from $1.45bn. Some 27% of quarterly sales came from Israel, against 17% last year. At 29%, Europe was Elbit’s largest customer, with North America steady at 23% but Asia-Pacific slipping to 15%.

“We see many more opportunities for us in the global market, not just in Israel,” CEO Bezhalel Machlis told Reuters, adding that given its pipeline “it’s quite obvious the company will continue to grow quite rapidly in the coming years.”

“Unfortunately, globally there are many conflicts right now, and these conflicts drive high investment in defence … Our portfolio is very wide and we can take advantage of this.”

Machlis said an order backlog of $21.1bn meant Elbit was likely to reach $7bn in revenue in 2025 rather than in 2026 as initially thought.

“What really limits us is our operational capacity,” he said.

To that end, Elbit plans to open a new munitions facility in southern Israel with robots and automation that Machlis said should “drastically” boost production and revenue, as well as another plant to produce unmanned aerial vehicles (UAVs).

Elbit has some 40 subsidiaries around the world, including in the United States, Britain and Germany, that have helped with production. “Quite soon, we will be able to meet all the demand that we see ahead of us,” Machlis said.

Revenue over the first half of 2024 hit $3.2bn.

Machlis said that since the Gaza war erupted on Oct. 7, Elbit had brought out a host of new technologies for the Israeli military.

“The portfolio was improved drastically and this war has been an accelerator for many developments. The IDF (Israel Defense Forces) is using these technologies now and in the future, we will bring them to the rest of the market as well,” he said.

These include UAVs, communication systems and AI capabilities.

Elbit’s Nasdaq listed shares were up 4.6% at $198.67 in early trading, but down 11% this year, partly pressured by divestments by some investors, including Scotiabank’s 1832 Asset Management, a unit of Canada’s Bank of Nova Scotia. (Source: Reuters)

14 Aug 24. 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 second quarter ended June 30, 2024.

Order backlog at $21.1bn; Revenues of $1.6bn; Non-GAAP

net income of $93m; GAAP net income of $78m;

Non-GAAP net EPS of $2.08; GAAP net EPS of $1.76

Management Comment: Bezhalel (Butzi) Machlis, President and CEO of Elbit Systems, commented: “Elbit Systems demonstrated a 12% year-over-year increase in revenues in the second quarter. The continuous high demand for our products and solutions reinforces our position as industry leaders. Our long-term investments in technologies, research and development in collaboration with our key customers, and the expansion of our manufacturing capabilities, enable us to meet our commitments to our customers and to drive the continued growth and focus on profitability of the Company, in alignment with our strategic goals. This growth reflects the dedication and commitment of Elbit Systems’ employees in Israel and around the world, who contribute every day to the Company’s success.”

13 Aug 24. Dowlais struggles to maintain momentum.

Slowing battery electric vehicle market take-up hits ePowertrain arm

Shares are 60 per cent below debut price
Chief executive points to market recovery next year

The birth of Dowlais (DWL) as a standalone entity has been an increasingly tortured affair. Its shares started to fall as soon as the former GKN Automotive, powder metallurgy and hydrogen business units were spun out from Melrose (MRO) in April last year and – with a few brief exceptions – have maintained their downward spiral since.

After a disappointing set of half-year results and a lowering of full-year expectations, the shares are now 60 per cent below the 146p level at which they commenced trading. Management put a brave face on things, highlighting how its driveline, China and powder metallurgy arms (which make up 75 per cent of sales) outperformed the wider market, with global light vehicle production outside China declining by 2.4 per cent in the year to date. Full-year (ex-China) production is forecast by S&P Global Mobility to fall by 2.9 per cent, but the market is expected to return to a compound annual growth rate of 2.8 per cent over the next three years, Dowlais chief executive Liam Butterworth said.

Management also took measures to improve margins, such as offloading its lossmaking hydrogen business for a nominal sum and announced a strategic review of the powder metallurgy business.

At the current price, there will be value investors tempted by a business whose shares trade at less than four-times forecast earnings and just a third of their book value, offering a dividend yield of 6.8 per cent. Yet free cash flow generation remains anaemic and the performance of its ePowertrain arm is a concern given the slower uptake of battery electric vehicles, so we stick to hold. Last IC view: Hold, 86p, 21 Mar 2024.

(Source: Investors Chronicle)

13 Aug 24. Dowlais looks to offload powder metallurgy division.

Car parts supplier will seek to sell its £1bn business a second time amid a slowdown in electric car sales.

Dowlais has taken large bets on investments in epowertrains for zero-emission vehicles.

Dowlais is looking at selling its £1bn powder metallurgy business as the car parts supplier counts the cost of the slowdown in demand for electric cars.

For the first six months of this year, Dowlais’s revenues were down by 9 per cent at £2.57bn and, with group margins falling to 5.9 per cent, its pre-tax profits tumbled by 32 per cent to £95m. Dowlais, which was spun off from Melrose Industries, the aerospace supplier, in April last year, said it now expected its 2024 adjusted revenue to fall by mid-to-high single digits.

Its businesses comprise GKN Automotive and GKN Powder Metallurgy. While GKN Automotive is a provider of the drivetrains and sideshafts in conventional cars, the electric revolution has led Dowlais to take large bets on investments in epowertrains for zero-emission vehicles. It is this part of the business, accounting for more than a fifth of Dowlais, that is hurting.

Car production in general is decelerating more rapidly than expected and is likely to be down by 2 per cent for the full year. The production of electric cars is still growing, but only just. It is up 2 per cent year-on-year, but that is against growth of 49 per cent at this time last year. Without China, the largest electric car market in the world, the production of zero-emission vehicles would be down by 9 per cent year-on-year.

Big players, such as the Volkswagen Group and Stellantis, have been powering down their expansion into electric vehicles as consumer subsidies to buy battery electric cars are withdrawn across Europe, most notably in Germany, the Continent’s largest market.

“Battery electric vehicle production has significantly impacted our epowertrain business,” Liam Butterworth, Dowlais’ chief executive, said, blaming the issue for all of the decline in the group’s revenue.

Dowlais, which has no operations in Britain, has been a poor play for investors since it was spun out of Melrose. Soon after its initial public offering, the shares touched 139p. Since then they have collapsed and were down by 2¾p, or 4.4 per cent, at 58¾p at the close.

The powder metallurgy business makes parts for automotive and other industrial concerns, typically processing materials into precision-engineered components, including for gear systems and motors. Under Melrose, which is now solely the GKN Aerospace business, it had been strongly signalled that the powder metallurgy business would go up for sale, but no buyer was found.

When Dowlais was spun out of Melrose, a sale of powder metallurgy was still on the agenda. However, a review of the business culminated in a £449m accounting writedown in the value of the business to £884 m because of the “overly ambitious growth projections” of previous management.

That £884m book value of powder metallurgy is larger on its own than the market value of Dowlais, which stands at about £814m. That suggests investors believe the rest of Dowlais is worth less than nothing, or that the accounting valuation of powder metallurgy remains too high.

Last year powder metallurgy brought in revenue of £1.04bn and, on profit margins of 9.2 per cent, it made an operating profit of £96 m. In the first six months of this year, revenues have fallen by 3 per cent, but, with margins up at 9.5 per cent, first-half profits have remained steady at £50m.

The expected sale of powder metallurgy comes hard on the heels of the company’s decision to quit investment in hydrogen powertrains of the future and to sell its nascent business at a loss.

Dowlais is holding its interim dividend at 1.4p. (Source: The Times)

12 Aug 24. Spirit Aero CEO Shanahan to get $28.5m ‘golden parachute.’ Spirit AeroSystems (SPR.N) CEO Patrick Shanahan will receive a payout of $28.5m after the 737 MAX fuselage supplier completes its merger with Boeing (BA.N), according to a regulatory filing on Monday.

Shanahan will get a cash payment of $2.3m, converted Spirit restricted stock units worth $26.1m and perquisites and benefits worth $45,000 as part of a package known as a “golden parachute”.

Such payments are commonplace in corporate America and are intended to incentivize management to sell a company, even if it means ending their own employment.

Boeing agreed in July to buy back Spirit AeroSystems for $4.7bn in stock and Airbus (AIR.PA) moved to take on the supplier’s loss-making Europe-focused activities. It was a transatlantic break-up of the world’s largest standalone aerostructures company.

Shanahan had been seen as a frontrunner to take over the reins at Boeing, which is now headed by former aerospace executive Kelly Ortberg.

Boeing chair Steven Mollenkopf asked Shanahan in May if he would be interested in being considered as a candidate for the role of Boeing’s president and chief executive officer, the filing showed.

Shanahan responded that he would not rule out being in the running for the role, according to the filing. (Source: Reuters)

10 Aug 24. High yield TT Electronics on brink of turnaround. The electronics components company is focusing on productivity as it strips away unnecessary parts. Electronic components business TT Electronics (TTG) is continuing its path towards recovery, and at its low price offers an enticing dividend yield. On the surface, the results look underwhelming but this is a business in recovery, so they come with a few caveats. In the six months to June, adjusted operating margin dropped 20 basis points to 8.1 per cent. However, this included £1.7m of divestment costs. It sold businesses in Cardiff, Hartlepool and China which completed at the end of Q1. In the short run this is costly but will help management reach its long-term 10 per cent operating margin target. The most important number is the order intake. This grew 15 per cent organically and means the book to bill ratio if now up to 110 per cent. It has signed a couple new contracts with defence customers to supply them with electric cabling and power cabinets. Profit is expected to start improving as this order book is converted into revenue. FactSet analyst consensus is forecasting EPS to rise to 21.7p in 2025. This leaves TT Electronics trading on a forward PE ratio of just 7, while its dividend yield is five per cent. This is good value for a company on the brink of a turnaround. Looking for profit growth through cost cutting is not a sign of a high growth business. But at this price, there looks to be more value here than the market is suggesting. Stick to buy. Last IC View: Buy, 149p, 08 Mar 2024. (Source: Investors Chronicle)

12 Aug 24. Pexco LLC, a leading North American specialty plastics processor, announced the acquisition of Precise Aerospace Manufacturing, Inc. Based in Yorba Linda, CA, Precise Aerospace Manufacturing is a leading full-service supplier of injection, compression, transfer molded plastic, and value added assembly and contract manufacturing, with expertise in tight tolerance custom molding of high performance thermoplastic materials such as PEEK, Torlon®, Ultem® and Ryton®.

This acquisition enhances Pexco’s injection molding and material science capabilities and increases the Company’s presence on the West Coast. Precise Aerospace Manufacturing’s end-to-end capabilities and commitment to quality and customer service align with Pexco’s strategy. The acquisition also builds on Pexco’s presence in the Aerospace, Defense, Medical and Electronics markets.

Pexco CEO Sam Patel stated, “The acquisition of Precise Aerospace Manufacturing marks a significant milestone in Pexco’s strategic growth journey. This expansion not only strengthens our capabilities in injection molding and high-performance polymers but also underscores our commitment to enhancing service offerings for Aerospace & Defense. We look forward to integrating Precise Aerospace Manufacturing’s expertise seamlessly into Pexco’s operations, further advancing our position as a leader in engineered plastic components.”

Roxanne Abdi, CEO at Precise Aerospace Manufacturing, added, “We are excited to become part of Pexco and are thrilled to join forces to expand the breadth of products and services to each of our customer bases. Combining with Pexco enables us to continue building on both companies’ reputation for quality products and service excellence. Our focus on high performance products and complex engineering are a great cultural fit with Pexco.”

Precise Aerospace Manufacturing was founded as Precise Plastic Products in 1965 and has a 55-year track record of manufacturing and quality excellence. They now join Pexco as part of its strategic expansion, marking the addition as Pexco’s 13th manufacturing site. Houlihan Lokey served as financial advisor to Precise Aerospace Manufacturing.

About Pexco LLC

Based in Atlanta, with multiple plants across North America, Pexco is a leader in the design and fabrication of engineered plastic components. It provides standard and specialty parts and components to manufacturers and end users for a broad range of custom applications, including the specialty industrial, fluid handling, aerospace, life science, traffic safety, lighting, fence, and electrical insulation industries. Pexco offers a full range of custom design, engineering, and fabrication services, with ISO 9001:2015 registration across its manufacturing operations. For more information, visit www.pexco.com or call (770) 872-8013.

About Precise Aerospace Manufacturing, Inc.

Since 1965, Precise Aerospace Manufacturing Inc. has been the premier full-service supplier of injection, compression, transfer molded plastic, CNC machining and value-added assembly specializing in close tolerance custom molding for the aerospace, defense, medical, and electronics industries with complex engineering resin projects, from thermoset and thermoplastic materials. We are AS9100, ISO9001, and ITAR certified. For more information, visit www.precisemfg.com.

About Odyssey Investment Partners

Odyssey Investment Partners, with offices in New York and Los Angeles, is a leading private equity investment firm with a more than 25-year history of partnering with skilled managers to transform middle-market companies into more efficient and diversified businesses with strong growth profiles. Odyssey makes majority-controlled investments in industries with a long-term positive outlook and favorable secular trends. For further information about Odyssey, please visit www.odysseyinvestment.com. (Source: BUSINESS WIRE)

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

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BUSINESS NEWS

August 9, 2024 by

Sponsored by SPX Communication Technologies (TCI & ECS)

www.tcibr.com

www.enterprisecontrol.co.uk

08 Aug 24. MDA Space Ltd. (TSX: MDA), a trusted space mission partner to the rapidly expanding global space industry, today announced its financial results for the second quarter ended June 30, 2024.

Q2 2024 Highlights
Record backlog of $4.6bn at quarter-end, up 318% YoY
Strong top line growth with revenues of $242.0m, up 23% YoY
Solid profitability with adjusted EBITDA1 of $48.7m, up 21% YoY, and adjusted EBITDA margin1 of 20.1%
Strong operating cash flow of $149.0 m and healthy balance sheet with net debt to adjusted EBITDA1 ratio of 2.0x
Solid adjusted net income1 of $23.4m, up 7% YoY, and adjusted diluted earnings per share1 of $0.19, up 6% YoY
Updated 2024 full-year financial outlook
Raised revenue guidance, narrowed guidance for adjusted EBITDA and capex
Positive free cash flow1 expected in 2024, one year ahead of plan

“The MDA Space team delivered a solid Q2 driven by strong execution as we continued to convert our backlog and deliver on our customer commitments,” said Mike Greenley, Chief Executive Officer of MDA Space. “With robust momentum in our end-markets, we also continue to grow our backlog, which at quarter-end stood at a record $4.6bn. Notable awards in Q2 included a $1bn contract from the Canadian Space Agency for the next phases of the Canadarm3 program that will see us finalizing the design and carrying out the construction of the robotic system and ground control segment.”

“During the quarter we also continued to advance the manufacturing of MDA CHORUS™, our next generation Earth Observation constellation. We unveiled additional features including a new vessel detection onboard processing demonstration capability to enable future rapid delivery of data and actionable insights for maritime customers,” continued Mr. Greenley.

“Our teams were also busy advancing a number of programs including Telesat Lightspeed where MDA Space is the prime contractor to deliver 198 digital low earth orbit satellites. At quarter-end, we had approximately 75% of the supplier base for the program under contract, setting the stage for work volumes to accelerate in the second half of 2024 consistent with our full year plan.”

“Given strong operational performance year-to-date, we are updating our 2024 financial guidance and expect to be free cash flow positive in 2024 as we look to deliver another successful year.”

1 As defined in the “Non-IFRS Financial Measures” section

Q2 2024 HIGHLIGHTS

Backlog of $4.6bn at quarter-end continued to build and was up 318% compared to Q2 2023. The increase in backlog is driven by new order bookings including the $1bn award for Phases C/D of the Canadarm3 program announced in Q2 2024 and $2.4bn Telesat Lightspeed LEO constellation award announced in Q3 2023.
Revenues of $242.0m in Q2 2024 were up 23% YoY driven by higher work volumes across our three business areas, with strong contributions from the Robotics & Space Operations and Satellite Systems businesses.
Adjusted EBITDA of $48.7m in Q2 2024 compared to $40.4m in Q2 2023, representing an increase of $8.3m (or 21%) YoY. Adjusted EBITDA margin of 20.1% in Q2 2024 is consistent with the Company’s full year margin guidance of 19-20% and compares to adjusted EBITDA margin of 20.6% reported in the second quarter of 2023.
Adjusted net income for Q2 2024 was $23.4m compared to $21.9m in Q2 2023, representing an increase of $1.5m (or 7%) YoY driven by higher operating income. Adjusted diluted earnings per share of $0.19 in Q2 2024 compared to $0.18 in Q2 2023.
Operating cash flow was $149.0m in Q2 2024 compared to $38.9m in Q2 2023. The year-over-year increase in operating cash flow was driven by positive working capital contributions primarily related to the Telesat Lightspeed program.
At quarter-end, net debt to adjusted EBITDA ratio was 2.0x compared to 2.4x as of December 2023 (2.6x as of March 31, 2024) as the Company utilized its strong operating cash flow in Q2 2024 to make repayments to its revolving credit facility and deleverage the balance sheet while continuing to invest in its growth initiatives.

2024 FINANCIAL OUTLOOK

As a trusted mission partner and leading global space technology provider, we are leveraging our capabilities and expertise to execute on targeted growth strategies across our end markets and business areas. Our strategic initiatives, which span across our three businesses, include investing in next generation space technology and services, expanding our presence in high growth markets and geographies, scaling and expanding skills, talent and operations to meet current and future market demand and leveraging strategic M&A to complement organic growth. We continue to make good progress against our long-term strategic plan.

MDA Space is well positioned to capitalize on strong customer demand and robust market activity given our diverse and proven technology offerings. Our growth pipeline is significant and underpinned by existing and new programs and our book of business is healthy. We see activities ramping up in line with our expectations and are encouraged by the team’s solid execution.

For fiscal 2024, we are raising our full year revenue guidance to $1,020 – $1,060m from $950 – $1,050m previously, representing robust year-over-year growth of approximately 30% at the mid-point of guidance compared to 2023 levels. We continue to expect revenue growth to accelerate in the second half of 2024 as we ramp up work volumes on a number of programs. We are narrowing our 2024 adjusted EBITDA guidance to $200 – $210m from $190 – $210 m previously, representing approximately 19% – 20% adjusted EBITDA margin. We are narrowing our 2024 capital expenditures range to $200 – $220m from $210 – $230m previously, comprising primarily of growth investments to support CHORUS and the previously outlined growth initiatives across our three business areas. Additionally, as a result of favourable working capital contributions related to the Telesat Lightspeed program, we now expect to generate free cash flow and continue to deleverage our balance sheet in 2024.

For Q3 2024, we expect revenues to be $270 – $280m as we continue to execute on our backlog. (Source: PR Newswire)

08 Aug 24. Kopin Corporation Reports Financial Results for the Second Quarter 2024.

Q2 2024 product revenues increased 84% compared to the same period in 2023
Defense product revenues increased 106% partially offset by a 30% decrease in Industrial product revenues
5 new customers placed development orders fueling opportunities for multi-million dollar per year production revenues

Kopin Corporation (Nasdaq: KOPN), a leading provider of application-specific optical solutions and high-performance microdisplays for defense, enterprise, consumer, and medical products, today reported financial results for the second quarter ended June 29, 2024.

Commenting on the quarterly results, Michael Murray, Chief Executive Officer, stated, “The second quarter was highlighted by continued sales momentum of our products for defense applications, delivering year over year growth of 106% and five new customer development orders which provide significant multi-m dollar per year production revenue opportunities in the future. This progress has validated our strategy that we began last year to reset the course within Kopin to focus on defense products. Additionally, as we continue our output ramp on our thermal weapon sight contracts, our sustained focus on operational excellence resulted in enhanced margins for this critical product line and the company.

“As we move into the second half of the year, we expect continued growth from new customers and projects, which during the second quarter included the development award for the U.S. Army’s Next Generation-Short Range Interceptor (NG-SRI) system, which is expected to replace the Stinger Missile. We were selected to design, develop, and produce the targeting eye piece for the program, won by Lockheed Martin. The program is expected to move into full rate production in 2027, which we estimate could provide Kopin with tens of ms in revenue, in peak annual production.

“Kopin was also selected for several new Phase One development contracts including with the U.S. Army to research optical approaches for Visual Augmentation Systems to improve performance, and lessen cognitive dissonance and nausea. We also received a development contract with the U.S. Navy to research and produce a means to reduce the size and weight of the optics needed in advanced sensor systems. In addition to these research and development awards, we partnered with market leading firms like Wilcox Industries on several new dismounted soldier products and demonstrated our progress on our innovative AI enabled NeuralDisplay™ hardware and software architecture.

“Looking ahead we expect to continue accelerating our growth with a strong order book of new and long-standing customers and expect to see the benefits of our efforts with new designs and opportunities. We are leveraging our increased emphasis on business development to expand into new international markets. We continue to believe Kopin is well positioned to deliver long-term growth for our shareholders,” concluded Murray.

Second Quarter Financial Results

Total revenues for the second quarter ended June 29, 2024, were $12.3m, compared to $10.5m for the second quarter ended July 1, 2023, an 18% increase. Year-over-year product revenues increased 84%, with defense product revenues increasing by $5.4m or 106% year over year, while industrial product revenues decreased by $0.3m or 30% year over year. Second quarter 2024 funded research and development revenues declined by $2.7m or 70% as certain defense development programs were successfully completed and are now moving into low-rate initial production.

Cost of Product Revenues for the second quarter of 2024 were $8.7m, or 79% of net product revenues, compared with $5.7 m, or 95% of net product revenues for the second quarter of 2023. The decrease in cost of product revenue as a percent of net product revenues for the three months ended June 29, 2024, as compared to the three and six months ended July 1, 2023 was due to a decrease in expected rework costs, attributed in part to sustained improvements in labor hours/unit, improved work instructions, reduced scrap rates and lower customer acceptance reject rates. We estimate that the lower estimated rework cost improved gross margins by approximately $1.3 m for the three months ended June 29, 2024.

Research and Development (R&D) expenses for the second quarter of 2024 were $1.8m compared to $3.1m for the second quarter of 2023, a decrease of 41% from the prior year. Customer-funded R&D expense declined $1.5m in the second quarter of 2024 as compared to the second quarter of 2023, while internal R&D increased $0.2m year over year. The decline in customer-funded R&D programs was due to decreased spending on specific U.S. defense programs and programs previously in development were successfully completed. Internal R&D expense increased due to an increase in process improvements and NeuralDisplay™ advancements.

Selling, General and Administration (SG&A) expenses were $7.3m for the second quarter of 2024, compared to $6.5 m for the second quarter of 2023. The increase for the three months ended June 29, 2024, as compared to the three months ended July 1, 2023, was primarily due to an increase in legal fees of $1.2m, partially offset by a decrease in credit loss expense of $0.2m. Included in SG&A was legal fees associated with the BlueRadios lawsuit of $3.1m for the second quarter of 2024 and $1.9m for the second quarter of 2023.

The Net Loss for the second quarter of 2024 was ($5.9)m, or ($0.05) per share, compared with ($8.2)m, or ($0.07) per share, for the second quarter of 2023.

All amounts above are estimates and readers should refer to our Form 10-Q for the quarter ended June 29, 2024, for final disposition as well as important risk factors.

(Source: BUSINESS WIRE)

08 Aug 24. BlackSky Reports Second Quarter 2024 Results.

Q2 Total Revenue Increases 29% Over Prior Year Period

Company Wins $40m in New Contracts and Renewal Agreements

First 35cm Very High Resolution Gen-3 Satellite Planned for Launch in Q4

BlackSky Technology Inc. (“BlackSky” or the “Company”) (NYSE: BKSY) announced results for the second quarter ended June 30, 2024.

Second Quarter Financial Highlights:

Revenue of $24.9m, up 29% from the prior year quarter
Imagery & software analytical services revenue grew 14% over the prior year quarter
Imagery & software analytical services cost of sales(1), as a percent of revenue, improved to 20% from 23% in the prior year quarter

“BlackSky delivered another strong quarter driven by a 29% year-over-year increase in second quarter revenue and substantial operating leverage which led to improved margin performance,” said Brian E. O’Toole, BlackSky CEO. “We won $40 m in new awards and extension agreements, including the continuation of subscription services under the EOCL contract. Our Gen-3 constellation remains on track to unlock our next phase of growth by enabling transformative solutions our customers are demanding, using the power of our very high resolution imagery, combined with high-frequency monitoring and automated AI.”

Recent Highlights

The National Reconnaissance Office extended its subscription to our Gen-2 high-frequency imagery services under the Electro-Optical Commercial Layer (EOCL) contract
Won a $7m contract renewal with an international government customer to provide dynamic space-based imagery and analytics monitoring services
Continued to win task orders under the multi-year contract with the U.S. Air Force Research Laboratory to develop and demonstrate AI-enabled space-based moving target detection, tracking and identification
Awarded multiple six-figure subscription contracts in support of various international government agencies
In the final phases of assembly, integration, and testing on our Gen-3 satellites and have begun mission planning preparation for launch and commissioning operations
Finalizing launch window for first Gen-3 satellite with Rocket Lab

(1) 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 second quarter of 2024 was $24.9m, up $5.6m, or 29%, from the second quarter of 2023. Imagery and software analytical services revenue was $17.5m in the second quarter of 2024, up 14% over the prior year period, primarily driven by incremental customer orders for BlackSky’s imagery services. Professional and engineering services revenue was $7.5m in the second quarter of 2024, up 87% over the prior year period. The significant year-over-year increase was primarily related to the execution step up of multiple major international contracts. 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(1)

Total cost of sales as a percentage of revenue improved to 28% for the second quarter of 2024, compared to 44% in the second quarter of 2023. Imagery and software analytical service costs as a percentage of revenue improved to 20% in the second quarter of 2024, compared to 23% in the second 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 second quarter of 2024 were $29.8m, which included $2.2m of non-cash stock-based compensation expense and $11.3m in depreciation and amortization expenses. Operating expenses for the second quarter of 2023 were $30.7m, which included $2.1m in non-cash stock-based compensation expense and $11.8m 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 second quarter of 2024 were $16.3m, compared to cash operating expenses of $16.8m for the second quarter of 2023. The year-over-year decrease of $0.5m, or 3%, was primarily driven

by reductions in general corporate costs, which more than offset investments in our go-to-market initiatives.

Net Loss

Net loss for the second quarter of 2024 was $9.4m, compared to a net loss of $33.4m in the second quarter of 2023.

Adjusted EBITDA(2)

Adjusted EBITDA for the second quarter of 2024 was $2.1m, compared to an Adjusted EBITDA loss of $5.8m in the second quarter of 2023. The $7.9m year-over-year improvement was primarily driven by strong operating leverage achieved through higher revenues, improvement in gross margins, and reductions in cash operating expenses.

Balance Sheet & Capital Expenditures

As of June 30, 2024, cash and cash equivalents, restricted cash, and short-term investments totaled $42.3m. In addition, the Company anticipates receiving approximately $28.2m 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 second quarter of 2024 were $12.9m.

2024 Outlook

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 our Gen-3 satellites. (Source: BUSINESS WIRE)

08 Aug 24. Berlin defence strategy eyes stakes in arms companies, report says. The German government could take a stake in arms-makers and defence projects in “strategic cases”, according to a draft paper written by the economy and defence ministries, the Handelsblatt newspaper reported on Thursday.

The proposal is part of a new strategy Berlin is developing to strengthen Germany’s arms industry, Handelsblatt said, as Europe bolsters its defences following Russia’s 2022 invasion of Ukraine.

A spokesperson for the economy ministry said the paper had not yet been finalised.

The defence ministry could not immediately be reached for comment.

If approved, such a strategy could see the government taking stakes in companies and projects that it deems strategically important – already allowed in principle – more frequently, the report added.

The government already has a 25% stake in German defence electronics maker Hensoldt (HAGG.DE) according to LSEG data.

Sources told Reuters in June that state-lender KfW and private equity firm Carlyle (CG.O) were also in talks to jointly buy a majority of Thyssenkrupp’s (TKAG.DE) warship division, adding a deal could be agreed as soon as September if all parties agree.

Russia’s invasion of Ukraine in February 2022 prompted a massive ramp-up of defence spending in Germany and other European countries, swelling the order books and market value of arms-makers such as Rheinmetall and Hensoldt. (Source: Reuters)

08 Aug 24. Rheinmetall expects up to 25bn eur in orders for JV with Leonardo. Rheinmetall (RHMG.DE), expects orders worth up to 25bn euros ($27.27bn) from the Italian government for its joint tank-building venture with defence manufacturer Leonardo (LDOF.MI) the German defence group’s CEO said on Thursday.

“The first order for the joint venture should be awarded either at the end of the year or in the first quarter of 2025,” Rheinmetall chief executive Armin Papperger said in a conference call following the company’s quarterly results.

“We are talking about 20 to 25bn euros, the latest status is 24bn euros, but this has not yet been finalised,” he added. ($1 = 0.9168 euros)(Source: Reuters)

07 Aug 24. After Approving the Constitution of the Space NewCo, Indra Strengthens its Portfolio by Acquiring Deimos.

Indra’s Board of Directors has approved the creation of the Space NewCo, as announced in the presentation of its Leading the Future Strategic Plan, which will serve as a vehicle to provide comprehensive capabilities throughout the space industry value chain
In order to expand its portfolio, Indra recently signed a contract with Elecnor to acquire Deimos, thus reinforcing its capabilities in all phases of a space mission, including satellite design and integration and the ground segment
Indra’s 50% stake in Startical, an initiative to provide air traffic management communication and surveillance services, will be incorporated into the NewCo to improve its positioning in the downstream segment for the exploitation of space capabilities

Indra has signed a contract with Elecnor for the acquisition of Deimos, a Spanish space company specializing in the undertaking of space missions and satellite integration, which has subsidiaries in the United Kingdom and several European Union countries. The agreement constitutes a major step in Indra’s space strategy and complements other recent developments, including the approval of the Indra Space spin-off and the creation of the Space NewCo and the integration of the Startical initiative into its portfolio.

On 27 June, the Shareholders’ Meeting approved the Indra Space spin-off, as announced during the presentation of the Leading the Future Strategic Plan, together with the incorporation of the Space NewCo, recently approved by Indra’s Board of Directors. This new entity will serve as a vehicle to offer comprehensive capabilities throughout the space industry value chain, seeking to position Indra as a relevant player in domestic, European and international space programs and initiatives.

In an initial step to fulfill this ambition, Indra has entered into a contract with Elecnor for the acquisition of Deimos to strengthen its capabilities in all phases of a space mission. Deimos will provide key capabilities for the integration of satellites and critical flight subsystems. The acquisition will also enhance Indra’s capabilities in the ground segment, particularly in terms of control and mission software and space surveillance and tracking. Deimos also enjoys a privileged position among space institutions and participates in domestic and European programs and initiatives, factors that will reinforce Indra’s position in the space industry. The transaction is expected to be completed in the last quarter of the year, once the customary regulatory approvals have been obtained.

In addition, in order to reinforce the positioning of the Space NewCo in the downstream segment for the exploitation of space capabilities, it will incorporate Indra’s 50% stake in Startical, a project for the provision of air traffic management communication and surveillance services.

With these developments Indra demonstrates its commitment and its desire to stand at the forefront of the European space industry, with an integral presence in the value chain. The operation also forms part of one of the key lines of growth included in the Leading the Future Strategic Plan presented by Indra this year. This new company envisions incorporating long-term global partners to increase its financial capacity and speed up its inorganic growth in Europe, with the aim of achieving revenues totaling more than €1 bn by 2030. (Source: ASD Network)

08 Aug 24. Defence technology start-up Anduril Industries has raised $1.5bn to accelerate the production of autonomous weapons for the US military and its allies, as investment in the sector surges on the back of conflict in Ukraine. Peter Thiel’s venture capital firm Founders Fund, which provided the seed funding that launched Anduril, co-led the latest round with Virginia-based investor Sands Capital. This latest investment values the California-based start-up at $14bn, double its valuation in December 2022, the last time the company raised money. Fidelity Management, Baillie Gifford and Franklin Venture Partners, the venture capital arm of Franklin Templeton, also participated in the round. The seven-year-old company will invest the funds into new manufacturing facilities capable of mass producing “tens of thousands of autonomous weapons systems addressing the urgent needs of the United States and our allies”. Anduril will invest “hundreds of millions” of dollars to develop the first factory, named Arsenal-1, which will be in the US — although the company declined to specify where. Anduril Anduril’s rapid growth is a sign of shifting sentiment among venture capitalists, many of whom have reversed their opposition to investing in defence technology since Russian President Vladimir Putin’s full-scale invasion of Ukraine in 2022. Venture investment into defence tech doubled to $33bn between 2019 and 2023 amid a broader downturn in venture funding. “The bottom line is: America and our allies don’t have enough stuff,” said Anduril chief strategy officer Chris Brose, previously the late US senator John McCain’s principal adviser on national security. “We don’t have enough vehicles, we don’t have enough platforms, we don’t have enough weapons. This has been true for a long time,” he added. “Ukraine has put that into high relief.” Anduril is the most prominent of a group of defence start-ups aiming to break into a sector where a handful of “primes” — large defence contractors including Lockheed Martin, Raytheon, General Dynamics and Boeing — have a stranglehold on lucrative government contracts. The company estimated that the US would run out of munitions in “less than eight days” in the event of a major conflict. The start-up, headquartered in Orange County, California, and led by virtual reality pioneer Palmer Luckey, has made inroads with the US and UK military, winning contracts to supply both with advanced weapons systems. In 2022, it was awarded a $1bn contract by US Special Operations Command to provide anti-drone technology. Earlier this year, it beat Lockheed Martin, Northrop Grumman and Boeing to win a large US Air Force contract to provide collaborative combat aircraft. Luckey co-founded Anduril in 2017 after he left Facebook, which had bought his virtual reality headset business, Oculus, for $2bn three years earlier. Recommended Jacquelyn Schneider How missiles became the modern weapon of choice The US spends far more on defence than any other country in the world, much of it on military hardware. Its defence budget is $842bn this year. But Brose said the government’s procurement of military technology was slow and insufficient. “We’re off by an order of magnitude the amount of defence systems that we as America are generating today,” he said. Rather than highly complex, bespoke vehicles and armaments, Anduril will develop autonomous weapons that are “as simple as possible”, using the commercial manufacturing techniques used by tech companies such as Elon Musk’s Tesla and SpaceX as a blueprint. Anduril said Arsenal “dismantles the traditional defence production preference for complexity by . . . eliminating unnecessary materials, parts and specialised processes”. (Source: FT.com)

08 Aug 24. TT Electronics, a global provider of engineered electronics for performance critical applications, specialising in sensing, power, and manufacturing today announces its half year results today for the period ending 30th June 2024.

Financial Highlights

Resilient performance against a mixed backdrop for H1 with revenue up 1% organically excluding unwind of pass-through revenue
Strong European and Asian growth largely offset by weakness in components demand impacting North American region
Strong growth in Aerospace & Defence, headwinds in Distribution
Significant cost action taken to address impact of components demand reduction1. £9m headcount savings actioned in H1
Order intake up 15% organically over H1 2023, H1 book to bill of 110%
Adjusted operating margin unchanged at constant currency, 8.7% ex Albert divestment, 9.3% excluding severance costs
Statutory operating profit £15.1m, statutory basic EPS of 3.4p
Cash conversion at 30% due to seasonality and mix however, on-track to deliver FY guidance
Interim dividend increased 5% to 2.25p per share
Board’s expectations for the full year remain unchanged

Project Dynamo

Improvement in execution through the period and excellent progress on collaboration demonstrating early benefits of move to function-led regional structure
Material further opportunities identified under Project Dynamo underpinning medium-term financial goals
£17m of net cost savings and margin improvement by 2026 identified, up from £5-6m, of which £4m has already been actioned
Eight key workstreams identified to drive productivity and efficiency, including make vs buy and cost of production
Inventory management project expected to deliver £15m of cash in H2 2024 and an additional £15m by 2026

Peter France, Chief Executive Officer, said: “We have made good progress on the early stages of Project Dynamo to unlock value and drive financial and operational improvements across the Group. We have identified significantly more opportunity increasing the potential annual benefit from £5-6m to £17m by 2026, underpinning our medium-term goal of 12 per cent operating margin.

De-stocking in our shorter cycle components business in North America has persisted for longer than anticipated and we have taken £9 m of swift cost action to address this. Our European and Asian businesses have both performed well in the period with strong revenue growth and margin improvement.

The Group’s order book and current momentum of order intake in our components business underpin our confidence in the full year outturn. The completion of Project Albert, significant cost action taken and some early benefits from our self-help programme, Project Dynamo, support our 10 per cent operating margin target for the year and for leverage to return to the lower end of our 1-2x target range.”

07 Aug 24. Curtiss-Wright Reports Second Quarter 2024 Financial Results and Raises Full-Year 2024 Guidance. Curtiss-Wright Corporation (NYSE: CW) reports financial results for the second quarter ended June 30, 2024.

Post this

Second Quarter 2024 Highlights:

Reported sales of $785m, up 11%;
Reported operating income of $129m, operating margin of 16.4%, and diluted earnings per share (EPS) of $2.58;
Adjusted operating income of $133m, up 16%;
Adjusted operating margin of 17.0%, up 60 basis points;
Adjusted diluted EPS of $2.67, up 24%;
New orders of $995m, up 18%, reflected a book-to-bill of approximately 1.3x driven by strong demand within our Aerospace & Defense (A&D) markets;
Backlog of $3.2bn, up 13% year-to-date; and
Free cash flow (FCF) of $100m, generating 97% Adjusted FCF conversion.

Raised Full-Year 2024 Adjusted Financial Guidance:

Sales increased to new range of 6% to 8% growth (previously 5% to 7%), driven by strong growth in our A&D markets;
Operating income increased to new range of 6% to 9% growth (previously 5% to 8%);
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 $10.40 to $10.65, up 11% to 14% (previously $10.10 to $10.40, up 8% to 11%);
Reduced effective tax rate by 100 bps to 22.5% following consolidation of U.K. legal entity structure, and
Free cash flow increased to new range of $425 to $445m, up 3% to 8% (previously $415 to $435m, up 0% to 5%), and continues to reflect greater than 105% FCF conversion.

“Curtiss-Wright delivered strong second quarter results, highlighted by mid-teens revenue growth in our A&D end markets, continued operating margin expansion, and 24% growth in Adjusted diluted EPS,” said Lynn M. Bamford, Chair and CEO of Curtiss-Wright Corporation. “We once again demonstrated robust order activity, as bookings increased 18% year over year, yielding a book-to-bill of 1.3x. Based on the strong first half results and our outlook for the remainder of 2024, we have increased our full-year Adjusted guidance for sales, operating income, diluted EPS and free cash flow.”

“As we discussed at our Investor Day event in May, we continue to build momentum through the execution of our Pivot to Growth strategy. We remain focused on accelerating operational excellence to drive margin expansion and generate funding to reinvest into the business. As part of this strategy, we recently launched restructuring actions to support volume increases, improve efficiencies and further optimize our operations. These actions are expected to produce both recurring operational savings and increased free cash flow.”

2024 Restructuring Program and Other Cost Savings Initiatives

During the second quarter of 2024, the Company initiated restructuring actions across all three segments, principally within the Aerospace & Industrial segment. These initiatives are expected to result in approximately $15m in restructuring costs in 2024, and are expected to yield initial savings in 2024, as well as approximately $10m in annualized savings in 2025; and
Curtiss-Wright launched a U.K. legal entity consolidation program anticipated to facilitate more efficient cash repatriation. This initiative is expected to generate approximately $5 m in annualized savings, based on a 100 basis point reduction in the effective tax rate, and approximately $5m in annual recurring free cash flow.

Acquisition of Ultra Energy

On June 3, 2024, the Company announced 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 monitoring systems, temperature and pressure sensors, and reactor protection and control systems principally to the commercial nuclear and A&D markets;
The business 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 free cash flow conversion rate in excess of 100%; and
The acquisition is expected to close in the third quarter of 2024, subject to U.K. regulatory approval, and the acquired business will operate within Curtiss-Wright’s Naval & Power segment.

Second Quarter 2024 Operating Results

Sales of $785m increased 11% compared with the prior year period;
Total A&D market sales increased 16%, while total Commercial market sales increased 2%;
In our A&D markets, we experienced strong growth in the defense markets principally driven by strong demand for our defense electronics products and the timing of production ramps in naval defense, as well as higher OEM sales in the commercial aerospace market;
In our Commercial markets, we experienced solid growth in the power & process markets, principally driven by higher sales of our commercial nuclear products, while sales in the general industrial market declined modestly; and
Adjusted operating income of $133m increased 16%, while Adjusted operating margin increased 60 basis points to 17.0%, principally driven by favorable overhead absorption on higher revenues in all three segments and favorable mix in the Defense Electronics segment, partially offset by unfavorable mix and timing of development programs in the Naval & Power segment.

Second Quarter 2024 Segment Performance

Aerospace & Industrial

Sales of $233m, up $7m, or 3%;
Commercial aerospace market revenue increases reflected strong demand and higher OEM sales of sensors and actuation products, as well as surface treatment services, on narrowbody and widebody platforms;
General industrial market revenues declined modestly, as the benefit of higher sales of surface treatment services was more than offset by reduced sales of industrial vehicle products to off-highway vehicle platforms; and
Adjusted operating income was $38m, up 6% from the prior year, while adjusted operating margin increased 40 basis points to 16.2%, mainly due to solid absorption on higher sales and the initial benefits of our restructuring initiatives.

Defense Electronics

Sales of $228m, up $31m, or 16%;
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;
Strong revenue growth in the ground defense market primarily reflected higher sales of tactical battlefield communications equipment; and
Adjusted operating income was $59m, up 36% from the prior year, while adjusted operating margin increased 390 basis points to 25.7%, reflecting favorable absorption and mix on higher revenues, and the benefits of our cost containment initiatives.

Naval & Power

Sales of $323m, up $43m, or 15%;
Strong revenue growth in the naval defense market principally reflected higher demand on various submarine programs and the CVN-81 aircraft carrier program;
Higher revenue in the aerospace defense market was primarily driven by increased sales of our arresting systems equipment supporting various domestic and international customers;
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 $47m, down 6% from the prior year, while adjusted operating margin decreased 320 basis points to 14.4%, as favorable absorption on higher revenues was more than offset by unfavorable mix of products and timing of development programs.

Free Cash Flow

Reported free cash flow of $100m increased slightly as higher cash earnings were essentially offset by the timing of tax payments and working capital;
Adjusted free cash flow of $100m; and
Capital expenditures decreased $1m compared with the prior year.

New Orders and Backlog

New orders of $995m increased 18% compared with the prior year and generated an overall book-to-bill of approximately 1.3x, principally driven by strong demand for naval defense and commercial aerospace products within our A&D markets; and
Backlog of $3.2bn, up 13% from December 31, 2023, reflects strong demand in both our A&D and Commercial markets.

Share Repurchase and Dividends

During the second quarter, the Company repurchased 47,174 shares of its common stock for approximately $13m; and
The Company also declared a quarterly dividend of $0.21 a share, an increase of 5% from the previous quarter.

07 Aug 24. CACI Reports Results for Its Fiscal 2024 Fourth Quarter and Full Year and Issues Fiscal Year 2025 Guidance.

Annual revenues of $7.7bn, up 14% YoY

Annual net income of $419.9m; Diluted EPS of $18.60, up 13% YoY

Annual adjusted net income of $475.1m; Adjusted diluted EPS of $21.05, up 12% YoY

Annual EBITDA of $798.0m and EBITDA margin of 10.4%

Annual contract awards of $14.2bn and book-to-bill of 1.9x

Company committed to continued healthy cash flow in Fiscal Year 2025, driven by revenue growth, strong margins, and efficient capital management

CACI International Inc (NYSE: CACI), a leading provider of expertise and technology to government customers, announced results today for its fiscal fourth quarter and full year ended June 30, 2024, and issued guidance for fiscal year 2025.

“CACI’s exceptional fiscal year 2024 financial performance is the result of the relentless execution of our strategy. Our results were strong across the board, including achieving organic growth in the mid-teens, and delivering on our margin and cash flow expectations,” said John Mengucci, CACI President and Chief Executive Officer. “With more than $14 bn of awards, we continue to demonstrate our ability to win in the marketplace with differentiated capabilities that address our customers’ most critical national security needs. Our industry-leading business development efforts drove a 22% increase in our backlog, boosting it to $32bn. Overall, our FY24 performance expands our ability to deliver value for our customers and shareholders throughout fiscal year 2025 and beyond.”

Fourth Quarter Results

Revenues in the fourth quarter of fiscal year 2024 increased 19.7 percent year-over-year, driven by 18.5 percent organic growth. The increase in income from operations was driven by higher revenues and gross profit. Growth in diluted earnings per share and adjusted diluted earnings per share was driven by higher income from operations and share repurchases earlier in the year, partially offset by a higher tax provision. The increase in cash from operations, excluding MARPA, was driven primarily by higher net income and strong working capital management.

Fourth Quarter Contract Awards

Contract awards in the fourth quarter totaled $5.4bn, with nearly 70 percent for new business to CACI. Awards exclude ceiling values of multi-award, indefinite delivery, indefinite quantity (IDIQ) contracts. Some notable awards during the quarter were:

CACI was awarded an eight-year contract worth up to $2bn to provide digital solutions technology to standardize and centralize 11 of NASA’s IT services under the NASA Consolidated Applications and Platform Services (NCAPS) award. NCAPS expands CACI’s current relationship with NASA and will bring enterprise-wide automation across more than 200 systems from various NASA locations into a single program, enhancing efficiency and boosting productivity.
CACI was awarded a ten-year expertise contract valued at up to $450m to support the Joint Navigation Warfare Center (JNWC), an operational center of U.S. Space Forces – Space and the Department of Defense’s center of excellence for navigation warfare (NAVWAR). CACI will provide 24/7 operations support, joint and operational planning, adversary positioning, navigation, and timing (PNT) capability and order of battle assessment, and other tasks that inform and enhance joint force, DoD combatant commander, interagency, and allied NAVWAR requirements.
CACI was awarded a five-year technology task order valued at up to $416m to design, produce, and deliver complex, customized radio frequency (RF) systems for the U.S. Army’s signals intelligence (SIGINT) missions. As part of the Exploit, Enhance, Enable and Influence-TENCAP (E3I-T) work, CACI will begin deploying new, upgraded hardware systems this year.
CACI was awarded a five-year task order valued at up to $414m to provide expertise and unmanned systems support to the U.S. Army Combat Capabilities Development Command (DEVCOM) – Command, Control, Communications, Computers, Cyber, Intelligence, Surveillance, and Reconnaissance (C5ISR) Center to enable warfighter rapid response to current and emerging threats.
CACI was awarded a five-year task order valued at up to $319m to provide intelligence systems expertise to the U.S. Army, Communications-Electronics Command (CECOM), Software Engineering Center (SEC), Electronic Warfare & Sensors Directorate (IEWSD), Army Reprogramming Analysis Team-Program Office (ARAT-PO). Through the ARAT task order, CACI will help the Army, other services, and foreign military partners establish a state-of-the-art, on-demand environment that provides the most current threat data possible to support multi-domain operations.
CACI was awarded a six-year expertise task order valued at up to $239m to provide intelligence analysis and operations to the U.S. Army commands in Europe and Africa. Under the Theater Military Intelligence Support Services (TMISS) task order, CACI will deliver comprehensive all-source and single-discipline intelligence expertise tailored to the U.S. European Command (EUCOM) and U.S. Africa Command (AFRICOM) AORs during peacetime activity as well as crisis and contingency.
CACI was awarded a firm-fixed-price contract worth approximately $100m for the Terrestrial Layer System Brigade Combat Team Manpack (TLS BCT Manpack) by the U.S. Army. CACI will deliver a tailorable, modular, low size, weight, and power (SWaP) solution that integrates and delivers significantly improved signals intelligence and electronic warfare capabilities to soldiers at the tactical edge.

Total backlog as of June 30, 2024 was $31.6bn compared with $25.8bn a year ago, an increase of 22 percent. Funded backlog as of June 30, 2024 was $3.8 bn compared with $3.7bn a year ago, an increase of 3 percent.

Additional Highlights

CACI’s optical communications technology was used by NASA to successfully send data from its Psyche spacecraft to the Jet Propulsion Laboratory in Southern California, a distance of more than 200m kilometers, as part of the Deep Space Optical Communications (DSOC) experiment. Additionally, NASA will continue to leverage CACI’s optical technology for DSOC as the range is extended.
CACI hired Retired Lieutenant General Bob Marion as a Senior Vice President in the new role of corporate strategic advisor. In this new position, Marion will provide insight on critical industry and acquisition issues as an active member of the team charged with leading efforts to augment CACI’s growing national security business.
CACI Chairman of the Board of Directors, Michael “Mike” A. Daniels, received the Virginia Chamber of Commerce Lifetime Achievement Award honoring his career as a technology leader and for promoting a thriving economy within the Commonwealth, supported by a world-class workforce.

Fiscal Year Results

Revenues in fiscal year 2024 increased 14.3 percent year-over-year, driven by 13.7 percent organic growth. The increase in income from operations was driven by higher revenues and gross profit. Growth in diluted earnings per share and adjusted diluted earnings per share was driven by higher income from operations and share repurchases, partially offset by higher interest expense and a higher tax provision. The increase in cash from operations, excluding MARPA, was driven by higher net income, lower tax payments including those related to our method change enacted in fiscal year 2021 and Section 174 of the Tax Cuts and Jobs Act of 2017, and strong working capital management.

(Source: BUSINESS WIRE)

07 Aug 24. SkyWater Technology Reports Second Quarter 2024 Results.

Eighth Straight Quarter of Record Revenue and 34% Growth Year-Over-Year

SkyWater Technology, Inc. (NASDAQ: SKYT), the trusted technology realization partner, today announced financial results for the second quarter 2024 ended June 30, 2024.

Financial Highlights for Q2 2024:

Revenue increased 34% year-over-year to a record $93.3m.
Gross margin decreased to 18.3% on a GAAP basis, compared to 23.9% in Q2 2023, and decreased to 18.9% on a non-GAAP basis, compared to 25.3% in Q2 2023.
Net loss to shareholders of $1.9m, or $0.04 per share on a GAAP basis, and net income to shareholders of $0.8m, or $0.02 per share on a non-GAAP basis, compared to net loss to shareholders of $8.6m, or $0.19 per share on a GAAP basis, and net loss to shareholders of $2.0m, or $0.04 per share on a non-GAAP basis in Q2 2023.
Adjusted EBITDA of $8.1m, or 8.7% of revenue, compared to $10.3m, or 14.7% of revenue in Q2 2023.

“We are pleased to report continued strong results for our unique and differentiated Advanced Technology Services business, which – coupled with record levels of customer-funded CapEx – drove another record revenue quarter and positive non-GAAP EPS,” commented Thomas Sonderman, SkyWater Chief Executive Officer. “With continued progress in efficiency gains, our second quarter results are indicative of the new revenue baseline required to support future profitability and positive cash flow from operations as we move into next year and beyond. With our revenue outlook for the underlying business remaining relatively consistent as we have progressed through 2024, our customers’ commitments to fund the technical capabilities and capacity that will support future growth have continued to expand further. We believe these unprecedented levels of customer co-investment make SkyWater a uniquely CapEx-light semiconductor manufacturing partner, with an expanding gross margin profile and significant earnings growth potential in the years to come.”

Recent Business Highlights:

Advanced Technology Service (ATS) development revenue exceeded expectations to reach a new record in Q2, reflecting strong operational execution and improved cycle times in response to accelerated demand on multiple aerospace and defense programs.
Record revenue results, along with significant progress achieved in our ongoing cost-control efforts, enabled positive non-GAAP EPS along with strong operating cash flow generation in Q2.
In next-generation medical applications, through our recent ATS collaboration with Quantum-Si, we are now transitioning their baseline technology to Wafer Services, a key milestone as they progress commercialization efforts for their state-of-the-art proteome sequencing technology.
The recent installation of Multibeam’s high-productivity, direct-write patterning system is a key development supporting strong customer demand for our Technology as a Service (“TaaS”) business model. The first-of-its-kind Multicolumn E-Beam Lithography (MEBL) system enables advanced lithography capability from early-concept prototyping through the production ramp.
The recent delivery of the first fan-out wafer-level packaging tool to SkyWater Florida is a significant milestone as we accelerate the tooling and facilitation of our operations in preparation for an expected 2025 ramp of our advanced packaging service offering.

Q2 2024 Summary:

GAAP

Q2 2024 Results:

Revenue: Revenue of $93.3m increased 34% year-over-year. ATS development revenue of $61.7m increased 18% year-over-year. Tools revenue was $25.9m in the second quarter of 2024 compared to $0.9m in the second quarter of 2023. Wafer Services revenue of $5.8m decreased 66% compared to the second quarter of 2023.
Gross Profit: GAAP gross profit was $17.1m, or 18.3% of total revenue, compared to gross profit of $16.7m, or 23.9% of total revenue, in the second quarter of 2023. Non-GAAP gross profit was $17.6m, or 18.9% of total revenue, compared to non-GAAP gross profit of $17.7m, or 25.3% of total revenue, in the second quarter of 2023.
Operating Expenses: GAAP operating expenses were $15.7m, compared to $20.2m in the second quarter of 2023.
Net Loss: GAAP net loss to shareholders was $1.9m, or $0.04 per share, compared to a net loss to shareholders of $8.6m, or $0.19 per share, in the second quarter of 2023. Non-GAAP net income to shareholders was $0.8m, or $0.02 per share, compared to a non-GAAP net loss to shareholders of $2.0m, or $0.04 per share, in the second quarter of 2023.
Adjusted EBITDA: Adjusted EBITDA was $8.1m, or 8.7% of total revenue, compared to $10.3m, or 14.7% of total revenue, in the second quarter of 2023. (Source: BUSINESS WIRE)

07 Aug 24. Aeva Reports Second Quarter 2024 Results.

On Track with Daimler Truck Program Milestones and 2026 Start of Production Timeline

Advanced with Global Top 10 Passenger OEM RFQ, Award Decision Expected This Year

Top U.S. National Defense Security Organization Selected 4D LiDAR to Protect Critical Energy Infrastructure

First Industrial Launch with Nikon On Schedule for Q4 2024

August 07, 2024 04:05 PM Eastern Daylight Time

Aeva® (NYSE: AEVA), a leader in next-generation sensing and perception systems, today announced its second quarter 2024 results.

Key Company Highlights

Daimler Truck program is on track with continued scaling of sensor shipments for the OEM’s on-road vehicles. Daimler Truck unveiled its battery electric autonomous Freightliner eCascadia vehicle technology demonstrator equipped with Aeva 4D LiDAR
Strong momentum in passenger vehicles: continued expectation for a global top 10 OEM RFQ award decision this year; a new collaboration with an additional global top 10 OEM for integration concept of next-generation FMCW LiDAR
Completed final validation for the first industrial precision product with Nikon ahead of Aeva deliveries in Q4 2024
First expansion into security with Aeva 4D LiDAR selected by a top U.S. National Defense Security organization to protect critical energy infrastructure
Germany’s AutomatedTrain program selected Aeva 4D LiDAR to help enable driverless, fully automated passenger train dispatch and parking functionality
Achieved ISO/IEC 27001:2022 certification of Aeva’s information security management system, demonstrating continued progress on automotive Tier-1 readiness

“We continue to achieve key milestones on our production programs with Daimler Truck in auto and Nikon in industrial, while also making significant strides on additional automotive opportunities with multiple global top 10 passenger OEMs looking to adopt 4D LiDAR,” said Soroush Salehian, Co-Founder and CEO at Aeva. “We believe the demand for Aeva’s unique FMCW technology across a broad range of applications is only beginning, as evidenced by recent wins in new areas including security, and we see opportunity to continue securing additional program wins in 2024.”

Second Quarter 2024 Financial Highlights

Cash, Cash Equivalents and Marketable Securities

o Cash, cash equivalents and marketable securities of $160.2m and available facility of $125.0m as of June 30, 2024

Revenue

o Revenue of $2.0m in Q2 2024, compared to revenue of $0.7m in Q2 2023

GAAP and Non-GAAP Operating Loss*

o GAAP operating loss of $48.9m in Q2 2024, compared to GAAP operating loss of $38.2m in Q2 2023

o Non-GAAP operating loss of $32.0m in Q2 2024, compared to non-GAAP operating loss of $31.1m in Q2 2023

GAAP and Non-GAAP Net Loss per Share*

o GAAP net loss per share of $0.82 in Q2 2024, compared to GAAP net loss per share of $0.82 in Q2 2023

o Non-GAAP net loss per share of $0.57 in Q2 2024, compared to non-GAAP net loss per share of $0.66 in Q2 2023

Shares Outstanding

o Weighted average shares outstanding of 53.0m in Q2 2024

Aeva’s mission is to bring the next wave of perception to a broad range of applications from automated driving to industrial robotics, consumer electronics, consumer health, security and beyond. Aeva is transforming autonomy with its groundbreaking sensing and perception technology that integrates all key LiDAR components onto a silicon photonics chip in a compact module. Aeva 4D LiDAR sensors uniquely detect instant velocity in addition to 3D position, allowing autonomous devices like vehicles and robots to make more intelligent and safe decisions. For more information, visit www.aeva.com, or connect with us on X or LinkedIn. (Source: BUSINESS WIRE)

07 Aug 24. Graham Corporation Net Income Increased 12% to $3.0m on Expanded Gross Margin of 24.8% in First Quarter of Fiscal 2025

Strong financial results further validates solid execution of strategic initiatives to grow and drive stronger earnings power
Revenue up 5% to a record $50.0m reflecting strength in defense and refining; gross margin expanded 170 basis points to 24.8%
Net income increased 12% to $3.0m for net margin of 5.9%, adjusted net income1 was up 20% to $3.6m and adjusted EBITDA1 was $5.1m, or 10.3% of sales
Orders of $55.8m driven by defense market and international demand, resulted in a book-to-bill ratio of 1.1x and nearly $400m in backlog2
Strong balance sheet with no debt and $21.6m of cash at June 30, 2024, provides financial flexibility to support future growth

Graham Corporation (NYSE: GHM) (“GHM” or the “Company”), a global leader in the design and manufacture of mission critical fluid, power, heat transfer and vacuum technologies for the defense, space, energy, and process industries, today reported financial results for its first quarter for the fiscal year ending March 31, 2025 (“fiscal 2025”). (instead of Graham Corporation (NYSE: GHM) (“GHM” or the “Company”), a global leader in the design and manufacture of mission critical fluid, power, heat transfer and vacuum technologies for the defense, space, energy, and process industries, today reported financial results for its first quarter for the fiscal year ended June 30, 2024 (“fiscal 2025”).

“We are delivering consistent improvement, solid growth and strengthening profitability,” commented Daniel J. Thoren, President and Chief Executive Officer. “We believe our solid results reflect the commitment and discipline of the GHM team, the confidence our customers have bestowed on us and the effectiveness of our strategy to build better companies. In addition to the visibility our nearly $400 m in backlog provides, it is worth noting that the growth of our defense business has also reduced our economic sensitivity as we receive a steady flow of program renewals and new opportunities with the U.S. Navy. In fact, we will be breaking ground this month on a new 29,000 square foot facility in Batavia, NY to provide production efficiencies, and increased capabilities and capacity to support our defense customer’s needs.”

He concluded, “These are exciting times at Graham Corp. We are steadily advancing our plan, delivering on our targets and are strategically positioning for continued growth.”

First Quarter Fiscal 2025 Performance Review

(*Graham believes that, when used in conjunction with measures prepared in accordance with U.S. generally accepted accounting principles, adjusted net income, adjusted diluted net income per share, Adjusted EBITDA and adjusted EBITDA margin, which are non-GAAP measures, help in the understanding of its operating performance. See attached tables and other information on pages 10 and 11 for important disclosures regarding Graham’s use of these non-GAAP measures.

Record quarterly net sales of $50.0m increased 5%, or $2.4m, and included $1.6m of incremental sales from P3. Sales to the defense market increased $6.3m, or 28%, and were driven by better execution, improved pricing, and increased direct labor. These increases more than offset lower “Other” revenue that reflected variability in project timing across multiple markets and customers. Aftermarket sales to the refining, chemical/petrochemical, and defense markets of $7.8m remained strong but were $3.0m lower than the prior year record levels.

See supplemental data for a further breakdown of sales by market and region.

Gross margin expanded 170 basis points to 24.8%, which reflected higher margin defense sales, higher margin P3 sales, and improved execution. Additionally, gross profit for the quarter benefited $480 thousand due to a $2.1m grant received from BlueForge Alliance to reimburse the Company for the cost of its defense welder training programs in Batavia and related equipment. BlueForge Alliance is a nonprofit, neutral integrator that supports the U.S. Navy’s submarine industrial base initiatives.

Selling, general and administrative expense (“SG&A”), inclusive of amortization, was $9.3m, or 18.6% of sales, up $2.0m over the prior year. This increase reflects the continued investments the Company is making in its operations, employees, and technology. This included $0.3m of incremental costs related to P3, $0.3m for enterprise resource planning (“ERP”) conversion costs at the Batavia facility, $0.4m of incremental research and development costs, and a $0.3m increase in the supplemental performance bonus for Barber-Nichols employees3. When compared with the fourth quarter of fiscal 2024, SG&A expenses decreased $1.8m, or 16%, primarily due to lower professional services fees and performance-based compensation.

Cash Management and Balance Sheet

Cash provided by operating activities was $8.7m for the first quarter of fiscal 2025. Cash and cash equivalents on June 30, 2024, were $21.6m up from $16.9m on March 31, 2024. Capital expenditures for the first quarter of fiscal 2025 were $3.0m.

The Company had no debt outstanding at June 30, 2024 with $29 m available on its senior secured revolving credit facility.

Orders, Backlog, and Book-to-Bill Ratio

See supplemental data filed with the Securities and Exchange Commission on Form 8-K and provided on the Company’s website for a further breakdown of orders and backlog by market. See “Key Performance Indicators” below for important disclosures regarding Graham’s use of these metrics.

(in millions)

Orders for the three-month period ended June 30, 2024, were $55.8m, which equated to a book-to-bill ratio of 1.1x. Defense orders represented 51% of total orders and included the second option year award to support the MK48 Mod 7 Heavyweight Torpedo program with mission critical alternators and regulators. Additionally, orders for the quarter included three surface condenser systems for the world’s first net-zero carbon emissions integrated ethylene cracker and derivatives site located in North America. Aftermarket orders for the refining and petrochemical markets for the first quarter of fiscal 2025 increased 4% to $8.2m compared with the prior-year period.

Backlog at quarter end was $396.8m, up 23% compared with the prior-year period and up 2% compared with the end of the trailing fourth quarter of fiscal 2024. Approximately 35% to 45% of orders currently in backlog are expected to be converted to sales in the next twelve months and another 25% to 30% is expected to convert to sales over the following year. The majority of orders expected to convert beyond twelve months are for the defense industry, specifically the U.S. Navy.

(Source: BUSINESS WIRE)

08 Aug 24. Planemaker Embraer shares jump after quarterly earnings beat.

Summary
Companies
Q2 adjusted net profit $80.4m vs f’cast $47.66m
Revenue $1.49bn vs f’cast $1.45bn
Says fully committed to reaching full-year guidance
Shares up 9.5%, taking year-to-date gain to more than 85%

Brazilian planemaker Embraer’s (EMBR3.SA) second-quarter net income jumped by almost 40%, it said on Thursday, beating market expectations and sending its shares sharply higher after increased deliveries of commercial aircraft.

The world’s third-largest planemaker behind Airbus (AIR.PA), and Boeing (BA.N), posted adjusted net profit of $80.4m in the three months to June 30, exceeding the $47.66m forecast by analysts polled by LSEG.

Embraer had previously reported deliveries of 19 commercial jets in the period, up 12% year on year, pushing up revenue and helping to offset a 10% drop in business jet deliveries.

Sao Paulo-traded shares of the planemaker rose as much as 9.5% after the results, making it one of the top performers on benchmark stock index Bovespa (.BVSP) and extending its year-to-date gain to more than 85%.

The company reaffirmed its outlook for 2024, which includes the delivery of between 72 and commercial aircraft, and 125-135 executive jets, bringing in revenue of between $6bn and $6.4bn.

“We are fully committed to reaching our full-year guidance, despite all the ongoing supply-chain constraints we continue to deal with,” Chief Financial Officer Antonio Carlos Garcia told a call with analysts.

Revenue for the quarter was $1.49bn, up 15.6% from a year earlier and slightly more than the $1.45bn expected by analysts. Its commercial aviation and defense arms stood out with 17% and 130% rises, respectively.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 27.9% to $190.4m, beating the $135.45m expected by analysts, while the EBITDA margin grew 120 basis points to 12.7%.

Analysts at BTG Pactual said the results were solid and highlighted the company’s strong margins, reiterating their “buy” rating for the shares which they see as offering “nice exposure” to the aviation industry at a compelling valuation.

Embraer voiced optimism about fresh commercial jet orders soon and sees room to expand the presence of its E2 jets in the Brazilian market, as it holds talks with local airlines such as LATAM (LTM.SN), for potential deals.

The planemaker, whose traditional niche fits just below Boeing’s and Airbus’s best-selling 150-seat plus market, has been experiencing positive demand amid the larger peers’ extended delivery deadlines.

Sales so far this year include 20 E2 jets to state-run Mexicana de Aviacion and 90 E175 aircraft to American Airlines (AAL.O). “We are working on a lot of sales campaigns in basically all regions of the world, so we are confident that we will bring good news soon about new orders,” CEO Francisco Gomes Neto said. ($1 = 5.6369 reais) (Source: Reuters)

08 Aug 24. Embraer delivered 47 jets in 2Q24 of which 27 were executive jets (20 light and 7 medium), 19 were commercial jets and 1 multi-mission C-390 Millennium in Defense – an increase of 88% compared to the 25 aircraft delivered in 1Q24.

Firm order backlog of US$21.1 bn in 2Q24 – a 7-year high, up more than 20% annually.
Revenues totaled US$1,494m in the period or an increase of 67% compared to the previous quarter (qoq). Highlight for Commercial Aviation revenues with 176% growth.
Adjusted EBIT reached US$138.8m with a 9.3% margin in 2Q24 (US$6.8 m and 0.8% in 1Q24).
Adjusted free cash flow w/o Eve in 2Q24 was negative US$(215) m because of working capital needs to support higher number of deliveries in the second half of 2024.
2024 Guidance reiterated: Management believes current estimates are valid and represent evenly balanced opportunities and risks for full year operations. Commercial Aviation deliveries between 72 and 80 aircraft, and Executive Aviation deliveries between 125 and 135. Total company revenues in the US$6.0-6.4 bn range, Adjusted EBIT margin between 6.5% and 7.5%, and Adjusted free cash flow of US$220 m or higher.

08 Aug 24. Rheinmetall confident of hitting ‘at least’ full-year targets. German defence group Rheinmetall (RHMG.DE) will at the very least hit its full-year sales and earnings targets after a strong first half as demand for weapons in Europe remains unabated after Russia’s invasion of Ukraine in 2022.

“We have never seen such growth,” said Chief Executive Armin Papperger, reportedly the target of a Russian assassination plot for his role in supporting the West’s efforts in Ukraine.

“After six months of the 2024 fiscal year, Rheinmetall is confirming at least the sales and earnings forecast for 2024,” said the maker of Leopard 2 tanks.

It has guided for record sales of 10bn euros and an operating profit margin of 14-15% this year.

Papperger said on Thursday that Rheinmetall now expects annual sales growth of around 2bn euros in coming years.

Sales rose nearly 50% in the second quarter, to 2.23bn euros, the company said, confirming preliminary results released last month that also saw operating profit double in the quarter and reported earnings after taxes at 79m euros.

Its backlog, which includes potential orders from contracts with civilians and call-offs expected from framework agreements with military customers, was up 62% to 48.6bn euros ($53.12bn) in the first half of this year, it said. ($1 = 0.9148 euros) (Source: Reuters)

08 Aug 24. Financial report for H1 2024 – Rheinmetall on track for success with record figures: sales up by a third, earnings nearly doubled.

Boom in military business: Group sales increase of 33% in the first half of 2024 to more than €3.8bn
Continued strong increase in orders: Rheinmetall Nomination more than doubles to more than €15bn
Rheinmetall Backlog reaches new high at €48.6bn
Operating result nearly doubles from €212m to €404m
Operating margin climbs to 10.6%
Operating free cash flow improves by €306m to €-19m
Annual guidance for 2024 confirmed

Accelerating sales growth and substantially increased revenues characterize the business performance of Düsseldorf-based Rheinmetall AG in the first half of 2024. Business with the armed forces of Germany and partner nations in the EU and NATO along with assistance to Ukraine continue to significantly improve business performance. Sales in the civilian business also improved slightly from the previous year. With demand consistently high, the market situation in the defence industry continues to grow. The Group also saw noticeable improvement in operating free cash flow.

Group management is confirming its current guidance for the Group´s sales growth and operating result margin based on the current market situation, a continuously excellent order situation and the business performance expected in the second half of the financial year.

Armin Papperger, CEO of Rheinmetall AG, said of the company’s performance, “The supercycle is clearly accelerating. In the second quarter of 2024 alone, our sales increased around 50 percent and our result more than doubled. Positive margin effects are significantly increasing our profitability. With positive development in all areas, we are well on our way to reaching our annual targets.”

“We have never seen such growth. We also expect annual sales growth of around two bn euros in the coming years. This very positive development is only possible because we invested early and have been following a strategic plan since 2014 – when Crimea was invaded. We massively expanded capacities, made acquisitions and are now also additionally building new plants in countries like Lithuania, Hungary, Romania and Ukraine. Forward-looking partnerships in key markets are also bringing us closer to our goal of becoming a global defence industry champion,” Papperger added.

Rheinmetall Group: Strong sales growth of 33% – Rheinmetall Nomination more than doubles

Group sales in the first half year of 2024 climbed noticeably from the previous year by €955m or 33% to €3,815m (previous year: €2,861m). Adjusted for currency effects, sales were around 34% higher than in the previous year, with 76% of sales coming from outside Germany.

Operating result as of June 30, 2024 amounted to €404m, an increase of €192m, or 91% from the previous year’s €21m. In addition to sales growth, the improvement in operating result is particularly due to the profit contribution of Rheinmetall Expal Munitions in Spain, which was acquired in the previous year. The Group’s operating margin improved in the first half year of 2024 to 10.6% (previous year: 7.4 %).

The Group’s accelerated growth is particularly evident in a quarterly comparison: Compared to the previous year, the second quarter of 2024 saw a sudden leap in sales of around 49% to €2.234m (previous year: €1,498 m) and in operating result of 110% to €270m (previous year: €128 m).

Earnings per share from ongoing operations improved in the first half of 2024 compared to the previous year’s period, rising from €2.53 to €4.21.

Operating free cash flow substantially improved in the first half of 2024, increasing by €306m to €-19m from the €-325m in the same quarter of the previous year. Despite further increases in inventories, this improvement was made possible by higher payments from customers.

Compared to the first half of the previous year, the value of Rheinmetall Nomination more than doubled in H1 2024, rising to €15,376m (previous year: €7,192m). This was driven in essence by orders from Germany – mostly from the special fund for the Bundeswehr – and by orders in aid of 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 grew significantly compared to the previous year, rising 62% from €30.0bn to €48.6bn (June 30, 2024). In addition to orders on hand, Rheinmetall Backlog includes the call-offs expected from framework agreements in place with military customers and potential orders from contracts with civilian clients.

Vehicle Systems: Rheinmetall Backlog grows 31% from previous year

Sales in Vehicle Systems, which mainly operates in military wheeled and tracked vehicles, in the first half of 2024 reached €1,300m, an increase of €288m or 28% from the previous year. The increase in sales is particularly attributable to projects for the supply of tactical vehicles as well as increased deliveries of logistic vehicles.

Rheinmetall Nomination – the total of order intake and the volume of new framework agreements with military customers – increased by €22m from the previous year to €3,114m. The largest orders in 2024 have so far been 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 €1,600m, as well as the associated service contract with over €620 m.

The Rheinmetall Backlog – the total of orders on hand and the call-offs expected from framework agreements in place with military customers – came in at €18,148m as of June 30, 2024, an increase of €4,252 m or 31% from the previous year. The operating result improved in the first half of 2024 from €100m to €119m. The operating result margin was 9.2%, less than the previous year’s 9.9%.

Weapon and Ammunition: Backlog more than triples to €19bn

Weapon and Ammunition achieved with the activities in weapon systems and ammunition sales of €1,054m in the first half of 2024, exceeding the previous year’s figure by €508m or 93%. The increase compared to the same period in the previous year is mainly due to higher ammunition deliveries. Important projects were artillery orders for Germany and Ukraine. Rheinmetall Expal Munitions, which was acquired on July 31, 2023, made a significant contribution to growth with sales totaling €230m.

Rheinmetall Nomination rose to €8,828m in the first half of 2024, considerably higher than the previous year (previous year:€1,543m). Its main driving factor is a framework contract amounting to €8.5bn gross by the German customer. Further growth stemmed from countries in Germany and West Asia for indirect fire and medium caliber products.

The Rheinmetall Backlog more than tripled, reaching about €19bn as of June 30, 2024. Compared to the previous year (June 30, 2023: €5.8bn), growth totaled €13 bn or 229%. The driving factors here were the conclusion of two multi-year ammunition framework contracts in the second half of 2023 and the subsequent increase in the artillery framework contract by the German customer in June 2024.

The operating result in the first half of 2024 more than doubled, growing by €117m or 131% to €206m (previous year: €89m). Operating result margin increased substantially from 16.3% to 19.5% despite rising labor and material costs. This margin includes a profit contribution of €73m by Rheinmetall Expal Munitions.

Electronic Solutions: Rheinmetall Nomination quadruples

Electronic Solutions, which produces solutions in the field of armed forces digitalization, infantry equipment, air defence and simulation, increased sales in the first six months of 2024 by €143m to €647m (previous year: €504 m), an increase of 28%. This increase in sales is mainly due to an order of the German armed forces for the Skyranger 30 mobile air defence system, further contributions for the Puma infantry fighting vehicle and the updating of an existing air defence system for a European customer.

Rheinmetall Nomination more than quadrupled from the previous year’s period, from €671m to €3,020m. A development contract for the short and very short range air defence protection system as well as a delivery agreement for the Skyranger 30 mobile air defense system were material incoming orders from the German customer. A framework agreement for the delivery of communication and hearing protection headsets for the German customer was also concluded. The Rheinmetall Backlog as of June 30, 2024 was €6,609m, a significant increase of €2,924m compared to the previous year (previous year: €3,685m).

The operating result improved in the first half of 2024 to €53m, up from €32m in the previous year. The operating margin increased to 8.3% (previous year: 6.3%) due to sales.

Power Systems: Operating result exceeds previous year’s level

Sales in Power Systems, which bundles technological expertise in civilian markets, were €1,056m, slightly above the previous year’s level (previous year: €1.026m). The sales growth in the US region compensated for the decline in sales in Europe. Booked business in the first half of 2024 was €1,357m, well below the previous year (previous year: €1,775m). Nominated Backlog as of June 30, 2024 dropped 9.9% to €7,938m (previous year: €8,806m).

Operating result rose in the first six months of 2024 compared to the previous year by 54% to €57m (previous year: €37m). The comparative 2023 figure was affected by an IT incident resulting in additional costs that encumbered the operating margin for this period. The improved at-equity result of a Chinese joint venture had a positive effect on operating result. The operating margin was subsequently 5.4% (previous year: 3.6%).

Outlook: Current annual guidance confirmed

At the end of the first half of fiscal year 2024, Rheinmetall is confirming at least its sales and result guidance for 2024, with Group sales of around €10bn, due to the business performance expected in the second half of 2024. Based on this sales guidance and taking holding costs into account, Rheinmetall anticipates an improvement in the Group’s operating earnings and the operating margin of between 14% to 15% in fiscal 2024 (margin in fiscal 2023: 12.8%).

06 Aug 24. H3X Closes Oversubscribed $20m Series A to Advance Revolutionary Electric Motors in Aerospace, Defense, and Marine Sectors.

H3X, the leading manufacturer of high power density electric motors, announced today a $20m oversubscribed Series A raise. The funding round was led by Infinite Capital, with participation from Hanwha Asset Management, Cubit Capital, Origin Ventures, Industrious Ventures, Venn10 Capital, and follow-on investors that include Lockheed Martin Ventures, Metaplanet, Liquid 2 Ventures, and TechNexus.

H3X $20m Series A

H3X Co-Founders Max Liben (CTO), Jason Sylvestre (CEO), Eric Maciolek (President)

“We’re on an ambitious journey to become the world’s leading supplier of advanced electric motors,” said Jason Sylvestre, Co-Founder and CEO of H3X. “With remarkable speed, we’ve proven that this technology works and has a key role to play in enabling sustainable aviation, decarbonizing the marine and industrial sectors, and unlocking next-generation electrified defense technology. This funding round will enable us to scale up production and operations and deliver on some very large contracts in our pipeline.”

“Through the past three years working with H3X, I have seen a phenomenal display of rapid innovation from the team. Bringing technical advancements to market this fast is rare, as they have already commercialized a series of market-leading electric motors,” said Nathan Doctor, Founder and Managing Partner at Infinite Capital. “I strongly believe we’re on the verge of electrifying aviation and maritime transport, with H3X’s electric propulsion systems as the foundational technology.”

In the past 24 months, H3X has successfully validated its high-performance core technology, launched the HPDM-30, HPDM-250, and HPDM-140 integrated motor drives, and delivered these units to leading aerospace and defense customers. They also successfully completed multiple contracts with both NASA and the Air Force. With the Series A funding, H3X plans to expand production and bring its next-generation, multi-sector class of integrated motor drives to the market (HPDM-350, HPDM-1500, and HPDM-2300). The HPDM-1500 and HPDM-2300 are megawatt-class machines that will significantly enhance the performance of electric aircraft through their high power density and fault tolerance. In some cases, aircraft range can be doubled by using H3X motors versus conventional solutions by freeing up weight for additional energy storage onboard. These megawatt-class machines will also unlock new market segments for H3X in both marine and heavy industry.

“H3X is focused on scaling innovative technologies that we believe could offer our customers effective solutions for electrifying legacy, multi-domain systems,” said Chris Moran, vice president and general manager of Lockheed Martin Ventures. “Lockheed Martin’s continued investment in H3X underscores our dedication to advancing innovative solutions and expanding the defense industrial base to ensure the U.S and its allies remain ahead of emerging threats.”

“As an investor in frontier technologies, we were immediately impressed that H3X has solved the biggest engineering challenges to unlock major benefits for weight and volume sensitive applications,” said Philip Carson of Cubit Capital. “Notably, every customer spoke about how they want to work with this team above others. With strong traction today at the Department of Defense, we’re excited about how they can leverage that success to scale across industries.”

Engineered, built, and tested at H3X headquarters in Denver, Colorado, these advanced integrated motor drives can scale in power from 30kW to 30MW and fill a large gap in the market for US-made, high power density motors and generators. H3X sees hybrid systems playing an increasingly larger role in the electrification transition of these industries because of the fuel burn reduction that can be realized without sacrificing mission range/endurance. This translates to lower operating costs as well as reduced emissions. In hybrid applications, H3X’s products can be used as either motors or generators without any hardware modifications required.

About H3X

Founded in 2020 by a team of engineers, H3X is an advanced technology and electric motor manufacturing company based in Denver, Colorado. Their team brings together driven minds from aerospace, automotive, and motorsports with deep knowledge in electric machines, power electronics, material science, and advanced manufacturing. They are heavily vertically integrated: designing, manufacturing, and testing their integrated motor drives under one roof at their 17,000 sq-ft headquarters facility. The mission of the company is to become the world’s leading supplier of advanced electric motors by 2030 to drive deep decarbonization in aviation, marine, and heavy industrial applications and unlock next-generation electrified defense technology to strengthen national security. For more information, visit http://www.h3x.tech/ and follow the company on LinkedIn.(Source: PR Newswire)

06 Aug 24. Axon reports Q2 2024 revenue of $504m, up 35% year over year, raises outlook. Axon Cloud & Services revenue grows 47% to $195m

Annual recurring revenue grows 44% to $850m
Net income of $41m supports non-GAAP net income of $93m and Adjusted EBITDA of $123m
Raises full year revenue outlook to a range of $2.00bn to $2.05bn, up from $1.94bn to $1.99bn

Fellow shareholders,

Axon closed the first half of 2024 with record quarterly revenue and an improved outlook for the remainder of the year. Our pipeline has grown across product categories and customer verticals, bolstered by our market-leading innovation, which we believe positions us for durable, profitable growth over the long term. Second quarter revenue growth of 35% marks our 10th consecutive quarter growing more than 25% year over year. We delivered growth with profitability, achieving second quarter net income margin of 8.1% and Adjusted EBITDA margin of 24.5%.

Strength in our business continues across the board in all product categories. Axon Cloud & Services revenue grew 47% year over year, driven by growing adoption of software applications from both new and existing customers, with net revenue retention of 122%. Axon Cloud software growth remains primarily driven by Axon Evidence and is further accelerated by productivity software, artificial intelligence (AI), real-time operations (RTO) and robotic security. These categories collectively drove almost half of the year over year growth in our software revenue. Sensors & Other revenue grew 28% year over year, supported by strong demand for Axon Body 4, which is now our fastest adopted body camera product and has surpassed 200,000 units in the field. TASER revenue growth of 28% year over year was fueled by the continued ramp of TASER 10, which has grown sequentially each quarter since launch and has surpassed 100,000 units in the field.

We continue to see expansive opportunities across our customer verticals. Increasing penetration of our Officer Safety Plan (OSP) remains a driver of growth within our U.S. state and local customer base, and more than 20% of the potential users within this cohort are now on one of our OSP offerings(1). At the same time, we have seen strong demand from our new and emerging customer verticals, including international, U.S. federal, corrections and enterprise. Our top four TASER 10 deals have come from these verticals and each vertical grew ahead of our overall revenue in the quarter — international revenue grew 49% year over year.

Axon is mission-driven with a strategy to deliver the technology ecosystem for public safety. We take an innovative approach to solving problems for our customers, and our product roadmap and engagement with them builds our confidence to provide a strengthened outlook. Axon’s updated guidance for the full year 2024 contemplates approximately 29.5% annual revenue growth at the midpoint, with an expanded Adjusted EBITDA margin of approximately 23.1%. We provide more detail on our product vision, most recent financial performance and improved outlook below.

Axon Cloud & Services

Digital Evidence Management

Axon Evidence, our flagship digital evidence management product, is the largest revenue contributor within Axon Cloud software. Today, Axon Evidence is used by more than 20,000 agencies, in every state within the United States and in over 90 countries worldwide. Over 2 bn evidence files have been loaded into Axon Evidence and our cloud stores more than 400 petabytes of data. Our solution has also enabled communities to upload more than 30m files via Axon Community Request. The vast reach of our platform is used both in evidence collection and downstream analysis and review, with over 400m pieces of evidence having been shared with our case sharing feature.

Many of our product solutions include cameras or devices with integrated digital evidence management licenses, and give customers the ability to upgrade to premium options to unlock additional features and functionality. We continue to drive growth with our evidence management software by building new premium capabilities and attracting new users. In the second quarter, over half of the growth in Axon Cloud software revenue was driven by digital evidence management licenses, primarily tied to our body and in-car cameras.

Productivity Software

Disruptive innovation is part of Axon’s DNA. When we began to drive public safety’s move to the digital age with our cloud software, we also saw the potential to modernize and disrupt existing workflows to create significant productivity gains for our customers in the future. This led to our investment in a suite of productivity software applications supporting administrative tasks that demand an outsized share of our customers’ time. Axon productivity software encompasses Axon Records and Axon Standards, and has expanded to include several emerging AI-driven applications.

Axon has been a leader in driving AI-powered technology to our customers for several years. We brought our first AI-powered product to the market in 2019 with automated video redaction. We followed shortly after with audio-to-text transcription in 2020 and AI-driven automatic license plate reading (ALPR) in 2021. This year, we took a giant leap forward with our launch of Draft One, a powerful new AI service that creates the first draft of a police report extracted directly from Axon body camera recordings. Released less than one year following the general availability of generative AI large language models, Draft One has received the best early customer feedback of any product we have introduced and supports our strategy to build for future technology. Agencies are reporting that Draft One dramatically reduces the amount of time officers spend writing police reports, with time savings in excess of 50%.

Revenue from our productivity and AI product suite grew more than 70% year over year in the second quarter. Contribution from our newest AI product, Draft One, was immaterial to this growth given the timing of sales cycles and is an opportunity for continued growth looking ahead. We see growing opportunities for AI applications in our portfolio and we are accelerating our investment to extend deeper into our digital evidence management, productivity and real-time operations.

“If we can cut out the worst parts of being busy, then we can say to a young recruit who has options, ‘We’re all hurting for bodies. We can use this technology to free up your time to go do the stuff that we all signed up to do.'” — Captain Gossard, Lafayette Indiana PD

“I have gotten nothing but absolutely positive responses back, including one officer who said, ‘Please don’t take this away. This makes the difference between me absolutely loving my job like I used to a few years ago, to where now it seems like there’s this constant conundrum of trying to stay caught up on reports [and] administrative functions. You’re giving me time back in my day where I can go back out, be engaged with my community, do enforcement, be relatable to my citizens, and be doing what I love to do, which is serve my community.’ So it’s a win-win.”

— Sergeant Younger, Fort Collins PD.

Real-Time Operations

In 2019, Axon introduced Axon Body 3 with LTE connectivity. This was a major advancement in body camera technology and a bet on the future long before customers were asking for the capabilities LTE connectivity would unlock. We recognized that powering real-time operations was critical to our ecosystem strategy and paved the path for future technologies with this new disruptive product introduction. Five years later, every new device we have introduced is connected — body cameras, in-car cameras, drones, TASER devices — via LTE, Bluetooth or networked docks, and our recent acquisition of Fusus, LLC (Fusus), a global leader in real-time crime center technology, enables us to connect countless other third-party devices through our real-time operations software. In addition, LTE connectivity is now foundational to enabling our advanced productivity applications, such as Draft One.

With Axon Body 4, we took real-time operations a step further and introduced two-way voice communications, turning our latest generation camera into a communications platform. Our customers are seeing the value in this new capability, which enables them to more seamlessly communicate and react to situations than ever before. In one recent example, the New Orleans Emergency Medical Service (EMS) leveraged Axon Body 4 real-time capabilities to enhance their operations during the Mardi Gras festivities. Facing the challenge of maximizing limited resources, New Orleans EMS relied on Axon’s live streaming and dynamic maps in their EMS Operations Center. Command staff monitored events as they unfolded and were able to tap into any camera feed in real-time to provide crucial support via two-way communication during one of the city’s largest events.

Axon’s real-time operations portfolio continues to evolve. With the addition of Fusus to our RTO suite, we are redefining public safety operations and adjusting our focus away from displacing highly customized legacy software. We see greater opportunity to focus deeper into areas where we believe our technology can drive significantly improved decision making. So, we are pivoting away from the command-line console to focus on sensor fusion and AI, integrating multiple data feeds (both human and technology) in a “single pane of glass.” Strategically, we are focusing-in where our ability to innovate is aligned with emerging technological capabilities, and where we are seeing the fastest adoption and customer demand. Our acquisition of Fusus has been key in providing us the platform to accelerate our momentum. We are doubling down. In the second quarter, revenue from our real-time operations portfolio grew more than 100% year over year.

Expanding Partnerships

In June, we expanded our partnership with Skydio, Inc. (Skydio), a leading U.S. drone manufacturer and world leader in autonomous flight, to integrate Axon’s real-time operations and evidence management with Skydio’s autonomous drones, establishing the most scalable, comprehensive drone solution for public safety. The combined offering supports Drone as First Responder (DFR) programs across our customer base and reinforces our leadership in this category.

Effective DFR programs require a suite of integrated hardware, software and services. Specific advanced features in our new offering with Skydio address implementation complexities with AI-powered autonomous launch and recovery, include seamless connectivity into real-time crime centers, provide sensor-based airspace awareness and deconfliction, integrate evidence management and reporting, support 360-degree obstacle avoidance with night-time vision, and include regulatory support, all as a service.

DFR is one emerging use case Axon is investing in to help optimize resource allocation, leading to quicker, safer responses while reducing risks for officers and communities. In addition to partnering with Skydio, we continue to invest behind and support DroneSense, Inc., another Axon ecosystem partner and the market leader in Drone software. We also believe our pending acquisition of Dedrone Holdings, Inc., a global leader in airspace security, will strengthen Axon’s ability to help customers safeguard their communities, improve response to critical incidents and protect even more lives in more places. We have strong conviction that drone usage in public safety will grow dramatically over the next 5-10 years and we are working to bring that vision to life.

“We deal with over 48 events a year where our community can swell from our 93,000 to several hundred thousand over a weekend. Having our drones out there, being able to act as a force multiplier for our officers to augment what we’re already doing at the patrol level and to increase and provide better actionable intelligence for our officers is a phenomenal tool for us.” — Sergeant Loperfido, Miami Beach PD

Q2 2024 Summary Results

Quarterly revenue of $504m grew 34.6% year over year, exceeding our expectations, driven by growth in each of our product categories. Demand for our latest TASER and body camera products remained strong in the second quarter, driving growth in TASER and Sensors & Other revenue, while adoption of premium software offerings continued to fuel growth in Axon Cloud & Services.

Total company gross margin of 60.3% declined 170 basis points year over year driven by increased stock-based compensation expense and amortization of acquired intangibles in our cost of goods sold (COGS). Excluding the impacts of stock-based compensation and intangibles amortization, non-GAAP company gross margin of 62.5% increased 10 basis points year over year.

Operating profit of $33m decreased from $40m year over year due to increased stock-based compensation expenses. COGS and operating expenses included $75m in stock-based compensation expenses, up from $32 m in Q2 2023, driven by $35m accrued expenses related to broad-based equity incentive programs that were approved by our shareholders in May 2024.

COGS of $200m, 39.7% of revenue, included $9m in stock-based compensation expense.
SG&A expense of $169m, 33.6% of revenue, included $39m in stock-based compensation expense.
R&D expense of $101m, 20.1% of revenue, included $28m in stock-based compensation expense.

Net income of $41m, or $0.53 per diluted share, supported non-GAAP net income of $93m (18.5% non-GAAP net income margin), or $1.20 per diluted share. Net income margin of 8.1% for Q2 2024 increased compared to 3.3% in Q2 2023, primarily due to absence of a non-cash unrealized impairment loss recognized in Q2 2023.

Adjusted EBITDA of $123m (24.5% Adjusted EBITDA margin, compared to 21.8% in Q2 2023) increased 51.1% year over year driven by higher revenue and operational leverage.

Operating cash flow of $83m increased 94.0% year over year and supported free cash flow of $71m and adjusted free cash flow of $75m.

As of June 30, 2024, Axon had $969 m in cash, cash equivalents and investments, and outstanding convertible notes in principal amount of $690m, for a net cash position of $279m, up $5m sequentially.

(Source: PR Newswire)

06 Aug 24. ATI Announces Second Quarter 2024 Results.

Strong performance in Aerospace & Defense propels sequential growth

Q2 2024 sales of $1.1bn, up 5% from Q1 2024
Q2 2024 net income attributable to ATI of $81.9m, or $0.58 per share, up 26% from Q1 2024
Aerospace & defense represent 62% of Q2 2024 sales, up from 59% of Q1 2024 sales
Non-GAAP Information*
Q2 adjusted net income attributable to ATI of $86.0m or $0.60 per share
Q2 2024 ATI adjusted EBITDA of $182.6m, or 16.7% of sales

ATI Inc. (NYSE: ATI) reported second quarter 2024 results, with sales of $1.10bn and net income attributable to ATI of $81.9m, or $0.58 per share.

Adjusted earnings per share* for Q2 2024 was $0.60, and ATI adjusted EBITDA* was $182.6m, or 16.7% of sales. 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 related costs. These pre-tax charges were partially offset by credits of $1.9m due to lower severance reserves primarily for our ongoing European restructuring. Q1 2024 adjusted results exclude pre-tax charges of $3.1m, primarily consisting of start-up related costs. Q2 2023 adjusted results exclude pre-tax charges of $4.5m for start-up related costs, $2.8m primarily for asset write-offs for a facility closure, $2.7m of severance-related restructuring charges, and $0.6m related to the loss on the sale of our Northbrook, IL operation.

“ATI’s strong 2024 performance continued in the second quarter,” said Kimberly A. Fields, President and CEO. “Growth in aerospace & defense accelerated in the second quarter, with sales increasing sequentially by 11%. This is due in part to the diversification in our jet engine and airframe customer bases. ATI is on every major commercial platform flying today,” she said.

“With a strong focus on execution, we delivered on second quarter expectations for adjusted EBITDA and adjusted earnings per share,” said Fields. “Our efforts to improve working capital intensity yielded significant improvements in year-over-year operating cash flow performance,” she said. “Overall, consolidated adjusted EBITDA, as a percentage of sales, was up 100 basis points over the prior year, reflecting improving operational performance and leverage from higher production volumes.”

Operating Results by Segment

High Performance Materials & Components (HPMC)

HPMC’s second quarter 2024 sales increased $32m, or 6%, compared to the first quarter 2024, primarily due to an 8% increase in aerospace & defense sales. Overall aerospace & defense sales were 85% of total HPMC sales in the second quarter 2024. Second quarter 2024 sales improved 7% compared to second quarter 2023, with total aerospace & defense related sales increasing 9% compared to the prior year period.
HPMC segment EBITDA was $113.8m, or 20.2% of sales. Increased volumes on higher-margin latest generation commercial aerospace platforms drove sequential incremental margins.
Second quarter 2024 results included a $3.5m benefit from the recognition of previously deferred employee retention credits, which were mostly offset by higher incentive compensation costs.

Advanced Alloys & Solutions (AA&S)

AA&S second quarter 2024 sales increased $20m, or 4%, compared to the first quarter 2024, a result of increased aerospace & defense and specialty energy sales. These increases were partially offset by lower conventional energy sales. Overall aerospace & defense sales were 39% of total AA&S sales in the second quarter 2024. Second quarter 2024 sales increased 3% compared to the second quarter 2023. Higher sales to aerospace & defense, specialty energy and medical end markets were partially offset by lower conventional energy sales.
AA&S segment EBITDA was $87.5m, or 16.4% of sales. Sequential margin improvement was primarily due to improved sales mix from increased deliveries of titanium.
Second quarter 2024 results included a $5.1m benefit from the recognition of previously deferred employee retention credits, which were mostly offset by higher incentive compensation costs.

Corporate Items and Cash

Restructuring and other charges:
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 related costs. These pre-tax charges were partially offset by credits of $1.9m due to lower severance reserves primarily for our ongoing European restructuring.
First quarter 2024: $3.1m for start-up and restructuring related costs.
Second quarter 2023: $9.2m includes pre-tax charges of $4.5m for start-up related costs, $2.8m primarily for asset write-offs for a facility closure, of which $0.8m was accelerated depreciation on fixed assets, and $2.7m of severance-related restructuring charges.
Corporate expenses in the second quarter 2024 were $19.4m, compared to $17.1m in the first quarter 2024, and $17.7m in the prior year quarter. The increase in second quarter 2024 was due to higher incentive compensation costs compared to prior periods.
Closed operations and other income/expense was income of $0.7m in the second quarter 2024, compared to expense of $1.3m in the first quarter 2024, and expense of $1.9m in the prior year quarter. The second quarter 2024 included a $2.3m gain from the sale of our previously idled Houston, PA facility.
Second quarter 2024 results include a $25.3m income tax provision, or an effective tax rate of 22.8%. First quarter 2024 results include a $16.9m income tax provision, or an effective tax rate of 19.8%. Second quarter 2023 results include a tax provision of $3.7m, or an effective tax rate of 3.8%. The effective tax rate for the second quarter 2024 increased compared to the first quarter 2024 primarily due to lower discrete tax benefits. The Company’s effective tax rate for second quarter 2023 was lower than the second quarter 2024 due to the net valuation allowance position in the U.S.
For the second quarter of 2024, cash provided by operating activities was $101m, and cash provided by operating activities was $2 m on a year-to-date basis. Second quarter 2024 managed working capital as a percent of sales was 35.5%, which was down slightly from 35.9% in the first quarter 2024. Capital expenditures for the second quarter 2024 were $60m.
Cash on hand at June 30, 2024 was $426m, and available additional liquidity under the asset-based lending (ABL) credit facility was approximately $556m. As of June 30, 2024, we had no outstanding borrowings on the ABL credit facility. ATI has no significant debt maturities until the second quarter 2025.

Outlook

“Our execution and ability to capitalize on market opportunities allows us to drive increased margins and generate strong operating cash flow,” said Fields. “ATI’s capabilities, long-term agreements and backlog positions us to reaffirm our full year outlook. Our clear strategy of leading in aerospace & defense and ‘aero-like’ markets puts us on track us to meet our 2024 guidance. We continue to be confident in our ability to deliver our 2025 and 2027 financial targets. Our recently announced new sales commitments of $4bn from the Farnborough International Airshow, which are predominantly for nickel alloys, include $550m of revenue for 2027. This further demonstrates that we remain on track to exceed both $5bn in revenue and $1bn in adjusted EBITDA by 2027.” (Source: PR Newswire)

06 Aug 24. V2X, Inc. (NYSE:VVX) announced second quarter 2024 financial results.

Second Quarter and Recent Highlights

Record revenue of $1.07bn, up 10% y/y
Operating income of $27.4m; adjusted operating income1 of $65.8m
Net loss of $6.5m, down $8.3m y/y
Adjusted EBITDA1 of $72.3m with a margin1 of 6.7%
Diluted EPS of ($0.21); Adjusted diluted EPS1 of $0.83
Over $4bn of recent awards, including a new award valued up to $3.0+bn to provide next generation readiness
Successfully repriced and extended $904m Term Loan B

2024 Guidance:

Raising full-year revenue guidance and reaffirming Adjusted EBITDA, EPS, and Operating Cash Flow1

“I am honored to join the V2X team and look forward to leveraging our mission first culture, differentiated capabilities, and impressive past performance to achieve our next stage of growth,” said Jeremy C. Wensinger, President and Chief Executive Officer of V2X. “Our people, processes, agility and expertise to operate worldwide are a differentiator. This enables alignment to critical missions with an ability to operate at scale around the globe.”

Mr. Wensinger continued, “Demand remains strong for our mission based full lifecycle solutions and was demonstrated through several recent awards valued at over $4bn. This includes a new five-year award valued at $3.0+bn to deliver next generation readiness. In addition, we received a new production award from the U.S. Army for our Gateway Mission Routers valued at $49m, an award valued at $265m to support NASA’s operations in preparation for human spaceflight missions at the Johnson Space Center, and the award of the F-5 adversarial aircraft program from the U.S. Navy valued at $747m.”

“Importantly, our ability to deliver a full range of assured communications has resulted in two awards, further expanding our relationship with the Navy and our footprint in the Pacific. Our $88 m Naval Computer and Telecommunications Pacific award will provide vital C4I support to forces across the Pacific and Indian Oceans. Our $141 m Fleet Systems Engineering Team (FSET) program will continue to deliver end-to-end C4I systems engineering solutions. FSET ensures that no U.S. Navy Strike Group deploys without V2X.”

Mr. Wensinger concluded, “V2X has great momentum and I believe there is substantial opportunity to build upon the impressive foundation by further leveraging technology and solutions to enhance business and customer outcomes.”

Second Quarter 2024 Results

“V2X reported record revenue of $1.07bn in the quarter, which represents 10% year-over-year growth,” said Shawn Mural, Senior Vice President and Chief Financial Officer. “Revenue growth in the quarter was achieved through continued expansion of existing business in the Pacific and Middle East regions, as well as new programs. Revenue growth in the Pacific was 29% year-over-year and 23% on a sequential basis, driven by continued expansion of scope and services in the region. Revenue growth in the Middle East was also 29% year-over-year, driven primarily by expansion in Qatar and the continued phase-in of our longer-term Saudi Aviation Training and Support Services program.”

“For the quarter, the Company reported operating income of $27.4m and adjusted operating income1 of $65.8m. Adjusted EBITDA1 was $72.3m with a margin of 6.7%. Second quarter GAAP diluted EPS was ($0.21). Adjusted diluted EPS1 for the quarter was $0.83. The adjusted tax rate in the second quarter was 28% due to the executive transition. Absent this, our adjusted tax rate would have been approximately 23% yielding adjusted EPS of $0.88.”

“Year to date, net cash used by operating activities was $31.6m, reflective of working capital requirements to support growth. Adjusted net cash used by operating activities1 was $137.3m, adding back approximately $12.1m of M&A and integration costs and removing the contribution of the master accounts receivable purchase or MARPA facility of $117.8m.”

“At the end of the quarter, net debt for V2X was $1,150m. Net leverage ratio1,2 was 3.56x, essentially flat compared to the first quarter 2024. We expect to achieve a net leverage ratio of 3.0x, by the end of 2024. During the quarter, we successfully repriced and extended our $904m Term Loan B. This outcome is a testament to the strength in our business and is yielding additional interest expense savings while lowering our overall cost of capital.”

“Total backlog as of June 28, 2024, was $12.2bn. Funded backlog was $2.9bn. Bookings in the quarter were $759m. We expect backlog to increase in the second half of the year due to awards and contract definitizations.” (Source: PR Newswire)

06 Aug 24. Aerospace supplier TransDigm beats quarterly estimates on strong demand. Aerospace supplier TransDigm Group (TDG.N), on Tuesday beat third-quarter earnings estimates as robust travel demand led to increased orders for components and aftermarket parts from planemakers and carriers. Shares were up 3% in premarket trading in light volumes.

Aircraft parts suppliers are seeing strong demand as planemakers ramp up production to fulfill airlines’ expansion plans. Delayed new plane deliveries have also pushed airlines to extend the use of older aircraft, boosting orders for profitable aftermarket parts.

The company deployed over $2.2bn of capital in the past three months in relation to acquisitions of SEI Industries, the CPI Electron Device Business and Raptor Scientific to beef up its product offerings.

Ohio-based TransDigm currently makes mechanical/electro-mechanical actuators and controls, ignition systems and other parts for the aerospace market.

Quarterly net sales jumped 17% to $2.04bn, ahead of estimates of $2.01bn, as per LSEG data. Profit for the quarter ended June 29 was $7.96 per share, beating expectations of $7.56 per share. (Source: Reuters)

06 Aug 24. TransDigm Group Incorporated (NYSE: TDG), a leading global designer, producer and supplier of highly engineered aircraft components, today reported results for the third quarter ended June 29, 2024.

Third quarter highlights include:

Net sales of $2,046m, up 17% from $1,744m in the prior year’s quarter;
Net income of $461m, up 31% from the prior year’s quarter;
Earnings per share of $7.96, up 30% from the prior year’s quarter;
EBITDA As Defined of $1,091m, up 19% from $915m in the prior year’s quarter;
EBITDA As Defined margin of 53.3%;
Adjusted earnings per share of $9.00, up 24% from $7.25 in the prior year’s quarter; and
Upward revision to fiscal 2024 financial guidance to reflect TransDigm’s continued strong performance as well as to include the recent acquisitions of SEI Industries, the CPI Electron Device Business and Raptor Scientific.

Quarter-to-Date Results

Net sales for the quarter increased 17.3%, or $302m, to $2,046m from $1,744m in the comparable quarter a year ago. Organic sales growth as a percentage of net sales was 14.6%.

Net income for the quarter increased $109m, or 31.0%, to $461m from $352m 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, income tax expense, and acquisition transaction-related expenses.

Adjusted net income for the quarter increased 25.8% to $521m, or $9.00 per share, from $414m, or $7.25 per share, in the comparable quarter a year ago.

EBITDA for the quarter increased 19.9% to $995m from $830m for the comparable quarter a year ago. EBITDA As Defined for the quarter increased 19.2% to $1,091 m compared with $915m in the comparable quarter a year ago. EBITDA As Defined as a percentage of net sales for the quarter was 53.3% compared with 52.5% in the comparable quarter a year ago.

“I am incredibly pleased with the operating results for the third quarter and our continued strong performance,” stated Kevin Stein, TransDigm Group’s President and Chief Executive Officer. “Total revenue for the quarter ran ahead of our expectations, and revenues sequentially improved in all three of our major market channels – commercial OEM, commercial aftermarket and defense. Our EBITDA As Defined margin improved to 53.3% for the quarter, up approximately 80 basis points from the comparable prior year period. Excluding the results related to SEI Industries and the CPI Electron Device Business, acquired in May and June 2024, respectively, our third quarter EBITDA As Defined margin was approximately 53.6%. As always, we remain focused on our operating strategy, value drivers and effectively managing our cost structure.

Additionally, we are excited to have recently closed the acquisitions of SEI Industries, the CPI Electron Device Business and Raptor Scientific. In the aggregate for these three acquisitions, we have deployed over $2.2 bn of capital in the past three months. These businesses fit well with our long-standing strategy, and we expect each of these acquisitions to create equity value in-line with our long-term private equity-like return objectives.”

Acquisition Activities

As previously reported on May 22, 2024, TransDigm completed the acquisition of SEI Industries LTD (“SEI”). SEI is a leading provider of highly engineered products for aerial firefighting and other liquid transportation solutions, such as remote refueling. Their innovative and world renowned Bambi Bucket®, is a proprietary collapsible firefighting bucket used across the globe to combat forest fires, among other applications.

Additionally, on June 6, 2024, TransDigm completed the acquisition of the Electron Device Business of Communications & Power Industries (“CPI”). The CPI Electron Device Business is a leading global manufacturer of electronic components and subsystems primarily serving the aerospace and defense market.

Subsequent to the quarter, 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 Activities

During the quarter, on June 4, 2024, TransDigm successfully repriced the existing approximately $997m Tranche J term loans maturing February 28, 2031, to bear interest at Term Secured Overnight Financing Rate (“SOFR”) plus 2.50% compared to Term SOFR plus 3.25% applicable prior to the repricing. Additionally, TransDigm amended and extended $2,644m of existing Tranche I term loans maturing August 24, 2028, and converted such loans into Tranche J term loans maturing February 28, 2031.

Year-to-Date Results

Net sales for the thirty-nine week period ended June 29, 2024 increased 21.6%, or $1,021m, to $5,754m from $4,733m in the comparable period a year ago. Organic sales growth as a percentage of net sales for the thirty-nine week period ended June 29, 2024 was 17.7%.

Net income for the thirty-nine week period ended June 29, 2024 increased $363m, or 41.0%, to $1,248m from $885m in the comparable period 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 income tax expense, interest expense, non-cash stock and deferred compensation expense, acquisition transaction-related expenses, and one-time refinancing costs.

GAAP earnings per share were reduced in fiscal 2024 and 2023 by $1.75 per share and $0.67 per share, respectively, as a result of dividend equivalent payments 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.

Adjusted net income for the thirty-nine week period ended June 29, 2024 increased 37.3% to $1,396m, or $24.15 per share, from $1,017m, or $17.80 per share, in the comparable period a year ago.

EBITDA for the thirty-nine week period ended June 29, 2024 increased 23.9% to $2,772 m from $2,237m for the comparable period a year ago. EBITDA As Defined for the period increased 24.3% to $3,023m compared with $2,432m in the comparable period a year ago. EBITDA As Defined as a percentage of net sales for the period was 52.5% compared with 51.4% in the comparable period a year ago.

Fiscal 2024 Outlook

Mr. Stein stated, “We are raising our full year guidance primarily to reflect our strong third quarter results and current expectations for the remainder of the fiscal year, as well as to include the recent acquisitions of SEI Industries, the CPI Electron Device Business and Raptor Scientific. We are pleased to once more raise our guidance for fiscal 2024 and to see further progression in our primary end markets.”

TransDigm now expects fiscal 2024 financial guidance to be as follows:

Net sales are anticipated to be in the range of $7,870m to $7,930m compared with $6,585m in fiscal 2023, an increase of 20.0% at the midpoint (an increase of $160m at the midpoint from prior guidance);
Net income is anticipated to be in the range of $1,632m to $1,678m compared with $1,299m in fiscal 2023, an increase of 27.4% at the midpoint (an increase of $8m at the midpoint from prior guidance);
Earnings per share is expected to be in the range of $26.47 to $27.27 per share based upon weighted average shares outstanding of 57.85m shares, compared with $22.03 per share in fiscal 2023, which is an increase of 22.0% at the midpoint (an increase of $0.14 per share at the midpoint from prior guidance);
EBITDA As Defined is anticipated to be in the range of $4,100m to $4,160m compared with $3,395m in fiscal 2023, an increase of 21.6% at the midpoint (an increase of $85m at the midpoint from prior guidance and corresponding to an EBITDA As Defined margin guide of approximately 52.3% for fiscal 2024);
Adjusted earnings per share is expected to be in the range of $32.62 to $33.42 per share compared with $25.84 per share in fiscal 2023, an increase of 27.8% at the midpoint (an increase of $0.60 per share at the midpoint from prior guidance); and
Fiscal 2024 outlook is based on the following market growth assumptions:
Commercial OEM revenue growth around 20%;
Commercial aftermarket revenue growth in the mid-teens percentage range; and
Defense revenue growth in the high-teens percentage range.

06 Aug 24. Héroux-Devtek Inc. (TSX: HRX) (“Héroux-Devtek” or the “Corporation”), a leading international manufacturer of aerospace products and the world’s third-largest landing gear manufacturer, today reported its financial results for the first quarter ended June 30, 2024. Unless otherwise indicated, all amounts are in Canadian dollars.

Highlights

Sales increased to $174.0m, up 23.7% from $140.7m a year ago
Operating income increased to $19.4m, compared to $7.5m a year ago
Adjusted EBITDA1 increased to $29.6m or 17.0% of sales, compared to $16.4m, or 11.6% of sales a year ago
Earnings per share and adjusted earnings per share1 increased to $0.37 and $0.39 compared to $0.12 last year
Cash flows related to operating activities increased to $9.9m compared to a usage of $12.2m last year
Subsequent to the quarter end, Héroux-Devtek entered into a definitive agreement to be acquired by Platinum Equity

“We have delivered another good quarterly performance thanks to the resilience of our teams in coping with the challenges of the current production environment. More than ever, I would like to extend my gratitude to our employees for their hard work and dedication, and to all our customers and business partners for their unwavering trust. The commitment of our employees and our excellence in execution will allow us to continue building Héroux-Devtek in both the civil and defence markets,” said Martin Brassard, President and CEO of Héroux-Devtek.

FIRST QUARTER RESULTS

Consolidated sales increased 23.7% to $174.0m, from $140.7m in the same period last year, largely due to the strategies the Corporation implemented over the past two years.

Defence sales were up 20.1% to $108.7m mainly due to higher aftermarket business for legacy programs as well as higher deliveries for the Lockheed Martin F-35 program, partly offset by lower deliveries for the Sikorsky CH-53K program. Civil sales were up 30.1% to $65.3m, mainly driven by increased deliveries for the Boeing 777 and Embraer E2 programs.

Gross profit increased to $35.6m or 20.5% of sales from $20.1m or 14.3% last year, mainly as a result of the positive impact of higher volume and pricing initiatives.

Operating income increased to $19.4m or 11.2% of sales from $7.5m or 5.3% of sales last year, mainly reflecting higher volume and margin combined with the 1.3% year over year positive impact of foreign exchange. Adjusted EBITDA, for the same reasons, rose 80.7% to $29.6m, or 17.0% of sales, from $16.4 m or 11.6% of sales last year.

Net income for the first quarter of fiscal 2025 increased to $12.5m, or $0.37 per diluted share, and adjusted net income stood at $13.5m or $0.39 per diluted share, both compared to $4.0m or $0.12 per diluted share in the corresponding quarter last year. (Source: PR Newswire)

Morgan Stanley Comment: TransDigm Group Inc.: Growth and Margins Remain Strong; Reiterate OW-Rating

We reiterate our OW-rating and increase our PT to $1,575 as TDG continues to showcase strong execution and surprise to the upside on both growth and margins. Recently completed deals provide additional lever for upside.

Key takeaways

Management execution remains a strength as adj. EBITDA margin has increased 80bps YoY to 53.3% and 53.6% ex-recent acquisitions.
We remain positive on all of TDG’s primary end markets.
TDG closed on three separate acquisitions from May to July, totaling ~$2.2bn, which we expect to help drive incremental upside.
We reiterate our Overweight rating and PT of $1,575.

Strong Execution and Business Growth

Yesterday, TDG’s stock ended the day up ~2.3%, while the S&P 500 was up ~1%. The outperformance of the stock was driven by better than expected results and increased FY24 outlook which investors view as largely conservative, in our view. Management execution remains a strength as adj. EBITDA margin has increased 80bps YoY to 53.3% and 53.6% ex-recent acquisitions. We remain positive on all of TDG’s primary end markets. Defense performance in FY24 continues to surprise to the upside, a robust pipeline for commercial aftermarket remains, and Commercial OE provides incremental upside as production growth takes hold in the future. Additionally, TDG closed on three separate acquisitions from May to July which we expect to help drive incremental upside as combined adj. EBITDA margin for the acquisitions is close to 30%. We expect management execution to drive these margins higher. We reiterate our Overweight rating and PT of $1,575.

Valuation Methodology

We arrive at our $1,575 PT using a ~35x P/E on our 2025E EPS. Our 35x multiple remains a premium to 2019 levels of ~22x as we continue to see further runway for commercial aftermarket and acknowledge the company’s higher EBITDA margin compared to 2019 levels. We also include the potential benefit of capital deployment at a target Net Debt to EBITDA of ~6x given the company’s M&A strategy. TDG ended 3QFY24 with Net Debt to EBITDA of ~4.2x. This provides $3.65 of accretion to our 2025 EPS estimate.

Model Changes

We update our model as we flow through 3QFY24 results, updated management commentary on the FY2024 outlook, and take into account recently closed acquisitions. We increase our FY24 revenue and adj. EBITDA estimates by ~1%. As a result, we increase our FY24 adj. EPS to $33.40 from $33.10. We increase our FY25 to FY27 revenue by ~1.5% as we flow through the better than expected results and our estimated revenue benefit from the three recently closed acquisitions. We increase our adj. EBITDA by ~2% in FY25 to FY27. As a result, we increase our FY25 adj. EPS to $41.05 from $40.30, to $46.10 from $45.10 in FY26, and to $50.60 from $49.50 in FY27.

FY2024 Outlook

TDG provided an update to its FY24 outlook. TDG increased its operating outlook across the board as it increased its sales outlook at the midpoint by ~2% and its adj. EBITDA outlook by ~2% at the midpoint. The company increased its adj. EPS outlook to $32.62-$33.42 from $31.75-$33.09.

The company expects Sales of $7,870mn-$7,930mn (vs. cons of ~$7,834mn), adj. EBITDA of $4,100mn-$4,160mn (vs. cons of ~$4,086mn), and adj. EPS of $32.62-$33.42 (vs. cons of ~$33.13). The company’s growth outlook is underpinned by commercial OEM growth of ~20%, commercial aftermarket growth of Mid-Teens %, and defense growth of High-Teens %.

Commercial Aftermarket Remains Strong; Maintained Growth Outlook of Mid-Teens % for FY24

Commercial Aftermarket performed well as traffic continues to recovery globally. Aftermarket revenues were up ~11% YoY and ~14% YTD, while strong bookings support the company’s FY24 revenue growth outlook of Mid-Teens %. Continued growth in aftermarket provides tailwinds to margin given its positive impact on business mix. Passenger transport aftermarket revenue was up ~16% YoY, interior aftermarket was up ~8% YoY, and business jet/helicopter was up ~10% YoY, while freight aftermarket revenue was down ~8% YoY as a result of the continued return of belly cargo capacity. Management noted that business jet/helicopter remains a watch item due to the slowdown of business jet flight activity and expects freight to remain light YoY as a result of current trends in the underlying market.

Defense Growth Outlook of High-Teens % for FY24

Defense revenue was up ~13% YoY and ~20% YTD. The company called out steady improvements in U.S. Government Defense spend outlays. Defense aftermarket growth slightly outpaced Defense OEM. TDG increased its FY24 defense revenue growth outlook to High-Teens % growth from Mid-Teens % growth.

Leverage and Debt Profile

TransDigm has ~$21.9bn of total debt (~$18.5bn net debt) on the balance sheet with ~75% of the debt hedged/fixed through FY27 by a combination of interest rate caps, swaps, and collars. We estimate Net Debt/EBITDA ratios will be ~4.5x in FY24, ~3.4x in FY25, and ~2.7x in FY26. We see TDG generating sufficient free cash flow to sustain and pay down leverage in the future.

Recent M&A Activity & Commentary

Management noted that it continues actively look for M&A opportunities that fit the TDG model and continues to see an expanding pipeline of potential M&A targets. TDG remains confident that there is a long runway for acquisitions that fit the portfolio and expects the majority of M&A activity to continue to be in the component business. For the 3 recently completed acquisitions (SEI, Electron Device Business of CPI, and Raptor Scientific), management expects revenue contribution of ~$125mn in 4QFY24 revenue, while the combined adj. EBITDA margin of the entities is near 30%. This lower margin profile of the acquired entities is expected to lead to ~125bps of margin dilution to FY24 EBITDA margins (guide of ~52.3% at the midpoint).

On May 22, 2024, TDG announced that it completed the acquisition of SEI Industries Ltd. SEI is a leading provider of highly engineered products for aerial firefighting and other liquid transportation solutions, such as remote fueling. SEI employs ~80 people and is expected to generate ~$30m in revenue in 2024.
On June 6, 2024, TDG announced that it completed the acquisition of the Electron Device Business of Communications & Power Industries (CPI) for ~$1.385bn in cash. TDG financed the acquisition through cash on hand as well as cash proceeds from the notes offerings completed in November 2023. The CPI Electron Device Business is a leading global manufacturer of electronic components and subsystems primarily serving the aerospace and defense market. ~70% of its revenue is derived from the aftermarket and nearly all of its revenue is generated from proprietary products. The CPI Electron Device Business generated approximately $300 m in revenue for its fiscal year ended September 29, 2023.
On July 31, 2024, TDG announced that it completed the acquisition of Raptor Labs Holdco, LLC, a portfolio company of L Squared Capital Partners, for ~$655 m in cash, including certain tax benefits. TDG financed the acquisition through cash on hand. Raptor Scientific is a leading global manufacturer of complex test and measurement solutions primarily serving the aerospace and defense end markets. Its products are highly engineered, proprietary components with significant aftermarket content and a strong presence across major aerospace and defense platforms. Nearly all of Raptor Scientific’s revenue is generated from proprietary products. Raptor Scientific is expected to generate ~$90 m in revenue in 2024.

Best in Breed US Industrial Company; Defensible Business Model

We continue to view TransDigm as a ‘best in breed’ US Industrial company as its margin profile largely tops the industry, it has exposure to in demand and growing end markets, and has executed through COVID-19 and a challenging macroenvironment without missing a beat. As we screen the Industrials GICS for US companies greater than $20bn in market cap, we can only find company which has a higher expected Adj. EBITDA margin than TDG.

We view the company as having the most defensible business model amongst peers and management has overcome numerous short theses. TransDigm’s portfolio is made up of ~90% proprietary products and ~75% sole sourced products, which allows the business to flex pricing.

06 Aug 24. Vivace Announces Growth Investment from Cerberus. Vivace International Corporation (“Vivace” or the “Company”), a manufacturer of specialty propulsion tanks for space and defense applications, today announced that it has received a growth capital investment from an affiliate of Cerberus Capital Management, L.P. (“Cerberus”), a global leader in alternative investing. Building upon the Company’s successes to date, the investment will support Vivace’s current work on important national security programs and position the Company for a period of sustained growth.

Since its founding in 2006, Vivace has combined highly specialized engineering, design, and manufacturing capabilities to develop mission-critical propulsion tanks for leading commercial and government customers across key U.S. spaceflight, hypersonics, and launch vehicle markets. The Company is based in the NASA Michoud Assembly Facility outside of New Orleans and is a key supplier to the Commercial Lunar Payload Services program, which will land numerous missions on the lunar surface as part of the larger Artemis program.

The partnership with Vivace is led by Cerberus’ Supply Chain and Strategic Opportunities platform, which invests in companies that are addressing critical national shortage areas to drive innovation, promote resilient infrastructure, and increase security for the United States and its allies. Cerberus is an experienced investor in the aerospace industry, bringing to bear extensive operating, technical, and government expertise to help position portfolio companies as key partners to customers on large, complex programs.

“This transaction represents an important milestone in our efforts to advance cutting-edge products and services to support many of the nation’s most advanced spaceflight programs,” said Dave Cochran, Co-Founder and President of Vivace. “We are excited to be working with the Cerberus team and to benefit from their deep domain and operational expertise as we build upon our reputation as a trusted long-term partner to world-class aerospace companies and to the U.S. Government.”

Steve Cook, Senior Managing Director at Cerberus and recently appointed Chairman of Vivace’s newly formed Advisory Board, added: “Amid the rapidly growing investment in spaceflight and hypersonic missions, there is a critical need for sophisticated tank and pressure vessel engineering and manufacturing capabilities. With proven product lines and an outstanding foundation of technical excellence, we believe Vivace is well-positioned to bolster the tank and pressure vessel shortage. We look forward to continuing to support Vivace as it takes the next step in its journey to serve programs of national significance.”

Vivace today also announced the appointment of Luke Wright as Director of Operations. Mr. Wright most recently served as a senior engineering and operating executive at global industrial conglomerate Textron, and he brings nearly two decades of experience in managing complex development and production programs manufacturing critical defense systems for U.S. Government customers.

Mr. Cochran continued: “Luke is a talented leader and an important addition to our team. His broad operating and functional experience in large-scale manufacturing businesses will help further solidify Vivace’s operational infrastructure as we enter our next phase of growth.”

About Vivace International

Founded in 2006 and based in NASA’s Michoud Assembly Facility near New Orleans, Louisiana, Vivace provides mission-critical product development, engineering, and management services for U.S. spaceflight systems, hypersonics, and launch vehicle markets. Its products include flight hardware, ground support equipment, development hardware, tooling, and engineering services. From concept development through detailed design, analysis, manufacture, and test, Vivace develops high-performance, efficient solutions and delivers them on time. Learn more at vivace.com.

About Cerberus

Founded in 1992, Cerberus is a global leader in alternative investing with approximately $65 bn in assets across complementary credit, real estate, and private equity strategies. We invest across the capital structure where we believe our integrated investment platforms and proprietary operating capabilities create an edge to improve performance and drive long-term value. Our tenured teams have experience working collaboratively across asset classes, sectors, and geographies as they seek to achieve strong risk-adjusted returns for our investors. For more information about our people and platforms, visit us at www.cerberus.com. (Source: BUSINESS WIRE)

06 Aug 24. SIXGEN Acquires Boldend to Advance Innovation in US Defense and National Security. SIXGEN, a full-spectrum provider of cyber products, operations, and solutions to the U.S. national security and critical infrastructure sectors, announced today its acquisition of Boldend, Inc. (“Boldend”). Boldend develops leading-edge cyber and electronic warfare solutions, empowering the U.S. Government’s operations in an evolving threat landscape. Boldend marks SIXGEN’s second acquisition since Washington Harbour Partners’ (“WHP”) investment in the company in November 2023. Boldend’s suite of software and cyber automation tools will further accelerate SIXGEN’s achievement of its strategic vision to empower the digital warfighter.

“We look forward to SIXGEN’s continued growth and innovation, powered by the combined company’s differentiated cyber operations platform.”

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“I am incredibly excited to welcome Mike Barry and the entire Boldend team to SIXGEN,” said Jack Wilmer, CEO of SIXGEN. “Boldend brings a dynamic team of individuals possessing exceptional mission experience and an unrivaled portfolio of solutions that are integral to SIXGEN’s growth objectives and amplifies our product roadmaps. Boldend’s curated and highly mission-centric IP strengthens our ability to address the needs of our partners and customers.”

Boldend is a cyber automation company, focused on building software products that scale cyber capabilities to offset higher operational demands, ensure responsive delivery, and address organizational resource gaps. The company’s solutions blend cutting-edge electronic warfare components with next generation, modern cyber operations – designing products specifically for the United States’ most sensitive defense and national security mission areas. Boldend’s capabilities are purpose built with operational security and tradecraft to solve the impossible for the U.S. Government, their only customer by design, and meet the government’s critical needs across the cyber domain.

“Partnering with SIXGEN is a strategic next step in navigating our continued high degree of mission impact and technological advancement,” said Mike Barry, Boldend CEO. “Boldend delivers some of the most exclusive solutions to national security missions, and we are excited to join SIXGEN to augment our resources and capabilities to create even greater impact. Boldend looks forward to joining the SIXGEN team in their work in service of the nation.” Mike Barry – a former national security official with extensive experience in critical leadership and operational positions at the White House and across the Intelligence Community – will join SIXGEN as a senior member of its team, along with Boldend’s extensive engineering and technical talent.

As Boldend joins the SIXGEN team, the combined company will continue to provide unique and tailored cyber solutions for the US national security community. The partnership and collaboration of highly qualified and dedicated engineers, sharing similar cultures and values, will allow for rapid development of innovative capabilities and provide next-level solutions for our nation’s best operators.

“Joining forces with SIXGEN is a natural and strategic alignment for Boldend,” said Bryan Smith, Boldend Chief Technology Officer. “By merging our capabilities, we can accelerate our progress and leverage crucial customer insights more effectively. This partnership, rooted in a shared vision, will act as a catalyst, unlocking new possibilities and driving product innovation.”

“We are excited by this strategic combination and look forward to continuing to enable SIXGEN’s investment in an IP-driven and talent-centric approach to enable national security missions and the digital warfighter,” said Mina Faltas, Washington Harbour’s Founder & Chief Investment Officer. “We look forward to SIXGEN’s continued growth and innovation, powered by the combined company’s differentiated cyber operations platform.”

This acquisition comes only one month after SIXGEN’s most recent acquisition of Secure-EE earlier in July, with the combined strength and impact of the three companies expected to drive significant value creation and positive impacts for all employees, customers, and mission sets, with increasing sophistication and advanced efficacy of modern cyber solutions.

Washington Harbour was advised by Morrison & Foerster on legal matters. Cooley served as legal advisor to Boldend.

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 Boldend

Boldend is a leading-edge cyber automation company developing software solutions that enhance and scale cyber capabilities. The company focuses on addressing operational demands, ensuring responsive delivery, and filling organizational resource gaps. Aligned with organizational authorities and requirements, Boldend facilitates the rapid and organic development of cyber solutions to meet the specific needs of each mission. We proudly support and deliver exclusive solutions to the interagency and select DOD cyber operations, partnering, and information sharing arenas. (Source: BUSINESS WIRE)

06 Aug 24. Magellan Aerospace Corporation Announces Financial Results.

Magellan Aerospace Corporation (“Magellan” or the “Corporation”) released its financial results for the second quarter of 2024. All amounts are expressed in Canadian dollars unless otherwise indicated. The results are summarized as follows:

Overview

A summary of Magellan’s business and significant updates

Magellan is a diversified supplier of components to the aerospace industry. Through its wholly owned subsidiaries, controlled entity and joint venture, Magellan designs, engineers and manufactures aeroengine and aerostructure components for aerospace markets, including advanced products for defence and space markets, and complementary specialty products. The Corporation also supports the aftermarket through supply of spare parts as well as performing repair and overhaul services.

Magellan operates substantially all of its activities in one reportable segment, Aerospace, which is viewed as one segment by the chief operating decision-makers for the purpose of resource allocations, assessing performance and strategic planning. The Aerospace segment includes the design, development, manufacture, repair and overhaul, and sale of systems and components for defence and civil aviation.

The Industry and the Supply Chain

Though global air travel has seen signs of recovery with both domestic and international revenue passenger kilometers, on a combined basis, approaching pre-COVID 19 pandemic levels, Magellan’s financial results and operations continue to be influenced by overhanging impacts from the pandemic. These impacts include customer build rate adjustments (and the impact on production scheduling), higher input prices for goods and services, limited availability of products, disruptions to supply chains and labour shortages. Magellan continues to manage these impacts and strives to mitigate their effect on Magellan’s operations, supply chain, and most importantly the health and safety of its employees.

In the first six months of 2024, 65.6% of revenues were derived from commercial markets while 34.4% of revenues related to defence markets.

Business Update

On May 7, 2024, Magellan announced that it would provide Black Brant vehicles and hardware to Peraton in support of the NASA Sounding Rocket Program. Under the terms of the five-year agreement Magellan will supply NASA’s annual requirements and could generate revenues up to a maximum of $75m.

On May 24, 2024, Magellan renewed its normal course issuer bid (“2024 NCIB”) which allows the Corporation to purchase for cancellation up to 2,857,469 of its common shares during the 12-month period commencing May 28, 2024 and ending May 27, 2025 through facilities of the Toronto Stock Exchange (“TSX”) or other alternative Canadian trading systems.

On July 25, 2024, Magellan announced the signing of a Memorandum of Understanding with Aequs Private Limited to explore the development of a business plan for a jointly-owned engine MRO business in the Aequs Special Economic Zone, at Belagavi in Karnataka, India.

For additional information, please refer to the “Management’s Discussion and Analysis” section of the Corporation’s 2023 Annual Report available on www.sedarplus.ca.

Results of Operations

A discussion of Magellan’s operating results for the second quarter ended June 30, 2024

The Corporation reported revenue in the second quarter of 2024 of $242.9m, a $23.2m increase from the second quarter of 2023 revenue of $219.7m. Gross profit and net income for the second quarter of 2024 were $26.6m and $7.4m, respectively, in comparison to gross profit of $23.0m and net income of $2.0m for the second quarter of 2023.

Consolidated Revenue

Revenue in Canada decreased 6.7% in the second quarter of 2024 compared to the corresponding period in 2023, mainly due to lower casting product revenues from work stoppages at one of the Corporation’s facilities offset in part by increased specialty product revenues in propulsion and wirestrike.

Revenue in the United States increased by 16.9% in the second quarter of 2024 compared to the second quarter of 2023, largely due to increased revenue for defense aircraft and wide body aircraft parts, higher helicopter part revenues, higher casting product revenues and favourable foreign exchange impacts due to the strengthening of the United States dollar relative to the Canadian dollar. On a currency neutral basis, revenues in the United States increased 14.7% in the second quarter of 2024 over the same period in 2023.

European revenue in the second quarter of 2024 increased 30.0% compared to the corresponding period in 2023 primarily driven by volume increases for single aisle and wide body aircraft parts and favourable foreign exchange impacts resulting from the strengthening of the United States dollar relative to the British pound. On a currency neutral basis, European revenues in the second quarter of 2024 increased by 28.4% when compared to the same period in 2023.

Gross Profit

Gross profit of $26.6m for the second quarter of 2024 was $3.6m higher than the $23.0m gross profit for the second quarter of 2023, and gross profit as a percentage of revenues of 11.0% for the second quarter of 2024 increased from 10.5% recorded in the same period in 2023. The gross profit in the current quarter increased from the same quarter in the prior year as a result of volume increases and contract rehabilitations on certain programs in addition to favourable product mix, offset in part by supply chain disruptions, price increases of purchased materials and supplies, and work stoppage at one of the Corporation’s facilities.

Administrative and General Expenses

Administrative and general expenses as a percentage of revenues was 6.1% for the second quarter of 2024, lower than the same period of 2023 percentage of revenues of 6.4%. Administrative and general expenses increased $0.8m or 5.6% to $14.9m in the second quarter of 2024 compared to $14.1m in the second quarter of 2023 mainly due to higher salary, benefit and short-term compensation costs in addition to increased information technology spending.

Restructuring

Restructuring in 2023 was primarily related to ongoing costs associated with the closure of the Bournemouth facility and dismantling its former operations.

Other

Other for the second quarter of 2024 included a $0.2m foreign exchange gain compared to a $1.5m foreign exchange loss in the second quarter of the prior year. The movements in balances denominated in foreign currencies and the fluctuations of the foreign exchange rates impact the net foreign exchange gain or loss recorded in a quarter.

Other for the second quarter of 2024 also includes $0.8m of provisioning related to certain of the Corporation’s environmental obligations.

Interest Expense

Total interest expense of $1.1m in the second quarter of 2024 increased by $0.3m compared to the second quarter of 2023, mainly due to higher interest on bank indebtedness and long-term debt as a result of increased interest rates and higher principal amounts borrowed in the quarter as compared to the prior year.

Provision for Income Taxes

Income tax expense for the three months ended June 30, 2024 was $2.5m, representing an effective income tax rate of 25.0% compared to 67.8% for the same period of 2023. The change in the effective tax rate and current and deferred income tax expenses year over year was primarily due to the change in mix of income and losses across the different jurisdictions in which the Corporation operates and the reversal of temporary differences.

(Source: Google/BUSINESS WIRE)

05 Aug 24. BWX Technologies Reports Second Quarter 2024 Results.

2Q24 revenues of $681.5m
2Q24 net income of $73.0m, adjusted EBITDA(1) of $126.2m
2Q24 diluted GAAP EPS of $0.79, non-GAAP(1) EPS of $0.82
BWXT-led JV awarded management and operations contract for the NNSA’s Pantex Plant
2024 non-GAAP EPS(1) guidance revised to $3.10-$3.20

BWX Technologies, Inc. (NYSE: BWXT) (“BWXT”, “we”, “us” or the “Company”) reported second quarter 2024 results.

“Second quarter results were ahead of our expectations driven by strong organic growth and crisp execution across our business lines,” said Rex. D Geveden. “Our solid year-to-date performance provides us the confidence to raise the lower end of our 2024 non-GAAP EPS guidance.”

“In recent months there have been multiple important developments supporting our nuclear markets, including passage of the ADVANCE Act, federal and state legislation supporting small modular reactor development and the Army and Defense Innovation Unit’s acquisition plans for microreactors at remote military bases, all of which have been complemented by broad-based support from private industry,” continued Geveden. “These developments demonstrate the increasing appetite for nuclear solutions across the global security, clean energy, and medical markets, ultimately driving new and exciting opportunities for BWXT.”

“Overall, we had a solid first half both financially and strategically and we continue to see favorable demand momentum in our end-markets,” continued Geveden. “Based on our year-to-date performance and anticipated progress on key contracts during the second half of the year, we are narrowing our 2024 non-GAAP EPS guidance to $3.10- $3.20.”

Revenues

Second quarter revenue increased in both operating segments. The Government Operations increase was driven by higher naval nuclear component production, microreactors and special materials processing. The Commercial Operations increase was driven by higher revenue associated with commercial nuclear field services, components, and fuel and fuel handling systems as well as higher medical sales.

Operating Income and Adjusted EBITDA(1)

Second quarter operating income increased in both segments. The Government Operations increase was mainly driven by higher revenue, which was partially offset by investments in new initiatives. The Commercial Operations increase was primarily driven by higher revenue and a shift in product and services mix.

Second quarter adjusted EBITDA(1) increased for the reasons noted above.

EPS

Second quarter GAAP EPS increased due to higher operating income, lower interest expense and a lower effective tax rate compared to second quarter 2023. The lower tax rate was mainly driven by Canadian legislation that provides for a lower statutory tax rate for clean energy, including nuclear, manufacturers. Non-GAAP EPS(1) increased driven by the items noted above.

Cash Flows

Second quarter operating cash flow decreased as higher net income was more than offset by greater working capital needs due to contract timing. Capital expenditures were lower due to timing of select growth investments.

Dividend

BWXT paid $22.0m, or $0.24 per common share, to shareholders in the second quarter of 2024. On August 1, 2024, the BWXT Board of Directors declared a quarterly cash dividend of $0.24 per common share payable on September 5, 2024, to shareholders of record on August 16, 2024.

2024 Guidance

BWXT reaffirmed its 2024 guidance for Revenue, Adjusted EBITDA(1), and Free Cash Flow(1) and narrowed its guidance range for Non-GAAP EPS(1).

(Source: BUSINESS WIRE)

05 Aug 24. Palantir Reports Revenue Growth of 27% Year-Over-Year and Raises Full Year Revenue Guidance; Record GAAP EPS of $0.06 in Q2 2024. Palantir Technologies Inc. (NYSE:PLTR) today announced financial results for the second quarter ended June 30, 2024.

Q2 2024 Highlights

Revenue grew 27% year-over-year and 7% quarter-over-quarter to $678 m
US commercial highlights

o US commercial revenue grew 55% year-over-year and 6% quarter-over-quarter to $159m

o US commercial customer count grew 83% year-over-year and 13% quarter-over-quarter to 295 customers

o US commercial remaining deal value (“RDV”) grew 103% year-over-year and 11% quarter-over-quarter

US government revenue grew 24% year-over-year and 8% quarter-over-quarter to $278m
Commercial revenue grew 33% year-over-year and 3% quarter-over-quarter to $307m
Government revenue grew 23% year-over-year and 11% quarter-over-quarter to $371m
Closed 27 deals over $10m
Customer count grew 41% year-over-year and 7% quarter-over-quarter
GAAP net income of $134m, representing a 20% margin
GAAP income from operations of $105m, representing a 16% margin
Adjusted income from operations of $254m, representing a margin of 37%
Rule of 40 score of 64%
GAAP earnings per share (“EPS”) grew 500% year-over-year to $0.06
Adjusted EPS grew 80% year-over-year to $0.09
Cash, cash equivalents, and short-term US treasury securities of $4.0bn
Cash from operations of $144m, representing a 21% margin
Adjusted free cash flow of $149m, representing a 22% margin

Outlook

For Q3 2024, we expect:

Revenue of between $697 – $701m.
Adjusted income from operations of between $233 – $237m.

For full year 2024:

We are raising our revenue guidance to between $2.742 – $2.750bn.
We are raising our US commercial revenue guidance to in excess of $672m, representing a growth rate of at least 47%.
We are raising our adjusted income from operations guidance to between $966 – $974m.
We continue to expect adjusted free cash flow of between $800m – $1bn.
And we continue to expect GAAP operating income and net income in each quarter of this year. (Source: BUSINESS WIRE)

05 Aug 24. Advent Technologies Reaches Agreement for up to $3m in Debt from Institutional Investor. Advent Technologies Holdings, Inc. (NASDAQ: ADN), an innovation-driven leader in the fuel cell and hydrogen technology sectors, today announced that the Company entered into a Securities Purchase Agreement, with an institutional investor pursuant to which the Investor will lend the Company $1,000,000.

The Investor has also agreed to provide the Company with a one-year revolving line of credit for $2,000,000 upon the Company’s filing of a Registration Statement on Form S-1 with the Securities and Exchange Commission with respect to an underwritten or “best efforts” public offering by the Company of its common stock and/or Common Stock equivalents for proceeds to the Company of not less than $5,000,000.

The Company will use the proceeds from the loan for general corporate purposes, including expenses related to the preparation of its Annual Report on Form 10-K for the year ended December 31, 2023, and expenses to facilitate a public offering of common stock.

The loan bears interest at the rate of 18% per year and is due in full in one year. The Company is required to reduce the salary of its Chief Executive Officer by at least 50%, and of each other employee of the Company and its subsidiaries by up to 50%.

The closing of the transaction is subject to (i) the Company filing its 2023 annual report on Form 10-K with the Securities and Exchange Commission; and (ii) the resignation of at least five of the current members of the Company’s Board of Directors and appointment to the Board of three nominees designated by the Investor. As a result, (i) each of Nora Goudroupi, Anggelos Skutaris, Larry Epstein, Wayne Threatt and Von McConnell will resign as directors of the Company, and (ii) Katie Field, Richard Paolone and Avtar Dhaliwal will be appointed to the Board of Directors. The Class I Directors will be Vassilios Gregoriou and Emory DeCastro, the Class II Directors will be Richard Paolone and Avtar Dhaliwal, and the Class III Director will be Katie Field.

Dr. Vasilis Gregoriou, Advent’s Chairman and CEO, commented: “This additional funding will empower us to further our mission of decarbonizing hard-to-abate sectors through our Ion-Pair™ MEA fuel cell technology. Advent’s management team remains confident in the transformative potential of our fuel cell technology. We are pleased to welcome our new lender and board members.”

About Advent Technologies Holdings, Inc

Advent Technologies Holdings, Inc. is a U.S. corporation that develops, manufactures, and assembles complete fuel cell systems as well as supplying customers with critical components for fuel cells in the renewable energy sector. Advent is headquartered in California and holds the IP for next-generation HT-PEM that enables various fuels to function at high temperatures and under extreme conditions, suitable for the automotive, aviation, defense, oil and gas, marine, and power generation sectors. For more information, visit www.advent.energy. (Source: BUSINESS WIRE)

06 Aug 24. Sensitive British military projects face disruption from the threatened closure of one of the country’s last remaining microchip factories. Coherent, a US semiconductor company, ceased taking orders at its facility in County Durham and said the 310,000 sq ft site may have to be sold after Apple dropped the business as a supplier.

It can now be revealed the factory’s customers also include Leonardo, the Italian defence giant that makes radar systems, electronic warfare devices and helicopters in the UK.

It is understood the plant has previously supplied chips used for radar power amplifiers in Typhoon jets and other British military platforms.

Coherent is not thought to have any outstanding orders with Leonardo, but sources suggested the plant may still be needed for future, unspecified programmes. This is because the site, which specialises in photonics, is understood to be one of just two in the country that are currently geared for commercial processing of gallium arsenide semiconductors.

The factory’s customers also include Italian defence giant Leonardo, which makes helicopters in the UK Credit: Jason Alden/Bloomberg

The factory’s closure threatens to reduce the UK’s domestic capabilities and potentially force Leonardo to source the chips from elsewhere.

It would represent a blow to the UK at a time when the Government is seeking to build up the domestic industry for making semiconductors, a key technology underpinning everything from smartphones to complex computer systems and high-precision missiles.

A spokesman for Leonardo UK said: “Leonardo is aware of the current situation and is working with all of our stakeholders to deliver a resilient supply chain.”

The Ministry of Defence was asked to comment on Monday.

One semiconductor industry source suggested a white knight investor may yet emerge to save the Coherent plant, adding: “There are potentially interested parties.”

The Telegraph first revealed in May that the site’s future was in doubt and undergoing a strategic review that could lead to the plant being sold.

In company accounts, Coherent said it had issued a last-time-buy notice to other customers.

It said the decision by Apple – which was not named in the accounts – to stop using the company as a supplier “places the ongoing viability of the business in doubt”.

The accounts added: “A strategic review of the business is currently being undertaken with potential new technologies and/or sale of the business as options under consideration.”

Losing a contract from Apple can often be disastrous for the company’s suppliers. The British semiconductor company Imagination Technologies lost half of its value and was eventually sold after Apple said it no longer planned to use the company’s graphics chip designs in 2017.

Other companies including Volex and Wolfson Microelectronics suffered share price plunges after losing contracts.

The Government announced a £1bn semiconductor strategy last year but critics say the money is not supporting the industry and pales in comparison to semiconductor subsidies in the US and Europe.

Coherent was asked for a comment on Monday but did not respond. (Source: Daily Telegraph)

05 Aug 24. Capita’s asset sales win a second look. Debt is less of a worry at the outsourcer these days but what the path to a sustainable future looks like is anyone’s guess. Interim results for perennially troubled outsourcer Capita (CPI) has a slightly different feel from the normal sense of impending dread that even a cursory look at the company’s balance sheet induces; Capita has been caught in what would be a nominally fatal combination of endless pension fund contributions, alongside ongoing debt repayments for some time.

However, after achieving a decently high sales price for its Capita One IT division, which it sold for a net £180m to MRI software earlier this year, the pathway to a net cash inflow position in the medium term looks more plausible.

The cash bleed seems to be slowly staunching with an outflow in these results of £51.9m, compared with £64.3 last time, with costs associated with the savings programme (plus further pension deficit contributions of £14.5m in the half, triggered by the sale of Trustmarque in March 2022) being the main reasons for cash going out the door.

The company hopes to achieve £160mn of savings by 2025; so far it has delivered £100mn towards the target and generated £19m of associated costs in the process. The business disposal programme still has some way to go; group assets worth a nominal £83.2m are listed on the balance sheet as held for sale.

Capita is never far from the headlines and the penny share crowd loves the volatility associated with the company. Admittedly, the shares have performed well this year, while an ability to generate consistent cash flow through assets sales deserves an upgrade, the rump of the company is not worth serious consideration until its balance sheet is fixed beyond reasonable doubt. Hold. Last IC View: Sell, 23p, 4 Aug 2023. (Source: Investors Chronicle)

05 Aug 24. Private investor, Rcapital has signed an agreement to acquire GT Emissions Systems, a subsidiary of Knorr-Bremse, the global market and technology leader for braking systems and other rail and commercial vehicle systems. GT Emissions Systems is a leading supplier of emission control systems for diesel engines in on-highway commercial vehicles and off-highway equipment. The transaction is expected to close in the fourth quarter.

Founded in 1974, GT Emissions Systems is headquartered in Peterlee (UK) with assembly lines in Italy, India and Brazil. The business employs c.225 people globally and its customers include Daimler, Volvo, Scania, JCB, MAN and John Deere.

GT has established itself as a leading manufacturer and supplier of engine air valve systems for medium and heavy-duty commercial trucks and the off-highway equipment market. It specialises in “engine air” components which include: exhaust throttle valves, exhaust gas recirculation valves and intake throttle valves. GT’s solutions are a critical component of the internal combustion engine and are designed to help ensure OEMs are able to meet ever evolving emission standards.

Rcapital is uniquely placed to support the business, thanks to its strong track record in the engineering sector with its existing investments in Bromford Precision Solutions, Trac Precision Solutions, Nasmyth Group and, most recently, FGP Systems. This transaction also marks Rcapital’s eighth corporate carve-out transaction in recent years.

Sam Duberley, Investment Director at Rcapital, said: “GT is a great business, providing well-engineered complex components to an impressive blue chip client base. We are passionate about supporting great British engineering businesses and we firmly believe that under our stewardship, GT will grow from strength to strength. ”

Steve Wright, Managing Director, GT Emissions Systems, said: “GT Emissions Systems has great potential and an opportunity to build on its market-leading position, serving clients globally. I am looking forward to working with the Rcapital team and benefiting from their significant experience in the sector and track record of delivering strong returns and long-term growth.”

05 Aug 24. SENIOR: The FTSE 250 engineer has reported a 1 per cent rise in first-half pre-tax profits to £13.2m on revenue up 4 per cent at £501.4m, buoyed by demand for commercial aircraft and higher defence spending. The full-year outlook is unchanged. David Squires, chief executive, said: “Our aerospace revenue and profits have grown strongly notwithstanding 737 Max volumes being subdued as a consequence of the ongoing situation at Boeing. Our Flexonics division continued to perform well.” (Source: The Times)

05 Aug 24. Senior’s orders improve as it looks to boost delivery

Order intakes improves in spite of industry problems linked to Boeing

The group turns free cash flow positive
Underlying operating margin on the rise

Senior (SNR) has released a solid if unspectacular set of half year numbers about a week after it announced that it had secured a five-year contract with Rolls-Royce (RR.) to provide aerofoils for the Pearl engine series, a component in ultra-long range business jets.

The group, a supplier of high-end components for the aerospace and defence industries, saw interim revenues increase by 7 per cent on a constant currency basis, while adjusted operating profits rose by 13 per cent to £25.1m on a 30-basis point increase in the underlying margin to 5 per cent. However, reported profitability was essentially flat on the 2023 half year once a series of costs and charges linked to amortisation, restructuring, relocation, pension settlements and US class actions are added to the mix.

The group turned free cash flow positive through the period and its return on capital employed increased by a full percentage point to 7.3 per cent. Though these last two metrics point to improvements at the operating level, the group’s net margin at 2.17 per cent is more in keeping with a high street grocery chain than a high-tech engineer. Competition is fierce among the original equipment manufacturers within the aerospace industry, so margin pressure comes with the territory.

Move over Airbus and Boeing – this planemaker is flying high

Order intake has been promising despite ongoing external issues with Boeing (US:BA) and management maintains that the build rate within the aerospace business and improved pricing mechanism should support margins going forward. Indeed, a book-to-bill ratio of 1.15 indicates that Senior received more orders than it fulfilled, a pointer to buoyant demand levels. A forward rating of 18 times consensus earnings and a price/earnings to growth ratio of 1.3 indicates that the market is up to speed, so we remain neutral on the stock despite the operational improvements. Hold. Last IC view: Hold, 160p, 04 Mar 2024. (Source: Investors Chronicle)

02 Aug 24. Moog Inc. Reports Strong Third Quarter 2024 Results with Further Margin Expansion. 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 third quarter 2024 diluted earnings per share of $1.74 and adjusted diluted earnings per share of $1.91.

“Fiscal year 2024 is measuring up to be a great step towards achieving our long-term financial targets”

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“We delivered a solid performance in the third quarter of 2024, with significant improvements in our financial results,” said Pat Roche, CEO. “Our teams continue to execute well, driving both top-line growth and margin expansion across our businesses. Our commitment to achieving our Investor Day targets remains strong, with clear progress in our pricing and simplification initiatives. With this momentum we are confident in our continued success and growth.”

Quarter Highlights

Net sales of $905m increased 6% compared to the prior year’s quarter, with increases in our aerospace and defense businesses, while Industrial was slightly down.
Operating margin of 11.6% increased 170 basis points, driven by improved performance in Space and Defense, Commercial Aircraft and Military Aircraft, while Industrial declined 130 basis points.
Adjusted operating margin of 12.3% increased 210 basis points, reflecting improved business performance across all segments.
Diluted earnings per share of $1.74 increased 32% due to higher operating profit, partially offset by restructuring charges and a higher tax rate.
Adjusted diluted earnings per share of $1.91 increased 39%, driven by operating margin expansion and incremental profit from higher sales.
Free cash flow improved by $17m as compared to last year.

Quarter Results

Sales in the third quarter of 2024 increased compared to the third quarter of 2023, with notable growth in Military Aircraft, Space and Defense and Commercial Aircraft. Military Aircraft sales increased 18% to $207 m due to the ramp of the FLRAA program and other OEM production programs. Space and Defense sales increased 7% to $258m driven by strong U.S. and European defense demand. Commercial Aircraft sales increased 6% to $189 m due to the increased production in our widebody business. Industrial segment sales decreased 1% to $250m due to a slowdown in orders for industrial automation applications, partially offset by higher product demand in other markets.

Operating margin increased 170 basis points to 11.6% in the third quarter of 2024 compared to the third quarter of 2023. Space and Defense operating margin increased 490 basis points to 12.6% due to improved performance on space vehicle development programs. Commercial Aircraft operating margin increased 190 basis points to 12.9%, driven by higher sales volume and pricing initiatives, as well as mix. Military Aircraft operating margin increased 130 basis points to 11.6%, driven by cost absorption on the FLRAA program. Industrial operating margin decreased 130 basis points to 9.8%, impacted by higher restructuring and inventory write-down charges.

Adjusted operating margin in the third quarter of 2024 increased 210 basis points to 12.3% compared to the third quarter of 2023. The only segment with significant adjustments was Industrial, whose adjusted operating margin increased as the benefits of pricing more than offset an unfavorable sales mix and planned product transfers.

Twelve-month backlog remains robust, increasing 7% to $2.5bn, driven by strong product demand across the aerospace and defense businesses.

Free cash flow in the third quarter was a use of cash of $2m, an improvement of $17m year-over-year, driven by higher net cash from operating activities and lower capital expenditures.

2024 Financial Guidance

“Fiscal year 2024 is measuring up to be a great step towards achieving our long-term financial targets,” said Jennifer Walter, CFO. “This year, our sales will grow by 8%, our adjusted operating margin will expand by 150 basis points and our adjusted earnings per share will increase by 20%.” (Source: ASD Network)

02 Aug 24. Rheinmetall to acquire majority stake in Resonant Holdings of South Africa. Rheinmetall is to expand its plant engineering portfolio by acquiring a majority stake in the business of Resonant Holdings (Pty) Ltd, a leading South African specialist in plant engineering for chemical applications. An agreement to this effect has now been signed. Rheinmetall Waffe Munition GmbH will hold 51% of the shares in a newly formed joint venture Rheinmetall Resonant South Africa, and the current Resonant Holding shareholders will possess the remaining 49%. The company to be founded expects an annual sales potential of more than EUR 100m.

The parties have agreed not to disclose the purchase price. The transaction and the final company name are still subject to customary regulatory approvals.

The planned acquisition is Rheinmetall’s response to the growing global demand in the ammunition sector and the resulting customer requirements for the construction of corresponding production facilities. Rheinmetall is therefore significantly expanding its existing capabilities in ammunition production by vertically integrating further competences, thus positioning itself even more robustly for the independent planning, construction and operation of production facilities for the manufacture of chemical products such as propellant powder and explosives.

Resonant Holdings employs around 150 people and brings proven experience and outstanding expertise in designing and constructing specialised plants. This includes production facilities for chemical and explosives products. Resonant’s leading expertise complements Rheinmetall’s plant engineering capabilities, particularly in the fields of chemical, energetic, and explosives technology, industrialization, and manufacturing. This expands Rheinmetall’s ability to offer a comprehensive range of services, including the design, construction and commissioning of state-of-the-art plants tailored to the specific needs of our global partners.

At the same time, the partnership offers Resonant a strong global reach, industry expansion and access to new markets. The combined expertise of both entities will drive innovation and efficiency, delivering unparalleled value to customers. Rheinmetall aims to preserve the company’s existing technology and workforce.

The planned acquisition of Resonant Holdings underscores Rheinmetall’s dedication to expanding its technological capabilities and delivering state-of-the-art solutions to its partners. This strategic acquisition of the controlling stake ensures that Rheinmetall remains at the forefront of innovation in the engineering and defence industries, providing unparalleled expertise and comprehensive solutions.

09 Apr 24. The VanEck Defense UCITS ETF of the asset manager VanEck has reached a fund volume of USD 500m approximately one year after its launch. The fund invests worldwide in companies that are active in the defence industry or are involved in defence-related government contracts. “The rapid growth of our ETF illustrates the importance of defence nowadays for investors”, explains Martijn Rozemuller, CEO of VanEck Europe. “Traditionally, the defence industry has been a rather sensitive topic, especially in Europe. However, the outbreak of war in Ukraine and other areas of tension and conflict around the world have changed the way many people view defence policy.” For example, many governments in Western European countries, which have repeatedly undershot NATO’s two per cent target for military spending in the past, have announced increased investment in defence infrastructure and military stocks in order to meet the two per cent target in the future and ensure their own defence capabilities. “Companies in the security and arms industries could benefit from this development in the long term in the coming years,” Rozemuller said. “Reflecting on one year since the launch of VanEck Defense UCITS ETF, events have reinforced on the pivotal role that defense plays in world affairs and how defense budgets around the world are rising to address the geopolitical challenges of our times,” stated Steven Schoenfeld, Chief Executive of MarketVector Indexes. “Our MVDEF index incorporates the leading global companies in the defense industry, and we are proud to collaborate with VanEck Europe in bringing this unique and timely investment solution to the market,” he continued. Since its launch in spring 2023, the VanEck Defense UCITS ETF was the first Pure-Play ETF available in Europe to offer investors access to this sector. The fund aims to invest in companies that generate the majority of their sales with the following products or services in the defence sector: Defence equipment, aerospace technology, communications systems and services, satellite technology, unmanned aerial vehicles, security software, IT hardware and services, cybersecurity software, training and simulation solutions, digital forensics, tracking devices, and e-authentication or biometric identification applications. To this end, the ETF follows the MarketVector™ Global Defense Industry Index and explicitly excludes companies that generate revenue from controversial weapons or have demonstrably failed to comply with established standards or are suspected of doing so. The ETF is classified as Article 6 under the EU Disclosure Regulation.

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

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BUSINESS NEWS

August 2, 2024 by

Sponsored by SPX Communication Technologies (TCI & ECS)

www.tcibr.com

www.enterprisecontrol.co.uk

01 Aug 24. AMETEK, Inc. (NYSE: AME) today announced its financial results for the second quarter ended June 30, 2024.

AMETEK’s second quarter 2024 sales were $1.73bn, a 5% increase over the second quarter of 2023. Operating income increased 7% to a record $447.5m and operating margins were 25.8%, up 40 basis points from the second quarter of 2023. Operating cash flow in the quarter was $381.4m, up 14% versus the prior year.

On a GAAP basis, second quarter earnings per diluted share were $1.45. Adjusted earnings in the quarter were $1.66 per diluted share, up 6% from the second quarter of 2023. Adjusted earnings adds back non-cash, after-tax, acquisition-related intangible amortization of $0.21 per diluted share. A reconciliation of reported GAAP results to adjusted results is included in the financial tables accompanying this release and on the AMETEK website.

“Our operating performance in the second quarter was strong with outstanding core margin expansion, record operating income and EBITDA, and earnings growth ahead of our expectations,” commented David A. Zapico, AMETEK Chairman and Chief Executive Officer. “We also generated excellent cash flows, with free cash flow up 17% and free cash flow conversion of 107% in the quarter. These results reflect the strength and flexibility of our operating model as well as our team’s ability to successfully manage through a slower growth environment.”

Electronic Instruments Group (EIG)

EIG sales in the second quarter were $1.15bn, up 2% from the same quarter in 2023. EIG’s operating income in the quarter increased 14% to $349.9 m with operating income margins of 30.3%, an increase of 320 basis points compared to the second quarter of 2023.

“EIG delivered strong results this quarter with excellent operating performance leading to outstanding profit growth and robust margin expansion,” stated Mr. Zapico. “Our EIG businesses are well positioned across a diverse set of attractive market segments.”

Electromechanical Group (EMG)

EMG sales in the second quarter were a record $581.2m, up 14% from the second quarter of 2023. EMG’s second quarter operating income was $123.1 m, while operating income margins were 21.2% in the quarter.

“EMG continued to experience headwinds in the quarter from the normalization of inventory levels across our OEM customer base,” stated Mr. Zapico. “Despite these headwinds, our teams delivered solid operating performance with sequential margins improving 50 basis points versus the first quarter’s adjusted margins.”

2024 Outlook

“Our operating results through the first half of 2024 have been solid against the backdrop of a slower growth environment. We now expect the impact of inventory normalization within our OEM customer base will continue through the balance of 2024. Additionally, customers are turning more cautious leading to some short-term delays in project spending,” stated Mr. Zapico.

“As a result, we are adjusting our sales and earnings guidance for the year,” continued Mr. Zapico. “We remain confident in our ability to successfully manage through these near-term demand headwinds, deliver strong operating performance and cash flows, and ensure AMETEK is well positioned for strong growth and profitability.”

“For 2024, we now expect overall sales to be up between 5% and 7% compared to 2023. Adjusted earnings per diluted share, including a lower tax rate in the fourth quarter, are now expected to be in the range of $6.70 to $6.80, up 5% to 7% over the comparable basis for 2023,” he added.

“For the third quarter of 2024, overall sales are expected to be up mid-single digits on a percentage basis compared to the same period last year. Adjusted earnings in the quarter are anticipated to be in the range of $1.60 to $1.62, down 1% to 2% compared to the third quarter of 2023,” concluded Mr. Zapico. (Source: PR Newswire)

01 Aug 24. Averna, a leading global test & quality solutions provider, announced the acquisition of Global Equipment Services, Inc. (GES), a division of Kimball Electronics, Inc. (Nasdaq: KE) specialized in automation, test and measurement solutions for industries such as consumer electronics, semiconductor and medical devices.

Averna Expands its Asian and North American Footprint with the Acquisition of Global Equipment Services, Inc. from Kimball Electronics, Inc.

This strategic acquisition combines both companies’ strengths and footprint to create one of the largest independent system integrators in test automation with 1,200 employees across 20 offices within 11 countries. New Averna locations will include Ho Chi Minh, Vietnam; Suzhou, China; Trivandrum, India; Tokyo, Japan and San Jose, United States with technical support in the Philippines, Taiwan, South Korea, Malaysia, and Thailand.

“As our global customers’ operations spread across all continents, it was important for us to join forces with the right team and establish a significant presence in diverse geographies in Asia,” explains François Rainville, President and CEO of Averna. “With this acquisition, Averna now has a solid footprint in the Americas, Europe and Asia where the majority of our customers’ research & development and manufacturing activities are taking place. Combine that with the in-depth automation, vision and test engineering capabilities of the team and their impressive client database, GES was clearly the right fit.”

GES customers include both Original Equipment Manufacturers (OEMs) as well as their Contract Manufacturers (CMs). Core technical capabilities include optical metrology and defect detection, image processing/software, and micro-alignment of components/parts for products. GES offers a wide scope of automation and inspection equipment, including functional testing, cosmetic inspection, and assembly applications across all markets.

“Being part of Kimball Electronics, we have been exposed to many large-scale projects.” said Chris Thyen former Vice President, New Platforms at GES and now Vice-President, Averna APAC. “By joining forces with Averna, not only will we be exposed to a new landscape of test, but we can share our expertise in different areas of quality innovation.”

This acquisition solidifies Averna as a leader in test, measurement, and quality. By adding over 160,000 ft² of new manufacturing space, including class 100K and 10K clean rooms, Averna is solidly prepared to take on large customer challenges, anywhere in the world. (Source: PR Newswire)

01 Aug 24. Behrman Capital, a private equity investment firm based in New York, today announced that it has entered into a definitive agreement to sell its portfolio company kSARIA Holdings (“kSARIA” or “the company”), a leading producer and supplier of mission-critical connectivity solutions for the aerospace and defense end markets, to ITT Inc. (“ITT”, NYSE: ITT) in a transaction valued at approximately $475m.

Founded in 2000, kSARIA brings extensive process technology and engineering expertise to the high-reliability connectivity industry, offering interconnect products and services with superior performance, quality and value to the Mil/Aero end market. The Company’s products support applications for avionics, sensors, communications and networking on coveted platforms with defense prime contractors and commercial aerospace leaders. The majority of the Company’s positions are sole or primary source. kSARIA is also the only provider in its space offering a combination of ruggedized fiber optic and electrical solutions with complementary service offerings. kSARIA’s proprietary engineering and manufacturing capabilities in both fiber and electrical interconnect technologies enable it to deliver mission-critical, engineered products which must survive and function in harsh environments.

“We are incredibly proud of kSARIA’s remarkable growth and achievements during our ownership,” said Grant Behrman, Managing Partner at Behrman Capital. “The four add-on acquisitions consummated by the Company have created a highly differentiated market leader in high-reliability connectivity solutions for Mil/Aero customers. We believe the business is exceptionally well-positioned for further growth under its new ownership and we commend Tony Christopher and the management team for their innovative leadership, wishing them success in the future as part of ITT.”

After partnering with the kSARIA management team in 2018 to acquire the Company, Behrman has pursued a wide range of strategic initiatives. These include four strategic add-on acquisitions, geographic expansion in the US and internationally, and the achievement of supplier positions on high-growth, next-generation defense and aerospace platforms that will have decades of longevity.

“Behrman Capital has been an excellent partner to the kSARIA team,” said Tony Christopher, kSARIA’s Chief Executive Officer. “Their vision for the Company’s growth strategy and approach to due diligence on acquisition candidates added a tremendous amount of strategic value that enabled us to offer an increasingly deep portfolio of highly customized connectivity solutions to our customers, who require the highest quality products to meet their mission-critical needs.”

The transaction is expected to close before the end of the third quarter of 2024.

For kSARIA, Guggenheim Securities, LLC and BMO Capital Markets Corp. served as financial advisors and Goodwin Procter LLP served as legal advisor.

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 http://www.behrmancap.com.

About kSARIA

kSARIA, based in Hudson, New Hampshire, offers complete interconnect solutions for mission critical applications with unsurpassed quality and performance. kSARIA offers unmatched advantages for all aspects of Mil/Aero connectivity solutions from cable assembly design, connector products, fabrication, installation, training, and logistics management. Whether it is optical fiber, copper, RF or hybrid cable assemblies, kSARIA has the technology, expertise, and an end-to-end approach to optimize solutions for customers. For more information, please visit www.ksaria.com. (Source: PR Newswire)

01 Aug 24. Electron Energy Corporation (“EEC”) has joined Magnetic Holdings, LLC, the parent company of Dexter Magnetic Technologies (“Dexter”) and Magnetic Component Engineering (“MCE”). Magnetic Holdings is a portfolio company of Tinicum.

The Walmer family, who founded EEC as the world’s first manufacturer of samarium cobalt magnets in 1970, retained a significant minority interest in Magnetic Holdings, and Michael Walmer, its Chairman and CEO, joined the Magnetic Holdings board of directors. Financial terms of the transaction were not disclosed.

The transaction creates a group of leading permanent magnet firms, each with unique and complementary capabilities to solve customers’ most demanding challenges. The businesses of Magnetic Holdings collectively have nearly 500 employees, and over 200,000 square feet of manufacturing space, serving critical applications for aerospace, defense, medical, semiconductor, energy, and industrial customers.

The companies of Magnetic Holdings will collaborate to provide integrated solutions, utilizing the most technically advanced raw materials, world-class magnet fabrication and assembly capabilities, and expertise in designing and developing customized high-performance motors and electromechanical components, all supported by one of the largest technical engineering and commercial teams in the industry. Moreover, Magnetic Holdings now has four highly capable facilities in three distinct locations and a vertically integrated manufacturing process, creating a robust and resilient supply chain.

Magnetic Holdings is backed by Tinicum, which has over $2.4bn of committed capital, providing the financial, operational, and strategic resources to grow and the stability that comes from its long-term ownership philosophy.

Mr. Walmer stated, “In 54 years, EEC has grown from two people with a great vision and little resources to a team of 150 committed and talented individuals serving our specialized markets with strength. EEC will continue to find new opportunities to do what has never been done before in support of space exploration, aviation, defense, medical and energy initiatives. Our growth will be enhanced by this new, dynamic relationship with these strong partners. This growth enables EEC to keep pace with increasing vital customer demand, providing continual purposeful work for our employees.”

He continued, “After exploring partnerships with firms that are also rooted in and appreciate the advantages of our family-run culture, we found one that stands out as extremely well aligned with our values: Tinicum. Both Tinicum and EEC are led by their founding families, ensuring a continuation of vision for the future and legacy for the long term. Moreover, Magnetic Holdings now features three of the strongest, most entrepreneurial magnet companies in the United States. Together, each company will benefit from collaboration within Magnetic Holdings, the strength and scale of the larger enterprise, and the capital resources of Tinicum, while also maintaining agility and vitality in each of our respective markets. Based on our talent and creative spark, we know that EEC will continue to engineer solutions for a healthy, secure nation and for the challenges of a dynamic world for generations to come.”

Joe Stupfel, CEO of Magnetic Holdings, stated, “We are thrilled to join forces with EEC, a firm whose capabilities, employees, and leadership we hold in the highest regard. We are excited to now be able to offer our customers a comprehensive solution—unique in the magnetics industry—with the ability to design and produce custom samarium cobalt formulations, manufacture magnetics with world class speed, precision, and quality, and engineer, design and build assemblies and motors customized to customer applications.”

Stupfel added, “Our employees are our most important asset. Investing in their careers and personal development not only benefits them but increases capabilities of our businesses. The larger size of our business creates opportunities for all the employees of Dexter, EEC, and MCE to grow. We strive to attract and retain the best talent in the magnetics industry and to be the employer of choice in each market in which we operate.”

Rich Dosik, partner at Tinicum, stated, “We are thrilled to partner with the Walmer family and the team at EEC, and we are honored that they have entrusted us with their business. We have the utmost respect and admiration for EEC. As we have done at both Dexter and MCE, we are excited to continue to make significant investments into EEC to help them grow as we build Magnetic Holdings for the long term.”

About EEC

EEC is an expert developer and leading American producer of rare earth magnets serving the global aerospace, defense, energy, medical and semiconductor markets. Founded in 1970 by Marlin Walmer, EEC is headquartered in Pennsylvania and is the only vertically integrated American manufacturer of DFARS- and ITAR-compliant samarium cobalt magnets. EEC’s ability to control material compositions allows for customization and precise control of magnetic properties. Engineers at EEC collaborate with customers to devise solutions and enable applications that were previously not possible. For more information about EEC, visit www.electronenergy.com.

About Dexter

Dexter provides specialized magnetic components and assemblies for use in demanding applications in the medical, aerospace, defense, semiconductor manufacturing, oil and gas, and industrial end markets. Dexter has been solving complex customer challenges since 1951 and manufactures its products at its headquarters in Elk Grove Village, Illinois. Dexter manufactures DFARS- and ITAR-compliant products and holds AS9100D, ISO13485, and ISO9001 certifications. For more information about Dexter, visit www.dextermag.com.

About MCE

MCE manufactures permanent magnets and magnet assemblies for the most demanding applications for aerospace, defense, medical, and industrial technology customers. MCE manufactures DFARS- and ITAR-compliant products and holds AS9100D and ISO9001 certifications. For more information about MCE, visit www.mceproducts.com.

About Tinicum

Tinicum, founded in 1974 as a family investment office, is a private partnership that manages a diversified group of industrial manufacturing, distribution, and technology companies. Based in New York, Tinicum also has offices in San Francisco, Houston, and Frankfurt. For more information about Tinicum, visit www.tinicum.com. (Source: PR Newswire)

01 Aug 24. Reticulate Micro, Inc. (“Reticulate Micro,” “Reticulate” or the “Company”), a commercial and defense technology company dedicated to delivering trusted and resilient communications over any transport and in any environment, has launched its Regulation A stock offering to raise up to $10m (the “Reg A Offering”) to support Reticulate’s product and market launch efforts as a leading provider of video compression and tactical and SATCOM management solutions. Its flagship product, VAST™, is designed to enable ultra-efficient streaming video and situational awareness in bandwidth-challenged environments.

Reticulate’s offering was qualified with the Securities and Exchange Commission (“SEC”) this week and allows anyone to now invest in the Company. The Reg A Offering has an offering price of $3.50 per unit. Each unit includes one share of the Company’s Class A Common Stock and one warrant to purchase one share of the Company’s Class A Common Stock at an exercise price of $5.50 per share. The minimum investment is $700 for 200 units and is open to all investors.

The lead selling agents for the transaction include Boustead Securities, LLC, a leading full-service investment banking firm and licensed FINRA member, and Digital Offering LLC, a next-generation investment bank focused on technology and innovation and helping high-quality private and public growth companies access U.S. capital markets.

“We are delighted to launch our capital raise with such an experienced investment banking team who share our vision to democratize our offering to a broad investment pool,” said Michael Chermak, Executive Chairman of Reticulate Micro.

Reticulate will utilize the DealMaker platform which allows the public to invest directly in Reticulate’s stock: https://invest.reticulate.io

The Company plans to use the proceeds from the Reg A Offering to scale sales and marketing as well as operations, invest in new product development, and expand its IP portfolio.

“We are excited to leverage the funds from our Reg A Offering to accelerate the development and delivery of our cutting-edge VAST™ video compression technology, ensuring we stay at the forefront of innovation in national security, healthcare, and critical infrastructure,” said Joshua Cryer, President and CEO of Reticulate Micro.

Investors can receive additional information on the offering either on Reticulate’s investor page at https://reticulate.io/investors/ or via email at .

About Reticulate Micro, Inc.

Reticulate Micro, Inc., with headquarters in Palm Bay, Florida, is a commercial and defense technology company dedicated to delivering trusted and resilient communications over any transport and in any environment. Reticulate is building one of the world’s first post-quantum-encrypted open-systems platforms for robust video streaming, simplified terminal management and satellite mobile connectivity in austere environments and diverse orbital regimes. Serving the defense, mobility, broadcasting, enterprise infrastructure monitoring and security sectors, Reticulate Micro and its newest business segment Reticulate Space embrace open standards across its software and product offerings. (Source: PR Newswire)

01 Aug 24. MACOM Reports Fiscal Third Quarter 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 third quarter ended June 28, 2024.

Third Quarter Fiscal Year 2024 GAAP Results

Revenue was $190.5m, an increase of 28.3%, compared to $148.5m in the previous year fiscal third quarter and an increase of 5.1% compared to $181.2m in the prior fiscal quarter;
Gross margin was 53.2%, compared to 58.0% in the previous year fiscal third quarter and 52.5% in the prior fiscal quarter;
Income from operations was $19.7m, or 10.4% of revenue, compared to income from operations of $17.3m, or 11.7% of revenue, in the previous year fiscal third quarter and income from operations of $15.4m, or 8.5% of revenue, in the prior fiscal quarter; and
Net income was $19.9m, or $0.27 per diluted share, compared to net income of $11.9m, or $0.17 per diluted share, in the previous year fiscal third quarter and net income of $15.0m, or $0.20 per diluted share, in the prior fiscal quarter.

Third Quarter Fiscal Year 2024 Adjusted Non-GAAP Results

Adjusted gross margin was 57.5%, compared to 60.1% in the previous year fiscal third quarter and 57.1% in the prior fiscal quarter;
Adjusted income from operations was $45.6m, or 24.0% of revenue, compared to adjusted income from operations of $37.0m, or 24.9% of revenue, in the previous year fiscal third quarter and adjusted income from operations of $40.2m, or 22.2% of revenue, in the prior fiscal quarter; and
Adjusted net income was $48.9m, or $0.66 per diluted share, compared to adjusted net income of $38.5m, or $0.54 per diluted share, in the previous year fiscal third quarter and adjusted net income of $43.2m, or $0.59 per diluted share, in the prior fiscal quarter.

Management Commentary

“We remain focused on engineering excellence, financial performance and execution,” said Stephen G. Daly, President and Chief Executive Officer. “Our portfolio expansion strategy continues to create new business opportunities with our Industrial, Defense, Telecom and Data Center customers.”

Business Outlook

For the fiscal fourth quarter ending September 27, 2024, MACOM expects revenue to be in the range of $197m to $203m. Adjusted gross margin is expected to be between 57% and 59%, and adjusted earnings per diluted share is expected to be between $0.70 and $0.76 utilizing an anticipated non-GAAP income tax rate of 3% and 75.0 m fully diluted shares outstanding. (Source: BUSINESS WIRE)

01 Aug 24. nLIGHT, Inc. Announces Second Quarter 2024 Results. 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 second quarter of 2024.

“Second quarter revenue of $50.5m was at the upper end of our guidance range and increased 13% compared to the first quarter”

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“Second quarter revenue of $50.5m was at the upper end of our guidance range and increased 13% compared to the first quarter,” commented Scott Keeney, nLIGHT’s President & Chief Executive Officer. “Strong execution in directed energy and in existing laser sensing programs resulted in 26% quarter-over-quarter growth in our Aerospace & Defense business. We also announced a strategic partnership with EOS, an industry leader in additive manufacturing. Additive manufacturing remains a key growth area for nLIGHT and we believe our work with EOS positions us even better for long-term growth in this market.”

Mr. Keeney continued, “Higher volumes and a more favorable mix of business during the second quarter enabled us to increase products gross margin to 30%, above the high end of our guidance range. We generated approximately $7m from cash flow from operations during the first six months of the year and we ended the quarter with approximately $115 m of cash and investments with no debt.”

Second Revenues of $50.5m for the second quarter of 2024 were down 5.2% compared to $53.3m for the second quarter of 2023. Gross margin was 23.5% for the second quarter of 2024 compared to 22.7% for the second quarter of 2023. GAAP net loss for the second quarter of 2024 was $11.7m, or $0.25 per diluted share, compared to net loss of $8.8m, or $0.19 per diluted share, for the second quarter of 2023. Non-GAAP net loss for the second quarter of 2024 was $4.6m, or $0.10 per diluted share, compared to non-GAAP net loss of $0.9m, or $0.02 per diluted share, for the second 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 third quarter of 2024, nLIGHT expects revenues to be in the range of $53m to $58m. The midpoint of $55.5m includes Laser Products revenue of approximately $39.5m and Advanced Development revenue of approximately $16m. nLIGHT expects overall gross margin to be in the range of 22% to 26%, with Laser Products gross margin in the range of 28% to 32% and Advanced Development gross margin of approximately 8%. nLIGHT expects Adjusted EBITDA to be in the range of ($2)m to $1m. (Source: BUSINESS WIRE)

01 Aug 24. BigBear.ai Announces Second Quarter 2024 Results

Revenue up 3.4% to $39.8m compared to $38.5m in 2023, up 20% QoQ vs. 1Q24.
Cash balance of $72.3m as of June 30, 2024.
Announced upcoming exercises for ConductorOS distributed platform.
Signed MSA with Heathrow Airport to deliver advanced technologies to Europe’s largest airport.
Adjusting full-year 2024 revenue guidance to $165-$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 second quarter of 2024 and issued an investor letter that has been posted to the Investor Relations section of the Company’s website.

“BigBear.ai continues to focus on our mission of creating clarity for the world’s most complex decisions by delivering enabling technology and expertise so our customers can take action faster. We are excited to share progress on the trajectory of our business as well as our ConductorOS distributed platform investment.”

Post this

“ConductorOS is built to be lightweight, and works within any existing infrastructure to rapidly and seamlessly orchestrate sensor data and artificial intelligence models across highly diverse and distributed environments. We believe that ConductorOS will play a critical role in unlocking the last mile for artificial intelligence for our customers, and that BigBear.ai is uniquely positioned to deliver this capability,” said Mandy Long, CEO of BigBear.ai.

“I am also proud today as we announce signing a Master Service Agreement with Heathrow Airport – this is exactly the sort of win that demonstrates that the path we are on is the right one.”

“We also faced several challenges this quarter, particularly around the timing of certain customer awards and regulatory approvals. While we’re confident in our ability to achieve these milestones and execute on these opportunities, as a result of the current timing uncertainty we’ve experienced, we are adjusting our full year guidance down to $165 – $180 m,” she continued.

Financial Highlights

Revenue increased 3.4% to $39.8m for the second quarter of 2024, compared to $38.5m for the second quarter of 2023. The year-over-year increase was impacted by the planned wind-down of the Air Force EPASS program in mid-2023 offset by a full quarter of Pangiam revenue in the second quarter of 2024.
Gross margin increased to 27.8% in the second quarter of 2024 as compared to 23.3% in the second quarter of 2023, partially driven by higher margin solutions in the second quarter of 2024 compared to the second quarter of 2023.
Net loss of $11.7m for the second quarter of 2024, compared to $16.9m for the second quarter of 2023. The decrease in net loss was primarily driven by the change in fair value of warrants issued in 2024 of $11.0m, which was partially offset by higher non-recurring integration and strategic initiatives of $2.1m and higher equity-based compensation of $1.8m.
Non-GAAP Adjusted EBITDA* of $(3.7)m for the second quarter of 2024 compared to $(3.2)m for the second quarter of 2023, primarily driven by increased Recurring SG&A* of $2.7m, increased research and development expense of $0.6m net of capitalized software development costs, partially offset by higher gross margin driven by higher mix of higher margin solutions in the second quarter of 2024 compared to the second quarter of 2023.
SG&A of $23.4m for the second quarter of 2024 compared to $16.9 m for the second quarter of 2023, partially due to higher costs related to non-recurring integration and strategic initiatives.
Recurring SG&A* increased $2.7m from $13.1m in the second quarter of 2023, to $15.8m for the second quarter of 2024, which includes a full quarter of Pangiam’s operating results.
Ending backlog was $266m as of June 30, 2024.
The consolidated year-to-date results include results from Pangiam from the acquisition date of February 29th, 2024 to the end of June 2024.

*Refer to the “Non-GAAP Financial Measures” section in this press release.

Momentum

BigBear.ai to Showcase AI Orchestration at the Edge during DoD Technology Readiness Experimentation 2024 — BigBear.ai is slated to battle-test its ConductorOS distributed platform at the Department of Defense’s (DoD) RDER Technology Readiness Experimentation 2024 event in August. An exclusive live-fire, full-scale event, DoD’s T-REX-24-2 is an essential demonstration and evaluation event for advanced military technologies. BigBear.ai’s ConductorOS is a lightweight, distributed platform built to support the rapid adoption and integration of AI-powered solutions at the edge. Read the PR: https://rb.gy/h9d0sg
MSA with Heathrow Airport — Bigbear.ai entered into a Master Service Agreement with Heathrow to deliver advanced technologies at Europe’s largest airport. The partnership between BigBear.ai and Heathrow aims to improve security and operational effectiveness, while enhancing the overall experience for travelers through the UK’s hub airport.
BigBear.ai’s Troy workflow engine newest ‘Awardable’ product on DoD’s Tradewinds procurement platform — Troy, the company’s intelligent workflow engine designed to automate and accelerate the process of binary reverse engineering, has achieved “Awardable” status and is now available for procurement on the Chief Digital and Artificial Intelligence Office’s (CDAO) Tradewinds Solutions Marketplace. Troy is the latest of six BigBear.ai products now available on the Marketplace. Read the PR: https://rb.gy/shzjoi
EPP in Vancouver: Canada Place cruise terminal implements cutting-edge facial recognition technology for passenger processing — Vancouver Fraser Port Authority (VFPA), the federal agency mandated to enable Canada’s trade through the Port of Vancouver, selected BigBear.ai to enable deployment of the US Customs and Border Protection’s (CBP) new Enhanced Primary Processing (EPP) initiative. BigBear.ai’s technology provides passengers the EPP option, which fully automates the existing manual documentation identity verification checks for passengers boarding a cruise requiring admission into the United States. This is BigBear.ai’s first deployment of facial recognition technology for cruises in Canada.
Dallas Fort Worth International Airport (DFW) – BigBear.ai continues to expand its strategic partnership with DFW; most recently, working with DFW’s Terminal Experience team to deploy Enhanced Passenger Processing for use by US CBP. BigBear.ai’s VeriScan enables the expedited screening of returning US citizens, significantly reducing passenger processing times. (Source: BUSINESS WIRE)

01 Aug 24. Astronics Corporation Reports 14% Growth in Sales in 2024 Second Quarter

Sales grew 14% to $198.1m in the quarter
Operating income increased to $7.6m in the quarter, or 3.8% of sales
Achieved net income for the quarter of $1.5m, or $0.04 per diluted share
Adjusted EBITDA1 grew 28% to $20.2m, or 10.2% of sales, an increase of $4.4m over the second quarter of the prior year
Bookings in the quarter were $219.0 m, driving a record backlog of $633.4m with book to bill ratio of 1.11x
Aerospace achieved its tenth consecutive record backlog of $554.6m
Raising 2024 revenue guidance to $780m to $800m

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 six months ended June 29, 2024.

Peter J. Gundermann, Chairman, President and Chief Executive Officer, commented, “Our second quarter confirmed success with increased demand, new program wins, and our ability to deliver product to our customers more efficiently and predictably. We exceeded our guidance with 14% growth in sales and improved profitability. Bookings were at a post-pandemic high, resulting in yet another record backlog. Our strong performance supports raising our expectations for the year. Looking beyond 2024, our market leadership positions, the significant programs that we have won recently, and our high level of innovation point to a long runway for delivering value and improved earnings power.”

Consolidated sales were up $23.7m, or 13.6%. Aerospace sales increased $18.6m and Test Systems sales increased $5.1m.

Consolidated operating income increased to $7.6m, compared with operating income of $2.4m in the prior-year period. Improved operating income reflects the operating leverage gained on higher sales volume, partially offset by $4.0m in bonus expense as the Company’s incentive programs resumed in 2024.

Consolidated sales and operating profit were negatively impacted by $3.5 m due to a revision of estimated costs to complete certain long-term mass transit contracts in the Test Systems segment.

Consolidated net income was $1.5m, or $0.04 per diluted share, measurably improved compared with the net loss of $12.0m, or $0.37 per diluted share, in the prior year. Tax benefit in the quarter was $0.3m, compared with tax expense of $8.1m in the prior year.

Consolidated adjusted EBITDA increased to $20.2m, or 10.2% of consolidated sales, compared with adjusted EBITDA of $15.8m, or 9.1% of consolidated sales, in the prior-year period primarily as a result of higher sales.

Bookings were $219.0m in the quarter resulting in a book-to-bill ratio of 1.11:1. For the trailing twelve months, bookings totaled $783.6m and the book-to-bill ratio was 1.06:1.

Aerospace Segment Review (refer to sales by market and segment data in accompanying tables)

Aerospace Second Quarter 2024 Results (compared with the prior-year period, unless noted otherwise)

Aerospace segment sales increased $18.6m, or 11.7%, to $176.9m. The improvement was driven by a 14.6% increase, or $16.3m, in Commercial Transport sales. Sales to this market were $128.4m, or 64.8% of consolidated sales in the quarter, compared with $112.1m, or 64.3% of consolidated sales in the second quarter of 2023. Higher airline spending drove increased demand.

Military Aircraft sales increased $11.2m, or 82.4%, to $24.8m, driven by progress on the FLRAA program as well as higher sales of lighting, safety and avionics products for military aircraft. General Aviation sales decreased $6.0m, or 24.0%, to $19.0m due to lower antenna and VVIP sales.

Aerospace segment operating profit of $19.3m grew 41% compared with operating profit of $13.7m in the same period last year. As a percent of sales, operating margin expanded to 10.9%, or 220 basis points over the prior-year period. Operating margin expansion reflects the leverage gained on higher volume and improving production efficiencies. Operating profit in the second quarter of 2024 was impacted by a $3.0m increase in litigation-related legal expenses and reserve adjustments related to an ongoing patent dispute and $2.9m related to the resumption of the Company’s incentive programs.

Aerospace bookings were $192.7m for a book-to-bill ratio of 1.09:1. Backlog for the Aerospace segment was a record $554.6m at quarter end.

Mr. Gundermann commented, “The strong demand for our Aerospace products and technologies continues to gain momentum as the aerospace industry recovers. Encouragingly, we are seeing strength across all of our Aerospace product lines. While our significant position in inflight entertainment and connectivity continues to grow, we are also seeing strong growth in our flight critical power and aircraft lighting thrusts. At the same time, we are continuing to become more efficient at delivering product reliably and predictably and the higher throughput is beginning to show the operating leverage that is inherent in our business.”

Test Systems Segment Review

Test Systems Second Quarter 2024 Results (compared with the prior-year period, unless noted otherwise)

Test Systems segment sales were $21.2m, up $5.1m. The improvement was driven by radio test sales following the award of the U.S. Army TS-4549/T contract, which contributed $7.2m in sales during the quarter. However, segment sales were negatively impacted by $3.5m due to a revision of estimated costs to complete certain long-term mass transit Test contracts. The revision resulted in reduced revenue recognized in the period due to lower estimates of the percentage of work completed on the programs.

Test Systems segment operating loss was $5.3m, compared with operating loss of $6.1m in the second quarter of 2023. The positive margin realized on the Army contract was offset by $3.5m related to the revision of estimated costs noted above. Additionally, Test Systems continues to be negatively affected by mix and under absorption of fixed costs due to current volume.

In April 2024, the Test Systems segment implemented restructuring initiatives to align the workforce and management structure with near-term revenue expectations and operational needs resulting in $0.7m in severance expense recognized during the second quarter. As part of the restructuring the Test business closed an operation in Kilgore, TX, simplifying its operations. We expect to realize annual savings of approximately $4m from these activities, beginning in the third quarter.

Bookings for the Test Systems segment in the quarter were $26.4m, including a $15.5m initial booking for the U.S. Army TS-4549/T radio test set program. The book-to-bill ratio was 1.25:1 for the quarter. Backlog was $78.8m at the end of the second quarter of 2024 compared with a backlog of $73.6m at the end of the previous quarter.

Mr. Gundermann commented, “The second quarter was an important reset for our Test business. We finally were awarded the U.S. Army’s radio test program known as 4549/T, which we expect will bring revenue of $215m or so over the next few years. We also completed a major restructuring of the business including the elimination of a peripheral manufacturing facility, our second of three such consolidations planned for the business. Finally, we performed our quarterly review of certain long-term mass transit contracts which resulted in an increase in the estimated costs to complete as the programs are not progressing as efficiently as expected. This was certainly a painful adjustment but, combined with the restructuring and the 4549/T award, we believe the business is set for a considerably brighter future.”

Liquidity and Financing

Capital expenditures in the quarter were $1.8m and $3.4m year-to-date. Net debt was $174.0m, up from $161.2m at December 31, 2023.

Cash used for operations in the second quarter of 2024 was primarily the result of a $16.7m increase in accounts receivable which was related to increased sales and the timing of shipments.

On July 11, 2024, the Company announced it had amended and expanded its revolving line of credit and refinanced its term loan. The refinancing provides improved liquidity, lower cash costs, and greater financial flexibility for the Company. The refinancing is comprised of an expanded asset-based line of credit and a reduced, lower-cost term loan.

The revolving line of credit was expanded from $115m to a $200m maximum subject to the borrowing base, with an interest rate of SOFR plus 2.5% to 3.0% varying based on the Company’s consolidated leverage ratio. At closing, Astronics had $128 m drawn on the facility.

The new $55 m term loan has an interest rate of SOFR plus 5.5% to 6.75% varying based on the Company’s consolidated leverage ratio. Cash amortization of the new term loan will be approximately $550,000 annually, down from the previous rate of approximately $9.0m.

The lower combined interest rate is expected to reduce interest expense by $2.0m annually. The new debt structure afforded the Company approximately $50m of available liquidity at closing, which was up from approximately $15m prior.

Third quarter 2024 expenses will include refinancing-related fees, the call premium on the previous term loan and the write-off of deferred financing costs related to the previous financing. These expenses in total are estimated to be $7.5m.

2024 Outlook

The Company is increasing its 2024 revenue guidance to $780m to $800m. The midpoint of this range would be a 15% increase over 2023 sales. Astronics considered the broad range of tailwinds affecting the business balanced against certain risks, including those associated with OEM production rates, in issuing its guidance.

The Company expects third quarter revenue to be in the range of $195m to $205m.

Backlog at the end of the second quarter was a record $633.4m, of which approximately $402.3m is expected to ship in 2024. Planned capital expenditures in 2024 are expected to be in the range of $17m to $22m.

Peter Gundermann commented, “We are making excellent progress as an organization, with first half 2024 sales up 15.8% and strong margin improvement. We believe the table is set for current trends to continue, and that 2024 will finish as a very strong year. Our innovative products are valued by our customers, we are executing on key wins after significant investments of time and money over the last few years, and we are regaining our operational stride which allows continued expansion of our margin profile and earnings.”

(Source: BUSINESS WIRE)

01 Aug 24. US navy shipbuilder Huntington Ingalls beats second-quarter estimates.

Huntington Ingalls on Thursday reported better-than-expected second-quarter results, as heightened global tensions drove up demand for aircraft carriers, amphibious assault ships and submarines.

The Virginia-based company reported a profit of $4.38 per share for the quarter ended June 30, ahead of analysts’ estimates of $3.62. Demand for submarines and aircraft carriers is surging, fueled by China’s expanding naval footprint and high global tensions.

Huntington Ingalls, the largest U.S. military shipbuilding company, saw a 6% rise in revenue to $2.98bn, compared with estimates of $2.84bn, according to LSEG data.

The company reaffirmed its annual outlook but raised its revenue forecast for the Mission Technologies segment, now seeing it at up to $2.8bn, compared with the previous range of $2.7bn to $2.75bn. (Source: Reuters)

01 Aug 24. Filtronic soars: revenue up 55% as profits explode.

Filtronic LON:FTC the AIM-listed electronic components business, published its full year results to end-March earlier this week, and the Durham-based company has had an excellent year.

Tipped as ‘One to Watch’ by The Armchair Trader back in February, Filtronic reported an increase in year-on-year revenue of 55.8% to GBP25.4m and the period saw earnings increase by 277% and operating profit up 1,700% to GBP3.6m.

Filtronic is a designer and manufacturer of products for the aerospace, defence, space and telecommunications infrastructure markets. Although Filtronic has been around since the 1980s as a defence contractor, before diversifying into telecommunications in the 1990s, the company has historically had quite a narrow and focussed client list, mainly government entities, especially in its defence portfolio.

Filtronic investing in growth

The electronic components business saw basic earnings per share increase from 0.22p/share to 1.45p/share, however Filtronic’s management decided that for reasons of long-term sustainability that any excess cash be retained in the business for investment in research and development to fund growth and therefore did not declare a dividend this year.

Filtronic has hoovered up a number of significant contracts in the past years, with the most significant a five-year partnership with Elon Musk’s SpaceX, where Filtronic will supply its Cerus solid state power amplifier. Jonathan Neale, Filtronic’s chairman notes: “Given the customer’s preference for vertical integration, this is a significant testament to our ability to design and deliver best in class technology.”

The company also won a GBP3.2m contract from the European Space Agency. Filtronic will develop a series of mmWave products for the next generation of the ESA’s lower earth orbit constellations and payload applications. Other big wins included radar contracts with BAE LON:BA. and QinetiQ LON:QQ. for a combined contract value of GBP6.5m.

Filtronic’s telecom business remains strong

In terms of telecoms, new orders came in from derivative products from OEMs (Original Equipment Manufacturers) and network providers, and on the design side Filtronic secured further work from the UK’s Defence Science and Technology Labs (DSTL) to design new radar products.

At the start of last month (1st July) Filtronic issued 113,880 new 1p shares as part of an exercise of options under the company’s share save plan. Filtronic opened trading today (1st August) at 66p. The company’s shares were up to 67.5p within the first few hours of trading. Over one-year Filtronic’s shares are up 295% and over the year-to-date up 210% with the AIM-listed company’s shares ranging between 14p and 80p over a 52-week period. The company has a market cap of GBP142m.

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

31 Jul 24. L3Harris expands footprint with milestones in propulsion and EW. L3Harris Technologies is celebrating a year of achievements and growth, marked by advances in propulsion systems and a new Centre of Excellence for electronic warfare in Australia.

The launch of L3Harris’s Centre of Excellence for Electronic Warfare, the facility will enable the delivery of T4 and T7 robots to the ADF. Source: L3Harris

In a year of evolution, L3Harris Technologies has made steps, notably in its propulsion systems through Aerojet Rocketdyne and the recent inauguration of a Centre of Excellence (COE) for electronic warfare in Australia.

Aerojet Rocketdyne was the second largest proponent of the missile defence market at the time of the acquisition due to its dominant position within the rocket motors segment of the missile systems supply chain. GlobalData’s Thematic Intelligence on Missile Defence highlights how focusing on a niche, but an indispensable family of products in the broader missile defence market can prove profitable.

Christopher E. Kubasik, Chair and CEO of L3Harris, emphasised the importance of these advancements: “The high demand for missiles and the solid rocket motors that propel them makes our investment in Aerojet Rocketdyne even more crucial to our national security. We remain focused on helping meet that demand while strengthening the US defence industrial base.” The integration of solid rocket motors and propulsion systems has supported missile defence tests and space launches, including the missions of Vulcan and Starliner.

On the other side of the globe, L3Harris is investing in Australia by launching its COE for Electronic Warfare in Brisbane. This facility marks a step in L3Harris’s commitment to the Australian defence industry and the Indo-Pacific region. The COE will focus on electronic warfare technology to bolster local manufacturing capabilities.

Australian officials, including Jennifer Howard MP and Graham Perrett MP, highlighted the importance of this investment for Australia’s defence sector.” L3Harris’ new operations in Queensland will contribute to a vibrant and growing defence supply chain, with their investment helping them better support the needs of the Australian Defence Force and the Australian defence industry,” said Howard. The COE will support the design and integration of technologies, provide new job opportunities, and strengthen the sovereign industrial base.

L3Harris’s expansion into Australia aligns with its strategy to bring support and delivery centres closer to key defence partners, reducing turnaround times and enhancing local capabilities. Introducing T4 and T7 robots as part of the Land-154 programme further exemplifies this commitment, offering solutions for explosive device neutralisation.

L3Harris Technologies is advancing its propulsion systems in the US and expanding its global presence with new facilities and capabilities in Australia. These efforts reflect a strategy to enhance defence technology and support international defence needs. (Source: army-technology.com)

31 Jul 24. Luminar buys G&H’s laser module unit to expand chip business- CEO. Luminar Technologies, a maker of lidar sensors for self-driving cars, has purchased the optoelectronic components and laser modules business of Britain’s Gooch & Housego (G&H) to expand its semiconductor operation, its CEO said.

The Nasdaq-listed firm launched its semiconductor arm Luminar Semi last year based on the prior acquisition of three companies: laser manufacturer Freedom Photonics, custom chip design house Black Forest Engineering and photodetector firm Optogration.

Luminar Semi is breaking even and will further expand into aerospace and defence following the acquisition of the G&H unit, EM4, Luminar chief executive Austin Russell told Reuters.

“We have now over 100 active customers and programs across the board for Luminar Semiconductor,” the 29-year founder said in his first interview on Luminar’s chip business.

“Companies are leveraging the same IP and technology that we had first developed for our Lidar systems for the broader sensing industry,” he said.

Lidar, which stands for light detection and ranging, shoots out light pulses that are reflected off objects, allowing self-driving systems and driver-assistance software to gain a three-dimensional map of the road. Many self-driving companies and experts regard it as a crucial component, especially during low-light situations.

Russell declined to comment on the size of the deal, which was agreed in March, but G&H said that month that it had sold EM4 to a U.S. tech company in a deal worth up to $12 m without naming the buyer.

Clients for Luminar’s chip business range from the U.S Department of Defence and the National Aeronautics and Space Administration (NASA) to technology companies, Russell said. (Source: Google/https://wtaq.com/)

01 Aug 24. HARLAND & WOLFF: The struggling Aim-quoted Belfast-based shipbuilder agreed a new $25m loan to shore up its finances, parted ways with its chief executive, John Wood, scrapped plans for a fast ferry service between Penzance and the Isles of Scilly, and formally engaged Rothschild & Co to assess its strategic options.

The loss-making company acted after hopes of securing a £200 m bailout from taxpayers were dashed last week when the government rejected a request for UK Export Finance to underwrite fresh funding from a US hedge fund.

Harland & Wolff said it would focus on its core business in Belfast, Appledore, Methil and Arnish and wind down non-core businesses, such as the Scilly Isles ferry. The shares are suspended after the company failed to file audited accounts on time. (Source: The Times)

The GMB Union has welcomed a finance injection for Harland and Wolff, which was confirmed today

Matt Roberts, GMB National Officer, said: “GMB is pleased Harland and Wolff’s financing has been confirmed and received. Now the company can focus on its core business and what we know GMB members can deliver. Harland and Wolff’s four core sites across the UK remain crucial to our domestic sovereign capabilities in shipbuilding and renewables fabrication,”

01 Aug 24. BAE Systems plc Half-yearly Report 2024.

Charles Woodburn, Chief Executive, said: “Thanks to the outstanding efforts of our employees around the world, we delivered a strong operational and financial performance in the first half of the year, giving us confidence to increase our year-end guidance across all our key metrics. Working closely with our customers, we have maintained momentum on key strategic activities, including AUKUS and the Global Combat Air Programme. We also continued evolving our technology portfolio through strategic acquisitions and the ongoing integration of our new Space & Mission Systems business.

“Our order intake shows that demand for our products and services remains high and we are well positioned for sustained growth in the coming years. We will keep investing in new technologies, facilities and our people so that we can deliver on our record order backlog and help our government customers stay ahead in an uncertain world.”

As defined by Group

The 13%2 growth in sales reflects the ongoing strong programme performance across the portfolio and the acquisition of the Space & Mission Systems (SMS) business in February.
Underlying earnings before interest and tax (EBIT) has grown 13%2, reflecting the increase in sales combined with strong programme execution and the ongoing efforts of our internal efficiency initiatives.
Growth of 7%2 in underlying earnings per share (EPS) is after the increase in underlying net finance costs, incurred primarily as a result of the $4.8bn (£3.8bn) debt finance raised in March, and the increased tax rate.
Free cash flow was £219m, with the comparative period of £1,070m reflecting a high level of customer advances.

As derived from IFRS

The growth in revenue of 13% reflects the same strong operational performance across the portfolio.
Operating profit is up 5% as the growth in underlying EBIT is offset by the additional amortisation of intangible assets acquired with SMS.
The reduction in basic earnings per share on the prior period reflects the increased interest cost and the amortisation of intangibles acquired with SMS.

We monitor the underlying financial performance of the Group using alternative performance measures. These measures are not defined in International Financial Reporting Standards (IFRS) and therefore are considered to be non-GAAP (Generally Accepted Accounting Principles) measures. The relevant IFRS measures are presented where appropriate. The purposes and definitions of non-GAAP measures are provided in the Alternative performance measures section on page 46 in the full report.
Growth rates for sales, underlying EBIT and underlying EPS are on a constant currency basis (i.e. calculated by translating the results from entities in functional currencies other than pounds sterling for the period ended 30 June 2023 to pounds sterling at the average exchange rate of such currencies for the period ended 30 June 2024). The comparatives have not been restated. All other growth rates and year-on-year movements are on a reported currency basis.
Order backlog includes £2.2bn acquired with the SMS business in February.

Strategic progress

Alongside strong operational delivery, we continued to invest in our people, research & development (R&D) and capital expenditure, which underpins our growth outlook. During the first half of the year, key areas of progress included the following:

Under the AUKUS agreement, we were selected to build Australia’s new fleet of nuclear-powered submarines, alongside ASC Pty Ltd.
We signed a contract, worth £4.6bn, for the delivery of the first three Hunter Class frigates (Batch 1) in Australia, following which, we entered the construction phase and officially cut steel on the first ship at a ceremony at the Osborne Naval Shipyard in Adelaide, South Australia.
We made progress against our 2024 target to recruit 2,700 graduates and apprentices in the UK.
In February, we completed the acquisition of the US-based Ball Aerospace business from Ball Corporation and formed our new SMS business, which is reported within our Electronic Systems sector. Since the acquisition, the SMS business has secured orders of £0.7bn and we are progressing with the integration activities.
In February, Air Astana completed an initial public offering (IPO) with a joint listing in London and Kazakhstan. Following the IPO, our shareholding reduced from 49% to 17% – with cash proceeds on disposal of £166m and a profit on disposal of £75m.
We completed two further acquisitions in the uncrewed air systems (UAS) technology market, both of which form part of FalconWorks® in our Air sector.

Operational highlights

The sixth Astute class submarine, Agamemnon, was officially named at our submarines site in Barrow-in-Furness, Cumbria.
We delivered two further Typhoon aircraft to Qatar – a total of 20 are now in service with the Qatar Emiri Air Force.
A new concept model of the next-generation combat aircraft, being developed by the Global Combat Air Programme (GCAP), was unveiled at the Farnborough International Airshow in July. This will be known as Tempest in the UK.
We marked the launch of satellites that will bridge critical gaps in current space-based environmental monitoring capabilities for the US Space Force.
Following the move to full-rate production, we are now delivering five variants of Armored Multi-Purpose Vehicles (AMPV) and, during the period, the US Marine Corps’ fleet of Amphibious Combat Vehicles (ACV) completed its first successful operational deployment.
Within our Hägglunds business, based in Sweden, we are expanding our production and delivery capabilities by investing more than £160m in advanced manufacturing capabilities and a new customer test and acceptance centre in the period.

Capital deployment

We successfully raised $4.8bn (£3.8bn) of debt finance, of which $4.0bn (£3.2bn) was used to refinance the bridge loan facility associated with the Ball Aerospace acquisition.
We completed the third and final tranche of the up to £1.5bn share buyback programme, announced in July 2022 (2022 share buyback programme) on 24 July 2024. In the six months ending 30 June 2024, we repurchased 19,403,928 ordinary shares under the 2022 share buyback programme at a total cost (including transaction fees) of £250m. The up to £1.5bn share buyback programme, which we announced in August 2023 (2023 share buyback programme), commenced on 25 July 2024.
The directors have declared an interim dividend of 12.4p per share in respect of the half year ended 30 June 2024. This represents an increase of 8% compared to the interim dividend declared in respect of the half year ended 30 June 2023. This will be paid on 2 December 2024, in line with our usual dividend timetable.

2024 Upgraded Group guidance1

Sales guidance is increased by 200 bps to 12% to 14% reflecting continued strong operational performance across all sectors.

Underlying EBIT guidance is increased by 100 bps to 12% to 14% reflecting the sales profile and strong operational performance.

Underlying earnings per share guidance is increased by 100 bps to 7% to 9% aligned to underlying EBIT. In addition, we have refined our guidance on underlying net finance costs and the effective tax rate.

We have increased our in-year free cash guide by £200m to >£1.5bn and we expect to deliver over £6.0bn of free cash flow for the three year period ending 2024.

The Group guidance for 2024 incorporates the acquisition of Ball Aerospace2 and the reduction in the Group’s shareholding in Air Astana following its initial public offering, both of which completed in February 2024.

Guidance is provided on a constant currency basis using an exchange rate of $1.24:£1, which is in line with the actual 2023 exchange rate. Sensitivity to foreign exchange rates: the Group operates in a number of currencies, the most significant of which is the US dollar. As a guide, a 5 cent movement in the £/$ exchange rate will impact sales by c.£500m, underlying EBIT by c.£70m and underlying earnings per share by c.1.3p.

01 Aug 24. BAE Systems gains ground with air and sea wins.

Backlog hits a record £74.1bn

Underlying profit rises by 11 per cent
Full-year earnings guidance upgraded

BAE Systems (BA.) reported a healthy set of first-half numbers, with underlying operating profit growing by 11 per cent.

Just as encouraging was the momentum in orders. The company took in £15.1bn of orders during the first half, including a £4.6bn deal for the first of three Hunter Class frigates in Australia. When combined with the £2.2bn of orders brought in following the $5.5bn (£4.3bn) acquisition of Ball Aerospace in February, BAE Systems’ backlog increased to a record £74.1bn.

And although free cash flow was much lower than last year, a stronger performance is expected in the second half, with the company lifting full-year guidance by £200mn to at least £1.5bn. It also increased guidance for sales growth by two percentage points and for underlying earnings per share growth by one percentage point.

Despite this, trading in the company’s shares was largely flat. This is understandable, given the 18 per cent gain recorded so far this year. There are also potential geopolitical headwinds to consider, with the new UK government embarking on a strategic defence review (the second in four years, not counting the ‘refresh’ following Russia’s invasion of Ukraine) and rumours swirling about its commitment to the Global Combat Air Programme (GCAP) in which BAE Systems is a partner.

Chief executive Charles Woodburn said it was foolish to speculate about the outcome of the review given it has just been announced, but added there was “a very strong case for GCAP from a capability perspective”. He also argued in a presentation to investors that the company’s £74bn backlog doesn’t fully reflect the opportunities that are available to the company.

“Our funded plus incumbent backlog is actually several times higher”, he said, citing the ongoing Dreadnought submarine and Typhoon air fighter programmes as significant revenue drivers, and pointed to the fact that little of its backlog is attributable to a US business where budgets are subject to annualised reviews.

It’s a compelling argument. And with brokers upgrading forecasts alongside the results we think we may have been too hasty in moving the shares to hold in February, when its valuation started to look stretched. The upgrades mean the shares trade at 15 times forecast earnings (compared with 19 times in February), and on next year’s numbers are in line with their five-year average in what is likely to remain a strong market. Back to buy.

Last IC View: Hold, 1,217p, 23 Feb 2024. (Source: Investors Chronicle)

01 Aug 24. Serco on track despite tough first half.

The FTSE 100 outsourcer is making good progress on margins

Win rate under pressure
Double-digit dividend hike

The first half of 2024 was challenging for Serco (SRP). Sales dipped by 5 per cent to £2.4bn and underlying operating profit declined by 4 per cent to £142mn. The reasons for this were well flagged: the outsourcer has ditched some low-margin work and is dealing with changes to one of its largest US contracts.

Across the full year, revenue is set to remain slightly depressed. However, widening margins are expected to boost adjusted operating profit by 9 per cent to £270mn.

All of this is very much as expected. However, shares dropped by 7 per cent in the aftermath of Serco’s interim results, suggesting something has spooked investors.

It could be the state of the order book. Serco’s book-to-bill ratio – which compares orders received with work billed for – was 82 per cent in the first half of 2024. While North America and the Middle East put in very strong performances, the UK and Europe book-to-bill ratio sat at just 70 per cent. Management blamed this on unsuccessful bids and existing contracts being extended (therefore delaying the procurement process).

Across the group, the win rate for new work was approximately 25 per cent – at the lower end of what Serco has delivered in recent years.

Rebids also limit visibility. Serco must rebid for contracts worth a total of £1.5bn by the end of 2026. Representing about 30 per cent of the group’s 2024 revenue guidance, this is actually at the low end of what investors have experienced in recent years. However, all eyes are on a lucrative, long-running Australian immigration contract that is due to expire this December.

Investing in outsourcers is not for the faint-hearted, and the market is unlikely to react well if Serco loses the Australian contract. However, the group looks significantly more reliable and robust than it did a few years ago and the progress on margins is encouraging. Buy.

Last IC View: Buy, 189p, 29 Feb 2024. (Source: Investors Chronicle)

01 Aug 24. Avon finds new calling. Defence group Avon Protection (AVON) is changing its name for the second time in three years, to Avon Technologies. The company changed its name from Avon Rubber in 2021 following the disposal of its milkrite business to DeLaval Holding.

(Source: Investors Chronicle)

01 Aug 24. GKN Aerospace owner Melrose cuts 2025 revenue on supply chain issues, shares drop. Melrose the owner of aerospace parts maker GKN Aerospace, cut its 2025 revenue outlook on Thursday due to supply chain challenges, sending its shares down 6%.

The company cut its 2025 revenue estimate to £3.8bn, from £4bn previously, implying a year-over-year growth of 1%-5%.

However, it maintained its profit guidance.

Melrose has recovered strongly from the pandemic, with a revenue growth of 17% last year. But the recent crisis at Boeing and production troubles at Airbus has tempered industry expectations of a faster growth rate.

Melrose, which spun off its auto and other businesses last year to become a pure-play aerospace supplier, reported an adjusted pre-tax profit of £204m for the first six months of 2024, higher than the £134m reported last year. (Source: Google/Reuters)

01 Aug 24. Melrose Industries PLC (“Melrose”, the “Company” or the “Group”), the aerospace focused Group, today announces its interim results for the six months ended 30 June 2024 (the “Period”).

Key messages

Results ahead of our expectations with adjusted1 operating profit up 62%2 versus prior year
Adjusted operating margin at Aerospace level at 14.9%, up 420bps versus prior year with Engines outperformance at 29.4% and good Structures progress at 4.7%
On track for 2024 guidance and 2025 profit targets, despite ongoing industry-wide supply chain challenges
2025 revenue guidance adjusted to £3.8 bn to reflect supply chain challenges and disposals; operating margin guidance increased to >18%
Clear long-term growth strategy driving double-digit EPS growth over the long term with improving cash flows post major restructuring
Further £250m 18 month share buyback announced today, while investing more in organic growth and keeping leverage between 1.5-2x

Net debt and leverage comparative information as at 31 December 2023

Financial highlights

Revenue of £1,742m, 12% growth on the prior year (9% including businesses exited)
Statutory operating loss of £62m (2023: £18m)
Adjusted1 diluted EPS of 11.9p compared to 7.5p in 2023. Statutory diluted EPS of (6.1)p (2023: (3.0)p)
Net debt of £976m, representing leverage1 of 1.7x, after £246 m of share buybacks in 2024 (£339 m in total since current £500 m buyback programme commenced)
Continuation of growing dividend, with an interim dividend of 2.0 pence per share declared, an increase of 33% on the prior year

Strategic highlights2

Engines adjusted operating margin outperforming recent guidance for 2024, and target for 2025, due to aftermarket growth; on track to >30% margin post 2025
Structures delivered 89% growth in adjusted1 operating profit as a result of business improvement actions and portfolio changes
Strong Group operational progress with further improvements in safety, customer quality, and productivity
Increasing interest in proprietary additive fabrication technology from all major engine customers, with ongoing investment in industrialisation and certification
New Engines repair centre in California and £50m additive fabrication capacity in Sweden progressing to plan
Successful disposal of our non-core Structures businesses at St. Louis, Orangeburg and Fuel Systems; disposal plan substantially complete

Divisional highlights

Engines

Engines revenue growth of 21% to £720m with adjusted1 operating profit up 46% to £212m and adjusted1 operating margin up to 29.4%
Engines performance driven by the strength of growth initiatives and the lucrative aftermarket including repairs and defence
Good progress being made on Pratt & Whitney GTF fleet management programme with growing partner confidence on long-term position and performance of programme

Structures

As expected, Structures revenue growth of 6% to £1,022m (1% including businesses exited) reflecting planned civil destocking offset by defence growth
Adjusted1 operating profit of £48m with margins increasing to 4.7% from 2.5% in 2023
Defence improvements are on track with good progress in portfolio repricing and rationalisation
Good progress with ongoing restructuring programme; further work focused on the Netherlands integration and productivity enhancements

Guidance maintained for 2024 full year

Revenue between £3.6bn and £3.75bn, growth tempered by ongoing sector-wide supply chain issues. Revenue guidance includes the effect of non-core disposals
Adjusted1 operating profit (pre-PLC costs3) guidance maintained between £550m and £570m despite recent OE build rate changes and continued supply chain challenges
Adjusted1 EBITDA of between £710m and £730m
Central costs at £30m
As previously guided, cash generation limited by ongoing restructuring in 2024 and announced GTF issues; increasing free cash flow is expected in 2025 and beyond, driven by RRSPs and wider Group

Governance

New Chair designate, Chris Grigg, appointed to the Board, with effect from 1 October 2024
Following a planned transition period, Justin Dowley will step down from the Melrose Board on 31 March 2025; Chris to succeed Justin as the Company’s Non-Executive Chairman

Peter Dilnot, Chief Executive Officer of Melrose Industries PLC, today said: “We have made strong progress in the first half, driven by Engines aftermarket performance and business improvement actions, despite industry-wide supply chain challenges. We remain confident of delivering on our 2024 and 2025 guidance. Our positive outlook and disciplined capital allocation enables us to invest more in attractive organic growth opportunities, as well as continue shareholder returns through our growing dividend and the further share buyback programme announced today. We have positive momentum, a clear strategy and excellent growth opportunities ahead.”

01 Aug 24. MTU Aero Engines expects higher profit as turbofan program progresses. German engine manufacturer MTU Aero Engines (MTXGn.DE) now expects an adjusted core profit margin of 13% for the financial year, from an earlier forecast of over 12%, the company said on Thursday.

The Airbus (AIR.PA) and Boeing (BA.N) supplier cited progress in its geared turbofan fleet management program and a sustained positive market.

Last year, MTU had to recall up to 3,000 geared turbofan engines from its partner Pratt & Whitney (RTX.N) due to a potentially defective turbine disc, costing the company about 1bn euros ($1.08bn). The company is said to be in talks with Pratt about a potential compensation.

MTU also reported second-quarter adjusted core profit at 252m euros ($508.8m), up 16% compared to 19m euros last year and above the 223m euros expected by analysts in a company-provided consensus.

($1 = 0.9237 euros) (Source: Reuters)

01 Aug 24. Rolls-Royce raises profit guidance, to resume dividend. Aerospace engineer Rolls-Royce said it would restart dividend payments when it reports 2024 results next year after it raised its guidance for operating profit and free cash flow by as much as £300m on Thursday after a strong first half.

The British company increased its forecast for 2024 underlying operating profit to between £2.1bn and £2.3bn ($2.70-2.95 bn) and free cash flow to between £2.1bn and £2.2bn.

Chief Executive Tufan Erginbilgic said his transformation of the company was proceeding with “pace and intensity”.

“We are expanding the earnings and cash potential of the business in a challenging supply chain environment, which we are proactively managing,” he said.

“These results and our increased financial resilience give us the confidence to raise our 2024 guidance and reinstate shareholder distributions in respect of the full year 2024 results.”

The company had axed its dividend in 2020 during the pandemic when most commercial flying stopped, cutting off a large chunk of its income.

Rolls reported underlying operating profit of £1.15bn for the first half, up from £673m a year earlier, as it improved its margin by 4.3 percentage points to 14.0%. ($1 = 0.7788 pounds) (Source: Reuters)

31 Jul 24. Houlihan Lokey Advises Ghost Robotics. Houlihan Lokey is pleased to announce that Ghost Robotics Corporation has sold a majority stake to LIG Nex1 Co. and Korea Investment Private Equity (KIPE) at an enterprise value of $400m. The transaction closed on July 26, 2024.

Ghost Robotics is a leading provider of technology-enabled robotic solutions for defense, security, and industrial technology applications worldwide. The company’s quadruped (four-legged) robots, including its flagship Vision 60 platform, operate with agility and autonomy, offering automated persistent and ad hoc remote sensing and manipulation capabilities. These robots are operationally proven and capable of navigating in urban and natural environments, traversing all types of terrain, including sand, snow, rocks, hills, and stairs. The company supports multiple branches of the U.S. DoD, international governments, law enforcement agencies, and Fortune 500 companies, among others.

LIG Nex1 is a Korea-based defense technology company engaged in the research, development, and production of cutting-edge defense systems. LIG Nex1 specializes in precision-guided munitions, surveillance and reconnaissance, communications, avionics, electronic warfare, unmanned systems, and other related fields of technology that support the warfighter on the battlefield.

KIPE is an independent private equity firm wholly owned by Korea Investment Holdings. Since its establishment in 2010, KIPE has achieved rapid growth by focusing its investments on the industrials market. KIPE’s investment approach encompasses growth capital, mezzanine financing, special situations, and secondary markets. The firm has more than $2.5bn under management and 33 active investments.

Houlihan Lokey served as the exclusive financial advisor to Ghost Robotics and assisted in structuring and negotiating the transaction on its behalf. This transaction underscores the firm’s continued global leadership and experience in the unmanned systems market.

31 Jul 24. Babcock warns defence budget growth does not match military demand. In their annual financial report, Babcock touch on the gap between defence budgets and military demand, and the need to shorten the gap.

Babcock, a leading defence engineering company, released their fiscal year financials for 2024 in which they accounted an 11% increase in organic growth.

Each year the company selects a theme for their annual report and 2024 honed in on ‘purpose’, or as Babcock put it more meaningfully, “What we do matters.” This focus demonstrates how Babcock is responding to the recent growth in military demand in a more uncertain world, from the war in Ukraine to adversarial postures in the Indo Pacific.

However, this newfound demand far exceeds what governments appear to be willing to spend on defence, agreed the company Chair, Ruth Cairnie, and CEO, David Lockwood.

“The growth in defence budgets is still not matched by the growth in military demand, making Babcock’s ability to affordably add increased value, essential,” Lockwood maintained in his review.

“Additionally, the threats that governments face are here today, while typically new product development programmes take years to deliver. Increasing availability and capability with existing assets have become ever more important.”

UK Defence struggles to reach 2.5% target

Pending a thorough Defence Strategic Review, the third of its kind in the last five years, the new Labour government will lay to bare its “root and branch” assessment of policy and capability before the end of the first half of next year.

This much-anticipated document will determine the government’s priorities going into a contentious period in world affairs.

Ahead of that though, the Minister for the Armed Forces, Luke Pollard, revealed that a roadmap for the government’s plan to spend 2.5% of the country’s gross domestic product (GDP) on defence will be revealed in a Treasury speech due to be given by the Chancellor, Rachel Reeves, in the autumn period.

While the government nears its target, some commentators have urged allocating a larger portion than that, perhaps 3%, bringing UK Defence up to the leading spending standard of fellow Nato members, Poland and the US.

However, as necessary as the suggestion may be, this seems unlikely given Reeves’ account of the public finances in a speech to Parliament this week (29 July 2024). Citing an audit that began when the Labour Party came to government, the Chancellor claimed that the former Conservative administration accrued a projected overspend of £22bn, which she added included unfunded military aid to Ukraine.

“Threats are here today”

Nonetheless, Babcock was able to report organic revenue growth of £4.3bn driven, largely, by its Nuclear (+29%) and Land (+17%) services, which the company says offset an expected revenue decline in Aviation (-17%).

Furthermore, within the underlying operating profit there was a £90m loss on the Type 31 contract (FY23: £100m loss), as set out in an update on 17 July.

Despite the growth this year, Lockwood added that Babcock must also think about delivering orders going forward.

“The threats that governments face are here today, while typically new product development programmes take years to deliver. Increasing availability and capability with existing assets have become ever more important.”

One well-regarded airpower academic, Justin Bronk, with the Royal United Services Institute, painted a sobering picture of Britain’s warpath in the coming years:

“We need to be ready by 2028 to war fight against the Russians because we may not have a choice about it.”

This examination of the Russian threat perception as an imminent crisis has led to a corollary that services do not have the time to buy new platforms; that only so much can be prepared in such a short amount of time.

(Source: Google/army-technology.com)

31 Jul 24. VSE Corporation Announces Second Quarter 2024 Results.

Record Revenue and Record Profitability for Aviation Segment. VSE Corporation (NASDAQ: VSEC, “VSE”, or the “Company”), a leading provider of aftermarket distribution and repair services, announced today results for the second quarter 2024.

“In the second quarter, we made significant progress in strengthening our balance sheet and reducing our net leverage”

Post this

SECOND QUARTER 2024 RESULTS(1)

(As compared to the Second Quarter 2023)

Total Revenues of $266.0m increased 29.6%
GAAP Net Loss of $(2.8)m decreased 127.5%
GAAP EPS (Diluted) of $(0.16) decreased 120.5%
Adjusted EBITDA(2) of $31.3m increased 18.4%
Adjusted Net Income(2) of $11.0m increased 4.5%
Adjusted EPS (Diluted)(2) of $0.64 decreased 22.0%

1 From continuing operations

2 Non-GAAP measure. See additional information at the end of this release regarding non-GAAP financial measures

MANAGEMENT COMMENTARY

“The VSE team delivered another milestone quarter marked by record revenue and profitability for our Aviation segment coupled with solid execution against our 2024 strategic transformation priorities,” said John Cuomo, President and CEO of VSE Corporation. “Within our Aviation segment, we reported 55% revenue growth and a 70-basis point improvement in Adjusted EBITDA margins as compared to the prior year, driven by a very balanced quarter of execution supported by strong performance of existing distribution programs, the scaling of new distribution awards, an expanded portfolio of maintenance, repair and overhaul (“MRO”) capabilities, and contributions from recent acquisitions. Although our Fleet segment results were temporarily impacted by the United States Postal Service’s (“USPS”) transition to a new Fleet Management Information System (“FMIS”), the decline in USPS revenue was partially offset by 22% growth in our e-commerce fulfillment and commercial fleet businesses.”

“We enter the second half of the year with significant momentum within our Aviation business and a continued focus on executing our strategic and operating plans,” Mr. Cuomo continued. “This includes scaling our new European distribution center of excellence, supporting our Pratt & Whitney Canada Europe, Middle East and Africa (“EMEA”) agreement, launching our new OEM licensed manufacturing program, integrating the Desser Aerospace acquisition, and executing on our growth and integration plans for the Turbine Controls, LLC (“TCI”) acquisition. Within our Fleet business, we remain committed to supporting the USPS through this period of transition, while continuing to scale our e-commerce fulfillment and commercial fleet businesses. We remain confident in the long-term market trends in both businesses and believe we are strategically well positioned to capitalize on the opportunities that lie ahead.”

“In the second quarter, we made significant progress in strengthening our balance sheet and reducing our net leverage,” stated Tarang Sharma, Chief Accounting Officer and Interim Chief Financial Officer of VSE Corporation. “Following the acquisition of TCI in April 2024, we reduced debt and net leverage through a successful equity offering in May 2024. Pro forma net leverage ratio is currently 3.2 times, within our target range of 3.0 to 3.5 times. We are in position to further improve net leverage by year-end, driven by stronger free cash flow generation in the second half of the year, supported by the optimization of working capital following our strategic inventory investments in the first half of the year.”

STRATEGIC UPDATE

AVIATION NEW PROGRAM EXECUTION AND ACQUISITION UPDATE:

The Aviation segment continues to scale the new European Distribution Center of Excellence in Hamburg, Germany. The facility, launched earlier this year, supports the Pratt & Whitney Canada EMEA program which is performing in line with expectations and is expected to be at a full year run-rate by the fourth quarter of 2024. In late 2024, the facility is expected to support additional distribution products, including tires, tubes and batteries.
The launch of the new OEM licensed manufacturing fuel control program continues to outpace early expectations and contribute to the segment’s profitability. The Kansas facility expansion supporting the fuel control program remains on track to be operational by the end of this year.
The integration of Desser Aerospace is in process with plans to be completed over the next twelve-months.
VSE Aviation’s new e-commerce site supporting both VSE Aviation and legacy Desser customers is on schedule to launch in the third quarter of 2024.
On April 24, 2024, VSE completed the acquisition of TCI, a leading provider of aftermarket MRO support services for complex engine components, as well as engine and airframe accessories. The initial performance of TCI has exceeded expectations, and VSE’s initial focus is on expanding capacity and increasing its scope with existing OEM partners.

FLEET UPDATE:

Fleet remains committed to supporting the USPS through their transition to a new FMIS platform.
The Memphis distribution center of excellence continues to scale and support above-market growth and additional market share opportunities.
The Fleet segment strategic review is in process and the Company expects to provide additional updates after the USPS system transition is complete and the revenue recovery is realized, both of which are anticipated to be in late 2024.

CORPORATE UPDATE:

Completed Follow-on Equity Offering

In May 2024, VSE completed a follow-on equity offering of 2,429,577 shares of common stock at $71.00 per share, resulting in net cash proceeds of approximately $162.0m.
The net proceeds from the offering were used to repay outstanding borrowings under its revolving loan facility, including borrowings that were used to fund its acquisition of TCI and to support future strategic acquisitions.

Corporate Restructuring

As previously disclosed, the Company expected to recognize approximately $15 to $18m in additional restructuring charges related to the relocation of the Company’s headquarters and other corporate restructuring initiatives supporting the finalization of the Federal and Defense segment divestiture. In connection with these activities, the Company recorded a charge of $17m in the second quarter and expects no subsequent material charges related to the aforementioned activities.
VSE plans to relocate its corporate headquarters to one of its Aviation segment’s operating facilities later in 2024.

SECOND QUARTER SEGMENT RESULTS

Aviation segment revenue increased 55% year-over-year to a record $192.8 m in the second 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 recent acquisitions. On an organic basis, revenue increased approximately 14%, as compared to the prior-year period. Aviation distribution and MRO revenue increased 32% and 112%, respectively, in the second quarter of 2024, versus the prior-year period. The Aviation segment reported operating income of $24.5m in the second quarter, compared to $15.8 m in the same period of 2023. Segment Adjusted EBITDA increased by 61% in the second quarter to $31.0m, versus $19.2m in the prior-year period. Adjusted EBITDA margin was 16.1%, an increase of approximately 70 basis points versus the prior-year period, driven primarily by favorable price and product mix, along with strong MRO revenue growth slightly offset by lower margins from recent acquisitions.

Fleet segment revenue decreased 9% year-over-year to $73.1 m in the second quarter of 2024. Revenue from the USPS declined approximately 37% on a year-over-year basis. This revenue decline was primarily driven by USPS’ transition to a new FMIS platform, which is expected to be completed in the third quarter of 2024. Revenue from commercial customers increased 22% 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 $2.2 m in the second quarter, compared to $7.9 m in the same period of 2023. Segment Adjusted EBITDA decreased 65.7% year-over-year to $3.3 m, and Adjusted EBITDA margin declined approximately 740 basis points to 4.5%, primarily driven by the decline in USPS revenue.

FINANCIAL RESOURCES AND LIQUIDITY

As of June 30, 2024, the Company had $194m in cash and unused commitment availability under its $350m revolving credit facility maturing in 2026. As of June 30, 2024, VSE had a total net debt outstanding of $445 m. Pro forma net leverage was approximately 3.2 times Adjusted EBITDA as of the end of the second quarter.

GUIDANCE

VSE is reaffirming its full-year 2024 revenue growth and Adjusted EBITDA margin guidance for its Aviation segment. The guidance is as follows:

Aviation segment full-year 2024 revenue guidance range of 34% to 38% growth, as compared to the prior year.
Aviation segment full-year 2024 Adjusted EBITDA margin guidance range of 15.5% to 16.5%.

VSE is reaffirming its full-year 2024 revenue growth and Adjusted EBITDA margin guidance for its Fleet segment. The guidance is as follows:

Fleet segment full-year 2024 revenue guidance range is 0% to 5%, as compared to the prior year.
Fleet segment full-year 2024 Adjusted EBITDA margin guidance is 6% to 8%. (Source: BUSINESS WIRE)

31 Jul 24. Oshkosh Corporation Reports 2024 Second Quarter Results.

Reports Sales of $2.85bn, up 18 Percent

Reports Earnings per Share of $2.56; Adjusted1 Earnings per Share of $3.34

Updates 2024 Earnings Expectations

Declares Quarterly Cash Dividend of $0.46 Per Share

Oshkosh Corporation (NYSE: OSK), a leading innovator of purpose-built vehicles and equipment, today reported 2024 second quarter net income of $168.6m, or $2.56 per diluted share, compared to net income of $175.0 m, or $2.67 per diluted share, for the second quarter of 2023. Adjusted1 net income was $219.8m, or $3.34 per diluted share, for the second quarter of 2024 compared to $179.6m, or $2.74 per diluted share, for the second quarter of 2023. Comparisons in this news release are to the second quarter of 2023, unless otherwise noted.

“We reached a significant milestone in our partnership with the US Postal Service (USPS) during the quarter as we began low volume production of our Next Generation Delivery Vehicles (NGDV). We look forward to continuing to support the USPS on its journey to modernize and decarbonize its fleet.”

Post this

Consolidated sales in the second quarter of 2024 increased $433.8m, or 18.0 percent, to $2.85bn primarily due to improved organic sales volume in all three segments, sales related to the AeroTech acquisition of $192.0m and improved pricing.

Consolidated operating income in the second quarter of 2024 increased 11.1 percent to $260.9m, or 9.2 percent of sales, compared to $234.9m, or 9.7 percent of sales, in the second quarter of 2023. The increase in operating income was primarily due to favorable price/cost dynamics and higher organic sales volume, offset in part by intangible asset impairments in the Defense segment of $51.6m, higher new product development spending and higher operating costs to support the higher sales levels. Adjusted1 operating income in the second quarter of 2024 increased 36.1 percent to $328.2m, or 11.5 percent of sales, compared to $241.1m, or 10.0 percent of sales, in the second quarter of 2023.

“We are pleased to report another quarter of strong performance highlighted by growth in revenue, adjusted operating income and adjusted earnings per share,” said John Pfeifer, president and chief executive officer of Oshkosh Corporation. “In the second quarter, we grew revenues by 18 percent and adjusted operating income by 36 percent, leading to an adjusted operating margin of 11.5 percent and adjusted earnings per share of $3.34. Our exceptional performance is a testament to the outstanding execution of our 18,000 Oshkosh team members who share a passion for our mission.

“Given our strong performance in the first half of the year and continued confidence in our outlook, we are updating our full-year guidance for earnings per share to be in the range of $10.45 and raising our full-year guidance for adjusted earnings per share to be in the range of $11.75.

“As we look forward, we have a positive outlook for 2025. Based on discussions with customers and our expectations for ongoing infrastructure investments, mega projects, industrial onshoring and current fleet age, we expect Access segment sales in 2025 to be in the range of 2024 sales. In our Defense segment, we expect that revenues from the ramp up of NGDVs in 2025 will more than offset the decline of Joint Light Tactical Vehicle (JLTV) revenues from 2024 to 2025. Additionally, our Vocational segment has excellent visibility with a large backlog and strong pricing, which supports continued revenue and margin growth.

“This is an exciting time for Oshkosh. Our investments in innovation and capacity underpin our Innovate. Serve. Advance. strategy, enabling us to support our customers and remain at the forefront of our industries,” said Pfeifer.

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

Access – Access segment sales for the second quarter of 2024 increased 5.9 percent to $1.41bn primarily as a result of higher sales volume in North America.

Access segment operating income in the second quarter of 2024 increased 16.4 percent to $246.5m, or 17.5 percent of sales, compared to $211.7m, or 15.9 percent of sales, in the second quarter of 2023. The increase was primarily due to higher sales volume, favorable price/cost dynamics and improved sales mix, offset in part by increased selling, general and administrative costs.

Adjusted1 operating income in the second quarter of 2024 was $248.8m, or 17.7 percent of sales, compared to $214.0m, or 16.1 percent of sales, in the second quarter of 2023.

Defense – Defense segment sales for the second quarter of 2024 increased 20.2 percent to $598.7m due to higher Family of Medium Tactical Vehicle sales volume, the commencement of NGDV production for the USPS and higher aftermarket parts volume.

The Defense segment had an operating loss in the second quarter of 2024 of $39.9m, or 6.7 percent of sales, compared to operating income of $6.3m, or 1.3 percent of sales, in the second quarter of 2023. The operating loss was the result of intangible asset impairments at Pratt Miller of $51.6m as market conditions led to a decline in expectations of future performance.

Adjusted1 operating income in the second quarter of 2024 was $13.1m, or 2.2 percent of sales, compared to $7.5m, or 1.5 percent of sales, in the second quarter of 2023. Adjusted1 operating income increased as a result of higher sales volume, offset in part by start-up costs on the NGDV program and adverse production variances.

Vocational – Vocational segment sales for the second quarter of 2024 increased $255.6m, or 43.5 percent to $843.1m due to the inclusion of sales related to the AeroTech acquisition, improved pricing and improved organic sales volume. AeroTech had sales of $192.0m during the second quarter of 2024.

Vocational segment operating income in the second quarter of 2024 increased 76.0 percent to $106.5 m, or 12.6 percent of sales, compared to $60.5 m, or 10.3 percent of sales, in the second quarter of 2023. The increase was primarily due to improved price/cost dynamics and higher organic sales volume.

Adjusted1 operating income in the second quarter of 2024 was $118.5m, or 14.1 percent of sales, compared to $63.2m, or 10.8 percent of sales, in the second quarter of 2023.

Corporate – Corporate costs in the second quarter of 2024 increased $8.6m to $52.2m due to higher new product development investments and higher compensation costs.

Interest Expense Net of Interest Income – Interest expense net of interest income in the second quarter of 2024 increased $22.2m to $30.3m due to increased borrowings on the Company’s revolving credit facility following the acquisition of AeroTech.

Miscellaneous, net – Miscellaneous expense, net in the second quarter of 2024 was $1.5m compared to miscellaneous income, net of $4.8m in the second quarter of 2023.

Provision for Income Taxes – The Company recorded income tax expense in the second quarter of 2024 of $53.5m, or 23.4 percent of pre-tax income, compared to $56.3m, or 24.3 percent of pre-tax income, in the second quarter of 2023.

Losses of unconsolidated affiliates – Losses of unconsolidated affiliates in the second quarter of 2024 increased $6.7m to $7.0m due to an impairment of an equity method investment of $6.7m.

Repurchases of common stock – The Company repurchased 334,699 shares of common stock in the second quarter of 2024 for $39.5m, compared to 92,626 shares for $7.4m in the second quarter of 2023.

Six-month Results

The Company reported net sales for the first six months of 2024 of $5.39bn and net income of $348.0m, or $5.27 per diluted share. This compares with net sales of $4.68bn and net income of $263.5m, or $4.01 per diluted share, for the six months ended June 30, 2023. The increase in net income for the first six months of 2024 compared to the six months ended June 30, 2023 was primarily due to improved price/cost dynamics, higher organic sales volume and favorable mix, offset in part by the intangible asset impairments, higher interest expense net of interest income and higher new product development investments.

Adjusted1 net income for the first six months of 2024 was $410.9m, or $6.23 per diluted share compared to $287.2m, or $4.37 per diluted share, for the six months ended June 30, 2023.

2024 Expectations

The Company expects its 2024 diluted earnings per share to be in the range of $10.45 and its adjusted1 earnings per share to be in the range of $11.75, compared to its previous estimates of $10.55 and $11.25, respectively. The Company continues to expect net sales of approximately $10.7bn in 2024.

Dividend Announcement

The Company’s Board of Directors today declared a quarterly cash dividend of $0.46 per share of Common Stock. The dividend will be payable on August 30, 2024 to shareholders of record as of August 16, 2024. (Source: BUSINESS WIRE)

31 Jul 24. Boeing posts bigger loss as defense business struggles to turn around. Boeing (BA.N) posted a bigger quarterly loss, as its troubled defense and space business exacerbated the financial strain on the U.S. planemaker that has already scaled back commercial aircraft production to tackle a quality crisis.

Its second-quarter net loss stood at $1.44bn, the company said on Wednesday, compared with $149m a year ago.

Boeing’s Defense, Space and Security unit, one of its three main businesses, has lost bns of dollars in 2023 and 2022, which executives attributed to cost overruns on fixed-price contracts.

Such contracts have high margins but leave defense contractors vulnerable to inflationary pressures that have dented U.S. corporate earnings in the last few years.

The planemaker used to bid aggressively for fixed-price contracts before the pandemic, but has now said it would pivot away from such contracts to stem losses at the business, which amounted to $1.76bn last year.

Ahead of last week’s Farnborough Air Show, the unit’s head had said it was “significantly challenged” during the quarter.

Boeing CFO Brian West said in May the planemaker will burn rather than generate cash in 2024, hamstrung by lower jet deliveries compared to last year.

The company is mired in crisis after a cabin panel on a 737 MAX 9 jets blew off midair in January, which led to a slowdown in production of its top-selling plane and a management shakeup, even as it came under intense regulatory and legal scrutiny.

The U.S. aviation regulator has capped production of 737 MAX jets at 38 per month, though Reuters has reported that Boeing has been producing jets during some weeks at a much lower level.

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That has led to lower deliveries, frustrating customers. During the second quarter, Boeing delivered a total of 92 aircraft, down 32% from last year. (Source: Google/Reuters)

31 Jul 24. Boeing Reports Second Quarter Results.

Second Quarter 2024

Submitted comprehensive safety and quality plan to the Federal Aviation Administration
Announced agreement to acquire Spirit AeroSystems in July; transaction expected to close mid-2025
Revenue of $16.9bn, GAAP loss per share of ($2.33) and core (non-GAAP)* loss per share of ($2.90)
Operating cash flow of ($3.9)bn and free cash flow of ($4.3)bn (non-GAAP)*
Total company backlog of $516bn, including over 5,400 commercial airplanes

The Boeing Company [NYSE: BA] recorded second quarter revenue of $16.9bn, GAAP loss per share of ($2.33) and core loss per share (non-GAAP)* of ($2.90)

. Boeing reported operating cash flow of ($3.9)bn and free cash flow of ($4.3)bn (non-GAAP)*

. Results primarily reflect lower commercial delivery volume and losses on fixed-price defense development programs.

“Despite a challenging quarter, we are making substantial progress strengthening our quality management system and positioning our company for the future,” said Dave Calhoun, Boeing president and chief executive officer. “We are executing on our comprehensive safety and quality plan and have reached an agreement to acquire Spirit AeroSystems. While we have more work ahead, the steps we’re taking will help stabilize our operations and ensure Boeing is the company the world needs it to be. We are making important progress in our recovery and will continue to build trust through action and transparency.”

Cash and investments in marketable securities totaled $12.6bn, compared to $7.5bn at the beginning of the quarter driven by the $10.0bn issuance of new debt partially offset by the usage of free cash flow in the quarter. Debt was $57.9 bn, up from $47.9bn at the beginning of the quarter due to the issuance of new debt. The company has access to credit facilities of $10.0 bn, which remain undrawn.

Total company backlog at quarter end was $516bn.

Commercial Airplanes second quarter revenue of $6.0bn and operating margin of (11.9) percent primarily reflect lower deliveries and planned higher period costs, including research and development.

During the quarter, the company submitted its comprehensive safety and quality plan to the Federal Aviation Administration (FAA). The 737 program gradually increased production during the quarter and still plans to increase production to 38 per month by year end. The 787 program maintains plans to return to 5 per month by year end. In July, the company announced an agreement to acquire Spirit AeroSystems, and the 777X program began FAA certification flight testing after obtaining type inspection authorization.

Commercial Airplanes delivered 92 airplanes during the quarter and backlog included over 5,400 airplanes valued at $437bn.

Defense, Space & Security

Defense, Space & Security second quarter revenue was $6.0bn. Second quarter operating margin of (15.2) percent primarily reflects $1.0bn of losses on certain fixed-price development programs, including a $391m loss on the KC-46A program largely driven by a slowdown of commercial production and supply chain constraints. Losses recorded on the T-7A, VC-25B, and Commercial Crew programs reflect higher estimated engineering and manufacturing costs, as well as technical challenges.

During the quarter, Defense, Space & Security captured an award for seven MH-139A helicopters from the U.S. Air Force and delivered the first CH-47F Block II Chinook to the U.S. Army. Backlog at Defense, Space & Security was $59 bn, of which 31 percent represents orders from customers outside the U.S.

Global Services

Global Services second quarter revenue of $4.9bn and operating margin of 17.8 percent reflect higher commercial volume and mix.

During the quarter, Global Services secured an Apache performance-based logistics contract from the U.S. Army and captured FliteDeck Pro service contracts with Hainan Airlines and Ryanair.

Additional Financial Information

Other unallocated items and eliminations include an earnings charge of $244 m that reflects a fine that would be paid to the U.S. Department of Justice pursuant to an agreement that was recently filed in federal district court, if the agreement is approved.

30 Jul 24. Airbus faces UK criminal probe over potential export control breach. Airbus (AIR.PA) is facing a criminal investigation in Britain into potential violations of export control rules involving several of its British entities, the aerospace group said on Tuesday.

The investigation emerged in footnotes to the company’s half-yearly earnings, which said Airbus was fully cooperating with the probe by Britain’s Revenue and Customs agency (HMRC).

“Airbus is working with all relevant authorities to ensure full remediation of all identified deficiencies,” a spokesperson said in response to a Reuters query about the filing, adding that it was not expected to have a material financial impact.

A spokesperson for HMRC declined comment, citing a policy of never discussing ongoing or specific investigations.

Airbus said the decision to launch the probe followed an audit carried out by British export control authorities in 2022.

The British probe comes around nine months after the U.S. State Department formally lifted the threat of charges over alleged violations of export rules in the United States.

In January 2020, Airbus reached a trio of deferred prosecution agreements and agreed to pay record fines totalling 3.6bn euros following broad investigations in Britain, France and the United States into allegations of corruption.

As part of the settlements, Airbus agreed to pay 9m euros and set up a three-year monitoring plan to resolve findings by the State Department that Airbus had violated U.S. International Traffic in Arms Regulations (ITAR).

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Airbus also agreed to appoint an export control compliance officer.

‘NO LINK’ TO RECENT U.S. CASE

ITAR is the official name for a 40-year-old set of rules governing the export of defence goods and data perceived to have implications for U.S. national security.

In 2017, Airbus said it had discovered and reported to U.S. authorities inaccuracies in past declarations to the State Department over the sale of goods and services under ITAR.

The ending of the three-year monitoring period was delayed to October last year after Airbus asked for more time to complete the process after diverting internal resources to ensuring it complied with Western sanctions against Russia.

Airbus also warned last year that the factual disclosures in the State Dept probe could spawn other international investigations, though a person familiar with the latest British investigation told Reuters the two cases were not related.

The British criminal probe puts Airbus back in the judicial spotlight, albeit on what so far appears to be a relatively limited scale, just as Boeing wrestles with the fallout from criminal probes into its handling of the safety of the 737 MAX.

The U.S. planemaker initially won a prosecutor settlement over allegations that it misled U.S. regulators over development of a software feature linked implicated in two fatal crashes.

But the U.S. Justice Department said in May that Boeing had breached its obligations in the agreement, and the U.S. planemaker last week finalised a guilty plea to a criminal fraud conspiracy charge and agreed to pay at least $243.6 m. (Source: Reuters)

30 Jul 24. SRT Marine Systems battles headwinds but charting a course to recovery.

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 choppy waters since we last wrote about the marine defence and security firm.

Since November 2022 the company’s shares are down 16.4%, opening the week at 30.5p. However, in the intervening period, SRT experienced a high tide of 68p in June 2023 and low watermark of 17p in June this year. The market reacted savagely to press reports in April from the Philippines, where questions were raised about the transparency of an international tender to supply surveillance equipment to the country’s IMEMS fisheries project. After investigations by the Ombudsman, SRT and its CFO Richard Hurd were cleared of any malfeasance. However, the Ombudsman recommended further investigations into CEO, Simon Tucker and other agents outside of SRT.

SRT’s problems were compounded in June when management announced that two project revenue milestones in its systems business had slipped and would move from this year to the start of the next financial year. The customers in question were a Middle Eastern coastguard and a South East Asian coastguard.

Tucker said at the time: “[…] I take full responsibility for the ups and downs of the share price [and] we’ve seen some reactions recently to some short-term events, for which I apologise and wish it was different. But I believe it’s one of those times, often the case, where the share price is not reflective of actually where the business is…”

As previously reported, SRT Marine Systems is a global leader in maritime domain awareness technologies, products and systems, with two divisions: Systems and Transceivers. 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.

Tucker explained: “[…]We are seeking to be the dominant player in a new market that is forming – the digital maritime domain awareness market – and to do that we have had to develop some pretty complex technologies, and from that sophisticated products [and …] we have the advantage of nearly a decade of accumulated experience, products and technologies which gets us to the place we are today, where we can talk about USD180m and USD200m contracts […] that’s not something that happens overnight, it takes a lot of time.”

SRT Marine Systems CEO prefers to keep shareholders informed

He said that the company is starting to take off, “although some of you might not think that.” The CEO said that SRT is prepared to talk about forward contracts that are yet to be fulfilled, but then it goes over to the governments SRT is negotiating with, and Tucker said it is hard to predict what a government will do and how long it will take, but: “[sometimes] we get that wrong, either it’s too late or too soon, but I would rather communicate about what is coming and [that] we have [secured], for example, a substantial new Middle East contract sometime this year, but the government may decide to do that in two months or twelve months and they decide that independently of us. But I’d prefer to speak about forward business rather than give [investors] a black hole of information until everything is fully done.”

The delays, however, put a GBP14m black hole in SRT’s revenues for this year. The money isn’t lost, it’s just been held up by the customers’ bureaucratic and administrative processes, so will lead to a loss in this financial year, but will be bumped into next year’s accounts. In March, SRT moved its year-end from 31st March to 30th June.

The Middle Eastern contract that has been delayed is worth GBP40m, and SRT has finished GBP16m of the work by completing Phase One. Phase Two is worth another GBP12.5m and Phase Three is worth GBP11.5m and SRT hopes that Phase Two will kick off in the second half of the year. The client amended the scope of the project a number of times, and this slowed progress meaning GBP9m of revenue will not be secured this year due to the logistics of physical delivery and customer acceptance. Phase Three will commence in 2025.

The South East Asian contract is worth GBP140m and is dependent on an inter-government loan between UK Export Finance and the country. Usually export credit agreements take six to nine months to complete, but this one has taken more time than anticipated. Tucker said that the bankers involved are confident of completion, but all parties will have to wait for the slow wheels of government to turn. On completing, SRT is expecting GBP45m from the loan, but this is likely to arrive early on in the new financial year.

Shareholders have had their patience tested by the slowness of SRT fulfilment, something Tucker says is out of the company’s hands. He also regarded the accusations against him regarding the Philippine contract as baseless, and was confident of the Ombudsman ruling in his favour.

Confidence on uptick in deal flow

Some shareholders may have called time on SRT in the past few months, but on a longer-term basis, the company seems to be in fine fettle. It is still ‘one to watch’ at The Armchair Trader. Tucker is confident on an uptick in deal flow in the short- to medium-term. He said: “In the Middle East region there are two contracts we see coming up, one [a USD9m contract] is with an old existing customer that is very dear to us; the second is for a couple of hundred m dollars in another country and there have been some recent changes there and they really want to crack on with their maritime surveillance system. We have a team in country doing site surveys to finalise the proposal and that suddenly seems to have leaped forward and will probably start to crystallise at the end of this year.”

The company also said that maritime security contracts in South East Asia worth USD50m are in the offing from next year. There is also a potential African client with sea and lake control issues looking for a maritime surveillance system with a potential contract value in the region of USD200m

SRT’s transceivers business is also expanding its market penetration. The company explained that the late start to the boating season due to the adverse conditions means that sales are lower than last year, but gross margin contribution the same as the company’s cost of production has normalised. SRT expects sales to pick up as the season progresses, as well as see the effect of some new regulations for vessels to install AIS.

The engineering company successfully completed a fundraising exercise this year, issuing GBP10.5m in an equity placement and retains GBP16.7m of headroom on its secured loan note programme.

Despite recent setbacks, in our view SRT remains a company with significant potential. With a strong order book on the horizon and a proven track record in maritime surveillance technology, the company is still well-positioned to capitalise on the growing demand for secure and efficient maritime operations. While shareholders have endured a period of volatility, in our view the long-term prospects for SRT still appear promising. (Source: https://www.thearmchairtrader.com/)

31 Jul 24. France’s Safran posts higher first-half profit. Jet engine and equipment maker Safran (SAF.PA) reaffirmed financial targets as it posted higher first-half profit on Wednesday, led by growth in the demand for spares and maintenance for existing aircraft and an end to losses in aircraft interiors.

The French aerospace company said recurring operating income rose 41% in the first half to 1.974bn euros ($2.14bn) as sales rose 19% to 13.047bn euros.

Safran expressed confidence in its ability to reach 2024 financial targets, especially at the operating level, but joined U.S. partner GE Aerospace (GE.N) in trimming the outlook for growth in LEAP jet engine deliveries to between zero and 5% from a previous target of 10%-15% amid supply chain problems.

Safran and GE Aerospace jointly own CFM International, the world’s largest jet engine maker by volume, whose engines power all Boeing (BA.N) 737s and about half of the competing Airbus (AIR.PA) A320 family. (Source: Reuters)

30 Jul 24. Howmet lifts financial forecasts, says Boeing trimming parts orders. Aircraft parts maker Howmet Aerospace (HWM.N) on Tuesday said customer Boeing Co (BA.N) was trimming orders for its best-selling programs, as the planemaker grapples with a safety crisis that has hit its production.

But parts orders continue to be above actual 737 and 787 production rates, Howmet CEO John Plant said on an analyst call.

Boeing, which is set to report second-quarter results on Wednesday, has been producing jets at a lower rate than its stated goal of 38 737 aircraft per month to plug quality holes, Reuters has reported. But the planemaker has been buying parts from its suppliers higher than its production rate.

Parts procurement has been in focus as some aerospace suppliers have been struggling to report consistent positive cash flows in the last two years.

However, Howmet, one of the industry’s biggest suppliers, has produced strong results in recent quarters. On Tuesday, it lifted its annual forecasts, driven by strong demand for engine products and fastening systems.

The company also raised its buyback authorization by $2 bn and quarterly dividend by 60% to 8 cents per share.

Shares of the company, which also supplies parts to Airbus (AIR.PA) jumped nearly 13% to close at $93.81 after its second-quarter results also topped estimates.

Pennsylvania-based Howmet now expects 2024 revenue between $7.40 bn and $7.48 bn, up from its prior forecast of $7.23bn to $7.38bn.

Howmet, one of the main suppliers of aerospace castings, expects annual adjusted earnings between $2.53 and $2.57 per share, compared with previous forecast of $2.31 to $2.39.

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“The portion of the supply chain where Howmet sits, particularly in advanced metal components for engines, continues to see strong demand; price and execution are supportive as well,” said Seth Seifman, an analyst at J.P. Morgan.

On an adjusted basis, the company earned 67 cents per share for the quarter ended June 30. (Source: Reuters)

30 Jul 24. Filtronic poised for stratospheric growth. Having already landed multiple contracts with Space X, the electronic equipment group’s pipeline of contract opportunities has now doubled year-on-year

Annual revenue up 55 per cent to £25.4m
Cash profit rises from £1.3m to £4.9m
Pre-tax profit up 34-fold to £3.4m
Net cash more than trebles to £5.2m

Communications equipment designer and manufacturer Filtronic (FTC:72p) upgraded earnings guidance multiple times during its 2023-24 financial year, so the eye-catching results had been well flagged.

The company’s key strategic markets are the low earth orbit (LEO) space communication market and aerospace, defence and security sectors. Filtronic’s main customer is Starlink, the LEO operation of Space X and the world leader in LEO constellation operations. Specifically, the company supplies amplified modules for the ground stations which link the LEO constellation network into terrestrial telecom networks and provide high speed, low latency and ubiquitous connectivity.

Having landed its first LEO contract in January 2023, Filtonic has won multiple follow-on orders that culminated in the announcement of a £15.8m order and a five-year strategic partnership with Space X in April this year (‘Space offers a new frontier for Filtronic’, 10 May 2024). Earlier this month, the company announced a £7.1m order pursuant to the five-year Starlink partnership.

The Space X orders and others from the European Space Agency (£3.2m), Qinetiq (£2m) and BAE Systems (£4.5m) not only provide material coverage for current year revenue estimates of £36m, but highlight the company’s focus on end markets that are delivering structural growth. In the aerospace and defence markets, there is an increasing requirement for high bandwidth, fast and secure data telemetry and infrastructure.

In the 2023-24 financial year, Filtronics’ top three clients accounted for 84 per cent of revenue of which Space X accounted for almost half the total, so there is a high degree of customer concentration risk. However, this also reflects the company’s reputation for pushing the boundaries of what is possible in radio frequency (RF) design for customers in its strategic markets.

Moreover, Filtronic’s ability to undertake rapid cutting-edge RF design and scale the manufacturing of mmWave products enables its customers to drive performance improvement and accelerate time to market for demanding applications. This is a competitive advantage that blue-chip clients value, so expect the customer base to broaden in due course as the company converts its pipeline of contract opportunities, which has doubled year-on-year.

Operational gearing underpins robust earnings growth

Reflecting the ongoing ramp up in business, which could see revenue rise to £36m in the 2024-25 financial year and £40mn the year after, the company is investing in engineering, manufacturing and design capabilities to deliver the ramp up in its programmes. Staff costs accounted for two-thirds of Filtronic’s operating costs of £12.5m in the 2023-24 financial year and the research & development (R&D) budget will be maintained at 13 per cent of revenue. At the same time, the board are looking to expand manufacturing space at the Sedgefield facility to cater for the higher workload.

However, the business still has a relatively fixed cost base, so benefits from high operational gearing in a positive sales cycle whereby an increasing proportion of incremental gross profit earned drops through to cash profit and operating profit. This explains why house broker Cavendish expects cash profit to surge 63 per cent from £4.9m to £8m on 41 per cent higher revenue of £36m in the 12 months to 31 May 2025, rising to a cash profit of £9mn on revenue of £9mn in 2025-26. On this basis, expect current year pre-tax profit to increase 88 per cent to £6.4m and earnings per share (EPS) to almost double to 2.7p, rising to £7.6m and 2.9p, respectively, in 2025-26.

Closing net cash of £5.2mn (excluding plant and equipment lease liabilities) is forecast to rise to £6.6m (31 May 2025) and £10.5m (31 May 2026). The company has a favourable working capital cycle with average debtor days around 30 days below average creditor days, and client pre-payments on orders enhancing the cash flow position.

Admittedly, the shares are hardly a bargain after rising more than 40 per cent since my colleague Michael Fahy highlighted the investment opportunity. They now trade on forward price/earnings (PE) ratios of 27 and 25 across the two-year forecast period. However, the growth in satellite launches – the US Government Accountability Office forecasts more than 50,000 new satellites by 2030 – suggests that demand for LEO technologies is on a sharp upward trajectory and that 2025-26 forecasts could prove too conservative. Hold. (Source: Investors Chronicle)

31 Jul 24. Airbus quarterly profit falls on industrial costs and space charge. Europe’s Airbus (AIR.PA) unveiled sharply lower second-quarter profits on Tuesday as the cost of investing in higher jetliner production, coupled with largely pre-announced charges in its Space Systems business, outweighed higher revenue.

The world’s largest planemaker said adjusted operating profit fell by more than half to 814m euros ($879.7m) in the quarter as revenue edged up to 15.995bn euros.

It also took a charge of 989m euros on forward losses in its space business, exceeding the estimate of about 900 m euros it gave with a profit warning last month.

Profits still exceeded analysts estimates, who according to a survey complied by the company were on average expecting second-quarter adjusted operating income of 699m euros on revenue of 15.822bn euros.

The charges bring to just under 1.6bn euros the amount written off Airbus’s balance sheet in just over five months to reflect a new audit of potential losses on key communications and navigation satellite in its troubled Space Systems business.

“I won’t take my eyes off the case before it is fixed,” Airbus CEO Guillaume Faury told analysts.

Industry sources say much of the newly identified risk is accumulated in the OneSat satellite project and EGNOS, a system designed to improve accuracy of existing navigation signals.

Airbus is working on a review of space activities as it discusses potential alliances with France’s Thales (TCFP.PA) and Italy’s Leonardo (LDOF.MI) and will detail a turnaround plan for Space Systems in September, Reuters reported on Monday.

It has also launched an expanded cost-containment plan for the wider Defence and Space division, accelerating and deepening existing cost measures, industry sources said. That comes on top of a new efficiency and costs plan at the commercial division.

Faury confirmed the space restructuring as well as the new

cost reduction plans in space and commercial aircraft.

The company has not provided specific cost reduction targets. Industry sources said the immediate cost containment plan at the Defence & Space division would start with 2% being chopped off budgeted spending plans for 2024.

Announcing its own mid-year results on Tuesday, Leonardo confirmed talks with its existing partner Thales and with Airbus over possible alliances in the space sector.

Europe needs a stronger structure to compete with the United States and China, Leonardo CEO Roberto Cingolani told analysts.

Airbus reaffirmed recently softened goals for 2024 including a target of 770 airplane deliveries this year, down from 800.

Faury said Airbus had been “blind-sided” by a shortfall in deliveries of LEAP engines made by CFM, a joint venture of GE Aerospace and Safran, which come on top of recent supply problems with competing Pratt & Whitney (RTX.N) engines.

GE Aerospace said last week it had made progress with a number of suppliers but that new engine output, which fell 20% from the previous quarter, had not recovered in May as hoped. It reiterated that the supply of materials was a key constraint. (Source: Reuters)

30 Jul 24. Airbus reports Half-Year (H1) 2024 results.

323 commercial aircraft delivered
Revenues € 28.8 bn; EBIT Adjusted € 1.4bn
EBIT (reported) € 1.5 bn; EPS (reported) € 1.04
Free cash flow before customer financing € -0.5bn
2024 guidance as per June update

Airbus SE (stock exchange symbol: AIR) reported consolidated financial results for the Half-Year (H1) ended 30 June 2024.

“The half-year financial performance mainly reflects significant charges in our space business. We are addressing the root causes of these issues,” said Guillaume Faury, Airbus Chief Executive Officer. “In commercial aircraft, we are focused on deliveries and preparing the next steps of the ramp-up, while addressing specific supply chain challenges and protecting the sourcing of key work packages.”

Gross commercial aircraft orders totalled 327 (H1 2023: 1,080 aircraft) with net orders of 310 aircraft after cancellations (H1 2023: 1,044 aircraft). The order backlog amounted to 8,585 commercial aircraft at the end of June 2024. Airbus Helicopters registered 233 net orders (H1 2023: 131 units), including 38 H225s for the German Federal Police in the second quarter. Airbus Defence and Space’s order intake by value was €6.1bn (H1 2023: €6.0bn).

Consolidated revenues increased 4 percent year-on-year to € 28.8bn (H1 2023: € 27.7bn), mainly reflecting the number of commercial aircraft deliveries and a higher volume in the Air Power business of Airbus Defence and Space. A total of 323 commercial aircraft were delivered (H1 2023: 316 aircraft), comprising 28 A220s, 261 A320 Family, 13 A330s and 21 A350s. Revenues generated by Airbus’ commercial aircraft activities increased 4 percent, mainly reflecting the higher number of deliveries. Airbus Helicopters’ deliveries totalled 124 units (H1 2023: 145 units) with revenues broadly stable year-on-year, reflecting a solid performance, notably in services. Revenues at Airbus Defence and Space increased 7 percent, mainly driven by the Air Power business, partly offset by the recent update of Estimates at Completion assumptions in Space Systems. Four A400M military airlifters were delivered in H1 2024 (H1 2023: 3 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 – was € 1,391 m (H1 2023: € 2,618 m). This decrease primarily reflects the charges recorded in the Space Systems business of € 989 m.

EBIT Adjusted related to Airbus’ commercial aircraft activities decreased to € 1,954 m (H1 2023: € 2,256 m), with the increase in deliveries reduced by investments for preparing the future.

The A220 ramp-up continues towards a monthly production rate of 14 aircraft in 2026, with a focus on the programme’s industrial maturity and financial performance. In addition, on 24 June 2024, in line with agreements in place and as planned, the Company and Investissement Québec agreed to provide shareholder financing for the Airbus Canada Limited Partnership. As announced in June 2024, the A320 Family ramp-up trajectory has been adjusted to reflect specific supply chain challenges. The production rate of 75 A320 Family aircraft per month is now expected in 2027. The A321XLR powered by CFM engines received its Type Certification from the European Union Aviation Safety Agency (EASA) earlier in July. Entry-into-service is expected at the end of the summer 2024. On widebody aircraft, the Company continues to target a monthly production rate of 4 A330s in 2024 and rate 12 for the A350 in 2028.

Airbus Helicopters’ EBIT Adjusted decreased to €230m (H1 2023: €274m), reflecting the lower deliveries and programme mix.

EBIT Adjusted at Airbus Defence and Space totalled €-807m (H1 2023: €78m), reflecting the €989m of charges mainly linked to the updated Estimates at Completion in Space Systems.

On the A400M programme, development activities continue towards achieving the revised capability roadmap. Retrofit activities are progressing in close alignment with the customer. No net material impact was recognised in the first half 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 €1,593m (H1 2023: €1,431m).

Consolidated EBIT (reported) amounted to €1,456m (H1 2023: €1,887m), including net Adjustments of €+65m.

These Adjustments comprised:

€+19m related to the dollar working capital mismatch and balance sheet revaluation, of which €+32m were in Q2. 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;
€-5m of other costs including compliance costs, of which €+1m were in Q2.

The financial result was €-108m (H1 2023: €102m), mainly reflecting the negative impact from the revaluation of certain equity investments. Consolidated net income(1) was €825m (H1 2023: €1,526m) with consolidated reported earnings per share of €1.04 (H1 2023: €1.94).

Consolidated free cash flow before customer financing was €-529m (H1 2023: €1,635m), mainly driven by the change in working capital which includes the planned inventory build-up to support the ramp-up plan. Consolidated free cash flow was €-559m (H1 2023: €1,593m). The gross cash position stood at €21.9bn at the end of June 2024 (year-end 2023: €25.3bn), with a consolidated net cash position of €7.9bn (year-end 2023: €10.7bn) after the payments of the 2023 dividend and special dividend.

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 Jul 24. Leonardo DRS Announces Financial Results for Second Quarter 2024.

Revenue: $753m, up 20% year-over-year
Net Earnings: $38m, up 9% year-over-year
Adjusted EBITDA: $82m, up 32% year-over-year
Diluted EPS: $0.14, up 8% year-over-year
Adjusted Diluted EPS: $0.18, up 20% year-over-year
Bookings: $941m (book-to-bill ratio of 1.2x)
Backlog: $7.9bn, up 82% year-over-year
Increases 2024 guidance across metrics

Leonardo DRS, Inc. (Nasdaq: DRS), a leading provider of advanced defense technologies, today reported financial results for the second quarter 2024, which ended June 30, 2024.

CEO Commentary: “Our strong second quarter 2024 results reflect the solid momentum evident across the business. Healthy customer demand continues to propel our bookings and backlog growth. This demand along with an improving supply chain is unlocking revenue growth above our expectations. Overall, I am pleased with our year-to-date performance, however, we are maintaining a clear focus on execution to deliver on our commitments to customers and shareholders,” said Bill Lynn, Chairman and CEO of Leonardo DRS.

Leonardo DRS continued to deliver remarkable year-over-year revenue growth, which stood at 20% for the second quarter. Our programs related to advanced infrared sensing, electric power and propulsion and tactical radars were key drivers behind the robust revenue growth in the quarter.

Higher volume spurred the significant year-over-year adjusted EBITDA growth and margin expansion in the quarter. Quarterly net earnings, adjusted net earnings, diluted EPS and adjusted diluted EPS were all higher as a result of strong operational performance, which outweighed a higher tax rate and expense compared to the prior year.

Cash Flow and Balance Sheet

Net cash flow provided by operating activities was $34m for the second quarter. The company’s free cash flow generation was $1m in the quarter. The operating and free cash flow trends were largely consistent with the historical patterns of the business but showed year-over-year improvement on both metrics due to increased profitability and better working capital efficiency.

At quarter end, the balance sheet had $149m of cash and $208m 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.

ASC bookings continued to exceed expectations with solid demand for our advanced infrared sensing as well as our naval and ground network computing technologies. Revenue growth on advanced infrared sensing and tactical radar programs were 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

Strong IMS bookings were driven by healthy demand for our electric power and propulsion capabilities. Drivers for quarterly revenue growth were broad-based and came from increases in our electric power and propulsion, force protection and ground systems integration programs. While adjusted EBITDA increased as a result of higher volume, unfavorable program mix and less efficient execution related to a ground surveillance integration program led to margin contraction in Q2. Our Columbia Class program continued to trend positively with significantly improved year-over-year profitability.

2024 Guidance

The company does not provide a reconciliation of forward-looking adjusted EBITDA and adjusted diluted EPS, due to the inherent difficulty in forecasting and quantifying the adjustments that are necessary to calculate such non-GAAP measures without unreasonable effort. Material changes to any one of these items could have a significant effect on future GAAP results. (Source: BUSINESS WIRE)

29 Jul 24. Airbus to restructure Space Systems as consolidation talks continue. Airbus (AIR.PA) is drawing up a turnaround plan for its struggling Space Systems business, industry sources said, without waiting for the outcome of European consolidation talks that include Italy’s Leonardo as well as France’s Thales. Airbus also hopes to complete a separate Space Systems strategy review in the fourth quarter as it reels from 1.5bn euros ($1.6bn) of recent charges, they said.

But even beforehand, it aims to announce a restructuring of Space Systems activities in September and has launched an urgent cash containment plan across the wider Defence and Space unit, where managers have declared the cost situation “critical”.

Airbus declined to comment.

CEO Guillaume Faury told reporters last week that Airbus was looking at opportunities to create scale in defence, space and particularly satellites markets where traditional players have been heavily disrupted by the success of new constellations.

La Tribune and Reuters reported earlier this month that Airbus and France’s Thales (TCFP.PA), were exploring a tie-up of space activities as new competition disrupts the sector.

On Monday, industry sources said those talks also include Leonardo (LDOF.MI), partner to Thales in a pair of ventures focusing on satellite manufacturing and the services business.

None of the companies involved had any comment.

Airbus is one of the two largest satellite makers in Europe alongside Thales Alenia Space (TAS), two-thirds owned by Thales and one-third by Leonardo. Telespazio, in which Leonardo owns two thirds and Thales the rest, provides satellite services.

Europe’s biggest satellite firms have traditionally been geared towards one-off satellites parked in geostationary orbit, deploying ambitious but costly technology. They face increasing competition from small satellites in low Earth orbit built at a fraction of the cost by new rivals led by Elon Musk’s Starlink. (Source: Reuters)

30 Jul 24. Spain’s Indra lifts 2024 guidance on defence boost. Spanish defence and technology firm Indra (IDR.MC) lifted its guidance for 2024 after reporting a strong second quarter, helped by its fast growing defence unit.

The war in Ukraine and tensions with China are prompting Western nations to boost military spending and Indra is focused on building a position as one of the leading defence companies in Europe.

The group said it now expects its overall revenue in 2024 to exceed 4.80bn euros ($5.19bn) after defence revenue jumped 16% in the April to June quarter. In February it had forecast full-year revenue of 4.65bn euros.

Chairman Marc Murtra pointed to “higher investments in transnational programmes” and the “growing importance in the command and control systems that are Indra’s core”, when asked by investors about the defence outlook for the next few years.

The company’s shares, which have risen 37% in the year to date, were down 1% at 0958 GMT after falling as much as 3%.

Indra’s second-quarter net profit rose 15% from a year earlier to 53m euros, below the 62m euros forecast by analysts polled by LSEG.

“Indra is used to outperform every quarter and this one it has underperformed, except in revenues. It may be profit taking,” Renta 4 analysts said of the share price reaction.

More than half of Indra’s revenue is generated by its tech unit Minsait, which posted quarterly revenue growth of 5.8% lagging the performance of Indra’s defence and air traffic business, which grew 7.5% in the period.

“We are relatively confident with potential additional growth in the future,” Minsait director Luis Abril told a conference call. (Source: Reuters)

30 Jul 24. Fitch finds “uncertainties” continue at Denel. The latest Fitch rating for South African State-owned defence conglomerate Denel reflects what the United States (US) credit rating agency says are “continuing operational, strategic and liquidity uncertainties despite recent cash equity injections and financial debt repayment”.

Its July rating of CC(zaf) in the national long-term category shows, according to the credit rating agency, weaknesses exacerbated by regular changes in executive management, which limit effective implementation of the group’s turnaround strategy. “Further, the lack of clear, consistent financial reporting provides additional uncertainty to Denel’s financial position and its ability to monitor the progress of its operational and financial initiatives.”

Denel was rated C(zaf) in the Fitch national short-term category. The ratings are unchanged from 2023.

The Fitch credit rating scale uses categories ‘AAA’ to ‘BBB’ (investment grade) and ‘BB’ to ‘D’ (speculative grade) with an additional +/- for AA through CCC levels indicating relative differences of probability of default or recovery from issues. The terms “investment grade” and “speculative grade” are market conventions and do not imply recommendation or endorsement of a specific security for investment purposes. Investment grade categories indicate relatively low to moderate credit risk, while ratings in the speculative categories signal either a higher level of credit risk or that a default has already occurred.

In commentary on its July rating of the South African State-owned enterprise (SOE), Fitch notes the lack of clarity on contracts, coupled with the absence of a long-term funding structure and requirements for repeated equity contributions, highlights the high liquidity risk Denel continues to face.

A lack of financial transparency is cited by Fitch as a key driver of the latest Denel rating. In this regard it notes Denel has an increasing lack of financial transparency as it has not produced independently audited information since the financial year ended 2020.

“Our conservative rating case is based on Denel’s management accounts and related notes and we continue to assume that it has only a limited ability to improve operational capacity and thereby generate sufficient profitability to support liquidity.”

As far as liquidity is concerned Fitch has it that while Denel’s liquidity position has improved as a result of the government’s equity contributions, uncertainty remains over its operating profitability and free cash flow (FCF) generation. The equity contributions have significantly reduced Denel’s debt burden, interest costs and liquidity risk.

“Nevertheless, we expect that the longer Denel takes to generate operating profitability the higher the risk to liquidity arising from claims either from suppliers for non-payment or from claims under guarantees provided by the group (be that either advance payment or performance guarantees),” Fitch stated.

Other negatives influencing its latest rating are what Fitch terms “continued management volatility” and “uncertain operational turnaround”.

“Denel has agreed a turnaround plan with its key stakeholders and is in the process of implementation. While the group maintains that it has simplified its operating structure and has re-established a focus on core projects and capabilities, we are as yet unable to ascertain this and expect poor performance in the near term,” Fitch cautioned.

It added that the government has continued to provide significant additional liquidity support to Denel through direct equity contributions during 2021-2023. In the 2023 financial year, management indicated they had received a further R3.5bn, enabling some debt repayment, payments to employees and creditors and providing working-capital support to enable resumption of operations for key projects.

“Denel continues to benefit from various forms of government support, which had previously allowed the rating to be notched up from its Standalone Credit Profile (SCP). However, under our Government-Related Entities (GRE) Rating Criteria, where near-term default is a real possibility, notching up from the SCP becomes irrelevant and might not adequately reflect near-term default risk. Given continuing operational and liquidity risks, we do not employ any upward notching for state support and Denel remains rated on a standalone basis,” the credit agency stated in its July commentary.

Due to its weak operating and financial profiles, Denel is rated significantly below entities like Rand Water, Fitch stated, with the CC national rating denoting a high level of default risk. The ratings agency added that Denel’s links to the state no longer benefit the company.

However, Denel could improve its ratings by successfully implementing its turnaround plan, leading to normalised operations and production under existing contracts with a sustainable capital structure. Other factors that could lead to improvement would be operational profitability and further demonstration of government support and stronger links.

If Denel does not improve liquidity, or it begins to start to default or launch insolvency proceedings, that would negatively affect future ratings. (Source: https://www.defenceweb.co.za/)

26 Jul 24. EnerSys Completes Acquisition Of Bren-Tronics To Expand Presence In Critical Defense Applications. EnerSys (NYSE: ENS), the global leader in stored energy solutions for industrial applications, announced today that it has completed its acquisition of Bren-Tronics. The acquisition of Bren-Tronics marks a significant milestone in EnerSys’ strategic growth and expansion initiatives.

“We are very pleased to have closed this important transaction and can officially welcome Bren-Tronics to the EnerSys family,” said EnerSys President & CEO David M. Shaffer. “EnerSys’ combination with Bren-Tronics will strengthen our position as a critical enabler of the energy transition and supports our growth in the attractive and growing military and defense end markets.”

Shaffer added, “Our acquisition will accelerate EnerSys’ transformation in expanding our lithium product offerings, growing revenue and profitability and advancing toward our fiscal year 2027 targets.”

Bren-Tronics, headquartered in Commack, N.Y., was previously a privately held company and has developed a legacy of innovation since 1973. Bren-Tronics is a leading manufacturer of highly reliable portable power solutions, including small and large format lithium batteries and charging solutions, for military and defense applications. It has approximately 280 employees across the U.S., France, and the U.K., with 2023 sales of approximately $100m. Bren-Tronics will be integrated within EnerSys’ Specialty line of business.

EnerSys purchased Bren-Tronics for an all-cash transaction of $208 m. The purchase price represents approximately 8.7x Bren-Tronics’ adjusted EBITDA for the twelve months ending December 31, 2023. The transaction will be immediately accretive to EnerSys.

Reed Smith LLP served as legal advisor to EnerSys in connection with the transaction.

Stout, a global advisory firm, served as financial, tax, and IT advisor to EnerSys in connection with the transaction. (Source: BUSINESS WIRE)

17 Jul 24. Momentum builds at Cohort. A huge naval order has swollen the pipeline by 60 per cent. Shares in Cohort (CHRT) had been one of the laggards in the UK defence market following the outbreak of the war in Ukraine, but that has changed meaningfully over the past 12 months. The mini-defence conglomerate’s shares have almost doubled during the last year, with the steepest climb beginning in March after the company announced a bumper £135m order from the Royal Navy.

The navy put in an order for a decoy launcher system used on warships known as Ancilia, which uses lasers as a countermeasure to direct guided missiles away from vessels. It has been developed by Cohort’s Systems Engineering and Assessment subsidiary, and provides a steady stream of work that will continue for more than a decade.

It also helped to increase the size of the company’s order book by nearly 60 per cent in the year to March, to £519mn. A further £70m of deals secured since means that 95 per cent of this year’s expected revenue is in the bag, plus at least £100m of next year’s. On top of this, the company pointed to a greater spread of orders in future years, which chief executive Andy Thomis said offers the company some “long-term stability” from which it can continue to grow the business.

In divisional terms, all of the companies under its umbrella performed well except for EID, the Portuguese company making communications equipment for naval vessels. Continued delays to expected orders meant it incurred another (albeit smaller) loss, although orders received from the Portuguese navy since the year-end means that Thomis also expects a turnaround in this division in the current financial year. Cash from operating activities improved by around £7mn and it finished the year with net funds (excluding leases) of just over £23m, although planned investment in a new site in will eat into this over the next 12 months.

Overall, the strong results and decent order momentum led to several broker upgrades to forecasts. Shore Capital lifted its earnings per share estimate for 2025 by 7 per cent and 2026 by 9 per cent. Based off the former, Cohort’s shares trade at a price/earnings ratio of just under 20 times, which is well above its five-year average of 15 times as well sector giants like BAE Systems (BA.) and Lockheed Martin (US:LMT).

As Shore Capital’s Jamie Murray points out, though, further upgrades seem likely given recent order momentum. Maintain buy. Last IC View: Buy, 532p, 13 Dec 2023. (Source: Investors Chronicle)

29 Jul 24. Ghost Robotics, a leading innovator in legged robotics, and LIG Nex1, a premier South Korean defense technology company, are pleased to announce the close of a strategic partnership through LIG Nex1’s control-stake acquisition of Ghost Robotics. LIG Nex1 has acquired a 60% control-stake in Ghost Robotics for $240m USD, valuing the company at $400m USD.

This partnership marks a significant milestone for both companies as they combine their expertise and resources to advance the field of autonomous robotic solutions. The acquisition will enable Ghost Robotics to leverage LIG Nex1’s extensive experience and capabilities in defense technology and manufacturing to further accelerate scaling.

“We are thrilled to partner with LIG Nex1 and embark on this exciting new chapter for Ghost Robotics,” said Gavin Kenneally, PhD, Co-founder & CEO of Ghost Robotics. “Their investment and strategic guidance will accelerate our growth and enhance our ability to deliver groundbreaking robotic solutions to a wider range of industries and applications.”

LIG Nex1’s CEO, Shin IckHyun, echoed the enthusiasm, stating, “Our acquisition of a majority stake in Ghost Robotics aligns perfectly with our vision to lead the future of defense and security technology.” He added, “We expect this acquisition will serve as momentum for both companies to grow together based on our leading-edge technological capabilities and close cooperation.”

This partial acquisition will foster innovation and drive the development of next-generation robotic systems for both industrial and defense markets. By combining their strengths, Ghost Robotics and LIG Nex1 are well-positioned to lead the industry in delivering robust, versatile, and reliable robotic solutions.

About Ghost Robotics

Founded in 2015, Philadelphia-based Ghost Robotics develops Quadrupedal Unmanned Ground Vehicles, or Q-UGV® for short. Ghost’s Q-UGVs not only manage unstructured terrain well but are built for demanding customers in demanding environments. Their robots have a place in a broad range of government and enterprise applications where mobile robots with four legs have inherent advantages over wheels, tracks and even bipedal systems. To learn more about Ghost Robotics, visit www.ghostrobotics.io.

About LIG Nex1

LIG Nex1 is a leading defense technology company based in South Korea, specializing in advanced weapon systems, electronics, and communication solutions. With a commitment to innovation and excellence, LIG Nex1 is dedicated to providing world-class defense and security technologies. (Source: PR Newswire)

26 Jul 24. Battling Babcock withstands frigate loss.

Defence company takes another £90m hit on the Type 31 contract

Adjusted operating profit up by a third
Strong cash flows accelerate pension payments

The inclusion of a further £90mn loss on a contract to build five frigates for the Ministry of Defence – a year after recording a £100mn loss on the same deal – was the only real fly in the ointment of Babcock International’s (BAB) results.

The company entered into largely fixed-price deals to deliver the Type 31 frigates in 2019 but was then hit with a wave of additional costs as labour, raw materials and other overheads soared. Designs put together when teams were working remotely meant construction of the first ship (for which the superstructure is now complete) has been difficult, chief executive David Lockwood admitted to investors. Operational improvements have allowed the second ship to be built more efficiently and, although future losses can’t be ruled out, “we have dramatically reduced the possible range of outcomes”, Lockwood said.

Even accounting for the loss, this was a strong set of results, with like-for-like revenue up 11 per cent and adjusted operating profit increasing by a third to £238m on improved margins.

Underlying free cash flow more than doubled to £160mn, and the company used some of this to accelerate pension payments. Over the past four years, the actuarial deficit has been cut by £500m to £200m, and annual pension deficit payments are expected to fall by £25m to £40m. Net debt over the four years has been cut from £1.6bn to £435m.

The deleveraged balance sheet and strong end markets offering the prospects of enhanced returns to shareholders were the main reasons for highlighting Babcock in our Ideas of the Year issue. The company’s shares have risen by a third since but at 12 times FactSet consensus earnings they still look like good value. Buy.

Last IC View: Buy, 389p 4 Jan 2024. (Source: Investors Chronicle)

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

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BUSINESS NEWS

July 26, 2024 by

Sponsored by SPX Communication Technologies (TCI & ECS)

www.tcibr.com

www.enterprisecontrol.co.uk

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26 Jul 24. HENSOLDT with strong order intake and increased profitability in the first half of 2024.

Order intake reaches EUR 1,359m in the first half of the year
New record order backlog of EUR 6,553m
Revenue up 17.0% to EUR 849m in the first half of 2024
Adjusted EBITDA rises by 26.2% to EUR 103m
Adjusted EBITDA margin increases to 12.2% (previous year: 11.3%)
Guidance for the 2024 financial year confirmed

The HENSOLDT Group (“HENSOLDT”) further underpinned its position as a leading European company in the defence electronics industry with global reach in the first half of 2024. The positive business environment and continued high defence spending led to another strong order intake, which rose to a total of EUR 1,359 m in the first six months of the current financial year and exceeded the already high order intake in the same period of the previous year (EUR 1,071m).

Revenue increased by 17.0% (EUR 849m; previous year: EUR 726m) compared to the same period of the previous year. In addition, there was lower pass-through business (revenue with a low value-added share) compared to the previous year. The TRML-4D radars in particular contributed to this dynamic growth in the core business. The strong increase in adjusted EBITDA of 26.2% (EUR 103m; previous year: EUR 82m) was mainly due to an increase in revenue volume, primarily driven by the core business, and the corresponding economies of scale as well as the first-time consolidation of the ESG Group. The ESG Group contributed EUR 82m to this growth. Adjusted for the business activities of the ESG Group, the core business grew by 10% compared to the same period of the previous year.

The adjusted EBITDA margin improved by 12.2% (previous year: 11.3%).

Oliver Dörre, CEO of the HENSOLDT Group, says: “The successful development of our business shows that, even in this tense geopolitical security climate, we, as a platform-independent provider can support our customers with market-leading solutions for the security needs of the future. The positive results from the first half of 2024 confirm that our strategy is effective and that we have set the right course, especially in operational terms. The integration of ESG Group has been successful and we continue to drive profitable growth. This ensures we remain a reliable partner for our customers.”

Christian Ladurner, CFO of the HENSOLDT Group, says: “The sustained momentum of our order intake reflects the growing awareness of the importance of air defence. For the second consecutive year, we have recorded a strong order intake of well over one bn euros at the half-year mark. Our current order backlog amounts to around EUR 6.6 bn – about one bn more than the same period last year. With this robust foundation, we are once again underscoring our commitment and ability to make an important contribution with our solutions to national and international defence.”

Continued strong growth in order intake

With a volume of EUR 1,359m, order intake in the first half of the current financial year exceeded the already high level of EUR 1,071 m in the same period of the previous year by 26.9%. The order intake was characterised in particular by the close-range and short-range air defence system (LVS NNbS) commissioned for the German Bundeswehr. In addition, orders were received for further TRML-4D radars to support Ukraine as well as orders received as part of the European Sky Shield Initiative ESSI for Latvia and Slovenia. From the second quarter of 2024, order intakes from the ESG Group, which was included for the first time, totalling EUR 166m are included in the Sensors segment for three months. At EUR 139m, incoming orders in the Optronics segment in the first half of 2024 were significantly lower than the strong order intake in the same period of the previous year. In particular, the first half of 2024 included orders for the laser rangefinder for the M1 Abrams main battle tank, an order as part of the LVS NNbS project in the Ground Based Systems product line and orders in the Industrial Commercial Solutions product line in connection with Final Focus Metrology (FFM). The previous year was characterised by incoming orders, including for the Leopard 2 platform in the Ground Based Systems product line.

Positive increase in revenue, earnings and free cash flow

The HENSOLDT Group’s revenue increased by 17.0% to EUR 849m (previous year: EUR 726m). The TRML-4D air defence radars in particular contributed to dynamic growth in the core business in the first half of 2024. The two major projects PEGASUS (airborne system for electronic signals intelligence) and the Eurofighter radars developed as expected, revenue with a low value-added share were significantly below the previous year’s figure. Adjusted EBITDA increased to EUR 103 m (previous year: EUR 82 m). The adjusted EBITDA margin was 12.2% (previous year: 11.3%). The adjusted free cash flow also improved compared to the previous year and amounted to EUR -145m (previous year: EUR -157m).

Outlook for the 2024 financial year confirmed

For the 2024 financial year, HENSOLDT expects business to continue to develop positively, driven primarily by the continuing high demand from the special funds of the German government and NATO countries and the continuing high international demand for defence solutions. Specifically, HENSOLDT expects consolidated revenues of approx. EUR 2.3bn for the 2024 financial year and a moderate increase in adjusted EBITDA with an adjusted EBITDA margin before pass-through business is expected to be between 18% and 19%.

26 Jul 24. Leonardo, Airbus in talks to strengthen collaborations, paper says. Leonardo and France’s Airbus (AIR.PA), opens new tab are discussing ways to strengthen collaborations and industrial synergies, the chief executive of the Italian defence group said on Friday.

“There are many potential synergies between Airbus and Leonardo in different sectors,” Chief Executive Roberto Cingolani told financial daily Il Sole 24 Ore in an interview. “Our technical teams are working to see how to strengthen collaborations and industrial synergies.”

In mid-July Cingolani had said the state-controlled group was working with Airbus and Thales <TCFP.PA> on a joint strategy for the space sector. (Source: Reuters)

25 Jul 24. RTX lifts 2024 profit forecast on strength in aviation sector. U.S. aerospace and defense company RTX, raised its full-year earnings forecast and beat estimates for second-quarter profit on Thursday, aided by a rebound in the broader commercial aviation sector.

RTX stock hit an all time high, trading up 8% at $113 in New York.

Airlines are flying older aircraft to meet the surge in air travel demand amid a shortage of new jets, leading to a bustling aftermarket business and benefiting companies such as RTX.

“The strength in our end-markets and first-half performance gives us the confidence to increase our outlook for adjusted sales and adjusted EPS for the full year,” said CEO Chris Calio.

Meanwhile, strong demand for original equipment and aftermarket services led to a more than twofold jump in quarterly profit at Pratt and Whitney, a subsidiary of RTX, to $542m.

GTF COMPENSATION

Pratt and Whitney — the maker of the popular Geared Turbofan (GTF) engines, which powers Airbus’ A320neo jets — has been conducting an inspection drive to check for potentially flawed components in the GTF jet engines.

RTX said it has reached agreements with more than 18 GTF engine customers.

“We had 9 (agreements) that were completed at the end of the first quarter, we’ve more than doubled that,” Chief Financial Officer Neil Mitchill told Reuters in an interview.

According to a Bernstein note published this month, around 540 GTF-powered Airbus A320neo aircraft are currently grounded due to engine issues.

RTX posted adjusted per-share net income of $1.41 in the quarter, beating analysts’ average estimate of $1.30, according to LSEG data.

The company’s revenue jumped 8% to $19.72 bn during the period.

It expects full-year adjusted profit per share to be between $5.35 and $5.45, compared with its prior forecast range of $5.25 to $5.40.

GE Aerospace, which makes the competing LEAP engines, also raised its full-year profit forecast earlier this week, but flagged persistent supply constraints hurting new engine output. (Source: Reuters)

25 Jul 24. RTX Reports Q2 2024 Results.

RTX delivers solid operational performance and 8% sales growth; Increases 2024 outlook for adjusted sales* and adjusted EPS*, revises free cash flow. RTX (NYSE: RTX) reported second quarter 2024 results.

Second quarter 2024

Reported sales of $19.7bn, up 8 percent versus prior year and up 10 percent on an organic* basis
Adjusted sales* of $19.8bn, up 8 percent versus prior year
GAAP EPS was $0.08 and included $0.29 of acquisition accounting adjustments and $1.04 of other net significant and/or non-recurring items and restructuring, including $0.03 of restructuring and other non-recurring items, a $0.68 charge related to the expected resolution of several legacy legal matters, and a $0.33 charge related to a fixed priced development contract with a foreign customer at Raytheon
Adjusted EPS* of $1.41, up 9 percent versus prior year
Operating cash flow of $2.7bn; Free cash flow* of $2.2bn
Company backlog of $206bn; including $129 bn of commercial and $77bn of defense
Realized $120m of incremental RTX gross cost synergies

Updates outlook for full year 2024

Adjusted sales* of $78.75 – $79.5bn, up from $78.0 – $79.0bn
Adjusted EPS* of $5.35 – $5.45, up from $5.25 – $5.40
Free cash flow* of approximately $4.7bn, down from approximately $5.7bn

“RTX delivered strong operational performance in the second quarter, with 10 percent organic sales* growth, adjusted margin* expansion across all three segments and $2.2bn in free cash flow*,” said RTX President and CEO Chris Calio. “The strength in our end markets and first half performance give us the confidence to increase our outlook for adjusted sales* and adjusted EPS* for the full year.”

“With a $206bn backlog and unprecedented demand across our portfolio, we are focused on executing on our customer commitments powered by our CORE operating system, investing in innovative technologies and capabilities, and leveraging the breadth and scale of RTX to drive long-term shareowner value.”

Second quarter 2024

RTX reported second quarter sales of $19.7bn, up 8 percent over the prior year. Adjusted sales* were $19.8bn, also up 8 percent over the prior year. GAAP EPS of $0.08 was down 91 percent versus the prior year, and included $0.29 of acquisition accounting adjustments, $0.03 of restructuring and other net significant and/or non-recurring charges, a $0.68 charge related to the expected resolution of several legacy legal matters and a $0.33 charge related to a fixed price development contract with a foreign customer at Raytheon. Adjusted EPS* of $1.41 was up 9 percent versus the prior year.

The company reported net income attributable to common shareowners in the second quarter of $111m which included $393m of acquisition accounting adjustments, $35m of restructuring and other net significant and/or non-recurring charges, a charge of $918m related to the expected resolution of several legacy legal matters and a $43 m charge related to a fixed price development contract with a foreign customer at Raytheon. Adjusted net income* of $1.9bn was flat versus prior year as growth in adjusted segment operating profit* was offset by higher interest and tax expenses, and lower pension income. Operating cash flow in the second quarter was $2.7bn. Capital expenditures were $537m, resulting in a free cash flow* of $2.2bn.

Legacy Legal Matters

The Company has made progress in the quarter on resolving several outstanding legal matters which has resulted in an EPS charge of $0.68 associated with the expected resolution of these matters. The Company expects to enter into a deferred prosecution agreement with the Department of Justice (DOJ) and to be subject to an administrative order with the Securities and Exchange Commission (SEC) to resolve the previously disclosed criminal and civil government investigations into improper payments made by Raytheon Company and its joint venture, Thales-Raytheon Systems (TRS), in connection with certain Middle East contracts since 2012. The Company also expects to enter into a deferred prosecution agreement and an False Claims Act (FCA) settlement with the DOJ to resolve previously disclosed criminal and civil government investigations into defective pricing claims for certain legacy Raytheon Company contracts entered into between 2011 and 2013 and in 2017. The charge also includes the impact of certain voluntarily disclosed export controls violations primarily identified in connection with the integration of Rockwell Collins and, to a lesser extent, Raytheon Company into RTX, including certain violations expected to be resolved pursuant to a consent agreement with the Department of State (DOS). In total, RTX recorded an aggregate charge of $918m in the quarter, bringing the total associated reserve for these matters to $1.24bn. Based upon the current status of discussions, we believe that the finalization of our respective agreements with the DOJ, SEC and DOS will occur during the second half of 2024 and therefore, expect approximately $1.0bn of related payments to be made within the same timeframe with the balance to be paid over the next several years. The items above have been incorporated in our updated 2024 free cash flow* outlook.

Collins Aerospace had second quarter 2024 reported sales of $6,999m, up 10 percent versus the prior year. The increase in sales was driven by a 12 percent increase in commercial aftermarket, a 10 percent increase in commercial OE, and a 7 percent increase in defense. The increase in commercial sales was driven primarily by an increase in commercial air traffic, including in higher flight hours, and increased volume across all OEM sales channels. The increase in defense sales was driven primarily by higher volume.

Collins Aerospace reported operating profit of $1,118m, up 24 percent versus the prior year. The increase in operating profit was primarily driven by drop through on higher commercial aftermarket volume, as well as higher defense and commercial OE volume. On an adjusted basis, operating profit* of $1,145m was up 25 percent versus the prior year.

Pratt & Whitney

Pratt & Whitney had second quarter 2024 reported sales of $6,802m, up 19 percent versus the prior year. The increase in sales was driven by a 33 percent increase in commercial OE, a 16 percent increase in military, and a 15 percent increase in commercial aftermarket. The increase in commercial sales was primarily due to higher volume and favorable mix within aftermarket as well as higher GTF OE volume and favorable mix. The increase in military sales was driven by higher sustainment volume across multiple platforms.

Pratt & Whitney reported operating profit of $542m, up 136 percent versus the prior year. Drop through on higher commercial aftermarket volume as well as favorable Large Commercial OE and commercial aftermarket mix, was partially offset by higher Large Commercial OE deliveries and the absence of a $60 m favorable prior year contract matter. Higher military volume and favorable mix was more than offset by higher production costs and higher R&D and SG&A expenses. The prior year reported operating profit included the impact of a charge related to a customer insolvency of $181m. On an adjusted basis, operating profit* of $537m was up 23 percent versus the prior year.

Raytheon

Raytheon had second quarter 2024 reported sales of $6,511m, down 3 percent versus prior year as higher volume on land and air defense systems including Global Patriot, counter-UAS programs and Stinger was more than offset by the divestiture of the Cybersecurity, Intelligence and Services business completed in the first quarter of 2024. Adjusted sales* of $6,581 m were down 2 percent versus prior year. Excluding the impact of acquisition and divestitures, sales were up 4 percent versus prior year*.

Raytheon reported operating profit of $127m, down 80 percent versus the prior year. Drop through on higher volume, favorable mix, and improved net productivity was more than offset by a $575m charge related to the anticipated termination of a fixed price development contract with a foreign customer which was contracted in 2016 under legacy Raytheon Company. On an adjusted basis, operating profit* of $709m was up 7 percent versus the prior year.

*Adjusted net sales, organic sales, adjusted operating profit (loss) and margin, adjusted segment operating profit (loss) and margin, adjusted net income, adjusted earnings per share (“EPS”), adjusted effective tax rate and free cash flow are non-GAAP financial measures. When we provide our expectation for adjusted net sales, adjusted EPS and free cash flow on a forward-looking basis, a reconciliation of these non-GAAP financial measures to the corresponding GAAP measures (expected diluted EPS and expected cash flow from operations) is not available without unreasonable effort due to potentially high variability, complexity, and low visibility as to the items that would be excluded from the GAAP measure in the relevant future period, such as unusual gains and losses, the ultimate outcome of pending litigation, fluctuations in foreign currency exchange rates, the impact and timing of potential acquisitions and divestitures, and other structural changes or their probable significance. The variability of the excluded items may have a significant, and potentially unpredictable, impact on our future GAAP results. See “Use and Definitions of Non-GAAP Financial Measures” below for information regarding non-GAAP financial measures.

26 Jul 24. Babcock International Group PLC.

Full year results for the year ended 31 March 2024

David Lockwood, Chief Executive Officer, said: “We have made good strategic progress, delivering another year of strong growth with cash flow ahead of expectations. Babcock is well positioned to benefit from the sustained uplift in global defence budgets, driven by the need to recapitalise, re-equip and modernise militaries, resulting in an increase in our opportunity set. We combine strong engineering know-how, high customer intimacy and extensive operational asset knowledge together with highly collaborative relationships and product development capability. This differentiated proposition is increasingly attractive to our customers. We look to the future with confidence as we continue to progress towards our medium-term targets.”

Financial highlights

– Contract backlog £10.3bn, up 9%, driven by Nuclear and Marine

– Revenue of £4,390.1m grew 11% on an organic basis, driven by strong growth in Nuclear and Land

– Statutory operating profit increased to £241.6m driven by improved performance across the Group, a one-off £17m profit on property disposal and non-repeat of a £118m loss on disposals in FY23. Within operating profit is the £90m loss on the Type 31 contract as set out in our trading update on 17 July 2024

-Underlying operating profit increased 34% to £237.8m, which includes the loss on Type 31 and profit on property disposal. Strong performance in Nuclear, Land and Aviation

– Underlying operating margin improved 140 basis points to 5.4%, which includes (2.0)% from the Type 31 loss and 0.4% from the profit on property disposal

– Underlying free cash flow of £160m was significantly better than expected, with operational performance and early customer receipts affording an accelerated £35 m pension deficit repair contribution. Underlying operating cash conversion was 136% (FY23: 173%); excluding Type 31 this was 98% (FY23: 110%)

– Net debt to EBITDA reduced to 0.8x on a covenant basis. Net debt reduced by £129.0m to £435.4m

– Dividend reinstated: recommended final dividend of 3.3 pence per share, taking the total dividend for FY24 to 5.0 pence per share (FY23: nil)

Outlook

– Our expectations for FY25 remain unchanged

– With c.70% of FY25 expected revenue under contract at 1 April 2024, we enter the year strongly positioned 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

– Cooperation agreement with Saab to develop an advanced naval corvette for Sweden with initial design contract award

– Strategic agreement with HII to collaborate on nuclear-powered submarine capabilities to support the AUKUS endeavour

– Babcock General Logistics Vehicle (GLV) launched to target emerging UK and international opportunities

– Type 31 programme restructured following detailed operational review

– Babcock Skills Academy launched in Devonport to develop submarine support capabilities in our growing workforce

– Gained validation of our net-zero targets from the Science based Targets initiative (SBTi)

– Long-term funding agreements reached with two of our three large pension schemes

Operational highlights

Marine

– Type 31: HMS Venturer (ship 1) superstructure almost complete, HMS Active (ship 2) keel laid and HMS Formidable (ship 3) steel cut due in FY25. Programme restructured following a detailed operational review

– Three Arrowhead 140 licences delivered for the MIECZNIK Class frigate for the Polish Navy

– Awarded contract by Saab to support design of the Swedish Navy’s Luleå Class Next Generation Surface Combatant

– Achieved Operation Service Commencement of the Skynet Service Delivery Wrap space communications contract

– Contract awarded by Government of Ukraine to support two Mine Countermeasure Vessels (MCMVs) purchased from the UK

Nuclear

– Commenced deep maintenance on the second of the UK’s Vanguard Class nuclear submarines, HMS Victorious, under a c.£560m full cost recovery contract

– Awarded contracts to develop the support solution for the UK’s Dreadnought and SSN-AUKUS submarine programmes

– X-energy and Cavendish Nuclear selected for UK Government’s Future Nuclear Enabling Fund (FNEF)

– Nuclear submarine Major Infrastructure Programme (MIP) revenue increased to £459m (FY23: £267m).

– Awarded c.£750m infrastructure contract in preparation for Astute Class deep maintenance programme (DMP)

Land

– DSG contract extension under negotiation following notification by UK MOD of its intention to exercise up to five option years

– Awarded second Land contract to deliver ground and equipment support to the French Navy, Army and Air Force

– Signed a collaboration agreement with Singapore Technology Engineering for manufacture of UK mortar systems

– Contract expansion to support UK-gifted platforms to Ukraine

– Won the seven-year ARMCEN support contract for armoured vehicle technical training for the British Army

Aviation

– Completed delivery of the six H160 helicopters to the French Navy as part of a 10-year contract with the French MOD

– Delivered the first Elementary Flying Training (EFT) phase of the Ukrainian Pilot Force programme to fly F-16 jets

– Delivered unprecedented volume of firefighting operations in Canada with >1,500 flight hours and >99% aircraft availability

– Exploring opportunities with Zero Petroleum for synthetic fuel to minimise the environmental impact of military aircraft

– In May 2024, awarded 12-year contract with Airbus to support 48 French Civil Security and police EC145 helicopters

Alternative Performance Measures (APMs):

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.

The Group’s APMs are not defined by IFRS and are therefore considered to be non-GAAP measures. The measures may not be comparable to similar measures used by other companies, and they are not intended to be a substitute for, or superior to, measures defined under IFRS. The Group’s APMs are consistent with the year ended 31 March 2023.

Revenue:

– FY24 included a revenue reversal of £66.3m from the Type 31 loss. Excluding this, FY24 revenue was £4,456.4m

– FY23 included £421.6m from disposals, a revenue reversal of £42.6m from the Type 31 loss and a £11.6m one-off credit (revenue and profit). Excluding these, FY23 revenue was £4,048.0m

Underlying operating profit:

– FY24 underlying operating profit included a £90.0m Type 31 loss and a profit on property disposal of £17.0m. Excluding these, FY24 underlying operating profit was £310.8m

– FY23 underlying operating profit included the £100.1m Type 31 loss, a one-off accounting credit (£11.6 m as above), and £1.1m operating profit contribution from businesses divested in the year. Excluding these, FY23 underlying operating profit was £265.3m

Underlying operating margin:

– Excluding the Type 31 loss and profit on property disposal, FY24 underlying operating margin was 7.0%

– Excluding disposals, the Type 31 loss and the one-off credit, FY23 underlying operating margin was 6.6%

25 Jul 24. L3Harris raises 2024 outlook amid global tensions. L3Harris, raised its outlook for 2024 after beating Wall Street estimates for second-quarter profit on Thursday, betting on sustained weapons demand and robust defense spending amid escalating global security concerns.

The defense firm raised its 2024 adjusted profit forecast to be between $12.85 and $13.15 per share, up from its previous range of $12.70 to $13.05. Analysts were expecting $12.97 per share, according to LSEG.

The ongoing war in Ukraine has driven strong global demand for U.S. weaponry, with nations actively negotiating and securing deals to acquire arms and expedite existing contracts.

The U.S. Congress’s approval in April of an additional $95bn in funding—including aid for replenishing U.S. stockpiles in Ukraine and Israel— has further benefited defense companies like L3Harris.

The defense contractor, formed by the merger of L3 Technologies and Harris Corp in 2019, counts the Pentagon, planemaker Boeing and defense and aerospace giant RTX, among its customers.

Florida-based L3Harris posted an adjusted net income of $3.24 per share, exceeding Wall Street estimates of $3.18 per share.

L3Harris, along with Northrop is one of the top two suppliers of sought-after rocket motors used in guided multiple-launch rocket systems, which have played a crucial role in Ukraine.

The company now expects revenue to be between $21.0bn and $21.3bn, up from its previous estimate of $20.8bn to $21.3bn. Overall sales rose 13% to $5.3bn. (Source: Reuters)

25 Jul 24. L3Harris Technologies Reports Strong Second Quarter 2024 Results, Increases 2024 Guidance

Orders1 of $5.2bn; book-to-bill of 1.0x
Revenue of $5.3bn, up 13%
Operating margin of 9.0%; adjusted segment operating margin1 of 15.6%
Diluted earnings per share (EPS) of $1.92; non-GAAP EPS1 of $3.24
2024 revenue guidance range increases from $20.8B – $21.3bn to $21.0bn – $21.3bn
2024 adjusted segment operating margin1 guidance increases from >15% to 15.2% – 15.4%*
2024 Non-GAAP EPS guidance range increases from $12.70 – $13.05 to $12.85 – $13.15*

L3Harris Technologies (NYSE: LHX) reported second quarter 2024 diluted EPS of $1.92, on second quarter revenue of $5.3bn. Second quarter 2024 non-GAAP diluted EPS1 was $3.24, as compared to non-GAAP diluted EPS1 of $2.97 for the second quarter of 2023, a 9% increase.

“We delivered another strong quarter of financial results with improved margins, reflecting our commitment to operational excellence and a relentless focus on execution that delivers value to our customers and shareholders,” said Christopher E. Kubasik, Chair and CEO.

Kubasik added, “As we celebrate the five year anniversary of the L3 and Harris merger, I’m proud of the progress we’ve made as the industry’s Trusted Disruptor. Our first half results reflect progress toward achieving our 2026 financial framework. We are raising our revenue, margin and EPS guidance for the year, underscoring the tangible results of our LHX NeXt initiative, which is focused on streamlining our operations and enhancing our efficiency while transforming the company.”

* A reconciliation is not available. See the note on page 2 and Non-GAAP Financial Measures on page 6 for more information.

*When we provide our expectation for adjusted segment operating margin, effective tax rate on non-GAAP income, non-GAAP EPS and adjusted free cash flow on a forward-looking basis, a reconciliation of these non-GAAP financial measures to the corresponding GAAP measures 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.

Revenue: Second quarter revenue increased 13%, primarily driven by the acquisition of Aerojet Rocketdyne (AR) and 1% total organic growth from increased demand for tactical and broadband communication products in our Communication Systems (CS) segment. Growth was also driven by continued demand in Space Systems and classified Intel & Cyber programs within the Space & Airborne Systems (SAS) Segment. This growth was offset by lower volumes in our Airborne Combat Systems business. In the Integrated Mission Systems (IMS) segment, growth in Maritime programs was offset by lower volumes associated with our Commercial Aviation business, the divestiture of which is pending closure.

* A reconciliation is not available. See the note on page 2 and Non-GAAP Financial Measures on page 6 for more information.

Operating Margin:

GAAP: Second quarter operating margin increased 50 bps to 9.0% driven by improved operational performance, partially offset by the impact of increased corporate unallocated items, including intangible amortization from mergers and acquisitions and LHX NeXt implementation costs.

Adjusted segment operating margin1: Expanded 80 bps to 15.6% due to improved operational and program performance across the SAS, IMS and CS segments, including LHX NeXt driven cost savings.

EPS:

GAAP: Second quarter EPS increased 5% to $1.92 due to an increase in operating income, partially offset by the impact of intangible amortization from mergers and acquisitions, LHX NeXt implementation costs and higher interest expense.

Non-GAAP1: Increased 9% to $3.24 driven by higher adjusted segment operating income1, partially offset by higher interest expense.

The largest differences between GAAP and Non-GAAP EPS are attributable to intangible amortization and LHX NeXt implementation costs.

Cash Flows:

Cash from Operations: Second quarter cash from operations was $754 m driven by net income growth and improved working capital performance.

Adjusted free cash flow1: Delivered $714 m in adjusted free cash flow1 driven by net income growth, improved working capital performance and adjustments for acquisitions and severance related costs.

SEGMENT RESULTS AND GUIDANCE:

SAS

Revenue: Second quarter revenue was flat year-over-year, resulting from continued growth in Space Systems and classified program growth in Intel and Cyber, which was offset by lower volumes in our Airborne Combat Systems business and lower revenues from the divestiture of the antenna business. Excluding this divestiture, organic revenue increased 1%.

Operating Margin: Second quarter operating margin increased 280 bps largely due to the absence of a non-cash charge that impacted 2023, improved operational and program performance, including the impact of the LHX NeXt cost savings initiative.

* A reconciliation is not available. See the note on page 2 and Non-GAAP Financial Measures on page 6 for more information.

IMS

Revenue: Second quarter revenue was flat, as higher volumes on Maritime programs were offset by lower volume in our Commercial Aviation business.

Operating Margin: Second quarter operating margin increased 260 bps from improved program performance, including the impact of LHX NeXt cost savings.

Revenue: Second quarter revenue increased 4%, primarily from higher volumes in Broadband Communications and increased Department of Defense (DoD) sales in Tactical Communications.

Operating Margin: Second quarter operating margin decreased 80 bps primarily from higher domestic tactical radio mix and timing of software sales, partially offset by LHX NeXt cost savings and the favorable impact of legal settlements.

Revenue and Operating Margin: Second quarter results are attributed to program execution across Missile Solutions and Space Propulsion and Power Systems. (Source: BUSINESS WIRE)

25 Jul 24. Northrop Grumman lifts 2024 earnings forecast on weapons demand. July 25 (Reuters) – U.S. defense company Northrop Grumman, raised its forecast for full-year revenue and profit on Thursday, amid increased global defense spending and a strong backlog.

Shares were up 5.1% to $464.77 during the New York trading session.

Chief Executive Officer Kathy Warden told investors on a post earnings conference call that the headwinds for the B-21 Raider program are behind them and they “expect program margin dollars to grow annually from here.”

The B-21 Raider program has incurred losses on initial production contracts.

The ongoing war in Ukraine has fueled a strong demand for U.S. weaponry in Europe, with nations actively engaged in negotiations and striking deals to acquire arms and looking to speed up ongoing contracts.

Northrop now expects annual sales to reach up to $41.4bn, up from its previous forecast of $40.8bn to $41.2bn. It sees adjusted profit per share between $24.90 and $25.30, up from an earlier $24.45 to $24.85 per share.

The U.S. Congress’ recent approval for $95bn additional funding, which includes aid for replenishing U.S. stockpiles in Ukraine and Israel has benefited Northrop.

Other major defense contractors, such as Lockheed Martin, RTX , and General Dynamics are also benefiting from the new funds.

Northrop is facing cost challenges on some of its fixed-price contracts due to inflation, strained supply chains, and labor shortages.

Additionally, the Northrop-managed Sentinel program, aimed at replacing the aging intercontinental ballistic missile system, has significantly exceeded its initial budget estimate.

“Northrop is well positioned for defense work related to nuclear capabilities. We think this is one key area poised for relatively strong spending in coming years with an aggressive Russia on the horizon, as well as newfound cooperation between Russia and China raising the geopolitical stakes.” CFRA Research’s Garrett Nelson said.

The company posted earnings per share of $6.36 for the second quarter ended June 30, up from $5.34 per share a year earlier. Sales rose 7% to $10.22bn.

Profits in Northrop’s Defense Systems segment jumped by 23%, on high demand for ammunition and rocket motors used in guided multiple-launch rocket systems, which are critical in the Ukraine conflict.

Northrop and L3Harris Technologies Inc., are the top companies that supply these sought-after rocket motors. (Source: Reuters)

25 Jul 24. Northrop Grumman Reports Second Quarter 2024 Financial Results.

Net awards of $15.1bn; book to bill of 1.5x
Sales increase 7 percent to $10.2bn
Operating income increases 13 percent driven by strong performance and cost efficiencies
Diluted earnings per share increase 19 percent to $6.36
Operating cash flow of $1.4bn; free cash flow1 increases 80 percent to $1.1bn
Company raises 2024 sales guidance to $41.0 – $41.4bn and MTM-adjusted EPS1 guidance to $24.90 – $25.30

Northrop Grumman Corporation (NYSE: NOC) reported second quarter 2024 sales increased 7 percent to $10.2bn, as compared with $9.6bn in the second quarter of 2023. Second quarter 2024 sales reflect continued strong demand for our products and services. Second quarter 2024 net earnings totaled $940m, or $6.36 per diluted share, as compared with $812m, or $5.34 per diluted share, in the second quarter of 2023.

“The Northrop Grumman team extended our strong performance into the second quarter with continued double-digit earnings growth, fueled in part by a 7 percent sales increase and expanding operating income. Our diverse portfolio includes capabilities in high demand and we have invested to create capacity and drive productivity to deliver differentiated capabilities for our customers,” said Kathy Warden, chair, chief executive officer and president. “We are laser focused on performance and continue to expand profitability through the deliberate actions we are taking. With strong support for our programs, growing global orders for our products, and solid execution in our business, we are increasing our revenue and EPS guidance for the year.”

Sales

Second quarter 2024 sales increased $642m, or 7 percent, due to higher sales at all four sectors, including 14 percent growth at Aeronautics Systems. Second quarter 2024 sales reflect continued strong demand for our products and services.

Operating Income and Margin Rate Second quarter 2024 operating income increased $123m, or 13 percent, primarily due to $49m of higher segment operating income and $47m of lower unallocated corporate expense. Operating margin rate increased to 10.7 percent from 10.1 percent primarily due to lower unallocated corporate expense and a benefit associated with the FAS/CAS operating adjustment.

Segment Operating Income and Margin Rate

Second quarter 2024 segment operating income increased $49m, or 5 percent, primarily due to higher sales.

Segment operating margin rate decreased to 10.8 percent and reflects lower operating margin rates at Mission Systems and Aeronautics Systems, partially offset by higher operating margin rates at Space Systems and Defense Systems. Federal and Foreign Income Taxes The company’s second quarter 2024 effective tax rate (ETR) increased to 18.0 percent from 17.7 percent in the prior year period principally due to higher interest expense on unrecognized tax benefits.

Net Earnings and Diluted EPS Second quarter 2024 net earnings increased $128m, or 16 percent, primarily due to $123m of higher operating income and a $34m increase in the non-operating FAS pension benefit, partially offset by a higher ETR.

Second quarter 2024 diluted earnings per share increased 19 percent, reflecting a 16 percent increase in net earnings and a 3 percent reduction in weighted-average diluted shares outstanding. Cash Flows Second quarter 2024 cash provided by operating activities increased $506m primarily due to improved trade working capital, largely driven by lower net federal tax payments, partially offset by lower advance payments. Second quarter 2024 free cash flow1 increased $490m, or 80 percent, principally due to higher net cash provided by operating activities. Awards and Backlog Second quarter 2024 net awards totaled $15.1bn and backlog totaled $83.1 bn. During the second quarter of 2024, the company reduced unfunded backlog by $0.7bn related to a termination for convenience on the Next Generation Interceptor (NGI) program at Space Systems.

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. The realignment is not reflected in the financial information contained in this release (except as it pertains to the company’s updated 2024 guidance). The realignment will be reflected in the company’s operating results beginning in the third quarter of 2024. Recast financial information for current and certain prior periods is presented in Schedule 6 of this release. AERONAUTICS SYSTEMS

Three Months Ended June 30

Second quarter 2024 sales increased $368m, or 14 percent. This increase was primarily due to higher restricted sales, a $128m increase on F-35 sustainment and production work largely driven by the timing of materials, and higher volume on the Triton program. Operating Income Second quarter 2024 operating income increased $17m, or 6 percent, due to higher sales, partially offset by a lower operating margin rate. Operating margin rate decreased to 10.0 percent from 10.7 percent principally due to sales growth on a low margin restricted program and lower net EAC adjustments. The second quarter 2023 operating margin rate reflected particularly strong performance due, in part, to restricted work.

DEFENSE SYSTEMS

Three Months Ended June 30

Sales

Second quarter 2024 sales increased $93m, or 7 percent, primarily due to ramp-up on certain military ammunition programs, higher volume from the timing of materials and increased order quantities on the Guided Multiple Launch Rocket System (GMLRS), ramp-up on the Stand-in Attack Weapon (SiAW) program and higher volume on the Integrated Battle Command System (IBCS) program. These increases were partially offset by lower volume due to the completion of an international training program. Operating Income Second quarter 2024 operating income increased $38m, or 23 percent, due to a higher operating margin rate and higher sales. Operating margin rate increased to 13.5 percent from 11.7 percent principally due to higher net EAC adjustments driven by cost efficiencies and improved performance, as well as changes in contract mix.

MISSION SYSTEMS

Three Months Ended June 30

Sales

Second quarter 2024 sales increased $132m, or 5 percent, primarily due to higher volume on restricted advanced microelectronics programs, the timing of materials on marine systems programs, higher volume on the Surface Electronic Warfare Improvement Program (SEWIP) and ramp-up on full-rate production (FRP) awards on the Ground/Air Task Oriented Radar (G/ATOR) program. These increases were partially offset by lower sales on the F-35 program largely due to timing.

Operating Income Second quarter 2024 operating income decreased $40m, or 10 percent, due to a lower operating margin rate, partially offset by higher sales. Operating margin rate decreased to 13.0 percent primarily due to lower net EAC adjustments on certain airborne radar 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. SPACE SYSTEMS

Three Months Ended June 30

Sales

Second quarter 2024 sales increased $85m, or 2 percent, primarily due to a $117m increase on the Space Development Agency (SDA) Tranche 2 Transport Layer (T2TL) programs as they ramp, increased sales on the HALO program and higher materials volume on the GEM 63 program in support of Amazon’s Project Kuiper. These increases were partially offset by lower restricted sales due to a termination for convenience in our restricted space business during the first quarter of 2024.

Operating Income Second quarter 2024 operating income increased $41 m, or 14 percent, due to a higher operating margin rate and higher sales. Operating margin rate increased to 9.1 percent from 8.1 percent principally due to changes in contract mix and an improvement in net EAC adjustments. The prior year period included a $15 m write-down of commercial inventory.

24 Jul 24. KBR, Inc. (NYSE: KBR) today announced its second quarter fiscal 2024 financial results.

“I am pleased to announce another fantastic quarter in which KBR continues to drive operational excellence and deliver outstanding results for customers. The focus, agility and commitment of our people have the business performing well across our key metrics. We expect this to continue for the rest of the year and thus are raising profit and cash flow guidance,” said Stuart Bradie, KBR President and CEO.

Bradie continued, “The announcement of the agreement to acquire LinQuest, an engineering, data analytics and digital integration company, builds on the strategy outlined in our investor day. We believe LinQuest will be an important accelerator to KBR’s strategy of furthering the delivery of high-end technology, expertise and mission capabilities. It is a leader in supporting the U.S. Space Force, U.S. Air Force and other U.S. Department of Defense and intelligence agencies, and together, KBR and LinQuest have highly complementary capabilities that we expect will drive revenue growth and synergy opportunities.”

New Business Awards

Backlog and options as of June 28, 2024 totaled $20.1bn. Delivered 1.0x trailing-twelve-months (TTM) book-to-bill1 as of June 28, 2024. Awarded $2.1bn of bookings and options in the quarter.

Sustainable Technology Solutions (STS) delivered 0.8x TTM book-to-bill1 as of June 28, 2024, including awards and achievements in the quarter as follows:

KBR’s green ammonia technology, K-GreeN®, selected by OCIOR Energy for its plant located in Odisha’s Gopalpur region, India. This will be the 10th KBR-licensed green ammonia plant globally and the first to be located in India.
Selected to design and deploy a proprietary operator training simulator for OCI Global’s 3,000 metric tonnes per day Texas Blue Clean Ammonia facility, which is expected to deliver a 70% reduction in total greenhouse gas emissions compared to conventional ammonia production.
Awarded a five-year contract, with options, to provide advisory and consultancy services to support the Iraqi government’s visionary infrastructure and future energy ambitions, including the delivery of megaprojects and sustainable development.
Awarded a contract by SABIC Fujian Petrochemicals to license KBR’s market-leading phenol technology in China. KBR’s phenol technology offers a sustainable and differentiated solution through reduced energy consumption and improved yields.

Government Solutions (GS) delivered 1.2x TTM book-to-bill1 as of June 28, 2024, including awards and achievements in the quarter as follows:

Selected as one of 11 awardees under the Medical Q Coded Support and Services Next Generation contract, which contains a ceiling of $43 bn, to bid on task orders to provide health and wellness support for military personnel and their families. This contract is a continuation of KBR’s five decades of vital health services support to individuals who perform in complex and multifaceted positions.
Awarded an $82m cost-plus-fixed-fee task order under an IAC MAC contract by the United States Air Force for the Air Force Life Cycle Management Center, which supports the B-52 System Program Office. This task order builds on KBR’s eight-year presence in the B-52 program office.
Selected as one of the awardees under the Global Contingency Services Multiple Award Contract III, which contains a ceiling of $2 bn, to bid on task orders to provide short-term facility support services for natural disasters, humanitarian efforts and military actions, and to cover incumbent contractors’ nonperformance or potential breaks in service at various locations throughout the world.
Awarded a $34m recompete cost-plus-fixed-fee single award IDIQ contract by the U.S. Naval Research Laboratory for facility operations, maintenance and security in Washington, D.C. over a five-year period.
Awarded a $52m, 60-month cost-plus-fixed-fee recompete Information Analysis Center Multiple Award Contract task order supporting the Counter Improvised Threat Systems Test and Evaluation for the Naval Air Warfare Center Weapons Division Quick Reaction Capability Office.

Financial Highlights for the Three Months Ended June 28, 2024

Revenue of $1.9bn, up 6% on a year-over-year-basis
Net income attributable to KBR of $106 m; Adjusted EBITDA2 of $216 m, up 13% on a year-over-year basis (11.6% Adjusted EBITDA2 margin)
Diluted EPS of $0.79; Adjusted EPS2 of $0.83, up 12% on a year-over-year basis
Operating cash flows of $170m
Bookings and options of $2.1bn during the quarter with 1.0x TTM book-to-bill1

Financial Highlights for the Six Months Ended June 28, 2024

Revenue of $3.7bn, up 6% on a year-over-year-basis
Net income attributable to KBR of $199 m; Adjusted EBITDA2 of $423m, up 13% on a year-over-year basis (11.5% Adjusted EBITDA2 margin)
Diluted EPS of $1.47; Adjusted EPS2 of $1.59, up 13% on a year-over-year basis
Operating cash flows of $261m
Bookings and options of $4.0bn during the year to date period with 1.0x TTM book-to-bill1

Commentary on the Three Months Ended June 28, 2024

Revenues were $1.9bn, up 6% compared to 2Q’23, primarily due to growth across Sustainable Technology Solutions; and within Government Solutions, new and on-contract growth across International, Defense & Intel, and Science and Space, partially offset by decline in Ukraine activity in Readiness & Sustainment.

Net income attributable to KBR was $106m, up $457m compared to 2Q’23, primarily due to an after tax cash charge of $132m in connection with the settlement of a legacy legal matter and a non-cash charge of $314m 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 $216m, up 13% compared to 2Q’23, with Adjusted EBITDA2 margins of 11.6%, up 75 bps year-over-year.

Diluted earnings per share was $0.79, up $3.39 compared to 2Q’23, primarily due to the increase in Net income attributable to KBR noted above. Adjusted earnings per share2 was $0.83, up $0.09 compared to 2Q’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, and provision for income taxes.

Operating cash flows were $170m, down 33% compared to 2Q’23, primarily due to the timing of collections in the prior year.

Capital returned to shareholders totaled $118 m during the quarter, consisting of $97m in share repurchases, inclusive of $96m of open market repurchases and $1m of repurchases to satisfy requirements of equity compensation plans, and $21m in regular dividends.

Commentary on the Six Months Ended June 28, 2024

Revenues were $3.7bn, up 6% compared to YTD 2Q’23, primarily due to growth across Sustainable Technology Solutions; and within Government Solutions, new and on-contract growth across International, Defense & Intel, and Science and Space, partially offset by decline in Ukraine activity in Readiness & Sustainment.

Net income attributable to KBR was $199m, up $464m compared to YTD 2Q’23, primarily due to an after tax cash charge of $132m in connection with the settlement of a legacy legal matter and a non-cash charge of $314 m 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 $423m, up 13% compared to YTD 2Q’23, with Adjusted EBITDA2 margins of 11.5%, up 72 bps year-over-year.

Diluted earnings per share was $1.47, up $3.42 compared to YTD 2Q’23, primarily due to the increase in Net income attributable to KBR noted above. Adjusted earnings per share2 was $1.59, up $0.18 compared to YTD 2Q’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 $261m, down 9% compared to YTD 2Q’23, primarily due to timing of collections.

Capital returned to shareholders totaled $197m during the year to date period, consisting of $158m in share repurchases, inclusive of $146 m of open market repurchases and $12m of repurchases to satisfy requirements of equity compensation plans, and $39m in regular dividends.

Anticipated Acquisition of LinQuest

On July 16, 2024, KBR announced it had entered into a definitive agreement to acquire LinQuest Corporation for $737m, net of modest expected tax benefits. Excluding the expected tax benefits, the base purchase price to be paid is $745 m, subject to certain working capital, net debt and other customary adjustments. The transaction is expected to be accretive to Adjusted EPS2, which excludes amortization from purchased intangible assets and non-recurring transaction costs. KBR will utilize a combination of cash and existing debt capacity to fund the transaction, which is expected to close in Q3 or Q4 this year.

Updated Fiscal 2024 Guidance

The table below summarizes updated FY24 guidance and represents our views as of July 24, 2024. Updated guidance does not reflect the anticipated acquisition of LinQuest.

The company does not provide a reconciliation of Adjusted EBITDA to the most comparable GAAP financial measure on a forward-looking basis because the company is unable to predict with reasonable certainty the ultimate outcome of legal proceedings, unusual gains and losses, and acquisition-related expenses without unreasonable effort, which could be material to the company’s results computed in accordance with GAAP.

24 Jul 24. Rheinmetall’s profit doubles as defence spending surges.

Summary

Confirms 2024 sales, earnings forecast
Receives order for ammunition factory in Ukraine
Shares up 2.4% after results

German arms manufacturer Rheinmetall, more than doubled operating profit in the second quarter, driven by a surge in defence spending as a result of Russia’s invasion of Ukraine.

The company has been one of the main beneficiaries of the defence boom since the Ukraine war began in 2022. Its chief executive, Armin Papperger, was reportedly the target of a Russian assassination plot. The Kremlin denied the reports.

The maker of the Leopard 2 tank said that during the second quarter it received 11.4bn euros in orders and in new framework deals that could later translate into firm orders.

The company said this was mainly due to orders from the German army using funds from a 100-bn-euro special fund created after the invasion of Ukraine to bolster the country’s armed forces.

The German company also said it had received an order from the Ukrainian government for the construction of an ammunition factory in Ukraine.

Operating earnings in April-June rose 111% year-on-year to 271m euros ($293 m) beating expectations for 226 m, while the operating profit margin rose to 12.1%, above the consensus for 11.0%, based on the preliminary numbers, the German company said.

Sales rose 49% to 2.23bn euros, above market expectations of 2.06 bn.

The second-quarter sales figures were boosted by early sales recognition in its weapons and munitions division, as well as a higher sales contribution from its Madrid-based ammunitions subsidiary Expal Munitions, Rheinmetall said.

Rheinmetall confirmed its guidance for record sales of 10bn euros and an operating profit margin of 14-15% this year, up from 12.8% in 2023.

The company will report the full financial results on Aug. 8. ($1 = 0.9222 euros) (Source: Google/Reuters)

24 Jul 24. Amphenol Reports Record Second Quarter 2024 Results and Announces Dividend Increase.

Second Quarter 2024 Highlights:

Record sales of $3.61bn, up 18% in U.S. dollars and 11% organically compared to the second quarter of 2023
GAAP Diluted EPS of $0.41, up 11% compared to prior year
Record Adjusted Diluted EPS of $0.44, up 22% compared to prior year
GAAP and record Adjusted Operating Margin of 19.4% and 21.3%, respectively
Operating and Free Cash Flow of $664m and $528m, respectively
Announces deal to acquire Lutze, with Lutze US closed during the quarter and Lutze Europe expected to close in the third quarter
Completed previously announced acquisition of CIT and in July signed deal to acquire CommScope’s mobile networks-related businesses
Increases quarterly dividend by 50% to $0.165 per share

Amphenol Corporation (NYSE: APH) today reported second quarter 2024 results.

“We are pleased to have closed the second quarter of 2024 with record sales and Adjusted Diluted EPS both exceeding the high end of our guidance”

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“We are pleased to have closed the second quarter of 2024 with record sales and Adjusted Diluted EPS both exceeding the high end of our guidance,” said Amphenol President and Chief Executive Officer, R. Adam Norwitt. “Sales increased from prior year by 18%, primarily driven by growth in the IT datacom, defense, commercial air, mobile devices, mobile networks and automotive markets, as well as contributions from the Company’s acquisition program, partially offset by organic moderations in the broadband and industrial markets. During the quarter, we again realized strong profitability with Adjusted Operating Margin reaching a record 21.3%. We are very proud of the Company’s outstanding performance during the quarter.”

The Company continues to deploy its financial strength in a variety of ways to increase shareholder value. During the quarter, the Company purchased 3.1 m shares of its common stock for $190 m and paid dividends of $132 m, resulting in total capital returned to shareholders of more than $320 m.

Amphenol remains focused on expanding its growth opportunities through a deep commitment to developing enabling technologies for customers across our served markets, an ongoing strategy of market and geographic diversification as well as an active and successful acquisition program. To that end, the Company is excited to have closed the acquisition of Carlisle Interconnect Technologies (CIT) on May 21, as previously announced. During the quarter, Amphenol also signed a definitive agreement to acquire Lutze, a leading provider of harsh environment cable and cable assembly solutions for high-technology applications in the industrial market. The acquisition includes two businesses: Lutze US, based in North Carolina, and Lutze Europe, based in Germany. In May, we closed on Lutze US, which has annual sales of approximately $75 m, and we expect to close on Lutze Europe, which has annual sales of approximately $100 m, by the end of the third quarter of 2024. Both the CIT and Lutze businesses are reported in our Harsh Environment Solutions segment.

Finally, as disclosed last week, Amphenol has entered into a definitive agreement to acquire CommScope’s mobile networks-related businesses.

Increase in Quarterly Dividend

On July 23, 2024, Amphenol’s Board of Directors approved a 50% increase in the Company’s quarterly dividend, from $0.11 per share to $0.165 per share. The new dividend amount will be paid on October 9, 2024 to shareholders of record as of September 17, 2024.

Third Quarter 2024 Outlook

Assuming the continuation of current market conditions as well as constant exchange rates, for the third quarter of 2024, Amphenol expects sales to be in the range of $3.70bn to $3.80bn. This represents a 16% to 19% increase over the prior year quarter. Adjusted Diluted EPS is expected to be in the range of $0.43 to $0.45, representing a 10% to 15% increase from the third quarter of 2023. This guidance does not include the impact of acquisitions that have not yet closed.

Mr. Norwitt continued, “I am very pleased with the Company’s second quarter 2024 results. The revolution in electronics continues to accelerate, with new innovations creating exciting growth opportunities for Amphenol across each of our diversified end markets. In turn, we have expanded our range of high-technology interconnect products, both through our organic innovation efforts as well as through our successful acquisition program. This expanded technology position coupled with our unique entrepreneurial culture has strengthened our competitive advantage. Our ongoing drive to leverage that competitive advantage and thereby create sustained financial strength has established an excellent base for the Company’s future performance. I am confident in the ability of our outstanding and growing entrepreneurial management team to continue to dynamically adjust to changing market conditions, to capitalize on the wide array of growth opportunities that arise in all market cycles and to continue to generate sustainable long-term value for our shareholders and other stakeholders.”

2-for-1 Stock Split

As announced on May 20, 2024, the Company’s Board of Directors approved a 2-for-1 stock split, which was paid in the form of a stock dividend to shareholders of record as of the close of business on May 31, 2024. The additional shares were distributed on June 11, 2024 and the Company’s common stock began trading on a split-adjusted basis on June 12, 2024. The effect of the stock split on the Company’s financial results, including all share and per share data for both the current and prior year periods, as well as the quarterly dividend is reflected in this press release. (Source: BUSINESS WIRE)

24 Jul 24. Teledyne Technologies Reports Second Quarter Results.

Teledyne Technologies Incorporated (NYSE:TDY):

“Our earnings exceeded expectations, orders were greater than sales for the third consecutive quarter, and we ended the period with record backlog. Therefore, we are reasonably confident that quarterly sales will again increase sequentially, and we will return to year-over-year growth in the second half of 2024.”

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Orders exceeded sales for the third consecutive quarter
Second quarter sales of $1,374.1m
Second quarter GAAP operating margin of 18.0% and second quarter non-GAAP operating margin of 21.6%
GAAP diluted earnings per share of $3.77 and second quarter non-GAAP diluted earnings per share of $4.58
All-time record cash from operations of $318.7m and free cash flow of $301.0m
Full year 2024 GAAP diluted earnings per share outlook of $15.87 to $16.13 and affirming full year 2024 non-GAAP earnings per share outlook of $19.25 to $19.45
Debt maturity payment of $450m
Completed the acquisitions of Valeport and Adimec for aggregate consideration of $123.6m
Capital deployment through July 2024 includes estimated stock repurchases of approximately $278m
Quarter-end Consolidated Leverage Ratio of 1.7x
Stock repurchases expected to continue under the current $1.25bn authorization

Teledyne today reported second quarter 2024 net sales of $1,374.1m, compared with net sales of $1,424.7 m for the second quarter of 2023, a decrease of 3.6%. Net income attributable to Teledyne was $180.2m ($3.77 diluted earnings per share) for the second quarter of 2024, compared with $185.3m ($3.87 diluted earnings per share) for the second quarter of 2023, a decrease of 2.8%. The second quarter of 2024 included $49.1m of pretax acquired intangible asset amortization expense, $1.0m of pretax FLIR integration costs and $0.2m of FLIR acquisition-related discrete income tax expense. Excluding these items, non-GAAP net income attributable to Teledyne for the second quarter of 2024 was $218.7m ($4.58 diluted earnings per share). The second quarter of 2023 included $49.3m of pretax acquired intangible asset amortization expense and $0.4m of FLIR acquisition-related discrete income tax expense. Excluding these items, non-GAAP net income attributable to Teledyne for the second quarter of 2023 was $223.7m ($4.67 diluted earnings per share). Operating margin was 18.0% for the both the second quarter of 2024 and the second quarter of 2023. Excluding the non-GAAP items discussed above, non-GAAP operating margin for the second quarter of 2024 was 21.6%, compared with 21.4% for the second quarter of 2023.

“In the second quarter, Teledyne achieved all-time record free cash flow, allowing us to deploy approximately $852 m on debt repayment, acquisitions and stock repurchases through July,” said Robert Mehrabian, Executive Chairman. “Our earnings exceeded expectations, orders were greater than sales for the third consecutive quarter, and we ended the period with record backlog. Therefore, we are reasonably confident that quarterly sales will again increase sequentially, and we will return to year-over-year growth in the second half of 2024.”

Review of Operations

Comparisons are with the second quarter of 2023, unless noted otherwise.

Digital Imaging

The Digital Imaging segment’s second quarter 2024 net sales were $739.4m, compared with $793.3m, a decrease of 6.8%. Operating income was $113.5m for the second quarter of 2024, compared with $124.6m, a decrease of 8.9%. The second quarter of 2024 included $1.0m of pretax FLIR integration costs, and there were no comparable costs in the second quarter of 2023. Acquired intangible amortization expense for the second quarter of 2024 was $45.4m compared with $45.6m. Excluding these items, non-GAAP operating income for the second quarter of 2024 was $159.9m, compared with $170.2m, a decrease of 6.1%.

The second quarter of 2024 net sales decreased primarily due to lower sales of industrial automation imaging systems, X-ray products and commercial infrared imaging systems, partially offset by higher sales of infrared detectors and surveillance systems. The decrease in operating income was primarily due to lower sales and unfavorable product mix, including less industrial automation imaging systems sales.

Instrumentation

The Instrumentation segment’s second quarter 2024 net sales were $333.5m, compared with $328.4m, an increase of 1.6%. Operating income was $87.2m for the second quarter of 2024, compared with $81.4m, an increase of 7.1%.

The second quarter of 2024 net sales increase resulted from a $20.4m increase in sales of marine instrumentation primarily due to stronger offshore energy and defense markets, partially offset by a $13.5m decrease in sales of electronic test and measurement instrumentation as well as a $1.8m decrease in sales of environmental instrumentation. The increase in operating income primarily reflected the impact of higher marine instrumentation sales as well as favorable marine instrumentation product mix.

Aerospace and Defense Electronics

The Aerospace and Defense Electronics segment’s second quarter 2024 net sales were $194.4m, compared with $186.0m, an increase of 4.5%. Operating income was $57.1m for the second quarter of 2024, compared with $53.2 m, an increase of 7.3%.

The second quarter of 2024 net sales reflected higher sales of $4.0m for aerospace electronics and $4.4m for defense electronics. The increase in operating income primarily reflected the impact of higher sales and improved product margins.

Engineered Systems

The Engineered Systems segment’s second quarter 2024 net sales were $106.8m, compared with $117.0m, a decrease of 8.7%. Operating income was $7.5m for the second quarter of 2024, compared with $11.5m, a decrease of 34.8%.

The second quarter of 2024 net sales reflected lower sales of $8.9m for engineered products and lower sales of $1.3m for energy systems. The lower sales for engineered products primarily reflected decreased sales from missile defense and maritime programs. The decrease in operating income was primarily driven by lower sales and unfavorable program mix.

Additional Financial Information

Cash Flow

Cash provided by operating activities was $318.7m for the second quarter of 2024 compared with $190.5m, with the increase driven by stronger working capital conversion in the second quarter of 2024. Depreciation and amortization expense for the second quarter of 2024 was $77.8m compared with $80.0m. Stock-based compensation expense for the second quarter of 2024 was $9.3m compared with $8.4m.

Capital expenditures for the second quarter of 2024 were $17.7m compared with $27.3m. Teledyne received $2.4 m from the exercise of stock options in the second quarter of 2024 compared with $4.8m. During the second quarter of 2024, the Company completed the acquisitions of Valeport and Adimec for aggregate consideration of $123.6m.

During the second quarter of 2024, the Company repurchased approximately 0.5m shares for $193.8m.

As of June 30, 2024, net debt was $2,354.2m which is calculated as total debt of $2,797.4m, net of cash and cash equivalents of $443.2m. As of December 31, 2023, net debt was $2,596.6m representing total debt of $3,244.9m, net of cash and cash equivalents of $648.3m. During the second quarter of 2024, the Company made a $450m debt maturity payment.

During the second quarter of 2024, the Company amended and restated its credit facility which extended the maturity date to June 2029 as well as increased the available borrowing capacity to $1.20bn. As of June 30, 2024, $1,177.7m was available under the $1.20bn credit facility, after reductions of $22.3m in outstanding letters of credit.

Income Taxes

The effective tax rate for the second quarter of 2024 was 22.2%, compared with 21.0%. The second quarter of 2024 reflected net discrete income tax benefits of $0.7m compared with $1.4m.

Other

Corporate expense was $18.3m for the second quarter of 2024 compared with $14.6m, with the increase driven primarily by increased legal contingencies as well as higher compensation costs. Non-service retirement benefit income was $2.7m for the second quarter of 2024 compared with $2.9m. Interest expense, net of interest income, was $15.8m for the second quarter of 2024 compared with $22.3m, with the decrease due to reduced outstanding borrowings with lower weighted average interest rates compared to the second quarter of 2023.

Outlook

Based on its current outlook, the company’s management believes that third quarter 2024 GAAP diluted earnings per share will be in the range of $4.02 to $4.16 and full year 2024 GAAP diluted earnings per share will be in the range of $15.87 to $16.13. The company’s management further believes that third quarter 2024 non-GAAP diluted earnings per share will be in the range of $4.90 to $5.00 and full year 2024 non-GAAP diluted earnings per share will be in the range of $19.25 to $19.45. The non-GAAP outlook excludes acquired intangible asset amortization for all acquisitions, further FLIR integration costs and FLIR acquisition-related tax matters. (Source: BUSINESS WIRE)

24 Jul 24. Astrion, a Brightstar Capital Partners Portfolio Company, to Acquire Axient. Astrion, a leading provider of mission support and advanced engineering services, announced today that it has signed a definitive agreement to acquire Axient, a highly regarded provider of specialized engineering solutions. Astrion is a portfolio company of Brightstar Capital Partners (Brightstar), a middle market private equity firm.

“Together, we will deliver elevated solutions for military and civilian agencies, delivering Results with Impact to critical global challenges.”

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Astrion is a partner for progress, providing cutting-edge services that boost preparedness, optimize performance, and ensure mission success for defense and federal agencies, including the Army, Air Force, Civilian Agencies, Navy and Space. Axient is a systems integrator advancing defense and civil missions from aerospace to cyberspace with multi-domain test and analysis, mission engineering and operations, and advanced technologies.

This strategic acquisition positions Astrion to significantly enhance its capabilities, increase opportunities for the combined employee base, expand its market presence, and deliver greater value to its customers.

“At Astrion, our mission extends beyond today. We are committed to the extraordinary and making our nation more resilient for future generations. Axient’s specialized capabilities, talented employees and robust customer base make it a highly complementary fit with Astrion,” said Dave Zolet, CEO of Astrion. “Together, we will deliver elevated solutions for military and civilian agencies, delivering Results with Impact to critical global challenges.”

“We believe this combination strengthens and expands the collective capabilities and services portfolio, and at a scale that creates advantages for our customers and stakeholders,” commented Michael Singer, Partner at Brightstar. “We look forward to welcoming the expert Axient team and supporting Astrion’s continued investment in customer innovation and mission delivery.”

“We are excited to join the Astrion team. Our shared commitment to customer success and innovation will allow us to deliver more comprehensive, innovative solutions for our customers’ mission-critical challenges,” said Randy Cash, President & CEO of Axient.

The transaction is expected to close in the third quarter of 2024, subject to customary closing conditions, regulatory and government approvals.

JPMorgan Securities LLC and Jefferies LLC are serving as financial advisors, and Kirkland & Ellis LLP is serving as legal counsel to Astrion. KippsDeSanto & Co. and Stone Key Partners LLC are serving as financial advisors and Paul, Weiss, Rifkind, Wharton & Garrison LLP and Morrison & Foerster LLP are serving as legal counsel to Axient.

(Source: BUSINESS WIRE)

24 Jul 24. Lower G700 business jet deliveries hit General Dynamics results, shares fall. General Dynamics, second-quarter revenue above Wall street estimates on Wednesday, but profit slightly missed and fewer high end jets were delivered than expected, and its shares fell 5%.

Despite a 50% increase in business jet deliveries in the quarter, the Gulfstream parent only handed over 11 of its top-of-the-line, most expensive G700 business jets, below the company target of 15.

The U.S. Federal Aviation Administration certified the G700 business jet just days before the quarter began, however persisting supply chain issues caused delivery delays.

“Q2’s EPS miss reflected a large shortfall at Gulfstream, which outweighed robust defense results,” TD Cowen analysts said in a note, adding that they expected investors to be disappointed.

The defense contractor reported an 18% rise in second-quarter revenue on Wednesday, helped by higher demand for its ammunition and nuclear-powered submarines.

“In the Aerospace segment, we are continuing to ramp up the pace of our G700 deliveries and our defense businesses continued to grow, reflecting increased demand in response to the threat environment,” CEO Phebe Novakovic said in a statement.

Despite cost pressures due to constraints on the U.S. defense budget, defense firms continue to see strong demand for military equipment amid ongoing geopolitical conflicts.

00:26Asian shares hammered by jitters over Big Tech earnings

Profits at General Dynamics’ combat systems unit, which makes vehicles and tanks, were $313 m in the quarter, up 25% from a year ago.

The company now sees combat systems’ annual revenue at $8.7bn, a $200m hike from its prior forecast.

It also lifted the full-year revenue forecast for its marine systems segment, which builds nuclear-powered submarines and ships, by $1 bn and now expects $13.4bn to $13.8bn. (Source: Reuters)

24 Jul 24. General Dynamics Reports Second-Quarter 2024 Financial Results.

Revenue of $12bn, up 18% from year-ago quarter
Operating earnings of $1.2bn, up 20.2% from year-ago quarter
Diluted EPS of $3.26, up 20.7% from year-ago quarter
Operating margin of 9.7%, a 20-basis-point expansion from year-ago General Dynamics (NYSE: GD) today reported second-quarter 2024 revenue of $12bn, up 18% from the second quarter of 2023. Operating earnings of $1.2bn were up 20.2% from the year-ago quarter. Diluted earnings per share (EPS) were $3.26, up 20.7% from the year-ago quarter. Operating margin for the quarter was 9.7%, a 20-basis point expansion from the year-ago quarter, with particular strength in the Technologies and Combat Systems segments. “This was a strong quarter overall, as reflected by solid growth in all key measures from a year ago. Our businesses continue to focus on disciplined execution of their programs, cost and schedule,” said Phebe N. Novakovic, chairman and chief executive officer. “In the Aerospace segment, we are continuing to ramp up the pace of our G700 deliveries and our defense businesses continued to grow, reflecting increased demand in response to the threat environment.” Gulfstream delivered 37 aircraft in the quarter, 31 of which were large-cabin aircraft. This compares with 24 aircraft delivered in the year-ago quarter, of which 18 were large-cabin. Cash and Capital Deployment Net cash provided by operating activities in the quarter was $814m, or 90% of net earnings. During the quarter, the company paid $389m in dividends, invested $201m in capital expenditures, and used $34 m to repurchase shares, ending the quarter with $1.4bn in cash and equivalents on hand. Orders and Backlog The consolidated book-to-bill ratio, defined as orders divided by revenue, was 0.8-to-1 for the quarter. Company-wide backlog was $91.3bn. Estimated potential contract value, representing management’s estimate of additional value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $38.5bn. Total estimated contract value, the sum of all backlog components, was $129.8bn.– more In the Aerospace segment, orders in the quarter totaled $2.7bn. Aerospace backlog of $20bn is 2.8% above the year-ago quarter. In the defense segments, orders in the quarter totaled $7.4bn, with particular strength in Combat Systems, which had a bookto-bill ratio of 1.5-to-1. Significant awards in the defense segments included two contracts from the Canadian government, with options having combined maximum potential value of $1.9bn shared with an industry partner, for the Logistics Vehicle Modernization (LVM) program; $205 m, with options having a maximum potential value of $1.1bn, for planning yard services for the Arleigh Burke-class (DDG-51) guided-missile destroyer program; a $25m contract from the U.S. Army, with maximum potential value of $535m, for systems technical support of the Stryker vehicle fleet; $205m, with options having a maximum potential value of $525m, from the North Carolina Department of Health and Human Services to operate its Medicaid Management Information System; various munitions and ordnance contracts with maximum potential value totaling $460m if all options are exercised; and several key contracts for classified customers with maximum potential value of $665m. A detailed list of significant awards is provided in Exhibit I.

24 Jul 24. Political storms won’t curb military spending boom, defence firms say.

Summary
China, Russia threats to support defence spending, execs say
Trump election win wouldn’t concern industry, analysts
UK’s new Labour government positive for weapons makers
French legislature gridlock worries industry

Defence firms are confident Western governments will continue to increase spending on weapons to counter Russia and China, brushing off concerns that political upheaval in the United States and Europe could curb military budgets.

Global defence spending hit a record $2.4trn last year, boosted by the war in Ukraine and rising tensions between China and the West, according to think-tank Stockholm International Peace Research Institute (SIPRI).

NATO members agreed to further boost spending at a summit in Washington this month.

But major recent political shifts in the United Kingdom, the United States and France – all top military spenders – have spooked some investors who think support for the war in Ukraine could ebb in the years ahead.

Industry executives at the Farnborough Airshow, one of the world’s largest gatherings of aerospace and defence companies, told Reuters that even if aid to Ukraine was reduced, Western governments would spend big to shore up defences for potential future conflicts with Russia and China.

“Ukraine has given one important lesson learned: if you don’t prepare, you’ve lost,” said Lorenzo Mariani, co-general manager of Leonardo, an Italian defence firm.

Visible evidence of geopolitical tensions were laid out across the airfield in southern England that serves as a jet showroom and arms bazaar every other year, from prototype armed drones to U.S. and European fighter planes.

Even an Air India A350 passenger jet parked on the tarmac in front of exhibitor chalets bore traces of the conflict on Europe’s border, since it was originally built by Airbus for Russia’s Aeroflot before switching owners due to sanctions.

The rush for arms since Russia’s full-scale invasion of Ukraine in 2022 has boosted the profits and share prices of U.S. defence giants like Lockheed Martin, and Raytheon as well as European companies including Leonardo and Britain’s BAE Systems.

For instance, shares in Germany’s Rheinmetall, are up 390% since Russia’s invasion of Ukraine, while Swedish defence manufacturer Saab’s (SAABb.ST), are up more than 340%. (Source: Reuters)

23 Jul 24. Terran Orbital Announces up to $98m of New Capital Through ATM Program.

Terran Orbital Corporation (NYSE: LLAP), a global leader in satellite-based solutions primarily serving the aerospace and defense industries (the “Company”), today announced the launch of an at-the-market offering program (the “ATM”), which will allow the Company to offer its common stock, from time to time, in transactions that are deemed to be “at the market” offerings not to exceed an aggregate amount of $98,000,000. Notwithstanding the foregoing, pursuant to certain of the Company’s debt documents, the Company is limited to selling 26,362,513 shares of its common stock under the at-the-market program unless the Company obtains the required consent to sell more shares of common stock. Sales pursuant to the ATM will be conducted through the Company’s sales agent, H.C. Wainwright & Co., LLC.

“As opportunities from our business pipeline convert to awards, we want to give our customers and vendors additional confidence that we have adequate capital to successfully manage current and future programs,” said Marc Bell, Co-Founder, Chairman, and Chief Executive Officer of Terran Orbital. “We are confident that the ATM announced today will allow us to deliver maximum value to our customers and other stakeholders.”

This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities in this offering, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation, or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction. (Source: BUSINESS WIRE)

23 Jul 24. Luna Announces Appointment of Kevin Ilcisin as CEO, Retirement of Richard Roedel and $15m Credit Facility from White Hat Capital Partners. Luna Innovations Incorporated (NASDAQ: LUNA) (the “Company”), a global leader in advanced fiber optic-based technology, today announced the appointment of Kevin Ilcisin as its new President and Chief Executive Officer, the retirement of Richard Roedel from the Board of Directors (the “Board”) after nearly 20 years of service, and the closing of a $15 m junior secured term loan facility (the “Loan Facility”).

Effective August 1, 2024, Mr. Ilcisin will assume his new role as the President, CEO and member of the Board of the Company. Mr. Ilcisin has been a strategic advisor to the Company since April 2024, bringing a wealth of experience, industry knowledge and strategic leadership. Mr. Ilcisin is the co-founder of the advisory firm Juniper Strategies. Previously, Mr. Ilcisin served as Senior Vice President of Strategy and Corporate Development at National Instruments, where he was responsible for corporate strategy and led all of National Instruments’ acquisitions and divestitures. Prior to National Instruments, Mr. Ilcisin was the Chief Technology officer of Tektronix, a subsidiary of Fortive, a spin-off of Danaher Corporation, where he managed strategic planning and technology growth initiatives. Mr. Ilcisin has also held several executive roles in the semiconductor equipment, consumer electronics, and energy research industries.

Mr. Ilcisin holds a Ph.D. and M.A. degrees in Plasma Physics from Princeton University and B.Sc. in Electrical Engineering with Distinction from the University of Alberta.

Warren B. (Barry) Phelps, III, Chair of the Board, said, “The Board welcomes Kevin to the leadership team and is confident that he is well-positioned to lead Luna with respect to its pursuit of opportunities for growth and strategic alternatives.”

Mr. Ilcisin commented, “I am honored to be named President and CEO at Luna. During my time as a strategic consultant, I saw firsthand Luna’s leading market position and was deeply impressed by the dedication and passion of our talented employees. I remain confident in Luna’s tremendous potential and look forward to leading our efforts to execute Luna’s strategy and deliver on that potential.”

Retirement of Richard Roedel:

Mr. Ilcisin succeeds Richard Roedel, who informed the Board on July 12, 2024, that, after nearly 20 years of dedicated service to the Company, he was stepping down as Interim President and Interim Executive Chairman of the Company due to health reasons, effective immediately.

Mr. Roedel commented, “As I reflect on my tenure and all we’ve accomplished at Luna, I am grateful for the talented and dedicated individuals with whom I have had the privilege to serve. I am proud of the strong and diverse Board that we have assembled and am excited to see what the future holds for Luna.”

On July 16, 2024, Warren B. (Barry) Phelps, III was appointed Chair of the Board of Directors. Mr. Phelps has served as a member of the Board since 2017. Mr. Phelps serves as the chair of the Board’s Audit Committee and as a member of the Compensation Committee.

Mr. Phelps said of Mr. Roedel’s retirement, “On behalf of the Board, I would like to thank Rich for his steadfast commitment and unparalleled service to Luna. Throughout his tenure, Rich’s technical skills, business acumen and insightful contributions to the Board and Luna have been instrumental in shaping the company’s growth and success.”

$15m Loan Agreement:

The new Loan Facility represents the second strategic investment in the Company by White Hat Capital Partners LP (“White Hat”), an investment firm focused on sustainable value creation in technology companies serving mission-critical applications. White Hat made an initial $50 m preferred stock investment in the Company in December 2023. An initial draw of $9 m was made upon the closing of the Loan Facility, with up to an additional $6m available for future draws, subject to certain conditions. The obligations under the Loan Facility are secured by a second priority lien on substantially all of the Company’s assets. The proceeds of the Loan Facility will be used for working capital as well as the Company’s ongoing strategic alternatives process.

About Luna

Luna Innovations Incorporated (www.lunainc.com) is a leader in optical technology, providing unique capabilities in high-performance, fiber optic-based, test products for the telecommunications industry and distributed fiber optic-based sensing for a multitude of industries. Luna’s business model is designed to accelerate the process of bringing new and innovative technologies to market. (Source: BUSINESS WIRE)

23 Jul 24. Dassault Aviation’s H1 net sales climb, despite ongoing supply chain issues. French planemaker Dassault Aviation (AM.PA) reported on Tuesday first half adjusted net sales of 2.54 bn euros ($2.76 bn), up from 2.30 bn euros over the same period last year.

The increase was driven by the delivery of 12 Falcon business jets and six Rafale France, slightly recovering from last year’s slump caused by supply chain issues, although the French group did not completely overcome the bottlenecks.

“There are many shortages in our production lines due to supplier inefficiencies in some cases, especially in the aerostructure sector,” it said.

The French group reaffirmed its forecasts for the year.

France has emerged as the second-largest arms exporter in the world, outpaced only by the U.S., according to a study published in March by leading conflict think-tank SIPRI. France’s surge up the rankings comes thanks to major deals for Dassault Aviation’s Rafale fighter jet, signed with Qatar, Egypt and India, which opted for French-made aircrafts over Russian ones.

“In France, the President of the Republic, as head of the armed forces, wrote to defense manufacturers urging them to step up their efforts in the context of a war economy. In response to this call, I instructed Dassault Aviation employees to prioritize Rafale production, for both France and for Export,” Chief Executive Officer Éric Trappier said in a statement.

Dassault’s order backlog stood at 41.16bn euros at the end of June and included 223 Rafale warplanes and 83 Falcon business jets, the group said.

The French group said its adjusted operating income for the January-June period rose to 170m euros from 151m euros a year earlier. (Source: Reuters)

23 Jul 24. Lockheed Martin lifts 2024 sales target on fighter jet, missile demand. U.S. defense company Lockheed Martin (LMT.N raised its annual sales target on Tuesday, following the unexpected resumption of deliveries of its F-35 aircraft after the Pentagon began accepting the jets last week.

It expects 2024 sales to be between $70.5bn and $71.5bn, versus $68.5bn to $70bn forecast earlier.

Shares of the Bethesda, Maryland-based company were up 3.2% in morning trade.

The U.S. resumed taking F-35 deliveries after a months-long pause on delays on its software upgrade. Lockheed has been upgrading the jets under Technology Refresh 3, or TR-3 program, that gives the F-35 better displays and processing power.

The delivery resumption includes incomplete software upgrades and Pentagon will withhold some payment, the details of which is unknown, until the remaining enhancements are finished.

Lockheed’s F-35 is the world’s largest defense program and contributes around 30% of the company’s revenue.

“The F-35 remains a top priority, and we recently delivered the first TR-3-configured aircraft to the customer and anticipate deliveries for 2024 to meet our expected range of 75-110 F-35s,” said CEO Jim Taiclet.

TR-3 involves both hardware and software improvements and is seen as a pillar of a wider upgrade to the stealth jet known as Block 4.

00:13Tesla misses earnings targets for fourth-straight quarter

The enhancements “are critical steps in ensuring the F-35 remains the most advanced fighter aircraft in the world and the key air vehicle node in the DoD’s joint all domain architecture”, Taiclet said.

Lockheed, however, does not expect the full tech refresh package to be ready for months.

Lockheed’s second-quarter net income of $6.85 per share beat LSEG estimates of $6.46 per share. Total quarterly sales rose 8.5% to $18.12bn, also above the $17.04bn estimated. (Source: Reuters)

23 Jul 24. Lockheed Martin Reports Second Quarter 2024 Financial Results.

Net sales of $18.1bn, an increase of 9% year over year
Net earnings of $1.6bn, or $6.85 per share, inclusive of net non-operational charges of $79m ($63m, or $0.26 per share, after-tax)
Cash from operations of $1.9bn and free cash flow of $1.5bn
$1.6bn of cash returned to shareholders through dividends and share repurchases
2024 outlook increased for sales, segment operating profit and earnings per share

Lockheed Martin Corporation [NYSE: LMT] today reported second quarter 2024 net sales of $18.1bn, compared to $16.7bn in the second quarter of 2023. Net earnings in the second quarter of 2024 were $1.6bn, or $6.85 per share, compared to $1.7bn, or $6.63 per share, in the second quarter of 2023. Cash from operations was $1.9 bn in the second quarter of 2024, compared to $1.1bn in the second quarter of 2023. Free cash flow was $1.5bn in the second quarter of 2024, compared to $771 m in the second quarter of 2023.

“Over the past few months, Lockheed Martin’s people, systems, and platforms have again demonstrated their ability to enhance security in Eastern Europe, the Red Sea, and the Middle East. From the PAC-3’s critical role in air defense, to the Aegis Combat System with AI augmentation, to the F-35 with its advanced sensor and data management capabilities, our company has made major contributions to allied and partner defense. We continue to demonstrate the impact of our 21st Century Security® strategy by harnessing the latest digital technologies to continuously improve mission effectiveness, strengthening and scaling the defense production system, and expanding industrial cooperation among our allies and partners. Consequently, demand for our defense technology solutions remains robust, with a backlog of nearly $160 bn, greater than two times annual revenue,” said Lockheed Martin Chairman, President and CEO Jim Taiclet.

“We delivered strong second quarter financial results, with year-over-year growth of 9% in sales and 10% in segment operating profit, and free cash flow generation in excess of $1.5bn. The year-to-date performance gives us confidence to raise our 2024 full-year outlook for sales, segment operating profit, and earnings per share. Operationally, the F-35 remains a top priority, and we recently delivered the first Technology Refresh 3-configured aircraft to the customer and anticipate deliveries for 2024 to meet our expected range of 75-110 F-35s. The TR-3 hardware and software update enables step function improvement in capability to our airmen, sailors, and marines, as well as to our partner and allied nations. This foundational upgrade and the follow-on series of enhancements, known as Block 4, are critical steps in ensuring the F-35 remains the most advanced fighter aircraft in the world and the key air vehicle node in the DoD’s joint all domain architecture.”

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, 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 increase in operating and free cash flows in the second quarter of 2024 compared to the same period in 2023 was primarily due to improvements in working capital (defined as receivables, contract assets, and inventories less accounts payable and contract liabilities) and the timing of federal tax payments. Improvements in working capital were driven by volume and timing of milestone payments impacting both contract liabilities and contract assets on classified programs at the company’s Space business segment, decreases in inventory due to deliveries of S-70 helicopters at Sikorsky at the company’s RMS business segment, and production and billing cycle timing impacting receivables (primarily F-35 at Aeronautics and Integrated Air and Missile Defense at MFC, partially offset by Integrated warfare systems and sensors at RMS). These improvements were partially offset by the timing of cash payments related to accounts payable (primarily Aeronautics).

The company’s cash activities in the second quarter of 2024, included the following:

paying cash dividends of $752m;
paying $850m to repurchase 1.9m shares; and
making a long-term debt scheduled repayment of $168m.

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 21% and 20% of total segment operating profit in the quarters ended June 30, 2024 and June 25, 2023. During the quarter ended June 25, 2023, we recognized a favorable profit adjustment of $65m on an international surveillance and control program due to the positive resolution of a contractual matter, and an unfavorable profit adjustment of $100m on the Canadian Maritime Helicopter Program (CMHP) as a result of increased costs and lower than planned revenues.

Aeronautics

Aeronautics’ net sales in the second quarter of 2024 increased $402m, or 6%, compared to the same period in 2023. The increase was primarily attributable to higher net sales of $335m on the F-35 program due to higher volume on sustainment, development and production contracts; and $105m on the F-16 program due to the ramp up on production.

Aeronautics’ operating profit in the second quarter of 2024 increased $33m, or 5%, compared to the same period in 2023. The increase in operating profit was attributable to $35m from higher volume and program ramp up described above and $25m from favorable contract mix across the portfolio, partially offset by $25m of lower profit booking rate adjustments. The decrease in profit booking rate adjustments was due to a $45m unfavorable profit adjustment on a classified program because of higher than anticipated costs to maintain program objectives, partially offset by higher net favorable profit adjustments across the portfolio.

Missiles and Fire Control

MFC’s net sales in the second quarter of 2024 increased $347m, or 13%, compared to the same period in 2023. The increase was primarily attributable to higher net sales of $320m 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.

MFC’s operating profit in the second quarter of 2024 increased $79m, or 21%, compared to the same period in 2023, due to $80m of higher profit booking rate adjustments which primarily reflects higher favorable profit booking rate adjustments on PAC-3 and Apache due to better than anticipated cost performance. Additionally, operating profit increased $30m from production ramp up described above, offset by $30m decrease from contract mix.

Rotary and Mission Systems

RMS’ net sales in the second quarter of 2024 increased $651m, or 17%, compared to the same period in 2023. The increase was primarily attributable to higher net sales of $420m on integrated warfare systems and sensors (IWSS) programs due to higher volume on radar programs and the Canadian Surface Combatant (CSC) program, and new program ramp up within the laser systems portfolio; and $160m for Sikorsky helicopter programs due to higher production volume on Black Hawk and CH-53K programs.

RMS’ operating profit in the second quarter of 2024 increased $41m, or 9%, compared to the same period in 2023. The increase in operating profit was attributable to $70m from higher volume described above, partially offset by $20m of lower profit booking rate adjustments. The decrease in profit booking rate adjustments was due to unfavorable profit adjustments on Seahawk and Black Hawk production programs as a result of increased costs, partially offset by the net impact in the second quarter of 2023 of both a $65 m favorable profit adjustment on an international surveillance and control program and a $100m unfavorable profit adjustment on the Canadian Maritime Helicopter Program (CMHP) that did not recur in the second quarter of 2024.

Space

Space’s net sales in the second quarter of 2024 increased $29m, or 1%, compared to the same period in 2023. The increase was primarily attributable to higher net sales of $110m for strategic and missile defense programs due to higher volume on the hypersonics and Fleet Ballistic Missile (FBM) programs; partially offset by lower net sales of $50m for national security space due to lower volume on classified programs and $45m for commercial civil space due to lower volume on the Orion program.

Space’s operating profit in the second quarter of 2024 increased $34m, or 11%, compared to the same period in 2023. The increase in operating profit was attributable to $20m from favorable contract mix across the portfolio and $20m of higher profit booking rate adjustments. The increase in profit booking rate adjustments was due to higher favorable profit adjustments on the FBM program.

Total equity earnings/(losses) (primarily ULA) represented approximately $10m, or 3% of Space’s operating profit in the second quarter of 2024, compared to approximately $20m, or 6% for the same period in 2023.

Income Taxes

The company’s effective income tax rate was 15.8% and 16.2% for the quarters ended June 30, 2024 and June 25, 2023. The rates for both periods benefited from research and development tax credits, tax deductions for foreign derived intangible income and dividends paid to the company’s defined contribution plans with an employee stock ownership plan feature.

Use of Non-GAAP Financial Measures

This news release contains the following non-generally accepted accounting principles (non-GAAP) financial measures (as defined by U.S. Securities and Exchange Commission (SEC) Regulation G). While management believes that these non-GAAP financial measures may be useful in evaluating the financial performance of the company, this information should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP. In addition, the company’s definitions for non-GAAP financial measures may differ from similarly titled measures used by other companies or analysts.

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.

23 Jul 24. Thales H1 operating profit beats expectations, helped by strong orders. Europe’s largest defence electronics company Thales (TCFP.PA) on Tuesday slightly beat expectations for half-year operating profit, helped by strong demand from clients in the defence sphere.

Half-year operating income rose 10.4% to 1.096bn euros ($1.19bn), while a consensus provided by the company had expected 1.093bn.

Thales has benefited from rising demand for military gear, bolstered by renewed engagements of NATO countries in Ukraine and deals with various armies.

In June it signed three deals with Ukraine’s arms industry. CEO Patrice Caine told reporters in a call there could be more such agreements.

Its order intake, which is a measure of future sales, rose 26% in the half-year to 10.77bn euros, beating the consensus forecast of 10.38 bn.

Sales, which grew 8.9% to 9.49bn euros, were boosted by the Defence and Security segment, the company said, adding that in the Aerospace segment, a strong performance in avionics offset weaker trends in its space business.

Industry sources have said that Airbus (AIR.PA), and Thales were in discussions to tie-up some of their space operations, to better compete with U.S giants such as Elon Musk’s Starlink. In a call, CEO Patrice Caine declined to comment directly, while saying that such talks had been ongoing during his ten-year tenure as chief executive. The group confirmed its full-year outlook, but warned that its operating profit margin in the Space business would be negative due to falling demand for its telecom services and some restructuring costs. (Source: Reuters)

19 Jul 24. Defense tech startup Saronic announces $175m in Series B funding. The funding round was led by venture capital firm Andreessen Horowitz. Defense tech startup Saronic announced today it had successfully raised $175m in series B funding that its executives say will play a key role in allowing the company to rapidly scale production of its three autonomous surface vessels.

The funding round was led by venture capital firm Andreessen Horowitz, with participation from other firms including 8VC, Caffeinated Capital, Elad Gil and NightDragon, according to a company statement. In April, executives from Saronic told Breaking Defense they had raised around $70m to date, meaning today’s funding round more than doubles the previous total raised.

“What we’re doing now is really focusing on the building the thousands,” Dino Mavrookas, Saronic’s chief executive, told reporters today. “It’s scaling that manufacturing plant. It’s building the system that builds the system. It’s laying in the foundation for rapid scale.”

The Austin, Texas-based firm primarily focuses on designing and building autonomous surface vessels and currently produces a 6-foot (Spyglass) and 14-foot model (Cutlass), and is developing a 24-foot model (Corsair). The ASVs, as Saronic describes them, largely fit the characteristics that US Navy officials have proclaimed are necessary to build the future hybrid fleet: unmanned and autonomous vessels with open systems architecture capable of transporting a diverse range of payloads depending on the mission.

Similarly, Mavrookas’ focus on rapidly scaling production echoes the goals of Replicator, the initiative started by Deputy Defense Secretary Kathleen Hicks that dictates the Pentagon must field thousands of unmanned systems in under two years as a means of countering China. (Saronic deferred to the Pentagon when asked whether it has had any discussions with the Defense Department about Replicator.)

Rob Lehman, Saronic co-founder, told reporters on the same call the company’s participation in Integrated Battle Problem 24.1, a key military exercise the Navy uses to experiment with unmanned systems, was a “coming out party for Saronic.”

The competition for Warfighter Training and Readiness Solutions will bring together training networks, combat training centers and live ranges across the DoD enterprise.

“We went to San Diego and brought more boats than folks expected us to bring. And, frankly, we participated in more vignettes and parts of the exercise than were even planned,” he said. “Post Integrated Battle Problem, frankly, the demand signal has accelerated for the exercises, demonstrations … throughout the rest of [2024] and [2025] as well.”

(Source: Defense News Early Bird/Breaking Defense.com)

22 Jul 24. Acorn Growth Companies, a leading middle-market private equity firm specializing in aerospace, defense, intelligence, and space, announced its rebranding as Acorn Capital Management. This strategic name change aligns with Acorn’s continued growth and the development of multiple capital deployment strategies.

The unveiling of Acorn Capital Management at the prestigious Farnborough Air Show marks a pivotal moment in the firm’s history. For over twenty years, Acorn Growth Companies has been a trusted partner, investing in and supporting companies that drive innovation and excellence. As the firm continues to grow and diversify its investment strategies, the new name symbolizes a renewed focus on deploying capital in ways that address the strategic needs of these industries.

“Today marks a significant milestone for Acorn,” said Rick Nagel, CEO and Managing Partner. “This new name better represents our expanding vision and our dedication to supporting investments in areas of strategic importance. As Acorn continues to grow and develop innovative strategies for capital deployment, we remain committed to identifying and investing in opportunities that drive value and long-term success in the sectors we serve.”

Originally founded to provide early-stage capital, Acorn has evolved into a robust middle-market private equity firm investing in the aerospace sector. The recent launch of Acorn’s private credit fund, AltAero Aviation Finance, further solidifies Acorn’s commitment to diversifying its investment offerings and exploring opportunities beyond the traditional fund structure.

AltAero leverages Acorn’s extensive industry expertise and strong relationships to provide tailored financing solutions to companies operating in the aerospace sector. By filling the gap left by traditional leasing companies, AltAero aims to support the growth and development of businesses in this dynamic industry.

“AltAero enables Acorn to further support the aerospace industry and provide innovative financing solutions,” said Nagel. “By expanding its investment offerings and exploring non-traditional fund structures, Acorn is well-positioned to capitalize on emerging opportunities and drive further growth in this dynamic sector.”

Acorn has long been a leader in the aerospace and defense industry. The company was the first of its kind invited to join the Aerospace Industries Association (AIA). This prestigious membership extended Acorn a seat on the Board of Governors, marking a groundbreaking moment in AIA’s 100-year history. Acorn is also the first member of the financial community and a non-operator to serve on the Executive Committee.

Acorn’s inclusion brings a vital investor and capital perspective to the boardroom, addressing a long-standing underrepresentation of the financial sector in shaping policy and aligning with the Department of Defense (DOD) perspective. AIA’s bold decision to integrate the financial community’s voice underscores its commitment to a more inclusive and comprehensive approach to industry leadership and policy development.

“The need for the private sector to invest is stronger than ever, and Acorn is answering that call,” said Greg Agnew, Partner. “Our new name signifies not just a rebranding, but a renewed dedication to our partners, stakeholders, and the innovative companies we proudly support.”

About Acorn Capital Management

Acorn Capital Management is a middle-market private equity firm focused exclusively on Aerospace, Defense, Space, and Intelligence. Acorn invests solely in operating companies that strive to enhance global mobility and protect national interests. Acorn has a formidable reputation in the industry and is recognized for its deep understanding of the Aerospace and Defense markets, with proprietary access to the best companies within these sectors. With operational expertise and its ability to lead and manage investments through variable economic and industry cycles, Acorn works in tandem with management to build its portfolio companies into significant market leaders.

13 Jul 24. Alpine Space Ventures closes EUR170m startup investment fund to support primarily European portfolio of space sectors.

Alpine Space Ventures, an industry-insider led venture capital firm dedicated to early-stage investments in the burgeoning European space sector, today announced the final closing of its first fund with a total volume of EUR170m.

The fund primarily targets Series A rounds to build an initial position, investing in startups that serve or utilize the global space industry, with a particular focus on the industrialization of the space sector and hardware and software solutions around connectivity and data. Alpine Space Ventures has a major focus on investments into the European ecosystem, but has some geographic flexibility to invest in the United States and beyond leveraging the team’s industry relationships especially with the early leadership team of SpaceX. A concentrated portfolio of no more than 10-15 selected investment targets will receive up to five M Euros initially with significant dry powder reserved for follow-on rounds.

A Fund Built by Industry Insiders

The Alpine Space Ventures investment team boasts more than 50 years of building products, teams, and companies while shaping up the NewSpace industry. Founding Partner Bulent Altan has been an early leader at SpaceX having joined Elon Musk’s team initially in 2004 and overseeing the avionics development for Falcon 1, Falcon 9, and Dragon capsule and later the development of the initial Starlink satellites before leaving the firm eventually in 2017. Founding Partner Joram Voelklein has been successfully investing in tech since 2015 with a notable angel investment in launch company Isar Aerospace, together with Bulent, that made him one of the earliest backers of the European space tech ecosystem.

This expertise is further supplemented by Alpine Space Ventures’ investor base, made up of many entrepreneurs and pioneers of the space industry — including more than 20 early SpaceX employees.

Additional investors behind the fund include the European Investment Fund (EIF), the NATO Innovation Fund (NIF) and several high-profile family offices.

Concentrated portfolio

The fund that has the goal to invest in an exclusive group of no more than 15 carefully chosen startups providing key space-enabled capabilities has added five companies to its concentrated portfolio so far:

K2 Space

K2 Space, a satellite manufacturer of extremely capable yet cost-efficient mega-class satellites for the era of mass abundance.

Reflex Aerospace, building payload-centric and scalable spacecraft at a fraction of the time historically possible utilizing a highly modular satellite bus.

Morpheus Space, offering electric thrusters and software solutions to bring in-space mobility to satellite operators.

“We are looking forward to putting the fund’s capital to work and continuing to support the industry’s best entrepreneurs”, said Bulent Altan, Founding Partner at Alpine Space Ventures. “First and foremost, we are investing in the best teams with a strong market understanding, who are putting customer-centricity first, and are iterating though technical solutions quickly in their pursuit to build the best possible commercial solution.”

Karan Kunjur CEO and co-founder of portfolio company K2 Space commented, “We are the newest to have joined the Alpine Space Ventures portfolio and yet we have already benefitted from having them behind us beyond their financial commitment. Bulent is a tremendous addition to our board, and we could not be happier to have Alpine Space Ventures on our cap table.”

“Today’s a great day for the ecosystem and beyond as we are making a significant volume of smart money available to scale up space-enabled solutions globally and across industries. We are still in the early days of the European space ecosystem and I could not imagine a better time to inject further momentum into it”, added Joram Voelklein, Founding Partner of Alpine Space Ventures.

“Since day 1, Alpine Space Ventures has convinced us through their depth and industry experience“, added Walter Ballheimer, CEO and co-founder of portfolio company Reflex Aerospace. “Their technical expertise, understanding of market dynamics, and network are beyond anything we have seen so far in the industry.”

The announcement of the closing of the EUR170m early-stage fund comes at a pivotal moment, as Europe establishes a commercial space industry and strengthens its civil and defense infrastructure in reaction to a deteriorating climate and geopolitical environment. The fund’s final closing follows earlier announcements that included a EUR60m landmark investment by the European Investment Fund (EIF) in 2023 and a EUR10m investment by the NATO Innovation Fund earlier this year. (Source: Satnews)

18 Jul 24. Rocket Lab receives up to $23.9m for the CHIPS Act funding in preliminary agreement for semiconductor production for spacecraft and satellites in Albuquerque. Rocket Lab executive leadership, Congressional leaders and state and local officials took part in the event to celebrate the preliminary agreement which would assist in the modernization and expansion project to increase the Company’s compound semiconductor production for spacecraft and satellites, helping to domestically meet the growing national security and consumer demand for these solar cells.

Rocket Lab’s solar cell facility has been a technology hub in Albuquerque for the past 25 years, employing more than 370 employees manufacturing space solar technology that has powered over 1,100 satellites in orbit. To date, Rocket Lab has produced more than four megawatts of solar cell energy — equivalent to powering 14,400 miles driven by an electric car.

The proposed funding will also allow Rocket Lab to bring more than 100 direct manufacturing jobs to Albuquerque in addition to expanding and modernizing its facility. The modernization and expansion project will increase Rocket Lab’s compound semiconductor production by 50% within the next three years powering critical space programs, missile awareness systems, exploratory science missions. To date Rocket Lab’s technology has enabled critical space missions such as the James Webb Space Telescope, NASA’s Artemis lunar explorations, Ingenuity Mars Helicopter, and the Mars Insight Lander, and served as a booming commercial satellite market, including powering the OneWeb broadband internet satellite constellation.

“It is an honor to celebrate Rocket Lab’s proposed CHIPS Act funding at our semiconductor manufacturing facility in New Mexico alongside our esteemed state and national officials,” says Rocket Lab’s Chief Financial Officer, Adam Spice. “This strategic investment will empower Rocket Lab to significantly expand and modernize our operations, bolstering our economic footprint and technological leadership in New Mexico, while adding more than one hundred manufacturing jobs to the U.S. economy in addition to reinforcing our national security.”

“Two years ago, I served on the conference committee of Senate and House members that finalized what eventually became the CHIPS and Science Act. I fought hard to pass the bill because I knew it would have a transformative impact here in New Mexico,” said U.S. Senator Martin Heinrich. “This investment of up to $23.9 m from the CHIPS and Science Act will create 100 new advanced manufacturing jobs in Albuquerque. These new jobs come alongside the clean energy and microelectronics manufacturing boom that we have spurred through both the CHIPS Act and our landmark Inflation Reduction Act. We are making New Mexico one of the best places in America to manufacture advanced technologies — and by doing so, we’re creating hundreds of new, good-paying jobs that New Mexicans can build their families around in their home communities.”

“Thanks to the CHIPS and Science Act, New Mexico is leading the nation in driving innovation and promoting tech advancement. The investment in Rocket Lab in Albuquerque will create new jobs in advanced manufacturing, boost the economy, and help meet the challenges of the future,” said U.S. Senator Ben Ray Luján. “I was proud to welcome this investment alongside the New Mexico Congressional Delegation, the Biden-Harris administration, and Rocket Lab leadership.”

“Thanks to President Biden’s CHIPS and Science Act, Rocket Lab will have 100 new manufacturing jobs in the semiconductor industry,” U.S. Congresswoman Melanie Stansbury said. “This industry is booming, and I’m proud that New Mexico is a leader in science and technology innovation. The expansion of Rocket Lab to New Mexico and modernization of their facility means more economic opportunities for high tech workers and their families in New Mexico.”

“The Economic Development Department is proud to support Rocket Lab’s expansion. In the last 25 years, they’ve been committed to investing in New Mexico and their local community, creating manufacturing jobs, and providing internship and educational opportunities for the next generation of New Mexicans,” Acting Cabinet Secretary for the New Mexico Economic Development Department Mark Roper said.

“Albuquerque continues to be a great home for innovation and advanced manufacturing, and we appreciate President Biden’s investments to help build a thriving, green economy in New Mexico,” said Albuquerque Mayor Tim Keller. “This expansion will bring good-paying jobs to our community and create more diverse career paths for our families.”

“This investment demonstrates that Albuquerque is a prime location for developing cutting-edge technology,” said City of Albuquerque Economic Development Director Max Gruner. “We have state-of-the-art research facilities, educational institutions, and a skilled workforce to support this growth.” (Source: Satnews)

BUSINESS NEWS

July 19, 2024 by

Sponsored by SPX Communication Technologies (TCI & ECS)

www.tcibr.com

www.enterprisecontrol.co.uk

19 Jul 24. The HENSOLDT Group (“HENSOLDT”) is streamlining its organization in order to accelerate growth and make full use of the acquisition and integration of ESG Elektroniksystem- und Logistik-GmbH (“ESG”). The company will divide its operations into four divisions focused on its different types of businesses: Radar, Optronics, Multi Domain Solutions, and Services & Training.

The core product divisions, Radar and Optronics will continue to focus on the development of cutting-edge defence electronics products, optimizing cross-project operations to drive synergies. The Services & Training division will maintain its current structure, fostering stability and growth beyond maintenance, repair, and overhaul (MRO), and expanding further into Training & Simulation services. The newly established Multi Domain Solutions division will serve as the growth engine of the company, combining HENSOLDT’s Spectrum Dominance and Airborne Solutions divisions with ESG’s capabilities. It will provide integrated, multi-domain solutions across Land, Air, Naval, Cyber, and Space domains, acting as a docking point for customers seeking comprehensive manufacturer- and platform-independent solutions.

HENSOLDT CEO Oliver Dörre, says: “Our new structure will strengthen HENSOLDT’s position as a leading platform-independent European provider of seamlessly integrated defence solutions. This evolution of our divisional structure will enable us to focus on scaling our solutions business further, while also strengthening our core product portfolio. Our platform-independence is thereby essential to secure and develop critical capabilities for German and European defence requirements.”

18 Jul 24. Amphenol Corporation to Acquire Mobile Networks Businesses From CommScope.

Transaction highlights:

To acquire CommScope’s Outdoor Wireless Networks and Distributed Antenna Systems businesses for $2.1bn in cash
Adds advanced antenna and associated interconnect products, technologies and capabilities
Complements Amphenol’s existing product portfolio for next-generation wireless networks
Expected to be accretive to Amphenol’s Diluted EPS in first full year after closing

Amphenol Corporation (NYSE: APH) today announced a definitive agreement to acquire CommScope’s (NASDAQ: COMM) mobile networks businesses for $2.1bn in cash, subject to customary post-closing adjustments. The deal includes the purchase of CommScope’s Outdoor Wireless Networks (OWN) segment as well as the Distributed Antenna Systems (DAS) business which resides in CommScope’s Networking, Intelligent Cellular and Security Solutions (NICS) segment. These combined businesses are currently expected to have full-year 2024 sales and EBITDA margins of approximately $1.2bn and 25%, respectively. Assuming a continuation of current economic conditions, the acquisition is expected to be accretive to Amphenol’s Diluted Earnings Per Share in the first full year after closing, excluding acquisition-related costs. “We are excited by the prospect of adding CommScope’s mobile networks businesses and their approximately 4,000 talented employees to the Amphenol family,” said Amphenol President and Chief Executive Officer, R. Adam Norwitt. “CommScope provides mobile networks solutions, with advanced technologies in the areas of base station antennas and related interconnect solutions, as well as distributed antenna systems. In particular, we are encouraged that the businesses we are acquiring make up the former Andrew Corporation portfolio of products, a company with a rich history of innovation and technology leadership in the wireless industry. We look forward to supporting customers who are developing next-generation wireless networks around the world with these advanced solutions as well as our own existing complementary products. Finally, this acquisition further supports Amphenol’s long-term growth and balanced end market exposure across all areas of the electronics market.”

Amphenol expects to finance the acquisition through a combination of cash on hand and debt. Subject to the receipt of customary regulatory approvals and other closing conditions, the deal is expected to close in the first half of 2025. Amphenol looks forward to discussing the acquisition when the Company reports second quarter 2024 earnings on July 24, 2024. (Source: BUSINESS WIRE)

18 Jul 24. Hexcel Reports 2024 Second Quarter Results. Hexcel Corporation (NYSE: HXL) today reported second quarter 2024 results including net sales of $500 m and adjusted diluted EPS of $0.60 per share.

CEO and President Tom Gentile said, “Our Hexcel team delivered a solid financial performance in the second quarter with strong overall revenue growth that drove continued recovery in margins. We are well-positioned and ready to support our customers’ rate increases and remain excited about the medium-term outlook and opportunity. In the near term, aircraft delivery levels and public comments by our customers on production plans warrant a more cautious stance, which we are reflecting in our revised 2024 guidance. We remain strongly positioned for growth with available plant capacity, and we continue employee training and operational optimization for the production ramp ahead. Reflecting our continued confidence in Hexcel’s future, we repurchased another $100 m of Hexcel common stock during the second quarter, bringing the total 2024 share repurchases to $200m.”

Mr. Gentile continued, “Since joining Hexcel earlier this year, I have had the chance to visit more than half of our manufacturing sites, which has accelerated my learning about our products and capabilities. Hexcel’s broad portfolio of lightweight materials is helping current programs reduce carbon emissions and suppress noise, and our R&T team is advancing technologies that will help next generation products drive more efficient and sustainable aviation.”

Markets

Sales in the second quarter of 2024 were $500.4m compared to $454.3m in the second quarter of 2023.

Commercial Aerospace

Commercial Aerospace sales of $320.7m for the second quarter of 2024 increased 21.3% (21.6% in constant currency) compared to the second quarter of 2023. Both widebody and narrowbody sales increased by double digit percentages. Other Commercial Aerospace increased 15.4% for the second quarter of 2024 compared to the second quarter of 2023 with growth in business jets and regional jets.

Space & Defense

Space & Defense sales of $138.9m in the second quarter of 2024 increased 1.0% (1.4% in constant currency) for the quarter as compared to the second quarter of 2023. Military helicopters were strong globally including the CH-53K and Apache, partially offset by declining V-22 sales as the program winds down.

Industrial

Total Industrial sales of $40.8m in the second quarter of 2024 decreased 22.3% (21.8% in constant currency) compared to the second quarter of 2023. Growth in Automotive was more than offset by declines in other sub-markets. The focus will continue to be high end premium industrial segments that utilize carbon fiber.

Consolidated Operations

Gross margin for the second quarter of 2024 was 25.3% compared to 24.4% in the second quarter of 2023 as higher sales drove favorable cost leverage. As a percentage of sales, selling, general and administrative expenses for the second quarter of 2024 were 8.0% compared to 7.9% for the second quarter of 2023. R&T expenses as a percentage of sales were 2.9% in the second quarter of 2024 compared to 2.9% in Q2 2023. Adjusted operating income in the second quarter of 2024 was $72.0m or 14.4% of sales, compared to $61.8 m, or 13.6% of sales in the second quarter of 2023. The impact of exchange rates on operating income as a percent of sales was favorable by approximately 40 basis points in the second quarter of 2024 compared to the second quarter of 2023.

Year-to-Date 2024 Results

Sales for the first six months of 2024 were $972.7m compared to $912.0m, a 6.7% increase from the same period in 2023.

Commercial Aerospace (64% of YTD sales)

Commercial Aerospace sales of $620.0 m increased 13.0% (13.1% in constant currency) for the first six months of 2024 compared to the first six months of 2023 led by growth in widebodies. Other Commercial Aerospace increased 4.1% for the first six months of 2024 compared to the same period in 2023 reflecting growth in regional jets and turboprops.

Space & Defense (28% of YTD sales)

Space & Defense sales of $278.0m increased 5.4% (5.5% in constant currency) for the first six months of 2024 as compared to the first six months of 2023. Growth was led by F-35 and a number of military helicopter programs, both domestic and international, partially offset by significantly lower V-22 sales.

Industrial (8% of YTD sales)

Total Industrial sales of $74.7m in the first six months of 2024 decreased 24.9% (25.0% in constant currency) compared to the first six months of 2023 due to declines in all sub-markets.

Consolidated Operations

Gross margin for the first six months of 2024 was 25.2% compared to 26.2% in the prior year period. The first quarter of 2023 benefited from particularly favorable cost absorption and sales mix. As a percentage of sales, selling, general and administrative expenses for the first six months of 2024 were 9.1% compared to 9.5% for the first six months of 2023. R&T expenses as a percentage of sales were 3.1% in the first six months of 2024 compared to 3.0% in the first half of 2023. Adjusted operating income for the first six months of 2024 was $126.1 m or 13.0% of sales, compared to $124.8m or 13.7% of sales in 2023. Other operating expense for the first six months of 2024 and 2023 included restructuring costs. The impact of exchange rates on operating income as a percent of sales was favorable by approximately 30 basis points in the first six months of 2024 compared to the first six months of 2023.

Cash and other

Net cash provided by operating activities in the first six months of 2024 was $37.2m, compared to $30.1m for the first six months of 2023. Working capital was a cash use of $118.3m for the first six months of 2024 and a use of $113.9m for the comparable period in 2023. Capital expenditures on a cash basis were $51.6m for the first six months of 2024. For the first six months of 2023, capital expenditures on a cash basis were $74.8m, including approximately $38m for the purchase of the land and building at the Hexcel Amesbury, Massachusetts facility. Free cash flow was ($14.4) m in the first six months of 2024 compared to ($44.7)m in the first six 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 $41.1 m and $70.5m for the first six months of 2024 and 2023, respectively.
The Company used $101.1 m to repurchase shares of its common stock during the second quarter of 2024 and $201.8m during the first six months of 2024. The aggregate remaining authorization under the share repurchase program as of June 30, 2024, was $285.3m.
As announced today, the Board of Directors declared a quarterly dividend of $0.15 per share payable to stockholders of record as of August 2, 2024, with a payment date of August 9, 2024.

2024 Guidance

Sales of $1.90bn to $1.98bn (previously $1.925bn to $2.025bn)
Adjusted diluted earnings per share of $2.02 to $2.18 (previously $2.10 – $2.30)
Free cash flow of around $200m (previously greater than $200m)
Capital expenditures less than $100m (unchanged)
Effective tax rate of 22.0%. (unchanged)

Market-Specific Sales Outlook

Commercial Aerospace: Up low double-digits to mid-teens (previously up mid-teens)
Space & Defense: Up mid-single digits (no change)
Industrial: Down low double-digits (previously up low to mid-single digits)(Source: BUSINESS WIRE)

18 Jul 24. Textron Reports Second Quarter 2024 Results.

EPS of $1.35; adjusted EPS of $1.54, up from $1.46 in prior year
Net cash from operating activities of $383m in the second quarter of 2024
$358m returned to shareholders through share repurchases in the second quarter

Textron Inc. (NYSE: TXT) today reported second quarter 2024 income from continuing operations of $1.35 per share, as compared to $1.30 per share in the second 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 $1.54 per share for the second quarter of 2024, compared to $1.46 per share in the second quarter of 2023.

“In the quarter, our team delivered higher revenue, earnings per share, and cash flow,” said Textron Chairman and CEO Scott C. Donnelly. “At Aviation and Bell, we continued to execute on key programs, including the Citation Ascend and FLRAA.”

Cash Flow

Net cash provided by operating activities of the manufacturing group for the second quarter was $383m, compared to $314m 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 $320 m for the second quarter, compared to $242m last year.

In the quarter, Textron returned $358m to shareholders through share repurchases. Year to date, Textron has returned $675 m to shareholders through share repurchases.

Second Quarter Segment Results

Textron Aviation

Textron Aviation’s revenues were $1.5bn, up $113m from last year’s second quarter, reflecting higher pricing of $57m and higher volume and mix of $56m.

Textron Aviation delivered 42 jets in the quarter, down from 44 in the second quarter of 2023, and 44 commercial turboprops, up from 37 in last year’s second quarter.

Segment profit was $195m in the second quarter, up $24m from a year ago, reflecting higher volume and mix of $35m, and a favorable impact from pricing, net of inflation, of $22m, partially offset by an unfavorable impact from performance of $33m.

Textron Aviation backlog at the end of the second quarter was $7.5bn.

Bell

Bell revenues were $794m, up $93m from the second quarter of 2023, largely reflecting higher military volume of $104m, primarily related to the FLRAA program, partially offset by lower volume on the V-22 program.

Bell delivered 32 commercial helicopters in the quarter, down from 35 in last year’s second quarter.

Segment profit of $82 m was up $17 m from last year’s second quarter, largely due to a favorable impact from performance of $39m, which included lower research and development costs, partially offset by mix.

Bell backlog at the end of the second quarter was $4.2bn.

Textron Systems

Revenues at Textron Systems were $323m, up $17m from last year’s second quarter, primarily due to higher volume of $14m.

Segment profit of $35 m was down $2m, compared with the second quarter of 2023.

Textron Systems’ backlog at the end of the second quarter was $1.7 bn.

Industrial

Industrial revenues were $914m, down $112m from last year’s second quarter, mainly due to lower volume and mix of $119m.

Segment profit of $42m was down $37m from the second quarter of 2023, primarily due to lower volume and mix.

Textron eAviation

Textron eAviation segment revenues were $9m and segment loss was $18m in the second quarter of 2024, compared with a segment loss of $12m in the second quarter of 2023.

Finance

Finance segment revenues were $12m, and profit was $7m. (Source: BUSINESS WIRE)

19 Jul 24. Saab Q2 2024 results: Strong order intake and continuous focus on capacity increases.

Saab presents the results for January-June 2024.

“In the quarter, Saab recorded a strong order intake of SEK 40bn, the second highest quarter in the company’s history. Our portfolio is uniquely positioned and we are strengthening our market presence. We are also continuing our uplift in investments for additional capacity and are fully focused on securing competences and increasing our workforce,” says Micael Johansson, President and CEO, Saab.

Key highlights Q2 2024

Order bookings amounted to SEK 39,574m (14,315) with several large contracts signed and booked in the quarter.
Sales increased 22% and amounted to SEK 15,170m (12,475), driven by growth in all business areas and Combitech.
EBIT increased 25% and amounted to SEK 1,331m (1,065). The EBIT margin increased to 8.8% (8.5), driven by improved profitability across the business areas and Combitech.
Net income increased by 27% to SEK 1,012m (798).
Earnings per share improved to SEK 1.85 (1.44), where the number of shares has been adjusted according to the 4:1 share split implemented in the quarter.
Operational cash flow in the quarter was SEK -2,251m (-1,548) and related to timing of customer payments.
Net debt position was SEK 2.4bn (-3.7) at the end of the period.
The full year 2024 outlook on organic sales growth, EBIT growth and positive operational cash flow is reiterated.

Saab Q2 2024 results: Strong order intake and continuous focus on capacity increases

Saab presents the results for January-June 2024.

Key highlights Q2 2024

Order bookings amounted to SEK 39,574m (14,315) with several large contracts signed and booked in the quarter.
Sales increased 22% and amounted to SEK 15,170m (12,475), driven by growth in all business areas and Combitech.
EBIT increased 25% and amounted to SEK 1,331m (1,065). The EBIT margin increased to 8.8% (8.5), driven by improved profitability across the business areas and Combitech.
Net income increased by 27% to SEK 1,012m (798).
Earnings per share improved to SEK 1.85 (1.44), where the number of shares has been adjusted according to the 4:1 share split implemented in the quarter.
Operational cash flow in the quarter was SEK -2,251m (-1,548) and related to timing of customer payments.
Net debt position was SEK 2.4bn (-3.7) at the end of the period.
The full year 2024 outlook on organic sales growth, EBIT growth and positive operational cash flow is reiterated.

19 Jul 24. Saab profit edges past forecast as defence orders surge.

Summary
Companies
Saab Q2 operating profit rises 25% y/y
Q2 profit 1.33bn SEK vs forecast 1.29bn
Order intake surges 176% y/y in quarter
Order backlog hits new record amid defence boom

Swedish defence equipment maker Saab (SAABb.ST) reported a marginally bigger-than-expected rise in quarterly operating earnings and maintained its outlook for surging sales and earnings this year as countries race to scale up militaries.

Saab repeated on Friday its forecast for sales to grow organically by 15-20% this year with operating earnings to rise even more.

The maker of defence material including missiles, submarines and the Gripen fighter jet said operating profit rose 25% to 1.33bn Swedish crowns ($125m) in the second quarter to come in just ahead of the 1.29bn seen by analysts according to LSEG estimates.

The company, which competes with defence giants such as U.S. Lockheed Martin (LMT.N), France’s Dassault Aviation (AM.PA) and Britain’s BAE Systems (BAES.L), is facing booming demand spurred by global tensions, the war in Ukraine and Sweden’s recent NATO accession.

Saab, which also sells equipment for civilian use to customers such as Airbus (AIR.PA), and Boeing (BA.N) said order bookings shot up 176% in the quarter with its backlog of orders growing to a record 182.7 bn crowns.

“This marks the second-highest quarter in terms of order bookings in the company’s history,” Saab CEO Micael Johansson said in a statement.

“The urgent need to provide Ukraine with more support and a clear uplift of European defence capabilities will remain a driver of growth in the industry for many years.” (Source: Reuters)

17 Jul 24. Funding for Battle-Tested Surveillance Technology.

Granta Autonomy has completed its seed funding round, providing its cutting-edge lightweight surveillance and reconnaissance UAVs, micro gimbals, and digital Datalink software.

Granta Autonomy, a specialist in fully autonomous UAVs for intelligence, surveillance, and reconnaissance missions, has successfully completed its €1 m seed funding round.

ScaleWolf VC, the leading Lithuanian dual-use tech VC Fund and Accelerator, led the round, with participation from Brolis Defence and HFL holdings. The new capital will enable Granta Autonomy to accelerate the development and production of its cutting-edge lightweight surveillance and reconnaissance UAVs, micro gimbals, and digital Datalink software, which its team has personally tested in active battlefields.

Granta Autonomy has been developing reconnaissance remote-controlled UAV aircraft, lightweight gimbals, and its unique Datalink software since 2015. The company now provides NATO forces across Europe with its range of hand-launched Hornet UAVs while also providing a range of partners with its proprietary, ultra-reliable, lightweight micro gimbals, which are the lightest direct drive gimbals on the market.

Granta Autonomy’s micro gimbals feature a powerful camera system that allows for clear daytime image capture at distances up to 5km and provides vital thermal vision for nighttime operations, ensuring mission success around the clock.

Granta Autonomy’s latest UAV, the Hornet XR, is a small, hard-to-detect, hand-launched mini reconnaissance UAV with several critical features for covert missions. With a simple throw take-off and a silent flight lasting up to 3 hours, it can cover distances up to 160km undetected.

Pre-programmed missions ensure autonomous operation, even in radio silence or GNSS-denied environments. The ultra-lightweight aircraft lands itself using a deep-stall method, making it easy to retrieve in tight spaces, and its compact, modular design allows for convenient transport in a car trunk.

Granta Autonomy’s powerful but lightweight GS-214X and GS-218X micro gimbal systems enable Hornets and other third-party drones to capture sharp images from long distances during the day and include a thermal camera for missions at night. Granta Autonomy’s Digital Datalink software ensures the gimbal integrates with most Ground Control Station (GCS) software.

Gediminas Guoba, founder and CEO of Granta Autonomy, commented; “The traditional battlefield is evolving, and Western armies require robust, reliable, and flexible solutions. Granta Autonomy is committed to ensuring our systems can be readily manufactured across Europe, reducing reliance on external sources. Today’s funding enables us to ramp up our production capacity to deliver the large-scale deployments Europe needs.

“However, our focus goes beyond just numbers; our team works directly with soldiers on the battlefield, testing our products and software in combat zones and collaborating on solutions that excel in the toughest conditions. This battlefield experience, valued by our Western partners, fuels our mission to revolutionize drone reconnaissance for global militaries.”

He continued; “The Hornet XR exemplifies our design philosophy, which is rooted in the expertise of our military UAV operators and engineers, delivering industry-leading flight time, simple operation, and rugged durability, which brings greater efficiencies, lower costs, and unmatched reliability to complex, multi-disciplinary missions.” (Source: https://www.defenseadvancement.com/)

17 Jul 24. Investors spooked as DroneShield experiences share price pain. Australian counter-drone manufacturer DroneShield has made major investment news with investors spooked and a chaotic share price journey.

Shares in the US publicly listed technology company have drastically fallen over the past week following massive market capitalisation reportedly equating to approximately $2 bn.

The company has since entered a trading halt with a price query undertaken by ASX Limited and answered by DroneShield on 16 July.

DroneShield stated it is not aware of any information concerning it that has not been announced to the market that could explain the recent trading in its securities, according to the statement.

However, it was aware of a news article featuring comments from Sublime Funds Management director Rodney Forrest that Forrest had shorted the stock.

“Its valuation is wild,” Forrest reportedly told Capital Brief.

It’s currently unknown what has so severely spooked investors, however, DroneShield had previously experienced a meteoric rise in recent months.

The company listed on the ASX in 2016 at $0.20 cents, trekking to $0.31 cents by December 2023, before rocketing upward to a high of $2.72 on 16 July. Panic-selling began this week with the share price falling to $1.57 on 17 July and slightly rebounding to where it now stands at $1.77 (as of 17 July). (Source: Defence Connect)

18 Jul 24. QinetiQ reports a solid start to FY25 with growth and strategic wins. Defence technology business QinetiQ showcases strategic advancements in Q1 FY25. QinetiQ Group plc has reported a strong start to the fiscal year 2025, emphasising increased revenue, successful contract acquisitions, and changes in leadership. Source: QinetiQ

QinetiQ Group plc, a player in defence technology, has unveiled its first quarter trading update for FY25, marking a solid start to the financial year.

The company reported progress across various operational fronts.

The trading update underlines QinetiQ’s growth trajectory. The company is on track to achieve high single-digit organic revenue growth and stable margins, in alignment with its FY25 guidance. Notably, the company’s order intake performance has surged, elevating revenue under contract for the full year to 73%, an increase from the previous quarter.

QinetiQ also reported strong financial results for FY24, with revenue and operating profit rising by 21% and 20%.

Steve Wadey, Group Chief Executive Officer, expressed satisfaction with QinetiQ’s performance, emphasising the company’s commitment to delivering shareholder value amidst a challenging geopolitical landscape. “I am pleased that we have delivered a good start to the year, with performance for the first quarter in line with our expectations and attractive shareholder returns,” Wadey stated.

The EMEA Services division reported growth, driven by long-term contracts such as the Engineering Delivery Partner role in the UK and Major Service Provider engagements in Australia. Additionally, QinetiQ secured a new framework contract to provide test and evaluation services to NATO, reinforcing its footprint in defence solutions.

QinetiQ achieved milestones in global solutions, including a contract win in the US for the Future Long Range Assault Aircraft (FLRAA) programme. The contract solidifies QinetiQ’s role as the sole source provider of survivability solutions, leveraging its light-appliqué armour systems technology. Furthermore, the company expanded its contract value by delivering the Tethered Aerostat Radar System and securing framework agreements with new National Security customers.

Amidst these operational successes, QinetiQ also announced leadership changes. Martin Cooper was appointed as Group CFO effective September 2024, earlier than originally planned.

Looking ahead, QinetiQ remains confident in its ability to deliver organic revenue growth and shareholder returns. It aims towards its FY27 target of approximately £2.4bn in revenue at a 12% margin.

(Source: army-technology.com)

18 Jul 24. Shore Capital has published a research note on QintetiQ’s Q1 Trading Update this morning. See a summary of the key points below and the full note attached.

Jamie Murray, Equity Analyst, said: “QinetiQ has published a strong Q1 FY25F trading update, which highlighted “good” operational performance. The outlook is positive, with near term expectations in-tact and the order coverage exceeding the corresponding period last year. We anticipate the market will have a modestly positive reaction to the strong order coverage. BUY.”

Noteworth Areas:

Revenue, profit and cash: QinetiQ stated that revenue is in on track to “deliver high single digit organic revenue”, operating margins are “stable”, and cash conversion is “good.” in the Q1. Although only limited information was provided, the update suggests that the key fundamentals remain in line with our expectations; we forecasts c7% revenue growth, flat EBITA margins and 95% operating cash conversion.
Order intake: QinetiQ stated the order intake has remained “good” throughout the quarter. Some material contract wins include the NATO customers to utilise its Test & Evaluation services in the UK and the Future Long Range Assault Aircraft programme.
Order book: In line with the positive order intake, the order book appears well filled. QinetiQ stated that visibility on revenue under contract for FY25F has increased to 73%, up from 64%at April 2024

Valuation/view: QinetiQ is an ambitious company with strong growth potential. On our current numbers, the stock trades on an FY26F EV/EBITA of 11.1x, whichremains below the peer average. Following today’s update, we would expect the shares to trade marginallyahead of the market given the strong order coverage. Our unchanged analysis of growth, ROCE and risk suggests it can trade on an undemanding FY2F EV/EBITA of 12x driving a FV of 520p, suggesting 12% upside. We reiterate our BUY recommendation

17 Jul 24. Cohort today announces its unaudited results for the financial year ended 30 April 2024. Highlights include:

– Record revenue, adjusted operating profit, order intake, closing order book and net funds, exceeding market expectations.

– Adjusted operating profit up 11% on revenue up 11%.

o Sensors and Effectors saw robust growth, with Chess and SEA delivering improved performances on the back of strong product offerings.

o Communications and Intelligence reported a weaker year overall.

– Order book exceeded half a bn pounds for the first time, with deliveries now extending out to 2037.

– Order intake of £392.1m (2023: £220.9m), including the £135m Royal Navy contract awarded to SEA in March 2024.

– Dividend increased by 10%; the dividend has been increased every year since the Group’s IPO in 2006.

– Net funds above market expectations at £23.1m (2023: £15.6m).

Commenting on the results, Nick Prest CBE, Chairman of Cohort plc, said:

“We are reporting another strong performance for Cohort with improved revenue, profit and net funds, and one that has exceeded expectations. Our order book surpassed £500m for the first time and provides a solid foundation for the future.

Our order book not only grew in value, but its longevity further increased, providing visibility out to 2037. We have good prospects to secure further long-term orders for our naval systems and support work.

The order book underpins more than £184m (2023: £140m), representing over 90% of 2024/25 revenue expectations. Following order wins since the start of the financial year of over £70m, that cover now stands at over 95%. These order wins include over £35m from Portugal.

We continue to expect another year of good growth in trading performance in 2024/25, enhanced by the addition of ITS. Given planned capital expenditure and expansion in working capital to support our record order book, net funds are likely to decrease.

We are optimistic that the Group will make significant further progress in 2025/26 and beyond, based on current orders for long-term delivery, our continued investment in the businesses and our pipeline of opportunities.”

Cohort also announces that its subsidiary Marlborough Communications Ltd (“MCL”) has been awarded two orders with a total value of £21.4m by a UK government customer.

Marlborough Communications Ltd (“MCL”) has been awarded two orders with a total value of £21.4m by a UK government customer. Work will commence immediately and is expected to be complete within one year.

Andy Thomis, Cohort Chief Executive, said:

“This order demonstrates again the effectiveness of MCL’s business model, based on close, trusted relationships with both external technology providers and UK government customers. Its highly skilled and knowledgeable team has a unique capability to provide effective solutions to emerging threats, rapidly, and at competitive prices.

“Together with other recent contract wins across the Group, this further underpins our order book and enhances the visibility of future revenues.”

17 Jul 24. Shore Capital has published a research note on Cohort’s Full Year Results this morning. See a summary of the key points below and the full note attached.

Jamie Murray, Equity Analyst, said: “Cohort’s FY24A results were strong with EPS beating our expectations by 21%. The outlook is very positive with a rapidly growing order book underpinning our expectations. As a result, we upgrade our FY25F-FY26F EPS by 7%-9%, introduce FY27F forecasts, and increase our fair value (FV) to 1,050p. Despite the shares rallying 50% ytd, we still see 27% upside potential against today’s price, which could be supplemented by further upgrades, which we believe is likely. We would BUY the shares.”

Performance:

Sales rose by 11% yoy to £203m (Shore Capital expectations: £185m). Growth was driven by excellent performance from Sensors and Effectors (+24% yoy) as work on naval systems made a major contribution.
EBIT rose by 11% yoy to £21m (Shore Capital expectations: £21m). Margins were unchanged yoy at 10.4%.
EPS rose by 18% yoy to 42.9p (Shore Capital expectations: 35.4p). This 21% beat was driven by a materially lower tax rate on adjusted earnings due to high R&D tax credits and a technical tax allowance.
Net cash (excluding leases) rose by £8m yoy to £23m. This was driven by favourable timing of working capital flows and delayed expenditures on the new facility in Germany due to adverse weather conditions.
DPS rose by 10% yoy to 14.8p (Shore Capital expectations: 14.6p)

Outlook: We believe the outlook is particularly favourable with risks on the upside. The order intake during the period rose by 78% yoy to £392m (although this includes the £135m Royal Navy contract awarded to SEA), which drives a book-to-bill of 1.9x, indicating extremely high demand for Cohort’s products. Adjusting for the Royal Navy contract award, the book-bill is still 1.3x. The order backlog rose by 58% to £519mm, with 90% of FY25F revenues covered at year end. This has risen to 95% since the start of the financial year, which provides excellent visibility. Following these positive results, we upgrade our FY25F-FY26F EPS by 7%-9% and introduce FY27F forecastsValuation/view: Cohort offers a solid and growing order book with a robust book-to-bill ratio, a positive industrial backdrop in defence and security markets, and a strategic supplier position with clients. This all points towards a premium valuation being sustained for Cohort, in our view. In March, we upgraded our fair value to 800p which has pleasingly been reached. Following today’s results, we increase this to 1050p. On our new FY26F expectations, Cohort trades on a PER of 16.7x and EV/EBITDA of 10.0x. We anticipate the shares will trade ahead of the market today.

17 Jul 24. Babcock FY24 results update and Type 31 contract update.

Babcock International Group PLC (“Babcock” or “the Group”) provides an update on its year ended 31 March 2024 (FY24) and the Type 31 contract.

FY24 – unaudited financial performance

Based on draft preliminary accounts, subject to finalisation of the year end audit, the Group’s summary results for FY24 are set out below.

Highlights

Strong revenue1 growth, up 11% organically to £4.4bn, contract backlog up 9% to £10.3bn

Underlying operating profit2 up 34% to £238m. This includes a £90m loss on the Type 31 contract and a £17 m profit on disposal of a property

Type 31 loss is fully recognised in FY24. Cash impact of the loss will be recognised over the life of the contract

Underlying free cash flow of £160m is significantly ahead of expectations, despite £35m accelerated pension deficit payment

Balance sheet strengthened: net debt down £129m. Net debt to EBITDA (covenant basis) 0.8x

Long term pension funding plans agreed on two of our three large pension schemes; future annual deficit payments reduced by £25m to c.£40m

Guidance unchanged: we expect a further year of progress in FY25 and reiterate our medium term guidance

Revenue £4.4bn (FY231: £4.4bn) grew 11% on an organic basis, driven by strong growth in Nuclear (up 29%) and Land (up 17%).

Underlying operating profit2 of £237.8m (FY23: £177.9m) reflects strong operating performance, particularly the Nuclear, Land and Aviation sectors.

Underlying operating profit includes a £90m loss on the Type 31 contract (FY23: £100 m loss), discussed below. Excluding the Type 31 loss, underlying operating profit was £328m (FY23: £278m). Also included is a £17 m profit on disposal of a property. Excluding these and Type 31 loss, FY24 underlying operating profit was £311m (see note 2).

Underlying operating margin3 improved to 5.4% (FY23: 4.0%). Excluding the impact of the Type 31 loss and profit on disposal underlying operating margin improved 40 basis points to 7.0%.

Underlying free cash flow of £160m was significantly ahead of expectations (FY23: £75m), despite an accelerated £35 m pension deficit repair contribution. Strong operational performance and the timing benefits of early customer receipts were the key drivers, resulting in an operating cash conversion ratio of 136% (FY23: 173%), or 98% excluding the impact of the Type 31 loss (FY23: 110%).

Strong balance sheet: Net debt at 31 March 2024 was £435m, a reduction of £129m driven by strong cash generation. Net debt excluding leases was £211m (FY23: £346m). On a covenant basis, net debt to EBITDA decreased to 0.8x (FY23: 1.5x).

Pension deficit, on an actuarial technical provision basis, reduced to c.£200m (FY23: c.£400m)

Long-term funding plans have been agreed with two of our three large pension schemes, the Babcock International Group Pension Scheme (BIGPS) and the Devonport Royal Dockyard Pension Scheme (DRDPS).

FY24 included a £35 m accelerated pension deficit repair payment to the BIGPS, which has now reached self-sufficiency.

As a result, we expect the total Group pension deficit repair payments to reduce to around £40m per annum (previously £65m per annum).

Type 31 update

The outturn over the lifetime of the contract has deteriorated by £90m, which has been fully recognised in FY24

The cash impact of this loss is expected to be realised over the remainder of the contract

The programme has been restructured following a detailed operational review to protect the in-service date

Excluded from the loss are the benefits from some planned productivity efficiencies and expected continuation of the Type 31 programme

Signed in 2019, the Type 31 contract for five ships is the last material legacy onerous contract the Group is managing. During FY24, we have made progress on the programme with the superstructure of the first ship almost complete. Work is also progressing on the second ship with the keel laid and the first double bottom blocks in the build cradle. In addition, during the year we have settled the Dispute Resolution Process with the customer, which has enabled the restructuring of the programme to drive efficiency and to protect the in-service date.

Overall estimated programme costs have increased due to the maturing of the design and increase in the forecast cost of labour. The increase in the cost of labour in the market available to Rosyth is forecast to be higher than CPI, the indexation within the Type 31 contract. These cost increases cause the total contract outturn to deteriorate by £90m, which has been fully recognised in FY24. The cash impact of the loss is expected to be realised over the remaining five years of the programme.

During the year we initiated an operational improvement programme to challenge all aspects of the contract, including a significant focus on cost drivers and financial modelling, supported by external consultants. This has been led by a new management team with enhanced capability to restructure the programme, and they are supported by the experienced leaders in the new Group functions. Our operational improvement programme is facilitated by the fact that the design is now more mature. Although this has increased the volume of work, the design maturity has allowed us to target improvements in productivity and ongoing support costs as well as benefitting prospective export sales of our Arrowhead 140 design.

The Audit Committee has reviewed the programme team’s plans to deliver additional programme benefits from improvements in productivity and further work relating to the continuation of the T31 contract. Some of these benefits have not been taken into account in the loss given the evidential bar required to recognise future benefits, although we do expect the benefits to be delivered over the course of the programme.

Preliminary results

The external audit is substantially complete in all areas except the finalisation of Type 31. Subject to completion of the audit process, we expect to announce our FY24 preliminary results on 26 July 2024.

Notes

Revenue

FY23 included £422m from disposals and a £12m one-off credit (revenue and profit)

Excluding these, FY23 revenue was £4,005m

Underlying operating profit

FY24 underlying operating profit included a £90m loss on Type 31 and a profit on property disposal of £17m

Excluding these, FY24 underlying operating profit was £311m

FY23 underlying operating profit included a £100m loss on Type 31, a one-off accounting credit (£12m as above), and £1m operating profit contribution from businesses divested in the year

Excluding these, FY23 underlying operating profit was £265m

Underlying operating margin

Excluding the loss on Type 31 and profit on property disposal, FY24 underlying margin was 7.0%

Excluding disposals and one-off credit, FY23 underlying operating margin, on an ongoing basis, was 6.6%

The FY23 figures were the basis of our medium-term guidance, outlined in the FY23 results.

Full year dividend

The full year dividend reflects the HY24 interim dividend of 1.7 pence (FY23: nil) and a FY24 proposed final dividend of 3.3 pence (FY23: nil)

17 Jul 24. UK’s Babcock posts 34% jump in annual profit. British engineering company Babcock (BAB.L)posted a 34% jump in its annual profit on Wednesday, helped by strong operating performance in nuclear, land and aviation sectors.

The company said underlying operating profit for the full year ended March 31 was £237.8m ($308.5m), and reiterated its medium-term guidance.

Babcock said its year-end net debt stood at £435m, a reduction of £129m from the year-ago period, driven by strong cash generation.

16 Jul 24.

12 Jul 24. SilencerCo Announces Acquisition of ZEV Technologies.

A big piece of industry news just dropped with the recent acquisition of ZEV Technologies by SilencerCo. The pending transaction brings “certain business operations” of ZEV under the SilencerCo banner.

SilencerCo Acquires ZEV Technologies

“We are very happy to align ourselves with such an innovative company as Zev Technologies,” said Jonathon Shults, SilencerCo CEO. “We look forward to the launch of the FDP-9/FDC-9 in conjunction with Magpul and anticipate that product launch taking place later this year.”

For the uninitiated, ZEV Technologies manufacturers firearms and firearm parts. The company’s Glock-pattern builds comprise some of the finest sport and EDC pistols in the business. ZEV helped pioneer Glock customization with upgraded slides, triggers, barrels and ultimately the OZ9 pistol family. Then ZEV and Magpul collaborated on the wildly popular Folding Defensive Pistol (FDP-9) and Folding Defense Carbine (FDC-9).

Meanwhile, SilencerCo continues its rise into one of the most influential suppressor companies in the industry. It expects the deal to finalize before the end of July. The company plans to continue placing emphasis on the ZEV brand as a manufacturer rather than an OEM supplier of components to other builders. SilencerCo stated it plans to maintain the ZEV headquarters in Centralia, Washington.

“Our team is excited for the future of Zev under this new acquisition,” said Taylor Goode, Zev Technologies President. “We look forward to working closely with SilencerCo to enhance both of our brands and product lines.”

For more info, visit zevtechnologies.com or silencerco.com.

GAT Editor’s Take: If we are reading the tea leaves correctly here, and we think we are, this acquisition is about to blow ZEV up even further in the consciousness of shooters everywhere. Trending away from OEM and shifting to hyper-focused on building the ZEV brand, look for more ZEV firearms and components to drop in the near future. Make no mistake, ZEV knows the Glock pattern, and their Magpul collab keeps us all eagerly waiting for more. This one could lead to some big moves in the competition, EDC and shooting spaces.

(Source: https://gatdaily.com/)

16 Jul 24. KBR to Acquire LinQuest, Expanding Technical Capabilities Across Air, Space and Digital Domains.

KBR entered into a definitive agreement to acquire LinQuest Corporation, adding digital integration capabilities for national security customers
Acquisition expands opportunities for revenue growth, meeting customer and market demands
Enhances KBR’s position in high-end, technically differentiated services across space, air dominance and battlespace missions

KBR (NYSE: KBR) announced today it has entered into a definitive agreement to acquire LinQuest Corporation. LinQuest is an engineering, data analytics and digital integration company with a legacy of solving complex technical challenges for national security missions. They develop and integrate advanced technology solutions to meet the most challenging demands across space, air dominance and connected battlespace missions, including advanced AI and machine learning capabilities. LinQuest is a leader in supporting the U.S. Space Force, U.S. Air Force and other U.S. Department of Defense and intelligence agencies.

The acquisition of LinQuest is an important accelerator to KBR’s strategy of furthering the delivery of high-end technology, expertise and mission capabilities. The two companies have highly complementary capabilities creating synergies across the portfolio of solutions that will drive new revenue growth. Additionally, over 74% of LinQuest’s 1,500+ employees hold security clearances, which will strengthen KBR’s support for strategic U.S. government clients to meet the demands of the rapidly changing defense and national security sector.

“LinQuest is an innovator in national security, space and technology solutions. Their talented people deliver high-end, technically and digitally differentiated services that are complementary to KBR,” said Stuart Bradie, KBR President and Chief Executive Officer. “LinQuest is a terrific company, and the revenue synergy opportunities are exciting. Our values are strongly aligned, and we are delighted to welcome this talented team to the KBR family.”

The transaction is expected to be accretive to adjusted EPS, which excludes amortization from purchased intangible assets and non-recurring transaction costs. The transaction has been unanimously approved by the KBR Board of Directors and is subject to certain regulatory approvals prior to closing.

The purchase price is $737m, inclusive of modest expected tax benefits, which represents a 2025 FY Adj. EBITDA multiple of just over 11x. KBR will utilize a combination of cash and existing debt capacity to fund the transaction, which is expected to close in Q3 or Q4 this year.

Arena Strategic Advisors supported financial due diligence and Gibson, Dunn & Crutcher LLP acted as legal advisor to KBR for the transaction.

Baird acted as the exclusive financial advisor to LinQuest in connection with the transaction. Kirkland & Ellis LLP acted as legal advisor to LinQuest.

Supplemental information is available at investors.kbr.com.

About KBR

We deliver science, technology and engineering solutions to governments and companies around the world. KBR employs approximately 35,000 people worldwide with customers in more than 80 countries and operations in over 30 countries.

KBR is proud to work with its customers across the globe to provide technology, value-added services, and long-term operations and maintenance services to ensure consistent delivery with predictable results. At KBR, We Deliver.

Visit www.kbr.com

About LinQuest Corporation

LinQuest is a national security space leader that enables defense and intelligence missions through advanced digital transformation solutions and the development, integration, and operation of mission-critical systems. With a legacy that spans 47 years, LinQuest’s 1,500-plus team members work side-by-side with their customers to solve their most complex technical challenges, drive innovation, and deliver fielded solutions for national security missions. More information can be found on the company’s website at www.linquest.com.

15 Jul 24. Shore Capital has published a research note on Cohort’s Contract Award this morning. See a summary of the key points below and the full note attached.

Robin Speakman, Equity Analyst, said: “The defence and security technology specialist has announced this morning that, following a competitive tender, its subsidiary EID (in its Communications and Intelligence Division) has signed a contract with the NATO Communications and Information Agency (NCI Agency) to supply the Portuguese Army with a Tactical Deployable Communication and Information System (TDCIS). The value of the signed contract is €33 m with delivery over a three-year period”.

Strong Order Book: This win further extends Cohort’s growing order book for FY25F. At the FY trading update stage in May (YE April) Cohort confirmed a book to bill ratio of 1.9x for FY24F with a very strong order intake of c.£387m (2023: £218m) through the year, resulting in another record closing order book of c.£518m (30 April 2023: £329m) including the £135m Royal Navy countermeasures contract awarded to SEA in March 2024. This order book already underpins FY25F revenues of c.£180m (90% of our current forecast revenues for the year).

Valuation/view: We eagerly await the full year results to update our model for the full extent of recent wins and the outlook. Cohort offers a solid and growing order book with a robust book-to-bill ratio (set to continue), a positive industrial backdrop in defence and security markets, and a strategic supplier position with clients, all point positively to a premium valuation being sustained for Cohort, in our view.). In March we set a 30% upgraded interim valuation target of 805p which has pleasingly being reached. On our current FY25F expectations, Cohort trades on a PER of 19.9x (EV/EBITDA 12.0x).We sense much more delivery and value creation to come and feel comfortable in sustaining our BUY case. This report is prepared solely for the use of Shore Capital Press/Media Support Shore Capital Press/Media Support.

Jul 24. Rafael Advanced Defense Systems Ltd. has been upgraded to an ‘A’ credit rating by S&P Global Ratings, with a stable outlook. This significant achievement underscores Rafael’s robust operating performance, resilient profitability, and strong competitive position within the aerospace and defense industry.

Key Highlights:

Enhanced Competitive Position: S&P Global Ratings has reassessed Rafael’s business risk profile from ‘fair’ to ‘satisfactory,’ reflecting our strengthened market position and the increasing demand for our cutting-edge defense solutions.

“Our view of Rafael’s competitive advantage and improved profitability underpins our reassessment of its business risk profile. Rafael’s improving competitive advantage and high demand for many of its products and services mean it is well placed to capture customer demand, both from the Israeli Ministry of Defense and from overseas governments and militaries.”

– S&P Global Ratings Report

Strong Financial Health: Our financial risk profile has been upgraded from ‘modest’ to ‘minimal,’ underpinned by a solid net cash position. Rafael’s cash balances are projected to exceed $4bn through 2024, further cementing our financial stability.
Growing Order Backlog: Rafael boasts an impressive order backlog exceeding ILS 50bn (approximately USD 13 bn), representing about three years of revenue. This surge is driven by heightened defense budgets and robust demand for our advanced defense systems.
Positive Outlook: The stable outlook from S&P Global Ratings is based on the expectation of continued strong demand for Rafael’s products and services, bolstered by rising government defense budgets. This trend is anticipated to support our order backlog and financial performance over the next two years.

Dr. Yuval Steinitz, Chairman of Rafael: “We are honored to receive the credit rating upgrade by the world-leading rating agency S&P especially during such a challenging time for the country and society as a whole. Here, again, we see that also economically Rafael can achieve the impossible. In the heat of the tireless efforts invested by the company during the “Swords of Iron” war and despite the extensive reserve enlistment from its ranks, Rafael continues to grow consistently with improvements of tens and hundreds of percent compared to previous years in most parameters. Rafael’s employees and senior directors work with determination, around the clock, especially during this wartime, to realize the company’s vision and be a significant pillar in the security of the State of Israel. I am pleased that these accomplishments are reflected in S&P’s upgraded rating, showcasing trust in Rafael’s strength and financial stability.”

Rafael CEO Yoav Tourgeman: “Rafael maintains its growth trajectory, demonstrating excellent financial results and stability. The S&P rating, the highest ever awarded to an Israeli company, is a testament to this. The year 2023 was a record year for Rafael, marked by technological breakthroughs and robust business activity, a trend we continue into 2024. Since the onset of the war, Rafael’s systems have been saving lives daily and making a decisive contribution to the ‘Swords of Iron’ efforts. This success is due to the unwavering dedication of Rafael’s employees and our commitment to staying at the forefront of technology, turning the impossible into possible. In 2023, Rafael seized important opportunities globally, securing significant deals like the historic sale of the David’s Sling to Finland and other major contracts.”

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11 Jul 24. NATO summit highlights defense deals for RTX, Boeing and others. The NATO summit in Washington showcased a series of significant deals for top U.S. defense companies and others, including RTX (RTX.N), , Lockheed Martin (LMT.N), Boeing (BA.N), , Norway’s Kongsberg Defense (KOG.OL), and Sweden’s SAAB (SAABb.ST).

Here are some of the weapons procurements that were highlighted, many of which have been in development for months, if not years. Many date to before the summit, with the exception of the Stinger contract which was first publicly announced at the summit.

HIGHLIGHTED DEALS

A $680m contract for 940 Stinger missiles made by the Raytheon unit of RTX (RTX.N). Shoulder-fired Stingers have been in hot demand in Ukraine, where they have successfully stopped Russian assaults from the air. Neighboring European countries have sought the weapon, fearing they may also need to beat back Russian forces.
Patriot GEM-T missiles, made by COMLOG, a joint venture between RTX’s Raytheon and MBDA valued at $5.5bn. NATO in January said its procurement arm would support a group of member countries, including Germany, the Netherlands, Romania and Spain, with a contract to buy up to 1,000 Patriot air defense missiles.
155mm artillery shell components, made by various companies including General Dynamics (GD.N), valued at $365m, have been ordered. The most pressing need for Ukraine two years after Russia’s full-scale invasion is artillery ammunition, much of which has been supplied by the U.S. and other NATO members.
An extension program for NATO’s AWACS airborne radar for $1.2bn that is being built by Boeing, Italy’s Leonardo (DRS.O), Spain’s Indra, Airbus (AIR.PA), Thales (TCFP.PA), Jacobs, and Kongsberg.

Tesla cars may have been used as cabs in New York, but the firm is hitting the brakes on plans for a self-driving robotaxi.

HIGHLIGHTED CO-PRODUCTION AGREEMENTS

Norway’s Nammo and RTX’s Raytheon business unit agreed to partner to build rocket motors. These engines have become a hot commodity to propel a wide range of rockets and missiles in Ukraine and for future weaponry across NATO.
The Ground Launched Small-Diameter Bomb (GLSDB) produced by SAAB and Boeing has been used successfully in Ukraine.
Portions of interceptors for Lockheed Martin’s Patriot missile defense system will be produced by Poland’s Wojskowe Zakłady Elektroniczne. The United States this week also announced a second $2bn foreign military financing direct loan deal with Poland as part of a major modernization program that will include buying U.S. defense equipment.
Kongsberg and RTX’s Raytheon business unit are working to improve the National Advanced Surface-to-Air Missile System, also called NASAMs. Originally announced in October 2023, NASAMs have become an important part of missile defense in Ukraine. (Source: Google/Reuters)

11 Jul 24. IFS, the leading technology innovator in cloud and Industrial AI software, today announces the acquisition of EmpowerMX. EmpowerMX is an AI-powered aviation maintenance software provider specialising in Airframe Maintenance Repair and Overhaul (MRO) solutions, which are trusted by the largest aviation organisations in the world, including Embraer, MRO Holdings, Delta, and American Airlines.

The acquisition reinforces IFS commitment to industrial AI and underpins the importance of industry-specific capabilities that enable customers to rapidly derive value and improve the way they serve their customers at the moment of service. For aerospace & defence customers, this translates to improving efficiencies, enhancing production control, minimising turn-around times, and reducing maintenance costs.

Together, EmpowerMX and IFS will provide aerospace & defence customers with the most comprehensive and capable maintenance management system that can support multiple users in multiple roles, as well as provide well-documented, paperless governance in the form of electronic task cards and logbooks.

The acquisition will deliver more value and industrial AI innovation to customers at a time when aviation MROs and the airline industry are experiencing multiple challenges that negatively impact profitability and operational efficiency, including supply chain disruption, labour and skills shortages, capacity shortfall, compliance, and ESG reporting.

EmpowerMX customers will now be able to leverage IFS capabilities and global scale to benefit from embedded IFS.ai innovation that enables them to maximise asset availability, deliver best practices, and ensure compliant delivery.

Scott Helmer, President, IFS Aerospace & Defence Business Unit, commented: “Combining EmpowerMX with IFS is a perfect opportunity to proactively advance our leadership position in the aviation MRO software space due to the many synergies we have: an aligned technology vision, deep sector expertise and a shared commitment to customer value. Together, we not only expand our reach and foothold into the burgeoning MRO space, but we can also better serve a wider base of global A&D customers with the industrial AI-fueled MRO innovation that enhances security, safety, and efficiency.”

Helmer added: “EmpowerMX’s world-class and established customer base of leading aviation brands complements our own roster of industry leaders including Southwest Airlines, Air France KLM, Lockheed Martin, and BAE Systems.”

Dinakara Nagalla, Founder & CEO, EmpowerMX, commented: “EmpowerMX has been at the forefront of technology innovation in the MRO space, and I am incredibly proud of what our team has achieved with the EMX platform, products, and services. We are excited to join the IFS team that will enable us to accelerate innovation and extend the value we create for MRO customers. With IFS’s global presence, EmpowerMX can help our MRO clients deliver faster turnaround, drive bottom line growth, and leverage the AI capabilities we are infusing into our products.”

IFS is independently recognised as a leader in EAM, ERP, and FSM solutions for asset and service-centric industries. Within A&D, more than 310 m passengers fly safely thanks to aircraft maintained by IFS.ai.

Aly Pinder, Research Vice President, Aftermarket Services Strategies, IDC, commented: “For the aviation MRO and airline industry, digital transformation initiatives are critical to addressing operational challenges, including long turnaround times, out-of-service aircraft, and compliance adherence,” said IDC analyst Aly Pinder. “As a notable company in the aviation MRO software market, IFS has helped some of the world’s largest air carriers address these challenges by modernising their enterprise intelligence systems. The acquisition of EmpowerMX will complement IFS’s existing cloud-based aviation maintenance solution and present IFS with an opportunity to strengthen its market position in the MRO sector.”

10 Jul 24. Videosys Expands Antenna Division Amid Increasing Demand from Defense Industry. Videosys has created a separate brand identity for its antenna business, named VB Antennas, fuelled by its expansion into new areas, including security and defense.

Videosys Broadcast has increased its office and manufacturing capacity in response to increased demand from robotics, security, and defense industries.

The company is recruiting more design and production staff and has created a separate brand identity for its antenna business, VB Antennas.

According to Videosys, the growth of the company’s antenna business has been fuelled by its expansion into new areas, including security and defense, where there is demand for robust, durable and flexible antennas that can be used in challenging terrain as well as harsh RF environments.

Colin Tomlin, CEO of Videosys Broadcast, stated that new customers in the defense and security sectors have been quick to recognise Videosys Broadcast not only has extensive expertise and knowledge of antennas, but is also an expert in video, radio and camera systems, placing Videosys in the unique position of being able to advise and build bespoke systems across a wide range of use cases.

Tomlin said, “Our antenna cover the L, S and C bands used in ground-based security and surveillance applications, as well as the NATO D-H frequency bands that enable battlefield and MANET connectivity, both on-the-move and at-the-halt.

“We also provide COTS and custom-designed antennas for use with unmanned vehicles such as drones, boats and ground transportation with a wide range of connector options. While our genesis and pedigree lie in the design and supply of broadcast quality antennas for outside broadcast and live sports events – a market that still accounts for the majority of our business – the technology used in broadcast antenna can equally be applied to these new markets. It’s just that the use case is different.”

“A good example of this is our new gooseneck omni antenna, which is ideal for body worn applications where having a fully bendable neck allows users to position the antenna in a particular direction to enhance battlefield communications,” he says. “We have expanded this principle across all our omni and sector antennas.”

Tomlin says; “Many of these new markets require suppliers to deliver up to 1,000 units at a time, so we must be nimble and ready to meet that demand without impacting on the supply of antenna products to our existing customers.

“By increasing our manufacturing capacity, we are able to keep lead times down to four to six weeks for all customers, which is significantly better than some of our competitors with lead times as long as 14 weeks. What’s more, all of our products are made in the UK. This is especially important in some sectors where provenance and reliability are key and where suppliers – and their suppliers – are carefully vetted before contracts are awarded.“

This comes two and a half years after the acquisition of Masthead Antennas. Tomlin added; “Since acquiring Masthead, we have streamlined our design and manufacturing processes, ensuring continuity of product. Parts are standardised and built with components that come from commercial suppliers.

“This is something we have always done, but is also a requirement for our ISO 9001 accreditation application, a globally recognised standard that helps companies audit their performance and demonstrate a commitment to quality.” (Source: https://www.defenseadvancement.com/)

11 Jul 24. Kitron: Q2 2024 – Robust profitability and positive outlook despite sector challenges. Kitron today reported quarterly figures that reflect the company’s ability to maintain operating margins in line with the company’s strategic target despite sector challenges.

Kitron’s revenue for the second quarter was EUR 167.6m, compared to 206.3m last year. There was strong growth within the Defence/Aerospace market sector, while other market sectors declined.

Second-quarter operating profit (EBIT) was EUR 15.0m, compared to 19.2m last year. EBITDA was EUR 19.6m, compared to 23.5m last year.

Profitability expressed as EBIT margin was 8.9 per cent, compared to 9.3 per cent last year.

The order backlog ended at EUR 454.5m, a decrease of 15 per cent compared to last year but an increase of 2 per cent from the preceding quarter.

Peter Nilsson, Kitron’s CEO, comments:

“Kitron is well-positioned for growth over the next 12 months. With robust performance in the Defence and Aerospace sector and strategic cost-saving measures, the company is well-placed to capitalize on emerging opportunities.”

Profit after tax amounted to EUR 10.4m, compared to 15.7m in the same quarter the previous year. This corresponds to earnings per share of EUR 0.05, compared to 0.08 last year.

Solid operating cash flow

Operating cash flow in the first quarter was EUR 18.8m, compared to 12.7m in the second quarter of 2023.

Net working capital was EUR 188m, a decrease of 1.0 per cent compared to the same quarter last year. Net working capital as a percentage of revenue was 28.4 per cent compared to 22.3 per cent last year.

Outlook

For 2024, Kitron reiterates its outlook from the first-quarter report and expects revenue to be between EUR 660 and 710m with an operating profit (EBIT) between EUR 53 and 60m, including EUR 4.8m in restructuring costs in the first quarter.

11 Jul 24. Booz Allen Fuels Automation in Space. Booz Allen Hamilton (NYSE: BAH) today announced that its corporate venture capital arm, Booz Allen Ventures, LLC, has made a strategic investment in Quindar, an early-stage commercial space technology company focused on automating and democratizing satellite operations. This investment is aligned with the firm’s VoLT business strategy—centered on velocity, leadership, and technology—and highlights the urgency of integrating mission-critical technologies across the space domain to increase awareness, security, automation, and data collection for decision advantage on a global scale.

“By continuing to invest in companies who are delivering innovative solutions and emerging tech to the space domain, we are demonstrating our commitment to safeguarding the nation’s interest and ensuring resiliency in an increasingly contested and competitive environment,” said Chris Bogdan, executive vice president at Booz Allen and leader of the firm’s space business. “This investment demonstrates Booz Allen’s commitment to shaping tomorrow’s capabilities and advancing our clients’ missions as a critical integrator and data solutions provider for the space domain.”

As commercial efforts continue to rapidly transform the space domain, federal clients are increasingly asking industry to help accelerate innovation and integrate technology to modernize legacy, monolithic satellite and ground systems that are aging out—replacing them with new, proliferated, commercially developed technologies that are AI-enabled.

To help integrate and automate these growing missions and processes, Booz Allen Ventures—which identifies and invests in early-stage technology believed to be transformative to mission outcomes for the public sector—scouted and made a strategic investment in Quindar whose virtualized, cloud-scalable platform significantly improves the ability to command cooperative fleets of spacecraft using non-proprietary technologies—opening a path to create near-autonomous command and control (C2) capabilities to support space battle management.

This is the second space-focused investment made by Booz Allen Ventures since its inception in 2022, and the tenth overall—with a throughline of AI, cyber, and data aimed at speeding innovation for the Department of Defense and federal government.

“Quindar is thrilled to partner with Booz Allen Hamilton in advancing AI-enabled solutions for space management. Together, we aim to transform how space missions are managed, making them more efficient, secure, and accessible,” said Nate Hamet, CEO and co-founder of Quindar. “Our combined expertise and technology will pave the way to utilize our mission management platform, which is currently operating multiple customers and assets in space and support the United States in achieving near-autonomous command, control, and communication capabilities across hybrid fleets.”

This collaboration further demonstrates the power of dual-use technology and the need for partnership between the federal and commercial arenas. It also reflects the growing need in the space domain to scale and integrate efforts for mission success, with a focus on automation and secure, open architectures.

“For the last five years or so, the stacks that support satellite operations have been separated into different stovepipes, such as launch, payload, and operation,” said Travis Bales, managing director of Booz Allen Ventures. “Quindar’s stack enables the future of space support operations for disparate partners and payloads to be controlled through one holistic view.”

Since launching, Booz Allen’s $100m corporate venture capital arm has made strategic investments in early-stage companies developing dual-use commercial technologies, including Latent AI, Synthetaic, Reveal Technology, Credo AI, Hidden Level, Shift5, Hidden Layer, Second Front (2F), and Albedo. (Source: BUSINESS WIRE)

11 Jul 24. Rosebank shares nearly double value on first day of trading.

Simon Peckham’s new venture modelled on his Melrose success has investors scrambling for a piece of the cash shell company, sending shares up 92%.

Shares in a £50m cash shell company attempting to replicate the success of the factory turnaround group Melrose Industries surged on their first day of trading as investors scrambled for a piece of the action.

Investors pushed the share price of Rosebank Industries from the 250p at which cornerstone investors took part in a placing earlier in the week to 480p, a first-day climb of 92 per cent.

Rosebank is headed by Simon Peckham, who led the old Melrose as it delivered fabulous returns for shareholders through a spate of bids that culminated in the £8.1 bn hostile takeover of GKN, the car and plane parts maker, in 2018.

He and other former executives of Melrose hope to adopt the same “Buy, Improve, Sell” formula on future prospective targets and are aiming for a first deal with an enterprise value of up to $3bn on either side of the Atlantic.

Investors were “clamouring” to own a slice of the new business, according to Dan Coatsworth, an investment analyst at AJ Bell. “Melrose is one of the best examples of value creation on the UK stock market,” he said, and Rosebank had “an identical strategy”.

In effect, the Aim-listed company still has no assets apart from net cash of £49m in the bank, but is now valued by the market at £96 m.

On paper, the early investors, who include the sovereign wealth funds of Singapore and Norway, respectively GIC and Norges, have almost doubled their money in the space of three days. Peckham, 61, who personally invested £1.35m for a 2.7 per cent stake, has already made a theoretical profit of £1.24m.

It is thought Rosebank could take advantage of the strong early performance to issue further shares to add to its cash pile.

The episode has echoes of the Spac [special purpose acquisition company] frenzy in the United States, when investors splashed out to back shell corporations that might or might not make large bids.

One notorious episode in UK stock market history was in 1999 when a quartet of big name entrepreneurs nicknamed the Knutsford Four floated a tiny cash shell, only to see its value mushroom from £5 m to £600 m on rampant speculation they might bid for Marks & Spencer. They didn’t. (Source: The Times)

10 Jul 24. Space startups funding continues to recover as investors bet on government spending. Space startups attracted $2.41bn in global investments from April to June, marking a third consecutive quarter of growth in funding, according to British investment firm Seraphim Space.

WHY IT’S IMPORTANT

This positive trend follows a period of high interest rates that had deterred investors from funding companies involved in rockets, satellites and space-based data services.

Companies such as SpaceX and Planet Labs (PL.N) have become increasingly vital as geopolitical tensions drive countries to spend more on satellite-based imagery and assets for intelligence gathering and communications.

CONTEXT

Investments in Europe were flat from the prior quarter, while in North America, they were down about 50%. However, deals are often announced after the end of a quarter and it is too early to tell whether a decline in the United States suggests a weak 2024, or a bumpy recovery, the space technology investment firm said.

The strong quarter was propelled by a $943m investment in Shanghai Spacecom Satellite Technology, the largest Chinese space tech deal to date.

This development reflects a growing determination among Chinese investors to rival U.S. capabilities in space, the report said.

KEY QUOTE

“I’m optimistic in predicting that at least in terms of growth, space investment market in 2025 is going to be better than 2024 because unfortunately I don’t really see the geopolitical challenges around the world resolving themselves in the course of the next 18 months,” said James Bruegger, chief investment officer at Seraphim Space.

(Source: Reuters)

10 Jul 24. Solid State – A solid way to ride the defence spending boom.

A UK electronics group is benefiting from increased defence spending and is making inroads into other markets

Annual revenue up 29 per cent to £163m
Pre-tax profit up 44 per cent to £15.6m
Net debt slashed 58 per cent to £4.7m

Redditch-based value-added electronics group Solid State (SOLI: 1,460p) has delivered a record year of profit and revenue, having upgraded guidance twice during the 12 months to 31 March 2024.

The outperformance was helped by the earlier than expected shipment of a Nato defence customer order which helped boost like-for-like revenue by 60 per cent in the group’s communication equipment division. The defence and security sector accounted for 44 per cent of total revenue, highlighting Solid State’s exposure to a market that is seeing increasing demand as governments raise budgets in an unstable global geopolitical environment. Indeed, such is the demand for more complex systems from Tier 1 security and defence customers that the group is investing in a new production facility.

The medical industry is another key market and one that now accounts for 10 per cent of group revenue. Solid State is benefiting from its relationship with Tier 1 customers, including Siemens Healthcare, and is focusing on higher-value, longer-term projects where it can offer its engineering value-added capabilities. This also highlights the strategy of focusing on structural growth markets to sell its diversified product range into a wide customer base, thus making the business more resilient.

True, analysts at house broker Cavendish conservatively forecast pre-tax profit of £10mn on revenue of £143mn in the new financial year. However, there is ample scope for upgrades as the year progresses (as was the case in the year just ended), driven by additional contract wins, and potentially large ones, as well as bolt-on acquisitions. Net debt is forecast to be slashed to £0.3mn by 31 March 2025, so the board has ample firepower.

Rated on 14.7 times forecast operating profit to enterprise valuation, I see scope for upside to consensus fair value (1635p) and my own 1,700p target price, having suggested buying the shares at 1,300p (‘Alpha Research: An overlooked share to benefit from rising defence spending’, 20 July 2023). Buy. (Source: Investors Chronicle)

09 Jul 24. AE Industrial Partners, LP (“AEI”), a private equity firm specializing in national security, aerospace and industrial services, today announced the close of its third flagship private equity fund, AE Industrial Partners Fund III, LP (“Fund III”), with total capital commitments of $1.28bn.

Reflecting the firm’s strategic focus on its three key target markets, Fund III will make control investments in the critical “toll gates” across the aerospace and defense supply chains and support key industry suppliers as they scale up production to meet ongoing and increased demand from their respective end markets.

Commitments to Fund III came from a diverse mix of institutional investors in the U.S. and around the world, including leading endowments, charitable foundations, public and corporate pensions, financial institutions, funds of funds, family offices, and sovereign wealth funds.

“We are extremely grateful for the support shown by our existing investor pool, as well as the numerous global commitments from new investors who have joined us, expanding and diversifying our investor base,” said Michael Greene, Co-CEO & Managing Partner at AEI. “Over the past several years we have seen a tremendous growth of interest in our target markets from LPs, and we look forward to continuing our work building the next generation of middle market companies in national security, aerospace and industrial services.”

To date, AEI has deployed more than a quarter of Fund III into five platforms and three add-on investments. These include:

York Space Systems: A leading independent provider of small satellites, satellite components, and turnkey mission operations.
RedLattice: A pure-play cyber technology company providing full spectrum cyber capabilities for customers in the U.S. national security, defense, and commercial communities.
Firefly Aerospace: An emerging leader in economical launch vehicles, spacecraft, and in-space services.
Yingling Aviation: A leading provider of maintenance, repair, and overhaul (“MRO”) and fixed-base operator (“FBO”) services to business aviation and government customers throughout the United States.
Calca Solutions: A proprietarily sourced specialty chemicals business that sits within several of AEI’s target markets, including specialty industrial, space, aerospace, and defense.

To date, Fund III has offered nearly $870m of co-investment to Fund III limited partners and other investors.

AEI’s investment approach focuses on identifying companies with differentiated capabilities and market positions and targeting opportunities that provide strong growth potential, with a balance of organic and acquisition-based growth.

“Investors value our team’s decades of experience, specialized industry expertise, and deep network of relationships that extend throughout our target markets,” added David Rowe, Co-CEO & Managing Partner at AEI. “We are also well positioned to take advantage of current geopolitical and macroeconomic trends that have contributed to a significant pipeline of exciting investment opportunities.” Kirkland & Ellis LLP served as legal advisor to AEI. (Source: BUSINESS WIRE)

10 Jul 24. Patria Group’s Interim Report for 1 January – 30 June 2024. Patria Group’s Interim Report for 1 January – 30 June 2024: Patria’s net sales and order stock developed well in the first half year.

The first half year 2024

Patria Group’s net sales for the first half year was EUR 375.9m (EUR 321.8m in the comparison period).
Operating profit was EUR 21.7m (EUR 15.8m).
Equity ratio was 33.0% (39.1%) and net gearing 118.6% (77.8%).
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 second quarter according to Patria’s Horizon 2025 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.
It was announced in early May 2024 that Germany proceeded to the research and development agreement phase of the Common Armoured Vehicle System (CAVS) programme. Germany is the fourth country to join this phase with Finland, Latvia and Sweden.
On 24 May, 2024 Patria opened a new armoured vehicle production facility in Valmiera, Latvia, marking the start of full-cycle production of Patria 6×6 armoured vehicles in Latvia, the first and so far, the only one in the Baltics.
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. The agreement covers the assembly of F135 engines and components between 2025-2030, followed by a transition to F135 engine Maintenance, Repair, Overhaul and Upgrade (MRO&U) operations, beginning in 2030.
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. Nordic Drones’ expertise in manufacturing professional drone systems for numerous customers is a reinforcement of Patria’s Unmanned Aerial Systems (UAS) offering, which benefit mutual and new customers in Finland and internationally, across all operating environments. The company employs 10 people. The completion of the acquisition requires the approval of the Finnish Ministry of Employment and the Economy (‘TEM’) and the related authority process has started.
On 17 June, 2024 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. The aim of FAMOUS programme is to improve the performance of new and existing armoured vehicles with the support of EU funding. Finland is the lead nation and Patria the industrial coordinator of the FAMOUS programme.
In June it was also announced that Patria signed a contract with the Finnish Defence Forces Logistic Command on Squadron 2020 programme´s project support expert services. Services include support for project management, engineering, and other expertise support.
Change negotiations were held in Patria’s Pilot Training operations during the second quarter on the possible termination of the function during 2025. The function is mainly focused on arranging professional civilian pilot training. Alternatively, efforts are being made to find an external successor for the business or part of it. After negotiations, the termination of the employment of all 36 employees in Finland is being considered on production-related and financial reasons due to the gradual decline in the training activities of airline pilots. The effects on personnel in Córdoba will be resolved separately, taking into account the procedures of Spanish legislation. The ongoing pilot training programmes will be finalised as planned. The plan will not have an impact on Patria’s military pilot training activities.

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.

09 Jul 24. Adam Sivner, a Managing Director in Houlihan Lokey’s Industrials Group, said: “The UK drastically needs a coherent and long-term focused industrial strategy. The country has a long-standing pedigree in various critical industries and remains a world leader in aerospace and defence, flow control, satellite communications technology, and electronic components, amongst others. Given such history, UK manufacturing has seen numerous businesses, such as Cobham, Ultra, and Meggitt, become acquisition targets for international strategics and private equity. Concurrently we are seeing significant investment in digitalisation and skilled labour on a global basis, which is making the UK less attractive to manufacture in. If the UK is to remain as a home to world leading manufacturers, then it will need a detailed investment strategy to help support these businesses in competing on the global stage and ensure they can resist being consolidated by larger acquirers.”

08 Jul 24. Boeing in talks with US defense department on impact of guilty plea – source. Boeing is in talks with the U.S. Defense Department over how the planemaker’s planned guilty plea could affect its extensive government contracts, a person briefed on the matter said.

Late on Sunday, the Justice Department said in a court filing that Boeing had agreed to plead guilty to a criminal fraud conspiracy charge to resolve an investigation linked to two 737 MAX fatal crashes.

Boeing and the Defense Department did not immediately comment on Monday.

Boeing shares were up 3.4% on Monday to $190.68 in morning trading.

A guilty plea potentially threatens the company’s ability to secure lucrative government contracts with the likes of the U.S. Defense Department and NASA.

Boeing’s defense and space unit is vital to its business, with $7bn in first quarter sales, up 6% from a year ago. Boeing in its annual report said U.S. government contracts represented 37% of its revenue last year including foreign military sales.

Still, the financial costs tied to the plea appeared “manageable relative to the company’s scale and overall obligations,” said Ben Tsocanos, airlines director at S&P Global Ratings.

“We expect that Boeing will likely continue to be a key supplier of defense and space products following the guilty plea,” he said.

As part of the plea deal, Boeing will pay a criminal fine of $243.6 m. Boeing has also agreed to invest at least $455 m over the next three years to strengthen its safety and compliance programs, have the Justice Department appoint a third party monitor to oversee the firm’s compliance, and to make annual reports to the Department of Justice.

Delivery Hero shares slide on EU antitrust worries

The prices of Boeing’s bonds were little changed in morning trading in New York on Monday, LSEG data shows.

Bankers said Wall Street’s appetite to finance Boeing could sour if the guilty plea had a material impact on its business – through missing out on major contracts, for example. (Source: Google/Reuters)

01 Jul 24. SpaceX valued at $200bn. SpaceX is contemplating another fundraising operation by selling shares in a tender offer that could value the closely held company at roughly $200bn (€185.7bn), according to Bloomberg. SpaceX is reportedly discussing a tender offer — a transaction that enables employees and insiders like investors to sell shares — that may kick in days, said some of the people, who asked not to be identified because the information is confidential. The price for the upcoming tender offer hasn’t been decided but SpaceX is weighing offering shares at $108 to $112 apiece.

The last sell-off of shares valued SpaceX at around $180bn.

SpaceX has frequently been said to be contemplating an Initial Public Offering (IPO) but both Elon Musk and President and COO of SpaceX, Gwynne Shotwell, have said “not yet” when specifically asked about an IPO.

Musk’s view is that an IPO and obligatory stock market listing places an unnecessary work-load on a business.

Last week, Musk said, “The legal load and pressure for short-term results for a public company are very high,” perhaps reflecting on the challenges he experienced in getting shareholders to approve his $56 bn compensation package on his Tesla shareholding.

According to numerous sources, SpaceX achieved cash flow breakeven in November of 2023. Musk stated that SpaceX had “no need for additional capacity and will actually be buying back shares.” He said liquidity rounds for investors and employees are held around every six months.

Bloomberg added that SpaceX probably booked revenues of $9 bn in 2023 for its rocket launch and Starlink broadband service, which provides low-cost internet in remote locations. (Source: Satnews)

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04 Jul 24. New DC Gov’t Relations Firm Launches to Champion Frontier Tech Companies. Today marks the official launch of Washington Office, a new DC-based strategy firm that aims to redefine government relations by focusing on frontier tech that powers the national interest. Specifically, Washington Office (W.O.) will serve as the DC team for startups and leading companies working to harness emerging technology – including artificial intelligence, autonomous systems, energy, materials sciences, robotics, space systems, synthetic biology, quantum computing, and beyond – to advance U.S. security and prosperity.

As the name implies, the firm will serve as a fractional “Washington office” for forward-thinking clients. W.O. will provide strategic communications, business development, and government relations support under one roof. The firm is launching with a bipartisan team of advisors offering deep expertise at the intersection of technology and public policy and in strategic partnership with Capital Factory, one of the nation’s leading startup incubators.

“This is the most pivotal moment in human history,” said Joshua Baer, W.O. co-founder and founder of Capital Factory. “For America to stay in the lead, the voices of ‘Little Tech’ need to be heard in the nation’s capital. There’s a reason this firm is born on the Fourth of July.”

“We built Washington Office because DC consultants claim to understand tech, but they’re locked into the status quo, not the future,” added W.O. co-founder Evan Burfield. “Our clients will be championed by people who’ve been policymakers and technologists — who actually understand product and have built things – and who have worked at all levels in Democratic, Republican, and nonpartisan leadership positions.”

“This firm will be unlike any other in the nation’s capital,” said W.O. co-founder Miles Taylor. “We’re building a tech-forward team that’s overseen sensitive national programs, negotiated deals with foreign leaders, and overhauled tech policy inside and outside of government. To put it more bluntly: we’re not slow-moving, boxy-suit lobbyists. We’re the get-shit-done crew.”

The firm’s advisors will support clients by guiding them through public-policy strategy and helping to advance the future. Founding advisors include the below individuals – and others to be announced:

Joshua Baer (Founder, Capital Factory); Sai Dhanak (former Head of Product, True Anomaly); Dan Fata (former Vice President of Government Affairs, Lockheed Martin; former Deputy Assistant Secretary for Europe/NATO, Department of Defense); Tim Gallaudet (Rear Admiral USN (ret.), former Acting Administrator, National Oceanic and Atmospheric Administration); Camille Stewart Gloster (former Deputy National Cyber Director, The White House); Hannah Hummelberg (former Director of Strategic Communications, Department of Homeland Security); Bob Kadlec (former Assistant Secretary, Department of Health and Human Services); Sean Kirkpatrick (former Director, All-Domain Anomaly Resolution Office, Department of Defense); Caitlin Legacki (former Senior Advisor to the Secretary, Department of Commerce); Mike MacKay (former National Security Advisor, U.S. Senator Joni Ernst); Jason Mello (former Chief Research and Technology Officer, Air Force Office of Scientific Research); Jeff Modisett (former Attorney General, Indiana); Brandon Pollak (former Head of Global Engagement, Bird); Dan Prieto (former Director for Cybersecurity, National Security Council, The White House); Dhruva Rajendra (Co-Founder, Latch); Denver Riggleman (former Member of Congress); Greg Schultz (former Presidential Campaign Manager); Rina Shah (GOP Strategist, Social Entrepreneur); Michael Slaby (former Chief Technology Officer, Obama for America); Miles Taylor (former Chief of Staff, Department of Homeland Security); Brad Viator (former Vice President, Edison Electric Institute); Patrick Weninger (former Senior Intelligence Service, Station Chief, CIA); Rear Admiral Mike Wettlaufer (former Commander, Military Sealift Command); Evan Burfield (Founder, 1776; former CEO, Helm).

Upcoming Initiatives:

NATO to the Future Event: On July 9 at Dock5 in D.C.’s Union Market District, Washington Office will co-host “NATO to the Future,” a micro-summit bringing together NATO leaders, tech companies, and policymakers to discuss the future of technology and its implications for national and international security.
New Tech Hub: Washington Office will provide pro-bono support for a major new tech hub in Washington, D.C. – to be announced on July 9. This initiative will be a center for innovators and policymakers to collaborate and drive progress on emerging technologies.

Washington Office will be based in Union Market District, partnering with EDENS – a leading national retail and mixed-use developer – to ensure its clients have a home in the nation’s capital. For more information, please visit www.YourWashingtonOffice.com.

(Source: BUSINESS WIRE)

04 Jul 24. Rheinmetall, Leonardo CEOs say deal paves way for EU defence consolidation. The newly-formed joint venture between Germany’s Rheinmetall (RHMG.DE), opens new tab and Italy’s Leonardo (LDOF.MI), opens new tab is a first step in the consolidation of the European defence vehicle sector, the chief executives of the two groups said on Thursday. Rheinmetall CEO Armin Papperger added that the agreement, announced on Wednesday, could capitalise on a European market worth more than 50bn euros ($53.99bn).

“My expectation is that, with (this) cooperation only on the vehicle side, there is a market of more than 50bn euros, a huge market that we can conquer,” Papperger said in a recorded message posted online.

“We can help Europe grow, together, and this is a very first small step on the vehicle side for consolidation on the European level,” he added.

The move could accelerate the consolidation of defence assets across Europe, a highly political endeavour where diverging national interests have so far proven somewhat of a hurdle.

However, Russia’s war with Ukraine has raised hopes for more concerted efforts, with Germany currently considering teaming up with private equity firm Carlyle to jointly acquire a majority in Thyssenkrupp’s (TKAG.DE), submarines and frigates division.

Last week, France agreed to buy the ASN submarine networks business from Nokia (NOKIA.HE) in the latest sign of a European government wanting to get a tighter grip on defence activities.

The alliance between Rheinmetall and Leonardo, which followed the breakdown of talks between Leonardo and Franco-German company KNDS, is in line with the two groups’ broader objective of creating pan-European consortia to develop new combat systems.

The two companies said on Wednesday the deal aims to produce tanks and other land defence systems.

“The target is to create a machine that is cutting-edge for the future. A machine that is cross-domain and interoperable, talking, in the future, to satellites, helicopters and aircraft,” Leonardo CEO Roberto Cingolani said. ($1 = 0.9261 euros) (Source: Google/Reuters)

02 Jul 24. John Cockerill Completes the Acquisition Process of Arquus. John Cockerill announces today the conclusion of the acquisition process of Arquus, the main French supplier of military vehicles, which began last January with the Volvo Group. The conclusion of the operation comes as France and Belgium recently signed a Memorandum of Understanding to support and oversee this alliance, with both states each entering at 10% in the capital of John Cockerill Defense. Beyond Arquus© vehicles and Cockerill© weapon systems, each a reference in their respective markets, John Cockerill Defense will also propose combined offers of vehicles equipped with light tank turrets to better serve ground forces worldwide. It aims for an annual turnover of 1 bn euros and a workforce of 2,000 professionals by 2026, with a global presence and major operational bases in Belgium, France, Italy, India, and Saudi Arabia. John Cockerill was advised by Crédit Agricole CIB as Sole Financial Advisor for this transaction, which was financed by Crédit Agricole CIB (Coordinator and Agent), BNP Paribas Fortis, and Société Générale Corporate and Investment Banking. (Source: ASD Network)

02 Jul 24. EIF and NATO Innovation Fund join forces to unlock private capital for Europe’s defence and security future.

European Investment Fund and the NATO Innovation Fund, a venture capital fund backed by 24 North Atlantic Treaty Organization nations, enter partnership.
Memorandum of Understanding signed in Brussels sets terms of closer collaboration.
Goal is to expand funding for start-ups, SMEs and midcaps in defence, security, and resilience sectors.

The European Investment Fund (EIF) and the NATO Innovation Fund (NIF) signed a Memorandum of Understanding (MoU) to cooperate in supporting the long-term growth of the defence, security, and resilience sectors across Europe. The EIF is part of the European Investment Bank (EIB) Group and the NIF is a standalone venture-capital fund backed by 24 NATO countries.

The MoU aims to encourage more private-capital funds to become active investors in technology sectors associated with defence and security, enabling EU companies to raise equity funding from a broader range of sources. The partnership reflects the shared interest of the NIF and EIF in establishing a framework to support start-ups, small and medium-sized enterprises (SMEs) and midcaps, as well as in enhancing the whole ecosystem by involving all the main stakeholders.

“By facilitating regular dialogue and knowledge sharing, the EIF and NIF will ensure a cohesive approach to strengthening the investment ecosystem for defence, security and resilience,” said Marjut Falkstedt, chief executive of the EIF. “This will benefit SMEs, midcaps, and the broader European innovation landscape.”

The MoU also outlines plans for EIF-NIF cooperation on ad-hoc activities to share knowledge and raise awareness about the potential of investments in defence and security. This will help foster a comprehensive investment ecosystem, ensure effective outreach to private-capital funds, support companies in their investment plans and raise awareness of the investment opportunities in the defence, security, and resilience sectors among limited partners.

The collaboration with the NIF also is in line with the EIB Group’s Security and Defence Action Plan, which is expected to support the effort primarily through the EIB’s venture-debt product designed to address the funding needs of innovative companies, and which may complement EIF and NIF venture capital and private-equity funding in some cases. The signatories will also exchange information with the European Commission in areas where its potential involvement may prove beneficial for the purposes of the MoU.

“There is great momentum in deep tech that is propelling innovations to help strengthen European defence, security and resilience,” said Andrea Traversone, Managing Partner, NATO Innovation Fund. “We are excited to be collaborating with the EIF, the EIB Group and the Commission to unlock investment opportunities for European businesses, advance capacity building for dual-use innovation, and share best practices across investors, innovators and government.”

The collaboration between EIF and NIF will also focus on the design of new financial products to cater for companies’ needs. The strategic alliance between the EIF and NIF represents a significant step forward in strengthening Europe’s defence and security capabilities, unlocking new avenues for private investment, and driving innovation in these vital sectors.

About the European Investment Bank and European Investment Fund:

The European Investment Bank (EIB) Group is the financing arm of the European Union, owned by its member states. It supports sound investments that contribute to EU policy objectives.

Financing for Europe’s security and defence industry is among the EIB Group’s strategic priorities. We provide a comprehensive range of financial support and solutions designed to meet the demands of companies and public sector entities in the security and defence sector, regardless of their size. From reconnaissance and surveillance, spectrum protection and control, to cybersecurity solutions, infrastructure and military mobility, our financing solutions are designed to bolster projects that keep Europe safe, resilient, and innovative.

The European Investment Fund (EIF) is part of the European Investment Bank Group. Its central mission is to support Europe’s micro, small and medium-sized enterprises (SMEs) by helping them to access finance. The EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, the EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth and employment.

About the NATO Innovation Fund:

The NATO Innovation Fund is a venture capital fund, backed by 24 NATO Allies, that deploys more than €1bn in deep tech to address challenges in defence, security, and resilience. The fund invests independently, with 24 nations supporting its portfolio’s success and helping provide deep tech entrepreneurs with access to both commercial and government markets.

Participating NATO Allies are: Belgium; Bulgaria; Czechia; Denmark; Estonia; Finland; Germany; Greece; Hungary; Iceland; Italy; Latvia; Lithuania; Luxembourg; Netherlands; Norway; Portugal.(Source: BUSINESS WIRE)

02 Jul 24. New Dutch government seeks to dictate defence M&A.

The Dutch Ministry of Defence has put forward a bill for military planning that also seeks to screen defence management for interference from other countries. The Netherlands government’s working on a law that will step-up the role of government in defence mergers, acquisitions and investments, as well as enable the Ministry of Defence (MoD), to give directions to defence companies and provide a legal basis to steer the defence industry on strategic stocks, supplies chains, and production capacity.

The bill also intends to give the government the power to issue eligibility certificates to Dutch companies that seek to pursue assignments abroad, “screening for unwanted interference from other countries in their management structure,” according to a release from the Dutch MoD on 1 July.

Netherlands new right-wing government was installed on 2 July 2024, formed of a coalition conservative parties, principally the Dutch anti-Islam populist Freedom Party led by Geert Wilders. The coalition was made possible after Wilders agreed to give up his bid to be Prime Minister, and installed to the premiership Dick Schoof, a senior official at the Ministry of Justice that had led the Dutch intelligence Agency AIVD.

The bill, which is part of an action plan for scaling up production and supply of military equipment, will be open to consultation from 1 July until 1 September 2024, and consists of three parts: a declaration of suitability, a sectoral investment test, and the introduction of new powers for market organisation.

Declaration of suitability for Dutch companies

While the language on deterring unwanted interference from other countries in the management structure of dutch defence companies may be dismissed by some as nativist pandering, the declaration of suitability, a requirement to achieve an eligibility certificate for work abroad, has some standing, according to GlobalData Defence analyst Fox Walker.

“I expect this has come up in great part due to the ongoing strategic competition with China and Russia,” said Walker. “This type of legislation ought to help prevent China from gaining access to critical emerging technologies and reduce Russia’s ability to evade the sanctions placed on it for Putin’s illegal invasion of Ukraine.”

“I’m not too surprised to see this sort of legislation come up, and I would not be surprised to see cross-party support for this bill,” continued Walker.

The MoD release does not detail if there will be carve-outs in the legislation for working with other Nato Allies.

Questions remain to be answered about the impact this will have on ASML, the Dutch company that is the hinge on the world’s supply of semiconducting microprocessors.

Defence market planning in Netherlands follows international template

The sectoral investment test will prevent mergers, acquisitions and investments that would lead to risks for the deployment of armed forces. While the defence industry is unlikely to appreciate additional regulation in this arena, it is unarguable that the consolidation of defence production chains has led to a brittle infrastructure in the past, inflexible to industrial disruption, such as the Suez Canal obstruction of 2021, or the impositions of international sanctions against Russia following the full-scale invasion of Ukraine.

The final element of the bill will give the MoD and the Ministry of Economic Affairs and Climate (EZK) powers to give directions to companies, including the production and maintenance of equipment and cooperation with ‘knowledge institutions’ according to the release from the MoD. The bill will also allow a level of market planning that the MoD claims fits into European Union developments, and includes some language from the EU.

In putting in place market planning legislation, Netherlands is not alone in Europe or among Nato Allies, following in line with Canada, Finland, France and the US. The US Defense Production Act is a leading example of such planning, and has been supported by Executive Orders from President Biden and the Federal Trade Commission (FTC) Chair Lina Khan. (Source: army-technology.com)

01 Jul 24. Altair (Nasdaq: ALTR), a global leader in computational intelligence, announced it has entered into a definitive agreement to acquire all of the outstanding capital stock of Metrics Design Automation Inc. (Metrics), a Canadian company with a game changing simulation as a service (SaaS) business model for semiconductor electronic functional simulation and design verification. Closing of the transaction is subject to customary conditions.

The Metrics digital simulator, DSim, when combined with Altair’s Silicon Debug Tools, will deliver a world-class, advanced simulation environment with superior simulation and debug capabilities in the EDA and semiconductor space. The cloud-based business model has the potential to transform the semiconductor space by making high caliber EDA design tools much more affordable and accessible for companies looking to aggressively scale out simulations to accelerate design cycles.

Today, integrated circuit (IC) design verification has high licensing costs and may require hundreds and sometimes thousands of seats to run a single chip simulation. Additionally, these tools run on desktop machines, and are not typically cloud-native or cloud-enabled. The Altair and Metrics solution delivers the flexibility to run as a desktop app, on your own servers, or in the cloud and can run very large regressions with the customer paying only for what they use. It supports System Verilog and VHDL RTL for digital circuits targeting application specific integrated circuits (ASICs) and field programmable gate arrays (FPGAs). Because of this, simulations can be run concurrently and at scale, removing massive amounts of time and costs from the traditional design cycle.

“By combining our best-in-class software with Metrics’ cloud-based simulation as a service, we are excited to bring this groundbreaking technology to our EDA and semiconductor customers,” said James R. Scapa, founder and chief executive officer, Altair. “Altair is unique in our ability to merge simulation with industry-leading workload and workflow optimization technology, serving as a true partner for companies embracing innovative tools and resource delivery models in this highly specialized and high-stakes industry. Customers now have a choice in design verification.”

DSim will be available through Altair One, Altair’s cloud innovation gateway, where it will also be available for desktop download. Whether in the cloud, on your own servers, or on the desktop, DSim is fully featured and optimized for speed, capacity and accuracy, providing semiconductor, automotive, aerospace and defense customers with Altair’s leading digital simulation, visualization, and circuit debug technology, so they can quickly track down design problems and move the most complex devices into production earlier and with a higher degree of confidence.

“We are proud to be first-to-market with our game-changing design verification product and business model for the semiconductor industry,” said Joe Costello, executive chairman, Metrics. “Joining Altair will allow us to grow and provide an alternative option – whether on desktop, on your own servers, or in the cloud – to engineers looking for a flexible, modern, accurate, and fast design verification solution that is truly scalable.”

Metrics is led by Joe Costello, who is considered one of the founders of the modern EDA industry when he became President of Cadence Design Systems and drove annual revenues to over $1bn—the first EDA company to achieve that milestone. In 2004, he was awarded the Phil Kaufman Award by the Electronic System Design Alliance in recognition of his business contributions that helped grow the EDA industry.

About Altair

Altair is a global leader in computational intelligence that provides software and cloud solutions in simulation, high-performance computing (HPC), data analytics, and AI. Altair enables organizations across all industries to compete more effectively and drive smarter decisions in an increasingly connected world – all while creating a greener, more sustainable future. To learn more, please visit www.altair.com. (Source: PR Newswire)

01 Jul 24. XTI Aerospace, Inc. (NASDAQ: XTIA) (“XTI” or the “Company”) today announced that it has entered into an agreement with FC Imperial Limited (“FCIL”), an affiliate of a private global investment consortium, FinExic Concordia Group, (“FCG” or “Investor Consortium”), for a proposed strategic equity investment for shares of convertible preferred stock (the “Investment”) of up to $55m (the “Maximum Amount”) at a post-money valuation of $27m (the “Locked Valuation”), with the successful consummation of the entire transaction process.

Mr. Anindya Chakraborty, leading the investment structuring for the Investment Consortium, said “For well over a year, extensive discussions were held with XTI management and XTI engineering team along with review of sector trends and technologies being developed. The Trifan is unique and perhaps the most efficient, practical, versatile and commercially viable VTOL aircraft with clear attributes of ushering in a game changing reality to the aviation industry.”

Scott Pomeroy, chairman and CEO of XTI, stated, “XTI has had the pleasure of working with and sharing information with the investment team for over a year, and they have performed extensive technical and financial due diligence on XTI Aircraft Company and the TriFan. Assuming the completion of the proposed investment, we believe the additional capital will help accelerate the development of the TriFan through several major milestones including completion of the updated preliminary design review along with launching the critical design review phase in preparation for the assembly of XTI’s Test Aircraft No. 1. Importantly, we also believe that our relationship with the Investor Consortium, which is a true collaboration of values and vision, aligns the long-term interests of both organizations.”

Mr. Pomeroy continued, “The $275m valuation aligns with the fairness opinion delivered to the Inpixon Board of Directors prior to Inpixon’s merger with XTI Aircraft Company. This valuation reflects the progress we have made, especially since our last private company capital raise, which was based on a $100 m valuation.”

Mr. Chakraborty added that “The Trifan represents traditional time-tested stability, hyper-boosted with intelligent innovation and we believe its elegant, utilitarian, cross purpose design is expected to fill up the skies across multiple geographies, including in the emerging aviation markets and some of the fastest growing economies like India, SE Asia and Middle East. It is a bold statement for a new segment in the aviation industry and with its unparalleled blend of speed and long-range VTOL capabilities, we feel the TriFan is uniquely positioned to achieve widespread global adoption. It is tailored for a broad spectrum of applications, from critical healthcare and emergency services to para-military operations, elite corporate mobility, and the ultimate aspirational luxury for enthusiasts. The Investment Consortium is willing to work with XTIA to provide more capital and help facilitate additional raises as milestones are met.”

Proposed material terms of Investment

The parties have entered into an agreement which stipulates a structured process for the distribution of capital within a defined time frame at the Locked Valuation of $275m and issuance of convertible preferred stock for an investment up to $55m which will convert into common stock through defined exchange events subject to execution of a definitive purchase agreement.

Further details of the proposed investment will be included in the Current Report on Form 8-k which will be filed by the Company with the Securities and Exchange Commission.

About XTI Aerospace, Inc.

XTI Aerospace (XTIAerospace.com) is the parent company of XTI Aircraft Company (XTIAircraft.com), an aviation business based near Denver, Colorado, currently developing the TriFan 600, a fixed-wing business aircraft designed to have the vertical takeoff and landing (VTOL) capability of a helicopter, speeds of 345 mph and a range of 700 miles, creating an entirely new category – the vertical lift crossover airplane (VLCA). Additionally, the Inpixon (inpixon.com) business unit of XTI Aerospace is a leader in real-time location systems (RTLS) technology with customers around the world who use the Company’s location intelligence solutions in factories and other industrial facilities to help optimize operations, increase productivity, and enhance safety. For more information about XTI Aerospace, please visit XTIAerospace.com.

(Source: PR Newswire)

29 Jun 24. Police search Thales offices in three countries in corruption probe. Police in France, Spain and the Netherlands searched the offices of French military equipment provider Thales (TCFP.PA) between Wednesday and Friday as part of a corruption probe, a judicial source told Reuters on Saturday. A spokesperson for Thales confirmed to Reuters that searches had taken place but gave no further details beyond saying that the company was cooperating with authorities.

The searches were part of two different investigations, the judicial source said, confirming a report by French news channel BFMTV.

One opened in 2016 for suspected corruption of a foreign public official, criminal conspiracy and money laundering related to the sale of submarines and the construction of a naval base in Brazil, the source said.

The second opened in June 2023 for suspected corruption and influence peddling, criminal conspiracy and money laundering linked to the sale of military and civilian equipment abroad, the source said.

“Thales points out that it strictly complies with national and international regulations,” the Thales spokesperson said. “The company has developed and implemented a global compliance program that meets with the highest industry standards.” Investigations are still ongoing. (Source: Reuters)

01 Jul 24. Boeing to Acquire Spirit AeroSystems.

– Demonstrates commitment to aviation safety, improves quality for Boeing Commercial Airplanes

– Leverages Boeing enterprise engineering and manufacturing capabilities

– Maintains continuity for key U.S. defense and national security programs

– Supports supply chain stability and critical manufacturing workforce

– Provides long-term value for commercial and defense customers, employees and shareholders

Boeing [NYSE: BA] today announced it has entered into a definitive agreement to acquire Spirit AeroSystems [NYSE: SPR]. The merger is an all-stock transaction at an equity value of approximately $4.7 bn, or $37.25 per share. The total transaction value is approximately $8.3 bn, including Spirit’s last reported net debt.

Each share of Spirit common stock will be exchanged for a number of shares of Boeing common stock equal to an exchange ratio between 0.18 and 0.25, calculated as $37.25 divided by the volume weighted average share price of Boeing shares over the 15-trading-day period ending on the second trading day prior to the closing (subject to a floor of $149.00 per share and a ceiling of $206.94 per share). Spirit shareholders will receive 0.25 Boeing shares for each of their Spirit shares if the volume-weighted average price is at or below $149.00, and 0.18 Boeing shares for each of their Spirit shares if the volume-weighted average price is at or above $206.94.

“We believe this deal is in the best interest of the flying public, our airline customers, the employees of Spirit and Boeing, our shareholders and the country more broadly,” said Boeing President and CEO Dave Calhoun. “By reintegrating Spirit, we can fully align our commercial production systems, including our Safety and Quality Management Systems, and our workforce to the same priorities, incentives and outcomes – centered on safety and quality.”

Boeing’s acquisition of Spirit will include substantially all Boeing-related commercial operations, as well as additional commercial, defense and aftermarket operations. As part of the transaction, Boeing will work with Spirit to ensure the continuity of operations supporting Spirit’s customers and programs it acquires, including working with the U.S. Department of Defense and Spirit defense customers regarding defense and security missions.

“We are proud of the role Boeing plays in supporting our men and women in uniform and are committed to ensuring continuity for Spirit’s defense programs,” said Calhoun.

Airbus SE and Spirit have also entered into a binding term sheet under which Airbus will acquire, assuming the parties entered into definitive agreements and receipt of any required regulatory approvals, certain commercial work packages that Spirit performs for Airbus concurrently with the closing of the Boeing-Spirit merger. In addition, Spirit is proposing to sell certain of its operations, including those in Belfast, Northern Ireland (non-Airbus operations), Prestwick, Scotland, and Subang, Malaysia. The transaction is expected to close mid-2025 and is subject to the sale of the Spirit operations related to certain Airbus commercial work packages and the satisfaction of customary closing conditions, including regulatory and Spirit shareholder approvals.

PJT Partners is acting as lead financial advisor to Boeing, with Goldman Sachs & Co, LLC and Consello acting as additional advisors. Sullivan & Cromwell LLP is acting as outside counsel to Boeing.

Additional information is available on the Events and Presentations section of www.boeing.com/investors.

01 Jul 24. Airbus enters agreement with Spirit AeroSystems. Airbus SE (stock exchange symbol: AIR) has entered into a binding term sheet agreement with Spirit AeroSystems in relation to a potential acquisition of major activities related to Airbus, notably the production of A350 fuselage sections in Kinston, North Carolina, U.S., and St. Nazaire, France; of the A220’s wings and mid-fuselage in Belfast, Northern Ireland, and Casablanca, Morocco; as well as of the A220 pylons in Wichita, Kansas, U.S.

With this agreement, Airbus aims to ensure stability of supply for its commercial aircraft programmes through a more sustainable way forward, both operationally and financially, for the various Airbus work packages that Spirit AeroSystems is responsible for today.

The transaction would cover the acquisition of these activities. Airbus will be compensated by payment of $559 m from Spirit AeroSystems, for a nominal consideration of $1.00, subject to adjustments including based on the final transaction perimeter.

Entering into definitive agreements remains subject to an ensuing due diligence process. Whilst there is no guarantee that a transaction will be concluded, all parties are willing and interested to work in good faith to progress and complete this process as timely as possible.

28 Jun 24. Tel-Instrument Electronics Corp. Reports Financial Results For Fiscal Year 2024. Tel-Instrument Electronics Corp. (“Tel-Instrument,” “TIC,” or the “Company”) (OTCQB: TIKK), a leading designer and manufacturer of avionics test and measurement solutions, today reported a net income of $342K on revenues of $8.8m for the 2024 fiscal year ended March 31, 2024.

Highlights include:

Revenues for the fiscal year ended March 31, 2024, increased $178K, or 2%, versus the prior fiscal year.
Gross margin for the 2024 fiscal year was 46.6%, or 11.3 percentage points increase over the prior fiscal year.
Operating expenses decreased by $666K, or 17% year-over-year, due primarily to client funded engineering projects.
Operating income was $737K as compared to an operating loss of $898K in the prior fiscal year.
Net income was $342K, compared to a net loss of $388K in the prior fiscal year.
Working capital increased $1.2m or 39% to $4.3m as compared to the prior fiscal year.
Backlog increased $640K from the prior year end to $7.2m as of March 31, 2024.
Recent receipt of Airbus order for SDR/OMNI.

Mr. Jeffrey O’Hara, Tel-Instrument’s President and CEO commented, “The 2024 fiscal year was very difficult due to parts shortages that significantly impacted production. This parts procurement issues are gradually easing, and we expect strong growth in fiscal year 2025. We are extremely excited by the prospects of the SDR-OMNI and the SDR-OMNI/MIL. We were pleased that Airbus selected our SDR-OMNI test set for use in its world-wide manufacturing operations after an extensive technical evaluation. We are even more excited about the prospects for the SDR-OMNI/MIL which has the potential to replace thousands of obsolete test sets currently in use by the U.S. military. The SDR-OMNI and SDR-OMNI/MIL are the only multi-purpose avionic test set in the market that meets Class 1 military environmental specification. We are confident that these two multi-purpose test sets provide market leading capabilities. We are also introducing a GPS simulator software application this summer.

The CRAFT ECP contract will be critical for the Company as this is expected to generate five m dollars of annual production revenues, starting when the engineering work is completed. TIC successfully completed the Test Readiness Review (“TRR”) in April 2024. The next major milestone is the Production Readiness Review that is scheduled for later this year. We expect to start shipping upgraded Navy production units in the fourth quarter of FY 2025.

The Lockheed Martin F-35 MADL Test Set development program has been completed. We are currently in negotiations to supply up to 119 MADL test sets this year.

About Tel-Instrument Electronics Corp.

Tel-Instrument is a leading designer and manufacturer of avionics test and measurement solutions for the global commercial air transport, general aviation, and government/military aerospace and defense markets. Tel-Instrument provides instruments to test, measure, calibrate, and repair a wide range of airborne navigation and communication equipment. For further information please visit our website at www.telinstrument.com. (Source: BUSINESS WIRE)

01 Jul 24. Porvair trades at an 18% discount.

Sizeable petrochemical orders will shift over the second half

Strength in the aerospace and petrochemical market
Net cash contracts due to M&A and capex

Porvair (PRV), in keeping with many other industrial groups, has had to contend with a period in which aggregate demand in the economy has been stifled by the rising cost of capital. Yet, if nothing else, the past couple of years suggest that demand for the industrial filtration specialist’s products and expertise is relatively inelastic. That’s because the group’s technologies are embedded within many production processes, so cyclical levers are unlikely to have a disproportionate impact on sales. Indeed, the group notes that compound annual growth rates for revenue and adjusted earnings come in at 6 and 10 per cent respectively over the past 10 years.

That said, the group chief executive, Ben Stocks, does highlight some variance in the group’s end markets in the first half of FY2024, indicating that strength in the aerospace and petrochemical markets offset weakness in industrial and laboratory consumables. Ultimately, “product use and replacement is mandated by regulation, quality accreditation or a maintenance cycle”, which goes someway towards explaining why performance hasn’t been unduly affected by external macroeconomic factors, although demand will wax and wane due to periodic de-stocking in some markets – the group’s laboratory markets provided a case in point at the half-year mark.

The group also targets markets with long-term growth potential and/or those where “product use is mandated, and replacement demand is regular”. So, although the general economic environment hasn’t been overly favourable, the steady increase in environmental regulations governing industrial production continues to support the order book.

Financial performance was mixed through to the end of May. Statutory figures compared unfavourably with the 2023 half-year, but adjusted operating profit edged up by 2 per cent to £12.5m. Revenues were down by 3 per cent once the impact of M&A activity is stripped out. Margins were constrained by the de-stocking issues in the group’s laboratory markets, and foreign exchange translations trimmed adjusted profits by £0.4mn. Net cash contracted due to £12.7m given over to acquisitions and capex, the benefits of which will accrue through the remainder of the year.

Trading patterns are likely to be consistent with the first half, although the second half will benefit from the shipping of several larger petrochemical orders. The forward rating of 18 times consensus earnings doesn’t scream value but the 18 per cent discount to the target price suggests that there is still potential low-risk upside on offer. Buy.

Last IC view: Buy, 670p, 5 Feb 2024. (Source: Investors Chronicle)

28 Jun 24. DZYNE adds C-UAS capability with High Point Aerotechnologies acquisition. DZYNE Technologies, a developer and manufacturer of autonomous technologies, has announced the strategic acquisition of counter-uncrewed aerial systems (C-UAS) specialist High Point Aerotechnologies. The acquisition enables DZYNE to extend into the C-UAS domain. Al White, CEO of High Point, will continue to manage the C-UAS business as it becomes part of DZYNE as EVP of Air Defense Technologies.

High Point produces large military-grade air defence systems capable of kinetic defeats as well as the handheld Dronebuster jammer which became part of the range following the company’s acquisition of Flex Force earlier this year. DZYNE and High Point are both portfolio companies of Highlander Partners, a Dallas-based private investment firm. (Source: www.unmannedairspace.info)

01 Jul 24. HARLAND & WOLFF: Shares in the Belfast shipbuilder that built the Titanic were suspended today after the company failed to publish its annual results as it battles to shore up its finances. The shipbuilder said it expected to publish audited annual statements next week, with the “delay necessary to ensure the accurate recognition of revenues related to a multi-year contract”, which has now been agreed with its auditors.

The company remains in talks with the government over a £200 m support package, which will be crucial in paying off high-interest debt from Riverstone Credit Partners, an American credit investor, and fulfilling contracts it has already won. The loan guarantee from the government agency, UK Export Finance, won ministerial approval in December, but final sign-off is subject to a commercial rate review and ministerial consent. A decision is expected after the general election. (Source: The Times)

BATTLESPACE Comment: Another example of a botched MoD Procurement of the FSS. No doubt this will return to be built by Navantia in Spain losing many UK jobs if Harland & Wolf goes into Receivership.

02 Jul 24. SIXGEN, a full-spectrum solutions provider of cybersecurity products and expertise to U.S. national intelligence, defense and critical infrastructure customers, announced today its acquisition of Secure Enterprise Engineering, Inc. (“Secure-EE”). Secure-EE is a leading provider of bespoke cybersecurity products and services across various domains, and marks SIXGEN’s first acquisition following Washington Harbour Partners’ (“WHP”) investment in the company in November 2023. This acquisition brings unique capabilities, software products, tier I engineers and longstanding customer relationships, accelerating SIXGEN’s strategic vision to empower the digital warfighter.

“I am thrilled to combine forces with Laura, Shawn and the entire Secure-EE team to further amplify SIXGEN’s impact on the national mission,” said Jack Wilmer, CEO of SIXGEN. “Secure-EE has exceptionally differentiated proficiencies that are complementary to SIXGEN’s growth objectives and product roadmaps. This combination of talent and highly complementary IP creates a leading team and strengthens our ability to address the mission needs of our national partners and customers.”

Secure-EE utilizes its proprietary intellectual property (“IP”) to deliver a comprehensive suite of capabilities across multiple software infrastructure layers and cyber environments, including data management, provisioning, cyber tooling and command & control. Grounded in its unified platform of data management and integration based on the Joint Cyber Warfighting Architecture (“JCWA”), Secure-EE enables operators to focus on mission objectives rather than system configuration and infrastructure management. Additionally, the company’s Distant Rook platform, designed for automated provisioning of joint deployable hunt kits, further enhances the impact of SIXGEN’s RAVEN ecosystem, offering customers rapid integration of new tools for dynamically evolving missions.

“SIXGEN is the ideal strategic partner for Secure-EE,” said Laura Montano, Secure-EE Founder & CEO. “I am incredibly proud of what we have been able to accomplish to date, and where we’re headed with SIXGEN and Washington Harbour. This combination will enable us to deliver an expanded set of capabilities and resources to both new and existing customers as we focus on achieving an even greater mission impact,” said Shawn Oles, Chief Technology Officer at Secure-EE. Both Laura and Shawn will join as senior members of the SIXGEN team, along with their extensive engineering and technical talent.

This strategic partnership will enable deeper collaborations on the rapid development of innovative technologies and the deployment of unique capabilities to a growing set of customers and end users. The companies share similar cultures and values, focusing on mission impact and cutting-edge technologies, and are committed to attracting and developing the best talent in the industry, all while building the new industry standard for multi-domain cyber operations.

“We have been extremely impressed with the vision and leadership of the SIXGEN team, and their relentless desire to bring modern solutions to critical national security missions,” said Mina Faltas, Washington Harbour’s Founder & Chief Investment Officer. “The combination of SIXGEN and Secure-EE brings together two cybersecurity leaders, now poised to make significant impacts for our country.”

The acquisition follows SIXGEN’s recent additions to its executive leadership team, with Jack Wilmer as Chief Executive Officer and Jonathan Sholtis as Chief Operating Officer. SIXGEN has also recently appointed renowned cybersecurity leaders across the digital battlespace to their Board of Directors, with Andrew Boyd and Lieutenant General Charles Moore.

Washington Harbour was advised by Morrison & Foerster on legal matters and PwC on financial. Davis Agnor Rapaport Skalny (DARS) served as legal advisor and Evergreen Advisors provided M&A advisory to Secure-EE.

About SIXGEN

SIXGEN is a mission-driven leader in cybersecurity, dedicated to supporting the U.S. Department of Defense, intelligence community, and other federal agencies. With a focus on operational excellence and innovative solutions, SIXGEN ensures operational mission success in the digital era across all cyber domains.

For more information, please visit www.sixgen.io.

About Secure-EE

Since its inception, Secure-EE has been providing disruptive cybersecurity system engineering, architecture, and operational capabilities to make customer’s missions execute faster, smarter, and more securely. The Company works directly with senior IC and DoD leaders to develop bleeding edge concepts, coordinate community buy-in, specify cybersecurity requirements, and drive implementation. (Source: BUSINESS WIRE)

BUSINESS NEWS

June 28, 2024 by

Sponsored by SPX CommTech (TCI & ECS)

www.tcibr.com

www.enterprisecontrol.co.uk

27 Jun 24. Serco raises guidance after strong first half.

New contracts ramping up
Revenue still expected to dip

Shares in Serco (SRP) are climbing again, following an upgrade to the outlook for 2024. The FTSE 100 outsourcer now expects to deliver an annual adjusted operating profit of £270mn, £10mn more than management had previously forecast. If achieved, this would represent a profit increase of 9 per cent versus 2023.

Serco expects to secure this growth by widening its margins, as opposed to boosting sales. Indeed, revenue is expected to dip by 2 per cent in the period.

2024 has got off to a strong start, with Serco reporting revenue of £2.4bn for the six months 30 June, according to a trading update. Adjusted operating profit was ahead of plan at £140mn. However, revenue and profits have come in below the same period last year, which management attributed to lower revenue from its new Medicare and Medicaid contract and the decision to ditch some low-margin work in the UK.

Serco expects growth to accelerate in the second half as new contracts ramp up and efficiency measures kick in. Second-half profit is expected to be nearly 30 per cent higher than the same period in 2023.

A key question for investors remains unanswered, however. Serco has provided facility management services to onshore immigration detention centres in Australia since 2009, and the contract is now up for rebid, with a decision due later this year. According to analysts at HSBC, this contract represented 5 per cent of group revenue in 2023 with a margin above group average. Should Serco’s rebid prove unsuccessful, therefore, the market is unlikely to take it well.

For now, however, the outsourcer is going from strength to strength, having shrugged off fears that it was a temporary pandemic winner.

Last IC View: Buy, 189p, 29 Feb 2024. (Source: Investors Chronicle)

27 Jun 24. Houlihan Lokey Advises Stellar Blu Solutions. Houlihan Lokey is pleased to announce that Stellar Blu Solutions LLC (Stellar Blu), a portfolio company of Fortress Investment Group LLC (Fortress) and Maz Group, has agreed to be acquired by Gilat Satellite Networks Ltd. (Gilat). The transaction is subject to customary regulatory approvals and is expected to close in the second half of 2024.

Stellar Blu is a leading avionics provider of next-generation SATCOM terminal solutions, offering turn-key inflight connectivity solutions, including terminal development, aircraft integration, and certification and installation packages. The company’s flagship product, SIDEWINDER, is a multi-orbit, multinetwork aero terminal that utilizes an open architecture and fuselage-mounted electronically steered array antenna. The SIDEWINDER has been selected by Intelsat, Panasonic, OneWeb, and others to redefine the in-flight connectivity paradigm for its airline customers with its network-agnostic design, high throughput, minimalist design, and significantly lower total cost of ownership.

Fortress is a leading, highly diversified global investment manager. Founded in 1998 and based in New York City, Fortress manages $48 bn of assets on behalf of approximately 2,000 institutional clients and private investors worldwide across a range of credit and real estate, private equity, and permanent capital investment strategies.

Gilat (NASDAQ:GILT) (TASE:GILT) is a leading global provider of satellite-based broadband communications. With more than 35 years of experience, Gilat creates and delivers deep technology solutions for satellite, ground, and new space connectivity and provides comprehensive, secure end-to-end solutions and services for mission-critical operations. Gilat’s comprehensive offerings support multiple applications with a full portfolio of products and tailored solutions to address key applications, including broadband access, mobility, cellular backhaul, enterprise, defense, aerospace, broadcast, government, and critical infrastructure clients, all while meeting the most stringent service level requirements.

Houlihan Lokey served as the exclusive financial advisor to Stellar Blu and assisted in structuring and negotiating the transaction on its behalf. Houlihan Lokey’s Aerospace and Defense practice is a leading M&A advisor, having closed more than 70 transactions worth over $12 bn in enterprise value since 2020. With a staff of approximately 20 investment bankers, Houlihan Lokey’s Aerospace and Defense practice is among the largest dedicated industry banking teams worldwide.

26 Jun 24. AeroVironment Announces Fiscal 2024 Fourth Quarter and Fiscal Year Results. AeroVironment, Inc. (“AeroVironment” or the “Company”) reported today financial results for the fiscal fourth quarter and year ended April 30, 2024.

Fourth Quarter and Fiscal Year Highlights:

Record fourth quarter revenue of $197.0m and fiscal year revenue of $716.7m, up 6% and 33%, year-over-year, respectively
Fourth quarter net income of $6.0m and adjusted EBITDA of $22.2m and fiscal year net income of $60.0m and adjusted EBITDA of $127.8m
Company on track for nearly 12% top line growth in fiscal year 2025 with expected revenue of between $790 m and $820m

“AeroVironment has yet again delivered exceptional results this past quarter resulting in record revenue and full year profitability for the company,” said Wahid Nawabi, AeroVironment chairman, president and chief executive officer. “We are pleased to also announce our full year revenue increased 33% from last year’s results. Our Loitering Munitions Segment continues to be a key growth driver for our company, and we have expanded capacity to deliver these much-needed systems to keep up with increasing customer demand.

As the need for our autonomous systems continues to rapidly increase worldwide, AeroVironment stands ready to meet our customer’s needs while delivering solid bottom-line results for our shareholders. We are therefore issuing fiscal year 2025 revenue guidance of between $790m and $820 m, another record year and double-digit revenue increase from fiscal year 2024.”

FISCAL 2024 FOURTH QUARTER RESULTS

Revenue for the fourth quarter of fiscal 2024 was $197.0m, an increase of 6% as compared to $186.0m for the fourth quarter of fiscal 2023, reflecting higher product sales of $23.1m, partially offset by a decrease in service revenue of $12.1m. From a segment standpoint, the year-over-year increase was due to revenue growth in Loitering Munitions Systems (“LMS”) of 74%, partially offset by decreases in UnCrewed Systems (“UxS”), the renamed Unmanned Systems segment, of 15% and MacCready Works (“MW”) of 9%.

Gross margin for the fourth quarter of fiscal 2024 was $75.6m, an increase of 11% as compared to $68.4m for the fourth quarter of fiscal 2023, reflecting higher service margin of $8.0m, partially offset by lower product gross margin of $0.8m. As a percentage of revenue, gross margin increased to 38% from 37%, primarily due to a decrease in the proportion of service revenue to total revenue driven by the closure of COCO site locations, partially offset by product mix. Gross margin was favorably impacted by a decrease in depreciation charges for in-service assets of $4.4m related to the closure of COCO site locations during fiscal year 2023. Gross margin was negatively impacted by $3.9m of intangible amortization expense and other related non-cash purchase accounting expenses in the fourth quarter of fiscal 2024 as compared to $3.6m in the fourth quarter of fiscal 2023.

Income from operations for the fourth quarter of fiscal 2024 was $5.9m as compared to loss from operations of $(165.7)m for the fourth quarter of last fiscal year. The increase year-over-year was primarily due to the MUAS goodwill impairment of $156.0 m recorded during the fourth quarter of fiscal 2023, lower selling, general and administrative (“SG&A”) expense of $27.0m inclusive of $34.1m of accelerated intangible amortization expenses associated with the closure of all of the Company’s MUAS COCO sites during the fourth quarter of fiscal 2023, and higher gross margin of $7.2m, partially offset by an increase in research and development (“R&D”) expense of $18.6m.

Other loss, net, for the fourth quarter of fiscal 2024 was $1.5m, as compared to $0.8m for the fourth quarter of last fiscal year. The increase in other loss, net was primarily due to increases in net unrealized losses on investment holdings, partially offset by a decrease in interest expense.

Provision for (benefit from) income taxes for the fourth quarter of fiscal 2024 was $1.8m, as compared to $(6.3)m for the fourth quarter of last fiscal year. The increase in provision for income taxes was primarily attributable to the increase in net income before income taxes.

Net income attributable to AeroVironment for the fourth quarter of fiscal 2024 was $6.0m, or $0.22 per diluted share, as compared to net loss of $(160.5)m, or $(6.31) per diluted share, in the prior-year period, respectively.

Non-GAAP adjusted EBITDA for the fourth quarter of fiscal 2024 was $22.2m and non-GAAP earnings per diluted share were $0.43, as compared to $46.4m and $0.99, respectively, for the fourth quarter of fiscal 2023.

BACKLOG

As of April 30, 2024, funded backlog (defined as remaining performance obligations under firm orders for which funding is currently appropriated to us under a customer contract) was $400.2 m, as compared to $424.1 m as of April 30, 2023. Funded backlog as of April 30, 2024 does not include new orders related to recently announced program wins such as the Low Altitude Stalking and Strike Ordnance or “LASSO” program, Organic Precision Fires-Light or “OPF-L” program, the Replicator Initiative and the Ukraine Aid Initiative as well as our first Lithuanian order for Switchblade 300 and 600.

FISCAL 2025 — OUTLOOK FOR THE FULL YEAR

For fiscal year 2025, the Company expects revenue of between $790m and $820m, net income of between $74m and $83m, Non-GAAP adjusted EBITDA of between $143m and $153m, earnings per diluted share of between $2.61 and $2.92 and non-GAAP earnings per diluted share, which excludes amortization of intangible assets, other non-cash purchase accounting expenses and equity securities investments gains or losses, of between $3.18 and $3.49.

26 Jun 24. Solus Power, an innovator of portable electric vehicle charging solutions, has revealed a £22m (US$28m) funding deal received from Dubai-based Petra Equity Partners, helping the UK company accelerate the development of its battery technology.

Solus Power has devised a revolutionary mobile solution to solve the key challenges of providing flexible electric vehicle charging where infrastructure is limited, as well as hard-to-access and off-grid environments.

The London-based company’s highly engineered, products include a portable military-grade, ruggedised power unit named ‘Kratos’ each of which is the size of an attaché case for easy transportation and deployment as well as specifically designed to discretely slide under vehicles to be out of sight and avoid any obstruction.

The Lithium-ion power units, described as ‘Jerry Cans of electricity’, can deliver ultrafast charging to the likes of electric vehicles, drones, or electrical equipment, anywhere in an instant. Through its innovative and simple modular design, users can scale the number of packs to increase energy capacity depending on their needs.

Petra Equity Partners is an investment firm that specialises in identifying disruptive technologies, such as Solus Power, that are poised to reshape industries. Its intent to invest ideally aligns Solus Power’s game-changing solution with its commitment to shaping the future of technology and nurturing high-potential opportunities.

The announcement of Solus Power securing a funding pledge from Petra Equity Partners to develop its technologies follows a recently signed Memorandum of Understanding (MoU) with QinetiQ Group, a defence and security technology company, to explore the deployment of its charging technology to provide a viable, flexible energy solution in challenging environments as militaries seek to maintain operational advantage and be less reliant on adversaries for energy.

A spokesperson for Petra Equity Partners, said: “Solus Power’s push into the defence and security sector and its ambitious plan to help electrify and evolve such a key, yet sometimes overlooked, sector aligns with our approach to identify key opportunities within certain industries.

The UAE’s mission has always been to be at the forefront of clean energy and is a strategic player within the defence industry. We are excited about the potential impact of Solus Power’s technology to help advance the electrification of not only the battlefield but also our ever-evolving cities.”

Solus Power Chief Executive Officer, Stas Leonidou, said: “Receiving the incredible support and pledged investment from Petra Equity Partners, which is renowned for backing cutting-edge technology innovators, is testament to our effort to radically rethink how to mobilise energy and solve the biggest challenge of electrification.

Our collaboration will help accelerate the development and deployment of our charging technologies to transform mobility across the globe, including the defence sector where we believe we can support the evolving criteria of its sustainable and adaptable energy needs.”

Since Solus Power was established in 2020 it has experienced formidable momentum and investment from a range of commercial customers who have expressed interest in the modular charging solutions for applications including car parks, car hire, and defence use. It recently received financial backing from US investment firm Marbanc International to expedite the development of its technology to market.

About Solus Power

Established in 2020, Solus Power specialises in the generation, storage, management, and distribution of power for electric vehicles as well as delivering innovative solutions to sectors where the mobilisation of energy is critically needed. Headquartered in London with its engineering division part of The Innovation Centre Warwick, Solus Power is at the forefront of an energy revolution, focussed on EV charging and off-grid solutions and committed to advancing sustainable energy practices.

About Petra Equity Partners

Petra Equity Partners is a cutting-edge private equity firm focusing on the GCC and other emerging markets. We specialize in backing disruptive technology ventures poised to reshape industries. Our team of sector-focused investors and entrepreneurs leverages deep industry knowledge and strategic insight to identify high-potential opportunities. With a track record of driving growth and maximizing returns, we’re committed to shaping the future of technology through strategic investments and partnerships. As an innovative private equity and venture capital group, our core focus spans across clean energy, digital infrastructure, and Artificial Intelligence.

25 Jun 24. Kingswood U.S., part of a network of independent wealth management firms that oversees more than $14 bn in client assets globally, today announced the launch of Kingswood Defense Group (KDG), a team of senior veteran military leaders and capital market experts who will support companies in the national defense and aerospace sectors.

“This new group represents a balanced combination of defense expertise and world-class investment capabilities that will help our clients gain access to capital markets and catapult them to their next stage of growth within these incredibly competitive and complex sectors,” said Michael Nessim, CEO and Managing Partner of Kingswood U.S. “We’re honored that this incredible team of decorated U.S. military veterans has made their home at Kingswood.”

KDG is at the forefront of driving innovation and growth in the national defense and aerospace sectors. With its deep-rooted and enduring connections at all levels within the defense and financial industries, KDG is well-positioned to support companies through various stages of Department of Defense (DOD) contract negotiation and capital markets activities.

KDG collaborates with both public and private companies on their strategic planning, mergers and acquisition and capital market needs, and provides guidance to enhance their current operations, product development, DOD procurement strategies and evaluation of global markets. By leveraging KDG, clients gain accelerated decision-making capabilities across various segments of the national defense and aerospace sectors.

Kingswood Defense Group Team

With over two decades of experience in financial services and entrepreneurship, Army veteran Jeff Thompson heads this team of senior-level executives and former military leaders.

Thompson has amassed expertise across capital markets, investment management, private equity, venture capital and banking. He has led organizations through transformative change and growth, driving market share and revenue growth initiatives while spearheading sales and distribution efforts for a $200 bn investment management and private banking business, specializing in alternative assets, structured lending and lower mid-market investment banking.

“We are thrilled to begin our work as Kingswood Defense Group,” Thompson said. “I am honored to work with this team of exceptional Army veterans; they have extensive expertise in bringing cutting-edge technology and capabilities to our Armed Forces, deep networks and an unparalleled understanding of what is needed to be successful in the defense procurement and contracting process. I can’t think of another group more capable.”

Additional KDG members are:

Scott Robison is a Special Forces veteran, with more than 22 years on active duty. He has eight years of operational test experience as an acquisition officer testing many new technologies for the Army and establishing testing protocols that later became the U.S. Army Futures Command. Robison’s extensive background in managing teams and programs to evaluate emerging technology in both the military and commercial business, combined with his success as a serial entrepreneur and business consultant, means he is regularly sought out by companies looking to strengthen their market presence within both federal and commercial markets.
Marcos A. Cervantes is a veteran with an established career spanning over two decades in venture capital and the Army. He served as the DOD expert in weapons systems, procuring innovative technologies for the Special Operations community and supporting broader national security initiatives. Cervantes founded the Army’s Rapid Capabilities and Technologies Office, contributing to the formation of the Army’s Future Command. At the helm of Coppertone Venture Firm as Managing Partner, and as CEO at Q-Branch, Cervantes has concentrated on leading global projects and strategic investments aimed at driving technological progress and expansion. His efforts have involved active investment and support of entrepreneurs, companies and governments in their commercial ventures.
Jay Wisham, a 25-year Army veteran who commanded at multiple levels, is the former Executive Director of the Army Applications Laboratory, the only unit with the sole mission to conduct innovation activities and partner with private capital investments for the Army. He also led several successful initiatives in Army Futures Command to make AI and data-enabled systems a reality at the tactical edge. Wisham has led a broad technology investment portfolio leveraging private sector innovators, DOD expertise and technical subject matter experts to deliver multiple technologies and capabilities to Army and SOCOM units.

The Kingswood Investment Banking Group provides access to capital to mid-market businesses undergoing varying degrees of operational, financial or market-driven change. Recently, the team served as the sole bookrunners for the Syra Health Corp and SolarMax public offerings. The Kingswood Investment Banking Group comprises senior professionals with an average of more than 20 years in investment banking, located in New York, Florida and Texas.

About Kingswood U.S. / Kingswood Group

Kingswood U.S., part of the Kingswood Group, is a network of wealth management firms that includes an SEC-registered RIA and a FINRA-licensed broker-dealer, offering comprehensive wealth management and business-building services, designed specifically for the independent financial advisor. With our parent company, we represent more than $14 bn in AUM, and support 400 registered individuals. Kingswood has the resources and capital of a very large financial services firm and the personalized touch and feel of a boutique company. Kingswood has earned a reputation as a firm built for advisors by advisors.

(Source: PR Newswire)

25 Jun 24. Australian cyber security business CSO Group and xAmplify, Australia’s leading automation systems and artificial intelligence (AI) integrator, today announced that they intend to merge. The merger will create the nation’s largest Australian-owned and operated integrator of AI, cyber security, technology and business automation services, to bring a sophisticated suite of solutions to digitally advance and protect government and corporate clients.

Once complete, the merged business will deliver some of the most innovative and digitally advanced AI, automation and cyber solutions to over 110 enterprise and government organisations across Australia spanning industries such as defence, federal and state government, energy, financial services, health, logistics, retail, construction and mining.

The new entity will be headquartered in Sydney and have a significant national presence with operations across every state and territory, with a combined headcount of more than 160 staff.

Michael Simkovic, CEO and Founder of CSO Group said: “The merger of CSO Group and xAmplify will create Australia’s largest home-grown cyber security, AI and automation consulting business, with a gross turnover exceeding AU$100 m annually. We see an enormous market and growth opportunity to disrupt and challenge the traditional large global service provider models.”

“This is a true merger of equals. The integration of the two businesses will create an amplifier effect, enabling us to deliver a new generation of innovative and integrated business solutions with the convergence of cyber security, automation and AI technologies. Ultimately this will bring more intelligence, optimisation and value to our clients, while also building greater Australian sovereign capability and expertise,” he added.

The merger will enable government and corporate clients to access the capabilities of both CSO Group and xAmplify, spanning strategy, governance, risk and compliance, managed security, AI and both technology and business automation services. It will also bring a renewed cyber security lens to provision high performance IT service and sovereign-secure AI technologies.

Wayne Gowland, CEO and Co-founder, xAmplify commented: “This merger will create a fully integrated national business that will work across every state and territory, enabling clients to leverage AI, automation and cyber security to deliver greater innovation, efficiency, assurance, and business value. The business and technology worlds are changing rapidly, and our customers are wanting to transform and adopt the next generation of groundbreaking technologies in a safe and secure way. Together, we aspire to create a digitally advanced and protected Australia by helping clients to identify, solve and manage their real-world problems of today, while safeguarding them for tomorrow.”

With the number of cyber attacks increasing exponentially, analyst group Gartner forecasts that Australian organisations will spend more than AU$7.3 bn on information security and risk management products and services in 2024, an increase of 11.5% from 2023. National spending on AI systems will grow to over AU$3.6 bn by 2025, according to the Commonwealth Scientific and Industrial Research Organisation.

The merger is expected to be completed in the second half of 2024.

25 Jun 24. European shares fall as Airbus hammers aerospace shares, tech slips.

Summary
Airbus tumbles on profit warning
Other aero-related stocks slide
Tech, industrials lead sell-off
STOXX 600 down 0.3%

European shares declined on Tuesday as Airbus tumbled after a profit warning and dragged down aerospace-related stocks, while technology shares slumped tracking the overnight selloff on Wall Street.

The continent-wide STOXX 600 (.STOXX) fell 0.3% by 0819 GMT.

Airbus (AIR.PA) tumbled nearly 11%, and was among the biggest drags on the index, after Europe’s largest aerospace group cut its industrial and financial targets and took a hefty 900m euro ($965m) charge for its troubled space activities.

Its profit warning and forecast for fewer plane deliveries dragged jet-engine manufacturers Rolls-Royce (RR.L), and MTU Aero Engines (MTXGn.DE), lower.

Indeed, the wider STOXX Europe aerospace and defence index (.SXPARO), slid 5.1%, on track for its biggest one-day drop since November 2021.

The tech sub-index (.SX8P), which houses some of Europe’s biggest chip-related firms, dropped 1.4%, tracking the Nvidia-led (NVDA.O), pullback in U.S. stocks.

Still, some market strategists spotted an opportunity in tech stocks, whose 14% gain so far this year places it among the best-performing sectors in Europe.

“We’re seeing a pretty healthy broadening of a longer-term equity rally … tech stocks had an amazing run and it’s nothing but healthy that they’re taking a bit of a pause giving opportunity to investors to catch their breath and reposition,” said Tom Gehlen, senior market strategist at SG Kleinwort Hambros.

The market’s focus would remain on the first round of French parliamentary elections later in the week.

Paris stock market operator Euronext’s CEO said the prospect of a politically extreme party with little or no government experience reaching power is worrying investors.

France’s benchmark CAC 40 (.FCHI), slipped 0.6% amidst the broader sell-off. (Source: Google/Reuters)

24 Jun 24. Safran in talks to buy French AI startup Preligens for €220m. Aerospace firm Safran is in exclusive talks to buy French defense artificial-intelligence startup Preligens, whose algorithms are used to analyze satellite data for the French and U.S. militaries, for an enterprise value of €220m, or $236m.

Safran said the potential deal is a “unique opportunity” to add cutting-edge AI to its product offering. The transaction is subject to the usual regulatory approvals, and is expected to close in the third quarter of 2024, the Paris-based company said in a statement on Monday

“The proposed acquisition of Preligens will boost the adoption of AI within the group,” Safran CEO Olivier Andriès said in the statement. “It will represent a step-change for our defense and space technology businesses.”

The acquisition would ensure French control of a technology that the country’s Armed Forces Ministry has identified as crucial in the competition between global powers. The French government owns 11.2% of Safran and 18.1% of voting rights. Other bidders for Preligens included Sweden’s Hexagon and the Leonardo-Thales joint venture Telespazio, Les Echos reported in April.

The Preligens AI has been trained specifically for detecting military equipment such as armored vehicles, aircraft and ships on satellite or drone images, and France’s military intelligence uses the technology to monitor activity at strategic sites. The startup also works with NATO, the U.S., the U.K. and the EU, and last month announced a new contract with an Asia-Pacific customer for AI analysis of high volumes of government satellite images.

The startup was approached in 2020 by the CIA-sponsored investment fund In-Q-Tel, prompting French government-owned defense investment fund Definvest to participate in a €20m funding round that same year to keep ownership fully in France. The French armament agency DGA signed a framework contract for AI analysis with Preligens in 2022 with a value of as much as €240m over seven years.

France in March announced plans to reallocate €2bn of funding from its 2024-2030 defense budget to artificial intelligence. Armed Forces Minister Sébastien Lecornu last week announced plans to build Europe’s most powerful classified supercomputer to take the lead in AI for defense purposes, saying France will be the European power that will devote most resources to military AI.

Preligens had sales of €28m in 2023 and employs about 220 people, including 140 engineers in research and development. The company’s products include Xerus, which uses AI to map terrain for military purposes such as mission planning, and Robin, which provides AI-based monitoring of activity at strategic sites such as air bases. The Paris-based startup is also working with the French Navy on AI-powered analysis of underwater acoustic signals.

Adding the Preligens technology will allow Safran deploy AI-enabled digital inspection focused on flight safety and quality, the company said. Safran gets more than three-quarters of its revenue from civilian aerospace.

Safran Electronics & Defense presented an AI solution called Advanced Cognitive Engine (ACE) at the Eurosatory defense show here last week, adding AI-based target detection and tracking to the company’s optronics for land vehicles, naval sights and aircraft. The company plans to integrate ACE with its drones and robotic systems.

Preligens was founded in 2016 by Arnaud Guérin, a former executive at French government-owned nuclear-power technology firm Areva, and Renaud Allioux, previously an engineer at Airbus Defence and Space focusing on remote sensing for Earth observation. (Source: Defense News)

25 Jun 24. The US defence industry is enjoying a munitions “boomlet” thanks to jumbo aid packages for Ukraine, Israel and Taiwan, allowing it to better meet surging orders after years of declining demand. Aid bills for the three countries allocated nearly $13bn for boosting weapons production at the US’s five biggest defence groups — Lockheed Martin, RTX, Northrop Grumman, Boeing and General Dynamics — and their suppliers. But despite the jump in funding, defence experts warn that uncertainty around future contracts means the sustained, longer-term growth needed to supply its — or its allies’ — armed forces is not guaranteed. “It is not quite a bonanza” for missiles and munitions “but it is, for the first time in a long time, a significant uptick in this area that has been sustained”, said Stacie Pettyjohn, director of the defence programme at the Center for a New American Security, a think-tank. She added that the injection of aid funds “alone isn’t going to fix the problem [of inconsistent demand] or be a long-term solution, as these are sort of one-off Band-Aids”. The war in Ukraine revitalised global demand for weaponry as western nations donated their stocks to Kyiv, and moved to bolster their own defences and replenish their stockpiles. The Ukraine bill set aside $5.4bn to develop and expand production of artillery, air defence munitions, anti-drone systems and critical munition components. The aid to Israel included $1bn to expand artillery production, while the Indo-Pacific bill allocated $3.3bn to expand the submarine industrial base, $2.5bn for a submarine and $133mn for making artillery and cruise missiles. Soon after the Ukraine war broke out, aerospace and defence executives warned that it would take years to ramp up to meet demand due to supply chain snarls, labour shortages and a fragile defence industrial base. They say they would like more multiyear contracts to allow them to invest in new facilities and expand production capacity. Even with the extra funding, defence analysts say the US could still struggle to supply its allies should a conflict break out between China and Taiwan. The structure of the industry has made it difficult to respond to sudden changes in demand. In the 1990s it began consolidating rapidly and eventually adopted “lean manufacturing” — a just-in-time delivery strategy. This left supply chains populated by fewer companies, leaving limited recourse should something go wrong at a supplier. It also left the five big defence companies interlinked, with each subcontracting to the others on various programmes, which meant that a problem for one affected the whole industry.

As a result, when the war in Ukraine broke out, they quickly found their production lines stretched to the limit. Mark Cancian, a former Pentagon procurement official now at the Center for Strategic and International Studies think-tank, estimates the aid funding will increase the Pentagon’s procurement spending by 5 per cent or 6 per cent between 2024 and 2030. “This will be a boomlet” for defence companies, he said, adding that “for the defence industry, that’s nice . . .[but] it’s not a huge spike”. Still, more than two years on, the sector is in better shape than it was before the Russian invasion. The industry is recruiting workers at the fastest clip since the end of the cold war. And US executives are bullish about their businesses’ top lines. Lockheed chief financial officer Jay Malave said late last month that with the current conflicts, the group’s missiles division is “going to be our highest grow over the next three or five years”, at an estimated $750mn annually. Revenue across the entire company is increasing more than originally anticipated this year. Northrop Grumman has tripled its production of rocket motors — which propel tactical missiles — in recent years, and chief executive Kathy Warden said the new funds will allow it to boost capacity further. Meanwhile, General Dynamics opened a new ammunition facility in Texas at the end of May, which chief executive Phebe Novakovic has said will increase production of sought-after 155mm ammunition rounds by 83 per cent. But the long-term future of government funding for weaponry remains uncertain. While US President Joe Biden signed a 10-year bilateral security pact with Ukrainian President Volodymyr Zelenskyy this month, the agreement could be torn up by Donald Trump should he end up back in the White House. Republicans put up fierce resistance to passing the supplemental aid bill, and many US voters are sceptical about continued assistance for Kyiv, even though about 86 per cent of the military aid will be spent in the US. The most recent FT-Michigan Ross poll found that nearly half of respondents think Washington is giving too much aid to Ukraine, while 45 per cent believe too much is going to Israel. “It makes it really difficult for industry to plan with all the uncertainty,” said Elizabeth Hoffman, director of congressional and government affairs at CSIS. That and the systemic weakness “prevent industry from really ramping up probably in the way they — even Congress and the administration — would like to see”, she added. Hoffman added that the Pentagon had yet to sign contracts from supplemental packages that would show its longer-term commitment to the industry. The exception is in munitions production. New money has been going towards expanding production of High Mobility Artillery Rocket Systems (Himars) and the guided multiple-launch rockets (GMLRS) that they fire, as well as Javelin and Stinger missiles, rocket motors and AIM-9X Sidewinders, which are short-range, air-to-air missiles, among others. Almost everything in Lockheed’s missile portfolio “is increasing its rate of production over the next couple of years”, according to chief operating officer Frank St John. Production capacity for its Himars is expected to double from its 2022 level by the end of this year, while its annual production of GMLRS has jumped from about 6,000 to 10,000 this year, and is expected to rise to 14,000 by 2025. (Source: FT.com)

24 Jun 24. Airbus provides 2024 guidance update.

Charges of around €0.9bn reported on certain telecommunications, navigation and observation space programmes
A320 ramp-up trajectory adjusted to reflect specific supply chain challenges in a degraded operating environment; around 770 commercial aircraft deliveries now expected in 2024; target production rate of 75 A320 Family aircraft a month maintained and now expected to be reached in 2027
2024 guidance updated

Airbus SE (stock exchange symbol: AIR) is providing a market update to report on new developments related to its space activities and commercial aircraft business, the impact of which is leading the Company to update its 2024 guidance.

In the first half of 2024, the Space Systems management team conducted an extensive technical review of all programmes, identifying further commercial and technical challenges. On that basis, the Company has decided to record charges of around € 0.9bn in the H1 2024 accounts. These are mainly related to updated assumptions on schedules, workload, sourcing, risks and costs over the lifetime of certain telecommunications, navigation and observation programmes.

In commercial aircraft, Airbus is facing persistent specific supply chain issues mainly in engines, aerostructures and cabin equipment. The Company now intends to deliver around 770 commercial aircraft in 2024 and continues to ramp up towards a rate of 75 A320 Family aircraft per month, which is now expected in 2027.

Accordingly, Airbus is updating its 2024 guidance.

As the basis for its updated 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, in 2024, the Company now targets to achieve:

Around 770 commercial aircraft deliveries;
EBIT Adjusted of around € 5.5bn;
Free Cash Flow before Customer Financing of around € 3.5 bn.

The Company’s half-year results will be disclosed on 30 July 2024.

24 Jun 24. Ukraine tactics are reshaping the defence industry.

Tanks and armoured vehicles are being destroyed in their thousands, expert says

Drones now the ‘largest built components’ of modern war
Defence companies raising capex, but profits sustainable

The war in Ukraine is leading to a fundamental reshaping of the defence industry in Europe, given the scale of drone use and widespread loss of tanks and other armoured fighting vehicles.

The number of armoured fighting vehicles lost by both Russia and Ukraine since the conflict started two years ago “is basically the equivalent of all of Europe’s armoured fighting vehicle production”, said Phillips O’Brien, professor of strategic studies at the University of St Andrews.

Speaking in a webinar organised by HanETF, O’Brien said there had been at least 3,000 “visually confirmed” losses of main battle tanks by Russia and 827 by Ukraine, although actual losses are likely to be much higher. “We’re looking at 4,000 main battle tanks lost on both sides, which is a number that would dwarf European defence capacity to replace.”

The UK, France and Germany currently only operate around 700 main battle tanks between them, he added.

If losses of armoured personnel carriers and other fighting vehicles are added in, the number tops around 10,000. This begs the question as to whether a new kind of war has emerged “where we don’t need to build or invest a huge amount” in heavily armoured vehicles, O’Brien said.

Increased drone use is the reason for such heavy losses. Although drones have been used in wars before, the scale of their deployment, production and destruction is unprecedented. Tens of thousands of unmanned aerial vehicles (UAVs) are being lost each month and Ukraine has set an optimistic target of building a m this year.

“Even if they get anywhere close to that figure, that would make UAVs one of the largest built components of modern war.”

Meeting pledges

Defence spending is ramping up across Europe. The number of countries expected to meet their commitment to Nato to spend at least 2 per cent of gross domestic product on defence will more than double this year, the organisation said.

Some 23 out of 32 members of the pact will meet the goal this year, an increase from just 10 last year. Nato has forecast an 18 per cent increase in spending this year, up from 9 per cent last year.

The UK’s three main political parties have all committed to increasing defence spending to 2.5 per cent of GDP, although the Conservatives are the only party to set a timeline to achieve this. Its manifesto not only pledged to hit 2.5 per cent by 2030 but to lobby for all other Nato members to do the same.

The UK has historically been one of the countries that has met the target, and currently spends around 2.3 per cent of GDP on defence. Other major member nations are falling well short – Italy is expected to spend less than 1.5 per cent of GDP this year, Canada less than 1.4 per cent and Spain less than 1.3 per cent, Nato’s figures show.

Labour’s manifesto acknowledged the changing nature of war, including the greater use of hybrid warfare, and pledged to conduct a strategic defence review within its first 12 months. The Liberal Democrats pledged to “tackle longstanding problems in defence procurement”.

Europe’s defence companies have re-rated since Russia’s invasion of Ukraine in February 2022. Shares in Germany’s Rheinmetall (DE:RHM) have increased fivefold, while those in Italy’s Leonardo (IT:LDO) have doubled.

In the UK, BAE Systems (BA.) shares are up 128 per cent, Babcock International’s (BAB) have gained 75 per cent and Qinetiq’s (QQ.) 45 per cent.

The strong tailwind that increased spending will provide “is now largely priced in for most UK defence companies, as shown by increased valuation multiples”, said Jamie Murray, an equity analyst at Shore Capital.

For example, shares in BAE Systems traded at 13 times earnings as the war broke out, a discount to US peers such as Northrop Grumman (US:NOC) and Lockheed Martin (US:LMT). They now trade at a premium, at 19 times earnings, and Murray said that, given the company’s sheer size, it is unlikely to grow at a rate that would outpace the wider market. But he still expects the sector as a whole to outperform the market over the medium term.

Many companies face a few years of increased capex to meet additional demand. Once complete, the investment will underpin their long-term potential, he said, citing Hampshire-based Chemring (CHG) as an example.

Chemring is currently spending £200mn to ramp up the production of energetics used in artillery shells, whose stocks have been severely depleted. This will add £100mn to its top line and £30mn to its operating profit once work completes in 2028.

Although Chemring’s valuation multiples might appear elevated in the short term, “if you look further out towards 2028, it is clear the current valuation is very appealing”, Murray said.

(Source: Investors Chronicle)

24 Jun 24. Skynopy raises $3.1m to bring a simple and seamless connectivity for Low Earth Orbit satellites. Skynopy, a Paris-based space start-up specialised in satellite connectivity, announces a fundraising of $3.1m closed in only 3 weeks, just months after its creation. This funding round was supported by a pool of investors, including the pan-European fund Heartcore Capital, Kima Ventures, Better Angle, and BPI France, alongside well-known entrepreneurs like Thibaud Elziere (e-founders, Hexa) and Yohann Leroy (CEO of Maia Space). This initial funding will enable Skynopy to develop its turnkey connectivity service for LEO satellite operators, addressing the growing needs of the rapidly expanding space industry.

Imagine, when sending a video with your phone, having to locate the nearest antenna, orient your smartphone towards the antenna, define and adjust the radio settings, including modulations and protocols, and then being charged per minute of antenna use for this service. This is the technical and commercial complexity that all satellite operators currently face when downloading a picture or video taken by a satellite. Skynopy aims to solve this complexity.

Founded in October 2023 by Pierre Bertrand and Antonin Hirsch, former directors of Loft Orbital, Skynopy has an ambition: to bring the simplicity of mobile phone connectivity to low-orbit satellites and constellation sector, thanks to a unique business model and key interface technologies.

Skynopy offers a seamless, simplified and worldwide service for satellite operators to connect their satellites (send commands and receive data) using its hybrid network of ground antennas. This “as-a-service” approach allows operators to focus on their missions without worrying about the technical details of connectivity or the costly internal infrastructure of ground antennas, providing smooth communication with their satellites, similar to a mobile phone experience. Skynopy is developing universal connectors capable of interfacing with existing ground station networks allowing Skynopy to scale much faster than a more traditional approach. This strategy allows Skynopy to offer high-bandwidth connectivity while limiting its CAPEX needs, thus positioning itself as the Airbnb of ground antennas.

By managing the entire value chain of satellite mission connectivity, Skynopy aims to become a leader in the rapidly expanding ground segment market. This unique positioning has already enabled Skynopy to sign and deliver several contracts with key players in the French space ecosystem, including HEMERIA and CNES, just six months after its incorporation.

The funds raised will enable Skynopy to accelerate the commercial deployment of its “as-a-service” ground station offering. The start-up has already signed industrial partnerships to integrate initial ground station networks and implement its vision of turnkey connectivity. Finally, this funding will allow Skynopy to structure its teams through new recruitment.

Pierre Bertrand, CEO of Skynopy, commented: “The ground segment, and specifically ground stations, is the third pillar of any space infrastructure, alongside the launch vehicle and the satellites. Today, industrial players and public policies have tended to underestimate this essential pillar, which is crucial for data creation and retrieval, representing up to 20% of a mission’s cost. Skynopy aims to solve this deadlock and offer a true innovation in the business model. In this context, this funding round marks a major milestone for Skynopy and the development of the first seamless satellite connectivity service, meeting the growing needs of the space industry.

Yohan Pereira, Representative of Heartcore Capital: “Skynopy offers an innovative solution to a major challenge in the space industry. Pierre and Antonin’s profound market knowledge, coupled with their ambitious international vision— made obvious through their significant contributions to Loft’s success in Europe —strengthens our belief in their ability to revolutionize the satellite connectivity sector. We are fully convinced of their transformative potential and are thrilled to be part of the Skynopy journey.”

Lionel Suchet, Director of Innovation, Applications, and Science at CNES: “Skynopy’s ground station service addresses a well-identified commercial need within the satellite ecosystem, thus filling a commercial and industrial gap. Such a player, with sufficient commercial traction, can leverage major advantages, whether geographical, industrial, or institutional.”

About Skynopy

Founded in October 2023 by Pierre Bertrand, CEO, and Antonin Hirsch, CTO—both former directors at Loft Orbital, a US/French startup that develops shared satellites and sells them as a service, having raised a total of $200M—Skynopy aims to bring the economic model of infrastructure service (as-a-service) to the ground segment, specifically through a network of hybrid ground stations (antennas) necessary for downloading data from satellites in orbit. Skynopy offers a turnkey service, enabling satellite operators to enjoy seamless and accessible communication and control with their satellites as easily as a mobile phone. Through its established partnerships, Skynopy already has a global network of antennas and currently offers its connectivity optimization services to initial clients such as Hemeria. Its ambition is to meet the growing needs of the low Earth orbit space industry with an innovative and efficient solution that brings the simplicity of mobile connectivity to the satellite sector.

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21 Jun 24. EADS considers capital increase-Figaro paper. European defence and aerospace group EADS could ask for a capital increase at its next annual meeting to replenish its finances following a cash bleeding caused by troubled plane unit Airbus, the Le Figaro newspaper said on Thursday.

Citing what it called “a very good source” Le Figaro said that while the French state, which has a 15 percent stake, backed the idea, private holders Lagardere and DaimlerChrysler are reticent and prefer reducing their investment.

A capital hike would reduce the stakes of the current big shareholders — if they don’t participate — and could change the corporate governance structure.

“One cannot solve the equation of a capital increase without solving the problem of corporate governance,” Le Figaro quoted its source.

“How can one explain that with 7.5 percent Lagardere runs the company (EADS) while the (French) state with 15 percent has nothing to say? How to justify this eternal Franco-German power game,” the source said.

“For a fund like Fidelity, which has 6 percent of the capital, that is incomprehensible. Everything has to be overhauled — the Franco-German pact, the two-headed management that makes EADS ungovernable,” Le Figaro quoted the source as saying.

On Wednesday, Airbus chairman and EADS co-chief executive Louis Gallois, unveiling details of the Power8 restructuring plan to cut costs, said there was no urgent need to raise cash. (Source: Google/Reuters)

20 Jun 24. Honeywell backs growth drive with $1.9bn aerospace and defense deal. Honeywell (HON.O) will buy aerospace and defense technology provider CAES Systems for $1.9bn, the U.S. manufacturing giant said on Thursday, part of its focus on three broader business trends to drive growth.

Since taking charge as chief executive in June 2023, Vimal Kapur has steered the company toward three “compelling megatrends” – automation, the future of aviation and energy transition.

The all-cash transaction with private equity firm Advent International for CAES is Honeywell’s third deal this year.

“We do believe there has been a demonstrable uptick in deal activity this year under Vimal’s leadership, a growth dimension that was notably missing under the previous CEO,” said Deane Dray, equity analyst at RBC Capital Markets.

CAES develops electronics such as antenna systems and communication networks for aerospace and defense companies, and the deal comes when orders have surged in response to drawn-out conflicts, including Russia-Ukraine and Israel-Hamas.

The deal complements Honeywell’s offerings on programs such as Lockheed Martin’s (LMT.N), F-35, Boeing’s (BA.N), EA-18G, and missiles including Raytheon’s (RTX.N), AMRAAM, Sheila Kahyaoglu, equity analyst at Jefferies, said in a note.

Advent completed its buyout of CAES (then Cobham Advanced Electronic Solutions) for $5bn in January 2020 and later carved out CAES as a standalone entity in 2021.

The CAES deal, which is expected to close in the second half of 2024, will add to Honeywell’s adjusted earnings per share in the first full year of ownership.

With the CAES acquisition, the company has deployed just under $10 bn, or about 40% of the targeted amount set in 2023 for M&As and buybacks, halfway through the targeted timeline of three years, Dray said.

The deal will provide additional automated facilities and about 2,200 employees, many of them highly skilled engineers who could boost the aerospace operations, Honeywell said. (Source: Reuters)

19 Jun 24. Denmark’s largest pension fund ATP invests in Terma and joins the Board of Directors. The company will use the new capital in connection with a new growth strategy.

Denmark’s largest defense company and leading high-tech company will for the first time have shared ownership. This will happen when ATP Long-Term Danish Capital becomes a minority owner in Terma.

Thus, ATP Long-Term Danish Capital invests in a successful Danish company, which today employs more than 1,700 employees – of which the majority work at the two large production facilities in Eastern Jutland.

The investment is an important step on the road to growth of the Danish defense industry, says Terma:

“There is a great need for the Danish defense industry to be able to deliver new technologies and more equipment. We need to be able to do more ourselves. This need has been expressed by the government, the European Commission, and many others. Therefore, we at Terma have launched an ambitious growth strategy where we will double our turnover over the next three years. Of course, this requires capital and a solid and long-term ownership that wants to be part of the growth journey, and we are incredibly pleased that ATP wants to do that,” says Carsten Dilling, Chairman of the Board of Directors of Terma.

An attractive return and a secure contribution to society

For ATP, the investment in Terma is part of the ambitions to ensure solid and long-term returns for Danes’ pension savings. The investment is made through ATP Long-Term Danish Capital and consists of a single-digit DKK bn amount in the form of equity investment and a loan facility.

“Terma is a very good fit for what ATP wants to do with Long-Term Danish Capital. It is an unlisted Danish company with a clear global potential – and here, as a long-term investor, we can act as a sparring partner on the coming part of the growth journey,” says Mikkel Svenstrup, Chief Investment Officer at ATP.

He adds: “In Terma, ATP sees both the opportunity to create an attractive return for our members and to invest in a growth company that creates new Danish jobs. In addition to being an investment with potential, ATP is making an important contribution with the capital injection at a time characterized by security policy instability.”

The investment is the third single investment for ATP Long-Term Danish Capital.

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18 Jun 24. Comtech (NASDAQ: CMTL) (“the Company”) today announced its third quarter fiscal 2024 financial results in a letter to shareholders which is now posted to the Investor Relations section of Comtech’s website. Investors are invited to access the third quarter fiscal 2024 shareholder letter at comtech.com/investors/. A copy of the letter will also be filed with the Securities and Exchange Commission in a Form 8-K.

Comtech also announced that on June 17, 2024, the Company entered into a $222.0 million credit facility with a new syndicate of lenders which is expected to be funded on or around June 18, 2024. The New Credit Facility matures on July 31, 2028, consists of a committed $162.0 million term loan facility and $60.0 million revolver loan facility and is expected to have outstanding borrowings at close of approximately $187.0 million, reflecting $25.0 million drawn on the revolver. A copy of the credit agreement will be filed with the Securities and Exchange Commission in a Form 8-K.

18 Jun 24. Europe’s armor industry must merge, Arquus boss says. The European market for light and medium armored vehicles has too many players and needs to consolidate, as some companies currently lack the size necessary to push research and development, according to Emmanuel Levacher, the CEO of French armored-vehicle maker Arquus.

Joint European purchasing of armored vehicles is also needed to bring the industry together, with various national programs too small to result in high production volumes and economies of scale, compared to U.S. acquisition programs that can be a factor 10 or 20 bigger, Levacher said in a briefing with reporters at the Eurosatory defense show in Paris on Tuesday.

Belgium’s John Cockerill in January agreed to buy Arquus, and that deal is expected to go ahead next month, Levacher told Defense News. The combined company targets defense revenue of €1bn ($1.1bn) by 2026, an amount that the Arquus CEO says is enough to invest around €50m to €100m a year in “new capacities, new technologies and so on.”

Arquus posted 2023 sales of €600m, and the company invested €20m of its own money in R&D as well as €30m of French government funds, according to Levacher.

“We can still do lot of things, we are also quite agile, but I think there is a limit to also being able to finance new development, innovation and R&D,” Levacher said, “It’s not an exact science, but I think if we would be the double our size it would be better. There is an issue of reaching a critical size.”

Consolidation of European armored-vehicle programs will be key to bringing the industry together, according to the Arquus CEO. He said just joining up the industrial players wouldn’t be enough, as that would still leave European orders fragmented. “Then you will not reach what we want to achieve, which is economies of scale and reaching higher volumes, which is really the key.”

Levacher said the French-German Main Ground Combat System program to develop a future main battle tank is a demonstration of “how difficult it is to align the needs of different European countries.”

Europe can help by synchronizing and aligning R&D programs, which allows firms “to learn to work with each other and build some trust between the different companies,” Levacher said. “And then little by little, we may go together on some programs.”

The executive said an example of cooperation is the Famous program financed by the European Defence Fund, which is providing the basic building blocks for the French-Belgium program for the VBAE small reconnaissance vehicle. Finland’s Patria presented an all-terrain vehicle developed within the Famous program at Eurosatory on Monday.

Europe’s fragmented armored-vehicle industry faces competition in export markets, with firms from Turkey, South Korea, Israel and South Africa competing for international orders. Turkish firms are also increasingly a competitive threat in Europe, where they are “quite aggressive” in vying for orders for armor, according to Levacher.

With Turkey a NATO member, its companies offer products that are “very close” in terms of concept and regulation to those offered by European Union firms. Turkish defense armored-vehicle makers are competitive on cost, if not necessarily cheap due to the cost of technology that needs to be included.

“They have very good players in Turkey, and they have invested a lot in product and technologies,” the Arquus CEO said. “We respect them very much, because they have made a lot of progress. It’s nothing surprising that labor cost is a bit lower in Turkey, so that makes a bit of the difference.”

Governments increasingly demand localization as a condition for contract awards, including European clients such as Belgium, which is “not a very exotic country for us.” (Source: Defense News)

18 Jun 24. HII, Babcock announce H&B Defence joint venture to accelerate Australian submarine support. The United States’ largest military shipbuilder, Huntington Ingalls Industries (HII), and British engineering prime Babcock International Group have launched the H&B Defence company in Australia.

Both companies have formed the new joint venture to accelerate Australia’s nuclear-powered submarine program and push the development of critical sovereign capability for the once-in-a-generation AUKUS conventional armed, nuclear-powered submarine program.

H&B Defence combines nuclear submarine and shipbuilding experience from Australia, the United Kingdom, and the United States to support the nation’s inaugural nuclear-powered submarine program under AUKUS.

HII Australia business lead Michael Lempke said both companies bring comprehensive expertise in every aspect of nuclear-powered submarine activities to support the development of Australia’s sovereign capability.

“H&B marks a significant step forward in an enduring partnership. HII is excited to work through H&B Defence to leverage the deep-rooted experience and advanced methodologies from Australia, the UK, and the US to support AUKUS Pillar 1.

“This collaboration is a fusion of resources and visions – aiming to enhance capabilities and foster innovation in submarine technologies and maritime systems to strengthen national and global security while ensuring a safe and secure future.”

The company, headquartered in Canberra, will work with government and key stakeholders from industry and academic sectors to develop a comprehensive program to promote and grow a skilled sovereign nuclear workforce in Australia.

Babcock Australasia chief executive officer Andrew Cridland said HII and Babcock’s H&B Defence has been established to support all steps of Australia’s optimal pathway to sovereign nuclear-powered submarines under AUKUS Pillar 1 – including workforce, nuclear infrastructure design and build, submarine defuelling and decommissioning, nuclear waste and future sustainment. (Source: Defence Connect)

17 Jun 24. L3Harris and Accenture Collaborate to Accelerate Technology Reinvention for Growth. L3Harris Technologies (NYSE:LHX) announced a strategic collaboration with Accenture (NYSE:ACN) to accelerate its technology reinvention. The initiative, part of L3Harris’ LHX NeXt transformation, is centered around building a strong digital core and establishing new ways of working that will help optimize operations and enable future growth.

L3Harris will leverage Accenture’s deep industry expertise and digital skills steeped in cloud, infrastructure, and application services to drive increased agility, scalability and improved user experiences. As part of this collaboration, a portion of L3Harris’ IT professionals will join Accenture, where they will benefit from industry-specific training, new technology and operational skills development.

“Our relationship with Accenture will enable us to modernize and automate our IT infrastructure at an accelerated rate,” said Christopher E. Kubasik, Chair and CEO, L3Harris. “As the industry’s Trusted Disruptor, we are continually identifying ways to unlock innovation so that we can deliver even greater value to our customers.”

This innovation-focused, managed service approach will provide L3Harris’ business operations, customers and team members with benefits including:

Improved cost structure: The new governance of the IT organization will result in a consolidated, standardized and modernized IT environment with better financial management.
Enhanced customer service and delivery: Customers will benefit from more innovative software, hardware, and systems as L3Harris continues to reinvest IT infrastructure and application savings back into the business.
Enriched talent experience: People in the IT organization will have access to new enterprise resources, business systems, training and tools, enabling them to do their best work.

“Building a strong digital core will enable L3Harris to more quickly harness the potential of cloud and automation, take its customer service and people experience to the next level, and accelerate its ongoing reinvention,” said Julie Sweet, Chair and CEO, Accenture. “We are excited to work together to help L3Harris optimize operations, drive growth and reach new levels of performance across the business.” (Source: BUSINESS WIRE)

17 Jun 24. Quantum Corporation (Nasdaq: QMCO) (“Quantum” or the “Company”), a leader in solutions for AI and unstructured data, announced today financial results for its fiscal full year 2024 ended March 31, 2024.

Fiscal 2024 Financial Summary

Revenue was $311.6m
GAAP gross profit was $124.9m, or 40% of revenue
GAAP net loss was $41.3m, or ($0.43) per share
Annual recurring revenue was $145m
Subscription ARR was up 33% year-over-year at $17.8m
Adjusted non-GAAP net loss was $27.5m, or ($0.29) per share
Adjusted EBITDA was ($5.3)m

“Following the recent completion of our financial re-evaluation process, we are pleased to be back discussing our operations and financials, including results for fiscal 2024,” stated Jamie Lerner, Chairman and CEO of Quantum. “Although this comprehensive process was time-intensive, it demonstrates our commitment to the highest standards of financial integrity and transparency. The financial restatement adjustments made were all technical accounting in nature and we found no evidence of intentional misconduct.

“Our full year 2024 results reflect a significant reduction of revenue from our largest hyperscale customer, which we had expected would scale down over time but instead stopped placing orders at the end of fiscal Q1 2024. While extremely disappointed with the impact from significantly lower revenue year-over-year, we have been proactively accelerating our business transformation. During this time, our team continues to focus on improving the Company’s capital structure as well as optimizing our overall business operations.”

“These actions include improved focus and retooling of our sales and product initiatives in strategic growth areas; accelerating operational efficiencies and cost reductions to achieve $16 m of total annualized savings; year-over-year gross margin improvement of over 600 basis points; and strengthening our capital structure through balance sheet optimization, sale of non-core assets, and debt reduction. A recent example of these actions in motion, subsequent to fiscal year-end, was completing a transaction to reduce liabilities and carrying costs through the sale of service inventory assets. Then using the proceeds to pay down outstanding debt. Additionally, we have active efforts to restructure and shift resources to leverage our international footprint and to expand our channel partner network in Asia and North America,” Mr. Lerner commented further.

Mr. Lerner continued, “Looking ahead, we remain committed to getting back to profitability as well as stabilizing and improving the performance of our legacy Automation and StorNext solutions. Quantum remains dedicated to use cases for Media & Entertainment, Life Sciences, Industrial Technology, and Federal while improving our position to address the prevailing industry trends around Artificial Intelligence across the multiple verticals we serve. ActiveScale and Myriad will be the center of our growth strategy by serving use cases that drive higher recurring revenue, with improved margins, in faster growing market segments. Execution of our strategy to advance our operating model, combined with improving our capital structure, will drive step-change improvements to Quantum in fiscal 2025.”

Fiscal 2024 vs. Prior Year

Revenue of $311.6m for fiscal 2024 decreased 26.2% from $422.1m in the prior year, primarily reflecting lower revenue contribution from hyperscale customers combined with lower tape media and royalty business. Gross profit in fiscal 2024 was $124.9m, or 40.1% of revenue, compared to $143.3m, or 33.9% of revenue, in the prior fiscal year.

Total GAAP operating expenses in fiscal 2024 were $153.8m, or 49.3% of revenue, compared to $159.9m, or 37.9% of revenue, in the prior fiscal year. Selling, general and administrative expenses were $112.4m in fiscal year 2024, compared to $113.8m in the prior fiscal year. Research and development expenses were $38.0m in fiscal 2024, compared to $44.6m in fiscal 2023. Non-GAAP operating expenses in fiscal 2024 were $136.1m, compared to $142.9m in the prior fiscal year.

GAAP net loss in fiscal 2024 was $41.3m, or ($0.43) per share basic and diluted, compared to a net loss of $18.4m, or ($0.20) per share basic and ($0.28) per share diluted, in the prior fiscal year. Excluding the income statement impact of the warrants, stock compensation, restructuring charges, and other non-recurring costs, non-GAAP adjusted net loss in fiscal year was $27.5m, or ($0.29) per share basic and diluted, compared to an adjusted net gain of $3.2m, or $0.04 per share basic and $0.03 per share diluted, in the prior year.

Adjusted EBITDA in fiscal 2024 was ($5.3)m, compared to $21.1m in fiscal year 2023.

For a reconciliation of GAAP to non-GAAP financial results, please see the financial reconciliation tables below.

Liquidity and Debt (as of March 31, 2024)

Cash, cash equivalents and restricted cash were $25.9m, compared to $26.2 m as of March 31, 2023.
Total interest expense for the three- and twelve-month periods were $4.1m and $15.1m, respectively, compared to $3.0m and $10.6m for the same periods a year ago.
Outstanding term loan debt, excluding debt issuance costs, was $87.9m, compared to $74.7m as of March 31, 2023. Outstanding borrowings on revolving credit facility was $26.6m, compared to $16.8m as of March 31, 2023.

o Subsequent to quarter end, we paid down $12.3m of term loan debt through improved working capital by outsourcing our service inventory logistics and management.

Guidance

For the fiscal first quarter of 2025, the Company expects the following guidance:

Revenues of $72.0m, plus or minus $2.0m
Non-GAAP adjusted basic net loss per share of ($0.09), plus or minus $0.02
Adjusted EBITDA of approximately ($2.0)m

For fiscal year 2025, the Company expects the following outlook:

Revenues of $310m, plus or minus $10.0 m
Non-GAAP adjusted basic earnings per share of ($0.10), plus or minus $0.05
Adjusted EBITDA of $15.0m, plus or minus $5.0m

This assumes an effective annual tax rate of negative 14%; non-GAAP adjusted net loss per share assumes an average basic share count of approximately 96 m in the fiscal first quarter of 2025 and approximately 96.4m for the fiscal year 2025. (Source: BUSINESS WIRE)

17 Jun 24. FN Browning Group & Financial Results 2023.

Summary:

In 2024, to mark its 135th anniversary, the Herstal Group is changing its name to FN Browning Group. This change, supported by a comprehensive brand identity, is accompanied by the announcement of an exhibition dedicated to the Group’s brands and their contribution to Liège’s industrial heritage, to be held at La Boverie in Liège (Belgium) from April to August 2025.
FN Browning Group also publishes its first activity report for the financial year 2023. It presents a historic net profit of 75m euros, with an EBIT of 90m euros and sales of 908 m euros.

FN Browning Group

On 14 June 2024, the Group is officially changing its name to FN Browning Group, succeeding the Herstal Group.

Julien Compère, CEO FN Browning Group: As we celebrate our 135th anniversary, the name FN Browning Group highlights the leading brands that have built our outstanding global reputation. John Moses Browning and FN Herstal joined forces in the 19th century to design pioneering small arms that gave birth to modern weaponry. Today, our products and services continue to set global standards for innovation and dependability. FN Browning Group reflects our commitment to stay true to this DNA by continuing, as our vision states, “to set market-leading standards that anticipate the needs of the most demanding defence institutions, law enforcement authorities, responsible firearm owners and hunters”.

The FN Browning Group name change is supported by a comprehensive brand identity that reflects the Group’s strategy and details its vision, mission and strategic drivers.

This is presented on the Group’s new website: www.fnbrowninggroup.com.

Ars Mechanica Exhibition

To mark its 135th anniversary, FN Browning Group is also pleased to announce a major exhibition organised by its Ars Mechanica Foundation in collaboration with the City of Liège and hosted by the La Boverie Museum (Belgium).

Open to the public from 25 April to 26 July 2025, the exhibition will be dedicated to the Group’s history, its acute sense of innovation and its undeniable contribution to Liège’s industrial heritage. It will feature a wide range of unique artefacts testifying to the achievements of the Group’s brands in the various fields they have explored since 1889: small arms, vehicles, aircraft engines, aerospace and sports, among others.

Financial Results 2023

Julien Compère, CEO FN Browning Group: FN Browning Group has emerged stronger from 2023, with solid sales and a historic net profit. All our operating subsidiaries ended the year with positive results, and I would like to congratulate our teams in Belgium, the United States, Portugal, Finland and the United Kingdom. Our financial, industrial and commercial fundamentals are solid and we can look forward to the coming months with confidence.

In 2023, FN Browning Group posted sales of 908 m euros, its second-highest figure ever.

The Defence & Security Division, with the FN and Noptel brands, contributed more than 500 m euros, and the Hunting & Shooting Division, with the Browning and Winchester* brands, more than 400m euros.

The Group’s net profit reached a record level of more than 75m euros, with an EBIT of 90m euros. The EBITDA margin also improved, rising from 10% to over 14%.

The FN Herstal subsidiary is returning to positive results thanks to sales of more than 300m euros and the success of the cost reduction plans implemented since 2022.

FN Browning Group will pay a dividend of 15 m euros to its shareholder Wallonie Entreprendre, which is owned by the Walloon Region, an entity of the Belgian federal state.

Activity Report 2023

FN Browning Group presents its first activity report for the year 2023.

It is introduced by an exclusive interview with the Belgian Minister of Defence, Ludivine Dedonder.

It also presents the latest news from the Group, its subsidiaries and its brands around the world, including new products and services, industrial and R&D capabilities, and continuous improvements in corporate governance.

The 2023 Activity Report is available on the Group’s website: www.fnbrowninggroup.com/news/activityreport.

* Winchester is a registered trademark of Olin Corporation.

18 Jun 24. HAL shares: Hindustan Aeronautics in focus as Defence Ministry looks to procure 156 light combat helicopters.

HAL share price: HAL shares are up 84 per cent in 2024 so far and 167 per cent in the past one year. Chola Securities recently included HAL among its investment ideas for the forthcoming Budget.

Shares of Hindustan Aeronautics Ltd (HAL) are in focus on Tuesday after the PSU defence company said the Request for Proposal (RFP) has been issued by the Ministry of Defence for procurement of 156 Light Combat Helicopter. This included 90 units for Indian Army and 66 units for IAF.

In a filing to stock exchanges, HAL said: “We would like to inform that, Request for Proposal (RFP) has been issued by the Ministry of Defence for procurement of 156 Light Combat Helicopter (90 nos. for IA and 66 nos. for IAF),” it said.

HAL shares are up 84 per cent in 2024 so far and 167 per cent in the past one year.

Chola Securities recently included HAL among its investment ideas for the forthcoming Budget, saying the stock is a pure play on defence and Make in India.

Our of the total allocations of Rs 47,65,768 crore (approx. $574bn) in the interim Budget 2024-2025, Rs 6,21,541 crore ($74.8bn) has been earmarked to the Ministry of Defence (MoD). Representing an increase of 4.7 per cent over the previous allocations.

HAL, Chola Securities said, is sitting on strong order book of around Rs 94,000 crore, up 15 per cent YoY, and that its pipeline is strong. “Ministry of Defence has set a target of achieving a turnover of Rs 1.75 lakh crore in aerospace and defence manufacturing by 2025, which includes exports of Rs 35,000 crore.

Chola Securities said HAL has established strategic alliances with General Electric (USA), Safran Helicopter Engines (France) and Airbus.

“It’s a net debt free, having cash per share of about Rs 395. Shareholders enjoy dividend yield of 0.59 per cent. Strong financials ROE of 29 per cent, margins 32 per cent based of FY’24,” it said. (Source: Google/https://www.businesstoday.in/)

13 Jun 24. Adarga, the leader in AI-driven information intelligence, today announced the acquisition of US strategic risk intelligence firm, J2X Solutions. This move further strengthens Adarga’s expanding ecosystem of products and services, providing its fast-growing global customer base with the unparalleled quality, speed, and breadth of intelligence needed to gain decision advantage in today’s unpredictable threat landscape.

The J2X team has decades of experience in identifying, assessing, and mitigating complex risks for the US government and private corporations. Comprised of elite former military officers, federal law enforcement officers, and intelligence analysts, they specialise in areas such as supply chain risk, insider threat, due diligence, and geopolitical risk. They have helped organisations to minimise losses, de-risk global operations, identify emerging threats, and streamline security.

Combined with Adarga’s cutting-edge AI platform – built to enrich and accelerate intelligence outputs with state-of-the art information analysis capabilities – the J2X team’s unique skills and expertise will enhance Adarga’s existing risk intelligence services. They will also inform its continuously evolving product roadmap and reinforce Adarga’s competitive position in the market as it delivers organisational resilience to some of the world’s most demanding customers in the face of increasing competition.

The acquisition supports and accelerates Adarga’s expanding US growth, marked by recent contract wins with the Defence & National Security community. The combination of the two companies will deliver added value to J2X’s existing customers by leveraging Adarga’s technology and its proprietary curated data sets, enabling the team to rapidly interrogate, contextualise, and connect ms of global data points to derive valuable insight and foresight into near- and long-term threats.

“We are thrilled to integrate J2X’s leading capabilities with our robust products and services,” said Adarga CEO and Founder, Rob Bassett Cross, adding “This acquisition reinforces our commitment to delivering unrivalled excellence in information intelligence. Combining deep expertise and innovative technologies, underpinned by our state-of-the-art AI platform, will empower organisations across the UK, US and our allies with the foresight and clarity needed to navigate today’s complex geopolitical environment.”

“Joining forces with Adarga represents a significant milestone for J2X Solutions,” noted Chris Gore, J2X’s President. “Our longstanding commitment to providing strategic risk intelligence aligns perfectly with Adarga’s industry-leading approach to information analysis. Our combined strengths will deliver enhanced intelligence capabilities to our customers and enable them to counter an ever-growing number and range of threats.”

About Adarga

Adarga is an AI software leader specialising in information intelligence. Its technology is deployed to allied armed forces, national security organisations, and the commercial sector, delivering information and decision advantage in a world of increasing geopolitical threats. Headquartered in London, UK, Adarga has an expanding global footprint in the US and Australia.

Adarga’s flagship product, Vantage, is underpinned by its state-of-the-art AI platform, and provides analysts, planners, and commanders with a vital ability to rapidly extract, contextualise, interrogate, and connect information drawn from ms of internal and external sources in over 75 languages – in a single, secure environment.

Adarga’s services offering includes an AI innovation and deployment team that is supporting customers to design, develop, and scale AI capabilities, and an in-house geopolitical research unit that provides analysis-as-a-service to strengthen organisations’ operational resilience.

About J2X Solutions

J2X Solutions is a veteran-owned consulting company with a team that draws on decades of experience in the military and federal law enforcement. Specialising in areas such as supply chain risk, insider threat, due diligence, and geopolitical risk, J2X’s executives are experienced in delivering robust strategic risk intelligence programmes to the US Government, Global Fortune 50 enterprises, and small businesses. (Source: BUSINESS WIRE)

13 Jun 24. Merlin, the leading developer of safe, autonomous flight technology for fixed-wing aircraft, and EpiSys Science, Inc. (EpiSci), a software AI and autonomy company delivering groundbreaking solutions for dual-use applications, today announced that they have agreed to terms for the future acquisition of EpiSci by Merlin. With this strategic move, Merlin will solidify its position as the frontrunner in the autonomous aviation industry. Together the combined entity expands the suite of supported platforms to over 23 unique types, including operations on the X-62 VISTA, Cessna Caravan, F-16, L-29 Delfin, Berkut 540, C130J Super Hercules, KC-135 Stratotanker, multiple Unmanned Surface Vessels (USV), and small Unmanned Aerial Systems (sUAS).

“With the acquisition of EpiSci, we are uniquely positioned to lead the charge in autonomous aviation, which demands adaptable solutions that work across multiple platforms,” said Matt George, CEO and co-founder, Merlin. “We look forward to the final steps in this acquisition so that we can begin the real work of combining our efforts towards a versatile, trusted autonomy solution that unlocks human potential and delivers unparalleled value to our customers and stakeholders.”

“By merging with Merlin, we are choosing to deliver our TacticalAI autonomy software suite to the marketplace at significantly accelerated timelines and with greater impact. EpiSci has long been driving innovation in the hardware-centric industry by developing rapidly deployable autonomous software. Our team will continue to focus on empowering our warfighters through the integration of trusted, collaborative autonomy with TacticalAI,” added Bo Ryu, Founder and CEO, EpiSci.

Founded in 2012, EpiSci is a software company that develops next generation, tactical autonomy solutions. To date, EpiSci has participated in autonomy efforts across the acquisition lifecycle with a diverse set of DoD customers. TacticalAI-enabled products have been integrated on multi-domain platform types, including recent work with the AFWERX Autonomy Prime program and through the DARPA Air Combat Evolution program on the USAF TPS X-62 VISTA. In addition, EpiSci’s work is delivering value across domains by partnering with the Space Development Agency (SDA) to track hypersonic weapons and during successful Navy demonstrations powering heterogeneous platforms of airborne and surface vessels. These collective efforts resulted in an AFWERX Strategic Funding Increase (STRATFI) of $15M in committed, matching funds to accelerate the deployment of advanced autonomy capabilities. EpiSci’s target market, tactical autonomy, complements Merlin’s current transport aircraft pursuits, enabling the merged entity to capture the entire mission profile of the customer.

Merlin, headquartered in Boston, Massachusetts, is well known for its multi-year partnership with the U.S. Air Force, most recently having completed data collection flights in the KC-135 Stratotanker at MacDill Air Force Base. These important tests followed the company’s February 2024 agreement with Air Mobility Command (AMC) and Air Force Materiel Command (AFMC), to design, integrate, test, and demonstrate aspects of the Merlin Pilot on the KC-135 Stratotanker for the first time.

“At Merlin, we have always championed our aviate, navigate, communicate approach to developing and deploying autonomous flight technology across aircraft platforms. EpiSci has similarly focused on the sense, decide, act paradigm for the comprehensive development of trusted multi-domain autonomy to elevate human performance. The synergies across our corporate ethos, teams, and technologies are undeniable. This acquisition enables Merlin to quite literally double-down on our opportunities to advance the safety and scalability of autonomous systems,” continued George.

About Merlin

Founded in 2018 and headquartered in Boston, with additional offices in Denver and flight test facilities in Mojave, CA and Kerikeri, New Zealand, Merlin is building a platform-adaptable advanced automation system to perpetuate a resilient air network. To learn more, visit www.merlinlabs.com or follow us on X @merlinaero.

About EpiSci

EpiSci is a software company that develops next generation, tactical autonomy solutions for national security problems. EpiSci’s autonomy software is hardware agnostic, operationally informed, tactically relevant, and has piloted swarms of uncrewed aerial and maritime systems and tactical fighter aircraft. Additional applications include human-machine teaming for air dominance, cognitive sensors, networks for advanced communications systems, and battle management command and control for informed decision-making. EpiSci delivers unmatched speed, cost-efficiency, and scalability as the preferred partner for defense agencies & industry teams seeking mission-critical autonomy solutions. Learn more at EpiSci.com and follow EpiSci on LinkedIn. (Source: BUSINESS WIRE)

13 Jun 24. Introducing Element U.S. Space & Defense – The Next Chapter for NTS Technical Systems. NTS Technical Systems—the global authority for independent testing services across multiple industries—has reemerged as Element U.S. Space & Defense, marking a new era in the company’s transformative 63-year legacy. As a trusted government testing partner and pioneer service provider in space exploration since the 1960s, this new brand identity underscores its commitment to space and defense while continuing to serve other commercial markets.

“We have been intentional in setting the standard for testing excellence since 1961, and our decision to rebrand as Element U.S. Space & Defense exemplifies that commitment—embodying our concerted focus, expansion plans and investments aimed at raising the bar for testing services that will advance the space and defense industry’s important work,” said President & CEO of Element U.S. Space & Defense, Dennis Pyatt. “Our trusted team remains dedicated to providing the same high-quality testing services that define our legacy while simultaneously expanding our capabilities to better serve the U.S. Government and the U.S. industrial base.”

Following Element Materials Technology’s acquisition in September 2022, the NTS brand was divided—merging NTS Labs into Element’s portfolio while NTS Technical Systems was established as a separate and independently operated entity within the Element portfolio focusing on industrial bases in space and defense. This rebranding represents the next logical step in the company’s evolution, strategically aligning with its mission to deliver the most advanced testing services to this distinct market. While the company will now conduct business as Element U.S. Space & Defense, its legal name will remain NTS Technical Systems, allowing for continuity under existing contracts, purchase orders and agreements.

The company is globally regarded for its technical excellence and reliability, offering advanced testing services to meet stringent military and commercial compliance standards. From environmental simulations and EMI/EMC testing to ballistics, munitions, dynamic and hydraulics testing, its services mitigate risks and accelerate product development and market readiness.

To learn more about Element U.S. Space & Defense’s rebranding and its award-winning test and engineering services, please visit www.elementdefense.com.

About Element U.S. Space & Defense: Element U.S. Space & Defense, (formerly NTS Technical Systems) stands at the forefront of testing innovation, as a trusted government testing partner to NASA, the U.S. Department of Defense, government agencies and prominent industry leaders across the space and defense sectors. Today, Element U.S. Space & Defense brings more than 60 years of experience and expertise in navigating the most complex projects and programs in the world. From centrifuge testing for the latest Mars rover, vibration testing for the Space Launch System (SLS), or environmental simulations for next-generation missiles, Element U.S. Space & Defense is the pioneering partner for highly custom, end-to-end testing design and implementation. For additional information about Element U.S. Space & Defense, visit www.elementdefense.com or call (800) 270-2516. (Source: BUSINESS WIRE)

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BUSINESS NEWS

June 13, 2024 by

Sponsored by SPX CommTech (TCI & ECS)

www.tcibr.com

www.enterprisecontrol.co.uk

13 Jun 24. Enterprise Control Systems (ECS), part of the SPX Communication Technologies platform, today announces an expanded partnership with expert radiocommunication distributor SORRAC, to provide the French security and police teams with advanced Radio Frequency (RF) and Tactical Data Link capabilities.

The partnership agreement gives SORRAC rights to resell ECS Data Links capabilities in the region, where there is growing demand for secure real-time data transfer from air to ground to protect the nation and events such as the 2024 Paris Olympic Games. This extends SPX Communications Technologies’ existing relationship with SORRAC which provides defence and security teams with TCI’s Communications Intelligence (COMINT) capabilities.

Specifically, SORRAC will be able to sell ECS’s next-generation Evenlode Video and Audio Encoder / Decoder, its latest Tactical Data Link solution. It delivers improved low-latency, long-range, high-definition video and audio transfer for faster and more accurate intelligence gathering. Evenlode Video and Audio Encode / Decoder ensures timely and informed decisions can be made, even on the tactical edge. It also allows teams to select the latest mission-critical information required without disrupting the operation and simultaneously processing and transferring up to four video inputs for improved situational awareness.

James Cooke, European Business Development Manager at SPX Communication Technologies, says: “After years supporting defence and security forces across Europe, the extended collaboration with SORRAC reflects our commitment to the French market and in delivering its teams the right technology for a more secure future. By combining our proven technology with local expertise we’re able to address challenges with the appropriate solution, a process based on listening and working collaboratively within the business, but also with customers and partners like SORRAC.”

Ludovic Seixo, Sales Manager at SORRAC, says: “We look forward to expanding our collaboration with SPX Communication Technologies and delivering its Tactical Data Link technology to the French market. By continuing to combine our expertise, we’re confident in our ability to support customers in such a buoyant market and at such a critical time.”

About SPX Communication Technologies – ECS

Enterprise Control Systems (ECS), as part of the SPX Communication Technologies platform, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all.

SPX Communication Technologies’ Tactical Data Link portfolio allows organisations that are conducting airborne ISR operations in the defence, security, and policing environments to transfer video and data securely and reliably between enabled aircraft and ground users over long distances in congested RF environments.

Combining decades of technology innovation and expertise with agile and collaborative teams, SPX Communication Technologies delivers sustainable and exceptional results to customers across the globe – in regions including Europe, APAC, the Middle East and Africa.

For more information on SPX Communication Technologies’ Tactical Data Links, visit www.enterprisecontrol.co.uk

13 Jun 24. Patria acquires a leading manufacturer of drone systems Nordic Drones. Patria has signed 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. Nordic Drones has designed and delivered complete solutions and user training for various technical aerial photography as well as mapping, measurement, inspection, control and authority tasks for the needs of more than 100 companies and organizations. The company employs 10 people and is located in Muurame, Finland. The parties do not disclose the value of the acquisition.

Driving Patria’s growth strategy requires significant investments in product development, innovations and partnerships. What Patria offers also in the field of unmanned system solutions is constantly being developed.

“Integrating the capabilities of unmanned systems into the defence system is a prerequisite when preparing for today’s threats of battlefield. Patria’s strong development and research expertise as well as experience in autonomous systems, indirect fire systems and system integrations make our company a leading player in the field,” says Jussi Järvinen, Executive Vice President of Patria’s Finland Division. “Nordic Drones’ expertise in manufacturing professional drone systems for numerous customers is an excellent and logical reinforcement of Patria’s Unmanned Aerial Systems (UAS) offering, which benefit our mutual and new customers in Finland and internationally, across all operating environments.”

Nordic Drones has been developing unmanned drone systems for over ten years. The company has achieved a significant position as a partner for Nordic security authorities. “We have succeeded in developing internationally unique product systems with huge market potential. We believe that Patria is the best partner to speed up our internationalization. In the future, we will also be able to offer even wider and more interesting solutions to our customers together with Patria,” comments Pietari Sorri, Managing Director of Nordic Drones.

The completion of the acquisition requires the approval of the Finnish Ministry of Employment and the Economy (‘TEM’) and the related authority process has started. If the acquisition takes place, it will not affect the company’s customer commitments, employment relationships or other commitments made by the company. The length of the official process is dependent on TEM, the approving authority in question.

12 Jun 24. Emirati defense giant joins forces with Indian firm with an eye towards a host of defense systems. The Emirati firm has been eyeing expansion in multiple global markets, including Latin America and East Asia, EDGE Group’s CEO Hamad Al Marar told Breaking Defense in February.

As Emirati defense conglomerate EDGE Group is expanding its reach across the globe, the four-year old firm said it is joining forces with Indian Adani Defence and Aerospace, highlighting potential joint efforts in missile and unmanned cooperation.

“This agreement reflects our dedication to bringing our customers the most advanced and sophisticated products to the market, while taking advantage of the global export potential including critical UAE-grown technology. We are keen to setup the joint platform between Adani Defence and EDGE to pioneer new technologies and set new standards in advanced military equipment and defence sector,” EDGE’s CEO Hamad Al Marar said in a Tuesday announcement.

According to the agreement, EDGE and Adani will explore establishing facilities for production and maintenance, research and development in India and the UAE, respectively, in a deal that could increase both firms’ footprints in Southeast Asia and wider global markets.

The two plan to focus on a wide range of systems from missiles to weapons, including “airborne, surface, infantry, ammunition, and air defence products, platforms & systems covering unmanned aerial systems (UAS), loitering munitions, counter drone systems, unmanned ground vehicles (UGV), as well as electronic warfare (EW) and cyber technologies,” according to the firm’s statement.

The agreement “is a reflection of our shared vision to fortify our nation’s capabilities by not just delivering cutting-edge solutions for the two countries but also setting new benchmarks in the global defence landscape,” said Adani Defence & Aerospace CEO Ashish Rajvanshi.

It’s not EDGE’s first pitch for cooperation with Indian firms. During Dubai Airshow 2023, EDGE Group pitched its missiles to be carried by India’s HAL Tejas fighters, using a static display at the show as a demonstration.

space.

The Emirati firm has been eyeing expansion in multiple markets, including Latin America and East Asia, EDGE Group’s CEO Hamad Al Marar told Breaking Defense in February.

In the context of Asian expansion, earlier this year EDGE Group signed a contract to supply Indonesian state-owned enterprise PT Pindad with an ammunition production line in a $27m deal.

From its side India has been boosting ties with Arab states for some time now during Prime Minister Narendra Modi’s term. In September 2022, Indian defense minister Rajnath Singh visited each in an attempt to boost defense relations, and mainly trying to secure joint manufacturing deal for Indian light combat fighters. (Source: Defense News Early Bird/Breaking Defense.com)

12 Jun 24. Everfox to Purchase Garrison Technology Ltd and Expand its Mission to Reflect a New Era of Defense-Grade Cybersecurity. Today, Everfox (formerly Forcepoint Federal) announced a definitive agreement to purchase Garrison Technology Ltd. The transaction is subject to regulatory review and customary closing conditions and is expected to close this summer. The addition of Garrison’s hardware-enforced security (hardsec) and software capabilities into the Everfox software suite of cross domain, threat protection and insider risk solutions will provide enterprise customers in government and regulated industries a broader set of innovative cybersecurity solutions to protect their digital infrastructure.

Sean Berg, CEO of Everfox, states “We entered 2024 with great momentum, with the separation from Forcepoint and standing up Everfox. We are continuing our focus on growth and innovation and are excited to add Garrison’s hardsec and software solutions to our portfolio. Everfox has been working with Garrison as a partner for several years and have found their technology to be a complementary extension to our software cross domain solutions for connecting high-threat networks for both on-premise and cloud.”

Garrison has a strong reputation and is trusted by global national governments, critical infrastructure and enterprise commercial customers. “We created Garrison to develop nation-state level security technologies that enable the most sensitive government missions to operate efficiently in a digital world, and to then extend the availability of these solutions out to critical infrastructure and enterprise customers. Everfox and Garrison share a similar mission and we are confident the combination of our complementary hardsec solutions with Everfox’s portfolio will accelerate the delivery of high-assurance security that can really make a difference for our customers,” said David Garfield, Co-founder and CEO of Garrison Technology Ltd.

“The operating environment for the defense and intelligence communities has only become more complex, with cyber threats from sophisticated actors growing in frequency,” said Tim Millikin, Partner at TPG. “Garrison’s distinctive technology paired with Everfox’s expertise and history in government security create a powerful solution to further global resilience.”

Everfox is headquartered in Herndon, Virginia, with offices also located in Champaign, Illinois; Richardson, Texas; Salt Lake City, Utah; and Malvern, United Kingdom.

Citi served as financial advisor to Everfox.

About Everfox

Everfox, formerly Forcepoint Federal, has been defending the world’s most critical data and networks against the most complex cyber threats imaginable for more than 25 years. As trailblazers in defense-grade, high-assurance cybersecurity, Everfox has led the way in delivering and developing innovative cybersecurity technology. Headquartered in Herndon, VA, Everfox’s suite of cross domain, threat protection and insider risk solutions empower governments and enterprise organizations to use data safely – wherever and however their people need it. Learn more: www.everfox.com.

About Garrison Technology Ltd

Garrison is a London-based cybersecurity company founded in 2014 by David Garfield (CEO) and Henry Harrison (Chief Scientist). A global leader in hardsec, Garrison is revolutionizing ways of working for some of the most security-conscious parts of government by delivering innovative, cross-domain solutions that help drive digital transformation and user enablement. Garrison is also dedicated to protecting enterprise organizations from the threat of the web. Its pioneering hardsec Browser Isolation solution, Garrison ULTRA®, offers robust protection against web-based risks, including ransomware attacks, phishing, and other forms of malware. Learn more: www.garrison.com. (Source: BUSINESS WIRE)

12 Jun 24. Solid State aiming to earn market recognition through performance.

By “Simply, we do posh Lego,” according to Peter James, group finance director of Solid State [LON:SOLI]. “[…] if I give you a box of Lego with no instructions and ask you to assemble what’s on front of the box, you’ll have a hard time … We write the instructions manual, as we have the specialist knowledge on how to bring technologies together.”

James was simplifying what the Redditch-based electronic components distribution and manufacturing company does in its Systems Division. The AIM-listed technology firm has, as reported, had a strong year, and James is confident that this will continue in the coming years. “We have strength in diversity,” James said, “…we operate in a broad number of markets, and cover this with a number of different products and services to the industry and our diversity has given us resilience.”

As reported, Solid State operates through two main 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 and has been a component of AIM for 27-years and has employs around 400 people. Its subsidiary, Steatite, which Solid State acquired in 2002 was founded in 1938.

Diversity through adversity

The specialist value-added component supplier and design-in manufacturer of computing, power, and communications product range’s diversity really shone through during the Coronavirus pandemic, and although Solid State’s aerospace division suffered – as people were no longer taking flights – it more than made up for this in its Medical Division, as demand for its medical device battery units blew up.

Although the company said recently that trade for its Components Division had been subdued in the last year, as industrial customers unwound their stocked-up inventories from the period around the pandemic; it has made up the slack in its Systems Division especially in light of the heightened agitation from NATO governments with regard to their Defence and Security spending, and seen growth in its aerospace and defence product and system engineering lines.

Business Description

Solid State, together with its subsidiaries, designs, manufactures, and supplies electronic equipment in the United Kingdom, rest of Europe, Asia, North America, and internationally. It also supplies electronic components and materials. The company operates through Components and Systems divisions. The Components division provides own brand manufactured and franchised components; and value-added services, such as sourcing and obsolescence management. It engages in designing-in technical solutions for customers seeking cutting edge, electronic, opto-electronic, electro-mechanical components, and displays. The Systems division offers systems solutions, which include industrial computing and vision systems; custom battery packs providing portable power; energy storage solutions; and advanced communication systems, encompassing wideband antennas and radio products. The company also offers engineering consultation services. It serves commercial, industrial, and defence markets. The company was formerly known as Solid State Supplies plc and changed its name to Solid State in May 2006. Solid State was incorporated in 1963 and is headquartered in Redditch, the United Kingdom.

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“Our diversity of product has really helped us,” said James, “we divide our Components Division into two distinct product areas: our own brand, and franchise components […] if we have just one or two of our components on a product, that’s no good. What we want is four or five key parts, as it allows us to sell more products to the same customer, and thereby increases our margin.”

Low risk approach to acquisitions

The company has grown organically but is not averse to finding a rival with synthesis and trying to combine the businesses, especially in areas where it is more cost-effective and time-efficient to acquire expertise, as opposed to try to build new facilities from scratch.

The company has completed 13 acquisitions in 20-years but doesn’t have a target on a whiteboard of: ‘we must make an acquisition every year’ and will pick and choose its opportunities on a strategic basis. Sometimes it won’t make any acquisitions for a while, but when called upon management acts decisively and accomplished two acquisitions in the one year. Solid State’s last acquisition was Custom Power in 2022.

James said: “We have a low-risk approach to acquisitions […] looking to find a bolt-on that will add value to the group and is a strategic fit […] we look for a willing seller and walked away from one deal recently as the buyer wasn’t quite ready to sell and the acquisition didn’t quite fit our current risk profile […] that doesn’t mean that we won’t return to the opportunity, but at the moment that acquisition wasn’t perfect for us at this time.”

The company suffers from a similar problem to many smaller-cap and AIM-listed companies, in that it would like access to more liquidity, and to be fair, Solid State’s liquidity is better than many of its peers. The company has a roster of solid institutional backers including BGF Investment Management, Schroders and Abrdn, but would welcome a register of smaller shareholders.

UK tech companies should have greater recognition

James said that like many CFOs of smaller capitalization companies he would prefer greater recognition, “but I’m not going to whine about how the market has been unfair to my company’s shares like some of my peers might,” and believes that all things considered that the market has treated Solid State fairly, but when compared to the US or Asia, technology companies in the UK: “[…] don’t get the recognition we deserve […] and the UK [technology sector] trades at a comparative discount.”

James said that Solid State focuses on total shareholder return when selling the company to potential investors, concentrating on improving profit before tax on a consistent and sustainable basis. The company does pay a dividend, but it is paid as more of a recognition and thank you for being supporters of the company and shareholders get rewarded for their faith in Solid State through total shareholder return – primarily the share price going up.

He explained that Solid State isn’t the kind of company you buy if looking for a sleepy, income-orientated, dividend machine; instead, the company is on an ambitious growth trajectory and he believes that the company can become eminently more valuable in the coming years as the world increasingly relies on devices and the circuits, components and electrical engineering that drive their technology for its every need.

To wit, Solid State hopes to reward its shareholders by increasing the value and share price of the company. The expectation is that if Solid State continues to consistently increase total shareholder return year-on-year, it will start to gain proper recognition from the market.

Solid State opened trading on 11th June at 1,498p. Over one-year the company’s shares are up 31.4% and over the year-to-date up 5.9%. The company has a market capitalisation of GBP170m and its shares have ranged between 1,010p and 1,533.75p over a 52-week period. (Source: https://www.thearmchairtrader.com/)

12 Jun 24. Red Cat to Acquire FlightWave Aerospace Systems. Red Cat Holdings, Inc. , a drone technology company integrating robotic hardware and software for military, government, and commercial operations, announced it has entered into a Letter of Intent (LOI) for the planned acquisition of FlightWave Aerospace Systems Corporation a provider of Vertical Take-off and Landing (VTOL) drone, sensor, and software solutions. Edge 130, FlightWave’s Blue UAS approved military-grade tricopter would, upon closing, be added to Red Cat’s line of unmanned Intelligence, Surveillance, and Reconnaissance (ISR) systems.

“The planned acquisition builds on FlightWave’s accomplishments and continues our mission to provide low-cost, rucksack portable drones with diverse capabilities,” said Jeff Thompson, Red Cat CEO. “Our Teal drones already bolster mission effectiveness and safeguard warfighters globally. The Edge 130 complements Teal with extended range and endurance, additional payloads and capabilities for maritime and other environments, and positions us to address the evolving requirements of the Pentagon’s Replicator Initiative.”

Red Cat is redefining the role of Small Unmanned Aircraft Systems (sUAS) for defense applications with unparalleled technology innovation, strategic software and hardware partnerships, and a deep understanding of the operational needs of today’s warfighters. The company is expanding its line of sUAS to support the Pentagon’s desire to accelerate innovation and meet its growing need for “attritable” autonomous systems across air, land, and sea. FlightWave aligns perfectly with the Red Cat Futures Initiative, and the Edge 130 provides a new platform for Red Cat to augment with capabilities through its ecosystem of industry partners.

“Our acquisition by Red Cat will be a significant leap forward in UAV technology integration, setting the foundation for a UAV Family of Systems for easy deployment,” said Dr. Trent Lukaczyk, Co-Founder and CTO of FlightWave. “The Edge 130 is engineered to provide long-range aerial autonomy and is capable of performing long distance Beyond Visual Line of Sight (BVLOS) mapping, inspection, surveillance, and reconnaissance missions with exceptional accuracy. With a flight time exceeding two hours in forward flight mode and a design optimized for quick assembly and deployment, the Edge 130 sets a new standard for Group 1 military-grade VTOLs. We are excited to bring our expertise and innovations to Red Cat and enhance operational capabilities for defense and government agencies.”

“Catapult Ventures has proudly supported FlightWave’s long-range aerial autonomy vision and is thrilled for FlightWave to join forces with Red Cat leveraging the synergies of both companies to drive significant value for stakeholders,” said Darren Liccardo, Co-Founder & Managing Director Catapult Ventures and Lead Investor at FlightWave. “The inclusion of Edge 130 into Red Cat’s portfolio provides substantial opportunities for revenue growth and market expansion. We are confident this strategic acquisition will deliver cutting-edge UAV solutions to meet the evolving demands of defense and commercial markets and propel both companies to new heights.”

Red Cat subsidiary Teal Drones builds its Teal 2 system, designed to support U.S. and allied military operations, public safety organizations, and government agencies, at its Utah facility. Teal 2 is a cost-effective, man-portable sUAS designed to “Dominate the Night” that has best-in-class night vision, multi-vehicle control support, and a fully modular design. It is both Blue UAS Certified and FAA Remote ID approved. Through technology partnerships, the Red Cat Futures Initiative will exponentially expand the use cases for Teal Drones into multi domain (air, land, and sea) operations.

The Edge 130 Blue is a UAS Certified military-grade tricopter for long-range mapping, inspection, surveillance, and reconnaissance needs. Designed specifically for government and military applications, the Edge 130 Blue can be assembled and hand-launched in just one minute by a single user to capture high-accuracy aerial imagery with long-range autonomy. Weighing only 1,200 grams, the Edge has flown for over two hours in forward flight mode, an industry-leading endurance among all other Blue UAS approved drones available. (Source: UAS VISION)

10 Jun 24. Booz Allen Acquires PAR Government Systems Corporation.

Combined solutions will accelerate innovative, tech-enabled solution delivery at the edge
PAR Government Systems Corporation’s IP and technical workforce will strategically augment Booz Allen’s capabilities in situational awareness, decision advantage, and countering uncrewed aerial systems (UAS) threats
Acquisition will enable improved outcomes for agencies in national defense and beyond

Booz Allen Hamilton (NYSE: BAH) announced today that it has acquired PAR Government Systems Corporation (PGSC), a wholly owned subsidiary of PAR Technology Corporation (NYSE: PAR). The acquisition will combine PGSC’s edge technologies with Booz Allen’s deep mission expertise and digital battlespace solutions to accelerate and transform warfighter technology on the front lines.

Founded in 1985 and headquartered in Rome, New York, PGSC delivers differentiated services and solutions in strategic mission areas, including the provision of real-time communications and mobile situational awareness to maintain battlespace dominance. PGSC’s Integrated Tactical Solutions (ITS), Innovative and Commercial Solutions (ICS), and Intelligence and Readiness Operations (IRO) businesses have long-standing track records of innovation and development of technology-driven solutions for a range of government customers.

As a leading defense technology provider for the Department of Defense, Booz Allen combines deep mission expertise with advanced technology to accelerate results across the warfighting lifecycle. The acquisition strengthens the firm’s ability to meet the evolving needs of defense clients and adds highly technical and cleared talent with mission-relevant expertise to Booz Allen’s already strong global defense talent base.

Additionally, PGSC’s capabilities complement Booz Allen’s space data solutions, increasing the firm’s ability to leverage dual-use commercial intelligence, surveillance, and reconnaissance (ISR) to augment situational awareness capabilities for operators at the edge. PGSC’s suite of imagery and communications tools will also provide key operational mission capabilities that enable scaled operational planning, data sharing, visualization, and target management.

PGSC will integrate into Booz Allen’s global defense business led by Sector President Judi Dotson. The acquisition further broadens and deepens Booz Allen’s ability to bring cutting-edge technologies to evolving defense missions and deliver innovative solutions to warfighters in the digital battlespace.

“With increasing threats to joint all domain operations and heightened geopolitical uncertainty, securing the nation’s future against the pacing threat requires industry to invest and innovate in new ways. This acquisition reinforces Booz Allen’s commitment to help accelerate the modernization of tactical warfighting mission systems and secure the future,” said Dotson.

Combining PGSC’s skilled workforce, innovative capabilities and products, and dedicated client commitment with Booz Allen’s software development capabilities, talent, and deep mission expertise will expand and enhance multiple solutions that address urgent national security priorities and geopolitical challenges, including tools to deliver advanced geospatial mapping, counter uncrewed aerial systems (C-UAS), improve situational awareness, and support proliferated Low Earth Orbit (pLEO) space data solutions.

“Booz Allen and PGSC share a deep commitment to addressing the evolving and systemic threats the nation faces with technology and solutions that drive greater mission outcomes,” said Michael Nelson, president at PGSC. “We look forward to applying our combined solutions for greater and broader impact on missions that matter, and infusing our analytical development with increased resources, tools, team members, and industry-level best practices to empower the nation’s warfighters and meet these next-gen warfare demands.”

The acquisition continues to strengthen Booz Allen’s position at the intersection of mission and technology, aligned with the firm’s VoLT (Velocity, Leadership, Technology) growth strategy, its investment thesis, and current and anticipated Department of Defense priorities.

Jefferies LLC and King & Spalding LLP advised Booz Allen on the transaction. Baird and Gibson, Dunn & Crutcher LLP advised PAR Technology Corporation.

About Booz Allen Hamilton

Trusted to transform missions with the power of tomorrow’s technologies, Booz Allen Hamilton advances the nation’s most critical civil, defense, and national security priorities. We lead, invest, and invent where it’s needed most—at the forefront of complex missions, using innovation to define the future. We combine our in-depth expertise in AI and cybersecurity with leading-edge technology and engineering practices to deliver impactful solutions. Combining 110 years of strategic consulting expertise with the perspectives of diverse talent, we ensure results by integrating technology with an enduring focus on our clients. We’re first to the future—moving missions forward to realize our purpose: Empower People to Change the World®.

With global headquarters in McLean, Virginia, our firm employs approximately 34,200 people globally as of March 31, 2024, and had revenue of $10.7 bn for the 12 months ended March 31, 2024. To learn more, visit www.boozallen.com. (NYSE: BAH)

About PAR Technology

For more than 40 years, PAR Technology’s (NYSE: PAR) cutting-edge products and services have helped bold and passionate restaurant brands build lasting guest relationships. We are the partner enterprise restaurants rely on when they need to serve amazing moments from open to close, during the most hectic rush hours, and when the world forces them to adapt and overcome. More than 70,000 restaurants in more than 110 countries use PAR’s restaurant hardware, software, loyalty, drive-thru, and back-office solutions. To learn more, visit www.partech.com or connect with us on LinkedIn, Twitter, Facebook, and Instagram.

(Source: BUSINESS WIRE)

07 Jun 24. Italy approves French firm Safran’s purchase of Microtecnica. Italy has approved French defense company Safran’s purchase of Italian firm Microtecnica after promising to safeguard Italy’s national interests, Safran announced.

The Italian government blocked the sale in November, with officials warning Safran’s management could endanger vital work Microtecnica performs on the Eurofighter jet, which is built by Italy, Germany, Spain and the U.K.

Explaining the Italian government’s change of heart, Safran said it had made “a number of commitments, which are compatible with the targeted objectives of this acquisition, and which address the concerns expressed in the initial Italian decree of Nov. 16, 2023 and provide adequate safeguards of the Italian national interests.”

In a statement on Thursday, the firm said it had been “informed by the Italian government of its decision ultimately to approve the sale to Safran of Microtecnica.”

Owned by U.S. firm Collins Aerospace, which is in turn owned by the large American defense contractor RTX, Microtecnica was part of Collins’ flight controls business, which Safran was to buy in a $1.8 bn deal announced in July.

Italy blocked the deal by using its so-called Golden Power legislation, which grants it the right to halt purchases of strategic firms by overseas buyers. It is often used to counter Chinese acquisitions in Italy.

Reuters reported at the time that Germany had shared with Italy its concerns about supplies of components to the Eurofighter.

In January, RTX and Safran said they were preparing to challenge the veto in court, but noted they were ready to offer more guarantees of protecting Italy’s national interests to make the deal go ahead.

“We look forward to the opportunity to resolve the matter through a constructive dialogue with the Italian Government outside of the appeal process,” an RTX spokesman said at the time. (Source: Defense News)

06 Jun 24. Dolby Laboratories, Inc. (NYSE: DLB), a leader in immersive entertainment experiences, announced today that it has entered into a definitive agreement to acquire GE Licensing, which owns, maintains, and licenses an extensive portfolio of IP primarily targeting the consumer digital media and electronics sectors.

As one of the most respected companies in the field of patent licensing and management, GE Licensing is a leading innovator with world-class patents and licensing expertise, especially with respect to pioneering video codec technology. The transaction will include a portfolio of over 5,000 patents, including foundational patents in standard essential video compression. GE Aerospace will retain its portfolio of IP related to its core aerospace and defense technologies, as well as the trademark portfolio for the GE brand.

“GE Licensing is home to a number of essential innovations that power the modern world” said Andy Sherman, Dolby Executive Vice President, Patent Licensing and General Counsel. “An important part of Dolby’s strategy is providing value to our customers, partners, and the industry through open standards and collaborative pool licensing. This acquisition gives us the opportunity to continue to promote and support innovation within our ecosystems.”

This acquisition is an extension of Dolby’s existing licensing businesses. GE Licensing’s portfolio of video codec technology, such as HEVC and VVC, complement, strengthen, and expand the scale of Dolby’s intellectual property portfolio. Dolby is committed to continuing to facilitate the adoption of next-generation standardized technologies – enabling industry efficiency, continuity, and growth.

“Dolby is a trusted leader and innovator with a long history in licensing technologies and patents through collaborative structures,” said Robert Giglietti, GE Aerospace’s CEO of Corporate Holdings and Treasurer. “As GE Aerospace continues to sharpen its focus as a standalone company serving aerospace and defense customers, Dolby is the right partner for ensuring these innovative digital media technologies continue to serve businesses and consumers around the world.”

Financial Considerations

Dolby Laboratories has agreed to acquire GE Licensing, an intellectual property licensing business primarily targeting the consumer digital media and electronics sectors, in a $429 m all cash transaction. This deal is expected to close by the end of fiscal year 2024, subject to regulatory approval and other customary closing conditions, and is not expected to have a material impact on Dolby’s fiscal year 2024 results. This transaction includes attractive complementary assets that strengthen and expand Dolby’s patent portfolios, and represents a compelling financial profile of durable, high-margin revenue. Dolby expects the deal to be accretive on a non GAAP basis to operating margins and EPS in fiscal 2025.

This transaction is not expected to affect Dolby’s practice of returning capital to stockholders through its quarterly dividend and through stock repurchases to offset dilution from stock-based compensation.

About Dolby Laboratories

Dolby Laboratories (NYSE: DLB) is based in San Francisco, California with offices around the globe. From movies and TV shows, to apps, music, sports, and gaming, Dolby transforms the science of sight and sound into spectacular experiences for bns of people worldwide. Dolby partners with artists, storytellers, developers, and businesses to revolutionize entertainment and communications with Dolby Atmos, Dolby Vision, Dolby Cinema, and Dolby.io. Dolby, Dolby Atmos, Dolby Vision, Dolby Cinema, Dolby.io, and the double-D symbol are among the registered and unregistered trademarks of Dolby Laboratories in the United States and/or other countries. (Source: PR Newswire)

07 Jun 24. Kromek – Cancellation of outstanding Convertible Loan Notes. Further to the Company’s announcement of 12 February 2024, which notified the market of a conversion of Loan Notes and accrued interest by Loan Note holders (the “Loan Notes”), Kromek (AIM: KMK), a leading developer of radiation and bio-detection technology solutions for the advanced imaging and CBRN detection segments, announces that it has since agreed to allot new ordinary shares of 1 penny each (“Ordinary Shares”) in the Company to a further Loan Note holder in consideration for them cancelling their Loan Note that expired on 22 May 2024 (the “Conversion”).

This final Loan Note holder will cancel their Loan Note, which totals £36k of debt, including accrued interest, and the Company has agreed to allot 527,092 new Ordinary Shares (the “New Ordinary Shares”) in consideration for the Loan Note being cancelled (the “Cancellation”). This is being done at an effective price of 6.85 pence per Ordinary Share, being the closing price of the Company’s Ordinary Shares on AIM on 22 May 2024.

Following the Cancellation, the Company will have no outstanding Loan Notes.

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

BUSINESS NEWS

June 7, 2024 by

Sponsored by SPX CommTech (TCI & ECS)

www.tcibr.com

www.enterprisecontrol.co.uk

04 Jun 24. Gooch & Housego points to outsourcing benefits.

The industrial and medical laser markets have been adversely affected by destocking

Good order visibility
Focus on margin expansion

Gooch & Housego (GHH) reported a steep fall in statutory profits at the half-year mark, yet group chief executive Charlie Peppiatt reassured investors that “market dynamics for G&H’s technologies and capabilities remain strong in all our target sectors”. The order book for the electronic component manufacturer finished marginally ahead of its September year-end rate at £115.8mn, although that amounts to substantially all of the order cover needed to match market consensus on full-year revenues.

The reality is that revenues and gross profits were broadly flat on the comparable interim release in 2023. The main problem in terms of financial performance is summed up by the fact that the group’s highest pre-tax margin over the past five years is 4.65 per cent. Management had to deal with the same external supply chain and labour market pressures that have made life difficult for manufacturers of all stripes in recent years, but certain parts of the business have dragged on profitability for different reasons.

So, in a bid to bolster margin growth, the group offloaded its EM4 subsidiary towards the end of the reporting period. EM4 is a Boston-based manufacturer of optoelectronic components and laser modules, but it had “struggled to demonstrate that it could provide a differentiated product offering compared with its competitors”.

A plan is in place to improve the return on sales to mid-teens over the medium term. One of the ways designed to achieve this goal is through proactive outsourcing, an area which management maintains is already delivering positive outcomes. The group continues to explore ways to improve supplier arrangements and customer engagement, but the push to develop further third-party manufacturing channels is likely to have the most immediate positive impact on margins.

Cavendish Securities left its full-year adjusted EPS estimate unchanged at 30.1p, rising to 40.7p in FY2025.

In April, management revealed that order levels in the group’s industrial and medical laser markets had been adversely affected by destocking, the impact of which is predicted to end towards the end of 2024. Unfortunately, interim revenues came up well short of the c. £67.5mn guidance provided in the trading update. So, the shares were duly marked down on results day, albeit on a wide(ish) spread. Good order visibility is set against the necessity to build margins. The forward rating of 18 times earnings is about par from an historical perspective, but a PEG ratio of 0.9 times suggests that the stock could be undervalued based on its growth potential. Cautious buy. Last IC View: Buy, 516p, 05 Dec 2023 (Source: Investors Chronicle)

03 Jun 24. SAIC Announces First Quarter of Fiscal Year 2025 Results.

Revenues of $1.85bn; 0.4% organic growth; organic growth reflects impacts of divestitures
Net income of $77m; Adjusted EBITDA(1) of $166m or 9.0% of revenues
Diluted earnings per share of $1.48; Adjusted diluted earnings per share(1) of $1.92
Cash flows provided by operating activities of $98m; Transaction-adjusted free cash flow(1) of $21m
Net bookings of $2.6bn; book-to-bill ratio of 1.4
Company reaffirms Fiscal Year 2025 financial guidance

Science Applications International Corporation (Nasdaq: SAIC), a premier Fortune 500® technology integrator driving our nation’s digital transformation across the defense, space, civilian, and intelligence markets, today announced results for the first quarter ended May 3, 2024.

“We reported solid financial results in the quarter as we began executing against our enterprise growth strategy introduced at SAIC’s 2024 Investor Day,” said SAIC CEO Toni Townes-Whitley. “We are confident that the strategy and investments we are making best position the company to maximize long-term shareholder value. While we are seeing early indications of progress, we expect returns from our investments to further accelerate in FY26 and FY27.”

First Quarter Summary Results

Revenues for the quarter decreased $181m or 9% compared to the same period in the prior year primarily due to the sale of the logistics and supply chain management business (“Supply Chain Business”) ($188 m) in the prior year and contract completions, partially offset by ramp up in volume on existing and new contracts. Adjusting for the impact of the divestiture of the Supply Chain Business, revenues grew 0.4%.

Operating income as a percentage of revenues decreased from the comparable prior year period primarily due to the sale of the Supply Chain Business in the prior year, a gain recognized from the deconsolidation of FSA in the prior year period, and contract completions, partially offset by ramp up in volume on existing and new contracts.

Adjusted EBITDA(1) as a percentage of revenues for the quarter decreased to 9.0% from 9.3% for the same period in the prior year primarily due to contract completions, partially offset by ramp up in volume on existing and new contracts.

Diluted earnings per share for the quarter was $1.48 compared to $1.79 in the prior year quarter. Adjusted diluted earnings per share(1) for the quarter was $1.92 compared to $2.14 in the prior year quarter. The weighted-average diluted shares outstanding during the quarter decreased to 52.1m from 54.8m during the prior year quarter.

Effective February 3, 2024, the first day of fiscal 2025, SAIC completed a business reorganization which replaced its previous two operating sectors with five customer facing business groups supported by the enterprise organizations, including the Innovation Factory. The five business groups represent SAIC’s operating segments and have been aggregated into two reportable segments (Defense and Intelligence, and Civilian) given the similarity in economic and qualitative characteristics, and based on the nature of the customers they serve. See “Schedule 4 – Segment Operating Results” for reportable segment results.

Cash Generation and Capital Deployment

Cash flows provided by operating activities for the first quarter increased $16m compared to the prior year quarter, primarily due to higher cash provided by the Master Accounts Receivable Purchase Agreement (“MARPA Facility”) in the current year, partially offset by higher incentive-based compensation payments in the current year and other changes in working capital.

During the quarter, SAIC deployed $107m of capital, consisting of $81m of plan share repurchases, $20m in cash dividends, and $6m of capital expenditures.

Quarterly Dividend Declared

As previously announced, subsequent to quarter end, the Company’s Board of Directors declared a cash dividend of $0.37 per share of the Company’s common stock payable on July 26, 2024 to stockholders of record on July 12, 2024. SAIC intends to continue paying dividends on a quarterly basis, although the declaration of any future dividends will be determined by the Board of Directors each quarter and will depend on earnings, financial condition, capital requirements and other factors.

Backlog and Contract Awards

Net bookings for the quarter were approximately $2.6bn, which reflects a book-to-bill ratio of 1.4 and a trailing twelve months book-to-bill ratio of 1.0. SAIC’s estimated backlog at the end of the quarter was approximately $23.6bn. Of the total backlog amount, approximately $3.5 bn was funded.

Notable New Awards:

U.S. Space Force: During the quarter, SAIC was awarded a five-year (one year base, plus four, one-year option periods), $444m contract to support Digital Transformation, Acquisition, Modernization and Modification (DTAMM) for the U.S. Space Force’s Space Systems Command and Space Launch Deltas (SLDs) 30 and 45. SAIC will support the modernization of the space launch range instrumentation. The efforts will support an accelerated national launch cadence across the Eastern Range (ER) and Western Range (WR) including Cape Canaveral Space Force Station and Patrick Space Force Base in Florida and Vandenberg Space Force Base in California. Experts from SAIC and partners will collaborate to modernize antiquated instrumentation and processes to enable a faster and more integrated launch environment. SAIC remains at the forefront of national priorities to explore, secure and influence space by leveraging industry expertise and legacy in this domain. In addition to DTAMM, SAIC’s work facilitates future unmanned spacecraft, earth science data-collecting satellites, space-ground systems for military joint all-domain command and control and more.

Office of the Under Secretary of Defense for Research and Engineering: During the quarter, SAIC was awarded a five-year (one year base, plus four, one-year option periods), approximately $90m contract by the Office of the Under Secretary of Defense for Research and Engineering (OUSD(R&E)) to modernize business operations. Through this contract, SAIC will partner with OUSD(R&E) to modernize its policies and procedures through SAIC’s data management, knowledge management and strategic planning capabilities. Enhancements will include an increase in data reuse and the reduction of internal organizational operational delivery times.

U.S. Navy: During the quarter, SAIC was awarded a five-year (one year base, plus four, one-year option periods), $92m contract to provide professional support services in the areas of sustainment, engineering, test and evaluation, logistics, research and development, and ancillary facilities in direct support of Underseas Sensors Branches at the Naval Surface Warfare Center and Crane Division.

Special Operations Command: During the quarter, SAIC was awarded a significant modernization role on the recently awarded $2.8bn SOCOM SITEC 3 EOM contract as part of Peraton’s winning team. SAIC will support the SOCOM mission by contributing to the modernization and sustainment of the IT, networks and infrastructure to support their 80,000 users. SAIC will provide enterprise-wide IT services and the SOF Information Environment to support the SOF global battle space. The contract will impact core services for users in more than 80 countries.

Notable Recompete Awards:

National Aeronautics and Space Administration (NASA): During the quarter, SAIC was awarded a $494m seven year (one year base, plus six, one-year option periods) single-award indefinite delivery, indefinite quantity (IDIQ) recompete contract by NASA to enable safe and reliable exploration of space through the Safety and Mission Assurance Engineering Contract III (SMAEC) program. Performing work at the Johnson Space Center in Houston, Texas and the White Sands Test Facility, N.M., SAIC will work on next-gen space missions like Orion, the lunar Gateway, the International Space Station and human space flight. Consistent with the Company’s policy, the Company included $350m of the IDIQ ceiling in bookings and backlog which represents its current estimate of expected delivery on the contract.

U.S. Navy: During the quarter, SAIC was awarded a six-year (one year base, plus five, one-year option periods), approximately $120m recompete to support the Navy’s afloat and ashore wargaming and fleet readiness. This effort will support the Tactical Training Group Pacific (TTGP), Expeditionary Warfare Training Group Pacific (EWTGPAC), Carrier Strike Group 15 (CSG-15), and Commander, Naval Air Forces Pacific (CNAP) through professional technical services providing FST and LVC wargame development and execution, as well as SME classroom instruction in warfighting doctrine and TTPs utilizing government furnished training systems and facilities, both afloat and shore.

U.S. Space and Intelligence Community: During the quarter, SAIC was awarded approximately $706m of contract awards by space and intelligence community organizations. These awards represent a combination of new business and recompetes.

Other Notable News:

SAIC launched a multi-year growth strategy at 2024 Investor Day and met with key analysts and shareholders to share the company’s new vision for strategic growth to increase its value for customers and stakeholders. SAIC has committed to growing the company through a phased approach that focuses on building the company’s portfolio and go-to-market approach, enhancing the brand and further developing a winning culture.

SAIC appointed Srinivas “Srini” Attili as executive vice president, Civilian Business Group, effective May 6, 2024. In this role, Mr. Attili will report to Chief Executive Officer Toni Townes-Whitley and will further extend SAIC’s position as a leader across Civilian markets through innovation and revenue growth.

SAIC was recognized as a Leader in the IDC MarketScape: U.S. National Government Professional Security Services 2024 Vendor Assessment. The report highlights the evolving challenges in cybersecurity due to emerging technologies, expanding attack surfaces and a significant shortage of skilled cybersecurity professionals. SAIC’s Trust Resilience™ cybersecurity solution provides the most advanced commercial technology to address security gaps and deliver cybersecurity across any enterprise. It aligns to all major zero trust governance models, reduces cyber risks, prevents system disruptions and guards against data loss.

(Source: BUSINESS WIRE)

03 Jun 24. NextFlex® Launches $5.3m Funding Opportunity to Strengthen U.S. Electronics Manufacturing and Promote Commercialization of Hybrid Electronics. NextFlex, the Department of Defense (DoD) sponsored Manufacturing Innovation Institute focused on maturing hybrid electronics, today released Project Call 9.0 (PC 9.0), its latest call for proposals that seek to fund projects that further the development and adoption of hybrid electronics while addressing key challenges in advanced manufacturing. The total PC 9.0 project value is expected to exceed $11m (including NextFlex investment and performer cost-share), bringing the total anticipated investment in advancing hybrid electronics since NextFlex’s formation to $143m.

Building from the success of past Project Calls, PC 9.0 uses broadly defined topics to enable a diverse proposer base, with special emphasis on areas in which hybrid electronics can impact high priority U.S. manufacturing opportunities and areas of emerging importance within the electronics manufacturing community. PC 9.0 emphasizes projects that address critical hybrid electronics manufacturing challenges, enabling the transition of hybrid electronics devices into applications that require superior performance, assured reliability, and improved environmental sustainability.

“NextFlex Project Calls advance the state of the art of hybrid electronics technology and have proven to push the field in new directions, with each marking development milestones that have been collectively achieved by the NextFlex consortium. PC 9.0 continues this trend, with increased emphasis on projects that will lead to technology transitions into both commercial markets and defense programs.” said Dr. Scott Miller, Director of Technology at NextFlex. “As hybrid electronics technologies increasingly find their way into products and manufacturing, these developments will expand the range of applications in aerospace, automotive, structural health monitoring, and medical wearables.”

Proposals focused on manufacturing challenges and advancing technology transitions are sought in these topic areas:

Topic 9.1: Manufacturing of High Resolution, Multilayer Electronic Packages and Devices

Topic 9.2: Thermal Management for Power Electronics

Topic 9.3: Reliable Hybrid Electronics for Extreme Conditions

Topic 9.4: Conformal & Structurally Integrated Hybrid Electronics

Topic 9.5: Additive Processes for Improved Environmental Sustainability of Electronics Manufacturing

Topic 9.6: Open Topic for “New Project Leads”

In addition, NextFlex announces the release of its latest public Hybrid Electronics Technology Roadmaps. Developed by subject matter experts from industry, academia and government. The NextFlex Technical Working Groups in 11 technical areas of emphasis – Automotive; Device Integration & Packaging; Materials; Modeling & Design; Printed Components & Microfluidics; Standards, Test & Reliability; Asset Monitoring Systems; Flexible Power; Human Monitoring Systems; Integrated Antenna Arrays; and Soft Wearable Robotics – update the roadmaps each year. The public roadmaps summarize the detailed information on the current state of the art, market opportunities and needs, key stakeholders, a five-year forward-looking development roadmap, and prioritized technical gaps identified by each Technical Working Group in the full-version roadmaps to which NextFlex members have access. These roadmaps inform the priorities and shape the topics for NextFlex Project Calls. You can access the public version of these roadmaps here.

Proposals are due July 24.

About NextFlex

NextFlex is a DoD sponsored Manufacturing Innovation Institute funded by Air Force Research Laboratory Cooperative Agreement numbers FA8650-15-2-5401 and FA8650-20-2-5506. NextFlex is a consortium of companies, academic institutions, non-profits and state, local and federal governments with a shared goal of advancing U.S. manufacturing of flexible and additive hybrid electronics. Since its formation in 2015, NextFlex’s elite team of thought leaders, educators, problem solvers and manufacturers have come together to collectively facilitate innovation, narrow the manufacturing workforce gap and promote sustainable manufacturing ecosystems. (Source: BUSINESS WIRE)

04 Jun 24. Chemring reports record order book and strong momentum.

Cold front in Tennessee puts freeze on first-half profits

Revenue goal set at £1bn by 2030
Investment in growing energetics capacity upped to £200mn

Defence company Chemring’s (CHG) interim results were somewhat frustrating for investors. For all of the talk of record order books and the long-term potential of the business, the short-term performance wasn’t great.

A 24 per cent decline in operating profit was attributed to problems at a countermeasures factory in Tennessee, which was forced to halt operations in January when local temperatures fell to minus 27 degrees Celsius.

An automation ramp-up at the site was also pushed back, while a legacy countermeasures contract signed with the US Department of Defense in 2016 also hit margins. This is set to be completed in the second half, though, and the company is forecasting a significant enough increase in activity to leave its full-year guidance unchanged.

It will require a stronger second-half performance than usual to meet this, though. Chemring’s sales, operating profit and cash flows are normally weighted towards the back end of its financial year, with 60 per cent earned in the second half and 40 per cent in the first, according to Jamie Murray, an analyst at Shore Capital. This year, that weighting “will be closer to 65:35”, he said.

Although this increases the potential for an earnings miss and a subsequent sell-off in the shares of a company that are up by 42 per cent over the past 12 months, this has to be weighed against Chemring’s brighter prospects.

An “unprecedented” increase in demand for energetics used in munitions has meant the company is being handed money (£90mn in total) by the European Union and the Norwegian government to ramp up production at its Chemring Nobel site. This has led it to increase its proposed spend on boosting energetics capacity to £200mn, up from £120mn. Once complete, this will deliver an extra £100mn in sales and £30mn in operating profit a year, with chief executive Mick Ord setting a long-term annual revenue target of £1bn by 2030.

Capex will therefore remain elevated in the short term, and a £34mn spend during the first half (coupled with £28mn on buybacks) pushed net debt higher to £75mn, from £14.4mn at the end of last year.

Net debt still stands at less than one times underlying Ebitda, though, and cash conversion remains strong. Even with Chemring’s shares trading at around 19 times consensus forecasts, above their five-year average of 16 times, it is demonstrating enough momentum for us to maintain our buy call. Last IC view: Buy, 326p, 12 Dec 2023 (Source: Investors Chronicle)

03 Jun 24. Curtiss-Wright Corporation (NYSE: CW) today announced that it entered into an agreement to acquire the stock of Ultra Nuclear Limited and Weed Instrument Co., Inc. (“Ultra Energy”), a subsidiary of Ultra Electronics, for $200m in cash. Ultra Energy is a leading designer and manufacturer of reactor protection systems, neutron monitoring systems, radiation monitoring systems, and temperature and pressure sensors that facilitate the safe and reliable operation of commercial nuclear power generation plants, and support UK nuclear defense, as well as aerospace and industrial applications.

Ultra Energy generated sales of approximately $65m 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 acquisition is expected to close in the third quarter of 2024, subject to UK regulatory approval, and the acquired business will operate within Curtiss-Wright’s Naval & Power segment.

“The acquisition of Ultra Energy significantly increases the breadth of Curtiss-Wright’s global portfolio with highly complementary, critical measurement and control solutions supporting the modernization of existing commercial nuclear power plants, as well as the design of new and advanced power plants including small modular reactors, in both the U.S. and Europe,” said Lynn M. Bamford, Chair and Chief Executive Officer. “The transaction provides an opportunity to leverage Ultra Energy’s relationships and UK-based nuclear manufacturing footprint to further expand Curtiss-Wright’s presence with the leading global designers of advanced nuclear reactors as well as our robust naval defense portfolio to support UK submarines.”

“Building on our successful acquisition track record, Ultra Energy’s critical solutions have a strong alignment to our strategic priorities as highlighted at our 2024 Investor Day. Further, the business is expected to support Curtiss-Wright’s financial objectives including long-term profitable growth and strong free cash flow generation.”

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. Ultra Energy is a subsidiary of Ultra Electronics, formerly a UK-traded public company.

03 Jun 24. MyDefence, the counter drone technology provider, announces Bridgepoint as new majority shareholder. MyDefence, a Danish specialist developer of counter drone technology, announces new investment via the Bridgepoint Development Capital IV fund. Bridgepoint will support MyDefence in its next stage of growth, including further investments in research and development as well as production expansion.

MyDefence, a leading provider of counter unmanned aerial systems, known as C-UAS or counter drone technology, has announced the global private equity group, Bridgepoint, as its new majority shareholder. The partnership leverages Bridgepoint’s strong track record of supporting international expansion and growth in global technology and advanced industrial sectors. The investment was made via Bridgepoint Development Capital IV, BDC, a fund focused on investing in mid-market growth business across Europe.

MyDefence develops radio frequency-powered products to detect and defeat unmanned aerial systems, such as drones. The company’s products can be worn by personnel or mounted to vehicles and buildings, and its technology is used to protect military or civilian critical infrastructure from the safety risks posed by hostile drones. The company has delivered 115% compound annual revenue growth over the last four years and is well-positioned to become a leader in the $1.1 bn addressable market for drone countermeasure solutions with its unique product offering.

“We are delighted to partner with the Bridgepoint team. Their extensive presence worldwide and their experience helping companies grow is valuable to us. Adding us to Bridgepoint’s vast network not only gives us financial support, but it also puts us on a path for faster development and innovation. C-UAS systems are among the most important next-generation defence technologies and MyDefence is at the forefront of all cutting-edge innovations required to meet the difficulties facing drone defence today,” says Dan Hermansen, CEO at MyDefence.

Poised for global expansion and further innovation

With access to capital and strategic support from Bridgepoint, MyDefence is advantageously placed to expand its reach globally and reinforce its position as a leader in C-UAS and other technologies with civil and defence applications. The partnership will enable MyDefence’s next phase of growth with a focus on the scaling of production, professionalization, and research and development.

– We have built a very strong relationship with Dan and his team, whose wealth of experience bridges the defence and security arenas. With a suite of products at the forefront of technology, MyDefence enjoys an enviable position in the market, underpinned by a robust orderbook and pipeline with significant scale-up opportunities. We look forward to leveraging the complete breadth of capabilities across our international network to help realise this exciting next stage of MyDefence’s journey, says Johan Gustafsson, Partner at BDC.

With a significant number of C-UAS systems supplied already, MyDefence has proven to be a dependable technology-provider in the defence industry. With the support of Bridgepoint, MyDefence is now ready to expand its technology offering, not only in defence but additionally in corporate, governmental and homeland security sectors.

This reflects the growing demand for comprehensive security measures against hostile drone threats across a range of applications, including the protection of critical infrastructure, including utilities like gas and electricity, public venues like stadia and event spaces, and high-security institutions such as prisons.

Financial terms of the transaction were not disclosed.

MyDefence was advised by PwC (M&A adviser), Plesner (legal adviser), and KPMG (financial and tax adviser). Bridgepoint was advised by SEB (M&A adviser), Accura (legal adviser, tax due diligence and structuring), Renaissance Strategic Advisers (commercial due diligence), Alvarez & Marsal (financial and operational due diligence), Crosslake (technology due diligence), ERM (ESG due diligence), and Marsh (insurance due diligence).

About MyDefence

Founded in 2013, the Danish company MyDefence has been developing counter drone defence technology, specializing in the development of radiofrequency-based solutions. Meeting the requirements of global defence organizations, MyDefence is dedicated to enhancing national security and protecting critical infrastructure through technological excellence. Its battle-proven systems have been rigorously reviewed and approved for purchase by NATO member nations. Following the vision of “Saving Lives” since its inception, MyDefence has successfully created a solid position in the C-UAS market as the leading provider of wearable and integrated solutions to protect humans, vehicles, and critical assets against malicious use of drones.

About Bridgepoint

Bridgepoint is one of the world’s leading quoted private asset growth investors, specialising in private equity and private debt. With over €41 bn of assets under management helping primarily European companies to grow, Bridgepoint combines global scale with local market insight and sector expertise, consistently delivering strong returns through cycles.

01 Jun 24. Drone Startup Neros Raises $11m Funding from Sequoia.

LA-based Neros, an autonomous drone startup founded about a year ago, has raised $10.9m in a seed round from Sequoia Capital to build a new factory and manufacture more drones to sell to Ukraine.

When Soren Monroe-Anderson and Olaf Hichwa first met, they were competitors with a lot in common. Both were first-person view drone pilots racing at the professional level, both ran their own businesses designing and selling drone components—and both were still in high school.

Soren grew up racing in Alaska before moving to New England, where his parents took jobs at Dartmouth, while Olaf built his skills near Washington, D.C., where he was part of the extended Sequoia family—his father spent his career as a leader at Oracle, a legendary part of our portfolio. By the time he was 17, Soren was a world champion in the MultiGP drone racing league; Olaf, meanwhile, had ranked third on the league’s global leaderboard a few years earlier and went on to design and sell thousands of drone circuit boards to the world’s top pilots.

MultiGP is like the Formula 1 of the drone world—to succeed at Soren’s and Olaf’s level requires elite skills in not just piloting but engineering. And now, these competitors turned co-founders are using that dual expertise to build the drones that they always wanted—and that they know soldiers need.

When I was in Afghanistan in 2012, the U.S. military was using what were then called drones—but they were large, fixed-wing devices that had more in common with airplanes than with the drones of today. Advances in technology in the decade since are on par with the jump between World War II and Vietnam; for the past two years, Ukraine’s military has defended against the Russia invasion not just with planes, ships and tanks but also electromagnetic energy, Starlink, hypersonic weapons—and modern, quadcopter drones.

Drones are a foundational technology for the future of warfare, with use cases going far beyond offensive missions; they are also used, in massive quantities, to gather intelligence, clear mines and more. But the U.S. is currently far behind in production of both these machines and their components, with 85% of global drone manufacturing capacity owned by China. Under the Department of Defense’s Replicator initiative, large U.S. defense companies will produce thousands of drones, but Ukraine will use an estimated 2.5 m this year alone.

With Neros, Soren and Olaf are determined to change that math.

Last year, a few days after we first met, Soren traveled to the front lines of Ukraine—to share what he knew about flying drones, and to see firsthand what the soldiers there needed. He came back with a clear vision for what Neros should build, and for how they should build it: a new generation of drones, from a fully American supply chain. We partnered soon after.

And then we saw just how quickly Soren, Olaf and their team work. They began in earnest in June, and by September, Neros—still a pre-seed company at the time—had successfully tested and deployed functional drones in Ukraine. Today, those drones remain a critical tool on the battlefield, and Neros recently completed an exercise with the U.S. Army, successfully removing anti-tank landmines in every attempt.

It’s an incredibly impressive track record for any new company, much less one led by co-founders who are barely in their 20s. But once you know Soren and Olaf, it’s difficult to be surprised. They are amazing: laser-focused on understanding their customers and iterating quickly to meet soldiers’ needs, and they are bringing on top talent to help them scale. With this round of seed funding, Neros will continue building that team, and will open a new 15,500-square-foot factory, enabling them to produce thousands of drones each month. From there, Soren and Olaf plan to bring production of more components in house—continuing progress toward their dream of a fully American drone supply chain—and eventually, to expand beyond drones to more aspects of defense, reshoring manufacturing as they go.

Less than a decade after they faced off as racers, these two teenage competitors turned friends and their team are already making a life-saving difference for soldiers in Ukraine—and soon, for the men and women who serve in the U.S. military and all around the world.

(Source: UAS VISION/Sequoia Capital)

BUSINESS NEWS

May 31, 2024 by

Sponsored by SPX CommTech (TCI & ECS)

www.tcibr.com

www.enterprisecontrol.co.uk

30 May 24. Cerberus Acquires Calspan’s Hypersonics and Test Systems Business Units from TransDigm and Forms North Wind, a Leading Independent Supplier of Hypersonic Test Infrastructure, Systems and Services. Cerberus Capital Management, L.P. (together with its affiliates, “Cerberus”), a global leader in alternative investing, today announced that it has acquired Calspan’s hypersonic and defense test systems business units from TransDigm Group (NYSE: TDG). In acquiring Calspan Aero Systems Engineering and Calspan Systems, Cerberus has established North Wind, an independent business centrally focused on the advancement of the United States’ hypersonic test capability through ground-based facility design, build and operations, testing, and analysis.

Headquartered in St. Paul, Minnesota, with decades of specialized experience as a trusted independent partner to the U.S. government’s Research, Development, Test & Evaluation (RDT&E) organizations, North Wind is uniquely positioned to serve the demands of its customers with high-quality, customized engineering services and integrated solutions.

The acquisition and subsequent formation of North Wind are led by Cerberus’ Supply Chain and Strategic Opportunities platform, which acquires and invests in companies addressing supply chain shortages, defined by critical long-term U.S. national security requirements, to help drive innovation, promote resilient infrastructure, and increase security for the United States and its allies.

Michael Palmer, Senior Managing Director on Cerberus’ Supply Chain and Strategic Opportunities platform, said: “We’ve been tracking this company for a while and admire their innovation and expertise in hypersonics analysis and testing. Enabling the U.S. to meet the great need for hypersonic capabilities, North Wind is an important investment. We couldn’t be more thrilled to execute against the team’s vision as a well-resourced standalone company.”

David Meier, who has been the President and CEO of Calspan Aero Systems Engineering since 2015, will lead North Wind as CEO. Stephanie Mumford, President of Calspan Systems since 2016, will serve as President of the North Wind Systems business unit headquartered in Newport News, Virginia. Dr. Anthony Castrogiovanni, a leading technologist in the hypersonics industry who has served as Calspan’s CTO since 2021 and previously founded ACEnT Laboratories, will assume the role of CTO for North Wind.

Mr. Meier added: “We’re excited to be joining forces with a like-minded partner in Cerberus to establish North Wind and drive the expansion and modernization of our nation’s valuable test infrastructure with a focus on hypersonics. With Cerberus’ support and dedicated resources, we’re confident that North Wind will thrive.”

About North Wind

North Wind is a leading independent supplier of complex hypersonic and Research, Development, Test & Evaluation (RDT&E) systems and services. Leveraging decades of specialized experience, North Wind delivers hypersonic and RDT&E capabilities through five complementary business segments: Applied R&D; Test Articles and Critical System Components; Test Facility Design & Build; Test Services; Flight Testing & Flight Systems. The Company’s offerings span the full life cycle of aerospace & defense and commercial systems, including end-to-end turnkey solutions. Learn more at www.north-wind.com.

About Cerberus

Founded in 1992, Cerberus is a global leader in alternative investing with approximately $65 billion in assets complementary credit, real estate, and private equity strategies. We invest across the capital structure where we believe our integrated investment platforms and proprietary operating capabilities create an edge to improve performance and drive long-term value. Our tenured teams have experience working collaboratively across asset classes, sectors, and geographies to seek strong risk-adjusted returns for our investors. For more information about our people and platforms, visit us at www.cerberus.com. (Source: BUSINESS WIRE)

30 May 24. Cuashub.com said today that ZeroMark Secures Seed Funding for “Handheld Iron Dome.” ZeroMark, a defense technology startup, has secured $7m in seed funding led by prominent venture capital firms Ground Up Ventures and Andreessen Horowitz. This investment will expedite the development of ZeroMark’s groundbreaking AI-powered auto-aiming system, which converts standard infantry rifles into highly effective counter-drone solutions, offering every soldier a “Handheld Iron Dome” capability.

“The proliferation of drone technology poses an evolving threat to our armed forces,” said Joel Anderson, CEO of ZeroMark. “Our mission is to empower every soldier with a cost-effective, highly portable counter-drone solution that delivers unparalleled performance. With the support of our investors, we are ready to deploy this critical capability and ensure our defenders maintain a decisive edge on the battlefield.”

ZeroMark’s cutting-edge technology revolutionizes modern warfare by integrating advanced computer vision and precision robotics with conventional firearms. This system is the only solution on the market that physically enhances the operator’s aim, enabling rapid and precise engagement of threats. By augmenting standard-issue rifles without compromising their functionality, ZeroMark’s approach increases the lethality and precision of armed forces while significantly improving operational safety and decision-making efficiency. This innovative technology ensures that the human remains in control, empowering soldiers to counter fast-moving, low-altitude drone threats effectively.

Jordan Odinsky, Partner at Ground Up Ventures, emphasized the critical need for companies like ZeroMark to protect freedom and democracy. “As a firm with deep roots in Israel, we have witnessed firsthand the critical need for companies like ZeroMark to provide superior precision hardware and software systems to those that protect and defend freedom and democracy,” Odinsky stated. “We are thrilled to lead this funding round, which will enable ZeroMark to have an outsized impact on the way the United States and its allies protect their citizens, law enforcement, and warfighters.”

Andreessen Horowitz (a16z), one of the world’s leading venture capital firms and the driving force behind the American Dynamism movement, also spearheaded the funding round. “Military precision is critical in the next generation of warfare. We’re proud to support ZeroMark as they build new technology to protect and serve armed forces on the battlefield,” said Katherine Boyle, a General Partner at Andreessen Horowitz. ZeroMark’s groundbreaking work has earned them a place in a16z’s American Dynamism portfolio.

The inclusion of NY Ventures in the funding round underscores the significance of ZeroMark’s technology and its potential impact on national security. “ZeroMark is pioneering a new era in defense technology with its AI-powered targeting system,” said Karan Mehta, Sr. Director at NY Ventures. “Its solution enhances the precision and safety of our armed forces while addressing critical gaps in defense capabilities. NY Ventures is proud to support a team that is having such a profound impact on national security.” ZeroMark’s commitment to making New York a leading hub for defense companies is a key factor in NY Ventures’ decision to invest.

The seed funding will expedite product development, enhance feature integration, and expand operational capabilities. ZeroMark’s technology can be seamlessly installed on any standard carbine or rifle without needing tools, offering real-time threat analytics, friend-or-foe identification, and automatic aim augmentation—crucial for maintaining tactical superiority in complex environments.

ZeroMark’s impressive momentum is driven by a team of experts and veterans from the military and technology sectors, including former special operators, leading computer vision and robotics engineers, and advisors with extensive government and security experience.

https://cuashub.com/en/content/zeromark-secures-seed-funding-for-handheld-iron-dome/?utm_campaign=C-UAS%20Hub%20General&utm_medium=email&_hsenc=p2ANqtz-98ra7SgQ_XpUGcsj_tnT_Z_1bZ2PSKM3SwuNLyJPQQW4Ld3x4SuoNVdad4tTKirpkVw8r0VqUznpl3bYwstUomj3Gk7xGM8Smc7Bt6H-Jk4pW-hRM&_hsmi=309394989&utm_content=309394989&utm_source=hs_email (Source: https://cuashub.com/)

29 May 24. Cohort rides defence spending wave. Cohort Plc [LON:CHRT], the AIM-listed defence company, has continued its forward advance. The Reading-based weapon systems manufacturer built on last year’s record performance and delivered results slightly ahead of expectations.

In its trading update to end-April 2024, Cohort said that trading performance for the year was slightly ahead of expectations on the back of a very strong order intake of GBP387m, up 77.5% year-on-year. This led, said the company, to a growth in revenue and profits

The company has also built up its cash armoury, increasing net funds from GBP15.6m in April 2023 to GBP23m. The company was expecting strong demand to continue in a growing market in last year’s results, and delivered a record closing order book of GBP518m, up 57.4% year-on-year. This order book gave Cohort’s management confidence that it would meet or exceed market expectations, as the order book underpins GBP180m, or 90% of current market revenue expectations.

As previously reported, Cohort’s divisions are: Mass, providing cyber defence and electronic warfare support to maritime and air assets; ELAC Sonar, providing passive and active sonar systems to submarines and surface ships; MCL a communications and surveillance specialist; SEA, focussing on maritime communications, torpedo launchers and decoys; EID a division that offers integrated communications systems to personnel deployed in the field; and Chess which provides tracking, fire control and anti-drone solutions for maritime and land platforms.

The defence company explained that its Sensors and Effectors division performed very strongly, especially its Chess and SEA subsidiaries, however, its Communications and Intelligence subsidiaries were a bit disappointing on the back of the UK Ministry of Defence slowing procurement in comparison with the previous years and the Portuguese military still dragging its feet on prearranged contracts.

Substantial Royal Navy order boosts Cohort results

The order book included a EUR16m (GBP13.6m) December follow-on 60-month contract win for ELAC to provide submarine sonar to the Italian navy, followed in January by a GBP15.1m win for SEA to supply torpedo launch systems to the Canadian navy. In March Chess won a GBP15.7m contract to provide surveillance systems for Australia’s Hunter class frigates and later that month Cohort’s SEA subsidiary won a chunky GBP135m naval countermeasures contract with the Royal Navy.

The Royal Navy contract includes the provision and support of SEA’s Trainable Decoy Launcher System, known as Ancilia, which delivers effective and rapid protection against modern anti-ship threats and sophisticated systems and tactics. It will be installed across a range of the Royal Navy’s surface ships. Its design builds on SEA’s deep knowledge of existing systems in service with the Royal Navy.

Andy Thomis, Cohort’s CEO said at the time: “This is a significant win for SEA and the group, and the project will deliver greatly enhanced protection for the Royal Navy’s surface ships against new and potent threat technologies. Over the life of the project, we estimate it will sustain employment for 150 skilled and professional people in North Devon, and export success could see this increase further still.”

Rise in global defence spending

Thomis explained that Cohort continues to see good demand for our products and services from both domestic customers and from export customers. The drivers for increased investment in defence have amplified during the year, with the ongoing conflicts in Ukraine and the Middle East, coupled with tensions in the Indo-Pacific region leading to increased global defence spending.

With an encouraging pipeline of order opportunities for the current year, providing a positive outlook for organic growth in the years ahead, things are looking good for Cohort. (Source: https://www.thearmchairtrader.com/)

29 May 24. The ELT Group continues its expansion with the 100% acquisition of ELTHUB. This latest development enhances the position of the group within the Space and Electro-Optics sectors.

Elettronica SpA, a company that is now known in the market under the brand name of ELT Group, acquires 100 per cent of ELTHUB, of which it already owned 70 per cent and which already works within the Group in the division called New Tech Lab.

The acquisition which has just been concluded aims to give a new impetus to the production site located in Abruzzo, and has been contributing to the ELT Group’s Research and Innovation activities for the last two years.

With a value proposition already strongly oriented towards the Research and Development of innovative solutions in the defence and security fields, ELTHUB has already brought to the Group expertise in the microelectronics and biodefence sectors and a track record in the space sector, where it has been working for many years on microsatellites for military and civil experiments. The company has also developed innovative product lines in terms of sustainability, such as hydroponic technologies for military and civil use also food 3D printers. The company also has assets such as microelectronics laboratories, a clean room certified up to class 10 (ISO 4), and a machine shop with rapid prototyping capability.

The acquisition is part of the Group’s growth plan with the aim of creating a true centre of competence in Abruzzo in the Space EW and Land segments, in addition to its current business lines. Further impetus will be given to the research, development and production of EW systems for Space and Land through a line of products related to Electro-Optics, C-IEDs (Counter Improvised Explosive Devices) and anti-drone systems, which represent a strategic enabler in the field of security and protection. The expected aim is to double the turnover and personnel of this subsidiary within the next three years.

“This operation – states CEO and Chairman Enzo Benigni – is part of the trajectory of the Tenet 2030 strategic plan, which is redesigning the perimeters and ambitions of the company, particularly in the Land segment, with renewed C-IED countermeasures systems and C-UAS (Counter Unmanned Aerial System) anti-drone systems, and Space, where the company has been working over the last three years on the spatialisation of the portfolio of EW, electronic intelligence and jammer systems, having already taken an EW payload into LEO orbit in 2023. The Land and Space segments represent a challenging frontier for the military and civil sectors, to which we dedicate investment and research, creating today a centre of competence in Abruzzo for new and traditional businesses, generating value and growth.

28 May 24. Drone-As-First-Responder Firm Aerodome Raises $21.5m in Series A Funding. Aerodome, a supplier of Drone-As-First-Responder (DFR) technology, announced that the company has raised $21.5 m in Series A funding to continue building DFR solutions and growing its engineering and go-to-market teams. CRV led the round with participation from Andreessen Horowitz (a16z), Karman Ventures, Immad Akhund (CEO, Mercury), and Ford Street Ventures. The company raised its seed round in October 2023, led by a16z and 2048 Ventures, bringing its total funding to $28 m.

The money will also go toward expanding Aerodome’s headcount, which currently sits around 30 people.

“Upon experiencing Aerodome’s technology firsthand on a fly-along, I immediately recognized its potential to have a scalable impact on public safety and its ability to save lives,” said Saar Gur, General Partner, CRV and Aerodome’s newest board member. “Speed is of the essence in emergencies. Aerodome doesn’t just provide police agencies with ROI, it also gives them an insanely valuable source of real-time intelligence to first responders out in the field.”

Co-founded by Aerodome CEO and reserve police officer Rahul Sidhu and Aerodome Chief Architect Kenaniah Cerny, the company is ushering in a new era of DFR with a turnkey solution that is faster, safer, and more energy efficient than others on the market. By providing a fully automated and remote air support operating system, Aerodome equips agencies with a highly advanced, 24/7 solution that reduces the need for patrol officers to respond to calls by 15 percent while offering 80 percent faster response times.

“As the second officer in the country to launch a DFR program, I wanted to build a more advanced, automated solution that would reduce the strain on officer resources,” said Sidhu, also a former paramedic, crew chief, and pilot. “Our DFR 2.0 solution is a true force multiplier, since it only requires a single operator overseeing multiple drones at once. Our air traffic awareness system acts as a better observer than human pilots – capable of tracking planes, helicopters, other drones, and even birds in all directions, which saves precious time and resources for agencies.”

In just a year since its founding, Aerodome has secured contracts with police departments, nearly doubling its earnings projections for Q1 of 2024. Aerodome attributes its rapid growth to its advanced DFR system that is fully remote and automated, multi-station, and multi-drone. Agencies are using the Aerodome DFR system to accomplish an average 86-second response time to 911 calls, versus the average 7-8 minutes of many precincts reliant on traditional response measures alone. Additionally, with an average of two deaths per year from aviation-related crashes, plus widespread pollution from helicopters, DFR continues to offer a safer, more environmentally conscious supplement to police helicopters.

“Aerodome’s willingness to engage with our staff on the unique characteristics of our jurisdiction, and future directions with which to grow DFR capabilities, has led to high levels of confidence between our Department and their company,” said Lieutenant Robert Mitchell at Hawthorne Police Department. “We were happy to partner with Aerodome. They did what they said they were going to do, and more.”

Aerodome has also secured a new exclusive partnership with Hextronics, a world leader in enabling drone autonomy. Hextronics is supplying a drone dock that is purpose-built for DFR with a rapid, automated battery-changing system, HVAC system, and the ability to operate remotely in any condition.

Response time is Aerodome’s immediate value prop for potential clients. Sidhu says the drone’s average time to arrive on the scene is 85 seconds — a big improvement over the five or 10 minutes experienced in many locales. It might not sound like a lot, but this is one of those cases where a few minutes could mean the difference between life and death.

Aerodome doesn’t make the drones itself, at least not currently, Sidhu specifies. Instead it partners with hardware makers. In the wake of ongoing governmental scrutiny against DJI over alleged ties to the Chinese government, many jurisdictions are looking to work exclusively with American manufacturers.

Sidhu concedes, however, that DJI continues to be far ahead of the pack when it comes to certain aspects of surveillance.

“I call it the license plate test,” he said. “If you pop a drone up to 400 feet, DJI — in a very stable way — is able to read a license plate. American drone companies will struggle at that distance.”

Essentially, if the client wants to use DJI drones, they’ll work with DJI drones.

Skydio, perhaps the best-known American drone maker in the DFR space, has declined to partner with Aerodome, likely because it’d rather compete directly with its own in-house offering. The category has grown increasingly important for Skydio after it pivoted away from consumer drones, partially inspired by DJI’s addition to the government entity list.

Aerodome’s system is triggered by a 911 call. If it determines that a drone is necessary, it’s able to send one to the location in less than three minutes, owing to its decentralized launch facilities. Sidhu balks at the mention of “autonomy,” however.

“That implies some regulatory scrutiny, when you say things are autonomous,” he said. “I would say they’re ‘automated.’”

Here that means that the systems are able to “automatically” fly from the launch pad to the scene. A human is in the loop, mostly in a supervisory role and as a fail-safe, taking over control of the system if things get hairy; it’s something on which the FAA understandably insists.

Aerodrome isn’t disclosing the precise number of clients it’s currently working with. Sidhu says it’s working with four cities in Los Angeles County, with additional customers in the Bay Area, New Mexico and “other states.” (Source: UAS VISION/TechCrunch)

28 May 24. L Squared Capital Partners Announces Pending Sale of Raptor Scientific to TransDigm Group Incorporated for $655m. L Squared Capital Partners (“L Squared”) announced today that TransDigm Group Incorporated (NYSE: TDG) (“TransDigm”), a leading global producer, designer and supplier of engineered aerospace components, systems and subsystems, has entered into a definitive agreement to acquire Raptor Scientific, a global leader in complex test and measurement solutions for advanced Defense, Space, and Aerospace applications, for $655 m in cash. The transaction is subject to customary closing conditions and the receipt of regulatory approval.

Raptor Scientific was founded by L Squared with the thesis of investing in the attractive Aerospace and Defense (“A&D”) test & measurement market. Since 2019, Raptor Scientific has built out a suite of complementary capabilities leveraging advanced test and measurement technologies. Under L Squared’s ownership, Raptor Scientific grew revenue from ~$9m to ~$90m. This performance was driven by a world-class management team, recruited by L Squared, and through strategic investments in go-to-market, human capital, and product development.

“We are grateful to Derek Coppinger and the entire Raptor Scientific executive team for their leadership that drove this highly successful outcome,” said Sean Barrette, Chairman of the Board of Raptor Scientific and Partner at L Squared. “Raptor Scientific was founded with the mandate to accelerate the growth of advanced A&D test and measurement technologies that support national security assets. These unique capabilities protect our freedom in a variety of operational theaters. We believe that TransDigm is the ideal new partner for Derek and the Raptor Scientific team as they continue this important mission.”

“I greatly appreciate the support and resources the L Squared team have provided over the years as we built Raptor Scientific into a leading provider of complex test and measurement solutions supporting the Defense, Space, and Aerospace industries,” said Derek Coppinger, CEO of Raptor Scientific. “We are excited to begin our next chapter of growth with TransDigm, who is well positioned to provide us with the additional resources and scale necessary to accelerate our momentum and drive future success. The world-class and dedicated employees of Raptor Scientific deserve the highest recognition for building this superior organization which supports our customers and warfighters every day. For that I am truly grateful.”

L Squared and Raptor Scientific were advised on the transaction by Harris Williams & Co., Vedder Price P.C., PwC, and CSP Associates.

About L Squared Capital Partners

L Squared Capital Partners is a private equity investment firm with over $2bn of equity commitments under management and is headquartered in Newport Beach, CA, that seeks to make long-term investments in leading growth companies that operate in targeted sectors: Education Technology, Tech-Enabled Services & Software, and Industrial Technology & Services. L Squared’s unique investor base of family offices and institutions enables the Firm to focus on long-term value creation driven by revenue and earnings growth, not financial engineering, or market timing. The principals of L Squared have worked together for over 15 years and have over 125 years of combined experience investing in growing private companies. For more information, please visit www.LSquaredCap.com.

About Raptor Scientific

Raptor Scientific is a global leader in complex test and measurement solutions for advanced Defense, Space, and Aerospace applications. The Raptor platform results from the prior acquisition and integration of five companies: Space Electronics, Sensor Concepts, TestVonics, King Nutronics, and MEDTHERM. Raptor Scientific’s core capabilities include an extensive range of test and measurement instrumentation and services, including Radio Frequency Systems; Physical Property Systems; and Pressure, Air Data, & Temperature Systems, that are critical to technological advancement and national security of the U.S. and its allies. (Source: BUSINESS WIRE)

28 May 24. Cerberus Acquires Controlling Interest in Leading Government Aviation Services Provider M1. Cerberus Capital Management, L.P. (together with its affiliates, “Cerberus”), a global leader in alternative investing with a dedicated investment platform focused on supply chain integrity and national security, today announced that it has acquired a controlling interest in M1 Support Services (“M1” or the “Company”).

Founded in 2003, M1 is a premier provider of aircraft Maintenance, Repair, and Overhaul (MRO), modification, flight training, logistics support, and supply chain management services to the U.S. Government for critical military aircraft and aviation programs. The Company has established an excellent track record of contractor performance and an uncompromising commitment to safety.

Under Cerberus’ ownership, M1 plans to build on its strong foundation by further investing in the Company’s infrastructure and the expansion of its capabilities to meet the mission-critical aviation requirements of the United States and its partner nations around the world.

In connection with the transaction, George Krivo, long-time aerospace and defense industry executive, has been appointed Chief Executive Officer of M1. M1’s Co-Founders, Kathy Hildreth and Bill Shelt, will remain investors in M1 and continue to support the business as active members of the Board of Directors.

Ms. Hildreth and Mr. Shelt said: “We are very excited about partnering with Cerberus to usher in the next chapter of growth for M1. Cerberus shares our ‘Mission First’ approach, has extensive expertise in our industry and across national security domains, and a reputation for supporting operational excellence and long-term growth.”

Following more than two decades of active service in the United States Army, Mr. Krivo has spent nearly 20 years as a senior executive across aerospace and defense services companies, including as CEO and COO of DynCorp International, a global leader in aviation and logistics support services and former Cerberus portfolio company. He also held numerous executive positions at DRS Technologies and Science Applications International Corporation.

Mr. Krivo said: “Bill and Kathy have established M1 as a trusted partner recognized for delivering the highest levels of service, performance, and safety on complex programs of national importance. I am honored to be joining M1 to lead the business into the future. With a deep and growing pipeline, an exceptional team, and Cerberus’ full support, we have great potential to extend M1’s impact and reach.”

Craig Brooks, a Senior Managing Director who leads private equity investments for multiple investment platforms at Cerberus, added: “M1 has a strong reputation and is well positioned to capitalize on significant growth opportunities. We look forward to bringing our deep operating and industry experience to help M1 expand and serve critical requirements for the United States and its allies.”

About M1 Support Services

M1 Support Services is a leading MRO partner with expansive capabilities in aviation support services, logistics, information technology, training services, supply chain management, acquisition and facilities and equipment maintenance. The company provides responsive, high quality technical solutions to a wide range of Federal Government customers including the United States Air Force, United States Army, United States Navy, Veterans Administration, Department of Interior, General Services Administration, Internal Revenue Service, Drug Enforcement Administration, NASA, and the Federal Aviation Administration.

About Cerberus

Founded in 1992, Cerberus is a global leader in alternative investing with approximately $65 bn in assets complementary credit, real estate, and private equity strategies. We invest across the capital structure where we believe our integrated investment platforms and proprietary operating capabilities create an edge to improve performance and drive long-term value. Our tenured teams have experience working collaboratively across asset classes, sectors, and geographies to seek strong risk-adjusted returns for our investors. For more information about our people and platforms, visit us at www.cerberus.com.

(Source: BUSINESS WIRE)

29 May 24. Kromek Group plc (“Kromek” or the “Group”) FY 2024 Trading Update. Expected to report record revenues; EBITDA to be ahead of market expectations. Kromek (AIM: KMK), a leading developer of radiation and bio-detection technology solutions for the advanced imaging and CBRN detection segments, provides the following update on trading for the 12-month period ended 30 April 2024.

As announced in its interim results, Kromek started the second half of FY 2024 with increasing commercial momentum whilst delivering on multi-year contracts. Both the advanced imaging and CBRN detection segments showed increased commercial traction and the Group expects to report record revenues for FY 2024.

Kromek is also experiencing improvements in its gross margin due to the product mix sold. The Group continues to exert tight cost control whilst driving further operational efficiencies, particularly within its advanced imaging manufacturing process. Consequently, Kromek expects to report positive EBITDA for FY 2024, and ahead of market expectations.

Further details will be provided at the time of the full year results, expected to be released in September 2024.

29 May 24. Kromek shares enjoy boost on projection of improved annual results. Kromek Group PLC on Wednesday said it expects to deliver full-year earnings ahead of market expectations, thanks to improvements in both commercial momentum and gross margin in the second half.

Shares in the Sedgefield, England-based detection technology supplier were up 11% to 7.50 pence each in London on Wednesday morning, following the announcement.

Kromek, as highlighted in its interim report, started the second half with increased momentum “whilst delivering on multi-year contracts”. Both the advanced imaging and chemical, biological, radiological and nuclear – or CBRN – detection segments showed increased commercial traction.

As such, Kromek expects to report “record revenues” for the year ended April 30. The year previously, it had reported revenue of GBP17.3 m, up 44% from GBP12.1 m in financial 2022.

The group also noted improvements in its gross margin “due to the product mix sold”. It said that it continues “to exert tight cost control whilst driving further operational efficiencies”, particularly within its advanced imaging manufacturing process.

Accordingly, Kromek expects to report positive earnings before interest, tax, depreciation and amortisation for the financial year just ended, and ahead of market expectations, though it didn’t specify what these were. Last year, it reported an adjusted Ebitda loss of GBP1.0 m, versus GBP1.2 m the year prior.

Kromek plans to release its full-year results in September. (Source: Alliance News)

22 May 24. Tron Future completes Series A financing to expand product line. Taiwanese startup founded in 2018, Tron Future Tech, has announced the completion of Series A financing of TWD900 m. The company specialises in counter-uncrewed aerial systems (C-UAS) technology, low-orbit satellite communication systems and synthetic aperture radars.

This round of funding was jointly led by Taishan Investment and Warwick Venture Capital. Innovative Industrial Technology Transfer Co., Ltd. (Industrial Research Institute Yard Company), Daya Venture Capital and Heku Venture Capital also participated in the investment.

After completing the fundraising, the company will invest in expanding its product line and production capacity. Tron Future also intends to increase its involvement in critical infrastructure protection markets in Japan, Europe and the United States.

The company’s C-UAS technology has been deployed in partnership with Taiwan’s armed forces and will also be deployed to protect the Hsinchu Science Park. (Source: www.unmannedairspace.info)

27 May 24. Drone Delivery Canada and Volatus Aerospace Announce Merger. Drone Delivery Canada Corp. and Volatus Aerospace Corp. have announced that they have entered into a business combination agreement to combine the companies in a merger of equals transaction, with the combined company to continue under the name ‘Volatus Aerospace Corp.‘ and, subject to approval of the TSX Venture Exchange, continue trading under the ticker “FLT”.

Under the Merger, which the boards of directors of both companies have approved, the combined company will be led by a board of directors and management team of experienced drone technology industry and business leaders, bringing together the cultures, strengths, and capabilities of both companies.

By joining forces, Volatus and Drone Delivery Canada plan to immediately begin commercialization efforts, which is intended to enhance shareholder value by forging a robust, financially sound enterprise focused on immediate and long-term revenue with a clear path to sustainable growth and market leadership. Subject to customary closing conditions, the Merger is expected to close in the third quarter of 2024.

Pursuant to the Merger, Volatus shareholders will receive 1.785 (the “Exchange Ratio”) Drone Delivery Canada voting common shares (each, a “Drone Delivery Canada Share”) for each Volatus common share (a “Volatus Share”) held (the “Consideration”). Upon closing of the Merger, existing shareholders of Volatus and Drone Delivery Canada will each own approximately 50% of the combined company (based on the current issued and outstanding shares of each of the companies).

Strategic Rationale

To date, Drone Delivery Canada has invested $40m into building strong, competitive drone cargo solutions that are now ready to go to market. By focusing on drone services, training, and equipment sales, Volatus is well-positioned to leverage these technologies and bring them to market. As regulations begin to enable the commercialization of drone cargo and remote drone operations, Volatus has been planning to commercialize its efforts in Advanced Air Mobility, adding to its go-to-market strategy.

Without technology such as Drone Delivery Canada’s remote operations centre; Flyte management software; DroneSpot infrastructure; and cargo-focused, commercialized aircraft, the path to competitively enter the Advanced Air Mobility market would require significant research and development (“R&D”) investment for any drone-based services company.

The combined company, with its shared decades of technology and aviation experience as well as strong financial and operating metrics, is expected to have a leading presence globally as a diversified technology and service leader to drive both short- and long-term growth opportunities in existing and new markets. Further, it is expected that the combined company will be able to achieve material cost synergies to support near-term profitability and enhance its margin profile as its revenue profile continues to grow.

Steve Magirias, Chief Executive Officer of Drone Delivery Canada, commented,

“Drone Delivery Canada has been searching for the right partner to join us on our growth journey and we are confident that Volatus is a great fit, from a management vision point of view, industry know-how, and experience. We were initially attracted to Volatus’ strong reputation in the industry, admirable fiscal management through a challenging capital markets environment, and vision towards generating diversified lines of revenue.”

Ian McDougall, Chair of Volatus board of directors, commented,

“We are thrilled to announce this transformative merger with Drone Delivery Canada. Merging with Drone Delivery Canada will enhance our ability to offer cutting edge technology and services to our clients and help position the combined company as a global leader. Volatus sees a tremendous opportunity to commercialize Drone Delivery Canada’s advanced technologies, through our network of partners, Fortune 500, international mining, oil and gas, and utilities clients, further positioning the combined company as a global leader in drone technologies and services.”

Glen Lynch, Chief Executive Officer, President and Director of Volatus, commented,

“We believe that the strategic impact will be significant right out of the gate, and allow us to drive innovative technology advancements and offer our clients industry leading technology and service.”

Leadership and Governance

Following the closing of the Merger, the board of directors of the combined company will consist of seven (7) directors, comprised of three (3) directors from Volatus including Ian McDougall who will act as the Chair of the combined company, two (2) independent directors from Drone Delivery Canada, and two (2) independent directors to be mutually agreed upon at a future date.

Management of the combined company will include executives from both Volatus and Drone Delivery Canada, with Volatus’ current Chief Executive Officer, President and Director, Glen Lynch, assuming the role as Chief Executive Officer of the combined company, and Drone Delivery Canada’s current Chief Executive Officer, Steve Magirias, becoming the Chief Operating Officer of the combined company.

Benefits to Drone Delivery Canada Shareholders

Pro forma ownership of 50% in the combined company is expected to provide immediate exposure to Volatus’ revenue profile and near-term cash flow generation with attractive long-term growth potential from Drone Delivery Canada’s portfolio of proprietary technology
Greater access to new geographies and sectors
Enhanced ability to realize value from an existing proprietary drone technology portfolio via a stronger financial position of the combined company, which is expected to achieve profitability in the near-term
Accretive to Drone Delivery Canada on key financial and operating metrics
Significant value upside as the combined company advances its business plan and achieves profitability

Benefits to Volatus Shareholders

Pro forma ownership of 50% in the combined company is expected to provide Volatus shareholders exposure to Drone Delivery Canada’s advanced operational and proprietary cargo drone technology and remote operating capabilities to enhance Volatus’ existing service offerings
Market expansion opportunity through enhanced geographic diversification, and entrance into new end markets including the emerging cargo sector, which is expected to have significant long-term upside
Presents opportunity to leverage the Volatus management team’s strong commercial expertise to ensure optimal commercialization of Drone Delivery Canada’s technology and product portfolio
Enhanced capital markets profile, supported by Drone Delivery Canada’s strong shareholder base
Significant re-rating potential as the combined company advances its business plan and achieves near-term profitability

Further Information

Further information regarding the Arrangement will be contained in the joint information circular that Volatus and Drone Delivery Canada will prepare, file and mail in due course to their respective shareholders in connection with the special meetings of each of the Volatus and Drone Delivery Canada shareholders to be held to consider and vote on the Arrangement.

All shareholders are urged to read the information circular once it becomes available as it will contain additional important information concerning the Arrangement. The Business Combination Agreement will be filed on the SEDAR+ profiles of Volatus and Drone Delivery Canada on the SEDAR+ website. (Source: UAS VISION)

28 May 24. Revenue at Denmark’s largest defense company, Terma, has grown by 17% compared to last year and profit before tax has increased by 33%. At the same time, the company, headquartered in Lystrup, Denmark, announces a new growth strategy that will include several acquisitions of “significant size” to double revenue in three years.

Denmark’s largest defense company continues its impressive growth journey with the latest financial statements. Revenue reaches DKK 2.6 bn. This is a growth of 17% compared to last year, while profit before tax ends at DKK 228 m – an increase of DKK 57 m compared to last year.

This means that Terma’s revenue has increased by 45% in 5 years, and profit before tax has more than doubled in the same period.

“I am very proud of the great result that Terma’s more than 1700 employees have delivered. Terma has gone from being a supplier of partial solutions and components to a unique platform that can take a leading role and deliver complete solutions – both to the Danish defense and other allied customers. Thus, Terma is now also much stronger and ready to take on the important task of strengthening Denmark and Europe’s security,” says Jes Munk Hansen, CEO of Terma.

New growth strategy: Revenue to double in three years

Along with the financial statements, Terma also launches a new and very ambitious growth strategy. The goal is to double Terma’s turnover over three years. This will be achieved both through organic growth, but acquisitions in particular will be the way forward:

“The security situation in Europe requires a strong Danish defense industry. Terma is at the forefront of this, and there is a need for us to expand our capabilities. We have concrete plans for significant organic growth in the coming years, but Terma’s growth will be primarily through acquisitions of relevant companies in the defense industry. The goal is to strengthen Terma and Denmark’s ability to develop and produce relevant capabilities ourselves,” explains Jes Munk Hansen, adding:

“We are already in close dialog with a number of exciting companies of significant size. Therefore, the first acquisitions may already fall into place this calendar year.”

The future holds even more artificial intelligence and cybersecurity

However, it is not only acquisitions that Terma is investing in. According to Jes Munk Hansen, Denmark’s largest defense company has also invested heavily in research and development, especially in artificial intelligence (AI) and cybersecurity:

“Digital warfare will only grow, and we at Terma have been aware of this early on. In recent years, we have therefore invested in and developed AI solutions that can significantly increase surveillance and security. At the same time, cybersecurity must be implemented in all solutions and products today, and here we are also well along,” says Jes Munk Hansen.

F-35 still the biggest

The first of Denmark’s new F-35 fighter jets arrived at Skrydstrup Air Base last year, and as a supplier to the program, which is the world’s largest industrial project, it’s not surprising that F-35 production is still a major focus for the company:

“Our factories in Grenå and Lystrup produce more than 80 different parts for the F-35 aircraft, which today is the first choice of fighter aircraft for the vast majority of Denmark’s allies. There is great professional pride in sending our contribution to Lockheed Martin’s factory in Fort Worth, Texas, where the aircraft are assembled,” Jes Munk Hansen concludes.

28 May 24. 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 first quarter ended March 31, 2024.

Order backlog at $20.4bn; Revenues of $1.6bn;

Non-GAAP net income of $81m; GAAP net income of $74m;

Non-GAAP net EPS of $1.81; GAAP net EPS of $1.65

Management Comment: Bezhalel (Butzi) Machlis, President and CEO of Elbit Systems, commented: “The significant increase in our order backlog, which surpassed $20bn, highlights the relevance of Elbit Systems’ portfolio of advanced technological and operationally proven solutions in light of the increase in defense budgets world-wide, which positively impacts the revenues and growth of the Company.

Elbit Systems is continuing to implement its long-term strategy and plans, while strengthening its global presence and maintaining its commitments to customers.”

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23 May 24. Qinetiq upgrades full-year outlook, shares surge. Defence technology firm Qinetiq surged on Thursday after lifting its full-year guidance as it reported a jump in underlying profit and revenue.

In preliminary results for the year ended 31 May, the company said underlying operating profit rose 20% to £215.2m, with revenue up 21% to £1.9bn.

The company said EMEA Services delivered “excellent” revenue growth at a stable margin, driven by strong execution of prior year orders and consistent operational delivery on its long-term contracts.

The Global Solutions business continued to be hit by “difficult” market conditions, in the US, however, resulting in lower revenue at a stable margin.

Chief executive Steve Wadey said: “I am pleased with our strong group financial results for FY24, delivered against the background of difficult market conditions in the US.

“These results have been achieved through the outstanding skills of our people, delivering highly relevant services and products critical to enduring national defence and security priorities.”

Wadey said the group enters this year with strong momentum and increasing spending in its major markets, giving Qinetiq confidence to increase it guidance for FY25 to high single-digit organic revenue growth compared to FY24, at a stable operating profit margin.

At 1000 BST, the shares were up 13.7% at 425.60p. (Source: Sharecast)

23 May 24. Qinetiq: orders and momentum pick up.

Guidance for current year upgraded
Share price up by 13 per cent

Things took a while to get going at defence technology specialist Qinetiq (QQ.) last year, most notably in the US where political wrangling over the federal budget slowed contract awards.

This provided a brief moment of concern for investors, not least because this is the market in which the company had splashed out $590mn (£483mn) on Avantus a year earlier – its biggest ever deal.

A stronger second half put some of those fears to rest, though, with the company reporting improved revenue growth in the second half and a big pick-up in orders. Avantus secured $977mn of orders during the year, a book-to-bill ratio of 1.2 times.

Qinetiq chief executive Steve Wadey expects this improvement to continue, with Avantus set to achieve mid single-digit growth this year, rising to double-digit levels from 2026 onwards. Qinetiq upgraded guidance for the current financial year. It now expects high single-digit revenue growth and a “stable” operating profit margin, which has hovered around the 10.5 per cent market for the past couple of years.

It also performed well on the cash front. Underlying operating cash flow increased by £50mn to £320mn last year. Net debt was cut by almost £56mn to £151.2mn, or 0.5 times Ebitda.

This gives it “optionality to invest in the business”, but also to return more cash to shareholders, Wadey said on an earnings call.

And although the integration of Avantus is now complete, hunting for other big deals doesn’t appear to be at the top of its priority list.

“Our near-term focus is absolutely on organic growth,” Wadey said, specifically hitting its stated goal of reaching £2.4bn of organic revenue and a 12 per cent margin by 2027. This means growing at a rate of about 8 per cent a year, or 11-12 per cent if small bolt-ons are factored in.

It also leaves the door open for more cash to be returned to shareholders. Qinetiq upped its full-year dividend growth rate to 7 per cent and in January announced plans to buy back £100mn-worth of shares over the next 12 months.

Qinetiq’s shares rose by 13 per cent after the results were published, bringing their year-to-date gain to 36 per cent. They now trade on 13.6 times earnings, in line with their five-year average. The shares have momentum, though, and more buybacks could be on the cards if no obvious use is found for the growing cash piles it is generating. Buy.

Last IC view: Buy, 337p, 16 Jan 2024. (Source: Investors Chronicle)

22 May 24. TAT Technologies Reports First Quarter 2024 Results. TAT Technologies Ltd. (NASDAQ: TATT) (TASE: TATT) (“TAT” or the “Company”), a leading provider of products and services to the commercial and military aerospace and ground defense industries, reported today its unaudited results for the three-month period ended March 31, 2024.

Financial highlights for the first quarter of 2024:

Revenues for Q1 2024 increased by 35.3% to $34.1m compared to $25.2m in Q1 2023.
Gross profit for Q1 2024 increased by 65.1% to $7.1m compared to $4.3m in Q1 2023.
Gross Margin for Q1 2024 improved by 3.8bp to 20.7% of revenues, compared to 16.9% of revenues in Q1 2023.
Adjusted EBITDA for Q1 2024 increased by 76.8% to $3.7m (10.8% of Revenues) compared to $2.08m (8.25% of revenues) in Q1 2023.
Operating Income for Q1 2024 increased by 133% to $2.2m (6.5% of Revenues) compared to $0.95m (3.8% of revenues) in Q1 2023.
Net income for Q1 2024 increased by 221% to $2.1m compared to a net Income of $0.6 m in Q1 2023.
Cash flow from Operating activities was negative $3.5m in Q1 2024 compared to positive $1.7 m in Q1 2023.

Mr. Igal Zamir, TAT’s CEO and President commented on the results: “The first quarter of 2024 marked the seventh straight quarter of Revenue and EBITDA growth, demonstrating consistent demand for our solutions and the sustainability of our business model.

As we grow our business and further scale our capacity to meet near-term demand, we are prioritizing operational efficiency to reduce backorders, better navigate industry wide supply chain dynamics, improve customer satisfaction and maximize our profitability.

During the first quarter we secured orders and long-term agreements at a value of over $40 m, increasing our backlog and LTA Value of over $410m. This strength will drive continued momentum in our business and support our revenue growth plan for the rest of 2024 and for years to come.”

Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with GAAP, the Company also presents Adjusted EBITDA. The adjustments to the Company’s GAAP results are made with the intent of providing both management and investors a more complete understanding of the Company’s underlying operational results, trends and performance. Adjusted EBITDA is calculated as net income excluding the impact of: the Company’s share in results of affiliated companies, share-based compensation, taxes on income, financial (expenses) income, net, and depreciation and amortization. Adjusted EBITDA, however, should not be considered as alternative to net income and operating income for the period and may not be indicative of the historic operating results of the Company; nor it is meant to be predictive of potential future results. Adjusted EBITDA is not measure of financial performance under generally accepted accounting principles and may not be comparable to other similarly titled measures for other companies. See reconciliation of Adjusted EBITDA below.

About TAT Technologies LTD

TAT Technologies Ltd. is a leading provider of services and products to the commercial and military aerospace and ground defense industries. TAT operates under four segments: (i) Original equipment manufacturing (“OEM”) of heat transfer solutions and aviation accessories through its Gedera facility; (ii) MRO services for heat transfer components and OEM of heat transfer solutions through its Limco subsidiary; (iii) MRO services for aviation components through its Piedmont subsidiary; and (iv) Overhaul and coating of jet engine components through its Turbochrome subsidiary. TAT controlling shareholders is the FIMI Private Equity Fund.

TAT’s activities in the area of OEM of heat transfer solutions and aviation accessories primarily include the design, development and manufacture of (i) broad range of heat transfer solutions, such as pre-coolers heat exchangers and oil/fuel hydraulic heat exchangers, used in mechanical and electronic systems on board commercial, military and business aircraft; (ii) environmental control and power electronics cooling systems installed on board aircraft in and ground applications; and (iii) a variety of other mechanical aircraft accessories and systems such as pumps, valves, and turbine power units.

TAT’s activities in the area of MRO Services for heat transfer components and OEM of heat transfer solutions primarily include the MRO of heat transfer components and to a lesser extent, the manufacturing of certain heat transfer solutions. TAT’s Limco subsidiary operates an FAA-certified repair station, which provides heat transfer MRO services for airlines, air cargo carriers, maintenance service centers and the military.

TAT’s activities in the area of MRO services for aviation components include the MRO of APUs, landing gears and other aircraft components. TAT’s Piedmont subsidiary operates an FAA-certified repair station, which provides aircraft component MRO services for airlines, air cargo carriers, maintenance service centers and the military.

TAT’s activities in the area of overhaul and coating of jet engine components includes the overhaul and coating of jet engine components, including turbine vanes and blades, fan blades, variable inlet guide vanes and afterburner flaps. (Source: PR Newswire)

21 May 24. Amid influence of Starlink, Thales buys Israeli company Get SAT.

“Requirements in the market are changing dramatically thanks to Elon Musk and SpaceX,” Aaron Brosnan, president of Thales subsidiary Tampa Microwave, said in an interview.

Call it a Musk effect: the success of constellations like SpaceX’s Starlink and Starshield has the Pentagon hungry for satellite communications (SATCOM) solutions with more capabilities, prompting firms like the French company Thales to shift their approach and even acquire new businesses, according to company executives.

“Requirements in the market are changing dramatically thanks to Elon Musk and SpaceX,” Aaron Brosnan, president of Thales subsidiary Tampa Microwave, said in an interview earlier this month on the sidelines of the SOF Week conference in Tampa. “Really now what the [US Defense Department] wants is terminals that can do any orbit, any network, any band, on the move.”

A response by Thales to that desire is to pitch the Ka-band Milli Sling Blade antenna manufactured by the Israeli company Get SAT. Thales acquired Get SAT in part for the rights to products like the Milli Sling Blade, which uses electronically steered phased array antenna technology.

“Thales confirms the acquisition of GET Sat,” a Thales official told Breaking Defense. “Get SAT will complement Thales’s existing global SATCOM business and enhance our secure satellite communications offering and leading position in communications integration.”

As opposed to when geostationary (GEO) satellites ruled the day, users now demand “lower latency, higher throughput, global coverage. And unfortunately, GEO can’t do that,” Brosnan said. “So that’s why Elon Musk picked LEO [low Earth orbit] and others have picked MEO [medium Earth orbit].”

A corresponding change is the desire for antennas that can communicate with more of those constellations, whether commercial or military. When users relied mostly on GEO satellites, Brosnan explained, GEO-focused parabolic antennas could easily connect to those satellites since they remained in a mostly fixed position. But fast-moving MEO and LEO birds require electronically steered arrays that can track those satellites, creating a need for a different kind of communications tech.

So, Thales is moving to field antennas that can meet the needs of satellites across multiple orbits. The company’s modernized outlook “moves us away from what was traditionally GEO-only parabolics towards electronically steered arrays, which is flat panel technology,” Brosnan said, pointing to the Milli Sling Blade on display at Thales Defense & Security’s SOF Week booth.

The particular appeal for special operators (not to mention the US Army which has long been seeking more mobile antennas) is that the flat panel tech can serve users like them who are constantly on the move, with software that can handle more mundane tasks and let operators focus on their mission. “Either [the terminal is] fixed and the satellite’s moving, or you put the terminal on a vehicle. Maybe the satellite’s fixed, but the terminal’s moving,” Brosnan said. “So now you have an on-the-move solution.”

Electronically steered arrays offer other advantages, Brosnan noted, like the ability to shape beams in a particular direction and guide the null of an antenna toward a jammer, minimizing interference as a result.

Another key innovation lies in the modems that modulate certain SATCOM signals, which are transmitted as specific waveforms. The Pentagon is working on developing more secure waveforms under an umbrella program dubbed the Protected Anti-Jam Tactical SATCOM family of systems, which encompasses ground- and space-based tech.

“If you use the right modulation techniques, you can basically almost hide the signal in the noise,” Brosnan said. “But also by spreading it and hiding it in the noise, you can be fairly unsusceptible to jamming.”

(Source: Defense News Early Bird/Breaking Defense.com)

22 May 24. Ondas Holdings to Acquire Airobotics for $15.2m. Ondas Holdings Inc. a provider of private wireless, drone and automated data solutions through its wholly owned subsidiaries, Ondas Networks Inc. and American Robotics, Inc., has entered into a definitive merger agreement to acquire AIROBOTICS Ltd., an Israeli developer of autonomous unmanned aircraft systems and automated data analysis and visualization platforms.

“I am thrilled to welcome Meir Kliner and the entire Airobotics team to Ondas,” said Eric Brock, Chairman and CEO of Ondas. “Airobotics brings Ondas incredible talent, along with the Optimus System, a proven, world class automated drone platform, which is highly complementary to AR’s market-leading Scout System”. The combination of Airobotics with American Robotics is a seminal event in the drone sector, creating a leading global provider of commercial drone solutions capable of scaling for customers. We believe the UAS industry will consolidate as the market transitions from development to growth. We will continue to position American Robotics to drive the technical and regulatory leadership required to lead this market.”

“We are excited to join the Ondas team where we will advance our mission to provide market-leading solutions to our customers,” said Meir Kliner, CEO & Co-Founder of Airobotics. “Combining with American Robotics offers massive benefits to our company and customers and will help accelerate our growth. Airobotics has developed a strong customer pipeline and is now positioned to leverage our investments in technology and the hard work of our team for growth. We look forward to working closely with our colleagues at American Robotics to maximize the potential of our companies and deliver for customers.”

Transaction Details

Each issued and outstanding share of Airobotics will be converted into, and exchanged for, 0.16806 shares of Ondas common stock. Ondas expects to issue approximately 2.8 m shares as consideration to the Airobotics shareholders (excluding approximately 1.7m shares underlying options and warrants to be outstanding following the acquisition), implying an acquisition value of approximately $15.2m as of Friday, August 5, 2022. The acquisition is subject to the satisfaction of numerous conditions, including the receipt of Airobotics’ shareholder approval in respect to the acquisition and the receipt of all material third party consents. The parties intend to complete the acquisition in the second half of 2022. We can provide no assurance that the acquisition will be completed as proposed or at all.

Riley Securities, Inc., a leading full service investment bank and wholly-owned subsidiary of B. Riley Financial, Inc. (NASDAQ: RILY), is serving as exclusive financial advisor toOndas in connection with the acquisition of Airobotics.

Akerman LLP and Pearl Cohen Zedek Latzer Baratz are serving as legal counsel to Ondas, and Herzog Fox & Neeman and Erez Rozenbuch Advocates are serving as legal counsel to Airobotics. (Source: UAS VISION)

22 May 24. CAE announces re-baselining of its Defense business, Defense impairments, accelerated risk recognition on Legacy Contracts and appointment of Nick Leontidis as COO.

Defense records $568.0m goodwill impairment, $90.3m unfavourable contract adjustments, and $35.7m impairment of related intangible assets
Preliminary unaudited fiscal fourth quarter and full fiscal 2024 results and initial fiscal 2025 outlook provided
Board approves NCIB for the repurchase of up to 5% of CAE’s common shares
Fourth quarter and full year fiscal 2024 results to be disclosed after market hours on May 27
Management to discuss financial results and outlook on May 28 earnings call

CAE (NYSE: CAE) (TSX: CAE) – CAE Inc. (CAE or the Company) today announced a re-baselining of its Defense business along with Defense impairments and unfavourable contract adjustments related to eight previously identified fixed-price legacy contracts (the Legacy Contracts).

CAE also announced the appointment of Nick Leontidis to the new position of Chief Operating Officer (COO) as part of a senior leadership reorganization to further strengthen its execution capabilities and drive additional synergies between CAE’s Defense & Security business and its Civil Aviation business. Mr. Leontidis was previously CAE’s Group President, Civil Aviation. As COO, he will have overall responsibility for both of CAE’s Civil and Defense business segments.

In the fourth quarter of fiscal 2024, CAE has recorded a $568.0m non-cash impairment of Defense goodwill and $90.3m in unfavourable Defense contract profit adjustments as a result of accelerated risk recognition on the Legacy Contracts. It also recorded a $35.7m impairment of related technology and other non-financial assets which are principally related to the Legacy Contracts.

“Because our Defense performance has fallen well short of our expectations, we have taken measures to re-baseline the business, including a leadership reorganization and further targeted operational changes at the segment and corporate executive management levels,” said Marc Parent, CAE’s President and Chief Executive Officer. “The impairments and the accelerated risk recognition on the Legacy Contracts are a disappointing but necessary step to account for the programmatic risks we previously identified and provide a clearer path to margin improvement amid compelling secular trends for Defense.”

To provide context for the impairments and accelerated risk recognition, CAE is disclosing preliminary summary tables of selected unaudited fiscal 2024 results for the fourth quarter and full year for Civil Aviation, for Defense & Security and on a consolidated basis, as well as a preliminary outlook for fiscal 2025. Civil, the larger of CAE’s two businesses, generated a record 27.3 percent adjusted segment operating income margin(1) in the fourth quarter and 13 percent adjusted segment operating income(1) growth for the year. CAE also had record Civil adjusted order intake(1) of $3.0 bn, including the sale of 64 full-flight simulators.

At the consolidated level, CAE generated over $400m of free cash flow(1) for a 1.5 times cash conversion rate(1) of net income and further solidified its financial position. Net debt-to-adjusted EBITDA(1) was 3.17 times at the end of the quarter and net debt-to-adjusted EBITDA excluding Legacy Contracts(1) was 2.89 times at the end of the same period. CAE expects improved results going forward, supported by continued growth in Civil and from the structural and organizational improvements in Defense and a growing backlog of high-quality, profitable programs. CAE will provide more detail with its full results to be disclosed on May 27 after market hours, and on the earnings conference call on May 28.

Senior leadership reorganization

CAE’s senior leadership reorganization takes advantage of the strength of the talent pool within the Company’s senior leadership ranks. As COO, Nick Leontidis will have overall responsibility for both of CAE’s business segments and will work closely with all five CAE P&L leaders, namely:

Jason Goodfriend, Interim President and Chief Operating Officer, Defense and Security, USA,
Marc-Olivier Sabourin, Division President of Defense and Security, International,
Michel Azar-Hmouda, Division President, Commercial Aviation,
Alexandre Prévost, Division President, Business Aviation,
Pascal Grenier, Division President, Flight Solutions and Global Operations

Mr. Leontidis, a 36-year CAE veteran, has a proven track record of performance and headed both Civil and Defense programs during his career. As Civil group president over the last decade, he has led CAE’s Civil Aviation Training Solutions business to record heights, nearly tripling adjusted segment operating income over the period, to become the world’s largest aviation training solutions provider. Under Mr. Leontidis’s tenure, Civil has achieved operational excellence across a broad global enterprise, and consistently delivered CAE’s highest returns on investment through disciplined capital deployment in lockstep with customer demand.

Defense transformation

CAE’s Defense segment is in the process of an ongoing multi-year transformation which is expected to yield a substantially bigger and more profitable business and to provide an additional source of stable and predictable free cash flows with which to fuel attractive growth investments in CAE’s aviation training network. The secular growth backdrop for Defense remains compelling and this has translated into an approximate 20% adjusted Defense backlog growth over the last two years, which portends well for the future.

Additional information pertaining to Defense Legacy Contracts

Within Defense, there are a number of fixed-price contracts which offer certain potential advantages and efficiencies but can also be negatively impacted by adverse changes to general economic conditions, including unforeseen supply chain disruptions, inflationary pressures, availability of labour; all contributing to execution difficulties. These risks can result in cost overruns and reduced profit margins or losses. While these risks can often be managed or mitigated, there are eight distinct legacy contracts entered into prior to the COVID-19 pandemic that are firm fixed price in structure, with little to no provision for cost escalation, and that have been more significantly impacted by these risks (the Legacy Contracts disclosed in the third quarter of fiscal 2024). Although only a small number of contracts, they have disproportionately impacted overall Defense profitability. The Legacy Contracts include one that was inherited with CAE’s 2021 acquisition of L3Harris Technologies’ Military Training business and have completion dates mainly within the Company’s next two fiscal years.

The impairments and accelerated risk recognition on Legacy Contracts resulting in unfavourable contract adjustments are expected to allow CAE to develop a new baseline for future profitability. In addition to the aforementioned senior leadership changes at the business unit and corporate levels, CAE has continued to implement measures to further enhance risk management and execution over the past few years, including an increasingly disciplined and rigorous approach to the selection of bids and proposals and an enhanced focus on higher quality program pursuits. (Source: PR Newswire)

23 May 24. UK’s Rolls-Royce says confident on 2024 forecasts. Britain’s Rolls-Royce (RR.L), opens new tab said it was confident on meeting its 2024 forecasts as air travel continues to grow, demand for power for data centres picks up and the engineering group focuses on finding efficiencies and contractual improvements.

CEO Tufan Erginbilgic, the former BP executive who took over 18 months ago, has said he will transform Rolls-Royce, which makes engines for Airbus and Boeing’s wide-body jets, into a more competitive company.

The group on Thursday stuck to its guidance for underlying operating profit to come in between 1.7 billion pounds and 2 billion pounds this year, up as much as 25%.

“We have had a strong start to the year, despite continued industry-wide supply chain challenges. This builds on our record performance in 2023 and provides further confidence in our guidance for 2024,” Erginbilgic said in the statement.

Strengthening Rolls-Royce’s balance sheet, which was battered during the pandemic when planes stopped flying, has been part of Erginbilgic’s plan.

In Rolls’s civil aerospace unit, its biggest, the company said flying hours, a measure of how much airlines use its engines, returned to 100% of 2019 levels in the first four months of the year and could finish the year at up to 110% of 2019 levels.

The company said it had recently been upgraded by credit rating agencies and had reduced its debt by repaying a 550m euro bond from its cash.

(Source: Reuters)

Commenting on Rolls-Royce’s AGM statement, Julie Palmer, Partner at Begbies Traynor said: “Rolls-Royce’s AGM update today may not have heralded immediate financial gain for investors, but it’s a clear sign that CEO Tufan Erginbilgic’s revival strategy is taking flight.

“The company’s solid start to the year, marked by a return to pre-pandemic levels of engine flying hours in Civil Aerospace, is a testament to the effectiveness of its turnaround. Much of this has been driven by Asia’s market recovery and a growing fleet, while strategic initiatives in its Defence and Power Systems division are also contributing to the company’s positive trajectory. Profits are up and it’s a sign of confidence that the company is sticking to its guns with its 2024 guidance, all while navigating the industry’s supply chain turbulence and reducing its levels of gearing. The spotlight this week has also been on developments regarding Rolls-Royce’s venture into small modular reactors, but let’s not overlook today’s news that the company has been selected to supply technology for the new ‘Doomsday plane’ – demonstrating trust in its cutting-edge capabilities and defence technology.Despite the challenges ahead, including tough restructuring decisions, Rolls-Royce’s ongoing transformation is laying the groundwork for a robust future. The Civil Aerospace division is flying high with a surge in engine orders, and the company is on course to realise a £200 million annualised benefit by 2025, which should support its ambitions well into 2024 and beyond.”

23 May 24. COHORT PLC(“Cohort” or “the Group”) Full Year Trading Update.

Performance slightly ahead of expectations

Record closing order boo

Cohort, the independent technology Group, today provides an unaudited trading update for its financial year ended 30 April 2024.

Summary

Trading performance for the year ended 30 April 2024 is slightly ahead of expectations, with growth in revenue and profits compared to the year ended 30 April 2023.
Strong net funds of c.£23m, ahead of expectations (30 April 2023: £15.6m; 31 October 2023: £13.3m).
Very strong order intake of c.£387m (2023: £218m)
Record closing order book of c.£518m (30 April 2023: £329.1m) including the £135m Royal Navy countermeasures contract awarded to SEA in March 2024
Order book underpins c.£180m (90%) of current market revenue expectations for the year ended 30 April 2025 (2024: £145m, 84%).

FY24 year-end update

Following a strong second half profit performance, Cohort has delivered results slightly ahead of expectations for the year. The Group has seen robust growth within the Sensors and Effectors division, offset by somewhat weaker trading seen within the Communications and Intelligence division.

Sensors and Effectors saw robust growth across all its constituent businesses but particularly within Chess and SEA. Chess continued its growth trajectory following its turnaround performance last year, with SEA continuing to secure and deliver on large naval orders.

In Communications and Intelligence, as expected, UK MOD product orders decreased from the high levels seen in 2022/23, whilst we continued to see contract delays within Portugal.

The closing net funds position was ahead of expectations and arose from favourable timing of working capital flows and delayed capital expenditure due to adverse winter weather, on our new facility in Germany, which will now take place in the 2024/25 financial year.

The order intake is c.1.9x the annual revenue (2023: 1.2x). Following significant contract awards during the year, the order book exceeded half a billion pounds for the first time, with on-order revenue now extending to 2037. The order intake performance was c.80% higher than last year.

The year end order book underpins c.£180m (90%) of the current consensus market revenue expectations for 2024/25, an improvement on the year just finished.

Outlook for FY25

Cohort continues to see good demand for our products and services from both our domestic customers, especially the UK, and from export customers. The drivers for increased investment in defence have amplified during the year, with the ongoing conflicts in Ukraine and the Middle East, coupled with tensions in the Indo-Pacific region leading to increased global defence spending.

The Royal Navy’s recent order for the Ancilia Trainable Decoy Launcher System, was a significant milestone for the Group. It represents a strong vote of confidence in the product; a fully UK designed and built solution for which we see encouraging export prospects. As stated in our announcement of 26 March 2024, this together with other recent order wins, is expected to materially enhance the Group’s earnings.

We have an encouraging pipeline of order opportunities for the current year, providing a positive outlook for organic growth in the years ahead. Overall, our expectations for the coming financial year remain unchanged.

Notice of FY24 results

It is the Group’s intention to issue its preliminary announcement for the year ended 30 April 2024 in late July 2024.

Andrew Thomis, Chief Executive of Cohort, said: “Cohort’s performance was slightly ahead of our previous expectations for the year with growth in revenue and profits. Following strong order intake, we have a record closing order book with encouraging prospects for further orders. Our strong closing net funds position provides a robust platform from which to invest in the business and, potentially, acquisitions. We expect to continue our organic growth in 2024/25 and beyond.”

21 May 24. Cuashub.com said today that Taiwanese C-UAS Startup Completes Series A Funding Round. Tron Future Tech, a Taiwanese startup established in 2018, has swiftly become a prominent player in Taiwan’s low Earth orbit (LEO) satellite and Counter-Unmanned Aircraft Systems (C-UAS) markets. The company’s proprietary Active Phased Array (AESA) radar technology is at the heart of this success. Recently, Tron Future announced it has raised NT$900m (approximately US$32.4m) in a Series A funding round. This round was led by Taiwania Capital and the CID Group, with participation from Industrial Technology Investment Corp. (ITRI’s venture capital arm), Taya Venture, and Taiwan Cooperative Venture Capital.

With this influx of capital, Tron Future plans to scale up its production capacity to support expansion into the US, European, and Japanese markets. The aim is to meet the rising military and civilian demand for protecting critical infrastructure from drone incursions. Wang Ju-jiu, the founder and CEO of Tron Future, stated that the company’s current production capacity already satisfies Taiwan’s long-term C-UAS needs in times of crisis.

Given the rapidly evolving geopolitical landscape, Wang highlighted that regions such as the Middle East, Central and Eastern Europe, and India exhibit the highest demand for C-UAS solutions. Since 2020, Tron Future has expanded its global C-UAS market presence, establishing partnerships with defense sector entities in the Middle East, India, and Southeast Asia. Tron Future swiftly entered the satellite communications and remote-sensing markets just two years after its founding. Additionally, the company quickly ramped up to meet Taiwan’s counter-drone demand as Chinese drones continued to disrupt Taiwan’s island outposts. Tron Future’s C-UAS solution, featuring the in-house developed AESA radar T.Radar Pro, passive radar T.Sensor, and T.Jammer, has already been deployed in partnership with Taiwan’s armed forces. Besides protecting military facilities, Tron Future’s C-UAS solution will also be implemented in the Hsinchu Science Park to safeguard key semiconductor players like TSMC.

Taiwanese C-UAS Startup Completes Series A Funding Round

(Source: https://cuashub.com/)

21 May 24. Avon Protection Reports Half Year Results.

*Record $199m order book

Significant strategic wins and orders in the first half and since H1 period end, including:

o New contract award worth up to £38m for the UK MoD General Service Respirator and filters

o New rebreather contract from the German Navy

o US DOD $14m ACH (Advanced Combat Helmet) GEN II order

o $36m Next Generation IHPS (Integrated Head Protection System) delivery order from the US Army Transformation on track – excellent strategic progress

IHPS successfully reached full run rate for delivery orders
Consolidation of helmet manufacturing sites progressing as planned: o Building production capacity for DOD programmes in Cleveland, Ohio o First lot of ACH Gen II helmets finished in Cleveland and approved by DCMA5 for ballistic testing o EPIC helmet finishing in Cleveland successfully ramped up to meet customer demand Group operational KPIs improving
23% productivity improvement6 vs H1 2023
45% reduction in scrap6 across all factories vs H1 2023
Group inventory turns6 increased 37% to 3.11x (H1 2023: 2.27x) Gaining momentum
On track to meet medium term goals set out in Capital Markets Day
Continuous Improvement results so far give us confidence we can achieve or exceed our operational targets

Confident in the outlook for H2, issuing updated FY 2024 guidance:

Revenue growth c.10%
Adjusted operating profit margin 10%
Transformation investment c.$15m
Cash conversion over 100%
Net debt: EBITDA <1.5x, new $137m financing facility successfully agreed

Jos Sclater, Chief Executive Officer, commented: “We are making excellent progress towards our medium-term goals and are increasingly excited by the growing momentum in our transformation programme. The results in H1 demonstrate that our strategy is working and pace is increasing, though we still have a lot to do. The work we have done so far to drive improvement has revealed further opportunities for operational improvement; this reinforces our confidence that we will deliver our medium-term goals. We are seeing a growing awareness of the importance of high-quality protection against chemical warfare and head injury. In particular, Russia’s deployment of chemical weapons in Ukraine has highlighted the need for effective respiratory protection. As the leading supplier of mission-critical head and respiratory protection to the US Department of Defence and other NATO countries, we are well positioned to help protect the people who are protecting us. More broadly, I am very pleased that we now have a much stronger business that is delivering on major programmes and is improving fast. We have moved quickly into execution phase of our STAR strategic plan and are already seeing productivity improvement, new contract wins and further innovation to revolutionise our world leading product portfolio.”

21 May 24. Avon Protection increases order intake by 50%.

Stronger cash generation helps defence equipment supplier to cut net debt

Adjusted tax profit up 66 per cent
$23mn of stock converted into cash

Things are looking up at Avon Protection (AVON). The maker of protective helmets and respiratory gear reported momentum in sales, margin and cash generation, although perhaps most encouraging was the 50 per cent increase in its order intake to $190m (£150m).

This shows that for all of the turmoil it has suffered in the past two-and-a-half years, key customers remain happy with its products.

Avon Protection reported an increase in adjusted pre-tax profit by two-thirds to $8.8mn, although adjustments including $5.3m of restructuring charges meant a reported loss of $1.5m. The costs relate to the consolidation of helmet manufacturing sites in the US.

Other improvements made to production processes mean losses due to scrapped helmet products have dropped from nearly $1mn a month to around $100,000-$150,000, according to chief executive Jos Sclater.

Avon has become more efficient in terms of inventory turn, converting $23m of stock into cash during the half. This helped to boost cash inflow from continuing operations to $23.4m, compared with an outflow of $15.7m in the same half last year. Net debt was cut by around 20 per cent to $76.5m.

“We’re on much firmer financial footing,” said Slater. “We’ve gone in the space of a year from being quite stretched to very secure.”

Although maintaining our hold call six months ago now looks overly cautious given the subsequent 75 per cent rally in the company’s share price, the turnaround has been achieved at speed. It was also far from guaranteed, given Avon’s recent history.

However, the rally means Avon’s shares now trade at 27 times earnings and, although broker upgrades could follow given a more confident outlook, the recovery already looks priced in. Hold. Last IC view: Hold, 770p, 21 Nov 2023. (Source: Investors Chronicle)

21 May 24. Dowlais Group plc Trading update. Start of the year broadly in line with expectations: Driveline, China and Powder Metallurgy growth ahead of market, ePowertrain challenged by BEV market volatility. Dowlais Group plc (“Dowlais” or the “Group”), the specialist engineering group focussed on the Automotive sector, provides a trading update for the four-month period to 30 April 2024 (“the period”) ahead of its Annual General Meeting to be held later today. The Group has continued to execute well on its strategic priorities, with continued focus on delivering operational efficiencies, amidst challenging market conditions. The Group delivered £1.7bn of adjusted revenue1 in the period, a year-on-year decline of 1.9%, as revenue growth ahead of the market in Powder Metallurgy, Driveline and our China joint venture (JV) was more than offset by weakness in the ePowertrain4 product group of the Automotive business. Translational foreign exchange headwinds were £90m, resulting in a year-on-year reported adjusted revenue decline of 6.6%. Encouragingly, despite market volatility, adjusted operating margins of 6.1% in the period were up 30bps over the same period of the prior year, with margin expansion achieved in both Automotive and Powder Metallurgy. Business Unit performance Automotive In the period, Automotive saw year-on-year adjusted revenue decline of 3.3%, as growth in Driveline and China was more than offset by revenue decline in ePowertrain.

The Driveline product group continued to perform well, with revenue growth ahead of the market5, benefitting from its broad portfolio and scale across customers, platforms and geographies. ePowertrain adjusted revenue declined largely driven by increased volatility in BEV production volumes. Revenue from our China JV operations grew slightly ahead of the Chinese market6 as it continued to gain market share with local OEMs. Adjusted operating margins further improved, driven by the recovery from customers of inflationary costs incurred in the prior year as well as ongoing performance initiatives. Year-to-date new business bookings are in line with expectations, balanced across a mix of platforms and continue to underpin expectations for long term profitable growth. Powder Metallurgy Powder Metallurgy had a strong start to the year, with year-on-year adjusted revenue growth of 4.0%, outperforming the market. Revenue growth was driven by improved performance in its ICE related business, as it benefitted from restocking in the period, and growth in the nonICE related portfolio. Adjusted operating margin improved, driven by the additional volume and improved performance in the North American sites. Outlook Overall, the Group has started the year broadly in line with expectations despite the increased volatility of production schedules for certain BEV platforms which have impacted the ePowertrain product group. While current industry forecasts expect an improvement in the second half, after a weak first half, some uncertainty remains. Consequently, the Group anticipates revenue for 2024 to be slightly below prior year at constant currency, with performance more weighted to the second half. Based on these assumptions the Group remains confident in its ability to achieve operating margin expansion and grow free cash flow for the full year. The Group’s interim results will be announced on 13 August 2024. Liam Butterworth, CEO of Dowlais, said: “This performance demonstrates the resilience of Driveline, whose powertrain agnostic characteristics and broad diversification make it well placed to succeed. I am also encouraged by the strong performance of our JV in China, where we grew ahead of the market and of Powder Metallurgy. These successes were tempered by challenges in the ePowertrain product group. We achieved a 30bps increase in our adjusted operating margins, driven by retrospective recoveries and ongoing performance initiatives. Our teams continue to capitalise on opportunities as we remain focused on delivering shareholder value.”

12 May 24. EchoStar “…bankruptcy the most likely outcome.” EchoStar, the Charlie Ergen-owned pay-TV and satellite operator, is struggling. CEO Hamid Akhavan told analysts in the company’s post-results call with analysts that the company has $1.98bn of debt maturing in November of 2024, and is forecasting negative cash flows for the remainder of the calendar year. Current trading is not helping. It reported a decline of 8.5 percent for its Q1 core business, with declining subscribers at Dish Network (down 348,000 subs) and Sling TV (down 135,000 subs). The total number of payTV customers served between Dish and Sling TV stood at just under 8.2m accounts.

In EchoStar’s latest 10Q obligatory filing to the SEC, the company stated, “Because we do not currently have committed financing to fund our operations for at least 12 months [there are] substantial doubt exists about our ability to continue as a going concern. We do not currently have the necessary cash on hand and/or projected future cash flows to fund fourth quarter operations or the November 2024 debt maturity.”

Akhavan told analysts that the company was working on a variety of avenues to refinance its obligations and improve its cash position. “The complex and delicate nature of this process demands time and confidentiality. We will certainly have more to share in due course. Our recipe is very simple, candidly. Can we push the maturities [of our debt] out … so that we have enough cash to operate the business? We’re very bullish about our prospects for operating the business if we have the capital to execute that. While we’re working on that financing, we aren’t sitting on our hands”

Ergen (the executive chairman) for the second time was not present on the call with analysts.

A report from analyst Craig Moffett at MoffettNathanson states that he saw foresees EchoStar filing for bankruptcy in the next 4 to 6 months. Moffett admitted that EchoStar’s spectrum had an enormous value, but he did not see likely buyers such as AT&T, Verizon or T-Mobile being in a position to buy extra spectrum.

MoffettNathanson was highly negative on EchoStar, not for the first time, and wrote, “There are only three potential bidders, two of whom have badly overburdened balance sheets. There is no longer Dish itself as the marginal bidder. And the time value of money is a real consideration; a liquidation would potentially take a very long time. In fact, it’s not even clear that spectrum sales of any size would be allowed.”

Also in negative territory is EchoStar’s cellular business (Boost Mobile) which lost 81,000 subscribers ending the quarter with 7.3m subscribers and a 7 percent decline Y-o-Y.

17 May 24. Is the cybersecurity sector shrinking?

The cybersecurity space is beginning to show some hallmarks of the 2000 dot-com bubble but it looks like investors, particularly large-scale investors, have learned valuable lessons over the last twenty years.

As artificial intelligence dominates the top of the list of the most interesting trading themes, cybersecurity is not far behind. Be it security breaches from unpopular governments or cyber threats from oddly named hacker groups (my personal favourite: Muddled Libra. And no, I did not invent that, they are a real group), as technology becomes more sophisticated so does the need for cyber protection.

This cybersecurity market is currently valued at around $200 bn but is expected to more than double before the end of the decade.

What is similar to the dot-com bubble is an abundance of smaller to medium-sized unproven players. Previously NASDAQ-listed ZeroFox Holdings [NASDAQ:ZFOX] is a good example, which I will elaborate on later.

At the same time, the massive amount of R&D and intellectual capital invested in these companies will eventually create the future Metas, Googles, and Amazons. There are gems to be had, and large digital companies as well as tech private equity seem to be particularly good at singling them out.

Private equity vs digital company buyers

Here are a couple of examples. The aforementioned ZeroFox, a provider of external cybersecurity was listed on NASDAQ in the summer of 2022 valued at around $1.4bn. Yet less than a year later shares dropped 50% as the company remained unprofitable even as revenue increased by almost 100%.

Spring forward to April this year and ZeroFox has been sold to Texas-based technology private equity firm Haveli Investments for $350m in cash, subsequently delisting from NASDAQ. If you are wondering what Haveli will do with ZeroFox, a possible path it could take would be similar to Thoma Bravo, a Chicago-based PE firm active in enterprise software.

Thoma Bravo was involved in three of the five largest cybersecurity acquisitions in 2023. In August it completed a $2.3bn deal for identity and access management company ForgeRock and then in October its subsidiary Proofpoint bought UK-based cloud email security provider Tessian. Although the value of the deal was never disclosed, at that time Tessian was valued at around $500m. The same year Thoma Bravo sold US cybersecurity company Imperva to French aerospace and defense firm Thales for $3.6bn.

Don’t forget the digital specialists

Apart from the PE-powered merry-go-round of sales and acquisitions, the second type of M&A activity in this sector comes from large digital players buying up smaller players to expand their cybersecurity offerings.

The single biggest deal last year was digital communications giant Cisco [NASDAQ:CSCO] buying cybersecurity firm Splunk for $28 bn, the largest investment in Cisco’s history. This move was followed up in April this year by Cisco releasing HyperShield, a new security architecture product that uses AI to protect clouds, data centres, and IT environments. Splunk was not Cisco’s only target, the company is also in the process of taking over Armorblox, Oort and Lightspin.

The trend continues. According to specialty magazine Security Week, in March alone there were 27 cybersecurity-related mergers and aquistions. This constitutes a slowdown from last year when the total number of M&A deals in this sector hit 400 but industry insiders believe that as the overall financial situation picks up in the US and Europe the number of deals will increase.

It seems that cybersecurity has a long way to go before this sector is truly consolidated. (Source: https://www.thearmchairtrader.com/)

20 May 24. Houlihan Lokey Advises TSPi. Houlihan Lokey’s Government Technology and Services team announced that Technology Solutions Provider, Inc. (TSPi) has been acquired by Abt Global (Abt). The transaction closed on May 9, 2024.

Headquartered in Reston, Virginia, TSPi is a leading provider of IT modernization solutions, specializing in agile low-code/no-code application development and cloud technologies across major platforms, including Pega, Salesforce, Appian, Amazon Web Services, and Google Cloud. The company is notably one of only a few Pega Government Elite partners and has been recognized by Google for its partnership within the federal space. TSPi has developed a franchise position leading digital transformation and data science initiatives for some of the nation’s largest federal assistance, conservation, and climate resilience programs that directly support farmers, ranchers, and other stewards of agricultural lands. The company is recognized as an exceptional employer in the area, securing The Washington Post’s Top Workplace awards each of the past three years.

Headquartered in Rockville, Maryland, Abt is a global consulting and research firm that combines data and bold thinking to improve the quality of people’s lives. Abt partners with clients and communities to advance equity and innovation—from creating scalable digital solutions and combatting infectious diseases to mitigating climate change and evaluating programs for measurable social impact.

Houlihan Lokey served as the exclusive financial advisor to TSPi and marketed, structured, and negotiated the transaction on behalf of the company.

20 May 24. Sidus Space Reports First Quarter 2024 Financial Results and Provides Business Update. Sidus Space, Inc. (NASDAQ:SIDU) (the “Company” or “Sidus”), a Space and Data-as-a-Service satellite company, announced its financial results for the first quarter ended March 31, 2024.

“During the first quarter of 2024, we successfully launched and deployed our first LizzieSat from the SpaceX Transporter-10 Rideshare Mission, representing the first of several satellites we are planning to launch into Low Earth Orbit. With this new launch, the first commercial satellite designed, manufactured and operated by the company, we have demonstrated our expertise in vertical manufacturing integration as well as our ability to successfully deploy and operate a 275lb satellite with multiple technologies supporting a broad range of applications and customers. This unprecedented success lays the foundation for our continued growth as we prepare for LizzieSat-2 and 3, which are manifested for launch with SpaceX in the fourth quarter of this year,” said Carol Craig, Founder and CEO of Sidus.

“Successfully launching LizzieSat into orbit was a key milestone for Sidus and a vital element of our strategy to position our company as a leader in the Space ecosystem. Our Space-based Data-as-a-Service business model that is enabled by our LizzieSats has the capacity to scale rapidly and generate meaningful, high-margin revenue as we continue deploying additional LizzieSats into orbit,” Ms. Craig concluded.

Operational Highlights for the Quarter Ending March 31, 2024:

Successfully launched and deployed first ever hybrid 3D printed, Artificial Intelligence (AI) enhanced micro satellite on SpaceX Transporter-10 rideshare mission
Established two-way communications with LizzieSat™ SCN 59132
Teammate on winning Solis Applied Science team for National Geospatial-Intelligence Agency IDIQ research and development contract with $794 m ceiling
Awarded contract for technology hosting payload contract with ASPINA
Announced publication of new U.S. patent application for LizzieSat platform
Completed contract to deliver onboard computing flight hardware with final revenue payments
Unveiled cutting-edge multi-material 3D printed space hardware division
Achieved AI and hardware contract revenue milestones
Secured NOAA approval to provide imaging services to government and commercial customers

Subsequent Operational Highlights:

Completed commissioning Phase and began operating as a fully functional satellite ID# 59132
Began activation of customer payloads including NASA ASTRA
Executed subcontract with Intuitive Machines as a Teammate on the NASA Lunar Terrain Vehicle Services (LTVS) contract
Delivered Electronic LCS Cabinets to Bechtel as Part of NASA’s Mobile Launcher 2
Expanded sales reach by executing agreement with Orbital Transports for global market reach
Awarded additional contract with HEO, a Leading Provider of Non-Earth Imaging and Data, for NEI Payload and Data Services on LizzieSat-3
Unveiled Commercial Mission Control Center for expansion across Space ecosystem

Corporate Governance and Capital Formation Highlights:

Appointed Bill White as Chief Financial Officer
Appointed Richard J. Berman to Board of Directors
Raised Gross Proceeds of $15.2m through the Exercise of Warrants and Two Equity Offerings

Financial Highlights for the First Quarter Ending March 31, 2024:

Total revenue for the three months ended March 31, 2024, totaled approximately $1.1m, a decrease of $1.2m compared to total revenue for the three months ended March 31, 2024. This decrease was primarily driven by the timing of fixed price manufacturing milestone contracts related to delivery of hardware as directed by the contract requirements. Additionally, timing of satellite contract payments from existing customers varies for each calendar year. Due to customer driven delays, both manufacturing and satellite milestone payments shifted to the right and are expected to increase in the second half of the year.

Cost of revenue decreased 29% for the three months ended March 31, 2024, to approximately $1m as compared to approximately $1.4m for the three months ended March 31, 2023. The decrease in cost of revenue is primarily driven by the reduction of total revenue.

Gross profit margin decreased to 8% for the first quarter of 2024 as compared to 40% for the first quarter of 2023 due to the higher percentage of material costs as compared to labor for manufacturing contracts and the shifting of the satellite milestones due to customer delays along with the change in calculation of COGS.

Selling, general, and administrative expenses for the first quarter ended March 31, 2024, totaled approximately $3.6m as compared to $3.5m for the same period the prior year. The slight increase was primarily due to fundraising expenses from two capital raises in Q1 2024 and an increase in Mission Operations support expense related to ground support required for tracking and communicating with our first satellite, partly offset by a reduction in D&O insurance expenses, marketing and investor relations expenses.

Adjusted EBITDA loss, a non-GAAP measure, for the three months ended March 31, 2024, totaled $2.7m as compared to an Adjusted EBITDA loss of $2.6m for the same period the prior year. Total non-GAAP adjustments for interest expense, depreciation and amortization, acquisition deal costs, severance costs, capital markets and advisory fees, equity-based compensation, and warrant costs are provided in the reconciliation table listed below.

Net loss for the three months ended March 31, 2024, was $3.8m as compared to a net loss of $3.4m for the same period the prior year.

Balance Sheet:

At March 31, 2024, the Company had cash of $6.2m as compared to $1.2m at December 31, 2023. During the quarter, the Company received gross proceeds of $15.2 m through the exercise of warrants and two offerings.

Current liabilities decreased by approximately $4.0m to approximately $8.2 m as of March 31, 2024, from approximately $12.2m as of December 31, 2023. The decrease was primarily attributable to a decrease in accounts payable and other current liabilities and our asset-based loan liability.

Total stockholders’ equity increased to $17.2m as of March 31, 2024 as compared to $7.1 m as of December 31, 2023.

As of May 20, 2024 the Company had 4,081,344 Class A common shares and 100,000 Class B common shares. (Source: BUSINESS WIRE)

17 May 24. Boeing shareholders vote to re-elect CEO Calhoun to board. Boeing Co (BA.N) shareholders voted to re-elect outgoing Chief Executive Dave Calhoun to the planemaker’s board at the company’s annual meeting, as per a preliminary tally. Proxy adviser Glass Lewis had last month recommended shareholders vote against the reelection of Calhoun and two other Boeing directors, citing dissatisfaction over the efforts to transform the safety culture at the planemaker. (Source: Reuters)

16 May 24. Boeing-Spirit acquisition may risk US aerial defence supply chain. The US defence community expressed fear that they will lose a critical point of the air systems supply chain should Boeing subsume Spirit Aerosystems for its commercial enterprise.

Since Spirit AeroSystems confirmed it began discussing the prospect of Boeing acquiring the company in March 2024, the potential deal has haunted US defence and government circles.

While an agreement still hangs in the balance, US politicians are watching closely to see whether the acquisition will have an adverse reaction on the defence capabilities that Spirit offers as a critical supplier in the supply chains for military aerial systems.

As both a defence and commercial company, Spirit supports a range of programmes including the B-21 Raider strategic bomber, the Bell V-280 tiltrotor aircraft, the CH-53K King Stallion transport helicopter as well as numerous Bombardier business jets.

Even though Boeing is a notable aerial systems contractor in its own right within the US defence industrial ecosystem, some observers are still weighing the prospect that it intends to leverage Spirit largely for its commercial enterprise.

The company also has an international presence, having announced the establishment of a design centre in Malaysia according to a statement at the end of February on the opening day of the Singapore Air Show. It is said that Spirit’s Malaysian engineering team is already a significant player in the design of commercial aircraft, including the A350XWB section 15 freighter, A350XWB ultra long range and a key partner to A220 wing programme.

The Senator for Kansas, Jerry Moran, in a Senate Defense Appropriations Committee hearing on 15 March 2024, inquired into the situation of the Wichita-based supplier, which he said employs 13,000 workers from his state. (Source: airforce-technology.com)

17 May 24. Houlihan Lokey Advises General Dynamics. Houlihan Lokey announced that General Dynamics Corp. (NYSE:GD; General Dynamics) has sold its Italian subsidiary, General Dynamics Mission Systems–Italy (GDMS–Italy), to Maticmind, an Italian system integrator controlled by CVC Capital Partners (CVC), with Cassa Depositi e Prestiti Equity (CDP Equity) a minority shareholder. The transaction closed on 26 April 2024.

Headquartered in Rome, Italy, GDMS-Italy specialises in the design, architecture, integration, and implementation of highly complex information technology, communications, security, and surveillance systems in the defence, energy, and critical infrastructure end markets. With important partnerships with NATO and several ministries of defence, GDMS-Italy has more than 60 years of success in delivering turnkey systems globally, with operations in Italy, Turkey, and Brunei.

General Dynamics, headquartered in Fairfax, Virginia, provides mission-critical solutions for defence, intelligence, and cybersecurity customers in all domains. General Dynamics employs approximately 12,500 people worldwide.

Maticmind is an Italian system integrator in the information and communication technology sector. The company provides solutions for networking, cybersecurity, digital workplace, data centre, cloud, enterprise applications, and automation/IoT. In August 2022, Maticmind was acquired by CVC, with a minority stake acquired by CDP Equity, an Italian sovereign fund.

Houlihan Lokey served as the exclusive financial advisor to General Dynamics and assisted in structuring the transaction process as well as marketing and negotiating the transaction.

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16 May 24. Rivals line up to take £1.6bn Navy contract from Titanic shipyard. Britain’s biggest defence companies are lining up to take over a £1.6bn Royal Navy supply ship contract amid fears the business tasked with delivering it could collapse.

On Thursday, a Government defence source said rival companies would be asked to step in and manufacture three Fleet Solid Support (FSS) warships should Harland & Wolff, the Belfast-based yard that built the Titanic, be unable to deliver.

It is understood the project could be split among members of the former “Team UK” consortium, including BAE Systems, Babcock, A&P Group and Cammell Laird – all of which previously bid for the work unsuccessfully.

Sources close to Team UK confirmed they had capacity to take on the work and “stood ready” to help if asked, depending on the terms.

However, the Government source added that talks were still focused on helping to secure Harland & Wolff’s future, adding that contingency plans would only be looked at in a “worst-case scenario”.

They said: “We are not reliant on the fate of one shipbuilder.”

It came as urgent discussions over a £200m support package for the Northern Ireland company continued, with Whitehall officials said to be looking at “all options”.

Harland & Wolff was plunged into uncertainty earlier this week after it emerged a loan guarantee promised by the Government was in doubt amid legal concerns it could breach state aid rules.

In the company’s most recent annual report, auditors warned the business would struggle to survive without the support.

Jeremy Hunt, the Chancellor, is expected to make a final decision on whether to approve the guarantee within days.

The issue has reportedly pitched the Treasury against the defence, business and Northern Ireland departments, with Grant Shapps, the Defence Secretary, lobbying the Chancellor to wave the deal through.

Despite the turmoil, Harland & Wolff said it was “business as usual”, stressing that “nothing had changed” in relation to ongoing talks.

On Thursday, a spokesman added: “Only yesterday we accepted four of our new burning machines, which is a multimillion-pound investment.

“We have many other projects across all of our facilities that are in full production.”

The £1.6bn contract to build three FSS ships for the Royal Fleet Auxiliary, a civilian branch of the Royal Navy, was awarded to Harland & Wolff and Spanish shipbuilding giant Navantia following a fraught bidding process in 2022.

That decision was criticised by some MPs because it will see certain sections of the ships – known as blocks – built at Navantia’s shipyard in Cadiz.

However, ministers have insisted the warships, which will have a crucial role in supplying Royal Navy aircraft carriers and other vessels with munitions and stores, will mostly be built in the UK.

Under current plans, seven rear-end blocks will be produced by Navantia in Cadiz.

These will then be shipped to Belfast, where Harland & Wolff will make the remaining 14 front and middle blocks before assembling the ships.

A source at Navantia on Thursday refused to comment on Harland & Wolff’s future but said: “The FSS programme is progressing, with contracts being awarded to different suppliers, the engineering advancing and the transfer of knowledge, modernisation and preparation of Harland & Wolff shipyards underway.” (Source: Daily Telegraph)

16 May 24. Nortech Systems Reports First Quarter Results and Actions to Reduce Facility Costs. Nortech Systems Incorporated (Nasdaq: NSYS) (“Nortech” or, the “Company”), a leading provider of engineering and manufacturing solutions for complex electromedical and electromechanical products serving the medical, industrial and defense markets, reported first quarter ended March 31, 2024 financial results.

2024 Q1 Highlights:

Net sales of $34.2m, down 1.9% from Q1 2023.
Net income increased to $765,000, or $0.26 per diluted share, compared with net income of $681 thousand or $0.23 per diluted share, in Q1 2023.
Gross margin of 15.9%, up 20 basis points from gross margin of 15.7% in the same prior-year quarter.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) of $1.637m, compared with EBITDA of $1.559 m in the prior year.
Signed new $15m cash flow line of credit agreement.
90-day backlog of $35.2m as of March 31, 2024, consistent with the prior year-end level.

Management Commentary

“We posted solid results in the first quarter of 2024 and continued to improve margins and manage expenses,” said Jay D. Miller, President and CEO of Nortech. “As a result, we are generating improved net income and EBITDA in the quarter as compared with the same quarter in 2023.”

“Our dedicated Nortech employees worldwide embody our corporate values, including teamwork, excellence, commitment, integrity and innovation,” Miller noted. “While we measure employee engagement success with a number of metrics, we are pleased to see continued high employee retention and high employee engagement. Most recently, 230 of our North American employees participated in the American Cancer Society “FIT2Be Cancer Free” challenge.”

“As we further look for opportunities to optimize our expense structure and plant capacity utilization, we are consolidating our Minnesota facilities. This morning we announced the decision to consolidate production of our wire and cable products for the Aerospace and Defense industry to our Bemidji, Minnesota facility. The shift in production is expected to be completed by the end of 2024, at which time the Company will close the Blue Earth, Minnesota facility. In the spirit of taking the best care of our employees as possible, all Blue Earth employees will be extended job offers at our other Minnesota facilities. We sincerely hope to keep them all.”

“Further, we are consolidating the square footage of our Maple Grove, Minnesota headquarters and engineering facility by almost 30 percent. This reduction reflects our current and future space needs which have been heavily influenced by the Company’s hybrid remote work arrangements.”

2024 First Quarter

In the first quarter of 2024, net sales totaled $34.2m. This represents a 1.9% decrease from net sales of $34.9 m in the first quarter of 2023. For the first quarter, gross profit totaled $5.4 m, or 15.9% of net sales, compared with gross profit of $5.5m, or 15.7%, in the prior year. First quarter 2024 operating expenses totaled $4.3m, a 3.1% decrease from the prior year operating expenses of $4.4m.

GAAP net income totaled $765 thousand, or $0.26 per diluted share, in the current quarter, up from GAAP net income of $681 thousand, or $0.23 per diluted share, in the same prior-year quarter. EBITDA totaled $1.637m, a 5.1% increase from EBITDA of $1.558 m in the same prior-year quarter. (Source: BUSINESS WIRE)

02 May 24. SPX Technologies Reports First Quarter 2024 Results.

Q1 GAAP EPS of $1.05; Adjusted EPS* of $1.25

Strong Demand and Execution in HVAC

Raising 2024 Full-Year Adjusted EPS* Guidance to a Range of $5.15 to $5.40

SPX Technologies, Inc. (NYSE:SPXC) (“SPX”, the “Company”, “we” or “our”) today reported results for the first quarter ended March 30, 2024.

Gene Lowe, President and CEO, remarked, “I’m very pleased with our strong Q1 performance, which included substantial growth in all of our key profit measures and significant margin expansion in both segments. During the quarter we continued to see solid demand across several key markets and our businesses executed well operationally.”

Mr. Lowe continued, “During Q1, we made significant progress on several key value creation initiatives, including driving greater efficiencies in our production facilities and effectively integrating our recent acquisitions. These enhancements are strengthening our company and positioning us for further growth.”

Mr. Lowe commented further, “Looking ahead, we continue to see overall favorable demand trends and positive operational momentum. Following the strong start to the year, we are raising our full-year guidance for Adjusted EPS* to a range of $5.15 to $5.40 from $4.85 to $5.15 previously, with the midpoint implying year-on-year growth of approximately 23%.”

First Quarter 2024 Overview:

For the first quarter of 2024, the company reported revenue of $465.2m and operating income of $64.6m, compared with revenue of $399.8m and operating income of $49.8m in the first quarter of 2023. Net income for the first quarter of 2024 was $49.0m, compared with $42.8m in the first quarter of 2023. Diluted income per share from continuing operations in the first quarter of 2024 was $1.05, compared with $0.84 in the first quarter of 2023. The increase in revenue, operating income, net income and diluted income per share from continuing operations were due primarily to higher revenue in both our HVAC and Detection & Measurement segments.

Adjusted EBITDA* was $92.0m, compared with $62.7m in the first quarter of 2023, or an increase of 46.7%. Adjusted earnings per share* in the first quarter of 2024 was $1.25, compared with $0.93 in the first quarter of 2023. Adjusted EBITDA* and Adjusted earnings per share* exclude amortization expense and acquisition-related costs, among other items.

HVAC Segment

Revenue for the first quarter of 2024 was $302.4m, compared with $251.6m in the first quarter of 2023, an increase of 20.2%, including a 22.2% increase from the acquisitions of Ingénia, ASPEQ, and TAMCO, a 1.9% organic revenue* decline, and a 0.1% unfavorable impact related to currency fluctuation. The organic decline was due primarily to lower sales of heating products associated with unseasonably warm temperatures during the Q1 heating season compared with higher prior-year sales that were supported by elevated post-pandemic backlog.

Segment income in the first quarter of 2024 was $68.4m, or 22.6% of revenue. This compares with segment income of $47.7m, or 19.0% of revenue in the first quarter of 2023. The increase in segment income and 360 basis points increase in segment income margin were due primarily to the higher revenues noted above as well as a more favorable product mix.

Detection & Measurement Segment

Revenue for the first quarter of 2024 was $162.8m, compared with $148.2m in the first quarter of 2023, an increase of 9.9%, including a 9.6% increase in organic revenue* and a 0.3% favorable impact related to currency fluctuation. The organic increase was primarily due to higher project sales in our Communication Technologies platform.

Segment income for the first quarter of 2024 was $31.4m, or 19.3% of revenue. This compares with segment income of $26.7m, or 18.0% of revenue of in the first quarter of 2023. The increase in segment income and 130 basis points increase in segment income margin were due to the higher revenue noted above and the associated operating leverage.

Financial Update: As of March 30, 2024, SPX Technologies had total outstanding debt of $854.4m and total cash of $105.5m. During the first quarter of 2024, SPX’s net operating cash from continuing operations totaled $10.7m. Capital expenditures for continuing operations for the first quarter of 2024 were $9.9m.

2024 Guidance Update:

SPX Technologies is increasing full-year 2024 guidance. The company is now targeting consolidated revenue of $1.965-$2.025 bn ($1.93-$2.00 bn prior), adjusted EBITDA* of $390-$420m ($375-$405m prior), and adjusted earnings per share* of $5.15-$5.40 ($4.85-$5.15 prior).

16 May 24. India’s HAL posts Q4 profit climb on defence aircraft demand. India’s Hindustan Aeronautics Ltd (HAL) (HIAE.NS), opens new tab reported a rise in fourth-quarter profit on Thursday, helped by demand for its aircraft from the country’s defence ministry. Consolidated net profit rose 52% year-on-year to 43.09bn rupees ($516.2m) for the three months ended March 31. Capital goods and manufacturing companies have benefited throughout fiscal 2024 from the Indian government’s push for higher capital expenditure. This extended into the fourth quarter.

The state-owned aerospace and defence company bagged orders worth 176 billion rupees during the quarter, up 135% from a year earlier, per Elara Capital.

The company’s order inflow includes the supply of 25 Dornier aircraft to the Indian Navy and orders for engines for MiG-29 aircraft, the brokerage said. HAL, whose customers include the Indian Army, Navy and Air Force, along with aerospace corporations Airbus (AIR.PA), opens new tab and Boeing (BA.N), opens new tab, said revenue rose over 18% to 147.69bn rupees. Its two main businesses are manufacturing defence technology and aircraft maintenance, but it does not give a segment-wise break-up.

Its rivals Bharat Electronics (BAJE.NS), opens new tab and Bharat Dynamics (BARA.NS), opens new tab have yet to report March-quarter results. HAL’s shares jumped as much as 5.4% after the results. ($1 = 83.4807 Indian rupees) (Source: Google/Reuters)

15 May 24. Sypris Reports First Quarter Results.

Growth Continues; Revenue Up 10%; Backlog Over $110m

Sypris Solutions, Inc. (Nasdaq/GM: SYPR) today reported financial results for its first quarter ended March 31, 2024.

HIGHLIGHTS

The Company’s first quarter 2024 consolidated revenue increased 10.1% to $35.6m compared with the prior year quarter, representing the 11th quarter of double-digit year-over-year growth during the past 12 quarterly periods.
Revenue for Sypris Electronics increased 34.5% year-over-year and 9.5% sequentially, reflecting the continued growth in shipments under recently announced contracts with customers serving the markets for electronic warfare, aircraft and missile avionics, and subsea communications.
Revenue for Sypris Technologies decreased 5.9% year-over-year to $18.4m, reflecting the short-term timing of certain energy, specialty automotive and ATV product shipments.
Orders for Sypris Technologies energy products increased during the first quarter compared to the same period in 2023, driving backlog up 50.1% from year end.
During the quarter, Sypris Technologies announced that it had received an award to supply specialty high-pressure closures for use in a large international liquified natural gas project. The closures will be integrated into the filtration systems of the carbon capture and storage facilities of the project. Production is expected to be completed during 2024.
In May, Sypris Electronics announced that it received releases for an additional four systems under a multi-year production contract that was first announced in 2022. The modules to be produced by Sypris will be integrated into an electronic warfare improvement program for the U.S. Navy. Deliveries are expected to begin in 2024.
The Company updated its full-year outlook for 2024, maintaining the expected increase in revenue at 10%-15% year-over-year, while adjusting the gross margin guidance to a 100-125 basis point increase, reflecting the impact of unfavorable foreign currency exchange rates and program ramp costs.

“The financial results of Sypris Electronics were impacted by additional costs related to two large programs that ramped during the quarter. As these programs stabilize, we anticipate increasing sequential margins for the remainder of the year.

First Quarter Results

The Company reported revenue of $35.6m for the first quarter of 2024, compared to $32.3m for the prior-year comparable period. Additionally, the Company reported a net loss of $2.2m, or $0.10 per share, as compared to a net loss of $0.2m, or $0.01 per share, for the prior-year period.

Sypris Technologies

Revenue for Sypris Technologies was $18.4m in the first quarter of 2024 compared to $19.5m for the prior-year period, reflecting the short-term timing of certain energy, specialty automotive and ATV product shipments. Gross profit for the first quarter of 2024 was $2.1m, or 11.2% of revenue, compared to $2.6m, or 13.5% of revenue, for the same period in 2023. Gross profit for the first quarter of 2024 was negatively impacted by lower volumes and an unfavorable mix. Additionally, gross profit was negatively impacted by foreign currency exchange rates for our Mexican subsidiary, resulting in a decrease of $0.4m.

Sypris Electronics

Revenue for Sypris Electronics was $17.2m in the first quarter of 2024 compared to $12.8m for the prior-year period. Increased shipments for two follow-on programs contributed to the growth over the prior-year comparable period. Gross profit for the first quarter of 2024 was $0.8m, or 4.8% of revenue, compared to $1.5m, or 11.9% of revenue, for the same period in 2023 primarily due to additional costs incurred on two programs that ramped production during the period.

Outlook

Commenting on the future, Mr. Gill added, “While new program launch costs and an unfavorable mix impacted our first quarter 2024 results, demand from customers serving the automotive, commercial vehicle and sport utility markets remains positive. Similarly, demand from customers serving the markets for electronic warfare, aircraft and missile avionics, secure and subsea communications, and ground-based radar remain robust, while the outlook for the energy market continues to move in the right direction.

“With a strong backlog, new program wins, and long-term contract extensions in place, we are confident that 2024 has the potential to be very positive for Sypris. As a result, we continue to expect revenue to increase 10-15% year-over-year. We expect to achieve gross margin expansion in the range of 100 to 125 basis points with gross profit forecast to increase 20-25% in 2024.” (Source: BUSINESS WIRE)

14 May 24. Pennant disappoints – but there are reasons to stick around.

Prospects look good for this software provider with blue-chip customers, even though procurement timelines have lengthened

Business pipeline robust
Longer order conversion timeframe
Positive outlook but earnings downgrades

Pennant International (PEN:27p), a provider of Oracle-based software that reduces the support cost of maintaining major assets such as trains, tanks or aeroplanes, is starting to see a material increase in activity in its key markets.

Pennant provides software and integrated product support solutions to a blue-chip client list of original equipment manufacturers and governments, as well as supplying complex training products to a prestigious global client base, the majority of which work in the world’s defence ecosystem. So, with the global defence sector strong, the company is seeing rising bid volumes. In fact, in response to customer tenders and requests for proposals, Pennant quoted more than £32mn of business opportunities in the past six months.

The issue is that order conversion is taking longer due to extended customer procurement timeframes. So, although Pennant is actively progressing several material sales prospects that should result in new orders in the second half of the year, analysts are taking a conservative approach to their forecasts.

This explains why house broker WH Ireland lowered its 2024 revenue estimate from £16.1mn to £14.8m. On this basis, analyst Nick Spoliar forecasts current-year adjusted pre-tax profit of £1.2m (downgrade from £1.6mn), albeit he also expects 2023 pre-tax profit to have increased sixfold to £1.3m on 13 per cent higher revenue of £15.5m when Pennant reports annual results in early June 2024. That said, with £0.25m of cost savings anticipated in the current financial year, Spoliar views his forecasts as conservative.

Moreover, with the new version of Pennant’s high-margin innovative logistics support analysis software released in the past fortnight, there is potential for a greater share of earnings from this activity in the business mix. That’s important given that Pennant earns a 90 per cent gross margin on software licences, and additional recurring revenue from maintenance strands.

Pennant’s share price fell 13 per cent after the trading update and the shares are now rated on modest prospective price/earnings (PE) ratios of 7.7 (2024) and 8.4 (2024), multiples that suggest potential for upside. So, although the shares are well below the price (36p) at which I suggested buying at last autumn (‘A software provider with a potential 80% upside’, 28 September 2023), I would not be selling out at this depressed level. Hold. (Source: Investors Chronicle)

14 May 24. Terran Orbital Reports First Quarter 2024 Financial Results.

Expanding collaboration and commitment from Lockheed Martin, awarded a new contract for 18 space vehicles for the Space Development Agency (SDA)
Second quarter 2024 awards exceed $100m to-date
As of March 31, 2024, backlog was $2.7bn; and, as of today, is estimated to be over $2.8bn, inclusive of $400m of non-Rivada programs
Review of strategic alternatives still ongoing

Orbital Corporation (NYSE: LLAP) (“Terran Orbital” or the “Company”), a leading manufacturer of satellite products primarily serving the aerospace and defense industries, today announced financial results and operational highlights for the three months ended March 31, 2024.

Marc Bell, Co-Founder, Chairman, and Chief Executive Officer of Terran Orbital prefaced the release by saying, “Our team was selected by Lockheed Martin to build 18 space vehicles for the SDA’s Tranche 2 Tracking Layer. We value Lockheed Martin’s partnership and look forward to continued collaboration under our Strategic Cooperation Agreement, which runs through 2035. We remain committed to exceeding customer expectations and delivering cutting-edge satellite solutions while our strategic review is still ongoing. This process includes a range of options, including staying independent.”

Results for the First Quarter of 2024

Revenue for the first quarter of 2024 was $27.2m, down 3% compared to $28.2m for the same quarter in 2023. The decrease in revenue was driven by unfavorable Estimate-at-Completion (EAC) adjustments, primarily on a single program due to challenges with a subcontractor, and was partially offset by an increase in revenue due to the continued and increased level of progress made in satisfying our customer contracts. During the three months ended March 31, 2024 and 2023, revenue included an estimated $13.1 m negative impact and $0.8m positive impact, respectively, related to EAC adjustments on our firm fixed price contracts. EAC adjustments represent net impacts during the period related to changes in our aggregate program contract values, estimated costs at completion, and other program estimates, including the impacts of cost overruns and recognition of loss reserves.

Commenting on the first quarter, Mr. Bell said, “We expect the delayed revenue from this single program to be recognized by the end of the third quarter of 2024. This supply chain disruption underscores the importance of our vertical integration strategy. By bringing more aspects of the manufacturing process in-house, we can become less reliant on external factors and ensure on-time delivery for our valued customers.”

Cost of sales for the quarter was $33.4 m compared to $29.6m for the same period in the prior year. The increase in cost of sales was primarily due to an increase of $2.9m in labor, materials, third-party services, overhead, launch costs, other direct costs, $1.4m related to reserves for anticipated losses on contracts period over period, and $1.3m in depreciation and amortization, partially offset by a decrease of $2.3m in share-based compensation expense. During the three months ended March 31, 2024 and 2023, cost of sales included an estimated $0.5m negative impact and a $0.8m positive impact, respectively, related to EAC adjustments on our firm fixed price contracts.

Gross loss for the first quarter of 2024 was $6.2m compared to a loss of $1.4m for the same period in the prior year. Excluding share-based compensation and depreciation and amortization included in cost of sales, Adjusted Gross (Loss) Profit(1) was $(3.4)m for the first quarter compared to $2.3m for the same period in 2023. EAC adjustments negatively impacted gross loss and Adjusted Gross Loss by an estimated $13.6m during the period compared to a positive impact of $1.5m for the same period in the prior year.

Selling, general, and administrative expenses were $28.3m in the first quarter of 2024, compared to $32.5m for the same period in the prior year. The decrease in selling, general, and administrative expenses was primarily due to a decrease of $4.0m in share-based compensation expense, as certain awards granted in connection with becoming a public company were fully expensed during the first quarter of 2023, and a decrease of $3.6m in research and development activities, exclusive of allocated share-based compensation and depreciation. These decreases were partially offset by an increase of $3.0m in administrative labor and benefits, net of allocated overhead, due to the increase in headcount on a comparative basis.

Net loss was $53.2m in the first quarter of 2024, compared to a net loss of $54.4m for the same period in the prior year. The improvement in net loss was driven by items discussed above and lower losses from changes in the fair values of warrant and derivative liabilities, partially offset by higher interest expense.

Adjusted EBITDA(1) was $(28.2)m for the first quarter of 2024, compared to $(22.6) m for the same quarter in 2023. The increase in negative Adjusted EBITDA was primarily due to a decrease in Adjusted Gross (Loss) Profit.

Capital expenditures totaled $2.5m in the first quarter.

Balance Sheet and Liquidity

As of March 31, 2024, Terran Orbital had $43.7m of cash on hand and approximately $316.7m in gross debt obligations. The Company’s debt includes $15.0m in connection with an obligation under one of its PIPE investment subscription agreements, which is payable in cash or equity at the Company’s option, subject to certain limitations.

Backlog

Backlog represents the estimated dollar value of executed contracts, including both funded (firm orders for which funding is authorized and appropriated) and unfunded portions of such contracts, for which work has not been performed. The unfunded portion of enforceable contracts is accounted for as variable consideration and is reported at our estimate of the most likely amount to which the Company is expected to be entitled. Although backlog reflects business associated with contracts considered to be firm, terminations, amendments or contract cancellations may occur, which could result in a reduction in our total backlog.

As of March 31, 2024, backlog was $2.7bn, of which $2.4bn was related to our contract with Rivada and $300m was related to non-Rivada programs. As of May 14, 2024, backlog is estimated to be over $2.8bn, inclusive of $400m of non-Rivada programs.

Ongoing Review of Strategic Alternatives

As previously announced, a special committee of Terran Orbital’s board of directors composed solely of independent and disinterested directors, consistent with its fiduciary duties and in consultation with its financial and legal advisors, has engaged in an ongoing proactive process to evaluate strategic opportunities that are or may be available to the Company, including maintaining the status quo and continuing to operate as a standalone, independent publicly traded company, to determine the course of action that it believes will maximize value for the company’s stockholders.

Regarding the previously announced and subsequently withdrawn non-binding proposal from Lockheed Martin to acquire, in a merger transaction, all of the outstanding shares of the Company’s common stock not owned by it for a price of $1.00 per share (the “Lockheed Proposal”), independent director and special committee chair James LaChance stated: “We appreciate Lockheed Martin’s interest and engagement. In our discussions with Lockheed Martin regarding their proposal, including at an in-person meeting on April 16, 2024, we shared that the Company values its strategic relationship with Lockheed Martin, both as a security holder and as a key customer, and, as the strategic review process continues, we are committed to maximizing stockholder value and remain open to further exploring if there is value to be created for our stockholders through future commercial and strategic arrangements or transactions with Lockheed Martin.”

The special committee does not intend to provide any updates regarding the company’s ongoing strategic review process, unless and until it deems further disclosure is appropriate. There can be no assurance that the strategic review process will result in any transaction or strategic alternative, or any assurance regarding its outcome or timing. (Source: BUSINESS WIRE)

14 May 24. Kopin Corporation Reports Financial Results for the First Quarter 2024.

Q1 2024 product revenues increased 18% compared to the same period in 2023
Defense product revenues increased 28% partially offset by a 17% decrease in Industrial product revenues
2.7:1 Positive book-to-bill for Q1, 2024
Expect Double Digit Revenue Growth in 2024 over 2023
Received several new customer orders including a Naval Warfare Research Contract
Verdict received in Blue Radios Litigation

Kopin Corporation (“Kopin” or “the Company”) (Nasdaq: KOPN), a leading developer and provider of high-performance application-specific optical solutions consisting of high-resolution microdisplays, microdisplays subassemblies and related components for defense, enterprise, industrial, and consumer products, today reported financial results for the first quarter ended March 30, 2024.

Commenting on the quarterly results, Michael Murray, Chief Executive Officer, stated, “We continued to make strong progress on our strategy to reset the course and focus within Kopin. Sales of our products for defense applications continued to be strong, which has been our primary focus since we initiated our new strategies in 2023. We continue to believe that 2024 revenues will have double digit-growth as the first quarter marked the entrance of new customers and projects including a new development project with the Navy Air Warfare Center for research in advanced high frame rate lens-less display architectures. Also in the first quarter, Kopin received a $20.5m order for a new weapon sight configuration deliverable in 2024 and 2025. Furthermore, the company also received a $1.4m order for a specialized weapon sight.

“Kopin continues to demonstrate very strong momentum in our book-to-bill rate which ended positively in the first quarter of 2024. We are fortunate to have many great long-standing customers who remain supportive of Kopin during this transformative time. Further, we are excited to see the benefits of these efforts as we see new designs and opportunities with our current and new customers increasing.

“Our focus remains on quality and efficiency. Over the last year, we have instituted several organizational changes to clarify accountability, established measurable goals and metrics, and brought in new program management, business development, and quality skill sets. These changes are the foundation of our growth plan. To improve cashflow and focus, we also began exploring the process of monetizing the investments we have in several companies, our Intellectual Property portfolio, and several cost reduction activities.

“The global landscape suggests aggressive tensions are increasing around the world and defense affairs are becoming more dynamic. We believe Kopin is well positioned to deliver to our soldiers and allies the defense systems they need and the innovations that enable the market and return value to our customers, society, and internal and external stakeholders.”

Mr. Murray concluded: “Regarding our recent announcement of our Blue Radios litigation, we are disappointed in the outcome and do not believe the findings were justified by the facts. We are reviewing our options, including a possible appeal of any judgment that Court ultimately enters.”

First Quarter Financial Results

Total revenues for the first quarter ended March 30, 2024, were $10.0m, compared to $10.8m for the first quarter ended April 1, 2023, a 7% decrease. Year-over-year product revenues increased 18%, with defense product revenues increasing by $1.8m or 28% year over year, while industrial product revenues decreased by $0.2m or 17%, year over year. First quarter 2024 funded research and development revenues declined by $2.0m or 69% as certain defense development programs were completed.

Cost of Product Revenues for the first quarter of 2024 were $8.5m, or 95% of net product revenues, compared with $6.6m, or 87% of net product revenues for the first quarter of 2023. The increase in cost of product revenues resulted from a higher provision for excess and obsolete materials in the first quarter of 2024 compared to the first quarter of 2023.

Research and Development (R&D) expenses for the first quarter of 2024 were $2.1m compared to $2.3m for the first quarter of 2023, essentially flat year over year. Customer-funded R&D expense declined $0.8m in the first quarter of 2024 as compared to the first quarter of 2023, while internal R&D increased $0.6m year over year. The decline in customer-funded R&D programs was due to the completion of certain defense development programs.

Selling, General and Administration (SG&A) expenses were $7.2m for the first quarter of 2024, compared to $4.6m for the first quarter of 2023. The increase for the three months ended March 30, 2024, as compared to the three months ended April 1, 2023, was primarily due to an increase in legal fees of $2.6 m, professional fees of approximately $0.2m, marketing expenses of $0.2 m and stock-based compensation of $0.2m, partially offset by a decrease in bad debt expense of $0.5m.

On April 22, 2024, a jury verdict was entered in the U.S. District Court for the District of Colorado, finding for the plaintiff, BlueRadios, Inc., and awarding approximately $5.1m in damages as well as recommending $19.7m in disgorgement and exemplary damages. While the court has not yet entered a final judgment, the Company has accrued the full $24.8m judgment under the relevant accounting guidance. The Company is reviewing its options, including a possible appeal of any judgment that the Court ultimately enters.

Net Loss Attributed to Kopin Corporation for the first quarter of 2024 was ($32.5)m, or ($0.27) per share, compared with ($2.6)m, or ($0.03) per share, for the first quarter of 2023.

All amounts above are estimates and readers should refer to our Form 10-Q for the quarter ended March 30, 2024, for final disposition as well as important risk factors. (Source: BUSINESS WIRE)

14 May 24. Fincantieri sees ‘very positive’ outlook for newly-bought UAS business. Fincantieri’s (FCT.MI), newly-acquired Underwater Armament Systems (UAS) submarine business has a “very positive” outlook, the shipbuilder’s chief executive Pierroberto Folgiero said on Tuesday.

The state-controlled shipbuilder bought UAS from defence company Leonardo’s LDOF.MI in a deal giving the submarine business line an enterprise value of 415m euros ($449.15m).

In a call with analysts, Folgiero declined to be specific about the impact of the UAS acquisition for Fincantieri’s prospects.

“There will be time for details, what I can say is that UAS will have a very positive outlook. I believe UAS has a lot of growth ahead of it,” Folgiero said when asked about specific guidance for the business, once incorporated into the group.

Fincantieri said in slides that the deal would be “margin accretive from the outset” with UAS increasing the group’s EBITDA margin to 5.5% pro-forma 2023 from 5.2%. Last year UAS posted 160m euros in revenues and 34.1m euros in core profit, it added. ($1 = 0.9240 euros) (Source: Google/Reuters)

13 May 24. Calian® Completes Acquisition of Mabway, Expanding Military Training and Simulation Solutions Globally. Calian Group Ltd. (TSX: CGY), a diverse products and services company, providing innovative healthcare, communications, learning and cybersecurity solutions, has agreed to acquire U.K.-based Mabway for up to CAD$41M (GBP£24M). This includes CAD$32.4M (GBP£19M) on closing.

Mabway is a leader in the management of large-scale defence role-playing environments that simulate real-world operational environments and provides technical engineering education for naval and maritime communities. The company has been a prime supplier to the British Army since 2012. Mabway has several offices across the U.K., a workforce of more than 1,000 ex-military and civilian permanent staff and contractors, and services reaching into Europe and the Middle East.

“We’re delighted to be acquiring a company that has such a strong offering that both complements and expands our current solutions in the military training and simulation sector. This acquisition presents a great opportunity to leverage the capabilities of both companies to provide a more comprehensive range of solutions to military and defence customers globally. And with the U.K. looking to increase defence spending to 2.5 per cent of GDP by 2030, Calian will be well positioned as a strategic partner supporting their operational readiness,” says Kevin Ford, Calian CEO.

The acquisition expands Calian’s existing presence in the U.K. and Europe, bolstering the company’s military training and simulation solutions portfolio in the region and presenting more opportunities for further global and customer diversification.

“This acquisition strategically aligns with our vision for Calian Learning, propelling us toward our goal of becoming a premier global training and delivery partner for customers when they cannot fail,” says Don Whitty, President of Learning. “Mabway’s strong position in the U.K. defence sector provides opportunities for us to introduce our immersive learning solutions to complement the solutions Mabway is delivering—and bring their capabilities into our solutions to support our growth objectives,” he says.

“The Mabway team is excited to be joining Calian,” says Mabway co-owner, Mark O’Reilly. “We take our corporate culture seriously and share Calian’s values of integrity, teamwork, innovation, respect and customer commitment. We are known for our unrelenting focus on providing mission-critical solutions for our customers and will be able to deliver even more effectively as part of the Calian team.”

The acquisition is effective immediately.

14 May 24. Leopard tank maker Rheinmetall’s profit rises on arms spending boom. German arms group Rheinmetall (RHMG.DE), posted a 60% rise in first-quarter profit on Tuesday, as the joint manufacturer of Leopard tanks rides a defence spending boom triggered by Russia’s invasion of Ukraine.

However, Rheinmetall’s earnings were below consensus forecasts, Stifel analyst Alexander Wahl said, and its shares were seen 1% lower in early market trading in Frankfurt.

Rheinmetall, whose market value has more than quadrupled since the war in Ukraine, is seeing a sharp increase in orders as Western governments look to replenish their stocks after supplying substantial amounts of arms to Kyiv.

“Rheinmetall is needed by a large number of nations, now and in the future, to satisfy the sharp rise in demand for military equipment,” its CEO Armin Papperger said in a statement.

The Duesseldorf-based firm’s quarterly operating profit was 134m euros and sales 1.58bn euros, both below a company-provided consensus estimate of 143.4m euros and 1.68 bn euros respectively.

Sales climbed 16% in the three months from January through March compared with the same period last year.

Rheinmetall is set to get orders worth as much as a third of the 100bn euro ($108bn) special defence fund introduced by Germany, Ukraine’s second-biggest supporter, shortly after the Russian invasion in 2022.

Meanwhile, the European Union is trying to ramp up ammunition production capacity to 2m shells per year by the end of 2025.

Rheinmetall, one of the world’s biggest producers of artillery and tank shells, in February rolled out plans to increase production of the 155mm artillery shells, a standard caliber used by NATO countries, to 1.1m by 2027. The firm said its order backlog grew by 43% to 40.2bn euros in the quarter. It also confirmed its 2024 sales guidance at around 10 bn euros. ($1 = 0.9274 euros) (Source: Reuters)

14 May 24. Rheinmetall reports strong start to first quarter of 2024 – Group continues profitable growth and increases order backlog .

Expansion of military business: Consolidated sales climb by 16% to around €1.6bn
Further significant increase in orders – Rheinmetall Nomination rises to around €4bn
Rheinmetall Backlog rises by 43% from €28.2bn to €40.2bn
Operating earnings increase by 60% to €134m
Operating margin improves significantly to 8.5%
Guidance for 2024 confirmed

Rheinmetall AG, Düsseldorf, has closed the first quarter of fiscal 2024 with ongoing sales growth and significantly higher income. The positive business performance is still largely being driven by business with the armed forces in Germany and its partner states, as well as by the activities in support of Ukraine. The Group achieved double-digit sales growth thanks to the consistently dynamic market situation and ongoing high demand in military business. Rheinmetall’s strong position in the ammunition business is particularly reflected in a strong increase in earnings.

In light of the current market situation and the consistently positive order situation, management is confirming its current guidance for the Group’s sales growth and operating margin.

Armin Papperger, CEO of Rheinmetall AG, commented: “We are well on track to achieve our ambitious annual targets for sustainable, profitable growth. Rheinmetall is needed by a large number of nations, now and in the future, to satisfy the sharp rise in demand for military equipment. High-volume framework agreements provide us with a good order backlog and ensure capacity utilization over a prolonged period. Looking ahead as well, we anticipate orders for further key projects by the German armed forces and its NATO partners.”

Armin Papperger commented: “We saw the signs of the times early on and plotted the right course. The integration of the Spanish ammunition manufacturer Expal Systems is progressing smoothly and is allowing us to enhance our capacity significantly. We will continue to expand our position as a leading European munitions manufacturer with new production facilities in a number of countries. We are thereby making a substantial contribution to safeguarding Ukraine’s defence capability and ensuring the urgently necessary replenishment of supplies for NATO partners.”

“We are a major player in the civilian sector as well, and anticipate huge potential for the innovative developments of the Group. As a technology leader, it is also of central importance to us to contribute to the mobility revolution and to make crucial progress in the use of hydrogen energy with our ambitious solutions,” added Armin Papperger.

Rheinmetall Group: Sales growth of 16% – Rheinmetall Nomination rises by around 27%

Consolidated sales climbed by €218m or 16% to €1,581m in the first quarter of 2024 (previous year: €1,363m). Adjusted for currency effects, sales were more than 17% higher than in the previous year. 77% of sales were generated abroad.

Operating earnings amounted to €134m as of March 31, 2024, up by around €50m or 60% on the previous year’s figure of €83m. The improvement in operating earnings relates in particular to the strong contribution by the Rheinmetall Expal Munitions, which was acquired in the previous year. The Group’s operating margin improved significantly by 2.3 percentage points to 8.5% in the first quarter of 2024 (previous year: 6.1%).

Earnings per share from continuing operations slightly declined from EUR 1.21 in the same period of the previous year to EUR 1.13 in the first three months of fiscal 2024 as the earnings after taxes attributable to the shareholders of Rheinmetall AG were lower than in the previous year.

Operating free cash flow declined by €82m to €-187m in the first quarter of 2024 after €-105m in the same period of the previous year. The deterioration in operating free cash flow relates in particular to the increase in inventories and cash capital expenditure.

The value of Rheinmetall Nomination climbed by around 27% year-on-year to €3,933m in the first quarter of 2024 (previous year: €3,104m). The increase is due to orders from Germany, the Near East and Australia in particular. In addition, the Spanish Rheinmetall Expal Munitions in particular contributed to growth. Rheinmetall Nomination comprises classic 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).

Rheinmetall Backlog rose significantly by around 43% year-on-year from €28.2bn to €40.2bn (March 31). 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.

Change in Group structure

Effective January 1, 2024, Rheinmetall’s civilian business has been restructured, combining ‘Sensors and Actuators’ and ‘Materials and Trade’ to form the new Power Systems. Rheinmetall is taking this step in order to bundle its business models and innovation in civilian business more effectively. Power Systems forms the organizational umbrella at Rheinmetall for key technological competencies on civilian markets. These range from the traditional combustion engine and commercial business to new technologies such as electromobility and hydrogen, charging infrastructure and lightweight construction through to warm home heating systems.

Vehicle Systems: Rheinmetall Backlog rises significantly by 33% year-on-year

Sales in Vehicle Systems, which mainly operates in military wheeled and tracked vehicles, were up by €31m or around 7% year-on-year at €493 m in the first three months of 2024. The increase in sales relates to projects for the delivery of tactical vehicles in particular.

Rheinmetall Nomination – the total of order intake and the volume of new framework agreements with military customers – increased by €301m as against the previous year to €929m. The largest single order is the service contract already issued for the Boxer heavy weapon carrier, which has a net value of more than €620m. Meanwhile, the same period of the previous year was defined by several major orders, in particular the Leopard 2 upgrade for Norway, the Puma infantry fighting vehicle upgrade for the German armed forces and the frame nomination for military trucks in Austria.

Rheinmetall Backlog – the total of orders on hand and the call-offs expected from framework agreements in place with military customers – was up by €4,208m or around 33% year-on-year at €16,866bn as of March 31, 2024. Operating earnings declined from €43m to €38m in the first quarter of 2024. This development is essentially due to the decline in high-margin orders. The operating margin was down on previous year at 7.7% (9.2%).

Weapon and Ammunition: Backlog more than doubles to around €12bn

Weapon and Ammunition generated sales of €362m in the first quarter of 2024, outperforming the figure for the previous year by €149m or 70%. The increase as against the same period of the previous year relates to higher ammunition call-offs by customers in particular. Key projects included artillery orders for Germany and Ukraine. The sales growth includes €101m from Rheinmetall Expal Munitions, which was acquired as of July 31, 2023 and thus made a crucial contribution to sales growth. Intragroup sales accounted for €29m of this.

Rheinmetall Nomination amounted to €836m in the first three months of 2024, up significantly on the prior-year figure (€595m). There were significant new orders at Rheinmetall Expal Munitions. Further growth was generated in Near East countries and Australia in particular with indirect fire products.

Rheinmetall Backlog more than doubled, rising by €6,394m or around 123% to €11.6bn as of March 31, 2024 (previous year: €5.2bn). The main factor driving this was the signing of two multi-year ammunition framework agreements in the second half of 2023 for the German customer and the Ukrainian armed forces.

Operating earnings more than doubled in the first three months of 2024, rising by €30m or 129% to €53m (previous year: €23m). Despite higher staff and non-staff costs, the operating margin improved significantly from around 11% to around 15%. This includes an earnings contribution of €37m from Rheinmetall Expal Munitions.

Electronic Solutions: Sales growth of 26%

Electronic Solutions, which produces solutions in the field of armed forces digitalization, infantry equipment, air defence and simulation, increased its sales by around 26% or €59m to €287m in the first quarter of fiscal 2024 (previous year: €227m). This sales growth is essentially thanks to the Skyranger 30 mobile air defence system for the German customer and other delivery shares for the Puma infantry fighting vehicle.

As a result of the five-fold increase in incoming orders, Rheinmetall Nomination rose from €339m in the same period of the previous year to €1,812m. Key incoming orders in the first three months of 2024 related to the development contract for the short and very short range air defence protection system and the delivery agreement for the Skyranger 30 mobile air defence system for the German customer. Rheinmetall Backlog amounted to €5,751m as of March 31, 2024, up significantly by €2,129 m on the prior-year figure (€3,622m).

Operating earnings improved to €17m in the first three months of 2024 after €12 m in the previous year. The operating margin rose to 6.0% as a result of sales (previous year: 5.4%).

Power Systems: Operating earnings up by 29%

Sales in Power Systems, in which Rheinmetall bundles its technological expertise for civilian markets, were stable year-on-year at €541m (previous year: €541m). The sales growth in the US region compensated for the decline in sales in Europe. Booked business was down significantly year-on-year at €620m in the first three months of fiscal 2024 (previous year: €1,230m). Nominated Backlog fell by 3% to €8,461m as of March 31, 2024 (previous year: €8,741m).

Operating earnings climbed by 29% to €31m in the first quarter of 2024 (previous year: €24m). The increase is thanks to the positive effect of higher sales prices and a better product mix. The improvement in the at-equity result of a Chinese joint venture also had a positive effect on operating earnings. The operating margin is therefore 5.8% (previous year: 4.5%).

Outlook: Current guidance for year confirmed

Rheinmetall is confirming its current guidance for the year after the first three months of fiscal 2024.

The Rheinmetall Group’s annual sales are expected to rise to a level of around €10 bn in fiscal 2024 (sales in fiscal 2023: €7.2bn). Based on this sales guidance and taking holding costs into account, Rheinmetall anticipates an improvement in the Group’s operating earnings and the operating margin of around 14% to 15% in fiscal 2024 (margin in fiscal 2023: 12.8%).

Forward-looking statements and forecasts

This press release contains forward-looking statements. These statements are based on Rheinmetall AG’s current estimates and forecasts and the information available at the time. Forward-looking statements are not a guarantee of future performance or the results indicated. Rather, they are dependent on a number of factors, entail various risks and uncertainties, and are based on assumptions that may prove to be incorrect. Rheinmetall is under no obligation to update the forward-looking statements in this press release.

Financial report on Q1 2024:

Rheinmetall reports strong start to first quarter of 2024 – Group continues profitable growth and increases order backlog

Expansion of military business: Consolidated sales climb by 16% to around €1.6bn
Further significant increase in orders – Rheinmetall Nomination rises to around €4bn
Rheinmetall Backlog rises by 43% from €28.2bn to €40.2bn
Operating earnings increase by 60% to €134m
Operating margin improves significantly to 8.5%
Guidance for 2024 confirmed

In light of the current market situation and the consistently positive order situation, management is confirming its current guidance for the Group’s sales growth and operating margin.

Armin Papperger.

Rheinmetall Group: Sales growth of 16% – Rheinmetall Nomination rises by around 27%

Operating earnings amounted to €134m as of March 31, 2024, up by around €50 m or 60% on the previous year’s figure of €83m. The improvement in operating earnings relates in particular to the strong contribution by the Rheinmetall Expal Munitions, which was acquired in the previous year. The Group’s operating margin improved significantly by 2.3 percentage points to 8.5% in the first quarter of 2024 (previous year: 6.1%).

Rheinmetall Backlog rose significantly by around 43% year-on-year from €28.2 bn to €40.2 bn (March 31). 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.

Change in Group structure

Vehicle Systems: Rheinmetall Backlog rises significantly by 33% year-on-year

Sales in Vehicle Systems, which mainly operates in military wheeled and tracked vehicles, were up by €31m or around 7% year-on-year at €493m in the first three months of 2024. The increase in sales relates to projects for the delivery of tactical vehicles in particular.

Weapon and Ammunition: Backlog more than doubles to around €12bn

Electronic Solutions: Sales growth of 26%

Operating earnings improved to €17m in the first three months of 2024 after €12m in the previous year. The operating margin rose to 6.0% as a result of sales (previous year: 5.4%).

Power Systems: Operating earnings up by 29%

Outlook: Current guidance for year confirmed

Rheinmetall is confirming its current guidance for the year after the first three months of fiscal 2024.

The Rheinmetall Group’s annual sales are expected to rise to a level of around €10bn in fiscal 2024 (sales in fiscal 2023: €7.2bn). Based on this sales guidance and taking holding costs into account, Rheinmetall anticipates an improvement in the Group’s operating earnings and the operating margin of around 14% to 15% in fiscal 2024 (margin in fiscal 2023: 12.8%).

12 May 24. IAI releases its financial statements for the first quarter of 2024. Israel Aerospace Industries’ (IAI) net income saw a surge of 48%, amounting to USD 135m in the first fiscal quarter of 2024, compared with USD 91m from the previous year’s first quarter, according to financial statements published by the company on Sunday.

IAI said its cash flow, money, or securities generated by a company totaled USD 1,780m, while its sales had garnered USD 1,432m.

The company also noted that its earnings before interest, taxes, depreciation, and amortization (EBITDA) had grown by 19%, amounting to USD 217m.

The company’s operating income, or profit after expense deduction, amounted to USD 147m, while its gross profit totaled USD 273m,

The logo of state-owned Israel Aerospace Industries (IAI), the country’s biggest defence contractor, is seen at their offices next to Ben Gurion International airport, near Or Yehuda, Israel February 27, 2017. (credit: REUTERS/BAZ RATNER)

IAI said the sums garnered from the sale value of the orders that have not yet been shipped to customers amounted to USD 19.1bn. The company noted that its free cash flow, or leftover cash after it had paid expenses or expenditures, amounted to USD 3,200bn.

Chairman of IAI, Amir Peretz, noted regarding the statements “that Israel Aerospace Industries is Israel’s leading and most successful defense and technological company, and we are committed to continuing this excellent performance in all our fields of activity.”

He addressed Iran’s attack on Israel in mid-April. He said, “On the night of April 14, when IAI-developed systems proved capable of providing a good operational response to protect the country’s skies against extra-atmospheric ballistic missiles, we were able to restore a sense of personal security to Israel’s population and subsequently received many expressions of interest from countries around the world.”

CEO of the company, Boaz Levy added, “The excellent financial results presented by the company clearly reflect its pioneering work, both in Israel and internationally, and its extraordinary contribution to Israel’s security, as is evident beyond any doubt even in the latest fighting.”

Levy continued, “The whole world is witnessing the impressive performance of IAI’s systems in the face of unprecedented threats, attacks from Iran and its proxies, and the increase in demand all over the world for our systems is also a result of the innovation and originality demonstrated by the company’s employees.” (Source: Google/https://www.msn.com/)

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

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