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25 Jul 25. Defense contractor L3Harris raises 2025 outlook on steady demand. U.S. defense contractor L3Harris Technologies raised its annual forecast and beat Wall Street expectations for second-quarter results on Thursday, driven by resilient demand amid rising geopolitical tensions. Shares of the company rose 2% in premarket trading. Demand for arms and military equipment has ballooned in the face of a protracted Russia-Ukraine war and tensions in the Middle East, boosting sales at L3Harris and rivals. The company, which makes solid rocket motors on the anti-tank Javelin missile system, expects about $21.75bn in annual revenue, up from its prior forecast of between $21.4 bn and $21.7bn. It projected an adjusted profit of between $10.40 and $10.60 per share for the year, up from its previous expectation of $10.30 and $10.50. The company’s adjusted profit of $2.78 per share in the second quarter topped expectation of $2.50, according to data compiled by LSEG The defense contractor posted a revenue increase of 2.4% to $5.43 bn, beating estimates of $5.32bn. (Source: Reuters)
23 Jul 25. General Dynamics quarterly results beat estimates on strong marine, jet business. General Dynamics’ (GD.N) second-quarter profit and revenue topped analyst estimates on Wednesday, aided by robust earnings from the marine segment and higher business jet deliveries. The Gulfstream jet maker’s quarterly adjusted profit was $3.74 per share, compared with analysts’ estimates of $3.53 per share, according to data compiled by LSEG. General Dynamics’ aerospace segment, which is recovering from supply chain woes and longer certification times, was able to ramp up deliveries during the quarter ended June 29. (Source: Reuters)
24 Jul 25. Amphenol Reports Record Second Quarter 2025 Results
Second Quarter 2025 Highlights:
• Sales of $5.7bn, up 57% in U.S. dollars and 41% organically compared to the second quarter of 2024
• GAAP Diluted EPS of $0.86, up 110% compared to prior year
• Adjusted Diluted EPS of $0.81, up 84% compared to prior year
• GAAP and Adjusted Operating Margin of 25.1% and 25.6%, respectively
• Operating and Free Cash Flow of $1.4bn and $1.1bn, respectively
• Acquired Narda-MITEQ in May
Amphenol Corporation (NYSE: APH) today reported record second quarter 2025 results.
“We are pleased to have closed the second quarter of 2025 with record sales and Adjusted Diluted EPS, both significantly exceeding the high end of our guidance,” said Amphenol President and Chief Executive Officer, R. Adam Norwitt. “Sales increased from prior year by 57%, driven by strong organic growth in all of our end markets including exceptional organic growth in the IT datacom market as well as contributions from the Company’s acquisition program. In the second quarter, we once again realized excellent profitability with Adjusted Operating Margin reaching a record 25.6%. We are extremely proud of the Company’s outstanding performance.”
The Company continues to deploy its financial strength in a variety of ways to increase shareholder value. During the second quarter, the Company purchased 2.0m shares of its common stock for $160m and paid dividends of $200m, resulting in total capital returned to shareholders of approximately $360m.
Amphenol remains focused on expanding its growth opportunities through a deep commitment to developing enabling technologies for customers across our served end markets, an ongoing strategy of market and geographic diversification as well as an active and successful acquisition program. To that end, we are excited to have closed on Narda-MITEQ (“Narda”) in May 2025. Based in Hauppauge, New York, with annual sales of approximately $120m, Narda designs and manufactures active RF interconnect components that complement our product offering primarily serving the defense market. The Narda business is included in the Harsh Environment Solutions Segment.
Third Quarter 2025 Outlook
Assuming the continuation of current market conditions as well as constant exchange rates, for the third quarter of 2025, Amphenol expects sales to be in the range of $5.4bn to $5.5bn, representing a 34% to 36% increase over the prior year quarter. Adjusted Diluted EPS is expected to be in the range of $0.77 to $0.79, representing a 54% to 58% increase from the third quarter of 2024.
Mr. Norwitt continued, “I am very pleased with the Company’s outstanding second quarter 2025 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 expanding 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.” (Source: BUSINESS WIRE)
22 Jul 25. Lockheed profit dives 80% on $1.6bn charge, shares tumble.
• Summary
• Net income falls to $342m from year-ago $1.64bn
• Company trims 2025 operating profit estimate by $1.5bn
• Now targets $6.65bn in operating profit for the year
Lockheed Martin (LMT.N)reported on Tuesday that its second-quarter profit plunged by about 80%, after the U.S. defense group recorded a pretax loss of $1.6bn, mainly linked to a classified program within its Aeronautics segment, sending its shares down more than 8%.
The company also trimmed its 2025 profit outlook by $1.5bn or 18% and said it now targets $6.65 bn in operating profit for the year.
(Source: Reuters)
23 Jul 25. xLight, the American company building the world’s most powerful lasers, today announced it has closed an oversubscribed $40M Series B equity raise. The round was led by Playground Global, an early-stage venture capital firm investing in entrepreneurs who have developed breakthroughs in frontier technologies, and joined by Boardman Bay Capital Management, a leading investment manager specializing in high-growth opportunities across transformative technology subsectors. Morpheus Ventures and others also joined the round. This funding further enables xLight to develop the world’s most powerful extreme-ultraviolet (EUV) free electron lasers (FEL), which will revolutionize advanced semiconductor manufacturing and unlock other critical economic and national security applications.
“xLight represents a once-in-a-generation opportunity to restore American leadership in one of the most critical technologies underpinning the semiconductor industry,” said Pat Gelsinger, Executive Chairman of the Board, xLight and GP, Playground Global
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“xLight is on a mission to build a transformational new light source for semiconductor manufacturing that addresses the key challenges facing the industry today – cost, capabilities, and capacity. This round will equip the company with the capital needed to complete detailed design and kickstart construction of our full-scale prototype,” said Nicholas Kelez, CEO and CTO of xLight. “Advanced semiconductor manufacturing is approaching a key inflection point – together with our partners across the National Lab and semiconductor ecosystem, and with the support of our investors, we will commercialize free electron lasers and help reclaim American leadership in semiconductor manufacturing.”
“xLight represents a once-in-a-generation opportunity to restore American leadership in one of the most critical technologies underpinning the semiconductor industry,” said Pat Gelsinger, Executive Chairman of the Board, xLight and General Partner, Playground Global. “By delivering an energy efficient EUV laser with tenfold improvements over existing technologies, xLight has the potential to drive the next era of Moore’s Law – keeping chip scaling alive, accelerating fab productivity, and anchoring this foundational capability in the U.S. supply chain.”
“xLight’s breakthrough technology delivers a real edge for next-generation semiconductor manufacturing,” said Peter Barrett, General Partner and co-founder at Playground Global. “With AI driving unprecedented demand for more powerful and complex chips, the industry needs a step change in productivity. By applying proven accelerator physics in a novel way, xLight’s EUV FEL platform has the potential to enable not just more efficient production, but entirely new kinds of devices. It’s a bold leap forward, and one that will help reignite Moore’s Law.”
“We believe the semiconductor manufacturing industry is on the precipice of the next major dislocation and xLight is perfectly positioned to capitalize on that shift,” said Will Graves, Chief Investment Officer, Boardman Bay Capital Management. “The company’s platform has the potential to reshape how fabs think about light, manufacturing capabilities, and scalability. We’re proud to partner with a team pushing the boundaries of what’s possible in advanced laser light sources.”
“xLight represents exactly the kind of transformative technology we seek at Morpheus Ventures—a company that’s not just disrupting its market, but fundamentally redefining what’s possible,” said Howard Ko, Partner, Morpheus Ventures. “The company’s deeply experienced team, coupled with the incredible technology they’ve developed under Nicholas’ leadership, uniquely position the company for hypergrowth in the years to come, and we’re thrilled to be one of their partners.”
The company continues to execute against its business goals, as evidenced by the ongoing partnerships with the Cornell Laboratory for Accelerator-based ScienceS and Education (CLASSE), the Los Alamos National Laboratory (LANL), and Fermi National Accelerator Laboratory, three globally recognized, leading research facilities. In the last two years, the company has completed key systems designs, including subsystem prototyping and first articles, and established a working relationship with technical leaders at ASML.
xLight’s work with CLASSE focuses primarily on research and development, with the ultimate goal of commercializing technologies developed by Cornell’s BNL ERL Test Accelerator (CBETA). The joint venture with LANL, funded by New Mexico’s TRGR Technology Readiness Initiative, is focused on the application of modern machine learning techniques to enable the automation of a large-scale accelerator. Large-scale accelerators like those under cooperative development at LANL are an integral component of xLight’s technical roadmap. The company’s collaboration with Fermilab is focused on superconducting radio frequency cavity and cryomodule development and testing – two particle accelerator technologies that the lab mastered over decades. (Source: BUSINESS WIRE)
24 Jul 25. Indra’s profit nearly doubles on operations boost, higher TESS stake valuation. Spanish defence and technology firm Indra (IDR.MC), said on Wednesday its net profit soared 88% in the first six months of the year, thanks to operational improvements and the one-off impact of the increase in the valuation of its stake in TESS.
European defence stocks have been gaining ground recently amid heightened geopolitical tensions and U.S. President Donald Trump’s pressure on NATO allies to hike their defence spending to 5% of gross domestic product by 2035. The company booked a net profit of 215m euros ($252m), up from 114m euros in the same period a year ago.
Indra seeks to scale up its production capacity through a series of acquisitions as governments rush to increase their military expenditures across Europe, where Indra generates over 70% of its revenues.
Revenues rose 6.3% to 2.45bn euros between January and June, above the 2.3bn euros reported last year and the 1.28 bn euros forecast by analysts in an LSEG poll.
The company’s order backlog reached 9.47 bn euros, up 32.5% year-on-year, of which 1.45 bn euros correspond to the consolidation of its TESS Defense unit. Indra sees the defence order backlog doubling by the end of 2025.
Indra, which is partly owned by the Spanish government, increased its stake in TESS Defense to 51% from a previous 24.7% in October.
The company said it was on track to meet all the commitments in its strategic plan for 2025 as it continues to benefit from strong defence sector tailwinds.
It expects to complete the acquisition of satellite operator Hispasat in the second half of the year, CEO Jose Vicente de los Mozos told an analyst call on Wednesday. De los Mozos added Indra was considering selling its outsourcing business BPO, which is part of the Minsait unit, to Anglo-Swiss fund AS Equity Partners. ($1 = 0.8530 euros) (Source: Reuters)
23 Jul 25. IFS, the leading provider of enterprise cloud and Industrial AI software, today announced record-setting H1 2025 results. The company is rewriting the rules of enterprise software with Industrial AI that acts, learns, and delivers. In H1, IFS outpaced legacy enterprise vendors, driving double-digit growth across all key performance metrics, further validating the strength of IFS’s strategy, the scalability of its model, and accelerating momentum as the category leader in Industrial AI.IFS H1 2025 Key Financial Results:
• Annual Recurring Revenue (ARR): +30% YoY
• Cloud Revenue: +37% YoY
• Recurring Revenue: +24% YoY (now 82% of total revenue)
Unlike traditional, legacy software vendors, IFS is purpose-built for the operational core of industrial businesses, powering the real-world systems that keep the world running. Average customer deal size from new customers continued to grow significantly in the first half of the year, with 130 leading industrial brands choosing to future-proof their growth with IFS in H1, including: Arcelor Mittal, Callaway, Collins Aerospace, Hitachi Energy, Japan Airlines, TotalEnergies.
In addition to continued organic growth, IFS extended its Industrial AI lead with the acquisition of TheLoops, launching the first agentic AI workforce for complex industries. Complementing this, the launch of Nexus Black, IFS’s AI innovation accelerator, is already delivering bespoke, scalable solutions that traditional platforms cannot match.
Together, Nexus Black and TheLoops mark a new era for enterprise software, where self-learning AI agents operate in real time inside customer environments, reducing manual effort and accelerating decisions from edge to boardroom.
“Our phenomenal growth proves customers are done with AI theory. They want AI that solves real problems, at scale, and are placing their trust in IFS to lead them through the Industrial AI revolution,” said Mark Moffat, CEO of IFS. “The connection between our performance and AI innovation is unmistakable. As demand intensifies, IFS stands apart, thanks to our domain depth, contextual intelligence, and unwavering focus on industry.”
Matthias Heiden, CFO of IFS commented: “Our fiscal performance reflects the fast-growth, differentiated Industrial AI leader that IFS has become, with a disciplined financial model rooted in recurring revenue, resilient operations, and scale-ready agility. These same principles are built into our solutions to empower our customers to drive long-term value. With this strong foundation, we’re not just growing, we’re redefining what’s possible for industrial enterprises.”
Demand for AI-powered solutions from prior acquisitions – Copperleaf, Poka, Ultimo, P2 and EmpowerMX – remains strong and continues to contribute meaningfully to IFS growth. The thriving global network of IFS strategic partners also played a key role in enabling continued scaling and deal size growth.
H1 Highlights:
AI and Innovation
• Launched Nexus Black: bespoke accelerator for industrial-grade scalability and security
• Acquired TheLoops: first agentic AI workforce for mission-critical industries
• Released IFS Cloud 25R1: made 200+ AI-driven capabilities
Market Momentum and Recognition
• EUR 15bn valuation amid soaring Industrial AI demand
• Only company named Customers’ Choice in the 2025 Gartner Peer Insights Voice of the Customer for EAM report
• IFS ranked #1 for EAM for fourth consecutive year, Gartner Market Share: Enterprise Software, Worldwide, 2024 report
• Named a Leader in two IDC MarketScape 2024-2025 Vendor Assessments in two IDC MarketScape 2024-2025 Vendor Assessments
• IFS appointed Advisor to UK Parliamentary Group on AI
23 Jul 25. RTX Corp: A Value Play, Top Pick in Aerospace. RTX posted a strong 2Q25 beat but lowered its 2025 adj. EPS outlook as a result of tariffs. We see a compelling valuation argument as we contemplate its steep discount to peers. We reiterate our OW-rating and increase our PT to $180 from $165. RTX is our new Top Pick in Aerospace.
Key takeaways
• We reiterate our Overweight rating and increase our PT to $180 from $165. RTX is our new Top Pick in Aerospace.
• Currently trading at a ~33% discount to GE on a NTM P/FCF basis and at a ~40% discount on a NTM EV/EBITDA basis, we see current valuation levels as compelling.
• In our view, RTX should be able to narrow the valuation gap to premium peers given its strong underlying fundamentals and demand across its end markets.
Reiterate Overweight Rating; Increase PT to $180 from $165
RTX reported a 2Q25 beat yesterday, driven by a strong top line and better than expected business segment operating profit, which came in ~5% and ~8% above consensus estimates, respectively. However, despite an earnings beat, RTX lowered its 2025 outlook for adj. EPS and adj. operating profit growth at Collins Aerospace and Pratt & Whitney due to tariff impacts. Though facing similar levels of tariff exposure (~$500mn impact to operating profit), GE Aerospace (not covered by MS Research) posted a 2Q25 beat and raise on July 17, further widening the valuation gap between the two companies. Currently trading at a ~33% discount to GE on a NTM P/FCF basis and at a ~40% discount on a NTM EV/EBITDA basis, we see a compelling valuation argument for RTX given its strong underlying fundamentals and continued demand across its segments. As we evaluate RTX’s relative discount to peers, we move RTX to our Top Pick in Aerospace. We view RTX’s ability to narrow the valuation gap with peers trading at a premium positively as its tariff exposure is within bounds, the GTF fleet management plan continues according to plan, and endmarkets in aerospace and defense provide tailwinds. In our view, the market is disproportionally penalizing RTX, creating a relative value opportunity and an attractive entry point. We reiterate our Overweight rating as we see risk reward skew positive and increase our PT to $180 from $165.
Increase PT to $180 from $165
We increase our PT to $180 from $165. We reach our PT using 2026E FCF/share and applying a ~29x multiple. Our ~29x P/FCF multiple is ~4 turn premium to the high end of the range in which the stock traded prior to the announcement of the GTF contaminated metal issue of ~23x-25x NTM P/FCF. However, we note RTX continues to trade at a discount to its closest large-cap peer, GE Aerospace, currently trading at a ~33% discount on a NTM P/FCF basis and a ~40% discount on a NTM EV/EBITDA basis. In our view, RTX should not be trading at such a steep discount to GE. Our 2026 P/FCF multiple of ~29x is a ~25% discount to GE, which we view as warranted. While investor sentiment has over-penalized RTX for near-term execution challenges, we see its diversified end market exposure and improving fundamentals supporting a narrower valuation gap over time. We note RTX is currently trading at ~26x NTM P/FCF and ~16.7x NTM EV/EBITDA.
Model Changes
We update our model to incorporate 2Q25 results and management commentary. We modestly increase our 2025E – 2028E revenue by ~2% as we flow through better than expected results. We lower our 2025 business segment operating margin by ~10bps as we decrease Collins margins by ~40bps, increase Pratt & Whitney margins by ~20bps (driven by higher sales), and increase Raytheon margins by ~30bps. As we flow these changes through our model, we increase our 2025E adj. EPS to $5.90 from $5.86. We also increase our 2025E FCF to ~$7bn from ~$6.9bn. We lower our Collins Aerospace margins to ~17.3% from ~18.7% in 2026 and to ~18.3% from ~19.1% in 2027. As a result, we lower our adj. EPS to $6.70 from $6.90 in 2026 and to $7.40 from $7.50 in 2027.
Updated 2025 Outlook
RTX updated its 2025 outlook for sales of $84.75bn-$85bn (vs. prior $83bn-$84bn), adj. EPS of $5.80-$5.95 (vs. prior $6.00-$6.15), and FCF of ~$7.0bn-$7.5bn (unchanged). Management noted that the updated outlook includes the expected impact of tariffs and changes associated with recently enacted tax legislation.
$500mn Tariff Impact in 2025
RTX now estimates a $500mn impact to operating profit from tariffs in 2025, net of mitigations, with ~$125m of costs already incurred in 1H25. Management expects the associated cash impact to be ~$600m in 2025. The company is actively working on strategies to maximize its ability to mitigate tariff headwinds, including optimizing material flow, pricing actions, expanding USMCA coverage, qualifying additional parts for military duty-free exemptions, and maximizing the use of free trade zones. We note that RTX had previously estimated an ~$850m impact to operating profit and a ~$1bn impact to FCF in 2025 as a result of tariffs.
Collins Aerospace
Sales at Collins Aerospace increased ~9% YoY. Commercial aftermarket sales increased ~13% YoY, driven by a 20% increase in mods and upgrades, a 12% increase in parts and repair, and a 9% increase in provisioning. Commercial OE sales increased ~1% YoY, with lower volume on the 737 MAX offset by higher volume on other platforms, including the 787. Defense sales increased 11%, largely due to higher volumes across multiple programs and platforms. Adjusted operating profit increased ~9% YoY and margins were ~flat as higher commercial aftermarket and defense volume, favorable defense mix, and lower R&D expense were offset by unfavorable commercial OE mix and the impact of higher tariffs. Including the potential impact of tariffs, management now expects adjusted sales growth of MSD% (vs. prior LSD%) and adjusted operating profit growth of ~$275mn-$350m YoY (vs. prior outlook of ~$500m-$600m YoY growth).
Pratt & Whitney
Sales at Pratt & Whitney increased ~12% YoY. Commercial aftermarket sales increased ~19% YoY, driven by higher volume in large commercial engines and favorable mix in Pratt Canada. Commercial OE sales increased ~15%, driven by favorable mix in large commercial engines and higher Pratt Canada volume. Military sales were ~flat, driven by F135 volume, including the impact of contract award timing. Adjusted operating profit increased ~13% YoY and margins increased ~10bps as favorable commercial OE mix, higher commercial aftermarket volume, and lower R&D expense more than offset unfavorable commercial aftermarket mix, the impact of higher tariffs, and the 4-week work stoppage. Including the potential impact of tariffs, management now expects sales growth of LDD% (vs. prior HSD%) and adjusted operating profit growth of ~$200mn-$275mn YoY (vs. prior outlook of ~$325m-$400m YoY growth).
We continue to view it positively that there was no incremental news on the GTF. The estimated financial impact of the issue initially provided by management in September 2023 of $6-7bn ($3-3.5bn for RTX’s share) remained unchanged. RTX continues to focus on increasing PW1100 MRO output, which increased ~22% YoY and remains on track for a >30% increase in 2025. Management also noted a 12% YoY increase and 10% sequential increase in isothermal forging output.
Raytheon
Sales at Raytheon increased 6% YoY, driven by higher volume on land and air defense systems and higher volume on naval programs, which was partially offset by lower development program volume within air and space defense systems. Adjusted operating profit increased ~14% YoY and margins expanded ~80bps, primarily driven by favorable program mix and higher volume. International demand continues to be a tailwind for Raytheon, with management noting a trend towards more international mix in backlog. Including the potential impact of tariffs, management continues to expect adjusted sales growth of LSD%, with adjusted operating profit growth of ~$225mn-$300mn YoY (vs. prior outlook of ~$150mn-$225mn YoY growth).
23 Jul 25. Lockheed Martin Corp: Too Cheap to Ignore; Remain OW
$1.8bn in charges this qtr. took the market by surprise, compounding already-low sentiment. Valuation, however, for the largest US Defense pureplay has become too cheap to ignore at a time when global budgets are accelerating. Remain OW / PT to $530.
Key takeaways
• LMT recognized ~$1.8bn in charges in 2Q25 across multiple programs, including a major classified Aeronautics program and multiple helicopter programs at RMS
• Mgmt. upheld 2025 FCF outlook ($6.6-6.8bn), but suggested 2026 FCF would fall closer to~$6bn as program losses + pension pressure offset cash tax + WC tailwinds
• LMT trades cheapest among the Primes. We remain OW and lower our PT to $530 from $575
Value or Value Trap?
2Q25, in our view, reflected a kitchen sink qtr. from a program-loss standpoint (~$1.6bn in program changes and $169m in other charges). The question now from investors is whether LMT can work from here as a value play or whether continual program losses and a potentially murkier future for the F-35 will together hinder earnings / FCF growth, rendering LMT a value trap. We lower our PT to $530 from $575 as we flow through 2Q25 earnings / updated mgmt. commentary. We remain Overweight as we still see a number of bright spots in LMT’s portfolio (e.g., missiles / missile defense) and significant opportunities ahead (e.g., Golden Dome, F-35 internationally), and think the stock reflects attractive value at ~15.5x our 2026 FCF per share estimates (~40% discount to the broader market multiple).
Program Charges
LMT recognized ~$1.6bn in pre-tax program charges across Aeronautics and RMS. At Aeronautics, a classified program continues to pressure performance at the segment, which drove LMT to recognize a $950mn pre-tax loss in 2Q25. Notably, LMT recognized a ~$410mn pre-tax loss on this effort in 4Q24 after a program review. While details are scant given program classification, we note LMT has recognized a total of ~$1.775bn in losses related to this one program. With cumulative charges so far, this program is clearly significant in size. Mgmt. indicated that this capability is game-changing in nature for US capabilities.
In 2Q25, LMT also recognized ~$665m in program losses at RMS. These charges span two programs: the Canadian Maritime Helicopter Program ($570mn) and Turkish Utility Helicopter Program ($95mn).
Beyond the $1.6bn in program charges, LMT also recognized $169mn in other charges, including ~$66mn related to a fixed-asset write-off following the loss of the US Air Force’s Next Generation Air Dominance (NGAD) program. Boeing was announced as the winner of this program in March 2025.
Select Bright Spots
Despite the significant charges recognized in the quarter, we see a number of potentially overlooked bright spots in LMT’s 2Q25 print. Underlying Aeronautics profitability (~11% excl. charges) was stronger than cons. expectations of ~9.5% margins at the segment, driven by positive F-35 booking rate adjustments. We note LMT delivered 50 F-35s in the quarter, up 3 aircraft sequentially, and is on track to deliver 170-190 aircraft this year. With ~311 F-35s in current backlog and an incremental ~150 expected to hit backlog in 3Q25 (pending Lot 18/19 contract finalization), we see sufficient buffer for LMT to weather near-term, domestic procurement perturbations. Space Systems performance in 2Q25 also exceeded expectations with segment margins of ~10.9% vs. cons. of ~9.3% driven by higher booking rate adjustments at Commercial Civil Space.
FCF Moving Pieces
Despite the sizeable program losses recognized in 2Q25, mgmt. reaffirmed its 2025 FCF outlook of ~$6.6-6.8bn. The classified program at Aeronautics and tariff headwinds are pressuring cash by ~$500mn in 2025. Offsetting these headwinds are ~$400-600mn of cash tax benefits related to recent changes made via the One Big Beautiful Bill Act (i.e., R&D capitalization). In 2026, LMT faces additional Aeronautics program loss headwinds and ~$200-250m of pressure from a MFC classified program on which LMT recognized a sizeable program loss in 4Q24. New tax legislation presents a cash tailwind, but is more than offset by ~$1bn of anticipated pension headwind next year. All told, LMT suggested that 2026 FCF will be closer to $6bn (~12% y/y decline at guidance midpoint).
2025 Outlook Updates
Mgmt. reiterated 2025 guidance for sales ($73.75-74.75bn) and FCF ($6.6-6.8bn). Driven largely by 2Q25 program losses, LMT lowered outlook for segment operating profit (now $6.6-6.7bn from $8.1-8.2bn prior) and EPS (now $21.70-22.00 from $27.00-27.30 prior).
Lowering PT to $530
We lower our PT to $530 from $575 following 2Q25 results. We arrive at our price target of $530 by placing a ~20x multiple on base case 2026E FCF/share of $26.25. Our ~20x multiple reflects a ~20% discount to the S&P 500, which is in line with Defense’s historical discount to the market. Our prior PT of $575 leveraged a ~20x multiple on prior 2026E FCF/share of $29.25.
Post-2Q25 Model Updates
We update our model to factor in 2Q25 results and updated mgmt. commentary. In 2025, we lower GAAP EPS to $21.85 from $27.30, driven in large part by 2Q25 program charges (~$1.8bn pre-tax). We leave 2025 FCF largely unchanged at ~$6.73bn. In the outyears, we leave EPS unchanged at $29.80 in 2026 / $32.15 in 2027 / $34.40 in 2028. We update FCF estimates to ~$6.13bn in 2026, ~$6.34bn in 2027, and ~$7.62bn in 2028. We continue to project ~$3bn of buybacks annually over the 2025-2027 period,.
23 Jul 25. CSG Acquires Majority Stake in Arms Manufacturer ZVI Vsetin, a Traditional Czech Producer of Medium-Caliber Ammunition.
MSM Group, the Slovak subsidiary of the industrial group CSG, has signed a purchase agreement with the MPI Group to acquire ZVI a.s., a Czech manufacturer primarily focused on medium-caliber ammunition in 20mm and 30mm calibers. The transaction price was not disclosed, as per mutual agreement between the parties.
“ZVI Vsetín is an important and traditional player in the Czech defense industry, and its know-how in ammunition, weapon, and cannon production holds strategic value for the CSG group. While this acquisition is relatively small in size, it is both symbolically and practically very significant – we are decisively expanding our capacity for ammunition and weapons systems production directly on Czech soil,” said Jan Marinov, Head of the CSG Defence Division.
In addition to its 20mm ammunition, used for example by the Czech Air Force, ZVI is the only Czech producer of 30mm ammunition certified for MK44 Bushmaster II cannons. These cannons are used by many armed forces worldwide, including the Czech Armed Forces, particularly in the Pandur 8×8 armored vehicles. This type of ammunition will also be used in the newly procured CV-90 infantry fighting vehicles for the Czech Army. ZVI is also a qualified supplier for several foreign militaries. The company’s production capacity for medium-caliber ammunition is in the high hundreds of thousands of units per year. With this acquisition, CSG expands its portfolio to include medium-caliber ammunition, which it plans to supply to the Czech Army and Air Force, as well as export abroad.
Jaroslav Král, CEO of ZVI, commented on the transaction:
“CSG’s entry is a logical step in the further development of ZVI. With this partnership, the company gains not only a strong investor but above all a partner with significant export capabilities and extensive experience in growing defense-sector businesses. Furthermore, CSG will enhance ZVI’s supply chain by providing selected components – particularly energetic materials – that ZVI previously sourced from third parties. We are confident that this partnership marks the beginning of a new era of substantial growth for ZVI.”
CSG plans to invest in extensive modernization and expansion of ZVI’s production, primarily in anticipation of increased demand. Another priority is integrating ZVI into CSG’s export projects and embedding it further into the global defense industry supply chains. ZVI will become part of the CSG Defence Division. CSG also plans to invest in the development of new ammunition products in additional calibers and to place this production within ZVI’s facilities. This will result in a significant expansion of manufacturing capabilities within the Czech Republic. (Source: ASD Network)
23 Jul 25. Thales raises 2025 sales growth forecast on strong defence demand. French defence and aerospace group Thales (TCFP.PA) raised its 2025 sales growth forecast on Wednesday after posting higher first-half sales and profit amid higher military spending in Europe. Europe’s largest defence electronics firm also said its widely watched adjusted operating profit rose 12.7% on a comparable basis to 1.25 bn euros, fractionally above market forecasts, led by the Aerospace and Defence units. The company, whose portfolio spans fighter radars to seat-back screens for airlines, now expects 2025 sales growth of between 6% and 7% instead of the 5% to 6% it had forecast previously, pointing to full-year revenue between 21.8 bn euros ($25.62 bn) and 22 bn euros. (Source: Reuters)
22 Jul 25. Quantum Systems Takes 10% Stake in Ukrainian Defence Robotics Firm Frontline. Quantum Systems – the German-Ukrainian leader in unmanned aerial intelligence solutions, today announced the finalization of an investment agreement with Frontline, the Ukrainian defence robotics company and a member of the government-backed defence tech cluster Brave1.
The deal marks a new phase in their collaboration under the Memorandum of Strategic Partnership, signed in Kyiv in April 2025.
As part of this agreement, Quantum Systems will acquire a 10% stake in Frontline, with an option of increasing its share to up to 25% over the next 12 months. This strategic agreement is focused on building deeper industrial, technical, and strategic cooperation between the two companies. It also strengthens their alliance and reflects growing synergy between their defence innovation ecosystems. The partnership also aims to scale manufacturing in Ukraine and strengthen ties within the broader European defence ecosystem.
The close collaboration between Frontline and Quantum Systems is already showing tangible results. Frontline has begun integrating a broader pool of European-sourced components facilitated by Quantum Systems into its robotic systems, enhancing their performance and resilience in combat environments.
Ukraine not only has a high demand for excellence in their defence products, but also for excellence in their defence production capacity. Quantum Systems and Frontline are committed to providing both and our deepening partnership is a reflection of this. Together, we are proud to be the first movers in Euro-Ukrainian defence manufacturing.
Florian Seibel, co-CEO and co-founder, Quantum Systems
The new investment follows Frontline’s recently closed seed round, which raised $800,000 from both Ukrainian and international investors, including Nezlamni, Startup Wise Guys, Angel One, and Freedom Fund along with several undisclosed partners. The fundraising round lasted approximately six months — from Frontline’s first pitch at Brave1’s Investor Demo Day to the final closing of the deal.
The new funding will be directed towards scaling Frontline’s manufacturing capacity. It will also support the expansion of critical defence technologies, including Frontline’s multi-rotor reconnaissance drones “Zoom” and “Linza” often referred to as “Ukrainian Mavics” and a kinetic counter-UAS system. Both technologies are in high demand among military units and play a vital role in modern combat operations in Ukraine.
Quantum Systems becoming a strategic investor marks a key milestone for Frontline. This partnership goes beyond capital—it reinforces our shared vision and accelerates our mission to scale battlefield-proven technologies and turn real frontline feedback into next-generation military robotics.
Yevhenii Tretiak, CEO, Frontline
The agreement reflects confidence in Frontline’s technological capabilities and operational execution, while also signaling a broader intent to deepen Ukrainian-German cooperation in the defence technology sector. Together, the companies aim to build a scalable, cross-border model for defence industrial integration in Europe. (Source: UAS VISION)
22 Jul 25. Safran Announces the Acquisition of Flight Control and Actuation Activities from Collins Aerospace. Safran today announces the closing of the acquisition of Collins Aerospace’s flight control and actuation activities which are mission critical systems for commercial and military aircraft, and helicopters. With this transaction, Safran becomes a global leader in flight control and actuation systems and is well-positioned for next-generation platforms.
The acquired business employs approximately 4,000 people across eight main facilities in Europe (UK, Italy and France) and Asia, and has activities in Poland, USA and India. Flight control and actuation systems from Collins are integrated on board 180 platforms, and generated revenue of around $1.55 bn in 2024 and an EBITDA of about $130m. This business will be consolidated from August 1st, 2025 within Safran Electronics & Defense.
Olivier Andriès, CEO of Safran stated: “This acquisition offers a unique opportunity to solidify our position in mission critical flight control and actuation functions and create a global leader in this domain. It will enable us to deliver a comprehensive offering to our customers and position us extremely well for next-generation aircraft. This business fits perfectly with both our product portfolio and our DNA with a high technology content, recurring aftermarket sales and profitable growth.”
In order to meet the decarbonization ambition of the industry, the next generation of single-aisle aircraft will have disruptive architecture features and be increasingly electrified requiring a breakthrough in flight control and actuation systems. The combination of Collins’ best-in-class hydraulic and mechanical actuation capabilities with Safran’s strong know-how in electro-mechanical actuation and electronics will enable the Group to meet this challenge.
This acquisition also brings added complementarity for Safran in helicopter and nacelle actuation where the Group is already among the global leaders. In the defense segment, Safran is enhancing its offer in actuation and flight control solutions for military aircraft and missiles, reinforcing the growth of its sovereignty activities.
The key strategic benefits of this acquisition for Safran include:
• A highly complementary product offering, positioning Safran as a sector leader with an expanded portfolio in flight control and actuation systems,
• A well-balanced exposure across commercial, military, and helicopter segments with strong positions on both mature and growing platforms,
• Complementary expertise in hydraulic and electromechanical actuation, strengthening Safran’s capability to support the next-generation aircraft,
• Attractive recurring revenue potential from service activities, representing approximately 40% of turnover.
• Compelling value creation supported by short-medium term cost synergy potential with further upside from commercial synergies
The enterprise value of the acquired business amounts to $1.8bn, with an accretive impact on Safran earnings per share from year one. The transaction is expected to generate approximately $50m of annual pre-tax run-rate cost synergies by 2028.
In order to respect the regulatory requirements, Safran has simultaneously completed the sale of its North American electro-mechanical actuation business, with approximately $65M of sales in 2024, to Woodward, Inc. (Source: ASD Network)
21 Jul 25. Thales Aims to Acquire TRS AMDC2, Key Supplier of NATO Command Systems. On July 16, Thales, a global leader in advanced technologies for the Defense, Aerospace, and Cybersecurity & Digital sectors, announced it has signed a Memorandum of Understanding (MoU) with RTX to acquire all shares of Thales Raytheon Systems Air and Missile Defense Command And Control SAS – TRS AMDC2 -, a French joint venture currently equally owned by entities of Thales and RTX.
For over two decades, TRS AMDC2 has played a central role in developing NATO’s Air Command and Control System (ACCS). This strategic program aims to provide member states and the Alliance’s command structure with a unified air operations management system.
As part of an ongoing acquisition project, employee representative organizations will be consulted to ensure a transition in consultation with employees. The acquisition is expected to be finalized by the end of 2025, subject to competition authority approval and the usual regulatory authorizations.
This operation could mark a turning point for TRS AMDC2, consolidating its position as a strategic supplier to NATO in a highly sensitive and technological field. (Source: Google/https://www.aerocontact.com/)
15 Jul 25. EuroUSC Italia rebrands as Unifly Consulting. EuroUSC Italia, a specialist in drone regulation and risk assessment, has rebranded as Unifly Consulting, marking full integration into the Unifly group.
By combining EuroUSC Italia’s regulatory expertise with Unifly’s advanced digital infrastructure, this move enables deeper collaboration and is designed to deliver a comprehensive foundation for drone operations, from risk assessment and safety cases to seamless UTM deployment.
With this integration, Unifly’s comprehensive portfolio now offers enabling services to support the full spectrum of autonomous flights, from regulatory consulting and safety assessments to scalable UTM platform deployment. This evolution therefore enhances Unifly’s capacity to support safe and efficient drone operations across Europe and globally.
EuroUSC Italia has built a strong reputation over more than ten years as a trusted partner to UAS operators, OEMs, and public authorities. Known particularly for pioneering tools such as SAMWISE, the first online platform enabling structured and rapid SORA (Specific Operations Risk Assessment) analysis, the team has played a critical role in enabling complex drone operations with confidence and compliance. The mission to support the safe integration of UAS into the airspace continues under the new Unifly Consulting brand.
Unifly Consulting will hold a webinar in collaboration with DJI, unveiling its new identity and sharing its knowledge of SORA 2.5 and its potential to unlock UAS operations at scale. The webinar will take place on July 22 at 15:00 with registration details to be announced soon.
(Source: www.unmannedairspace.info)
21 Jul 25. Ukrainian Drone Maker TFL Secures Funding from EU, US, and Canadian Investors. Ukrainian defense technology company The Fourth Law (TFL) has attracted investment from venture funds and private investors across the EU, the United States, and Canada. TFL develops TFL-1 guidance modules – compact, scalable components engineered for mass production at a rate of hundreds of thousands per month. Their affordability makes it possible to equip every FPV drone with precision targeting capabilities.
The module enables the drone to autonomously lock onto its target during the final 500 meters of flight, using artificial intelligence algorithms for navigation. It is noted that the system can identify the type of stationary or moving target and fly precisely to its center, regardless of various obstacles.
In addition to its modules, The Fourth Law also supplies the Defense Forces with Lupinis-10-TFL-1 systems (both day and night versions) — available as individual UAVs or as full unmanned aerial systems (UAS), which include a hundred 10-inch FPV drones equipped with TFL-1 modules, a ground control station, and supporting equipment.
“These drones are capable of striking targets at distances of up to 30 kilometers while carrying a 1 kg payload, and up to 3.5 kg at shorter ranges. Beyond the Lupinis platform, the TFL-1 module has also been integrated into drones from over a dozen major FPV manufacturers,” the company stated.
Yaroslav Azhniuk, the company’s founder and CEO, stated:
“Mass-scalable drone autonomy is arguably the most important defense technology of this decade. No one in the world understands this better than Ukraine’s Defense Forces. We are doing the most important work of our lives, and the funding from investors is a critical catalyst for strengthening the defense capabilities of the Free World.”
Colonel Ruslan Shevchuk, commander of the 58th Independent Motorized Infantry Brigade, shared that since March 2025, the brigade’s drone pilots have been using drones equipped with the TFL-1 system, which has proven effective in combat.
“It helps overcome electronic warfare interference and acquire and strike targets in difficult conditions. Its advantages are most evident during special missions. Based on our operational experience, this is a system that truly works,” Shevchuk shared.
TFL states that its products have undergone codification procedures and are being used by dozens of units within the Ukrainian Defence Forces. The company has offices in the United States, the European Union, and Ukraine. (Source: UAS VISION/MILITARNYI)
21 Jul 25. Ambiq Micro, Inc. (“Ambiq”), a technology leader in ultra-low-power semiconductor solutions for edge AI, today announced the commencement of its initial public offering of 3,400,000 shares of its common stock. The initial public offering price is expected to be between $22.00 and $25.00 per share. Ambiq expects to grant the underwriters a 30-day option to purchase up to an additional 510,000 shares (solely to cover over-allotments, if any) of its common stock at the initial public offering price, less underwriting discounts and commissions. Ambiq has applied to list its common stock on the New York Stock Exchange under the ticker symbol “AMBQ.”
BofA Securities and UBS Investment Bank are acting as joint lead book-running managers for the proposed offering. Needham & Company and Stifel are acting as joint book-running managers for the proposed offering.
A registration statement on Form S-1, including a prospectus, relating to the proposed offering of securities has been filed with the U.S. Securities and Exchange Commission but has not yet become effective. Accordingly, these securities may not be sold, nor may offers to buy be accepted, prior to the time the registration statement becomes effective. The proposed offering will be made only by means of a prospectus. Copies of the preliminary prospectus relating to the proposed offering may be obtained by contacting: BofA Securities, NC1-022-02-25, 201 North Tryon Street, Charlotte, North Carolina 28255-0001, Attention: Prospectus Department, or by email at or UBS Securities LLC, Attention: Prospectus Department, 1285 Avenue of the Americas, New York, New York 10019, by telephone at (888) 827-7275 or by emailing .
This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, 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.
About Ambiq
Ambiq’s mission is to enable intelligence (artificial intelligence (AI) and beyond) everywhere by delivering the lowest power semiconductor solutions. Ambiq enables its customers to deliver AI compute at the edge where power consumption challenges are the most severe. Ambiq’s technology innovations, built on the patented and proprietary sub-threshold power optimized technology (SPOT®), fundamentally deliver a multi-fold improvement in power consumption over traditional semiconductor designs. Ambiq has powered over 270 m devices to date.
18 Jul 25. York to expand services from space to ground via ATLAS acquisition. York Space Systems, a key supplier for the Space Development Agency’s proliferated constellation, announced today it is acquiring ATLAS Space Operations, a ground software provider.
“The move brings York a powerful, software-led ground architecture that simplifies operations, removes integration barriers and enhances space-to-ground resilience,” the company said in a statement.
York builds small satellites for a range of government and commercial customers, among them the Space Development Agency and its Proliferated Warfighter Space Architecture — a mega constellation of small missile warning and data transport satellites in low Earth orbit. The company is on contract to build 136 satellites for the agency’s data transport layer.
The acquisition of ATLAS by York’s holding company is awaiting approval from the FCC. If approved, it will give York access to the company’s global antenna network, undergirded by a software platform that enables real-time tasking, cloud-based mission data delivery and automated scheduling.
That capability, York says, will play a significant part in its proposal for the Pentagon’s Golden Dome architecture, a homeland missile defense capability that will be composed of space and ground-based sensors and interceptors. The release notes that York, with ATLAS, offers “a next-generation defense solution that unifies spacecraft, software, and ground operations to deliver full-spectrum capabilities across contested environments.”
York’s General Manager Melanie Pressier told Defense News in June the company believes there’s “plenty of work to go around” if Golden Dome moves forward at the pace officials have suggested. President Donald Trump said the plan is to have an operational capability in the next three years — an aggressive timeline that suggests the Pentagon will need to tap existing product lines and vendors to scale up their systems and deliver in larger quantities.
Pressier echoed that sentiment, pointing specifically to the SDA’s constellation.
“Many of the key capabilities for the Golden Dome are actually being delivered by the Proliferated Warfighter Space Architecture today,” she said. “I think a very important attribute of the PWSA is it’s all interoperable.” (Source: Defense News)
14 Jul 25. SES acquisition of Intelsat approved by the U.S. FCC.
SES S.A. (“SES”) and Intelsat S.A. (“Intelsat”) announce an agreement for SES to acquire Intelsat through the purchase of 100% of the equity of Intelsat Holdings S.a.r.l. for a cash consideration of $3.1bn (€2.8bn) and certain contingent value rights. The combination will create a stronger multi-orbit operator with greater coverage, improved resiliency, expanded suite of solutions, enhanced resources to profitably invest in innovation, and benefit from the collective talent, expertise, and track record of both companies.
The combination will deliver greater value for customers and partners, as well as providing a compelling alternative in the new era of growth, innovation, and competition for the satellite communications industry.
The transaction, which is subject to relevant regulatory clearances/filings and customary provisions concerning cooperation and measures in seeking such regulatory clearances, which are expected to be received during the second half of 2025, is fully supportive of SES’s financial policy and is underpinned by expected total synergies equivalent to 85% of the total equity value of the transaction. The transaction has been unanimously approved by the Board of Directors of both companies and Intelsat shareholders holding approximately 73% of the common shares have entered into customary support agreements requiring them to vote in favour of the transaction.
Transaction highlights
• Delivers €2.4 bn (NPV) of synergies (85% of equity consideration) with 70% executed within 3 years after closing.
• Expands multi-orbit satellite-based capabilities, spectrum portfolio, and global ground network to serve customers.
• Increases revenue in high demand and growing Networks segments representing ~60% of expanded revenue base.
• Combines complementary investment in space, ground, and network innovation to unlock future value and opportunity.
Brings together a wealth of collective talent, expertise, engineering knowledge, and go-to-market capabilities.
• Company will benefit from gross backlog of €9bn, revenue of €3.8bn, and Adjusted EBITDA of €1.8bn.
• Medium-term Adjusted EBITDA growth driving future free cash flow (FCF) generation outlook.
Commitment to investment grade metrics with net leverage below 3 times within 12-18 months after closing.
• Commitment to annual dividend of €0.50 per A-share with expanded FCF base supporting potential for future increases.
Adel Al-Saleh, CEO of SES, said, “This important, transformational agreement strengthens our business, enhances our ability to deliver world-class customer solutions, and generates significant value for our shareholders in a value accretive acquisition which is underpinned by sizeable and readily executable synergies.
In a fast-moving and competitive satellite communication industry, this transaction expands our multi-orbit space network, spectrum portfolio, ground infrastructure around the world, go-to-market capabilities, managed service solutions, and financial profile. I am excited by the opportunity to bring together our two companies and augment SES’s own knowledge base with the added experience, expertise, and customer focus of the Intelsat colleagues.
Going forward, customers will benefit from a more competitive portfolio of solutions with end-to-end offerings in valuable Government and Mobility segments, combined with value-added, efficient, and reliable offerings for Fixed Data and Media customers. This combination is also positive for our supply chain partners and the industry in creating new opportunities as satellite-based solutions become an increasingly integral part of the wider communications ecosystem.
Our expanded business will deliver sustained EBITDA growth and strong cash generation, in turn supporting incremental profitable investment in capabilities and solutions to fulfill rapidly expanding and evolving customer demand while also delivering sustained returns to shareholders.”
David Wajsgras, CEO of Intelsat, said, “Over the past two years, the Intelsat team has executed a remarkable strategic reset. We have reversed a 10-year negative trend to return to growth, established a new and game-changing technology roadmap, and focused on productivity and execution to deliver competitive capabilities. The team today is providing our customers with network performance at five 9s and is more dedicated than ever to customer engagement and delivering on our commitments. This strategic pivot sets the foundation for Intelsat’s next chapter.
By combining our financial strength and world-class team with that of SES, we create a more competitive, growth-oriented solutions provider in an industry going through disruptive change. The combined company will be positioned to meet customers’ needs around the world and exceed their expectations.”
All financial information in this press release is stated using a foreign exchange (FX) rate of €1: $1.09. Pro forma (combined) revenue and gross backlog is adjusted to eliminate intercompany transactions. Pro forma leverage is after acquisition costs including related fees. The financial outlook assumes nominal satellite launch schedule and nominal satellite health status. Net Present Value (NPV) of expected synergies includes expected realization costs. Further information regarding the financial information presented is provided below.
Overview of the transaction
On closing of the transaction (subject to receipt of relevant regulatory clearances and other relevant requirements expected during the second half of 2025), SES will pay $3.1bn (€2.8bn) to acquire 100% of the equity of Intelsat Holdings S.a.r.l. in a transaction which implies an Enterprise Value of $5.0bn (€4.6bn). The transaction will be financed from existing cash and equivalents (which stood at €2.4bn on March 31, 2024) and the issuance of new debt, including hybrid bonds. Additionally, SES will issue contingent value rights in respect of a portion of any potential future monetization of the combined collective usage rights for up to 100 MHz of C-band spectrum.
Prior to closing, both company’s existing management teams will maintain their focus on executing against their respective near-term business and financial objectives, as well as closing of the transaction.
The combined SES will continue to be headquartered and domiciled in Luxembourg, while maintaining significant presence in the U.S., notably in the greater Washington, D.C. area.
Highly accretive acquisition
The transaction will be free cash flow accretive to SES from Year 1 and brings together two trusted operators with a combined gross contract backlog of €9 bn, growth-oriented portfolios concentrated on Networks segments with expanding demand, shared vision of delivering seamless end-to-end customer solutions, and complementary investment in innovation, while also sharing strong balance sheet metrics and long-term cash generation fundamentals.
By integrating the two companies, SES expects to deliver synergies with a total net present value (NPV) of €2.4bn (after approximately €155m of estimated realization costs), representing an annual run rate of €370m of which approximately 70% is anticipated to be executed within 3 years after closing of the transaction. The NPV of the synergies is equivalent to 85% of the total equity value of the transaction, while opportunities to realise further synergies will be explored before and after closing.
Most of the synergies are expected to be executed from the combination of selling, general, and administrative savings as well as optimization of third-party capacity costs and future efficiencies in procurement. The remaining synergies will be captured from optimising the combined satellite fleets and ground infrastructure with the process expected to start soon after closing.
Creating a stronger multi-orbit operator in the new market landscape
Bringing together these two companies, with the associated synergies, will create a stronger multi-orbit operator better able to compete in a fast-moving satellite communications landscape and respond to the evolution of competing communications technologies.
With a combined fleet of more than 100 Geostationary Earth Orbit (GEO) and 26 Medium Earth Orbit (MEO) satellites, the combined SES will benefit from enhanced coverage, greater network resiliency, complementary spectrum (C-, Ku-, Ka-, Military Ka-, X-band, and Ultra High Frequency) rights, and improved service delivery utilizing an expanded network of ground segment assets.
By end-2026, 8 new GEO (including 6 software-defined) satellites and 7 new MEO (O3b mPOWER) satellites are expected to be launched adding further redundancy and additional growth capacity.
On a pro forma basis, Government, Mobility, and Fixed Data segments with expanding customer demand for reliable, high-performance connectivity solutions anywhere on land, at sea, or in the air will represent around 60% of SES’s total expanded revenue base of €3.8 bn, underpinning the group’s orientation to valuable growth segments.
The integrated company will have a stronger financial profile compared with the standalone SES, with combined gross backlog of €9 bn (on December 31, 2023) underpinning future cash flow visibility, expected Adjusted EBITDA of €1.8 bn (year ended December 31, 2024) demonstrating robust profitability, and expected Adjusted EBITDA less CapEx of €0.8 bn (year ended December 31, 2024) supporting recurring cash generation fundamentals.
In turn, the stronger financial profile enhances the ability to better invest in future network infrastructure, customer solutions, and future use-cases and/or business diversification opportunities with a better risk profile, than could be done by the two companies on a standalone basis.
Strengthening competitive positioning with enhanced customer solutions
With the creation of a stronger multi-orbit operator, customers across Government, Mobility, Fixed Data, and Media segments will benefit from an expanded set of capabilities and solutions which will enable them to expand their network reach, add further resiliency, improve productivity across their operations, and bring world-class experiences to their end-users.
The combined company will be able to better meet growing Government demand for secure, reliable, and high-performance connectivity for a wide range of mission-critical applications. Customers will benefit from the integrated, multi-orbit solutions of both companies and their expertise in delivering trusted services for some of the most demanding government agencies and missions around the world.
In Mobility, customers will be better served from bringing together the two companies’ complementary offerings, notably Intelsat’s commercial aviation division which today is serving nearly 3,000 connected aircraft, and SES’s maritime business which includes supporting five major cruise line operators via fully managed, multi-orbit connectivity agreements. The combination will also support the evolving needs of channel partners across the segments.
In Fixed Data, customers will be able to take advantage of the combined company’s expanded multi-orbit network coverage, complementary innovations in software-defined delivery, and competitive offerings capable of seamless integration with cloud and 5G applications. Both companies have a proven record serving the requirements of major telecommunications companies, mobile network operators and cloud service providers in this growth segment.
In Media, the transactions brings together complementary capabilities for customers including pay-TV operators, free-to-air/free-to-view platforms, public and private broadcasters, and sports & events brands who will have access to global audience reach with improved redundancy features via a competitive range of broadcast solutions, plus additional value-added services.
Building sustained total shareholder return
Based on the 2024 financial outlook, the combined company is expected to generate approximately €3.8bn in annual revenue (after adjusting for intercompany eliminations) and is expected to deliver low- to mid-single digit average annual growth over the medium-term. Growth will be driven by the combination of high growth Government, Mobility, and Fixed Data businesses, anchored by a Media business with solid cash generation fundamentals, despite contracting capacity demand in mature markets due to expansion of terrestrial broadband networks and changing consumer viewing habits against which the combined company will be better positioned to compete.
Including the benefit of OpEx synergies, 2024 pro forma Adjusted EBITDA of approximately €1.8bn is expected to increase by a mid-single digit average annual growth rate. Adjusted EBITDA includes around €175 m of Intelsat non-cash revenue.
The two companies are expected to invest combined CapEx of approximately €1 bn in 2024, with an average of €600-650 m per annum for the period 2025-2028 including synergies. The combination of growing EBITDA and decreasing CapEx will support future free cash flow expansion, supporting future investment in innovation and shareholder returns.
The transaction is expected to deliver an internal rate of return of more than 10%. On closing, Adjusted Net Debt to Adjusted EBITDA is forecast to be around 3.5 times before reducing to below 3 times within 12-18 months after closing, consistent with SES’s commitment to maintain investment grade balance sheet metrics. SES will maintain an annual base dividend of €0.50 per A-share (€0.20 per B-share) with a stable to progressive dividend policy.
Guggenheim Securities acted as lead financial advisor to SES. Morgan Stanley acted as co-financial advisor. Deutsche Bank Securities Inc also acted as a financial advisor. Morgan Stanley & Co LLC and Deutsche Bank AG, Filiale Luxembourg are providing committed financing for the transaction. Both Guggenheim Securities and Morgan Stanley & Co LLC rendered a fairness opinion to SES’s Board of Directors. Gibson, Dunn & Crutcher, Arendt & Medernach, Hogan Lovells, and Freshfields served as legal counsel to SES.
PJT Partners served as financial advisor to Intelsat and rendered a fairness opinion to the Intelsat S.A. Board of Directors. Skadden, Arps, Slate, Meagher & Flom, and Elvinger Hoss Prussen served as legal counsel to Intelsat.
Financial information presented in this release
Accounting recognition and measurement principles: SES financial information presented using the recognition and measurement principles of International Financial Reporting Standards (IFRS). Intelsat financial information uses those of U.S. Generally Accepted Accounting Principles (GAAP). The financial information presented for SES and Intelsat does not apply a consistent set of accounting policies.
Currency conversion: all financial numbers based on an assumed foreign exchange (FX) rate of €1: $1.09. Pro forma financial information are aggregations of the corresponding SES and Intelsat financial information, adjusted for the elimination of material intra-group transactions. Financial Outlook information is conditional on
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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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