25 Oct 19. SCISYS Group PLC (“SCISYS” AIM SSY; ESM: SCC), the supplier of bespoke software systems, IT-based solutions and support services to the space, media & broadcast, government, defence and commerce sectors, is pleased to announce that it has received regulatory approval from the German Federal Ministry of Economics and Energy (Bundesministerium für Wirtschaft und Energie) in respect of the anticipated acquisition by CGI Group Holdings Europe Limited of SCISYS Group plc (“Acquisition”). All of the general regulatory and anti-trust/competition conditions relating to the Scheme as set out in paragraph 3.1 of Part 5 of the Scheme Document have now been satisfied.
Effective Date and Timetable
Completion of the Acquisition remains subject to the satisfaction or (if capable of waiver) waiver of the remaining Conditions, including the sanction of the Scheme by the High Court.
A court hearing has been scheduled for 30 October 2019 at which it is expected that the date of the Court Hearing to sanction the Scheme will be set. Once the Court Hearing date has been determined, a further announcement will be made setting out the final expected timetable for completion of the Acquisition, including for the proposed cancellation of the listings of SCISYS Ordinary Shares.
Capitalised terms used but not otherwise defined in this announcement have the meanings given to them in the Scheme Document.
24 Oct 19. Raytheon profit beats estimates, raises 2019 forecast on higher weapons demand. U.S. weapons maker Raytheon Company (RTN.N) reported better-than-expected third-quarter profit on Thursday and raised its full-year earnings and sales outlook, helped by higher demand for space programs, weapons and missile warning systems.
Shares of the maker of the Patriot missile-defense system were up 2.3% in morning trading.
During an interview with Reuters on Thursday, Chief Financial Officer Toby O’Brien said higher profit margins due to timing were helpful in the quarter and that across the business units, “the segment margins of 12.1% exceeded our expectations.”
The company maintained its revenue growth expectations of 6% to 8% in 2020, he said.
Massachusetts-based Raytheon and other U.S. weapons makers are expected to benefit from the $733bn defense bill for fiscal 2020, which is about 2% higher than the bill for 2019.
Sales of U.S. military equipment to foreign governments fell slightly, however, in the government’s fiscal year ended Sept. 30.
The space and airborne systems business, Raytheon’s second biggest by revenue, jumped 14.4% to $1.94bn, on higher sales from classified programs and Next Generation Overhead Persistent Infrared (Next Gen OPIR) missile warning program. Margins in the unit rose to 14% from 13.2%.
Sales in Raytheon’s missile systems unit, which makes radar threat-countering high-speed anti-radiation missiles and rapid-fire, radar-guided guns for ships, rose 4% to $2.17bn in the quarter. But margins in the unit fell to 10.1% from 12.3%.
After the quarter ended, Raytheon was selected by the U.S. Army to develop the Lower Tier Air and Missile Defense Sensor (LTAMDS) to upgrade the radar on Patriot missile defense systems.
O’Brien said there will be about 250 radars that will need to be upgraded, and that contract could be in “the plus or minus $20bn dollar range” over 10 years.
“This is a huge extension of the Patriot franchise,” O’Brien said.
O’Brien said on a conference call with analysts that Vista Equity Partners, joint venture partner in struggling cybersecurity unit Forcepoint, told Raytheon earlier this month it had exercised its put option “to require Raytheon to purchase their interest in Forcepoint.”
As a result, O’Brien said, the parties were engaged in a formal process to determine the fair value of their interest.
Forcepoint saw sales decline 3% from the same quarter last year.
The company now expects 2019 net sales to be between $29.1bn and $29.4bn, up from its prior range of $28.8bn to $29.3bn. It raised its full-year forecast for earnings per share from continuing operations to between $11.70 and $11.80, from $11.50 to $11.70. Earnings from continuing operations rose to $3.08 per share in the quarter, from $2.25 per share, a year earlier. Overall sales rose 9.4% to $7.45bn. Analysts on average had expected quarterly earnings of $2.86 per share on revenue of $7.28bn, according to IBES data from Refinitiv. (Source: Reuters)
24 Oct 19. CoorsTek agrees to sell Gaiser assets to SPT/Small Precision Tools. SPT to purchase Gaiser-branded bonding tools business for back-end semiconductor processing and other custom products.
CoorsTek, Inc., a leading global manufacturer of engineered ceramics, has entered into an agreement to sell select assets from its facility in Ventura, Calif., the “Gaiser facility,” to SPT/Small Precision Tools.
“Our Gaiser facility makes small tools for the back-end semiconductor processing market under the Gaiser brand and CoorsTek has decided to exit this market segment. Through the end of December, we will continue to deliver the highest quality products to our customers up until we close the operation and transition those assets to SPT,” says Jay Voncannon, chief financial officer for CoorsTek.
“Gaiser is highly complementary to SPT’s product and customer portfolio. Both were pioneers in the Semiconductor Bonding Tools business with over 100 years of combined experience in Fine Machining of High Tech Materials. By acquiring the Gaiser assets from CoorsTek, SPT intends to provide an alternate supply source to customers impacted by the closure of CoorsTek’s Gaiser facility. We are happy to be able to acquire and integrate the Gaiser assets into our organization,” says Peter Glutz, President and CEO of SPT.
As previously announced, CoorsTek will close the Gaiser facility and cease the production of all associated products manufactured therein, effective December 20, 2019. CoorsTek team members will remain employed through the closure of the Gaiser facility. CoorsTek will continue to offer on-site career transitional support to its employees with marketplace chaplains, outsourcing workshops and on-site job fairs.
CoorsTek and SPT intend to close the transaction by late January 2020. (Source: BUSINESS WIRE)
24 Oct 19. Piaggio Aerospace ready to be sold after securing contracts – administrator. Piaggio Aerospace is now in a position to entice buyers after securing a contract to sell at least 10 aircraft, the temporary administrator of the troubled company said.
Vincenzo Nicastro said in a statement that Piaggio Aerospace’s order portfolio was expected to reach its highest-ever value of 838m euros (£723m) by the end of this year.
“We are approaching our target to make the company attractive for a new owner,” Nicastro said
Piaggio Aerospace said on Thursday it had agreed to sell at least 10 of its Avanti EVO P180 twin turboprop executive transport aircraft to Saudi Arabia’s Al Saif Aviation. The agreement is “first evidence of strong confidence from the private sector, showing that Piaggio Aerospace is making its comeback to the market,” Nicastro said.
Last year Piaggio Aerospace – which also produces unmanned drones and supplies engine maintenance services – sought protection from creditors after the company, a unit of Abu Dhabi’s sovereign fund Mubadala, went into bankruptcy and lost its sole customer.
The Italian government appointed Nicastro in December last year with a task to revive the company and seek perspective buyers.
Piaggio Aerospace said it expected to sign new contracts by the end of this year, including one worth 262m euros to sell Italy’s Armed Forces nine new Avanti Evos and to refurbish 19 aircrafts, and a 160m euro contract with Rome to further develop its P1HH unmanned drone and to sell one of those systems to Italy’s Air Forces. (Source: Reuters)
23 Oct 19. General Dynamics profit rises but headwinds for jets in fourth quarter send shares lower. Gulfstream jet deliveries helped General Dynamics Corp (GD.N) report a 7.3% rise in quarterly profit on Wednesday, but shares fell as much as 4% after company officials said the fourth quarter would see more deliveries of less-profitable refurbished aircraft.
“Based on the inputs we’re seeing right now and the contracts that will deliver in the fourth quarter, we would expect to see, at this point, more pre-owned aircraft in sales in the fourth quarter,” Chief Financial Officer Jason Aiken told investors on a conference call, with margins on pre-owned aircraft not being as profitable as those for new jets.
In morning trading, shares of the U.S. aerospace and defence company fell 3.5% to $173.56 after earlier sinking about 4%. Shares had surged 2.5% on Tuesday ahead of the earnings report.
Revenue in the aerospace unit jumped 23% to $2.5bn (£1.9bn) in the third quarter ended Sept. 29, as new Gulfstream deliveries, a key metric for investors, increased to 38, from 27 a year earlier.
The company delivered some of its first G600 jets to customers in August.
Net earnings climbed to $913m, or $3.14 per share, in the quarter, from $851m, or $2.85 per share, a year earlier. Wall Street analysts estimated earnings per share of $3.06, according to Refinitiv data.
Revenue rose 7.3% to $9.76bn.
On Monday, General Dynamic’s Gulfstream division unveiled its widely expected G700 long-range jet, in a challenge to Bombardier Inc’s (BBDb.TO) flagship Global 7500 aircraft.
Chief Executive Office Phebe Novakovic told analysts on the conference call on Wednesday that the first flight of the new jet would be in December.
Profit margins at the aerospace unit fell nearly three percentage points to 15.8% from 18.5% in the same quarter last year as the company invested in G600 and G700 jet production.
Operating earnings from the Marine Systems unit, which makes ships and submarines for the U.S. Navy, rose to $209m, a 24% increase compared to the same quarter a year ago.
Combat systems, which makes tanks, saw its revenue go up 14% from last year to $1.7bn. In July, the U.S. State Department approved the possible sale to Taiwan of 108 of General Dynamics’ M1A2T Abrams tanks, angering China. Also in July, General Dynamics won a $2bn contract to continue supporting global security, engineering and supply chain missions for the U.S. Department of State. Total backlog at the end of third quarter 2019 was $67.4bn, compared with $67.7bn at the end of the second quarter. (Source: Reuters)
23 Oct 19. Lockheed Martin (NYSE: LMT) and TRC Companies (“TRC”) announced today a definitive agreement in which TRC will acquire Lockheed Martin Energy’s Distributed Energy Solutions group. The sale is part of Lockheed Martin Energy’s strategy to focus on products and technology for the energy marketplace and the Department of Defense. Lockheed Martin Energy is a line of business within Lockheed Martin focused on delivering targeted, flexible, affordable and effective energy products to customers all over the world.
Distributed Energy Solutions (DES) is a commercial business principally engaged in providing distributed energy services to electric and gas utility customers. DES provides comprehensive services for energy efficiency, demand response, beneficial electrification, distributed energy resource management, data analytics, IT/OT systems integration & operation, cyber security, cloud and web services.
TRC is a leading provider of end-to-end engineering, consulting and construction management solutions, fueled by innovative technology. TRC’s strong utility and industry relationships, along with the addition of the DES group, will position TRC as one of the leading players in the Advanced Energy segment. The combined capabilities offer best quality, industry leading and tech enabled solutions to a combined customer base and the segment in general.
23 Oct 19. BEI Precision Announces Acquisition of Wenzel Associates, Inc.. BEI Precision Systems & Space Company, Inc. (“BEI Precision”), a portfolio company of investment affiliates of J.F. Lehman & Company (“JFLCO”), announced today the recent acquisition of Wenzel Associates, Inc. (“Wenzel”).
Headquartered in Austin, Texas, Wenzel is a leading designer and manufacturer of crystal oscillators, fixed frequency systems, integrated microwave assemblies and synthesizers for military, space and commercial markets. Since 1978, Wenzel has defined the state-of-the-art in ultra-low phase noise crystal oscillators, manufacturing products that are capable of highly reliable and precise performance in extreme environments. Wenzel is supported by its Croven Crystals division in Whitby, Ontario, which supplies precision quartz resonators with extremely low noise and low sensitivity to vibration. Wenzel is the second add-on acquisition completed by BEI Precision under JFLCO’s sponsorship.
BEI Precision is a leader in high-accuracy positioning sensor technologies, providing advanced design, manufacturing and testing for reliable and resilient products and systems. BEI Precision’s core product lines, which are used primarily in mission-critical defense and space applications, include optical encoder-based and resolver-based positioning systems, scanners for situational awareness requirements and precision accelerometers. BEI Precision is headquartered in Maumelle, Arkansas with an operating subsidiary in Edinburgh, Scotland, and has a longstanding track record of technological innovation, with corporate roots dating back to 1862.
Mark Mirelez, Chief Executive Officer of BEI Precision, commented, “Our partnership with Wenzel will further strengthen both organizations’ abilities to meet the unique and evolving requirements of our customers, particularly in the space and military markets.”
“The Wenzel acquisition further enhances BEI Precision’s reputation as a provider of the highest-performance advanced sensing and positioning solutions for critical applications,” said Steve Brooks, Partner at JFLCO. “We are excited to welcome Wenzel and its strong engineering-focused culture to the BEI Precision platform,” added Will Hanenberg, Principal at JFLCO.
KippsDeSanto & Co. served as financial advisor to BEI Precision and JFLCO, and Jones Day (lead counsel) and Baker Hostetler (international trade, government contracts and defense security compliance matters) provided legal counsel. Sperry, Mitchell & Company served as financial advisor to Wenzel while McGinnis Lockridge were Wenzel’s legal representatives for the transaction.
23 Oct 19. Caterpillar cuts outlook and posts quarterly profit decline. Group’s shares fall 5 per cent as sales fall more than expected amid China weakness. Industrial bellwether Caterpillar lowered its profit outlook for the year and posted a bigger than expected decline in third-quarter revenues amid weak demand for construction and mining equipment. The Illinois-based company cut its full-year earnings forecast to between $10.90 to $11.40 a share, down from its previous outlook of between $12.06 to $13.06 a share. That forecast reflects “modestly lower sales” this year. Caterpillar, known for its bulldozers, backhoes and other large machinery, said it expects demand to be flat in the current quarter. Revenues fell 6 per cent from a year ago to $12.8bn in the penultimate quarter of the year as dealers reduced their inventories. That missed analyst expectations for $13.6bn, according to a Refinitiv survey of analysts.
Shares in the company fell 5 per cent to $127.49 in pre-market trade, having been up more than 5 per cent year-to-date as of Tuesday’s close. “Our volumes declined as dealers reduced their inventories, and end-user demand, while positive, was lower than our expectations,” said Jim Umpleby, chief executive. Dealers reduced their machine and engine inventories by $400m in the third quarter, compared with an increase of $800m in the same period a year ago. The decline in revenues was spread across all its major segments — construction, resources and energy industries. In construction, Caterpillar’s largest segment, revenues edged up in North America supported by road and non-residential building construction. However, they deteriorated in the Asia-Pacific region amid competitive pressures in China. Investors have been concerned about the impact on Caterpillar of a slowdown in the Chinese economy and the US-China trade war. Profits fell to $1.5bn or $2.66 a share in the three months ended in September, down from $1.7bn to $2.88 a share in the year-ago quarter, and was shy of Wall Street’s expectations. (Source: FT.com)
22 Oct 19. Boeing profits weighed down by costs from 737 Max crisis. US aerospace group expects regulators to approve aircraft’s return to service in Q4. Boeing profits and revenues took a hit in the third quarter from the costs of the crisis surrounding the 737 Max aircraft, which has been grounded by the world’s aviation authorities since March after two fatal crashes in just over five months. The US aerospace giant announced a 43 per cent drop in third-quarter earnings from operations to $1.3bn, on revenues down by 21 per cent in the third quarter to $19.98bn. To the surprise of many analysts it did not add to the $5bn charge taken in the second quarter to cover the costs of the global grounding of its fastest selling jet. Still, many expect further costs to emerge, with Boeing potentially facing cancellations the longer the grounding continues, while victims’ families and airlines have launched lawsuits. The crisis has delivered a severe blow to cash flow, with the group recording an outflow of $2.4bn against a positive inflow of $4.6bn in the same period last year.
Boeing said it had developed software and training updates for the 737 MAX and “continues to work with the Federal Aviation Authority and global civil aviation authorities to complete remaining steps toward certification and readiness for return to service”. While regulatory authorities would determine the timing and conditions of return to service, Boeing said it had assumed this would happen in the fourth quarter of 2019. Offering a sign of confidence despite intensifying controversy over the group’s handling of the crisis, Boeing said it expected to gradually increase the 737 production rate from 42 per month to 57 per month by late 2020. “Our top priority remains the safe return to service of the 737 MAX, and we’re making steady progress,” said Boeing President and Chief Executive Officer Dennis Muilenburg. “We’ve also taken action to further sharpen our company’s focus on product and services safety, and we continue to deliver on customer commitments and capture new opportunities with our values of safety, quality and integrity always at the forefront.” If the recertification of the aircraft is delayed, however, analysts said there was a risk that Boeing would have to further reduce production of the aircraft, which has already been cut from 52 a month. That could mean job losses, Boeing executives have indicated.
The latest hit to profits comes a day after Boeing announced the biggest executive reshuffle since the crashes. Kevin McAllister, an outside hire in 2016 to head the $60bn a year commercial aircraft division, has been replaced by 33-year Boeing veteran Stan Deal. The company has also come under fire in recent days over disclosures on information relating to the automated software system. A series of text messages sent in 2016 by two Boeing technical pilots — who prepare training simulators and manuals — were leaked last Friday. These appeared to suggest that Boeing had long been aware of problems with the aircraft’s anti-stall system, known as the manoeuvring characteristics augmentation system, or MCAS. However, Boeing has argued that these texts had been handed over to the Department of Justice after the first crash in October 2017 and were not about problems with the software but with the simulator. Nevertheless, the head of the FAA last week publicly reprimanded Boeing for failing to hand the texts to the regulator, casting fresh doubt on when the company might get the jet back in the air. On Wednesday victims’ families were briefed by Indonesian safety authorities about the conclusions of their investigation into the crash of the Lion Air jet in October 2018, which resulted in the death of 189 people. They cited design flaws in the MCAS and a lack of information for pilots on the behaviour of the system, according to Bloomberg. (Source: FT.com)
23 Oct 19. Plymouth Rock Technologies Announces Aerospace and Scientific Components Acquisition from Aerowave Corp.. Plymouth Rock Technologies Inc. (CSE: PRT) (OTC: PLRTF) (FSE: 4XA) (WKN: A2N8RH) (“Plymouth Rock”, “PRT”, or the “Company”) announced today that it has entered into a binding agreement to acquire the intellectual property, finished goods and inventory, as well as name rights and goodwill from Massachusetts based aerospace and scientific component manufacturer Aerowave Corporation (“Aerowave”).
Under the terms of the agreement, Plymouth Rock will pay Aerowave’s principals 50,000 common shares. The shares will be restricted securities under the US Securities Act and subject to Canadian securities legislation.
“The Aerowave acquisition brings significant strategic advantages and cost savings on components for Plymouth Rock’s multiple new products and platforms,” stated Dana Wheeler President and CEO. “The fifty year heritage and reputation of Aerowave is well known throughout the North American, global scientific and aerospace industries and allows us to access their current and past extensive customer base.”
Aerowave customers include but are not limited to:
- BAE Systems (UK and North America)
- MIT Lincoln Laboratory
- NASA/Jet Propulsion Labs
- Northrop Grumman
“Having known the executive team for many years, Plymouth Rock Technologies was the obvious partner to take Aerowave forward with a focused growth strategy,” stated Leon Kozul, President of Aerowave Inc. “The combined understanding and commitment of the PRT team is very well known within the NATO Defence and aerospace fraternity.” (Source: Google/https://finance.yahoo.com)
23 Oct 19. Thales: Launch of the 2019 Employee shareholding plan. Thales (Euronext Paris: HO) announces the launch of its 2019 employee shareholding plan. This offer is available to the employees of the Group in 34 countries and will cover nearly 80,000 Group employees and retirees. The purpose of this plan is to strengthen the relationship between Thales and its employees by offering them the opportunity to be more closely involved in the Group’s future objectives, performance and successes. The plan consists of offering existing shares held in treasury previously repurchased by Thales.
The terms and conditions of this offer are detailed below.
For any question regarding this offer, beneficiaries may contact their Human Resources Manager and/or any other person as specified in the documents delivered to the beneficiaries of the offer.
This is the press release required by the AMF pursuant to Article 212-4 5° of the AMF General Regulation and Article 19 of Instruction 2016-04.
2019 Employee Shareholding Plan: terms and conditions
This shareholding plan is available to Group employees in France, Australia, Austria, Belgium, Brazil, Canada, China, Czech Republic, Denmark, Finland, Germany, Hong Kong, India, Italy, Israel, Japan, Mexico, Norway, Netherlands, Philippines, Poland, Portugal, Qatar, Romania, Saudi Arabia, South Africa, Singapore, Spain, Sweden, Switzerland, Turkey, United Arab Emirates and United States of America, who will be eligible and members of the Group’s savings plan and under a Share Incentive Plan (“SIP”) scheme in the United Kingdom.
The employee shareholding plan will consist in offering existing treasury shares previously repurchased by Thales as part of a share buyback program authorized by the general shareholders’ meeting pursuant to Article L. 225-209 of the French Commercial Code. The sale of the shares to employees and retirees who are members of the Group’s savings plan will be implemented in accordance with the provisions of Articles L. 3332-18 et seq. of the French Labour Code, with the exception of the offer made in the United Kingdom, where it is carried out as part of a SIP.
On 27 November 2018, the Board of Directors decided to implement this employee shareholding plan and delegated to the Chairman and Chief Executive Officer the powers necessary for its implementation. In accordance with the decision of the Board of Directors, the offer will cover a maximum number of 550,000 shares.
The Chairman and Chief Executive Officer, on the authority of the Board of Directors, set the dates of the subscription period and set the purchase price by decision dated 11 October 2019. The acquisition price is equal to 80% of the reference price.
The reference price, noted by the Chairman and Chief Executive Officer on 11 October 2019 and equal to the average of the opening prices of the Thales share on the Euronext Paris market during the twenty (20) trading days preceding this date is 103,61 €. The acquisition price is therefore 82,89€. For the offer made in the United Kingdom, the acquisition price will be determined in accordance with the rules applicable in the context of a SIP.
As the shares acquired by employees are existing ordinary shares, they are fully comparable to the existing ordinary shares comprising Thales’ share capital.
Conditions of the plan
- Employee Shareholding Plan Beneficiaries: the beneficiaries of the offer are employees of companies in the scope of consolidation who have joined the group’s savings plan, regardless of the nature of their employment contract (fixed-term or permanent, full-time or part-time) and who have three months of employment. Retirees and early retirees of the Group’s French companies who joined the savings plan before they ceased to operate are beneficiaries of the offer, provided they have retained assets in the Group’s savings plan since their retirement or early retirement.
In the United Kingdom, the Thales shareholding plan is implemented as part of a Share Incentive Plan (“SIP”).
- Companies within the scope of the offer:
o Thales, a company with a share capital of 639,312,243 euros, whose registered office is located Tour Carpe Diem, place des Corolles, esplanade nord, 92400 Courbevoie, and
o Companies of the Thales group, in which Thales directly or indirectly holds more than 50% of the share capital, having their registered office in France, Australia, Austria, Belgium, Brazil, Canada, China, Czech Republic, Denmark, Finland, Germany, Hong Kong, India, Italy, Israel, Japan, Mexico, Norway, Netherlands, Philippines, Poland, Portugal, Qatar, Romania, Saudi Arabia, South Africa, Singapore, Spain, Sweden, Switzerland, Turkey, United Arab Emirates and United States of America and which have joined the group savings plan and in the United Kingdom via the SIP.
- Terms of participation: the shares will be acquired through a Fonds Commun de Placement d’Entreprise or directly depending on the country, and through a Trust under the SIP.
- Formulas for acquiring Thales shares: employees will be able to acquire Thales shares within the framework of a = “classic subscription formula”. Employees will receive a matching contribution from their employer corresponding to one free share for every four shares acquired, up to a maximum of ten matching shares for forty shares acquired.
- Voting rights: the voting rights attached to the shares will be exercised by the Supervisory Board of the shareholding fund (FCPE) and directly by the employees when the shares are held directly. Under the SIP, the voting rights attached to the shares may be exercised by the beneficiaries.
- Subscription’s cap: the annual payments of the beneficiaries of the offer into the group savings plan may not exceed, pursuant to Article L. 3332-10 of the French Labour Code, one quarter of their gross annual compensation for 2019.
- Holding / Lock-Up period: the employees participating in the offer must keep the corresponding FCPE units or shares held directly for a period of five years, unless an early exit event occurs as provided for in Article R. 3334-22 of the Labour Code or by local regulations. Concerning the vested shares in the SIP in the United-Kingdom, the keeping terms are different and depend on the nature of the share (partnership share or matching share).
Indicative timetable of the plan
- Subscription period: from October 24 2019 (inclusive) to November 15, 2019 (inclusive).
- Settlement of the offer: Scheduled for December 19, 2019.
These dates are provided for information purposes only and are subject to change.
Thales shares are admitted to trading on Euronext Paris (ISIN Code: FR0000121329).
This press release does not constitute an offer to sell or a solicitation to acquire Thales shares. The offer of Thales shares reserved for employees will be made only in countries where such an offer has been registered or notified to the competent local authorities and/or following the approval of a prospectus by the competent local authorities, or in consideration of an exemption from the obligation to prepare a prospectus or to register or notify the offer.
More generally, the offer will only be made in countries where all required registration procedures and/or notifications have been completed and the necessary authorizations have been obtained.
22 Oct 19. Lockheed Martin profit climbs, expects lower cash flow in 2020; shares gain. Lockheed Martin Corp (LMT.N) raised its estimate for 2019 earnings on Tuesday as quarterly profit climbed 9.2% amid improved sales of its F-35 fighter jets, sending shares higher even as it forecast a lower cash flow for next year.
The company also said the “preliminary outlook for 2020 assumes there is no impact from U.S. Government actions related to Turkey.” The U.S. and Turkey are embroiled in a dispute over a Russian missile defence system and its impact on Turkish defence purchases. (Read more here)
Lockheed estimated 2020 cash flow of $7.2bn, lower than its 2019 year-end estimate of $7.6bn, which disappointed investors. That had sent the stock down about 3% in premarket trading, but shares recovered those losses after the market opened and were up 0.8% at $377.16.
Lockheed raised its profit estimate for 2019 by 1.9% to $21.55 per share from $21.15, the high point of a previous guidance, amid improved performance in its aeronautics business. The Bethesda, Maryland-based company said 2020 sales would climb 5% to $62bn from an estimated $59.1bn at the end of 2019.
The results were “impressive” and driven by better operations, while the guidance was “conservative, as expected,” Jefferies analyst Sheila Kahyaoglu said in a note to investors.
Business unit profit margins in 2020 were estimated to be between a range of 10.5% and 10.8%, lower than the 11.2% margin so far this year.
Turkey had agreed to buy 100 stealthy F-35 jets, Lockheed’s biggest program, but the Pentagon removed the NATO ally from the program and from the jet’s supply chain. (Read more here)
To be sure, other countries have expressed an interest in buying the F-35, and in September, the U.S. State Department approved a proposed sale of 32 F-35 fighter jets worth as much as $6.5 bn to Poland.
The Pentagon has said the U.S. is spending between $500m and $600 m in non-recurring engineering in order to shift the supply chain away from Turkey. There were some operating segment wins for Lockheed during the quarter.
Lockheed’s space unit was awarded a NASA contract worth up to $4.6 bn to build Orion astronaut capsules to help NASA build a sustainable presence on the moon. Though sales at the unit were up 5%, the 11.5% profit margin at the space unit was unchanged from last year.
The missiles and fire control unit, which makes missile defences like the Terminal High Altitude Area Defense (THAAD), was one of its best-performing units. Sales grew 14% to $2.6 bn during the quarter.
The aeronautics division which makes the F-35 received some bad news last week when the Pentagon said it could delay its decision to move into a full-rate production of the F-35 jet by as many as 13 months, or until 2021, because of issues integrating the jet with its testing facilities.
Full-rate production contracts are more lucrative for defence, and the news from the Pentagon suggests larger payments for F-35 deliveries to Lockheed from the U.S. government and its allies could be delayed by as much as a year.
The company delivered 28 F-35 combat jets in the quarter, compared with 20 a year earlier. During the second quarter, Lockheed delivered 29 F-35s. So far this year, the company has delivered 83 of the jets, out of a total expected for the year of 131.
Lockheed’s net income rose to $1.61bn, or $5.66 per share, in the third quarter ended Sept. 29, from $1.47bn, or $5.14 per share, a year earlier.
Net sales rose to $15.17bn from $14.32bn. Lockheed’s income tax rate was 9.7% in the third quarter, compared to 6.5% in the third quarter of 2018. (Source: Reuters)
22 Oct 19. Saab third-quarter tops forecasts, order intake more than doubles. Swedish defence firm Saab (SAABb.ST) reported quarterly operating earnings well ahead of market forecasts on Tuesday, and affirmed its view that operating cashflow this year would improve versus 2018. The Stockholm-based company, maker of the Gripen fighter jet, said its third-quarter operating profit was 518m Swedish crowns ($53.76m), versus a 61m loss in the year-earlier quarter. Analysts had forecast an operating profit of 301m crowns according to Refinitiv estimates including three analysts. Order intake at the firm, which typically sees sharp swings, more than doubled to 9.4bn crowns from 4.5bn, with Saab highlighting an order from Finland’s Ministry of Defence to provide and integrate combat system for Finland’s new corvettes
“Although sales and profits are much better than thin consensus, cashflow is the big focus for the stock,” Citigroup analysts said in a research note.
“Q3 operating cashflow being on target and commentary around cash in Q4 should be taken positively by the market given the recent underperformance of the shares.”
Saab has been burning through cash and last year raised 6 bn crowns to boost its balance sheet, allow it to compete on big new contracts and meet a growing order backlog.
The company said its operational cashflow was developing in line with its plan for the year, adding it still expected better cash flow in 2019 than 2018, with large milestone payments scheduled in the fourth quarter
Saab shares are down 12% over the past three months, compared to a 2% rise for the European industrials sector. (Source: Reuters)
22 Oct 19. Thales discloses its order intake and sales at 30 September 2019.
- Order intake: €10.4bn, up 10% (-6% on an organic basis)
- Sales: €12.4bn, up 14.1% (+0.0% on an organic basis)
Thales (Euronext Paris: HO) announced today its order intake and sales for the period ending 30 September 2019.
“Q3 2019 reflects the same contrasted momentum we experienced in H1 2019: sales were up slightly at constant scope and currency, with the solid growth in the Defence & Security segment offsetting both the slowdown in the commercial space market and a high basis of comparison in Transport.
This trend will show as well in the Full Year 2019 organic sales growth, which we now expect to be around 1%.
The reduced guidance is explained by the conjunction of two factors: the massive cyclical downturn of the commercial satellite market in 2017 and 2018, and the record sales level achieved by our Transport business in 2018.
The mobilization and commitment of the teams all over the world enables us to confirm our Full Year 2019 EBIT target in spite of the revised organic sales growth objective.
Across all our markets, the medium-term outlook is solid, driven by growing needs for security, efficiency, connectivity and digital trust.
The integration of Gemalto and the acceleration of our R&D investments will uniquely reinforce our positioning, at the heart of our profitable growth strategy.” Patrice Caine, Chairman & Chief Executive Officer
In the first nine months of 2019, order intake stood at €10,445m, up 10% compared with 9m 2018 (-6% at constant scope and currency).
Over the period, Thales received 9 large orders over €100m, for a total amount of €1,905m, compared with 10 large orders at 30 September 2018:
- 3 large orders were booked in Q1 2019, covering the acquisition of new mobile radars by the Dutch army, a support contract for a European army and the provision of equipment for Indian army helicopters;
- 4 large orders were booked in Q2 2019, concerning the construction of the ground segment of the Syracuse IV satellite, the delivery of electronic systems aboard Belgian Scorpion vehicles (CaMo project), a significant long-term maintenance contract for the French air force, and the design of 2 geostationary satellites for Spain as part of a consortium (SpainSat NG);
- 2 large orders were booked in Q3 2019, both in the Defence & Security segment:
o the supply of combat management systems for two military ships;
o the modernization of the French army’s satellite navigation systems.
At €8,539m, orders with a unit value of less than €100m rose by 21% compared to the first nine months of 2018, after the integration of Gemalto.
From a geographical perspective, order intake enjoyed solid growth in emerging markets, driven by all major geographic areas (+11% organically, +47% on a reported basis). Orders booked in mature markets declined organically by 10% (+1% on a reported basis), affected by a high basis of comparison.
At €2,625m compared with €3,044m in the first nine months of 2018, order intake in the Aerospace segment remained affected by the weakness of the commercial space market. The Group is currently participating in the final stage of 4 significant commercial satellite tenders, whose conclusion is expected in the coming weeks. This level of commercial activity confirms the gradual recovery of the market.
Order intake in the Transport segment stood at €868m, down 32% compared to the first nine months of 2018, when several significant contracts were booked.
Order intake in the Defence & Security segment stood at €5,270m, compared with €4,998m in the first nine months of 2018 (+7% on an organic basis) thanks to the 8 large orders with a unit value of over €100m mentioned above. This segment benefits from strong momentum in many activities: systems for combat aircraft, systems and services for military ships, radio communications products, systems and network infrastructures, etc.
At €1,621m, order intake in the Digital Identity & Security segment was very close to sales, with most of the businesses in this segment running on relatively short cycles.
9m 2019 sales stood at €12,410m, compared to €10,873m in 9m 2018, up 14.1% after the integration of Gemalto. Sales were stable (+0.0%) at constant scope and currency, with the decline in sales in Aerospace and Transport masking the robust performance in Defence & Security.
From a geographical perspective, this stability in sales is due to contrasting momentum: sustained growth in mature markets (+4.2%), and a decline in emerging markets (-10.0%) following several years of robust growth.
Sales in the Aerospace segment totalled €3,787m, a 5.6% decline compared to 9m 2018(-6.8% at constant scope and currency). This decline in sales was only driven by Space, with all Avionics businesses delivering organic growth. It reflects the prolonged wait-and-see attitude of customers in the commercial telecommunications satellite market, combined with the delivery of the last satellites of the Iridium constellation and the end of a number of military projects. This trend continued in the 3rd quarter, resulting in a lower than expected order intake, which will therefore contribute only slightly to Q4 sales. This situation should continue to weigh on Space sales in Q4 2019 and in 2020. Consequently, Space sales are expected to see a decline of around 13% over Full Year 2019, and in a lower proportion in 2020.
In the Transport segment, sales came in at €1,268m, down 7.6% compared with the first nine months of 2018 (after an increase of +21.1% at constant scope and currency during 9m 2018). This decline resulted mainly from phasing effects on major urban rail signalling contracts, particularly in Doha (Qatar) and London.
Sales in the Defence & Security segment stood at €5,670m, up 6.6% compared with the first nine months of 2018 (up +7.7% at constant scope and currency). This segment continues to benefit from a broad growth basis, led in particular by airspace protection solutions, optronics systems, missile electronics, systems for combat aircraft and military ships, and military radio communications.
At €1,631m, sales in the Digital Identity & Security segment were in line with the Full Year objective (organic growth of 0 to 2%). As was the case in the second quarter, this level reflects a positive momentum in EMV payment cards, the negative impact of the reorganisation of the HSM business, and the continuous slowdown in traditional SIM card sales.
Acquisition of Gemalto
On 17 September 2019, the Chamber of Commerce of the Court of Appeal in Amsterdam (Netherlands) issued its ruling in connection with the statutory buy-out proceedings for Gemalto shares. In consequence, Thales was able early October to purchase all the outstanding Gemalto shares (2.78m shares). This transaction resulted in a cash outflow of €143m, and took the percentage of Gemalto shares held by Thales to 100%.
As announced on 17 October 2019, and taking into consideration both the around 13% decline in Space sales expected this year and the very high basis of comparison in Transport, Thales now expects its organic sales growth to be around 1% over Full Year 2019.
The acceleration of competitiveness initiatives however enables the Group to maintain its EBIT target for the Full Year: Thales should deliver an EBIT of between €1,980m and €2,000m, based on September 2019 scope and currency. The Group also confirms its Full Year 2019 order intake target, expected to be slightly above €18bn.
21 Oct 19. The Business Rescue Practitioner of Aerospace Development Corporation (Pty) Ltd (“ADC”), the manufacturer of the AHRLAC aircraft, has announced the successful adoption of a Business Rescue supported by Paramount Aerospace Holdings (Pty) Ltd, a Paramount Group company.
Paramount Group is a global aerospace and technology company, with multiple aerospace, defence and technology companies in its global portfolio.
The Business Rescue Plan will secure the future of the AHRLAC aircraft, its employees and will see the resumption of sales, marketing and manufacturing of the aircraft to customers around the world.
Paramount Group has already injected new capital in the form of post commencement funding, and will inject significant further capital into the business over the coming months.
Paramount is committed to building a strong sustainable aircraft and aerospace systems capability in South Africa and this transaction supports this objective. (Source: Google/https://www.defenceweb.co.za)
21 Oct 19. Halliburton reports declining 3Q profit and revenue; shares slip pre-market. It blamed the 32% drop in quarterly profit on weak demand for its services and equipment from oil and gas producers in North America. Halliburton’s stock has fallen more than 30% this year
Halliburton Company (NYSE:HAL) on Monday reported declining profit and revenue in the third quarter, sending shares down nearly 2% in pre-market trading.
The company blamed the 32% drop in quarterly profit on weak demand for its services and equipment from oil and gas producers in North America, its biggest market.
Net profit fell to $295mn, or $0.34 cents per share, in the third quarter ended September 30, from $435mn, or $0.50 cents per share, a year earlier. Analysts had on average estimated $0.34 cents per share earnings.
Reduced spending by oil and gas producers
Revenue fell 10% to $5.55bn, below analysts’ average estimate of $5.80bn.
Halliburton and its rivals are battling reduced spending by oil and gas producers as investors push for higher returns rather than growth in a weak oil price environment.
Larger rival Schlumberger Limited (NYSE:SLB) said on Friday it had recorded a $1.58bn goodwill impairment charge related to its pressure pumping business in North America.
Halliburton’s stock, which has fallen more than 30% this year, recently traded down to $18.16 a share in New York. (Source: proactiveinvestors.co.uk)
21 Oct 19. Advent vows to keep jobs at Cobham. US private equity firm tries to ease takeover fears. The American private equity giant attempting to buy Cobham is ready to commit to protect British jobs and investment as it seeks to allay concerns over its £4bn takeover of the defence and aerospace company.
Amid fears that a sale to private equity runs the risk of a further sale and possible break-up of a key British industrial asset in a few years’ time, it is understood that Advent International will promise the government that it will maintain UK employment at current levels at least, invest in research and development in Britain and keep the Cobham brand.
Advent will also commit to keeping Cobham’s various “sector headquarters” around southeast England and East Anglia. Advent secured support from Cobham investors for the proposed purchase last month, but it is subject to a review from competition regulators concerning national security implications.
Cobham is one of Britain’s biggest defence and aerospace businesses. An in-flight aircraft refuelling specialist, it was founded 85 years ago by Sir Alan Cobham, an adventurer and aviation pioneer. It employs about 10,000 staff around the world, of which almost 1,800 are in the UK.
Advent is among the world’s 20 largest private equity firms and is based in Boston in the United States. Its 165p-a-share offer for the FTSE 250 company was approved by 93 per cent of investors last month despite some strong objections, including from Lady Cobham, daughter-in-law of Sir Alan. (Source: The Times)
15 Oct 19. Mercury Systems, Inc. (NASDAQ: MRCY, www.mrcy.com) announced today a $15m capital investment to expand its trusted custom microelectronics business, bringing cutting-edge commercial silicon technology to the Department of Defense (DoD). The technology is applicable to all defense platforms and programs and offers fast, affordable and secure and trusted chip-scale open system architecture (OSA) devices to accelerate future modernization efforts.
“This investment directly addresses the DoD requirement for made-in-USA microelectronics and equips the warfighter with a state-of-the-art military-grade product, leveraging the most advanced commercial technologies,” said Mark Aslett, Mercury’s President and CEO. “This is an expansion upon existing investments which began in earnest three years ago, following Mercury’s acquisition of Microsemi’s custom microelectronics business. Leveraging our proven expertise in the worlds of silicon integration, embedded security, and trusted manufacturing, we can act as the merchant supplier conduit between the commercial sector and the defense industry to deliver long-term, trusted supply continuity for our valued customers and the DoD,” continued Aslett.
This initiative represents one of the first commercial applications of the Defense Advanced Research Projects Agency’s (DARPA) Electronics Resurgence Initiative (ERI) and directly aligns with the ERI’s stated goal of “creating a more specialized, secure, and heavily automated electronics industry that serves the needs of both the domestic commercial and defense sectors.” Combined with Mercury’s industry-leading ‘defense-ready’ processing capabilities for military and aerospace applications, the initiative extends the Company’s strategy to further develop leading-edge technology and manufacturing capabilities in order to bring innovative products and services to valued aerospace and defense industry customers. As the first volume realization of a project of this kind, it reinforces Mercury’s leadership in embedded security, high-performance RF, digital and mixed-signal microelectronics.
“This expansion sets the stage for the continued accelerating growth of game-changing chiplet technology integration and agile customization ideal for next-generation edge processing applications,” said William Conley, Ph.D., Mercury’s Senior Vice President and Chief Technology Officer. “We are proud to bring open standards architecture at chip-scale to the defense community and are uniquely equipped to generate industry-leading defense electronics at a rapid pace that delivers innovation that matters. This is testament to our commitment to innovation in chip-scale technologies. Chip scale will enable solutions that would normally be housed on a board or other large-scale system to now be miniaturized onto a single chip in a reliable, secure and trusted manner.”
Critical to defense applications, Mercury has significant expertise in the defense industry and can integrate requisite security with proven silicon fingerprinting capabilities, cryptographic protection capabilities, ITAR requirements implementation and on-shore silicon integration. When combined with major industry initiatives, such as trusted manufacturing, this chip-scale integration is highly complementary to Mercury’s longstanding expertise in system-scale processing capabilities. Now for the first time, a single company can provide chip-scale to system-scale processing solutions optimized for increased performance, reduced power and low latency to meet the rapid growth of massive data processing in edge computing applications such as artificial intelligence.
Mercury System’s Thomas Smelker, Vice President and General Manager has an extensive background in developing advanced solutions in embedded defense computing and system security technologies and was recently appointed to lead these efforts with the Company’s leadership team.
29 Apr. 19. Parker to Acquire LORD Corporation in Strategic Transaction that Significantly Expands Engineered Materials Business.
Stock Symbol: PH – NYSE
Parker to Acquire LORD Corporation in Strategic Transaction that Significantly Expands Engineered Materials Business
- Strategically Strengthens Parker’s Portfolio of Attractive Margin, High Growth Businesses
- Adds Approximately $1.1bn in Annual Sales to Engineered Materials with Complementary Products
- Expected to Be Accretive to Parker’s Organic Growth, EBITDA Margin, Cash Flow and EPS
- Culturally Aligned with Rich History of Innovation and Product Reliability
- Strengthens Materials Science Capabilities, Electrification and Aerospace Product Offerings
- Parker to Host Conference Call Today at 8:30 AM ET
Parker Hannifin Corporation (NYSE:PH), the global leader in motion and control technologies, today announced that it has entered into a definitive agreement to acquire LORD Corporation for approximately $3.675bn in cash. The transaction has been approved by the Board of Directors of each company and is subject to customary closing conditions, including receipt of applicable regulatory approvals.
LORD, headquartered in Cary, North Carolina, is a privately-held company founded in 1924 offering a broad array of advanced adhesives, coatings and specialty materials as well as vibration and motion control technologies. LORD’s products are used in mission-critical applications in the aerospace, automotive and industrial markets. LORD has annual sales of approximately $1.1bn and employs 3,100 team members across 17 manufacturing and 15 research and development facilities globally.
“This strategic transaction will reinforce our stated objective to invest in attractive margin, growth businesses, such as engineered materials, that accelerate us towards top-quartile financial performance,” said Tom Williams, Chairman and Chief Executive Officer of Parker. “LORD will significantly expand our materials science capabilities with complementary products, better positioning us to serve customers in growth industries and capitalize on emerging trends such as electrification and lightweighting.
“This transaction will meaningfully transform our portfolio. We anticipate a smooth closing of the transaction and integration of our two businesses, and through adoption of The Win Strategy™ we believe we can capture significant operational synergies. The combination of Parker and LORD is expected to drive significant value for Parker shareholders and be accretive to organic growth, EBITDA margins, cash flow and EPS, excluding one-time costs and deal related amortization.”
Ed Auslander, President and CEO of LORD, commented. “With complementary business segments, coming together with Parker enables LORD to carry out our grander vision. Parker is already a large tier one supplier in many areas, allowing our business lines immediate access to growth, additional markets, applications and new customers. In addition, the two companies are very much aligned when it comes to core values, great business acumen and cultural fit.”
Delivers Compelling Financial and Strategic Benefits
- Greatly Expands Parker’s Engineered Materials Business Adding Strong Brands: LORD’s unique and proprietary products, solutions and technologies for mission-critical applications will increase Parker’s overall engineered materials product and solutions offerings to enable a stronger value proposition for customers. LORD’s portfolio includes strong brands such as LORD®, Chemlok®, FUSOR®, Maxlok®, LORD Adhesives®, Versilok®, LokRealease®, CoolTherm®, LORD® High Capacity Laminate (HCL) Elastomeric Bearings, Dynaflex®, and SensorCloud™. These brands reflect trusted, safe and reliable products that deliver critical solutions at a high value.
- Complementary Products and Markets: LORD will strengthen Parker’s offering of complementary products in core aerospace and defense, high-value automotive and industrial markets and enhance opportunities to capitalize on emerging electrification and lightweighting trends. LORD serves a global, blue-chip customer base and consistently serves partners through the entire product lifecycle.
- Substantial Synergy Potential: Parker expects to realize approximately $125m in pre-tax run-rate cost synergies by full-year 2023. The cumulative cost to achieve these synergies is expected to be approximately $80m. Synergies are expected to come from implementation of Win Strategy initiatives such as supply chain and lean productivity, and SG&A. Cross-selling opportunities and global market distribution are expected to provide incremental revenue synergies over time.
- Adds Significant Shareholder Value and is Accretive to EBITDA Margins: The transaction is expected to be accretive to Parker’s organic growth, EBITDA margins, cash flow and EPS within the first 12 months, and to achieve high single-digit ROIC by year five, after adjusting for one-time costs and deal related amortization.
Organization and Leadership
Upon closing of the transaction, LORD will be combined with Parker’s Engineered Materials Group.
Williams added, “We look forward to joining our teams and cultures, each of which places significant focus on safety, engaged people participating in high performance teams, customer experience, profitable growth and top quartile performance. Our shared values, built over the long histories of both companies, make our two companies an ideal match.”
Financing and Dividend
Parker plans to finance the transaction using new debt. Following the completion of the transaction, Parker expects to maintain a high investment grade credit profile.
The transaction is not expected to impact Parker’s dividend payout target of approximately 30-35% average percent of net income over a five-year period, while maintaining its record of annual dividend increases.
Approvals and Time to Closing
The transaction is expected to be completed within the next four to six months and is subject to customary closing conditions, including receipt of applicable regulatory approvals.