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01 Nov 19. Levett Engineering, an SA supplier of precision components and assemblies for the defence and commercial aerospace industries will join Marand Precision Engineering, a supplier of vertical tails to the global F-35 program, which was acquired by CPE Capital (when it was known as CHAMP) in June 2019, in the ASDAM group.

CPE Capital is building an integrated precision engineered products, solutions and sustainment company to support the Australian defence and aerospace industry and to service its global defence and aerospace customers. Levett provides machining, assembly and inspection of a range of complex components for clients in the aerospace and defence industry. It has built long term relationships with a number of defence prime contractors, including Lockheed Martin, L3Harris, Pratt & Whitney, BAE Systems, Northrop Grumman and Boeing.

“I’m incredibly proud of what the team at Levett has achieved since its founding in 1989,” Paul Levett, founder and owner of Levett said. “The acquisition by CPE Capital’s Australian defence portfolio company will provide the capacity and capability to better service our existing clients in the Joint Strike Fighter Program, and create the platform to service new clients in different domains and programs.”

“We were impressed by Levett’s breadth and depth of client relationships, and believe their expertise in precision components will be highly complementary to Marand and ASDAM,” Steve Sargent, Chairman of ASDAM said. “We look forward to Levett joining the ASDAM group and growing our presence in SA.”

Levett will continue to operate in Adelaide, but will be able to utilise the combined capabilities of Marand in the ASDAM group to provide a wide range of solutions for defence customers.

CPE Capital is building an integrated precision engineered products, solutions and sustainment company to support the Australian defence and aerospace industry and to service its global defence and aerospace customers.

“I’m incredibly proud of what the team at Levett has achieved since its founding in 1989,” Paul Levett, founder and owner of Levett said. “The acquisition by CPE Capital’s Australian defence portfolio company will provide the capacity and capability to better service our existing clients in the Joint Strike Fighter Program, and create the platform to service new clients in different domains and programs.”

“We were impressed by Levett’s breadth and depth of client relationships, and believe their expertise in precision components will be highly complementary to Marand and ASDAM,” Steve Sargent, Chairman of ASDAM said. “We look forward to Levett joining the ASDAM group and growing our presence in SA.”

Levett will continue to operate in Adelaide, but will be able to utilise the combined capabilities of Marand in the ASDAM group to provide a wide range of solutions for defence customers.

(Source: Google/https://www.australiandefence.com.au)

31 Oct 19. FLIR Systems Announces Third Quarter 2019 Financial Results.

GAAP Diluted EPS of $0.46; Adjusted Diluted EPS of $0.59

Revenue Growth of 8%; Organic Revenue Growth of 2% Over Prior Year

Year-to-date Total Bookings Growth of 14% Over Prior Year

FLIR Systems, Inc. (NASDAQ: FLIR), a world leader in the design, manufacture, and marketing of intelligent sensing technologies, today announced financial results for the third quarter ended September 30, 2019.

Commenting on FLIR’s third quarter results, Jim Cannon, President and Chief Executive Officer, said, “Overall, FLIR’s third quarter results were somewhat mixed. I am pleased with the performance of the Government & Defense Business Unit, which delivered franchise program awards, solid organic revenue growth augmented by recent successful acquisitions, as well as improving organic operating margins. We also continue to build momentum in the Industrial Business Unit which generated strong bookings in the quarter along with expanding operating margins. However, several product lines within our Commercial Business Unit continue to face headwinds and some key end-markets served by the Commercial Business Unit were negatively impacted by geopolitical and macroeconomic factors. While consolidated earnings were in-line with our expectations and cash flow from operations was very strong, I am not satisfied with FLIR’s third quarter revenue performance.”

Mr. Cannon continued, “Based on our year-to-date results and outlook for the fourth quarter, we are slightly reducing full-year revenue expectations. However, year-to-date total bookings are up 13.5% and total backlog is up 16.7% from a year ago, bolstered by important franchise program wins, providing us with a long runway for growth. We remain very confident in our long term strategy and continue to believe that FLIR is poised to deliver profitable growth in the quarters and years ahead.”

Third Quarter 2019

Third quarter 2019 revenue was $471.2m, 8.4% higher than third quarter 2018 revenue of $434.9m. Organic revenue growth was 2.5%, which excludes revenue from acquisitions within the last twelve months. Third quarter total bookings increased 13.0% from the third quarter of 2018 to $495.3m, driven primarily by a contract with a prime defense manufacturer in the Industrial Business Unit, along with numerous smart city and industrial wins in the Commercial and Industrial Business Units. At the end of the third quarter total 12-month current backlog stood at $668m, an increase of 13.0% compared to the balance at the end of the third quarter 2018. Similarly, total backlog at the end of the third quarter increased 16.7% to $810m over the same period.

GAAP Earnings Results

GAAP gross profit in the third quarter 2019 was $229.6 m, compared to $222.1m in the third quarter 2018. GAAP gross margin decreased 234 basis points to 48.7% in the third quarter 2019, compared with 51.1% in the prior year. GAAP operating income in the third quarter decreased 16.0% to $74.4m, compared to $88.6 m in the prior year, representing a 458 basis point decline in operating margin. GAAP gross margin and GAAP operating margin were both negatively impacted by the acquisitions for our unmanned systems and solutions business as it ramps to support franchise program wins, the buildout of our Global Trade Compliance resources to sustain compliance, and the increase in amortization of intangible assets associated with the aforementioned acquisitions.

Third quarter 2019 GAAP net earnings were $62.0m, or $0.46 per diluted share, compared with GAAP net earnings of $73.2m, or $0.52 per diluted share in the third quarter last year. GAAP net earnings in the quarter were also negatively impacted by higher operating expenses and the increase in amortization of intangible assets associated with the previously announced acquisitions.

Cash provided by operations was $276.8m for the nine months ended September 30, 2019, compared to $275.8m realized in the first nine months of 2018. Approximately 2.5m shares were repurchased in the first nine months of 2019.

Non-GAAP Earnings Results

Adjusted gross profit was $240.4m in the third quarter 2019, increasing 5.7% over adjusted gross profit of $227.4m in the third quarter 2018. Adjusted gross margin decreased 129 basis points to 51.0%, compared with 52.3% in the third quarter 2018. Adjusted operating income decreased 4.2% to $101.6m in the third quarter 2019, compared to adjusted operating income of $106.0 m in the third quarter 2018. This was primarily driven by operating expenses associated with the recent acquisitions. Adjusted operating margin decreased 282 basis points to 21.6%, compared with 24.4% in the third quarter 2018.

Adjusted net earnings in the third quarter 2019 were $80.2m, or $0.59 per diluted share, which was 3.0% higher than adjusted earnings per diluted share of $0.57 in the third quarter 2018. The adjusted effective tax rate for the third quarter was 16.0%, down from 20.5% in the second quarter, driven mainly by a higher benefit earned from foreign derived intangible income and research expenditures, combined with a lower US tax burden on income earned by foreign subsidiaries. For the full year, the Company now expects our effective tax rate to be 19.0%.

Business Unit Results

Industrial Business Unit

The Industrial Business Unit generated revenue of $176.6m, a decrease of 0.3% over the third quarter last year, as strength in cooled cores and cameras was offset by lower demand for test and measurement products, machine vision cameras, and the continuing gradual transition from handhelds to UAS-based and fixed-mount offerings. Operating income was $58.3m, 4.1% higher than the third quarter of 2018. Operating margin improved 140 basis points year-over-year to 33.0% and gross margin improved 149 basis points to 57.3%. Growth in operating income and the improvement in gross margin and operating margin was driven by a favorable product mix as well as sustained productivity gains and lower operating expenses resulting from the FLIR Method.

Government and Defense Business Unit

The Government and Defense Business Unit revenue totaled $213.3m, up 24.1% from the prior year as a result of contributions from the successful acquisitions of Aeryon Labs and Endeavor Robotics earlier in the year and solid organic revenue growth of 9.8%. As a result, operating income for the third quarter of $56.3m increased 4.5% year-over-year, while operating margins declined 494 basis points due mainly to higher operating expenses from the acquired companies. However, third quarter operating margin improved 159 basis points from the prior quarter due to higher revenue. Third quarter bookings declined by 11.2% from the prior year period due to acceleration into the second quarter and timing delays on international bookings moving into the fourth quarter. This resulted in a book-to-bill ratio of 0.85 for the third quarter, and a year-to-date book-to-bill ratio of 1.06. Government & Defense current backlog totaled $447m at the end of the third quarter, a 20.5% increase year-over-year.

Commercial Business Unit

The Commercial Business Unit revenues totaled $81.3m, down 5.3% from the prior year. Revenues were adversely affected by foreign exchange effects as well as lower customer demand in the Maritime business primarily related to macroeconomic conditions. Partially offsetting this decline was strong growth in the Intelligent Transportation Systems (ITS) business. Third quarter operating income of $7.6m and operating margin of 9.3% decreased 27.5% and 286 basis points year-over-year, respectively. This decrease was primarily driven by revenue declines in the Maritime and Outdoor and Tactical Systems (OTS) businesses due to weaker end-markets impacted by geopolitical and macroeconomic factors, as well as the impact from foreign currency exchange and U.S. import tariffs.

Financial Outlook for 2019

Based on financial results for the third quarter and the outlook for the remainder of the year, FLIR is updating its guidance for the full year ending December 31, 2019, as follows. 2019 financial outlook includes contributions from the Aeryon Labs and Endeavor Robotics acquisitions, which have been and are expected to be dilutive to adjusted EPS through 2019.

  • Revenue is expected to be approximately $1.9bn, representing approximately 7% revenue growth compared to 2018, including approximately 2% organic revenue growth
  • Adjusted operating income margin is expected to be in the range of 22.0% to 23.0%
  • Adjusted effective income tax rate is expected to be 19.0%
  • Adjusted earnings per diluted share is expected to be approximately $2.30

Dividend Declaration

FLIR’s Board of Directors has declared a quarterly cash dividend of $0.17 per share on FLIR common stock, payable on December 6, 2019, to shareholders of record as of close of business on November 26, 2019.

31 Oct 19. Bombardier in advanced talks to sell three plants to Spirit AeroSystems for over $1bn. Canada’s Bombardier (BBDb.TO) is in advanced talks to sell three facilities, including its Belfast wing-making plant, to Spirit AeroSystems (SPR.N) for more than $1bn in cash and assumed liabilities, two sources familiar with the matter told Reuters on Thursday.

The two companies are nearing a deal, which could be announced as early as Thursday, the sources added, but they cautioned that talks could still fall apart. Both companies are scheduled to report third quarter earnings on Thursday.

Bombardier’s plan to sell two aerostructure facilities – the Belfast plant and another in Morocco – along with a smaller repair plant in Dallas comes as the Canadian company sheds its commercial aviation business to focus on its higher-margin business jets and rail divisions.

Analysts have previously said a deal would be strategic for Spirit, an aerospace components maker, as it diversifies its customer base away from Boeing Co (BA.N). Spirit is Boeing’s largest supplier, but the company has plans to grow its business with Europe’s Airbus (AIR.PA).

Reuters previously reported that Wichita-based Spirit had emerged as the front-runner to acquire the facilities.

Bombardier declined to comment. Spirit did not immediately respond to a request for comment out of business hours. The sources declined to be identified as the discussions are confidential. (Source: Reuters)

30 Oct 19. GE shares surge as it raises cash forecast despite earnings loss. General Electric Co (GE.N) posted adjusted profits on Wednesday that beat analysts’ estimates and wowed investors by promising $1bn (£776.10m) more cash this year than it had previously forecast, sending its shares sharply higher.

The Boston-based conglomerate made gains despite flat revenue and a $1.3bn (£1.01bn) net loss, when one-time charges were included.

But improvement in its aircraft and healthcare businesses, and “stabilization” at its power unit signaled “progress in the transformation of GE,” said Chief Executive Officer Larry Culp, who has called GE’s planned turnaround from a disastrous 2018 “a game of inches.”

GE shares surged 14% in morning trading and were up 10% at $10 in afternoon trading.

“People weren’t expecting the cash-flow increase,” said Deane Dray, an analyst at RBC Capital Markets in New York, who noted a lack of surprises in GE’s report. “The market was braced for bad news.”

GE said it now expects full-year industrial free cash flow to be between $0 and $2 bn, up from negative $1 bn to positive $1 bn forecast previously.

GE held other forecasts unchanged, though it trimmed plans for restructuring spending and noted earnings per share no longer reflects 5 cents a share of income from oil and gas company Baker Hughes Co (BKR.N).

“The sweet number is $650m in industrial free cash flow” in the quarter, said Nick Heymann, an analyst at William Baird and Co in New York, who expected $400m to $500m.

GE needs to generate about $2.6bn of cash in the fourth quarter to meet the midpoint of its new forecast, said John Inch, analyst at Gordon Haskett in New York, about half what GE generated in the same quarter last year.

“This seems plausible, but hardly robust – regardless of the company’s cash guidance ‘raise,’” Inch said in a note.

While GE’s adjusted results beat expectations, GE’s report showed difficulty in key business lines, and Culp said there remains plenty of “work to do.”

Orders at GE’s ailing power division fell 30%, and orders for GE’s gas-powered turbines fell 17%. GE said it shipped five of its HA gas turbines in the third quarter, after shipping just one in the first half. Power revenue, which includes gas, steam and nuclear equipment and services, fell 14% in the quarter.

Jet engine orders fell 27%, while engine service orders rose 15%. GE said it took a $300 m cash hit in the quarter from the grounding of Boeing Co’s (BA.N) 737 MAX jetliner, which uses engines partly made by GE. Culp said GE’s $1.4 bn forecast of charges for the full year does not anticipate the grounding will end this year. [nL2N27F194] The numbers also are in line with expectations GE set in July.

The grounding, after a second fatal crash of the plane last March, means Boeing cannot deliver jets to airlines, and GE is not being paid for the engines it delivers to Boeing.

GE took an $8.7 bn charge for reducing its stake in Baker Hughes to less than 50% in the quarter, a change that required GE to stop consolidating the oil and gas company’s earnings in GE’s results and to mark the remaining stake to fair value. Analysts had expected a charge up to $10 bn.

GE took a $1bn charge for its long-term care insurance business to account for the effect of falling interest rates on its obligations. The charge was about what analysts expected.

GE also wrote off $740 m in goodwill for its hydro power business. Together, the insurance and goodwill charges amounted to 17 cents of EPS, GE said.

On an adjusted basis, which excludes such charges, GE earned 15 cents per share, compared with 11 cents analysts expected, according to IBES data from Refinitiv.

Total revenue fell slightly to $23.36bn from $23.39bn. (Source: Reuters)

31 Oct 19. Kongsberg Group Reports Record-High Order Backlog & Growth. All the business areas in the Kongsberg Group (KONGSBERG) grew in the third quarter. The order intake was extremely strong during the quarter and the group now has an order backlog of more than BNOK 34. This provides a good basis for sound growth in the next few years.

Key financial figures

  • Order intake of MNOK 12,325 in Q3 compared to MNOK 4,477 in Q3 2018, an increase of MNOK 7,848, of which the order intake from Commercial Marine accounts for MNOK 1,840.
  • Operating revenues of MNOK 6,046 in Q3 compared to MNOK 3,154 in Q3 2018, an increase of MNOK 2,892, of which organic growth comprised 22%. Commercial Marine accounts for MNOK 2,089 of the operating revenues.
  • EBITDA of MNOK 535 in Q3 (MNOK 417 excl. IFRS 16 effects) compared to MNOK 347 in Q3 2018. The EBITDA margin was 8.8% (6.9% excl. IFRS 16 effects) in Q3 compared to 11.0% in Q3 2018.

The Kongsberg Defence & Aerospace, Kongsberg Maritime and Kongsberg Digital business areas achieved organic growth of 23, 21 and 18 per cent respectively compared to Q3 2018.

“We’ve delivered a strong quarter for the company as a whole, with greater profitability in all business areas. We’ve achieved sound growth from both our existing operations and acquired companies,” says KONGSBERG President and CEO Geir Håøy.

The order intake was good during the quarter and was especially strong in the defence area where KONGSBERG signed its biggest-ever contract, worth BNOK 5.6, to supply the NASAMS air-defence system to Qatar. Kongsberg Maritime contracted with Damen Shipyards to deliver its so-far most extensive system to a cruise ship. In addition, Kongsberg Digital had an important breakthrough in October when it won a contract with Shell concerning the digitalization of the Nyhamna gas processing plant.

Good profit performance in Kongsberg Maritime

Kongsberg Maritime (KM) had operating revenues of MNOK 4,255 during the quarter. The “former KM” had operating revenues of MNOK 2,166 compared to MNOK 1,798 in Q3 2018, equivalent to growth of 21 per cent. Commercial Marine (CM) grew by around 5 per cent and accounted for MNOK 2,089 of the Q3 operating revenues.

“Kongsberg Maritime has an order backlog of more than 13bn (NOK), which is sound in a challenging market. The order intake in the aftermarket and marine robotics area is good and there is a high level of activity related to deliveries to LNG vessels,” says Håøy.

The former Kongsberg Maritime improved its profitability and produced an EBITDA margin of more than 12 per cent. Kongsberg Maritime’s overall results are affected by the earnings level of Commercial Marine, an acquired company. However, the EBITDA is improving, and Commercial Marine’s own EBITDA was positive and better than in the previous quarter.

“The integration of Commercial Marine is ahead of schedule and we’ve increased our cost-synergy extraction goals for this year from NOK 200m to NOK 250m. Commercial Marine produced a positive result and I’m sure this acquisition will create value for KONGSBERG and our owners in the future,” says Håøy.

Very strong order intake for Kongsberg Defence & Aerospace

Kongsberg Defence & Aerospace (KDA) achieved operating revenues of MNOK 1,578 in Q3, compared to MNOK 1,180 in the same quarter last year. After adjusting for the acquisition of Kongsberg Aviation Maintenance Services (KAMS), the organic growth was 23 per cent.

KDA’s order intake remained strong in the third quarter, at MNOK 8,254 compared to MNOK 1,272 in the corresponding quarter last year. This business area signed a BNOK 5.6 NASAMS contract with Qatar, contracts worth MUSD 131 for deliveries to the US CROWS programme, and a MNOK 618 KSAT contract with Space Norway for the delivery of satellite-based broadband access in the Arctic.

“KDA’s order intake reinforces our robust position in the niches where we operate. This provides a basis for considerable growth in the future,” says Håøy. (Source: Google/https://seanews.co.uk)

30 Oct 19. RECOMMENDED CASH OFFER for SCISYS Group plc (“SCISYS”) by CGI GROUP HOLDINGS EUROPE LIMITED (“Bidco”) A WHOLLY-OWNED INDIRECT SUBSIDIARY OF CGI INC. (“CGI”) TO BE IMPLEMENTED BY WAY OF A SCHEME OF ARRANGEMENT UNDER CHAPTER 1 OF PART 9 OF THE COMPANIES ACT 2014. Court Hearing and Cancellation of Listings.

SCISYS Group PLC announces that further to its announcement on 25 October 2019, the Court Hearing, where sanction of the Scheme by the High Court will be sought, has been set for 14 November 2019 at 10.30am. An updated expected Timetable of Principal Events is set out below. The Acquisition remains conditional on the Conditions being satisfied or (where permissible) waived on or before the sanction of the Scheme by the High Court.

Time and/or date Scheme Court Hearing

14 November 2019: Expected last day of dealings in, and for the registration of transfers of, SCISYS Ordinary Shares.

14 November 2019: Dealings in SCISYS Ordinary Shares expected to be suspended.

7:30 a.m on 15 November 2019: Expected Scheme Record Time.

11.59 p.m. on 14 November 2019: Expected Effective Date of the Scheme

15 November 2019: Expected Cancellation of listings of SCISYS Ordinary Shares on AIM and Euronext.

8.00 a.m. on 18 November 2019: Expected date of despatch of cheques and crediting of CREST accounts for cash consideration due under the Scheme

By 29 November 2019.

All references to times are to Irish time unless otherwise stated.

Definitions

Capitalised terms used but not otherwise defined in this announcement have the meanings given to them in the Scheme Document.

A copy of this announcement will be available free of charge (subject to any applicable restrictions with respect to persons resident in Restricted Jurisdictions) on the SCISYS website at https://www.scisys.co.uk/who-we-are/investors/soa.html.

30 Oct 19. Curtiss-Wright Corporation (NYSE: CW) reports financial results for the third quarter ended September 30, 2019.

Third Quarter 2019 Highlights:

  • Reported diluted earnings per share (EPS) of $1.92, with Adjusted diluted EPS of $1.95 (defined below), each up 14% compared to the prior year;
  • Net sales of $615m, up 3%;
  • Reported operating income of $106m, up 9%, with Reported operating margin of 17.2%, up 90 basis points;
  • Adjusted operating income of $107m, up 9%, with Adjusted operating margin of 17.4%, up 90 basis points;
  • Reported free cash flow of $102m, with Adjusted free cash flow of $107m;
  • New orders of $647m, up 26%; and
  • Share repurchases of approximately $13m.

Full-Year 2019 Adjusted Guidance (compared to Adjusted full-year 2018):

  • Narrowed sales growth to new range of 4% – 5%;
  • Reaffirmed Adjusted operating income growth of 6% – 9%;
  • Increased Adjusted operating margin by 10 basis points to new range of 16.3% to 16.4%, up 50 – 60 basis points;
  • Increased Adjusted diluted EPS guidance by $0.10 to $0.15 to new range of $7.15 to $7.25, up 12% – 14%; and
  • Increased Adjusted free cash flow by $10m to new range of $340 to $350m, representing an Adjusted free cash flow conversion rate of approximately 111%.

“We generated solid third quarter results which exceeded our expectations, led by strong 17% sales growth in our defense markets and improved profitability in the Commercial/Industrial and Defense segments,” said David C. Adams, Chairman and CEO of Curtiss-Wright Corporation.

“We are pleased to announce the conclusion of the root cause analysis of the reactor coolant pump (RCP) matter at the Sanmen 2 nuclear power plant in China, which was determined to be isolated to a single RCP. As a result, the net impact to Curtiss-Wright’s full-year 2019 operating performance was immaterial. Further, the remaining three Sanmen 2 RCPs were inspected and it was determined that they do not have this problem, and the remaining 12 RCPs supporting additional plants in China have continued to operate successfully.”

“Based on our solid year-to-date results and outlook for the remainder of 2019, we increased our full-year Adjusted guidance for operating margin, diluted EPS and free cash flow. Overall, we anticipate delivering another solid operational performance this year led by strong margin expansion and solid free cash flow generation. We are in a strong position to continue to deliver significant long-term value to our shareholders and remain on track to achieve our 2021 financial targets.”

Third Quarter 2019 Operating Results

  • Sales of $615m, up $19m, or 3%, compared to the prior year (3% organic, 1% acquisitions, 1% unfavorable foreign currency translation);
  • From an end market perspective, total sales to the defense markets increased 17% (16% organic), led by strong growth in aerospace and naval defense, while total sales to the commercial markets decreased 6%, as higher commercial aerospace sales were more than offset by reduced power generation and general industrial sales, compared to the prior year. Please refer to the accompanying tables for an overall breakdown of sales by end market;
  • Reported operating income was $106m, up 9% compared to the prior year, while reported operating margin increased 90 basis points to 17.2%;
  • Adjusted operating income of $107m, up 9% compared to the prior year, principally reflects higher profitability on strong defense revenues in all three segments and lower non-segment expenses, partially offset by lower China Direct AP1000 revenues in the Power segment;
  • Adjusted operating margin of 17.4%, up 90 basis points compared to the prior year, primarily reflects higher operating income and favorable absorption in the Commercial/Industrial and Defense segments, partially offset by reduced profitability on lower power generation revenues in the Power segment; and
  • Non-segment expenses of $7m decreased by $3m compared to the prior year, primarily due to lower environmental expenses.

Net Earnings and Diluted EPS

  • Reported net earnings of $83m, up $8m, or 11% from the prior year, principally reflecting higher segment operating income and lower corporate expenses;
  • Reported diluted EPS of $1.92, up $0.24, or 14% from the prior year, principally reflecting higher net earnings, as well as a lower share count;
  • Adjusted net earnings of $84m, up $8m, or 11%, and Adjusted diluted EPS of $1.95, up $0.25, or 14%, compared to the prior year; and
  • Effective tax rate (ETR) of 20.6% increased slightly compared to the prior year quarter.

Free Cash Flow

  • Reported free cash flow of $102m, defined as cash flow from operations less capital expenditures, increased $40m, or 65%, compared to the prior year, primarily driven by an increase in advance payments and lower inventories, partially offset by higher capital expenditures;
  • Capital expenditures increased by approximately $6m to $16m compared to the prior year, primarily due to higher capital investments within the Power segment, including a $5m investment related to the new, state-of-the-art naval facility for the DRG business; and
  • Adjusted free cash flow, which excludes the facility investment in the current period, increased $45m to $107m.

New Orders and Backlog

  • Year-to-date, new orders of approximately $2.0bn increased 10% compared to the prior year, led by strong organic growth in naval defense and commercial aerospace orders; and
  • Backlog of $2.2bn is up 8% from December 31, 2018.

Other Items – Share Repurchase

  • During the third quarter, the Company repurchased 101,816 shares of its common stock for approximately $13 m; and
  • Year-to-date, the Company repurchased 318,524 shares for approximately $38 m.

Third Quarter 2019 Segment Performance

Commercial/Industrial

  • Sales of $305m, up $10m, or 3%, compared to the prior year (4% organic, 1% unfavorable foreign currency translation);
  • Strong sales growth in the aerospace and naval defense markets was led by higher sales of actuation systems on the F-35 program and higher sales of valves on the Virginia class submarine program;
  • Higher commercial aerospace market sales were led by higher sales of surface treatment services and sensors;
  • General industrial market revenue declined principally due to reduced demand for industrial vehicles and surface treatment services; and
  • Reported operating income was $48m, up 7%compared to the prior year, while reported operating margin increased 60 basis points to 15.8%, principally reflecting favorable overhead absorption on higher naval defense revenues, partially offset by increased research and development expenses and tariffs.

Defense

  • Sales of $150m, up $11m, or 8%, compared to the prior year (6% organic, 3% acquisition, 1% unfavorable foreign currency translation);
  • Higher aerospace defense market revenues principally reflect higher sales of embedded computing equipment on various programs, most notably the F-35 Joint Strike Fighter and the Apache and Seahawk helicopter programs;
  • Naval defense market revenue growth was primarily due to higher sales of embedded computing equipment on submarine programs;
  • Ground defense market revenue declined principally due to reduced sales of embedded computing equipment on various international programs, partially offset by higher revenues on domestic programs;
  • Lower general industrial market revenues reflect reduced industrial controls sales due to the timing of an automotive contract completed last year;
  • Reported operating income was $38m, with Reported operating margin of 25.5%; and
  • Adjusted operating income of $39m, was up $5 m, or 16% from the prior year, while Adjusted operating margin increased 150 basis points to 25.8%, reflecting favorable mix on strong sales of our defense electronics products, partially offset by higher research and development expenses.

Power

  • Sales of $160m, down $2 m, or 1%, compared to the prior year;
  • Strong naval defense market sales were driven by higher Virginia class submarine and CVN-80 aircraft carrier revenues, as well as solid service center revenues;
  • Reduced power generation market sales primarily reflect timing of production on the China Direct AP1000 program, as well as lower domestic aftermarket revenues;
  • Reported operating income was $26m, with Reported operating margin of 16.5%; and
  • Adjusted operating income was $27m, down $2m, or 7% compared to the prior year, while Adjusted operating margin decreased 110 basis points to 17.1%, principally reflecting lower China Direct AP1000 program revenues, partially offset by favorable overhead absorption on higher naval defense revenues and the benefits of our ongoing margin improvement initiatives.

Full-Year 2019 Guidance

The Company is updating its full-year 2019 financial guidance as follows:

30 Oct 19. “Naviris” is the name of the joint venture between Naval Group and Fincantieri. Following the announcement made on 14 June 2019, when the operational terms for the incorporation of a 50/50 owned joint venture between Naval Group and Fincantieri were settled out, today the two companies announced the name of the new company: NAVIRIS, which recalls a robust partnership that guarantees a higher quality know-how, projected to an international scenario.

The name was presented during the recent Steering Committee held in Genoa (it meets every quarter alternatively in France and Italy) and is a new step in the strong collaboration between Fincantieri and Naval Group.

The Alliance between Fincantieri and Naval Group represents a great opportunity for both groups and their ecosystems to enhance their ability to better serve the French and Italian navies, to capture new export contracts, to develop new technologies and, ultimately, to improve the competitiveness of the naval sectors of both countries The incorporation of the JV, is still expected as planned before the end of the year.

30 Oct 19. KBR Announces Third Quarter 2019 Financial Results.

*Strong Growth

*12% revenue growth led by restoration of ES growth of 31%; 2.1x consolidated book-to-bill

*Enduring Performance

*EPS of $0.39, Adjusted EPS of $0.45 and Adjusted EBITDA of $131m

*Cash Focus

*Year to date operating cash flow of $199m; 138% net income conversion

*Raising Guidance

*EPS $1.36 to $1.46, Adjusted EPS 1.64 to $1.74, and Operating Cash Flow $200-225m

*Successful Handover

*Completed commissioning and handover of Ichthys LNG onshore facilities

KBR, Inc. (NYSE: KBR), a global provider of differentiated, professional services and technologies across the asset and program life cycle within the government services and hydrocarbons industries today announced third quarter 2019 financial results.

“I am delighted to report another quarter of stellar performance across our key metrics – HSSE, revenue, cash and bookings,” said Stuart Bradie, KBR President and CEO, as the company announced its September 30, 2019 quarterly results. KBR’s 12% top line growth was led by Energy Solutions which achieved 31% growth as well as Technology Solutions and Government Solutions, which contributed 19% and 5%, respectively. “The resilience in our business model and OneKBR culture was again demonstrated as we delivered double digit growth with all segments contributing. Combined with a robust book-to-bill of 2.1x, again contributed from all areas of the business, we are tracking nicely with our long-term strategy and financial targets,” Bradie said. Consolidated book-to-bill of 2.1x, excluding the work-off of our privately financed initiatives and other adjustments, is comprised of 1.5x from GS, 1.1x from TS and an impressive 3.2x from ES. “We are happy to report that our JKC joint venture has completed commissioning and handover of the Ichthys LNG onshore facilities and power station and did so within guided cash flow requirements. This world-class facility is now in full production and export mode,” continued Bradie. “The results we report today demonstrate the laser-focused commitment and dedication of our 38,000 people, working together to ensure our clients achieve their missions and objectives. Again, I wish to thank the people of KBR for their contributions to our eleven straight quarters of meeting or exceeding expectations,” said Bradie.

Summary Results for the Quarter Ended September 30, 2019

  • Top line revenue growth of 12%, all organic, attributable to the following:
  • 5% growth in Government Solutions underpinned by the commencement of new programs, including cybersecurity and risk management services for the Defense Health Agency, holistic human and psychological performance services for the U.S. Special Operations Forces under the Preservation of the Force and Family program, and networking, communications and training services for the U.K. Ministry of Defence. Additionally, we substantially completed disaster recovery work at Tyndall Air Force Base during the quarter.
  • 19% growth in Technology Solutions attributable to strong execution across our chemical, petrochemical, refining and ammonia projects and expanded proprietary equipment sales.
  • 31% growth in Energy Solutions primarily attributable to ramp up of cost-reimbursable projects, including a brownfield revamp refinery project in the U.S. Gulf Coast, a crude terminal expansion project in the Permian Basin, and a greenfield methanol project in Louisiana.
  • Equity earnings, SG&A and interest expense were in line with expectations.
  • Adjusted EBITDA growth of 9% attributable to overall revenue growth, benefits from the favorable close-out of a lump sum project in our Non-strategic Business during the quarter, partially offset by the non-recurrence of closeout benefits recognized on two projects in 2018 in our Energy Solutions business.

Handover of Ichthys LNG onshore facility

Our JKC joint venture recently completed commissioning, performance testing and handover of the onshore portion of the Ichthys LNG project in Australia. The onshore portion represents JKC’s total scope on the project and includes two LNG liquefaction trains, cryogenic tanks and a combined cycle power generation facility.  The Ichthys LNG project, one of the most significant and complex oil and gas projects in the world, is delivering LNG to meet the world’s growing demand for clean energy.

Liquidity and Capital Structure

  • Year-to-date operating cash flow of $199m, or 138% net income conversion.
  • Gross and net debt leverage of 2.8x and 1.3x, respectively; continued gross debt de-leveraging attributable to pay down of debt during the year of $54m, including $32m of elective payments, and increasing EBITDA.
  • The Ichthys LNG facility was completed within the previously disclosed funding expectations.
  • An increase of KBR’s credit rating by S&P to BB- with stable outlook.

Notable New Business Awards/Developments:

Quality bookings continue to support the Company’s long-term outlook. Consolidated third quarter 2019 book-to-bill was 2.1x, excluding the workoff of our private finance initiatives and other adjustments. Each of our business segments achieved healthy book-to-bill in the quarter winning contracts aligned with our strategy that combines deep technical expertise, global presence and commercial discipline. Notable bookings in the quarter include the following:

  • A reimbursable contract in our Energy Solutions business to provide EPC services to deliver a methanol operating plant for Methanex located adjacent to its two existing Geismar, Louisiana facilities.
  • A Purifier™ license and basic engineering design contract in our Technology Solutions business for the largest grassroots ammonia plant ever designed by KBR. We believe this will be the largest true single-train plant in operation in the world. Our Purifier™ technology is highly attractive because of its energy efficiency, flexibility and lower capital costs.
  • A new five-year, $200 m contract in our Government Solutions business to provide launch range operations at NASA’s Wallops Flight Facility. Under this contract, we will perform a broad range of work, including radar, telemetry, logistics, tracking and communications services for flight vehicles. We will also test and maintain communications and electronic systems and will operate ground, spacecraft and launch vehicle processing systems.

Our backlog does not include our recent LOGCAP V and Freeport LNG Train 4 awards.

Raising Guidance

KBR raises 2019 GAAP EPS guidance with a range of $1.36 to $1.46 and Adjusted EPS guidance with a range of $1.64 to $1.74 per share. Our Adjusted EPS guidance excludes legacy legal costs for U.S. Government contracts, non-cash imputed interest on the conversion option of the convertible debt, acquisition and integration related costs, amortization related to the consolidation of Aspire and incremental 2019 interest expense associated with funding the Ichthys project. A reconciliation of GAAP EPS to Adjusted EPS guidance is included at the end of this release. Operating cash flows for 2019 are estimated to range from $200 m to $225m.

Reporting Changes and Reclassifications

Changes in reporting, effective January 1, 2019:

  • We changed the name of our Government Services segment to “Government Solutions”, our Technology segment to “Technology Solutions”, and our Hydrocarbons Services segment to “Energy Solutions”.
  • Effective January 1, 2019, we elected to classify certain indirect costs incurred as overhead (included in “Cost of revenues”) or general administrative expenses for U.S. GAAP reporting purposes in the same manner as such costs are defined in our disclosure statements under U.S. Government Cost Accounting Standards. We reclassified $27 m and $94 m from “Cost of revenues” to “Selling, general and administrative expenses” for the three and nine months ended September 30, 2019, respectively. There was no impact on consolidated or segment operating income or net income as previously reported.

30 Oct 19. Airbus reports Nine-Month (9m) 2019 results; delivery and FCF outlook updated, EBIT Adjusted guidance maintained.

  • Solid commercial aircraft environment
  • 9m financials mainly reflect A320neo ramp-up and A350 progress
  • Revenues € 46.2bn, +14% YoY; EBIT Adjusted € 4.1bn, +51% YoY
  • EBIT (reported) € 3.4bn; EPS (reported) € 2.81
  • 2019 guidance updated for delivery outlook of around 860 commercial aircraft: FCF before M&A and Customer Financing now approximately € 3bn, EBIT Adjusted guidance maintained

Airbus SE (stock exchange symbol: AIR) reported Nine-Month (9m) 2019 consolidated financial results and provided full-year guidance.

“Our nine-month results are mainly driven by the performance in commercial aircraft, reflecting both the A320neo ramp-up and progress on the A350,” said Airbus Chief Executive Officer Guillaume Faury. “We are focused on the A320neo ramp-up and improving the industrial flow while managing the higher level of complexity on the A321 ACF in particular. Our nine-month delivery numbers and the updated delivery outlook for the year reflect the underlying actions to secure a more efficient delivery flow in the next years as we progress to rate 63 per month for the A320 Family in 2021. The full-year free cash flow guidance has been adjusted to reflect the revised delivery outlook while the EBIT Adjusted target is maintained. We are focused on meeting our customer commitments and preparing the production system for the future.”

Gross commercial aircraft orders totalled 303 (9m 2018: 311 aircraft), including 20 A330neos and 22 A350 XWBs in the third quarter alone, with net orders of 127 aircraft (9m 2018: 256 aircraft). The order book stood at 7,133 commercial aircraft as of 30 September 2019. Net helicopter orders of 173 units (9m 2018: 230 units) included 12 H135s in the third quarter. Airbus Defence and Space’s order intake by value totalled € 6.1bn, with third quarter bookings supported by key contract wins in Space Systems.

Consolidated revenues increased to € 46.2bn (9m 2018: € 40.4bn), mainly driven by higher deliveries, a favourable mix and foreign exchange rate development. A total of 571 commercial aircraft were delivered (9m 2018: 503 aircraft), comprising 33 A220s, 422 A320 Family, 34 A330s, 77 A350s and 5 A380s. Airbus Helicopters delivered 209 units (9m 2018: 218 units) with its stable revenues supported by growth in services and reduced by programme phasing. In September, the 1,000th Super Puma helicopter was delivered. Higher revenues at Airbus Defence and Space were mainly driven by Military Aircraft activities.

Consolidated EBIT Adjusted – an alternative performance measure and key indicator capturing the underlying business margin by excluding material charges or profits caused by movements in provisions related to programmes, restructurings or foreign exchange impacts as well as capital gains/losses from the disposal and acquisition of businesses – increased to € 4,133m (9m 2018: € 2,738m), mainly reflecting the commercial aircraft performance at Airbus.

Airbus’ EBIT Adjusted increased sharply to € 3,833m (9m 2018: € 2,340m), largely driven by the A320 ramp-up and NEO premium, progress on the A350 financial performance and foreign exchange improvement which already materialised in H1 2019.

On the A320 programme, NEO aircraft represented 338 out of the total 422 deliveries. The production ramp-up continued for the Airbus Cabin Flex (ACF) version of the A321, which remains challenging. The ACF programme will further ramp up in Q4 2019 with efforts continuing throughout 2020 to improve the industrial maturity of the programme. Airbus also continues to study different options to increase the share of the A321 in current A320 Family production capacity. The ramp-up of the A330neo continued and represented 26 of the total 34 A330 deliveries over the nine-month period. Airbus continued to make good progress on A350 recurring cost convergence with the programme on track to reach the breakeven target for the year.

Airbus Helicopters’ EBIT Adjusted was stable at € 205m (9m 2018: € 202m), reflecting an increased contribution from services which was reduced by a less favourable delivery mix.

EBIT Adjusted at Airbus Defence and Space totalled € 355m (9m 2018: € 409m), mainly reflecting efforts to support ongoing and future campaigns. The Division’s focus is on performance improvement across its businesses.

Ten A400M military transport aircraft were delivered, bringing the in-service fleet to 84 as of 30 September 2019. During the third quarter several key milestones were achieved towards the aircraft’s full capability, including the successful deployment of 58 paratroopers through a single side door and 80 simultaneously from both side doors as well as in-flight refuelling contacts with an H225M helicopter. While the A400M cash consumption is reducing, it is not at the pace being targeted. Airbus will continue with development activities towards achieving the revised capability roadmap. Retrofit activities are progressing in line with the customer agreed plan. Challenges remain, particularly on exports.

Consolidated self-financed R&D expenses totalled € 2,150m (9m 2018: € 2,103m).

Consolidated EBIT (reported) increased to € 3,431m (9m 2018: € 2,683m), including Adjustments totalling a net € -702m. These Adjustments comprised:

  • A negative € -253m related to the dollar pre-delivery payment mismatch and balance sheet revaluation;
  • A negative € -221m related to the suspension of defence export licences to Saudi Arabia by the German government, now prolonged to March 2020, of which € -13m were booked in Q3 2019;
  • A negative € -158m related to A380 programme cost, of which € -22m were booked in Q3 2019, as part of Airbus’ continuous assessment of asset recoverability and the quarterly review of onerous contract provision assumptions;
  • A total of € -70m of other costs.

Consolidated reported earnings per share of € 2.81 (9m 2018: € 1.88) included a negative impact from the financial result, affected by the recognition of a loss on foreign exchange hedges as a result of the defence export licence suspension already booked as of Q2 2019. The financial result was € -233m (9m 2018: € -413m). The effective tax rate also reflected charges related to the defence export licence suspension, as well as the reassessment of tax assets and liabilities. Consolidated net income was € 2,186m (9m 2018: € 1,453m).

Consolidated free cash flow before M&A and customer financing of € -4,937m

(9m 2018: € -4,169m) mainly reflected the working capital build to support future deliveries, including advanced stage aircraft close to delivery. Consolidated free cash flow was € -5,127m (9m 2018: € -3,928m).

The consolidated net cash position was € 5.6bn on 30 September 2019 (year-end 2018:    € 13.3bn) after the 2018 dividend payment of € 1.3bn in the second quarter. The gross cash position on 30 September was € 17.8bn (year-end 2018: € 22.2bn).

In response to developments in the WTO dispute, the United States Trade Representative (USTR) decided to impose tariffs on Airbus commercial aircraft imported from the EU into the US from 18 October 2019. The tariffs, as announced, do not include components delivered to Mobile, US, from Europe. Airbus is working with its US customers to manage the consequences of these tariffs. The potential decision of the EU to impose tariffs on US products should come at a later stage. Airbus continues to support an outcome through a negotiated solution.

Outlook

As the basis for its 2019 guidance, the Company expects the world economy and air traffic to grow in line with prevailing independent forecasts, which assume no major disruptions.

The 2019 earnings and Free Cash Flow guidance is before M&A.

  • Airbus now targets around 860 commercial aircraft deliveries in 2019, which reflects the updated delivery schedule.
  • On that basis:

Airbus maintains its expected increase in EBIT Adjusted of approximately +15% compared to 2018.

Airbus now expects FCF before M&A and Customer Financing of approximately € 3bn.

29 Oct 19. UK clears acquisition of satellite company Inmarsat. The British government on Tuesday cleared the acquisition of satellite communications company Inmarsat by a private equity consortium after it accepted undertakings given by the acquirer relating to national security.

The consortium of UK-based Apax partners, US-based Warburg Pincus and two Canadian pension funds agreed to buy the provider of satellite communications to shipping, aircraft and governments for $3.4bn in March.

The government said the undertakings provided assurance that sensitive information was protected and that enhanced security controls were in place to ensure the continued supply of key services used by the Ministry of Defence. (Source: Reuters)

29 Oct 19. Eaton Reports Third Quarter Earnings Per Share of $1.44.

Third Quarter Adjusted Earnings Per Share of $1.52, Up 6 Percent Over the Third Quarter of 2018, Excluding Acquisition and Divestiture Costs and 2018 Arbitration Decision Expense

Record Adjusted Segment Margin in Third Quarter of 18.7 Percent

Operating Cash Flow in Third Quarter of $1.1bn, A New Quarterly Record

Lowering Midpoint of Full-Year 2019 Adjusted Earnings Per Share Guidance to $5.72, Nine Cents Below Current Consensus Due to Lower Markets

Operating Cash Flow for 2019 Now Expected to be Between $3.4bn and $3.6bn, $100m Above Prior Guidance

Power management company Eaton Corporation plc (NYSE:ETN) today announced that earnings per share were $1.44 for the third quarter of 2019. Adjusted earnings per share, which exclude charges of $0.08 per share for acquisition and divestiture transaction and integration costs, were $1.52. This represents an increase of 6 percent over the third quarter of 2018, excluding the 2018 arbitration decision related to the legacy Cooper business.

Sales in the third quarter of 2019 were $5.3 n, down 2 percent from the third quarter of 2018. Organic sales were down 1 percent and negative currency translation was 1½ percent, partially offset by the acquisitions of Ulusoy and Innovative Switchgear, which added ½ percent to sales.

Craig Arnold, Eaton chairman and chief executive officer, said, “We had a solid third quarter, with adjusted earnings per share up 6 percent over 2018 excluding the 2018 arbitration decision, despite market growth coming in significantly lower than our expectations. Our organic sales growth was down 1 percent. As we began the quarter, we expected organic sales would be up 3 percent. Our adjusted segment margins in the third quarter were 18.7 percent, an all-time record and above the high end of our guidance. This represents a 110 basis point improvement over the third quarter of 2018. We had all-time record margins in three of our segments – – Electrical Products, Electrical Systems and Services, and Aerospace. Together, these three segments represent nearly 80 percent of our segment operating profits.

“Operating cash flow in the third quarter was $1.1 bn, a new quarterly record. We now expect full year 2019 operating cash flow to be between $3.4bn and $3.6 bn, $100 m above our prior guidance. This reflects a cash conversion ratio above 120 percent,” said Arnold. “We continued to return substantial cash to our shareholders in the quarter, repurchasing $539m of our shares, bringing our year-to-date repurchases to a total of $949m, or 2.8 percent of the shares outstanding at the start of 2019.

“For full year 2019, we now expect organic sales to grow 1 percent, compared to our previous estimate of 3 percent, and we estimate the impact of negative currency translation to be $350 m, $50 m higher than our previous expectation. As a result, we now expect 2019 adjusted earnings per share to be between $5.67 and $5.77, down at the midpoint 9 cents from consensus, and representing a 6 percent increase over 2018, excluding the 2018 arbitration decision,” said Arnold. “Accordingly, for the fourth quarter of 2019, we anticipate adjusted earnings per share to be between $1.36 and $1.46.”

Business Segment Results

Sales for the Electrical Products segment were $1.8bn, flat with the third quarter of 2018. Organic sales were up 1 percent, offset by negative currency translation of 1 percent. Operating profits were $358m. Excluding $4m of transaction costs related to the divestiture of the Lighting business, adjusted operating profits were $362m, up 6 percent over the third quarter of 2018.

“Operating margins in the third quarter were 20.0 percent,” said Arnold. “Excluding costs related to the divestiture of the Lighting business, adjusted operating margins were 20.3 percent, up 110 basis points over 2018 and an all-time quarterly record.

“In mid-October, we signed an agreement to sell our lighting business to Signify for a price of $1.4bn,” said Arnold. “We believe this is a good outcome for our employees and shareholders.

“Orders in the third quarter, excluding Lighting, were up 1 percent, with growth strongest in residential and commercial construction markets in the Americas,” said Arnold.

Sales for the Electrical Systems and Services segment were $1.6bn, up 3 percent over the third quarter of 2018. Organic sales were up 3 percent and the acquisition of Ulusoy and Innovative Switchgear added 1½ percent to sales, which was partially offset by negative currency translation of 1½ percent. Operating profits were $284 m. Excluding transaction and acquisition integration costs of $3m related to Ulusoy and Innovative Switchgear, adjusted operating profits were $287m, up 23 percent over the third quarter of 2018.

“Operating margins were 18.1 percent. Excluding transaction and acquisition integration costs, adjusted operating margins were 18.3 percent, an improvement of 290 basis points over 2018 and an all-time record,” said Arnold. “The twelve-month rolling average of our orders in the third quarter was up 5 percent, with growth across all regions. Excluding hyperscale data center orders, which are sometimes lumpy due to customers placing orders for multiple years in a single quarter, the twelve-month rolling average of our orders in the third quarter was up 8 percent, the same as in the second quarter.”

Hydraulics segment sales were $603m, down 10 percent from the third quarter of 2018. Organic sales were down 8 percent and negative currency translation was 2 percent. Revenue declined due to weakness in the global mobile equipment market and destocking at both OEMs and distributors. Operating profits in the third quarter were $72 m, down 23 percent from the third quarter of 2018.

“We were pleased to see the margin step up in Hydraulics in the third quarter, with margins rising to 11.9 percent versus 11.5 percent in the second quarter of this year despite seasonally lower revenue,” said Arnold. “Orders in the third quarter decreased 14 percent from the third quarter of 2018, driven by continued weakness in the global mobile equipment market.”

Aerospace segment sales were $513m, up 7 percent over the third quarter of 2018. Organic sales were up 8 percent, partially offset by negative currency translation of 1 percent. Operating profits in the third quarter were $129 m, up 23 percent over the third quarter of 2018.

“Operating margins in the quarter were 25.1 percent, an all-time record, up 310 basis points over 2018,” said Arnold. “The twelve-month rolling average of our orders in the third quarter was up 13 percent. We saw particular strength in orders for the military market, specifically for fighters, rotorcraft, and aftermarket, as well as for business jets.”

The Vehicle segment posted sales of $761m, down 13 percent from the third quarter of 2018. Organic sales were down 12 percent and currency translation was negative 1 percent. Operating profits in the third quarter were $139 m, down 16 percent from the third quarter of 2018.

“Operating margins in the quarter were 18.3 percent,” said Arnold. “Our revenue in Vehicle declined due to global weakness in light vehicle markets, as well as revenues that transferred over to the Eaton Cummins joint venture.”

eMobility segment sales were $79 m, down 1 percent from the third quarter of 2018. Organic sales were flat and negative currency translation was 1 percent. Operating profits in the third quarter were $4 m, down 60 percent from the third quarter of 2018 due to increased investment in research and development. Operating margins in the quarter were 5.1 percent. (Source: BUSINESS WIRE)

29 Oct 19. Blighter Secures Major Funding to Expand Customer Base for its Radar and Counter-drone Solutions.

  • The funding will allow Blighter to improve its supply chain and shorten product lead times for new and existing customers in the global defence and commercial security markets
  • BOOST&Co’s growth capital loan will enable Blighter to further exploit the success of its advanced radars and counter-drone solutions for use by airports, nuclear power stations, oil/gas processing plants and other critical national infrastructure sites.

Blighter Surveillance Systems Ltd (www.blighter.com) (“Blighter”), a British designer and manufacturer of electronic-scanning (e-scan) radars and counter-drone solutions, has secured a significant growth capital loan from BOOST&Co (www.boostandco.com) to further exploit the success of its advanced radars and counter-drone solutions for use by airports, nuclear power stations, oil/gas processing plants and other critical national infrastructure sites.

The funding will also allow Blighter to improve its supply chain and shorten product lead times for new and existing customers in the global defence and commercial security markets. Blighter e-scan micro-Doppler radars and counter-drone solutions are deployed in 35 countries, including, for example, by the UK Ministry of Defence in Afghanistan, in South Korea monitoring the demilitarised zone (DMZ), and by the United States Department of Defense in Iraq.

Angus Hone, CEO, Blighter Surveillance Systems, said: “We are delighted to secure this funding as it will enable us to build on record growth and further expand our commercial client base. Having adapted our military-grade advanced ground radar and counter-drone solutions for use in the commercial world, we plan to leverage some early successes with airports and other critical infrastructure sites to further grow the business.

“Blighter ground surveillance radars are already successfully deployed at Stansted and Heathrow airports in the UK and at many other international airports,” said Angus Hone. “But we have seen a surge of interest in our counter-drone radars from airports and other critical infrastructure sites in recent years as a result of the growing sightings of rogue drones.  And our Blighter A400 series air security radar is now deployed at Gatwick as part of the airport’s counter-drone defences following last December’s incident that brought the airport to a standstill.”

The Blighter solid-state all-weather A400 series air security/counter-drone radars are optimised for the detection of small unmanned aerial vehicles (UAVs) or drones carrying video cameras, wireless communication systems, narcotics, explosives and other undesirable payloads. The radars detect and report Nano, Micro and Miniature drones at ranges from 10 metres up to 3.6 km (2.2 miles) and larger drones and aircraft at ranges up to 10 km (6.2 miles) at speeds from full flight down to hover-drift.

Tracy Sambrook, chief financial officer (CFO), Blighter Surveillance Systems, added, “Blighter is well placed to capitalise on the growth of drone detection systems given our reputation, track record and customer base. And the funding is good news for all our customers as some of the loan will be used to improve our supply chain so that we can shorten the lead times for our products.”

Blighter radars are deployed to deliver around the clock all-weather protection along borders, for coastal facilities, at military bases, and to guard critical national infrastructure such as airports, oil/gas facilities and palaces. Blighter Surveillance Systems delivers an integrated multi-sensor package to system integrators comprising the Blighter radars plus cameras, thermal imagers, trackers and software solutions.

29 Oct 19. Advent wins EU approval for Cobham deal, still waiting for UK nod. U.S. private equity firm Advent International said it had won approval from European Union, U.S. and Finnish regulators for its $5bn (3.9bn pounds) acquisition of British defence company Cobham (COB.L), as it continues to wait for U.K. approval.

Britain has intervened in the deal on national security grounds and its regulator, the Competition and Markets Authority, is due to give the results of its investigation on the matter to the business minister on Tuesday.

Advent said in a statement that it continued to work to win government approval. Shareholders backed its takeover of the air-to-air refuelling specialist in September.

“Advent continues to be positively engaged with the UK Government to demonstrate its commitment to providing assurances which reflect good custodianship of Cobham,” the private equity firm said. (Source: Reuters)

28 Oct 19. KKR adds Deutsche Bank to defence supplier Hensoldt’s IPO lineup – sources. Private equity firm KKR (KKR.N) has added Deutsche Bank (DBKGn.DE) and KKR Capital Markets as additional global coordinators for the planned stock market flotation of German defence supplier Hensoldt, people close to the matter said.

The buyout group is working with the two investment banks as well as JP Morgan (JPM.N) and Bank of America (BAC.N) on potentially listing 20-30% of the company on the Frankfurt stock exchange, in a deal that could take place in the second quarter of 2020 and value the group at about 2.5bn euros (2.2bn pounds), they said. KKR and the banks declined to comment.

Hensoldt makes military sensors, electronic warfare equipment, avionics and optronics. It employs 4,400 staff and has annual sales of 1.1 bn euros. In 2020, it is expected to post earnings before interest, tax, depreciation and amortisation of about 250m euros, one of the people said.

Hensoldt’s high-tech cameras are used in products including Tornado fighter jets that fly surveillance missions over Syria and Iraq, while it also supplies radars for Eurofighter jets as well as periscopes for submarines and Leopard and Puma tanks. (Source: Reuters)

28 Oct 19. Rohde & Schwarz remains on course for growth. Rohde & Schwarz has successfully closed its 2018/2019 fiscal year, achieving new highs in terms of both revenue and incoming orders. The consistent focus on connectivity and security, and the substantial investments made in recent years, have paid off. The group expects the positive business trend to continue despite cautious macroeconomic forecasts. The independent technology group Rohde & Schwarz closed its 2018/2019 fiscal year (July to June) with strong results. At EUR 2.14bn, revenue was 4.9 percent higher than in the previous year, while incoming orders rose by 10.6 percent to EUR 2.45bn. The number of employees worldwide climbed from 11,500 to around 12,100 by June 30, 2019.

5G mobile communications gaining momentum

In mobile communications, the commercial introduction of 5G has begun. Rohde & Schwarz was able to take advantage of the necessary infrastructure investments and did very well with its test and measurement solutions, especially with its products for base station testing. For testing 5G devices, the company launched a new generation of testers and over-the-air test chambers that are attracting a lot of interest from manufacturers. The upgrading of mobile networks is also fueling a significant increase in the demand for solutions that measure network quality. Rohde & Schwarz is meeting this demand with a comprehensive product portfolio for all phases in the lifecycle of a mobile network.

Smarter vehicles are driving automotive business

The test and measurement business also profited from the automotive industry, whose substantial R&D expenditures for driver assistance systems and autonomous driving are boosting the demand for test and measurement solutions. Rohde & Schwarz offers a broad portfolio of T&M solutions for V2X, radar, eCall, connectivity and automotive buses, for example a unique tester for radar sensors.

Covering all file based studio equipment needs

In broadcast studios, the technical modifications required to support ultra high definition HDR formats are well underway. Rohde & Schwarz is supporting this process with state-of-the-art products for ingest, post production and playout. Rohde & Schwarz strengthened its position in this area by acquiring the British company Pixel Power in 2019.

Healthy demand for security technology

The security scanner segment has developed beyond expectations. Numerous airports on three continents have now installed Rohde & Schwarz scanners. In the near future, the group will be rolling out another model for non-aviation scenarios where large crowds need to be scanned.  A number of incidents involving drones near airports made headlines around the world last year, again underscoring the vulnerability of critical infrastructures. With its drone detection system, Rohde & Schwarz offers a field-proven solution that locates drones and their pilots. Given the rising demand for the system and the market forecasts for anti-drone systems, the company expects the positive business trend to continue.

Software defined networking wins over large retail chains

The wholly-owned Rohde & Schwarz subsidiary LANCOM Systems, Europe’s leading manufacturer of network infrastructure solutions for business and the public sector, reported continued solid growth in the past fiscal year. Numerous large retail chains and other major companies with many branches use LANCOM technology to operate their networks. LANCOM assumed responsibility for the firewall business of Rohde & Schwarz Cybersecurity in the middle of the year and is now a single-source provider of comprehensive network technology solutions, including cybersecurity components.

Rohde & Schwarz ensures digital sovereignty for armed forces

Armed forces worldwide are forging ahead with digitalization. With its advanced communications solutions, Rohde & Schwarz has established a strong position as a technology partner. To date, the company has supplied 8000 airborne radios. More than 40 naval forces use Rohde & Schwarz communications equipment. Rohde & Schwarz was able to secure further strategically important major orders in the naval communications segment, largely thanks to the company’s positioning as an overall system integrator. The latest generation of Rohde & Schwarz software defined radios enables customers to develop their own communications and encryption methods. The new SOVERON product brand emphasizes this independence, an aspect that is very important to customers. SOVERON technology is being deployed in the “infantryman of the future” project, which will be one of Germany’s contributions to the NATO’s Very High Readiness Joint Task Force (VJTF).

Focus on growth markets

By concentrating on the high-growth market segments of communications, information and security technology, the company looks to the future with confidence.

28 Oct 19. China approves merger of shipbuilding giants. China’s State Council has approved the merger of its two state-owned shipbuilding enterprises: the China Shipbuilding Industry Corporation (CSIC) and China State Shipbuilding Corporation (CSSC). China’s Assets Supervision and Administration Commission of the State Council (SASAC) announced on 25 October that the merger, which was agreed in principle by the two groups in July, had received necessary approvals from the State Council and that CSIC and CSSC will now implement “joint restructuring”. SASAC gave no additional details but the merger is expected to be completed in the first half of 2020. Reports in China said the two merged enterprises will be named China Shipbuilding Group Corporation and will be led primarily by executives from CSSC. (Source: IHS Jane’s)

28 Oct 19. Hanwha Systems set for IPO. South Korean defence firm Hanwha Systems has announced plans to launch an initial public offering (IPO) in mid-November as part of efforts to expand in domestic and international markets. The company said on 28 October that through the listing, which will feature the sale of 33 million shares from KRW12,250 each, it aims to generate funds worth about KRW460bn (USD393m). Hanwha Systems CEO Kim Yeon-chul said, “Through our listing we will establish ourselves as a leading global company in the defence industry and ICT (information and communication technologies).” Hanwha Systems was previously known as Samsung Thales but was acquired by the Hanwha group in 2015. (Source: IHS Jane’s)