02 Jan 20. Curtiss-Wright Corporation (NYSE: CW) today announced that it has completed the acquisition of 901D Holdings, LLC (901D) for $132m in cash. 901D is a leading designer and manufacturer of mission-critical integrated electronic systems, subsystems and ruggedized shipboard enclosure solutions supporting every major U.S. Navy shipbuilding program.
The acquisition expands the breadth of our instrumentation and controls systems technologies and increases Curtiss-Wright’s footprint on critical U.S. Navy shipbuilding programs. In addition, the combination of 901D’s proven track record and Curtiss-Wright’s state-of-the-art electronic systems and software capabilities will allow us to provide shipboard solutions on both nuclear and non-nuclear powered vessels, and ensures that we are well-positioned to benefit from the continued expansion of the U.S. naval fleet.
The business will operate within Curtiss-Wright’s Defense segment. The acquisition supports our long-term financial objectives including increased sales growth, margin expansion and strong free cash flow generation. It is expected to be accretive to Curtiss-Wright’s 2020 adjusted diluted earnings per share, excluding first year purchase accounting costs, and produce a free cash flow conversion rate in excess of 100%.
Founded in 1999, 901D’s solutions are utilized in mission-critical applications to protect servers, weapons systems and other hardware aboard all major U.S. Navy aircraft carriers, submarines and surface ships from harsh environments (shock, thermal, electromagnetic). Further, it is a critical supplier of MIL-SPEC ruggedized enclosure solutions from specification through certification and also provides proven design configurations to match customers’ exact form, fit and function requirements. 901D employs approximately 85 people.
30 Dec 19. Maxar Technologies to Sell MDA to Northern Private Capital for CAD$1bn. Maxar plans to use the proceeds to pay down debt and fund investments in its core areas of Earth Intelligence and Space Infrastructure. Maxar will continue to be trusted, end-to-end solutions provider to world’s most sophisticated government and commercial entities.
Maxar Technologies (NYSE:MAXR) (TSX:MAXR), a trusted partner and innovator in Earth Intelligence and Space Infrastructure, today announced it has entered into a definitive agreement to sell MDA to a consortium of financial sponsors led by Northern Private Capital (NPC), for CAD$1bn (US$765m), subject to customary adjustments. The company expects to use proceeds to reduce leverage and improve its capital structure to prioritize investments for growth in its core areas of Earth Intelligence and Space Infrastructure.
The transaction includes all of MDA’s Canadian businesses, encompassing ground stations, radar satellite products, robotics, defense, and satellite components, representing approximately 1,900 employees. These businesses are expected to generate approximately US$370m and US$85m in revenue and Adjusted EBITDA, respectively in 2019. This revenue is inclusive of approximately US$78m of intercompany sales to other Maxar entities.
Following the completion of the transaction, the MDA team will operate as a stand-alone company within NPC’s portfolio, retaining its name and standing as the leading space and defense company in Canada. MDA expects to continue to supply Maxar with certain components and subsystems, and the companies expect to sell each other’s complementary satellite data. The revenue and Adjusted EBITDA numbers for MDA highlighted above include approximately US$52m of revenue and US$29m of Adjusted EBITDA for certain radar related imagery sales which have historically been included in Maxar’s imagery segment. This business activity has been included in the sale of MDA.
“The sale of MDA furthers execution on the company’s near-term priority of reducing debt and leverage,” said Dan Jablonsky, Maxar CEO. “It also provides increased flexibility, range, and focus to take advantage of substantial growth opportunities across Earth Intelligence and Space Infrastructure categories. After the transaction is complete, Maxar will retain leading capabilities in geospatial data and analytics, satellites, space robotics, and space infrastructure, and we will continue to have strong alignment with our defense and intelligence customers, the evolving requirements of civil governments, and the pursuit of innovation seen in the commercial marketplace. We thank the talented employees of MDA, who have built a world-class business with unique capabilities, and we look forward to working with them as a commercial partner and component supplier to Maxar going forward.”
“This transaction — when combined with the recently completed sale of real estate in Palo Alto — reduces Maxar’s overall debt by more than $1bn and significantly reduces Maxar’s leverage ratio,” said Biggs Porter, Maxar CFO. “Also, the loss of future cash flow from MDA will be significantly offset by interest savings from the reduction of debt. We expect the net effect of all these factors to only reduce our prior guidance for Adjusted EBITDA and free cash flow generation in the 2022 to 2023 time period by approximately $50m.”
Porter continued, “While the sale of MDA will re-baseline the size of the overall company, we continue to expect significant Adjusted EBITDA and Free Cash Flow growth over the next several years as the Legion constellation construction spend completes and the constellation comes online, Services executes on its growing backlog, and Space Infrastructure sees improved profit and cash flow driven by recent re-engineering efforts and new program wins.”
The completion of the transaction is conditioned on regulatory approvals, including review by the Committee on Foreign Investment in the United States, Hart-Scott-Rodino review by the U.S. Department of Justice and the U.S. Federal Trade Commission, and Canadian government reviews under the Radiocommunications Act and the Competition Act.
PJT Partners, RBC Capital Markets, and Bank of America Merrill Lynch are serving as financial advisors to Maxar. Wachtell, Lipton, Rosen & Katz and Stikeman Elliott LLP are serving as the company’s legal advisors for this transaction.
The amounts of revenue and Adjusted EBITDA given above in this release represent the expected results of MDA as they flow into Maxar’s Space Systems and Imagery segments and will vary from the amounts ultimately classified as discontinued operations for MDA, which will reflect interest, depreciation, amortization, taxes, certain corporate expenses, and the effect of blending margins on projects for which MDA is an intercompany subcontractor. The MDA businesses are expected to have approximately US$10m in Depreciation and Amortization expense. (Source: BUSINESS WIRE)
19 Dec 19. Celestia Technologies Group Secures Satellite Ground Systems Division from Antwerp Space. Celestia Technologies Group has acquired the satellite ground systems division of Antwerp Space, part of the Bremen-based OHB SE Group, in a deal that will boost Celestia’s existing expertise in EGSE (Electrical Ground Support Equipment) and ground systems. The Celestia Technologies Group is a pan-European network of SME’s based on innovation and development of high technology products for the space, defence, telecom and scientific markets. The addition of the Belgian business adds further capability to the group, enabling Celestia to offer customers a wider product portfolio of EGSE products alongside complete turnkey solutions. It also boosts annual group turnover by 4m euros. All the ground segment activities previously carried out by Antwerp Space will continue in a newly created Belgian entity Celestia Antwerp BV, a fully owned subsidiary focusing on the EGSE and ground segment activities that have been the cornerstone of the Antwerp Space business for the last 50 years.
Celestia already owns C-STS, formerly part of the SSBV group, also with a strong market position in satellite EGSE and modems for ground stations. This latest move therefore reinforces Celestia’s overall standing in the ground systems market, opening up a more extensive product portfolio alongside important technology and cost synergies.
The combined yearly turnover for both companies will be 8m euros, representing 25 percent of the Celestia group turnover. In welcoming the 17-strong team of Antwerp Space engineers to the business, Celestia group chairman José Alonso said the company is delighted to bring one of Belgium’s most well-established and experienced ground station specialists into the Celestia fold. This strategic move brings together the best of two formerly competing companies, allowing the firms to exploit synergies and knowledge while providing greater integration capabilities and expertise to customers. (Source: Satnews)
23 Dec 19. Boeing CEO Out; Systemic Problems May Remain. Boeing’s military programs have been affected by “under-prioritizing engineering resources,” says Teal Group’s Richard Aboulafia. Beleaguered Boeing Co. has pushed out CEO Dennis Muilenburg in an attempt to recover from a string of high-profile program failures. But it is unclear if a change at the top will fix what some close observers of the company say are the root causes of the company string of problems.
Richard Aboulafia, long-time aviation business analyst at Teal Group, says Boeing seems to be suffering from a systemic failure: a dysfunctional relationship between the management and engineering sides of the house that affect both military and civil programs.
“I think they’ve got big issues in communications between engineering and management,” he told me today. “The one consistent thread between commercial and military is that they’ve come to regard engineers as another asset to be leveraged.”
While Muilenberg is gone, Boeing has not swept out its core management team. The board simply promoted its chair, David Calhoun, to the CEO slot and rotated Lawrence Kellner into the slot of non-executive chairman of the board.
We asked Boeing for reaction to Aboulafia’s critique. This is what they said: “We’re remaining focused on our customers and meeting our commitments.”
The latest disaster for Boeing was the failure of the much-touted Starliner space capsule to reach the International Space Station last Friday due to a clock problem that deleted its fuel, and forced it to return to Earth after only two days in orbit. The company, and NASA Administrator Jim Bridenstine, downplayed the incident, but given the high stakes as NASA seeks to regain America’s ability to launch humans into space the fact of the failed test is a black eye to both.
The Starliner problem followed hard on the heels on the firm’s major announcement last Monday that it was shutting down the 737 Max airliner production line in January. As reported by David Schaper on Dec. 12, that decision came after Federal Aviation Administration (FAA) chief Stephen Dickson warned Muilenburg to back away from Boeing’s push to speed the 737 Max’s return to service following crashes in Indonesia and Ethiopia that killed 346 people.
Boeing did just have a win on the military side of its operations, with the Air Force last Wednesday lifting the three-month-long ban on KC-36 cargo and personnel flights. The lock-down was piqued by the discovery that cargo restraints came open of their own accord during test flights. that problem came, of course after years of delays and large cost overruns on what was supposed to be a low-risk program.
Aboulafia said the troubles stemming from “under-prioritizing engineering resources” have affected military programs as well as the commercial efforts.
(As an aside, it might be noted that Muilenburg served as president and chief executive officer of Boeing Integrated Defense Systems — later renamed Boeing Defense, Space & Security — from September 2009 until 2015.)
In particular, Aboulafia explained, that approach has led Boeing to contract out system design on many defense programs. These include the firm’s losing bid for the Long Range Strike Bomber (LRS-B, now the B-21 being built by Northrop Grumman), which was a Lockheed Martin design, he said.
Similarly, the T-7A Red Hawk trainer “was largely a Saab design,” and the “MH-139 leveraged a Leonardo helicopter.”
Ironically, Aboulafia added, the “KC-46, you could argue, was their one big win, leveraging a Boeing design from the 1970s and then badly mangling execution.” (Source: Breaking Defense.com)