11 Jun 20. Czech-Hungarian joint venture buys military jet maker Aero Vodochody. Czech defence and security group Omnipol said on Thursday it had acquired domestic aircraft maker Aero Vodochody Aerospace in a joint venture with Hungarian businessman and former chief security adviser Andras Tombor.
Aero Vodochody produces aircraft for military training and light combat, including its own L-39 and new L-39NG designs. Before the coronavirus outbreak hit, it had aimed to double its revenue to as much as 6bn crowns ($256m) this year.
Omnipol said in February it was in talks to buy the company.
Under the terms of the deal, the Omnipol-Tombor joint venture will buy the company in its entirety from Czech-Slovak group Penta Investments, which acquired Aero Vodochody in 2006 and will retain an airport at its main facility.
Tombor, former chief security adviser to Hungarian Prime Minister Viktor Orban, will hold 51% of the joint venture. Omnipol will manage Aero Vodochody.
No financial details were given.
“We want to build on the tradition of the company and restore its reputation on the Czech and world markets,” Omnipol owner Richard Hava said.
Omnipol had already been a strategic partner with Aero Vodochody in its new-generation L-39 plane project. (Source: Reuters)
11 Jun 20. HEICO Corporation Acquires Naval Hydraulic Repair Specialist. Flight Support Group Acquires Rocky Mountain Hydrostatics. HEICO Corporation (NYSE: HEI.A) (NYSE: HEI) today announced that its Flight Support Group acquired 70% of naval hydraulic systems specialist Rocky Mountain Hydrostatics, LLC in an all cash transaction. Additional financial details were not disclosed.
HEICO expects the acquisition to be accretive to its earnings within the first year following the closing.
(NOTE: HEICO has two classes of common stock traded on the NYSE. Both classes, the Class A Common Stock (HEI.A) and the Common Stock (HEI), are virtually identical in all economic respects. The only difference between the share classes is the voting rights. The Class A Common Stock (HEI.A) carries 1/10 vote per share and the Common Stock (HEI) carries one vote per share.)
Rocky Mountain overhauls industrial pumps, motors and other hydraulic units with a focus on the support of legacy systems for the US Navy. Customers include master ship repair contractors and the US Navy. Work is performed at Rocky Mountain’s facilities as well as shipboard at any location worldwide.
Rocky Mountain has 21 team members and is headquartered in Brighton, Colorado, with satellite services in San Diego, CA and Norfolk, VA. HEICO stated that it does not expect the purchase to result in any material team member turnover and that Rocky Mountain will continue to operate in its existing locations.
Rocky Mountain was founded in 1991 by Bradley and Therese Zuercher. Mr. Zuercher will continue to lead Rocky Mountain, and will retain 30% ownership.
Laurans A. Mendelson, HEICO’s Chairman & Chief Executive Officer, along with Eric A. Mendelson, HEICO’s Co-President and Chief Executive Officer of HEICO’s Flight Support Group, commented, “Rocky Mountain Hydrostatics has distinguished itself as a specialized provider to ensure the readiness of the United States Navy’s fleet. As such, Rocky Mountain is recognized as the US Navy’s Designated Overhaul Point for many critical components and assemblies and holds DOD qualifications to manufacture the parts incorporated in overhauls. We are impressed with the resources this company has assembled to perform urgent repairs on critical systems required for a ship to continue its mission.”
Bradley Zuercher commented, “We wanted the right partner to support our team with technical and financial resources to move to the next level, and where I can retain ownership and direct the growth of the organization which Therese and I have built with passion. HEICO’s culture, reputation, technical and manufacturing capabilities, along with its strong financial resources made partnering with HEICO an easy decision for Therese and myself.” (Source: BUSINESS WIRE)
11 Jun 20. SOSi Reorganizes Business to Drive Growth in the Defense IT and Intelligence Markets. SOS International LLC (SOSi) announced today the consolidation of its defense information technology and intelligence solutions business units under the leadership of Ed Bachl. Bachl was a co-founder of a company called Vykin Corporation, which was acquired by SOSi in July 2019.
The company’s newly integrated Defense and Intelligence Solutions Group aligns its intelligence analytic, information operations, and technical collection capabilities with its world-class engineering, cybersecurity, and mission IT expertise. The Group supports a variety of programs in the Department of Defense (DoD) and Intelligence Community (IC). It is a prime contractor on the Defense Intelligence Agency (DIA) Solutions for Intelligence Analysis (SIA) program. It is the lead architect of the DoD’s global Mission Partner Environment (MPE), which is used by allied, coalition, and bilateral partners to securely communicate and share information. Its success on the MPE program – awarded by the Defense Information Systems Agency (DISA) and transitioned recently to the U.S. Air Force – makes SOSi a lead contender for an $8bn contract to be solicited later this summer by the U.S. Air Force combining the MPE and Battlefield Information Collection and Exploitation Systems Extended (BICES-X) contracts. The new business also integrates SOSi’s advanced technology research and development capabilities with its real and virtual intelligence, surveillance, and reconnaissance (ISR) sensor and electronic warfare solutions, further promoting the objectives of a newly-formed business subsidiary within the business unit aimed at developing cutting edge technology products supporting classified programs.
“The lines between analytic services and technologies are continuously blurring as more defense and intelligence customers adopt and deploy cloud, machine learning, and artificial intelligence solutions enterprise-wide,” said Julian Setian, SOSi President & CEO. “As a bold and agile organization, we are adapting our business structure to align with the operational and procurement strategy shifts exhibited by our customers in the defense and intelligence markets.”
The newly integrated business is actively managing dozens of programs stretching across four continents. A large segment of the Group’s international workforce is comprised of trained analysts charged with providing timely, reliable, and relevant intelligence for warfighters, planners, and policy professionals worldwide. The organization also has a sophisticated team of multilingual analysts and advisors supporting global information operations.
“Approximately one-third of all SOSi employees are supporting U.S. government programs outside of the U.S., and roughly half are working in support of highly critical intelligence and information technology and cybersecurity missions,” said John Avalos, SOSi Chief Operating Officer. “We have an opportunity to leverage our global footprint and market-leading collection support and analysis capabilities to grow our business and address the emerging needs of the U.S. Intelligence Community and Combatant Commands.”
“Positioning our talented cadre of analysts, developers, and IT professionals within one business unit gives us a tremendous market discriminator,” said Bachl, SOSi’s Senior Vice President for Defense and Intelligence Solutions. “We can incorporate actual user feedback taken from our analysts in the field to develop more effective mission applications, networks, and IT solutions that meet our customers’ current and future needs.”
As part of the reorganization, SOSi promoted Christopher Alligood to Vice President of the Intelligence Solutions Division, where he will lead the delivery and growth of SOSi’s analytic and technical solutions for IC customers. Alligood, a prior Army officer with over 20 years of government and industry experience, joined SOSi in 2018.
SOSi’s Defense and Intelligence Solutions business makes up one-third of the company’s business portfolio. The organization’s Mission Solutions Group provides long-range logistics, operations, maintenance, and supply chain solutions to the DoD and Department of State (DoS). Its Federal Solutions Group provides software development, enterprise IT engineering, enterprise resource system management, network operations, cybersecurity, and language services to numerous non-DoD and non-IC government customers, including the DoS, Department of Justice (DoJ), and Internal Revenue Service (IRS).
ABOUT SOSi
Founded in 1989, SOSi is the largest private, family-owned and operated technology and services integrator in the aerospace, defense, and government services industry. Its portfolio includes military logistics, intelligence analysis, software development, and cybersecurity. (Source: BUSINESS WIRE)
10 Jun 20. NextFlex Secures Seven Years of Funding, Up to $154m, in Cost-Sharing Agreement with AFRL. Funding includes money from the Office of the Secretary of Defense to fuel electronics innovation for manufacturing and military purposes.
NextFlex, America’s Flexible Hybrid Electronics (FHE) Manufacturing Innovation Institute, announced today that it has secured seven years of government funding worth up to $154m in a cost-sharing agreement with the Air Force Research Laboratory (AFRL). The seven-year agreement also includes funding from the Office of the Secretary of Defense’s (OSD) Manufacturing Technology program, which focuses on cross-cutting defense manufacturing needs.
The funds will be used to directly support NextFlex’s ongoing mission to drive manufacturing technology needs for OSD Research & Engineering modernization priorities and developing FHE innovations to accelerate its adoption in the US, with particular focus given to Department of Defense technology transitions that increase military capabilities, and on developing a robust FHE workforce.
“We’re beginning to see some of the initial projects we’ve collaborated on with our members make great strides towards the market, or towards active military use,” explains NextFlex Executive Director Dr. Malcolm Thompson. “As the leading member organization and collaboration partner in the field of FHE, we know this new funding will pave the way towards the vision of Electronics Everywhere.”
Under the new Cooperative Agreement, NextFlex will update and extend its project support and technology roadmaps into FHE manufacturing in partnership with DoD and other government agencies to achieve specific goals in support of these agencies’ missions. With the additional funding, the Institute will also be able to expand on the number of FHE projects with its member partners and continue building a more robust FHE ecosystem in the US.
“We are excited to continue our partnership with NextFlex and its members. The Flexible Hybrid Electronic manufacturing ecosystem did not exist five years ago,” said Dr. Richard Vaia, Chief Scientist for the Materials and Manufacturing Directorate at AFRL. “Today these technologies are not only providing component solutions to our current platforms but are revolutionizing our design concepts for future transformation capabilities for 2030.“
“Over the last five years, the DoD and Government partnership with NextFlex and members demonstrated numerous flexible hybrid electronics-based prototypes for Modernization Priorities. We are excited to support the OSD ManTech Office in the execution of the second AFRL Cooperative Agreement. Many new approaches will be implemented in the second agreement supporting emerging National Advanced Manufacturing challenges and DoD priorities,” said Dr. Eric Forsythe, NextFlex Government Program Manager and ERP SAMM Hybrid Thrust Lead at the U.S. Army Combat Capabilities Development Command’s Army Research Laboratory.
NextFlex also announced today that it has received an additional $10M through the Department of Defense (DOD) Defense-wide Manufacturing Science and Technology Program to advance the state of the art for defense-essential manufacturing capability, through the development of technologies and processes necessary for the production of defense systems. This funding will be used for projects within NextFlex’s 100-member network that advance FHE manufacturing processes in support of DOD advanced manufacturing goals.
“I am proud to support Nextflex’s successful collaborations with organizations like The Center for Advanced Microelectronics Manufacturing (CAMM) at Binghamton University,” said Rep. Anthony Brindisi (NY-22). “I applaud NextFlex’s decision to use additional federal funding for advanced manufacturing projects that will accelerate the adoption of flexible hybrid electronics in the US.” (Source: ASD Network)
11 June 20. Year two post merger, L3Harris looks toward $1bn more in divestitures. One year post merger, L3Harris is a third of the way to its goal of shedding roughly $1.5bn of the company, with COVID-19 slowing progress, said its two top executives in an interview with Defense News.
About $500m in business has been divested since June 2019, when Harris and L3 Technologies combined into a single, $17bn company. That total came by way of three deals that shed the EOTech business, the night vision business, and the security detection and automation businesses.
“Out of the gates, we were really running at this,” said CEO Bill Brown, who noted in previous interviews the audacious goal for divestitures of 8-10 percent of total revenue. “We continue to make progress on others, but obviously with the COVID crisis and the financial impacts of that, it’s moved some opportunities to the right.”
The sale of the security detection and automation businesses to Leidos for about $1bn will ultimately be one of if not the biggest divestiture for the company, said Brown, who declined to point to any specific portions of business as currently up for sale or likely to be shed.
Thus far divestitures have been driven either by overlap created by the merger — which subsequently raised the alarm bells of regulators — or by a desire to focus the portfolio even more to become what Brown described as a “powerhouse C4ISR company.”
Brown stopped short of stating any intention to exit the commercial or federal business altogether — even as the former took a significant hit from pandemic fallout: Commercial revenues are expected to be down around 35 percent organically for the year.
Also likely to suffer from the COVID-19 pandemic is international business. Foreign sales, which account for 20 percent of total revenue, will likely remain flat, versus the increase in low to mid-single digits previously expected.
“We identify that as an area where we think we can outperform,” Chris Kubasik, L3Harris chief operating officer, said during the interview. “Clearly the global pandemic applies some pressure, especially in the Middle East with the prices of oil and all the countries having their own bailouts or stimulus plans. Just like the U.S., I think the situation is going to call into question how those countries deal with defense going forward. It’s going to be one of these areas that we need to monitor, and are probably going to have to take market share to grow.”
An inability to travel has, however, opened doors to new ways of doing business around the world. Kubasik pointed to a particular deal with a customer in a Far East country that was negotiated via Skype.
“Nobody’s really closed for business,” he said. “We’ve just got to be creative and do it differently. You feel pretty good when you do a one- or two-hour Zoom , where in the old days it would have taken four days by the time you flew to the country, cleared customs, got a good night’s rest, held a meeting, met again and flew back.”
For L3Harris, year two post merger will focus on the remaining $1bn in divestitures and see a continuation of company integration. In the longer term, those efforts will set the company up nicely for additional acquisitions, which Kubasik called “a clear expectation” for spurring growth.
And C4ISR is the area that will likely be the focus of potential buys.
“The value of those capabilities and technologies will be even greater in the future in a near-peer competition,” Brown said. “It’s not the platforms, but what the platforms do and how they interoperate that requires networks and new ways of communicating, which is in the sweet spot of the company. So I would imagine that anything we would do through acquisition would happen in that broad C4ISR domain.”
But for now, he added, the company is focusing on “the basic fundamentals.”
“And if we do that really well, then we build credibility to go and do another acquisition, another merger over time. The key is earning the right to do that — building the credibility and the muscle to go down that path, and that’s what we’re doing today.” (Source: Defense News)
11 June 20. Babcock announces Results. Resilient business model ready for the year ahead Archie Bethel, Chief Executive, said: “We end a busy year in a strong position to deal with the current Coronavirus (COVID-19) uncertainty. We saw strong performances across our Marine, Nuclear and Land sectors and have taken action to address weaknesses in Aviation, including writing down goodwill to reflect our updated expectations of the oil and gas market. The early impact of the global COVID-19 pandemic had a limited impact on the Group in the last financial year but is creating uncertainty as we head into this new financial year. “I am immensely proud of the way our people have responded in these challenging times. At Babcock we pride ourselves on the fact that we support customers responsible for providing critical services: our work in defence and aerial emergency services saves lives, supports national defence and protects communities. As always, my priority, and the priority of the Group, is to keep our people safe whilst making sure that those vital services can continue.
“I am also extremely grateful to HM Government and in particular the Cabinet Office and Ministry of Defence who acted quickly and decisively to ensure that contracts continue to be funded and that cash flowed effectively through the main suppliers and down into the supply chain. Also, working with us and other major suppliers, we have together quickly developed safe working solutions at site level supported by our employees, trades unions and regulators. These solutions are being widely shared to ensure that the entire sector is benefiting from the experiences of individual companies. “The majority of our work has been declared to be critical and our people designated as key workers. All of our major sites have remained open, and we have worked closely with our customers to understand and support their changing requirements and operational priorities.
Whether working on site or at home, we have continued to work on major defence programmes, to design new systems, to provide emergency services and to keep nuclear power sites operational. Across Europe our emergency medical services teams have worked courageously alongside national health services in the transport by air of critically ill patients to hospital. “We have also contributed to the fight against the pandemic with new innovative technical solutions. We pioneered the introduction of biocontainment isolation stretcher units which allow virus positive patients to be transported safely, and new in-helicopter barrier systems that provide added protection to flight crews and medical staff. We have shared the experiences gained in Italy, Spain and France with our teams elsewhere, including Sweden where we refitted one of our aircraft to create a dedicated COVID-19 air ambulance.
“By establishing strong safety protocols, many of our contracts have continued to operate throughout the crisis. The business impact of the virus will be felt most significantly in our short-cycle work and adjacent market businesses. We have put mitigation measures into place, including reducing and deferring non-essential operating and capital expenditure to protect the business in the short term. We continue to model a number of scenarios around the ongoing impact of the virus. We have also developed detailed plans to return to productive operating capacity in response to government guidance and customer need as the countries in which we operate begin to emerge from varied restrictions.
“Looking back over last year, we made solid progress in driving our strategy forward. We achieved good revenue growth across our defence businesses and won significant opportunities, including building the next generation of UK warships, securing long term positions on major submarine projects for the USA and Australia, and expanding our aviation defence operations in France. Our expanding technology capabilities were crucial in these wins, and I am really pleased with the high level of growth seen across our technology businesses this year.
“Our area of weakness was in the Oil and Gas aviation business. The global oil and gas market has become even more competitive and we have written down the value of assets in that business to reflect this and impaired Aviation goodwill to reflect how the market has changed and that we do not expect any recovery any time soon. We have also addressed the cost base of our civil aviation and civil nuclear businesses to right size them for the future given the weaker oil and gas market, price and cost pressures in our emergency services business and the smaller civil nuclear business following the end of the Magnox contract and a slowing UK civil nuclear market, exacerbated by COVID-19.
“We enter the new financial year facing uncertain times but the long term characteristics of our business remain strong. We provide some commentary on the year ahead across our sectors but are unable to provide detailed financial guidance at this time. Given this uncertainty, the Board has deferred the decision on our final dividend until there is greater certainty on the impact COVID-19 will have on our business and stakeholders. “Despite this uncertainty, the Group’s strong liquidity position, robust business model, record order book and pipeline and focus on critical services gives us confidence that we will deliver for all our stakeholders in the current year.” Archie Bethel CBE Chief Executive
Financial highlights
- Underlying revenue of £4.9bn in line with our FY20 guidance, statutory revenue of £4.4bn
- Underlying operating profit of £524m after a small impact of COVID-19
- Statutory operating loss of £165m after exceptional items
- Exceptional items of £503m include Aviation goodwill impairment of £395m, other Aviation charges of £143m (including Oil and Gas write downs, an Italy anti-trust fine and a sector restructure). Other exceptionals include a restructure of Nuclear and a profit on the sale of Context
- Total cash outflows from these charges expected to be £129m, reduced to £27m after proceeds from sale of Context
- Exceptional net cash inflow in FY20 of £23m, including Context proceeds
- Underlying basic EPS of 69.1p
- Underlying free cash flow of £192m compared to FY20 guidance of over £250m, with the shortfall reflecting the impact of COVID-19
- Statutory net cash flows from operating activities of £330m (2019: £386m)
- Net debt6 of £922 m with net debt / EBITDA at 1.7 times. Net debt including lease obligations was £1,595 m • Final dividend decision deferred until COVID-19 situation becomes clearer Operational highlights
- Record combined order book and pipeline of around £35 bn (March 2019: around £31 bn) with an order book of £17.6 bn and a pipeline of £17 bn
- Contract wins in the year included Type 31 frigate programme, Met Police training, Australia and USA submarine programmes
- Win rates continue at over 40% for new business and over 90% for rebids in our focus markets
- Increasing international presence: Aviation operations started in Norway and Canada, second defence contract in France
- Completed sale of Context for over £100m in March 2020
- Announced today, we completed the sale of our share of the Holdfast joint venture for £85 m, taking pro forma net debt / EBITDA to 1.5 times Financial strength and liquidity
- Group comfortable with liquidity under stress-tests performed • Group has access to around a total of £2.4bn of borrowings and facilities of mostly long-term maturities • Significant cash balance at 31 March 2020 of £1.35 bn • Net debt to EBITDA ratio of 1.7 times well within our covenant levels of 3.5 times Outlook for the year ending 31 March 2021 • Given the current level of uncertainty we are not providing financial guidance for the year ahead
- Work on critical, non-discretionary long term contracts (around 80% of Group revenue) continues • Work across our short-cycle businesses (around 20% of Group revenue) will be more heavily impacted due to lower demand levels
- Sector margins will be impacted by lower demand and productivity levels • Performance is expected to be weighted to the second half, reflecting normal business phasing and the expected impact of COVID-19
- We will provide a further update at our trading statement on 4 August 2020, the date of our AGM.
12 June 20. Kleos Space targeting $1.4bn Global Maritime market.
Over $50m revenue in pipeline post imminent launch.
Highlights:
- Kleos Space first to fly clusters of 4 satellites to accurately detect and locate the usage of the RF spectrum by legitimate and illegitimate actors
- Imminent launch of satellites leading to commencement of revenue generation with early agreements already executed
- Subscription revenue model providing recurring annuity type profitable cashflow
- Addressable market of US$1.4bn in Global Maritime Information
- Pipeline of over 130 clients ranging between AU$128k-AU$971k per licence per year
- Potential revenue ~AU$75m from current pipeline
- Next cluster of four satellites in progress
- Contracts and MOUs in place with Airbus, L3 Harris (NYSE:LHX US$43b), Ball Aerospace, UTC Collins, Telepazio, IMSL, Victoria Falls, Spire, ImageSat International, Brazilian Government Agency, Geollect, a Nation State, Earthlab, Chilean Geociences and Brazilian HEX Geospatial Technologies
- Agreement with L3Harris to place the Kleos product suite on their GSA Earth Observation Solutions (EOS) Schedule for US Government procurement
- No direct competitor with equivalent technology (Closest equivalent Hawkeye360 valued US$200m)
- Current Market Cap ~AU$30m
Kleos Space (ASX: KSS, Frankfurt: KS1), a space-powered RF reconnaissance data-as-a-service (DaaS) company, has released an updated Company presentation.
Kleos’ Scouting Mission satellites that are in Chennai, India awaiting launch on Indian Space Research Organisation (ISRO) PSLV C49, will detect and geolocate maritime radio frequency transmissions to provide global activity-based intelligence, enhancing the intelligence, surveillance and reconnaissance (ISR) capabilities of governments and commercial entities when Automatic Identification System (AIS) is defeated, imagery unclear or targets out of patrol range.
Initial agreements and MOUs in place with customers across USA, Europe, Asia Pacific, South America, Middle East and Canada
11 June 20. Babcock sinks to a loss. Engineering services group Babcock (BAB) swung from a £197m statutory operating profit to a £165m loss in the year to 31 March, weighed down by over £500m of exceptional charges. Largely relating to the aviation business, these include a £395m goodwill impairment and a £53m write-down of assets and onerous customer contracts in the oil and gas segment.
Aviation spans the defence, emergency medical services and oil and gas markets. The last of these segments – which accounts for 13 per cent of the sector’s £1bn revenue – “deteriorated significantly” during the year, after two competitors in helicopter services emerged from bankruptcy and pushed down global pricing. These woes have been compounded by the recent oil price turmoil.
Weakness in aviation prompted the group to reduce guidance for full-year underlying operating profit from £540m-£560m to £540m in February. In the end, it fell 11 per cent year on year to £524m after Covid-19 hit the end of the period. The pandemic has reduced demand for short-cycle work – which accounts for a fifth of revenue – and impeded flying activities.
The order book has expanded to £17.6bn, with the £5.3bn order intake more than replenishing the £4.9bn of revenue booked during the year. Meanwhile, the bid pipeline has increased to £17bn, from £14bn a year earlier, with more than two-thirds of opportunities relating to the defence sector.
Excluding lease liabilities and its share of joint venture (JV) net debt, Babcock’s net debt decreased by 4 per cent to £922m. This is equivalent to 1.7 times cash profits (excluding JV contributions) and above its 1.0-1.5 times target range. But following the £85m sale of its stake in military training services business Holdfast post-period, pro-forma leverage has come down to 1.5 times.
Underlying free cash flow (which is after pension contributions) dropped by over two-fifths to £192m, falling short of Babcock’s £250m guidance. This has been attributed to Covid-19 disrupting the collection of customer payments and delaying asset sales, leading to higher-than-expected capital expenditure.
Liberum forecasts adjusted pre-tax profit of £313m and EPS of 50.8p for March 2021, down from £426m and 70.4p in FY2020.
IC View
The exposure to defence related activities across its sectors should provide resilience. But the group is guiding that margins will be squeezed as Covid-19 impacts productivity – the underlying operating profit margin contracted by 0.6 percentage points to 10.8 per cent last year, already below its 11 per cent target. With short interest rising once again – now standing at 6 per cent of the issued share capital – we advise caution. Move to hold.
Last IC View: Buy, 527p, 12 Feb 2020. (Source: Investors Chronicle)
10 Jun 20. Chemring downgraded to ‘equal weight’ by Barclays following rally. The bank also said in the second half of the year the US election cycle was “likely to dominate news flow”, and that stocks in the sector usually underperformed due to the political uncertainty around American defence spending
Chemring Group PLC (LON:CHG) has been downgraded to ‘equal weight’ from ‘overweight’ by analysts at Barclays after the bank said the shares were “fairly valued” following a price rally.
In a note on Wednesday, the bank also retained its 250p target price on the defence firm, adding that into the second half of the year the US election cycle was “likely to dominate news flow”, adding that stocks in the sector usually underperformed in these periods due to the political uncertainty around American defence spending.
Barclays also said that while the company’s first half results were “solid”, deferrals were possible in the second half and in 2021 and that cash outlay growth was expected to decelerate following a surge in the first half of the year as the UK and US defence departments increased payments in support of supply chain health during the coronavirus pandemic.
In its first half results last week, the Chemring reported an underlying pre-tax profit of £24.2mln, 144% higher than the prior year, while revenues surged 37% to £191mln.
The company said all of its businesses had remained open despite the pandemic, adding that it had seen a “significant reduction” in net debt during the year, which fell 28% to £60.6mln, as well as “strong operational cash generation”.
Shares in Chemring were down 0.2% at 247p in late-morning trading. (Source: proactiveinvestors.co.uk)
07 Jun 20. CPI Completes Their Acquisition of General Dynamic’s SATCOM Technologies Business. Communications & Power Industries LLC (CPI) has successfully completed the purchase of SATCOM Technologies, the antenna systems business of General Dynamics Mission Systems, Inc., a business unit of General Dynamics.
The transaction was funded using a new committed debt financing. The newly acquired business, which consists of approximately 1,000 employees, as well as facilities in the United States, Europe and India, will be called CPI Satcom & Antenna Technologies Inc. The business will be owned and operated as a subsidiary of CPI, working closely with CPI’s existing antenna systems businesses, CPI Malibu Division and Orbital Systems LLC, to offer customers a broad and deep portfolio of satellite communications (SATCOM) antenna systems and related products for use in defense, communications and scientific applications. The organization’s executive management team will remain in place and report to Andrew Ivers, CPI’s chief operating officer.
Bob Fickett, President and CEO of CPI, said as recent events have shown, communications play an indisputably vital and necessary part of modern life, and satellite communications capabilities are more critical than ever. CPI remains committed to providing a broad selection of proven, reliable satellite communications products to meet the needs of commercial, government and military customers around the world, and this acquisition enables CPI to further strengthen the company’s SATCOM product offering. With the addition of CPI Satcom & Antenna Technologies, the firm’s antenna systems portfolio now ranges from VSAT (very small aperture terminal) antennas to portable common data link antennas to very large, complex, Earth station antennas. CPI offers a wide selection of related products, including feed components, SATCOM amplifiers, converters and antenna control systems to support defense, communications, astronomy, earth observation and scientific applications. (Source: Satnews)
09 Jun 20. Galvion announces progress. Following the announcement in October 2019 of the sale of its protective eyewear business, along with the Revision Military brand name, the remaining Armor, Soldier Power and Electronics, Vehicle Platform Power and Advanced Concept divisions of the company are moving forward under the new corporate name GALVION. With seven company sites located across Canada, USA and UK, Galvion’s product portfolio includes leading-edge head, face and torso protective solutions, as well as power management systems supplied to military and tactical clients worldwide. Galvion enjoys an impressive track record of large-scale global contracts for protective head systems as well as soldier power management systems, with customers including defence forces from the US, Canada, UK, France, Germany, Denmark, the Netherlands, the Czech Republic, Poland, UAE, Israel, Australia, Indonesia, Botswana and others. Chamois is proving PR support.
01 Jun 20. SES, as largely expected under the company’s ‘Simplify and Amplify’ cost-savings program, is to restructure their global operations. As part of the scheme, the company will consolidate many of their European offices into its Luxembourg HQ according to journalist Chris Forrester’s article at the Advanced Television infosite.
SES plans to close its offices in Brussels, central London, the Isle of Man, Warsaw and Zurich – redistributing activities in these locations to other offices in Kiev, Stockholm, Stockley Park in London and The Hague as well as its headquarters in Luxembourg.
An SES statement said, “In addition to consolidating SES’s global footprint and streamlining operating functions, other restructuring and delayering is underway including the removal of numerous open positions. SES has launched a compelling voluntary phased retirement program and is retraining and realigning resources internally towards high-value future market opportunities and to bolster its position in cloud, mobility and other emerging verticals. In aggregate, these changes will impact between 10 and 15 percent of its global employee base. Given that a number of these changes will impact employees in Luxembourg, SES has engaged its personnel representatives to discuss the implementation of a social plan.”
Steve Collar, the CEO of SES, said, “In this rapidly evolving market, it is important that SES remains an agile business partner for our customers. ‘Simplify & Amplify’ is a transformational undertaking that will streamline our business, drive collaboration, and improve efficiency. We are making these changes thoughtfully, ensuring that, wherever possible, we redeploy our talent within the company and minimize the impact to our global workforce while enhancing our ability to support and serve our global customer base.”
Chris also added the following news that SES currently has two core deployments of satellites: It has a fleet of powerful geostationary satellites that just about serves the whole planet as well as 20, O3b (‘the Other 3 Billion’) satellites in MEO, with seven new ‘super-power’ O3b satellites on order from Boeing, with their deployment to start in 2021.
The O3b fleet is responsible for much of SES ‘Networks’ division and SES has said that this is likely to be spun off into a new business.
Now, in common with Viasat, Telesat and even OneWeb, SES is looking to expand its O3b division dramatically with extra orbiting assets. SES already has FCC permission to expand beyond the existing (20 existing + seven new) O3b satellites. Back in 2018, the FCC approved a planned framework expansion to triple its O3b mPOWER fleet by giving it US market access for another 22 high-powered satellites, seven of which are already in construction and scheduled for launch beginning in 2021.
An SES spokesperson said, “We have always said the first seven satellites announced for O3b mPOWER is just the beginning, much as it was with O3b where our initial order was eight. The filing reaffirms our belief in MEO as a fantastic orbit from which we deliver high-end customer solutions underscored by the recent O3b mPOWER customer announcements and our proven success with our existing O3b constellation.”
SES is now proposing a fleet of new LEO satellites. The firm’s May 26th formal filing to the FCC asks for some key modifications including:
- 10 satellites at 8062 kms in equatorial orbits
- 24 satellites in inclined orbits at 8062 kms
- 36 satellites in inclined orbits at 507 kms
There are no dates supplied as to when the LEO fleet might happen. Indeed, the FCC filing does not obligate SES/O3b to proceed with the plan, but there are US government funds in the offing and a total of nine businesses have made FCC filings ahead of the May 26th deadline for potential spectrum allocations, including SES, Viasat, OneWeb, Telesat, Kepler, SpaceX and others.
The SES application stated, “The proposed expansion will allow O3b to respond to growing demand from Internet service providers, fixed and mobile network operators, large enterprises and governments for low-latency, high-throughput satellite capacity that enables fast, flexible and affordable broadband connectivity in locations unserved or underserved by terrestrial networks. Grant of this Modification will allow O3b to build on its proven record of meeting customer requirements for high-quality, cost-effective satellite services and will therefore serve the public interest.
“The new satellites will also be equipped with the ability to perform satellite-to-satellite communications. O3b’s LEO satellites will use the 27.5-29.1 GHz and 29.5-30 GHz FSS spectrum to transmit to O3b’s MEO satellites and to geostationary satellite orbit (GSO) space stations. The O3b MEO satellites will use the 17.8-18.6 GHz and 18.8-20.2 GHz FSS and MSS feeder link spectrum to transmit to O3b’s LEO satellites, and the LEO satellites will receive transmissions in these bands from GSO space stations as well. This functionality will enhance the overall network’s ability to support innovative offerings that use a combination of space station assets to satisfy developing customer needs.”
Also at the Advanced Television infosite is information that, last October, Intelsat made a $50m “synergistic” loan to BlackSky, owned by Spaceflight Industries. Now the company wants the Court to amend the loan obligations and permit certain sales plans to proceed despite the bankruptcy.
Spaceflight describes itself as a ‘next generation’ space company with launch facilities, and its BlackSky division specializes in images from space, industrial IoT and event monitoring. BlackSky wants a constellation of 60 EO satellites. Four are already orbiting and a further 6 are expected to launch later this year.
Japan-based conglomerate Mitsui & Co loaned a separate $26m to Spaceflight on October 31st 2019. Earlier this year Mitsui joined with transport and logistics business Yamasa to buy Spaceflight Industries in a 50/50 joint-venture.
Spaceflight had expected the sale of its “Industries” division to Mitsui to wrap in Q2 this year, and the deal has already been cleared by certain US regulators. Intelsat told the Court that the sale of Spaceflight’s launch business is ready to close subject to the Court’s approval.
Spaceflight owes cash to LeoStella, a joint-venture between Spaceflight and Thales Alenia Space.
Intelsat’s filing to the court said, “The Spaceflight Loan Agreement requires that proceeds from the Launch Business Sale would first be used to repay any outstanding amounts owed on the Mitsui Loan, after which excess proceeds would be used to repay overdue amounts owed to Leostella LCC, a satellite manufacturing joint venture (the “Joint Venture”) in which Industries owns a 50 percent interest. Thales Alenia Space France owns the remaining 50 percent interest in the Joint Venture.” (Source: Satnews)