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12 Feb 21. Kromek to raise £13m for bio-hazard detector push.

“This investment will help us with our next phase of growth and to become cash flow positive and achieve operational profitability.

The group said the money is earmarked for its range of bio-security/pathogen detectors and to increase the rate of commercialisation, sales and marketing of its nuclear detection and medical imaging ranges.

Rakesh Sharma, chairman, added: “This investment will help us with our next phase of growth and to become cash flow positive and achieve operational profitability.

“These funds in the short term will enable us to accelerate the commercialisation of our biological threat detection technology as well as the delivery of our nuclear detection and medical imaging pipeline.”

Terms of the open offer are 1 offer share for every 17 existing ordinary shares.

Shares in Kromek fell 14% to 16.9p. (Source: proactiveinvestors.co.uk)

BATTLESPACE Comment: A source told BATTLESPACE that there is a big chunk of Home Office money set aside for Cyclamen replacement as well. Kromek’s existing Cyclamen position puts it in a good position to benefit from this funding.

12 Feb 21. Saab seeks to diversify naval business. Saab’s Kockums business area, which mainly designs and builds submarines and surface vessels for the Swedish Navy, is looking to diversify its workload to improve its financial performance, according to Micael Johansson, the president and CEO of the Swedish defence company.

“In this part of Saab, you also have to have a combination of different types of contracts, not sort of one or two large mega-deals contracts with complicated developments,” said Johansson. “You need the support contracts, you need the upgrade contracts on the surface side, you need international contracts.”

Kockums generated SEK3 billion (USD363.7 million) in sales in 2020, up less than 1% from the previous year, Saab reported on 11 February. Kockums’ operating margin improved a full percentage point to 3.9% but remained well below the company’s long-term goal of 10%. “We’re still not pleased with the margin,” said Johansson.

Kockums is eyeing several new opportunities, including upgrades for Sweden’s possible sale of used submarines to Poland. In the competition to replace the Netherlands’ Walrus-class submarines, the Saab business is teamed with Dutch shipbuilder Damen Shipyards to offer a vessel based on the A26.

Kockums is also trying to boost its profitability by performing more efficiently on its current programmes. “We’re on that journey,” Johannson said. “We see a good trend in the programmes.”

Selling Kockums, which Saab acquired in 2014, does not seem to be an option. In response to a question, Johansson said “there are no plans to divest Saab Kockums”.

(Source: Jane’s)

11 Feb 21. Mercury Recognized as One of Massachusetts’ Fastest-Growing Middle-Market Companies. Only aerospace and defense company included on Boston Business Journal’s 2021 list. Mercury Systems Inc. (NASDAQ: MRCY, www.mrcy.com), a leader in trusted, secure mission-critical technologies for aerospace and defense, announced it has been named one of the Boston Business Journal (BBJ) Middle Market Leaders, a ranking of the 50 fastest- growing companies in Massachusetts. Mercury ranked 10th based on its 2017 to 2019 revenue growth and joins other rapidly growing Massachusetts-based companies on the exclusive list including Abiomed, Forrester Research and Rapid7.

“We’re honored that The Boston Business Journal recognized Mercury for our financial performance, especially during a period marked by a pandemic,” said Mark Aslett, Mercury’s president and chief executive officer. “COVID-19 didn’t highjack our agenda – it simply accelerated our adoption and adaption to a more agile work environment, for which we had already laid a strong foundation. Because of this commitment to digital transformation, we came out of crisis mode faster, protecting our employees’ health, safety and livelihoods while delivering on our commitments to our customers and shareholders. I am confident in our future as we continue to develop technology critical to a safer, more secure world.”

This is Mercury’s second appearance on the BBJ Middle Market Leaders list, ranking 11th last year, and the only aerospace and defense company recognized. The list is compiled through BBJ research and includes private and public companies across all industries, from life sciences and technology to construction, professional services and more. To qualify, companies must report annual revenue between $25m and $1bn for 2017, 2018 and 2019. The BBJ ranking of firms uses a weighted final score that incorporates their three-year growth and total revenue.

In December 2020, Mercury was ranked 50th on the FORTUNE “100 Fastest-Growing Companies” list and was the highest-ranking aerospace and defense company included. The company also garnered recent recognition from The Boston Globe as one of the Top Places to Work for 2020, Glassdoor, which named CEO Mark Aslett as the Highest Rated CEO During COVID-19, and Executive Mosaic, which awarded Aslett a coveted spot on its annual Wash100 listing.

11 Feb 21. Saab Year-End Report 2020: Strong order intake and positive cash flow. Saab presents the year-end results for 2020.

The prolonged pandemic continued to severely affect many countries in the fourth quarter, resulting in new restrictions and lockdowns. Despite this Saab continued to strengthen its competitiveness on the global defence market. We secured significant order intake, up 56 per cent compared to 2019 and the order backlog reached almost SEK 100bin. Saab’s international expansion continues and orders outside Sweden grew 52 per cent in 2020. The strong order backlog, combined with growing defence needs across Saab’s key markets, will be a continued support to our growth journey.

In the civil aviation business, demand remained weak compared to the previous year and in the fourth quarter some of our large customers declared significantly lower production volumes. This had a negative impact on parts of Saab’s civil business that design and manufacture composite doors and wing-parts to aircrafts. As a result, business area IPS took a one-time cost of SEK -315m in the quarter. Saab’s defence business showed solid performance, with five of six business areas reporting positive sales growth. Organic growth for Saab in the quarter was 18 per cent, while sales for the full year were in line with last year. Notably our sales were up 4 per cent, excluding project estimate adjustments in quarter three related to Covid-19, despite the downturn in the civil aviation market. For 2021, organic sales growth is expected to be in line with our long-term target of 5 per cent.

Operating income, excluding items affecting comparability, amounted to SEK 1,081m in the quarter, corresponding to a margin of 8.8 per cent (11.3%). Reported margin was 6.1 per cent. The decline is linked to Covid-19, affecting the performance in our civil business. Adjusted operating margin for 2020 were 7.4 per cent (8.3%). Reported margin for the full year was 3.7% per cent. For 2021, we expect the EBIT margin to be in line with adjusted EBIT margin for 2020. The uncertainty surrounding Covid-19 and its future effects remains high.

During the year, several important milestones were met, delivery of the first and second GlobalEye to the United Arab Emirates, delivery of the first Gripen E to Brazil and the second upgraded Gotland-class submarine to Sweden. Furthermore, the maiden flight of our new Fighter AESA radar was completed, strengthening our sensor capabilities further.

For 2020, we guided that operational cash flow would be positive, following two years of negative cash flow. Operational cash flow for the year came in at SEK 2,773m (-1,300). The cash flow was driven by good project execution and deliveries in several of Saab’s programmes. Looking into 2021, we expect operational cash flow for the full year to continue to be positive. Saab reports a solid balance sheet with a net financial debt position of 1.5 net debt/EBITDA. Based on the financial position and future outlook the Board will propose a dividend of SEK 4.70 per share for 2020.

As a defence and security company, our commitment to sustainability and the UN Global Compact Principles is of outmost importance. Throughout the year, we intensified our sustainability work and established, among others initiatives, the Saab Climate Fund for sustainable innovation and solutions. I am confident that Saab remains well positioned to continue growing and create long-term sustainable value to all its stakeholders.

Outlook for 2021*:

Sales growth: Organic sales growth to be in line with our long-term target of 5 per cent

Operating income: EBIT margin for the full year to be in line with adjusted EBIT margin,

7.4 per cent for 2020

Operational Cash flow: Positive for the full year.

11 Feb 21. Mercury Recognized as One of Massachusetts’ Fastest-Growing Middle-Market Companies. Only aerospace and defense company included on Boston Business Journal’s 2021 list. Mercury Systems Inc. (NASDAQ: MRCY, www.mrcy.com), a leader in trusted, secure mission-critical technologies for aerospace and defense, announced it has been named one of the Boston Business Journal (BBJ) Middle Market Leaders, a ranking of the 50 fastest- growing companies in Massachusetts. Mercury ranked 10th based on its 2017 to 2019 revenue growth and joins other rapidly growing Massachusetts-based companies on the exclusive list including Abiomed, Forrester Research and Rapid7.

11 Feb 21. Saab Year-End Report 2020: Strong order intake and positive cash flow. Saab presents the year-end results for 2020. The prolonged pandemic continued to severely affect many countries in the fourth quarter, resulting in new restrictions and lockdowns. Despite this Saab continued to strengthen its competitiveness on the global defence market. We secured significant order intake, up 56 per cent compared to 2019 and the order backlog reached almost SEK 100bin. Saab’s international expansion continues and orders outside Sweden grew 52 per cent in 2020. The strong order backlog, combined with growing defence needs across Saab’s key markets, will be a continued support to our growth journey.

Outlook for 2021*:

Sales growth: Organic sales growth to be in line with our long-term target of 5 per cent

Operating income: EBIT margin for the full year to be in line with adjusted EBIT margin,

7.4 per cent for 2020

Operational Cash flow: Positive for the full year

08 Feb 21. RapidSOS Raises $85m Series C Led by Insight Partners to Scale Emergency Response Data Platform. Round Brings Total Funding to $200m and Further Drives RapidSOS’s Mission to Connect Critical Life-Saving Data to First Responders.

RapidSOS, creators of the world’s first emergency response data platform, today announced it closed $85m in Series C funding led by global venture capital and private equity firm Insight Partners. Insight is a leading software investor with over $30bn AUM after announcing its 11th flagship fund, Fund XI at $9.5bn in April, 2020. The investment, which brings RapidSOS’s total funding to $200m, will advance the company’s work to connect emergency data from digital health, smart buildings, security, connected vehicles, and app companies with first responders globally.

The RapidSOS Platform powers 4,800+ Emergency Communications Centers (ECCs) across the US, covering 92% of the population, and is integrated with over 350 million connected devices. These devices, recognized as RapidSOS Ready, transmit real-time location, health and medical information, connected building and alarm data, and more in an emergency.

“2020 reminded all of us of the heroic work that first responders do in our most challenging moments,” said Michael Martin, founder & CEO of RapidSOS. “We spent the past eight years building the RapidSOS emergency response data platform in partnership with thousands of first responders — collaborating with leading technology companies to provide the right data, at the right place, at the right time to save lives across over 150 million emergencies annually.”

The new funding supports RapidSOS’s mission to link connected devices to first responders globally when we need it most — providing a life-saving ecosystem of safety, security, and digital health. For example, the RapidSOS Platform connects crash impact and occupant data from the following sources with 911 and first responders in an emergency: connected vehicles, critical health and medical information from medical profiles, wearables and devices, and connected building/alarm, address, sensor, and multimedia.

“Insight has a history of backing category-defining companies, and RapidSOS has all the makings of one in the emergency response space,” said Nikitas Koutoupes, Managing Director at Insight Partners. “We are excited to have our team of software ScaleUp and platform experts help drive RapidSOS’s mission.”

2020: An Unprecedented Year for Emergency Response

This past year put a spotlight on the importance of faster and more effective emergency response. The need for critical, life-saving data was never more apparent than in 2020 when the world faced unprecedented emergencies, including the COVID-19 pandemic, natural disasters, and domestic threats like the Christmas Day Nashville bombing. Data from the RapidSOS Platform was used in over 150 million emergencies during the calendar year (on average, 400,000+ per day) and in some cases became the critical link between citizens and first responders when traditional voice 911 circuits went down in major disasters or attacks.

Facing the global pandemic, RapidSOS worked to accelerate the connectivity between health data and 911.

Millions of Americans are able to share important medical information with 911 through the Medical ID feature on an iPhone. When a user chooses to set up the feature, the information is shared when making an emergency call or using the Emergency SOS feature, in supported regions. In addition, in collaboration with the American Red Cross, the American Heart Association, and Direct Relief, RapidSOS launched the Emergency Health Profile, a simple and free way for anyone to share their health data with 911.

With the support of Insight Partners and existing investors, RapidSOS plans to accelerate its partnership with first responders globally, supporting their life-saving work with critical data from hundreds of millions of devices.

About RapidSOS

In partnership with public safety, RapidSOS has created the world’s first emergency response data platform that securely links life-saving data from 350M+ connected devices to emergency services and first responders. Through the platform, RapidSOS provides intelligent data that supports over 4,800 Emergency Communications Centers worldwide, across 150 million emergencies in 2020. Together with innovative companies recognized as RapidSOS Ready, RapidSOS is supporting first responders in saving millions of lives annually.

08 Feb 21. Magal Security Systems Announces Sale of its Projects Division to Aeronautics Ltd., a Subsidiary of RAFAEL. Transaction Will Enable the Company to Execute Strategy of Scalable Growth with a Focus on Providing High Margin Technology-Rich Products and Solutions

The Company to Host a Conference Call to Discuss the Transaction.

Magal Security Systems, Ltd. (NASDAQ: MAGS), a leading international provider of comprehensive physical, video, and access control security products and solutions, as well as critical site management, announced today its entry into an asset purchase agreement to sell its Integration Solutions Division, or projects division, to Aeronautics Ltd., a subsidiary of RAFAEL Advanced Defense Systems Ltd., for approximately $35m. The transaction is expected to be completed by the second quarter of 2021, and is subject to customary closing conditions, including regulatory approvals. The Company will conduct a conference call to review the transaction on Wednesday February 10, 2021 at 11:00 a.m. Eastern Time.

Magal’s strategic decision to divest its projects division, will enable the Company to focus on providing technology-rich products, solutions and related services in its four key verticals: energy, logistics, critical infrastructure and correctional facilities. These verticals provide Magal the greatest opportunity to increase its security and related markets offerings while expanding its customer base.

Following the sale of the projects division, Magal, through its Israeli based headquarters, will continue to operate its Senstar product division, with development and manufacturing facilities located in Canada and sales offices in the US, EMEA, APAC, and LATAM regions. For the last 12 months, Senstar’s revenue represented 46% of the consolidated Magal revenue while delivering a 64% gross profit margin, compared to the consolidated 45% gross margin. Senstar’s R&D during the last 12 months represented 12% of its revenues, as compared to 8% for the consolidated company.

Post-divestiture, Magal anticipates higher growth rates with improved gross margins and a stronger balance sheet. The Company will leverage Senstar’s industry-leading position, continue expanding its tech-rich product and software lines organically and intends to optimize future strategic acquisitions to achieve incremental growth in its global markets.

Dror Sharon, Chief Executive Officer of Magal, said, “Magal’s future direction lies in developing industry-leading technology for the security industry. Senstar’s track record of growth and profitability is highly scalable to deliver ongoing operating leverage and deliver long-term shareholder value. The Senstar team is continuously innovating, improving product lines, and developing new products that set a standard for quality, innovation, and reliability. The divesture gives our business model greater visibility and a stronger balance sheet to stay on track with our acquisitions strategy and to execute our long-term growth strategy.”

Moshe Elazar, President and CEO of Aeronautics Group: “Magal’s project division will become an independent company under Aeronautics Group. Aeronautics Group is fully committed to Magal’s partners and customers worldwide. Magal’s projects international footprint, experience and technology combined with Aeronautics’ proven solutions, is a significant part of the Group growth strategy in the HLS and advanced para-military markets”

Pursuant to the share and asset purchase agreement, Aeronautics agreed to acquire the project division from Magal for a purchase price of $35m in cash, on a cash-free debt-free basis subject to post-closing working capital and other customary adjustments. As part of the acquisition, Aeronautics is also acquiring Magal’s facility in Yehud, Israel. The share and asset purchase agreement contains customary representations, warranties, covenants and indemnification provisions. Subject to regulatory approvals and the satisfaction of customary closing conditions set forth in the share and asset purchase agreement, Magal expects the acquisition to close during the second quarter of 2021.

The foregoing description of the share and asset purchase agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the share and asset purchase agreement, a copy of which is an exhibit to Magal’s Form 6-K that has been filed with the Securities and Exchange Commission on this date. (Source: PR Newswire)

08 Feb 21. DroneDeploy Secures $50m in Series ‘E’ Funding. Enterprise drone data company DroneDeploy announced that it has raised $50m in Series E financing. The round was led by existing investors Energize Ventures and AirTree, with participation from Bessemer, Scale, Emergence, Angelpad, Uncork and Frontline Ventures. This funding brings DroneDeploy’s total fundraising to date to $142m, the most of any drone data company.

The investment will be used to expand the company’s products beyond aerial capture, accelerate its expansion into Europe, and explore opportunities for strategic acquisitions.

DroneDeploy powers drones and ground-level cameras to automatically collect and analyze visual data from job sites, operations and assets. Companies across almost every sector have embraced commercial drones, especially as COVID-19 and global social distancing measures have made remote, cloud-based solutions essential. DroneDeploy has led the market, achieving 259% annual growth in enterprise use in 2020 and even greater adoption by Fortune 500 energy, agriculture, engineering, property and logistics management, and insurance companies.

“We see two powerful tailwinds. Enterprise use of drones is exploding. Across the globe, the largest agriculture, logistics, construction, and energy companies are operating fleets of hundreds of drones, and they are using DroneDeploy to manage them. To support our thousands of European users, we are launching an EMEA office,” said Mike Winn, CEO and co-founder of DroneDeploy. “At the same time, companies are digitizing their sites inside and out, creating full digital twins of their assets. We have expanded our drone technology with the ability to capture and analyze images from ground-based cameras operated by people or robots. We will continue to enhance our complete digitization platform to deliver fully immersive environments.”

DroneDeploy’s momentum in product development and customer wins has attracted investor interest.

“The health, economic and workforce pressures of the last year have accelerated the adoption of drones and drone data by asset owners,” said John Tough, managing partner of Energize Ventures and a director on DroneDeploy’s board. “We anticipate continued growth as industries expand their use of visual data to streamline operations. Energize is thrilled to continue to invest in DroneDeploy, the only company with a platform that captures and analyzes every dimension of job sites — interior and exterior, from any height and angle — and that has demonstrated the scale to meet the needs of fast-growing markets like energy and renewables.”

Stephen McIntyre, partner at European-based Frontline Ventures is particularly interested in DroneDeploy’s push into Europe, already DroneDeploy’s second largest market.

“U.S. companies have seen unprecedented growth overseas in recent years as software buyers around the globe catch up with those in the U.S. Frontline Ventures works with SaaS market leaders to break into Europe. DroneDeploy’s position as the leader in the U.S. commercial drone market and its rapidly expanding capabilities beyond drones position it to successfully solidify its leadership position internationally.”

Continuing to innovate to meet customers’ growing demands, DroneDeploy recently announced updates to 360 Walkthrough and Vertical Flight, key features that enable visual data capture from cameras on the ground and drones flying vertically beside a structure or asset. DroneDeploy continues to lead the industry in enterprise security, achieving both ISO-27001 certification and SOC 2 Type 1 attestation. (Source: UAS VISION)

08 Feb 21. Spirit AeroSystems Collaborates with Infosys to Integrate the IT Infrastructure of its Recently Acquired Businesses. Infosys (NYSE: INFY), the global leader in next-generation digital services and consulting, today announced a strategic collaboration with Spirit AeroSystems, a leading aero structures manufacturer. Spirit has chosen Infosys as its lead technology integration partner to help drive and set up the end-to-end applications and infrastructure integration of a few of Bombardier’s former aerostructures and aftermarket services assets, which have been recently acquired by Spirit. As the exclusive IT partner, Infosys will leverage its system integration expertise, ecosystem partners, and extensive knowledge of the aviation sector to develop a robust IT framework, which will be built on infrastructure solutions powered by Infosys Cobalt.

Seamless IT integration is imperative for successful mergers and acquisitions. The partnership will enable Spirit AeroSystems to empower stakeholders by transforming business applications and facilitating agile, resilient operations on the cloud.

Talking about the partnership, Sam Marnick, Executive Vice President and Chief Operating Officer, Spirit AeroSystems, said, “We look forward to partnering with Infosys on our efforts to further diversify our business and strategically position Spirit AeroSystems for the future. We appreciate the long-standing relationship we have with Infosys and the support they have brought to a number of strategic projects for Spirit.”

Jasmeet Singh, Executive Vice President and Global Head of Manufacturing, Infosys, said “We are excited to kickstart a new chapter in our long-term strategic partnership with Spirit AeroSystems and support their vision for the aerospace industry. We look forward to maximizing the synergies of the acquisition by facilitating seamless integration of IT ecosystems. Through the partnership, we will support Spirit with infrastructure build-out and unlock more opportunities to accelerate innovation and drive success.” (Source: PR Newswire)

09 Feb 21. Northrop CEO forecasts ‘more consolidation’ for defense sector. The drive to rapidly develop defense technologies will spur more industry mergers and acquisition activity over the next two decades, and create new entrants in the realm of cyber and artificial intelligence, Northrop Grumman CEO Kathy Warden said Tuesday.

“As a result, I believe the industry will look different in terms of its composition. There’ll be more consolidation,” Warden said in a wide-ranging interview through the Center for Strategic and International Studies. She also foresaw increased government-industry collaboration.

“There will also be more new entrants, and so it’s hard to say there will be fewer players, but the ones that exist today will likely continue to consolidate as we have seen in recent years and we’ve seen in other cycles,” she added.

New firms will adapt commercial AI and machine-learning applications for military surveillance as well as command and control, Warden predicted.

The executive’s comments came after the new deputy defense secretary, Kathleen Hicks, said at her confirmation hearing this month that she is concerned by consolidation in the defense-industrial base and that competition is needed for the U.S. military to maintain an edge over China and Russia. Hicks’ office will review deals that involve national security issues.

“Extreme consolidation does create challenges for innovation,” Hicks said. “We need to have a lot of different, good ideas out there. That’s our competitive advantage over authoritarian states like China, and Russia. And so if we move all competition out, obviously that’s a challenge for the taxpayer, but it’s also a challenge in terms of the innovation piece.”

The U.S. faces a new space race, and the Biden administration should continue work to compete in that domain, said Warden, whose firm saw sales growth last year driven by its space division. Her comments also come in the wake of the Biden administration’s affirmed support for Space Force, the military service created under the Trump administration.

“Many nations are demonstrating the capability to both operate in space but also have anti-satellite capability, so what we need to focus on is putting in place the norms and technologies that allow us to have freedom of operation in the space domain,” Warden said.

Last month, Northrop reported that its Space Systems segment led the company in sales for both the fourth quarter of 2020 and for the full year. The segment was driven by a higher volume on classified programs as well as the Next-Generation Overhead Persistent Infrared and NASA Artemis programs.

A ramp-up for the Ground Based Strategic Deterrent, launch vehicles and hypersonics programs drove the company’s Launch & Strategic Missiles sales. Northrop won a $13.3bn contract in September from the U.S. Air Force to build the GBSD, which replaces the aging Minuteman III intercontinental ballistic missile system.

President Joe Biden is expected to launch a review of the nation’s expensive nuclear modernization portfolio. Reportedly, the GBSD program could cost U.S. taxpayers as much as $110.6bn.

Warden defended the country’s current track on nuclear modernization and said America’s triad of nuclear weapons is “very important to keeping the peace.” More broadly, Warden offered a message that seemed calibrated to the new administration, saying the aerospace and defense industry provides platforms like the F-35 fighter as “an aid to diplomacy” and interoperability among allies.

“It’s hard for anyone to say what would have happened had we not had ICBMs over the last 50 years,” she said, “but lots of very smart statesman, military personnel and civilians alike have studied this through multiple nuclear posture reviews and come out believing that the best posture for our nation is continuing to move forward with the modernization of all three legs of our triad.” (Source: Defense News)

09 Feb 21. TransDigm Group Reports Fiscal 2021 First Quarter Results. TransDigm Group Incorporated (NYSE: TDG), a leading global designer, producer and supplier of highly engineered aircraft components, today reported results for the first quarter ended January 2, 2021, which were significantly impacted by the COVID-19 pandemic.

First quarter highlights include:

Net sales of $1,108m, down 24.4% from $1,465m in the prior year’s quarter;
Income from continuing operations of $50m;
Loss per share from continuing operations of $(0.42), with the loss driven by $1.32 per share of dividend equivalent payments made during the quarter, pursuant with the Company’s employee stock option program;
EBITDA As Defined margin of 42.8%, representing sequential improvement;
EBITDA As Defined of $474m;
Adjusted earnings per share of $1.97; and
Strong operating cash flow generation of $274m.

Fiscal 2021 financial guidance will not be issued at this time.

Net sales for the quarter declined 24.4%, or $357m, to $1,108m from $1,465m in the comparable quarter a year ago. In the current quarter, all sales represent organic sales.

Income from continuing operations for the quarter was $50m, a decrease of 78.6% compared to $234m in the comparable quarter a year ago. The decrease in income from continuing operations primarily reflects the decline in net sales described above and higher interest expense, partially offset by a lower effective tax rate.

GAAP earnings per share were reduced in the first quarter of fiscal 2021 and 2020 by $1.32 per share and $3.22 per share, respectively, as a result of dividend equivalent payments made during each quarter. As a reminder, GAAP earnings per share are reduced when TransDigm makes dividend equivalent payments pursuant to the Company’s stock option plans. These dividend equivalent payments are made during the Company’s first fiscal quarter each year and also upon payment of any special dividends.

Adjusted net income for the quarter decreased 59.4% to $115m, or $1.97 per share, from $283m, or $4.93 per share, in the comparable quarter a year ago.

EBITDA for the quarter decreased 38.0% to $378m from $610m for the comparable quarter a year ago. EBITDA As Defined for the period decreased 30.4% to $474m compared with $681m in the comparable quarter a year ago. EBITDA As Defined as a percentage of net sales for the quarter was 42.8%.

“Although commercial air travel demand has shown slight signs of recovery in recent months, the recovery is expected to continue to be slow and uneven depending on factors such as COVID-19 infection rates, vaccine rollout and effectiveness, and the easing of quarantines and travel restrictions, among other factors. Despite the challenges the commercial aerospace industry continues to face, I am pleased that we were able to sequentially expand our EBITDA As Defined margin to 42.8% as a result of careful management of our cost structure and focus on our operating strategy,” stated Kevin Stein, TransDigm Group’s President and Chief Executive Officer. “Additionally, we are excited to have recently closed the acquisition of Cobham Aero Connectivity. Cobham Aero Connectivity has established positions across a diverse range of new and existing aircraft platforms and the business fits well with our long-standing strategy.”

The effective tax rate in the current quarter of 5.5% was favorably impacted by the timing of tax benefits associated with the Company’s equity compensation plans. For the full 2021 fiscal year, consistent with previously disclosed expectations, the Company expects its GAAP, Cash and Adjusted tax rates to be in the range of 18-22%.

Acquisition of Cobham Aero Connectivity

Subsequent to the quarter, on January 5, 2021, TransDigm completed substantially all of the acquisition of Cobham Aero Connectivity (“CAC”) for approximately $965 m, including tax benefits to be realized by TransDigm. CAC is a leading provider of highly engineered antennas and radios for the aerospace end market. The products are primarily proprietary with significant aftermarket content and have a strong presence across major defense platforms as well as select commercial applications. Nearly 60% of CAC’s revenue is derived from international sales and over 70% of CAC’s revenue comes from the aftermarket. CAC has a strong presence across a diverse range of both helicopters and fixed wing aircraft.

A portion of the CAC acquisition representing approximately 2% of the total purchase price remains subject to Finnish regulatory approval and is expected to close during the second quarter of fiscal 2021.

Financing Activity Subsequent to the Quarter

On January 20, 2021, TransDigm successfully completed a private offering of $1.2bn of 4.625% senior subordinated notes due 2029. TransDigm expects to use the net proceeds from the offering, plus cash on hand, to redeem all of its $1.2bn of outstanding 6.50% senior subordinated notes due 2024.

Fiscal 2021 Outlook

Given the considerable uncertainty around the extent and duration of business disruptions related to the COVID-19 pandemic, and how that will impact operations, the Company will not provide fiscal year 2021 guidance at this time.

10 Feb 21. QuantiTech LLC Announces Merger with Millennium Engineering and Integration Company. QuantiTech LLC (“QuantiTech”), a portfolio company of Sagewind Capital LLC (“Sagewind”), announced today that it has merged with Millennium Engineering and Integration Company (“MEI”). The combined company is an industry leader in providing engineering services and solutions for mission critical programs within key U.S. defense and civilian agencies. Financial terms of the transaction were not announced.

QuantiTech and MEI have independently developed world-class systems engineering and integration capabilities across a wide range of markets, including space, counter unmanned aircraft systems, hypersonics, defense, cyber, intelligence, aviation, and missile defense. Both companies are trusted partners and solution providers to the U.S. Government and commercial industry solving engineering challenges on the nation’s most vital defense and civilian programs.

Patrick Murphy, who served as President and Chief Executive Officer of MEI and is an industry veteran with over 20 years of government contracting leadership experience, will serve as President and Chief Executive Officer of the combined company. Randy Cash, who served as Executive Chairman of QuantiTech, and was previously its President and CEO, will continue to serve as Executive Chairman of the Board. Other members of the management teams and employees of both companies will continue with the combined company.

“We are extremely excited to combine MEI and QuantiTech,” said Randy Cash. “This combination brings together two companies with an extraordinary depth of talent and expertise in high-end engineering. By strengthening our capabilities in the missile defense, space, and intel markets, we will be even better positioned to continue serving the important missions of the U.S. Government.”

“Together QuantiTech and MEI will have the agility and responsiveness at scale to rapidly adapt to the changing needs of our customers’ missions and the marketplace,” added Patrick Murphy. “With over 2,000 employees across more than 20 locations in the US, our capacity and ability to support our current and future US Government and commercial clients is greater than ever.”

“As part of our growth plan, QuantiTech has been looking for a partner with shared values and a similar company culture that allows us to increase the scale and depth of service offerings we provide to our customers and the market,” said Darryl Wortman, President and CEO of QuantiTech. “We are excited about joining forces with MEI and building upon our enhanced culture of innovation to drive dynamic solutions to our customers’ complex challenges.”

KippsDeSanto & Co. served as financial advisor and Miles & Stockbridge served as legal advisor to MEI on this transaction. RBC Capital Markets LLC served as financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal advisor to QuantiTech.

About MEI

Millennium Engineering and Integration Company provides world-class systems engineering and integration capability in the space, defense, cyber, intelligence, and aviation. MEI is a high-end engineering services provider to the U.S. Government and commercial industry solving engineering challenges on the Nation’s most vital programs in space/space resiliency, missiles, aircraft, cyber, and ground systems. For more information please visit www.meicompany.com.

About QuantiTech

QuantiTech is a leading provider of highly technical engineering services to the Army, Air Force, NASA, and various other key defense agencies responsible for maintaining technological superiority. Its capabilities are focused on systems engineering, cybersecurity, test & evaluation and program management for key defense end-markets such as hypersonics, counter unmanned aircraft systems, and human spaceflight. QuantiTech was founded in 1991 and is headquartered in Huntsville, AL. For more information please visit www.quantitech.com.

About Sagewind Capital

Sagewind Capital LLC is a New York-based middle-market private equity firm that partners with exceptional management teams, and focuses on significant capital appreciation by helping businesses grow organically and through strategic acquisitions. Sagewind invests across several industries, including government services, aerospace & defense, software, information technology, healthcare and business services. The firm is focused on long-term capital appreciation and has the flexibility to own businesses for extended periods. For more information please visit www.sagewindcapital.com.

10 Feb 21. Houlihan Lokey Advises UAV Factory. Houlihan Lokey announced that UAV Factory has been acquired by AE Industrial Partners. The transaction closed on January 27, 2021.

Headquartered in Riga, Latvia, with operations in the U.S., UAV Factory is a leading provider of mission-critical airborne intelligence, surveillance, and reconnaissance (ISR) solutions. The company designs and manufactures highly engineered unmanned aircraft technologies utilized in a wide variety of defense and civil applications. UAV Factory offers a complete suite of unmanned system solutions, including long-endurance unmanned aircraft systems (UAS), multisensor gyro-stabilized camera gimbals, and advanced subsystems and accessories. The company’s flagship UAS platform is one of the most effective tactical UAS in the market, and its portfolio of highly differentiated gyro-stabilized camera gimbals provides superior image stabilization and image processing. UAV Factory’s platforms and payload solutions are field-proven and capable of operating in the most demanding conditions.

AE Industrial Partners is a private equity firm specializing in aerospace, defense, and government services; power generation; and specialty industrial markets. AE Industrial Partners invests in market-leading companies that can benefit from its deep industry knowledge, operating experience, and relationships throughout its target markets. AE Industrial Partners is a signatory to the United Nations’ Principles for Responsible Investment.

Houlihan Lokey served as the exclusive financial advisor to UAV Factory. This transaction represents Houlihan Lokey’s fourteenth unmanned systems transaction in recent years and underscores the firm’s continued global leadership and expertise in the unmanned systems market.

Houlihan Lokey’s Aerospace, Defense & Government (ADG) practice within the global Industrials Group is a leading M&A advisor to aerospace, defense, and government services companies. Since the beginning of 2020, the team has closed more than 25 transactions worth nearly $5.6bn in enterprise value. With a staff of approximately 30 investment bankers in Washington, D.C., London, and Los Angeles, Houlihan Lokey’s ADG practice is among the largest dedicated industry banking groups worldwide. In 2020, the Industrials Group was once again ranked as the No. 1 M&A advisor for all U.S. industrial transactions, according to Refinitiv (formerly known as Thomson Reuters).

10 Feb 21. Triumph Group Expands Aerospace Structures Divestitures To Arlington Capital Partners With Sale Of Its Red Oak Texas Operations. Triumph Group, Inc. (NYSE:TGI) announced today that it has entered into a definitive agreement to sell its Red Oak, Texas operations to Arlington Capital Partners. The sale includes the Red Oak facility, together with its thermoplastic engineering capabilities. Arlington Capital Partners will combine the Red Oak business with the composites facilities it is separately acquiring from Triumph pursuant to a previously announced agreement.

“With the sale of Triumph’s Red Oak and composites operations, Triumph continues to execute on its strategic path to value initiative to exit large structures manufacturing and reduce our leverage. This transaction will further reduce debt and enhance liquidity while moving the company towards its future state as a leading provider of systems and aftermarket services,” said Daniel Crowley, Triumph’s Chairman and Chief Executive Officer.

The Red Oak site specializes in the manufacture of large, complex composite and metallic structures such as wing, empennage, and fuselage assemblies. The operations cover approximately 1.0 million square feet of factory space and employ approximately 400 people.

Both the Red Oak and previously announced composites transactions are subject to customary closing conditions and are expected to close in Triumph’s fourth quarter of FY21.

Lazard acted as exclusive financial advisor to Triumph on the transaction.

About Triumph Group:

Triumph Group, Inc., headquartered in Berwyn, Pennsylvania, designs, engineers, manufactures, repairs and overhauls a broad portfolio of aerospace and defense systems, components and structures. The company serves the global aviation industry, including original equipment manufacturers and the full spectrum of military and commercial aircraft operators.

More information about Triumph can be found on the company’s website at http://www.triumphgroup.com.

About Arlington Capital Partners:

Arlington Capital Partners is a Washington, DC-based private equity firm that is currently investing out of Arlington Capital Partners V, L.P., a $1.7bn fund. The firm has managed approximately $4.0bn of committed capital via five investment funds. Arlington is focused on middle market investment opportunities in growth industries including aerospace & defense, government services and technology, healthcare, and business services and software. The firm’s professionals and network have a unique combination of operating and private equity experience that enable Arlington to be a value-added investor. Arlington invests in companies in partnership with high quality management teams that are motivated to establish and/or advance their Company’s position as leading competitors in their field. www.arlingtoncap.com (Source: PR Newswire)

09 Feb 21. Irish aviation group lands RAF maintenance contract. Atlantic Aviation buys Flybe cargo plane maintenance business in Oxfordshire. Shannon-based Atlantic Aviation Group has bought a former Flybe business that maintains cargo planes for Britain’s Royal Air Force (RAF). Formerly known as Transaero, maintenance specialist Atlantic emerged from High Court protection in 2015 with an investment of €2.5m from backer Patrick Jordan.

Shane O’Neill, Atlantic’s chief executive, confirmed on Tuesday that the company had bought Flybe’s former aviation maintenance services in Brize Norton, Oxfordshire, in England, for an undisclosed sum.

That facility has a contract with the UK ministry of defence to maintain Airbus A400 cargo aircraft used by the RAF, some of which are currently deployed to transport Covid-19 vaccines.

Flybe went into administration – a form of protection for insolvent companies in Britain – a year ago as Covid-19 hit air travel. Atlantic bought the maintenance operation from the administrators.

Another Irish company, Conor McCarthy’s Dublin Aerospace, acquired Flybe’s other maintenance facility in Exeter.

Brize Norton

Mr O’Neill explained that the Brize Norton deal added aerospace and defence to Atlantic Aviation’s current businesses, which are focused on maintaining passenger and cargo jets.

It also added Airbus as a customer, he noted. The Irish business worked mainly with Boeing aircraft before the deal. “We are looking for further opportunities as well,” Mr O’Neill said.

Existing clients include logistics group DHL, Ryanair, cargo specialist ASL Airlines, Star Air, Tui Group, Jet 2 and major aircraft lessors such as Gecas, Aer Cap, SMBC Aviation Capital, Aergo and Avolon.

Brize Norton employs 112 workers, bringing Atlantic Aviation’s total headcount to more than 400. The Irish business has 320 staff and 24 trainees in its Co Clare headquarters. It began with 220 workers in 2015.

Skilled workers

Mr O’Neill noted that skilled workers were the core of Atlantic’s operation. “We’ve put about €11m-€12m back into the business in terms of people, that includes better terms and conditions, learning and development,” he said.

Atlantic also announced that Eileen O’Riordan, head of human resources in the Republic with pharma giant and Covid vaccine co-developer, Pfizer, is joining its board as a non-executive director.

“We are absolutely delighted to welcome someone of Eileen’s exceptional calibre to the board of Atlantic Aviation Group, ” Mr O’Neill said in a statement.

Atlantic has two hangars at Shannon. Its operations include maintaining, repairing and overhauling aircraft for airlines, continuous airworthiness management, which involves advising carriers and leasing companies on maintaining planes, and training prospective aircraft engineers.

The company said on Tuesday that despite the challenges that Covid posed to air travel, it would continue to expand customer numbers and its international reach. (Source: Google/https://www.irishtimes.com/business)

08 Feb 21. Veritas Capital and Evergreen Coast Capital to Acquire Cubic for $70.00 Per Share. All-Cash Transaction Valued at Approximately $2.8bn, Including Assumption of Debt.

Cubic Corporation (NYSE: CUB) (“Cubic” or the “Company”) today announced that it has entered into a definitive agreement (the “Agreement”) with an affiliate of Veritas Capital (“Veritas”), under which Veritas and Evergreen Coast Capital Corporation (“Evergreen”), an affiliate of Elliott Investment Management L.P. (“Elliott”), will acquire Cubic for $70.00 per share in cash.

Under the terms of the Agreement, Cubic shareholders will receive $70.00 in cash for each share of Cubic’s common stock they currently hold, representing a premium of approximately 58% to Cubic’s unaffected closing stock price on September 18, 2020, the last trading day before the Company’s disclosure of third-party interest in potentially acquiring Cubic. The all-cash transaction will be valued at approximately $2.8bn, including the assumption of debt.

Following the closing of the transaction, the Company will remain based in San Diego, California. The transaction is expected to be seamless for customers and employees across Cubic’s businesses.

Bradley H. Feldmann, Chairman, President and Chief Executive Officer of Cubic Corporation, said, “This transaction is in the best interests of our shareholders and provides them with a significant premium and liquidity – while accelerating future growth to the benefit of our employees and customers. Our success in attracting a premier, deeply experienced partner and securing a transaction at this premium reflects the positive momentum of our business. Although last fiscal year brought unprecedented challenges, Cubic was able to build on our strengths, protect our people, serve our customers and deliver a value-maximizing deal for our shareholders. We look forward to partnering with Veritas and remain grateful to our customers for their trust and to our fellow CUBES for their unwavering commitment to delivering innovative, mission-critical solutions.”

Ramzi Musallam, CEO and Managing Partner of Veritas, said, “Cubic has an unparalleled history of delivering innovative technology-based solutions to address the mission-critical needs of the global transportation and defense markets. We look forward to leveraging our expertise in the government technology market – a key focus of Veritas since our inception – in partnership with the team at Cubic to accelerate product development and drive growth as Cubic continues to improve the quality of global transportation systems and to deliver innovative defense solutions.”

On behalf of Elliott, Jesse Cohn said, “Elliott believes this outstanding transaction maximizes value for Cubic’s shareholders, and we are pleased to have engaged constructively with the Company’s Board and management to reach this outcome. We look forward to partnering with Veritas and the Cubic team as we work through Cubic’s next phase of growth as a private company.” Elliott has entered into an agreement to vote its shares in support of the transaction.

Transaction Details

The transaction will be financed through a combination of equity and debt financing. The Board of Directors of Cubic has unanimously approved the Agreement and recommends that Cubic shareholders vote in favor of the transaction.

This summary of the Agreement is incomplete, and Cubic encourages shareholders to read the full Agreement included with the Company’s current report on Form 8-K, which will be filed with the United States Securities and Exchange Commission in due course.

The transaction is expected to close during the second calendar quarter of 2021, subject to customary closing conditions, including the receipt of shareholder and regulatory approvals.

Advisors

J.P. Morgan Securities LLC is acting as lead financial advisor to the Company and Sidley Austin LLP and Faegre Drinker Biddle & Reath LLP are acting as the Company’s legal counsel. Raymond James & Associates, Inc. provided the Board with an opinion regarding the fairness, from a financial point of view, of the consideration offered to Cubic shareholders.

Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel to Veritas.

Gibson, Dunn & Crutcher LLP is acting as legal counsel to Evergreen.

About Cubic Corporation

Cubic is a technology-driven, market-leading provider of integrated solutions that increase situational understanding for transportation, defense C4ISR, and training customers worldwide to decrease urban congestion and improve the militaries’ effectiveness and operational readiness. Our teams innovate to make a positive difference in people’s lives. We simplify their daily journeys. We promote mission success and safety for those who serve their nation. For more information about Cubic, please visit the company’s website at www.cubic.com or on Twitter @CubicCorp.

About Veritas Capital

Veritas is a longstanding investor in companies operating at the intersection of technology and government. The firm invests in companies that provide critical products and services, primarily technology and technology-enabled solutions, to government and commercial customers worldwide, including those operating in the healthcare, national security, software, education, aerospace & defense, government services, communications, and energy industries. Veritas seeks to create value by strategically transforming the companies in which it invests through organic and inorganic means. For more information on Veritas, visit www.veritascapital.com.

About Elliott and Evergreen

Elliott Investment Management L.P. manages two multi-strategy investment funds which combined manage approximately $42bn of assets. Its flagship fund, Elliott Associates, L.P., was founded in 1977, making it one of the oldest funds of its kind under continuous management. The Elliott funds’ investors include pension plans, sovereign wealth funds, endowments, foundations, funds-of-funds, high net worth individuals and families, and employees of the firm. Evergreen Coast Capital Corporation is Elliott’s private equity affiliate, which focuses on technology investing. (Source: BUSINESS WIRE)

08 Feb 21. Aeronautics announces acquisition of Magal Security Systems’ Integrated Solutions Division, including all its operations and subsidiaries. The acquisition is a major milestone in extending Aeronautics Group’s activities in the field of HLS and advanced paramilitary markets.

Aeronautics Group – a leading provider of integrated turnkey solutions based on unmanned systems platforms, payloads and communications for defense and HLS markets – is acquiring the Integrated Solutions Division of Magal Security Systems, including all the division’s global operations and subsidiaries. The acquisition is a major milestone in extending Aeronautics Group’s operations further into additional military, HLS and advanced paramilitary markets. The acquisition is expected to be completed, 2021 second quarter, and is subject to customary closing conditions, including regulatory approvals.

“We are delighted that Magal’s Integrated Solutions Division – a world leader in HLS and paramilitary security solutions – is joining Aeronautics Group, and becoming part of the Group’s vast and proven solutions offering,” says Moshe Elazar, CEO of Aeronautics Group. “Together with our synergy with Rafael and the defense companies in Stolero Group, the acquisition of Magal’s Integrated Solutions Division is a power multiplier for the entire Group, both technologically and customers’ range wise. Magal’s Integrated Solutions Division acquisition is another step in providing a complete and flexible solution to customers of all around the world. “Over the years, Aeronautics Group has established itself as a leading group in the area of comprehensive integrated solutions for intelligence, surveillance and sensors. We welcome Magal as it joins the Group in a strategic move that combines the leading capabilities of Aeronautics and its subsidiaries with Magal’s comprehensive solutions in the HLS field, continuing to establish and deepen the Group’s specialization in this field.”

“Magal’s Integrated Solutions Division is a world leading international provider of solutions for the HLS markets,” says Arnon Bram, General Manager of Magal’s Integrated Solutions Division. “Over the past 45 years, we have delivered tailor-made security solutions and turnkey projects to hundreds of satisfied customers in over 100 countries, in different markets such as oil & gas, sea ports, air ports, critical infrastructure, safe cities, energy and more. I’m convinced that the collaboration between Magal’s Integrated Solutions Division and Aeronautics Group will broaden the range of our advanced solutions and local support and increase our international footprint.”

About Aeronautics Group

Aeronautics Group offers proven integrated turnkey solutions for multiple applications in the defense and HLS markets, including: unmanned systems, multiple sensors, big data exploitation and mission critical communications.

As a leader in the field of unmanned aerial systems, Aeronautics identifies its customers’ operational needs and responds with innovative technological solutions. The Group’s broad product portfolio offers comprehensive solutions for ISTAR and HLS missions, with demonstrated excellence in performance and operability. Backed by continuous research and development, these systems are built on decades of technological and operational experience. As part of Rafael Advanced Defense Systems, Aeronautics utilizes the technological synergy between the two companies – Rafael’s advanced air, land and naval defense capabilities and Aeronautics’ proven technologies – to strengthen its own status as a leading unmanned and autonomous solutions integrator.

For more information on Aeronautics Group, please visit the company’s website: www.aeronautics-sys.com

About Magal Security Systems

Magal is a leading international provider of comprehensive physical, video and access control security products and solutions, as well as site management. Over the past 45 years, Magal has delivered its products and tailor‐made security solutions and turnkey projects to hundreds of satisfied customers in over 100 countries ‐ under some of the most challenging conditions. Magal offers comprehensive integrated solutions for critical sites, managed by Fortis ‐ our cutting‐edge physical security information management system (PSIM). The solutions leverage our broad portfolio of home‐grown Perimeter Intrusion Detection Systems (PIDS), Symphony ‐ our advanced Video Management Software (VMS) with native Intelligent Video Analytics (IVA) security solutions.

For more information on Magal Security Systems, please visit the company’s website: www.magalsecurity.com

07 Feb 21. The UTM industry is facing a financial crisis – business models no longer work. The global UTM/U-space service supplier (USS) market is facing a major crisis before it really takes off – for most suppliers there will be a significant shortfall in planned income over the next two to three years and many will be forced out of business.

Delays to the introduction of networked remote ID regulations in the USA and the lack of a clear understanding of roles and business opportunities for U-space service providers and U-space technology suppliers in Europe have helped push back the opening of the commercial UTM/U-space market to mid-2023 at the earliest. This is when, in theory, USSs will be able to charge commercial drone operators for UTM services to support more complex missions such as beyond visual line of sight (BVLOS) and flights over people.

As a result, the USS business model which has underpinned many of these start-ups is under considerable strain – both the Federal Aviation Administration (FAA) and the European Safety Agency (EASA) want USSs to supply their UTM services at minimum or no cost to commercial drone operators. And the evidence that the commercial drone world is straining at the leash to introduce BVLOS services is sketchy at best, judging by the still relatively low number of BVLOS applications in the UAS and Europe (https://www.unmannedairspace.info/latest-news-and-information/faa-fact-book-records-thousands-of-uas-approvals-but-less-than-two-percent-bvlos/). It is clear that in some markets, such as Norway and Switzerland, there is a considerable pent-up demand for BVLOS services now. But it is also clear that the prospect of multiple drone operators sharing the same airspace, each one flying large fleets of autonomous drones – and prepared to pay premium charges for faster routeings – is still distant. The minimum operating standards for tracking and detect-and-avoid (DAA) are not yet clear and technical progress towards developing robust DAA systems which can detect a bird flying over water and instigate appropriate avoidance procedures are probably some years distant.

Nor are some of the very basic building blocks for USSs to share safety-critical data for autonomous BVLOS flights which can be used for tactical deconfliction yet in place, though considerable progress has been made to develop appropriate standards. Critically, there are conflicting views on the technical challenges facing developers of UTM services based on 4G/5G mobile networks, which are the most likely technology networks to underpin these more complex U-space/UTM services.

For many USSs, 5G is a double-edged sword. They face considerable competition from mobile network operators (MNOs) who are now developing very strong UTM service offerings of their own. As MNOs’ major drone revenue will come from offering command & control, IoT fleet management and video downlink services to operators based on new 5G networks, MNOs will be able to offer operators lost-leader rates for their UTM services, requiring a simple 4G link, to encourage operators to sign up to a package of services.

And the final nail in the coffin for many USS companies will be the ability of very large operators, such as delivery companies, to develop and integrate their own UTM system into their fleet operations management system.

Alas, the 2023 timetable for the launch of a fully commercial, global UTM competitive sector will come too late for many USSs. The more agile of these have been able to find new revenue streams for their businesses, beyond charging for “pure” tactical UTM services. There are five potential current revenue streams for UTM service providers:

Income from research organisations and governments to subsidise trials
Income from strategic national UTM development programmes, mainly from national ANSPs
Income as a supplier of independent ATM service provider and supplemental service provider low level airspace data.
Income from defence clients – In September 2020 the US Department of Defense (DoD) awarded AirMap a USD3.3m grant to commercialize its AirBoss platform
Income from drone fleet management and UTM integration contracts with drone operators

There are dangers in USSs being forced to offer UTM services beyond the regulated safety environment, as many regulators will be unhappy to see UTM delivered as part of a commercial package, rather than a stand-alone, independent service. And as the industry evolves to incorporate more complex UTM services such as tracking, DAA and rogue drone identification and mitigation – which will be managed by national security agencies – this issue will become even more problematic.

It is therefore not surprising to see even large, well funded UTM companies start to retreat. (https://www.unmannedairspace.info/latest-news-and-information/airxos-to-stop-operations-in-february-suas-news/).

On the face of it, the problem of unclear UTM revenue streams does not seem to be existential to the development of the global commercial drone industry. After all, there are still plenty of UTM companies left in the market and there was always going to be a process of consolidation taking place, whittling down the 30-40 UTM start-ups of 2019 to just five or six required for real-life competitive, tactical UTM service delivery.

But that is to underestimate the scale of the problem.

The commercial drone industry can only develop if there are a handful of competitive UTM service suppliers who have the financial clout to evolve the industry at scale – moving swiftly from supporting one-drone-to-one person operations (or one-drone-to-two-people in extended visual line of sight operations) to one person for every 50 or 100 drones, at which point the industry becomes commercially compelling. The scale of technology maturity and certification required for this is now only starting to become clear – it will require deep, deep pockets to fund the development of certified tracking, DAA and rogue drone identification and mitigation capabilities required for this “end state” to be reached.

There is another issue. The digitisation of airspace management – of which UTM/U-space is a part – as articulated in Europe’s Airspace Architecture Study foresees many of the current roles undertaken by air navigation service providers (ANSPs) as regulated services – such as surveillance and flight data processing – to be hived to global groups of technology providers who will compete to sell their data services at market rates to several ANSPs. This will substantially lower the requirement for ANSPs to undertake long-term, fixed-asset infrastructure investments and give them the flexibility to match their resource requirements to the peaks and troughs of the market. This will be a huge bonus. But what happens when one of these safety-critical infrastructure providers goes out of business? Not a problem – their business will be either replaced or taken over by a competitor, which is what happens when a mobile phone operator goes out business. But safety critical aviation services are not the same as commercial communications contracts and regulators will have to ensure the companies that manage these services will have the financial resources to scale and provide services even when demand falls – and aviation is a notoriously cyclical industry.

These two reasons should make regulators think again about their UTM/U-space business-case policies. Instead of requiring USSs to provide services at “minimal” cost they should amend these requirements to “market” costs, which will mean USSs’ will able to make a reasonable return on investment, even though this will be opposed by many commercial drone operators.

In the longer term (2025 and beyond) prospects for the UTM sector are strong and getting stronger every day. There are 10,000 cities worldwide[1] and if just half of these want to develop an urban air mobility system of some kind to deliver passengers and cargo, that’s 5,000 UTM systems required for starters. There are also over 40,000 airports in the world and thousands of sea-ports, most of which will require some kind of drone management system. Add to that the growing interest by air navigation service providers to use UTM systems as a basis for developing low airspace management systems to track and manage the growing number of manned and unmanned platforms – including personal air vehicles – heading for the skies above us and it is easy to see why there is still so much optimism in this sector.

But the next two years will be critical to ensuring there is enough money in the market to fund the UTM/U-space technologies to make these services available. (Source: www.unmannedairspace.info)

07 Feb 21. Embattled state-owned arms firm Denel operating at 30% capacity. Denel said on Feb.1 that it made a R1.96bn loss in the 2019/20 financial year, compared to a R1.47bn loss a year earlier.

Troubled state-owned defence conglomerate Denel is only operating at 30% of its capacity, impacting on revenues as all operating business units are consequently not meeting their budgets, according to a Department of Public Enterprises (DPE) parliamentary presentation on 3 February.

The presentation, outlining the progress in addressing challenges facing state-owned enterprises, states that Denel is unable to honour contractual obligations due to lack of working capital.

Employees have last been paid full salaries in April 2020 and this has led to unions taking the state-owned company to court with directors cited in their personal capacity. The matter was heard on 27 January 2021 and the Court has reserved judgement.

“Further, the business is burdened with high cost of capital with annual interest payments – R240m interest payment is projected for 2021 financial year.”

GLOOMY FORECAST

The forecast for the 2021 financial year is that revenues will be 26% behind 2020 financial year performance, the DPE presentation said.

“The low level of operations not only erodes the balance sheet, but also erodes reputation and capabilities… Denel has lost over approximately 200 employees and majority of those are individuals with the critical skills.”

Attempts to resolve the embattled arms firm’s challenges include discussions with National Treasury with an application submitted for recapitalisation and a majority of state-guaranteed debt has been rolled over to September 2021.

Denel is also without a permanent Chief Executive Officer.

And although turnaround times on export permits, end user certificates, and other authorisation has improved, “there is a need for additional resources to improve on the responsiveness of the regulatory structures.”

The presentation noted that Denel is mainly challenged by its liquidity crisis, with operations struggling to catch up as a result, while morale issues and the resignation of key personnel are putting more risk to the sustainability of operations.

The finalisation of the Defence and Aerospace Master Plan is also expected to help the growth of the sector and Denel as a whole, defenceweb reported. (Source: Google/https://www.thesouthafrican.com/

05 Feb 21. Strategy update: Rheinmetall presses ahead with strategic realignment – new corporate structure and updated financial targets.

– New structure with five divisions will support the Group’s strategic reorientation

– The executive board will run the divisions directly

– Auditing and adjustment of the product spectrum in line with megatrends like digitization and electric vehicles

– Updated financial targets with a focus on sustainable value added

The ONE Rheinmetall strategy programme is entering a new phase: Rheinmetall AG of Düsseldorf is pressing ahead with its systematic transformation into a fully integrated technology group, reorienting its corporate structure in the process.

First and foremost, Rheinmetall is pursuing three strategic goals here.

First: reducing the share of automotive components in total Group sales, especially products for internal combustion engines. Second: achieving a level of profitability of at least 10% in relation to operating margin in all business units. And third: continuous management of the Group’s portfolio in pursuit of the first two goals.

The division of the Group into two separate entities, Automotive and Defence, will cease. The intermediate holding company Rheinmetall AG will be dissolved and integrated into the Group structure.

As Armin Papperger, chief executive of Rheinmetall AG, explains: “We’re giving Rheinmetall a clear and uniform profile. Merging Automotive and Defence opens up a new and important chapter in the history of our company. The revamped corporate structure gives all of a chance to widen our technological spectrum and expand our position in global markets. As we see it, we’re thus well positioned to meet our ambitious medium-term goals for sustained growth and high profitability.”

Rheinmetall’s new structure encompasses five divisions, all of which will be directly run by the executive board of Rheinmetall AG. This reorganization is especially designed to promote the transfer of technology between individual parts of the Group, and to encourage a sharp focus on futureproof technologies with strong potential for sustained value added.

The five divisions are Weapon & Ammunition, Electronic Solutions, Vehicle Systems, Sensors & Actuators and Materials & Trade. The former pistons unit will be run as a non-core business, following the Group’s announcement in summer 2020 that it would be reviewing strategic options for the future development of the former Hardparts division, especially the small- and large-bore pistons segments.

Rheinmetall has tasked Goldman Sachs to assist it in the process. The initial results are to be submitted in the first half of 2021 for review by the Executive Board of Rheinmetall AG.

In line with the goals of the transformation process and the accompanying expectations for growth, the medium-term financial targets for the Group have been updated. Sales, which came to around €5.8bn in 2020, are to increase to about €8.5bn in 2025. In future, the operating margin is to be at least 10%, while operating free cash flow should be in the range of 3% to 5% of sales.

Security technology and electromobility are expected to be particularly strong drivers of growth, and thus to account for a greater share of Group sales. The percentage of sales relating to the internal combustion engine will be adjusted in accordance with the new market parameters. By 2025, security technology is expected to account for approximately 70% of Group sales, as opposed to roughly 63% in 2020. Reliance on the internal combustion engine will continue to decline, contracting from around 30% of total Group sales today to less than 20%. Not least of all, the new division structure takes account of these circumstances.

Moving forward, environmental sustainability will remain an integral part of Group strategy: Rheinmetall AG intends to be CO2 neutral by 2035. Energy consumption is to be substantially reduced and water use cut by around 10%. Transparency and Environmental Social Governance ratings are to see steady improvement. In future, meeting ESG goals will form part of the compensation policy for upper and middle management, accounting for around 20% of long-term incentives.

05 Feb 21. Héroux-Devtek Reports Strong Third Quarter Fiscal 2021 Financial results.

Q3 Financial Highlights

Sales of $150.3m, compared to $157.3m last year
Defence sales grew 21% year-over-year, mitigating the impact of the pandemic on the civil sector
Operating income remained stable at $13.4m
Adjusted EBITDA1 of $23.7m, or 15.8% of sales, compared to $24.6m, or 15.6% last year
Cash flows related to operating activities of $26.0m, compared to $9.7m last year
Net debt decreased by $29.1m, or $57.2m on a year-to-date basis

Q3 Operational Highlights

Héroux-Devtek selected as part of Boeing’s Premier Bidder Program
Early renewal of a three-year collective agreement with the unionized employees of its Laval facility

Héroux-Devtek Inc. (TSX: HRX) (“Héroux-Devtek” or the “Corporation”), a leading international manufacturer of aerospace products and the world’s third-largest landing gear manufacturer, today reported strong financial results for the third quarter ended December 31, 2020. Unless otherwise indicated, all amounts are in Canadian dollars.

“I am particularly pleased with our third quarter results. The disciplined approach we adopted early in the onset of the COVID-19 pandemic, including our restructuring plans and a pivot to defence orders, are reflected in our improved profitability and sales performance. Our diligent controls over inventory and working capital have also driven strong cash flow, leading to an even stronger balance sheet. This would not have been possible without the extraordinary resilience and commitment of our employees, each of whom I wish to thank wholeheartedly,” said Martin Brassard, President and CEO of Héroux-Devtek.

“As we turn to the final quarter of the fiscal year, we remain confident in our ability to deliver strong financial and operational performances in spite of the sluggish civil air travel environment. As we continue to rightsize our operational capacity to meet future demand and production rates, we will pursue further development and growth opportunities across all our markets,” added Mr. Brassard.

THIRD QUARTER RESULTS

Consolidated sales decreased 4.4% to $150.3m, from $157.3m last year. Defence sales were up 21.1%, from $84.1m last year to $101.8m. The increase was largely fuelled by the ramp-up of deliveries under the Boeing F-18, Sikorsky CH-53K and Saab Gripen-E programs. Civil sales decreased 33.7%, from $73.2m to $48.5m. This decrease is mainly related to lower deliveries for large commercial programs, where twin-aisle deliveries decreased 44%, reflecting lower OEM demand.

Gross profit for the quarter grew from $26.8m, or 17.1% of sales last year, to $28.1m or 18.7% of sales, driven by a better sales mix, the positive effect of restructuring activities on the Corporation’s fixed cost structure and lower depreciation costs.

Operating income increased from 8.6% to 8.9% of sales, or from 8.6% to 9.4% excluding $0.8m of restructuring charges, reflecting strong profitability. Foreign exchange had a negative impact of $0.5m, or 0.2% of sales. Adjusted EBITDA, which excludes non-recurring items, stood at $23.7m, or 15.8% of sales, compared with $24.6m, or 15.6% of sales, a year ago.

Earnings per share remained stable at $0.24, while adjusted EPS grew 8.3% at $0.26 compared to $0.24 last year due to the factors stated above.

NINE-MONTH RESULTS

Consolidated sales decreased 6.8% to $415.7m, from $446.2m for the corresponding period last year. Defence sales were up 15.2%, from $234.4m last year to $270.2m in the first nine months of the year, while civil sales decreased 31.3%, from $211.8m to $145.5m.

Gross profit decreased from $73.3m, or 16.4% of sales last year to $69.7m or 16.8% of sales. While the gross profit in dollars remained below last year due to the impact of COVID-19 on civil sales, a better sales mix than last year and the effects of restructuring initiatives drove an improvement in margins as a percentage of sales.

Operating income decreased from 7.7% to 5.3% of sales reflecting non-recurring charges totaling $9.5m compared to $0.6m last year. Excluding these items, adjusted operating income decreased from 7.8% to 7.5% of sales, reflecting a negative foreign exchange impact representing 0.3% of sales.

Adjusted EBITDA, which excludes non-recurring items, stood at $63.3m, or 15.2% of sales, compared with $67.6m, or 15.1% of sales last year.

EPS decreased from $0.60 last year to $0.31, mainly reflecting this year’s restructuring charges, while adjusted EPS decreased to $0.52 from the $0.61 recorded in the same period last year.

FINANCIAL POSITION

As at December 31, 2020, net debt stood at $189.7m, down from $246.9m as at March 31, 2020. In the third quarter, net debt decreased $29.1m, and decreased $57.2m over the nine-month period – as a result of cash flow generation over the three- and nine-month periods.

As at December 31, 2020, the Corporation had a strong financial position with $249.8m of available liquidity, compared to $192.8m as at March 31, 2020.

RESTRUCTURING UPDATE

Since the beginning of the fiscal year, Héroux-Devtek has announced restructuring initiatives in light of the ongoing COVID-19 pandemic. These initiatives will affect 15% of the workforce, or approximately 315 employees, and includes the closure of Alta Precision and APPH Wichita.

To date, $9.5m of related costs have been recorded as restructuring charges, mainly comprised of employee-related charges and costs to dismantle and relocate machinery. As planned, 76% of staff reductions have been completed as at the end of the quarter and the remaining reductions will occur after the closure of Alta Precision and APPH Wichita. (Source: PR Newswire)

05 Feb 21. Perspecta announces financial results for third quarter of fiscal year 2021.

– Revenue of $1.13bn

– Diluted earnings per share of $0.19; adjusted diluted earnings per share of $0.56

– Operating cash flow of $117m

– Bookings of $0.9bn (Q3 book-to-bill ratio of 0.8x; trailing-twelve-month book-to-bill ratio excluding NGEN SMIT impact of 1.2x)

Perspecta Inc. (NYSE:PRSP), a leading U.S. government services provider, today announced financial results for the third quarter of fiscal year 2021, which ended January 1, 2021.

As previously announced on January 27, 2021, Perspecta entered into a definitive merger agreement to be acquired by Peraton, a portfolio company of Veritas Capital Fund Management, L.L.C. Under the terms of the merger agreement, Perspecta stockholders will receive $29.35 per share in cash. The merger is subject to customary conditions, including approval by Perspecta stockholders as well as the receipt of regulatory approvals and other customary closing conditions. The transaction is expected to close in the first half of calendar year 2021.

Summary operating results (unaudited)

Revenue for the quarter was $1.13bn, up 1% compared to the third quarter of fiscal year 2020, and down 1% compared to the second quarter of fiscal year 2021. The year-over-year increase in revenue was due to growth on existing programs partially offset by the COVID-19 impact of approximately $19m in the third quarter of fiscal year 2021. Excluding the impact of the COVID-19 pandemic, revenue for the quarter grew 2% year-over-year.

Income before taxes for the third quarter of fiscal year 2021 was $45m, which was down 40% compared to the third quarter of fiscal year 2020. Operating margin decreased from 6.7% to 4.0% year-over-year. Net income was $31m, or $0.19 per diluted share.

Adjusted net income was $90m for the third quarter of fiscal year 2021, which was flat year-over-year. Adjusted EBITDA was $181m for the third quarter of fiscal year 2021, down 7% compared to adjusted EBITDA for the third quarter of fiscal year 2020. The as-expected year-over-year decrease in profitability was primarily due to lower asset intensity, an increased mix of cost-reimbursable programs and a $3m COVID-19 impact. Adjusted diluted EPS for the third quarter of fiscal year 2021 was $0.56, up 2% compared to adjusted diluted EPS for the third quarter of fiscal year 2020.

Segment operating results (unaudited)

For the fiscal quarter ended January 1, 2021, Defense and Intelligence segment revenue of $795m decreased by 2% compared to the segment’s revenue from the third quarter of fiscal year 2020, primarily due to lower volume, including revenue lost as a result of COVID-19. Civilian and Health Care segment revenue of $339m increased by 8% compared to the segment’s revenue from the comparable period of the prior year due to the continued ramp up of key new programs.

Defense and Intelligence adjusted segment profit margin for the third quarter of fiscal year 2021 decreased to 13.2% from 14.4% in the third quarter of fiscal year 2020. Civilian and Health Care adjusted segment profit margin for the third quarter of fiscal year 2021 decreased to 12.7% from 12.8% in the third quarter of fiscal year 2020.

Cash management and capital deployment

Perspecta generated $117m of net cash provided by operating activities, used $5m in investing activities, and used $101 m in financing activities in the third quarter of fiscal year 2021. Quarterly free cash flow was $93m, or 103% of adjusted net income, and was reduced by $15m (or approximately 17% of adjusted net income) of restructuring, separation, transaction, and integration-related costs. During the third quarter of fiscal year 2021, Perspecta used $72m to make debt repayments and returned $11m to shareholders in the form of its regular quarterly cash dividend program.

At quarter end, Perspecta had $224m in cash and cash equivalents, $750m of undrawn capacity in its revolving credit facility, and $2.4bn in total debt, including $191m in finance lease obligations. On February 3, 2021, the Perspecta Board of Directors declared that Perspecta will pay a cash dividend of $0.07 per share on April 15, 2021 to Perspecta shareholders of record at the close of business on March 3, 2021.

Contract awards

Contract awards (bookings) totaled $0.9bn in the third quarter of fiscal year 2021, representing a book-to-bill ratio of 0.8x. Included in the quarterly bookings were the following single-award prime contracts:

Space Development Agency (SDA) systems engineering and integration program work: Perspecta will deliver systems engineering and integration support for SDA’s initial satellite constellation known as Tranche 0, a system designed to demonstrate the initial capabilities of the National Defense Space Architecture (NDSA). Under the terms of the agreement, Perspecta engineers and architects will develop infrastructure to ensure the NDSA Transport Layer, Tracking Layer and ground segment operate in unison to support warfighter mission scenarios and experiments. The single award, indefinite delivery/indefinite quantity (ID/IQ) contract, which represents new work for the company, has a ceiling of $112m and an ordering period of five years.
Next Generation Enterprise Services Contract Extension from the U.S. Navy: Perspecta was awarded an extension of the Next Generation Enterprise Network (NGEN) contract from the U.S. Department of the Navy with a maximum ceiling value of $797m, if all options are exercised, for continued delivery of enterprise IT services. The ID/IQ contract includes an extension for six months of support, from January 1, 2021 to June 30, 2021, and three one-month options beyond that timeframe.

Perspecta’s backlog of signed business orders at the end of the third quarter of fiscal year 2021 was $13.6bn; funded backlog at the end of the third quarter was $1.7bn.

The fourth quarter of fiscal year 2020 marked the beginning of the COVID-19 pandemic in the United States, and the pandemic has continued through the third quarter of fiscal year 2021. Due to the mission-critical nature of the majority of our business, substantially all of the services we provide to our government customers have been considered essential services, which has allowed them to continue, and the company has maintained its workforce at near full capacity. For the fiscal quarter ended January 1, 2021, the overall impact of the COVID-19 pandemic on our results of operations was approximately $19m lower revenue, $3m lower adjusted EBITDA and a year-to-date liquidity benefit of $57m due to a deferral of payroll tax payments afforded by the Coronavirus Aid, Relief and Economic Security Act. We continue to assess further possible implications to our business, supply chain and customers, and to take actions in an effort to mitigate adverse consequences. (Source: PR Newswire)

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TCI International, Inc., is a wholly-owned subsidiary of SPX Corporation. TCI provides turn-key solutions for spectrum management and monitoring, direction finding, geolocation and communications intelligence to civilian, government, military and intelligence agencies as well as antennas for communications and high-power radio broadcasting. TCI is headquartered in Fremont, California, USA. For more information, visit www.tcibr.com.

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