Sponsored by TCI International Inc.
www.tcibr.com
————————————————————————-
19 Feb 21. Italy’s Leonardo to raise about 2.1bn euros in DRS U.S. listing: paper. Italian defence group Leonardo is set to raise about 2.1bn euros ($2.54bn) from the New York Stock Exchange listing of its U.S. unit DRS, daily Il Messaggero reported on Friday.
The newspaper said state-controlled Leonardo would hold a board meeting next week to decide on the initial public offering (IPO), which is expected to be completed by March.
At the request of Italy’s market watchdog Consob, the group issued a statement saying it was evaluating the possibility of listing DRS.
It added that no formal decision on the matter had been taken yet, confirming what a source had told Reuters.
The move is intended to support the defence conglomerate’s strategy and raise fresh liquidity and is expected to consist of a sale of 40% of Leonardo’s stake as well as a cash call, the report added.
In November, Leonardo said it intended to keep control of the unit as it assessed various options for the U.S. subsidiary, including a NYSE listing.
Leonardo bought DRS in 2008 in a deal valuing the U.S. defence company at $5.2bn, including $1.27bn in debt, equal to 3.4bn euros at the time of the acquisition, according to Leonardo’s presentation of the 2008 deal.
Il Messaggero said DRS was given a total value close to 3.5bn euros.
Shares in the defence conglomerate were among the top three best performers in Italy’s blue chip index, posting a 10% gain on the day.
($1 = 0.8268 euro) (Source: Reuters)
20 Feb 21. Saudi Arabia to invest more than $20bn in its military industry over next decade. Saudi Arabia will invest more than $20bn in its domestic military industry over the next decade as part of aggressive plans to boost local military spending, the head of the kingdom’s military industry regulator said on Saturday.
The Gulf state wants to develop and manufacture more weapons and military systems domestically, aiming to spend 50% of the military budget locally by 2030.
“The government has put a plan that we will be investing in excess of $10bn in the military industry in Saudi Arabia over the next decade and equal amounts on research and development,” Governor of the General Authority for Military Industries (GAMI) Ahmed bin Abdulaziz Al-Ohali told a defence conference in Abu Dhabi.
He also said the kingdom plans to increase military research and development (R&D) spending from 0.2% to around 4% of armaments expenditure by 2030. (Source: Reuters)
19 Feb 21. FTC makes second request on Lockheed’s takeover of Aerojet. Rocket maker Aerojet Rocketdyne Holdings said on Friday it had received a second request from the U.S. Federal Trade Commission (FTC) for a regulatory review of its proposed takeover by Lockheed Martin.
The FTC review is part of a process under the Hart-Scott-Rodino Act to scrutinize potentially anti-competitive mergers.
A second request by the FTC could indicate heightened antitrust scrutiny, as the vast majority of deals reviewed by the government and the Department of Justice are allowed to proceed after the first preliminary review.
The $4.4bn deal, announced late last year, has raised eyebrows because it would give Lockheed – the No. 1 defense contractor – the ownership of a vital piece of the U.S. missile industry.
Aerojet produces 70% of the solid fuel rocket motors and other propulsion products used in everything from antiballistic missiles to air-to-air missiles.
Lockheed Martin said lmt.co/3bngXPA on Friday it was cooperating with the FTC and reiterated it expects the deal to close in the second half of 2021. (Source: Reuters)
18 Feb 21. Berry Aviation announces expansion into autonomous and unmanned aviation. The Texas-based specialty aviation company recently unveiled a new Autonomous & Unmanned Aviation Division in Oklahoma focused on UAS research and innovation. Berry Aviation, Inc., an experienced manned aircraft operator has announced the opening of a new Autonomous and Unmanned Aviation Division located in Stillwater, OK. The new research facility conducts Unmanned Aerial Systems (UAS) research supporting the U.S. Department of Defense (DOD) in the areas of specialized navigation, propulsion, and acoustic improvements. The new group has a strong demand signal from several customers and recently added additional engineers to support its UAS and Counter UAS activities. “This new business line merges research, engineering, and integrations expertise into Berry’s more traditional aviation portfolio,” said Sean Iverson, COO, Berry Aviation. “It significantly enlarges the breadth and depth of support we are able to offer our DOD customers.”
Berry Aviation’s expansion into autonomous and unmanned aviation is creating job opportunities for highly-skilled labor in Oklahoma. Thomas Blem (L) and Aron Felder (R), both Oklahoma State University graduates, perform final checks on an American designed and manufactured drone at Berry Aviation’s Stillwater integration shop. Photo courtesy of Berry Aviation, Inc.
In addition to broadening the company’s aviation support capability, Berry Aviation expects the new Autonomous and Unmanned Aviation Division to have a meaningful impact in the local community. “The UAS group opens up numerous academic partnerships, internships and job creation opportunities in Oklahoma,” said Stan Finch, President, Berry Aviation. “This uniquely allows Berry to better serve our DOD customer base in mission areas such as Intelligence, Surveillance, and Reconnaissance (ISR), and other innovative research and development avenues, including optionally manned aircraft.” Berry Aviation recently added a dozen highly skilled jobs to the Edmond and Stillwater, OK areas and has plans to double that number by next year.
Founded in 1983, Berry Aviation, Inc. provides specialty aviation solutions for passenger and cargo transport, aerial delivery, personnel recovery, casualty and medical evacuation, ISR, night vision goggle, UAS, and training, along with maintenance repair and modification services. The company conducts 14,000 global flight and ground operations annually and possesses extensive operating experience in some of the world’s most austere and unique environments with customers and end-users including all branches of Department of Defense. Berry Aviation is based in San Marcos, Texas and is a member of Acorn Growth Companies. (Source: PR Newswire)
18 Feb 21. Metamaterial Converts $7.5m in Subordinated Debt. Metamaterial Inc. (“Company” or “META”) (CSE: MMAT) a developer of high-performance functional materials and nanocomposites, today announced that Dicot Holdings, Lark Investments, Tom Welch and Ann Lambert, each investors in and lenders to the Company, converted $1,936,984 of principal and accrued interest at $0.70 per share into 2,767,120 common shares of the Company in accordance with the terms of their debt instruments. Tom Welch also converted $5,526,082 of principal and accrued interest at $0.50 per share into 11,052,164 shares of the Company, in accordance with the terms of the bridge financing announced on December 20, 2020.
About Metamaterial Inc.
META is changing the way we use, interact with, and benefit from light and other forms of energy. META designs and manufactures advanced materials and performance functional films which are engineered at the nanoscale to control light and other forms of energy. META is an award winning Global Cleantech 100 company with products that support sustainability by doing more with less; they encompass lightweight, sustainable raw materials and processes which consume less energy and offer more performance. META has a growing patent portfolio and is currently developing new materials with diverse applications in concert with companies in the automotive, aerospace, energy, consumer electronics and medical industries. META is headquartered in Halifax, Nova Scotia and has R&D and Sales offices in London, UK and Silicon Valley. (Source: PR Newswire)
18 Feb 21. IFS refreshes its brand ahead of milestone launch. New identity reflects IFS’s growth journey and future plans, focused on helping customers be their best when it really matters—at the ‘Moment of Service’
IFS, the global enterprise applications company, today unveils a new brand identity to fuse its evolved market position and herald an industry-changing product launch that takes place on March 10, 2021.
Forward-thinking businesses are recognising the benefits of differentiating on service and the growth opportunities presented by offering new propositions leveraging service. Now, with more than half of the company’s revenue coming from customers using IFS’s technology in how they serve their customers, together with its clear category leadership as recognised by industry analysts, IFS is uniquely positioned to help customers deliver at the moment when it really matters. These are the moments when a company either delights or disappoints; the moments when all the decisions and processes that go into doing what you do need to come together; the moments when all the hard work pays off. We call them Moments of Service.
The launch of IFS Cloud™ on March 10 will enable more companies to be their best in their Moments of Service. The new platform enables companies to manage the customer, people, and asset elements of their business in a single, integrated solution. Packed with meaningful innovation, and the industry relevance that IFS has built a reputation for, IFS Cloud is the most significant launch in the company’s history and sets a new benchmark for the industry.
A new look for a new era
At the heart of IFS’s new identity is an iconic symbol that represents the many elements a business needs to orchestrate in order to deliver amazing Moments of Service. The symbol reflects the effort, energy, and complexity that goes into every customer engagement while retaining a sense of balance and symmetry. Honouring the company’s past while ushering in the future, the new colour palette is based on an updated, vibrant purple hue that is contrasted by a range of complementary colours.
The process behind the brand refresh was both collaborative and scientific, involving input from IFS customers, prospective customers, partners, employees, analysts, and journalists—as well as brand experts.
“We are thrilled to unveil our new look and feel, which is an integral part of the evolutionary shift the company is currently undergoing,” IFS Chief Marketing Officer Oliver Pilgerstorfer said. “The new brand identity reflects the business we are today and is also indicative of our plans for the future, especially in light of the upcoming launch of IFS Cloud. It’s a watershed moment in our company’s history. By creating an identity that is appealing and inspirational we are giving customers, partners, and the market at large a clear signal—and it’s something our own employees are immensely proud of.”
The new IFS branding is currently being deployed across all touchpoints, including digital platforms, print and digital marketing, collaterals, merchandise, and office interiors. The roll-out is being accompanied by out-of-home advertising on some of the world’s most iconic activation sites including Times Square in New York, Burj Khalifa in Dubai, and Shibuya in Japan.
17 Feb 21. Edgybees Closes $9.5m in Series A Funding, Delivers Breakthrough Geo-Mapping Accuracy and Speed for Lifesaving Aerial Video.
High precision geo-tagging of real-time video feeds enables defense, public safety, and critical infrastructure teams to accomplish lifesaving missions. Edgybees, the leading provider of real-time high precision geo-registration and visual augmentation of aerial video, today announced $9.5m in Series A Funding, led by Seraphim Capital, with participation from Refinery Ventures, LG Technology Ventures, Kodem Growth Partners, OurCrowd and Verizon Ventures. Existing investors include 8VC, Motorola Solutions Venture Capital and NFX. The investment will be used to drive product innovation, expand global adoption, and support an aggressive hiring strategy.
Defense, public safety, and critical infrastructure command centers depend on critical aerial video to make lifesaving decisions during public safety, rescue, and defense missions. Assembling this information in real-time presents a tremendous advantage when controlling and overcoming dangerous circumstances. However, to date, aerial streamed video referencing and positioning has been inaccurate, often with negative consequences. This is where Edgybees delivers.
Edgybees Visual Intelligence Platform™ provides the industry’s only high-accuracy geo-registration and alignment of aerial video in real time. The company’s unique approach enables rapid decision-making by visually augmenting roads, key landmarks and other mission-critical data on top of live video feeds, delivered through the Edgybees’ platform or by integrating with third-party systems. This operational perspective dramatically reduces time-to-target and enhances team collaboration, situational awareness, and mission effectiveness.
“Our mission is to ensure positive human outcomes during lifesaving missions,” stated Adam Kaplan, co-founder and CEO of Edgybees. “Our new partners bring unique industry expertise that optimally positions the company to drive innovation and expand our global footprint. We look forward to our next phase of growth, meeting the crucial demands of defense, public safety, and critical infrastructure operators.”
Investor Remarks
Seraphim Space Fund is the world’s first venture fund dedicated to financing the growth of companies operating in the new space ecosystem. Managing Partner and CEO, Mark Boggett, commented, “Edgybees can be described a Google Maps fused with live video footage in real-time. Their geo-referencing capability is a breakthrough technology that brings a new level of insight and usability to video streams from space, drones or bodycams. We are very excited about Edgybees, not only for the innovation it brings to public safety and defense, but because its ability to be utilized in a wide range of industries.”
LG Technology Ventures invests in early-stage start-ups in artificial intelligence, mobility, advanced materials, life sciences, next generation display, mobile, and 5G. Managing Director, Michael Falcon, remarked, “Edgybees enables operators to instantly understand live video in terms of geographical context and more. As a leading provider of Smart City networks, platforms and professional services offered by LG Group companies, LG Technology Ventures appreciates the benefits this innovative technology brings to security, surveillance and traffic monitoring.”
Refinery Ventures is an investment firm focused on disruptive, early-scale companies. Venture Partner, Stephen Rodriguez, and Managing Partner of One Defense, explained, “The dual-use Edgybees solution is ideal for the commercial risk management and national security markets. Its ability to depict real-time data feeds allows operators, whether they be insurance adjusters or drone pilots, to make accurate, timely decisions. A game-changer that is perfect for our portfolio.”
OurCrowd is a global venture investing platform that empowers institutions and individuals to invest and engage in emerging companies. CEO and Israel’s most active venture investor, Jon Medved added, “Edgybees solves a huge problem in spatial computing: how do you really know what you are seeing through fast moving airborne or other video feeds? Edgybees brings together the real and virtual worlds and helps first responders save lives, industrial drone users save money, and defense teams get the mission done.”
About Edgybees
Founded in 2017, Edgybees brings clarity, accuracy, and speed to mission-critical and lifesaving operations that rely on streamed aerial video for situational awareness. Edgybees’ solution combines advanced computer vision and machine learning technologies to accurately match aerial video to satellite reference imagery in real-time. This unique approach enables rapid decision-making by visually augmenting roads, key landmarks, and other mission-critical data on top of live video feeds – via our own platform or by integrating with third-party virtual augmentation solutions. With high-precision geo-tagging and near-zero latency, Edgybees makes complex operational environments instantly clear – enabling defense, public safety, and critical infrastructure teams to accomplish lifesaving and high-urgency missions quickly and safely.(Source: PR Newswire)
18 Feb 21. Airbus sees stable aircraft deliveries after 2020 loss. European planemaker Airbus restored key business targets after generating cash in the fourth quarter, but withheld a dividend as it posted a pandemic-driven loss for 2020 amid the industry’s “most challenging crisis”. Airbus, which has overtaken U.S. rival Boeing to become the world’s largest jetmaker after a 20-month safety grounding of the Boeing 737 MAX, predicted flat 2021 deliveries and adjusted operating profit of 2bn euros ($2.4bn).
Airbus last month reported 566 commercial deliveries for 2020 and said on Thursday it aimed for stability in 2021. But it also said it aims to increase underlying output this year, albeit at a slower rate than previously anticipated.
“We have issued guidance to provide some visibility in a volatile environment,” chief executive Guillaume Faury said in a statement, adding that many uncertainties remained for 2021.
The France-based maker of jetliners and helicopters posted a full-year operating loss of 510m euros, weighed down by charges booked in previous quarters, notably for coronavirus restructuring and the closure of the loss-making A380 programme.
On a widely watched adjusted basis, Airbus stayed in the black but saw operating profit drop 75% to 1.7bn euros as plunging airline demand drove revenues down 29% to 49.9bn.
Stronger than expected jet deliveries in the fourth quarter helped Airbus generate 4.9bn euros in cashflow before M&A and customer financing, beating a quarterly break-even target.
For the year as a whole, Airbus consumed 6.9bn euros, as the impact of the coronavirus crisis came hard on the heels of a record 3.6bn euro bribery fine agreed in early 2020. Airbus said it expected free-cashflow breakeven in 2021. ($1 = 0.8304 euros) (Source: Reuters)
18 Feb 21. Airbus reports Full-Year (FY) 2020 results.
- 566 commercial aircraft delivered in adverse market environment
- Financials reflect the early business adaptation and cash containment plan
- FY revenues €49.9bn; FY EBIT Adjusted € 1.7bn
- FY EBIT (reported) €-0. bn; FY loss per share (reported) € -1.45
- No dividend proposed for 2020
- FY FCF before M&A and customer financing € -6.9bn
- Net cash position at €4.3bn
- 2021 guidance issued
Airbus SE (stock exchange symbol: AIR) reported consolidated Full-Year (FY) 2020 financial results and provided guidance for 2021.
“The 2020 results demonstrate the resilience of Airbus in the most challenging crisis to hit the aerospace industry. I want to thank our teams for their great achievements in 2020 and acknowledge the strong support of our Helicopters and Defence and Space businesses. I would also like to thank our customers, suppliers and partners for their loyalty to Airbus,” said Airbus Chief Executive Officer Guillaume Faury. “Many uncertainties remain for our industry in 2021 as the pandemic continues to impact lives, economies and societies. We have issued guidance to provide some visibility in a volatile environment. Over the longer term, our ambition is to lead the development of a sustainable global aerospace industry.”
Net commercial aircraft orders totalled 268 (2019: 768 aircraft) with the order backlog comprising 7,184 commercial aircraft as of 31 December 2020. Airbus Helicopters booked 268 net orders (2019: 310 units), including 31 NH90s for the German Bundeswehr in Q4 and 11 H160s. Airbus Defence and Space’s order intake by value increased 39% year-on-year to € 11.9bn, a book-to-bill above one, mainly driven by major contract wins in Military Aircraft. This included a contract signed in November to deliver 38 new Eurofighters for the German Air Force.
Consolidated order intake by value decreased to €33.3bn (2019: €81.2bn) with the consolidated order book valued at € 373 bn on 31 December 2020 (year-end 2019: €471bn). The decrease in the value of the commercial aircraft backlog reflects the higher number of deliveries compared to order intake, the weakening of the US dollar and an assessment of the backlog’s recoverability.
Consolidated revenues decreased to €49.9bn (2019: €70.5bn), driven by the difficult market environment impacting the commercial aircraft business with 34% fewer deliveries year-on-year. A total of 566 commercial aircraft were delivered (2019: 863 aircraft), comprising 38 A220s, 446 A320 Family, 19 A330s, 59 A350s and 4 A380s. During the fourth quarter of 2020, a total of 225 commercial aircraft were delivered including 89 in December. In 2020, Airbus Helicopters delivered 300 units (2019: 332 units) with revenues increasing by around 4%, benefiting from a favourable product mix and growth in services. Revenues at Airbus Defence and Space decreased by around 4%, mainly reflecting lower volume as well as the impact of COVID-19 on business phasing, mainly in Space Systems.
Consolidated EBIT Adjusted – an alternative performance measure and key indicator capturing the underlying business margin by excluding material charges or profits caused by movements in provisions related to programmes, restructuring or foreign exchange impacts as well as capital gains/losses from the disposal and acquisition of businesses – totalled €1,706m (2019: €6,946m). This mainly reflects the weaker commercial aircraft performance, which was supported by a strong contribution from Airbus Helicopters and Airbus Defence and Space.
Airbus’ EBIT Adjusted of €618m (2019: €5,947m(1)) mainly reflects the reduced commercial aircraft deliveries and associated lower cost efficiency. It also includes €-1.1bn in COVID-19 related charges. In January 2021, an update on production rates was communicated in response to the market environment with rates to remain lower for longer.
Airbus Helicopters’ EBIT Adjusted increased to €471m (2019: €422m), mainly driven by strong government-related activities and reliable programme execution. It also includes lower Research & Development (R&D) expenses reflecting the end of the European Union Aviation Safety Agency (EASA) certification process for the five-bladed H145 and the H160.
EBIT Adjusted at Airbus Defence and Space increased to €660m (2019: €565m), mainly reflecting cost containment measures and lower R&D expenses, partly offset by the impact of COVID-19, including on the launcher business.
A total of 9 A400M military airlifters were delivered during the year, with Belgium taking delivery of its first of seven aircraft in December. Good progress was made with the aircraft’s capability roadmap, including the flight test campaign for Automatic Low Level Flight certification.
Consolidated self-financed R&D expenses decreased to €2,858m (2019: €3,358m).
Consolidated EBIT (reported) was €-510m (2019: €1,339m), including Adjustments totalling a net €-2,216m.
These Adjustments comprised:
- €-1,202m related to the Company-wide restructuring plan;
- €-385m related to A380 programme cost, of which €-27m were in Q4;
- €-480m related to the dollar pre-delivery payment mismatch and balance sheet revaluation, of which €-106m were in Q4;
- €-149m of other costs (including compliance), of which €-21m were in Q4.
The consolidated net loss(2) was €-1,133m (2019 net loss: €-1,362m). It includes the financial result of €-620m (2019: €-275m). The financial result largely reflects interest results of € 271m, Repayable Launch Investment re-measurement impact in the other financial result of €-157m, as well as a net €-149m related to Dassault Aviation financial instruments. It also includes the impairment of the OneWeb loan, recognised in Q1 2020. The consolidated reported loss per share was €-1.45 (2019: €-1.75).
Consolidated free cash flow before M&A and customer financing amounted to €-6,935 m (2019: € 3,509m), including the payment of the compliance-related penalties of €-3.6bn in Q1 2020. The Q4 2020 free cash flow before M&A and customer financing of €4.9bn reflects the solid level of aircraft deliveries in the quarter, the good performance from Helicopters and Defence and Space, as well as a strong focus on working capital management.
Various measures were taken during 2020 to maintain a strong liquidity position while navigating the COVID-19 crisis, including a new €15.0bn credit facility. Thanks to its strong credit rating, the Company was able to limit interest expenses to €0.4bn for the year and extend the maturities of funding sources by issuing new bonds.
Full-year capital expenditure was around €1.8bn, down by about €0.6bn year-on-year following the prioritisation of projects. Consolidated free cash flow was € -7,362m (2019: €3,475m). The consolidated net cash position was €4.3bn on 31 December 2020 (year-end 2019: €12.5bn) with a gross cash position of €21.4bn (year-end 2019: €22.7bn).
Given the global business environment, there will be no dividend proposed for 2020. This decision aims at strengthening the Company’s financial resilience by protecting the net cash position and supporting its ability to adapt as the situation evolves.
Outlook
As the basis for its 2021 guidance, the Company assumes no further disruptions to the world economy, air traffic, the Company’s internal operations, and its ability to deliver products and services. The Company’s 2021 guidance is before M&A.
On that basis, the Company targets to at least achieve in 2021:
- Same number of commercial aircraft deliveries as in 2020;
- EBIT Adjusted of 2bn;
- Breakeven free cash flow before M&A and customer financing.
17 Feb 21. U.S. antitrust enforcers seen extending review of Lockheed’s deal for Aerojet. Antitrust regulators will likely lengthen their investigation into Lockheed Martin Corp’s proposed purchase of rocket maker Aerojet Rocketdyne Holdings Inc, industry executives said, since the deal would give the No. 1 defense contractor ownership of a vital piece of the U.S. missile industry.
The $4.4bn dollar deal, announced late last year, has raised eyebrows because Lockheed would take over a company that produces 70% of the solid fuel rocket motors and other propulsion products used in everything from antiballistic missiles, to air-to-air missiles.
On Thursday the chief executive of one of Aerojet’s biggest customers, Raytheon Technologies Corp, said his company would speak with anti-trust regulators because they have “concerns” about the deal.
“If that merger actually happens, you don’t have an independent supplier in the solid rocket motor side,” Greg Hayes said at the Barclay’s Industrial Select Conference on Wednesday. Hayes said, “we’re going to make our concerns known to [antitrust enforcers]and the Department of Defense, and we’ll see how this whole thing plays out.” The Federal Trade Commission is reviewing the deal for the government, the people said.
Lockheed competes against Raytheon when it sells tactical missiles, often fired from jets, to the Pentagon.
Lockheed’s CEO, Jim Taiclet, said the deal could put Lockheed into a strong position in the growing propulsion and hypersonic weapons market.
Still, Taiclet has said Lockheed would simultaneously remain a partner to Aerojet’s current customer base by “providing outstanding propulsion products for the entire industry.”
The merger, announced on Dec. 20, is in its 60-day antitrust review period that expires at midnight Thursday and is widely expected be extended by the FTC, allowing the agency more time for review.
Lockheed has anticipated the deal could take until the second half of the year to close. (Source: Reuters)
17 Feb 21. Raytheon to challenge Lockheed’s takeover of Aerojet, CEO says. Raytheon Technologies plans to challenge Lockheed Martin’s proposed $4.4bn takeover of Aerojet Rocketdyne with the U.S. government, CEO Greg Hayes said Wednesday.
“They [Aerojet Rocketdyne] are a huge supplier to us, and if that merger actually happens, you don’t have an independent supplier on the solid-rocket-motor side. And also, I think it gives us pause as we think about the competitive landscape going forward,” Hayes said at the Barclays Industrial Select virtual conference.
If the deal is completed, Raytheon and Boeing would see a top competitor absorb a key supplier of solid-fuel rocket motors used in Raytheon’s missile systems. Hayes said the company would make its concerns known to the U.S. departments of Defense and Justice.
Raytheon had already quietly lobbied to block the acquisition amid concerns it would stifle competition in the missile market, according to industry officials. The firm has held several meetings with the Federal Trade Commission to voice its concerns.
Lockheed and Aerojet announced their deal in December, meant to beef up Lockheed’s technical know-how in the areas of space, propulsion and munitions. Aerojet’s business relies on selling propulsion systems and collaborating with other firms, some of which compete for the same business as Lockheed.
A decision on the acquisition is seen as a test for the new Biden administration, which was still installing the officials at the Pentagon and the Federal Trade Commission who would oversee the deal.
Lockheed Chief Financial Officer Ken Possenriede touted the deal in separate remarks at Barclays, saying that better integrating propulsion systems with missile and rocket designs should improve efficiency, planning and, for nascent hypersonic weapons, effectiveness.
Lockheed has suggested Northrop Grumman’s acquisition of solid-fuel rocket motor manufacturer Orbital ATK in 2018 would be a regulatory model, wherein Northrop was ordered to wall off its solid-fuel rocket motors business and make them available to all competitors for missile contracts.
“I’d stress is we have every intention of continuing to be a merchant supplier across our industry,” Possenriede said. “We’re going to continue to play fair, and we’re going to be a very effective supplier for all of our defense primes. And as a merchant supplier under Lockheed Martin’s ownership our business plan, frankly, is to offer it to all customers and that was part of our valuation.”
However, opponents of the Lockheed-Aerojet deal see a cautionary tale in the Northrop-Orbital deal, after the Air Force’s sole-source, $85bn award to Northrop to build the Ground Based Strategic Deterrent. In that case, Boeing declined to bid on GBSD, a next-generation intercontinental ballistic missile, because it claimed Northrop’s acquisition of Orbital gave Northrop an unfair advantage.
Lockheed’s acquisition of Aerojet could have implications for the Missile Defense Agency’s solicitation to build the Next Generation Interceptor, meant to counter future North Korean intercontinental ballistic missiles and cost $4.9bn over five years. A Raytheon-Northrop team, a Boeing-General Atomics-Aerojet team, and a Lockheed-Aerojet team announced they would compete for the program.
Loren Thompson, a defense industry consultant and analyst with the Lexington Institute, argued in a column Tuesday that the government should approve the proposed acquisition with conditions similar to the Northrop-Orbital consent decree.
Regulators, Thompson said, should weigh Aerojet’s fragility as a stand-alone player in the marketplace, that blocking the acquisition would confer an unfair advantage on Northrop Grumman and that the proposed deal would reduce government costs.
“The way the relationship currently works, Aerojet includes a profit margin in the price it charges for its engines, and then Lockheed adds its own profit margin when it bills the government for the finished product. Under federal accounting rules, this ‘fee-on-fee’ arrangement would disappear if Aerojet became part of Lockheed,” Thompson said. (Source: Defense News)
16 Feb 21. Red Cat Signs Definitive Agreement to Acquire Skypersonic and its “Fly Anywhere” Drone Technologies. Red Cat Holdings, Inc. (OTC: RCAT) (“Red Cat” or the “Company”), a leading brand in the drone industry, announced the signing of a definitive agreement to acquire Skypersonic, Inc., a provider of drone products and software solutions that enable drone inspection flights that can be executed by pilots anywhere in the world.
Skypersonic powers drones to “Fly Anywhere” and “Inspect the Impossible”. Its patented software and hardware solutions allow for inspection services in restricted spaces where GPS is not allowed or available. Skycopter is a miniature drone fitted into a cage to avoid damage to inspected areas and the drone. Skyloc is a stand-alone, real time, software system which enables the drone to record and transmit inspection data while being operated from thousands of miles away. Skypersonic’s intellectual property portfolio includes eight US and European patents.
“The addition of Skypersonic will further strengthen our growing suite of highly specialized and unique drone services,” stated Jeff Thompson, CEO of Red Cat. “We continue to build a strong platform of products and services in the drone industry which is forecast to reach $40bn by 2025.”
“Skypersonic currently services global customers in the automotive and energy industries who rely on our drone platform to perform real-time inspections in remote locations using pilots and inspectors located all over the world.” stated Giuseppe Santangelo, CEO of Skypersonic. “Combining our talent and resources with Red Cat will enable us to accelerate growth in established markets while expanding our reach into new territories.”
About Red Cat
Red Cat provides products, services and solutions to the drone industry through its three wholly owned subsidiaries. Fat Shark Holdings is the leading provider of First Person View (FPV) video goggles to the drone industry. Rotor Riot, LLC is a leader in the sale of FPV drones and equipment, primarily to the consumer marketplace through its digital storefront located at www.rotorriot.com. Rotor Riot enjoys high visibility in social media through its Facebook page and its sponsorship of a professional drone racing team which has won numerous championships. Red Cat Propware is developing a Software-as-a-Solution (“SaaS”) platform to provide drone flight data analytics and storage, as well as diagnostic products and services.
About Skypersonic Inc.
Skypersonic Inc., is a provider of drone products and software solutions designed to “Fly Anywhere” and “Inspect the Impossible”. Its patented software and hardware solutions allow for inspection services in restricted spaces where GPS is not allowed or available. Skycopter is a miniature drone fitted into a cage to avoid damage to inspected areas and the drone. Skyloc is a stand-alone, real time, software system which enables the drone to record and transmit inspection data while being operated from thousands of miles away. Skypersonic’s intellectual property portfolio includes eight US and European patents. (Source: PR Newswire)
16 Feb 21. CRC Ownership Unveils Major Corporate Restructuring. CRC to significantly improve focus on culture, employees, customers, quality, and safety.
Today, Timothy Jeffries, and his wife, Mary Frances Jeffries, co-owners of ChemResearch Company, Inc., unveiled their 2021 plan designed to significantly improve company culture, better compensate employees, increase talent retention, pro-actively engage customers, expand services, elevate quality assurance, and ensure company safety.
Mr. Jeffries, who also serves as Chairman and CEO, stated, “CRC has possessed the privilege and responsibility of serving the Aerospace and Defense (A&D) vertical market critical to Arizona’s economy and our country’s mobility and defense since 1954. Richard Burge, majority owner of CRC for over 20 years, invited me to serve as his Board Chairman in 2008. Richard and I became the best of friends, and when he passed away from ALS on August 25, 2014, my heart was broken. This major corporate restructuring was executed with this deeply personal commitment in mind: I will not fail my brother. With the strong support of our independent directors of the company board, we have already developed a vigorous 90-day-plan to elevate successes for our hard-working employees, our valued customers in all vertical markets, and our local community.”
Effective January 2021, CRC has a new company President, Clark Collier, who will also serve as Chief Operating Officer (COO), a new Chief Financial Officer (CFO), Josh Whitney, who will also serve as Vice President, and the company’s first ever Chief Business Development Officer (CBDO), Lindsay Kough, who will also serve as Executive Vice President.
To further enhance corporate transformation and company culture, Art Cortez and Tony Bouie, two accomplished CRC leaders, were promoted to the vice presidents of their respective company functional areas.
Jeffries shared, “The new CRC executive leadership is off to an extraordinary start. I’ve been blessed to build numerous high performing teams during my career, but in due time, this could prove to be the best I’ve ever built.”
Amidst the restructuring, CRC’s people and customers continue to be the measure of all successes. Quality Assurance (QA) is currently receiving significant focus with the company commitment that major improvements will be made. Safety is paramount, and a new investment plan will ensure it.
Mrs. Jeffries shared, “Despite the challenges and poignancy of some recent changes, Tim and I love our new team. We are certain sustainable success will be achieved. We are passionate about the cultural imperative and transformative blessings of our commitment to ‘People First, People Always.’ We will do everything possible, including additional and significant financial investments in our company, to maximize the bright future ahead.”
Founded in 1954, CRC Surface Technologies is an AS9100 and NADCAP certified, ITAR registered single-source metal finishing service provider for the aerospace, defense, medical, semiconductor, electronics, and heavy equipment industries. The multi-shift 65,000 square foot processing facility is the largest special processing facility in Arizona and offers over 33 plating and chemical processing services. CRC’s regional and national customers include BAE Systems, Bell Helicopter, Boeing, Bombardier Aerospace, General Electric, Goodrich, Hamilton Sundstrand, Honeywell, Northrop Grumman, Parker Aerospace, Rolls Royce, Spirit AeroSystems, and Space X. (Source: PR Newswire)
16 Feb 21. Axiom Space raises $130m in Series B funding.
– Capital will accelerate growth of workforce and development of world’s first commercial space station
– NASA selected Axiom to begin attaching its privately developed space station modules to the International Space Station as early as 2024
– Axiom recently revealed the first-ever private astronaut ISS crew, launching in January 2022
Axiom Space, Inc., which is developing the world’s first commercial space station, has raised $130m in Series B funding. The round was led by C5 Capital and includes TQS Advisors, Declaration Partners (the investment firm backed by David M. Rubenstein), Moelis Dynasty Investments, Washington University in St. Louis, The Venture Collective, Aidenlair Capital, Hemisphere Ventures, and Starbridge Venture Capital.
The new financing will accelerate the growth of Axiom’s workforce and construction of its privately developed space station. The Axiom Station will serve as the central pillar of a thriving network of commerce in Earth’s orbit – a linchpin of a space economy that Bank of America and Morgan Stanley both project could be valued at more than $ trn in the next few decades.
“Axiom Space is a force in the space sector, and it will become a centerpiece of the C5 Capital portfolio and enhance our vision for a secure global future,” said C5 operating partner Rob Meyerson, who will join the Axiom Board of Directors. “The Axiom Station will be the infrastructure upon which we will build many new businesses in space, and it will serve as the foundation for future exploration missions to the Moon, Mars, and beyond.”
Recent Milestones
- In January 2020, NASA selected Axiom to begin attaching its own space station modules to the International Space Station (ISS) as early as 2024, marking the company as a primary driver of NASA’s broad strategy to commercialize LEO. While in its assembly phase, Axiom Station will increase the current usable and habitable volume on ISS and provide expanded research opportunities. By late 2028, Axiom Station will be ready to detach when the ISS is decommissioned and operate independently as its privately owned successor.
- In January 2021, Axiom – also the commercial space industry’s full-service ISS mission provider – revealed its historic first private astronaut crew. Planned to fly to the ISS no earlier than January 2022, the crew of Axiom Mission 1 (Ax-1) intend to promote their philanthropic endeavors and conduct scientific research on behalf of organizations they support.
“Axiom Space was founded on the knowledge that commercial infrastructure and innovation in space would offer unique ways to improve life on Earth,” said Axiom co-founder and executive chairman Kam Ghaffarian, who provided the company’s seed funding through his family office, IBX. “Axiom’s sole-selection by NASA to connect to ISS and ability to leverage its key revenue lines are evidence of the company’s expertise and a business model that is set up to optimize across a variety of commercial on-orbit opportunities. This highly successful round is a pivotal moment for on-orbit commerce and its implications for our civilization’s potential are far-reaching.”
Ghaffarian founded and led Stinger Ghaffarian Technologies, which rose to become NASA’s second-largest engineering services contractor before being acquired by KBR in 2018. Axiom President & CEO Michael Suffredini was NASA’s ISS Program Manager from 2005 to 2015.
“We are proud to partner with Axiom’s exceptional management team, who built, led, and visited the International Space Station on behalf of NASA and its partners,” Brian Stern, a Partner at Declaration Partners, said. “The next-generation space station we are building today will be a key means of conducting space-based research, manufacturing, communication, and travel for decades to come.”
About Axiom Space
Axiom Space was founded in 2016 with the vision of a thriving home in space that benefits every human, everywhere. While building and attaching its commercial modules to the International Space Station to one day form the world’s first privately funded commercial space station, Axiom provides universal access to the ISS today by conducting crewed missions for national and private astronauts as well as research and manufacturing customers. More information about Axiom can be found at www.axiomspace.com. (Source: PR Newswire)
17 Feb 21. Elon Musk’s SpaceX raises $850m amid ‘insane demand.’ Elon Musk’s SpaceX has raised a mammoth $850 (£612m) in a private funding round that values the company at $74bn, according to reports.
Insiders told CNBC that there had been “insane demand” for shares in the cash-burning rocket company, which is busily launching hundreds of new satellites for its Starlink orbital internet service.
Mr Musk, who was just pipped to the post by Amazon founder and rival rocketman Jeff Bezos for the title of world’s richest person on Tuesday, has said that Starlink will need to “pass through a deep chasm of negative cash flow” before ultimately bringing in tens of billions of dollars per year.
Elsewhere, banks are seeking advice on how to start accepting Bitcoin, and Fornite maker Epic Games has reported Apple to the EU.
Mr Musk’s other company, SpaceX, has become the world’s biggest satellite launch service, with its Falcon reusable rocket boosters regularly delivering supplies to the International Space Station (ISS) and its Crew Dragon spacecraft completing its first human trip to the station last May.
It has also caught the eye of investors, raising $850m at a valuation of $74bn in a private funding round. As well as flying missions for Nasa and the US military, Musk has been hunting funds to fuel demand for its Starlink satellite constellation, which is planning to blanket the whole world in broadband satellites.
The remarkable success of SpaceX has led to a surge in interest in space flight, with investment channelled into space startups.
Early next year, it is expected to carry the first all-private astronaut crew to the ISS for Axiom Space, a Texas-based company that hopes to build the world’s first commercial space station. (Source: Daily Telegraph)
17 Feb 21. Codan to acquire Domo Tactical Communications. The ASX-listed firm has secured a deal worth up to $134m to acquire US-based technology company Domo Tactical Communications.
SA-based electrical engineering firm Codan has entered into an agreement to acquire 100 per cent of the shares in US-based company Domo Tactical Communications (DTC), from a private equity company.
DTC, which also has office locations in the UK and Denmark, is an established provider of high bandwidth wireless communications with specialist capabilities in MIMO Mesh networks — software defined networks that leverage multiple antennas to stream data to and from devices.
The US-based company’s MIMO Mesh products provide transmission of video and other data applications to military and special forces, intelligence agencies (including the Five Eyes), border control, first responders and broadcasters.
As part of the acquisition, Codan will make an upfront payment of US$88m ($114m), with the possibility of an additional payment of up to US$16m ($20.5m) if certain earn-out targets are achieved in calendar year 2021.
The acquisition is expected to be completed by 30 April 2021, subject to a number of US and UK regulatory conditions.
Upon completion of the acquisition, DTC is expected to contribute approximately $90m of sales, $14m in EBITDA and $9m profit before tax in the first full-calendar year.
“The acquisition of DTC is consistent with Codan’s well publicised strategic growth plan for our Tactical Communications business,” Codan chief executive Donald McGurk said.
“This is focused on providing total communications solutions by transitioning from a traditional voice only platform via the addition of data and video communication capabilities.
“This acquisition fills a technology gap and will be able to leverage Codan’s global distribution channels into the developing world.”
Codan’s president for tactical communications, Paul Sangster, added, “DTC is an important strategic acquisition for us and brings complementary capabilities to our existing tactical communications solutions.
“We will be able to add immediate value by integrating DTC’s and Codan’s sales and marketing teams as we open up new geographic routes to market.
“Over the long term our combined engineering capabilities will allow us to bring unique communications solutions to a diverse global customer base from military to security to broadcasting”. (Source: Defence Connect)
16 Feb 21. Chinese drone maker’s stock plunges as short-seller takes aim. Drone manufacturer EHang Holdings Ltd’s shares plunged on Tuesday after an investment research firm said it had shorted the stock and questioned the accuracy of what the Chinese company has said about its business.
Guangzhou, China-based EHang’s shares closed 62.7% lower at $46.30 on Nasdaq.
Wolfpack Research, which specializes in short-selling, or betting that shares will fall, said EHang is “an elaborate stock promotion” and that the producer of unmanned aerial vehicle technology has lied about its products, manufacturing, revenues and partnerships.
In response, EHang said the Wolfpack report contains “numerous errors, unsubstantiated statements, and misinterpretation of information.”
The drone maker also said it is in compliance with the regulations of the U.S. Securities and Exchange Commission and Nasdaq.
EHang’s stock had soared from around $13 a share in early December to $124.09 on Friday. The stock made its U.S. debut in December 2019 after an initial public offering priced at $12.50 share. (Source: Reuters)
16 Feb 21. Serco Group plc (‘Serco’ or ‘the Group’) has agreed to acquire Whitney, Bradley & Brown Inc (WBB), a leading provider of advisory, engineering and technical services to the US Military, for $295m from an affiliate of H.I.G. Capital. The acquisition will increase the scale, breadth and capability of Serco’s North American defence business and will give Serco a strong platform from which to address all major segments of the US defence services market. The acquisition will be immediately accretive to earnings and will be funded through existing debt facilities; it is expected to complete in the second quarter of 2021, subject to regulatory approvals.
Financial details
- In calendar year 2021 WBB is expected to generate revenue of around $230m (£168m), EBITDA of $29m (£21m) and UTP of $28m (£20m), before exceptional transaction and integration costs.
- We expect WBB to be immediately accretive to earnings following completion and to enhance Underlying EPS by around 10% in 2022, the first full year of ownership. The return on invested capital is expected to exceed our weighted average cost of capital in the third full year of ownership.
- Cost synergies of $4m per year, a large part of which are property-related, expected by 2023; significant opportunities for cross-selling services across both existing Serco and WBB customers.
- Prospective 2021 acquisition multiples: 10.2x EBITDA and 10.5x UTP.
- The consideration will be paid in cash funded through existing debt facilities.
This acquisition will increase our Adjusted Net Debt to EBITDA multiple by around 0.9x. Including the effect of this transaction, as well as the acquisition of Facilities First Australia and the share purchases announced in December, we expect our leverage to be around 1.6x at H1 2021, and decrease thereafter. Leverage of 1.6x is comfortably within our target range of 1-2x.
Strategic logic for the acquisition
- Highly complementary business: like Serco, WBB is a leading provider to the US Department of Defense of Systems Engineering and Technical Assistance (SETA) services focusing in the fields of Acquisition and Programme Management, Systems Design and Engineering, Through-Lifecycle Asset Management and Mission Performance.
- Adds scale, breadth and capability to Serco’s North American defence business creating a platform for future growth:
o Scale: adds 20% to Serco’s existing $0.9bn of North American defence revenues, and about 1,000 skilled people, reinforcing our position as a significant supplier in the US defence services market, with credible positions in all arms of the Department of Defense.
o Breadth: to our strong position in the US Navy, the acquisition of WBB adds new market segments and reach within US defence. It will approximately double Serco’s revenues across both the US Army and Air Force/Space Force, giving us ~$100m businesses in each. It will give us immediate access to markets that are difficult to enter organically including Air Force programme offices, the Missile Defense Agency, Space and Missile Defense Command, the Office of the Secretary of Defense, security agencies and others.
o Capability: WBB brings significant new areas of capability to Serco’s global defence business, including Advanced Data Analytics, Organisation Design, Cyber, AI & Machine Learning, Natural Language Processing, Wargaming, Modelling, and technologies related to geo-location. Among its 1,000 employees, 80% of whom have security clearances, it has around 200 “Subject Matter Experts” many of whom are former senior US military officers who are recognised experts in their fields. We believe we can offer these services to our existing customers in US defence and elsewhere.
Commenting on the acquisition, Rupert Soames, Serco Group Chief Executive, said: “Growing the scale, reach and capability of Serco in the largest defence market in the world is one of our strategic objectives, and the acquisition of WBB significantly advances that strategy. Following the acquisition of the Naval Systems Business Unit of Alion in 2019, which increased the size of our US Navy business by 70%, WBB takes our North American defence revenues to around $1.1bn and gives us credible positions in other parts of the market including Air Force, Space Force, Army, the Missile Defense Agency and the Office of the Secretary of Defense. It creates a powerful platform for future growth and brings us impressive new capabilities in areas such as Advanced Data Analytics, AI & Machine Learning and Precision Navigation and Timing, along with a team of renowned Subject Matter Experts covering a wide range of disciplines that can be deployed across our business. I greatly look forward to welcoming the WBB management team led by their CEO Robert Olsen along with 1,000 skilled WBB people to Serco and working with them and other colleagues as we build a strong global defence business.
The acquisition will be immediately accretive to our margins and to our earnings per share, and the recent strong cash performance allows us to execute this acquisition within our existing debt facilities whilst staying well within our target leverage ratio.”
Historic financial data: In 2019, the last full year of audited accounts, revenue of WBB was $114m, EBITDA $9m, UTP $9m and gross assets were $170m. There were two acquisitions made in the final quarter of 2019, with the income statement including a contribution only for the period of ownership. In 2020, revenue was $212m, EBITDA $29m and UTP $28m.
Currency exchange rates: For the conversion into pounds we use a GBP:USD rate of 1.37 as the average for 2021 and 1.37 as the spot rate for the acquisition consideration.
15 Feb 21. Montana Aerospace prepares for $1.8bn stock market listing – sources. Austrian-Swiss aircraft parts maker Montana Aerospace is preparing for a $1.8bn stock market listing as its private equity owner seeks to exit while stock market valuations are high, people close to the matter said.
Austrian billionaire Michael Tojner’s private equity vehicle Montana Tech Components is working with UBS and Berenberg on an initial public offering in Zurich, which could value Montana Aerospace at up to 1.5bn euros ($1.82bn) and take place before the summer break, one of the sources said.
Montana Aerospace said that it regularly reviews growth financing options but would not comment specifically on an IPO.
“Consolidation is taking place in the aerospace sector – here we regularly review what growth financing options are available in order to be able to take advantage of market opportunities, particularly in the area of mergers & acquisitions,” the company said.
The banks declined to comment.
Montana Aerospace comprises the units UAC, Alu Menziken, Alpine Metal Tech and ASTA, which specialise in aluminium profiles and ready-to-install components mainly for the aerospace industry.
The COVID-19 pandemic in 2020 weighed on Montana Aerospace’s sales as demand for new aircraft slowed with lockdowns and travel restrictions and the company had to temporarily close down sites.
However, in its third-quarter 2020 report Montana Tech said that despite a slow uptick in deliveries, the aerospace division secured attractive contracts that will result in significant increases in sales from 2022 onwards.
In 2019, Montana Aerospace posted earnings before interest, tax, depreciation and amortization of 72m euros. In addition to those earnings, at the time, Montana Tech Components separately listed 7.5m in core earnings for Metal Tech and 6.6m for ASTA.
Montana Tech Components was founded in 2006 by entrepreneur Tojner with the aim of forming an industrials company through acquisitions.
One by one the holding company acquired firms including battery maker Varta Microbattery, metal processing group Alu Menziken, packaging maker Aluflexpack and copper wire firm Asta.
It listed Varta on the Frankfurt stock exchange in 2017 and Aluflexpack in Zurich in 2019.
While Europe is seeing a swathe of initial public offerings, including bumper listings in Frankfurt by telecom towers firm Vantage or used-car trading platform Auto1, Switzerland is seeing less action this year.
One of the few exceptions is contract manufacturer Polypeptide’s planned pre-summer IPO, which it is preparing with the help of Credit Suisse and Morgan Stanley, according to people familiar with the matter. ($1 = 0.8238 euros) (Source: Reuters)
09 Feb 21. SmallSat M&A (Mergers & Acquisitions) 2020: A Year In Review. Trends To Watch Out For In 2021. As Karl Schmidt of KippsDeSanto & Company said, “The Space M&A markets couldn’t be any hotter. We’ll see more buying and more exits in 2021.” There was total agreement by the panel and everyone seemed to be onboard with his comment
The general consensus was certainly that 2020 was an interesting year, and for James Murray of PJT Partners, it was actually three separate years in one.
First, the private placement market was healthy and robust with around $4bn in private capital aid for business being doled out, enabling those firms to continue to build out their constellations — the industry and the markets continued to hum along quite admirably.
Then COVID arrived and the second segment of 2020 arrived when the market tipped sideways.
The third portion of 2020 found firms emerging from the shock of the coronavirus invasion and a different market materialized and the industry regained some of its footing. He noted that what used to be a nice market has now drawn a lot more attention. The success of Starlink, he noted, sent shock waves through the industry — many firms were struggling with the new smallsat paradigm. And a point that many agreed upon throughout the session was that there has never been a better time to raise capital. This is also a tale of two cities, where the opportunities for the smallsat segment are excitingly available, but for larger operations, the time has become far more challenging.
Many noted that a key investment player is the government and is becoming more and more interested in the smallsat environs. The pandemic helped the government realize the value of the space sector and their ability to access commercial space data and found such to be highly useful. Commercial space is very relevant to government players in the U.S.
The high profiles of OneWeb and Intelsat bankruptcies actually caused a refresh of the industry, according to Noel Rimalovski of GH Partners. Balance sheets became healthier and the deck was cleaned up going forward. With $10bn in capital coming into the industry, new investment models will further helps some of the smaller companies in the industry move from a small to a large size.
John Stack of Canaccord Genuity readily agreed that 2020 was clearly a dynamic year; however, there were many questions about where were all of the company exits into the markets. A lot was happening on the M&A side as company’s pondered their exits and examined a myriad of opportunities to grow. He notes a continued sense of urgency for those who have a fear of missing out. There are a lot of strategic discussions regarding what the best path forward be for them. If they don’t engage a SPAC, what does it mean about raising money downstream. Where do they fit into the ecosystem with competitive sets? Private rounds? Private equity rollups? Public equity routes? Many of the new investors are trying to get educated to get a feel for what’s going on while companies weigh their strategic options. There’s a lot of money, a lot of deals, and a lot of rollups.
In looking at SPAC (special purpose acquisition companies) Mr. Murray noted these have been around for decades. What is new in the market environment all now find themselves in. Market timing is crucial. There will be about 250 SPACs out there by the end of next month (March 2020). He believes there are different groups of players with the SPAC confines: Hedge fund investors who find the opportunity to put money into a SPAC and then have a look at early stage movement and can pull out when they wish. Then there are the SPAC sponsors who are coming to the table and they are chasing growth.
When looking across New Space, many companies are promising a lot of appreciation. The third group are companies’ management teams who themselves are seeking to raise funds at reasonable rates and they are looking at SPAC to see if this is suitable for their business plans. He thinks that in 2021, in genera, there will probably be five or six portfolio companies looking at SPACs, which is clearly a big topic of conversation. Whether they go forward will have to be seen. SPAC is simply a way of getting business capital into the door. There is some risk for companies that are not ready for primetime going out — a little bit of a rush to exit — and a SPAC would not be as great for those firms.
The panel agreed that SPACs are not for everyone… there are a number of concerns to consider when going public… there are investor relations concerns, legal issues and the necessity of building up senior management to handle the new requirements SPACs place on the firm and other challenges.
Without question, the continuing belief by the panelists was that the smallsat industry has certainly evolved into an exciting market segment and is attracting huge amounts of capital. There will be horizontal integration between firms that have complimentary data sets, for one thing.
One area being seen by Mr. Rimalovski, is that small companies have overlapping strategic interests and the anticipation is, especially in the EO sector, is horizontal integration, particular with those firms that have complimentary data sets. Additionally, a many investors not seen before in this sector are coming in taking a look. In terms of the GEO role, there will more than likely be a big recapitalization of these companies thru bankruptcy — LEO models will be eating GEOs traditional lunch, especially within the data sector. No doubt that the industry will continue to be disrupted by smallsats.
Mr. Schmidt added that many equity groups — particularly in the mid- to smaller size equity groups — that haven’t previously been able to get into the space sector are now looking at their next platform, such as the services and software side.
Mr. Murray believes that deal announcements are an indicator of positive activity. Many of these deals are under confidentiality agreements; however, he expects to see many new verticals opening up, especially around comms via smallsats. He thinks LEO operators may well consider funding along the s perhaps considering public financing route.
When discussing government involvement within the smallsat industry, Tom Gillespie of In-Q-Tel thinks it’s difficult right now to make a pronouncement on how the Biden administration is going to treat space. There are some questions regarding the National Space Council and how it will move forward and if the Office of Space Commerce will actually survive. He did note that, clearly, government is paying attention and is watching what’s happening in space. A lot of government money is going into the market segment. In example, the USAF is investing in smaller companies. There will be pressure on defense and intel budgets going forward, so space is a good place to be. Government is still grappling with how much should they own outright, or, do they pay someone to handle the project and at least get a piece of those operations.
Moderator Randy Segal of Hogan Lovells said that space is the next sexy thing. The rest of the world over the last two to three years has come to realize that space is the really cool thing and that is where they want to be. People want to invest and be part of it. She then asked for Words of Wisdom from the panel.
Mr. Rimalovski answered that small companies that are stretching for capital investment must be quite careful if they plan on doing business in western world — foreign ownership can be an impediment and if that path is taken, they must take into account that there will be a lot of legal fees. Mr. Stack succinctly stated, “Team, Tech and Traction, with a focus on the last ‘T’.” He will be excited to finally see company CEOs and management teams get their place in the sun, as they have imbued their companies with their own blood, sweat and tears into their firms. Finally to be seen will be the acknowledgement of their hard work. Mr. Schmidt emphasized that the space M&A markets couldn’t be any hotter and that there will be more buying and more exits in 2021. For Mr. Gillespie, this is going to be a truly exciting year, with the government really heading into commercial space. He also believes there will be a number of company exits via SPAC, which is really healthy for the industry.
Gathering all of the comments together in a single channel, there was no doubt by the panelists that this was an extremely exciting time to be involved in the smallsat industry. (Source: Satnews)
15 Feb 21. Kromek ramping up Covid-19 pathogen detectors.
- Placing and open offer to raise £13m.
- Proceeds to de-risk and commercialise bio-security pathogen detectors.
Kromek (KMK:16.75p), a Sedgefield-based radiation detection technology company focused on the medical, security screening and nuclear markets, has announced a placing and open offer to raise £13m at 15p a share.
Up to 25 per cent of the proceeds will be used to de-risk and commercialise Kromek’s bio-security pathogen detectors which sample air and identify the presence of any biological pathogen including Covid-19. They will be piloted in UK airports, hospitals and the retail sector in the coming months ahead of commercial roll-out. In addition, up to 20 per cent of the funds will be used to expand sales and marketing efforts for Kromek’s nuclear detection and medical imaging activities with the balance used to deleverage its balance sheet.
I feel the open offer is worth taking up. That’s because two-thirds of Cenkos Securities’ £15m revenue estimate for the 2021/22 financial year is already covered by the order book, but the house broker’s forecast excludes any contribution from the bio-security pathogen detectors. Bearing this in mind, Cenkos estimates that every £1m of additional revenue could generate £0.5m of incremental cash profit for the company. Analyst Paul Hill at Equity Development values the annual global market for the biological threat detection devices at £500m and believes that the company could win a 20 per cent share, an outcome that is simply not being priced into Kromek’s market capitalisation of £57m.
The shares doubled in price to 28p after my last article (‘Covid-19 airborne threat detection profit opportunity’, 14 January 2021), and the pull-back on news of the placing is a repeat buying opportunity. (Source: Investors Chronicle)
15 Feb 21. Bombardier to lay off 1,600, halt Learjet production. Bombardier Inc said on Thursday it would halt Learjet aircraft production and slash about 1,600 jobs this year as it becomes a pure-play business jet maker, after reporting an adjusted loss before interest and taxes for the fourth quarter due to the coronavirus pandemic.
After flagging likely layoffs in November, Montreal-based Bombardier announced further cost-cutting efforts to generate $400m in recurring savings by 2023 and improve earnings this year while increasing its aftermarket business.
“We view 2021 as a transition year,” Chief Executive Éric Martel told analysts.
The layoffs include 800 people in Canada, mostly in Quebec, and 250 in Wichita where Learjet is made, Martel later told reporters.
Bombardier, which had previously planned to break even on free cash flow in 2020, now expects to turn cash flow-positive between 2021 and 2023.
The company’s shares were down 11% to C$0.65 per share in midday Toronto trading.
Bombardier has shed assets in recent years, transforming itself from plane and train maker to business jet manufacturer, to restore profitability and cut debt after facing a cash crunch in 2015.
In 2021, the company expects business jet deliveries in line with 2020, modest revenue growth, and adjusted EBITDA of more than $500m, as it winds down production of the low-selling Learjet later in the year to focus on more profitable Challenger and Global jet models.
Analysts on average estimated 2021 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to be $661.3m, according to Refinitiv IBES data.
Ahead of its March 4 investor day, Bombardier cited cost improvements on the Global 7500 jet and its growing service business as key earnings drivers.
Bombardier reported a 19.7% fall in business jet deliveries to 114 in 2020, in line with industry trends. But 2020 revenues from corporate aircraft activities rose 3%, helped by year-end deliveries of Global 7500 jets and a rebound in demand.
Bombardier reported 2020 free cash-flow usage from continuing operations of $1.9bn, but expects to reduce cash burn in 2021 to better than $500m.
The company said it now has pro forma cash and cash equivalents of about $5.4bn, including proceeds from the sale of its transportation unit, and a pro forma net debt of about $4.7bn.
Bombardier reported an adjusted loss before interest and taxes of $165m for the quarter ended Dec. 31, compared with a profit of $168m a year earlier. (Source: Reuters)
12 Feb 21. CAE reports third quarter fiscal 2021 results.
- Revenue of $832.4m up 18% vs. second quarter and down 10% vs. third quarter last year
- EPS of $0.18 ($0.22 before specific items) vs. negative $0.02 ($0.13 before specific items) in the second quarter and $0.37 ($0.37 before specific items) in the third quarter last year
- Operating profit of $82.9m vs. $28.2m in the second quarter and $154.9m in the third quarter last year
- Segment operating income before specific items of $97.2m vs. $79.3m in the second quarter and $157.2m in the third quarter last year
- Net cash provided by operating activities of $234.8m vs. $45.6m in the second quarter and $322.1m in the third quarter last year
- Positive free cash flow of $224.0m vs. $44.9m in the second quarter and $275.3m in the third quarter last year
- Issued $495.3m in common equity and announced three acquisitions: Flight Simulation Company B.V., TRU Simulation + Training Canada Inc., and Merlot Aero Limited.
(NYSE: CAE) (TSX: CAE) – CAE today reported revenue of $832.4m for the third quarter of fiscal 2021, compared with $923.5m in the third quarter last year. Third quarter net income attributable to equity holders was $48.8m ($0.18 per share) compared to $97.7m ($0.37 per share) last year. Net income before specific items(5) in the third quarter of fiscal 2021 was $60.0m ($0.22 per share) compared to $99.4m ($0.37 per share) last year.
Operating profit this quarter was $82.9m (10.0% of revenue), compared to $154.9m (16.8% of revenue) in the third quarter of fiscal 2020. Restructuring costs of $14.3m were recorded this quarter whereas there were no restructuring costs in the third quarter of fiscal 2020. Third quarter segment operating income before specific items was $97.2m (11.7% of revenue) compared with $157.2m (17.0% of revenue) last year. Backlog(6) remains solid at $7.8bn. All financial information is in Canadian dollars unless otherwise indicated.
“CAE’s performance continued to strengthen sequentially in the third quarter, demonstrated by 69% higher earnings per share and a near five-fold increase in free cash flow to $224.0m, underscoring the resiliency of our business,” said Marc Parent, CAE’s President and Chief Executive Officer. “We are managing well through a challenging period and making important progress to significantly enhance CAE’s position for future growth. We bolstered our financial resources with the issuance of $495m of common equity and we strengthened and expanded our market position with a succession of three acquisitions.”
On CAE’s outlook, Marc Parent added, “The pandemic continues to be a global reality and the resumption of CAE’s recovery remains highly dependent on the timing and rate at which travel restrictions and quarantines can eventually be safely lifted and normal activities resume in our end markets. Looking beyond, given our recent investments and future potential opportunities to deploy growth capital, we are confident CAE will emerge from this period in a position of even greater strength.”
Civil Aviation Training Solutions (Civil)
Civil training centre utilization(8) is well below pre-pandemic levels; however, remains stable with the second quarter, which was already much-improved compared to the lows seen at the outset of the pandemic. This reflects the benefits of a highly regulated aviation industry and the fundamental requirement for aviation training. It also shows the ongoing effects on air travel demand resulting from persistent mobility and border restrictions brought by the pandemic. In the months since the onset of the pandemic, business aviation has been experiencing a more rapid recovery than commercial. COVID-19 continued to negatively affect Civil training revenues during the quarter with a significant decrease in training services demand as a result of the reduction in airlines’ global operations, disruption to the global air transportation environment and diminished air passenger travel. While most CAE locations are operating, certain training locations have recently had to curtail operating activities temporarily as local authorities implement measures to contain the spread of COVID-19. Training centre utilization remained stable at an average of 50 percent for the quarter. Since the beginning of January, Civil training centre utilization has continued to average at approximately this level.
Third quarter Civil revenue was $412.2m, up 13% compared to the preceding quarter, and down 26% compared to the third quarter last year. Operating profit was $48.4m compared to $15.5m in the second quarter and $123.0m last year. Segment operating income before specific items was $62.0m (15.0% of revenue) compared to $51.9m (14.2% of revenue) in the second quarter and $123.4m (22.1% of revenue) in the third quarter last year. During the quarter, Civil delivered 10 full-flight simulators (FFSs)(9) to customers.
During the quarter, Civil signed training solutions contracts valued at $329.3m, including contracts for three FFSs sales. Notable training contracts for the quarter include a five-year business aviation training agreement with Bundeswehr in Germany, a five-year pilot training agreement with cargo airline, MasAir, a five-year pilot training agreement with TUI Airways, a five-year exclusive pilot training agreement with Iberia, Líneas Aéreas de España, a two-year pilot training agreement with LOT Polish Airlines, and a five-year housing agreement with Virgin Atlantic Airways.
During the quarter, CAE announced a succession of three acquisitions, involving Flight Simulation Company B.V., Merlot Aero Limited, and TRU Simulation + Training Canada Inc. The combination of these acquisitions strengthens Civil’s core position in pilot training and expands its suite of solutions for aviation customers into the growing market for digitally-enabled crew optimization services.
The Civil book-to-sales ratio(6) was 0.80x for the quarter and 0.83x for the last 12 months. The Civil backlog at the end of the quarter was $4.2bn.
Defence and Security (Defence)
The COVID-19 pandemic continued to contribute to delays in the execution of programs from backlog and impacted a range of global defence programs involving government and OEM customers due to travel bans, border restrictions, client access restrictions and supply chain disruptions. Such delays continued to impact the attainment of key program milestones. Although Defence was awarded several strategic contracts during the third quarter, there have been delays in the award of additional contracts, as government acquisition authorities had to follow directives in their respective countries to shelter-in-place and eliminate travel.
Third quarter Defence revenue was $299.3m, stable compared to the preceding quarter, and down 10% compared to the third quarter last year. Defence operating profit was $21.8m compared to $11.4m in the second quarter and $31.3m last year. Defence segment operating income before specific items was $22.3m (7.5% of revenue) compared to $24.2m (8.0% of revenue) in the second quarter and $33.2m (10.0% of revenue) in the third quarter last year.
During the quarter, Defence booked orders for $260.5m, including contracts with Lockheed Martin to support the design, development and manufacture of a suite of C-130J training devices for the binational French and German C-130J training facility and to supply the CAE Magnetic Anomaly Detection-Extended Role system for U.S. Navy MH-60R Seahawk helicopters. Defence was also awarded a contract for the next increment of a multi-year contract with the U.S. Air Force to provide comprehensive C-130H aircrew training services. Other notable contracts include continuing to provide the U.S. Navy contract instruction services for the Chief of Naval Air Training at five naval air stations and T-44C aircrew training services.
Defence received authorization during the quarter to proceed on the previously awarded U.S. Army contract to provide advanced helicopter flight training support services at Fort Rucker, Alabama. In combination with the fixed-wing flight training program CAE currently supports at its Dothan Training Center, Defence now plays a pivotal role supporting the training of all Army aviators progressing to their assigned operational aircraft.
At the end of the quarter, Defence won the competitive recompete for the U.S. Air Force KC-135 Training System contract, valued at more than US$275m, involving a one-year base contract and seven additional one-year option periods. In the security sector, Defence was also awarded a contract to provide United States Customs and Border Protection with Aircraft Pilot Training Services and was selected in a competitive process to demonstrate its prototype for a synthetic training environment training simulation management tool in support of the Army Futures Command.
The Defence book-to-sales ratio was 0.87x for the quarter and 0.83x for the last 12 months (excluding contract options). The Defence backlog, including options and CAE’s interest in joint ventures, at the end of the quarter was $3.6bn. The Defence pipeline remains strong.
Additional financial highlights
CAE incurred restructuring costs of $14.3m during the third quarter of fiscal 2021 in connection with the previously announced measures to best serve the market by optimizing CAE’s global asset base and footprint, adapting its global workforce and adjusting its business to correspond with the expected lower level of demand for certain of its products and services. This brings the total restructuring costs incurred since the start of the program in the second quarter to $65.4m. CAE now expects to record a total of approximately $140m of restructuring expenses this fiscal year, which is higher than the previous $100m estimate, because additional measures have been identified for global asset base and footprint optimization, workforce adjustments, and restructuring related to the optimization and integration of recent acquisitions. In connection with these efforts, the Company expects to incur additional restructuring expenses of approximately $30m in fiscal year 2022. Taken together, the Company expects to realize significant annual recurring cost savings, commencing in fiscal year 2022 and ramping up to a run rate of approximately $65 to $70m.
On November 30, 2020, CAE completed a public offering and a concurrent private placement of 16,594,126 common shares at a price of $29.85 per share for aggregate gross proceeds of $495.3m (equity offering). Total issuance-related costs of the equity offering amounted to $22.4m, less income tax recovery of $5.9m. The net proceeds of the equity offering are for general corporate purposes, including to fund CAE’s recently completed acquisitions and other future potential acquisition and growth opportunities. Pending such uses, the proceeds have been used to repay indebtedness outstanding under the Company’s credit facilities and held as cash or cash equivalents.
Net cash provided by operating activities was $234.8m for the quarter, compared to $322.1m in the third quarter last year. Free cash flow was $224.0m for the quarter compared to $44.9m in the preceding quarter and $275.3m in the third quarter last year. For the first nine months, free cash flow was $176.2m, which compares to $166.1 m in the prior year period.
Income tax recovery this quarter was $0.1m, representing an effective tax rate of nil, compared to 16% for the third quarter last year. The tax rate was lower due to the positive impact of tax audits and the restructuring costs incurred this quarter. Excluding the effect of these elements, the income tax rate would have been 16% this quarter.
Growth and maintenance capital expenditures(11) totaled $23.9m this quarter and were $57.1m for the first nine months of the fiscal year.
Net debt at the end of the quarter was $1,819.9m for a net debt-to-capital ratio of 38.9%. This compares to net debt of $2,358.9m and a net debt-to-capital ratio of 50.1% at the end of the preceding quarter.
Return on capital employed (ROCE) was 6.4% this quarter compared to 11.4% in the third quarter last year, before specific items. (Source: PR Newswire)
————————————————————————-
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.
————————————————————————-