Sponsored by TCI International Inc.
28 Feb 21. CAE nears deal to buy L3Harris’s military training business for $1.05bn -WSJ. Canada’s CAE Inc is nearing a deal to buy L3Harris Technologies Inc’s military training division for $1.05bn, The Wall Street Journal reported on Sunday.
An agreement on the deal is expected on Monday, unless the talks fall apart, the newspaper said, citing people familiar with the matter. on.wsj.com. Flight simulator maker CAE will fund the deal by a private placement of roughly C$700m ($550m) from two institutional investors, the report said.
Following the close of the deal, the military training division is expected to be based in Tampa, Florida, according to the newspaper.
CAE expects the deal to be accretive to earnings per share and forecasts annual cost savings of about C$35m to C$45m ($27.6m to $35.4m) in the second year following closing, the Journal added.
Florida-based L3Harris declined to comment when contacted by Reuters, while CAE did not immediately respond to a request for comment.
01 Mar 21. Rocket Lab nears merger deal with a SPAC to go public: WSJ. Rocket Lab USA is nearing a deal to go public through a merger with a special-purpose acquisition company Vector Acquisition that would value the small-satellite launch firm at $4.1 billion, including debt, the Wall Street Journal reported.
The deal could be finalized on Monday, the newspaper reported, citing people familiar with the matter.
Vector Acquisition is backed by technology-focused private-equity company Vector Capital and raised $300 million in an initial public offering in September.
Vector Acquisition and Rocket Lab did not immediately respond to a request for comment on Sunday.
Rocket Lab’s backers have included defense giant Lockheed Martin Corp. The startup has already launched 97 satellites for the government and private companies for applications that include research and communications, the WSJ said.
Rocket Lab’s deal with Vector is expected to include additional funds of about $470 million in the form of a so-called private investment in public equity from investors including BlackRock Inc and Neuberger Berman Group LLC, the newspaper said.
Rocket Lab is expected to use proceeds from the deal to fund development of a medium-lift Neutron launch vehicle tailored for satellite mega-constellations, space missions and commercial spaceflight, the report added.
The Neutron rocket is expected to be able to lift most satellites forecast to launch in the coming years and be positioned as a lower-cost alternative to larger vehicles, according to the report.
26 Feb 21. Leonardo files for DRS NYSE listing, to be completed by end-March. Italy’s Leonardo on Friday filed for the initial public offering (IPO) of its DRS unit on the New York Stock Exchange, the aerospace and defence group said, adding it aimed to complete the listing by the end of March.
The state-controlled group will keep the majority of defence electronics division DRS to “maintain a significant exposure in this strategically important market,” its Chief Executive Alessandro Profumo said in a statement.
The defence conglomerate said the number of shares and the price range had not yet been determined.
The CEO added that the market debut was “an important step in the strategic development” of the company.
Sources close to the matter told Reuters on Thursday Leonardo is planning to list up to 30% of DRS, which competes with defence electronics companies such as BAE systems, Elbit and Hensoldt.
A new proxy agreement will be entered with the U.S Department of Defense in order for DRS to continue to compete and perform on classified programmes, the statement added.
Goldman Sachs, BofA Securities, and JPMorgan will act as lead book-running managers, and Barclays, Citigroup, Credit Suisse, and Morgan Stanley will act as book-running managers for the proposed offering. Mediobanca is acting as financial advisor for Leonardo.
25 Feb 21. France’s Safran sees gradual recovery after crisis-hit 2020. France’s Safran predicted a gradual recovery from the aviation industry’s worst crisis, after seeing demand for its jet engines and other equipment drop sharply last year.
The world’s third largest aerospace contractor said 2020 recurring operating income fell 56% to 1.686bn euros ($2.1bn) as revenue fell 33% to 16.498bn.
Operating margin dropped 530 basis points to 10.2%.
For 2021, Safran expected the key profitability gauge to recover by more than 100 basis points, with the recovery kicking in starting from the third quarter.
It predicted 2021 revenues would decrease 2%-4% on a like-for-like basis, disappointing some analysts who had expected Safran to hold its ground this year.
“We believe Safran acquitted itself extremely well in 2020. The snag is 2021 guidance looks weak,” Jefferies analyst Sandy Morris said in a note.
Shares in the French group fell around 3%.
Unveiling results for the first time since succeeding Philippe Petitcolin as chief executive, Olivier Andries linked the lower revenue forecast to recent cuts in Boeing 787 output and a strong pre-crisis comparison period in first-quarter 2020.
He told reporters a slump in Chinese air traffic in recent months, as Beijing took preventive measures to avoid a new wave of coronavirus infections, had bottomed out last week before seeing a “very, very strong” rebound this week.
Air traffic drives the majority of the company’s engine business through services and parts, for which demand is based on the number of hours flown.
Safran’s widely watched civil aftermarket revenue fell 43% in dollar terms in 2020 amid pandemic travel restrictions.
Safran co-produces civil jet engines with General Electric for Boeing and Airbus medium-haul jets.
Joint shipments of the latest-generation LEAP engine more than halved last year to 815 units from 1,736 in 2019. Safran said its forecasts assumed more than 800 deliveries in 2021.
Andries, a former Airbus strategist who helped launched the A350 and went on to run Safran’s engine division, backed plans by Airbus to boost single-aisle output by 12.5% to 45 a month by end-year, saying Safran could accommodate the rate “with no problem”. Engine manufacturers have previously warned planemakers not to stress the industry’s fragile supply chain.
“There has been no critical deterioration of the situation,” said when asked about the health of Safran’s own supply base.
He described alloys maker Aubert & Duvall, for which a group including Airbus and Safran has submitted a preliminary offer after Eramet put it on sale, as a strategic supplier but added no decision had been made on whether to buy it.
Safran cut its workforce by 17% in 2020, or 21% including temporary posts. Andries said the company had already shed another 1,500 positions this year.
On defence, Andries said Safran remained ready to supply a version of its M88 military engine for India’s Tejas light combat aircraft in a long-delayed deal.
The Tejas entered service in 2016, 33 years after it was approved as the country sought to build a fighter from scratch but has been dogged by production delays. It is currently powered by engines from GE.
25 Feb 21. FLIR Systems Announces Fourth Quarter and Full Year 2020 Financial Results.
– Revenue of $524.3m for the Fourth Quarter; $1.9bn for the Full Year
– Revenue Growth of 7% and 2% over Prior Year for Fourth Quarter and Full Year, Respectively
– GAAP Diluted Earnings Per Share (“EPS”) of $0.57 for the Fourth Quarter; $1.60 for the Full Year
– Adjusted Diluted EPS of $0.78 for the Fourth Quarter; $2.48 for the Full Year
FLIR Systems, Inc. (NASDAQ: FLIR) (“FLIR” or the “Company”), a world leader in the design, manufacture, and marketing of intelligent sensing technologies, today announced financial results for the fourth quarter and full year ended December 31, 2020.
Commenting on FLIR’s fourth quarter and full year results, Jim Cannon, President and Chief Executive Officer, said, “FLIR ended 2020 on a strong note with fourth quarter revenue growth of 7% compared to the prior year quarter. Over the course of the year, we continued to execute on our strategy, delivering new program wins, releasing new, innovative products for our customers, and realizing cost savings from Project Be Ready. I am very proud of our team’s performance. Their dedication and hard work ensured the pandemic did not have a material impact on our consolidated financial performance, and most importantly, allowed us to meet the needs of our customers throughout this challenging year.”
Mr. Cannon added, “We are entering 2021 with strong momentum, and are confident that our combination with Teledyne will create an even stronger organization. The joining of our companies will provide a broader springboard for growth and innovation to meet the evolving needs of our industrial and defense customers, drive enhanced stockholder value and create new opportunities for our employees.”
Fourth Quarter Summary Results
Revenues for the quarter were $524.3m, compared to $489.0m in the prior year quarter. Bookings totaled $424.2m in the quarter, representing a book-to-bill ratio of 0.81. Backlog at the end of the quarter was $809.7m, reflecting a 0.3% increase relative to the prior year quarter.
GAAP Earnings Results
Gross profit for the quarter was $246.5m, compared to $232.4m in the prior year quarter. Gross margin decreased to 47.0% from 47.5% in the prior year quarter, primarily attributable to product mix in the Defense Technologies segment. Earnings from operations for the quarter were $102.4m, compared to $54.1m in the prior year quarter. Operating margin increased to 19.5% from 11.1% in the prior year quarter, primarily due to the aforementioned higher revenue and associated gross profit, decreases in restructuring expenses and related asset impairment charges, lower consent agreement costs, operating expense reductions from Project Be Ready, and decreases in marketing and travel costs. Diluted EPS was $0.57, compared to $0.01 in the prior year quarter.
The weighted average diluted share count for the quarter was 132m, down from 136m in the prior year quarter primarily due to stock repurchase activity in the first quarter of 2020.
Non-GAAP Earnings Results
Adjusted gross profit for the quarter was $256.2m, compared to $248.8m in the prior year quarter. Adjusted gross margin decreased to 48.9% from 50.9% in the prior year quarter, primarily attributable to product mix in the Defense Technologies segment. Adjusted operating income for the quarter was $122.5m, compared to $101.7m in the prior year quarter. Adjusted operating margin increased to 23.4% from 20.8% in the prior year quarter, primarily due to the aforementioned higher revenue and associated gross profit, operating expense reductions from Project Be Ready, and decreases in marketing and travel costs. Adjusted diluted EPS was $0.78, compared to $0.53 in the prior year quarter.
Fourth Quarter Segment Results
Industrial Technologies Segment
Industrial Technologies revenues for the quarter were $298.3m, representing an increase of $20.0m, or 7.2% compared to the prior year quarter. The increase was primarily attributable to heightened demand for EST solutions due to the COVID-19 pandemic and an increase in maritime product sales, partially offset by lower volume in certain commercial end markets such as security products.
Industrial Technologies segment operating income was $85.2m, compared to $71.8m in the prior year quarter. Segment operating margin increased to 28.6% from 25.8% in the prior year quarter, primarily attributable to the aforementioned higher revenue and associated gross profit, operating expense reductions from Project Be Ready, and decreases in marketing and travel costs.
Industrial Technologies bookings totaled $235.4m for the quarter, representing a book-to-bill ratio of 0.79, and was impacted by the timing of awards and related shipments. Backlog at the end of the quarter was $284.8m, reflecting a 6.0% increase relative to the prior year quarter, primarily due to long term order award timing and an increased volume of maritime orders during the fourth quarter.
Defense Technologies Segment
Defense Technologies revenues for the quarter of $226.0m increased by $15.3m, or 7.2% compared to the prior year quarter. The revenue increase was primarily attributable to improved volumes for unmanned systems.
Defense Technologies segment operating income was $55.3m, compared to $50.1m in the prior year quarter. Segment operating margin increased to 24.5% from 23.8% in the prior year quarter, primarily attributable to decreases in marketing and travel costs, partially offset by lower gross margins due to product mix.
Defense Technologies bookings totaled $188.8m for the quarter, representing a book-to-bill ratio of 0.84, and was impacted by the timing of awards and related shipments. Backlog at the end of the quarter was $524.8m, reflecting a 2.5% decrease relative to the prior year quarter, primarily due to order volume and subsequent deployment timing, partially offset by increased demand for unmanned systems.
Full Year Summary Results
Revenues for the full year were $1,924m, compared to $1,877m in the prior year. Bookings totaled $1,924m for the full year, representing a book-to-bill ratio of 1.00.
GAAP Earnings Results
Gross profit for the full year was $947.0m, compared to $929.4m in the prior year. Gross margin was 49.2%, consistent with the prior year. Operating margin increased to 16.5% from 14.5% in the prior year, primarily due to the aforementioned higher revenue and associated gross profit, operating expense reductions from Project Be Ready, decreases in marketing and travel costs, lower intangible asset amortization, and a decrease in separation, transaction, and integration costs. The favorable impacts were partially offset by an increase in restructuring expenses and related asset impairment charges. Diluted EPS was $1.60, compared to $1.26 in the prior year.
The weighted average diluted share count for the year was 133m, down from 137m in the prior year primarily due to stock repurchase activity in the first quarter of 2020.
24 Feb 21. Curtiss-Wright Corporation (NYSE: CW) reports financial results for the fourth quarter and full-year ended December 31, 2020.
Fourth Quarter 2020 Highlights:
- Reported diluted earnings per share (EPS) of $1.30; Adjusted diluted EPS of $2.39, up 12%;
- Reported record free cash flow (FCF) of $246m, with record Adjusted FCF of $256m, up 3%;
- Net sales of $668m, up 2%, led by strong 15% organic growth in defense markets;
- Reported operating income of $76m, with Reported operating margin of 11.4%, including a $33m non-cash impairment of a German valves business classified as held for sale;
- Adjusted operating income of $133m, up 8%;
- Adjusted operating margin of 19.8%, up 100 basis points compared to the prior year, principally reflecting the benefits of cost containment and restructuring initiatives; and
- Share repurchases of approximately $62m.
Full-Year 2020 Highlights:
- Reported diluted EPS of $4.80, with Adjusted diluted EPS of $6.87;
- Reported FCF of $214m, with record Adjusted FCF of $394 m, up 6%, and an Adjusted free cash flow conversion of 137%;
- Net sales of $2.4bn, down 4%, with defense market sales up 17% (up 10% organic);
- Reported operating income of $289m, with Reported operating margin of 12.1%;
- Adjusted operating income of $391m, down 5%;
- Adjusted operating margin of 16.3%, down 20 basis points compared to the prior year, as strength in our defense markets and the benefits of our cost containment and restructuring initiatives partially offset reduced commercial markets sales; and
- Total share repurchases of $200m.
“As we reflect on Curtiss-Wright’s performance in 2020, I am proud of the team and their agility, resilience and focus to achieve exceptional results in a very challenging year,” said Lynn M. Bamford, President and CEO of Curtiss-Wright Corporation.
“We concluded 2020 by delivering solid fourth quarter results, driven by sequentially higher sales across all of our major end markets. During the quarter, we benefited from the acceleration of growth in our defense markets, the contribution from our recent PacStar acquisition and improving trends in our commercial markets. In addition, our strong financial performance reflects the savings generated by our restructuring actions and the benefit of our opportunistic share repurchase activity.
“Turning to our full-year 2020 results, we delivered strong full-year Adjusted operating margin, just shy of the prior year’s performance. We remain committed to achieving our 17% target in 2022. Further, we achieved record Adjusted free cash flow and leveraged our strong and healthy balance sheet to implement our balanced capital allocation strategy by completing our largest acquisition to date of $400m, executing $200m in share repurchases and maintaining a stable dividend.
“Looking ahead to 2021, we are projecting mid-to-high single digit growth in sales, Adjusted operating income and Adjusted diluted EPS. We are confident that our team can maintain its high level of performance and execution to keep us on a path to achieve our long-term targets. Additionally, today we are announcing new segment and end market structures to better align our business to our key strategies and industry drivers, while also helping to simplify our portfolio for investors. This is the first step, ahead of our planned May 2021 investor day, in communicating our new vision and strategy which will drive long-term profitable growth and deliver significant value for our shareholders.”
Fourth Quarter 2020 Operating Results
- Sales of $668m, up $13m, or 2%, reflect sequentially higher sales across all of our major end markets;
- Sales to the defense markets increased 27%, 15% of which was organic, led by strong growth in aerospace and naval defense, as well as the contribution of the PacStar acquisition in ground defense. Commercial sales decreased 18%, due to reduced demand in the commercial aerospace, general industrial and power generation markets. Please refer to the accompanying tables for an overall breakdown of sales by end market;
- Adjusted operating income was $133m, up 8%, reflecting higher revenues in the Defense and Power segments, partially offset by reduced operating income on lower sales in the Commercial/Industrial segment;
- Adjusted operating margin increased 100 basis points to 19.8%, reflecting the benefits of our company-wide restructuring and cost containment actions, most notably in the Commercial/Industrial segment; and
- Non-segment expenses of $10m increased by $2m compared to the prior year, primarily due to higher corporate costs.
Free Cash Flow
- Reported free cash flow was $246m, an increase of $4m compared to the prior year, as lower cash earnings were offset by improvements in working capital and reductions in capital expenditures;
- Capital expenditures decreased $9m to $11 m compared to the prior year, primarily due to lower capital investments within the Power segment; and
- Adjusted free cash flow was $256m in the fourth quarter, producing a free cash flow conversion rate of 259%.
New Orders and Backlog
- New orders of $573 m decreased 2% compared with the prior year period, as solid demand for defense electronics and the contribution from our PacStar acquisition were more than offset by reduced commercial aerospace orders; and
- Backlog of $2.2bn was unchanged from December 31, 2019, as growth in our defense markets of 12% was offset by lower commercial market demand principally driven by the pandemic.
Share Repurchase and Dividends
- During the fourth quarter, the Company repurchased 613,953 shares of its common stock for approximately $62m, or an average of $101.32 per share;
- Year-to-date, the Company repurchased 1.98m shares for $200m, or an average of $100.82 per share, which included $150m repurchased opportunistically; and
- The Company also declared a quarterly dividend of $0.17 a share, unchanged from the previous quarter.
Other Items – Business Held for Sale
- During the fourth quarter, the Company classified its German valves business within its Commercial/Industrial segment as held for sale and its results have been adjusted from comparisons between our future financial guidance and prior year results.
Fourth Quarter 2020 Segment Performance
- Sales of $249m decreased $47m, or 16%, but improved sequentially across our major commercial and industrial end markets compared with third quarter 2020 results;
- Commercial aerospace market revenues were driven by reduced OEM sales of actuation and sensors equipment, as well as surface treatment services, as expected due to customer-driven production slowdowns;
- General industrial market revenue declines principally reflect reduced year-over-year sales for industrial valves;
- Reported operating income was $7m, with Reported operating margin of 3.0%; and
- Adjusted operating income was $47m, down 4% from the prior year, while Adjusted operating margin increased 230 basis points to 19.0%, principally driven by the benefits of our cost containment and restructuring initiatives.
- Sales of $217m, up $44m, or 26%;
- Higher aerospace defense market revenues were driven by increased sales of embedded computing and flight test instrumentation equipment on various fighter jet programs, partially offset by the timing of orders on Unmanned Aerial Vehicle (UAV) platforms;
- Higher ground defense market revenues principally reflect the contribution from the PacStar acquisition;
- Strong naval defense market revenue growth reflected the timing of production and acceleration of valve revenues on submarine and aircraft carrier programs, as well as the contribution from the 901D acquisition;
- Reported operating income was $42m, with Reported operating margin of 19.4%; and
- Adjusted operating income was $53m, up 20% from the prior year, while Adjusted operating margin decreased 130 basis points to 24.2%, as the benefits of our cost containment and restructuring initiatives were more than offset by higher research and development costs.
- Sales of $202m, up $15m, or 8%;
- Strong naval defense market revenue growth reflected higher production revenues on Virginia and Columbia class submarines, CVN-80 and CVN-81 aircraft carriers and higher service center sales;
- Reduced power generation market sales principally reflect lower domestic and international aftermarket revenues, as well as lower revenues on the CAP1000 program;
- Reported operating income was $37m, with Reported operating margin of 18.2%; and
- Adjusted operating income was $43m, up 12%, while Adjusted operating margin increased 70 basis points to 21.1%, driven by improved overhead absorption on higher naval defense sales and the benefits of our cost containment and restructuring initiatives.
New Segment Structure and Realignment:
Beginning in the first quarter of 2021, the Corporation is realigning its segments, as follows:
- The Company will now operate under the following three segments: Aerospace & Industrial, Defense Electronics, and Naval & Power;
- The Aerospace & Industrial segment will be comprised of actuation and sensors products and surface treatment services serving the defense and commercial aerospace markets, as well as electronic components and systems, industrial automation and surface treatment services serving the general industrial market;
- The Defense Electronics segment will be comprised primarily of the electronics businesses serving the aerospace and defense markets;
- The Naval & Power segment will be comprised of major naval propulsion equipment serving the naval defense market, as well as process and energy solutions serving both the nuclear and process markets; and
- In addition, the Company is concentrating all of its valves related operations – which presently reside within the current Commercial/Industrial and Defense segments – solely into the new Naval & Power segment.
New End Market Structure and Realignment:
- The Company’s new end market structure will consist of two primary markets, (1) Aerospace & Defense and (2) Commercial;
- Aerospace & Defense markets will now represent approximately two-thirds of total 2021 estimated revenue, and will include all current Defense market revenues (aerospace, ground, naval) and all Commercial Aerospace market revenues;
- Commercial markets will now represent approximately one-third of total 2021 estimated revenue and will be comprised of two major end markets: Power & Process and General Industrial;
- The new Power & Process end market will be comprised of 1) Nuclear and 2) Process, while the new General Industrial end market will now be comprised of 1) Industrial Vehicles and 2) Industrial Automation and Services;
- In addition, our new Power & Process market revenues will be concentrated within the new Naval & Power segment, and the new General Industrial market revenues will be concentrated within the new Aerospace & Industrial segment; and
- Historical financial results in the new segment structure for 2020 and 2019 periods can be found in this release and available in the Investor Relations section of our website.
25 Feb 21. BAE SYSTEMS Announces 2020 Full Year Results.
Charles Woodburn, Chief Executive, BAE Systems, said: “Thanks to the outstanding efforts of our employees and close cooperation with our customers, suppliers and trades unions, we have delivered a strong set of results against a challenging backdrop of the global pandemic. Throughout 2020, we focused on keeping our people safe and supporting our communities, whilst continuing to deliver for our customers. In 2021, we will continue to drive operational performance, progress our sustainability agenda and invest in high-end discriminating technologies to meet our customers’ priorities, which will ensure we are well positioned to grow the business and contribute to the economic prosperity of the countries in which we operate.”
Our financial highlights
Financial performance measures as defined by the Group1
- Sales increased by £0.8bn to £20.9bn, a 4% increase, excluding the impact of currency translation5.
- Underlying EBITA increased to £2,132m, a 1% increase on a constant currency basis5.
- Underlying earnings per share increased by 2% to 46.8p, excluding the impact of the prior year one‑off tax benefit6.
- Free cash flow3 was £367m after the impact of the £1bn contribution into the UK pension scheme. Excluding this contribution free cash flow was £1.4bn.
- Net debt increased to £2,718m, following the £1bn bond issuance to fund the UK pension scheme, and the $2.2bn (£1.7bn) acquisitions of the Airborne Tactical Radios and Military Global Positioning System businesses.
- Order intake4 increased to £20.9bn.
- Order backlog4 of £45.2bn.
Financial performance measures defined in IFRS2
- Revenue increased by £1.0bn to £19.3bn.
- Operating profit increased by £31m to £1,930m, including the non-recurring credit of £19m (2019 £27m charge).
- Basic earnings per share decreased by 12% to 40.7p. 2019 included the impact of the one-off tax benefit of £161m.
- Net cash flow from operating activities decreased by £431m to £1,166m, including the effect of the £1bn contribution to the UK pension scheme.
- Order book of £36.3bn (2019 £37.2bn).
Post-employment benefits and dividend
- Group’s share of the pre-tax accounting net post-employment benefits deficit was in line with the prior year at £4.5bn.
- Final dividend of 14.3p per share making a total of 23.7p per share in respect of the year ending 31 December 2020. The total of 37.5p per share for the year includes an interim dividend of 13.8p per share in respect of the year ended 31 December 2019, which was originally proposed as a 2019 final dividend but subsequently deferred in the light of the COVID-19 pandemic.
Operational and strategic key points
- Contract secured to support the production of 38 Typhoon aircraft for the German Air Force
- Qatar Typhoon and Hawk aircraft programme met its contractual milestones in the year
- F-35 programme Lots 12 to 14 contract definitised following price agreement. 126 rear fuselage assemblies completed in the year, below the contracted level as a result of COVID-19 disruption. Ramp up to full-rate production in 2021
- Governments of Italy and Sweden committed to working with the UK to develop next-generation combat air capability
- A further six Hawk aircraft assembled in Saudi Arabia were accepted and entered service in‑Kingdom
- The design and production readiness phase of the Hunter Class Frigate programme for the Royal Australian Navy continues to make good progress
- Sale of Advanced Electronics Company to Saudi Arabian Military Industries completed in February 2021
- The fourth Astute Class submarine, HMS Audacious, left our Barrow site in April to begin sea trials with the Royal Navy
- Construction of the first two Dreadnought Class submarines continues to advance
- The build phase of the River Class Offshore Patrol Vessel programme is now complete, with the fourth ship, HMS Tamar, handed over to the Royal Navy in March, and HMS Spey, the fifth and final ship, handed over in October
- Construction of the first two City Class Type 26 frigates for the Royal Navy continues to progress
- Acquisition of Techmodal, a UK data consultancy and digital services business, completed in August
- Announcement of a 15-year agreement with the UK Ministry of Defence to supply the Next Generation Munitions Solution between 2023 and 2037
- RBSL has secured its share of the Mechanised Infantry Vehicle Boxer programme
- Airborne Tactical Radios and Military Global Positioning System acquisitions completed, performing well and integrations are progressing
- F-35 electronic warfare systems for Lot 12 completed, surpassing cumulative programme deliveries of 800 electronic warfare systems as of year end
- Successful demonstration of APKWS® ground-launch capability
- Terminal High Altitude Area Defense (THAAD) seeker executing at full-rate production, and receipt of additional order to design and manufacture next-generation infrared seekers
- Continued classified work
- Demand in the commercial business lines of Controls & Avionics Solutions and Power & Propulsion Solutions has been negatively impacted by COVID-19
Platforms & Services (US)
- Delivery of the first production Armored Multi-Purpose Vehicles took place in the second half; one of each of the five variants delivered by year end
- Amphibious Combat Vehicle programme moved to full-rate production phase after Initial Operational Capability declared
- Delivery of more than 50 production Bradley A4 vehicles
- New US Navy contract modifications totalling $114m (£83m) for Mk45 Mod 4 upgrades
- Initial deliveries of Virginia Payload Module tubes completed
- Ship Repair secured more than $1bn (£0.7bn) in US Navy maintenance and modernisation orders
- Ordnance Systems received $233m (£170m) in modernisation contracts
- Contracted to provide five 57Mk3 and ten 40Mk4 naval gun systems for the UK Royal Navy’s Type 31 frigates
- Operational delays and disruptions related to the COVID-19 pandemic were experienced across manufacturing and shipyard facilities
Cyber & Intelligence
Intelligence & Security
- US-based Intelligence & Security business continues to maintain its bid pipeline, perform on existing contracts and win new orders. All three businesses delivered a book to bill1 ratio of over one.
- Awarded a seven-year, $495m (£362m) contract on Instrumentation Range Support Programme
- Multi-year Indefinite Delivery, Indefinite Quantity contract received to provide electronic hardware and engineering services for a US government customer
- Our Federated Secure Cloud technology approach and processes are being employed to maintain and secure US Army Cyber Command’s virtual desktop infrastructure
- Strong order intake, revenue and profitability performance in the core underlying business driven by the Government business unit
- Significant profit growth year-on-year due to cycling the restructuring of the Technology & Commercial business in 2019
- Sale of the US-based software-as-a-service business completed in November
With a strong year behind us against a challenging backdrop of the global pandemic, we look forward to another year of top line growth, with a year of margin expansion and good cash flow, all reflected in our Group guidance. Guidance is provided on the basis of an exchange rate of $1.35:£1.
For the year ending 31 December 2021, the Group’s sales are expected to grow in the 3% to 5% range over 2020. Excluding the impact of foreign exchange, we expect growth to be between 5% to 7%.
Sales growth is expected in Air and Electronic Systems, including the full year impact of the acquisitions, partially offset by continued weakness in commercial aerospace revenues. Approximately 80% of expected sales is already in Order backlog.
Underlying EBITA is expected to increase in the range of 6% to 8%. Excluding the impact of foreign exchange, we anticipate growth in excess of 10%, with improved performance in Platforms & Services (US), continued expansion in Applied Intelligence, and a full year of contribution from the acquisitions in Electronic Systems.
Finance costs are expected to be approximately £270m with an effective tax rate expected to be around 18%, and non-controlling interest expected to be around £85m.
Underlying earnings per share is expected to increase in the range of 3% to 5%. A 10 cent movement in the exchange rate impacts underlying EPS by around 2 pence.
Free cash flow for 2021 is anticipated to be in excess of £1bn, with a three-year target for 2021 to 2023 in excess of £4bn.
25 Feb 21. Serco Group plc full year results 2020.
- Revenue: grew by 20% to £3.9bn, with organic growth of 16%, a 5% uplift from our US acquisition in August 2019 of NSBU and -1% from currency.
- Underlying Trading Profit: increased by 36% to £163m, with NSBU adding 8%; net impact of Covid-19 around £2m, or ~1% of UTP. Margin increased from 3.7% to 4.2%. Around three-quarters of our profit(7) is now from outside the UK.
- Reported Operating Profit: increased by 75%, or £77m, to £179m, as a result of the 36% increase in underlying profit and an exceptional gain on disposal.
- Earnings per Share: increased by 37% on an underlying basis and 153% on a reported basis.
- Free Cash Flow: more than doubled, to £135m.
- Adjusted Net Debt: reduced by £157m to £58m. Covenant leverage stands at 0.5x EBITDA.
- Order Intake and Pipeline: some customer decisions slipped from Q4 2020 to Q1 2021, leading to order intake of £3.1bn (80% book-to-bill) and significant year-on-year increase in year-end qualified pipeline of new business to £6.4bn (2019: £4.9bn).
- Government support & employee recognition: the Group has repaid all UK government employment and liquidity support, including £2m of furlough payments, and has made ex-gratia payments totalling £5m to around 50,000 front-line staff.
- Dividends: the Board recommends restarting dividends, last paid to Serco shareholders in 2014, with a payment of 1.4p in respect of the 2020 financial year.
- Acquisitions: in January 2021 we acquired Facilities First Australia (FFA), a leading Australian facilities management company for A$78m. In February 2021 we announced the acquisition, subject to regulatory approval, of Whitney, Bradley & Brown Inc (WBB), a leading provider of technical and engineering services to the US military for a consideration of $295m.
- Outlook for 2021(8): having delivered compound annual growth in profits of 33% over the last three years, we expect revenues and trading profit to continue to grow in 2021, albeit at a slower rate than seen in recent years. Reflecting a strong start to the year, we have increased our profit guidance for 2021 by 6%, which equates to year-on-year growth at constant currency of 10%. This excludes the effect of the acquisition of WBB. Guidance will be updated for this following completion.
Rupert Soames, Serco Group Chief Executive, said: “In the coming months, every company’s trading statement will pay glowing tributes to employees, and thank them for their resilience and courage. I have struggled to think of words that are not trite or clichés and will not be repeated by a thousand other CEOs, so I will use instead the words of a colleague, whose job is escorting prisoners, who wrote to me in January:
“Working as a Custody Officer is both challenging and rewarding, yes, the current situation with the virus has certainly changed the way in which we work and has made day to day life more challenging for everyone within Serco but also for the entire world. My husband has cancer and also a disease which has caused him to have no immune system. People have asked me why I would continue to work knowing that every day when I go home to him, I am putting his health at risk. The answer to this question is this: if everyone took that attitude then businesses would suffer more than they are already, people like myself and my colleagues are what keep the contract running, and without my work
to focus on I am sure I would have gone crazy by now. Both my husband and I know that life throws us curve balls now and again and we have to get on and make the best of it and most importantly never give in! My husband and I acknowledge how precious life is, we are as careful as we possibly can be in protecting ourselves and others and acknowledge that life has to go on. Serco has looked after its employees very well throughout this terrible time. I am grateful to be able to work every day in a job that I love doing.”
Around 90% of our 55,000 colleagues cannot work from home, because they work in places such as prisons, hospitals, ships, or trains. They have turned up each day to enable us to deliver our promise of supporting the delivery of public services; many have suffered loss, either of colleagues, friends or family, and still turned up for work. My respect and gratitude for them is unbound, and I want to extend our condolences to the families of those colleagues who have died from Covid-19 over the last year.
Turning to our financial performance in 2020, growing Revenues by 20% (2019: +15%) and Underlying Trading Profit by 36% (2019: +29%), is all the more impressive as it follows strong growth in 2019 and underlines the momentum behind Serco’s return to robust financial health. This performance is particularly gratifying given the disruption caused to some parts of our business by Covid-19; despite approaching £400m of Covid-19 related revenues, the net impact of Covid-19 was around 1% of Underlying Trading Profit, and the balance of the 35% increase in profits came from the normal operations of the business.
Our free cash flow, now released from the drag of recent years of Onerous Contract Provisions, was very strong at £135m, which, combined with strong growth in EBITDA brings our covenant leverage ratio down to 0.5x, which puts us in a very strong financial position. This has enabled us to finance the recently announced acquisition of WBB from our existing debt facilities and still be around the middle of our target leverage range of 1-2 times Net Debt: EBITDA.
It is pleasing finally to be able to re-start paying dividends, last paid in 2014. The Board has thought carefully about this, particularly in the light of the current circumstances; in April 2020, we justified withdrawing the proposed Final Dividend in respect of 2019 saying: “At a time when the UK and other governments are helping Serco with its liquidity, it seems inappropriate to use that cash for anything other than its intended purpose of protecting the financial strength and resilience of our business”. Subsequently, and for the same reason, we did not propose a dividend at the half year in August 2020. Four things have changed for us since the earlier decision-points in April and August. First, any concerns we had about liquidity have proved groundless; we have successfully re-entered the long term private placement debt market (and at lower cost); we have been strongly cash-positive in 2020; leverage is below our target range at year end, and even after the WBB acquisition would sit comfortably within our target range. Secondly, we have refunded all employment and liquidity support paid to Serco by governments, with the exception of £12m in the USA, for which there is no mechanism for early repayment, so will be repaid as scheduled in 2021 and 2022. Thirdly, whilst the profits arising from our work on Covid-19 are ephemeral, they do not represent a material proportion of our profits in the year (net, around 1% of Underlying Trading Profit). Finally, we have sought to recognise the intense pressure and extra work that Covid-19 has brought to our staff by making ex-gratia payments totalling £5m to 50,000 of our front line colleagues. In the light of these four considerations, the Board feels it appropriate to recommend the payment of a final dividend in respect of 2020 of 1.4p per share, representing a 25% payout ratio assuming a notional 1/3rd / 2/3rd split between interim and full year dividends.
Looking ahead to 2021, guidance set out below is improved from that which we gave in December. It does not reflect the acquisition of WBB, announced on 16 February, which is subject to regulatory approval; guidance will be updated immediately after completion, which is expected to be during the course of Q2. After the dramatic growth of the last three years – with 33% compound annual growth in Underlying Trading Profit – we see 2021 as being a year of more normal rates of growth in revenues and profits; we will have some “drags” on our profitability, notably only having six months of the AWE contract, and we expect revenues related to Covid-19 services to be much stronger in the first half than in the second. However, we have had a strong start to the year, and we are therefore increasing our profit guidance for 2021, with the revised guidance equating to 10% constant currency growth in the year.
Notes to guidance: The guidance uses an average GBP: USD exchange rate of 1.37 in 2021 and GBP:AUD of 1.79. If the WBB acquisition completes in Q2, we would expect our Net Debt: EBITDA to be around 1.6x at the half year and reduce thereafter.
24 Feb 21. IDS International Acquires International Training and Security Support Services Companies DECO and GovSource. Acquisitions position IDS to diversify geographical markets and establish new partnerships. IDS International, a security government services firm, announced today it has acquired DECO, a global training and specialized technical services company and GovSource (GSI), a leader in elite military and law enforcement training to the US Government and partner nations. The combination of these three businesses creates a global company for its range of services and a leader in international military training.
“By combining IDS, DECO, and GovSource, we are merging three companies with distinct strengths and mature customer relationships to address the world’s most complex and mission-critical programs,” said IDS President and Chief Executive Officer, Nick Dowling. “The benefits to all three firms are considerable, and IDS is now a fully integrated government services firm that is positioned to win larger, more complex contracts.”
IDS operates across three lines of business: training and technical services, expeditionary support services, and cyber and information warfare. With DECO and GSI, IDS broadens its global and technical reach and demonstrates its unique ability to support clients’ mission-critical needs in some of the most challenging environments anywhere in the world.
“As we reviewed potential acquisition candidates, it was clear that there was no better fit for IDS than DECO and GovSource,” said IDS Senior Vice President and Chief Financial Officer, Oron Strauss. “We’ve known DECO and GovSource for a number of years and both have built outstanding reputations. They were doing well on their own, but now will have the ability to cross-over and diversify contracts to bid on and embed great technology solutions into client programs.”
With the acquisitions, IDS International now has over 1,400 employees delivering superior services, dedicated support, and innovative solutions in over 20 countries. Clients include national governments, US/foreign militaries, nonprofits, and public sector.
About IDS International
IDS International brings multidisciplinary expertise and an innovative culture to address the national security challenges of the 21st century. IDS is a team of leading experts and field practitioners experienced in conflict, training, engineering, technology, and innovation. Our success is built upon expertise, strong customer relationships, and a passion for creating and delivering quality solutions. Visit www.idsinternational.com.
(Source: PR Newswire)
24 Feb 21. Leonardo plans to list up to 30% of DRS in New York – sources. Italian defence and aerospace group Leonardo plans to list up to 30% of its defence electronics division DRS in New York later this year, three sources close to the matter said. The Rome-based group has picked Goldman Sachs, JPMorgan, Bank of America Merrill Lynch, Citigroup and Morgan Stanley as bookrunners for the transaction, the sources said.
One source said the Italian group planned to list 25-30% of the DRS business, while the other two sources pointed to a stake of 20-25%.
Another source said a stake sale to a private investor like private equity was also possible if an initial public offering failed to meet price expectations.
Leonardo, Citigroup, Bank of America Merrill Lynch and Goldman Sachs declined to comment. The other banks were not immediately available for comment.
The share sale will bring new financial resources for the Italian defence company, which recorded an increase in its debt in the first nine months of last year to 5.88bn euros($7.14bn) from 4.3 bn euros in the same period of 2019.
A roadshow with investors could start in mid-March, one of the sources said, adding that DRS could be valued at 11-12 times its expected core earnings in the IPO.
DRS is expected to have core earnings of just over $200m this year, one defence industry analyst estimated.
DRS competes with defence electronics companies like BAE Systems, Elbit and Hensoldt, which trade at about 7-12 times their expected core earnings.
State-controlled Leonardo bought the U.S. defence company in 2008 in a deal that valued it at $5.2bn, including $1.27bn in debt.
In 2019 DRS, based in New Jersey, reported revenue of $2.7bn, up 17% year-on-year, and core earnings of $208m, up 38%. ($1 = 0.8235 euros) (Source: Reuters)
24 Feb 21. Italy’s Piaggio Aerospace invited five bidders to make purchase offer. Italy’s Piaggio Aerospace, which filed for protection from creditors late in 2018, said on Wednesday it had formally invited five bidders to make a purchase offer for the group.
The deadline for the five bidders to file non-binding offers is set for March 5, the company said in a statement, adding they were interested in buying both the group’s aircraft and engine business.
The company’s special administrator Vincenzo Nicastro has sent the letters as a further step in the company’s sale process, which started last year when Piaggio Aerospace initially drew expressions of interest from 19 international bidders.
“Having five suitors in the short list is very positive, especially if we consider that the pandemic has objectively discouraged many foreign subjects,” Nicastro said.
Nicastro said that the non-binding offers would be assessed by Italy’s Ministry for Economic Development and then talks would start to get to a binding offer. (Source: Reuters)
24 Feb 21. AeroVironment, Inc. (NASDAQ: AVAV), a global leader in unmanned aircraft systems (UAS), today announced it has acquired Progeny Systems Corporation’s Intelligent Systems Group (ISG), a leader in the development of artificial intelligence-enabled computer vision, machine learning and perceptive autonomy technologies and provider of related services to United States government customers. The acquisition will significantly accelerate AeroVironment’s development of advanced autonomy capabilities for the company’s growing portfolio of intelligent, multi-domain robotic systems, increase customer-funded research and development revenue and broaden its advanced engineering services offering to defense and commercial customers. Under the terms of the transaction, AeroVironment acquired ISG for $30m in cash and an earnout for Progeny Systems Corporation of up to $6m over three years, based on the achievement of specific performance targets.
Founded in 2006, ISG performs research and development to create highly innovative machine learning, active perception and autonomy capabilities for Department of Defense and intelligence community customers. ISG’s software performs high-volume, automated analysis of still and video imagery from a broad spectrum of sources, including satellites, unmanned aircraft and fixed cameras, to detect specific objects, perform change detection assessment or discern “pattern of life” activity. With more than $10m in fiscal year 2020 revenue, ISG is based in Manassas, Virginia and has 40 employees, all of whom are continuing in their current roles. The ISG team will merge with AeroVironment’s MacCready Works Advanced Solutions team to focus on expanding the company’s customer-funded research and development revenue, while also adding critical expertise and capabilities to expand AeroVironment’s artificial intelligence and autonomy portfolio.
“The ISG team is a leader in developing some of the most advanced artificial intelligence technologies and capabilities for United States government customers, including the U.S. Navy, Marine Corps, Special Operations Command and Air Force,” said Wahid Nawabi, AeroVironment president and chief executive officer. “Acquiring ISG will enhance the intelligence of our growing, multi-domain robotic systems portfolio, increase customer-funded research and development revenue and deepen our relationships with strategically important customers. Delivering higher-levels of intelligence and autonomy will improve the ability of our solutions to achieve customer mission objectives in permissive and anti-access/area-denied (A2/AD) environments through onboard processing, exploitation and dissemination (PED) without requiring radio communication. These capabilities will further differentiate our solutions and help our customers Proceed with Certainty.”
“ISG’s cutting-edge machine learning and computer vision capabilities are extremely complementary and relevant to our unmatched portfolio of unmanned systems. We continue to grow and shape our portfolio to align with the evolving needs of our customers, as evidenced by today’s announcement, by our acquisition of Arcturus UAV and our pending acquisition of Telerob. We believe that our strategy will deliver significant value to our customers and our shareholders. This series of acquisitions, combined with our focused research and development investments and our strong balance sheet, position us very well to deliver capabilities our customers will value, and capitalize on the long-term market opportunities in front of us. We are excited about our future and the significant value creation potential of our business,” Mr. Nawabi added.
“We’re very pleased to have our Integrated Systems Group (ISG), a division of Progeny Systems Corporation, join the AeroVironment team” said Walt Kitonis, chief executive officer of Progeny Systems. “The people, skills, and technologies that each company has are extremely complementary and will bring big benefits to the warfighter. Our employees have worked well together in the past and we are excited to see how the combined teams’ abilities will allow rapid support and deployment for current and emerging warfighter requirements. Progeny Systems and AeroVironment will continue to support existing programs and together pursue new opportunities in the future.”
“AeroVironment is a global leader in tactical unmanned systems and a trusted provider of unique, customer-funded research and development services,” said Dr. Timothy Faltemier, managing director of ISG. “Joining AeroVironment provides a unique opportunity to develop cutting-edge computer vision and perceptive autonomy functions specifically tailored to individual robotic platforms and missions. The ISG team will expand AeroVironment’s capabilities in perceptive autonomy with our advanced computer vision technologies and expand the scope of its advanced engineering services, while deepening existing relationships with key U.S. government customers. We are very excited to join the AeroVironment team and contribute our expertise to the realization of its exciting portfolio of intelligent, multi-domain robotic systems.”
The ISG facility in Virginia will now operate as AeroVironment’s new Artificial Intelligence Innovation Center. Within the AeroVironment Artificial Intelligence Innovation Center, the ISG team will collaborate with teams across AeroVironment to integrate cutting-edge technologies into the company’s growing offering and solution roadmap. For example, new artificial intelligence and perceptive autonomy capabilities from ISG will enable AeroVironment’s unmanned systems to identify specific objects autonomously while performing their missions and either proceed with or modify those missions, based on the objects they detect. These new capabilities will increase the effectiveness of AeroVironment’s solutions, reduce the workload of their operators and improve their ability to operate in complex or contested environments, where GPS signals and radio frequency communication may not be reliable or available.
23 Feb 21. Spirit Aero revenue halves, flies into loss as Boeing troubles weigh. Spirit AeroSystems Holdings Inc was hit by troubles at top customer Boeing, driving the aircraft parts maker to report a 55% slump in quarterly revenue and a much bigger-than-expected loss on Tuesday.
Spirit gets a big chunk of its revenue from Boeing Co, which was forced to cut back production due to the grounding of its 737 MAX jet and a slump in air travel due to the pandemic.
The MAX was finally cleared late last year to fly after being grounded for nearly two years and Spirit hopes to benefit from a ramp-up in production at the planemaker.
Shares of Spirit were down 3% in early morning trading as the company also reported a fall in fourth-quarter shipments to its other major customer, Airbus.
“2020 was one of the most challenging years in aviation history. For Spirit, the 737 MAX grounding and the COVID-19 pandemic created a dual-crisis,” Spirit Chief Executive Officer Tom Gentile said.
Spirit’s total deliveries of shipsets, or complete sets of parts, fell 48.9% to 231 units in the fourth quarter. Boeing 737 MAX deliveries fell to 19 shipsets from 153 a year earlier.
Airbus last week forecast flat deliveries in 2021 as it braces for more coronavirus-induced uncertainty in the wake of an annual loss. Boeing has yet to set out detailed targets.
Spirit posted a loss of $295.9m, or $2.85 per share, in the quarter ended Dec. 31, compared with a profit of $67.7m, or 65 cents per share, a year earlier.
On an adjusted basis, the company lost $1.31 per share. Analysts had expected the company to report a loss of 85 cents per share, according to Refinitiv IBES data. Total revenue slumped 55.3% to $876.6m. (Source: Reuters)
23 Feb 21. Leidos Holdings, Inc. Reports Fourth Quarter and Fiscal Year 2020 Results.
– Revenues: $3.25bn for fourth quarter; $12.30bn for the year
– Diluted Earnings per Share: $1.37 for fourth quarter, year-over-year growth of 9%; $4.36 for the year
– Non-GAAP Diluted Earnings per Share: $1.63 for fourth quarter, year-over-year growth of 8%; $5.83 for the year
– Cash Flows from Operations: $52m used in operations for fourth quarter; $1,334m provided by operations for the year
Leidos Holdings, Inc. (NYSE: LDOS), a FORTUNE 500® science and technology leader, today reported financial results for the fourth quarter and fiscal year 2020.
Roger Krone, Leidos Chairman and Chief Executive Officer, commented: “Fourth quarter results reflect the resilience of our growing portfolio with new record levels of revenue and backlog, coupled with margin expansion and further balance sheet optimization. This performance positions us for above-market growth in 2021, fueled by our talented diverse workforce who continue to engineer and deliver technologically innovative and secure solutions for our customers’ evolving needs.”
Fourth Quarter Summary Results
Revenues for the quarter were $3.25bn, compared to $2.95bn in the prior year quarter, reflecting a 10.1% increase. Revenues for the quarter included $300m and $89m related to the acquisitions of Dynetics, Inc. (“Dynetics”) and L3Harris Technologies’ security detection and automation businesses (the “SD&A Businesses”), respectively.
Operating income for the quarter was $299m, compared to $261m in the prior year quarter. Operating income margin increased to 9.2% from 8.8% in the prior year quarter. Non-GAAP operating margin for the quarter was 10.7%, compared to 10.5% in the prior year quarter, primarily due to favorable margin performance on certain contracts and higher margins on certain program wins.
Diluted earnings per share (“EPS”) attributable to Leidos common stockholders for the quarter was $1.37, compared to $1.26 in the prior year quarter. Non-GAAP diluted EPS for the fourth quarter was $1.63 compared to $1.51 in the prior year quarter. The weighted average diluted share count for the quarter was 144m, consistent with the prior year quarter.
Defense Solutions revenues for the quarter of $1.93 bn increased $273 m, or 16.5%, compared to the prior year quarter. The revenue growth was primarily attributable to $300m of revenues related to the acquisition of Dynetics and program wins, partially offset by a net decrease in volumes on certain programs and the completion of certain contracts.
Defense Solutions operating income margin for the quarter was 7.6%, compared to 8.9% in the prior year quarter. On a non-GAAP basis, operating margin for the quarter was 8.9%, compared to 9.8% in the prior year quarter, primarily attributable to the release of a contract reserve in the prior year quarter, a net decrease in volumes on certain programs and the completion of certain contracts, partially offset by higher margins on certain program wins.
Civil revenues for the quarter of $811m increased $38m, or 4.9%, compared to the prior year quarter. The revenue growth was primarily attributable to $89m of revenues related to the acquisition of the SD&A Businesses and program wins, partially offset by a net decrease in volumes on certain programs, including negative impacts on certain contracts due to the coronavirus pandemic (“COVID-19”), and the completion of certain contracts.
Civil operating income margin for the quarter was 11.0%, compared to 9.6% in the prior year quarter. On a non-GAAP basis, operating margin for the quarter was 12.3%, compared to 12.0% in the prior year quarter, primarily attributable to favorable product mix and higher margins on certain program wins.
Health revenues for the quarter of $513m decreased $13m, or 2.5%, as compared to the prior year quarter. The revenue decline was primarily attributable to a net decrease in volumes on certain programs and the completion of certain contracts, partially offset by recoveries on certain programs previously delayed due to COVID-19.
Health operating income margin for the quarter was 16.8%, compared to 13.9% in the prior year quarter. On a non-GAAP basis, operating margin for the quarter was 18.5%, compared to 16.0% in the prior year quarter, primarily attributable to favorable volume and margin performance on certain contracts.
Fiscal Year 2020 Summary Results
Revenues for fiscal year 2020 were $12.30bn, compared to $11.09bn in the prior year, reflecting a 10.8% increase. Revenues for the fiscal year included $937m and $243m related to the acquisitions of Dynetics and the SD&A Businesses, respectively.
Operating income for fiscal year 2020 was $998m, compared to $912m in the prior year. Operating income margin for fiscal year 2020 was 8.1%, compared to 8.2% in the prior year. Non-GAAP operating margin was 10.1%, compared to 9.9% in the prior year, primarily due to a net gain recognized upon the receipt of proceeds related to the VirnetX, Inc. (“VirnetX”) legal matter, higher margins on certain program wins and lower indirect expenditures due to cost reduction efforts in response to COVID-19. This was partially offset by negative impacts from reduced volume on certain contracts due to COVID-19 and a net gain recognized upon the receipt of the Greek arbitration award in the prior year.
Diluted EPS attributable to Leidos common stockholders for fiscal year 2020 was $4.36, compared to $4.60 for the prior year. Non-GAAP diluted EPS for fiscal year 2020 was $5.83, compared to $5.17 in the prior year. The diluted share count was 144m compared to 145m in the prior year.
Defense Solutions revenues of $7.34bn for fiscal year 2020 increased $1.04bn, or 16.5%, compared to the prior year. The revenue growth was primarily attributable to $937m of revenues related to the acquisition of Dynetics, program wins and a net increase in materials volume on certain programs. This was partially offset by the completion of certain contracts and negative impacts from reduced volume on certain contracts due to COVID-19.
Defense Solutions operating income margin for fiscal year 2020 was 6.9%, compared to 7.5% in the prior year. On a non-GAAP basis, operating margin for the year was 8.2% compared to 8.5% in the prior year, primarily attributable to negative impacts from reduced volume on certain contracts due to COVID-19, partially offset by higher margins on certain program wins and lower indirect expenditures.
Civil revenues of $2.99 bn for fiscal year 2020 increased $198m, or 7.1%, compared to the prior year. The revenue growth was primarily attributable to $243m of revenues related to the acquisition of the SD&A Businesses and program wins. This was partially offset by the completion of certain contracts and negative impacts from reduced volume on certain contracts due to COVID-19.
Civil operating income margin for fiscal year 2020 was 9.4%, compared to 8.3% in the prior year. On a non-GAAP basis, operating margin for the year was 11.7%, compared to 10.9% in the prior year, primarily attributable to a decrease in bad debt expense and higher margins on certain program wins, partially offset by the completion of certain contracts.
Health revenues of $1.96 bn for fiscal year 2020 decreased $36m, or 1.8%, compared to the prior year. The revenue decline was primarily attributable to the timing of program execution due to COVID-19, the impact from the sale of our health staff augmentation business in the prior year and the completion of certain contracts. This was partially offset by a net increase in volumes on certain programs, program wins and the impact from our acquisition of IMX Medical Management Services, Inc. (“IMX”) in the prior year.
Health operating income margin for fiscal year 2020 was 12.0%, compared to 12.1% in the prior year. On a non-GAAP basis, operating margin for the year was 14.4%, compared to 14.3% in the prior year, primarily attributable to increased volume on certain higher margin contracts, partially offset by reduced volume on certain managed service contracts with fixed cost infrastructures that were impacted by COVID-19.
Cash Flow Summary
Net cash used in operating activities for the quarter were $52m compared to $169m net cash provided by operating activities in the prior year quarter. The higher operating cash outflows were primarily due to the sale of accounts receivable in the prior quarter that did not recur in the current quarter and the timing of payroll payments.
Net cash used in investing activities for the quarter were $101m compared to $54m in the prior year quarter. The higher cash outflows were primarily due to cash paid related to the acquisition of the SD&A Businesses.
Net cash provided by financing activities for the quarter were $98m compared to $144m net cash used in financing activities in the prior year quarter. The higher cash inflows were primarily due to proceeds received related to the issuance of our $1.0bn senior notes and the timing of dividend payments, partially offset by principal payments related to refinancing of outstanding debt and higher stock repurchases in the current year quarter.
Net cash provided by operating activities for the fiscal year were $1,334m compared to $992m in the prior year. The higher operating cash inflows were primarily due to the timing of payroll payments, including the deferral of tax payments under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), and the receipt of proceeds related to the VirnetX legal matter.
Net cash used in investing activities for the fiscal year were $2,815m compared to $65m net cash provided by investing activities in the prior year. The higher cash outflows were primarily due to net cash paid related to the acquisitions of Dynetics and the SD&A Businesses, net proceeds received in the prior year for the disposition of our commercial cybersecurity and health staff augmentation businesses and the sale of real estate properties and higher purchases of equipment and leasehold improvements associated with our new global headquarters. This was partially offset by cash paid related to the acquisition of IMX in the prior year.
Net cash provided by financing activities for the fiscal year were $1,451m compared to $709m net cash used in financing activities in the prior year. The increase in financing cash inflows were primarily due to proceeds received related to the refinancing and issuance of new debt and higher stock repurchases in the prior year. This was partially offset by principal repayments of outstanding debt and the retirement of the $450m senior notes in the current year.
As of January 1, 2021, the Company had $524m in cash and cash equivalents and $4.7bn in debt.
New Business Awards
Net bookings totaled $3.3bn in the fourth quarter of fiscal year 2020 and $17.8bn for fiscal year 2020, representing a book-to-bill ratio of 1.0 and 1.4 for the fourth quarter and fiscal year 2020, respectively.
Notable recent awards received include:
- Next Generation Enterprise Network Service Management: The Company was awarded a prime contract by the Naval Information Warfare Systems Command, formerly known as the Space and Naval Warfare Systems Command, to provide global network services under the Next Generation Enterprise Network Re-compete Service Management, Integration & Transport contract. Under the contract, Leidos will unify, operate and maintain the shore-based networks and data management for the Department of the Navy’s Program Executive Office Digital to improve capability and service under one enterprise network construct. The single award, indefinite delivery/indefinite quantity, firm-fixed-price and cost-plus contract has a five-year base period of performance followed by three one-year option periods, and an approximate value of $7.7bn, if all options are exercised.
- Special Operations Command Tactical Airborne Multi-Sensor Platforms Support: The Company was awarded a task order by Army Contracting Command – Aberdeen Proving Ground under the Responsive Strategic Sourcing for Services indefinite delivery/indefinite quantity contract. Under the contract, Leidos will provide pilot services, airborne sensor operators, hub and spoke operations/excursion support, staffing for the Intelligence Coordination Center, system training, logistics, aircraft and primary mission equipment maintenance and integration, configuration management and engineering support services in support of the program’s DHC- 8 and King Air 300 aircraft. The award has a total value of $649 m and includes a one-year base period of performance followed by four one-year option periods.
- U.S. Intelligence Community: The Company was awarded contracts valued at $304 m, if all options are exercised, by U.S. national security and intelligence clients. Though the specific nature of these contracts is classified, they all encompass mission-critical services that help to counter global threats and strengthen national security.
The Company’s backlog at the end of fiscal year 2020 was $31.9 bn, of which $6.6 bn was funded.
Intent to Acquire Gibbs & Cox, Inc.
Consistent with Leidos strategy to add capabilities and deepen customer relationships, the Company has entered into a definitive agreement to acquire Gibbs & Cox, Inc. (“Gibbs & Cox”), the largest, full-service independent engineering and design firm specializing in naval architecture and marine engineering, for $380m in cash. Headquartered in Arlington, Virginia, Gibbs & Cox has 525 employees. Over its 90 plus year history, Gibbs & Cox has remained a leader in maritime innovation and is on the frontlines of providing maritime solutions. The deal extends Leidos into an attractive maritime market where Leidos is under-penetrated today, and adds valuable engineering talent (naval architects and digital engineers) to the team. It further positions Leidos for long-term growth in the maritime unmanned market – a market requiring tight integration of ship design and autonomy systems. The transaction is expected to close in the second quarter of fiscal year 2021, subject to satisfaction of customary closing conditions.
The Company’s outlook for fiscal year 2021, which excludes the announced acquisition of Gibbs & Cox, is as follows:
- Revenues of $13.7bn to $14.1bn;
- Adjusted EBITDA margins of 10.3% to 10.5%;
- Non-GAAP diluted EPS of $6.15 to $6.45; and
- Cash flows provided by operating activities at or above $850 m.
Non-GAAP diluted EPS excludes amortization of acquired intangible assets, asset impairment charges, acquisition, integration and restructuring costs, amortization of equity method investment, gain on sale of business, acquisition related financing costs, loss on debt modification and other tax adjustments. For additional information regarding non-GAAP diluted EPS and Leidos’ other non-GAAP financial measures, see the related explanations and reconciliations to GAAP measures included elsewhere in this release.
The Company does not provide a reconciliation of forward-looking adjusted EBITDA margins (non-GAAP) or non-GAAP diluted EPS to GAAP net income, due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. Because certain deductions for non-GAAP exclusions used to calculate projected net income may vary significantly based on actual events, the Company is not able to forecast on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income at this time. The amounts of these deductions may be material and, therefore, could result in projected GAAP net income and diluted EPS being materially less than projected adjusted EBITDA margins (non-GAAP) and non-GAAP diluted EPS.
The COVID-19 pandemic is affecting major economic and financial markets, and effectively all industries and governments are facing challenges, which has resulted in a period of business disruption, the length and severity of which cannot be predicted. The pandemic has resulted in significant travel restrictions, government orders to “shelter-in-place”, quarantine restrictions and significant disruption of the financial markets. We have acted to protect the health and safety of our employees, comply with workplace health and safety regulations and work with our customers to minimize disruptions. The pandemic has impacted each of our groups, primarily in access to customer sites, travel restrictions, limitations of remote work and COVID-19 related costs.
Consistent with federal, state and local guidance, we perform work that is essential to support the critical infrastructure of the United States, the Defense Industrial Base and healthcare sector, and we continue to operate in support of our customers. We have taken steps to support increased teleworking and safe workplace environments. We have some minor business operations that are not designated as critical infrastructure and therefore have been required to operate in minimal conditions.
For the quarter and fiscal year 2020, COVID-19 adversely impacted revenues by approximately $12 m and $198 m, respectively, and impacted operating income by approximately $8 m and $96 m, respectively, as compared to prior year results. Within our Health segment we saw recoveries in the fourth quarter of fiscal year 2020 and continue to expect to see further recoveries in fiscal year 2021. Our Defense Solutions segment experienced less of a negative impact in the fourth quarter of fiscal year 2020 than in previous quarters. We also experienced lower indirect expenditures for fiscal year 2020 as a result of COVID-19 which partially offset the operating income impact on our programs. The full extent of the impact of the COVID-19 pandemic on our operational and financial performance, including our ability to execute on programs in the expected timeframe, will depend on future developments, including the duration and spread of the pandemic and the distribution and efficacy of vaccines, all of which are uncertain and cannot be predicted.
The CARES Act, which is effective until March 31, 2021, enabled us to defer payment of the employer portion of social security taxes. As of January 1, 2021, we deferred $123 m of employer social security tax payments and received $12 m from the Employee Retention Credit.
We have taken measures to protect the health and well-being of our workforce and are working with our customers to minimize the delay and disruption of the award and performance on our contracts. Many of our employees continue to work remotely while our offices remain open with limited capacity. (Source: PR Newswire)
23 Feb 21. Redwire Acquires Deployable Space Systems (DSS), a Leading Supplier of Space Mission-Enabling Deployable Solar Arrays, Structures and Mechanisms.
Redwire, a new leader in mission critical space solutions and high reliability components for the next generation space economy, announced today that it has acquired Deployable Space Systems, Inc. (DSS), a leading supplier of mission-enabling deployable solar arrays, structures and mechanisms for space applications. Terms of the transaction were not disclosed.
“DSS has an unmatched reputation for innovative deployable space technologies and infrastructure, and that is a perfect fit for Redwire’s technology portfolio,” said Peter Cannito, Chairman and CEO of Redwire. “These new capabilities will expand our set of space infrastructure solutions and deliver even greater value to our customers.”
“Redwire has the vision, resources, reputation and relationships to take DSS to the next level, and we’re excited to join the team at this critical stage of our company growth,” said DSS President and Co-founder Brian Spence. “As a part of Redwire, we will be able to better serve our customers and scale our capabilities to support demand, while maintaining our innovative culture and strong commitment to provide the highest value for our customers.”
“While DSS has contracts with the largest leaders in aerospace today, Redwire will provide us with the size and breadth of services needed to secure even more competitive projects in the industry,” said DSS Vice President and Co-founder Steve White.
Founded in 2008 and headquartered in Goleta, California, DSS is the leading developer and provider of satellite mechanisms, deployable structures and booms and deployable solar array systems to the global space market. The company’s key products include deployable solar array systems, deployable structural and mechanical systems and supporting subsystems. This includes the award-winning and patented Roll-Out Solar Array, which NASA will use to upgrade the International Space Station’s solar arrays later this year. In collaboration with its customers, DSS designs, analyzes, builds, tests and delivers state-of-the-art deployable technologies and innovative products that are being implemented in Department of Defense, NASA and commercial programs.
DSS marks Redwire’s seventh acquisition. Redwire has amassed an innovative portfolio of space infrastructure capabilities through the strategic acquisitions of Adcole Space, Deep Space Systems, Made In Space, Roccor, LoadPath and Oakman Aerospace. Redwire was formed in June 2020 by AE Industrial Partners, LP (AEI), a private equity firm specializing in Aerospace, Defense, Space & Government Services, Power Generation and Specialty Industrial markets.
“Redwire and AEI have been focused on identifying innovative companies that are critical to enabling sustainable space infrastructure, and DSS’s dominance in innovative deployable solar arrays and structures is a valuable addition to Redwire’s technology portfolio,” said Kirk Konert, Partner at AEI. “We are pleased to see Redwire’s strategic growth as the industry leader for space infrastructure.”
PricewaterhouseCoopers LLP served as the financial advisor and Kirkland & Ellis LLP served as the legal advisor to Redwire. Fell, Marking, Abkin, Montgomery, Granet & Raney, LLP was the legal advisor to DSS.
Redwire is a new leader in mission critical space solutions and high reliability components for the next generation space economy. With decades of flight heritage combined with the agile and innovative culture of a commercial space platform, Redwire is uniquely positioned to assist its customers in solving the complex challenges of future space missions. For more information, please visit www.redwirespace.com.
About Deployable Space Systems
Deployable Space Systems (DSS) is a leading provider of satellite mechanisms, deployable structures and booms, and deployable solar array systems to the global space market. DSS’s product portfolio includes the award-winning and patented ROSA (Roll-Out Solar Array), Integrated Modular Blanket Assembly; Aladdin, Rigid-Panel and Functional Advanced Concentrator Technology solar array technologies; a multitude of elastically and articulated deployable structures and booms, open-lattice booms, telescopic booms; and a variety of mission-enabling mechanisms for space applications. Founded in 2008, DSS is headquartered in Goleta, California. For more information, visit www.dss-space.com.
About AE Industrial Partners
AE Industrial Partners is a private equity firm specializing in Aerospace, Defense, Space & 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. Learn more at www.aeroequity.com. (Source: PR Newswire)
22 Feb 21. Saudi defence firm SAMI targets $5bn annual revenue by 2030.
State-owned Saudi Arabian Military Industries (SAMI) aims to generate annual revenue of $5bn by 2030, its chief executive said on Monday, part of a drive to build more defence equipment inside the kingdom.
Saudi Arabia, one of the world’s largest buyers of foreign arms which has been embroiled in conflict in Yemen for six years, set up SAMI in 2017 to cut its reliance on imported weapons and military systems.
The government aims to spend 50% of its military budget by 2030 on equipment made at home.
Chief Executive Walid Abukhaled told Reuters at Abu Dhabi’s Idex defence exhibition that SAMI aimed to be among the world’s top 25 defence firms by 2030. “Being in the top 25 companies by 2030, you’re looking at $5bn a year” in revenue, he said.
Abukhaled, who did not give a figure for current revenues, took over as CEO in April.
He gave a more conservative target than his predecessor who said in 2019 he wanted SAMI to be one of the world’s top 10 defence companies by 2030. Abukhaled said there had been no major shift in strategy.
Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, set up SAMI as part of a broad economic programme to diversify the oil-dependent economy.
Abukhaled said SAMI would sign a deal on Monday with NIMR, a company in neighbouring United Arab Emirates which builds military vehicles, to set up manufacturing in Saudi Arabia.
SAMI on Sunday signed a joint venture agreement with U.S. firm Lockheed Martin, which is involved in installing a $15bn missile defence system in Saudi Arabia.
Abukhaled said SAMI was developing systems to counter drones, a move that would help deal with drone attacks that are frequently launched at the kingdom by Yemen’s Houthi movement.
“At the end of the day our ultimate objective is to really serve the (Saudi Arabian) armed forces,” Abukhaled said. (Source: Reuters)
22 Feb 21. Russia and the UAE have completed a deal that will see the Emirates’ Tawazun company buy a 50 per cent stake in Russian helicopter manufacturer VR-Technologies, RT reported yesterday.
VR-Technologies is a subsidiary of Russian Helicopters and was set up in 2014 to develop helicopters and unmanned aerial vehicles (drones).
According to RT, Russian Minister of Industry and Trade Denis Manturov told the journalists that the deal was worth €400m ($442m).
“The government committee for foreign investments has recently held a meeting on the issue,” Manturov said, adding: “Our colleagues plan to complete the deal before May.”
The agreement, which was signed by the Director-General of Russian Helicopters, Andrey Boginsky, and the Director-General of Tawazun, Tareq Abdul Raheem Al Hosani, gives the UAE company equal representation on the board of VR-Technologies.
It was also revealed that the UAE is planning to obtain 100 VRT 300 and VRT 500 helicopters for its police force. (Source: News Now/https://www.middleeastmonitor.com/)
20 Feb 21. GEOINT provider BlackSky to go public through merger with investment company. A geospatial imagery and analytics provider to the intelligence community is going public following an expected $1.5bn merger with an investment group, the company announced. BlackSky Holdings Inc., which regularly provides imagery and analytics to the National Geospatial-Intelligence Agency and other government organizations via its fleet of imagery satellites, said Feb. 18 it will merge with Osprey Technology Acquisition Corp., a special purpose acquisition company formed to raise money through an initial public offering to buy a private company. BlackSky will use the symbol BKSY on the New York Stock Exchange.
The company has five satellites in commercial operation, but expects to add nine more this year. In addition to producing high-resolution imagery, the company can provide real-time analytics with its artificial intelligence platform.
“This transaction fully funds our growth plans and accelerates our vision of providing our customers with a ‘first-to-know’ advantage. This is an important inflection point for our industry as commercial and government users demand access to real-time information about the changes that matter most to them,” said BlackSky CEO Brian O’Toole in a statement.
Since launching in 2014, BlackSky has secured a number of government contracts.
In 2017, the Air Force Research Laboratory awarded BlackSky $16.4m to develop a cloud-based GEOINT platform for collection and on-demand analytics.
BlackSky was one of three companies — along with Planet and Maxar Technologies — awarded study contracts by the National Reconnaissance Office, the intelligence agency charged with operating the nation’s spy satellites and securing commercial imagery. Issued in May 2019, those study contracts were meant to help NRO determine how it wants to secure commercial GEOINT for the intelligence community. The agency has since stated that no single provider can fully meet its needs, and it plans to rely on multiple vendors.
And in November 2020, the National Geospatial-Intelligence Agency announced that it was adding data from BlackSky and Planet to its Global Enhanced GEOINT Delivery system, a portal that supplies unclassified imagery to the federal government and foreign partners. NGA was also a partner on BlackSky’s work with AFRL.
BlackSky is also one of a handful of companies consistently mentioned by the military as it develops a beyond-line-of-sight targeting capability using LEO imagery satellites. In September, the U.S. Army tested its ability to use commercial imagery satellites to successfully target and hit threats during its Project Convergence event. Following the demonstration, Willie Nelson, director of Army Futures Command Assured Positioning, Navigation and Timing Cross-Functional Team, told C4ISRNET the Army could tap into the imagery capabilities of companies like BlackSky, Planet Labs, Maxar’s Worlview and Hawkeye 360.
The company said its “pipeline of opportunities grew by $1.1bn” to $1.7bn over the last 12 months.
“We are delighted to partner with BlackSky, a first mover in a large and exciting new market,” said Osprey CEO David DiDomenico, a partner with investor JANA Partners. “The new space economy is taking off, and we believe that BlackSky’s low-cost image capture and on-demand delivery of analytics will revolutionize the way companies and governments detect and track change.”
The transaction, which is set to close July, is expected to bring in $450m in net proceeds, BlackSky said. That money will go toward extending the company’s analytics platform and adding more satellites to its constellations. (Source: Defense News Early Bird/C4ISR & Networks)
22 Feb 21. KBR Announces Fourth Quarter and Fiscal 2020 Financial Results; Provides 2021 Guidance.
Accelerated Earnings Growth and Value Creation Expected Following Strategic Steps Taken in 2020.
4th Quarter 2020 Highlights
— Completed strategic acquisition of Centauri, accelerating KBR into national security missions at scale in growing areas including space, intelligence, cyber solutions and emerging technologies such as directed energy and missile defense
— Established a goal of net-zero carbon emissions by 2030, linked achievement of environmental, social and governance goals to executive compensation, and announced that KBR achieved carbon neutrality in 2019
Fiscal 2020 Highlights
— Delivered $5.8bn of revenue, $57 m of Operating Income, $478m of Adjusted EBITDA, $367m of Operating Cash Flow and $290m of Adjusted Operating Cash Flow
— Posted double-digit revenue growth in Defense & Intel and Science & Space businesses
— Achieved book-to-bill, excluding PFIs, of 1.2x in Government Solutions and 1.4x in Sustainable Technology Solutions
— Positioned Sustainable Technology Solutions for growth in attractive areas such as energy transition, digital operating solutions and circular economy technologies
KBR, Inc. (NYSE: KBR) today announced its fourth quarter and fiscal 2020 financial results and provided 2021 guidance.
Stuart Bradie, President and CEO of KBR, said, “2020 was a year of significant achievement for KBR, as we successfully advanced our long-term vision. We accelerated growth into attractive markets with the Centauri acquisition, strategically focused our commercial portfolio toward clean, sustainable solutions, and significantly advanced our corporate ESG and sustainability strategy, committing to net-zero carbon emissions by 2030 and achieving carbon neutrality in 2019. Throughout the year, our team of teams delivered outstanding safety and operational performance, generated healthy profit and superb cash flow, drove innovation with technology advances and expanded our footprint through new program wins. Our progress is underscored by the strong book-to-bill achieved by our Government and Sustainable Tech businesses that underpins the 2021 guidance we are announcing today. Looking ahead, I am confident KBR is well-positioned to continue driving growth and value for our stakeholders, and I would like to thank our 29,000 people for their perseverance, agility and teamwork through an unusual year.”
In 2021, KBR updated the names of its businesses as follows:
- Government Solutions includes the following four business units: Defense & Intel, formerly the Defense Systems Engineering and Centauri businesses; Science & Space, formerly called Space & Mission Solutions; Readiness & Sustainment, formerly called Logistics; and International.
- Sustainable Technology Solutions, formerly called Technology Solutions, to better reflect our business portfolio of advanced technology and solutions that enable customers to achieve their important sustainability objectives.
Key Financial Highlights:
- Revenue of $5.8bn increased $128m from the prior year, as follows:
- New program wins, on-contract expansion and acquisitive growth, including approximately $100m, or 12%, growth in Science & Space; approximately $175m, or 23%, growth in Defense and Intel (7% organic); and approximately $50m growth in sustaining programs in Readiness & Sustainment;
- Energy Solutions revenue volume increased $187m primarily attributable to the completion of projects in backlog;
- These revenue increases were partially offset by approximately $150m of revenue associated with Tyndall Air Force Base disaster recovery work performed in 2019 that did not recur in 2020, reduced volume in KBR’s Middle East contingency work of approximately $150m, reduced volume in the heritage Technology business of approximately $70m primarily attributable to a higher mix of proprietary equipment deliveries in 2019 that did not recur in 2020, and reduced activity in the international government business of approximately $25m.
- Selling, general and administrative expenses of $335m declined $6m compared to 2019, principally due to reductions associated with corporate cost control measures and travel restrictions related to COVID-19. These reductions were partially offset by increases in Government Solutions, including increased amortization attributable to our acquisition of Centauri, increased bid and proposal cost and favorable variances in 2019 that did not recur in 2020.
- Adjusted EBITDA of $478m increased 2% from the prior year principally due to revenue growth.
- Interest expense of $83m decreased $16m compared to 2019 principally due to lower outstanding borrowings under KBR’s Senior Credit Facility during the majority of 2020 as well as lower weighted-average interest rates resulting from the favorable refinancing of KBR’s Senior Credit Facility in early 2020 and reduced market interest rates.
- Restructuring and impairment charges totaled $313m and were primarily non-cash, were associated with KBR’s exit from commoditized services in its Energy Solutions business, and were related to lease abandonment, goodwill and asset impairments, and overhead reductions.
- Effective tax rate was 25%.
Recent Developments and New Business
- FY 2020 book-to-bill for Government Solutions was 1.2x, excluding privately financed initiatives, and was 1.4x for Sustainable Technology Solutions.
- Expanded footprint through new project/program wins, including a five year $539m ceiling contract to provide high-end technical services for rapid prototyping and fielding of systems for the U.S. Air Force; over $900m in IDIQ tasking through our IAC-MAC contract balanced nicely across the Army, Air Force and Navy; and an eight-year $974m ceiling contract to provide sustaining services to support U.S. Air Force operations in Europe.
- Delivered a 95% recompete win rate in the U.S. Government Solutions business that included a $400m NASA award to provide intelligent systems research and a $300m U.S. Geological Survey award to perform satellite systems engineering, software development, cybersecurity, data storage, program management, network engineering, satellite data acquisition, and scientific research and application development for remote sensing data.
- Continued track record of innovation, bringing new technologies to market, including:
- Entered into an agreement with Mura Technology to be the exclusive licensor of Cat-HTR™, an innovative, disruptive mixed plastics recycling technology that processes all types of plastic including many that are currently considered unrecyclable; and
- Entered into an agreement with Johnson Matthey to license a groundbreaking ammonia-methanol co-production process that combines KBR and Johnson Matthey market-leading ammonia and methanol technologies to enable superior end-product flexibility for our clients.
- Numerous engagements to consult, advise and deliver technology and professional services in the area of energy transition, hydrogen future and circular economy, including multiple engagements with various governments and companies to advise on climate change and transition to a hydrogen future; a five-year master services contract to provide engineering services for a client’s global carbon recycling technology projects; and a technology package, including license, basic engineering, proprietary equipment and catalyst, for a zero CO2 emissions, commercial-scale ammonia facility.
KBR continues to employ a balanced approach to capital allocation, which includes investments that facilitate sustainable, long-term growth and prudent return of capital to shareholders. KBR’s financial strength positioned the company to complete the strategic acquisition of Centauri on October 1, 2020, repurchase approximately $50m of its common stock in 2020, and increase its quarterly dividend to $0.10 per share, a 25% increase over 2019 levels.
FY 2021 Guidance
KBR expects its 2021 financial results to be as follows:
- Consolidated Revenue: $5.8bn to $6.2bn
- Adjusted EBITDA Margin: ~9%
- Effective Tax Rate: 25% to 26%
- Earnings per Share (EPS): $1.39 to $1.59
- Adjusted EPS: $2.00 to $2.20
- Operating Cash Flow (OCF): $250m to $290m
- Adjusted OCF: $280m to $320m
21 Feb 21. New Edgybees Funding. Edgybees has announced US$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. The investment will be used to drive product innovation, expand global adoption, and support an aggressive hiring strategy. Existing investors include 8VC, Motorola Solutions Venture Capital and NFX.
Defence, public safety, and critical infrastructure command centres depend on critical aerial video to make lifesaving decisions during public safety, rescue, and defence 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. This is delivered through the Edgybees’ platform or by integrating with third-party systems. The system provides an operational perspective which dramatically reduces time-to-target and enhances team collaboration, situational awareness and mission effectiveness.
Jack Richardson (Source: ESD Spotlight)
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.