Sponsored by TCI International Inc.
23 Apr 21. Saab presents the results for January-March 2021.
Key highlights Q1 2021
- Order intake up 22%, strengthening position in strategic markets.
- Sales growth of 13%, supported by a solid order backlog and activity level.
- EBITDA increased to SEK 1,066m (914), corresponding to a margin of 11.7%.
- Operating income amounted to SEK 597m (560), margin of 6.6%.
- Operational cash flow was SEK -160m (-1,582).
- Orders/milestones: Gripen C/D support contract to Sweden, orders for Carl-Gustaf and delivery of the third GlobalEye to UAE.
- New organizational structure to be implemented July 1, 2021, for increased focus on efficiency and a clearer connection between business areas, core areas, services and a simplified customer interaction.
Statement by the President and CEO Micael Johansson:
Continued good order and sales growth
In the first quarter, we continued to execute on our growth strategy to become a multi-domestic company and strengthen our position in strategic markets, despite the challenging pandemic environment. Saab continued to record good order intake in the first quarter, which increased 22%, supported by large orders from our defence related business. Order intake improved in several regions and was particularly strong in Sweden.
During the quarter, we secured a support contract for the Gripen C/D to Sweden and continued to drive growth in Ground Combat through orders for Carl-Gustaf M4 to the U.S. and Estonia as well as orders from Australia. During the quarter, Saab also signed a contract for delivery of the fire and control system UTAAS. The order backlog ended up at SEK 97bn.
Sales grew 13% in the quarter, supported by a solid order backlog and high activity level in Saab’s key programmes. Four out of six business areas showed organic growth. The downturn in the civil aviation market, however, continued to affect the civil business, primarily within IPS, negatively.
Earnings showed an improvement in the first quarter. EBITDA for the Group increased 17% and amounted to SEK 1, 066m, primarily driven by Dynamics, Surveillance and Support and Services. Operating income increased 7% compared to the same quarter last year and amounted to SEK 597m (560), corresponding to a margin of 6.6% (7.0). Even if risks related to Covid-19 remain and the civil aviation market is down, we are managing the effects from the pandemic within the risk provisions and activities initiated in 2020.
Operational cash flow in the quarter improved compared to the first quarter 2020 and came in at SEK -160m (-1,582). The improvement in cash flow was a result of higher EBITDA and lower investments as well as cash flow from milestone payments.
Apart from international expansion, our priority in 2021 is to increase focus on operational efficiency. We recently announced a new organisational structure, where six business areas becomes four, creating a clearer connection between businesses, core areas, services and a simplified customer interaction. This is to be implemented as of July 1, with the aim to support improved efficiency. Within the change, Saab is creating a new Operational Excellence function with focus on driving efficiency in the areas; project execution, quality, supply chain, sourcing and IT. The new structure will contribute to Saab’s long-term goals.
Saab has a healthy financial position and we continue with our actions to improve efficiency, maintain our technological leadership and strengthen our market position. Altogether, this puts us in a good position to deliver on our targets. We reiterate our outlook for the full year 2021.
22 Apr 21. COMSovereign Issues CEO Business Update.
COMSovereign Holding Corp. (NASDAQ: COMS) (“COMSovereign” or “Company”), a U.S.-based developer of 4G LTE Advanced and 5G Communication Systems and Solutions, today issued the following business update from Dan Hodges, Chairman and CEO:
To Our Fellow COMSovereign Stakeholders:
Over the last several months many notable developments have occurred at COMSovereign, and I am writing to you now to update you on the business. Supported by the raise of over $43 million completed in January and February, we are now entering the next growth phase of our strategic plan – the ramp up of commercial production – a stage for which our team has spent the past 18 months preparing.
For nearly a year and half, our energies were focused on assembling and integrating the operations of our various business units, conducting critical testing and evaluation of our advanced technologies, and, most importantly, building a world-class leadership team. Together, we worked to lay the foundation for a business that can capitalize on the opportunities we see in the market for a true, end-to-end domestic provider of key 4G LTE and 5G NR enabling technology. I am proud to say that we are now beginning to see the fruits of this labor.
In this update, I want to share developments underway in production that we are confident will help us to realize the tremendous unrealized value that exists in what we have built.
- Just 18 months ago, our principal operating unit, DragonWave, was operating with insufficient funds to invest in R&D and production. During this period, we were experiencing rising demands from our installed base of over 700+ telecommunications network customers for new and upgraded radios required to meet the surging demand for wireless connectivity in their networks. However, we could not support those customers that were looking to invest in the modernization of their networks as they made their initial moves towards 5G. Without robust production lines repositioned and operating, we made the decision not to accept any P.O.s that we were not able to fill within 45 days. Now, our manufacturing lines at Benchmark, which produces our DragonWave Harmony Enhanced and Harmony MC radios, are up and running with increasing capacity monthly. This should allow us to accept a steadily increasing number of P.O.s from customers, which should directly contribute to steady revenue growth going forward.
Although we anticipated significant customer interest once production resumed, during the first quarter, we were not yet equipped for the response we received. Radio hardware demand is high, and we are in the process of bringing our production capabilities online to meet the needs of our customers over the course of the year. This demand is coming from large existing and new domestic customers such as Windstream, other WISPs (“Wireless Internet Service Providers”) and Tier 1 network operators in the US and in international markets such as Mexico.
- At Fastback, production at the contract manufacturer where its radios are currently manufactured, is also ramping up as production runs are being completed and product has been, and continues to be, shipped. Incremental increases in capacity over the next 60-90 days will enable us to meet increased demand we are seeing in this segment of our business. Here too, increasing production capabilities will directly contribute to our revenue growth going forward.
- We believe the initial radio orders we secured over the past 30 days and the increasing number of sales inquiries and pricing requests we are receiving almost daily, clearly indicate a steep demand curve for both our DragonWave backhaul products and Fastback 5.8 MHz microwave radios. This demand is especially evident in large market segments, such as with WISPs, where customers require superior wireless performance and reliability. Sales to end-use customers over the past 30 days include ABC, 123 Net, CommTel, Execulink Telecom, the FAA, General Dynamics, Motorola, Nextera, Rogers Media, Saab, T-Mobile and Wavecom among others.
- The first run of our advanced Polaris line of advanced radios is expected for release to commercial customers in late 3rd quarter (slightly ahead of schedule). Polaris radios are expected to deliver significantly higher performance due to the doubling of capacity as a result of our Lextrum subsidiary’s In-Band-Full-Duplex feature, and another 30-50% increase due to our ability to transmit a simultaneous, discrete, and transparent data path within a wireless signal utilizing Transpositional Modulation waveforms. We believe Polaris’ performance advantages in the market will be enhanced further through our proposed Innovation Digital acquisition, which is expected to provide us with significant new technical capabilities once reserved only for military and government customers. We believe these technologies and valuable, legally defensible IP, gives us an even clearer advantage over potential competitors.
- One important investment we made following our raise of growth capital earlier this year was the purchase of a 140,000 sq. ft. manufacturing facility in Tucson, Arizona. This facility will serve as the main production center for our advanced DragonWave and VNC radios, InduraPower’s intelligent power supplies and our aerial platform products. The Tucson manufacturing facility and lines are progressing ahead of schedule, with the space for InduraPower fully renovated. Production is online for the current generation of battery units with an expectation to launch production of our next-gen power supplies in the 3rd quarter.
- The renovation of space in our Tucson facility for our drone operations is underway with Sky Sapience HoverMast unit production slated to begin in late May which should allow us to meet domestic demand from both commercial and governmental customers. Until then, sales will be filled by our factory in Israel. Sky Sapience’s Israel-based facility is still producing and advancing new features and disruptive technologies via their dedicated research and development arm. We believe these features are of high interest to government customers.
In addition, we believe the communications platform capability established through integration of an entire LTE network system sourced completely from within COMSovereign’s product portfolio and engineering ranks, deployed on our Drone Aviation and Sky Sapience aerial platform products, is finding acceptance by both mobile network operators and governmental agencies.
Domestic production capability is one of the foundational elements of our long-term plan and directly supports our corporate growth strategy and mission to be the recognized leader in US-sourced telecom network equipment. To achieve our mission, we have a two-pronged approach: 1) organically build from within, or 2) acquire existing solutions. Our strategic approach to acquisitions demands that each potential acquisition must not only deliver incremental revenue, existing customers, and talent, but must also add technical capabilities that we could not otherwise realize. We are disciplined in our approach to growth, and we are committed to continuing to follow this strategy. It is important to note that in all our prior acquisitions, the talented founders and staff have not only made long-term investments in our future through compensation in restricted shares, but most have become integral members of our team, overseeing key facets of our business. This commitment is a strong testament to a shared vision of the many opportunities we have ahead of us.
In closing, over the coming weeks and months, we intend to continue our efforts to communicate our progress on our growth path, including sales, production, and material news developments. We intend to host investor conference calls and continue engagement with the investment community and look forward to providing further updates and to sharing our progress as we realize the vision of American Made 5G. (Source: PR Newswire)
22 Apr 21. HENSOLDT AG joins UN Global Compact. Sensor specialist commits to UN principles in the areas of human rights, environmental protection, labour and anti-corruption. Sensor solution provider HENSOLDT is now a member of the United Nations Global Compact. The company is thus committed to the ten universal sustainability principles in the areas of human rights, labour, the environment and anti-corruption. By signing the Global Compact, HENSOLDT is making visible how important sustainable business practices are for the company. It is the world’s largest initiative for sustainable and responsible corporate governance.
As part of a group-wide sustainability initiative, the company has set itself numerous goals. Among other things, emissions are to be further reduced and the proportion of women within the workforce increased. “By joining, we want to show social and ecological responsibility,” says Thomas Müller, CEO of HENSOLDT AG. “For many customers and business partners, membership in the Global Compact has now become a kind of seal of quality,” Müller continues. By joining, the company is setting an example of corporate governance with integrity.
The Global Compact was launched in 2000 on the initiative of the then UN Secretary General Kofi Annan. Currently, around 15,000 companies and organisations from civil society, politics and science in more than 160 countries are part of it. HENSOLDT is proud to be a member of this high-level initiative of the United Nations.
HENSOLDT takes its responsibility as a global citizen and local company very seriously and has committed itself to performing sustainable pioneering work in the area of technology and human potential that supports the conservation of all species worldwide. At the same time, its activities serve the higher purpose of ensuring the freedom and future of our planet, our natural world and our lives. For this reason, also, HENSOLDT supports numerous initiatives that target sustainable investment in local communities, education, employees and the environment.
21 Apr 21. Airbus to transform its European set-up in aerostructures.
- Plans to create new aerostructures companies in France and Germany
- Discussions ongoing regarding industrial set-up in Spain
Airbus has provided more details to its social partners during a European Works Council (SE-WC) meeting about the Company’s ongoing assessment of its industrial set-up in Europe, notably regarding aerostructures activities in France and Germany.
Airbus has reaffirmed its intention to build a stronger aerostructures assembly value chain across its industrial system to its social partners, and considers aerostructures assembly as core to its business. Airbus presented its plans to create two integrated aerostructures assembly companies at the heart of its industrial system in order to reinforce its value stream management and prepare the Company for its short- and long-term future.
As part of these plans, and upon successful completion of the ongoing social process, the new company in France would bring together the activities currently managed within Airbus in Saint-Nazaire and Nantes together with those of STELIA Aerospace worldwide. Another company in Germany would bring the activities of Stade and Structure Assembly of Hamburg together with those of Premium AEROTEC in Nordenham, Bremen and partly in Augsburg, while rebalancing activities towards the upper part of the value chain and reviewing its involvement in the manufacturing of detail parts.
These two new aerostructures assembly companies, both wholly owned by Airbus, would no longer be suppliers to Airbus but become integrated within the Airbus perimeter, simplifying both governance and interfaces in a new industrial setup. Their distinct status would also enable them to focus on their industry segment and be leaner and more agile, fostering competitiveness, innovation and quality to the benefit of the Airbus programmes of today and tomorrow.
Airbus also intends to create a new global player in the detail parts business, anchored in Germany. Born out of today’s Premium AEROTEC, this new entity, with its scale and advanced technologies, would be empowered to capitalise on the significant long-term growth prospects with Airbus as well as external customers, on both civil and military platforms.
In Spain, Airbus continues to work on solutions with its social partners to optimise the current industrial and aerostructures set-up in the Cádiz area in order to ensure its viability, resilience and competitiveness for the future.
21 Apr 21. Airbus chief sets risky course with management reshuffle. Insiders worry over cultural shift to more centralised decision under Guillaume Faury. Jean-Luc Lagardère, the French industrialist who helped found Europe’s aerospace champion Airbus, used to liken his executives to racehorses. Highly intelligent and competitive, they performed best when given their heads — as long as he held the reins. There were pros and cons to this management style. After his death in 2003, bitter feuding nearly paralysed the company, then known as EADS. Worse, by 2016 Airbus was being investigated for corruption going back to 2008. It ended up paying €3.6bn in penalties in France, the UK and US. On the other hand, Airbus is now the world’s biggest commercial aircraft manufacturer by deliveries. It has outshone rival Boeing in the single-aisle segment and not just because the US manufacturer committed deadly errors with its 737 Max programme. Much of Airbus’s success over the past 20 years can be put down to a combination of talented, charismatic and ambitious executives who inspired teams that, for political reasons, were scattered across France, Germany, Spain and the UK. Which is why an executive reshuffle last week has several insiders worried as Airbus places big bets on new technologies such as hydrogen-powered aircraft in the wake of the Covid-19 crisis. The question preoccupying some inside the business is whether under Guillaume Faury, chief executive since 2019, there is less room for strong-minded executives willing to challenge the boss. “We now have an executive committee better suited to executing than challenging,” said one insider, whose views were echoed by several others. In particular, the departure of Grazia Vittadini, a near 20-year veteran of Airbus, as chief technology officer has sent shockwaves around the company. Vittadini was a rarity in the aerospace world — a senior female engineer, a pilot, and charismatic leader of her teams. The outpouring of regret both from insiders and peers — including from rival Boeing — is testament to the impact she has made since becoming CTO in 2018. There were tensions between Vittadini and the engineering division under Jean-Brice Dumont, a close associate of Faury. There also appear to have been tensions over Vittadini’s star status in the media. But what is puzzling is that, at a time when companies are seeking greater diversity, Faury could find no other role for her. Faury has merged the CTO and engineering jobs — a common practice in other companies — and appointed another woman, Sabine Klauke, to the role. But that still leaves just two women on the executive committee. Those close to the situation say Vittadini’s role was merged with engineering to improve collaboration. Neither Vittadini nor Airbus would comment. The departure of Grazia Vittadini has sent shockwaves around the company © Jason Alden/Bloomberg But people who worked with Vittadini say she was collaborative, if vocal. “She is someone who would take things on. She is passionate about all kinds of aviation,” says one colleague. “She didn’t toe the company line but she was loyal.” In fact, there are those who worry that the reshuffle centralises even more decision-making on Faury himself. Well known for his capacity for hard work, Faury involves himself in the minutiae of the units, according to several insiders. This has on occasion caused issues with other directors appointed by his predecessor, Tom Enders. Dirk Hoke, the head of defence and space who has long had ambitions to run his own show, is also quitting this summer. The concerns have been amplified by Faury’s appointment last week of Alberto Gutiérrez, outgoing head of military aircraft in Spain, as chief operating officer. Internally, Gutiérrez is regarded as a safe pair of hands. But there are questions over whether he has the right skills. He has spent his career in defence and Spain’s record on programmes such as the A400M transport aircraft has been patchy, although the troubles predate Gutiérrez. The conclusions from the reshuffle are two-fold: first, that Gutiérrez’s appointment is a political move to satisfy the Spanish government, which shares funding of a new European fighter aircraft. The second is that the company’s culture is changing significantly. Faury and his small inner circle have centralised decision making, and there are fewer inclined to speak out. The former helicopter test pilot is smart and capable, and so far has not put a foot wrong. As chief executive he has to lead. But, like anyone, he will have only so much bandwidth. As long as Airbus delivers, Faury will get the credit. But at the first sign of trouble, he also has to be ready to take the blame. (Source: FT.com)
20 Apr 21. Lockheed Martin raises outlook, beats earnings estimates. U.S. weapons maker Lockheed Martin Corp (LMT.N) increased its outlook for 2021 sales and profit as it reported better-than-expected quarterly profits on Tuesday, helped by higher sales and profits at its unit which makes ships and helicopters.
Though the maker of the F-35 fighter jet increased the midpoint of its full-year revenue outlook slightly to $68bn, the estimate is below Wall Street’s average estimate of $68.17bn.
One big potential dampener for defense companies’ profits was removed earlier this month when U.S. President Joe Biden’s proposed a flat defense budget for 2022 despite calls from progressive Democrats to reduce Pentagon spending.
“In relation to the president’s budget, that was in line with our expectations. And we believe once we get more details, we’ll see that a lot of our programs are in line with what our customers want,” Ken Possenriede, Lockheed’s chief financial officer, said in a telephone interview.
The Bethesda, Maryland-based company said it now expects full-year earnings per share to be in the range of $26.40 per share to $26.70 per share, a range with a midpoint that would beat analysts’ expectation of $26.31 per share, according to IBES data from Refinitiv.
Net earnings for the quarter which ended on March 28 rose from $1.7bn in the same period a year ago, to $1.8bn, or $6.56 per share, beating analyst estimates of $6.31 per share.
The company’s Aeronautics segment reported 17 deliveries of its F-35 jets in the quarter, down from 22 a year earlier. Lockheed plans to deliver between 133 and 139 of the jets this year, said Possenriede.
Though net sales in the quarter rose 3.9% to $16.26bn, they were below analysts’ expectation of $16.33bn. (Source: Reuters)
20 Apr 21. Marshall Aerospace and Defence Group sells Aeropeople. Aeropeople Ltd has been acquired by Bishill Holdings, which will be taking ownership of the business from Marshall Aerospace and Defence Group (MADG), headquartered in Cambridge. No price has been disclosed for the deal. Aeropeople is a market leader in specialist aerospace recruitment solutions, also providing expertise and manpower across the aviation, engineering, motorsport, automotive and defence industries.
Bishill Holdings is run by Kevan Bishop who was founder of Aeropeople Ltd back in 2001; Kevan spearheaded the successful growth, of Aeropeople for over 17 years from 2001 to 2018 and is again looking forward to leading the business as CEO.
He said: “This is an exciting time for Aeropeople. The change will allow us to be more flexible, agile and responsive to the needs of our clients and contractors. I am looking forward to sharing my vision for the future, with exciting growth plans and new business opportunities.”
The change in ownership will also give MADG the opportunity to refocus its resources and invest back into the core business. Aeropeople Ltd will continue with business as usual in supporting MADG with the provision of contractors and CAMO services in the same way it does today.
In January 2021, Aeropeople Engineering Services, part of Aeropeople Ltd announced it had won won a three-year multi-million pound contract with Virgin Atlantic Airways to manage cabin interior maintenance, repair and refurbishment across the airline’s global fleet. (Source: Google/https://www.businessweekly.co.uk/)
19 Apr 21. Jousting in Armour. BAE Systems (BA/ LN), BUY, 522.00p PT: 600.00p. The Daily Telegraph reported BAE was to bid on the US Army’s possible US$45bn Optionally Manned Fighting Vehicle (OMFV). We would say BAE’s hat is the ring; there is a long way yet to go. BAE has other fish to fry first, in our view. Ahead of the full FY22 Defense Budget, we take a canter through what BAE calls Combat Mission Systems and ask whether fighting vehicles fall into the legacy systems that may be dispensed with.
Optionally Manned Fighting Vehicle (OMFV). This is the US Army’s second competition for a Bradley replacement. The first required sample physical vehicles to be submitted. We believe only General Dynamics did so. This time, the US Army is being more flexible, avoiding stringent requirements and introducing a concept phase. The revised approach allows overseas manufacturers to participate, like Rheinmetall and Hanwha (South Korea). Once proposals are received, the aim is to select five in July and fund them to develop concepts. In 2023, three companies will be selected to finalise their designs and build 12 prototypes for testing. A winner would be selected in 2027.
Robotic Combat Vehicle (RCV). BAE revealed its Robotic Technology Demonstrator in October 2019. The US Army is, however, currently testing an RCV Light supplied by QinetiQ/Pratt Miller and an RCV Medium from Textron/Howe & Howe/FLIR. The vehicles are controlled by operators inside a modified Bradley. At this stage, the tests are essentially learning process, maturing and refining the autonomous software, such as target recognition. Ultimately, the technology could leap over into aircraft. At some point, there could be an RCV Heavy. The RCV Light could enter the engineering and manufacturing development phase in 2023 and the RCV Medium in 2014, with a lead systems integrator appointed at those times.
Mobile Protected Firepower (MPF). In December 2018, BAE and General Dynamics received US$376m contracts to develop the MPF, basically a light tank. We know BAE’s prototype has a 105mm gun that can fire 12 rounds a minute and has similar protection to BAE’s Armored Multi-Purpose Vehicle, a converted Bradley. BAE’s vehicle was delayed by COVID, but both contenders should now be under test at Fort Bragg. The MPF will be deployed with airborne and light infantry, hence MPF must be be readily deployed by air. We believe 500 MPFs could be acquired at a cost of around US$6bn. The winning contractor could be selected at end 2022. MPF could see a legacy system abandoned around 25 years ago (the Sheridan tank) return.
Jousting in armour. We believe BAE’s Amphibious Assault Vehicle, M109A7 Paladin self-propelled howitzer, and M88 Recovery Vehicle programmes are likely to continue. The question mark hangs over the Armored Multi-Purpose Vehicle (AMPV) where a full-rate production decision is due in 3Q22. AMPV, a modified Bradley, will replace the Vietnam-era M113 in the second echelon, so it cannot really be described as a legacy platform. Nonetheless, the potential scope of AMPV was reduced, meaning some M113s will remain, but the requirement is for 2,936 vehicles. We have already removed the growth full-rate production would generate from our forecasts. We hope that decision wrong. (Source: Jefferies)
14 Apr 21. QinetiQ Group plc Trading Update. QinetiQ Group plc (“QinetiQ” or “the Group”) today issues a trading update covering its fourth quarter to 31 March 2021. Strong operational performance – upgrading full year guidance. Through continued disciplined execution of our strategy the Group has delivered strong performance through the fourth quarter. As a consequence, today we announce that we expect our results for the full year to 31 March 2021 to be above our previous guidance and above market consensus expectations.
Full year order intake has been strong, and subject to audit, we expect to deliver high teens percentage revenue growth, high single digit percentage revenue growth on an organic basis. We expect the full year underlying operating profit margin percentage to be modestly ahead of that delivered in the first half, resulting in underlying operating profit for the full year of at least £147m. Operating cash flow has been good and we retain a strong balance sheet with net cash at 31 March 2021 of at least £150m.
Our strong performance is underpinned by overachievement across the EMEA Services portfolio offsetting the modest COVID-19 impacts seen earlier in the year in Global Products, affecting the United States and Target Systems. In addition, the three businesses sold in the last year have generated a non-trading gain which will be partly offset by a goodwill impairment in our German business due to a more challenging business environment.
We retain our medium to long-term guidance: we are targeting mid-single digit percentage compound annual organic revenue growth over the next 5 years, with strategic acquisitions further enhancing this growth. We are targeting operating profit margin of 12-13%, although in the short-term we continue to anticipate margins being c.100bps lower, driven by increased investment on our digital transformation programme and by the evolution of our business mix. Capital expenditure is expected to be in the region of £90m to £120m per annum for the next two years.
Steve Wadey, Group Chief Executive Officer said:
“I am extremely proud of how our people have continued to deliver critical defence and security capabilities for our customers around the world, despite significant challenges due to COVID-19. We continued to adapt our ways of working, increased the scale of our ambition and evolved our strategy to meet the changing needs of our customers. As a result, we are now upgrading our full year guidance, demonstrating the Group’s continued strong momentum.”
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.