Sponsored by TCI International Inc.
30 Apr 21. L3Harris Reports Strong First Quarter 2021 Results.
“Our first quarter results demonstrate continued strong execution by the L3Harris team in spite of the pandemic, which provides us confidence in delivering on our increased guidance for the year,” said William M. Brown, Chair and Chief Executive Officer. “Our ability to perform exceptionally, along with the differentiated capabilities highlighted at our Investor Briefing, position us to continue creating value for all stakeholders over the long term.”
o $4.6bn, down 1.3% versus prior year, up 1.8% on an organic1 basis
o Funded book-to-bill2 of 1.10
- Margins and earnings
o Net income margin of 10.2%; adjusted earnings before interest and taxes (EBIT) margin3 of 18.9%
o GAAP earnings per share from continuing operations (EPS) of $2.25, up 127%
o Non-GAAP EPS3 of $3.18, up 14%
- Cash flow and capital deployment
o Operating cash flow of $661m; adjusted free cash flow (FCF)3 of $630m
o Returned $909m to shareholders through $700m in share repurchases and $209m in dividends
- Raised 2021 non-GAAP EPS guidance to $12.70 – $13.00
L3Harris Technologies, Inc. (NYSE:LHX) reported first quarter 2021 revenue of $4.6bn, down 1.3% versus prior year, and up 1.8% on an organic1 basis. GAAP net income was $466m, up 140% versus prior year. Adjusted EBIT3 was $862m, up 6.7% versus prior year, and adjusted EBIT margin3 expanded 140 basis points (bps) to 18.9%. GAAP EPS was $2.25, up 127%, and non-GAAP EPS3 was $3.18, up 14% versus prior year.
“Our first quarter results demonstrate continued strong execution by the L3Harris team in spite of the pandemic, which provides us confidence in delivering on our increased guidance for the year,” said William M. Brown, Chair and Chief Executive Officer. “Our ability to perform exceptionally, along with the differentiated capabilities highlighted at our Investor Briefing, position us to continue creating value for all stakeholders over the long term.”
Summary Financial Results
First quarter revenue decreased 1.3% versus prior year primarily due to divestitures and COVID-related impacts within the commercial businesses. Organic revenue increased 1.8% for the quarter as 4.8% growth in U.S. and international government businesses, excluding commercial aviation and Public Safety, more than offset the anticipated COVID-related decline. At the segment level, revenue growth was driven by Integrated Mission Systems, Space and Airborne Systems and Communication Systems, partially offset by a decline in Aviation Systems primarily due to COVID-related impacts. Funded book-to-bill2 was 1.10 for the quarter.
First quarter net income margin expanded 600 bps and adjusted EBIT margin expanded 140 bps to 18.9% versus prior year. GAAP EPS increased 127% versus prior year driven by a reduction in charges for impairment of goodwill and other assets, operational excellence, integration benefits and a lower share count, partially offset by COVID and divestiture-related impacts. Non-GAAP EPS increased 14% versus prior year driven by operational excellence, integration benefits and a lower share count, net of COVID and divestiture-related impacts.
Integrated Mission Systems
First quarter revenue increased 5.9% from growth in Maritime, driven by a ramp on manned platforms, and in ISR from a newly awarded NATO program, with moderate growth in Electro Optical. First quarter operating income increased 19% to $240m, and operating margin expanded 180 bps to 16.5% versus prior year, driven by cost management, integration benefits and operational excellence.
Segment funded book-to-bill was 1.32 for the quarter.
ISR award activity continued with over $380m in orders for advanced capabilities across incumbent platforms, including the Rivet Joint reconnaissance, National Command Authority and classified aircraft, further strengthening the company’s position as a partner of choice with the U.S. Air Force. L3Harris also expanded its international presence with over $450m in orders, including a contract to deliver a series of missionized Gulfstream G550 aircraft to a NATO customer, with significant follow-on opportunity.
In Maritime, the company received a six-year, multi-award IDIQ contract for up to $827m to provide engineering services across a range of platforms for the U.S. Navy in support of the Hull, Mechanical and Electrical Systems modernization program. L3Harris also was awarded multiple contracts totaling over $60 m to provide imaging systems on submarines for customers in the Asia Pacific and Middle East regions, strengthening its position as a leading provider of maritime solutions.
In Electro Optical, domestic and international demand was strong and included a $127 m award to provide mission-critical avionics on the Vulcan Centaur rocket for U.S. Space Force launches. The company also reinforced its international position with $85m in orders for WESCAM airborne sensor systems from customers primarily in Europe and Northern Africa, as well as over $120m in orders for in-service support of fighter and surveillance aircraft, extending L3Harris’ long-standing incumbency with the Canadian Department of National Defence.
Space and Airborne Systems
First quarter revenue increased 3.7% versus prior year and 4.1% on an organic basis, primarily due to a ramp on missile defense and other responsive programs in Space and the F-35 platform in Mission Avionics, as well as classified growth in Intel and Cyber. This growth was partially offset by program timing in Electronic Warfare. First quarter operating income increased 8.6% to $240m, and operating margin expanded 90 bps to 19.4% versus prior year, driven by cost management, operational excellence and higher pension income.
Segment funded book-to-bill was 1.15 for the quarter.
In Space, the company received several key awards across its responsive and ground franchises, with multi-bn-dollar follow-on opportunities, including:
- $122m award from the U.S. Missile Defense Agency to develop a satellite for the Hypersonic and Ballistic Tracking Space Sensor (HBTSS) program
- More than $100m in awards from the U.S. Space and Missile Systems Center for modernization of space domain awareness infrastructure under the Maintenance Of Space Situational Awareness Integrated Capabilities (MOSSAIC) program, increasing inception-to-date awards to $340 m against a ten-year, $1.2bn total opportunity
- $40 m award from the U.S. National Oceanic and Atmospheric Administration (NOAA) to develop a space weather command and control system, an extension of the Geostationary Operational Environmental Satellite (GOES) – R ground system
Within Mission Avionics and Electronic Warfare, L3Harris recorded approximately $350m in orders on long-term platforms (F-35, F/A-18 and F-16), including a contract to develop the next-generation electronic warfare system on international F-16 aircraft, leveraging software-defined and open systems architecture, with over $1bn in future production opportunities. The orders also included a $72m contract from the U.S. Navy to supply the next production lot of the Integrated Defensive Electronic Countermeasures (IDECM) jammer system for the F/A-18 aircraft, increasing the inception-to-date awards to more than $2.1bn.
In Intel & Cyber, the company received a $113m sole-source, follow-on award to provide continued end-to-end mission solutions for a classified customer, sustaining its ground-based adjacency franchise.
First quarter revenue increased 1.6% versus prior year and 2.9% on an organic basis driven by growth in Tactical Communications, primarily from the continued ramp in U.S. DoD modernization, which also benefited Integrated Vision Solutions and Global Communications Solutions. This growth was partially offset by anticipated lower demand within Public Safety due to COVID-related impacts and lower volume on legacy unmanned platforms in Broadband Communications. First quarter operating income increased 12% to $281 m, and operating margin expanded 240 bps to 25.3% versus prior year from operational excellence, cost management and integration benefits.
Segment funded book-to-bill was 0.92 for the quarter.
Tactical Communications received several key orders that strengthen its domestic and international leadership, including:
- $72m follow-on production order under the U.S. Special Operations Command’s (SOCOM) $255 m Next Generation Tactical Communications (NGTC) multi-channel manpack IDIQ contract
- $42m in orders from the U.S. Air Force for multi-channel Falcon IV® handheld and man portable tactical radio equipment
- $36m order from the U.S. Marine Corps for advanced two-channel Falcon IV® manpack radios
- $68m in orders to provide Falcon III® products in support of force modernization to Germany and a country in Central Asia
In Integrated Vision Solutions, the company received multiple orders totaling $65m to deliver advanced night vision and aiming devices to a country in the Middle East, bringing total in-country orders recorded to-date to $220m.
Key awards in Broadband Communications included a $57m award for ROVER® 6S transceivers for the U.S. Army, supporting situational awareness and surveillance. In addition, the company received $28m in orders from the U.S. Navy to provide SATCOM terminals on surface warships under the Commercial Broadband Satellite Program (CBSP), enabling resilient communications.
In Global Communications Solutions, the company received multiple orders totaling $24m to deliver its Hawkeye™ III Lite Very Small Aperture Terminals (VSATs) in support of the U.S. Army’s SATCOM modernization program.
First quarter revenue decreased 19% versus prior year due to the divestiture of the airport security and automation business, COVID-related impacts in the commercial aviation business and program timing in Military Training, which also led to an 8.3% decline on an organic basis, consistent with expectations. This decline was partially offset by growth in Mission Networks, from higher FAA volume, and Defense Aviation. The first quarter increase in GAAP operating income was driven by the prior-year COVID-related impairment of goodwill and other assets, as well as operational excellence, cost management and integration benefits. Non-GAAP operating income decreased 13% to $128m due to COVID and divestiture-related headwinds, partially offset by operational excellence, cost management and integration benefits, which led to non-GAAP operating margin expansion of 120 bps to 15.7%.
Segment funded book-to-bill was 0.84 for the quarter.
In Mission Networks, L3Harris recorded more than $125m in orders on long-term air traffic management contracts, including the FAA Telecommunications Infrastructure (FTI) and Automatic Dependent Surveillance-Broadcast (ADS-B) programs.
In Defense Aviation, the company received a $25m follow-on production order for fuzing and ordnance systems from the U.S. Army.
Cash and Capital Deployment
In the first quarter of fiscal 2021, L3Harris generated $630m in adjusted free cash flow and returned $909 m to shareholders through $700m in share repurchases and $209m in dividends.
As previously announced, the L3Harris Board of Directors approved a 20 percent increase in the company’s quarterly cash dividend rate from 85 cents per share to $1.02 per share and a new $6bn share repurchase authorization. In addition, L3Harris signed definitive agreements to sell its Military Training, Combat Propulsion Systems and Voice Switch Enterprise-related businesses for a combined total of approximately $1.5bn, increasing the total gross proceeds from completed and announced divestitures to approximately $2.5bn. Each transaction is subject to customary closing conditions, including receipt of regulatory approvals, and is expected to close in the second half of 2021.
L3Harris updated 2021 guidance as follows:
o $18.5bn – $18.9bn, excluding effect of divestitures, up organically 3.0% – 5.0% (unchanged from previous guidance)
- Margin and earnings
o Adjusted EBIT margin of 18.0% – 18.5% (unchanged from previous guidance)
o Non-GAAP EPS of $12.70 – $13.00 (previous guidance of $12.60 – $13.00)
- Cash flow and capital deployment
o Adjusted free cash flow of $2.8bn – $2.9bn (unchanged from previous guidance)
o ~$2.3bn in share repurchases, excluding use of divestiture proceeds (unchanged from previous guidance)
The ongoing attempts to contain and reduce the spread of COVID, such as mandatory closures, “shelter-in-place” orders and travel and quarantine restrictions, have caused significant disruptions and adverse effects on the U.S. and global economies, such as impacts to supply chains, customer demand, international trade and capital markets. L3Harris’ response has involved increasing its focus on keeping its employees safe while striving to maintain continuity of operations, meet customer commitments and support suppliers. For example, the company instituted work-from-home (for employees who are able to work remotely) and social distancing arrangements; canceled travel and external events; procured personal protective equipment for employees; implemented health screening procedures at all facilities; staggered work shifts, redesigned work stations, implemented stringent cleaning protocols and initiated more detailed safety precautions and protocols for on-site work, such as daily health assessments and mandatory face coverings, which currently remain in effect. The company has also maintained an active dialog with key suppliers and developed plans to mitigate supply chain risks. The company has allowed certain essential business travel to resume, and continues to expect to utilize a phased approach based on local conditions for transitioning employees from work-from-home arrangements to on-site work or hybrid arrangements. As COVID vaccines are being distributed and administered throughout the U.S. and global community, the company is currently facilitating the provision of vaccines to its workforce. The U.S. Government response to COVID has included identifying the Defense Industrial Base as a Critical Infrastructure Sector and enhancing cash flow and liquidity for the Defense Industrial Base, such as by increasing progress payments and accelerating contract awards. As a part of the Defense Industrial Base, these actions have enabled the company to keep its U.S. production facilities largely operational in support of national security commitments to U.S. Government customers and to accelerate payments to small business suppliers, which it expects to continue while the U.S. Government’s responsive actions remain in effect.
Although the company believes that the large percentage of its revenue, earnings and cash flow that is derived from sales to the U.S. Government, whether directly or through prime contractors, will be relatively predictable, in part due to the responsive actions taken by the U.S. Government described above, the company’s commercial, international and public safety businesses are at a higher risk of adverse COVID-related impacts. For example, the severe decline in global air traffic from travel restrictions and the resulting downturn in the commercial aviation market and its impact on customer operations has significantly reduced demand for flight training, flight simulators and commercial avionics products in the company’s Aviation Systems segment. As a result, the company temporarily closed some of its flight training facilities, initiated restructuring and other actions to align its resources with the outlook for the commercial aviation market (including workforce reduction and facility consolidation) and recognized $767 m of charges for impairment of goodwill and other assets and other COVID-related impacts in fiscal 2020.
The company’s 2021 guidance reflects the company’s current expectations and assumptions regarding disruptions, containment actions and other COVID-related impacts, including on the U.S. and global economies. These assumptions continue to include a measured assessment of the downturn in the commercial aerospace business and in demand for public safety solutions, as well as additional potential risks from facility shutdowns, supply chain disruptions and international activity weakness. The company’s current expectations and assumptions could change, which could negatively affect the company’s outlook. The extent of these disruptions and impacts, including on the company’s ability to perform under U.S. Government contracts and other contracts within agreed timeframes and ultimately on its results of operations and cash flows, will depend on future developments, including the severity and duration of COVID-related impacts and associated containment and mitigation actions taken by the U.S. Government, state and local government officials and international governments, and consequences thereof, and global air traffic demand and governmental subsidies to airlines, all of which are uncertain and unpredictable, could exacerbate other risks described in the company’s filings with the SEC and could materially adversely impact the company’s financial condition, results of operations and cash flows.
30 Apr 21. Kleos Space Activities Update and Outlook. Revenue to start increasing – Signs deal with US Carahsoft. Strong commercial progress; with data delivery & 2nd satellite cluster on track launch.
- Commercial progress including distribution agreement with US Govt specialist Carahsoft.
- Demand continues to increase for Kleos’ radio frequency geolocation data.
- Targeting 50 subscribers @ ~US$140,000 per annum by end of 2021
- Actively targeting more than 30 Government customers in the US
- Leadership growth with Vincent Furia joins global engineering team as a US-based Technical Director.
- Kleos data processing, management and subscriber access and fulfilment systems progressed for operational use.
- Scouting Mission (KSM1) satellites in test & transition to commercial operations
- Polar Vigilance Mission (KSF1) satellites pass technical milestones, on track for mid-2021 launch with delivery to site planned for the end of May.
- Kleos third satellite cluster; Polar Patrol Mission (KSF2) development in progress, for a SpaceX Falcon 9 launch scheduled for end 2021 under contract with rideshare provider Spaceflight Inc.
Kleos Space (ASX: KSS, Frankfurt: KS1), a space-powered Radio Frequency Reconnaissance data-as-a-service company, provides the following update for the quarter ending 31 March 2021 (Q1 2021).
Commenting on the company’s progress over Q1 2021, Kleos Space CEO Andy Bowyer said, “Kleos has had a productive start to 2021, with in-orbit commissioning and testing of our Scouting Mission satellites as well as the development of the complex data processing and subscriber management systems required to fulfil our contracts ahead of data delivery and revenues in Q2 2021, and progressing the development and launch of our second and third satellite clusters. Our growing constellation increases the capability and value of our geospatial data products, improving coverage over multiple key areas of interest to generate new datasets and tiered licensing options for subscribers.
In addition to our technical progress, we remain focused on commercialisation as we transition to our operational model of a Data-as-a-Service provider with scalable recurring revenues. Data delivery from our Scouting Mission satellites will provide us with an initial data product and we are continuing to build our subscriber pipeline. We have a large, and growing, addressable market with overall geospatial technologies expected to reach $549bn by 2025. Our independent intelligence data provides governments and commercial entities with intelligence, surveillance and reconnaissance (ISR) capabilities, enhancing the detection of illegal activity such as border and security challenges, piracy, drug smuggling and illegal fishing and providing a level of access hitherto unavailable to most of the defence and security sector worldwide.
Demand for our global maritime intelligence data is being driven by the high financial, societal and environmental costs of illegal activity at sea, and the ongoing challenges of policing large coastlines and international waters. Our global geolocation data can be used to validate or tip and cue other government or commercial datasets and has broad applications within defence and security, maritime intelligence, insurance, regulatory and environmental sectors.”
Kleos is now putting evaluation and initial integration contracts in place with dozens of customers and integrator partners around the world to prepare for the initial delivery of data from KSM1. These contracts include extensions that can be exercised after an evaluation period with a subscription pricing agreement. The Company is also starting to see multiple governments and other customer organizations start to develop and issue RFI’s and RFP’s that include requirements for the collection and analysis of RF data. We continue to see strong interest in evaluating Kleos data from defence entities, naval forces, coast guard and border control agencies, as well as national security agencies in many countries.
Distribution agreement with Carahsoft
In April, Kleos’ US subsidiary signed a multi-year distribution agreement with leading US Government IT solutions provider Carahsoft Technology Corporation. The agreement provides Kleos with direct access to Carahsoft’s US federal, state and local government contracts, including the General Services Administration schedule, NASA’s Solution for Enterprise-Wide Procurement (SEWP), Federal Information Technology Acquisition (FITARA), and ITES-SW2 – which supplies enterprise IT infrastructure for the US Army and Department of Defence.
Kleos Space CRO Eric von Eckartsberg said, “Globally, the US is the largest market for Geospatial Intelligence and Reconnaissance data and we are actively targeting more than 30 Government customers in the region. Our partnership with Carahsoft, one of the most successful technology providers in the country, will enable our independent geolocation data to be incorporated into solutions for multiple US government sectors.”
Kleos’ radio frequency geolocation data will be sold as-a-service with qualified governments and commercial entities able to purchase single user, team, or enterprise data licenses. The data-as-a-service business model enables Kleos to effectively service a large and growing subscriber base without significantly increasing base operational expenses.
Kleos will initially introduce new subscribers using data sourced from its four Scouting Mission satellites. As the company launches new satellite clusters, subscribers will be able to increase the ‘areas of interest’ they can access as well as reduce revisit rates over these areas by purchasing data from more clusters. This approach will facilitate the increase of potential monthly revenue from existing subscribers. Subscribers will be able to access Kleos’ data, however, they will not own it, with shareability and historical data access costing users more.
Like SaaS (Software as a Service) companies, Kleos’ Data-as-a-Service business model will generate recurring revenue. The Company’s initial commercialization strategy is to allow subscribers to evaluate the Company’s data and services at an introductory price representing a fraction of the full monthly cost.
The Company has already entered into contracts, agreements and discussions with subscribers from the pipeline of 160+ opportunities to evaluate its data and services, and is targeted to have 50 active subscribers (being subscribers who have completed the evaluation phase and entered into contracts at commercial rates) by year end.
Subject to completion of the commissioning of the Scouting Mission, launch and commissioning of the Company’s second cluster (anticipated in mid-2021) and pricing at commercial rates for its launch of (initial) data products following successful customer evaluations, the Company’s targeted annualized revenue entering into 2022 is approximately US$7m ( Average revenue per active subscriber of US$140,000 per annum).
With the launch of the Company’s third cluster (which is expected to occur in late 2021), the Company is positioned to capture both a greater number of subscribers and increased average pricing as its datasets expand in 2022. The number of subscribers and average pricing are both projected to continue increasing for enhanced data products following further constellation expansion.
First satellite cluster, Kleos Scouting Mission (KSM1) at milestone
The KSM1 cluster of satellites:
- Are transitioning from GomSpace commissioning, test, and calibration to their operational state with Kleos Mission Operations Team.
- Formation in transition from that used for systems commissioning to the operational formation (note; the formation of the satellites is not static; they are in constant motion in relation to each other)
Polar Vigilance satellites pass Integration Readiness Review
The development of the second Kleos satellite cluster, the Polar Vigilance Mission (KSF1), is on track for a mid-2021 SpaceX launch after successfully completing Integration Readiness Review, and the satellites start the build process with satellite builder ISISPACE.
The four Polar Vigilance nanosatellites are in the assembly and testing phase in preparation for final acceptance. Kleos’ satellites will then be delivered to the launch site for integration into the SpaceX Falcon 9 launch vehicle.
The KSF1 Polar Vigilance Mission satellites are scheduled for a mid-2021 launch onboard a SpaceX Falcon 9, under a rideshare contract with Spaceflight Inc. The KSF1 satellites will launch into a 500-600km Sun Synchronous orbit, increasing Kleos’ coverage to the north and south of the 37° inclination of the Scouting Mission satellites.
Kleos Space CTO Miles Ashcroft said, “Development of the KSF1 cluster is progressing at an incredible pace with delivery to site planned for the end of May. Kleos is leveraging the experience and enthusiasm of its satellite builder, Netherlands-basedISISPACE, to develop and deliver quickly as well as improve hardware and software capability. We are growing our constellation rapidly in 2021 with a further cluster scheduled for launch towards the end of the year. Every satellite cluster launched increases the ground covered and the time covered, thus, the value of our radio frequency geolocation data increases, enabling tiered subscription licences for governments and commercial entities to be offered.”
Third satellite cluster development in progress scheduled for end 2021 launch
Kleos & Innovative Solutions in Space B.V. (ISISPACE) have developed the design specification and are constructing the end to end programme to build and support, the Polar Patrol Mission (KSF2) (ISISPACE are also currently building Polar Vigilance satellites (KSF1)), that are booked on a SpaceX Falcon 9 launch scheduled for end 2021 under contract with rideshare provider Spaceflight Inc. growing the constellation further.
The four KSF2 Polar Patrol Mission satellites will launch into a 500-600km Sun Synchronous orbit, complementing KSM1 and KSF1 satellite clusters increasing cover of areas of interest.
In the coming quarter, Kleos will commence generating early adopter subscription revenues from the release of its initial data products, further supporting the company’s existing cash and equivalents balance of EUR5.7m (A$8.7m).
Development of the company’s second and third satellite clusters remain on track, targeting mid-2021 and December 2021 launches, respectively. These launches will increase Kleos’ product offering, with the company targeting 50 data subscribers by the end of 2021.
29 Apr 21. Northrop raises annual outlook as results beat on nuclear programs, radar demand. Northrop Grumman Corp (NOC.N) raised its full-year sales and earnings outlook as the U.S. weapon maker’s quarterly results topped estimates on Thursday, helped by higher demand for its nuclear programs and missile-warning radars.
Shares were up slightly in pre-market trading on Thursday to $340.
U.S. President Joe Biden has proposed a flat defense budget for 2022, despite calls from progressive Democrats to cut Pentagon spending, removing a potential hurdle to profits at defense companies, including Northrop.
“Our team booked competitive new awards and generated higher sales, earnings and cash,” Chief Executive Officer Kathy Warden said in a statement.
Northrop said it now expects full-year adjusted earnings per share between $24 and $24.50, up from its prior range of $23.15 to $23.65, and above analysts’ average estimate of $23.65, according to IBES data from Refinitiv.
The company raised it 2021 sales outlook to between $35.3bn and $35.7bn from $35.1bn to $35.5bn.
Sales in Northrop’s space systems business jumped 29% to $2.52bn and operating income surged 37% to $276 m, aided by the production ramp up of its GBSD intercontinental ballistic missiles and higher demand for Next Gen OPIR missile-warning radars.
Sales in Northrop’s aeronautics systems unit, which makes the center fuselage for the F-35 jets, rose 5% to $2.99bn, while operating income increased 17% to $308m in the first quarter ended March 31.
Higher demand in the F-35 program and E-2 early warning aircraft boosted sales in the unit, the company said.
Excluding the sale of its IT services business, Northrop earned $6.57 per share in the quarter, up from $5.15 per share a year earlier, topping analysts’ average estimate of $5.48 per share.
Total sales rose 6% to $9.16bn, beating Wall Street’s estimate of $8.53bn. The company order backlog at the end of the quarter was to $79.3bn. (Source: Reuters)
29 Apr 21. Embraer Reports 1st Quarter Results.
*Embraer delivered 9 commercial jets and 13 executive jets (10 light / 3 large) in 1Q21. Total company firm order backlog at the end of 1Q21 was US$ 14.2bn;
*Revenues in 1Q21 reached US$ 807.3m, representing year-over-year growth of 27.4% compared to 1Q20, with growth in the Commercial Aviation, Defense & Security, and Executive Aviation segments;
*On April 23, the Company signed a firm order for 30 E195-E2 jets with an undisclosed customer, with deliveries starting in 2022. The 30 firm orders will be included in Embraer’s second quarter backlog;
*Excluding special items, adjusted EBIT and EBITDA were US$ (29.6)m and US$ 18.0m, respectively, yielding adjusted EBIT margin of -3.7% and adjusted EBITDA margin of 2.2%;
*Adjusted net loss (excluding special items and deferred income tax and social contribution) in 1Q21 was US$ (95.9)m, with adjusted loss per ADS of US$ (0.52);
*Embraer free cash flow in 1Q21 was a usage of US$ (226.6)m, which is consistent with normal quarterly seasonality of free cash flow usage in the first quarter. The free cash flow usage represented a significant improvement compared to the US$ (676.6)m in free cash flow consumption in 1Q20 on considerably better inventory levels given steps taken to stabilize production and operations in the midst of the COVID-19 pandemic;
*The Company finished the quarter with total cash of US$ 2.5bn and net debt of US$ 1.9bn;
*Due to continued uncertainty related to the COVID-19 pandemic and its impacts on the industry, Embraer has decided to not publish 2021 financial and delivery guidance at this point.
29 Apr 21. Meggitt Plc 1Q21 – Mixed Messages, but Cash Good. Meggitt Plc (MGGT LN) – BUY, 465.80p PT: 500.00p. 1Q21 saw some sequential improvement in sales, but COVID-related disruption dampened profitability. Cash performance was better than expected. FY21 guidance is unchanged, but there is perhaps something above for both Bulls and Bears. We continue to view FCF as key.
Trading Update. 1Q21 revenue was down 29% YoY, a sequential improvement on 4Q20’s 35% decline. Civil Aero OE and Aftermarket (AM) sales both fell 46% (4Q20, OE – 54.8%, AM -56.9%). Defence sales fell 10% against a strong comparative (+15%). Energy sales were flat YoY, but other markets fell 7%. COVID-related disruption is said to have dampened profits. However, 1Q21 cash performance was better than expected due to a lower working capital outflow. FY21 guidance is unchanged – revenue in line with FY20, underlying profit ahead of FY20, and FCF positive. We regard FCF as the key metric. A strong balance sheet is an asset, but other observers may seize on the comment about dampened profitability. We deem it opportune to provide a reminder of what unfolded in FY19 and FY20 so that Meggitt’s progress through FY21 can be gauged.
FY19 – the way it was. In FY 2019, Services & Support saw 15% growth in the Civil Aftermarket (AM). In 1Q 2019, sales benefitted from the initial provisioning of spares as the 737 MAX entered service. In Airframe Systems, Civil AM revenue rose just 1%. The Regional jet AM fell 7%. The Business jet AM grew 6%. In FY19, total Civil AM revenue grew 8% (1H19 +7%), with revenue split 38% Narrow Body, 18% Wide Body, 24% Regional, and 20% Business. By quarter, Civil AM growth was: 1Q19 +6%, 2Q19 +7%, 3Q19 +4%, and 4Q19 +14%.
FY20 – how it unfolded. Airframe Systems saw Civil AM revenue fall 42%, with Large Jets -38%, Regional -52% and Business -32%. In Services & Support (S&S), Civil Aerospace revenue (all AM) fell 40%. Large Jets represented 82% of S&S Civil sales. By platform, the declines were: Large Jets -41%, Regional -39%, and Business -32%. In total, and by quarter, FY20 Civil AM revenue tracked as follows: 1Q20 +1.1%, 2Q20 -47.3%, 3Q20 – 50.2%, and 4Q20 -56.9%.
Peers in 1Q 2021. GE reported the 1Q21 spares sales at US$13.1m/day, down from US$17.5m/day in 4Q20 and 3Q20 at US$14.4m/day. GE guided FY21 shop visits flat. Honeywell reported 1Q21 Commercial AM sales fell 34% YoY. Honeywell had seen FY21 Commercial AM sales flat to up low single-digit, but stated it was trending to the low end of that range. At Pratt & Whitney, 1Q21 Commercial AM sales fell 35% YoY versus 4Q20 down 32%. Collins Aerospace saw 1Q21 Commercial AM sales fall 43% YoY versus 4Q20 down 48% YoY. Parts and repairs fell 39%, initial provisioning fell 66%, and modifications and upgrades fell 32%. However, the 11% sequential improvement seemed to have come in March. It was attributed to airlines being proactive in getting aircraft ready for service in the summer.
Cash still the key. In the past, we have seen people measure Meggitt against one peer or another, but that ignores the different mix of business across parts, repair, provisioning, upgrades and across aircraft types. We have no bone to pick with Meggitt’s 1Q21 performance and continue to regard the balance sheet as a key support. (Source: Jefferies)
29 Apr 21. South African companies commit to grow aerospace and defence sectors under new Masterplan. More than a dozen South African aerospace and defence companies have made commitments to move their industries forward into growth as part of the Aerospace and Defence Masterplan.
Actions in the very short term to stabilise and ensure the survival of the industry have been approved by the working stakeholder partnership of the State, the Private Sector and Organised Labour, according to the Aerospace and Defence Masterplan document published at the end of 2020.
Aircraft engine maker Adept has committed to additional internships and apprenticeship training while aircraft parts maker Aerosud will provide Letters of Intent for investment in the Centurion Aerospace Village (CAV), pursue foreign direct investment, explore investment in the maintenance, repair and overhaul (MRO) of fixed wing aircraft and helicopters, and establish a training school for artisans in the CAV. Aerosud International will resuscitate discussions with Boeing, Airbus, Embraer, and others in the future over aircraft parts manufacture. The Commercial Aerospace Manufacturing Association of South Africa (CAMASA) is also willing to facilitate international investment in the CAV.
The Aerospace, Maritime & Defence Industry Association (AMD) will provide an expert task team to define and provided an optimal border management framework and solution for South Africa; and is willing to provide an online model to the Directorate of Conventional Arms Control (DCAC) to streamline the defence import/export license application process. Armscor and Reutech are also willing to assist in this process.
Reutech will implement investment in local production and international markets to the value of R750m, resulting in the retention of 600 jobs and a significant increase in export sales within three to five years. The company is also willing to lead/support an industry export programme for international markets and provide resources towards this.
Rheinmetall Denel Munition (RDM) will fund bursaries for engineers and support high schools with equipment and capacity to strengthen Science, Technology, Engineering & Mathematics (STEM) training and outcomes. The company is currently providing 80 interns per annum with workplace internships and retaining over 20% in permanent positions. It will support Small, Medium, & Micro Enterprise (SMME) development through 1% and 2% of Net Profit After Tax (NPAT) spending on programmes; and continues to support Military Veterans programmes with significant financial resources.
Sandock Austral has committed to implementing the largest apprenticeship programme in KwaZulu-Natal through its shipyards and will implement an Enterprise Development programme by allocating between 30% and 40% of each project revenue to black-owned SMME support in the supply chain.
The South African Civil Aviation Authority (SACAA) is, according to the Masterplan, committed to ensure through its working groups with the relevant State entities and the industry that the final regulatory framework and related systems for RPAS/UAS (drone) design, manufacturing, utilisation, training, certification and operations would be concluded by the end of March 2021.
The SACAA will convene, once a year, an indaba with the civil aviation industry and those affected, to feed back on its benchmarking of application and certification systems, as well as its international benchmark performance and confirm ongoing engagement with the industry. The SACAA will also complete its shift to electronic and online application processing by the end of November 2021.
Other companies that have pledged commitments in support of the Masterplan are African NDT Centre, Damen Shipyards Cape Town, GEW, Hensoldt Optronics, Paramount Group, and the Council for Scientific and Industrial Research (CSIR). The latter will continue to pursue research and development activities, while Denel will secure strategic equity partners in core Strategic Business Units as approved by the Board and this may include missiles, artillery, and UAVs.
The Aerospace and Defence Masterplan, completed in 2020, aims to increase local production of selected products by 50% from current baseline levels by the end of 2024; improve export sales by 100% from the current baseline by the end of 2022; increase formal employment from current levels by 50% by the end of 2025; retain advanced skills in the ecosystem and double the participation of black and/or women participants in the industry from the current baseline by the end of 2022.
For more on this subject, consider attending defenceWeb‘s Aerospace and Defence Masterplan webinar on 25 May. Registration for the first 100 defenceWeb readers is free. (Source: Google/https://www.defenceweb.co.za/)
28 Apr 21. Boeing CEO points to defense and space biz as financial stabilizer. Boeing reported a wider-than-expected first-quarter loss on Wednesday, although revenue met Wall Street forecasts as the company generated cash by delivering more new airliners than it did a year ago.
Boeing lost $561m — or $537m after accounting for a loss attributable to a noncontrolling interest — as the coronavirus pandemic continued to hurt demand for new planes.
After the quarter ended, Boeing suffered a new setback with its 737 Max jetliners, more than 100 of which are now parked again because of issues around electrical grounding of some parts.
CEO David Calhoun said the pandemic continues to challenge the market for planes but said the company sees 2021 as a turning point, with distribution of vaccines against COVID-19 picking up. He said Boeing’s defense and space business is providing stability for the company.
Excluding one-time items such as a charge related to a building the next Air Force One presidential jets, Boeing’s loss was $1.53 per share. Analysts expected a loss of 97 cents per share, according to a FactSet survey.
The loss was smaller than the $628m loss Boeing reported a year earlier, when the pandemic was just starting to hit the airline industry. In the first quarter of pre-pandemic 2019, the company earned $2.15bn on revenue of $22.92bn.
Revenue fell 10 percent from a year earlier, to $15.22bn, nearly matching the $15.23bn that analysts expected. Boeing generated cash when regulators in the U.S. and other countries allowed the company to resume deliveries of 737 Max jets, which were grounded for nearly two years after two crashes that killed 346 people.
Boeing delivered 77 commercial planes in the quarter, up from 50 in the same period last year, although revenue from those sales dropped.
The company’s defense and space business accounted for nearly half of Boeing revenue, and it earned a profit as revenue climbed 19 percent.
Wednesday’s report lacked the big unpleasant surprises Boeing has sometimes dropped on investors, including three months ago when it announced another delay in its newest plane, the 777X. The resumption of 737 Max deliveries has helped Boeing’s cash flow, but the pandemic is still depressing orders for new planes.
Last week, as the company met online with shareholders, it announced that the board raised Calhoun’s retirement age from 65 to 70, meaning he won’t be forced to step down next April. At the same time, Boeing said Chief Financial Officer Greg Smith, 54, will retire in July, a move that caught Wall Street off guard. Analysts speculated that Smith saw his path to the top job closed off by Calhoun’s extended term. The shares dipped 1 percent in trading before the market opened Wednesday. (Source: Defense News Early Bird/Defense News)
28 Apr 21. AmpliTech Group Well Positioned to Deliver Amid Global Acceleration of Satellite Launches. AmpliTech Group, Inc. (NASDAQ: AMPG) (NASDAQ: AMPGW) (the “Company”), a designer, developer, and manufacturer of custom and standard state-of-the-art RF components for 5G/6G Communications, Commercial, SATCOM, Space, Defense, and Military markets.
AmpliTech has enjoyed the advantage of manufacturing some of the highest performing and most reliable low noise amplifiers available for players in the SATCOM space. As the race to launch Low Earth Orbit (LEO) and Medium Earth Orbit (MEO) accelerates, the need for low noise, low power dissipating, and highly reliable amplifiers grows to be absolutely essential for organizations preparing to launch satellites in coming cycles. Marketwatch reports that the global Satellite Communication (SATCOM) market will reach US$30.6bn by the end of 2025, growing at a CAGR of 8.3% from 2019 through 2025.
“AmpliTech manufactures a suite of Low Noise Amplifiers primed to offer companies superior communication solutions.”
This week Bloomberg reported that SpaceX moved closer to obtaining FCC approval to launch Starlink satellites at a lower orbit to achieve higher service performance. Starlink alone plans to launch up to 42,000 satellites by mid-2027. CNBC reported last week that Amazon will also be looking to commence 9 missions to launch 3,236 satellites in LEO in the near future. LEO and MEO satellite launches aim to increase global connectivity among billions of IoT devices, improve network speed constraints, democratize internet access, and connect people as well as devices in a way never before attainable. It is crucial to ensure mission success by limiting SATCOM component vendors to best-in-breed solutions.
AmpliTech manufactures a suite of Ku, Ka, and X band Low Noise Amplifiers primed to offer companies superior communication solutions. The Ka band LNA operating at 26.5-40 GHZ is preferred for usage in SATCOM devices. AmpliTech’s Ka band LNA features the lowest noise figures in the industry (80K @ room temperature), wide bandwidth, and reduced size wavelength leading to powerful, size efficient devices. This promises high throughput, low interference connectivity for optimal network flow. Superior product design, painstaking quality control, and an aggressive growth strategy has enabled AmpliTech to achieve unparalleled product specifications to push the needle on satellite deployment.
AmpliTech recently secured a $23m capital raise that will be allocated towards a long-term growth strategy geared towards cementing themselves as a top facilitator of 5G/6G, Commercial, SATCOM, Space, Defense, and Military innovation.
CEO Fawad Maqbool states, “Recent events have proved that the state of the SATCOM industry is at an inflection point for hyper growth. The journey is just beginning and AmpliTech is fortunate to be in a position to push the envelope on satellite technology adoption.”
About AmpliTech Group, Inc.
AmpliTech Group, Inc. designs, develops, and manufactures custom and standard state-of-the-art RF components for the Domestic and International, SATCOM, Space, Defense and Military markets. These designs cover the frequency range from 50 kHz to 40 GHz – eventually, offering designs up to 100 GHz. AmpliTech also provides consulting services to help with any microwave components or systems design problems. Our steady growth over the past 13+ years has come about because we can provide complex, custom solutions for nearly ANY custom requirements that are presented to us. In addition, we have the best assemblers, wires, and technicians in the industry and can provide contract assembly of customers’ own designs. Website: http://www.AmpliTechinc.com. (Source: PR Newswire)
29 Apr 21. Annual results from Pennant (PEN:39p), an Aim-traded supplier of products and services that train and assist engineers in the defence and civilian sectors, were in line with the directors’ guidance given at the interim results (‘Companies on the rebound’, 24 September 2020).
A Covid-19 pandemic induced first half underlying operating loss of £2m on revenue of £6m, reversed into a second half operating profit of £1m on revenue of £9.1m. These figures exclude £0.54m of restructuring expenses which will produce £1m of cost savings in 2021. Prospects for the momentum to build are undeniably positive.
Firstly, £14.4m of Pennant’s £31m order book is for delivery in 2021 and includes two valuable government multi-year contracts (£5.4m of annual revenue) with the Canadian and Australian defence departments to use Pennant’s Oracle-based OmegaPS software product (reduces the support cost of major capital equipment). The 2021 order book also includes £1.4m of revenue from Absolute Data Group (ADG), a Brisbane-based software company that complements Pennant’s OmegaPS software. ADG helps its client base (military aviation, commercial aerospace, and marine, rail, nuclear and automotive sectors) to manage vast quantities of maintenance and training data.
Pennant’s chief executive Phil Walker informed me that ADG, which was acquired for £3.4m last year, is “performing exceptionally well” and is in active contract talks with a US defence original equipment manufacturer (OEM) and an Australian company in relation to contracts worth “seven figures in revenue”. ADG’s North American trading subsidiary accounts for two-thirds of its annual sales. Winning either award would drive up earnings markedly given the high margins earned on software sales.
Secondly, having landed a £1.5m training aids contract from a long standing Middle East customer last year, Walker revealed that the balance of the contract (around £3m) needs to be signed by the autumn for it to be fulfilled for the start of the 2022 academic year.
Thirdly, Pennant’s £50m bid pipeline includes the ‘Major Programme’, for which it was ‘down-selected’ in August 2018. Progress to contract award (£15m to £20m) has been impacted by the UK Government’s ‘Integrated Review of Security, Defence, Development and Foreign Policy’. The Review was finally published last month and reaffirmed the UK Government’s commitment to the relevant military platform. This means that the overarching programme should proceed, albeit Walker doesn’t expect any contract award until the latter part of 2021, at the earliest.
Importantly, Pennant has balance sheet flexibility to fulfil its working capital requirements as business ramps up again. Proforma net cash is £1.1m and Pennant has a £4m low-cost bank facility with HSBC.
The bottom line is that although house broker WH Ireland’s 2021 revenue estimate of £16m produces a modest pre-tax profit, there is a live chance of material outperformance if ADG lands any one of several live contracts in its pipeline. Buy. (Source: Investors Chronicle)
29 Apr 21. Airbus reports First Quarter (Q1) 2021 results.
- 125 commercial aircraft delivered in a market environment that remains uncertain
- Strong focus on cost and cash containment; progress on restructuring
- Revenues €10.5bn; EBIT Adjusted €0.7bn
- EBIT (reported) €0.5bn; EPS (reported) €0.46
- Free cash flow before M&A and customer financing €1.2bn, including positive phasing impact
- Net cash position at €5.6bn
- The guidance issued in February 2021 remains unchanged
Airbus SE (stock exchange symbol: AIR) reported consolidated financial results for its First Quarter (Q1) ended 31 March 2021.
“The good Q1 results mainly reflect our commercial aircraft delivery performance, cost and cash containment, progress with the restructuring plan as well as positive contributions from our helicopter and defence and space activities,” said Airbus Chief Executive Officer Guillaume Faury. “The first quarter shows that the crisis is not yet over for our industry, and that the market remains uncertain. We are investing in innovation and in the transformation of our Company to deliver on our long-term ambitions across the portfolio.”
Gross commercial aircraft orders totalled 39 (Q1 2020: 356 aircraft) and included 38 single-aisle aircraft. After cancellations, net commercial aircraft orders were -61 (Q1 2020: 290 aircraft) with the order backlog comprising 6,998 aircraft on 31 March 2021. Airbus Helicopters booked 40 net orders (Q1 2020: 54 units), including 2 Super Puma Family rotorcraft and 1 H160. Airbus Defence and Space’s order intake by value was €2.0bn (Q1 2020: €1.7bn) and included major contract wins in Space Systems and recurring services orders in Military Aircraft.
Consolidated revenues were broadly stable year-on-year at €10.5bn (Q1 2020: €10.6bn). A total of 125 commercial aircraft were delivered (Q1 2020: 122 aircraft), comprising 9 A220s, 105 A320 Family, 1 A330 and 10 A350s. Revenues generated by Airbus’ commercial aircraft activities decreased by 4 percent, mainly reflecting lower volume in services. Airbus Helicopters delivered 39 units (Q1 2020: 47 units) with revenues reflecting lower volume in civil helicopters, partly offset by growth in services. Revenues at Airbus Defence and Space were stable compared to a year earlier.
Consolidated EBIT Adjusted – an alternative performance measure and key indicator capturing the underlying business margin by excluding material charges or profits caused by movements in provisions related to programmes, restructuring or foreign exchange impacts as well as capital gains/losses from the disposal and acquisition of businesses – increased to €694m (Q1 2020: €281m).
The EBIT Adjusted related to Airbus’ commercial aircraft activities increased to € 533 m (Q1 2020: € 191 m), mainly reflecting the focus on cost as well as a favourable mix. It also includes a positive impact from currency hedging.
Airbus Helicopters’ EBIT Adjusted increased to €62m (Q1 2020: €53m), driven by services, programme execution and lower spending on Research & Development (R&D) following the certifications of the H160 and five-bladed H145 in 2020.
EBIT Adjusted at Airbus Defence and Space increased to €59m (Q1 2020: €15m), mainly reflecting continued cost containment and positive phasing in the quarter. One A400M military airlifter was delivered.
Consolidated self-financed R&D expenses totalled €620m (Q1 2020: €663m).
Consolidated EBIT (reported) amounted to €462m (Q1 2020: €79m), including Adjustments totalling a net €-232m.
These Adjustments comprised:
- €-29m related to A380 programme cost;
- €-177m related to the dollar pre-delivery payment mismatch and balance sheet revaluation;
- €-26m of other costs, including compliance.
The financial result was €59m (Q1 2020: €-477m). It mainly reflects the revaluation of financial instruments and the evolution of the US dollar as well as €43m from the revaluation of the Dassault Aviation equity stake, partly reduced by the net interest result of €-82m. Consolidated net income(1) was €362m (Q1 2020 net loss: €-481m) with consolidated reported earnings per share of €0.46 (Q1 2020 loss per share: €-0.61).
Consolidated free cash flow before M&A and customer financing amounted to €1,202m (Q1 2020: €-8,030m), mainly driven by a strong positive phasing impact from working capital and reflects continued cash containment efforts. Consolidated free cash flow was €1,164m (Q12020: €-8,501m).
The consolidated net cash position was €5.6bn on 31 March 2021 (year-end 2020: €4.3bn) with a gross cash position of €22.6bn (year-end 2020: €21.4bn). The Company’s liquidity position remains strong. The maturity of the Supplemental Liquidity Line has been extended by 6 months, maintaining a high level of flexibility in the uncertain environment caused by COVID-19.
The guidance issued in February 2021 remains unchanged.
As the basis for its 2021 guidance, the Company assumes no further disruptions to the world economy, air traffic, the Company’s internal operations, and its ability to deliver products and services. The Company’s 2021 guidance is before M&A.
On that basis, the Company targets to at least achieve in 2021:
- Same number of commercial aircraft deliveries as in 2020;
- EBIT Adjusted of €2bn;
- Breakeven free cash flow before M&A and customer financing.
29 Apr 21. KBR Announces First Quarter 2021 Financial Results; Reaffirms FY 2021 Guidance.
– Delivered $89m of operating income and >20% growth in adjusted EBITDA
– Achieved strong cash generation; 109% adjusted free cash conversion of net income
– Awarded $1.6bn of contracts and options in high-end, technical, upmarket areas
– Reaffirming FY 2021 guidance that reflects 20% embedded earnings growth over 2020
KBR, Inc. (NYSE: KBR) today announced its first quarter 2021 financial results and reaffirmed FY 2021 financial guidance.
“KBR is off to a strong start in 2021, building on its momentum with new program wins, innovative technologies and solid execution and safety performance, all contributing to profitable growth in the first quarter,” said Stuart Bradie, President and CEO of KBR. “We posted key wins in trusted microelectronics, automation, rapid prototyping, sustainable technology licensing, energy transition and more. At the same time, we continued advancing innovations in important high-growth areas such as climate change, cyber analytics and space superiority. Thanks to the unrelenting focus of our talented people, KBR is poised to continue generating strong free cash flow and to delivering revenue and profitability in line with our expectations and long-term objectives. Given KBR’s solid foundation of enduring long-term contracts, and strong macro-tailwinds that align with our expertise, we are confident that the company is well positioned for sustainable growth and value creation.”
Key Financial Highlights
- Revenue of $1.5bn is aligned with management’s consolidated revenue guidance for the year of circa $6 bn.
- New programs, on-contract expansion and acquisitive growth, as follows: approximately $145m, or 71%, growth in Defense and Intel, 5% organic; approximately $45m, or 15% growth, all organic, in Readiness & Sustainment, predominantly in enduring O&M programs such as planning, scheduling, and supporting training rotations at the National Training Center; and approximately $10m, or 4%, organic growth in Science & Space;
- A reduction of approximately $275m primarily attributable to the non-recurrence of non-core Sustainable Technology activities exited in 2020 and a reduction in the International government business primarily attributable to the substantial completion of a program in 2020.
- Selling, general and administrative expenses of $89m declined $8 m compared to 2020, principally due to the company’s 2020 restructuring and exit from non-core businesses as well as reduced travel associated with the ongoing pandemic. These decreases were partially offset by an increase in SG&A associated with our acquisition of Centauri in late 2020.
- Adjusted EBITDA of $135m increased 21% principally due to strong performance in the Sustainable Technology business, the acquisition of Centauri and SG&A savings.
Recent Developments and New Business
In the quarter ended March 31, 2021, the company was awarded approximately $1.6bn in backlog and options, as follows:
- Expanded footprint through new project/program wins, including a new five year, $195m ceiling IDIQ contract to provide high-end technical services in the emerging areas of trusted microelectronics; a new five year, $470m contract won by a KBR joint venture to provide technology-led, data driven facilities management support to the U.K. MoD; and a new contract to assist in the development and management of the navigation training system for the Royal Australian Navy’s premier maritime warfare training establishment.
- Continued track record of innovation, bringing new technologies to market, including:
- Won a contract to provide KBR’s proprietary K-COT™ catalytic olefins technology that converts naptha to propylene. Because of its differentiated fluidized bed continuous cycle process, K-COT™ produces larger volumes of high demand propylene at a significantly lower capex and opex cost and with a more attractive environmental footprint compared to competing technologies;
- Won a contract to provide KBR’s proprietary K-PRO™ propane dehydrogenation technology that converts propane to propylene. K-PRO™, a new technology introduced in 2019, is a disruptive alternative enabling clients to measurably reduce cost and improve environmental footprint. Unlike competing technologies, the catalyst does not contain semi-precious metals or chromium, significantly reducing processing cost and eliminating the need to treat or dispose of chromium byproducts;
- Awarded a new contract by the National Renewable Energy Laboratory (NREL) to provide engineering, test and evaluation services to advance NREL’s R&D in the area of renewable energy, energy efficiency, energy systems integration, and sustainable transportation;
- Won a feasibility study for our groundbreaking ammonia-methanol co-production process. This technology combines KBR’s market-leading ammonia technology and Johnson Matthey’s market-leading methanol technology to give clients superior flexibility in end product diversification.
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. During the quarter, KBR’s Board of Directors increased the company’s quarterly dividend 10% to $0.11 per share.
Reaffirming FY 2021 Guidance
KBR has reaffirmed its expectations of FY 2021 financial results, including:
- 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): $243 m to $283m; adjusted OCF: $280m to $320m
29 Apr 21. Marshall Honoured with Queen’s Award for Enterprise for International Trade. Marshall Aerospace and Defence Group’s Military Aerospace business has been honoured with a Queen’s Award for Enterprise for International Trade 2021. The award recognises the exponential growth in Marshall’s International C-130 customer base which now sees the business support 17 global operators enabling the business to deliver export sales in excess of £162m over the three year period between January 2017-December 2019.
Marshall Aerospace and Defence CEO Gary Moynehan comments: “We are absolutely delighted to be a recipient of this very prestigious award in recognition of the work that our Military Aerospace business has done to establish itself as the global leader in C-130 maintenance and support.
“Our business has been synonymous with the RAF for many years and whilst we have a number of other European C-130 customers who have been with us for decades we have been very much focussed over the past five years on growing our international portfolio.
“This has resulted in us winning significant new business in Africa, the Middle East and North America, notably the US Marine Corps, who awarded us a 10-year enablement contract to deliver scheduled and unscheduled maintenance across its 66-strong fleet of KC130J aircraft last year.
“At the same time as growing our own business, we have also been able to work in partnership with the MoD to support the resale of RAF C-130J aircraft to countries including Austria, Bahrain and Bangladesh, adding significant value to the UK economy, and will continue this work as the UK fleet size is further reduced.”
This is the third time in eight years that Marshall Aerospace and Defence Group has been a recipient of a Queen’s Award for Enterprise having been previously recognised for International Trade in 2013 and Innovation in 2016.
28 Apr 21. Ex Airbus unit ordered to pay $42m over corrupt Saudi contracts. A former Airbus (AIR.PA) subsidiary was on Wednesday ordered to pay more than 30m pounds ($42m) after pleading guilty to corruption over contracts to provide military communications services for the Saudi Arabian National Guard.
GPT Special Project Management Ltd, which ceased operations last year, told London’s Southwark Crown Court earlier that it would admit to one count of corruption between December 2008 and July 2010.
It was ordered to pay a confiscation order of 20.6m pounds, a fine of 7.5m and costs of 2.2m.
The resolution of the corporate case, after a near nine-year investigation, was described by pressure group Spotlight Corruption as a “stunning and hard-won victory” for the UK Serious Fraud Office (SFO), which prosecuted the case.
The SFO filed charges against GPT and three individuals last year. A trial of the individuals has been pencilled in for May, 2022.
The investigation is unconnected to a record $4bn deferred prosecution agreement struck by Airbus and U.S., British and French authorities in 2020 after a three-year probe into allegations of bribery and corruption over jetliner sales. ($1 = 0.7186 pounds) (Source: Reuters)
27 Apr 21. Air Force One Supplier GDC Technics Files for Bankruptcy.
The aerospace company’s bankruptcy comes after aircraft maker Boeing sued over delays on two presidential planes. Air Force One supplier GDC Technics LLC has filed for bankruptcy and warned that it would lay off more than 200 employees after Boeing Co. canceled its contracts.
GDC, a Boeing subcontractor working on government executive fleets, filed for chapter 11 protection Monday in the U.S. Bankruptcy Court in San Antonio. The Fort Worth, Texas-based aerospace company valued both its assets and liabilities in the $10m to $50m range, according to court papers.
The decision to file for bankruptcy comes after Boeing and GDC sued each other earlier this month over their business dealings in building two new Air Force One aircraft, which would be used to transport the U.S. president.
Chicago-based Boeing filed a lawsuit against GDC on April 7 in Texas state court alleging GDC was roughly a year behind schedule in completing interior work on the two presidential planes. The delays caused by missed deadlines allegedly resulted in millions of dollars in damages to Boeing and jeopardized work that is of critical importance to the U.S. Air Force and the president, the lawsuit said.
Boeing, responsible for designing and manufacturing the military aircraft, hired GDC as a subcontractor to design and build the interiors of the planes. Boeing also hired GDC as a subcontractor on existing Air Force One aircraft to help refurbish the interiors. (Source: Defense News Early Bird/WSJ)
27 Apr 21. Defense and commercial travel boost Raytheon’s hopes for the year. U.S. aerospace manufacturer Raytheon Technologies Corp (RTX.N) on Tuesday lifted the lower end of its full-year sales forecast on strong performance of its defense unit and a recovery in commercial air travel.
Neil Mitchill, Raytheon’s newly appointed chief financial officer, said in an interview that “increasing confidence and a commercial aero recovery that we began to see take hold at the end of the first quarter” led to the company’s view for 2021.
While demand for Raytheon’s aviation technologies and service for aircraft manufacturers slumped during the global health crisis, its robust defense unit that contributes more than half of overall sales continued to lift its bottomline.
During the quarter, the company had a notable $1.4bn in classified bookings for work at Raytheon’s Intelligence and Space unit, which Mitchill said was “clearly an indication that the operations tempo is increasing from where we saw it exiting 2020.”
The company now expects between $63.9bn and $65.4bn in full-year sales, compared with its previous forecast of $63.4bn to $65.4bn.
For the quarter, Raytheon had earnings per share of $0.90 versus Wall Street analyst’s consensus estimate of $0.88. Revenue rose to $15.25bn from $11.36bn but missed Wall Street’s estimate of $15.36bn.
Net income attributable to common shareowners was $753m, or 50 cents per share, in the quarter ended March 31, from a loss of $83m, or 10 cents per share, a year earlier.
Raytheon increased its 2021 share repurchase authorization from $1.5bn to at least $2bn.
The company, which had about 195,000 employees when it merged with United Technologies last April, has laid off nearly 20,000 full-time and contract employees in its commercial aerospace business, which makes aircraft engines and spare parts. Raytheon said savings from the merger increased by $300m to $1.3bn.
On a call with Wall Street analysts, management said Raytheon was cooperating with Department of Justice investigations into contract pricing in the 2011-2013 timeframe. Management said the investigations were not expected to have a material impact. Raytheon ended the first quarter with a backlog of $147.4bn. (Source: Reuters)
27 Apr 21. Space race with Musk heats up as Eutelsat takes stake in OneWeb. European group intensifies battle with SpaceX to deliver broadband from satellites OneWeb and SpaceX aim to put constellations of low-earth orbit (Leo) satellites in space. Eutelsat, the European satellite operator 20 per cent owned by the French state, is paying $550m for a 24 per cent stake in OneWeb, the space-based internet pioneer. It marks a substantial step forward for the group, rescued from bankruptcy by the UK government and India’s Bharti Global last year, in its satellite space race against Elon Musk, chief executive of SpaceX. OneWeb and SpaceX’s Starlink are aiming to launch mega constellations of low-earth orbit (Leo) satellites to deliver high-speed broadband from space.
The deal brings into the fold one of the world’s largest fixed satellite operators, with extensive commercial, government and institutional customers, who could be tapped to buy the low latency satellite services offered by OneWeb’s low-earth orbit fleet, people close to the deal said. OneWeb and Eutelsat would explore combined configurations for future services, they said. OneWeb will now target annual revenues of more than $1bn within five years following the full deployment of the constellation, and it intended to deliver “a profitable wholesale approach”. As a result of the investment, however, the stakes held by the UK government, Bharti and SoftBank, which invested $350m in January, are expected to fall from roughly 30 per cent each to about the same level as Eutelsat’s 24 per cent. The UK will retain its golden share.
Eutelsat’s investment suggests the valuation of the satellite operator has increased roughly 10 per cent since it was rescued. The UK and Bharti paid $500m each for their stakes against Eutelsat’s $550m. Eutelsat will also receive three seats on the board — the same as the UK and Bharti.
OneWeb said its plan to launch 648 first-generation satellites to deliver a global broadband service by next year was now 80 per cent funded, at a total of $1.9bn since emerging from the Chapter 11 bankruptcy process in November. By the end of this year OneWeb intends to offer a more limited internet service to the UK, Alaska, Northern Europe, Greenland, Iceland, the Arctic and Canada. On Monday OneWeb launched a further 36 satellites, bringing its total fleet in orbit to 182. For Eutelsat the investment is a means to catch up in the race to deliver internet access from orbits closer to the earth than the traditional fixed satellite services. These lower-earth orbit services are seen as the answer to providing high-speed internet to the most remote parts of the planet. Eutelsat, which was traditionally dependent on broadcast revenue, has targeted satellite broadband as a core business capable of returning the business to growth. In December Eutelsat launched its Konnect service to target remote areas in Europe and the UK. It also acquired UK-listed satellite broadband reseller Bigblu Broadband last year. Eutelsat has signed deals with telecoms companies Orange and Telecom Italia to resell capacity as satellite has become a legitimate alternative to building expensive fibre networks. Neil Masterson, OneWeb chief executive, said Eutelsat’s global distribution network opened up new opportunities. “We look forward to working together to capitalise on various growth opportunities, as we learn from our new partner’s experiences and technical knowledge.” Rodolphe Belmer, Eutelsat’s chief executive, said low-earth orbit presented a “substantial opportunity . . . within our industry. We are confident in OneWeb’s right-to-win thanks to its earliness to market, priority spectrum rights and evolving, scalable technology”. (Source: FT.com)
27 Apr 21. HENSOLDT AG documents strong business year 2020. Annual Report 2020 available – Focus on innovation and sustainability. HENSOLDT AG (“HENSOLDT”) has had an exceptionally strong 2020 financial year, in which it achieved and in some cases exceeded all relevant key figures (balance sheet press release dated 24.02.2021). An overview of the main pillars on which this success rests – operational performance, innovation, sustainable corporate governance – is provided in the annual report now available.
In addition to the business figures, the report documents exciting progress in the development of innovative technologies, from hacker-resistant computer chips to AI-based defence against drones and all-round vision systems for helicopter pilots. The fact that the responsible handling of the multitude of data processed in the process is an absolute must for HENSOLDT employees is just one of the findings of the sustainability report, which for the first time forms part of the annual report. In addition, the sustainability report shows the whole variety of initiatives that are intended to ensure the achievement of demanding goals in the areas of environmental protection, working conditions, diversity and compliance within the company.
In line with our sustainability goals, the 2020 Annual Report is preferably available online (https://annualreport.hensoldt.net/de/). Upon request, the report can also be sent in printed form (please address ).
27 Apr 21. IFS hits significant Q1 markers with recurring revenue over 80% of software revenue, cloud revenue growth at 102% and representing over 50% of recurring revenue. IFS, the global enterprise applications company, today announced its financial results for the first quarter—January to March of 2021. After a strong 2020, Q1 results point to a continuation of the growth trajectory across the entire business and specifically in recurring revenue, cloud revenue and service management revenue.
The IFS position as the global vendor of choice for companies transforming their business models away from selling products towards selling services and outcomes is validated by its Q1 performance and the triple-digit growth of its service management business at 103 percent.
Q1 also saw some key milestones for IFS, which included:
The launch of IFS Cloud, which was the most significant in the Company’s history. It brings the entire depth and breadth of IFS functionality into a single platform. Deployable in a modular way, on-premises or in the cloud, it not only supports a composable enterprise but with digital innovation natively part of the product, it also accelerates digital transformation.
The acquisition of Axios Systems extends the Company’s enterprise service management proposition with IT Service Management (ITSM) and IT Operations Management (ITOM) functionality and creates new opportunities for IFS and Axios customers alike. The combination of IFS and Axios Systems is instrumental in extending the IFS ambition to cement itself as the market leader in the service space.
The global launch of the IFS Moment of Service positioning and new branding took place in February. This set out clear IFS strategy to align its value proposition to servitisation and become the default vendor for organisations who want to be their best when it matters to their customers—at the Moment of Service.
IFS CEO Darren Roos commented, “The launch of IFS Cloud in Q1 was the most important launch in company history. It was a milestone that delivers on our promise of helping customers create truly amazing moments of service. The impressive performance and growth of our cloud and service management business is evidence that customers value that we understand their needs and are delivering products that support their journey.” He added, “In addition to our organic growth, we are strengthening our proposition with the addition of Axios Systems to ensure we remain the de facto leader for companies that want to differentiate in how they deliver and profit from service.”
IFS Chief Financial Officer, Constance Minc, added, “I believe Q1 is representative of the recognition IFS is getting in the cloud software market. By continuing to deliver double-digit recurring revenue growth at 24 percent we are showing a consistent upward trend in our performance and in the quality of our revenue mix. With our cloud software revenue now representing 40 percent of our total software revenues and 50 percent of recurring revenue, IFS is hitting some very significant milestones.”
Other financial highlights:
- Q1 software revenue was SEK 1.2bn, an increase of 13 percent Year on Year
- Q1 recurring revenue was SEK 1.0bn, an increase of 24 percent Year on Year and representing more than 80 percent of software revenue
- Q1 cloud revenue increased 102 percent Year on Year representing more than 40 percent of software revenue (cloud revenue defined as all revenue streams associated with a cloud deployment deal)
- Proportion of licence revenues from new customers up to 57 percent.
* Note: all figures based in Swedish Krona and reported in constant currency. Service management revenue growth normalised for one large deal in Q1 2020.
27 Apr 21. Advanced F1 engineering, aerospace and defence sector group secures future ownership with an eight-figure deal. Tech-focused investment bank, ICON Corporate Finance, has advised Swindon-headquartered Retrac Group – one of the UK’s leading advanced manufacturing specialists in the Formula 1, Formula E, aerospace and defence sectors – enabling its employees to acquire the business in an eight-figure deal.
ICON acted as lead advisor to Retrac, enabling the staff to acquire the business through an Employees Ownership Trust. Under the deal, five decades of ownership by the Carter family, has been transferred to the 115-strong workforce, who will be the beneficiaries of the company’s future success.
In a dual announcement, experienced automotive and motorsport executive Dan Walmsley has been appointed as CEO. Dan joins the company having played a key role in the Ventilator Challenge UK Consortium, where he co-ordinated multi-site production activities for Airbus, Ford, Siemens, McLaren, Penlon and GKN Automotive as part of the Cabinet Office response to the Covid-19 pandemic. Prior to this, Dan spent four years as McLaren’s motorsport director and four years as team principle at FIA World Sportscar Championship team, Strakka Racing.
In his new role, Dan will lead the Group’s two divisions, Retrac Productions Ltd and Retrac Composites Ltd. Long-standing co-owner and Retrac Productions managing director, Andy Carter, steps into the role of Chairman of Retrac Group.
Commenting on the EOT Andy Carter said: “We firmly believe that the EOT mechanism is the correct succession plan for the business. Since my father founded Retrac in 1972, the most important aspect of the business is the employees. The average service record of more than a decade stands as testament to the loyalty and commitment of the Retrac workforce.
“The benefits that EOT employee ownership can bring to businesses are widely acknowledged – including improved employee engagement and wellbeing, and better business performance. We want our employees to have the chance to share in future success.
“Thanks to ICON’s advice, expertise and support throughout, we are able to take the business to the next phase, increasing growth and enhancing the security and prospects of all our employees.”
Dan Walmsley, CEO at Retrac Group, added: “Retrac Group has been a key supplier to more than half of the Formula 1TM World Champions over the past 25 years. The business has diversified its blue-chip client portfolio across multiple sectors, providing engineering solutions in advanced materials, tooling and component manufacture.
“Under the EOT, we aim to build on this legacy, targeting revenue growth of 50% by 2023 and creating a bright future, bringing tomorrow’s technologies to reality for our clients today through the use of innovative, lightweight materials and rapid manufacturing.
James Kenward, Director at ICON Corporate Finance, commented: “We are delighted to have led, and supported the shareholders on this transaction. The Retrac team have created an award-winning innovative composites and engineering group that fulfils mission-critical supply to the largest global manufactures in F1, motorsport, aerospace and defence. It has been a pleasure to work with the team and we look forward to their continued success under new ownership.” (Source: Google/https://bdaily.co.uk/)
26 Apr 21. SAIC Strengthens AI and Analytics Capabilities with Acquisition of Koverse. With Koverse, SAIC expands its software portfolio into full-stack AI with the ability to tackle the challenge of organizing structured and unstructured data from multiple sources
Science Applications International Corp. (NYSE: SAIC) announced today that it has entered into a definitive agreement to acquire Koverse, a software company that provides a data management platform enabling artificial intelligence (AI) and machine learning on complex, sensitive data.
Founded in 2012 by former U.S. intelligence community AI and high-volume data processing experts, Koverse is a 16-person, Seattle-based company that delivers scalable, secure, and high-performing solutions to federal and commercial customers. Koverse solves one of the most difficult and time-consuming challenges in developing AI tools: organizing structured and unstructured data from multiple sources based on a user’s individual attributes and permissions. This capability is essential for government and military organizations where data access requires various clearance levels, as well as regulated commercial industries such as healthcare, financial services, and pharmaceuticals.
Koverse’s unique mission expertise and secure platform are already used in the most demanding environments, and SAIC will bring this offering at scale to security-conscious customers across government.
“I am excited to welcome Koverse to team SAIC. Koverse’s impressive track record among its commercial and government customers coupled with its unique data management platform makes it a rare gem that enriches our current data modernization offerings,” said SAIC CEO Nazzic Keene. “We see many opportunities for Koverse across the federal defense, civilian, and intelligence communities. Together, we bring a passion for service, innovation, and integrity that will further drive digital transformation and innovation.”
“This transaction will drive faster innovation and enable organizations to transform how they use complex and sensitive data,” said Jon Matsuo, president and CEO of Koverse. “Joining forces with SAIC creates a direct channel to include Koverse as the underlying data platform in large, important pieces of the emerging defense and national intelligence community mission.” Details of the transaction were not disclosed.
(Source: PR Newswire)
26 Apr 21. H.I.G. Announces the Sale of WBB. H.I.G. Capital (“H.I.G.”), a leading global alternative investment firm with $44bn of equity capital under management, announced today the sale of its portfolio company, Whitney, Bradley & Brown, Inc. (“WBB” or the “Company”), to Serco Inc. (“Serco”) for $295m.
WBB transforms, modernizes, and sustains major mission-centric defense and intelligence platforms that are critical to maintaining national security superiority. Through data-driven, knowledge-based solutions, WBB provides program management, advanced engineering and analytical support to the U.S. Department of Defense and other federal agencies.
H.I.G. acquired WBB in October 2017 as part of the firm’s government services investment initiative. During H.I.G.’s ownership, H.I.G. invested alongside management in organic growth initiatives and completed two strategic and transformative acquisitions. These investments created new capabilities and provided access to new customers, markets and contract vehicles that enhanced growth, doubled revenue and tripled EBITDA during H.I.G.’s ownership.
Robert Olsen, WBB’s CEO, said, “We appreciate H.I.G.’s strategic guidance and commitment to the WBB platform over the last three years. They were a truly value-added partner and as a result of their involvement, WBB is better positioned to capitalize on the exciting growth opportunities ahead. We look forward to this next chapter working with Serco as we continue to serve as an integral partner to the Department of Defense and other federal agencies.”
Jeff Zanarini, Managing Director at H.I.G. Capital, commented, “It has been a pleasure working with Robert Olsen and the entire WBB team. The success of this transaction for WBB management, H.I.G., and its investors is a direct result of a near-perfect execution on the growth plan we devised together from the onset of our relationship. We expect WBB to continue setting new standards of excellence for our nation’s most critical priorities, working with the newly-expanded Serco leadership team.”
WBB transforms, modernizes, and sustains major mission-centric defense and intelligence platforms that are critical to maintaining our nation’s defense and national security superiority. Through data-driven, knowledge-based solutions, WBB provides program management and consulting services to the U.S. Department of Defense and other federal agencies.
WBB has supported the federal government for almost four decades on mission critical programs and has developed deep domain expertise within critical capabilities including systems engineering, lifecycle logistics, cybersecurity, data analytics and machine learning to deliver innovative solutions to complex problems for the U.S. Department of Defense and other federal agencies.
WBB’s highly-specialized and experienced workforce provides services across the full lifecycle from program development to ongoing support and mission performance. The company has approximately 1,000 employees, the majority of which are veterans and greater than 75% possess security clearances. Headquartered in Reston, Virginia, WBB is an ISO 9001-registered company operating at over a dozen strategically-located facilities across the United States and abroad. For more information, please visit https://wbbinc.com/.
About H.I.G. Capital
H.I.G. is a leading global private equity and alternative assets investment firm with $44bn of equity capital under management.* Based in Miami, and with offices in New York, Boston, Chicago, Dallas, Los Angeles, San Francisco, and Atlanta in the U.S., as well as international affiliate offices in London, Hamburg, Madrid, Milan, Paris, Bogotá, Rio de Janeiro and São Paulo, H.I.G. specializes in providing both debt and equity capital to small and mid-sized companies, utilizing a flexible and operationally focused/ value-added approach:
- H.I.G.’s equity funds invest in management buyouts, recapitalizations and corporate carve-outs of both profitable as well as underperforming manufacturing and service businesses.
- H.I.G.’s debt funds invest in senior, unitranche and junior debt financing to companies across the size spectrum, both on a primary (direct origination) basis, as well as in the secondary markets. H.I.G. is also a leading CLO manager, through its WhiteHorse family of vehicles, and manages a publicly traded BDC, WhiteHorse Finance.
- H.I.G.’s real estate funds invest in value-added properties, which can benefit from improved asset management practices.
Since its founding in 1993, H.I.G. has invested in and managed more than 300 companies worldwide. The firm’s current portfolio includes more than 100 companies with combined sales in excess of $30bn. For more information, please refer to the H.I.G. website at www.higcapital.com.
* Based on total capital commitments managed by H.I.G. Capital and affiliates. (Source: PR Newswire)
25 Apr 21. Leonardo clinches Hensoldt stake to boost presence in Germany. Italian group buys 25% of military sensor maker in deal that could drive defence consolidation Leonardo and Hensoldt already co-operate on pan-European programmes including the Eurofighter Typhoon fighter.
Leonardo, the Italian defence group, intends to use the purchase of a stake in military sensor maker Hensoldt as a springboard to expand its presence in Germany’s growing defence market, according to its chief executive. The deal, agreed at the weekend, could help drive European consolidation in the sector and eventually pave the way for the creation of a major defence electronics concern. Under the terms of the deal, Leonardo will buy a 25.1 per cent stake in Hensoldt from private equity group KKR for €23 a share in cash or about €606m. The Italian group will become Hensoldt’s largest shareholder alongside German state bank KfW, which bought a 25.1 per cent stake in March. KKR will maintain a share of about 18 per cent. The balance of the shares are listed in Germany. Leonardo held off competition from France’s Thales and Sweden’s Saab to clinch the purchase.
“It is another step in the European defence system,” Alessandro Profumo, Leonardo chief executive, told the Financial Times. While Leonardo had “some presence” in Germany, it was a country where the company “could improve”. “Germany is an incredibly important country,” he added, noting that in a previous role as chief executive of UniCredit he had said that “you can’t be European without Germany”. “It is the same in this case,” Profumo added.
The deal will strengthen Leonardo’s position in Europe’s three core defence markets: Italy, the UK and Germany. It is also an important step in what could be a series of strategic partnerships in defence electronics, according to industry analysts. Leonardo and Hensoldt already co-operate on pan-European programmes including the Eurofighter Typhoon fighter. The two companies, together with Spain’s Indra, provide the advanced radar on the aircraft. The German air force last year ordered a further 38 Typhoons. Longer-term, the two companies’ close relationship could help pave the way towards closer co-operation between Europe’s two future-generation fighter programmes, Britain’s Tempest and the Franco-German Future Combat Air System (FCAS). In the UK, Leonardo is one of the industry partners working with BAE Systems on Tempest, the new generation fighter jet for the Royal Air Force. Hensoldt, meanwhile, is part of the FCAS consortium. Defence industry analysts said that while it was unlikely the two programmes would come together, the respective aircraft would eventually have to fly together as part of Nato.
“It would make sense to explore whether the two programmes could share some commonality,” said one person familiar with the thinking.
Leonardo said it intended to fund the purchase of the stake through the sale of non-core assets and the flotation of a minority stake in DRS, its American military electronics arm. The Italian group postponed the listing on the New York Stock Exchange in March citing adverse market conditions. Analysts had estimated that the group, which acquired the US unit in 2008 for $5.2bn, would sell between 20 per cent and 30 per cent of its subsidiary for at least $3bn. Profumo said the company was ready to proceed with the listing as soon as market conditions allowed. (Source: FT.com)
19 Apr 21. Intelsat’s Subsidiaries + Sister Companies At The Root Of Bankruptcy Court Headaches. Intelsat has dozens of inter-related subsidiary and sister companies. These associated business are creating significant headaches for its bankruptcy court, Intelsat’s many debtors and arch-rival SES.
SES, and some bond holders, are arguing that Intelsat is deliberately using these sister businesses to hide its current and especially future assets. Those future assets include the much-anticipated pay-out from the FCC of almost $5bn in ‘incentive’ payments from the FCC for freeing up Intelsat’s C-band frequencies over the US.
Intelsat has told its bankruptcy court that the $4.8bn coming from the FCC will belong to its license-holding subsidiaries and not the prime trading – and arguably – parent business, or to the part of its business that has the greatest debts (Intelsat Jackson). Consequently, the payments could end up protected from those claiming compensation from the bankruptcy.
Intelsat has accused SES of deliberately running a “smear campaign” and argues that SES knew that the 50/50 revenue split died with the FCC’s decision to hold a public auction of the spectrum.
One motion, for example, filed on April 15th from the ‘Ad-Hoc Committee of Parent Company Creditors’ argued that some sort of mediation should take place under the umbrella of the bankruptcy court to solve some of the headaches and avoid what it suggests will be “contested hearing” to Intelsat’s exit plan from bankruptcy.
The Committee pulls no punches in accusing other interest parties of “blackmail,” “extortion,” “threats,” “ransom,” or have agreed to pay “hush money” in a “transparent value grab.”
The Committee also points out that taxation figures highly in the end settlement, and argues that Intelsat’s Luxembourg formal domicile “would shield the Reorganized Debtors from paying any income tax in Luxembourg until at least 2030.” Just to show the complexities of this bankruptcy, there are four Luxembourg-relevant businesses (Intelsat Holdings, I-Investments, I-LuxCo and I-Jackson).
However, also on April 15th, a ‘Special Committee of the board of Intelsat’ comprising disinterested directors of Intelsat appealed for various objecting parties to avoid a “litigation quagmire” and asking for the Intelsat bankruptcy exit plan to proceed as planned.
April 15th saw the bankruptcy court approve some 30 motions, all routine in nature and mostly concerning regular expense claims for the professional firms handling Intelsat’s bankruptcy. The amounts were, in some cases, considerable. Kirkland & Ellis, for example, filed an expense claim of $6.9m for their work on behalf of Intelsat. Alvarez & Marshall filed for $7.2m. Overall, the bankruptcy court allowed millions of dollars in claims for the quarter-year to November 30th of 2020.
April 16 saw a motion filed by Intelsat’s lawyers asking for the judge to order a mediation “to attempt to build further consensus for the [Intelsat exit] Plan” which also said that Intelsat believes it has formal and informal requests from other parties to join a mediation exercise.
Intelsat’s bankruptcy court is currently scheduled to hear more of Intelsat’s exit plan on May 11th, although a court hearing on April 19th has about 22 individual motions for adjudication by the judge. (Source: Satnews)
19 Apr 21. Intelsat Getting Tough + Musk’s Millions. The avalanche of legal filings and motions in the increasingly bitter dispute between SES and Intelsat over the division of C-band ‘incentives’ from the FCC is simply immense. April 14th saw another flood of documents, but one stood out, which contained Intelsat’s strong rebuttal of some of SES arguments. The opening paragraph says it all — “SES’s Motion is mostly a continuation of its smear campaign against [Intelsat], SES’s largest competitor. SES first seeks to intervene in a lawsuit that does not exist.”
The filing to Intelsat’s bankruptcy court then takes 17 pages of legalese to expand on its rebuttal of SES’s arguments, and states, “SES has pursued its claim through bombastic character assassination, in an effort to advance SES’s competitive efforts against the Debtors, while ignoring the text of the contract it signed and the FCC Order that the Debtors are working to implement…. SES’s approach is simply not how bankruptcy works. SES (and all other creditors) will have every opportunity to advance its opposing assertions about payments flowing from the FCC Order during [Intelsat’s exit from bankruptcy plan] confirmation proceedings.”
The invective from Intelsat certainly manages to match that already filed by SES. Intelsat claims that the C-Band Alliance – the initial entity which negotiated with the FCC over the allocation of C-band frequencies over the US – had no role once the FCC had determined its auction process.
Intelsat argues that “none of the proceeds from the FCC-run auction will flow to the CBA or any of the satellite operators; instead, those proceeds will all go to the U.S. Treasury. The payments allocated to each separate satellite operator under the FCC regime are for their actions separately—and they are not related to the auction proceeds. As such, the acceleration payments were not a part of the Market Approach nor even contemplated by the Agreement.
“SES is trying to pocket for itself money that Intelsat is eligible for on account of Intelsat’s rights in the C-Band—and that value belongs to Intelsat’s real creditors (not its chief competitor),” stated the Intelsat filing, adding ”The reality is clear: SES, the Debtors’ fiercest competitor, seeks a windfall for doing nothing while the Debtors earn incentive payments, described in the FCC Order, for the benefit of the Debtors’ stakeholders.”
The judge in this case needs – and probably has – the wisdom of Solomon!
Millions For Musk
Elon Musk might well mount an IPO for his SpaceX business somewhere down the line, but for the moment, he seems happy to raise cash by issuing new equity. In a regulatory filing, SpaceX says it has raised a total of $1.164bn over the past few weeks.
The company had already reported raising some $850m back in February, which gave the rocket and broadband-by-satellite company a valuation of about $74bn. Last August, SpaceX raised $1.9bn according to Reuters.
The net total of this latest funding round places another $314m or so into SpaceX’s coffers.
Somewhat coincidentally, SpaceX president Gwynne Shotwell, on April 15th, said that her company will be providing a consistent global connectivity business by late this year and within 5 years will be using its larger Starship rocket to be carrying people within 5 years. Starship would be flying inter-continentally as well as – eventually – to Mars “before 2030”.
Shotwell said that SpaceX was targeting its broadband service to be global shortly after its scheduled 28th launch. Earlier in April it made its 23rd Starlink launch, so simple math suggests another 300 satellites need to be placed into orbit.
Shotwell also talked about its development of inter-satellite laser links, saying that Version 3 (SpaceX had already tested two iterations) of its laser-linked craft would be orbited in the next few months.
The demand for broadband connectivity over both fixed and mobile broadband networks is increasing dramatically. However, despite network expansions and upgrades, only half of households worldwide currently have access to fixed broadband services.
With the rollout of LEO constellations, satellite broadband services will improve broadband penetration significantly. Global tech market advisory firm ABI Research forecasts that the satellite broadband market will reach 3.5 million subscribers in 2021, grow at a CAGR 8 per cent to reach 5.2 million users in 2026, and generate $4.1bn service revenue.
“LEO satellites will play an important role in satellite broadband services in the years to come,” says Khin Sandi Lynn, Industry Analyst at ABI Research. “High Throughput Satellite (HTS) LEO systems can support multi-Gbps speed per satellite. Orbiting around 800-1600 km from the Earth’s surface, LEO systems offer a major advantage of low latency between 30-50 milliseconds, enabling LEO broadband services to support low latency services such as online gaming and live video streaming.”
ABI Research notes that, traditionally, GEO satellites are mainly used to provide broadband services to homes and businesses in remote or rural areas where the deployment of mobile or fixed broadband connectivity is challenging. Although GEO satellites support viable speed over 100 Mbps speed broadband access, their distance from the Earth surface, about 36,000 km, creates a drawback of longer latency as high as 600ms, limiting the use of low latency applications.
LEO satellite operator SpaceX first launched its Starlink broadband services to residential users in 2020, supporting 100 Mbps broadband speed with unlimited data caps per month. SpaceX has launched more than 1,000 LEO satellites and aims to serve more than 600,000 homes and businesses in the United States. The company is now working toward the expansion of its broadband service to some markets in Latin America.
Other companies, such as OneWeb and Telesat, have launched LEO satellites providing connectivity to the business segment. Amazon, which plans to launch LEO constellations named project Kuiper, received FCC approval for its project in mid-2020, although the first satellite launch date is yet to be confirmed.
As broadband connectivity is becoming an essential service in today’s homes, satellite broadband services will remain an important part of the broadband market. There is inevitable competition from terrestrial broadband networks due to the expansion of fixed broadband networks and mobile networks.
The expansion of LTE and 5G networks will challenge the satellite broadband industry by supplying fixed wireless access (FWA) services to residential users. However, the cost and time associated with terrestrial network deployments can limit distribution in remote areas. “Satellite systems will continue to provide broadband services to underserved and unserved areas,” Lynn says.
LEO systems’ arrival will benefit users in remote areas by supporting high-speed, low latency broadband service. “The challenge of LEO-based broadband service currently is the cost of terminals, which are relatively high compared to existing satellite or terrestrial platforms. LEO satellite operators need to find ways to lower the terminal cost. Flexible packages and pricing could make the services affordable for users in both developed and emerging markets. Even though heavy subsidising of hardware costs may be required initially, the ability to boost adoption rates will help ecosystem development and eventually lower the hardware cost,” concludes Lynn. (Source: Satnews)
23 Apr 21. Plymouth Rock Technologies Acquires Tetra Drones. Plymouth Rock Technologies Inc. has announced that it has signed a binding LOI to acquire, in whole, Tetra Drones Limited , a developer of custom-made, high-performance and niche Unmanned Aircraft Systems (UAS).
The proposed transaction will take the form of a corporate combination whereby PRT will acquire all of the then issued and outstanding shares of Tetra Drones. Tetra has issued and outstanding share capital of 100 ordinary shares held by the sole Shareholder, Mr. Ben Pickard.
The terms of the LOI shall be a binding agreement of the parties. The form and substance of a definitive agreement is to be negotiated on or before April 30, 2021.
Plymouth Rock has agreed to acquire the Tetra Shares for the sum of £350,000 payable in installments and satisfied in cash.
Payment of the Purchase Price will be on the following schedule:
- As to 10% of the Purchase Price (£35,000), within seven (7) days after the date the Definitive Agreement has been executed and delivered by all parties thereto (the “Initial Payment”);
- As to an additional 10% of the Purchase Price (£35,000), within 21 days of the Initial Payment (the “Second Payment”);
- As to an additional 40% of the Purchase Price (£140,000), within 120 days of the Second Payment (the “Third Payment”); and
- As to the balance of 40% of the Purchase Price (£140,000), within 120 days of the Third Payment
“Like PRT, Tetra is highly focused on supporting its customers around the world with the most reliable and purposeful products and services for their missions”, said Carl Cagliarini, Chief Strategy Officer of PRT. “As we welcome the Tetra team to PRT, we commit to moving forward into a sales phase within the USA and EU. The addition of the team members and facility ties in perfectly with our long-term strategy, which adds a significant expansion to PRT’s reach and technical capability”, concluded Cagliarini.
“After working closely with the PRT team on recent projects, it became clear that their vision, connections, and focus was something that my team and I wanted to evolve into”, stated Ben Pickard, Director and Lead Designer of Tetra Drones Ltd. “Being part of a focused public company also opens many doors that were once closed to Tetra when dealing with certain governments and agencies, as well as an offering a presence and expansion into the US market.” (Source: UAS VISION)
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.