Sponsored by TCI International Inc.
20 May 21. Salient CRGT and Digital Consultants form Digital Salient Solutions (DSS), LLC, an 8(a) Mentor Protégé Joint Venture. Salient CRGT (SCRGT), a leading provider of health, data analytics, cloud, agile software development, cyber security, and infrastructure solutions, is pleased to announce a formal Mentor-Protégé relationship with Digital Consultants, a Small Business Administration (SBA) certified 8(a) Small Disadvantaged Business (SDB).
Digital Salient Solutions
Digital Consultants’ core competencies include information technology engineering and operations support, audiovisual systems design, engineering, installation and operations, cybersecurity, data management, and mission systems training support. The company supports a diverse range of customers, such as the Department of Defense (DoD), Federal Communications Commission (FCC), American Battle Monuments Commission (ABMC), and the Social Security Administration (SSA).
“Digital Consultants is committed to providing effective and efficient solutions to help our clients achieve mission success,” said D.J. Kim, Digital Consultants Founder and CEO. “The SBA’s Mentor-Protégé Program allows Digital Consultants to partner with a proven large business to provide us with the assistance needed to expand and execute our vision.”
“Salient CRGT is committed to supporting small businesses that strengthen the nation’s defense through innovative solutions that solve customer problems,” said Mike Ryan, Salient CRGT’s National Security Sector Senior Vice President for Growth and Technology. “By entering into SBA’s Mentor-Protégé Program, we are excited to support Digital Consultants in their goal of further growth while better positioning them to serve federal government customers.”
As a result of this approval, Digital Consultants and Salient CRGT have formed Digital Salient Solutions (DSS), LLC, an 8(a) Mentor Protégé Joint Venture. DSS will market their innovative solutions within the Defense Sector. This strategic alliance enables the agility of a small business while providing the resources, power, and expertise of a large business.
About Salient CRGT
Salient CRGT’s diverse, hard-working team provides a wide range of technology and mission support services to U.S. federal government agencies. We’ve earned the unwavering trust of our customers, who cite our deep expertise, exceptionally responsive approach, and high-value solutions for consistently ensuring their success. Founded in 1998, Salient CRGT is a privately held company headquartered in Fairfax, VA. Visit our newsroom and explore www.salientcrgt.com. (Source: PR Newswire)
20 May 21. Triumph Group Reports Fourth Quarter Fiscal 2021 Results. Positive Free Cash Flow in the Quarter. Triumph Group, Inc. (NYSE: TGI) (“Triumph” or the “Company”) today reported financial results for its fourth quarter and full fiscal year 2021, which ended March 31, 2021.
Fiscal 2021 Highlights
- Delivered positive free cash flow in second half of year as domestic COVID-19 recovery advances
- Achieved third consecutive quarter of sequential growth in Systems and Support revenue and margins
- Continued to successfully execute portfolio strategy to position Triumph for success in the post-COVID landscape
- Exited the G650 and G280 structures programs and announced the divestiture of three Aerostructure sites: Milledgeville, Georgia; Rayong, Thailand; and Red Oak, Texas. Completed 19 divestitures since 2016
- Contract wins included systems and MRO content on military helicopters and engines as well as the renegotiation and extension of several of its largest commercial transport contracts with Boeing
- Strengthened balance sheet and enhanced liquidity following issuance of new $700m bond offering and at-the-market equity raise of approximately $150m with the issuance of 9.2m shares
Fourth Quarter Fiscal 2021
- Net sales of $466.8m
- Operating loss of $46.2m with operating margin of (10%); adjusted operating income of $32.9m with adjusted operating margin of 7%
- Net loss of $73.5m, or ($1.27) per share; adjusted net income of $5.7m, or $0.10 per diluted share
- Cash flow provided by operations of $22.8m; free cash flow of $16.6m
Full-Year Fiscal 2021
- Net sales of $1.9bn
- Operating loss of $326.2m with operating margin of (17%); adjusted operating income of $107.8m with adjusted operating margin of 6%
- Net loss of $450.9m, or ($8.55) per share; adjusted net loss of $1.6m, or ($0.03) per share
- Cash flow used in operations of $173.1m; free cash use of $198.3m
“As the pandemic recovery progressed, we generated cash for the second consecutive quarter demonstrating strong management of working capital, improving margins from our core operations due to increased efficiencies and the benefits of robust cost reduction actions,” stated Daniel J. Crowley, Triumph’s chairman, president and chief executive officer. “Profitability on an adjusted basis improved sequentially in the quarter, showing measurable recovery towards pre-COVID levels across both business units. As Triumph accelerates our organic growth, we remain committed to conserving cash and partnering with our customers to deliver value to all our stakeholders.”
Mr. Crowley continued, “For the third consecutive quarter, we increased revenues in our core Systems & Support business driven by higher military volumes and continued aftermarket recovery. Consolidated organic revenue in the quarter decreased compared to the prior year period due to the exit from and expected declines in certain Aerospace Structures programs as part of our portfolio transformation, as well as the ongoing impact of the COVID-19 pandemic. We continued to hit our transformation milestones and completed the sale of our Composites and Military structures operations earlier this month. Furthermore, our at-the-market equity raise in the fourth quarter bolstered our liquidity position and provides additional capital to support growth.”
Fourth Quarter Fiscal Year 2021 Overview
After accounting for the impact of the divestitures, sales for the fourth quarter of fiscal year 2021 were down 29% organically from the comparable prior year period. The consolidated decline was driven by planned reductions on sunsetting and transitioned programs, impacts of the COVID-19 pandemic and resulting production rate decreases primarily on commercial programs, partially offset by increases in military programs.
Fourth quarter operating loss of $46.2m included $58.7m loss on held for sale assets and $20.5m of restructuring costs associated with reduction in force. Net loss for the fourth quarter of fiscal year 2021 was $73.5m, or ($1.27) per share. On an adjusted basis, net income was $5.7m, or $0.10 per share.
Triumph’s results included the following:
The number of shares used in computing diluted earnings per share for the fourth quarter of 2021 was 58.6m.
Backlog, which represents the next 24 months of actual purchase orders with firm delivery dates or contract requirements, was $1.9bn, down as expected compared to the prior year period and on a sequential basis due to divestitures, sunsetting programs and recent production rate reductions, but partially offset by military program increases in Systems & Support.
For the fourth quarter of fiscal year 2021, cash flow provided by operations was $22.8m, reflecting improved working capital and operating margins and which included liquidation of approximately $10.0m in prior period advances against current period deliveries.
Due to the uncertainty around the impacts of business disruptions related to the COVID-19 pandemic on the global market and general economic conditions, the Company is not providing financial guidance for its fiscal year ending March 31, 2022 at this time.
(Source: PR Newswire)
20 May 21. Héroux-Devtek Reports Strong Fourth Quarter and Fiscal 2021 Year-End Financial Results.
- Sales of $155.0m, compared to $166.8m last year
- Defence sales up 13% year over year, mitigating the impact of the pandemic on the civil sector
- Operating income of $12.2m compared to a loss of $64.4m last year
- Adjusted EBITDA1 of $25.0m, or 16.1% of sales, compared to $28.6m, or 17.2% last year
- Solid cash flows from operating activities of $31.6m, compared to $26.7m last year
- Awarded a Life-Cycle Contract for the new Dassault Falcon 10X
- Normal course issuer bid to repurchase up to 2.4m shares announced today
Héroux-Devtek Inc. (TSX: HRX) (“Héroux-Devtek” or the “Corporation”), a leading international manufacturer of aerospace products and the world’s third-largest landing gear manufacturer, today reported strong financial results for the fourth quarter and fiscal year ended March 31, 2021. Unless otherwise indicated, all amounts are in Canadian dollars.
“Even if this past fiscal year has brought along challenges of unprecedented magnitude for the global aerospace industry, our early and decisive actions, resilience and focus on execution have enabled us so far to successfully weather the storm. More importantly, we have done so while strengthening our balance sheet, generating record cash flows and gaining new operational efficiencies across our sites – lowering fixed costs, reallocating resources as well as optimizing inventories and working capital. We achieved these objectives while keeping our employees safe and healthy, which has always been our number one priority. I want to thank each of my colleagues for their continued work and dedication; you truly make us proud,” said Martin Brassard, President and CEO of Héroux- Devtek.
“As pleased as I am with our performance this past year, I am equally confident that our more agile structure positions us favorably for the road ahead as the industry outlook slowly starts improving, enabling us to capture opportunities across all markets. This namely includes a recently announced life-cycle contract to design, develop and manufacture the complete landing gear system for the new Dassault Falcon 10X, furthering our position in the large business aircraft market segment. Finally, recognizing that our share price does not reflect the full underlying value of Héroux-Devtek, we announced today our decision to initiate a normal course issuer bid to optimize our capital allocation with the objective to unlock stronger returns for our shareholders, without compromising our position for future growth initiatives,” concluded Mr. Brassard.
FOURTH QUARTER RESULTS
Consolidated sales decreased 7.1% to $155.0m, down from $166.8m last year. Defence sales were up 13.1%, from $94.8m to $107.3m, namely resulting from the ramp-up of deliveries under the Boeing F- 18, Sikorsky CH-53K and Saab Gripen E contracts as well as from strong deliveries for existing OEM platforms such as the Eurofighter and Lockheed F-35 programs. Civil sales decreased 33.7% from $72.0m to $47.7m. The decrease was mainly the result of lower deliveries for large commercial programs, where twin- aisle deliveries decreased 45% reflecting lower OEM demand due to the COVID-19 pandemic.
The decrease in gross profit from $29.9m or 17.9% of sales, to $25.2m or 16.2%, was mainly due to less favourable sales mix than last year and lower sales volume without a corresponding decrease in fixed costs, such as depreciation. Foreign exchange fluctuations had a negative net impact of 0.5% of sales.
Operating income reached $12.2m, compared to a loss of $64.4m last year when the Corporation had recorded $82.0m of non-cash impairment charges. Adjusted EBITDA, which excludes non-recurring items, stood at $25.0m, or 16.1% of sales, compared with $28.6m, or 17.2% of sales, a year ago due mainly to lower volume and the negative year-over-year impact of foreign exchange representing $1.7m or 1.1% of sales.
Results per share increased from a loss of $1.98 last year to earnings of $0.24, and decreased from $0.38 to $0.28 per share on an adjusted basis due to the same factors described above.
Consolidated sales decreased 6.9% to $570.7m, from $613.0m last year, due mainly to the 45% decrease in deliveries for twin-aisle large commercial programs caused by the COVID-19 pandemic. Defence sales were up 14.6%, from $329.3m to $377.5m, while civil sales decreased 31.9% from $283.7m to $193.2m.
Gross profit decreased from $103.1m, or 16.8% as a percentage of sales, to $94.9 m, or 16.6% as a percentage of sales, mainly explained by lower sales volume without a corresponding decrease in fixed costs such as depreciation, which represented a negative year-over-year impact of 0.4% of sales.
Operating income reached $34.1m, compared to a loss of $30.1m the year prior when the Corporation recorded $82.0m of non-cash impairment charges. Excluding non-recurring items, adjusted EBITDA stood at $88.3m, or 15.5% of sales, compared with $96.2m, or 15.7% of sales last year, mainly due to lower volume and negative foreign exchange impacts.
Results per share grew from a loss of $1.38 last year to earnings of $0.55, while adjusted EPS decreased to $0.80, from the $1.00 recorded last year due to the factors described above.
As at March 31, 2021, net debt stood at $157.5m, down from $246.9m a year prior. The substantial $89.3m decrease during the fiscal year is mainly the result of the record $89.2m of cash flows from operating activities, up from $52.6m the prior year. The increase in cash flow generation is mainly the result of strong working capital management.
NORMAL COURSE ISSUER BID
In May 2021, the Corporation filed a notice with the Toronto Stock Exchange advising of its intention to initiate a normal course issuer bid (NCIB). Under the terms of the NCIB, the Corporation may acquire up to 2,412,279 of the issued and outstanding common shares of Héroux-Devtek, 10% of the public float. The actual number of common shares purchased, the timing of such purchases and the price at which common shares are purchased will be determined by Héroux-Devtek.
Management views the NCIB as a flexible means to allocate capital to drive shareholder value without compromising the Corporation’s position for future growth initiatives, whether they are new contract opportunities or acquisitions.
(Source: PR Newswire)
19 May 21. Inside Raytheon’s four-year blueprint for growth. One year on from its creation, Raytheon Technologies is turning the page on portfolio transformation and is now looking at how to achieve what the company’s chief executive called “operational transformation.”
That second and “really just beginning” transformation as described by Greg Hayes was the overarching topic of Raytheon’s four-hour investor day event on Tuesday to share its four-year blueprint for success.
One more divestiture is on the horizon for Raytheon though as the company is planning to sell its global training and logistics unit that generates roughly $1bn in annual sales, Hayes said.
Here are some broad themes from Tuesday that warrant consideration for Raytheon and its market peers.
Office of the future
Future of work is an item Raytheon and substantially all companies are looking hard at given the large number of employees not going to their offices regularly during the coronavirus pandemic.
Raytheon has been looking hard at its physical footprint to begin with given the push to achieve $1.3bn in gross cost synergies by 2024.
Michael Dumais, Raytheon chief transformation officer, said the company’s envisioned “office of the future” will likely see less than half of employees be onsite full-time with the majority shifting to a hybrid model or be permanently remote.
Fifty projects are ongoing to help Raytheon figure out how to revamp its highest-cost sites whether they be factories, offices or other locations. But that is only just part of the review of Raytheon’s 32 m square feet of office space, according to Dumais.
“We see that generating $80m in annual synergy, and that’s just about halfway on our plan to reduce 25 percent of all the office space across the company,” Dumais said.
Physical assets are one aspect of the integration process to help Raytheon make the most out of the merger. Dumais said Raytheon is also moving to common operating system and implementing digital twins of factories and products before breaking ground on a project.
Increased use of cloud computing infrastructures underpin those shifts. Dumais said the company is pushing to get half of its data into a cloud environment from the current rate of 25 percent.
One-stop tech shop
Perhaps the biggest rationale behind the merger to create what Wall Street calls “RTX” in shorthand is envisioned technology and revenue synergies across the defense-government and commercial aerospace businesses.
Raytheon recorded $65bn in pro forma revenue last year and pegs its research-and-development spend at approximately $8 bn per year: $3bn on the company’s own dollar and the other $5bn customer-funded.
That government-commercial rationale has been put to the test during the pandemic that saw air travel plummet last year and slowly trickle back up since.
Hayes said that Raytheon sees “slow, steady growth” in global defense spending amid expectations the U.S. portion will remain large but hold flat.
“Whether it’s in space-based systems, whether it’s in joint command and control, sensing systems and propulsion, we think we’re in the right markets,” Hayes said.
To date, Raytheon has identified 300 separate projects they see as revenue synergy opportunities that feed into a potential $10bn pipeline over the full lifetime. Hayes said Raytheon has booked $150m in awards under that category with “more to come” on the pipeline front.
One early test of that thesis will come when the Federal Aviation Administration awards the recompete of its $3.5bn telecommunications services contract known as FENS, which a team of Raytheon and MetTel is bidding for to try and unseat longtime incumbent L3Harris Technologies.
Right bets by RTX?
The longer-term test for Raytheon will see whether the company is indeed placing the right technology bets for itself amid expectations that U.S. defense budgets will not grow significantly over the next few years and perhaps decade.
Does that mean Raytheon may have to put more resources into advanced technology R&D so it can keep its defense business growth going, particularly with what the likes of Russia and China are doing?
Hayes believes Raytheon’s focus on the technologies that augment the larger platforms represents a good overall bet.
“As we think about the (2023) and out budget, I think the DOD is going to be forced to make some choices in terms of legacy programs versus future programs,” Hayes said.
“The good news is we don’t have a single program out there that is more than 3 percent of our total revenue. I think some of those old legacy programs will probably be cut to fund some of this newer technology that’s emerging.”
Raytheon’s plan is to see revenue growth of between 5 and 7 percent on a compound annual basis through 2025 from this year’s expectation of $63.9bn-to-$65.4bn in sales. Segment margin is seen as improving to between 13.4 and 14.4 percent by 2025, up from 7.9 percent last year.
All of that aided by expanding the defense business and riding the ongoing recovery in air travel, the latter of which you’ll have to go elsewhere for more. (Source: Defense Systems)
19 May 21. Teledyne, FLIR merger brings deep space to deep-sea sensing tech under one roof. Teledyne Technologies’ $8.2bn acquisition of FLIR Systems, finalized May 14, sets it up to become increasingly competitive in the world of unmanned and sensing capabilities, the latter’s vice president and general manager of unmanned systems and integrated solutions told Defense News in a May 18 interview.
The Teledyne-FLIR merger makes it “the only company that has the breadth and depth of unmanned systems across its portfolio,” Roger Wells said. “FLIR was very strong and continues to be very strong in the unmanned airborne systems and in the unmanned ground systems, building on our acquisition of Prox Dynamics and Aeryon Labs and then, on the ground, Endeavor Robotics.”
Teledyne brings an “extremely strong, very sophisticated set of capabilities, underwater systems as well as surface vehicles,” he added. “Together we have the opportunity to not only put more advanced technology on our platforms, but also integrate in driving interoperability across all of these platforms to really create unique ways of solving very complex operational problems.”
“We have the capabilities to go from deep space to deep seas,” he noted, “and that’s kind of cool having that breadth and that amount of capability across this diverse market set.”
While FLIR will be fully incorporated into the digital imaging segment with Teledyne, it will get to keep its name, going by Teledyne FLIR.
“We want to build on the strength of Teledyne, but we also want to acknowledge the strength of FLIR.Aand those two brands, those two technology sets together really, really sets us apart in the market,” Wells said.
He added that Teledyne doesn’t plan to spin off any of FLIR’s businesses or close down its facilities.
FLIR, as part of Teledyne, will continue to capitalize on its successful contracts. It is supplying the tiny Black Hornet, a palm-sized unmanned aircraft system, which was chosen to become the U.S. Army’s Soldier Borne Sensor, providing reconnaissance capabilities at the individual soldier level. The company recently won an additional $14.5m contract to provide Black Hornet to the Army. Black Hornet became a FLIR product when it purchased its developer, Norwegian company Prox Dynamics, in 2016 for $134m.
FLIR was also chosen to produce the Common Robotic System-Heavy for the U.S. Army and reached full-rate production in November 2020. It is also delivering the Man Transportable Robotic System, a medium-sized robot to provide standoff capability to identify and neutralize explosive hazards, to the service as well.
Additionally, the company is providing advanced sensors for the Army’s medium robotic combat vehicle prototyping effort as part of a Textron and Howe & Howe team.
FLIR is contributing technology, particularly thermal imaging and artificial intelligence capabilities, to the Integrated Visual Augmentation System, a pair of goggles worn by soldiers providing intelligence during operations. FLIR also provides countless imaging and detection sensors on a wide variety of platforms throughout the U.S. military and to more than 50 countries around the globe. The company expects its technology in that department to become even better under Teledyne, according to Wells.
“Teledyne is a technology company, and they really work hard to make sure that they’ve got the right technology that is designed to fit the mission, the solution and the needs of the customer. That philosophy and that culture really aligns well with FLIR, as does the technology base that we are pursuing,” Wells said.
“We’ve got really strong technology that goes everywhere from sonar to [chemical, biological, radiological, nuclear, and high-yield explosives detection] and everything in between, especially the really core pieces of technology that both Teledyne and FLIR have strengthened including visible thermal X-ray, electronic [light detection and ranging] technology that’s designed to support a wide variety of applications.”
Now that FLIR has become part of Teledyne, it hopes to have even more leverage to pursue critical parts of major modernization opportunities on the horizon like next-generation combat vehicle development the Army is pursuing.
“The combined entity gives us the opportunity to expand our solution set and go pursue larger opportunities,” Wells said.
Together, Teledyne and FLIR will be able to “combine true, multi-modal sensing capabilities, driving increasing levels of intelligence and embedding [artificial intelligence] on the edge, tying these capabilities together in interoperable frameworks, through common software … to really reduce the cognitive load and burden on the operator, drive better information that enables more timely and mission-oriented decision making and embed these next-generation capabilities in these evolving programs.”
(Source: C4ISR & Networks)
BATTLESPACE Comment: The hidden jewel in the FLIR portfolio is its radar division which has a wide range of radar products supplied to US and other armed forces. It will be interesting to see what Teledyne does with the Raymarine civil maritime business based in the UK which does not seem to be a good fir to the new enterprise.
19 May 21. CAE reports fourth quarter and full fiscal year 2021 results. (NYSE: CAE) (TSX: CAE) – CAE today reported annual revenue of $3.0bn, compared to $3.6 bn last year. Annual operating income was $48.4m and adjusted segment operating income(2) was $280.6m compared to $590.4 m last year. Adjusted segment operating income excluding COVID-19 government support programs was $153.2m this year. Annual net loss attributable to equity holders was $47.2m (negative $0.17 per share) compared to net income of $311.4m ($1.16 diluted earnings per share) in fiscal year 2020. Adjusted net income was $127.1m ($0.47 per share) this year, compared to $359.7m ($1.34 per share) last year. Adjusted net income excluding COVID-19 government support programs was $33.6m ($0.12 per share) this year.
Fourth quarter fiscal 2021 revenue was $894.3m, compared with $977.3m last year. Fourth quarter net income attributable to equity holders was $19.8m ($0.07 per share) compared to $78.4m ($0.29 per share) last year. Adjusted net income in the fourth quarter was $63.2m ($0.22 per share), compared to $122.3m ($0.46 per share) last year. Adjusted net income excluding COVID-19 government support programs was $35.9m ($0.12 per share) this quarter. All financial information is in Canadian dollars.
Summary of consolidated results
We have introduced new non-GAAP measures to reflect the impact of COVID-19 government support programs to incorporate recently published and evolving guidance by the Canadian Securities Administrators. These measures, as discussed in section 3.8 “Non-GAAP measure reconciliations” of our fiscal year 2021 MD&A, do not adjust for COVID-19 heightened operating costs that we have been carrying and that have been included in our results. While these additional costs are in certain cases estimated, they almost entirely neutralize the positive impacts of the COVID-19 government support programs. In addition, we no longer use segment operating income as a non-GAAP measure as it has been replaced with adjusted segment operating income. Comparative figures have been reclassified to conform to these adopted changes in presentation.
“CAE demonstrated mettle and resiliency during the fiscal year by successfully confronting the challenges of COVID-19, and at the same time, seizing on opportunities to fundamentally strengthen the Company for the future,” said Marc Parent, CAE’s President and Chief Executive Officer. “We harnessed our One CAE culture and secured highly strategic growth opportunities, launched new digitally-enabled services and software solutions, innovated business processes, structurally lowered our cost base, and bolstered key talent – all of which give us greater potential than ever before for higher growth and profitability in the years ahead.”
Marc Parent added, “Turning to our results, given the magnitude of COVID-19 impacts, I am especially pleased with what we have been able to deliver in fiscal 2021. In the face of the biggest-ever shock in the history of civil aviation and major disruptions across the defence and healthcare markets, CAE rebounded to quarterly profitability and positive free cash flow after only our first quarter. Our recovery momentum has continued into the fourth quarter with average training network utilization of 55% and sequentially higher margins in Civil, order bookings to sales breaking above 1.1x in Defence, and record quarterly revenue in Healthcare. For CAE overall, we generated $0.22 adjusted EPS in the quarter and $0.47 adjusted EPS for the year. We also generated strong annual free cash flow of $347m, serving as a testament to CAE’s resiliency as a good port in a storm.”
On CAE’s outlook, Marc Parent added, “we are making important progress to galvanize CAE as an industrial technology leader and position the Company for higher growth. This includes the integration of our four recent acquisitions in Civil that will strengthen our offering and expand our addressable market with highly innovative software solutions. In Defence, the opportunity to acquire L3Harris’ Military Training business will significantly accelerate our Defence growth strategy and align us more closely with national defence priorities. In addition, we maintain the financial flexibility and bandwidth to continue to cultivate a pipeline of sustainable growth opportunities, including the deployment of expansion capital and customer outsourcings. We expect strong growth in fiscal year 2022, with the slope of recovery continuing to depend on the timing and rate at which travel restrictions and quarantines can be safely lifted in our various geographies and normal activities resume in our end markets. For the long-term, we are more confident than ever that CAE will emerge from this period in a position of even greater strength.”
Civil Aviation Training Solutions (Civil)
Fourth quarter Civil revenue was $388.2m, down 6% compared to the preceding quarter, and down 36% compared to the same quarter last year. Operating income was $40.5m compared to $48.4 m in the third quarter and $151.5m in the fourth quarter last year. Fourth quarter Civil adjusted segment operating income was $66.6m (17.2% of revenue), compared to $62.0m (15.0% of revenue) in the third quarter and $153.6m (25.5% of revenue) in the fourth quarter last year. Adjusted segment operating income excluding COVID-19 government support programs was $46.9m (12.1% of revenue) this quarter and $58.4m (14.2% of revenue) in the third quarter. Fourth quarter Civil training centre utilization was 55% and has trended at a similar level since the end of the quarter.
Annual Civil revenue was $1,412.9m, down 35% compared to last year. Annual operating income was $6.5m compared to $473.3m last year, and annual adjusted segment operating income was $164.3m (11.6% of revenue) compared to $479.4m (22.1% of revenue) last year. Adjusted segment operating income excluding COVID-19 government support programs was $100.7m this year (7.1% of revenue). Annual Civil training centre utilization was 47%.
During the quarter, Civil signed training solutions contracts valued at $385.8m, including long-term training services agreements and the sale of 4 full-flight simulators (FFSs). For the year, Civil booked orders for $1.3bn, demonstrating CAE’s continued momentum as the training partner of choice for airlines, business jet operators and pilots worldwide. These included 11 FFS sales and comprehensive, long-term training agreements with customers worldwide, including Iberia, Líneas Aéreas de España, Azul Brazilian Airlines, Bundeswehr in Germany, Virgin Atlantic, Alitalia and Air France. In fiscal year 2022, Civil expects to maintain its leading share of the available FFS sales and expects to deliver upwards of 30 FFSs to customers worldwide.
The Civil book-to-sales(8) ratio was 0.99x for the quarter and 0.89x for the last 12 months. The Civil backlog at the end of the year was $4.3bn, which is down 20% from the prior year period.
Since the end of the quarter, in the Advanced Air Mobility market, CAE announced that it has been selected by Jaunt Air Mobility to lead the design and development of the Jaunt Aircraft Systems Integration Lab (JASIL) for the company’s new all-electric vertical take-off and landing (eVTOL) aircraft, the Journey aircraft. By leveraging CAE’s 70+ years of experience in high-fidelity simulation, CAE will work hand-in-hand with Jaunt to bring best-in-class simulation and modeling to the aircraft development program from inception.
Summary of Civil Aviation Training Solutions results
Defence and Security (Defence)
Fourth quarter Defence revenue was $334.4m, up 12% compared to the preceding quarter, and down 2% compared to the same quarter last year. Operating loss was $8.5m compared to an operating income of $21.8m in the third quarter and $32.4m in the fourth quarter last year. Fourth quarter Defence adjusted segment operating income was $23.2m (6.9% of revenue), compared to $22.3m (7.5% of revenue) in the third quarter and $40.2m (11.8% of revenue) in the fourth quarter last year. Adjusted segment operating income excluding COVID-19 government support programs was $6.8m (2.0% of revenue) this quarter and $15.9m (5.3% of revenue) in the third quarter.
Annual Defence revenue was $1,217.1m, down 9% over last year. Annual operating income was $15.5m compared to $104.8 last year, and annual adjusted segment operating income was $87.0m (7.1% of revenue), compared to $114.5m (8.6% of revenue) last year. Adjusted segment operating income excluding COVID-19 government support programs was $26.7m this year (2.2% of revenue).
During the quarter, Defence booked orders for $370.4m. Notable wins in the quarter include a contract with the U.S. Air Force for the base year of the new KC-135 Aircrew Training System contract which now includes training support services for the Air National Guard boom operator simulation systems, Boeing to provide P-8A training support services, General Atomics to continue development of a comprehensive synthetic training system for the United Kingdom’s Protector remotely piloted aircraft program, United States Customs and Border Protection aircraft pilot training services, and provision of training to the Irish Air Corps at CAE’s Dothan Training Center. Expanding its position in new markets, Defence also won a flagship program from the United States Special Operations Command (USSOCOM) to lead the integration efforts for the SOF Global Situational Awareness initiative.
For the year, Defence booked $1.1bn in orders, securing all its foundational recompetes, winning significant new competitions in its core market, and expanding its position in digital immersion, operational support, and security. In addition to the US Air Force KC-135 Aircrew Training System, key foundational recompete wins include the US Navy T-44C Instructional Services. Additional core market competitive wins during the year include the US Army Advanced Helicopter Flight Training Services, UK Protector and France/Germany C-130J training solutions. Defence also expanded its position in new markets with notable wins including the US Air Force Advanced Battle Management System, and the UK Single Synthetic Environment.
During the quarter, CAE announced it entered a definitive agreement with L3Harris Technologies to acquire L3Harris’ Military Training business (L3H MT) for US$1.05 bn, subject to customary adjustments. The proposed acquisition is expected to expand CAE’s position as a platform-agnostic training systems integrator by diversifying CAE’s training and simulation leadership in the air domain, complementing land and naval training solutions, and by enhancing CAE’s training and simulation capabilities in space and cyber. L3H MT also brings significant experience in the development and delivery of training systems for fighter and bomber aircraft, Army rotary-wing platforms, submarines and remotely piloted aircraft. The closing of the acquisition is expected in the second half of calendar year 2021, subject to regulatory approvals and other customary closing conditions.
The Defence book-to-sales ratio was 1.11x for the quarter and 0.91x for the last 12 months (excluding contract options that extend beyond the initial funded year of these contracts). The Defence backlog, including options and CAE’s interest in joint ventures, at the end of the year was $3.9bn. (Source: PR Newswire)
19 May 21. SAMI shakes up board. Defence conglomerate Saudi Arabian Military Industries (SAMI) announced the restructuring and expansion of its board of directors during an extraordinary general assembly meeting on 18 May. As a result of the meeting, the company has expanded its number of board members from nine to 10. New members admitted to the board include General Abdulrahman bin Saleh Albunayyan, Dr Khaled bin Hussain Albiyari, Engineer Mosaed bin Sulaiman Al-Ohali, Mazen bin Ahmed Al-Jubeir, and Yasir bin Abdullah Al-Salman. Ahmed bin Aqeel Al-Khateeb has retained his role as chairman of the company’s board.
The restructure also resulted in the departure of Prince Faisal Bin Farhan Al Saud, Michael Cosentino, Giuseppi Giordo, and Philip Yeo.
“We congratulate the company for restructuring its board, and we welcome its new members in their roles, to whom we wish every success,” Al-Khateeb said in a statement. “We also thank the former board members for their hard work and efforts during a period of significant accomplishments. We would like to renew our commitment to all our customers and stakeholders that we will continue our journey of achievements and that the board will make every effort to ensure the company’s success in supporting the localisation of more than 50% of Saudi Arabia’s military spending by 2030. (Source: Jane’s)
19 May 21. Horizon Technologies Secures Series A Financing Round Led by Maven Capital Partners. Horizon Technologies a UK aerospace OEM, a world leader in airborne signals intelligence (SIGINT) systems, today announced it has received a significant growth investment in a multi-million-pound Series A round of financing. This Series A investment will aggressively advance Horizon Technologies’ space-based Maritime Domain Awareness (MDA) Amber™ data service. Maven Capital Partners led the latest investment round with participation from Virgin Money. New funding will accelerate the company’s launch of further Amber™ CubeSats in 2022, augment sales and marketing efforts, and supplement staffing. The company also will be better positioned to broaden and fund product development across both its Horizon Aerospace and Horizon Space business segments.
Maven’s Investment Director Luke Mathews, who will join Horizon Technologies Board of Directors, said “We are excited to support Horizon Technologies as the Amber™ programme progresses to this next, exciting stage. John and his team of aerospace industry heavyweights have done a remarkable job in developing the business to this point, and we are delighted to find a local company with truly global opportunities ahead of it.”
Ylan Lamour, Associate Director, Growth Finance at Virgin Money, adds “Under the guidance of a well-established and respected management team, Horizon Technologies has consistently pioneered the growth of the Signals Intelligence market and is now well-positioned to take the next step in its growth path. The team at Virgin Money is delighted to have collaborated with Maven to create a tailored package of support which will allow Horizon Technologies to continue to innovate and grow its business.” The finance package was secured by Alexander Duffy and the corporate finance team at accountancy firm, Menzies LLP. International law firm, Jones Day, acted as legal advisers to Horizon Technologies’ management team, and assisted Menzies LLP in structuring the funding package.
The Series A financing builds on an exceptional year for Horizon Technologies which saw unparalleled financial growth in new orders, an ever-increasing roster of clients, key executive appointments, and market momentum in its two business areas: systems for airborne intelligence collection, and space-based geospatial data collection.
“Today, we’re just scratching the surface of how space-based RF data can be used especially when it’s combined with other sensors such as imagery, and presented to customers as an integrated data product,” said Horizon Technologies Chief Executive Officer John Beckner. “This capital funding will build off of the tremendous support provided to us by the UK Government/Innovate UK, and enable us to leverage off the launch of Amber-1 later this year and launch additional satellites in 2022. This will put us on the path to eventually deliver a near real-time non-cooperative maritime domain awareness intelligence and analysis service to our customers. Ongoing conversations to potential end-users of these new services in the media, shipping, finance, insurance & trading markets outside our traditional defence/aerospace national customers confirm, that there is a genuine appetite in enhancing existing vessel tracking services traditionally based on AIS. Having the financial support and expertise of Maven Capital Partners will help us execute our vision even more rapidly and broadly—and with the benefit of experience, perspective and relationships of a leading tech investor.”
Horizon Technologies is well known for its FlyingFish™ SIGINT system, flying on many ISR aircraft around the world from NATO and non-NATO Allied countries. The Horizon Aerospace business segment which produces and supports FlyingFish™ will be announcing a new product (BlackFish™) later this year and is coming off its best financial year ever. The Series A investment will primarily go into the Horizon Space segment with its transformational Amber™ MDA data as a service business.
Maritime Domain Awareness key features and benefits of Amber™ include:
- Collection and geolocation of a specialized maritime set of RF emitters (sat phones, maritime vessel navigational radars, commercial satcom communications, AIS, and others);
- Enhanced signal processing whereby signals are demodulated so actual intelligence data can be derived from them (radar “fingerprints,” sat phones’ metadata/GPS locations, etc.) rather than predicted geolocations;
- Initial constellation of only six (6) Amber™ CubeSats with less than one (1) hour latency rather than RF collection using expensive “formation flying” clusters of satellites;
- Unique geolocation techniques using single CubeSats (pat pending);
- Established and expanding customer base including the Royal Navy to Horizon Technologies’ successful OEM business;
18 May 21. BAE Systems (BA/ LN), BUY, 520.40p PT: 600.00p. The Trading Update confirms performance YTD has been in-line with expectations and underlines BAE’s overall confidence in the FY21 guidance (at constant FX). There is positive news on both the pension funding and accounting deficits; a “material reduction”. The tone of the commentary on future business opportunities is also encouraging. None of this, however, may decisively settle the debate about where priorities lie in the USA.
Trading update. At constant FX, BAE’s expectations remain unchanged. Air, Maritime, Electronic Systems and Intelligence & Security continue to perform strongly. Combat vehicle production across multiple platforms continues to ramp and is on schedule. Performance in Ship Repair is improving. In the UK, the opportunity pipeline is described as positive. Further, the increase in bond yields and higher asset values have led to material reductions in both the pension funding and accounting deficits since end FY20. The latter is incrementally positive, in our view.
A look back at 1H20. In 2Q20, sites in the Air and Maritime sectors and the US commercial avionics business were the most affected by the pandemic. In Air and Maritime, 2Q20 disruption impacted cost recoveries and sales volumes. The US-based Controls and Avionics business had weakened as had demand from mass transit. In the US, the defence manufacturing facilities had encountered some disruption on the supply chain, as well as intermittent production delays. In the event, reported 1H20 sales grew 4% at constant FX and excluding acquisitions while EBITA decreased 11%.
Guidance for FY21. At the FY20 stage, BAE guided for Group sales to grow 3-5% equating to 5-7% at constant FX, with the FX rate on 25 Feb 2021 at US$1.41/£. Underlying EBITA was guided to increase 6-8%. FCF was guided at over £1bn. However, BAE flagged that it would stop reporting divisional EBITA and change to EBIT. The latter would be after amortisation of software and development costs. For FY20, Group EBITA would become EBIT of £2,037m. The most significant changes would be in Air (EBITA £941m versus EBIT £909m) and Maritime (EBITA £306m versus EBIT £279m). FY20 underlying EPS would reduce from 46.8p to 44.3p.
An element of Hobson’s choice. The full US FY22 Defense Budget may be released on 27 May 2021. That might reduce uncertainty about what programmes are deemed legacy and cut or ended. However, it is unlikely projections will be given for the Five Year Defense Plan, so we suspect not all issues will be settled. Many changes may not be evident until the FY23 Defense Budget is submitted. Even the F-35 programme may not proceed without some change. In FY20, the F-35 generated 13% of Air domain revenue (not the Air division’s revenue), so around £1,500m, or 7.2% of Group revenue. That will be split between the Electronic Systems and Air divisions. Our view is that while the market might like certainty, in a Group as geographically and product diverse as BAE, that is probably never going to exist. The degree of uncertainty must, however, be dampened by 37% of Group revenue coming from Technical Services and Support, 36% from Platforms and 22% from Electronic Systems. It’s Hobson’s choice to a degree. (Source: Jefferies)
19 May 21. BAE Systems plc – market update. Charles Woodburn, BAE Systems Chief Executive, said: “I am proud of how our employees have continued to perform and adapt this year, against the backdrop of the global pandemic. Our focus for 2021 is driving operational performance, progressing our sustainability agenda and investing in and developing the technologies to meet our customers’ needs.
“Our good operational performance underlines our confidence in the full year guidance for top line growth and margin expansion and our three-year cash targets. Strategically, our geographically diverse portfolio is aligned to growing defence budget areas; we’re ramping up investment in self-funded R&D aligned to customer focus areas and we’re leveraging our leading capabilities in evolving markets to ensure we’re increasingly well placed to deliver for all our stakeholders.”
At a constant currency, Group sales and underlying EBIT growth expectations in the full year 2021 guidance remain on track. The Group’s full year 2021 guidance across all other metrics is unchanged.(1)
Whilst there remain uncertainties arising from the COVID-19 pandemic, progress continues in combatting the virus under the vaccination programme in our major markets and our good operational performance underlines our overall confidence in the full year guidance.
Air, Maritime, Electronic Systems and Intelligence and Security continue to perform strongly and there is positive momentum in Platforms & Services (US). Combat vehicle production across multiple platforms continues to ramp and is on track to meet agreed delivery schedules, and US ship repair performance is improving following COVID-19 and other disruptions experienced last year. Applied Intelligence has had a good start to the year with improved performance together with realised benefits from the restructuring.
Our backlog and programme positions support our growth expectations in the coming years, and the pipeline of opportunities across all sectors remains strong. Demand for our capabilities remains high with order intake ahead of expectations. Notable new and strategically important awards received to date include:
F-16 support: IDIQ worth up to $600m over 10 years
F-15 EPAWSS LRIP
Advanced Military Code GPS modules – $325m
Platform & Services
Amphibious Combat Vehicle build – $200m
Platform & Services
Netherlands CV90 upgrade – over $500m
Platform & Services
Sweden BvS10 new vehicles – c.$200m
Dreadnought funding – £848m
Commander Radar for International Customer – £119m
Future Maritime Support Programmes – follow on to existing programmes – BAE Systems’ share booked – £473m
RBSL – Challenger upgrade programme – BAE Systems’ share £300m
Defence Spending outlook in our key markets
Our geographic diversity positions us strongly in the post pandemic cycle where many of the countries we operate in have made plans to increase their spending to counter challenging threat environments.
In the US, the President’s budget request for fiscal year 2022 is expected to include top line defence funding of $715bn, representing a relatively stable funding level compared to $704bn in the current fiscal year. BAE Systems is prominent on many of the most important long-term defence programmes for the US armed forces. Our portfolio remains well aligned with customer priorities and the key focus areas outlined in the US National Defense Strategy. Through a wide range of leading capabilities, long-standing incumbencies often with high barriers to entry and deep customer relationships, we are demonstrating a competitive advantage in many domains. We are well placed to address the requirements of long-range precision munitions, air and missile defence systems, unmanned and autonomous vehicles, long-range strike platforms and systems, space and combat vehicles.
In the UK, the publication of the Defence Command Paper was positive for the Group with renewed commitments to our major long-term programmes in complex warship, submarine and combat aircraft design and build, allowing for long-term investment in these key sovereign capabilities, as well as strong support for cyber. The opportunity pipeline is positive with domestic, export and collaboration opportunities identified, and we have capabilities to support our UK customer in its space ambitions.
In Europe, a number of nations including Germany and France continue to increase their defence budgets to address the threat environment and move towards their 2% of GDP NATO commitments. We remain well placed in the region through our positions on the Eurofighter Typhoon, our shareholding in MBDA and our BAE Systems Hagglunds land business based in Sweden with a number of opportunities being pursued in addition to the significant wins secured in the last year.
Additionally, our portfolio is well positioned to benefit from increased defence spending in Asia Pacific through our Australia business, which is already set to grow significantly from our contracted positions, and sizeable increase in Australian defence spending, and through export opportunities from our UK, US and Australian business to the region.
In line with our strategy to increase R&D investments and make a number of technology bolt on acquisitions, in March, we completed the acquisition of Pulse Power and Measurement Limited (PPM), an independent developer and manufacturer of high-end electronics. Its technologies are highly complementary to the Group’s existing strong digital and data capabilities.
In April, we completed the sale of Rokar, a small Electronics business, to Elbit Systems.
All payments in our current UK pension deficit funding programme have now been completed. The combination of the increase in bond yields and the higher asset values has led to material reductions to both our funding and accounting deficits since the end of last year.
We are progressing on our 2030 greenhouse gas net zero programme with assessment of the impacts associated with our products, the opportunities through future technology and our supply chain. In addition, we are currently assessing the impacts of climate risk as part of our commitment to TCFD reporting in 2022. We have strengthened our commitment to diversity with both long term and in-year targets.
The progress we are making on our sustainability agenda has been reflected with an improvement in ratings across a number of platforms, and we have maintained our AA leader class rating with MSCI.
As previously announced, Dame Carolyn Fairbairn joined the Board on 1 March, and Dr Ewan Kirk will join from 1 June.
The 2020 final dividend of 14.3 pence per share will be paid on 1 June 2021.
18 May 21. Teledyne-FLIR Merger Creates Tactical Drone Powerhouse. The combined company will offer a wide range of unmanned vehicles (mostly small ones) for air, land, sea, and underwater, said exec Roger Wells.
Teledyne $8.2bn acquisition of FLIR wrapped up on Friday and on Monday the merged teams started work to ensure all the new company’s drones can work with one another — and boy, the combined Teledyne-FLIR builds a lot of drones.
“We’re only two days in, but the excitement is extremely high,” Teledyne-FLIR exec Roger Wells told me. (Wells has worked at FLIR since 2010). Both companies build a wide range of sensors, from FLIR’s namesake infrared to chemical-biological toxin detectors. “We are now a multi-domain unmanned and autonomous systems company, and in a way not many, if any, companies can rival, especially when we’re talking about small, tactical, fully deployed solutions … worldwide.”
Teledyne builds a range of watergoing drones, both Unmanned Surface Vehicles (robot boats) and Unmanned Underwater Vehicles (mini-subs), with the largest being the 18-foot-long SeaRaptor. FLIR builds a host of small aerial drones and ground robots, from the tiny Black Hornet, which can take off from your hand, to the Kobra, whose mechanical claw can lift 330 pounds. The Army is buying thousands of Black Hornets for infantry squads and has officially picked the Kobra as its Common Robotic System – Heavy to replace existing bomb-squad bots.
Now comes the hard part: getting the FLIR and Teledyne products to share data, components, and key technologies. The combined company isn’t imposing a single common set of standards on all its projects – although many already use commercial open architectures. But it’s pushing for a new design philosophy it calls “advanced common software systems architectures.” The goal, Wells told me, is for everything to be “interoperable and integratable out of the box,” not only with other Teledyne-FLIR products but with ongoing military programs such as the handheld ATAK and the IVAS goggles.
“We’re going to be pushing more forcefully to common use of algorithms, of applications, of processing, of software,” Wells told me. Reusing code and physical components across the combined company, instead of reinventing the wheel, saves FLIR-Teledyne money – and, Wells told me, “it makes sense for our customers as well.” (Source: Breaking Defense.com)
18 May 21. Quantum-Systems Raises Growth Funding from 10x Group. Quantum-Systems GmbH, Munich-based manufacturer of small Unmanned Aircraft Systems (sUAS), announced that it has closed an additional round of financing and raised an undisclosed amount from also Munich-based 10x Group. The investment round will support the company’s continued expansion as it takes advantage of accelerating market demand for next-generation sUAS with electric vertical take-off and landing capabilities and onboard edge AI.
Quantum-Systems has achieved a 155% growth rate in revenue in the year 2020 compared to the previous year and has built a global customer base, which is using Quantum-Systems’ drone platform for missions like smart farming, volume calculation in open-pit mining, surveying work for large construction sites, real-time situational awareness, tactical mapping, Search and Rescue (SAR) and automated railway inspection.
Demo use cases also include the transport of medications and blood reserves. With this growth funding, Quantum-Systems intends to further accelerate its growth strategy towards building the pan-European leader and will substantially invest into sales, marketing, and R&D.
The strong customer traction and investor interest is a tremendous validation of our technology and the market opportunity. We are excited and thankful for the trust of our new investors. 10x Group’s investment is a turnkey event for Quantum-Systems. -Florian Sebel CEO, Quantum-Systems GmbH
More financial and networking resources to drive the company’s development.
10x Group will support Quantum-Systems with its continuous growth plans. Key initiatives are the expansion of the globally operating sales team, the expansion of R&D capacities in the field of autonomous flying and artificial intelligence as well as further vertical integration of system-critical components of the eVTOL drones.
Quantum-Systems’ unique technology and easy-to-use software form the company’s opportunities for drones within the commercial and governmental space. The new EU framework on the future operation of drones, which successfully passed the German Parliament last week, finally makes Germany the country with the most innovative regulatory rule set in the world.
The opportunities for professional, industry-grade, drones are unprecedented in the commercial and governmental markets for the years to come. We identified Quantum-Systems as the world leader regarding technology and products and we look forward to supporting the management team to execute this huge opportunity.
-Felix Haas, Partner at 10x Group and lead for Quantum-Systems GmbH, 10x Group
10x Group is joined in this investment round by their affiliated partner Andrej Henkler from Leblon Capital. Mr. Henkler is an early backer of multiple US successes like Palantir and will advise Quantum-Systems on the upcoming global expansion. (Source: UAS VISION)
14 May 21. Israel’s IAI reports 23.5% increase in net income in Q1 2021. IAI’s net income in Q1 2021 was $42m, up 23.5% from $34m in Q1 2020. Military and civilian security defence company Israel Aerospace Industries (IAI) has reported 23.5% net income growth in the first quarter of this year.
The figure jumped from $34m to $42m on a year-on-year basis.
The Military Groups recorded a nearly 39% increase in net income to $68m while the Aviation Group reported a net loss of around $8m.
The company’s operating income recorded 10% growth, increasing from $61m in Q1 2020 to $67m in Q1 2021. The increase was attributed to a decrease in general, administrative, selling, marketing and employee retirement expenses.
Gross profit was nearly $166m, declining from $170m registered in the first three months of 2020.
IAI’s sales in the first quarter of this year amounted to $1.015bn.
The figure marginally dropped from $1.018bn in the prior year’s quarter due to a decline in sales of Aviation Group and Military Aircraft Group. However, Military Groups sales soared by 12% on a year-on-year basis to $914m in the same period.
EBITDA totalled $120m in Q1 2021, an increase of 17.6% compared to $102m in the corresponding period a year ago.
The company’s order backlog amounted to $12.2bn at the end of the first quarter of 2021.
IAI president and CEO Boaz Levy said: “IAI continues to record excellent results in the first quarter of 2021. The increase in operating performance ratios alongside the increase in bottom-line profit in the current quarter reinforces the strategic growth process the company has undergone in recent years.
“The company was recently ranked third place in the list of best companies to work for in the Israeli market and is currently in the midst of recruiting talented engineers with hundreds of positions available, another testament to the company’s growth and business expansion worldwide and in Israel.”
In April, IAI completed a set of test flights of BARAK extended range (ER) 150km range interceptor. (Source: Google/army-technology.com)
13 May 21. Precision Optics Reports Third Quarter Fiscal Year 2021 Financial Results. Precision Optics Corporation, Inc. (OTCQB: PEYE), a leading designer and manufacturer of advanced optical instruments for the medical and defense industries, announced operating results on an unaudited basis for its third quarter fiscal year ended March 31, 2021.
Third quarter fiscal 2021 highlights:
- Revenue for the quarter ended March 31, 2021 was $2.46m compared to $2.37m in the same quarter of the previous fiscal year.
- Gross margins for the quarter ended March 31, 2021 were 33% compared to 34% in the same quarter of the previous fiscal year; and compared to 31% for the quarter ended December 31, 2020.
- Net Income of $552,280 during the quarter included $809,000 of Other Income due to the forgiveness of the SBA PPP Loan as well as $86,000 of stock-based compensation. This compared to a loss of $466,000, including $76,000 of stock-based compensation in the same quarter of the previous fiscal year.
- The Company’s cash position remains strong with an ending balance for the third quarter of $782,000.
Precision Optics’ CEO, Joseph Forkey, commented, “The market opportunity for micro-optic and 3D-enabled devices and components in the medical and defense industries continues to be robust. Large, established industry players, and well-funded startup companies are looking for enabling technology partners, such as Precision Optics, that can make next generation products a reality. Over the past couple of years, we have made significant progress expanding the number of jointly developed projects in our engineering pipeline. We expect many of these to move into production in the coming year to help drive growth.”
Dr. Forkey continued, “While our ongoing production levels continue to be depressed due to the pandemic, the increase in engineering pipeline activity has helped to cushion the impact on overall revenues. Our production revenue of $1.9m during the quarter was flat compared to the most recent quarter and was down about $250,000 from the third quarter a year ago. Engineering revenue of $550,000 was down sequentially, but was up year-over-year, and is expected to increase again in future quarters. Due to revenue recognition timing, reported revenue growth quarter-to-quarter may not reflect the full underlying growth trend of the business. Further, we have efficiently managed the business with year-to-date improvements in adjusted EBITDA of over $500,000 compared to the same period a year ago. With a burgeoning pipeline, near-term projects expected to move from the pipeline to production, and the resumption of normalized production levels for products impacted by the pandemic, we believe we are well positioned heading into fiscal 2022.” (Source: PR Newswire)
11 May 21. Full Deployment Of Their First Fund Announced By SpaceFund. SpaceFund Inc. announced the company has fully deployed investments from its first “LaunchPad” fund — this venture capital firm placed investor funds in 14 companies, including some well-known NewSpace stars as well as seeding rising stars the firm believes are capable of helping to lead humanity into the frontiers of space.
SpaceFund is rapidly becoming one of the world’s leading space venture capital companies. The firm’s team started the LaunchPad fund in 2019 as a proof of concept to demonstrate its ability to find, navigate, and capitalize on deal flow that may be elusive to those outside of the insular next generation space community.
In addition to one stealth company, the LaunchPad fund has now completed building its portfolio with investments in the following companies:
- Axiom Space: The world’s first commercially built, owned and operated space station.
- Cognitive Space: Transforming the state of automation and AI for spacecraft and orbital machines.
- Cosmic Shielding: Major game changing radiation shielding and space weather forecasting.
- Eden Grow Systems: The first built-for-space integrated food and energy production system, now commercializing this technology for use on Earth.
- Made In Space (Redwire): The first in-space additive and industrial manufacturing company.
- Novo Space: The first plug-and-play modular computers for the most ambitious space missions.
- Orbit Fab: The first Gas Stations in Space™ for satellite refueling and the first Satellite Gas Cap™ fueling ports.
- Sen: The first commercial live high-resolution television of Earth (and space), from space.
- Skyloom: The first high speed laser (optical) space communications network.
- Space Forge: The first end-to-end, free-flying space micro-manufacturing plants.
- Space Perspective: The world’s first luxury spaceflight experience company.
- SpaceX: The world’s most advanced rockets and spacecraft.
- Voyager Space Holdings: A leading global space exploration company.
“We’re right on track in our plan to seed and support the growth of these amazing companies,” said SpaceFund founder Rick Tumlinson. “Our formula is working. First we find brilliant frontier tech startups in need of early funding, then we bring in funds from visionary investors, and after significant diligence, we place those funds in just the right places to power the space revolution. These companies are a good representation of those rising to meet the challenge of what Gerard O’Neill called the ‘High Frontier. The seeds our investors are enabling us to plant and support now, will grow into the mighty oaks of the future space industrial ecosystem. With our next BlastOff fund, we will widen this base, finding new leaders, and providing the funding for growth needed to assure humanity can permanently and profitably expand into that frontier.”
“We balance our excitement about what is and will be happening in space with a deep and thorough vetting process,” said SpaceFund managing partner and co-founder Meagan Crawford. “We don’t chase rockets, satellite swarms, or shiny objects. Instead, we find brilliant teams with game changing technologies and solid business plans. While some of them may not seem glamorous, they are the foundational elements of a rapidly rising space economy.”
SpaceFund is now investing in new companies out of its second fund, the BlastOff fund. If your space startup would like to be considered for investment, please fill out the ‘Submit Your Company for Consideration’ form on the SpaceFund website: https://spacefund.com/submit/ (Source: Satnews)
13 May 21. Centricus Acquisition Corp. Combines With Arqit Limited To Focus On Cyber Security With Quantum Encryption Technology. Arqit Limited (“Arqit”), a leader in quantum encryption technology and Centricus Acquisition Corp. (Nasdaq: CENH, CENHW, CENHU) (“Centricus”), a special purpose acquisition company, have entered into a definitive agreement that would result in Arqit becoming a publicly listed company (the “Business Combination Agreement”). Upon closing of the transaction, a newly formed Cayman holding company, Arqit Quantum Inc., will merge with Centricus, acquire Arqit and register its shares for listing on the Nasdaq Stock Market. Arqit has pioneered a unique quantum encryption technology, QuantumCloudTM, which makes the communications links of any networked device secure against current and future forms of hacking – even an attack from a quantum computer. Currently “public key infrastructure” or “PKI” is used to encrypt most of the world’s communications, however PKI was designed in the 1980s and is no longer fit for purpose in a hyperconnected world. Furthermore, within this decade quantum computers will likely be able to break PKI’s encryption algorithms.
Symmetric encryption is a well understood encryption technology that is known to be more secure than PKI, including against quantum attack. However, to date there has been no secure way to distribute symmetric encryption keys at scale. Arqit has invented a way to create those keys at end points when they are needed, at scale, securely, at any kind of end point device and in groups of any size. Arqit’s product, QuantumCloudTM, is symmetric encryption, reborn for the cloud.
QuantumCloudTM puts a small software agent at any end point device. This software creates an unlimited number of symmetric keys with partner devices. The process is very simple and fast. Currently Arqit’s system uses source keys which are originated in data centers, however by 2023 it plans to launch two quantum satellites to assume that role. Those satellites will use a transformational new quantum protocol invented by Arqit which solve all of the known problems of satellite quantum key distribution. They will create a backbone of secure keys within data centers all over the world, and a quantum safe boundary protecting those data centers.
A customer/user can create an infinite number of symmetric key pairs, in groups as large as are needed. Keys are never “delivered”, so they cannot be intercepted. They are created at the end points and therefore can never be known by third parties. They can be used only once if necessary and replaced frequently. The service is sold and fulfilled on a self-service basis in the cloud making it an easily scalable business model.
Arqit believes its solution will provide a transformation in cyber security that provides a simple and elegant migration from existing encryption technology and will also protect against quantum attack.
Arqit’s current customers include the UK Government, the European Space Agency, BT plc, and Sumitomo Corporation. In addition, many companies like Verizon, BP, Northrop Grumman and Iridium are currently testing the use of Arqit’s technologies in different use cases.
It is estimated that the global addressable market for information security and risk management will be approximately $194bn by the end of 2024, as government, military, cybersecurity, telecoms and financial services players move at speed to protect themselves and their customers from critical security breaches.
Manfredi Lefebvre d’Ovidio, Chairman of both Centricus and Heritage Group, which was the anchor investor in the PIPE transaction, said: “Arqit is a unique company, with disruptive deep technology that will ensure a safer environment for businesses and people. David and his team have built an extraordinary enterprise and we are delighted to support Arqit’s development. Garth and the Centricus Acquisition Corp. team have done a remarkable job and we are extraordinarily pleased to be able to announce our partnership. I and my colleague Carlo Calabria have accepted David’s invitation to remain on the board and to work tirelessly to bring all of our skills and relationships around the world to bear to help to hyperscale this business.”
Centricus CEO Garth Ritchie said: “This transaction will give Arqit the ability to establish itself as a leader in the encryption space – the prospect of the threat from quantum computing will serve to accelerate the broad adoption of Arqit technology. This is a deep tech company which is many years ahead of the market. Arqit has protected its IP by remaining in stealth mode whilst filing over 1,000 claims on more than a dozen patent applications. It is thanks to funding from the British Government and its VC partners that Arqit is now ready to commercialize and scale its product suite; this will complement an already strong cohort of launch customers. The executive and advisory team are a ‘transatlantic who’s who’ of relevant cybersecurity, space and military experience – this team also enjoys peerless access to relevant enterprise customers.”
David Williams, Arqit CEO said: “The world needs simpler, stronger cyber security, and Arqit addresses that need. After four years of innovation in stealth mode by a world leading multi- disciplinary teams of scientists and engineers, we are ready to go to market. This technology is important and we need to take it to hyperscale as quickly as possible, because the problems we solve are problems for everyone. The capital from this transaction will enable us to develop critical relationships with existing and new customers and fully scale our platform as a service with a balance sheet which gives us speed, momentum and the resilience to deliver on our commitments to customers for the long term.”
The transaction values the combined company at a pro forma enterprise value of approximately $1.0bn, and is expected to provide up to $400m of gross proceeds to Arqit from a combination of $345m of cash held in Centricus’ trust account (assuming minimal redemption from Centricus existing shareholders), and approximately $70m from a fully committed PIPE. All existing shareholders and investors will continue to hold their equity ownership, and current Arqit shareholders will remain the majority owners of the combined company at closing.
In addition to financial investors, strategic investors Heritage Group, Virgin Orbit and Sumitomo Corporation have agreed to invest in the PIPE offering.
The proposed transaction was unanimously approved by Arqit’s board of directors as well as Centricus’ board of directors and is expected to be completed by the end of the third quarter of 2021. The proposed transaction will be subject to approval by Centricus’ shareholders and satisfaction or waiver of the closing conditions identified in the Business Combination Agreement.
Additional information about the proposed transaction, including a copy of the Business Combination Agreement, will be provided in a Current Report on Form 8-K to be filed by Centricus with the Securities and Exchange Commission (the “SEC”) and will be available at www.sec.gov. In addition, Arqit Quantum Inc., a newly formed Cayman holding company, intends to file a registration statement on Form F-4 with the SEC, which will include a proxy statement/prospectus of Centricus, and will file other documents regarding the proposed transaction with the SEC.
Deutsche Bank is serving as financial advisor and capital markets advisor to Arqit and as a placement agent on the PIPE offering. J.P. Morgan is serving as financial advisor to Centricus in connection with the business combination and as a placement agent on the PIPE offering. White & Case LLP is serving as legal advisor to Arqit Limited. Latham & Watkins LLP is serving as legal advisor to Centricus Acquisition Corp. Sidley Austin LLP is serving as legal advisor to the placement agents. (Source: Satnews)
14 May 21. Teledyne Completes Acquisition of FLIR. Teledyne Technologies Incorporated (NYSE:TDY) announced today the successful completion of the acquisition of FLIR Systems, Inc. (NASDAQ:FLIR). At each of the respective company’s special meeting of stockholders held on May 13, 2021, the stockholders approved and adopted merger proposals related to the Agreement and Plan of Merger dated January 4, 2021. FLIR will now be included in Teledyne’s Digital Imaging segment and operate under the name Teledyne FLIR.
Under the terms of the agreement, FLIR stockholders received $28.00 per share in cash and 0.0718 shares of Teledyne common stock for each FLIR share, which implies a total purchase price of approximately $57.40 per FLIR share based on Teledyne’s closing price on May 13, 2021. The aggregate consideration for the transaction was approximately $8.2bn, including net debt. Previously, Teledyne secured all permanent cash financing for the transaction with a weighted average borrowing cost of less than two percent.
Teledyne expects the acquisition to be immediately accretive to earnings, excluding transaction costs and purchase price accounting, and accretive to GAAP earnings in the first full calendar year following the acquisition.
Simultaneously, Teledyne announced the following executive promotions, effective today. Edwin Roks, current Vice President of Teledyne and President of Teledyne’s Digital Imaging Segment, is now Executive Vice President of Teledyne. Edwin will continue to serve as President of Teledyne’s Digital Imaging Segment, which now includes Teledyne FLIR. In addition, Todd Booth is promoted to Senior Vice President and Chief Financial Officer for the acquired Teledyne FLIR group of businesses.
“We appreciate the support from our stockholders, and I am delighted to welcome FLIR to the Teledyne family,” said Robert Mehrabian, Executive Chairman of Teledyne. “As a combined company, Teledyne FLIR will uniquely provide a full spectrum of imaging technologies and products spanning X-ray through infrared and from components to complete imaging systems. Teledyne FLIR will also provide a complete range of unmanned systems and imaging payload across all domains ranging from deep sea to deep space. Finally, I want to congratulate Edwin and Todd, whose promotions are very well deserved.”
Teledyne and FLIR filed the vote results for their respective special meetings of stockholders on a Form 8-K with the U.S. Securities and Exchange Commission on May 13, 2021. (Source: BUSINESS WIRE)
13 May 21. TAT Technologies Reports First Quarter 2021 Results. TAT Technologies Ltd. (NASDAQ: TATT) (“TAT” or the “Company”), a leading provider of products and services to the commercial and military aerospace and ground defense industries, reported today its unaudited results for the three-month period ended March 31, 2021.
Financial highlights for the first quarter of 2021 (unaudited):
- Revenues for Q1 2021 increased by 11% to $18.3m compared to revenues of $16.5m in Q4 2020 and decreased by 25% compared to $24.6m in Q1 2020.
- Gross profit for Q1 2021 increased by 259% to $3.4m compared to $0.9m in Q4 2020 and decreased by 26% compared to $4.6m in Q1 2020.
- Gross margin for Q1 2021 improved to 18.6% compared to 5.7% in Q4 2020 and compared to 18.5% in Q1 2020.
- Adjusted EBITDA for Q1 2021 increased by $2.7m to $1.6m compared to a loss of $1.1m in Q4 2020 and decreased by 36% compared to $2.5m in Q1 2020.
- Net income for Q1 2021 increased to $0.6m compared to a loss of $1.9m in Q4 2020 and compared to net income of $0.4m in Q1 2020.
The Company is proceeding with its recently announced plan to improve its cost structure, and in that respect has recently begun executing on its plan to consolidate the Company’s operations in Kiryat Gat, Israel and Tulsa, Oklahoma. Among other things, such actions will enable the Company to concentrate its heat exchanges cores activity in the United States allowing for better operational flow, getting closer to the Company’s customer base and cutting fixed costs. To support this process, the Company successfully continued to obtain loans from banks in Israel and the US and has continued in improving its working capital. In connection with such plan, the Company incurred expenses of $0.5m and capital expenditures of $0.5m in Q1 2021.
As part of the consolidation of certain of the Company’s operations in the US, the Company secured grants and incentives from the State of Oklahoma in an amount of approximately $11m (subject to the terms of such grants) which will be utilized to finance investments and employee-related expenses of the Company’s operations in Oklahoma.
Mr. Igal Zamir, TAT’s CEO and President commented on the results: “In Q1 we increased our revenues and gross margin, improved our working capital and stabled the Company’s operational cash flow. In Q1 of 2021 we already started enjoying the fruits of our strategic lease deal with Honeywell that was signed at the end of 2020 as well as a PPP loan forgiveness of $1.44m. We continue with the plan to streamline our operations and expect our cost structure to improve by 2022.” (Source: PR Newswire)
TCI International, Inc., is a wholly-owned subsidiary of SPX Corporation. TCI provides turn-key solutions for spectrum management and monitoring, direction finding, geolocation and communications intelligence to civilian, government, military and intelligence agencies as well as antennas for communications and high-power radio broadcasting. TCI is headquartered in Fremont, California, USA. For more information, visit www.tcibr.com.