Sponsored by TCI International Inc.
16 Aug 21. Meggitt publishes Parker-Hannifin takeover documents. Britain’s Meggitt (MGGT.L) said that it published the scheme document for its recommended takeover by Parker-Hannifin (PH.N), as the process for that offer continues despite the possibility of a higher bid coming in from U.S. rival TransDigm (TRDG.UL). Megggitt, which makes components for aircraft, said on Monday that Britain’s Takeover Panel is due to announce a deadline by which TransDigm must clarify its intentions. A meeting to vote on the offer from Parker-Hannifin is set for Sept. 21. (Source: Reuters)
16 Aug 21. Cobham to buy UK rival Ultra in $3.6 bn deal. Defence firm Cobham said on Monday it has agreed to buy Ultra Electronics (ULE.L) in a deal valuing its UK-listed rival at 2.57bn pounds ($3.56bn) and set out commitments to allay any potential concerns over national security. Shareholders in Ultra, which counts the British and U.S. governments as its customers, will get 35 pounds a share as per the terms of the proposed deal, first announced in late July. Cobham, owned by American private equity firm Advent, said it will engage with the British government to agree the detailed terms, duration, nature and form of its binding commitments, which would apply immediately after the closing of the deal to protect Ultra’s businesses and stakeholders.
“Cobham recognises the specific importance of Ultra’s contribution to the UK’s economy and national security,” Cobham said. ($1 = 0.7222 pounds) (Source: Reuters)
13 Aug 21. Sale of Frazer-Nash Consultancy. Babcock International Group (Babcock), the international aerospace, defence and security company, is pleased to announce that it has entered into a definitive agreement with KBR for the sale of its wholly owned subsidiary Frazer-Nash Consultancy Limited (Frazer-Nash Consultancy) for a cash consideration of £293m (implying an enterprise value of £285m on a cash free/debt free basis), subject to routine closing adjustments and before transaction costs.
Headquartered in the UK, Frazer-Nash Consultancy delivers innovative engineering and technology solutions across a broad range of critical national infrastructure, helping to provide assurance to operators and regulators from a network of nine UK and four Australian locations. The consultancy, which has grown strongly since Babcock acquired it in 2007, employs around 900 people.
The sale forms part of Babcock’s targeted disposal programme, which aims to generate at least £400 million of proceeds in the next twelve months. Frazer-Nash Consultancy is an outstanding business which provides independent advice to its customers and on that basis has operated largely independently from Babcock. Proceeds from this transaction will be used to reduce net debt.
Babcock CEO David Lockwood said: “We are making real progress on our plan to streamline and focus the group on our key markets. Divesting at least £400m of businesses in our targeted disposals programme will enable us to reduce complexity and increase our focus as we return Babcock to strength. Frazer-Nash Consultancy is a good fit for KBR, and I wish them every success in growing the business further.”
The consultancy is part of Babcock’s Marine sector. For the year ended 31 March 2021 it reported total revenues of £100.5m (year ended 31 March 2020: £101.9m), profit before interest and tax of £13.5m (year ended 31 March 2020 £17.1m). As of 31 March 2021 gross assets were £79.9m.
Completion of the agreement is subject to approval by the Australian foreign investment authority.
The agreement constitutes a class 2 transaction for the purposes of the UK Financial Conduct Authority’s Listing Rules, and as such does not require Babcock shareholders’ approval.
12 Aug 21. Denel announces restructuring in effort to reform company. South Africa’s Denel formally announced the reorganisation of the company from six divisions to two, as part of a broader five-year plan.
“We are determined to turn Denel around and repurpose it while retaining the core capabilities required to meet South Africa’s strategic security requirements,” William Hlakoane, Denel’s interim Group Chief Executive Officer, said. Announced on 11 August, information about the reforms began to leak out at the end of July, following a written question from the National Assembly member Michéle Clarke of the opposition Democratic Alliance to the Minister of Public Enterprises, Pravin Gordhan. The plan, known as Denel 5.Y, involves the creation of two divisions – Engineering, and Manufacturing and Maintenance – that merges a number of existing product lines and brands into the new structure. The Engineering division will merge Denel’s capabilities in artillery, infantry and vehicle systems, missile and precision-guided munitions business, as well as its management of complex integrated systems. The Manufacturing and Maintenance division will be responsible for work in aeronautics, unmanned aerial vehicle systems, and the production of small and medium calibre ammunition as well as the production of combat vehicles. The Engineering division will also be involved in the diversification of technology into existing and new markets in fields that include command and control, cyber security, and communications, as well as undertaking research and development activities. (Source: Jane’s)
12 Aug 21. CACI: Military modernization sales will eclipse Afghanistan pullout losses. Defense contractor CACI International on Thursday forecast that its future losses from the U.S. pullout from Afghanistan would be more than offset by the U.S. military’s growing investments in forward-leaning technologies.
The company projected 4 percent sales growth despite a 2 percent headwind linked to Afghanistan, where CACI has supported the U.S. Army with intelligence analysis. The Virginia-based company sees its agile software development business as a key driver and touted its April award worth $376 million from the National Geospatial-Intelligence Agency for an AI-driven intel processing platform.
During CACI’s fourth-quarter earnings call Thursday, CEO John Mengucci told analysts some of its Afghanistan-based employees are continuing work from different locations, while others remain at work in Africa, Korea and throughout the Middle East, including Iraq.
“We’ve watched the administration make the decision to completely exit Afghanistan by 9/11, and all I can say is they’re executing on that decision,” Mengucci said, adding that CACI’s ongoing analytical services are “much broader counter-terrorism” to include “near-peer threats.”
As the military modernizes with an eye toward competition with Russia and China, CACI sees bipartisan support for information technology modernization, offensive and defensive cyber capabilities, border security, electronic and space ― all a potential boon to its bottom line.
The company’s comments come just days after the Democrat-led Senate Armed Services Committee unveiled its draft 2022 defense authorization bill, with $25bn more for defense than President Joe Biden proposed.
But while CACI is betting on persistent demand for agile software development, Mengucci acknowledged it does upend the traditional contracting cycle. Meant to help the government update continuously, the contracts are not as predictable as cost-plus or a firm-fixed-price methods.
“We’re all still working through the challenges of contracting for agile. By the nature of the word, it’s agile, which means it’s fluid, it’s going to change,” he said. “That’s tough coming from the contracting world.”
To win future work, the company hopes to leverage its contract worth up to $1.9 billion with Customs and Border Protection to modernize back-office systems. The contract, dubbed BEAGLE, includes more than 100 applications, according to the company.
“We’re delivering on agile software development with about 300 people,” Mengucci said. “What it does is it allows us to deliver programs and agile applications at a lower price to our customer and a lower cost. If we do that right, the margins will be higher for us, because we’re taking on some of that risk.”
Meanwhile, CACI disclosed on the call that Ascent Vision Technologies, which it acquired a year ago, has felt the impact of the global semiconductor shortage. AVT specializes in intelligence, surveillance and reconnaissance technologies.
To manage broader pandemic-related supply chain slowdowns, the company has made bulk buys of certain long-lead items.
“We have had supply chain issues,” Mengucci said. “We’ve also had customer delivery delays because our customers were not there to receive those items.” (Source: Defense News)
12 Aug 21. Sypris Reports Second Quarter Results. Sypris Solutions, Inc. (Nasdaq/GM: SYPR) today reported financial results for its second quarter ended July 4, 2021.
- Revenue for the second quarter increased 51.4% year-over-year and 30.0% sequentially, driven by the accelerating expansion of shipments at Sypris Technologies.
- Gross profit increased 103.2% year-over-year and 137.3% sequentially, while gross margin expanded to 16.6%, up 420 basis points over the prior year and up 750 basis points sequentially, with both segments reporting margin expansion.
- Earnings per diluted share rose to $0.17 per share, up from a loss of $0.02 per share in the prior-year period, reflecting strong revenue growth, positive operating performance and the forgiveness of the Paycheck Protection Program (“PPP”) loan by the Small Business Administration (“SBA”).
- Backlog for Sypris Electronics increased 29.3% year-over-year and 51.9% year-to-date on the strength of orders in the first half of 2021. Similarly, backlog for the energy products of Sypris Technologies increased 56.4% year-over-year and 32.3% year-to-date, while the order board from commercial vehicle customers continued to increase significantly.
- Sypris Electronics revenue expanded 30.0% sequentially, while gross profit increased 179.1% and gross margin reached 20.4% of sales.
- Sypris Technologies revenue increased 130.2% year-over-year and 29.9% sequentially, while gross profit surged and gross margin expanded significantly to 14.6%.
- The Company updated its full-year outlook for 2021, with revenue now expected to increase 30-35% year-over-year, up from prior guidance of 25-30% in May and 20% in March. The continued improvement in the Company’s financial performance is expected to accelerate during the second half of 2021, with gross margin expected to expand 300-400 basis points over the comparable period of 2020. Cash flow from operations for 2021 is expected to increase significantly year-over-year.
- Sypris Electronics announced a number of important contract awards during the quarter, including the following:
o A contract to manufacture and test electronic assemblies for power management and other systems for a Deep Space program from a U.S. DOD prime contractor, with production to begin during 2021.
o An agreement to manufacture and test electronic power supply modules for multiple high-reliability Subsea Communication Networks, with production to begin during 2021 and continue into 2022.
o A full-rate production award from a U.S. DOD prime contractor to manufacture and test multiple electronic power supply modules for a large mission-critical Electronic Warfare program for the U.S. Navy, with production to begin during 2021.
- Sypris Technologies announced awards for specialty high-pressure closures for use in two large projects, the Golden Pass LNG Export project and the Cherry Point Refinery Renewable Diesel Optimization project, with shipments expected to be completed during 2021.
- Subsequent to quarter end, Sypris Electronics announced a contract award to manufacture and test embedded circuit card assemblies that will perform certain Cryptographic functions for the Army Key Management System, with production to begin during 2021.
“Both operating segments reported notable improvements in their financial results for the quarter, contributing to a strong quarter for the Company and positioning the business for further improvements during the second half. Backlog for Sypris Electronics is up 29.3% from the second quarter of 2020 and up 51.9% since the beginning of the year, while the OEM backlog of Class 8 commercial vehicles is estimated to be up 187% year-over-year,” commented Jeffrey T. Gill, President and Chief Executive Officer.
“Backlog for Sypris Electronics in 2021 has reached its highest level in eleven years, with deliveries now scheduled well into 2022. Shipments increased during the second quarter, up 30.0% sequentially from the first quarter. We expect shipments from our recent contract wins to begin to contribute to revenue in the third quarter and provide meaningful sequential growth in the top line going forward.
“Demand from customers serving the automotive, commercial vehicle, sport utility and off-highway markets has continued to accelerate. Freight demand is currently overwhelming industry capacity, with supply chain constraints currently dictating OEM production levels. The continued strong outlook for these markets gives us a clear path to support our growth objectives going forward.
“As we discussed on our previous call, activity levels in the oil and gas industry remained challenging during the first half of 2021. However, steadily improving commodity prices, gradually reopening economies and increasing pipeline activity have resulted in increased orders recently, and we continue to anticipate year-over-year growth of our energy related products.”
Concluding, Mr. Gill said, “Our customer base and the markets we serve are considerably more diversified than at any point in our recent history. As an essential business, we have a responsibility to ensure that our defense, communications, energy, and transportation sectors remain vibrant. We will continue to monitor developments, act promptly to mitigate risks and take the necessary steps required to ensure deliveries continue to be made to our customers in a timely manner.”
Second Quarter Results
The Company reported revenue of $26.0m for the second quarter of 2021, compared to $17.2m for the prior-year period. Additionally, the Company reported net income of $3.8m for the second quarter of 2021, or $0.17 per diluted share, compared to a net loss of $0.3m, or $0.02 per share, for the prior-year period. Net income in the second quarter of 2021 included the recognition of a $3.6m gain on the forgiveness of the Company’s PPP loan. Results for the second quarter of 2020 include net gains of $0.8m from the sale of idle assets by Sypris Technologies.
For the six months ended July 4, 2021, the Company reported revenue of $46.0m compared with $39.6m for the first half of 2020. The Company reported net income of $2.2m, or $0.10 per diluted share, compared with a net loss of $0.7m, or $0.03 per share, for the prior year period. Results for the six months ended July 4, 2021, include the gain from the forgiveness of the Company’s PPP loan noted above. Results for the six months ended July 5, 2020, include gains of $1.0m from the sale of idle assets by Sypris Technologies.
Revenue for Sypris Technologies was $17.1m in the second quarter of 2021 compared to $7.4m for the prior-year period, reflecting the positive impact of new programs and the strength of the commercial vehicle market to drive revenue to its highest quarterly level since the first quarter of 2016. Gross profit for the second quarter of 2021 was $2.5m, or 14.6% of revenue, compared to $0.2m, or 3.1% of revenue, for the same period in 2020. Gross profit for the second quarter of 2021 benefitted from the significant increase in shipments, higher levels of fixed cost absorption and greatly improved productivity.
Revenue for Sypris Electronics was $8.8m in the second quarter of 2021 compared to $9.7 m for the prior-year period. Shipments during the second quarter of 2021 were lower than the prior-year period as production tapered down on a limited rate production contract for a key program that is expected to ramp up beginning late in the third quarter as full rate production is launched. Gross profit for the second quarter of 2021 was $1.8m, or 20.4% of revenue, compared to $1.9m, or 19.5% of revenue, for the same period in 2020.
Commenting on the future, Mr. Gill added, “Demand has strengthened significantly from customers serving the automotive, commercial vehicle and sport utility markets, with Class 8 forecasts showing year-over-year production increases of over 34.6% for 2021 and an additional 24.6% in 2022. Similarly, demand from customers in the defense and communications sector remains robust. While the energy market continues to be volatile, we continue to secure new orders on important projects around the world.
“The second quarter marks the turning point for the Company. We expect the significant growth in orders and strength of our markets to have a substantial impact on our financial results through the second half of the year, with a strong rise in revenue, margins and income forecast for the period and continuing going forward.
“As a result, we have updated our outlook to include a 30-35% growth in the Company’s top line in 2021, which is up from our previous guidance of 25-30% in May and 20% in March. Gross margin is forecast to expand 300 to 400 basis points year-over-year during the second half of 2021, which is expected to contribute to strong double-digit percentage growth in cash flow generated from operations for the full year.
“We remain focused on meeting the important needs of our customers who serve defense, communications, energy, transportation, and other critical infrastructure industries. With a strong backlog and recovering markets, we believe that the remainder of 2021 has the potential to be very positive for Sypris.”
About Sypris Solutions
Sypris Solutions is a diversified provider of truck components, oil and gas pipeline components and aerospace and defense electronics. The Company produces a wide range of manufactured products, often under multi-year, sole-source contracts. For more information about Sypris Solutions, visit its Web site at www.sypris.com. (Source: BUSINESS WIRE)
12 Aug 21. Advent Technologies Reports Q2 2021 Results.
- Q2 Revenue up 400% versus prior year on increased customer demand for Advent product offerings and acquisition of UltraCell
- Net loss of $(3.14)m and adjusted net loss of $(6.79)m excluding warrant valuation adjustment
- Company holds cash reserves of $116.11m
- Strong market interest reflected in high level of commercial activity
Advent Technologies Holdings, Inc. (NASDAQ: ADN) (“Advent” or the “Company”), an innovation-driven leader in the fuel cell and hydrogen technology space, today announced consolidated financial results for the three months ended June 30, 2021. All amounts are in U.S. dollars unless otherwise noted and have been prepared in accordance with U.S. generally accepted accounting principles (GAAP).
Q2 2021 Financial Highlights
(all comparisons are to Q2 2020 unless otherwise noted)
- Total revenue of $1.00m, a 400% year-over-year increase, the result of increased customer demand for Advent’s products across the board and the acquisition of UltraCell.
- Gross Profit of $0.33m, a year-over-year increase of $0.35m primarily due to higher revenues.
- Operating expenses were $7.2m, primarily related to increased staffing and costs to operate as a public company, as well as our cooperative research and development agreement (“CRADA”) with the Department of Energy which we announced in March 2021.
- Net loss and adjusted net loss were $(3.14)m and $(6.79)m, respectively. Adjusted net loss excludes the impact from the change in the fair value of outstanding warrants.
- Net loss per share was $(0.07).
- Cash reserves were $116.11m on June 30, 2021, a decrease of $8.87m from March 31, 2021, driven primarily by the use of cash for operating and capital expenses and a $2 m payment to complete the acquisition of UltraCell.
“As a public company, we continue to see strong demand for our products from existing and new customers, especially following the acquisition of UltraCell LLC,” said Dr. Vasilis Gregoriou, Chairman and CEO of Advent Technologies. “The strong revenue growth in the quarter continues to demonstrate market interest in high-temperature proton exchange membrane (HT-PEM) based products. We are confident that many of our customers are on a fast growth trajectory and our HT-PEM based products are an enabling technology that will serve their needs.”
Q2 2021 Financial Summary
For a more detailed discussion of Advent’s second quarter 2021 results, please see the company’s financial statements and management’s discussion & analysis, which are available at ir.advent.energy.
Q2 2021 Business Updates:
- Acquisition of the Fuel Cell Systems Businesses, Serenergy and fischer eco solutions GmbH, from fischer Group: On June 25, 2021, Advent announced that the Company entered into an agreement to acquire the fuel cell systems businesses, Serenergy and fischer eco solutions GmbH, from fischer Group. Serenergy, based in Denmark and the Philippines, is a leading manufacturer of HT-PEM fuel cell systems globally, with thousands shipped around the globe during its 15-year operation. fischer eco solutions (“FES”), based in Germany, provides fuel-cell stack assembly and testing as well as the production of critical fuel cell components, including membrane electrode assemblies (“MEAs”), bipolar plates, and reformers. FES operates a facility on fischer Group’s campus in Achern, Germany, and that facility will be leased to Advent upon closing of the deal. The transaction is expected to accelerate the implementation of Advent’s business plan and to expand Advent’s growing revenue base in full fuel cell stacks and systems. The transaction is expected to close in the third quarter of 2021.
- Expanding Global Footprint Through Acquisitions: With the addition of Serenergy and fischer eco solutions, Advent will expand its geographic footprint by three countries in Europe and southeast Asia and will add 92 employees to its growing team. The deal will bring together some of the leading minds in the high-temperature fuel cell space and will further build Advent’s platform to meet the rapidly increasing demand for clean energy worldwide. This transaction fully aligns with Advent’s “Any Fuel. Anywhere.” option and this, together with the previously completed UltraCell acquisition, makes Advent a true global leader in the remote and off-grid power market for fuel cell production, with mobility and aviation products on the horizon as well.
- Collaboration with the DOE: On March 1, 2021, Advent announced that it had entered into a joint development agreement (the “CRADA”) with the United States Department of Energy’s (DOE’s) Los Alamos National Laboratory (LANL), Brookhaven National Laboratory (BNL), and National Renewable Energy Laboratory (NREL). Under this CRADA, along with support from the DOE’s Hydrogen and Fuel Cell Technologies Office (HFTO), Advent’s team of scientists are working closely with its LANL, BNL, and NREL counterparts to develop breakthrough materials to help strengthen U.S. manufacturing in the fuel cell sector and bring high-temperature proton exchange membrane (HT-PEM) fuel cells to the market. This very important program has continued to progress over recent months, including delivery and testing of samples for key components of next generation HT-PEM materials.
- Announced Participation in Major European Hydrogen Project (IPCEI) “White Dragon” Proposal Submission: On May 19, 2021, Advent announced the national proposal for hydrogen technologies “White Dragon” was submitted by a group of the largest energy companies in Greece. The proposal sets forth a future vision for the entire hydrogen value chain and a path to expand its role in the Greek energy system’s reduced carbon goals. The objective of the project is to gradually replace the lignite power plants of Western Macedonia and transition to clean energy production and transmission, with the ultimate goal of fully decarbonizing Greece’s energy system. The “White Dragon” project plans to use large-scale renewable electricity to produce green hydrogen by electrolysis in Western Macedonia. This hydrogen would then be stored and, through Advent’s high-temperature fuel cells, supply all of Greece with clean electricity, green energy and heat. Further, in July 2021, Advent announced that it had been nominated by the Greek Ministry of Development and Investment to be part of the first wave of IPCEI on Hydrogen and had also been selected by the Ministry to be the Coordinator of Technology Field 2 dedicated to fuel cells and associated technologies. The company is pleased to be the designated fuel cell partner for an €8 bn project.
- Selection of Advent’s Wearable Fuel Cell for the New Contract with U.S. Department of Defense: On June 7, 2021, Advent signed a new contract through its subsidiary, UltraCell, with the U.S. Department of Defense for a wearable fuel cell. Through this contract, Advent will be focusing on completing the MIL-STD certification of UltraCell’s 50 W Reformed Methanol Wearable Fuel Cell Power System (“Honey Badger”). Honey Badger is designed to integrate with materials already utilized by the U.S. Army and will operate as a wearable battery that can be functioning “on the move.” As noted previously, Honey Badger was selected by the DoD’s National Defense Center for Energy and Environment (NDCEE) to take part in its 2021 demonstration/validation program. The Company remains excited about the continued progress of Honey Badger, and partnering with the U.S. Army is a landmark for Advent as its products become a key choice for defense applications.
- Announced New Chief Financial Officer: On July 2, 2021, Advent announced that Kevin Brackman joined the Company as its new Chief Financial Officer. He will report to Advent Chairman and CEO Dr. Vasilis Gregoriou. Mr. Brackman replaces Bill Hunter, who had served as CFO of Advent following its merger in February 2021 with AMCI Acquisition Corp., where he was Chief Executive Officer.
Dr. Gregoriou continued, “Our business momentum continues to build as we focus on developing and fostering new and existing customer relationships that support our strategic growth initiatives. Our sales of MEAs and redox flow battery components remain strong, and we expect to see both revenues and bookings increase as we move through the remainder of 2021. In addition, the pending acquisition of the fuel cell systems businesses, Serenergy and FES, from fischer Group will help us execute on our business plan.”
“The future for Advent Technologies has never been brighter. We are optimistic that Advent will continue to increase market share as the world focuses more on clean energy. Advent’s “Any Fuel. Anywhere.” products give us a clear advantage in a market for which very few companies compete and where hydrogen in its compressed gas form required by the low-temperature PEM competitors is not an economical option. Countries representing over half of global GHG emissions have communicated net-zero emissions targets. We believe our fuel cell technology will play a key role in driving decarbonization and as we move worldwide towards clean renewable energy, Advent is prepared to increasingly contribute to the goal of 100% clean energy.” (Source: BUSINESS WIRE)
11 Aug 21. Precision Aviation Group, Inc. (PAG) acquires Trace Aviation (TA). Atlanta-based Precision Aviation Group, Inc. (PAG), a leading provider of products and value-added services to the Worldwide Aerospace and Defense industries, announces the acquisition of Trace Aviation (TA) of Jackson, Mississippi. TA is widely recognized for its MRO capabilities on King Air/1900 landing gear assemblies.
David Mast, President & CEO of PAG stated, “We are very pleased with the acquisition of Trace. The addition of TA expands our Landing Gear MRO capabilities. TA focuses on Beechcraft King Air/1900 landing gear exchanges and overhauls. Additionally, TA, like PAG, is well known for delivering exceptional customer service and industry leading products to their customers worldwide. It is the perfect platform to expand our MRO Services to better serve our customers.”
Mike Pigott, President of TA stated, “We are enthusiastic about becoming part of PAG. Not only will we be able to significantly expand our product and service offerings to our existing customers by having access to PAG’s $50m rotable inventory, but we are excited to expand our MRO capabilities in the coming months. We believe this partnership will provide significant benefit to our customers, vendors, and employees.”
Precision Aviation Group (PAG) is a leading provider of products and value-added services to the aerospace and defense industry worldwide. With 13 Repair Stations, and over 500,000-square-feet of sales and service facilities in the United States, Canada, Australia, Singapore, and Brazil – PAG uses its distinct business units and customer-focused business model to serve aviation customers through two business functions – Aviation Supply Chain – and its trademarked Inventory Supported Maintenance, Repair and Overhaul (ISMRO®).
PAG provides MRO and Supply Chain Solutions for Fixed and Rotary-wing aircraft. PAG subsidiaries have MRO capabilities on over 39,000 products, including Accessories, Avionics, Dynamic Components, Engines, Fuel Accessories, Glass Panel Displays, Hydraulics, Instruments, Landing Gear, Starter/Generators, Sub-Assemblies and Wheels/Brakes. (www.precisionaviationgroup.com)
About Trace Aviation:
Trace Aviation was founded by Mike and Cheryl Pigott in 2004, when Mike realized the need for quality King Air landing gear built with the eye of a mechanic. The company developed in-house capabilities to deliver Beechcraft King Air landing gear built per aircraft specification, serial number, and configuration. TA repairs worn bores and bushings, brace assemblies, hydraulics, actuator housings, cylinder bearings and axles. The company stocks landing gear assemblies for King Air 90, 100, 200, 300, and 1900 platforms. TA is an FAA and EASA certified Repair Station. TA operates out of a 20,000 square foot facility at Medgar Evers International Airport in Jackson, MS and currently employs over 20 aircraft professionals. (www.traceaviation.com) (Source: PR Newswire)
11 Aug 21. CAE reports first quarter fiscal 2022 results.
Revenue of $752.7m up 37% vs. $550.5m in prior year
- EPS of $0.16 vs. negative $0.42 in prior year
- Adjusted EPS(1) of $0.19 ($0.15 excluding COVID-19 government support programs(2)) vs. negative $0.11 (negative $0.24 excluding COVID-19 government support programs) in prior year
- Operating income(3) of $86.2m vs. loss of $110.3m in prior year
- Adjusted segment operating income(4) of $98.4m ($84.8m excluding COVID-19 government support programs(5)) vs. loss of $2.1m (loss of $46.5m excluding COVID-19 government support programs) in prior year
- Concluded US$1.05bn acquisition of L3Harris Technologies’ Military Training business post quarter
(NYSE: CAE) (TSX: CAE) – CAE today reported revenue of $752.7m for the first quarter of fiscal 2022, compared with $550.5m in the first quarter last year. First quarter net income attributable to equity holders was $46.4m ($0.16 per share) compared to a loss of $110.6m (negative $0.42 per share) last year. Adjusted net income(6) in the first quarter of fiscal 2022 was $55.6m ($0.19 per share) compared to a loss of $30.3m (negative $0.11 per share) last year.
Operating income this quarter was $86.2m (11.5% of revenue), compared to a loss of $110.3m in the first quarter of fiscal 2021. First quarter adjusted segment operating income was $98.4m (13.1% of revenue) compared to a loss of $2.1m last year. Adjusted segment operating income excluding COVID-19 government support programs was $84.8m (11.3% of revenue) compared to a loss of $46.5m last year. All financial information is in Canadian dollars unless otherwise indicated.
“Our positive momentum continued into the new fiscal year and I am pleased with our strong first quarter performance, punctuated by 37% year over year revenue growth and $0.19 of adjusted earnings per share,” said Marc Parent, CAE’s President and Chief Executive Officer. “We made important strategic progress during the quarter, penetrating more share in the Civil training market with two new ten-year exclusive airline training agreements, and two new partnerships with OEMs in the emerging Advanced Air Mobility market. In Defence, we won prime contracts and key positions on major IDIQs that significantly expand CAE’s customer base and market reach. Subsequent to the end of the quarter, we announced our $1 bn, five-year research and development program, Project Resilience, to develop the technologies of tomorrow, including digitally immersive solutions using data ecosystems and artificial intelligence in civil aviation, defence and security and healthcare.”
On CAE’s outlook, Marc Parent added, “we expect continued strong year over year growth in fiscal year 2022, as recovery takes hold in our end markets, we integrate our recent acquisitions and ramp up our cost savings initiatives. The slope of recovery to pre-pandemic levels and beyond continues to depend on the timing and rate at which border restrictions can be safely lifted and normal activities resume in our end markets and in the geographies where we operate. Notwithstanding disparate global vaccination rates and volatile border rules which obscure normal market visibility, we still expect strong growth in Civil, weighted more to the second half. In Defence, we are extremely pleased to have concluded the L3Harris Technologies Military Training business acquisition as early as we did, thereby creating the world’s leading platform-agnostic, global training and simulation defence pure play business. COVID-related headwinds persist for international defence business; however, we view them as temporary, and we also expect strong growth in Defence this fiscal year, similarly weighted to the back half. In Healthcare, our outlook is for continued growth involving our core Healthcare training and simulation products. We made several highly strategic moves over the last year-and-a-half to expand CAE’s position and further strengthen the Company. The multi-year outlook for CAE is more compelling than ever, and we expect to deliver superior and sustainable growth and strong free cash flow(9) over the long-term.”
Civil Aviation Training Solutions (Civil)
First quarter Civil revenue was $432.9m, up 75% compared to the first quarter last year. Operating income was $59.0m compared to a loss of $97.9m in the same quarter last year. Adjusted segment operating income was $69.7m (16.1% of revenue) compared to a loss of $16.2m in the first quarter last year. Adjusted segment operating income excluding COVID-19 government support programs was $64.5m (14.9% of revenue) compared to a loss of $38.8m in the same quarter last year. During the quarter, Civil delivered 11 full-flight simulators (FFSs)(10) to customers and first quarter Civil training centre utilization(11) was 56%.
During the quarter, Civil signed training solutions contracts valued at $338.1m, including contracts for five FFSs sales. Notable training contracts for the quarter include ten-year exclusive aviation training agreements with Scandinavian Airlines (SAS) and WestJet, four-year business aviation training agreements with Journey Aviation and GAMA Aviation and a three-year business aviation training agreement with Avcon Jet AG.
Civil also made progress in the Advanced Air Mobility market with its selection 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. Civil also announced a strategic partnership with Volocopter to develop, certify and deploy an innovative pilot training program and courseware development for eVTOL operations.
The Civil book-to-sales ratio(8) was 0.78x for the quarter and 0.88x for the last 12 months. The Civil backlog at the end of the quarter was $4.2bn.
Defence and Security (Defence)
First quarter Defence revenue was $288.2m, up 3% compared to the first quarter last year. Operating income was $22.6m compared to a loss of $9.2m in the same quarter last year. Adjusted segment operating income was $23.7m (8.2% of revenue) compared to $17.3m (6.2% of revenue) in the first quarter last year. Adjusted segment operating income excluding COVID-19 government support programs was $15.7m (5.4% of revenue) compared to a loss of $3.3m in the same quarter last year.
During the quarter, Defence booked orders for $151.8m, including newly awarded contracts from the U.S. Army to provide a new and upgraded Maritime Integrated Training System. Defence was also awarded a contract from the SOSSEC consortium to design and develop the initial prototype HH-60W virtual reality/mixed reality aircrew trainer for the USAF. Other notable contracts include: continuing to provide upgrades and updates on C-130J training systems for the U.S. Air Force as well as KC-130J training systems for the U.S. Marine Corps; continuing to provide a range of in-service support solutions for the Royal Canadian Air Force’s CF-18 aircraft; and continuing to provide management and support to the Royal Australian Air Force aerospace simulators. Defence also received an order to provide a new part-task trainer, a range of updates, and additional training support services for the PC-21 ground-based training system supporting pilot training for the French Air Force (Armée de l’Air).
The Defence book-to-sales ratio was 0.53x for the quarter and 0.87x for the last 12 months (excluding contract options). The Defence backlog, including options and CAE’s interest in joint ventures, at the end of the quarter was $3.7bn. The Defence pipeline remains strong with some $5.8bn of bids and proposals pending customer decisions.
Following the end of the quarter, CAE concluded the acquisition of L3Harris Technologies’ Military Training business (L3H MT) for US$1.05bn, subject to customary adjustments, with all regulatory approvals having been obtained and all other closing conditions having been met. Augmented by L3H MT, Defence won key positions on three major indefinite delivery/indefinite quantity contracts (IDIQs) and two noteworthy prime contract wins, including prime positions on the U.S. General Service Administration (GSA) ASTRO IDIQ vehicle, the largest-ever IDIQ contract win in CAE’s history, for data operations, aircraft, development and systems integration, support and training pools, providing access to a budget of several billions of dollars over 10 years. In addition, Defence won a prime position on the Multiple Award Task Order Contract (MATOC) IDIQ to provide mission support services to the US Army Futures Command, and it won a position as a key partner to a small business on the National Cyber Range Complex IDIQ. Furthermore, Defence won a competitive prime contract with an expected life cycle value of $90 m USD over eight years to develop simulators and training for U.S. Air Force Joint Terminal Attack Controllers. Defence also won its first three letter agency prime contract, expanding its market penetration into synthetic environment-enhanced multi-domain operational support and training.
First quarter Healthcare revenue was $31.6m, up 42% compared to the first quarter last year. Operating income was $4.6 m compared to a loss of $3.2m in the same quarter last year. Adjusted segment operating income was $5.0m (15.8% of revenue) compared to a loss of $3.2m in the first quarter last year. Adjusted segment operating income excluding COVID-19 government support programs was $4.6m (14.6% of revenue), compared to a loss of $4.4m in the same quarter last year.
During the quarter, Healthcare released CAE Vimedix 3.2, an advanced software technology that makes Vimedix the industry’s first ultrasound simulator with 3D/4D ultrasonography and multiplanar reconstruction for improved fidelity and realism, and re-launched CAE ICCU, a digital portfolio of learning solutions targeting critical-care clinicians for ultrasound education. Additionally, Healthcare continued to provide new tools and training capabilities to meet its customers’ training needs during the COVID-19 pandemic.
Healthcare also partnered with Rush Center for Clinical Skills and Simulation (RCCSS) to enhance healthcare education and improve patient safety, including support for RCCSS simulation research initiatives. CAE incurred restructuring, integration and acquisition costs of $12.2m during the first quarter of fiscal 2022 in connection with the previously announced measures to best serve the market by optimizing CAE’s global asset base and footprint, adapting its global workforce and adjusting its business to correspond with expected levels of demand for certain products and services. This brings the total restructuring, integration and acquisition costs incurred since the start of the program in the second quarter of last year to $136.2m. Related to these measures, CAE expects to incur total restructuring expenses of approximately $50m in fiscal year 2022. The Company continues to expect significant annual recurring cost savings to ramp up to a run rate of approximately $65 to $70m by the end of the current fiscal year 2022.
Net cash used in operating activities was $129.1m for the quarter, compared to $88.4m in the first quarter last year. Free cash flow was negative $147.6m for the quarter compared to $92.7m in the first quarter last year. The decrease was mainly due to higher investments in non-cash working capital, partially offset by an increase in cash provided by operating activities. CAE usually sees a higher level of investment in non-cash working capital accounts during the first half of the fiscal year and tends to see a portion of these investments reverse in the second half.
Income taxes this quarter were $10.3 m, representing an effective tax rate of 18%, compared to 24% for the first quarter last year. The income tax rate was impacted by restructuring costs this quarter, excluding which, the rate would have been 19%. On this basis, the decrease in the tax rate was mainly attributable to a beneficial impact on certain tax assets, partially offset by the change in the mix of income from various jurisdictions.
Growth and maintenance capital expenditures(13) totaled $73.9m this quarter.
Net debt(14) at the end of the quarter was $1,669.2m for a net debt-to-capital ratio(15) of 33.9%. This compares to net debt of $1,425.4m and a net debt-to-capital ratio of 30.7% at the end of the preceding quarter.
Adjusted return on capital employed (ROCE)(16) was 6.7% this quarter compared to 5.0% last quarter and 8.0% in the first quarter last year. Adjusted ROCE excluding COVID-19 government support programs was 5.3% this quarter compared to 3.1% last quarter and 7.4% in the first quarter last year.
CAE’s participation in the Government of Canada CEWS program (COVID-19 government support) ceased on June 5, 2021.
Management outlook for fiscal year 2022
CAE is a high technology company at the leading edge in digital immersion. The Company is poised to benefit from how the world is changing in a post-COVID-19 environment and management has adapted its growth strategy to seize on the opportunities presented by this new reality. CAE has made several important moves over the last year-and-a-half to expand its position, including raising approximately $1.5 bn in equity to pursue a pipeline of growth opportunities, including the acquisition of five companies in core and related markets in Civil and the Company’s largest-ever acquisition, namely L3H MT. At the same time as expanding CAE’s reach externally, the Company embarked on enterprise level projects to substantially lower its cost structure and achieve even greater levels of operational excellence, including consolidating its global asset base and innovating digitally enabled processes.
CAE’s adapted strategy and expanded position are well aligned with a post-COVID-19 business and geopolitical landscape, with expected secular trends favorable for all three of the Company’s business segments. Greater desire by airlines to entrust CAE with their critical training and operational support activities, higher expected pilot demand (attrition and crisis-induced career shifts) and strong growth in business jet travel demand are enduring positives for the Civil business. The paradigm shift from asymmetric to near-peer threat and recognition of the sharply increased need for digital immersion-based, synthetic solutions in national defence considerations are tailwinds that favour the Defence business. Healthcare is poised to leverage opportunities presented by a growing nursing shortage and rising demand for Public Safety and Security.
CAE’s customers operate in high stakes, complex environments, and ensuring the highest levels of safety, efficiency and readiness requires innovative approaches rooted in technology. CAE intends to continue making important progress to galvanize its industrial technology leadership, underscored by the recent announcement that it will be investing $1 bn over the next five years in innovation via Project Resilience. This transformation project is intended for CAE to develop the technologies of tomorrow, including digitally immersive solutions using data ecosystems and artificial intelligence in civil aviation, defence & security and healthcare. The project will also allow CAE to position itself as a leader in end-to-end technology, operational support and training solutions for the emerging Advanced Air Mobility market.
The outlook for the Company is more compelling than ever, and it expects to deliver superior and sustainable growth and strong free cash flow over the long-term. The short-term outlook for CAE for fiscal year 2022 is for continued strong year over year growth as recovery takes hold in its end markets, it integrates recent acquisitions and ramps up cost savings initiatives. The slope of recovery to pre-pandemic levels and beyond continues to depend on the timing and rate at which border restrictions can be safely lifted and normal activities resume in CAE’s end markets and in the geographies where it and its customers have significant operations. This is especially the case for its Civil business unit, where the Company believes there is considerable pent up demand for air travel. Notwithstanding disparate global vaccination rates and volatile border rules which obscure normal market visibility, the Company still expects strong growth in Civil, with a greater proportion of that growth expected to come in the second half. In Defence, the closing of the L3H MT acquisition provides greater definition to the remainder of fiscal year 2022. Management’s focus will be on the successful integration of L3H MT, establishing CAE as the world’s leading platform-agnostic, global training and simulation defence pure play business, which is expected to bring increased potential to capture business around the world, accelerated with the expanded capability and customer set the combined entity now possesses. COVID-related headwinds persist for international defence business; however, Management views them as temporary, and expects strong growth overall in Defence this fiscal year, also to be more heavily weighted to the second half. And in Healthcare, the outlook is for continued growth this fiscal year, based off the core Healthcare training and simulation products business.
With several attractive market-led expansion investment opportunities on the horizon, management sees more opportunities to deploy organic capital and has increased expectations for total capital expenditures to now exceed $250m in fiscal year 2022. The Company usually sees a higher investment in non-cash working capital accounts in the first half of the fiscal year, and as in previous years, management expects a portion of the non-cash working capital investment to reverse in the second half. The Company continues to target a 100% conversion of net income to free cash flow for the year. CAE expects to incur total restructuring expenses of approximately $50m in fiscal year 2022, and continues to expect significant annual recurring cost savings to ramp up to a run rate of approximately $65 to $70 m by the end of the current fiscal year.
Management’s expectations are based on the prevailing market conditions, the timing and degree of easing of global COVID-19-related mobility restrictions, and customer receptivity to CAE’s training solutions and operational support solutions as well as material assumptions contained in this press release, quarterly MD&A and in CAE’s fiscal year 2021 MD&A.
Corporate Social Responsibility
During the quarter, CAE issued its FY21 Annual Activity and Corporate Social Responsibility (CSR) report, a single source of information in key areas demonstrating how our solutions and activities generate benefits across the three central dimensions of sustainability: economic, environmental and social. In addition to reporting according to the Global Reporting Initiative (GRI), the Carbon Disclosure Project (CDP) and the Task force on Climate-related Financial Disclosures (TCFD), as of FY21, CAE now reports on two industrial categories identified by the Sustainability Accounting Standards Board (SASB).
The report also includes information on CAE’s FY21 achievements, which include becoming the first carbon-neutral Canadian aerospace company and the evolution of its responsible procurement practices by integrating labour, environment and anti-corruption considerations as well as Diversity & Inclusion initiatives into its global strategic sourcing tools and processes. To learn more about CAE’s corporate sustainability roadmap and achievements, the report can be downloaded at https://www.cae.com/social-responsibility/. (Source: PR Newswire)
11 Aug 21. Americans vie for UK’s Meggitt as TransDigm makes $9.7bn overture. A U.S. bidding battle could be brewing for UK aerospace engineer Meggitt (MGGT.L), which has been approached by TransDigm (TDG.N) over a possible 7.03bn pound ($9.74bn) offer, days after accepting a lower bid from Parker-Hannifin (PH.N).
Meggitt, a supplier of aerospace components including wheels and brakes for military fighters, announced TransDigm’s overture on Wednesday, saying the possible offer of 900 pence per share from the U.S. player was preliminary and non-binding.
Nonetheless, that topped an 800 pence per share proposal from Parker last week. Meggitt said it continued to back Parker’s 6.3bn pound proposal, but said it would also review TransDigm’s potential offer. read more
News of the approach from Ohio-based TransDigm, which makes aircraft components and systems used in commercial and military aircraft, sent shares of London-listed Meggitt to a fresh record high of 846 pence before closing at 830 pence.
Meggitt shares, which lost nearly 30% in value last year, have gained 77% since the Parker deal was announced last week.
“Meggitt believes Parker’s offer continues to represent an attractive proposition for Meggitt’s shareholders and for its broader stakeholders,” said the company, based in Coventry, central England.
TransDigm’s plans for Meggitt and the potential impact on the company’s employees, pension schemes and customers along with the British government and other regulatory bodies would be considered carefully, the British firm added.
Meggitt employs over 9,000 people in 14 countries across the defence, aerospace and energy sectors.
Parker, which is also based in Ohio, and operates in industrial and aerospace markets, has made a series of commitments to the British government on jobs and security.
Analysts have said that it was unlikely that the government would block Meggitt’s deal with Parker, given the suitor’s proposed safeguards.
U.S.-listed shares of Parker were down 1.2%, while TransDigm was marginally up by 1627 GMT.
TransDigm’s move marks the latest interest from a U.S. company for a British defence group. Cobham, which was bought by U.S. private equity firm Advent last year, made a $3.6bn offer to buy UK-based rival Ultra Electronics (ULE.L) last month, for instance. read more
The Ultra proposal has attracted the attention of the British government.
Takeovers for British companies hit a 14-year high by value in the first seven months of 2021, driven by relatively cheap valuations due in part to the pandemic and Brexit.
UK drugmaker Vectura (VEC.L) is in the middle of a takeover battle between New York-based tobacco giant Philip Morris and Washington-based private equity firm Carlyle. read more
Global M&A hit $3.6trn so far this year, an all-time year-to-date high, with the United States driving activity, according to data provider Refinitiv. ($1 = 0.7214 pounds) (Source: Reuters)
12 Aug 21. Elbit Systems Ltd. (the “Company”) (NASDAQ and TASE: ESLT), the international high technology company, reported today its consolidated results for the quarter ended June 30, 2021. In this release, the Company is providing US-GAAP results as well as additional non-GAAP financial data, which are intended to provide investors a more comprehensive view of the Company’s business results and trends. For a description of the Company’s non-GAAP definitions see page 4 below, “Non-GAAP financial data”. Unless otherwise stated, all financial data presented is US-GAAP financial data.
Management Comment: Bezhalel (Butzi) Machlis, President and CEO of Elbit Systems, commented: “Our second quarter results included a 21% growth in revenues, underscoring our diversified portfolio of technologies and broad global footprint. I am also pleased by the improvement in profitability and cash generation. Demand for our systems and services from customers around the world supported the 26% growth in our backlog to $13.6bn. The diversification of our growth across areas of operation and geographies reflects successful implementation of our strategy and provides us with confidence in the Company’s future”.
Acquisition of Sparton
On April 6, 2021, we completed the acquisition of Sparton Corporation (“Sparton”) for a purchase price of approximately $380m. Headquartered in De Leon Springs, Florida, Sparton is a premier developer, producer and supplier of systems supporting Undersea Warfare for the U.S. Navy and allied military forces. The financial results of Sparton were included in our consolidated reports commencing the date of the acquisition.
Second quarter 2021 results:
Revenues in the second quarter of 2021 were $1,302.4m, as compared to $1,079.4m in the second quarter of 2020. A major part of the growth was organic, in addition to the contribution of Sparton.
Non-GAAP(*) gross profit amounted to $346.6m (26.6% of revenues) in the second quarter of 2021, as compared to $286.4m (26.5% of revenues) in the second quarter of 2020. GAAP gross profit in the second quarter of 2021 was $339.2 m (26.0% of revenues), as compared to $280.5m (26.0% of revenues) in the second quarter of 2020.
Research and development expenses, net were $95.4m (7.3% of revenues) in the second quarter of 2021, as compared to $79.0m (7.3% of revenues) in the second quarter of 2020.
Marketing and selling expenses, net were $75.4m (5.8% of revenues) in the second quarter of 2021, as compared to $67.4m (6.2% of revenues) in the second quarter of 2020.
General and administrative expenses, net were $65.9m (5.1% of revenues) in the second quarter of 2021, as compared to $52.0m (4.8% of revenues) in the second quarter of 2020.
Other operating income, net was $14.7m in the second quarter of 2021, as compared to $35.0m in the second quarter of 2020. Other operating income was mainly a result of gains from sale of buildings.
Non-GAAP(*) operating income was $114.9m (8.8% of revenues) in the second quarter of 2021, as compared to $92.7m (8.6% of revenues) in the second quarter of 2020. GAAP operating income in the second quarter of 2021 was $117.1m (9.0%of revenues), as compared to $117.1m (10.9% of revenues) in the second quarter of 2020.
Financial expenses, net were $7.1m in the second quarter of 2021, as compared to $16.6m in the second quarter of 2020. The lower level of financial expenses in the second quarter of 2021 was mainly a result of gains from changes in fair value of financial assets and liabilities.
Other expenses, net were $1.4m in the second quarter of 2021, as compared to other income, net of $13.0m in the second quarter of 2020. Other income, net in the second quarter of 2020 included income of approximately $15.4m as a result of revaluation and capital gain related to the sale of shares in a subsidiary in Israel.
Taxes on income were $20.1m in the second quarter of 2021, as compared to $23.6m in the second quarter of 2020.
Equity in net earnings of affiliated companies and partnerships was $13.5m in the second quarter of 2021, as compared to equity in net losses of $0.4m in the second quarter of 2020. Equity in net earnings of affiliated companies and partnerships in the second quarter of 2021 included a gain of approximately $10m, which resulted from the sale of the Company’s share in an affiliated company.
Non-GAAP(*) net income attributable to the Company’s shareholders in the second quarter of 2021 was $93.4m (7.2% of revenues), as compared to $68.9m (6.4% of revenues) in the second quarter of 2020. GAAP net income attributable to the Company’s shareholders in the second quarter of 2021 was $101.7m (7.8% of revenues), as compared to $89.3m (8.3% of revenues) in the second quarter of 2020.
Non-GAAP(*) diluted net earnings per share attributable to the Company’s shareholders were $2.11 for the second quarter of 2021, as compared to $1.56 for the second quarter of 2020. GAAP diluted earnings per share attributable to the Company’s shareholders in the second quarter of 2021 were $2.30, as compared to $2.02 in the second quarter of 2020.
The Company’s backlog of orders as of June 30, 2021 totaled $13.6bn, as compared to $11.8bn as of March 31, 2021. Approximately 72% of the current backlog is attributable to orders from outside Israel. Approximately 51% of the backlog is scheduled to be performed during the remainder of 2021 and 2022.
Cash flows provided by operating activities in the six months ended June 30, 2021 were $157.1m, as compared to $169.3m for the six months ended June 30, 2020.
Impact of the COVID-19 Pandemic on the Company:
The Coronavirus disease 2019 (COVID-19) was declared a pandemic by the World Health Organization in March 2020. COVID-19 has had significant negative impacts on the worldwide economy, resulting in disruptions to supply chains and financial markets, significant travel restrictions, facility closures and shelter-in place orders in various locations. Elbit Systems is closely monitoring the evolution of the COVID-19 pandemic and its impacts on the Company’s employees, customers and suppliers, as well as on the global economy.
As we last reported on May 25, 2021, we have been taking a number of actions to protect the safety of our employees as well as maintain business continuity and secure our supply chain. We also reported on a number of activities where we are leveraging our technological capabilities to assist hospital staffs and other first responders protecting our communities from the impact of the pandemic. All of these actions remain ongoing.
We have implemented a series of cost control measures to help limit the financial impact of the pandemic on the Company, in parallel to the measures we are taking to maintain business continuity and deliveries to our customers. We also are working on efficiency initiatives with a number of our suppliers. We continue to evaluate our operations on an ongoing basis in order to adapt to the evolving business environment.
During 2020 and the first half of 2021 our defense activities, which account for most of our business, were not materially impacted by the pandemic, although some of our businesses experienced certain disruptions due to government directed safety measures, travel restrictions and supply chain delays.
We believe that as of June 30, 2021, Elbit Systems had a healthy balance sheet, adequate levels of cash and access to credit facilities that provide liquidity when necessary. We have given high priority to cash management and adequate cash reserves to run the business.
The extent of the impact of COVID-19 on the Company’s performance depends on future developments including the duration and spread of the pandemic, the measures adopted by governments to limit the spread of the pandemic, including implementation of vaccinations, and resulting actions that may be taken by our customers and our supply chain, all of which contain uncertainties. As noted in our annual report on Form 20-F, the preparation of financial reports requires us to make judgments, assumptions and estimates that affect the amounts reported. For our financial results for the quarter ended June 30, 2021, we considered the economic impact of the COVID-19 pandemic on our critical and significant accounting estimates. The expected impact of the COVID-19 pandemic did not have a material effect on our judgments, assumptions and estimates reflected in the results. However, our future results may differ materially from our estimates. As events continue to evolve in connection with the COVID-19 pandemic, the estimates we use in future periods may change materially.
* Non-GAAP financial data:
The following non-GAAP financial data is presented to enable investors to have additional information on the Company’s business performance as well as a further basis for periodical comparisons and trends relating to the Company’s financial results. The Company believes such data provides useful information to investors by facilitating more meaningful comparisons of the Company’s financial results over time. Such non-GAAP information is used by the Company’s management to make strategic decisions, forecast future results and evaluate the Company’s current performance. However, investors are cautioned that, unlike financial measures prepared in accordance with GAAP, non-GAAP measures may not be comparable with the calculation of similar measures for other companies.
The non-GAAP financial data includes reconciliation adjustments regarding non-GAAP gross profit, operating income, net income and diluted EPS. In arriving at non-GAAP presentations, companies generally factor out items such as those that have a non-recurring impact on the income statements, various non-cash items including significant exchange rate differences, significant effects of retroactive tax legislation, changes in accounting guidance, financial transactions and other items not considered to be part of regular ongoing business, which, in management’s judgment, are items that are considered to be outside of the review of core operating results.
These non-GAAP measures are not based on any comprehensive set of accounting rules or principles. The Company believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations, as determined in accordance with GAAP, and that these measures should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures. Investors should consider non-GAAP financial measures in addition to, and not as replacements for or superior to, measures of financial performance prepared in accordance with GAAP.
11 Aug 21. Meggitt gets unsolicited takeover approach from TransDigm, shares surge. Meggitt shares surged on Wednesday after the defence and aerospace engineer said he it had received an unsolicited takeover approach from US aerospace manufacturer TransDigm at 900p per share in cash.
Meggitt said there can be no certainty that any firm offer will be made by TransDigm nor as to the terms.
The company announced last week that it had agreed to be bought by US rival Parker-Hannifin for £6.3bn. Under the terms of the deal, Meggitt shareholders would receive 800p per share.
The transaction also includes certain binding commitments that will ensure that Meggitt continues to meet its contractual obligations in respect of goods and services supplied to the UK government, and maintain its headquarters in the UK, among other things.
Meggitt said it will review the TransDigm offer but that its directors continue to recommend the offer by Parker, as it represents an “attractive proposition” for shareholders and broader stakeholders, “including its employees, pension schemes and customers, together with HM Government, for the long-term”.
At 1540 BST, the shares were up 17% at 836.20p.
CMC Markets analyst Michael Hewson said: “Meggitt is a key defence contractor for the UK military, and supplies a range of systems including thermal and weapon scoring systems, as well fire protection and control systems and avionics, and while the new proposed bid is being considered by the board, management don’t appear to be resiling from recommending the original Parker Hannifin bid.” (Source: Sharecast)
11 Aug 21. Houlihan Lokey Advises Martin UAV. Houlihan Lokey is pleased to announce that Martin UAV has been acquired by Shield AI. The transaction closed on July 30, 2021. Based in Plano, Texas, Martin UAV is a leading provider of highly differentiated unmanned aircraft systems (UAS) and enabling flight control technologies for mission-critical military, civil and maritime applications. The company’s V-BAT series aircraft are some of the most technologically advanced UAS designed to address emerging Group I-IV UAS operational requirements. V-BAT’s proprietary, ducted fan fixed-wing vertical take-off and landing technology enables launch and recovery in virtually any operating environment, allowing the aircraft to make mid-flight transitions from horizontal flight to “hover-and-stare” at targets, providing superior intelligence, surveillance and reconnaissance capabilities. With a near-zero footprint, V-BAT requires no launch or recovery equipment and is ideally suited for operations in closely confined areas.
Shield AI is a fast-growing technology company that develops artificial intelligence and autonomous technologies for the defense industry. The company is venture-backed and built around a team of proven executives, warfighters with relevant national security experience, and world-class AI engineers. Shield AI is headquartered in San Diego, California, with satellite offices across the United States.
Houlihan Lokey served as the exclusive financial advisor to Martin UAV. This transaction underscores the firm’s continued global leadership and expertise in the unmanned systems market.
Houlihan Lokey’s Aerospace, Defense & Government (ADG) practice within the global Industrials Group is a leading M&A advisor to aerospace, defense, and government services companies. Since 2020, the team has closed more than 35 transactions worth nearly $8 bn in enterprise value. With a staff of approximately 30 investment bankers in Washington, D.C., London, and Los Angeles, Houlihan Lokey’s ADG practice is among the largest dedicated industry banking groups worldwide. In 2020, the Industrials Group was once again ranked as the No. 1 M&A advisor for all U.S. industrial transactions, according to Refinitiv.
10 Aug 21. TransDigm Group Reports Fiscal 2021 Third Quarter Results and Announces Transition of W. Nicholas Howley to Chairman.
TransDigm Group Incorporated (NYSE: TDG), a leading global designer, producer and supplier of highly engineered aircraft components, today reported results for the third quarter ended July 3, 2021, which continue to be unfavorably impacted by the COVID-19 pandemic. TransDigm also announced today that W. Nicholas (Nick) Howley, previously TransDigm’s Executive Chairman, transitioned to non-executive Chairman of the Board of Directors effective August 6, 2021.
Third quarter highlights include:
- Net sales of $1,218m, up 19% from $1,022m in the prior year’s quarter;
- Income from continuing operations of $317m, up from a loss from continuing operations of $(5)m;
- Earnings per share from continuing operations of $5.43, up from a loss per share from continuing operations of $(0.09);
- EBITDA As Defined of $559m, up 32% from $424m;
- EBITDA As Defined margin of 45.9%, representing sequential improvement;
- Adjusted earnings per share of $3.33, up 116% from $1.54 in the prior year’s quarter; and
- Strong operating cash flow generation of $252m.
Fiscal 2021 financial guidance remains suspended at this time.
Net sales for the quarter increased 19.2%, or $196m, to $1,218m from $1,022m in the comparable quarter a year ago. Organic sales growth was 15.1%. Net acquisition and divestiture sales growth was $42m over the comparable quarter a year ago.
Income from continuing operations for the quarter increased $322m to $317m from a loss from continuing operations of $(5) m in the comparable quarter a year ago. The increase in income from continuing operations primarily reflects the increase in net sales described above, lower effective tax rate, the net gain on sale recognized as a result of the divestitures completed during the third quarter of fiscal 2021, and lower COVID-19 restructuring costs.
Adjusted net income for the quarter increased 120.5% to $194m, or $3.33 per share, from $88 m, or $1.54 per share, in the comparable quarter a year ago.
EBITDA for the quarter increased 56.3% to $572 m from $366m for the comparable quarter a year ago. EBITDA As Defined for the quarter increased 31.8% to $559m compared with $424m in the comparable quarter a year ago. EBITDA As Defined as a percentage of net sales for the quarter was 45.9%, representing sequential improvement versus the second fiscal quarter of 2021.
“Trends in the commercial aerospace industry are encouraging and have increasingly shown signs of recovery in recent months with vaccination rates expanding and air traffic improving, especially in certain domestic markets. We also saw another quarter of sequential improvement in our commercial aftermarket revenues,” stated Kevin Stein, TransDigm Group’s President and Chief Executive Officer. “Additionally, I am very pleased that we continue to sequentially expand our EBITDA As Defined margin as a result of continued recovery in our commercial aftermarket revenues as well as careful management of our cost structure and focus on our operating strategy in this challenging commercial environment.”
The current quarter effective tax rate was (30.0)% compared to 113.5% for the comparable period of fiscal 2020. The effective tax rate in the current quarter was positively impacted by the release of the valuation allowance applicable to the net interest deduction limitation carryforward and the discrete impact of excess tax benefits associated with share-based payments. For the full 2021 fiscal year, the Company expects the effective tax rate to be in the range of 0% to 3% and the adjusted tax rate to be in the range of 18% to 20%.
On April 27, 2021, TransDigm completed the divestiture of the Technical Airborne Components business (“TAC”) to Searchlight Capital Partners for approximately $40m in cash.
On June 30, 2021, TransDigm completed the divestiture of its ScioTeq and TREALITY Simulation Visual Systems (“ScioTeq and TREALITY”) businesses to OpenGate Capital for approximately $200m in cash. ScioTeq and TREALITY were acquired by TransDigm in March 2019 as part of the Esterline Technologies acquisition.
The net gain on sale recognized during the third quarter of fiscal 2021 as a result of the ScioTeq and TREALITY and TAC divestitures was approximately $68m.
The financial results of the ScioTeq and TREALITY and TAC businesses for all periods under TransDigm’s ownership will remain classified as continuing operations in accordance with U.S. generally accepted accounting principles.
Net sales for the thirty-nine week period ended July 3, 2021 declined 10.5%, or $411m, to $3,519m from $3,930m in the comparable period a year ago.
Income from continuing operations for the thirty-nine week period ended July 3, 2021 was $473m, a decrease of 14.3% compared to $552 m in the comparable period a year ago. The decrease in income from continuing operations primarily reflects the decline in net sales described above, along with higher non-cash stock compensation expense and interest expense, partially offset by a lower effective tax rate and the net gain on sale recognized as a result of the divestitures completed during the third quarter of fiscal 2021.
GAAP earnings per share were reduced in fiscal 2021 and 2020 by $1.24 per share and $3.22 per share, respectively, as a result of dividend equivalent payments made during each year. As a reminder, GAAP earnings per share are reduced when TransDigm makes dividend equivalent payments pursuant to the Company’s stock option plans. These dividend equivalent payments are made during the Company’s first fiscal quarter each year and also upon payment of any special dividends.
Adjusted net income for the thirty-nine week period ended July 3, 2021 decreased 30.7% to $460m, or $7.88 per share, from $664m, or $11.57 per share, in the comparable period a year ago.
EBITDA for the thirty-nine week period ended July 3, 2021 decreased 13.6% to $1,414m from $1,637m for the comparable period a year ago. EBITDA As Defined for the period decreased 12.8% to $1,552 m compared with $1,780m in the comparable period a year ago. EBITDA As Defined as a percentage of net sales for the current period was 44.1%.
Please see the attached tables for a reconciliation of income (loss) from continuing operations to EBITDA, EBITDA As Defined, and adjusted net income; a reconciliation of net cash provided by operating activities to EBITDA and EBITDA As Defined, and a reconciliation of earnings (loss) per share to adjusted earnings per share for the periods discussed in this press release.
Fiscal 2021 Outlook
Given the considerable uncertainty around the extent and duration of business disruptions related to the COVID-19 pandemic, and how that will continue to impact operations, the Company will not provide fiscal year 2021 guidance at this time.
Transition of W. Nicholas Howley from Executive Chairman to Non-Executive Chairman
TransDigm also announced today the transition of Mr. Howley from TransDigm’s Executive Chairman to Chairman of the Board of Directors, effective August 6, 2021.
As Chairman and Chair of the Executive Committee, Mr. Howley will continue to focus his efforts primarily on matters relating to capital allocation, mergers and acquisitions, corporate strategy, and leadership of the Board of Directors.
This transition timeline is accelerated by roughly one year, as Mr. Howley’s previous employment agreement anticipated his transition from Executive Chairman to Chairman in December 2022. Mr. Howley intends to continue in the Chairman role through at least fiscal 2024, which is the same commitment time period as his previous employment agreement.
Mr. Howley stated, “The duration of my time commitment with TransDigm will continue through at least 2024 – unchanged by this action. The orderly transition outlined in my previous employment agreement is proceeding well and ahead of schedule, and after three years, now seems like an appropriate time to move into the next phase. Over the past three years, Kevin and his team have dealt well with many significant issues, including both the highly successful integration of Esterline Technologies, our largest acquisition to date, and the unprecedented COVID-19 situation. I look forward to continuing as Chairman of the Board and working with Kevin on TransDigm’s consistent strategy of creating long term intrinsic value for our shareholders. As part of this effort, I will maintain a particular focus on capital allocation, mergers and acquisitions, and major strategic issues.”
“I have benefited tremendously as the CEO of TransDigm from the overlap with Nick in his Executive Chairman role,” stated Kevin Stein, TransDigm Group’s President and Chief Executive Officer. “I look forward to a continuing partnership with Nick in his role as Chairman and to continuing together the exceptional value generating strategy that has been the cornerstone of this organization since Nick and Doug Peacock founded TransDigm in 1993.” (Source: PR Newswire)
10 Aug 21. Vectrus Announces Strong Second Quarter Results; Increases Revenue and Adjusted Diluted EPS Guidance.
– Q2 revenue +40% Y/Y to $471m; Organic revenue(1) +21% Y/Y
– Operating margin of 4.8%; Adjusted EBITDA margin(1) of 5.6%
– Q2 fully diluted EPS of $1.35; Adjusted diluted EPS(1) of $1.52
– Increasing 2021 revenue and adjusted diluted EPS(1) guidance
– Pacific region activities driving incremental revenue growth under LOGCAP V
– Successfully phased-in new task orders to provide sustainment services in the Middle East
Vectrus, Inc. (NYSE: VEC) announced strong second quarter 2021 financial results.
“Our second quarter results are demonstrative of Vectrus’ ability to provide mission critical and rapid response converged solutions across all time zones and operational environments,” said Chuck Prow, Chief Executive Officer of Vectrus.
“During the quarter, revenue grew 40% year-over-year, with organic revenue growth of 21%,” said Prow. “Our strong organic revenue growth in the quarter was driven partly by the successful performance and execution of a task order to support an important training initiative based in the Indo-Pacific region, as well as achieving full operational capability under our new LOGCAP V CENTCOM task order in Iraq.”
“Our adjusted EBITDA margin in the second quarter was strong, reaching 5.6%,” said Prow. “Our year-to-date adjusted EBITDA margin is 5.2%, which is driven in part by the continued focus on operationalizing our enterprise performance improvement initiatives and demonstrates Vectrus’ ability to expand margins over time. LOGCAP V continues to gain momentum and during the quarter we successfully achieved full operational capability in Iraq,” said Prow. “This transition represents a significant milestone for Vectrus and our employees that worked around the clock in challenging environments to ensure client success. We look forward to serving as the Army’s preferred source for base operations support and sustainment services in Iraq over the next several years.”
Prow continued, “In terms of INDOPACOM, we are experiencing growth executing task orders to support mission requirements in the region. We expect growth to continue as we ramp up operations in Kwajalein and become fully operational by mid-2022. We are also continuing to execute client campaigns by inserting innovative technology-based solutions into infrastructure and creating value through mission effectiveness and cost reduction,” said Prow. “In the second quarter, we were awarded a position on the U.S. Navy Supply Systems Command Worldwide Expeditionary Multiple Award IDIQ Contract2 (WEXMAC). WEXMAC provides worldwide expeditionary supplies and services to support humanitarian and disaster relief, military exercises, and contingencies in 22 geographic regions. This award builds on our position under the Naval Facilities Engineering Command Global Contingency Services Multiple Award IDIQ Contract II, which has been an instrumental part of our Navy campaign. Importantly, WEXMAC represents another avenue to access this important client and we see significant opportunity to leverage Vectrus’ geographic positioning to support future opportunities under this new contract.”
“Additionally, we continue to focus on advancing our presence with the Air Force and in the second quarter won two new firm-fixed-price task orders valued at $40 m to provide installation and other support services, which were awarded under the Air Force Contract Augmentation Program V, or AFCAP V, which is a $6.4 bn IDIQ contract vehicle that provides contingency planning, deploying, training, and equipping of forces; emergency and contingency construction; and logistics and commodities and services,” said Prow.
Second Quarter 2021 Results
Second quarter 2021 revenue of $470.8m was up $134.8m year-on-year or 40.1% as compared to the same period last year. Revenue grew by $64.4m year-over-year as a result of the two acquisitions on December 31, 2020 and grew $70.4m organically.
Operating income was $22.6m or 4.8% margin. Adjusted operating income1 was $25.0m or 5.3% margin.
Adjusted EBITDA1 was $26.6m or 5.6% margin.
“Margin improved 360 basis points year-over-year in the second quarter and 210 basis points year-to-date,” said Susan Lynch, Senior Vice President and Chief Financial Officer. “Our strong first half results were driven by the ongoing execution of our enterprise performance improvement initiatives, recent acquisitions, our team’s success converting certain cost-plus components of a contract to fixed price and continued focus on prudently managing our cost structure. We remain focused on transforming Vectrus into a higher margin business and our second quarter and year-to-date performance reflects our ability to expand margins over time.”
Fully diluted EPS for the second quarter of 2021 was $1.35 as compared to $0.09 cents in the same period last year. Adjusted diluted EPS1, which adds back amortization of acquired intangible assets, was $1.52 for the quarter, as compared to $0.31 cents in the prior year. The increase in diluted EPS was driven by the company’s improved operating performance and two recent acquisitions.
Lynch continued, “Our results year-to-date are representative of Vectrus’ ability to generate substantial growth and earnings power. The second quarter results demonstrate our organic ability and how our strategic acquisitions are transforming the company into a higher value, growth-oriented platform. Our thoughtful deployment of capital is adding value from both an operational and financial perspective and we believe our strong balance sheet positions Vectrus to pursue future opportunities that align with our strategy and increase shareholder value.”
Cash provided by operating activities through July 2, 2021 was $14.0m. Operating cash flow decreased year on year primarily due to the CARES Act Benefit in Q2’20 of $13m in addition to the working capital requirements associated with several new program phase-ins.
Net debt at July 2, 2021 was $105.2 m, up $100.4 m from July 3, 2020. Total debt at July 2, 2021 was $175.0 m, up $107.5 m from $67.5 m at July 3, 2020. Both net and total debt were up due to the acquisitions of Zenetex and HHB on December 31, 2020. Cash at quarter-end was $69.8 m. Total consolidated indebtedness to consolidated EBITDA1 (total leverage ratio) was 1.76x.
Total backlog as of July 2, 2021 was $4.9bn and funded backlog was $1.3bn. The trailing twelve-month book-to-bill was 1.2x as of July 2, 2021. (Source: PR Newswire)
10 Aug 21. Héroux-Devtek Reports First Quarter Fiscal 2022 Financial Results.
- Sales of $126.2m, compared to $128.3m last year
- Defence sales growth of 21.5%, mitigating the impact of the pandemic on the civil sector
- Operating income of $10.8m, compared to $1.4m last year
- Adjusted EBITDA1 of $20.0m, or 15.9% of sales, compared to $18.4m, or 14.3% last year
- Strong cash flows from operating activities of $18.2m, compared to $15.5m last year
- Purchase and cancellation of 672,827 common shares for $11.9m under the NCIB through August 9
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 its financial results for the first quarter ended June 30, 2021. Unless otherwise indicated, all amounts are in Canadian dollars.
“I am encouraged with our first quarter results with sales at $126.2m, supported by continued growth in our defence sales which mitigated softness in the civil sector as well as head winds coming from foreign exchange. I am confident that we can deliver stronger throughput as our production system is continuing to adapt to the changes we made over the past year,” said Martin Brassard, President and CEO of Héroux-Devtek.
“We continue to see the future with prudent optimism given our diversified product portfolio and the flexibility we can derive from our strong financial position. Once the civil aerospace market recovers, we will be ready to absorb the resulting growth within our current production structure,” added Mr. Brassard.
FIRST QUARTER RESULTS
Consolidated sales decreased 1.7 to $126.2m, from $128.3m last year. Lower foreign exchange rates, particularly for the U.S. dollar, negatively impacted sales by $9.5m, or 7.4%, compared to the corresponding quarter in Fiscal 2021.
Excluding the impact of foreign exchange rate fluctuations, defence sales were up 21.5%, while civil sales decreased 19.0%. The increase in defence sales mainly resulted from the ramp-up of deliveries under the Boeing F-18 and Sikorsky CH-53K programs, as well as by higher aftermarket demand. The decrease in civil sales is mainly related to lower demand due to the COVID-19 pandemic, whose impact had not fully materialized in the first quarter of Fiscal 2021.
Gross profit for the quarter grew from $20.5m last year to $21.6m, mainly as a result of the positive effect of the Corporation’s restructuring initiatives on its cost structure, partially offset by the negative impact of foreign exchange fluctuations. As a percentage of sales, gross profit grew from 16.0% to 17.1%.
Operating income grew to $10.8m, or 8.6% of sales, compared to $1.4m, or 1.1% of sales last year, which reflected $6.0m of restructuring charges. Adjusted EBITDA, which excludes non-recurring items, stood at $20.0m, or 15.9% of sales, compared with $18.4m, or 14.3% of sales, a year ago.
Earnings per share grew from a loss of $0.04 last year to earnings of $0.19 in the first quarter this year, as a result of the same factors as those presented above. Adjusted EPS reached $0.19 in the first quarter, up from $0.09 last year.
Cash flows related to operating activities reached $18.2m in the first quarter, up from $15.5m last year, mainly as a result of higher adjusted EBITDA.
As at June 30, 2021, net debt stood at $148.0m, down from $157.5m as at March 31, 2021. The decrease in net debt during the three-month period is mainly related to cash flow generation net of cash allocated to the Normal Course Issuer Bid.
NORMAL COURSE ISSUER BID
In May 2021, the Corporation announced the approval by the Toronto Stock Exchange of its Normal Course Issuer Bid (NCIB), under which Héroux-Devtek has the right to purchase for cancellation, from May 25, 2021, to May 24, 2022, a maximum of 2,412,279 common shares, representing, as of May 12, 2021, 10% of the public float of 24,122,794 common shares.
As of August 9, 2021, Héroux-Devtek has purchased and cancelled a cumulative 672,827 common shares for a cash consideration of $11.9m, representing a weighted average price of $17.69 per share. (Source: PR Newswire)
10 Aug 21. Graham Corporation Reports Fiscal 2022 First Quarter Results.
- Revenue of $20.2m up 21%, driven by defense and refining industry sales
- Orders increased to $20.9m including $11.4m from the refining industry
- Backlog at quarter-end was $235.9m; 80% of backlog was for the defense industry; Added space industry to backlog with acquisition of Barber Nichols
- Profits and margins heavily impacted by product mix
Graham Corporation (NYSE: GHM), a global business that designs, manufactures and sells critical equipment for the defense, energy, and chemical/petrochemical industries, today reported financial results for its first quarter ended June 30, 2021 (“first quarter of fiscal 2022”). Results include one month of financials related to Barber-Nichols (“BN”) which was acquired on June 1, 2021. Separately today the Company announced that Daniel J. Thoren will be promoted to President and Chief Executive Officer effective September 1, 2021, immediately following the retirement of James R. Lines who served with the Company for 37 years.
Mr. Lines commented, “While sales improved as a result of the acquisition, we had a number of projects with lower margins which heavily impacted profitability in the quarter. This partially reflects our initial strategy to aggressively enter the Naval Nuclear Propulsion Program (“NNNP”). Given our strong performance on the NNNP projects, we were successful with our strategy and have since earned a sole source position. We expect that the vast majority of the impact of first order projects will be behind us by the end of fiscal 2022.”
Mr. Lines added, “While the quarter’s results were disappointing, we view this fiscal year as a transition and believe we are better positioned to drive growth and stronger margins for the future.”
First Quarter Fiscal 2022 Sales Summary (All comparisons are with the same prior-year period unless noted otherwise. See accompanying financial tables for a breakdown of sales by industry and region.)
Net sales of $20.2m increased $3.4 m, or 21%, driven by $3.5m in sales associated with the acquisition of BN and higher sales to the refining industry which helped to offset lower petrochemical sales. Last fiscal year’s first quarter benefitted from the shipment of a large petrochemical project that had been extended from fiscal 2020 into fiscal 2021 due to the COVID-19 pandemic. BN had one month of sales included in the fiscal 2022 first quarter’s results.
Sales to the defense markets were up 104% to $7.1m and represented 35% of total revenue. Sales to the refining markets increased $1.9 m from the prior-year period to $4.6m and represented 23% of total sales. Chemical/petrochemical market sales were $4.6m compared with $8.0 m in the prior fiscal year.
From a geographic perspective, domestic sales were 69% of total sales and reflect the impact of BN, along with higher sales to the defense industry. The majority of international sales were to Asia, which accounted for 17% of total sales.
Fluctuations in Graham’s sales among geographic locations and industries can vary measurably from quarter-to-quarter based on the timing and magnitude of projects. Graham does not believe that such quarter-to-quarter fluctuations are indicative of business trends.
First Quarter Fiscal 2022 Performance Review
Lower gross profit and margin despite higher sales volume, was due to a poor mix of projects in the Company’s Batavia production facility combined with a lower level of outsourced fabrication.
Selling, general and administrative (“SG&A”) expenses were $4.9m, up $1.0m, or 26%. BN accounted for $0.6m of the increase, including the impact of intangible asset amortization. The remaining increase was due to acquisition-related and organizational development costs. SG&A, as a percent of sales for the three-month periods ended June 30, 2021, and 2020 were 24.4% and 23.4%, respectively.
Net loss per diluted share was $0.31. On a non-GAAP basis, which excludes intangible amortization and other costs related to the acquisition, adjusted earnings per share were $(0.28).
Strong Balance Sheet with Ample Liquidity
Cash, cash equivalents and investments at June 30, 2021 were $19.1m compared with $65.0m at March 31, 2021. During the quarter, in connection with the acquisition of BN, the Company utilized $41.1m of cash, cash equivalents and investments, and incurred debt of $20 m pursuant to a 5-year term loan.
Net cash used by operating activities was $7.1m compared with cash usage of $4.4m in the prior-year period. The change in cash usage reflects the higher net loss and changes in working capital, which included the utilization of customer deposits.
Year-to-date capital spending was $0.4m. The Company has adjusted anticipated capital expenditures for fiscal 2022 to be between $3.5m and $4.0m (including BN).
Orders and Backlog
Orders of $20.9 m increased 82% over the prior-year period and 55% sequentially. The year-over-year growth was across each of Graham’s major industries, with the bulk from defense and refining. The growth in orders sequentially was largely from the refining industry. The one month of orders from BN during the quarter were $0.2m. Domestic orders were 74% of total net orders in the first quarter of fiscal 2022 compared with 28% in the prior-year period, reflecting the demand from the U.S. Navy.
Backlog at the end of the quarter was $235.9m, inclusive of BN backlog of $94.4m.
Backlog by industry at June 30, 2021 was approximately:
- 80% for defense projects
- 12% for refinery projects
- 3% for chemical/petrochemical projects
- 2% for space projects
- 3% for other industrial applications
The Company expects approximately 35% to 40% of backlog will convert to revenue in the last nine months of fiscal 2022. Approximately $25m to $27m of backlog related to the defense industry is expected to convert to sales in fiscal 2022.
Fiscal 2022 Guidance Remains Unchanged
Daniel J. Thoren, currently the Company’s President and COO, concluded, “I am encouraged by the improvement in orders in the quarter, specifically from the refining market. Our quoting activity is picking up and, while still early, we believe our customers are more optimistic. We anticipate this optimism will translate into greater capital investments and improving demand for our products. In the meantime, our second quarter will benefit from having BN for a full three months. However, based on the timing of customers’ projects, we expect that revenue and profits will ramp through the second half of the fiscal year. We see fiscal 2022 as a transition year as it relates to earnings, given the timing of conversion of first order projects for the U.S. Navy.”
He added, “We are very optimistic about our future. We believe that we have the right strategy, the best talent and the ideal technologies to capitalize on the growing requirements of our customers in the defense industry. We also are encouraged with the improvements we are seeing in our core energy markets. Together, our combined Graham and BN teams are looking to improve our growth profile while driving profitability.”
Revenue in fiscal 2022 is expected to be $130m to $140m with 45% to 50% associated with the defense industry. Revenue expectations are inclusive of BN’s 10-month revenue contribution for the fiscal year which is expected to be between $45m to $48m. Adjusted EBITDA* is expected to be approximately $7.0m to $9.0m in fiscal 2022. (Source: BUSINESS WIRE)
10 Aug 21. Houlihan Lokey Advises Integral Aerospace. Houlihan Lokey is pleased to announce that Integral Aerospace, LLC, an affiliate of Admiralty Partners, Inc., has been acquired by PCX Aerosystems, a portfolio company of Greenbriar Equity Group, LP. The transaction closed on July 28, 2021. Integral Aerospace is a leader in metallic and composite solutions for mission-critical military, commercial aerospace, and space launch applications. The company specializes in the precision manufacture of critical large-scale assemblies and components, including landing gear and actuation assemblies, external fuel tanks, and composite structural components and assemblies. Integral supplies complex components for critical defense and commercial aerospace platforms, including the F-18, CH-53, CFM56-5, CF34-8, and all H-60 variants.
PCX Aerosystems is a leading supplier of highly engineered, precision, flight-critical components and assemblies primarily for military rotorcraft platforms as well as selected commercial rotorcraft and fixed-wing aircraft. The company’s industry customers include Boeing, Lockheed Martin’s Sikorsky subsidiary, General Electric Aircraft Engines, and Textron’s Bell subsidiary.
Admiralty Partners is a family office that invests exclusively within the global aerospace, defense, and federal information technology industries. The firm invests only its own capital, which permits it to adhere to a unique model. It provides portfolio companies more flexibility through the use of significantly less leverage and without imposing fees while providing superior strategic guidance based upon its decades of industry-sector-focused expertise.
Founded in 1999, Greenbriar is a private equity firm with over $6bn of committed capital focused on investing in market-leading manufacturing and services businesses in partnership with proven management teams. Greenbriar looks to identify companies capitalizing on strong long-term growth prospects that can benefit from Greenbriar’s industry knowledge, operating capabilities, network of senior executive relationships, strategic insight, and access to capital. Sectors of particular focus include aerospace and defense, industrial and business services, transportation and logistics, and specialty manufacturing.
Houlihan Lokey’s Aerospace, Defense & Government (ADG) practice within the global Industrials Group is a leading M&A advisor to aerospace, defense, and government services companies. Since 2020, the team has closed more than 35 transactions worth nearly $8bn in enterprise value. With a staff of approximately 30 investment bankers in Washington, D.C., London, and Los Angeles, Houlihan Lokey’s ADG practice is among the largest dedicated industry banking groups worldwide. In 2020, the Industrials Group was once again ranked as the No. 1 M&A advisor for all U.S. industrial transactions, according to Refinitiv.
10 Aug 21. TP Group receives takeover approach from Science Group. TP Group shares jumped after Science Group revealed it bought more than 10% of the company with a view to buying the engineering group.
Science said it bought 79.3m shares in the market, equivalent to about 10.2% of voting shares in TP, at 5p a share. Science said TP had rebuffed several approaches about an investment by Science and more recently a proposed takeover.
TP shares rose 29.7% to 5.06p at 09:52 BST after TP confirmed it had received an approach from Science.
Science said its approaches were all rejected by TP’s board without any discussion between the companies. It noted “very evident challenges” for TP including a record of poor returns to shareholders and the company’s admission that there was material uncertainty over its position as a going concern. (Source: Sharecast)
09 Aug 21. Annual Defense Revenues Break Half a Trillion Dollars as Market Expands. FN Media Group Presents Microsmallcap.com Market Commentary. Although the effects of the coronavirus pandemic were far reaching, the security defense industry proved to be resilient enough to weather this storm. As a matter of fact, Defense News estimates that the top 100 defense companies raked in a combined $551bn in 2020 representing a 5% increase compared to the prior year. Going forward, it appears that this trend is likely to continue as illustrated by President Biden’s $715bn defense budget proposal, a $10bn increase from the previous allocation as he shifts focus from the Middle East to emerging threats from China. For companies like Liberty Defense Holdings Ltd (TSXV: SCAN) (OTCQB: LDDFF), Evolv Technologies Holdings Inc (NASDAQ: EVLV), ShotSpotter (NASDAQ: SSTI), OSI Systems, Inc. (NASDAQ: OSIS) and Honeywell International Inc (NASDAQ: HON) this signals a promising opportunity which if well capitalized on could further strengthen these companies’ position in the industry.
The Defense Industry Appears Pandemic-Proof
With more variants of the coronavirus being discovered it’s becoming all too clear that it’s going to be a long while before things get back to ‘normal’. Since the defense industry appears to be insulated from these effects, it is not surprising that companies like Liberty Defense (TSXV:SCAN) (OTCQB:LDDFF) which provides multi-technology security solutions for concealed weapons and threat detection in high volume foot traffic areas look poised to continue delivering significant shareholder value.
Recently Liberty Defense revealed that it had entered into a collaboration agreement with Micro-X Ltd, a pioneer of medical and security imaging products using cold cathode X-ray sources to apply x-ray nanotech to weapons detection. In addition to this, Liberty has been hitting major corporate milestones including signing a major deal with the US Department of Homeland Security (DHS).
The deal, which was announced on July 12, 2021, will provide Liberty Defense with $1m in funding courtesy of the Israel-US Binational Industrial Research and Development (BIRD) Foundation under a program that is sponsored jointly by the DHS and the Israel Ministry of Public Security (MOPS).
“Over the past several months, Liberty has announced continued progress on the development of our flagship HEXWAVE walk through portal and the acquisition of aviation specific threat detection technology for passenger screening,” said Liberty Defense CEO Bill Frain. “The development of HQ with Levitection will add to our portfolio to thwart the potential for terrorist acts in high traffic areas. This includes taking a layered approach to security which HQ will provide.”
Evolv Technologies Holdings Inc has also been strengthening its position in the defense industry going by recent developments. The company recently went public through a SPAC, resulting in a pro forma total enterprise value of approximately $1.3bn. Evolv investors include Bill Gates, DCVC, Motorola Solutions, Finback Investment Partners, General Catalyst, Lux Capital, SineWave Ventures and STANLEY Ventures.
Collaboration and innovation Appear to be Key Growth Drivers in Defense Industry
One emerging theme in the defense industry that appears to be a key driver of growth is collaboration. For instance, ShotSpotter (NASDAQ:SSTI) just partnered with Anti-Trafficking International (ATI) to deploy its ShotSpotter Investigate solution for a one-year pilot with ATI’s National Human Trafficking Intelligence Center (NHTIC). ShotSpotter Investigate will be used as the central digital case folder for the NHTIC to streamline efforts to capture, analyze, connect and provide reporting and real-time intelligence to involved agencies across the US.
Another collaboration that fits into this theme is Honeywell International Inc (NASDAQ:HON) and ASM Global, a world’s leading producer of entertainment experiences. The company will work with the ASM Global venue network to deploy a variety of technologies that support smarter, safer and more sustainable venues to improve the overall guest experience. The six-year agreement will support the digitization of the global venue network’s operations to establish new standards related to indoor air quality, safety and regulatory compliance for its VenueShield LIVE proprietary program for venue reopenings and operations.
Meanwhile, security and inspection systems provider OSI Systems’ (NASDAQ:OSIS) security division was one of three vendors awarded an indefinite delivery, indefinite quantity (IDIQ) contract by the US Customs and Border Protection for multi-energy portal x-ray systems. The contract, which has a potential value of up to $480m, contains a five-year ordering period for systems and up to 10 years for potential maintenance support.
In short, the defense industry seems well positioned to continue growing in spite of the uncertainty in the broader economy which bodes well for companies like Liberty Defense Holdings.
For more information about Liberty Defense Holdings Ltd (TSXV:SCAN) (OTCQB:LDDFF), click here.
Disclaimer: Microsmallcap.com (MSC) is the source of the Article and content set forth above. References to any issuer other than the profiled issuer are intended solely to identify industry participants and do not constitute an endorsement of any issuer and do not constitute a comparison to the profiled issuer. FN Media Group (FNM) is a third-party publisher and news dissemination service provider, which disseminates electronic information through multiple online media channels. FNM is NOT affiliated with MSC or any company mentioned herein. The commentary, views and opinions expressed in this release by MSC are solely those of MSC and are not shared by and do not reflect in any manner the views or opinions of FNM. Readers of this Article and content agree that they cannot and will not seek to hold liable MSC and FNM for any investment decisions by their readers or subscribers. MSC and FNM and their respective affiliated companies are a news dissemination and financial marketing solutions provider and are NOT registered broker-dealers/analysts/investment advisers, hold no investment licenses and may NOT sell, offer to sell or offer to buy any security. (Source: PR Newswire)
05 Aug 21. AVIAN acquires counter drone tactics and training company redUAS. US government acquisition services company AVIAN, has acquired redUAS, a counter-unmanned aircraft systems (C-UAS) tactics, and training joint-venture. Prior to its acquisition, redUAS was a joint venture formed in 2017 between AVIAN, and five US Armed Forces veteran-owned, and first responder-owned companies.
AVIAN said the acquisition will simplify service offerings to redUAS clients by restructuring the joint-venture under AVIAN’s Test & Evaluation/Flight Support (TFS) sector, which supports unmanned systems projects for the United States Navy.
Currently, AVIAN supports Air Test and Evaluation Squadron TWO FOUR (UX-24) test and evaluation of small, medium, and large UAS as well as the stimulation and assessment of C-UAS systems for Naval Air Systems Command (NAVAIR). AVIAN supports the Naval Sea Systems Command (NAVSEA) at Naval Surface Warfare Center – Panama City Division (NSWC – PCD) for the unmanned underwater vehicle mine countermeasures system, the remote multi-mission vehicle mine countermeasures system, and unmanned maritime systems.
To date, redUAS develops and delivers C-UAS training for U.S.-based first responders through a contract with the New Mexico Institute of Mining and Technology (NMT) as part of the National Domestic Preparedness Consoortium. NMT works in partnership with the Department of Homeland Security (DHS) and the Federal Emergency Management Agency (FEMA) through a cooperative agreement to provide training geared toward preparing emergency first responders to better prevent and respond to terrorist incidents.
redUAS offers DHS/FEMA-certified in-person and virtual courses designed to provide awareness of the unmanned aircraft threat, the legalities of using both drones and counter-drone technology, and an introductory framework of tactics, techniques, and procedures (TTP’s) to assist first responders and emergency management professionals to develop an organized and practiced response to malicious and negligent drones operating within their areas of responsibility. For more information visit: www.avian.com
06 Aug 21. Huntington Ingalls Industries records 10.1% increase in revenue in Q2 2021. In the three-month period that ended on 30 June 2021, the military shipbuilding company’s revenue was $2.2bn. US-based military shipbuilding company Huntington Ingalls Industries (HII) has reported a 10.1% year-on-year (YOY) increase in revenue in the second quarter of 2021. The company’s revenue was $2.2bn in the three-month period that ended on 30 June, compared to $2bn in the same period a year ago.
Operating income jumped by 124.6% to $128m in Q2 2021. The company’s operating margin also improved from 2.8% to 5.7% on a YOY basis.
The increase was attributed to stronger segment operating results compared to the prior year despite less favourable operating FAS/CAS adjustment.
HII’s net earnings soared 143.4% to $129m in the second quarter of this year. A year ago, the figure was $53m.
Diluted earnings per share in the quarter was $3.20, compared to $1.30 last year.
The total value of the new contract won in the quarter was nearly $1.2bn. This brought its total backlog to $47.7bn as of 30 June 2021.
HII president and CEO Mike Petters said: “We are pleased with second-quarter results that demonstrate another quarter of consistent programme execution.
“We recently announced the agreement to acquire Alion Science and Technology, which we believe is a perfect complement to our existing capabilities in the technology-driven defence solutions space.
“We believe Alion offers significant growth potential and represents an investment in capabilities that are critical to national security now and into the future and will generate significant value for our stakeholders over the long term.”
HII will acquire Alion Science and Technology from Veritas Capital for a cash consideration of $1.65bn. Once complete, Alion will become part of Huntington Ingalls Industries’ Technical Solutions division. (Source: army-technology.com)
04 Aug 21. Arlington Capital Partners To Acquire L3 Harris Technologies’ Electron Devices + Narda Microwave-West Divisions. Arlington Capital Partners (“Arlington”) has entered into definitive agreements to acquire L3Harris Technologies’ (NYSE:LHX) Electron Devices and Narda Microwave-West divisions (the “Company”) — this agreement is subject to customary closing conditions and regulatory approvals.
After closing, the Company will operate independently as Stellant Systems (“Stellant”) and will be a standalone platform for Arlington in the mission-critical defense electronics market. The transaction is occurring in partnership with current L3Harris Electron Devices’ leadership who, upon close, are expected to continue to operate and lead the Company.
The Company provides RF amplification products for the space, electronic warfare, radar, medical and industrial end markets. With a multi-generational legacy supporting the most important military and intelligence programs, as well as addressing some of the most complicated technical requirements in medical and industrial markets, the Company designs and assembles traveling wave tubes (TWTs), nano microwave power modules, and other related subsystems and is the only domestic provider of space-qualified TWTs. The Company has more than 800 employees across its three facilities in Torrance, California, Williamsport, Pennsylvania and Folsom, California.
Peter Manos, a Managing Partner at Arlington, said, “Identifying and investing behind mission-critical systems and subsystems within the defense end market have long been areas of focus for Arlington. The Company is the domestic leader in its market with a first-mover advantage in new technologies, which we are privileged to support. We are eager to hit the ground running in partnership with current management to not only address the Company’s core opportunity set, but also capture the market opportunities we have collectively identified to produce additional growth.”
Ben Ramundo, a Vice President at Arlington, said, “The combination of the Company’s unparalleled technical achievements and close customer relationships creates an ideal foundation on which to build an organization with a renewed and singular focus on what it does best. While we have tremendous respect for the Company’s storied legacy, and are grateful for L3Harris’ contributions to that journey, we are excited to invest behind the current management team to reinvigorate the Company’s innovative spirit and enter promising new markets.”
The transaction is expected to close before year-end.
Arlington Capital Partners is a Washington, DC-based private equity firm that is currently investing out of Arlington Capital Partners V, L.P., a $1.7bn fund. The firm has managed approximately $4.0bn of committed capital via five investment funds. Arlington is focused on middle market investment opportunities in growth industries including aerospace & defense, government services and technology, healthcare, and business services and software. The firm’s professionals and network have a unique combination of operating and private equity experience that enable Arlington to be a value-added investor. Arlington invests in companies in partnership with high quality management teams that are motivated to establish and/or advance their company’s position as leading competitors in their field. (Source: Satnews)
04 Aug 21. Theorem Launches A New Division, TheoremOrbital. Theorem, LLC, has launched Theorem Orbital, a new division focused on end-to-end space logistics and enablement for the Global 2000. While recent space-related startups have focused primarily on delivering launch-side capability, other aspects of the space industry are experiencing significant growth and game-changing opportunities have become within reach for even those who have made minimal investments to date. These include bespoke satellite programs focused on activities like Earth Observation (EO), remote sensing, and satellite-enabled communications and connectivity.
Theorem Orbital will leverage its direct relationships with space launch providers, prime contractors and suppliers, universities, and NGOs, allowing for a wide range of services tailored to clients expanding their existing footprint, or building a space strategy from the ground up. Theorem Orbital’s preferred providers for launch services and space-based data today include Rocket Lab, Virgin Orbit, Firefly Aerospace, and Satellogic.
“Today, only 100 of the Global 2000 have active space programs, but that number will increase tenfold over the next decade,” said Brady Brim-DeForest, CEO of Theorem. “The space industry can seem intimidating and hard to navigate — we are here to help make navigating it easy and transparent.”
“Our partnership with Theorem will help further our mission of democratizing access to Earth Observation data,” said Thomas VanMatre, Satellogic’s Vice President of Global Business Development. “The combination of Theorem’s world-class software innovation and engineering capabilities and Satellogic’s unit cost advantage will unlock a multitude of use cases for the commercial market.”
As part of its commitment to opening up access to space as a strategic resource for the enterprise, mid-market, and academic markets, Theorem is also announcing a strategic investment into bluShift Aerospace, a maker of the Starless Rogue launch platform that is designed to enable a low barrier to entry for a diverse collection of payloads into the suborbital space ecosystem.
“bluShift’s approach to developing cost-effective and sustainable next-generation rocket technology will open up space to new markets,” said Sascha Deri, CEO of bluShift Aerospace. “We feel that our mission and philosophy are well aligned with Theorem Orbital’s commitment to lowering the barrier to entry for companies beginning to leverage space-based infrastructure in their mid and long-term strategic plans. We’re pleased to welcome them as an investor, and excited to collaborate on uncovering opportunities to accelerate the adoption of bluShift capabilities within the enterprise market.”
At launch, Theorem Orbital’s initial suite of services will include…
- Satellite Data & Connectivity Strategy and Planning
Strategy services designed to enable clients to leverage data and connectivity generated by existing satellite infrastructure, as well as planning for proprietary constellations.
- Advanced-Data Analysis
Real-time satellite imagery and remote communication networks are shifting how construction, agriculture, real estate, retail, travel, and mining industries run their daily operations, quarterly planning, risk management, insurance negotiations, and other major drivers of their bottom line. Data providers like Satellogic are opening new use cases daily — Theorem Orbital can help clients make the most of this rapidly evolving field.
- Software Platform Development
Theorem Orbital designs and builds advanced proprietary software platforms that bring together advanced space-based data sources with existing internal enterprise data and systems.
- Hardware Development
Theorem Orbital can assist clients in using Satellogic’s unique hosted payload program to rapidly prototype and fly proprietary and commercial off-the-shelf sensors to meet client requirements.
Theorem Orbital can assist clients in establishing their own IoT communications network in space including the design and launch of bespoke constellations through preferred launch providers.
Theorem Orbital partners with preferred providers — including Virgin Orbit, Rocket Lab, SpaceX, and more — in order to enable the launch of custom payloads into LEO and NEO.
“The cost of putting satellites into space has been dramatically reduced due to the innovations from launch providers such as SpaceX, Rocket Lab, and others,” said Nicolas Spurlock, Director of Corporate Strategy at Theorem. “Now is the time for large enterprises to invest in building their own space-based infrastructure and gain an advantage in the new Space 2.0 era.” (Source: Satnews)
06 Aug 21. Capita sells the silver. Capita continues with its survival strategy of selling everything not physically bolted to the floor.
Ever-shrinking outsourcer Capita (CPI) enjoyed a reasonable half compared with its usual dreadful standards. The results were flattered by £536m of disposals in the half – management aims to have completed £700m of sales by this time next year – after the initial impact of the pandemic threw its timetable into disarray. That effect seems to have partially unwound and the company expects to finally see sustainable free cash flow in 2022.
Part of the problem is that Capita is simply bleeding cash. This year cash outflows are forecast to be £340m related to pension payments and restructuring costs, around £300m of which is expected to reverse in 2022. Cleary, that situation can’t continue, especially as the reason for the asset fire sale is that Capita is fast running up against a wall of maturing short-term debt – over £440m falls due this year and next. To keep up, Capita must achieve its disposals target.
Making a quantifiable assessment of Capita’s position is virtually impossible until it completes its disposal program and investors get a close look at the company then performs on an operational level. The balance sheet is flashing a dangerous current ratio of 0.5, implying it is not producing the cash to meet its current liabilities. The problem with Capita, and most other outsourcers, is that their assumptions on government spending have been proved consistently wrong, leading them to take on troublesome and underperforming contracts in a dash for revenue yield. With the covid-19 bill coming in for state spending, the odds against Capita being caught in the ensuing blow-back are evens at best. Sell. Last IC view: Sell, 32.5p, 18 Aug 2020. (Source: Investors Chronicle)
05 Aug 21. Counter Threat Solutions Acquires Quantitative Analytics, LLC. In its second strategic acquisition, Reston VA-based consulting firm Counter Threat Solutions (CTS) has purchased Quantitative Analytics, LLC of Stafford, VA. The financial details of the acquisition were not disclosed.
Established in 2011, Quantitative Analytics provides program management, data analytics, logistics and air operations, and financial management services to military, government, and commercial customers. The merger brings added expertise and personnel to expand CTS’ service offerings and diversify its client base.
“The talent, experience, and commonality in our client base makes this merger a logical combination of our two firms,” explains Theresa Keith, CEO of Counter Threat Solutions. “Quantitative Analytics complements our existing management consulting services and broadens our depth in data visualization and predictive analytics and expands our capabilities in Logistics Management and Aviation Operations (L&AO), particularly within the Intelligence and Defense communities.”
Joining CTS in key operational roles are Quantitative Analytics president and CEO Robert J. Darling. Darling, founder of the firm, is a 20-plus year veteran of the United States Marine Corps. He piloted attack helicopters in Desert Shield and Desert Storm; was selected to fly as a presidential pilot with Marine Helicopter Squadron One (HMX-1), worked as an airlift operations officer for the White House Military Office; and served as the Department of the Navy Flying Hour Program manager at the Pentagon. A sought-after speaker on crisis leadership, Darling is the author of “24 Hours Inside the President’s Bunker, 9/11/01: The White House,” and the owner of Turning Point Crisis Management-USA, a crisis leadership training and technology firm located in Stafford, VA.
“Bob and I share a heritage of military service and commitment to national defense, and we have a mutual respect and admiration for what each other has accomplished as entrepreneurs and as Service Disabled Veteran Owned Small Businesses (SDVOSB),” reports Keith.
“Our shared ability to bring creative solutions and professional resources to meet our clients’ most complex challenges will allow our legacy to live on in CTS,” adds Darling. “I am excited for our future as we join forces with CTS.”
About Quantitative Analytics
Quantitative Analytics, LLC is a Service-Disabled Veteran-Owned Small Business (SDVOSB) specializing in aviation operations, financial management, program management, cost and performance modeling, and logistics. From comprehensive management consulting and IT services to staff augmentation, Quantitative Analytics has earned a reputation for delivering technical solutions to complex operational and logistics challenges. Learn more about Quantitative Analytics at quantitative-analytics.com.
About Counter Threat Solutions
Counter Threat Solutions LLC (CTS) is a Woman-Owned Service-Disabled Veteran-Owned Small Business (SDVOSB) consulting company providing mission-savvy subject matter experts skilled in analysis, finance, multimedia, administrative support, program management, and IT solutions to the U.S. government’s intelligence and defense communities as well as commercial clientele. Learn more about CTS at ctstruenorth.com or LinkedIn. (Source: PR Newswire)
05 Aug 21. TAT Technologies Reports Second 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 and six month periods ended June 30, 2021.
Key Financial Highlights:
- Revenues for Q2 2021 were $21.6m, an increase of 24% compared with $17.4m in Q2 2020. Revenues for the six-month period that ended on June 30, 2021 were $39.9m compared with $42m in the six-month period that ended on June 30, 2020.
- Gross profit for Q2 2021 was $3.2m (14.6% as a percentage of revenues) an increase of 214% compared with $1.5m (8.7% as a percentage of revenues) in Q2 2020. Gross profit for the six-month period that ended on June 30, 2021 was $6.6m (16.4% as a percentage of revenues) an increase of 8% compared with $6.1m (14.5% as a percentage of revenues) in the six-month period that ended on June 30, 2020.
- Adjusted EBITDA for Q2 2021 was 0.4m compared with $0.0m in Q2 2020. Adjusted EBITDA for the six-month period that ended on June 30, 2021 was $2.0m compared with $2.5m in the six-month period that ended on June 30, 2020.
- Net loss was ($2.5)m, or loss of ($0.3) per diluted share in Q2 2021 compared with a net loss of ($2.2)m, or loss of ($0.3) per diluted share in Q2 2020. For the period of H1 2021, net loss was ($1.9)m, or loss of ($0.2) per diluted share compared with a net loss of ($1.8)m, or $0.2 per diluted share in H1 2020. Net loss for Q2 2021 and for the six-month period that ended on June 30, 2021 include restructuring expenses of $1.9m and $2.4m, respectively.
Mr. Igal Zamir, TAT’s CEO and President commented on the results: “As the commercial aviation industry continues to emerge from the deep crisis and the major slow-down during 2020, we see sequential recovery in the volumes of our MRO activities and related revenues. This trend started in Q1 2021 resulting in improvement in our gross margin and operational cash flow.
“During Q2 2021, we signed a third strategic agreement (following the two agreements that were announced in January 2021 and September 2020) with Honeywell for the repair and lease of the APU 131 engines, the most common of Honeywell’s APU series. This deal opens a much larger market that we were not exposed to in the past. We believe that due to the execution of the new strategic agreement with Honeywell (together with the two agreements with Honeywell previously announced), the Company’s addressable market size in the MRO segment is expected to grow in a substantial manner, and therefore opens the door to the Company for potentially significant revenue growth in the MRO segment. In first half of 2021 we already started enjoying the fruits of our strategic lease deal with Honeywell for the rental of APU 331-500 which was announced in January 2021. We continue with the plan to streamline our operations and expect our cost structure to improve by 2022.
“We strongly believe that the three strategic agreements with Honeywell coupled with the operations rationalization scheme will position TAT as a strong player in its lines of business with the expected recovery of the commercial aviation industry.”
The Company is proceeding with its recently announced plan to improve its cost structure and operational efficiency, and in that respect has begun executing on its plan to consolidate the Company’s operations from four to three production sites by consolidating its production sites in Israel and transferring additional production operations to the Company’s production site in 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. In connection with such plan, the Company incurred restructuring expenses of $2.4m and capital expenditures of $1.5 m in H1 2021. (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.