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05 Nov 21. Moog Inc. Reports Fiscal Year End 2021 Results and Initial Guidance for Fiscal Year 2022.
Moog Inc. (NYSE: MOG.A and MOG.B) announced today financial results for the quarter and fiscal year ended October 2, 2021.
Fourth Quarter Highlights
- Sales of $724 m, up 2% from a year ago;
- GAAP diluted earnings per share of $1.07, up 32%, including $0.18 of one-time adjustments;
- Operating margins of 8.7%;
- Effective tax rate of 19.0%; and
- $63 m cash flow from operating activities.
Full-Year 2021 Highlights
- Sales of $2.9 bn, down 1% from a year ago;
- GAAP diluted earnings per share of $4.87, including $0.18 of one-time adjustments, up 1% from adjusted results a year ago;
- Operating margins of 9.5%;
- Effective tax rate of 22.8%; and
- $293 m cash flow from operating activities.
Fiscal 2022 Guidance
- Sales of $3.0 bn, a 6% increase;
- Forecast diluted earnings per share of $5.50, plus or minus $0.20;
- Forecast full year operating margins of 10.3%;
- Forecast tax rate of 25.5%; and
- Forecast $338 m cash flow from operating activities.
Aircraft Controls segment sales in the quarter were $298m, 8% higher year over year. Total commercial aircraft revenues were $99m, up 23%. Sales from the Genesys acquisition and strong sales to Airbus for the A350 compensated for lower 787 sales to Boeing. Commercial aftermarket sales increased 25% on strong 787 activity.
Military aircraft revenues in the quarter were up 2% to $199m. OEM revenues were 12% higher, to $144 m. Increased funded development and acquired sales from the Genesys acquisition offset lower F-35 Joint Strike Fighter sales. Military aftermarket sales of $55 m were off 16% when compared to a very strong quarter last year.
Full-year Aircraft Controls segment sales were $1.16 bn, down 4%. Total military aircraft sales increased 8%, to $782 m. Military OEM sales, led by F-35 program sales and foreign military sales, were $574 m, an increase of 22%. Military aftermarket sales were off 17%, with the decrease tied to lower F-35 spares and V-22 repair volume. Sales to commercial customers were down 22%, with aftermarket down 7% year over year, all related to COVID challenges.
Space and Defense segment sales in the quarter were $200 m, down 3% year over year. Space sales of $81 m were 3% lower on weakness in sales for launch vehicles, hypersonics, and satellite engines. Defense sales were down 4%, at $119m, mainly tied to weaker sales of security products and missile controls.
Space and Defense sales for the year increased 4%, to $799m. Space sales were $333m, up 13%, driven by increases across space vehicles and avionics. Defense sales of $466m were off 2% on lower sales of security products and missile controls.
Industrial Systems segment sales in the quarter were $226 m, in line with last year’s fourth quarter, excluding foreign exchange adjustments. Industrial automation sales were up 11% on strength across the portfolio tied to increases in global capital spending. Energy sales increased 10% year over year as off-shore production activity picked-up in the quarter. Sales into simulation and test applications were mostly flat. Medical product sales decreased 17% on slowing demand for OEM components used for sleep therapy and imaging.
Full-year Industrial Systems segment sales were $892m, down 2%. Industrial automation sales of $427m were 5% higher. Energy sales were down 6%, at $120 m. Simulation and test sales were 13% lower as the flight simulator market has not rebounded from the effects of the pandemic. Sales of medical pumps and associated products, at $255 m, were 7% lower after the surge experienced last year.
Consolidated 12-month backlog was $2.1 bn, up 24% from a year ago.
“As we entered fiscal ’21, we projected that COVID would be with us throughout the year and anticipated top and bottom results similar to the second half of fiscal ’20,” said John Scannell, Chairman and CEO. “Looking back on the year, our business performed much better than this. As we now enter fiscal ’22, we’re optimistic about the future, while remaining realistic about the challenges. We anticipate sales of just over $3 bn and earnings per share of $5.50, plus or minus $0.20, representing an increase of 6% on the top line and 13% on the bottom line.” (Source: BUSINESS WIRE)
05 Nov 21. Embraer Earnings Results 3rd Quarter 2021.
- Embraer delivered 9 commercial jets and 21 executive jets (14 light / 7 large) in 3Q21, bringing the year-to-date deliveries to 32 commercial jets and 54 executive jets (36 light /18 large). Following solid sales activity in the period across businesses, total company firm order backlog at the end of 3Q21 was US$ 16.8bn;
- Revenues in 3Q21 reached US$ 958.1m, representing year-over-year growth of 26.3% compared to 3Q20, with double digit growth in all segments;
- Excluding special items, adjusted EBIT and EBITDA were US$ 35.7m and US$ 79.2m, respectively, yielding adjusted EBIT margin of 3.7% and adjusted EBITDA margin of 8.3%. In the first nine months of 2021, adjusted EBIT margin was 3.8% and adjusted EBITDA margin was 8.9%;
- Adjusted net loss (excluding special items and deferred income tax and social contribution) in 3Q21 was US$ (33.9)m, with adjusted loss per ADS of US$ (0.18);
- Embraer generated free cash flow in 3Q21 of US$ 21.3m, and in the first nine months of 2021 free cash usage was US$ (160.2)m. The positive free cash flow in 3Q21 represented the first time in more than 10 years the Company generated cash in the usually seasonally weak third quarter. The free cash flow in both periods represented a significant improvement compared to the prior year periods on better profitability and working capital efficiencies, particularly with respect to inventory management;
- The Company finished the quarter with total cash of US$ 2.5bn and net debt of US$ 1.8bn;
- Given better-than-expected free cash flow performance over the first nine months of 2021, Embraer is updating its guidance for free cash flow without M&A or divestitures to a range of US$ 100m or better, from the prior range of US$ (150)m to breakeven. The Company reiterates its other financial and deliveries guidance for 2021 of commercial jet deliveries of 45-50 aircraft, executive jet deliveries of 90-95 aircraft, consolidated revenues in a range of US$ 4.0 to $4.5bn, adjusted EBIT margin of 3.0% to 4.0%, and adjusted EBITDA margin of 8.5% to 9.5%.
04 Nov 21. TAT Technologies Reports Third Quarter 2021 Results. TAT Technologies Ltd. (NASDAQ: TATT – News) (“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 nine month periods ended September 30, 2021.
Key Financial Highlights:
- Revenues for Q3 2021 were $17.6m compared to $16.8m in Q3 2020. Revenues for the nine-month period that ended on September 30, 2021 were $57.6 m compared with $58.8m in the nine-month period that ended on September 30, 2020.
- Gross profit for Q3 2021 more than doubled to $3m (16.8% as a percentage of revenues) compared with $1.4m (8.3% as a percentage of revenues) in Q3 2020. Gross profit for the nine-month period that ended on September 30, 2021, was $9.5m (16.5% as a percentage of revenues) compared with $7.5m (12.7% as a percentage of revenues) in the nine-month period that ended on September 30, 2020.
- Adjusted EBITDA for Q3 2021 significantly improved to $1.03 m compared with negative $0.3m in Q3 2020. Adjusted EBITDA for the nine-month period that ended on September30, 2021 improved by 40% to $3m compared with $2.2m in the nine-month period that ended on September 30, 2019.
- Net loss continues to decrease and was ($0.97) m, or loss of ($0.11) per diluted share in Q3 2021 compared with a net loss of ($1.6)m, or ($0.16) per diluted share in Q3 2020. Net loss was ($2.86)m (out of which $2.54m in restructuring costs) , or loss of ($0.32) per diluted share in the nine-month period that ended on September 30, 2021, compared with a net loss of ($3.38)m, or ($0.37) per diluted share in the nine-month period that ended on September 30, 2020.
- The implementation of the strategic footprint rationalization scheme is on-track. The main objective of the new footprint calls for concentration in three main production facilities (instead of four) and the creation of a “center of excellence” in the heat transfer activities. In connection with such plan, the Company incurred restructuring expenses of $2.5m and capital expenditures of $3.1m in the nine months of 2021.
Mr. Igal Zamir, CEO and President of TAT Technologies stated, “During the last quarter we continued the strategic rationalization scheme to reduce the main production sites from four to three. We expect to benefit from the internal synergies of combining the heat transfer activity in one center of excellence and improve our cost structure. The process is progressing on track and is expected to be completed by Q2\22. We continued strengthening our position as Honeywell’s premier partner to serve Honeywell’s main line of APUs that are used in the majority of the active platform (including the Boeing 737 family and the Airbus 320 family). In this regard we continue to build our capabilities to serve new platform and increase revenues from this segment starting from 2022”. Mr. Zamir continues: “We continue to enjoy US grants in support of the pandemic impact of $2.5M in Q3 and see a sequential improvement in volumes of the MRO activity as the commercial airline industry starts to recover from the meaningful slow-down of the pandemic.” (Source: PR Newswire)
05 Nov 21. Rheinmetall: Profitable growth with significant increase in earnings and margin.
– Consolidated sales grow by around 6% to over €3.8bn
– Operating result improves by 45% to €297m
– Operating margin of 7.7% significantly exceeds previous year’s level of 5.7%
– Continued high growth in orders
– Earnings per share from continuing operations double to €4.16
– Annual forecast for 2021 adjusted: Operating margin of around 10% with sales growth of around 6%
The Düsseldorf-based Rheinmetall AG is entering the home stretch of the current fiscal year with significant sales growth in civilian business and a considerably increased consolidated operating result. In its global business with civilian products, Rheinmetall’s sales performance in the first three quarters significantly exceeded the global production increases in the automotive sector. At the same time, the technology group again recorded a high order intake from the military sector. The Group’s profitability increased significantly with an operating margin of 7.7%.
Primarily due to the ongoing shortages of semiconductors and of certain raw materials, the Group anticipates slightly slower sales growth in its forecast for fiscal 2021 compared to its previous expectations. With regard to the operating margin, Rheinmetall now expects to achieve a figure at the upper end of the previously forecast range.
Armin Papperger, Chief Executive Officer of Rheinmetall AG, comments: “Rheinmetall remains on a profitable growth trajectory. We have set a new record high for the operating result after nine months. In civilian business, we managed to increase our sales significantly again. With an ever-growing share of sales in the field of alternative drive technologies, we are well on track to manage the transformation of the industry in our civilian business. And with regard to military products, we are benefiting from increasing budgets in several markets and persistently high demand for modern equipment for the armed forces. We have now expanded our very high order backlog to more than €14 bn with major new orders, thus reaching a completely new level for Rheinmetall.”
Rheinmetall Group: Sales and operating result up year-on-year
Rheinmetall increased its consolidated sales by around 6% year-on-year to €3,841m in the first three quarters of 2021, compared with €3,633m in the same period of the previous year. This increase in sales was largely attributable to the economic recovery in the automotive industry, after sales in the comparative prior-year period had been impacted by the cyclical weaker development of the automotive markets and by the pandemic-related declines in global automotive manufacturing.
The Rheinmetall Group’s operating result increased significantly in the first three quarters of 2021. The Group generated an operating result of €297m, thus exceeding the previous year’s figure (€205m) by around €91m. In addition to the positive sales performance, this improvement was particularly due to cost reduction measures that the company management had initiated back in 2020 in response to the negative effects of the coronavirus pandemic. The operating margin also developed positively, rising from 5.7% in the comparative period of the previous year to 7.7% in the first three quarters of 2021.
Earnings per share from continuing operations doubled year-on-year from €2.08 to €4.16 in the first nine months of fiscal 2021.
Vehicle Systems: New orders worth almost €2.5bn gained
At €1,304m, sales in the Vehicle Systems division, which operates in the sector of military wheeled and tracked vehicles, were down around 3% in the first three quarters of 2021 compared to the previous year’s figure (€1,339m). This was particularly due to the expiration of two major projects. By contrast, the order intake increased significantly by €1,728m to €2,456m compared to the same period of the previous year (€728m). Major incoming orders included the commission to modernize Challenger main battle tanks in the UK and orders from the German Bundeswehr to deliver Kodiak armored engineering vehicles and upgrade the Puma infantry fighting vehicle.
Due to the decline in sales, the operating result for the nine-month period was down slightly on the previous year’s figure (€122m) at around €104m. The operating margin was 8.0% after 9.1% in the same period of the previous year.
Weapon and Ammunition: Strong increase in operating margin
The Weapon and Ammunition division generated sales of €700m with its weapon system and ammunition activities in the first three quarters of 2021, up around 4% on the previous year’s figure of €670 m. The order intake amounted to €752m and thus fell short of the previous year’s high figure (€867m). In the previous year, the development of the order intake had been positively influenced by a large single order of €80m for the delivery of artillery propellants to an international customer and by higher orders from German and British customers.
The continued high sales level and a good product mix led to a significant improvement in the result in the Weapon and Ammunition division. The operating result grew by €43m to €73m (previous year: €30m). As a result, the operating margin improved to 10.4%, compared to 4.4% in the same period of the previous year.
Electronic Solutions: Order intake increased by over 20%
With sales of €558 m, the Electronic Solutions division, which develops and produces solutions in the field of defence electronics, was down around 8% compared to the figure of €604 m achieved in the same period of the previous year. By contrast, the division significantly increased its order intake by 22% to €695m in the first nine months (previous year: €569 m). Major new orders related to the upgrade program for the German armed forces’ Puma infantry fighting vehicle and an air defence project for an international customer.
In the first three quarters of 2021, the operating result declined to €48m after €53m in the same period of the previous year. At 8.6%, the operating margin remained at the previous year’s good level (8.8%).
Sensors and Actuators: Significant increase in sales and operating result
The Sensors and Actuators division, which does business with its components and control systems for reducing emissions and for thermal management, increased its sales significantly by around 20% to €1,007 m in the first three quarters of 2021, after €838m in the same period of the previous year. The division thus significantly outstripped the development of production figures in the global automotive industry, where the increase for light vehicles up to 6 tons came to around 10%. However, the previous year was impacted by the sometimes significant production restrictions in the automotive industry, particularly during the first phase of the coronavirus pandemic. In the current year, the reduced availability of semiconductors, which meant that several automotive manufacturers could only produce considerably fewer vehicles than originally planned, prevented more significant sales growth in the Sensors and Actuators division.
Booked business for the first nine months of fiscal 2021 amounted to €1,480m, representing an increase of around 13% on the previous year’s level (€1,309m). 56% of this was attributable to new business, while 44% related to extensions and increases in the volume of existing customer projects. The percentage of booked business with alternative drive technologies increased year-on-year from 16% to 31%.
In the first three quarters, the division increased its operating result by around €69 m year-on-year from €6m to €74m. This increase was attributable firstly to the growth in sales and secondly to the measures introduced to reduce costs sustainably in the wake of the coronavirus pandemic. As expected, the operating margin therefore recovered to around 7.4%, after 0.7% in the comparative period of the previous year.
Materials and Trade: Operating result more than doubled
The Materials and Trade division, which supplies plain bearings and structural components and conducts global aftermarket business, also significantly increased its business volume in the first three quarters of 2021. Sales amounted to €485m, significantly exceeding the previous year’s figure of €387m with growth of around 25%.
This sales growth mainly resulted from increased production in the international automotive industry as compared to the previous year, which had been impacted by pandemic-related plant closures and production cuts. In the first nine months of fiscal 2021, the division generated booked business of €515m. This represents an increase of around 25% compared to the same period of the previous year (€412m).
The operating result in the Materials and Trade division more than doubled year-on-year from €18m to €38m in the first three quarters of 2021. In particular, the sales increases combined with continued strict cost management contributed to this good development of the earnings situation. The operating margin rose from 4.7% in the previous year to 7.9% after the first nine months of 2021.
Outlook: Forecasts for sales and operating margin modified slightly
Chiefly due to the still limited availability of raw materials and semiconductor components, which has led to lower delivery call-offs by major customers, Rheinmetall is forecasting slightly lower sales growth of around 6% for fiscal 2021, measured against the pro forma sales of €5,406m in 2020. The original forecast anticipated sales growth between 7% and 9%.
With regard to the earnings performance in fiscal 2021, Rheinmetall expects to reach the upper end of the original forecast for the operating margin of 9% to 10% as a result of strict cost management and further savings in the context of the Group restructuring. Rheinmetall now anticipates an operating margin of around 10%.
04 Nov 21. Nordic fund KLP excludes 14 weapons companies on ethical grounds. Norway’s largest pension fund KLP said on Thursday it would no longer invest in 14 major weapons makers and their suppliers, including Raytheon Technologies Corporation (RTX.N) and Rolls-Royce (RR.L).
The exclusion of the firms, based in Britain, China, France, Israel, India, Italy and the United States, is because they produce certain types of weapon, mostly involving nuclear arms, that violate fundamental humanitarian principles, KLP said.
“The criterion applies mainly to nuclear weapons and cluster munitions, as well as anti-personnel mines,” it said in a statement.
The other 12 companies are Babcock International Group (BAB.L), China Shipbuilding Industry Co (601989.SS), Dassault Aviation , Elbit Systems (ESLT.TA), General Dynamics Corp (GD.N), KBR Inc (KBR.N), L3Harris Technologies (LHX.N), Larsen & Toubro Ltd (LART.NS), Leidos Holdings (LDOS.N), Leidos (SAICI.UL), Leonardo SpA (LDOF.MI) and Thales SA (TCFP.PA).
Two of the companies – Elbit Systems and Leonardo – have already been excluded by KLP for other reasons.
“Dassault Aviation is at the service of France, its homeland,” a Dassault Aviation spokesman said in an emailed response to Reuters.
Babcock declined to comment, while none of the other companies were immediately available for comment when contacted by Reuters.
KLP’s decision follows a review of ethical criteria, expanding its definition to include makers of key components used for these types of weapons and providers of key support services.
“Companies do not need to produce the actual weapons components themselves,” Kiran Aziz, KLP’s head of responsible investment, said in an email to Reuters.
“We are now taking a slightly more stringent line with producers of aircraft and vessels that have been developed, produced or adapted to launch nuclear weapons.”
KLP, which has $90bn worth of assets under management, said all the companies had been divested from its portfolio.
The exclusions mean that KLP has sold shares worth just over 1 bn Norwegian crowns ($117.50m) and debt securities in the form of bonds worth about 200m crowns, the company said. ($1=8.5104 Norwegian crowns) (Source: Reuters)
05 Nov 21. NetScientific (NCSI: 98p), an investment company that backs early-stage life sciences, healthcare, and technology businesses has announced a raft of news for its portfolio companies.
A small-cap investment company’s cash pile and listed holdings back up 90 per cent of its share price, meaning its unlisted portfolio is in the price for 90 per cent below carrying value
- Portfolio company Sofant signs contract with the UK Space Agency and European Space Agency and has successful fundraise.
- ProAxsis wins US patent for technology associated with a patented bone-specific enzyme-linked immunoassay.
Sofant, the Edinburgh University spin-out that is developing a state-of-the-art antenna for satellite communications and 5G applications, has signed a $7.3m (£5.4m) contract with the UK Space Agency and European Space Agency. It will support the commercialisation of Sofant’s low-cost, low-power satellite communications platform that requires 70 per cent less power by eliminating the need for complex and expensive cooling systems. By connecting devices wirelessly via a satellite network, Sofant’s terminal also reduces the needs for terrestrial infrastructure and makes it easier for people in rural and remote locations to access the internet. Sofant also completed a £843,000 fundraise, of which £300,000 was made by Netscientific.
ProAxsis, a health and life sciences company with a focus on respiratory diagnostics in which NetScientific holds a 95 per cent stake, has received approval of a key US patent for the technology associated with its brand-new K-POSTN Assay, which it intends to launch shortly. This is a major step towards measuring bone health with a new innovation for patients at high risk of osteoporotic fractures.
In partnership with University of Geneva, ProAxsis is creating a patented bone-specific enzyme-linked immunoassay for the detection of serum K-POSTN, a fragment produced from the digestion of periostin (a type of protein that in humans is encoded by the POSTN gene) by cathepsin K which has localised activity in bone and can predict incident fractures independently of bone marrow disease and fractured risk in post-menopausal women. The technology is likely to be of great interest to pharmaceutical companies seeking to develop new treatments for osteoporosis. That’s because the K-POSTN assay can deliver specific and quantifiable outcome measurements (due to the rapid response shown by biomarkers) to both anabolic and anticatabolic drugs.
Nasdaq-listed PDS Biotechnology Corporation (US:PDSB:$11.80), a clinical-stage immunotherapy company developing novel cancer therapies based on its proprietary Versamune® T-cell activating technology, has temporarily suspended recruitment for a National Cancer Institute (NCI)-led Phase II clinical trial. It is evaluating PDS0101 in combination with two investigational immune-modulating agents in advanced human papillomavirus (HPV) cancers that have progressed or returned after treatment.
NCI anticipates that the issue, which is unrelated to any safety or efficacy concerns, should be resolved timely, at which time the PDS0101 trial recruitment will resume. The timing of clinical data resulting from this trial is not expected to be impacted by the recruitment suspension. Although US investors took the news in their stride – shares in PDS are unchanged since the announcement was made – it prompted an unwarranted 20 per cent slide in Netscientific’s share price back to around my entry point (‘Alpha Research: Back life sciences tech with a hefty margin of safety’, 20 July 2021). The UK group holds a 4.72 per cent stake in PDS worth £11.9m (56.5p a share), or almost three times the £4.1m cost of the investment.
Effectively, the value of the PDS shareholding and net cash of £6.7m (32p a share) post the Sofant investment backs up 90 per cent of NetScientific’s £20.6m market capitalisation. This means the group’s other holdings (‘Hunting for hidden gems’, 29 September 2021), which have a sum-of-the-parts valuation of £20m (95p a share), are in the price for a bargain basement £2m. The valuation anomaly is glaring and presents a repeat buying opportunity worth exploiting. Buy. (Source: Investors Chronicle)
04 Nov 21. nLIGHT, Inc. Announces Third Quarter 2021 Results. Revenues of $72.2m and gross margin of 29.6% for the third quarter of 2021. nLIGHT, Inc. (Nasdaq: LASR), a leading provider of high-power semiconductor and fiber lasers used in the industrial, microfabrication, and aerospace and defense markets, today reported financial results for the third quarter of 2021.
“nLIGHT delivered another record revenue quarter and generated the highest products gross margin in our history as a public company,” commented Scott Keeney, nLIGHT’s President and Chief Executive Officer. “We increased revenue year-over-year in each of our end markets as demand for both our semiconductor and fiber lasers was strong throughout the quarter. Our performance in the third quarter reflects the execution of our strategy to increase our focus on customers outside of China and the diversity in our revenue base.”
Mr. Keeney continued, “As a result of a 17% year-over-year increase in revenue combined with a higher mix of business coming from outside of China, we increased our products gross margins by 490 basis year-over-year to a record 37.1%. Assuming the midpoint of our Q4 revenue guidance, we are again on track to deliver more than 20% year-over-year growth.”
Third Quarter 2021 Financial Highlights
Revenues of $72.2m for the third quarter of 2021 were up 17.0% compared to $61.7m for the third quarter of 2020. Gross margin was 29.6% for the third quarter of 2021 compared to 27.8% for the third quarter of 2020. GAAP net loss for the third quarter of 2021 was $(6.9)m, or net loss of $(0.16) per diluted share, compared to net loss of $(2.1)m, or net loss of $(0.05) per diluted share, for the third quarter of 2020. Non-GAAP net income for the third quarter of 2021 was $3.9m, or non-GAAP net income of $0.08 per diluted share, compared to non-GAAP net income of $5.3m, or non-GAAP net income of $0.12 per diluted share, for the third quarter of 2020. Reconciliations of the non-GAAP information provided here to the most directly comparable GAAP metric have been provided in the financial statement tables included in this release.
For the fourth quarter of 2021, nLIGHT expects revenues to be in the range of $66m to $72m, gross margin to be in the range of 25% to 28%, and Adjusted EBITDA to be in the range of $3m to $5m.
We have not reconciled our outlook for Adjusted EBITDA because unrealized and realized foreign exchange gains and losses cannot be reasonably calculated or predicted nor can the probable significance be determined at this time. Accordingly, a reconciliation is not available without unreasonable effort. (Source: BUSINESS WIRE)
04 Nov 21. SEA, the UK’s defence and security electronic system specialist, has completed the purchase of the remaining 50% of JSK Naval Support (JSK), which it now owns outright. The agreement will see UK-based SEA continue to provide technical expertise and support to JSK, while expanding operations in Canada through recruitment. Trading since April 2014, JSK is a Canadian company created by SEA and Kaycom Inc. Since its launch, JSK has supported the sonar and acoustic systems on the Victoria class submarines and has been successfully contracted for larger programmes such as the Canadian Surface Combatant (CSC). Included in the acquisition is a recently awarded contract to supply the Torpedo Launcher System for the first four CSC platforms. The Canadian Government has committed to a total of 15 CSC platforms, to be delivered over the next 20 years, providing a significant long-term future for JSK. Also included as part of the agreement are repair and overhaul contracts with the Royal Canadian Navy that were previously held by Kaycom, which will provide additional and regular work for JSK.
SEA’s Managing Director, Richard Flitton said: “There are common needs and requirements across the UK, Australian and Canadian navies, and as a result of this agreement, JSK and SEA are now strategically better positioned to help meet these. Our combined expertise and experience in delivering leading anti-submarine warfare and ship survivability capabilities will be crucial to further developing our Canadian partnerships and supply chain.
“Members of our leadership team recently visited the JSK facility in Montreal to formally welcome the JSK team, and to discuss how our activities in Canada contribute to the overall strategic direction and growth of both SEA and JSK. SEA remains committed to supporting and developing Canadian skills, and creating career opportunities, and look forward to continuing our successful partnership.”
JSK is located in Pointe-Claire, Montreal, and is committed to developing extensive technical expertise and enhancing sovereign capability within Canada. It delivers expert engineering and manufacturing capabilities, including in-service support to the Royal Canadian Navy and local defence contractors.
04 Nov 21. Avon Protection’s rebirth has been a painful one.
Shift in strategy has been beset by delays and disappointments
The transformation of Avon Protection (Avon) into a business that focuses on providing personal protection equipment to military, police and other ‘first responder’ customers has been almost as eventful as the work done by its end-users.
In September last year, the Wiltshire-based company, which began life in 1885 producing everything from pneumatic tyres to conveyor belts, exited one of its oldest businesses making rubber tubes for milking machines. It sold Milkrite for £180m to DeLaval – £130m of which was booked as a one-off gain for the year ending September 30, 2020.
It spent $130m (£95m) of the proceeds on Team Wendy, a US-based manufacturer of head protection systems used by the military, law enforcement officers, search and rescue teams and people involved in adventure sports.
This fitted more neatly with its now-core offering of making body armour and masks providing breathing protection.
Investors clearly bought into the company’s transformation, which involved a name change from Avon Rubber. Well they might. Its protection business had long been a source of dependable sales and high profit margins, reflecting Avon’s specialist knowledge and deep client relationships. The performance of the milking division, which had accounted for about one-quarter of sales, was historically less impress. The pivot to protection saw the share price more than double from 2,065p at the beginning of 2020 to 4,650p last October, valuing the company at £1.44bn.
To say this was a stretch proved something of an understatement. The valuation peaked in late 2020 at almost 37 times next-12-month forecast earnings. Then a disappointing trading update in December led to a sustained sell-off.
The company reported two pieces of bad news – firstly, body armour plated designed for use in the US failed a key testing process. Secondly, a contract it had secured in September 2020 for a “next generation” head protection system for the US army had been objected to by a competitor, creating an unspecified delay to its delivery.
More than half of Avon’s value has since been wiped off and it now trades at just above £600m. The question for investors, though, is whether the company’s value has further to fall or if it rebounds from here?
A momentum trader wouldn’t be too sure. At 1,915p, the shares trade marginally above their 50-day moving average of 1,896p, but well below their 200-day, 2,700p a share average. The share price has experienced a couple of brief rallies this year, but any serious signs of momentum were extinguished in August when Avon reduced its revenue outlook for the year ending 30 September, citing delays to orders, supply chain disruption and a “tight” US labour market.
No sure thing
The decline in its valuation may seem extreme, but it is a reflection of new uncertainties about the way in which the company now makes its money when previous confidence was sky high. In the first six months without milkrite, nearly nearly 80 per cent of the company’s revenue came from North America and 60 per cent from military customers. This no longer seem to be the sure thing investors were betting it was at 2020 highs.
Uncertainty or delays to US military contracts therefore have a much more significant impact on forward earnings. What’s more, the high level of fixed costs associated with the company’s manufacturing base means the impact of sales disappointments on profits are magnified.
Supply chain pressures have also affected cash flow. In the first half, Avon moved from a net cash position (excluding leases) of $147.7m to net debt of $12.9m. The bulk of this ($135.5m) was used for the Team Wendy acquisition, but $10m was taken up in working capital to build inventory levels and almost $16m was spent on capital expenditure – mainly on product development and IT infrastructure costs.
Some $12m also went to dividends and share buybacks. Avon Protection has a progressive dividend policy and increased its half-year payout by 30 per cent to 14.3¢.
Full-year results are due on 23 November and the company has indicated that revenue will come in at about $250m. This is a 17 per cent increase on the same period last year, but at the lower end of the $245m-$260m guidance range provided in August. Sales have been affected by procurement “bottlenecks” and delays to existing orders as lead times for parts have lengthened.
Cash profit (Ebitda) margins are likely to fall to 15-16 per cent, which is lower than previous guidance given by the company of 17-18 per cent and a decline on its five-year average of 20.6 per cent.
The lower forecast is due in part to a non-cash inventory write-down in its ballistics protection arm relating to the purchase of 3M’s ballistics protection business and the Ceradyne brand acquired from 3M in 2019.
Given the frequency of issues that have occurred over the past 12 months, it is perhaps understandable that some investors have lost faith.
From dark skies
Things appear to be looking up, though. The contested helmet contract for the US army was superseded in September by a new deal worth up to $87.6m over two years. The company has also said it expects approval for the body armour product that initially failed testing in the first quarter of its 2022 financial year, with initial deliveries expected in the second quarter.
Avon also reported a strong intake of new orders – up 34 per cent year on year to $280m. This bodes well for a bounce back in profitability.
Although the past 12 months have been “a year that neither management or investors were hoping for”, its year-end net debt forecast of $27m was better than expected, joint broker Jefferies said in a recent note.
With consensus earnings forecasts of about 66¢ (49p) for the year just ended, Avon ’s price/earnings ratio of 40 times earnings may seem a bit rich. However, the average estimate for next year is a 91 per cent increase in basic earnings per share of about 126¢ (92p), valuing it at 21 times earnings, which is in line with peers. What’s more, Avon’s profit fight back is not expected to lose steam quickly. While some way off, brokers think the company could produce earnings of 161¢ (118p) come 2023. It is easy to feel cynical about forecasts after the last 12 months, but before its annus horribilis Avon was better known for beating expectations rather than falling short of them.
Cash conversion increased from 53 per cent at the half-year stage to 80 per cent by year-end, and much of the investment the company needed to make to ramp up production of both helmets and body armour fell into the year ended on 30 September.
Although it has suffered a series of setbacks, the rationale for the Avon’s transformation still makes sense. It has developed a strong niche, serving the most important customers in its field – the US Department of Defense, the UK’s Ministry of Defence and a framework contract with the NATO that allows member countries to buy from it.
The US military is obviously a key customer, and although there have been contract and delivery delays, it has not lost work and still has the faith of the world’s biggest spender on military equipment.
The US increased defence spending for the third year in succession in 2020, with its 4.4 per cent budget increase outpacing the global market growth rate of 2.6 per cent, according to the Stockholm International Peace Research Institute.
Avon’s chief executive, Paul McDonald, seems confident that the company can regain its footing. He bought almost £40,000-worth of shares in late September at 2,069p a pop. Although he can’t guarantee a bullet-proof performance for investors, he’ll clearly be hoping that the year ahead will prove less of a minefield than the one it has just negotiated its way through. If the company can avoid stepping on any more of those mines, the current price should prove a good entry point. (Source: Investors Chronicle)
04 Nov 21. Kratos’ Q3 2021 revenues drop 1.4% to $200.6m. In the third quarter of 2021, Kratos also incurred a net loss of $2.4m. Kratos Defense & Security Solutions has posted a nearly 1.4% year-on-year (YoY) decline in quarterly revenues in the third quarter of this year.
In the three-month period that ended on 26 September 2021, the company’s revenues totalled $200.6m. The figure was $202m in the prior-year period.
The fall was primarily attributed to a $6.2m drop in legacy government services revenues to $11.2m. The company also recorded a $5.5m YoY revenue fall due to a drop in certain international contracts for the Training Solutions business.
“The technology function has moved ever closer to the strategic heart of business – in many cases, redefining what businesses are capable of achieving. Post-Covid, technology has now become an integral part of our present culture itself. And digital is the predominant meme in this culture.”
However, revenue registered an organic increase of 5.8% on a pro forma basis, excluding the reductions.
Kratos also recorded a net loss of $2.4m in Q3 2021, compared to a profit of $2.4m registered in the same period a year ago.
Operating income decreased from $12.7m to $10.5m on a YoY basis. Adjusted EBITDA stood at $23.8m, down from $24.6m in Q3 2020.
In the third quarter of the year, Kratos’ Unmanned Systems Segment (KUS) revenues jumped 14.6% to $61.3m, while Kratos’ Government Solutions Segment (KGS) revenues fell from $148.5m to $139.3m.
Kratos’ Space, Satellite and Cyber business revenues increased to $72m in Q3 2021, compared to $61.3m.
Kratos president and CEO Eric DeMarco said: “Though we expect Covid-19 related, supply chain and customer issues the industry and Kratos are experiencing to continue, there is no change in Kratos’ expected up and to the right long term organic growth profile with increasing profit margins.
“Kratos is the growth leader in space, satellite communications and unmanned drone systems as reflected in our results today and our C5ISR, Rocket System and Next Generation Engine businesses are also positioned to be future growth leaders.”
The company added that it expects full-year revenue in the range of $805m-$815m. In September, Kratos delivered the first batch of its OpenSpace quantum and SpectralNet products to Northrop Grumman for the US Army Tactical Intelligence Targeting Access Node (TITAN) space-ground system prototype. (Source: army-technology.com)
04 Nov 21. Thales: Launch of the 2021 Employee shareholding plan. Thales (Euronext Paris: HO) announces the launch of its 2021 employee shareholding plan, which opened on Wednesday 3 November 2021. This offer is available to the employees of the Group in 36 countries and will cover Thales employees and retirees. The purpose of this plan is to strengthen the relationship between Thales and its employees by allowing them to be involved in the Group’s future objectives, performance and successes.
The terms and conditions of this offer are detailed below. For any question regarding this offer, beneficiaries may contact their Human Resources Manager and/or any other person as specified in the documents delivered to the beneficiaries of the offer.
2021 Employee Shareholding Plan: terms and conditions
This shareholding plan is available to the Group employees in France, Australia, Austria, Belgium, Brazil, Canada, China, Columbia, Czech Republic, Denmark, Egypt, Finland, Germany, Hong Kong, India, Italy, Israel, Japan, Mexico, Norway, Netherlands, Philippines, Poland, Portugal, Qatar, Romania, Saudi Arabia, South Africa, Singapore, Spain, Sweden, Switzerland, Turkey, United Arab Emirates, and United States of America, who will be eligible and members of the Group’s savings plan and under a Share Incentive Plan (“SIP”) scheme in the United Kingdom.
The employee shareholding plan will consist in offering existing treasury shares previously repurchased by Thales as part of a share buyback program authorized by the general shareholders’ meeting pursuant to Article L. 22-10-62 of the French Commercial Code. The sale of the shares to employees and retirees who are members of the Group’s savings plan will be implemented in accordance with the provisions of Articles L. 3332-18 et seq. of the French Labour Code, with the exception of the offer made in the United Kingdom, where it will be carried out as part of a SIP.
On 24 November 2020, the Board of Directors decided to implement this employee shareholding operation and delegated to the Chairman and Chief Executive Officer the powers necessary for its implementation. In accordance with the decision of the Board of Directors, the offer will cover a maximum number of 600,000 shares.
The Chairman and Chief Executive Officer, on the authority of the Board of Directors, set the dates of the subscription period and set the purchase price by decision dated 28 October 2021. The acquisition price is equal to 80% of the reference price.
The reference price, noted by the Chairman and Chief Executive Officer on 28 October 2021 and equal to the average of the opening prices of the Thales share on the Euronext Paris market during the twenty (20) trading days preceding this date is €83.07. The acquisition price is therefore €66.46. For the offer made in the United Kingdom, the acquisition price will be determined in accordance with the rules applicable in the context of a SIP.
As the shares acquired by beneficiaries of the offer are existing ordinary shares, they are fully comparable to the existing ordinary shares comprising Thales’ share capital.
Conditions of the plan
- Employee Shareholding Plan Beneficiaries: the beneficiaries of the offer are employees of companies in the scope of consolidation who have joined the group’s savings plan, regardless of the nature of their employment contract (fixed-term or permanent, full-time or part-time) and who have three months of employment. Retirees and early retirees of the Group’s French companies who joined the savings plan before they ceased to operate are beneficiaries of the offer, provided they have retained assets in the Group’s savings plan since their retirement or early retirement.
In the United Kingdom, the Thales shareholding plan is implemented as part of a Share Incentive Plan (“SIP”).
- Companies within the scope of the offer:
o Thales, a company with a share capital of 640 097 874 euros, whose registered office is located Tour Carpe Diem, place des Corolles, esplanade nord, 92400 Courbevoie, and
o Companies of the Thales group, in which Thales directly or indirectly holds more than 50% of the share capital, having their registered office in France, Australia, Austria, Belgium, Brazil, Canada, China, Columbia, Czech Republic, Denmark, Egypt, Finland, Germany, Hong Kong, India, Italy, Israel, Japan, Mexico, Norway, Netherlands, Philippines, Poland, Portugal, Qatar, Romania, Saudi Arabia, South Africa, Singapore, Spain, Sweden, Switzerland, Turkey, United Arab Emirates and United States of America and which have joined the group savings plan and in the United Kingdom via the SIP.
- Terms of participation: the shares will be acquired through a shareholding fund (Fonds Commun de Placement d’Entreprise) or directly depending on the country, and through a Trust under the SIP.
- Formulas for acquiring Thales shares: employees will be able to acquire Thales shares within the framework of a “classic subscription formula”. Employees will receive a matching contribution from their employer corresponding to one free share for every four shares acquired, up to a maximum of ten matching shares for forty shares acquired.
- Voting rights: the voting rights attached to the shares will be exercised by the Supervisory Board of the shareholding fund (FCPE) and directly by the employees when the shares are held directly. Under the SIP, the voting rights attached to the shares may be exercised by the beneficiaries.
- Subscription’s cap: the annual payments of the beneficiaries of the offer into the Group savings plan may not exceed, pursuant to Article L. 3332-10 of the French Labour Code, one quarter of their gross annual compensation for 2021.
- Holding / Lock-Up period: the employees participating in the offer must keep the corresponding FCPE units or shares held directly for a period of five years, unless an early exit event occurs as provided for in Article R. 3334-22 of the Labour Code or by local regulations. Concerning the vested shares in the SIP in the United-Kingdom, the keeping terms are different and depend on the nature of the share (partnership share or matching share).
Indicative timetable of the plan
- Subscription period: from 3 November 2021 (included) to 24 November 2021 (included).
- Settlement of the offer: Scheduled for 16 December 2021
These dates are provided for information purposes only and are subject to change.
Thales shares are admitted to trading on Euronext Paris (ISIN Code: FR0000121329).
This press release does not constitute an offer to sell or a solicitation to acquire Thales shares. The offer of Thales shares reserved for employees will be made only in countries where such an offer has been registered or notified to the competent local authorities and/or following the approval of a prospectus by the competent local authorities, or in consideration of an exemption from the obligation to prepare a prospectus or to register or notify the offer.
More generally, the offer will only be made in countries where all required registration procedures and/or notifications have been completed and the necessary authorizations have been obtained.
03 Nov 21. Curtiss-Wright Corporation (NYSE: CW) reports financial results for the third quarter ended September 30, 2021.
Third Quarter 2021 Highlights:
- Reported sales of $621m, operating income of $98m, operating margin of 15.7%, diluted earnings per share (EPS) of $1.70, and free cash flow (FCF) of $97m;
- Adjusted sales of $614m, up 12%;
- Adjusted operating income of $108m, up 12%;
- Adjusted operating margin of 17.5%, up 10 basis points;
- Adjusted diluted EPS of $1.88, up 6%;
- New orders of $617m, up 13%; and
- Adjusted FCF of $97m, up 76%, with 127% free cash flow conversion.
Expansion of Company’s Share Repurchase Authorization:
- In September, the Company’s Board of Directors authorized an additional $400m for future share repurchases, increasing the total available authorization to $550m;
- The Company immediately and opportunistically began the repurchase of $200m in additional shares via a 10b5-1 program, conducted in concurrence with its existing $50m share repurchase program being executed this calendar year; and
- As of November 3, the Company has completed its $200m opportunistic share repurchase program, buying back approximately 1.5 m shares, and remains on track to repurchase a total of $250 m in shares in 2021.
Full-Year 2021 Adjusted Guidance:
- Raised bottom end of Adjusted diluted EPS guidance to new range of $7.20 to $7.35 (previously $7.15 to $7.35);
- Maintained sales growth of 7% to 9%, Adjusted operating income growth of 9% to 12%, and Adjusted operating margin range of 16.7% to 16.8%, up 40 to 50 basis points compared with the prior year; and
- Maintained Adjusted FCF range of $330 to $360m, representing a free cash flow conversion rate of approximately 116%.
“We delivered strong third quarter results, with double-digit growth in sales and operating income, despite supply chain headwinds, which produced Adjusted diluted EPS of $1.88 and generated strong free cash flow of approximately $100 m,” said Lynn M. Bamford, President and CEO of Curtiss-Wright Corporation. “Our results reflect the continued execution of our operational excellence initiatives and savings generated by our prior year restructuring actions, which drove operating margin expansion that more than offset the $4 m in incremental year-over-year research and development investments to support our long-term organic growth.”
“In addition, we continued to leverage our strong and healthy balance sheet to implement our balanced capital allocation strategy. We firmly delivered on our commitment to drive solid returns to our shareholders by completing the recently announced $200 m opportunistic share repurchase program, and we remain devoted to supporting our organic growth with high quality, strategic acquisitions to drive long-term shareholder value.”
“Looking ahead to the remainder of 2021, while global supply chain disruption continues to impact many businesses, we will continue to work aggressively to mitigate any negative effects on Curtiss-Wright, leveraging the strength and resilience of our combined portfolio, which has provided us with confidence to raise the midpoint of our Adjusted diluted EPS guidance range.”
Third Quarter 2021 Operating Results
- Adjusted sales of $614m, up $64m, or 12%;
- Aerospace & Defense (A&D) market sales increased 15%, led by strong growth in commercial aerospace and naval defense, and the contribution from the PacStar acquisition in ground defense;
- Commercial market sales increased 6%, principally due to continued, strong demand in the general industrial market;
- Adjusted operating income of $108m, up 12%, while Adjusted operating margin increased 10 basis points to 17.5%, principally reflecting favorable overhead absorption on higher organic revenues in our Aerospace & Industrial segment, as well as the benefits of our prior year restructuring and ongoing company-wide operational excellence initiatives. Those gains were partially offset by $4m in higher research and development investments, principally within the Defense Electronics segment; and
- Non-segment expenses of $9m increased by $2 m compared with the prior year, primarily due to higher corporate costs.
Free Cash Flow
- Free cash flow of $97m increased $48m, or 98%, principally driven by the timing of tax payments and improvements in working capital;
- Capital expenditures increased $3m compared with the prior year, primarily due to higher capital investments within the Naval & Power segment; and
- Adjusted free cash flow of $97m increased $42m, or 76%.
New Orders and Backlog
- New orders of $617m increased 13% compared with the prior year period, generating overall book to bill that exceeded 1.0x, principally driven by solid demand for our commercial aerospace and defense electronics products within our A&D markets, and for industrial vehicle products within our Commercial markets; and
- Backlog of $2.2bn, up 2% from December 31, 2020, principally reflects the rebound in commercial market demand.
Share Repurchase and Dividends
- During the third quarter, the Company repurchased 540,643 shares of its common stock for approximately $67m;
- Year-to-date through September 30, 2021, the Company repurchased 746,851 shares for approximately $92 m; and
- The Company also declared a quarterly dividend of $0.18 a share, unchanged from the previous quarter.
Other Items – Business Held for Sale
- During the fourth quarter of 2020, the Company classified its German valves business (previously within its Commercial/Industrial segment, currently within its Naval & Power segment) as held for sale and its results have been adjusted from comparisons between our current and prior year results, and full-year financial guidance.
Third Quarter 2021 Segment Performance
Aerospace & Industrial
- Reported results reflected sales of $196m, operating income of $31m and operating margin of 15.7%;
- Adjusted sales of $196m, up $24m, or 14%;
- Higher general industrial market revenue principally reflected the continued strong rebound in industrial vehicle product demand for on- and off-highway platforms in response to the economic recovery;
- Strong commercial aerospace market revenue growth reflected higher sales of sensors products and surface treatment services on narrowbody platforms, partially offset by lower actuation sales on widebody platforms; and
- Adjusted operating income of $31m, up 34% from the prior year, while Adjusted operating margin increased 240 basis points to 15.7%, reflecting strong absorption on higher sales, and the benefits of our ongoing operational excellence and prior year restructuring initiatives.
- Reported results reflected sales of $182m, operating income of $41m and operating margin of 22.5%;
- Adjusted sales of $183m, up $34m, or 22%, principally driven by the contribution from the PacStar acquisition for tactical battlefield communications equipment within our ground defense market;
- Lower aerospace defense market revenue reflected reduced sales of our embedded computing equipment on various Unmanned Aerial Vehicle (UAV) and fighter jet platforms, partially offset by solid growth on various helicopter platforms;
- Higher commercial aerospace market revenue reflected increased sales of electronic systems and flight test equipment on various domestic and international platforms; and
- Adjusted operating income of $42m, up 9% from the prior year, while Adjusted operating margin decreased 270 basis points to 23.2%, as favorable mix in defense electronics was more than offset by higher research and development investments and unfavorable foreign currency translation.
Naval & Power
- Reported results reflected sales of $243m, operating income of $35 m and operating margin of 14.6%;
- Adjusted sales of $235m, up $7m, or 3%;
- Strong naval defense market revenue growth primarily reflected higher revenues on the Virginia-class submarine and CVN-81 aircraft carrier programs;
- Reduced power & process market sales reflected timing of production on the China Direct AP1000 program in the nuclear market, partially offset by solid industrial valve demand in the oil and gas market; and
- Adjusted operating income of $44m, up 4% from the prior year, while Adjusted operating margin increased 20 basis points to 18.6%, driven by solid absorption on higher revenues and the benefits of our prior year restructuring initiatives, partially offset by unfavorable mix in the power & process market.
03 Nov 21. AMETEK Announces Record Third Quarter Results and Raises the 2021 Guidance. AMETEK, Inc. (NYSE: AME) today announced its financial results for the third quarter ended September 30, 2021. AMETEK’s third quarter 2021 sales were a record $1.44bn, a 28% increase over the third quarter of 2020, with organic sales growth of 17%. Operating income increased 25% to a record $337.6m and operating margins were 23.4% with strong core operating margin expansion.
On a GAAP basis, third quarter earnings per diluted share were $1.10. Adjusted earnings were a record $1.26 per diluted share, up 25% versus the prior year’s adjusted results. Adjusted earnings adds back non-cash, after-tax, acquisition-related intangible amortization of $0.16 per diluted share. A reconciliation of reported GAAP results to adjusted results is included in the financial tables accompanying this release and on the AMETEK website.
“AMETEK’s results in the quarter were outstanding,” commented David A. Zapico, AMETEK Chairman and Chief Executive Officer. “Our businesses delivered record results which exceeded our expectations despite a challenging operating environment. Order growth remains strong and broad-based resulting in a record $2.6bn backlog. Given this performance, we are again raising our sales and earnings guidance for the full year.”
Electronic Instruments Group (EIG)
Third quarter EIG sales were a record $981.8 m, up 31% compared to last year’s third quarter. EIG’s operating income in the quarter was up 20% to a record $245.1m, and operating margins were 25.0%.
“EIG performed extremely well in the quarter delivering record sales and operating income driven by strong organic sales growth and the contribution from recent acquisitions,” noted Mr. Zapico. “Sales growth remains robust across our businesses reflecting continued strengthening in our end markets.”
Electromechanical Group (EMG)
EMG sales in the third quarter were $458.9 m, an increase of 21% over the third quarter of 2020. Operating income for EMG increased 36% over the prior-year period to a record $114.6m, and operating margins were up 270 basis points to a record 25.0%.
“EMG had an impressive quarter with strong sales growth and outstanding operating performance,” commented Mr. Zapico. “Our EMG businesses delivered exceptional results with broad-based sales growth, operating income up 36% over the prior year, and record level operating margins.”
“Our businesses continue to perform exceedingly well in a challenging environment. Our success reflects the hard work and commitment of all AMETEK colleagues worldwide as well as the power of the AMETEK Growth Model. Our differentiated businesses, diversified market exposures and proven operating model provide us the ability to drive long-term, sustainable growth,” continued Mr. Zapico.
“Following our third quarter results, we are increasing our guidance for the year. For 2021, we now expect overall sales to be up in the low 20% range with organic sales up low double digits on a percentage basis versus 2020. Adjusted earnings per diluted share are expected to be in the range of $4.76 to $4.78 an increase of 21% over the prior year comparable basis. This is an increase from our previous adjusted earnings guidance range of $4.62 to $4.68 per diluted share,” he added.
“We expect overall sales in the fourth quarter to be up in the low 20% range compared to the fourth quarter of 2020. Adjusted earnings per diluted share are anticipated to be in the range of $1.28 to $1.30, up 19% to 20% over the same period in 2020,” concluded Mr. Zapico.
02 Nov 21. Leidos Holdings, Inc. Reports Third Quarter Fiscal Year 2021 Results.
– Revenues of $3.5bn, up 7% year-over-year
– Net Income of $208m; Adjusted EBITDA of $403m
– Diluted Earnings per Share of $1.43, or $1.80 on a non-GAAP basis
– Cash Flows from Operations of $565m; Free Cash Flow of $541m
– Net Bookings of $4.7bn (book-to-bill ratio of 1.4) drive record backlog of $34.7bn
Leidos Holdings, Inc. (NYSE: LDOS), a FORTUNE 500® science and technology leader, today reported financial results for the third quarter of fiscal year 2021.
Roger Krone, Leidos Chairman and Chief Executive Officer, commented, “The third quarter marked another strong quarter for Leidos, with record levels of revenues, adjusted EBITDA, non-GAAP diluted EPS, and backlog. Our success is the direct result of building a business portfolio focused on vital missions and a workforce that is motivated to enhance those missions through technology, engineering, and science. As we described at our October Investor Day, we see continued success ahead based on our scale, positioning, and talented people.”
Summary Operating Results
Revenues for the quarter were $3.48bn, up 7% compared to the prior year quarter. Excluding acquired revenues of $47m, revenues increased 6% organically. Revenues grew across all reportable segments; the largest contributors were the increase in veterans’ disability examinations after the pause from the COVID-19 pandemic and the start-up of the Navy Next Generation IT contract.
Net income was $208m, or $1.43 per diluted share. Net income was up 28% and diluted EPS was up 27% from the third quarter of fiscal year 2020. The weighted average diluted share count for the quarter was 143 m compared to 144m in the prior year quarter. Net income margin increased from 5.0% to 6.0% year-over-year as a result of the strong program management and higher volumes on certain fixed price programs.
Adjusted EBITDA was $403m for the third quarter, up 16% year-over-year; adjusted EBITDA margin increased from 10.7% to 11.6% over the same period consistent with the increase in operating income margin. Non-GAAP net income was $260m for the third quarter, which was up 23% year-over-year, and non-GAAP diluted EPS for the quarter was $1.80, which was up 22% compared to the third quarter of fiscal year 2020.
Cash Flow Summary
In the third quarter of fiscal year 2021, Leidos generated $565m of net cash provided by operating activities for an operating cash flow conversion ratio of 276%. After adjusting for payments for property, equipment and software, quarterly free cash flow was $541m for a free cash flow conversion ratio of 211%. In addition, Leidos used $53m in investing activities and used $209m in financing activities.
During the third quarter of fiscal year 2021, Leidos made open market repurchases of common stock for an aggregate purchase price of $137m and returned $51m to shareholders as part of its regular quarterly cash dividend program. In addition, Leidos paid down $27m of debt and completed a small, strategic acquisition for preliminary purchase consideration of approximately $36m. As of October 1, 2021, Leidos had $587m in cash and cash equivalents and $5.1bn of debt.
On October 29, 2021, the Leidos Board of Directors declared that Leidos will pay a cash dividend of $0.36 per share on December 30, 2021 to stockholders of record at the close of business on December 15, 2021.
New Business Awards
Net bookings totaled $4.7bn in the quarter, representing a book-to-bill ratio of 1.4. As a result, backlog at the end of the quarter was $34.7bn, of which $7.3bn was funded. Included in the quarterly bookings were several particularly important awards:
- High-Resolution Three Dimensional (3D) Geospatial Information Operation and Technology Integration Program. Leidos was awarded a prime contract by the U.S. Army to support the Army Geospatial Center’s (AGC) Buckeye program. Under the contract, Leidos will continue to support AGC’s BuckEye mission. The BuckEye program provides mission critical unclassified high resolution color imagery and digital 3D terrain over all operationally relevant areas of the world. The single-award contract has a one-year base period of performance followed by three one-year options and a total estimated value of $600m if all options are exercised.
- Technical Signals Intelligence. Leidos was awarded a prime contract by the National Security Agency (NSA) to provide development and modernization efforts in support of the agency’s Technical Signals Intelligence (TechSIGINT) mission. Under the contract, Leidos will provide the technical services to develop, deploy and sustain a wide range of new and improved TechSIGINT collection, production and analysis capabilities. The single award contract has a five-year base period of performance and holds a ceiling value of $300m.
- Enduring Indirect Fires Protection Capability. Leidos was awarded a contract by the U.S. Army Program Executive Office Missiles and Space for the Enduring Indirect Fires Protection Capability (IFPC) to provide its mobile ground-based weapon system. Under the contract, Dynetics, a wholly owned subsidiary of Leidos, will produce a transportable system designed to engage and defeat Cruise Missile (CM) and Unmanned Aircraft System (UAS) threats. The award has an estimated value of $237m over the next 2.5 years.
In addition, Leidos received prime positions on several indefinite delivery/indefinite quantity (IDIQ) contracts that provide competitive differentiation and channels for future growth but are not included in bookings or backlog beyond any awarded task orders. The largest of these IDIQs was:
- Low-Energy Portal. Leidos was awarded a new prime contract by U.S. Customs and Border Protection (CBP) to provide Low-Energy Portal (LEP) systems for non-intrusive inspection (NII) of passenger vehicles at U.S.-Mexico land border crossings. Under the contract, Leidos will integrate, deploy and train CBP staff to use its VACIS® LEP systems, incorporating Viken Detection’s OSPREY™ scanning technology. The multiple-award LEP contract has a total ceiling value of $390m.
02 Nov 21. Redwire Corporation (NYSE: RDW), a leader in space infrastructure for the next generation space economy, today announced that it has acquired Techshot, Inc., a leader in biotechnology in microgravity, bioprinting, and on-orbit manufacturing needed for commercial space-based research and development.
“Techshot’s space bioprinting and other proven biotech solutions in microgravity are some of the most consequential innovations in Low Earth Orbit (LEO) with life-saving benefits on and off our home planet,” said Peter Cannito, Chairman and CEO of Redwire. “Adding Techshot’s leading position in commercial space biotechnology with Redwire’s leading position in on-orbit material manufacturing adds significant scale and synergy to our commercial space offerings. This is a giant leap forward in our vision for people living and working in space for the benefit of the terrestrial economy.”
This acquisition aligns with Redwire’s growth strategy to leverage strategic investments to scale in-space manufacturing in LEO which will directly impact the sustainability of future human spaceflight and deliver optimized products for Earth-based industries. The acquisition of Techshot is value accretive and will provide a complementary suite of products to further advance Redwire’s disruptive innovation.
“As part of Redwire, we now have more of the resources we need to help accelerate the development of our growing portfolio of new space biomedical technologies, while we continue to provide great service to our research and deep space exploration customers,” said Techshot President and Co-founder John Vellinger. “We’re excited to be part of a leading company in the commercialization – and indeed, the industrialization – of low Earth orbit, and beyond.”
Since 1988, Techshot has been at the forefront of biological and physical-science research in space. It has developed more than a dozen payloads – four of which currently are operating on the International Space Station. The company’s key products include the 3D BioFabrication Facility: the first American system capable of manufacturing human tissue in microgravity; the Multi-use Variable-gravity Platform: containing a set of centrifuges for in-space biological and physical-science research; the Advanced Space Experiment Processor: a multipurpose device for biological research and small scale manufacturing in space; and the Bone Densitometer: an in-orbit X-ray machine chiefly used by Techshot customers for researching new treatments for osteoporosis and muscle wasting diseases.
Techshot’s development pipeline includes a new payload for 3D printing metal and electronic components, and devices for manufacturing pharmaceuticals and large quantities of human cells for bioprinting and cell therapies. Beyond operating its own devices, Techshot also manages research in NASA’s space station furnaces and the Advanced Plant Habitat.
Techshot’s customers include, Eli Lilly and Company, AstraZeneca, UCLA, MIT, and the Geneva Foundation among other government and commercial entities. Based in Floyd County, Indiana, Techshot’s 22,000 square foot facility, located near world-class aeronautical and biomedical engineering university programs, will expand Redwire’s technology ecosystem with additional engineering labs and payload operations control center.
Following its NYSE debut in September, Redwire recently announced plans to partner with Blue Origin, Sierra Space, Boeing and teammates to develop a commercial space station that will be outfitted with the company’s advanced manufacturing capabilities and focused on delivering important Earth benefits—now including bioprinting human tissue and organs for therapeutical applications. Redwire has continued its strong growth trajectory through strategic acquisitions as the company now owns over 25 commercially developed facilities that have flown, are in development or currently operating on the International Space Station.
Redwire Corporation (NYSE: RDW) is a leader in space infrastructure for the next generation space economy, with valuable IP for solar power generation and in-space 3D printing and manufacturing. With decades of flight heritage combined with the agile and innovative culture of a commercial space platform, Redwire is uniquely positioned to assist its customers in solving the complex challenges of future space missions. For more information, please visit www.redwirespace.com.
03 Nov 21. Rohde & Schwarz consistently aligns business performance for further growth. The Rohde & Schwarz technology company ends a successful 2020/2021 fiscal year despite ongoing global economic challenges. With its cutting-edge solutions, the company has continued to prove robust in last year’s highly dynamic market environment. In addition to its established business fields, Rohde & Schwarz has made substantial investments in future technologies such as 6G, quantum technology, the industrial internet of things (IIoT), artificial intelligence and cloud technology. The company is a trailblazer in the socially relevant topics of security and connectivity.
The independent technology company Rohde & Schwarz closed its 2020/2021 fiscal year (July to June) with EUR 2.34bn in revenue. Operating results were almost at the previous year’s level. The company exceeded its target values that had been adjusted to match market developments. This sends a good signal in light of the challenging dynamics of the past fiscal year.
Employees are the most valuable asset
Even under challenging economic conditions, Rohde & Schwarz has proven a reliable employer that sees its innovative employees as the cornerstone of success. Consequently, many issues related to how the company will collaborate in the future are high on the agenda. For example, the high-tech company now offers greater flexibility for working hours and workplace, and has anchored this in agreements to reflect current and future changes in conditions. The workforce of the privately owned, global company grew at a moderate rate. At the end of the fiscal year, Rohde & Schwarz had around 13,000 employees in more than 70 countries worldwide.
Future technologies drive innovations
Rohde & Schwarz is a pioneer in many technologies, including the further development of mobile communications up to 6G, T&M solutions for quantum computing, the IIoT, the increasing inroads made by artificial intelligence as well as cloud technologies. Together with its subsidiaries and partners, the company is developing future technological solutions with a passion for innovation.
New three-division structure creates added value for customers
Three strong divisions allow Rohde & Schwarz to address distinct customer needs even more closely and lay the foundation for further growth. The Test & Measurement Division provides products for diverse market segments such as wireless communications, industry, components and research as well as automotive.
The former Secure Communications, Monitoring & Network Testing and Broadcast & Media Divisions were merged to create the new Technology Systems Division. In this division, Rohde & Schwarz bundles technological system expertise and resources in the markets where project business plays an important role. The company’s solutions contribute significantly to the digital sovereignty of customers.
The Networks & Cybersecurity Division equips business and public authorities with secure WAN, LAN and WLAN network infrastructures and products to protect data transmission, devices and applications. Future-ready network, security and encryption solutions protect the digital information and business processes of companies and public institutions against the effects of cyberattacks.
Test & measurement business again proved to be robust
Especially markets highly dependent on the latest technologies as well as their suppliers continued to invest heavily. This drove business performance in the Test & Measurement Division.
Rohde & Schwarz has designed market-leading solutions from V2X to 5G for challenging automotive applications such as communications between vehicles and their surroundings and for the latest wireless communications standard in mobility. The company could further improve its position in this field with innovative radar T&M instruments and systems. For example, automotive manufacturers, suppliers and test houses benefited from a unique test solution that cost-efficiently translates realistic driving scenarios from the road to the lab. The global expansion of 5G networks continued unabated, generating high demand, in particular for user equipment testing in the frequency range up to 7 GHz.
Rohde & Schwarz has meanwhile established itself on the market as an oscilloscope supplier. Since entering the market over 10 years ago, the technology company has continually developed new instruments that were designed and developed specifically with customer needs in mind. The demand for T&M solutions among component manufacturers reflected the sustained high level of investment in digitalization and connectivity in almost all industries. To position Rohde & Schwarz T&M solutions in the quantum computing field, the company successfully completed the acquisition of the leading Swiss T&M manufacturer Zurich Instruments AG, effective July 1, 2021.
Global customer proximity ensures technology partnership in project business
The strong local presence of Rohde & Schwarz compensated for pandemic-related restrictions on project business, e.g. due to travel regulations. In Germany, the company consolidated its position as a national champion in the secure communications market segment. From air traffic control to secure communications for ground and naval forces, Rohde & Schwarz makes a key contribution to the digital sovereignty of government customers for security-critical applications by offering cross-platform systems such as CERTIUM®, SOVERON® and NAVICS®.
The global expansion of 5G networks requires technical adaptations to network monitoring systems, driving demand for suitable solutions in the mobile network testing (MNT) market segment. Major network operators and infrastructure providers worldwide appreciate the test performance of Rohde & Schwarz solutions due to their optimal quality of experience (QoE) and quality of service (QoS). A 5G campus network at one of its plants allows Rohde & Schwarz to directly optimize the implementation of real Industry 4.0 use cases.
Rohde & Schwarz meets growing demand for network and security solutions
The Networks & Cybersecurity Division benefits from additional demand for network and security solutions in both public and private sectors. The growing number of cyberattacks, increasingly decentralized structures and rise in mobile work are raising the importance of digital security and sovereignty. Together with its subsidiaries LANCOM Systems and Rohde & Schwarz Cybersecurity, the technology company is one of the largest suppliers of network, security and encryption solutions for professional customers in Europe.
LANCOM Systems offers the first software based business router certified by the Federal Office for Information Security (BSI) to enable secure site networking. As part of the DigitalPakt Schule (digital pact for schools) support program, the network and security specialist has already equipped more than 3,000 schools with network technology that meets the highest security and data protection standards. In the government sector, Rohde & Schwarz Cybersecurity equipped the public authority network of a German federal state with BSI-approved encryption technology. Other German federal states are planning to use this as a blueprint for the modernization of their networks.
Outlook: focus on growth
The global economic recovery positively impacted the performance especially towards the end of the fiscal year. Thanks to its global positioning in future markets and its strong economic base, Rohde & Schwarz is very well positioned for further growth.
02 Nov 21. Intevac Announces Third Quarter 2021 Financial Results.
Intevac, Inc. (Nasdaq: IVAC) today reported financial results for the quarter and nine months ended October 2, 2021.
“We are pleased to report Q3 financial results that were above forecast, and up sequentially from the second quarter, chiefly as a result of the continued acceleration of upgrade programs by our hard disk drive (HDD) customers,” commented Wendell Blonigan, president and chief executive officer. “We achieved improved operating results in the quarter, with a significant sequential increase in gross margin and continued control of expenses. In the third quarter, we completed our restructuring efforts in Thin-film Equipment (TFE) to enable reduced expense levels during this period of limited new system sales, while maintaining our ability to support the expected growth in our HDD business, and continue the technology development efforts in our TFE growth initiatives. To date in 2021, we have closely managed cash and maintained the strength of our balance sheet, achieving a net increase in total cash, restricted cash and investments since year-end 2020.
“We continue to achieve momentum in each of our businesses and expect a return to revenue growth in 2022. Our confidence in the growth ahead reflects solidifying plans by our HDD customers to expand media manufacturing capacity over the next several years, as well as the U.S. Military’s continued investment in Intevac Photonics as a key technology provider for their digital night vision programs. We recently announced a new $16 m IDIQ award for Apache Helicopter night vision cameras and support, and we are the only technology provider actively working on all three of the U.S. Army’s development programs focused on enhancing the night vision performance of the IVAS dismounted soldier platform.” Mr. Blonigan concluded, “We believe the revenue growth ahead in both HDD and Photonics will be further bolstered by opportunities in new TFE growth markets for the Company.”
Third Quarter 2021 Summary
The net loss for the quarter was $4.2m, or $0.17 per diluted share, compared to a net loss of $357,000, or $0.02 per diluted share, in the third quarter of 2020. The non-GAAP net loss was $4.0m, or $0.16 per diluted share, compared to a non-GAAP net loss of $254,000, or $0.01 per diluted share, for the third quarter of 2020.
Revenues were $14.8m, including $8.0m of TFE revenues and $6.8m of Photonics revenues. TFE revenues consisted of upgrades, spares and service. Photonics revenues included $3.1m of research and development contracts and $3.7m of product sales. In the third quarter of 2020, revenues were $21.6m, of which $9.4m in TFE revenues consisted of upgrades, spares and service, and $12.2m in Photonics revenues consisted of $6.5m of research and development contracts and $5.7m of product sales.
TFE gross margin was 41.9% compared to 43.5% in the third quarter of 2020 and 18.7% in the second quarter of 2021. The improvement compared to the second quarter of 2021 reflected higher revenues and more favorable product mix. Photonics gross margin was 32.0% compared to 42.8% in the third quarter of 2020 and 24.9% in the second quarter of 2021. The improvement compared to the second quarter of 2021 reflected higher margins on product sales. Consolidated gross margin was 37.4%, compared to 43.1% in the third quarter of 2020 and 22.5% in the second quarter of 2021.
R&D and SG&A expenses were $9.5m, compared to $9.4m in the third quarter of 2020 and $9.4m in the second quarter of 2021.
Order backlog totaled $44.9m on October 2, 2021, compared to $51.7m on July 3, 2021 and $63.3m on September 26, 2020. Backlog at October 2, 2021, July 3, 2021 and September 26, 2020 did not include any 200 Lean HDD systems.
The Company ended the quarter with $51.4m of total cash, restricted cash and investments and $89.6m in tangible book value.
First Nine Months 2021 Summary
The net loss was $16.9m, or $0.69 per diluted share, compared to a net loss of $57,000, or $0.00 per diluted share, for the first nine months of 2020. The non-GAAP net loss was $16.5m or $0.68 per diluted share, compared to non-GAAP net income of $46,000 or $0.00 per diluted share, for the first nine months of 2020.
Revenues were $44.8m, including $22.6m of TFE revenues and $22.2m of Photonics revenues, compared to revenues of $69.2m, which included $33.9m of TFE revenues and $35.3m of Photonics revenues, for the first nine months of 2020.
TFE gross margin was 28.7%, compared to 40.2% in the first nine months of 2020, primarily due to lower revenues which affected factory utilization. Photonics gross margin was 23.4% compared to 43.2% in the first nine months of 2020 due to lower revenue levels, as well as higher costs related to completing the integration of our camera into the IVAS platform. Consolidated gross margin was 26.1%, compared to 41.7% in the first nine months of 2020. R&D and SG&A expenses were $28.5m compared to $28.0m in the first nine months of 2020. (Source: BUSINESS WIRE)
02 Nov 21. BWX Technologies Reports Third Quarter 2021 Results, Narrows 2021 Guidance and Strategically Deploys Capital to Repurchase Shares.
- Generates 3Q21 earnings per share of $0.63 (GAAP), $0.76 (non-GAAP)
- Narrows 2021 non-GAAP earning per share guidance to low end of initial range
- Returns $166m of cash to shareholders in 3Q21 through share repurchases
BWX Technologies, Inc. (NYSE: BWXT) (“BWXT”, “we”, “us” or the “Company”) reported third quarter 2021 revenue of $499 m, down 4% compared with $520m in the third quarter 2020. GAAP net income for the third quarter 2021 was $59.9m, or $0.63 per diluted share, compared with GAAP net income of $73.2m, or $0.76 per diluted share, in the prior-year period. Non-GAAP net income for the third quarter 2021 was $72.0m, or $0.76 per diluted share, compared with non-GAAP net income of $75.6m, or $0.79 per diluted share, in the prior-year period. A reconciliation of non-GAAP results is detailed in Exhibit 1.
“BWXT delivered its strongest quarter year-to-date as we executed well in all areas of the business” said Rex D. Geveden, president and chief executive officer. “However, given the pandemic headwinds which were acute in the first and third quarters as well as unfavorable government contract award timing, we are narrowing 2021 guidance to the low end of the initial range.”
“We maintain strong conviction in the future growth of BWXT as we continue to execute and reliably generate cash across the core businesses while simultaneously building for future growth through new technology investments in microreactors for space and national security applications, advanced nuclear fuels, and nuclear medicine. Our conviction is underscored by the fact that we returned more than $166 m of cash to investors through strategic share repurchases in the third quarter. We look forward to sharing our growth plans at the BWXT Investor Day on November 16 in New York City,” said Geveden.
Nuclear Operations Group (NOG) segment revenue was $387 m for the third quarter 2021, about the same compared with the prior-year period as volume across operations were consistent. NOG GAAP and non-GAAP operating income was $79.4m and $79.5m, respectively, in the third quarter 2021, a 16% increase compared with the prior-year period driven by more favorable contract adjustments due to timing of certain milestones. This resulted in a strong third quarter 2021 segment GAAP and non-GAAP operating margin of 20.5% and 20.6%, respectively.
Nuclear Power Group (NPG) segment revenue was $83.4m for the third quarter 2021, a 23% decrease from the prior-year period primarily due to lower volume of field services and component manufacturing volume partially offset by higher nuclear medicine demand. NPG GAAP and non-GAAP operating income was $9.0m and $9.3m, respectively, for the third quarter 2021, a significant decrease compared with the prior-year period driven primarily from lower revenue and the significant decrease of funds received under the Canadian COVID-19 Economic Response Plan to offset incurred expenses related to the pandemic that occurred in the prior-year period. Third quarter 2021 segment GAAP and non-GAAP operating margin was 10.8% and 11.1%, respectively.
Nuclear Services Group (NSG) segment operating income was $10.3m for the third quarter 2021, up 36% compared with the third quarter 2020 driven by better project fee performance.
Cash and Capital Returned to Shareholders
The Company generated $67.3m of cash from operating activities in the third quarter 2021, compared with $7.5m of net cash utilized in the third quarter 2020. As of September 30, 2021, the Company’s cash balance, net of restricted cash, was $69.4m.
During the third quarter 2021, the Company returned $186 m of cash to shareholders in share repurchases and dividends, resulting in a total of $246 m of cash returned to shareholders year-to-date, including $186 m in share repurchases and $60 m in dividends.
On October 28, 2021, the BWXT Board of Directors declared a quarterly cash dividend of $0.21 per common share. The dividend will be payable on December 10, 2021, to shareholders of record on November 19, 2021.
(Source: BUSINESS WIRE)
02 Nov 21. Chemring sees FY in line as it wins $99m US govt contract.
8.50p. Defence and security technology company Chemring said it had won a $99m US government contract to supply a biological warfare detection system, and added that full-year trading was in line with expectations.
Aerospace and Defence
The Enhanced Maritime Biological Detection system is an advanced sensor system to detect, collect and identify airborne biological warfare agents, Chemring said on Tuesday.
An initial delivery order of $16m would see deliveries made in the final quarter of fiscal 2022 and 2023, the company added.
In Australia, Chemring said it had received a contract modification valued at $20m in addition to the $22m contract that was announced on September 28 to supply of MJU-68/B infrared countermeasures as part of the F-35 fighter jet programme.
Looking ahead, the company said the results for the year to October 31 was expected to be in line with expectations, with adjusted operating profit forecast to be in line with the consensus expectations of £57.5m in a range of £56m – £59.6m. (Source: Sharecast)
01 Nov 21. Department of Defense cyber contractor Gryphon acquired by ManTech. Texas Army National Guard Chief Warrant Officer 2 Nathan Mack conducts network surveillance during Cyber Shield 19 training week at Camp Atterbury, Ind. April 7, 2019. As the nation’s largest unclassified cyber defense training exercise, Cyber Shield provides participants with training on industry network infrastructure and cyber protection best practices. (U.S. Army National Guard Photo by Staff Sgt. George B. Davis)
ManTech International has agreed to acquire Department of Defense IT and cyber contractor Gryphon Technologies for $350m.
Gryphon works primarily with U.S. military services and provides digital and systems engineering, including predictive analytics and cloud engineering, to organizations including the Navy, Air Force, DARPA and the Missile Defense Agency.
As part of the deal, Gryphon’s 1,500 staff will be transferred to ManTech. The acquisition will be funded with cash, with additional assistance from ManTech’s existing credit lines and loan facilities. The transaction is subject to regulatory approval and is expected to complete by the end of the year.
ManTech is a long-term partner of government agencies, including the Department of Homeland Security. In 2018 it was awarded a $688m contract as part of the agency’s efforts to upgrade the Continuous Diagnostics and Mitigation cybersecurity program.
The acquisition is the latest of several M&A deals in the defense IT market this year. In May, Peraton acquired Perspecta, shortly after Peraton itself was spun out by Northrop Grumman and sold to private equity group Veritas Capital. (Source: Defense News Early Bird/https://www.fedscoop.com/)
02 Nov 21. Kaman Reports 2021 Third Quarter Results.
Third Quarter Highlights:
- Kaman revises full year outlook for 2021; higher earnings from continuing operations on lower sales, cash flow guidance unchanged
- Net sales from continuing operations of $179.8m, down 15.9% over the prior year period
- Gross profit from continuing operations of $63.1m; or 35.1% of sales, a 380 basis point increase over the prior year period
- Earnings from continuing operations of $14.7m, up $2.8m from the second quarter of 2021 and $53.2m over the third quarter of 2020
- Adjusted EBITDA from continuing operations* of $27.8m, or 15.5%, a 70 basis point improvement from the second quarter of 2021
- Diluted earnings per share from continuing operations of $0.53; Adjusted diluted earnings per share from continuing operations* of $0.60
- Year-to-date net cash provided by operating activities of $14.1m; Adjusted Free Cash Flow* of $27.9m, a $94.5m improvement over the prior year period
Kaman Corp. (NYSE:KAMN) today reported financial results for the third fiscal quarter ended October 1, 2021.
Ian K. Walsh, Chairman, President and Chief Executive Officer, commented, “We continue to focus on driving improved performance through the deployment of our operations excellence model across all of our businesses, which provides a sustainable foundation to achieve our financial targets. We saw gross margin of 35.1% in the quarter, a strong result which helped drive a sequential increase of $2.8m in earnings from continuing operations and our third consecutive quarter of sequential Adjusted EBITDA* margin growth to 15.5%.”
“Our solid third quarter results also underscore the benefits we receive from the diversity of our product offerings. During the quarter we saw sequential improvements on sales to Boeing and Airbus, specifically for our bearings products, while continuing to see year-over-year sales growth in our medical and industrial product lines. For the quarter, we generated Net Cash Provided by Operating Activities of $28.8m, leading to Free Cash Flow* in the period of $25.6m, giving us a high degree of confidence in our Free Cash Flow* expectations for the full year.”
“We remain committed to driving organic growth through new product development and recently met a number of significant milestones. First, we unveiled our KARGO UAV aerial vehicle, a new purpose built medium-lift autonomous aircraft. Since the unveiling we have received interest from multiple defense and commercial customers, demonstrating the need for this cost-effective cargo hauling system. Second, we continue to expand the utilization of our Titanium Diffusion Hardening solution exploring opportunities across multiple end markets. To-date we have a number of TDH applications on new space platforms and recently we received an award to provide components to a leading eVTOL manufacturer. These achievements speak to our focus on innovation and investment across our organization with a specific focus on growing our highly engineered product offerings.”
Management’s Commentary on Third Quarter Results:
Net sales for the quarter decreased 15.9% when compared to the third quarter of 2020 and 1.4% sequentially. Organic sales*, which excludes sales from our former U.K. composites business, decreased 14.8% from the third quarter of 2020 and 1.4% from the second quarter of 2021. As expected, the decrease from the prior year period was primarily driven by lower Defense sales, given the record JPF sales volume we recorded in the third quarter of 2020. During the third quarter of 2021, we delivered 4,000 fuzes, bringing our total year-to-date deliveries to 20,290 units; and we now expect JPF deliveries for the year to be 28,000 to 30,000 units, slightly below our prior expectations. Given the over-time revenue recognition method related to our USG contract, the reduction in deliveries does not result in a change to our sales expectations for this product. Excluding the JPF sales results and taking into consideration the shift of a K-MAX® aircraft sale to the fourth quarter, Organic sales* would have been up for the remainder of the business as compared to the prior year period.
Sales for our Commercial, Business and General Aviation products increased 8.8% from the second quarter of 2021, with much of the increase relating to bearings product sales to Boeing and Airbus and an increase in engine aftermarket components.
Higher sales volume of our medical devices and implantables and miniature bearings contributed to year-over-year growth in our Medical and Industrial product lines. Sales for our Medical and Industrial products increased 25.6% and 29.4%, respectively, when compared to the third quarter of 2020. We continue to see high order intake for these product offerings and expect strong performance through the remainder of the year.
Gross margin for the period of 35.1% was up 380 basis points over the third quarter of 2020 and 110 basis points sequentially from the second quarter, despite the decrease in net sales. Margin improvement was largely driven by the absence of sales from lower margin programs from our former U.K. composites business and improved performance on our K-MAX® spares and support and on our seals, springs and contacts. (Source: BUSINESS WIRE)
28 Oct 21. CACI adds space, intel firms to growing tech portfolio.
Defense contractor CACI International on Thursday announced it made two acquisitions in the last quarter, in line with plans to increase its technology-focused business, according to chief executive John Mengucci.
Defense contractor CACI International on Thursday announced it made two acquisitions in the last quarter, in line with plans to increase its technology focus, according to chief executive John Mengucci.
The Reston, Va.-based firm acquired Bluestone Analytics, which is focused on Dark Web intelligence analysis and exploitation, and a second, space-focused company, to do top secret cyberspace and satellite communications work. In an interview with Defense News, Mengucci said little about the second acquisition, but touted its intersection with the Pentagon’s emphasis on space.
“It’s a classified suite of technologies for a very classified customer,” Mengucci said. “Space has become a contested domain [with] comms going to satellites and comms going to the ground, and to the extent we can protect and exploit those links, that’s highly important today, given near-peer threats.”
CACI disclosed Thursday on its quarterly earnings call it spent about $120m on the acquisitions and expects them to add roughly $30m in 2022 sales. The company posted $1.5bn in sales during the quarter, up 2.2 percent from the prior year.
Though CACI was historically a professional services firm, it has since 2012 been increasing its investments in forward-looking technologies, as well as agile software development. There’s now a 47 percent-53 percent split between government services, or “expertise,” and technology. The firm employs 23,000.
“Wherever the pointy end of the spear is, I want to be building mission packages and technology that helps the warfighter,” Mengucci said, adding that could mean the military, law enforcement or intelligence agency customers.
finding out from a client their current or future technology gaps to guide the company’s internal investments. Mengucci said that could mean training, partnerships or acquisitions of companies “that go narrow and deep into an area where our customers are screaming for solutions” ― all of it trending more toward more technology-driven products and less toward personnel-driven solutions.
In that vein, the Bluestone Analytics acquisition offered a “tuck-in” open source intelligence capability for military commanders: an artificial intelligence-driven tool to detect threats on the Dark Web, called DarkBlue.
Mengucci said the company’s strategy has cushioned the firm from budgetary turbulence as well as the Biden administration’s withdrawal of U.S. troops from Afghanistan and the coronavirus pandemic. Still, there have been impacts: Afghanistan represents a 2 percent headwind for the firm, and it has had to stock up on microelectronics to mitigate COVID-related shortfalls.
“When a black swan event ― when we hit COVID and realized, ‘My Lord, we can’t have all these people sitting in a building,’ we survived quite well,” he said. “We continue to grow, we continue to work on all those technology development programs that were under contract, and the ones we struggled with were much less than other people in our sector.” (Source: Defense News Early Bird/Defense News)
29 Oct 21. HK Made Satellite Is Getting Ready For its Debut in 2022. As Space X founder Elon Musk continues to mark new milestones in his net worth, the Hong Kong Aerospace Technology Group, Ltd. (HKATG) (SEHK:1725) which Bloomberg has hailed as the “mini Space X” has also made a highly positive announcement earlier, disclosing the details of strategic sale and purchase made between HKATG and CGWIC. According to the announcement, HKATG agreed to purchase the entire set of integrated supporting ground facilities and related services from CGWI, which means HKATG will soon be able to manufacture a satellite from scratch and own the testing capability. The announcement has given a boost to investor sentiment especially those with a strong appetite for “Space Tech” investment.
Local Integrated Solution On The Way
In case people don’t understand why this announcement stirs up the market, here is the background of China’s Great Wall Industry Corporation (CGWIC). It is the only commercial organization authorized by the Chinese government to provide commercial launch services, satellite in-orbit delivery, aerospace infrastructure construction, consulting, and human resources solutions, etc. Under the sale and purchase agreement, HKATG will “inherit” the all-round capability from CGWIC, it not only lays the foundation for ‘the Re-industrialization of Hong Kong”, but also means that HKATG is about to have the core competency requirements for manufacturing satellite, including the ability to create satellite assembly, to launch and carry out full examination and control.
Improve bargaining power and productivity
As an international financial centre, Hong Kong is well known for its highly attractive tax regime. With low corporate tax rates between 8.25% and 16.5%, this fragrant harbour imposes no value-added tax or sales tax and offers zero-tariff treatment to local exporters.
On the contrary, Mainland China imposes a value-added tax (VAT) for manufacturers at 13%, while under the CIT law, the standard tax rate is between 15% and 25%. In a tax-unfriendly country like the United States, sales tax rates vary from state to state (between 0.5% and 9.45%), and there is also a tax on the profits of US resident corporations at a rate of 21%. Simply put, the cost to manufacture satellites for HKATG in Hong Kong, is expected to be 30% to 40% lower than in Mainland China or the United States. What’s more, Hong Kong has unparalleled speed and efficiency of logistics processes in customs procedures, everything is done within 30 minutes, way faster than the 1-month clearance time in Mainland China, Europe and the United States (sometimes up to 1-2 months.)
As one of the then four “Asian Tigers” economies, both employees and employers in Hong Kong glorify hard work and work nearly 300 days a year, the productivity, efficiency, and competitiveness of the labour force in Hong Kong are beyond doubt. These turbo-boost factors play a significant role in the localization of satellites manufacturing, putting the company in extremely well-positioned to capture market share at home or aboard.
With the evolution of technology, space has become an accessible place, it is not surprising to see satellites being classified under “consumer staple”. It is estimated that more than 40,000 Low-Earth Orbit Satellites will be produced and being used annually in various fields. The operation life of a satellite is around 3 years. In other words, there are defunct satellites needed to be replaced every year, such demand-supply dynamics will continue to drive the industry forward. Low-Earth Orbit Satellites may not be a story of looming, acute shortages yet, it’s just a matter of time.
It is known that the average profit of each satellite of HKATG is about HKD 10m, let’s keep in mind that the marginal cost formula, if HKATG manufactures over 1,000 satellites, the marginal cost will go down and the company can see profits as high as over HKD 10bn.
Based on an average P/E ratio of 30 and the estimated revenue of HKD 10 bn, HKATG as a high-growth stock still has plenty of room left to grow, an explosion of market value is yet to come. It is no surprise that analysts describe this Hong Kong-based space tech firm as “the goose that laid the golden egg”, alike the Chinese idiom, “being with the right person at the right time in the right place”, the company simply has the most favourable conditions, including time, place, and people, it seems the best time to capture the infinite possibilities with space tech stock is now. (Source: PR Newswire)
01 Nov 21. TP Group plc (“TPG”, “TP Group” or “the Company”) Business and Board Update. Following the investment by Science Group plc (“Science Group”) and the recent changes to the Board of TP Group plc, the following update sets out the current position of the Company and the future direction.
Following the recent Board changes and the adoption of a new strategy for the business, detailed below, David Lindsay, Chief Executive Officer, has given notice of his intention to resign his position. Mr Lindsay has a 12 months’ notice period, which will expire in October 2022. He will continue to support the Board, focusing on the continuing restructuring and realignment of the Group to provide a solid platform for the future. It is anticipated that he will leave the Company upon completion of that process, anticipated to be in March next year.
Martyn Ratcliffe has been appointed Executive Chairman of TP Group plc with immediate effect. Until a new CEO is appointed, if the Board consider that such appointment is necessary, he will take over the direction of the core business operations. Mr Ratcliffe’s services will be charged to the Company by Science Group on the basis of 25 days per Quarter, which will reduce if/when a new CEO is appointed.
Derren Stroud continues in his role as Chief Financial Officer, with the full support of the new Board. Peter Bertram will chair the Audit Committee and until a new appointment is made will also chair the Remuneration Committee. Claire MacPherson will continue in her role as Company Secretary.
The Board will now commence a search for two independent non-executive directors, including a Senior Independent Director and at least one female director.
TP Group Strategy
The strategy for TP Group will be to focus on the UK-based Defence and Aerospace operations, comprising TPG Maritime, UK Consultancy and Osprey. These businesses constitute approximately 70% of the TP Group revenue and a greater proportion of the profit contribution. The organisation will be structured to improve operational corporate governance with checks and balances appropriate for a public company.
The Board will be reviewing the strategy of Sapienza, Westek and the Northstar operations. David Lindsay will lead these activities, together with the restructuring and cost reduction programme that he has already initiated.
In due course, opportunities for cooperation and collaboration between TP Group and Science Group, TP Group’s largest shareholder, will be explored.
The Group’s trading has been satisfactory during the third quarter ended 30 September 2021 and the forecast from the operating businesses for the full financial year remains broadly in line with market expectations and in compliance with banking covenants. Certain payments, including deferred consideration related to the Osprey acquisition, advisor fees and the payment to the former CEO, have been phased and deferred to assist cash flow through to Q1 2022.
To the end of September, TP Group has incurred exceptional costs totalling £2.1m, including £0.5m related to the termination of the former CEO in June 2021; £0.5m in relation to the corporate defence in August/September 2021; and £0.8m associated with the Osprey deferred consideration. In view of the changes set out above, it is anticipated that further exceptional costs will be incurred in the current year. It is also anticipated that impairment of goodwill and intangibles may be required.
In conjunction with the CFO and the finance team, the newly appointed Chairman of the Audit Committee will conduct a thorough review of the Group’s balance sheet along with accounting policies, including revenue recognition and R&D capitalisation. The Board is aware of a number of legacy contracts which are proving challenging and provisions may be required in order to address these matters and position TP Group on a solid foundation for the future.
Management and Employee Incentive Schemes
The Remuneration Committee of the Board will be reviewing incentive/reward scheme(s) for management and staff. From 2022, it is anticipated that such schemes will be based on the financial performance of the Group to align management and employee rewards with shareholder interests.
The TP Group share option scheme has expired. It is proposed that a new scheme, or alternative incentive arrangement, be introduced. Approval from shareholders will be sought at the next Annual General Meeting of the Company in relation to any new scheme proposed.
On 30 September 2021, in lieu of advisory fees in relation to the possible offer by Science Group, an agreement was signed between TP Group and Cenkos granting warrants to Cenkos over 23,375,361 new ordinary shares in the Company, equivalent to approx. 3% of the Company’s issued share capital. The warrants are exercisable at 5.8 pence and the exercise period is five years.
The future direction of TP Group has now been resolved. Following recent events, the Board can now focus on implementing the strategy associated with the investment by Science Group. The opportunities for collaboration and cooperation between the two organisations will be explored in due course.
In the short term, the Board will be focused on completing the restructuring of the Group and addressing legacy issues to enable the Company to establish a solid platform for the future. This will require streamlining some operations to enable investment in the core, profitable UK-based businesses. Completing this realignment of the Group will be the priority.
01 Nov 21. Reliable Robotics Raises $100m to Expand Remotely Piloted Cargo Operations. Reliable Robotics, a supplier of automated aircraft systems, has announced a $100m Series C funding round led by Coatue Management. Coatue joins past investors Lightspeed Venture Partners, Eclipse Ventures, Teamworthy Ventures and Pathbreaker Ventures to bring total fundraising over $133 m.
With its innovative airframe independent technology, Reliable’s Remotely Operated Aircraft System is designed to expand safe, flexible and efficient air transportation service to more locations. The capital raised enables the company to scale its team to support its first aircraft certification program and expedite the launch of commercial cargo operations.
“We believe Reliable Robotics is a leader in aircraft automation for commercial aviation,” said Jaimin Rangwalla, a Senior Managing Director at Coatue. “We were impressed by the team’s clear vision, measured certification progress and track record of industry achievement. We are proud and excited to support Reliable’s goal to be the first to deliver FAA-certified, remotely piloted systems to market.”
Reliable Robotics is positioned to unlock access to thousands of underutilized regional and municipal airports in all corners of the country, greatly expanding air transportation options for cargo and eventually passengers. The company’s technology handles all phases of flight including taxi, takeoff, landing and parking, while licensed pilots remotely supervise each flight from a control center. The system has the capability to autoland on smaller airstrips in rural or remote areas without requiring expensive infrastructure to be installed and maintained.
“Automated aircraft present a massive opportunity to transform the cargo industry over the next several years,” said Jeff Drees, former Co-owner and Chief Commercial Officer of Ameriflight, the largest regional air cargo carrier in the world. “Remotely piloted cargo delivery provides a huge advantage with low cost, anytime, anywhere flights that increase aircraft utilization and availability.”
Drees recently joined Reliable Robotics to build its airline subsidiary and deliver cargo services while preparing for the adoption and scaling of remotely operated aircraft.
Reliable Robotics has made substantial progress in key development areas throughout its phased approach to certification, deepening its regulatory experience with ongoing engagement with the Federal Aviation Administration (FAA). As part of this work, the company has received key authorizations from the FAA for the flight of experimental unmanned aircraft. In 2019, Reliable demonstrated remote operation of a large commercial aircraft over a metropolitan area, marking an aviation first for a private company in the United States. Additionally, the company announced a partnership with NASA as part of the Advanced Air Mobility National Campaign to further real-world flight testing of its system.
“We appreciate our public-private partnership with the FAA and NASA as we work to integrate our Remotely Operated Aircraft System into the airspace. We intend to bring unprecedented safety and reliability to today’s commercial aircraft,” said Robert Rose, Co-founder and CEO of Reliable Robotics. “Close collaboration with our public institutions, strong backing from visionary investors and keen interest within the cargo industry further accelerates our mission to expand everyone’s access to air transportation.”
Planned expansion of the company’s aircraft program to additional, larger airframes will further demonstrate the versatility of its system. The company also intends to support emerging electric and hybrid electric platforms and eventually passenger aircraft.
Since emerging from stealth last year, Reliable Robotics has grown substantially. The company has more than doubled in size, attracting a diverse group of engineers with expertise in aviation, autonomy and other mission and safety-critical domains.
About Reliable Robotics
Reliable Robotics launched in 2017 to bring certified autonomous vehicles to commercial aviation as soon as possible. The company’s automation system enables remote operation of any aircraft type and expands access to more locations. Reliable’s vision is to transform the way we move goods and people around the planet with safer, more convenient and more affordable air transportation. (Source: UAS VISION)
26 Oct 21. Analytical Space To Become Hedron + Raises Millions In Series A Equity Funding. Analytical Space (the “Company”) has closed a $17.8m Series A equity funding round, enabling the firm to accelerate the development of the initial operating capability of the world’s first hybrid optical/RF data relay network. In addition, the Company is officially rebranding to Hedron, effective immediately. Hedron represents a shortening of the polyhedron shape, a reference to the Company’s network topology and core optical communications technology design. The round was led by Fine Structure Venture, joined by Lockheed Martin Ventures, Republic Labs, Lime Street, and Explorer 1 as well as existing investors: The Engine, Flybridge, Yard Ventures, NKM Capital, and Space Angels. These funds enable Hedron to expand its U.S. operations to support the company’s growing pipeline of government and commercial business. The initial Network Operating Demonstration, scheduled to begin deployment in 2022, will serve as an operational service demonstration for Hedron’s resilient, low-latency connectivity service for satellites. Hedron will launch a series of data-relay backbone nodes, configured in multiple orbital planes, to provide near-constant connectivity to customer satellites, helping to deliver actionable insights about the Earth’s surface. The network will assist disaster response efforts, intelligence gathering, commercial applications, and climate monitoring. In addition, the network provides a capability to increase scientific return on NASA space missions as it is well-suited for supporting the future commercial architecture that is currently being created to replace the Tracking Data Relay Satellite System (TDRSS), which NASA plans to retire by the end of the decade.
Over the past three years, Hedron has successfully integrated and launched two technical demonstration satellites and proven out critical networking technologies that will enable customer connection to the network. In parallel with these efforts, Hedron has successfully demonstrated compatibility in a laboratory setting with leading remote sensing satellite operators in preparation for this initial network deployment.
Following the completion of this funding round and rebrand, Hedron will build upon these technical accomplishments by deploying additional orbital planes of data relay satellites, to provide broader network coverage for critical earth observation assets. These deployments will enable Hedron to rapidly scale the availability of data relay services for key government and commercial partners.
Fine Structure Ventures’ Senior Managing Director, Jennifer Uhrig, said, “We are excited to join Hedron as it strives to build a next-generation data network in space. The demand for satellite-generated data is growing rapidly and Hedron’s vision and technology will address the need to reduce latency and cost. We believe Hedron’s network has the potential to be a key driver of richer business and consumer applications here on Earth.”
“The availability of real-time space data will advance the art of the possible for customers and industry partners,” said Chris Moran, Vice President and General Manager of Lockheed Martin Ventures. “We invest in companies whose innovative technologies have the potential to benefit our core business and customers and Hedron’s planned data relay network which has the ability to provide critical insights to users meets this criteria.”
“It is an honor to be working with financing partners who have a track record of backing world-changing companies and we look forward to exploring potential commercial opportunities with them,” said Dan Nevius, CEO, and co-founder of Hedron. “Since our founding, our goal at Hedron has been to provide low latency access to space-borne data, paving the way for new sensor technologies and time-sensitive applications. Today, we are one step closer to reaching this goal. These additional resources will allow us to move even faster toward the deployment of our global data relay network, starting with our Network Operating Demonstration that will prove our novel network architecture and underlying technology while showcasing new applications with our remote sensing satellite operator and end-user partners.”
Hedron (formerly Analytical Space) is an on-orbit communications company on a mission to provide a more dynamic communications infrastructure that provides real-time access to the critical information that is collected on space platforms. The real-time connectivity enabled by the Hedron network creates a rapid commanding and data downlink capability that allows for data to be used for time-sensitive tactical applications (e.g., wildfires, disaster response, national security, etc.). Enabling this type of active intelligence provides a significant new tool in the world’s ability to understand and address major global challenges. (Source: Satnews)
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.