BATTLESPACE Updates

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22 Dec 21. Message from NP Aerospace CEO, James Kempston.  This year has been a great year for NP Aerospace, we have made progress in many areas of the business with further new product developments, contract wins and technology initiatives.

Some of the highlights are as follows

  • Sales of our new NIJ certified 4030 ELITE Bomb suit are continuing particularly in North and South America and we are working with technology partners to continue to expand our offering
  • Our vehicle integration business with the UK MoD has grown significantly and we now have off-road heavy armoured vehicles out in Mali, Africa, with the British Army supporting UN operations
  • Sales of our off-the-shelf ballistic helmets, shields and plates continue to increase with high volume orders shipped to Canada, Middle East, Asia and South America
  • Our vehicle armour business is expanding with exciting new opportunities, existing programmes and new team members
  • We have signed up more than 20 new global distributors for NP Aerospace personal armour products
  • We are involved in new technology innovations from hybrid electric and autonomous drive systems to integrated EOD communications technologies and high threat tactical armour

 

22 Dec 21. Leonardo sees KNDS proposal as interesting, no decision on units sale. The CEO of Italy’s Leonardo (LDOF.MI), which is considering the sale of two of its units, said he saw a proposal from Franco-German consortium KMW+Nexter Defence Systems (KNDS) as interesting, but added nothing had been decided over the sale.

KNDS and Italian shipbuilder Fincantieri (FCT.MI) have both expressed their interest in buying Leonardo’s OTO Melara and Wass units, sources have said.

The possibility of a foreign consortium buying the two units has raised eyebrows in Italian political circles.

Speaking to a parliamentary committee, Leonardo Chief Executive Alessandro Profumo on Wednesday said the group was waiting for the two potential buyers to present a detailed offer for the units before taking a decision.

“KNDS is potentially an interesting partner because it has a role in the ‘Main battle tank’ (programme) and does not compete with Leonardo on electronics,” Profumo said, adding that Italy would benefit from being part of the so-called Main Ground Combat System (MGCS) tank project.

“We have received two expressions of interests and today we asked prospective buyers to present non-binding offers,” he said, adding the group would make a decision considering several aspects including the price offered and the possibility of international cooperation.

Profumo denied media rumours regarding tensions with Fincantieri over the sale of the two units.

“We are not arguing with Fincantieri, we are not arguing with anyone,” Profumo said.

German defence contractor Rheinmetall could also join the race to acquire Leonardo’s assets, through a partnership with Fincantieri.

Rheinmetall expressed an informal interest for Oto Melara to Italy’s government, “in collaboration” with Fincantieri, daily Il Sole 24 Ore reported on Tuesday.

Rheinmetall Italy’s head Alessandro Ercolani on Wednesday told a parliamentary committee that the German group was ready to evaluate a possible cooperation with Oto Melara.

In a hearing following Profumo’s, Ercolani added that the group is ready to help Oto Melara grow in the terrestrial field, making of it an hub of excellence.

However he did not explain how this “cooperation” would work and did not directly mention a possible acquisition of Leonardo’s unit. (Source: Google/Reuters)

 

21 Dec 21. Carbon Disclosure Project rates Thales among top-performing companies.

  • Thales has achieved the highest “Leadership” level (A/A-) in the respected Carbon Disclosure Project benchmark, which assesses the transparency and low-carbon objectives of companies and their ability to combat climate change.
  • Thales’s A- rating puts it in the top 21% of companies in the electrical and electronic equipment sector, above the European average (B) and the sector average (B-).
  • This rating reflects the Group’s sustainable development efforts and the commitments made within its broader ESG policy, which was presented at the Thales ESG Investor Day on 5 October 2021.

Recognition of Thales’s efforts to combat climate change

The Carbon Disclosure Project (CDP) is an international non-profit organisation that maintains the world’s largest database on the environmental performance of companies and cities. The CDP encourages investors, companies and cities to take action to build a truly sustainable economy by helping them measure and understand their environmental impact.

Every year since 2003, the CDP has conducted an annual survey to gather information on the greenhouse gas emissions of companies around the world to measure progress in the environmental performance of each company. Thales is ranked at the highest “Leadership” level (A/A-). This level recognises companies that have adopted best practices in the fight against climate change.

Across the various criteria, Thales was recognised in particular for its moves to reduce its CO2 emissions, for its Scope 1, 2 and 3 commitments and for the robust system of governance it has put in place to implement the Group’s low-carbon policy.

Thales accelerates its low-carbon policy and raises its targets

Thales intends to combat climate change by aiming for “net zero” emissions by 2040, as announced at its first Investor Day dedicated to its ESG strategy. The Group is aiming to achieve a 35% reduction in operational CO2 emissions by 2023, a 50% reduction by 20301 (scope 1, scope 2 and business travels). These operational emissions targets are consistent with the Paris Agreement’s global warming objectives of -1,5°.

In addition, Thales has pledged that 100% of its new products and services will be eco-designed by 2023, and the Group will engage more methodically with suppliers to support their own efforts to reduce carbon emissions, with 100% of the action plans of the 150 most polluting suppliers analysed and launched by 2023. It will also systematically engage with partners in the supply chain to bring them into line with its goal of cutting emissions by 50% by 2030.

The Group will soon start the SBTi (Science-Based Target initiative) certification process to substantiate its action plan for a low carbon future.

Thales technology expertise in the fight against global warming

In the civil aviation sector, for example, Thales flight management and air traffic control systems can optimise flight paths and aircraft operations, which is one of the main ways for the sector to achieve its objective of halving emissions by 2050. Optimising air transport in this way would reduce CO2 emissions by 10–15%, or by more than 100 m tonnes of CO2, by 2040.

Thales is also leveraging its global leadership in sensors and satellites to expand space-based surveillance capabilities and better understand climate phenomena. Thales Alenia Space is developing instruments to measure the amount of atmospheric CO2 caused by human activity with unprecedented accuracy (within 4 m²), making it possible to detect peaks in pollution around a given factory or city, for example.

Lastly, Thales is developing disruptive technologies that will make artificial intelligence more energy-efficient. Thales is the first company to develop “frugal” AI based on algorithms that only require small amounts of energy.

“This top rating from the Carbon Disclosure Project reflects a strong commitment to combat climate change by Thales and our 81,000 employees. The Group will continue to leverage its knowledge and advanced technologies to devise innovative solutions that help to make the world safer, greener and more inclusive.” Patrice Caine, Chairman & Chief Executive Officer, Thales.

 

20 Dec 21. Red Cat Holdings Reports Financial Results from Fiscal Second Quarter 2022 and Provides Corporate Update.

Red Cat Holdings, Inc. (Nasdaq: RCAT) (“Red Cat” or “Company”), a hardware-enabled software provider to the drone industry, reports its financial results for the fiscal quarter ended October 31, 2021 and provides a business update.

Second Quarter 2022 Financial Highlights:

  • Revenues for the fiscal quarter ended October 31, 2021 were approximately $1.9m, compared to approximately $428,000 for the same period in 2020, representing an increase of more than 300%
  • Adjusted Net loss for the quarter ended October 31, 2021, which excludes non-cash expenses, primarily related to stock-based compensation, was approximately $3m, as compared to an adjusted net loss of approximately $640,000 for the fiscal quarter ended October 31, 2020
  • Cash and investments were approximately $60m as of October 31, 2021

Recent Corporate Highlights:

  • Closed the acquisitions of Teal Drones
  • Passage of Infrastructure Bill Should Benefit Drone Industry
  • Teal Opens new Manufacturing Facility in Salt Lake City, Utah
  • Skypersonic awarded contract with NASA (National Aeronautics and Space Administration)

“We made significant corporate progress on several fronts in our fiscal second quarter and saw record revenue that grew 336% year-over-year and 33% quarter-over-quarter.  Closing the acquisition of Teal Drones was a critical milestone for the Company and allows for expansion into the military segment,” commented Red Cat CEO Jeff Thompson. “The successful integration of Teal Drones and its recent move into a larger manufacturing facility will be instrumental in our success going forward and allow us to execute on a number of larger Department of Defense contracts we are pursuing in our expanding sales funnel.  Moreover, beginning in January, we expect to generate at least $1m in monthly revenue from drone production at Teal to satisfy existing orders and envision revenue growth accelerating in the first half of calendar 2022 based on our current contracts alone. Any additionally announced contracts would be additive to our current outlook.

“We believe the recently passed federal infrastructure bill, which has $280bn in earmarked funds to provide inspection services on railways, roads, bridges, and electrical grid maintenance will also provide opportunities for U.S.-based drone manufacturers like Red Cat. Our Skypersonic segment is well-positioned to provide efficient and reliable inspection and surveillance services that are needed in identifying weak links in our country’s infrastructure,” added Mr. Thompson.

“The second quarter represents our sixth consecutive quarter of revenue growth and we are confident in our ability to continue that trend going forward,” stated Joseph Hernon, Chief Financial Officer. “Our increased cash burn during the second quarter primarily related to investments in inventory and manufacturing capacity at Teal Drones which we expect to drive revenue growth during calendar year 2022.” (Source: PR Newswire)

 

17 Dec 21. Dedrone Secures $30.5m Series C to Protect Airspace Against Unauthorized Drones. Axon leads investment round to help ensure airspace security and community safety. Dedrone, the market leader in smart airspace security, today announced it has closed a $30.5m Series C financing round led by Axon, the global leader in connected public safety technologies. Previous investors, including Aqton Partners, Menlo Ventures, Felicis Ventures, Target Partners, TempoCap and John Chambers, Chairman Emeritus of Cisco Systems and founder of JC2 Ventures, also participated. This latest funding comes on the heels of a strong year of growth for Dedrone, including surpassing 1,000 sensors sold and expanding to detect, identify and locate over 200 different drone types.

“Drone detection and tracking is highly complex and we are seeing more and more instances of drones being used for nefarious purposes, including the first known drone-based terrorist attack on U.S. soil last year,” said Aaditya Devarakonda, CEO of Dedrone. “This investment demonstrates clear validation of Dedrone’s technology and team. Axon is a tremendous strategic partner for delivering airspace security to the public safety sector.”

Dedrone is the most prolific drone security company in the world, working across 33 countries to deliver best-in-class detection, identification, tracking and mitigation of Small Unmanned Aircraft Systems (sUAS). Dedrone’s solution is used by the governments of four G-7 nations, nine U.S. federal agencies, including the Department of Defense, and internationally by more than 65 critical infrastructure sites, 20 airports, 50 correctional facilities and 10 Fortune 500 companies.

“The drone economy is flourishing and Dedrone is very much at the heart of it, providing critical protection to organizations around the world and keeping communities safe,” said Rick Smith, founder and CEO of Axon. “Axon is proud to support Dedrone’s solution as it offers unmatched technology in airspace security.”

Dedrone leverages advanced AI/ML technology to analyze and fuse data from multiple sensors to detect, identify and track drones. The airspace security solution also equips users with advanced data analytics and mitigation functionality. Dedrone is the only solution capable of quickly and reliably detecting, identifying and locating the largest variety of drones from over 65 manufacturers as well as homemade drones without decoding telemetry data.

Axon launched its end-to-end drone solution, Axon Air, in 2018, which delivers secure wireless live streaming, integrated evidence management, and program management to improve operational efficiency and outcomes for public safety agencies and the communities they serve.

“At Axon, we are dedicated to leveraging technology to improve safety. Our existing Axon Air program is a great example of putting the latest in drone technology to work for good in the hands of responsible agencies,” said Aydin Ghajar, General Manager of Axon Air. “We chose to invest in Dedrone because of our shared commitment to deliver reliable, robust airspace security that ensures public safety.”

About Dedrone

Dedrone is the market leader in smart airspace security. Dedrone’s counter-drone system is trusted by hundreds of commercial, government, and military customers globally to protect against unauthorized drones. With flexibility to host on premise or in the cloud via Dedrone’s Airspace Security-as-a-Service (ASaaS), Dedrone customers can detect, identify, locate, and mitigate unauthorized drone threats. Established in 2014, Dedrone is headquartered in San Francisco, with operations in the Washington, D.C.-area, Columbus, Ohio, London, and Germany. For more information about Dedrone and to reach our airspace security experts, visit dedrone.com and follow @Dedrone on Twitter, Vimeo, and LinkedIn.

(Source: BUSINESS WIRE)

 

17 Dec 21. SkySafe Raises $30m Series B to Scale Drone Defense and Airspace Security System for Commercial Drone Adoption. Technology provides necessary protection for airports, prisons, stadiums, borders and other critical infrastructure from malicious drones.

SkySafe, an airspace security and management technology company, today announced a $30m Series B investment led by Kingfisher Investment Advisors with participation from new investors Gaingels, and MIT alumni investment fund Castor Ventures. Previous investor Andreessen Horowitz, who led the seed and Series A investments, also joined the round. To date, SkySafe has raised $45m in total financing. The fresh capital will help further accelerate the company’s growth through strategic hiring, R&D, and expanded production of its airspace security system for commercial adoption.

SkySafe’s technology applies advanced radio technology, reverse engineering, and deep threat analysis to provide the infrastructure needed for the commercial drone industry. The SkySafe system delivers in-depth airspace awareness, differentiating authorized drones from those that may pose a threat. Its modular hardware and software can be tailored to specific regulatory environments to protect public spaces from potential drone threats. Simultaneously, it supports the adoption of commercial drone use for surveying, disaster relief, delivery, hobbyists and other consumer applications.

According to the FAA, there are more than 900,000 drones registered in the United States today, with nearly 3.5 m total drones currently in use. The global commercial drone market is projected to reach $58.4bn in 2026.

“As our airspace gets more crowded with drones, it becomes increasingly difficult to ensure those flying over our airports, stadiums, borders and other public spaces are authorized to be there,” said SkySafe Founder and CEO, Grant Jordan. “SkySafe has created an airspace awareness system for drones, to offer visibility, accountability, and ultimately, safety. Without this infrastructure for drones, it’s difficult to build public trust and scale commercial use. It’s critical to adoption as drones increasingly become important tools for things like utility inspections, airline maintenance, delivery, and aerial photography.”

“The intersection between physical and cyber security is an Achilles’ Heel of many organizations. We believe that SkySafe’s proprietary technology enables government and private sector customers to identify and mitigate in real-time these mission critical threats,” said newly-appointed SkySafe board member Yariv Robinson, Co-Founder and Managing Partner of Kingfisher Investment Advisors. “The Company has repeatedly demonstrated the ability to rapidly and efficiently deploy its solutions with new customers. Kingfisher is thrilled to partner with SkySafe and believes the Company has a potential to become the category defining company in this vital sector.”

As demonstrated in the 2018 Gatwick airport incident, speed and accuracy are critical to airspace management. When a hobbyist drone came within airport boundaries, more than 1,000 flights were diverted or canceled and an estimated 140,000 passengers were affected during the two days it took to identify the potential threat. The incident caused panic, significant financial loss for the international airport and massive disruption to operations. With SkySafe’s technology, the Gatwick incident could have been completely avoided. What took days could have been solved in minutes.

“With drone policy and regulations still in development, commercial drone use will be stymied without technology helping to pave the way for its widespread and safe adoption,” said Lisa Ellman, Executive Director of the Commercial Drone Alliance (CDA) and a partner at Hogan Lovells. “SkySafe has been a leader in the industry moving drone security policy development forward.”

Founded in 2015 by former U.S. Air Force Officer Grant Jordan, along with fellow MIT alum Scott Torborg and Michael Spindel with co-founder Paul Wicks, SkySafe has scaled quickly and reached profitability in 2020. As the recognized industry expert in drone forensic data extraction, the company’s technology has evolved to include the development of a fixed, mobile or temporarily installed hardware and software system to serve as the infrastructure for airspace safety. The SkySafe team includes individuals hailing from MIT, UC San Diego, Toyota, AWS, Samsung, the Air Force Research Lab, US Navy, and the Special Operations community.

“Skysafe and Gaingels are aligned on the mission to build a better ecosystem for private companies with more diversity and equity,” said Lorenzo Thione, Managing Director of Gaingels. “As Grant and his team build a global company with global aspirations, they are also building a global and interconnected culture and team with diversity at the core.”

SkySafe technology is deployed to customers globally in more than 30 countries. International airports, prisons, stadiums, border patrol, law enforcement agencies, and U.S. and allied militaries all use the technology. SkySafe serves its growing base of customers from its San Diego headquarters and with this financing plans to grow its team and scale up production of systems. The company holds a board position with the Commercial Drone Alliance (CDA).

ABOUT SKYSAFE

Founded in 2015 in San Diego, CA, SkySafe provides world-class drone defense and airspace control solutions. It provides military, public safety, and commercial customers with comprehensive airspace management and control. SkySafe applies advanced radio technology, reverse engineering, and deep threat analysis to develop tools to safely and effectively operate authorized drones while protecting against threats for airspace security. For more information, visit: https://www.skysafe.io/ (Source: BUSINESS WIRE)

 

17 Dec 21. Seraphim Space Investment Trust plc (LSE: SSIT), the world’s first listed fund focused on SpaceTech, announces the acquisition of the holdings of ICEYE Oy (“ICEYE”) and D-Orbit SpA (“D-Orbit”) from  Seraphim Space LP (“Seraphim Space Fund “).

As set out in the IPO prospectus, SSIT agreed to acquire four assets from the Seraphim Space Fund for newly issued ordinary shares in the Company. These two acquisitions represent the final of these transactions to complete.

ICEYE operates the world’s first and largest constellation of miniaturised satellites that use radar to image the Earth both during the day and night, even through cloud. ICEYE’s radar technology has the ability to monitor change in near real-time with unrivalled sensitivity and at a global scale. The unique insights this data provides holds enormous potential to help combat some of the world’s most pressing problems, including climate change. For example, ICEYE’s data is used by customers, including governments, to track illegal deforestation in the Amazon and insurance companies to respond quickly to natural disasters such as floods.

D-Orbit is the market leader in the space logistics and orbital transportation services industry. D-Orbit’s multi-purpose ‘ION’ satellite carrier spacecraft is the only space logistics solution currently available that offers a flexible, cost-effective in-orbit ‘last mile’ delivery solution that guarantees satellite deployment in requested orbits and reduces customers’ time from launch to revenue generation. After delivering its customers’ satellites to their destinations, the ION spacecraft are then able to undertake a range of additional secondary in-orbit applications that include cloud infrastructure for space-based edge compute / data analytics, data storage and relay communications. Additional applications which are anticipated to accelerate the growth and development of the expected trillion-dollar in-orbit space economy include space debris removal and satellite servicing. D-Orbit is also the first space company worldwide to be a certified a B Corporation (“B-Corp”), reflecting that its purpose-driven mission benefits all stakeholders.

In accordance with the relevant sale and purchase agreement entered into at the time of the IPO, the Company has acquired for cash shares in ICEYE and D-Orbit for £28.1m and the partners of the Seraphim Space Fund have used substantially all of this cash (net of tax) to subscribe for 27,255,074 new ordinary shares in the Company at a price of 100p per share. These new ordinary shares rank pari passu with the existing ordinary shares in issue.

As a result of this issue, the total number of ordinary shares in issue now stands at 239,384,928  and the total number of voting rights in the Company is 239,384,928 . There are no shares held in treasury.

The above figure of 239,384,928 may be used by shareholders as the denominator for the calculation by which they may determine if they are required to notify their interest in, or change to their interest in, the Company under the FCA’s Disclosure Guidance and Transparency Rules.

Applications have been made to the Financial Conduct Authority (the “FCA”) and the London Stock Exchange (the “LSE”) for the admission of  27,255,074 new ordinary shares to the premium listing segment of the Official List of the FCA and to trading on the main market for listed securities of the LSE. Admission is expected to take place at 8:00 a.m. on Monday,  20 December 2021.

Will Whitehorn, Chair of Seraphim Space, commented: “SSIT now has exposure to 21 SpaceTech companies uniquely positioned to drive changes and improve our day to day lives. ICEYE, in which the Company made an additional investment earlier this month, and D-Orbit, the pioneering logistics and infrastructure provider, are welcome and exciting additions to our portfolio.”

Mark Boggett, CEO of Seraphim Space (Manager) LLP, the Company’s investment manager, commented: “We are delighted to complete the transfer of these final two assets to theCompany’s portfolio. We have done everything we had set out to do at the time of the IPO and have also invested in a variety of new portfolio companies that are rapidly transforming the SpaceTech sector to provide solutions to some of the world’s most pressing problems.”

 

16 Dec 21. Analytic Services Inc (ANSER) Acquires InTec, LLC. Analytic Services Inc (ANSER) announced today it has acquired Fairfax-based InTec, LLC., a leader in delivering technical and management expertise across the federal government, to include Intelligence, Civil, and Defense Agencies. With the acquisition of InTec, ANSER broadens its capabilities as a leading public service not-for-profit providing systems engineering and integration, intelligence operations, mission assurance, and program management expertise in the fields of national security, homeland security, and public policy.

Steve Hopkins, ANSER President and Chief Executive Officer, said, “For sixty-three years ANSER has enhanced national and homeland security by strengthening public institutions. We provide thought leadership for complex issues through independent analysis and we deliver practical, useful solutions. ANSER values collaboration, integrity, and initiative, and we are client focused in all that we do. Because we were established for the purpose of public service and not for profit, we measure our success in the impact of our service. With InTec, our combined client-focused culture and innovative approach enables us to deliver to a broadened client base.”

Bruce Donaldson, Founder and Chief Executive Officer of InTec, said, “It is great to see that the years of hard work to develop and mature a very innovative and high-performance approach to address client needs in the Intelligence Community and elsewhere continues with a great company like ANSER.”

About ANSER

ANSER is a public service research institute organized as a not-for-profit corporation dedicated to informing decisions that shape the nation’s future. We provide objective studies and analyses to the national security, homeland security, and public policy communities using a diverse set of skills and capabilities that include Analysis of Alternatives, Acquisition Analysis, Workforce Analysis, Performance Measurement, Policy Formulation, Counter Weapons of Mass Destruction and Risk Assessment. Additionally, ANSER builds and leads technology development collaborations through its subsidiary, Advanced Technology International (ATI), specializing in organizing and managing research and development consortia on behalf of the federal government. For more information visit: www.anser.org. (Source: PR Newswire)

 

17 Dec 21. Aircraft supplier MagSeal gets new owner. US-based Ducommun Inc has strengthened its position in “niche engineering products” by acquiring Magnetic Seal Corporation (MagSeal), which makes magnetic seals for military and commercial aircraft, Ducommun announced on 16 December.

Ducommun is paying USD69.5m for MagSeal, which was founded in 1954 by George Colby and Robert Stevenson and remained owned by the Colby family until the acquisition.

Based in Warren, Rhode Island, MagSeal provides seals for such military aircraft as AH-64 Apache and CH-53K helicopters, F-15 and F-18 fighters, and C-130 transports.

Stephen Oswald, Ducommun’s chairman, president, and CEO, said the acquisition continues “our strategy of adding high value-added [aerospace and defence] engineered products with recurring aftermarket to our portfolio”. Ducommun acquired ammunition handling systems provider Nobles Worldwide in 2019 and lightning protection company Lightning Diversion Systems in 2017.

MagSeal president Robert Garde said that joining a larger enterprise like Ducommun will help his company accelerate its growth. MagSeal has fewer than 100 employees, while Ducommun has about 2,500 after the acquisition. (Source: Janes)

 

15 Dec 21. Avon Protection to wind down body armour business. Closure will lead to an impairment charge of $46.8m.

  • Management expects remaining business to generate $260m-$290m of sales
  • Adjusted cash profit margin “to recover materially”

Avon Protection (AVON) is shutting down its body armour business following its announcement last month that it had failed US military tests.

A review concluded it is in “the best interests of our stakeholders as a whole” to wind down the business.

The closure means the company is taking a $46.8m (£35.3m) hit to its balance sheet in its 2021 accounts, triggering a pre-tax loss of $35.6m.

Avon Protection bought 3M’s ballistics protection business, which consisted of the body armour unit and a protective helmets business, two years ago. It paid an initial $75m, with a further $25m dependent on it hitting future targets. A gain of $15.7m recorded to account for the fact contingent consideration is not being paid will partially offset the impairment recorded.

The body armour unit will generate $25m a year of revenue over the next two years as it delivers remaining contracts. Once closed, Avon Protection expects to save $15m a year in overheads, although it remains on the hook for $11.8m of lease liabilities unless three sites it will vacate in the US can be sub-let.

It also expects to pay $3m-$5m in closure costs and to restructure the remaining business, which will be weighted towards its 2023 financial year.

What will remain are protective helmet and respiratory systems businesses which Avon Protection expects will generate sales of between $260m and $290m next year, representing growth of between 8-20 per cent.

The company also expects its adjusted cash profit margin “to recover materially”. It dropped to 15.1 per cent, from 22.1 per cent last year.

Broker Jefferies expects the consensus estimate to settle at around 20 per cent, implying earnings of $55m at its mid-point, or $1.79 a share.

After dropping a further 20 per cent in early trading to a 12-month low of 860p, Avon Protection’s shares recovered to 920p, or below seven times implied earnings. Given the defence sector trades at 19 times earnings, it is tempting to look at this as a buying opportunity.

However, there are still too many moving parts. The group’s chief financial officer has left and a new arrival will want to run their own rule over the books before making projections, which could differ markedly.

Henry Carver, an analyst at Peel Hunt, said an investor coming to this business without the context of its last 12 months would value the company differently, given the prospects for the core business and the relative strength of its balance sheet.

However, after a year of disappointments, “the market is not going to suddenly just get the right valuation based on the medium-term prospects – it will need to see a few periods of delivery”, he said. At the risk of falling into a value trap, this seems like the sensible thing to do. Hold. Last IC View: Hold, 928p, 12 Nov 2021. (Source: Investors Chronicle)

BATTLESPACE Comment: This news will be of great interest to companies such as NP Aerospace who will no doubt ramp up their efforts in the US to fill the gaps created by Avon’s withdrawal from the armor plate business.

 

15 Dec 21. Novaria Group Announces Acquisition of GK Mechanical Systems, LLC. Novaria continues to expand its strategy of acquiring proprietary hardware businesses. Novaria announced the acquisition of GK Mechanical Systems LLC (“GK”), a leading engineer and manufacturer of automatic, positive locking systems and components. The terms of the deal were not disclosed. This acquisition furthers Novaria’s portfolio expansion of proprietary and qualified product offerings.

“The acquisition of GK continues Novaria’s strategy to invest in highly engineered products that service our core end markets in Aerospace, Defense and Naval,” said Novaria CEO Bryan Perkins. “We have watched GK grow over time by developing some of the most unique latching and locking technologies for critical applications.”

The company’s product capabilities include custom equipment design and locking mechanisms including, but not limited to, latches, quick disconnects, locks, struts and blade fold restraints.

Since 2002, GK has successfully partnered with several of the biggest defense OEMs and engineering departments such as General Dynamics, Huntington Ingalls, Boeing, Lockheed Martin, Northrop Grumman and the Department of Defense.

“GK is an excellent fit with Novaria, as it brings along a strong management team that is customer-focused and designs and builds great locking products which complement Novaria’s current hardware offerings,” said Novaria CFO Justin Tucker. “We are looking forward to welcoming them to the team and having access to GK Mechanical’s expertise and resources.”

Mike Barnes, General Manager of GK, and the GK team will continue to serve the business under Novaria.

“Joining the Novaria team couldn’t have come at a better time for us,” Barnes said. “Our strength in design and production of automatic, positive, locking systems and components in the defense industry will match well with Novaria’s recognized strengths in the commercial aerospace sector. Working with Novaria will provide us with the resources needed to expand our product lines to the commercial and defense aerospace customers we have been targeting for continued growth.”

About Novaria Group

Novaria Group is a privately held business focused on precision component companies that deliver optimum performance and sustainable growth within the aerospace and defense marketplace. For more information on Novaria’s business units, please visit www.novariagroup.com. (Source: BUSINESS WIRE)

 

15 Dec 21. IronNet Reports Third Quarter Fiscal 2022 Financial Results. Revises Fiscal Year Revenue and ARR Guidance Due to Delayed Strategic Opportunities. Added 49 New Customers Year-Over-Year; Grew Cloud Subscription Revenue 74% Year-Over-Year. IronNet, Inc. (NYSE: IRNT) (“IronNet”), a leading provider of solutions Transforming Cybersecurity Through Collective Defense(SM), announced today its financial results for the third quarter ended October 31, 2021.

“Our prior outlook for both the quarter and fiscal year was supported by what we assessed as late-stage multi-m dollar strategic customer opportunities, the majority of which are in the U.S. public sector. We had previously expected to finalize these opportunities in the second half of the fiscal year, however they remain pending primarily due to government delays in getting funding through to federal budgets. These continue to be viable opportunities in our pipeline. Given the difficulty in predicting when they will close, we have removed them from our ARR guidance. We will disclose any strategic contracts that are accretive to our revised fiscal year ARR outlook,” said GEN (Ret.) Keith Alexander, Chairman and co-CEO of IronNet.

Alexander added: “Our conviction remains strong that the need for IronNet Collective Defense(TM) — characterized by anonymized, real-time network detection, event correlation and response collaboration across the public and private sectors — has never been greater. Recent government mandates and senior officials have highlighted how nations, sectors and companies must shift to defending in collaboration with one another. With this capability, IronNet has a strongly differentiated solution. We will continue to advance our strategy in pursuit of market share, encouraged by a number of leading indicators in the business, including our cloud subscription revenue growth, 30% ARR growth over the same point in time last year, and a healthy pipeline of customer opportunities that is simply taking time to convert to active engagements.”

William Welch, co-CEO of IronNet, commented: “We have taken steps to drive improved predictability in our business, including increased emphasis on cloud deployments to expedite time to value for customers. As we continue to aggressively pursue the network detection and response market, our technology continues to distinguish us from other vendors. Recent favorable evaluations by highly discriminating IT teams noted that IronNet detected attack behaviors in customer networks and cloud deployed infrastucture with a level of speed and accuracy unmatched by other vendors. This goes beyond the indicators of compromise that many already share, and is a validation of our unique model.”

Third Quarter Fiscal 2022 Financial & Operating Highlights

  • Revenue: $6.9 m compared to $7.0m in the same quarter last year

o Cloud subscription revenue grew to $3.8m from $2.2m in the same quarter last year

o Recurring product revenue, which is defined as revenue that is subscription-based, grew to $6.1m, up from $4.4m in the same quarter last year

  • Gross Margin: 65.7% compared to 70.5% in the same quarter last year, with one-time cost of sales accounting charges accounting for 2.4% of the year over year decline
  • Operating loss:

o GAAP: $185.6m, which includes $160.1m in non-cash stock-based compensation expense and $1.6m of transaction expenses, in both cases one-time, accounting-driven expenses triggered by the closing of the transaction this quarter, compared to $12.6m in the same quarter last year

  • Net loss:

o GAAP: $193.1m, which includes the one-time, accounting-driven expenses of $160.1m and $1.6m noted above as well as the additional one-time non-cash accounting-driven expense of $11.3m related to the change in fair market value of the private warrants between the date of the closing and their exercise in late September and early October, compared to $12.5m in the same quarter last year

o Non-GAAP Adjusted: $20.2m after excluding the one-time expenses described above

  • Annual Recurring Revenue (ARR): $27.5m compared to $21.2m at the end of the same quarter last year and $24.1m at the end of the prior quarter
  • Dollar-based average contract length: 2.8 years compared to 3.2 years at the end of the same quarter last year
  • Calculated billings (Non-GAAP): $3.4m compared to $8.1m for the end of the same quarter last year
  • Cash and cash equivalents: $73.9m at end of quarter
  • Customer Count: 74 compared to 25 at the end of the same quarter last year

Business Highlights

  • The IronNet Threat Intelligence Brief, published monthly, gathers data from IronNet’s expert threat analysts to provide insight on significant community findings from malware analysis, threat research, and detection of malicious behavior targeting an enterprise or other IronDome(R) community participants. Year-to-date, IronNet has identified and reported on more than double the amount of unique malicious or suspicious indicators of compromise (IoCs) as compared to the same period in the prior year.
  • IronNet’s innovation was recognized globally with the following recent awards: the 2021 Cyber Security Awards for Threat Detection Product of the Year, CybersecAsia Readers’ Choice Awards for best in Network Monitoring and Observabiity, Northern Virginia Technology Council for Cyber Deal of the Year, and the 2021 APT Solution Provider of the Year by CyberSecurity Breakthrough.
  • IronNet executives provided thought leadership and created brand awareness for IronNet’s NDR technology and Collective Defense(TM) business model at recent high-profile events, including: the Advanced Threat Summit (Poland), theCUBE interview at AWS Re-Invent, Washington Post LIVE interview with David Ignatius, the 9-11 Memorial Security Summit, the Federal Reserve Roundtable, Institute of World Politics, and Singapore CISO Leadership Roundtable.
  • At the Black Hat USA and London conferences in the third quarter, IronNet expert threat hunters were selected to monitor the Network Operations Center (NOC) using the IronDefense(R) solution, successfully identifying more than 1,700 potential threats at the USA conference alone.

Outlook

For the fiscal year 2022, IronNet now expects:

  • Revenue of approximately $26m
  • ARR of approximately $30m to exit the fiscal year (Source: BUSINESS WIRE)

 

14 Dec 21. Chemring bolstered by cyber defence business.

Order book grows by 5 per cent to £501m

  • Net debt falls by 45 per cent to £26.6m
  • Group to embark on sales and marketing push to launch Roke in US

Last week, 10 nations took part in an exercise that simulated a cyber attack on the global financial system which was observed by the World Bank, the IMF and the Bank of International Settlements, according to Reuters.

The exercise demonstrates the scale of the perceived threat to critical systems in a year which has seen US fuel pipelines and the computer system running Ireland’s health service knocked out by ransomware attacks.

Defence company Chemring (CHG) has been a beneficiary of increased cyber security spending. Its revenue was 2 per cent lower year on year, but 1 per cent higher on a constant currency basis.

The performance of its Roke business, which provides cyber security research and advisory services to government and corporate clients, was flagged as a highlight as the division’s revenue, operating margin and order intake all grew by double digits. Roke now provides one-fifth of group revenue. Most of its business is currently in the UK, but a push into the US in its current financial year will require a higher sales and marketing spend. Chemring can easily afford this, having reduced net debt by 45 per cent during the year to £26.6m, or 0.35 times cash profit.

Roke’s contribution helped to offset a decline in revenue of its countermeasures and energetics business, which suffered from delays to orders it attributed to Covid-19 and the change in administration in the US.

Chemring’s order book increased by 5 per cent to £501m at its year-end, £358m of which is likely to be recognised as revenue this year. This covers about 84 per cent of the £426m of sales broker Panmure Gordon forecasts for its current year. It increased its earnings per share forecast for the company to 18.3p. Chemring’s shares currently trade at 16 times this level, compared with an industry average for aerospace and defence companies of 19.5 times. This, and continued growth in global defence spending, support our buy recommendation. Last IC View: Buy, 301p, 15 Dec 2020. (Source: Investors Chronicle)

 

14 Dec 21. Operational Solutions receives GBP8m investment. Counter-unmanned aircraft system (C-UAS) specialist Operational Solutions Ltd (OSL) has received an investment of GBP8m (USD10.6m) from Reading-based investor BGF. The C-UAS market is growing rapidly and OSL already has proprietary software, experience of establishing and managing C-UAS systems at major airports, and has a global co-operation agreement with Thales. Liam Pursall of BGF said, “The inevitable and well-documented rise in the use of drones in the coming years will necessitate a clearly defined counter-drone and drone management proposition.” OSL makes the FACE TM software that connects different sensors detecting, tracking, identifying and managing drones. FACE TM aligns with SAPIENT, which is a messaging standard for the C-UAS system developed by the UK’s Defence Science and Technology Laboratories (DSTL). SAPIENT is also in contention to be the official standard for NATO. It was demonstrated in the Netherlands during the C-UAS Technical Interoperability Exercise (TIE21) that ran from 2–12 November. Two other languages – Link 16 and ASTERIX – were also trialled, however, neither was designed for the C-UAS role. (Source: Janes)

 

13 Dec 21. Viasat Named 2021 Global Satellite Business of the Year by Euroconsult. Viasat Inc. (NASDAQ: VSAT), a global communications company, proudly announced it was the 2021 Global Satellite Business of the Year Award recipient at this year’s World Satellite Business Week Summit.

Euroconsult, a leading global space and satellite consulting and market intelligence firm, hosts the World Satellite Business Week Summit in Paris annually, which brings together executives from across the global space, satellite and communications sectors. The Global Satellite Business of the Year Award recognizes the operator that achieved the best performance in terms of strategic initiatives as well as revenue growth, margins and commercial development during the past year.

“We are honored to be named the 2021 Global Satellite Business of the Year by Euroconsult,” said Rick Baldridge, president and CEO, Viasat. “This is a testament to the hard work of our team and our ongoing commitment to transform how people and businesses connect around the world using space-based connectivity. This is an exciting time for our industry, and we’re proud to be recognized as a forward-thinking innovator helping to shape the future of the global space sector with an economically powerful and environmentally safe approach – thank you Euroconsult.”

“The World Satellite Business Week Awards seek to recognize those organizations, products and people who bring excellence to the forefront of the connectivity, space and satellite communications sectors,” said Pacôme Révillon, CEO, Euroconsult. “Viasat has once again demonstrated extraordinary accomplishments and momentum in the space and satellite communications markets. Today we celebrate their positive contributions, which have greatly impacted the growth of our world’s digital society.”

The Global Satellite Business of the Year Award is a performance-based honor. Shortlisted candidates were assessed by a panel of industry experts based on rigorous qualitative (innovation, strategic decisions, impact) and quantitative (financial and commercial indicators) criteria. (Source: PR Newswire)

 

14 Dec 21. BAE Systems and QinetiQ downgraded by Wall Street bank on US defence sector concerns. The move by JP Morgan had only a modest impact on the respective share prices. The US defence sector is now in slowdown mode, according to a leading Wall Street bank which, as a result, has downgraded its calls on shares two UK contractors. JP Morgan has cut its recommendation on BAE Systems PLC (LSE:BA.) to ‘underweight’ from ‘equal-weight’ and has done the same for QinetiQ Group PLC (LSE:QQ.). Stock in the former was off just under 1%, while the latter was down 1.8%. JPM reckons BAE has 45% exposure to the US market, while QinetiQ’s is 17%. It retained its ‘overweight’ call on Babcock PLC. (Source: proactiveinvestors.co.uk)

 

15 Dec 21. Indian Start-Up Johnnette Technologies Raises Nearly $1m Pre-Series A Round. Johnnette Technologies, a successful bootstrapped Indian UAV manufacturer, has raised close to a million dollars from Hardcastle Petrofer as it looks to scale up its UAV manufacturing and Drone pilot training business. The global drone market is expected to experience remarkable growth in the coming years owing to the rise in the use of drones in military and commercial sectors all across the globe. The UAV sector holds tremendous opportunities and if unleashed, has the potential to transform many of the sectors and could contribute 4-5 % to India’s GDP, due to multiplier effect. As per NITI Aayog estimates, the Indian market for UAV will be $50bn over the next 15 years.

With a vision to create cutting edge drones and to meet the growing demand of drone pilots across the world, Lt Cdr John Livingstone – Founder and CEO, started his entrepreneurial journey after retiring from the Indian Navy and founded Johnnette Technologies Private Limited in 2014. Since then, the company has been a pioneer in the development of cutting-edge products for the Military and Commercial applications.

“The investment is intended to be utilized for product development and expansion of our team. We provide cost-effective and high-quality indigenous products to the Defense forces and this investment will help us refine our existing line of products and enter the untapped market with a solution for industrial based applications.” says Lt Cdr John Livingstone.

“We are thrilled to associated with Johnnette Technologies and we strongly believe that the Indian drone industry will soon be the drone hub of the world” says Achal Jatia, Chairman, Hardcastle Petrofer. (Source: UAS VISION)

 

14 Dec 21. Chemring Plc has announced its full year results for the year ended 31 October 2021 which are in line with the Board’s expectations. Both business segments performed strongly, whilst Roke posted double-digit growth in orders, revenue and operating profit as order intake exceeded £100m for the first time.

Key points

  • 2021 performance was in line with the Board’s expectations with strong performance in both segments, despite an FX translation headwind caused by the 10 cent weakening of the US dollar
  •  Roke order intake exceeded £100m for the first time, with double digit growth in orders, revenue and operating profit in a positive market
  •  Successful acquisition and integration of the Cubica Group, performing well since completion in June 2021
  •  Continued progress in our US Sensors Programs of Record. Further orders received in the year for the next phase of HMDS delivery, valued at $69m, under the previously announced $200m IDIQ contract. $99m EMBD full rate production six-year contract awarded in October 2021
  •  Sensors & Information underlying operating margin increased from 20.0% to 21.6%
  •  Countermeasures & Energetics underlying operating margin increased from 15.0% to 16.2% as the UK countermeasures site delivered strong operational and financial performance
  •  Continued reduction in net debt with strong operating cash generation and cash conversion of 105%. Continued scheduled capital expenditure ahead of depreciation. Net debt to underlying EBITDA of 0.35 times
  •  New policy to target a medium-term dividend cover of c.2.5 times underlying EPS. Proposed final dividend increased by 23% to 3.2p, giving a total dividend of 4.8p (3.5 times cover)
  •  Investment in the Group’s manufacturing infrastructure continues to be a key enabler to deliver improved safety and operational excellence. TRIF rate was down 21% at 0.67 (2020: 0.85)
  •  Board’s expectations for 2022 are unchanged. Approximately 84% (2020: 78%) of expected 2022 revenue is covered by the order book

Michael Ord, Group Chief Executive, commented: “Despite being another challenging year in which we have continued to operate under the restrictions of CV-19, I am delighted with the financial and operational progress that has been made across Chemring. We have continued the process of transformation that was launched in 2019 as we build a stronger, higher quality and technology focused business. We maintain our relentless focus on safety and on living our shared values of Safety, Excellence and Innovation. In doing so we are driving our collective purpose – delivering innovative protective technologies to help make the world a safer place.

Chemring is now a stronger business with increasing opportunities for development and growth and I would like to thank all my colleagues across Chemring for their determination, hard work and support. The progress made over the past few years would not have been possible without their collective efforts.

Trading since the start of the current financial year has been in line with expectations. With 84% of 2022 expected revenue covered by the order book, the Board’s expectations for 2022 performance are unchanged. Chemring is well placed, with a robust strategy, market-leading positions across different geographies and sectors, and with products and services that are critical to our government and blue-chip customers around the world. Chemring’s long-term prospects remain strong.”

* All profit and earnings per share figures in this news release relate to underlying business performance (as defined below) unless otherwise stated.

The principal Alternative Performance Measures (“APMs”) presented are the underlying measures of earnings which exclude discontinued operations, exceptional items, gain or loss on the movement on the fair value of derivative financial instruments, the amortisation of acquired intangibles and the associated tax impact on these items. The Directors believe that these APMs improve the comparability of information between reporting periods as well as reflect the key performance indicators used within the business to measure performance. The term underlying is not defined under IFRS and may not be comparable with similarly titled measures used by other companies.

 

14 Dec 21. Strong Margin Improvement in FY21, Expect No Change to FY22F Consensus EBITA. Chemring plc (CHG LN)BUY, 289.00p PT: 400.00p. FY21 was a year of strong margin progression for Chemring, as the underlying earnings quality of the group improved, in line with our Buy thesis. Roke continues to impress with double-digit order intake, revenue, and operating profit growth. We expect progress on opportunities in new markets (US military, commercial industry) in FY22F. Cash conversion has become increasingly reliable and with Net Debt:EBITDA at <0.4x, M&A could be a positive catalyst.

Insights

FY21 in line, with 100bps yoy margin improvement: Adjusted operating profit of £57.5m was exactly in line with company provided consensus, confirming the group’s most recent trading update. Although revenue fell 2% yoy on FX, the group’s margin performance improved to 14.6%, from 13.6% in FY20. This was driven by improvements in both divisions, with Sensors & Information up an impressive 160bps, demonstrating the continued revenue mix effect from having high margin Roke grow at substantially stronger rates than the US Sensors & Information business.

Well set for FY22F: The group has 84% order book cover for consensus FY22F revenue forecasts, a position that compares well to FY21 (78% cover) and FY20 (71% cover). In our view, this may in time lead to consensus upgrades, especially if higher product sales from Roke emerge. However, factors such as extended contracting periods in Roke, which historically has had a much more book and turn business model, means that, for now, we do not expect any change to FY22F consensus (adjusted operating profit of c£62m). Overall the group order book grew 5% yoy to £501m, driven exclusively by the Sensors & Information division.

Investing in Roke USA: Roke USA continues to take steps forward, with the Resolve and Perceive Electronic Warfare products on trial with a number of different army divisions. The company intends to invest in further headcount this year to capitalise on the opportunity, though this may be to the slight detriment of S&I margins. Nevertheless, we expect these to remain well ahead of the medium-term guidance of “high-teens”. We also believe that FY22F could be a significant year for Roke’s progress into more commercial industrial end-markets. This was stymied in FY21F by the effect of COVID-19 on breaking into new clients/R&D budgets.

Net Debt:EBITDA just 0.35x: Chemring continues to deliver excellent operating cash-flow conversion, with 105% conversion in FY21 being the third consecutive year that this has been >100%. Although capex is set to increase in FY22F (c£40m-45m) due to COVID-19 delays in the current year, we still expect positive FCF generation post dividends and further deleveraging in FY22F, accelerating the following year as capex falls back towards depreciation (c£20m).

Valuation: Chemring trades on an annualised FY23F EV/EBITA multiple of 11.5x and PER of 14.8x. These multiples are slightly ahead of long-term averages; however, a premium is more than warranted, in our view, given that margins have improved by 60% from their FY14 lows. At our 400p price target, Chemring would trade on 15.9x EV/EBITA and 20.5x PER. (Source: Jefferies)

 

14 Dec 21. DoD IG Report Released: $21m of Voluntary Refund Requested. TransDigm Group Incorporated (TDG) BUY, $591.90 PT: $760.00. TDG issued a statement today regarding the DoD Inspector General audit of TDG and its fixed price DoD contracts (50% Defense in FY21 w/ 6% of Defense direct to DoD). The report recommends $20.8m of voluntary refund for excess profit during the Jan 2017 to June 2019 review period. The report continues to push for changes to law for better pricing data and disclosures, which had been part of previous TDG audits, potentially in the GFY23 legislative cycle.

Insights

DoD Requests $20.8m Voluntary Refund for Excess Profit on 150 Contracts. In a DoD IG audit regarding 150 contracts from January 2017 to June 2019, it was found that >95% of contracts, or $268m out of $569m (Ex. 1) contract value, were below the Truth in Negotiations Act (TINA) threshold for purchase size ($2m) and were not required to provide certified cost or pricing data. Using uncertified cost data, the DoD determined that TDG earned excess profit of at least $20.8m on 105 spare parts under 150 contracts. The DoD will continue to pay higher prices if unable to use cost analysis to determine price reasonableness on sole-source spare parts priced at commercial rates under the TINA threshold. There are legislative proposals to address issues around sole source pricing potentially in the FY23 legislative cycle, including those based on the February 2019 DoD IG report reviewing TDG purchases.

Recommendations from the IG Report. Several recommendations are made from the report. These include 1) Defense Pricing and Contracting Principal Director review DFARS and DFARS Procedures, Guidance and Information to determine whether current policy addresses when cost analysis should be required to determine price reasonableness for sole-source parts not subject to TINA; 2) Identify alternative contracting strategies for procurement items more efficiently at a lower price; 3) Recommend that DLA seek a voluntary refund from TDG of at least $20.8MM in excess profit on 150 contracts. The report goes on to state that DLA comments addressed recommendations, therefore, the recommendations are resolved, but remain open pending verification that the agreed-upon actions are complete.

TDG’s Response Points to Some Unfair Comparisons. Ultimately the IG reports clears TDG of any wrongdoing, a conclusion that TDG agrees with. However, the company does disagree with some of the standards and analysis including: 1) Report used arbitrary standards not applicable to audited contracts – i.e. standard that utilizes 15% mark-up benchmark only applicable to cost reimbursable contracts, not fixed price contract where contractor bears the risk and profit is only determined after contractor performs; 2) Ignored real costs and reports costs as excess profit such as tax; 3) Computes profit as a percentage of cost rather than percentage of revenue inflating margin assumptions; 4) Implied DoD negotiated prices were too high, when data demonstrated that DoD paid lower prices than commercial prices for similar parts. (Source: Jefferies)

 

13 Dec 21. TransDigm Comments on DOD IG Report. TransDigm Group Incorporated (NYSE:TDG) (“TransDigm” or “the Company”) today issued the following statement regarding a report issued by the Inspector General Department of Defense (“DoD”) on its audit of TransDigm and select firm-fixed price contracts between the DoD and TransDigm businesses:

“The report makes clear that there was no wrongdoing by TransDigm, its businesses, or by the DoD. TransDigm agrees with that conclusion.

However, TransDigm disagrees with many of the implications contained in the report, and objects to the use of arbitrary standards and analysis which render many areas of the report inaccurate and misleading.  These include:

  • The report expressly acknowledges that it used arbitrary standards that are not applicable to the audited contracts and warns that its arbitrary standards should not be used in the future.  The use of inapplicable standards results in flawed analysis and is misleading.
  • The report ignores significant real costs incurred by the business and contrary to law reports these costs as excess profit.
  • The report presents profit percentages in a misleading and provocative manner.  This includes computing profit as a percentage of cost rather than as a percentage of revenue—the internationally recognized method and business standard.
  • Despite data demonstrating that the DoD paid lower prices compared to the commercial prices for similar parts, the report did not conduct a price analysis and instead implies that the DoD negotiated prices that were too high.

Since 2019, TransDigm has invested considerable resources to better support the DoD and provide more information about the value of its products.  For this audit, TransDigm provided full access and cooperation to the IG to help promote a complete and accurate assessment of the Company and the value the Company provides to the DoD through its businesses.

Through regular engagement with DoD officials, there have been improvements to the procurement process, and the Company has received positive feedback from DoD customers.  TransDigm and its businesses look forward to continuing these efforts and their support of the DoD.”

(Source: PR Newswire)

 

13 Dec 21. SCF Partners Announces Investment In Powerstar, a Global Provider of Power Resiliency and Energy Efficiency Technology. SCF Partners (“SCF”) is pleased to announce its investment in Powerstar EMSc (UK) Ltd. (“Powerstar”), a leading provider of power resiliency, microgrids, and energy efficiency equipment to customers worldwide. Dr. Alex Mardapittas, Powerstar’s founder and CEO, will continue to serve in his current role as the company enters its next phase of growth.

Powerstar, headquartered in Sheffield, United Kingdom, designs and manufactures behind-the-meter hardware and software technologies that help commercial and industrial customers reach their net zero carbon goals. It has provided voltage optimization, power resiliency, energy storage, EV charging, and transformer equipment to customers on five continents worldwide. With a focus on helping clients solve unique energy problems affecting their business, Powerstar’s expertise enables a fully bespoke solution that meets the customer’s exact needs.

“We are very excited to enter the next phase of our ambitious growth plans,” said Dr. Mardapittas. “The need for a resilient and efficient power supply has never been greater than today, and our partnership with SCF will allow us to build on the record growth that Powerstar has seen over the past year.”

“SCF is pleased to partner with Powerstar and its exceptional technical team,” added Colin Welsh, International Partner at SCF. “Powerstar’s customized technology solutions that enable customers to reduce power costs while improving reliability and mitigating their carbon footprint will only grow in importance as the grid becomes more volatile and the global economy works to achieve net zero goals.”

About Powerstar

Founded in 2001 and headquartered in Sheffield, United Kingdom, Powerstar is a market-leading smart energy solutions provider. It designs and manufactures power resilience technologies that protect customer operations from disruption while enabling net zero goals. Powerstar’s highly capable technical team uses modelling and simulation capabilities to create a digital twin of the customer’s site, ensuring that its customized solution will perform reliably. Powerstar supports commercial and industrial users in the manufacturing, healthcare, data centre, retail & distribution, defence, and public sectors. To learn more, visit www.powerstar.com.

About SCF Partners

Founded in 1989, SCF provides equity capital and strategic growth assistance to build leading energy service, equipment, and technology companies that operate throughout the world. SCF has invested in more than 70 platform companies and made more than 400 additional acquisitions to develop 17 publicly listed energy service and equipment companies over its history. The firm is headquartered in Houston, Texas, and has offices in Calgary, Singapore, and Aberdeen. Learn more at www.scfpartners.com.

(Source: BUSINESS WIRE)

 

14 Dec 21. Cohort plc, the independent technology group, today announces its half year results for the six months ended 31 October 2021.

Financial overview

  • Revenue up 10% to £60.0m (2020: £54.4m).
  • Order intake up 18% to £105.3m (2020: £89.2m).
  • Record closing order book of £285.8m (30 April 2021: £242.4m).
  • Adjusted* operating profit down 60% to £1.7m (2020: £4.3m), due to weak performances at Chess and EID
  • Net funds of £6.1m (31 October 2020: net debt £6.1m; 30 April 2021: net funds £2.5m).
  • Adjusted* earnings per share down 60% to 3.04 pence (2020: 7.74 pence).
  • Interim dividend increased by 10% to 3.85 pence per share (2020: 3.50 pence per share).

* Adjusted figures exclude the effects of marking forward exchange contracts to market value, amortisation of other intangible assets (£3.4m; 2020: £3.3m) and exceptional items (£0.3m income; 2020: £1.1m charge).

Divisional overview

  • MCL had a stronger performance than last year, reflecting an improved UK domestic market;
  • SEA was also stronger on the back of good order intake in the second half of last year and more export activity improving its margin mix;
  • ELAC delivered a positive first half as work got underway on its significant Italian contract;
  • MASS remained the strongest contributor to Group profit, though its performance was behind last year’s;
  • Chess had a weaker than expected performance due to order slippage and delivery delays; and
  • EID, as previously signalled, had a weaker performance reflecting lower order intake in 2020/21.

Looking forward

  • Record order book of £286m underpins over £74m of revenue deliverable in the second half.  Taking into account revenue recognised in the first half, this covers 89% (2020: 92%) of consensus forecast revenue for the full year. As at 10 December this coverage now stands at 92%.
  • The outlook for the majority of the Group’s businesses is unchanged, but Chess order intake and delivery issues are expected to impact the Group result for the full year.
  • We continue to see a positive outlook for organic growth in the medium term.

Commenting on the results, Nick Prest CBE, Chairman of Cohort, said: “The first half of 2021/22 has been disappointing. Although we had strong order intake and further improved our cash position, weak performances from Chess and EID led to materially lower profitability, despite a good first-time contribution from ELAC.  COVID-19 restrictions have had some impact on both deliveries and orders. We anticipate a much stronger performance in the second half, but do not expect this to fully make up the shortfall.  As a result, the Board now believes that Cohort’s performance in 2021/22 will be materially below current market expectations.

 

14 Dec 21. Cohort kept in check by Chess. New management team appointed to loss-making division.

  • Revenue at Chess came in £9m lower than expectations
  • Buoyant defence market leads to board proposing dividend increase

Defence technology group Cohort (CHRT) saw its shares slide 12 per cent after it reported widening losses triggered by poor performance of the two businesses it acquired within the past five years.

Although the company reported a record order book of £289m, its half-year loss widened as its surveillance, tracking and fire control software arm, Chess, reported an operating loss of £2.7m (compared with a £308,000 profit in the same period last year) as revenue almost halved to £5.9m.

Revenue at Chess, which was bought three years ago, was £9m lower than management’s expectations. Cohort chief executive Andrew Thomis attributed about £3m of this to internal issues that had caused production and engineering delays, £2m to lower-than-anticipated orders and £4m to customer-driven delays to schedules.

He argued that Chess’s issues were fixable, as they relate to consistency of delivery, performance and resource management as opposed to its technology or gaining customers. Chess’s founder Graham Beall has moved on to a business development role in the US and a new managing director, operations director, technical director and head of projects have been appointed.

EID, its Lisbon-based producer of communications systems acquired in 2016, also recorded an operating loss of £489,000, compared with a profit of £329,000 in the corresponding period last year, as revenue fell by 44 per cent to £2.6m.

Other divisions performed well, though, and its cash flow remained positive – it finished the period with net cash (excluding leases) of £6.1m.

We move our recommendation to hold from buy until there is evidence of an improvement in Chess’s performance, which led broker Investec to shave 12 per cent of its full-year earnings per share forecast, to 30p. Activity in the defence market remains buoyant, though, which gave Cohort’s board the confidence to propose a 10 per cent increase its half-year dividend to 3.85p. Last IC View: Buy, 506p, 27 July 2021. (Source: Investors Chronicle)

 

13 Dec 21. What’s Up in Defense: Investment Outlays +30% in Nov.; +7% Rolling 3 Months.  Monthly DoD investment outlays were up 30% y-o-y in November to $24.1bn, with R&D up 4% y-o-y vs Procurement up 50%. Over the past three months, R&D was down 3% vs a 14% increase for procurement, leading to a 7% increase in investment outlays. Investment spending lagged the budget by $3bn, or 1%, in FY21 (Sept.) vs a 5% lag in FY20.

Insights

Investment Outlays Up 29.6% in November, Driven by Procurement. Investment outlays are up 6.6% for the trailing three months. Outlays remain lumpy, with the trailing three months’ increase driven by procurement up 13.7%, supported by accelerated progress payments and prior-year budget growth. The second month of the FY is up 29.6% y-o-y following an 18.9% decline in October. This compares to FY21 growth of 3.4%, which was led by R&D, up 5.8%, with a 1.7% rise for procurement. In November, the 50.3% increase in Procurement was driven by Air Force up 228%, while Defense Wide was down 56.9% on a tough comp. RDT&E was up 3.8% y-o-y, driven by a 17.0% increase in Army funding, partially offset by Air Force down 3.5%.

Tracking Outlays vs Appropriations – Two-Month Outlays 15% of Funding Under CR. Ex 4 highlights investment outlays relative to Appropriations. In FY19/FY20, there was a $43BB lag. For FY20, investment outlays of $239bn compared to the enacted budget of $251bn. This points to outlays lagging authority by 5%, which supports a longer tail to growth as Appropriations are spent. In FY21, outlays of $247bn lagged the budget authorization of $250bn by 1%. Underspending in FY19-FY21 averaged 6%, or $46bn of underspending. This is 18% of the most recent investment budget authorization. Outlays for the first two months of FY22 were 15% of funding under the CR, assumed flat with FY21.

Defense Budget What’s Next? On May 28, the bn, which was up ~2% y-o-y. The late release pushed the FY22 markup and Appropriations process, with the FY (Oct. 1) starting under a first CR through Dec 3, with the extended second CR pushing through Feb 18. There have been signs of encouragement with potential upside to the budget, as the Senate Appropriations Committee’s report added further support with a plus of >$22bn over the request supporting a defense budget of $728.9bn, up 5% y-o-y, including a 1% decline for procurement, with R&D up 8% over FY21 enacted levels. The NDAA was another positive sign with plus ups bringing Procurement to up 3% with the budget up 4% vs. FY21 levels. Congress must now come to an agreement over an Appropriations bill, but indications are that defense spending could be up MSDs in FY22, when a bill finally does get passed. FY23 could be a better indication with the budget likely pointing to a refreshed National Defense Strategy. Key will be any compromise between Republicans and Democrats and any impact from COVID-related spending and stimulus deficits. A baseline is in the LSD growth range with an initial request likely released in early February. (Source: Jefferies)

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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.

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