24 Feb 22. Axon Reports 2021 Results: Third Straight Year of 25%+ Revenue Growth.
Annual bookings top $1.7bn, up 54%; Annual recurring revenue of $327m, up 48%.
Axon’s expansion into justice software is a natural evolution of our market-leading cloud-hosted digital evidence management software category. Specifically, we are developing software to help prosecutors and defense attorneys streamline the discovery process. Not only is our goal to save attorneys time, but also to shorten the time people are jailed awaiting trial.
Our 2021 results reflect strong operational and financial execution across the business.We are executing upon our vision to build the world’s largest and most trusted network of safety devices, in service of protecting life by:
- Obsoleting the bullet
- Protecting truth
- Accelerating justice
- Building for racial equity, diversity, and inclusion
In 2021, we achieved revenue growth of 27% to $863m. Over the past three years, we have delivered a 27% compound annual revenue growth rate. While our net loss of $60m includes the impact of non-cash stock based compensation expenses, annual Adjusted EBITDA of $178m exceeded our guidance, reflected a 20.6% margin and showcases our ability to deliver profitability while investing heavily to scale. Indeed, we have achieved a three year Adjusted EBITDA CAGR of 43%.
Our focus on building best-in-class subscription software, with a positive user experience, has driven our annual recurring revenue to $327m, tripling over three years.
And record annual bookings of $1.7bn, up 54% over 2020, point to strong growth ahead.
This level of sustainable high growth and profitability underscores the importance and relevance of our mission to protect life. This is especially true at a time when pandemics and social unrest have created far-reaching impacts personally, professionally and societally, around the world.
The stories that we hear from customers and citizens about lives saved and communities feeling supported embolden us to continue innovating, to pursue new markets and expand Axon’s footprint into new geographies, executing against the $52bn total addressable market opportunity we laid out in November 2021.
Our long-term model and financial targets remain unchanged: We aim to deliver a 20%+ top line CAGR, while building recurring revenue streams that support underlying Adjusted EBITDA margins of 30%, allowing us to reinvest for growth, as a Rule of 40 grower(1).
Our priority in 2022 is to *further excel at what we do* and we are focused on setting our teams up for success. We are scaling new products and markets, and attracting and developing talent to continue executing on our mission.
The way Axon invests in future growth while also demonstrating leverage is to target the Rule of 40 — where the sum of our top line growth percentage plus our Adjusted EBITDA margin percentage equals or surpasses 40. This metric is typically used to evaluate pure SaaS companies, and has set a high bar for our entire business, which includes hardware. It’s a bar that we continuously beat.
Axon launched Attorney Premier in December, formally entering the justice software market, which we estimate to be worth $1bn. Attorney Premier enables prosecutors and defense attorneys to easily manage various forms of digital evidence, including body-worn and in-car video, drone footage, interview room video, CCTV video, photographs, audio, documents and more. Axon’s R&D on the category began more than a year ago, and included hundreds of interviews with prosecutors and defense attorneys. The proliferation of digital evidence has forced highly-trained attorneys to spend up to a third of their time on clerical work. Often, public defenders have as little as six minutes with a client before entering a plea deal, while prosecutors have less than an hour to make a charging decision. Both sides can have hours of video evidence to review for each case. Axon introduced plans for the Bolt 2, a new consumer device. The TASER Bolt 2 is Axon’s upcoming self-defense product. It will feature a 15-foot range, discreet design, enhanced features for improved accuracy in low-light, and the ability to alert emergency dispatch when discharged when paired with a companion app. The Bolt 2 is designed to immobilize attackers for up to 30 seconds. We anticipate that consumer will be a growing area of investment for us over the long term given our incredibly low penetration of this sizeable market. Our investments in personal safety devices fall alongside our other growth investments, including software. All of these investments are subject to the same financial discipline that allows us to deliver meaningful profitability while also growing the top line at 20% or higher.
Our geographical footprint continues to expand. Axon’s investments in CapEx include building out facilities around the world to better service our customers. In late 2021, we opened a new fulfillment center in Georgia, which aims to reduce shipping times to Europe by about 50% and allows us to reach many domestic customers more quickly, which is critical in peak season and in mitigation for poor weather. The Atlanta fulfillment center is one of five. Others include the facilities in or near Phoenix, the UK, Germany and Australia. In February 2022, we announced a new European R&D office. The London R&D hub is Axon’s fourth after Scottsdale, Ariz., Seattle, and Vietnam’s Ho Chi Minh City.
Two initiatives completed in Q4 2021 are highly strategic and value added.
Axon acquired Occam Video Solutions, a well-established provider of forensic video solutions software. Axon initially partnered with Occam in 2020 to license its technology. The purchase price was $26m, consisting of cash and stock. The Axon Evidence integration with Occam’s solution solves a key pain point for our customers. Video security, closed-circuit TV (CCTV) and publicly submitted video evidence can be burdensome for law enforcement agencies to manage. Many video security systems use unique video formats that can only be played back using third-party hardware or software. When agencies attempt to playback that video using other commercial software, the files often play incorrectly with frames being skipped entirely. Occam’s software solves this issue and supports most video file types.
Strategic investment in Dedrone, leader in drone detection and tracking: Axon invested $25m in Dedrone, a leader in drone security solutions to identify, track and mitigate Small Unmanned Aircraft Systems (sUAS). Dedrone has been delivering strong growth, and has surpassed 1,000 sensors sold, expanding to detect more than 200 drone types. Dedrone uses artificial intelligence and machine learning (AI/ML) to analyze and synthesize data from sensors to detect, identify and track drones. Its software also provides data analytics and drone mitigation. Axon’s investment in Dedrone is strategically significant to Axon’s long-term plans to leverage drones for public safety. Dedrone is selling into 33 countries, and customers include four G-7 nations, nine U.S. federal agencies, including the Department of Defense, and more than 65 critical infrastructure sites, 20 airports, 50 correctional facilities and 10 Fortune 500 companies. Dedrone’s product suite will integrate with Axon’s end-to-end drone solution, Axon Air, which we launched in 2018.
Summary of Q4 2021 results:
- Quarterly revenue of $218m declined 4% year over year, and exceeded our expectations. The negative growth rate reflects:
o A high year over year comparison was caused by a $20m TASER order received from a national government in Q4 2020.
o About $35m of revenue tied to demand for our TASER 7 platform shifted from Q4 2021 into 2022. This was due to industry-wide chip shortages, as we communicated in our Q3 2021 shareholder letter.
o About $15.5m of revenue tied to demand for Axon Body 3 cameras shifted from Q4 2021 into 2022 due to supply chain constraints.
- Total company gross margin of 62.1% was in line with our expectations.
- Operating expenses for the quarter of $162m included $40m in stock based compensation expenses.
o SG&A of $111m included $28m in stock-based compensation expenses.
o R&D of $51m included $12m in stock-based compensation expenses.
- Our quarterly net loss of $14m, or ($0.19) per share, included $41m in stock based compensation expenses, an $11m non-cash, unrealized, mark-to-market adjustment related to our strategic investment in Cellebrite and $9 m in payroll taxes tied to the vesting or exercising of our eXponential Stock Performance Plan (XSPP) and CEO Performance Award(2).
- Non-GAAP net income was $34m, or $0.46 per share.
- Adjusted EBITDA was $31m, adding up to full year Adjusted EBITDA of $178m, which exceeded our guidance.
o Of the $41m in total stock-based compensation expense in Q4 2021, $27m was related to our XSPP and CEO Performance Award.
- In Q4 2021, $14m was tied to acceleration of attainment dates, which means the time over which we record expense is shortened.
- Since the CEO Performance Award was adopted in 2018, we have expensed $230m of total potential expense of $246m under the plan. Since the XSPP plan was adopted in 2019, we have expensed $177m of total potential expense of $199m currently projected under the plan for XSPP grants issued to date.
- In 2021, our operating cash flow of $124m supported free cash flow generation of $74m.
o Excluding our campus investments, adjusted free cash flow more than quadrupled from $20m in 2020 to $85m in 2021. Principal uses of cash in 2021 included $40m of capital expenditures, primarily deployed toward manufacturing automation and global facilities expansion, and $43m of investment in working capital. We expect adjusted free cash flow generation to strengthen even further in 2022.
o Outside of adjusted free cash flow in 2021, other uses of cash included $68m from inorganic transactions, including the acquisitions of Occam and My90, and strategic investments in RapidSOS and Dedrone, a $90m strategic investment in Cellebrite, and $331m in tax payments related to vesting and exercises of net settled stock awards. We also invested $10m toward our new Scottsdale, Ariz. campus, which is described further in the Outlook section.
o Principal contributors to cash outside of adjusted free cash flow included $106m in net proceeds from our at-the-market offering, adopted in part to offset net settled stock award tax payments, $52m in proceeds from the exercise of stock options, and $14.5m in proceeds from our strategic investment in Flock Safety.
- As of 2021 year end, Axon had $402m in cash, equivalents and investments.
- Axon has zero debt. (Source: PR Newswire)
24 Feb 22. AE Industrial Partners Reaches a Definitive Agreement to Acquire a Significant Stake in Firefly Aerospace, a Leading Provider of Launch and In-Space Vehicles.
Definitive Agreement on Acquisition by U.S.-based Investment Firm will Fuel Firefly’s Continued Journey as a Leader in End-to-End Space Transportation
Industrial Partners, LP (“AEI”), a U.S-based private equity firm specializing in aerospace, defense & government services, space, power and utility services, and specialty industrial markets, announced today that it has reached a definitive agreement to acquire a significant stake in Firefly Aerospace (“Firefly” or “the Company”), an emerging leader in economical launch vehicles, spacecraft, and in-space services, from Noosphere Venture Partners LP (“Noosphere”). Transaction closing is subject to the satisfaction of regulatory approvals, including Hart-Scott-Rodino (“HSR”) clearance. Other terms of the transaction were not disclosed.
With the acquisition of Noosphere’s stake in Firefly, AEI will further expand its robust space investment portfolio, which includes investments in Redwire Space and Sierra Space. With the previous support and investment from Noosphere, the Company is now positioned for robust growth in the space transportation market. Firefly raised Series A financing in May of 2021 at a $1.1 billion valuation. Firefly performed its first launch of Alpha, its flagship launch vehicle, in September, and its second vehicle is awaiting necessary approvals ahead of its launch. Firefly has also recently completed the “critical design review” phase for its Blue Ghost Lunar Lander Program, bringing the Company one step closer to launching in late 2023.
Having recently achieved several major milestones, Firefly is at an inflection point and AEI’s acquisition will allow the Company to realize the significant opportunities ahead. AEI’s portfolio companies have a history of serving as strategic partners to the top national security agencies, including the Department of Defense. AEI believes that leveraging this experience will be a critical advantage as Firefly looks to secure additional U.S. Federal Government contracts.
Headquartered in Cedar Park, TX, Firefly is committed to providing economical and convenient access to space for small payloads through the design, manufacturing and operation of reliable launch vehicles. The Company leverages commercial off–the–shelf (“COTS”) components, manufactured by suppliers across the United States to reduce risk, maximize reliability and minimize development time, while addressing the market’s need for flexible access to space with a “simplest/soonest” approach to technology selection. Firefly is committed to restoring U.S. leadership in the small- to-medium launch market, while establishing international strategic partnerships to effectively serve the global market.
Covington & Burling LLP served as legal advisor and Ernst & Young served as financial advisor to AEI. DLA Piper LLP (US) and Kirkland & Ellis LLP served as legal advisors, and Jefferies LLC served as the exclusive financial advisor to Noosphere Venture Partners.
About Firefly Aerospace
Firefly is developing a family of launch and in-space vehicles and services that provide industry-leading affordability, convenience, and reliability. Firefly’s launch vehicles utilize common technologies, manufacturing infrastructure and launch capabilities, providing LEO launch solutions for up to ten metric tons of payload at the lowest cost per kg in the small-launch class. Combined with Firefly’s in-space vehicles, such as the Space Utility Vehicle and Blue Ghost Lunar Lander, Firefly provides the space industry with a single source for missions from LEO to the surface of the Moon or beyond. Firefly is headquartered in Cedar Park, TX. For more information please see: www.firefly.com.
About Noosphere Venture Partners LP
Noosphere Venture Partners LP, founded by Dr. Max Polyakov, is an international asset management firm with the strategic vision to transform high-potential companies into definitive market leaders. The company’s mission is to change the landscape of the digital economy and Noosphere invests in projects around the world that primarily are focused on space, consumer internet, advertising and marketing technologies. About Noosphere Venture Partners: www.noosphereventures.com.
About AE Industrial Partners
AE Industrial Partners is a private equity firm specializing in aerospace, defense & government services, space, power & utility services, and specialty industrial markets. AE Industrial Partners invests in market-leading companies that can benefit from our deep industry knowledge, operating experience, and relationships throughout our target markets. AE Industrial Partners is a signatory to the United Nations Principles for Responsible Investment and the ILPA Diversity in Action initiative. Learn more at www.aeroequity.com. (Source: PR Newswire)
25 Feb 22. Assac Networks announces US$7.5m investment by ASPIS Cyber Technologies. As well as using the funds to enhance its product offering, the relationship with ASPIS Cyber Technologies will enable Assac Networks to strengthen its sales channels, by leveraging the investor’s strong market positioning and access to ICARO’s telco clients. Assac Networks – a company specializing in cyber solutions for the complete protection of mobile devices from cyberattacks, for government agencies, defense and commercial organizations – today announced a new investment of US$7.5 million by ASPIS Cyber Technologies. The company will use the funding to enhance its product offering, while also leveraging ASPIS’s strong position in the international market to strengthen its own sales channels, in particular through the investor’s major client ICARO. Assac had previously received a seed-stage investment from Canadian-Israeli VC Awz Ventures.
Assac Networks’ flagship product, ShieldiT, is the only solution with a unified, managed anti-hacking and anti-tapping capability for Bring Your Own Device (BYOD) smartphones, which are the most vulnerable point in an organization’s IT network today. The company was recently awarded a government contract from one of the GCC countries.
“We are proud to enter this partnership with ASPIS Cyber Technologies, which opens up extensive opportunities for our company,” says Shimon Zigdon, founder and CEO of Assac Networks. “ICARO, a major consumer of ASPIS cyber services, has over 400 million subscribers worldwide, all of whom will now be able to use our unique comprehensive protection technology for their endpoint cell phones. We are confident the growth will come from the Telco vertical market. We thank ASPIS for their confidence in our solutions, as illustrated by this investment.”
“As a provider of cyber protection services to government-federal, corporate and cellular subscribers, we are delighted to incorporate Assac’s solution into our offering,” says Paul Feller, executive chairman of ASPIS Cyber Technologies. “It will now be available to all our customers, including American company ICARO, whose customers include TIM Mobile, Oi, AT&T, América Móvil , Vodafone and more. With 87% of cyber hacks now happening through employees’ cell phones, it was important for us to invest in a company that has a complete and proven solution. We are confident that this investment will bear fruit for everyone involved.”
About Assac Networks
Established in 2011 by seasoned veterans of the Israeli defense and security industries, Assac Networks develops and implements unique end-point security solutions. The company is particularly focused on the development, integration, and marketing of network forensic and security products and solutions in the fields of mobile and landline communication – as well as cyber protection systems for ISPs and mobile carriers, government agencies and commercial organizations. Assac’s flagship product, ShieldiT, integrates two proven smartphone security solutions originally designed to meet the strict, high-level security requirements of the security and defense market, which the company has adapted for the consumer and corporate user. The company’s clients include law enforcement and intelligence agencies, and large enterprises around the world. For more information, please visit www.assacnetworks.com
About ASPIS Cyber Technologies
ASPIS Cyber Technologies provides cyber intelligent protection, global security and end-point solutions that protect consumers, businesses and governments against theft, terrorism and crime. Leveraging AI to combat the world’s greatest security challenges, the company provides continuous innovation that leverages the latest breakthroughs in cyber protection, delivering an ecosystem of technology to protect organizations, municipalities, military and governments across clouds, networks, and mobile devices. ASPIS is headquartered in New York, with international offices located in Tel Aviv, Miami, and Los Angeles.
ICARO empowers global telecoms, media companies and broadcast television networks, with turnkey white-label technology that empowers its partners to better monetize their subscribers through personalized, state-of-the-art, AI-driven technology. Creating personalized content offerings and digital experiences for its customers, ICARO has over 400 million subscribers under contract in LATAM, North America, Europe, and the Middle East, and partners with TIM Mobile, Oi, AT&T, América Móvil, Vodafone, AZTECA TV, Record News, COMCAST, RCN and Multi Medios. ICARO is headquartered in New York, with international offices located in New York, Los Angeles, São Paulo, Mexico City, Toronto, Boca Raton and London. For more information, please visit www.icaromediagroup.com.
24 Feb 22. Oceaneering Reports Fourth Quarter and Full Year 2021 Results. Oceaneering International, Inc. (“Oceaneering”) (NYSE:OII) today reported a net loss of $38.8m, or $(0.39) per share, on revenue of $467m for the three months ended December 31, 2021. Adjusted net income was $5.0m, or $0.05 per share, reflecting the impact of $30.6m of pre-tax adjustments associated with the write-off of certain uncollectible accounts and foreign exchange losses recognized during the quarter and $19.6m of discrete tax adjustments, primarily due to changes in valuation allowances.
During the prior quarter ended September 30, 2021, Oceaneering reported net loss of $7.4m, or $(0.07) per share, on revenue of $467m. Adjusted net loss was $1.4m, or $(0.01) per share, reflecting the impact of $0.3m of pre-tax adjustments associated with foreign exchange losses recognized during the quarter and $5.8m of discrete tax adjustments, primarily due to changes in valuation allowances.
Adjusted operating income (loss), operating margins, net income (loss) and earnings (loss) per share, EBITDA and adjusted EBITDA (as well as EBITDA and adjusted EBITDA margins), and free cash flow are non-GAAP measures that exclude the impacts of certain identified items. Reconciliations to the corresponding GAAP measures are shown in the tables Adjusted Net Income (Loss) and Diluted Earnings (Loss) per Share (EPS), EBITDA and Adjusted EBITDA and Margins, Free Cash Flow, 2022 Adjusted EBITDA and Free Cash Flow Estimates, Adjusted Operating Income (Loss) and Margins by Segment, and EBITDA and Adjusted EBITDA and Margins by Segment. These tables are included below under the caption Reconciliations of Non-GAAP to GAAP Financial Information.
For the fourth quarter of 2021:
- Cash flow generated from operations was $140m yielding free cash flow of $126m
- Consolidated Adjusted EBITDA was $46.7m
- Consolidated Adjusted Operating Income was $17.0m
- Cash position increased by $90.4m, from $44m to $538m
- Repurchased $37.0m of our 2024 senior notes through open-market transactions
As of December 31, 2021:
- Remotely Operated Vehicles (ROV): fleet count was 250; Q4 utilization was 55%; and Q4 average revenue per day on hire was $8,162
- Manufactured Products backlog was $318m
Guidance for 2022:
- Consolidated EBITDA of $225m to $275m
- Continued significant free cash flow generation in the range of $75m to $125m
- Increased growth capital expenditures as compared to 2021
Roderick A. Larson, President and Chief Executive Officer of Oceaneering, stated, “I am pleased with our achievements in 2021 as our $211m of adjusted EBITDA achieved the top end of the adjusted EBITDA guidance range provided at the beginning of the year and exceeded the guidance mid-point by 14%. Except for Manufactured Products, which is tied to longer-cycle market drivers, all of our operating segments delivered improved sequential annual operating results in 2021. We delivered robust free cash flow in 2021, which supported our ability to repurchase $100m of our 2024 senior notes and increased our cash position by $86 m during the year to $538 m on December 31, 2021. I am encouraged by the supportive market fundamentals that emerged in 2021 and expect this to drive increased activity across all our segments in 2022.
“Turning to fourth quarter 2021 results, we produced consolidated adjusted EBITDA of $46.7m, within the guidance range provided at the beginning of the quarter. In addition to typical seasonality, the quarterly operating results, and associated EBITDA, were also impacted by a material increase in medical and information technology costs recognized during the quarter and additional incentive compensation accruals tied to our strong free cash flow and annual results. Consolidated revenue of $467m was flat with the third quarter, as a substantial revenue increase in Manufactured Products offset lower revenue in each of our other segments. Cash generated by operations of $140 m led to strong free cash flow of $126m.
“We made the decision during the fourth quarter to terminate a number of entertainment ride systems contracts with the financially embattled developer, China Evergrande Group and its affiliated companies (Evergrande). As a result, we recorded a net loss of $30 m in connection with these Evergrande contracts in our fourth quarter financial results. In conjunction with this termination, we reclassified $20 m of contract assets into salable inventory.
“Our fourth quarter 2021 Subsea Robotics (SSR) operating income improved sequentially, despite lower revenue. The performance was led by improved pricing in our ROV and tooling businesses. SSR EBITDA margin of 31% during the fourth quarter improved as compared to the 29% achieved during the third quarter of 2021 and was consistent with the average margin achieved during the first nine months of 2021.
“Fourth quarter 2021 ROV days on hire declined 12% as compared to the third quarter 2021 due primarily to typical lower seasonal vessel activity. Fleet utilization declined to 55% in the fourth quarter of 2021 from 63% in the third quarter of 2021. Our fleet use during the quarter was 62% in drill support and 38% in vessel-based services, compared to 57% and 43%, respectively, during the third quarter. Fourth quarter 2021 average ROV revenue per day on hire of $8,162 was 4% higher than in the third quarter of 2021.
“Manufactured Products fourth quarter 2021 revenue of $103m was 37% higher than in the third quarter of 2021. Adjusted operating income and adjusted operating income margin of 9% were substantially higher sequentially, primarily due to better absorption of fixed costs and favorable project mix. Our Manufactured Products backlog on December 31, 2021 was $318m, compared to our September 30, 2021 backlog of $334m. The backlog decline in the fourth quarter of 2021 reflects a $38m reduction associated with the Evergrande contract terminations. Our book-to-bill ratio was 1.1 for the full year of 2021, as compared with the trailing 12-month book-to-bill of 1.0 on September 30, 2021.
“Sequentially, our fourth quarter 2021 Offshore Projects Group (OPG) operating income decreased on lower revenue. Revenue declined 11% due to seasonality in the Gulf of Mexico (GoM) and the third quarter completion of the Angola riserless light well intervention project. Fourth quarter 2021 operating income margin of 8% remained consistent with the third quarter of 2021 as improved margins from intervention, maintenance and repair (IMR) activity positively offset the fixed cost margin effects of lower revenue.
“Integrity Management and Digital Solutions (IMDS) fourth quarter 2021 operating income increased sequentially on slightly lower revenue. Operating income margin improved to 10% in the fourth quarter of 2021 from 9% in the third quarter of 2021, as the business continued to benefit from operational improvements implemented since the beginning of 2020.
“Aerospace and Defense Technologies (ADTech) fourth quarter 2021 operating income declined from the third quarter of 2021, on a 6% decrease in revenue. Operating income margin declined, as expected, to 13%, due to changes in project mix. At the corporate level, fourth quarter 2021 Unallocated Expenses of $36.7m were higher than the third quarter of 2021 due to a combination of increased accruals for incentive-based compensation, higher than expected health care costs, and increased information technology costs.
Full Year Results:
“For the year, consolidated adjusted operating income improved on a slight revenue increase as compared to 2020. Adjusted operating income in our energy segments improved and operating income margin improved by 376 basis points over 2020 results, to 9%. The improved results were a result of a shift in the mix of revenue and a continued focus on operational excellence programs. Our ADTech segment continued to be a steady performer, delivering another record year of operating income and margins consistent with 2020.
“Compared to 2020, our 2021 consolidated revenue increased 2% to $1.9bn, with revenue increases in our SSR, OPG, IMDS, and ADTech segments being partially offset by a decline in our Manufactured Products revenue. Consolidated 2021 adjusted operating income and adjusted EBITDA improved, led by our OPG and SSR segments. In 2021, each of our operating segments contributed positive adjusted operating income and positive adjusted EBITDA. We generated $225m in cash flow from operations and invested $50.2m in capital expenditures. Significant free cash flow of $175m allowed us to repurchase $100m of our 2024 senior notes while increasing our cash balance by $86m to $538m.
“As a result of first quarter seasonality in our energy businesses, uncertainties regarding US Government appropriations due to the continuing resolution, and anticipated expenses needed to prepare for higher activity in 2022, we expect our first quarter 2022 financial results to be significantly lower as compared to the fourth quarter of 2021. However, based on year-end 2021 backlog, projected start dates of new contracts, anticipated 2022 order intake, and supportive market fundamentals, we project a greater than commensurate ramp-up in second quarter activity and financial results which are expected to be sustained throughout the remainder of the year. We are projecting our 2022 consolidated revenue to grow more than 10%, with increased revenue in each of our operating segments, led by Manufactured Products. We expect sequential improvement in our 2022 financial results based on our expectation for higher operating income and higher margins in each of our energy segments, led by SSR and OPG, and higher operating income and stable margins in our ADTech segment. For the year, we anticipate generating $225m to $275m of EBITDA, with increased contributions from each of our segments. At the midpoint of this range, our EBITDA for 2022 would represent an 18% increase over 2021 adjusted EBITDA. We anticipate our full year 2022 to yield positive free cash flow of $75m to $125m. These expectations assume the continuing trend of supportive commodity prices and no significant incremental COVID-19 impacts.
“For SSR, our expectation for improved results is based on increased ROV days on hire, minor shifts in geographic mix, and stable to improving pricing. Results for tooling-based services are expected to improve, with activity levels generally following ROV days on hire. Survey results are projected to improve on higher survey and positioning activity. We expect revenue growth in the high-single-digit range and EBITDA margins to average in the low 30% range for the full year.
“We expect Manufactured Products segment performance to improve on a significant increase in revenue, primarily as a result of increased order intake in our energy businesses during 2021. We are seeing increasing interest in our mobility solutions businesses, and currently expect to see marginally higher activity from these businesses in 2022 and see an opportunity to build backlog for a more meaningful contribution in 2023. We forecast our operating income margins to be in the mid-single-digit range for the year.
“OPG operating results are expected to improve in 2022, on a marginal increase in revenue. This expectation is based on better anticipated pricing, improved vessel utilization, and increased diving activities more than offsetting lower revenue from riserless light well intervention activities. Overall, for 2022, we expect operating income margins to average in the high-single- to low-double-digit range.
“IMDS results are forecast to improve on higher revenue, continuing the trend seen over the last several years. We believe customers continue to see value in our service offerings and see good global opportunities for renewals and business expansion, particularly in the UK and West Africa. Operating income margin is expected to remain in the high-single-digit range for the year.
“Our 2022 ADTech revenue is expected to be higher, producing improved operating results. We anticipate growth in all three of our government-focused businesses. Operating income margins are expected to average in the mid-teens range for the year.
“For 2022, we anticipate Unallocated Expenses to average in the mid-$30m range per quarter.
“Interest expense, net of interest income, is expected to be approximately $38m, and we expect our 2022 cash tax payments to be in the range of $40m to $45m.
First Quarter 2022 Guidance:
“Sequentially, as previously noted, we forecast our first quarter 2022 EBITDA to be significantly lower on lower revenue. As compared to the fourth quarter of 2021, we anticipate lower revenue and operating results in our energy segments, and relatively flat revenue and lower operating results in our ADTech segment. In the first quarter of 2022, we anticipate incurring higher costs for hiring and training of personnel, mobilization of equipment, and inflation as we prepare for a significant increase in activity forecast for the remainder of 2022.
Growth and Capital Discipline:
“Our ability to generate substantial free cash flow over the last several years has allowed us to de-risk the pending maturity of our 2024 senior notes. Our focus has turned to growth, where we will continue to develop and deliver technologies to help our customers produce hydrocarbons in a cleaner, safer manner while increasing our investments into new markets including energy transition, digital asset management, aerospace and defense solutions, and mobility solutions. We forecast our capital expenditures will total between $70 m to $90 m in 2022. We anticipate commodity prices to support growth and free cash generation in our traditional businesses during 2022 to underpin these investments.” (Source: BUSINESS WIRE)
24 Feb 22. Kaman Reports 2021 Results.
Full Year 2021 Highlights:
- Achieved our earnings targets by leveraging our new operations excellence model
- Net sales: $709m
- Gross margin: 33.4%
- Earnings from continuing operations: $43.7m
- Adjusted EBITDA*: $95.5 m; Adjusted EBITDA margin*: 13.5%
- Diluted earnings per share from continuing operations: $1.57 per share, $1.93 per share adjusted*
- Cash flow from operating activities: $48.7m
- Adjusted free cash flow*: $56.3m
Fourth Quarter 2021 Highlights:
- Net sales: $175.1m
- Earnings from continuing operations: $9.2m
- Adjusted EBITDA: $23.6m; Adjusted EBITDA margin: 13.5%
- Diluted earnings per share from continuing operations: $0.33 per share, $0.48 per share adjusted
- Cash flow from operating activities: $34.6m
- Adjusted free cash flow of $28.4m
Kaman Corp. (NYSE:KAMN) today reported financial results for the fourth fiscal quarter and full year ended December 31, 2021.
“Kaman made significant progress in 2021 through the deployment of our new operations excellence model, which provides a sustainable foundation to achieve our financial targets. For the year, we achieved the targets for our adjusted metrics of EBITDA, EBITDA margin and earnings per share and delivered significantly more free cash flow. Gross margin increased more than 200 basis points to 33.4% driven by improved performance in several of our businesses, primarily in our seals, springs and contacts products. Additionally, our focus on reducing costs is providing long term benefits as evidenced by a decline in SG&A expenses,” said Ian K. Walsh, Chairman, President and Chief Executive Officer.
“Beginning this quarter, we reported our results under a new segment structure. This reinforces Kaman’s commitment to provide transparency of performance in support of our growth strategy and portfolio management. The three segments are Engineered Products, Precision Products and Structures. The new reporting segments align well with our product capabilities and our recently launched brand structure.”
“During the fourth quarter we saw sequential improvement in sales to Boeing and Airbus, making it the second straight quarter of increased volumes. While we saw improved sales in the commercial, business and general aviation markets, results for the company declined, impacted by lower JPF sales in our Precision Products segment and lower demand for medical and industrial products in our Engineered Products segment. Demand in the medical and industrial markets declined slightly compared to the third quarter 2021, however, they remain elevated compared to 2020. Additionally, we continued to see strong cash generation in the fourth quarter leading to an Adjusted free cash flow of $28.4m.”
“We are committed to growing our business through innovation and have reached a number of milestones in 2021. In the first quarter, we began production of highly engineered products utilizing our proprietary Titanium Diffusion Hardening process. In the third quarter we unveiled our KARGO UAV unmanned aerial system, a purpose built autonomous medium lift logistics vehicle. In October 2021, we successfully completed the demonstration of two flight tests of FireBurstTM enhanced fuzing capability, a Kaman patented height of burst solution. These accomplishments support our strategic priority of achieving top quartile performance in the markets we serve,” said Walsh.
“Demand for Kaman’s products should improve as end markets recover from the impact of the pandemic. The progress for Kaman will follow the acceleration of orders in the commercial, business and general aviation markets. In the latter part of 2022, we expect to see growth in our Engineered Products segment combined with improvement in our Structures segment resulting from our operations excellence efforts and a focus on adding new more profitable businesses. In our Precision Products segment, we will continue to manage prospective JPF direct commercial sales orders, which can be difficult to predict. For 2022 we expect the improvements in our other segments to mostly offset the decreased volumes for this program.
“We continue to see meaningful order increases across the commercial aerospace, defense as well as medical and industrial end markets, led by especially strong order intake for our bearings, springs, seals and contacts products. In addition, we entered into a follow-on multi-year contract with Sikorsky in December 2021 to continue the manufacture of the UH-60 Black Hawk cockpits. The strength in order activity gives us confidence that the backlog level we saw at the end of 2021 can be maintained, ” Walsh said.
See Table 5 of this release for a full outlook summary for 2022.
KAMAN BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT
Kaman manages its portfolio through three segments: (1) Engineered Products; (2) Precision Products; and (3) Structures.
Engineered Products – Our Engineered Products segment serves the aerospace and defense, industrial and medical markets providing sophisticated, proprietary aircraft bearings and components; super precision, miniature ball bearings; and proprietary spring energized seals, springs and contacts.
Three months ended December 31, 2021 versus three months ended October 1, 2021 – Adjusted EBITDA decreased $2.8m and margin decreased 2.7 percentage points versus the third quarter of 2021. Compared to the prior period, volume declined modestly for products serving the medical end market.
Three months ended December 31, 2021 versus three months ended December 31, 2020 – Adjusted EBITDA increased $2.2m and margin increased 2.0 percentage points versus the fourth quarter of 2020. Results improved compared to the prior period driven by higher sales and gross margin for products serving the medical end market and lower salary and wage expense at certain foreign locations partially offset by lower gross profit on our defense bearings.
Full year ended December 31, 2021 versus full year ended December 31, 2020 – Adjusted EBITDA increased $4.0m and margin increased 1.1 percentage points versus 2020. Compared to the prior period, sales and gross profit increased on seals, springs and contacts for medical implantables, medical devices and analytical instruments. This was partially offset by lower sales volume of commercial bearing products driven by impacts of COVID-19 on the commercial aerospace end market.
Precision Products – Our Precision Products segment serves the aerospace and defense markets providing precision safe and arming solutions for missile and bomb systems for the U.S. and allied militaries; subcontract helicopter work; restoration, modification and support of our SH-2G Super Seasprite maritime helicopters; manufacture and support of our heavy lift K-MAX® manned helicopter, the K-MAX TITAN unmanned aerial system and the KARGO UAV unmanned aerial system, a purpose built autonomous medium lift logistics vehicle. (Source: BUSINESS WIRE)
24 Feb 22. Serco shrugs off subsiding pandemic contracts.
The outsourcing giant announced £90mn of share buybacks
- Pandemic-related work increased as share of profits in 2021
- Strong pipeline and £600mn of contract wins already since the start of 2022
Serco (SRP) managed to deliver consensus-beating sales despite 2021 being the “toughest operational environment” that chief executive Rupert Soames had ever seen, thanks to pandemic-induced labour shortages.
The outsourcing company’s surprise stemmed from its expectation that Covid-related government contracts, such as Test and Trace, would have wound down earlier in the year.
Instead, pandemic work drove a higher proportion of profits than in 2020, and contributed 15 per cent of total revenues in the year to 31 December. While some of these contracts such as Serco’s work housing UK asylum seekers will take some time to fall back to pre-pandemic levels, they can’t last forever. The outsourcer expects that £60mn of this year’s underlying profits will not recur in 2022, with revenues to fall by 6 per cent to £4.2bn.
Offsetting this is Serco’s £9.9bn pipeline of new business at the end of 2021, up 50 per cent year on year. A number of contract wins totalling £600mn have also already been announced since the start of 2022, including management of HMP Glen Parva prison, and a contested deal to upgrade missile defence systems for the US Navy.
Broker Numis praised the outsourcing company’s “solid growth prospects”, noting that free cash flows rose by 40 per cent to £190mn, providing good headroom for further acquisitions. Serco went on an international shopping spree in 2021, with three acquisitions in Australia, US, and Belgium. Even before acquisitions, the company plans to grow margins to between 5-6 per cent could support more than 70 per cent profit growth over five years from FY22, said the broker.
In the meantime, a new £90mn round of share buybacks should lend support to the shares and help to allay post-pandemic doubts. Buy.
Last IC View: Buy, 140p, 5 Aug 2021. (Source: Investors Chronicle)
24 Feb 22. BAE Systems forecasts more growth after 2021 earnings rise 13%. British defence company BAE Systems (BAES.L) on Thursday forecast another year of sales growth and margin expansion in 2022 after reporting a 13% increase in 2021 core earnings. The builder of combat ships, submarines and fighter jets said 2021 underlying earnings before interest and tax (EBIT) increased to 2.2bin pounds ($2.97bn) on sales up 5% to 21.3bn pounds. For 2022 BAE, whose main customers are the United States, Britain and Saudi Arabia, forecast sales growth of 2% to 4%, with core earnings up 4% to 6%. (Source: Reuters)
24 Feb 22. BAE SYSTEMS Announces 2021 Full Year Results. Charles Woodburn, Chief Executive, said: “Our strong results reflect the outstanding efforts of our employees who have continued to adapt and work closely with our customers, suppliers and trades unions to deliver capabilities which keep nations and citizens safe.
“We are continuing to evolve our business, increasing our investments in advanced technologies to deliver differentiated solutions to meet our customers’ priorities.
“Our diverse portfolio, together with our focus on programme execution, cash generation and efficiencies, is helping us to navigate the challenging operating environment, meaning we are well positioned for sustained top line and margin growth in the coming years.”
Results in brief
Our financial highlights
Financial performance measures as defined by the Group1
- Sales increased by £0.4bn to £21.3bn, a 5% increase, excluding the impact of currency translation7.
- Underlying EBIT3 increased to £2,205m, a 13% increase on a constant currency basis7.
- Underlying earnings per share3 increased by 12% on a constant currency basis7 to 47.8p, excluding the impact of the current year one‑off tax benefit4.
- Free cash flow3 was £1,864m (2020 inflow of £1,367bn, excluding the £1bn contribution into the UK pension scheme).
- Net debt (excluding lease liabilities) decreased to £2,160m (2020 £2,718m).
- Order intake5 increased by £0.6bn to £21.5bn (2020 £20.9bn).
- Order backlog5 decreased by £1.2bn to £44.0bn (2020 £45.2bn).
Financial performance measures derived from IFRS2
- Revenue increased by £0.2bn to £19.5bn.
- Operating profit increased by £459m to £2,389m (2020 £1,930m).
- Basic earnings per share was 55.2p (2020 40.7p).
- Net cash flow from operating activities was £2,447m (2020 £1,166m, including the effect of the £1bn contribution to the UK pension scheme).
- Order book decreased by £0.8bn to £35.5bn.
- Group’s share of the pre-tax accounting net post-employment benefits deficit decreased to £2.1bn, driven by higher discount rates and strong asset performance (2020 deficit of £4.5bn).
Dividends and share buyback
- Final dividend of 15.2p per share making a total of 25.1p per share in respect of the year ending 31 December 2021, an increase of 6% over dividends in respect of the year ended 31 December 2020 of 23.7p per share. The total of 37.5p per share for 2020 includes an interim dividend of 13.8p per share in respect of the year ended 31 December 2019, which was originally proposed as a 2019 final dividend but subsequently deferred in the light of the COVID-19 pandemic.
- The £500m share buyback programme announced on 29 July 2021 was completed in February 2022.
- We monitor the underlying financial performance of the Group using alternative performance measures. These measures are not defined in International Financial Reporting Standards (IFRS) and therefore are considered to be non-GAAP (Generally Accepted Accounting Principles) measures. Accordingly, the relevant IFRS measures are also presented where appropriate. The purposes and definitions of non-GAAP measures are provided in the Financial glossary on page 12.
- International Financial Reporting Standards.
- With effect from 2021, the Group adopted the underlying EBIT profitability measure, to include charges relating to software and development intangible amortisation, in place of the underlying EBITA measure. It reflects a better measure of underlying profitability, by including amortisation of software and development intangibles as these charges are viewed as a recurring operational cost for the business. Underlying earnings per share has also been recalculated to ensure consistency with the updated operational profitability measure. The underlying performance for 2020 of segments and the Group has been re-presented on this new basis. During 2020 the Group determined that Free cash flow was its key performance measure for utilisation of cash at a Group level. The Group continues to use Operating business cash flow as its key segment metric, to monitor operational cash generation.
- A one-off tax benefit of £94m was recognised in the year, in respect of agreements reached regarding the exposure arising from the April 2019 European Commission decision regarding the UK’s Controlled Foreign Company regime.
- Including share of equity accounted investments.
- The 2020 dividend per share of 23.7p is in respect of the year ended 31 December 2020. An interim dividend of 13.8p per share was paid in 2020, in respect of the year ended 31 December 2019, having been proposed as a 2019 final dividend but deferred in light of the pandemic.
- Current year compared with prior year translated at current year exchange rates.
Operational and strategic key points
- Cumulatively more than 1,000 electronic warfare systems delivered on F-35 programme
- Limited Interim Missile Warning System indefinite delivery, indefinite quantity sustainment and support contract awarded worth $872m (£644m) over ten years
- EPAWSS testing underway on F-15E and F-15EX aircraft
- Contract received from Defense Logistics Agency valued at more than $640m (£473m) to deliver Increment 1 M-Code devices
- Rising demand for low and zero emission vehicles in our Power & Propulsion Solutions business
- Demand in our Controls & Avionics Solutions commercial markets starting to recover from pandemic impacts
Platforms & Services (US)
- Selected to participate in the design concept phase for the US Army’s Optionally Manned Fighting Vehicle programme
- Consistent deliveries of the M109A7 Self-Propelled Howitzer enabled the programme to surpass 350 cumulative system deliveries
- Received a $600m (£443m) sustainment and technical support services contract for Armored Multi-Purpose Vehicle, and AMPV deliveries continued against the rebaselined customer schedule
- Amphibious Combat Vehicle deliveries against LRIP and design development have begun on mission variants
- Contract received worth approximately $200m (£148m) from Sweden for 127 BvS10s
- Contract received exceeding $500m (£369m) for mid-life upgrades of Dutch CV90s
- US Ship Repair was significantly impacted by the pandemic, but has seen some recent signs of recovery
- Ordnance Systems awarded additional contracts for modernisation projects at Holston
- Qatar Typhoon and Hawk programme is progressing well, with first Qatar Typhoon flight achieved in November and deliveries on schedule to commence in 2022
- F-35 rear fuselage production reached full rate levels, with 151 assemblies completed in the year
- Production progressing to plan on the German Typhoon programme
- Initial entry into service of the future electronically scanned European Common Radar Solution was achieved in December
- Tempest next-generation Future Combat Air System programme continues to progress well, with initial Concept & Assessment Phase contract secured
- Air sector continues to work closely with industry partners and the UK government to continue to fulfil contractual support arrangements in Saudi Arabia
- Australia Hunter Class Frigate programme continues through prototyping, with good engagement with the Commonwealth to agree revised schedule for production to commence
- MBDA won several export orders on air platforms
- Construction of first three City Class Type 26 frigates for the Royal Navy is now underway
- Canadian Surface Combatant programme entered a key design milestone in December, ahead of moving into the next Functional Design phase
- Fifth Astute Class submarine, Anson, launched in April, with final installation and commissioning activities continuing to ready her for scheduled exit in 2022
- Construction of the first two Dreadnought Class submarines continues to advance
- Contract awarded and early design and concept work underway on Royal Navy’s next generation of submarines
- Contracts worth more than £1bn received under UK Ministry of Defence’s Future Maritime Support Programme
- Maritime Services provided preparation and support capabilities to the UK’s Carrier Strike Group ahead of, and during, its first operational deployment
- RBSL secured the Challenger 3 Main Battle Tank upgrade contract
Cyber & Intelligence
Intelligence & Security
- US-based Intelligence & Security business continues to maintain its bid pipeline, perform on existing contracts and win new orders
- Awarded a five-year, up to $478m (£353m) Systems Engineering and Integration Support Services contract from the US Navy Strategic Systems Programs office
- Awarded classified contracts from Department of Defense and Intelligence Community customers in excess of $0.8bn (£0.6bn) to deliver mission-enabling engineering services
- Agreement announced for the proposed acquisition of Bohemia Interactive Simulations, a global software developer of simulation and training solutions for allied military customers
- Strong order intake and revenue growth driven by the government- and defence-facing business units
- Increasing profitability, supported by strong programme execution, productivity and cost base optimisation. Financial Services’ profitability benefited from restructuring in 2020
- Acquisition of In-Space Missions, a UK-based satellite and satellite systems company, to accelerate our Space capabilities
Guidance for 2022
While the Group is subject to geopolitical and other uncertainties, the following guidance is provided on current expected operational performance.
The guidance is based on the measures used to monitor the underlying financial performance of the Group. Reconciliations from these measures to the financial performance measures defined in International Financial Reporting Standards for 2021 are provided in the Group financial review on pages 12 to 20.
With a strong year behind us, we look forward to continued top-line growth with margin expansion and good cash delivery against our rolling targets. Guidance is provided on the basis of an exchange rate of $1.38:£1, which is in line with the actual 2021 exchange rate, therefore guidance is the same for both reported and constant exchange rates.
For the year ending 31 December 2022, the Group’s sales are expected to grow in the 2% to 4% range over 2021. Sales growth is expected in the Electronic Systems, Air, Maritime and Cyber & Intelligence segments, whilst Platforms & Services (US) is expected to be stable. Approximately 75% of the expected sales are already in the order backlog.
Underlying EBIT is expected to increase in the range of 4% to 6%.
Finance costs are expected to be approximately £240m, with an effective tax rate expected to be around 20%, and non-controlling interest expected to be around £70m.
Underlying earnings per share is expected to increase in the range of 4% to 6%. Sensitivity to EPS is around one pence for every five cent movement.
Free cash flow for 2022 is anticipated to be in excess of £1bn, with a three-year target for 2022 to 2024 in excess of £4bn. The three-year cash flow target for the period 2020 to 2022, originally set at £3.5bn to £3.8bn, has been upgraded to be in excess of £4bn.
Richard Sloss, Director of Edison, comments: “BAE Systems’ preliminary results highlight a very strong performance, partially reflecting supportive defence trends. The Group delivered impressive financial results, broadly in line with expectations, with sales increasing by 5% to £21.3bn and underlying EBIT rising by 13% to £2,205m. The company also reported an increase in the full year dividend of 6% to 25.1p and completed its £500m buyback this month.
This result was driven by strong operational performance, despite the ongoing effects of the pandemic. Electronic Systems delivered another year of growth with sales rising by 5% and within that business, Controls & Avionics Solutions and Power & Propulsion Solutions began to demonstrate signs of recovery. In Platforms & Services (US), vehicle delivery volumes rose by more than 60% as investment in new production capabilities enabled combat vehicle deliveries to continue at increased volumes. The Air sector and Maritime both demonstrated improving performance. Equally, Cyber and Intelligence delivered an increase in margin and Applied Intelligence saw improved profitability due to heightened demand within the Government sector.
The Group continues to drive value through a refocusing of its portfolio with several disposals completed during the period and two new acquisitions. The Group has also announced its agreement to acquire Bohemia Interactive Simulations as it targets the development of military simulation and training software. The Group intends to continue driving growth in the year ahead, with plans to increase self-funded research and development and also hopes to identify collaboration opportunities. This will allow the Group to target growth areas which are aligned to customer priorities.
During a period when ESG has become increasingly important, the Group has continued to make strides in improving its ESG agenda. This is reflected in the Group’s improved CDP score and maintenance of its AA leader class rating with MSCI.
Following the BAE’s strong performance in 2021, it continues to target further improvement with guidance for the year ahead expecting sales to grow by a further 2-4%. Underlying EBIT is also expected to rise by 4-6% with underlying earnings per share expected to increase by 4-6%. Despite ongoing economic uncertainty caused by the pandemic, wider supportive defence trends and the Group’s attractive market positions leave it well placed to drive further growth in the year ahead.”
24 Feb 22. BAE well placed in an insecure world.
NATO orders could multiply
- Worsening global geopolitical situation
- Marked increase in Maritime order intake
On the day that BAE Systems (BAE) revealed an 8 per cent rise in underlying trading profits to £2.2mn, Russia unleashed its military forces on neighbouring Ukraine. It may seem slightly distasteful, but western defence contractors will be weighing up the chances of a significant step-up in military spending by NATO members.
However, the FTSE 100 constituent’s full-year figures suggest that geopolitical tensions are not confined to eastern Europe. China may well feel emboldened to take decisive action in relation to Taiwan, while further increasing its influence in the Asia Pacific region. BAE, as the largest defence provider in Australia, is set to benefit from the strategically important AUKUS announcement made in September 2021. Australia’s Hunter Class Frigate programme is underway and the group’s engineering teams have been tasked with providing software and hardware upgrades to the Australian Mk 127 Hawk aircraft trainer fleet following a A$1.5bn (£796m) commitment by the Australian government.
BAE’s air segment delivered 42 per cent of group revenues, while generating a 10.3 per cent return on sales, driven by increased F-35 and Typhoon support activity, along with rising MBDA volumes.
The MBDA joint venture, in which BAE holds a 37.5 per cent stake, is expanding its capabilities following the award of a £550m contract by the Ministry of Defence to develop an air-to-ground strike weapon for the UK F-35 combat aircraft. The group is also moving ahead with the Tempest next-generation Future Combat Air System programme, though the front-loaded investment requirement weighed on margins.
The maritime business witnessed a marked increase in order intake, up by 15 per cent to £4.3bn, and delivered an 8.4 per cent return on sales. Design and concept work is underway on the Royal Navy’s next generation of submarines, while construction has begun on the first three City Class Type 26 frigates.
Logic dictates that the situation in Ukraine could intensify government focus on protecting key infrastructure assets. BAE’s Cyber & Intelligence business has already seen strengthening order intake in the applied intelligence space, including a Systems Engineering contract from the US Navy worth around £350m.
Finances look sound. On an IFRS basis, net operating cashflow of £2.45bn is in line with profits and the group’s share of net post-employment benefits deficit more than halved to £2.1bn. Shares are trading in line with consensus at 13 times forecast earnings, and though it’s a ‘slow burn’ stock – steady growth rather than accelerated – the worsening global geopolitical situation should underpin defence budgets. Buy. Last IC view: Buy, 561p, 29 Jul 2021. (Source: Investors Chronicle)
24 Feb 22. Rolls-Royce sees return to positive cash flow, CEO to step down. British aero engineer Rolls-Royce (RR.L) expects to return to positive cash flow in 2022, which it said would be the final year with Warren East at the helm, after it reported a better-than-expected reduction in its cash burn in 2021.
“We expect to generate modestly positive free cash flow in 2022, seasonally weighted towards second half of year,” the company said on Thursday.
East, who will step down at the end of 2022 after almost eight years, has had to navigate the engine maker through the COVID-19 pandemic, which wiped out a chunk of its revenue linked to engine flying hours.
He said the company had improved its financial and operational performance in 2021 and was now a better balanced business.
“We have achieved the benefits of our restructuring programme a year ahead of schedule, positioning Civil Aerospace to capitalise on increasing international travel,” he said.
Rolls reported a free cash outflow of 1.44bn pounds, beating market expectations and significantly ahead of the outflow of 4.18bn pounds in 2020. (Source: Reuters)
24 Feb 22. Rolls-Royce stymied by further aviation disruption. Cash outflow of £1.5bn leads to net debt reaching £5.1bn. Years of disappointment for Rolls-Royce (RR.) investors looked as if they may have been coming to an end in the back half of last year. The company, which has lost money for five of the past six years, had made progress with its restructuring, slashing overheads and kicking off the first round of asset disposals aimed at bringing in £2bn to shore up its balance sheet. Its consortium that plans to build small modular nuclear reactors also made decent headway, raising millions from the UK government and partners. Yet just as the iconic maker of jet engines seems poised to build momentum, external matters conspired to delay the anticipated revival of air travel – a major setback for Rolls-Royce as a major chunk of its revenue is tied to how many hours its engines stay in the air. First it was the emergence of Omicron. Then, on the day it announced a net profit (after a £418mn tax gain) of £124mn, compared to a prior-year loss of £3.1bn, Russia’s invasion of Ukraine threw aviation-related shares into a tailspin. The announcement that its longstanding chief executive Warren East, who has been in the top job for eight years, is to leave also didn’t help. The company’s shares slumped by 18 per cent in early trading before paring losses. Over the past two years, they have lost more than 50 per cent of their value, compared to a 4.8 per cent gain for the FTSE 100. Its current market capitalisation represents just eight months of consensus forecast sales of about £12.6bn. This is understandable. Although it cut more than 9,000 jobs, which will lead to annual savings of £1.3bn a year, there was still a cash outflow of £1.5bn last year, meaning net debt climbed to £5.2bn. This should come down once the €1.7bn (£1.42bn) sale of the ITP Aero business to Bain Capital is finalised. The haemorrhaging of cash should also end, with the company forecasting positive cash flow this year, albeit weighted towards the second half. East told investors on an earnings call that Rolls-Royce is now a better balanced business. The size of its civil aerospace arm has been cut by a third and should benefit from operational gearing as revenues return, while its defence and power systems arms now play a much bigger role – contributing almost 60 per cent of last year’s sales. The company’s shares are trading over 20 per cent below the level they were at when we flagged them as a buy in October, but Rolls-Royce is in much better shape and once air travel volumes make a sustained recovery we think the shares will quickly rebate. Buy.Last IC View: Buy, 127p, 04 Jan 2022. (Source: Investors Chronicle)
23 Feb 22. Curtiss-Wright Corporation (NYSE: CW) reports financial results for the fourth quarter and full-year ended December 31, 2021.
Fourth Quarter 2021 Highlights:
- Reported sales of $667m, diluted earnings per share (EPS) of $1.94, and free cash flow (FCF) of $219m;
- Adjusted sales of $655m, up 2%;
- Adjusted diluted EPS of $2.40, up 6%;
- New orders of $676m, up 19%;
- Adjusted FCF of $219m, with 230% FCF conversion; and
- Record share repurchases of approximately $258 m.
Full-Year 2021 Highlights:
- Reported sales of $2.5bn, operating income of $383m, operating margin of 15.3%, diluted EPS of $6.58, and FCF of $347m;
- Adjusted sales of $2.5 bn, up 7%;
- Adjusted operating income of $420m, up 12%;
- Record Adjusted operating margin of 17.0%, up 70 basis points;
- Adjusted diluted EPS of $7.34, up 11%;
- New orders of $2.5bn, up 11%; Backlog up 3%;
- Adjusted FCF of $347m, with 116% FCF conversion; and
- Record annual share repurchases of $350m.
“Curtiss-Wright delivered strong fourth quarter results with better-than-expected profitability, strong free cash flow and tremendous order growth,” said Lynn M. Bamford, President and CEO of Curtiss-Wright Corporation. “For the full year, we grew sales by 7% to nearly $2.5 billion, in line with our expectations, as we leveraged the strength and resilience of our combined portfolio to minimize the impact of the challenging supply chain environment. I’m proud of the team’s focus and continued strong execution of our operational excellence initiatives, which enabled us to generate 70 basis points in full-year operating margin expansion and meet our 17% operating margin objective one full year ahead of schedule.”
“We continue to utilize our strong and healthy balance sheet to implement a disciplined capital deployment strategy. Throughout the past year, we delivered on our commitment to drive returns to our shareholders by executing record annual share repurchases of $350m. We also recently announced our pending acquisition of Safran’s aerospace arresting systems business for $240m, which will increase the breadth of our global defense portfolio and is expected to yield significant opportunities for revenue growth”
“Over the past few weeks, we resolved two significant legacy matters. First, we have reached an agreement with Westinghouse to settle all outstanding legal matters covering both the U.S. and China AP1000 Reactor Coolant Pump (RCP) contracts dating back to 2007. As a result, we have secured Westinghouse’s commitment to Curtiss-Wright’s RCP technology in future AP1000 power plants globally, including their next multi-unit project in Eastern Europe. We now have a clear path moving forward and the potential to generate new RCP orders within the next three to five years. Second, we recently completed the divestiture of the German valves business which had been classified as held for sale since the fourth quarter of 2020. We are pleased to move past these matters with a well-defined focus on advancing our strategic priorities to generate long-term profitable growth.”
“Looking to 2022, we are projecting total sales growth of 3% to 5% driven by growth in all of our A&D and Commercial markets, continued operating margin expansion, and double-digit Adjusted diluted EPS growth of 10% to 12%. We remain on track to achieve our 3-year financial targets for 2023 that we communicated at last year’s investor day and successfully execute on our Pivot to Growth strategy to drive long-term shareholder value.”
Fourth Quarter 2021 Operating Results
- Adjusted sales of $655m, up $14m, or 2%;
- Total Aerospace & Defense (A&D) market sales were flat, while total Commercial market sales increased 6%;
- In our A&D markets, strong double-digit growth in commercial aerospace and the contribution from the PacStar acquisition in ground defense were offset by reductions in the aerospace defense and naval defense markets due to the timing of sales and ongoing supply chain headwinds;
- In our Commercial markets, we experienced continued strong demand in the general industrial market, as well as higher sales within the power & process markets, despite the wind down on the China Direct AP1000 program;
- Adjusted operating income of $129m improved 2%, while Adjusted operating margin remained flat at 19.7%. Higher operating income was driven by favorable overhead absorption on higher revenues in our Aerospace & Industrial and Defense Electronics segments, as well as the benefits of our ongoing company-wide operational excellence initiatives. These improvements were partially offset by lower revenues and unfavorable mix in the Naval & Power segment; and
- Non-segment expenses of $12m, up $2m, primarily due to higher environmental costs.
Fourth Quarter 2021 Segment Performance
Aerospace & Industrial
- Adjusted sales of $208m, up approximately $15m, or 8%;
- Higher general industrial market revenue was principally driven by the continued strong rebound in demand for industrial vehicle products for on- and off-highway platforms;
- Higher commercial aerospace market revenue reflected higher sales of sensors products and surface treatment services on narrowbody platforms, partially offset by lower actuation sales on widebody platforms;
- Aerospace defense market revenue increased primarily due to higher sales of actuation products and surface treatment services on the F-35 program; and
- Adjusted operating income of $40m, up 20% from the prior year, while Adjusted operating margin increased 200 basis points to 19.5%, reflecting strong absorption on higher sales and the benefits of our ongoing operational excellence initiatives.
- Adjusted sales of $200m, up approximately $17m, or 10%;
- Lower aerospace defense market revenues reflected the timing of sales of our embedded computing equipment on various programs, as certain revenues shifted into 2022 due to ongoing supply chain headwinds. This decrease was partially offset by higher production revenues on the F-35 program;
- Higher ground defense market revenue was principally driven by the contribution from the PacStar acquisition for tactical battlefield communications equipment;
- Higher commercial aerospace market revenue reflected increased sales of avionics and electronic systems on various domestic and international platforms; and
- Adjusted operating income of $53m, up 17% from the prior year, while Adjusted operating margin increased 160 basis points to 26.5%, as solid absorption on higher sales and favorable mix in defense electronics more than offset unfavorable foreign currency translation.
Naval & Power
- Adjusted sales of $248m, down $19m, or 7%;
- Naval defense market revenue declines primarily reflected lower revenues on the Virginia-class submarine program, partially offset by higher revenues on the CVN-81 aircraft carrier program;
- Higher power & process market sales reflected solid industrial valve demand in the oil and gas market and higher domestic nuclear aftermarket revenues, partially offset by the timing of production on the China Direct AP1000 program; and
- Adjusted operating income of $48m, down 16% from the prior year, while Adjusted operating margin decreased 210 basis points to 19.3%, driven by unfavorable absorption on lower revenues and unfavorable mix in the power & process market.
Free Cash Flow
- Reported free cash flow of $219m decreased approximately $28m, or 11%, primarily due to higher working capital and higher taxes;
- Capital expenditures increased $2m compared with the prior year, primarily due to higher capital investments within the Naval & Power segment; and
- Adjusted free cash flow of $219m decreased $37m, or approximately 15%, compared with record free cash flow achieved in the prior year period.
New Orders and Backlog
- New orders of $676m increased 19% and generated an overall book-to-bill that exceeded 1.0x, principally driven by solid demand within our A&D markets for our commercial aerospace and naval defense products; and
- Backlog of $2.2bin, up 3% from December 31, 2020, reflects higher demand in both our A&D and commercial markets.
Share Repurchase and Dividends
- During the fourth quarter, the Company repurchased 1.96m shares of its common stock for approximately $258m;
- During full-year 2021, the Company repurchased 2.70m shares for a record $350m; and
- The Company also declared a quarterly dividend of $0.18 a share, unchanged from the previous quarter.
Other Items – Business Held for Sale
- In January 2022, the Company completed the sale of its German valves business.
Other Items – Westinghouse Legal Settlement
- In February 2022, the Company and Westinghouse reached an agreement to settle all open claims and counterclaims under the AP1000 U.S. and China contracts. Based on the terms of the settlement, the Company recorded full-year charges of approximately $13 m related to this matter for the year ended December 31, 2021; and
- The Company’s 2021 non-GAAP results have been adjusted for this legal matter.
22 Feb 22. Darkweb And Cybercrime Monitoring Startup Cyble Announces US $10m in Series A Funding. AI-powered cyber intelligence company Cyble announced today that it has raised a US $10m Series A financing round led by Blackbird, with continued participation from Spider Capital, January Capital, Cendana Capital, and VentureSouq. The funds will be allocated to expanding Cyble’s product roadmap, enabling deeper penetration into existing & new markets, and amplifying its Cyble Research Labs (CRL) capabilities.
Founded by Beenu Arora and Manish Chachada in 2019, Cyble continuously monitors the darkweb and surfaceweb data in real-time across open and closed sources to map, monitor, and mitigate companies’ digital risk footprint. Today, Cyble is present in six nations and has tripled in business YoY.
The news of Series A funding marks almost a year since Cyble’s initial Seed funding round. In April 2021, Cyble announced it raised $4m led by Blackbird and Spider Capital, with participation from Picus Capital and Cathexis Ventures. Since then, the company has built a solid foundation through sustainable growth, evolving its client offering with darkweb, brand, and attack surface monitoring, growing its client base across 6 countries and increasing its headcount from 25 to 80 people.
“Cyble began with an ambitious goal to democratize visibility into the darkweb and empower organizations to fortify their security infrastructure and consequently ensure resilience to malicious cyberattacks,” says Manish Chachada, co-founder and COO of Cyble. “We are incredibly excited to receive the support from our investors to continue to carry out Cyble’s vision, and honored that Cyble is recognized as a leading voice in cybersecurity and a trusted partner that enables businesses to advance their Digital Risk Protection Strategy.”
Minsoo Chi of Spider Capital noted: “We’ve been impressed with Beenu and Manish and the entire Cyble team on their execution towards providing organizations with real-time visibility into the darkweb. We are thrilled to continue to support them in their vision to democratize digital risk protection.”
Tom Humphrey of Blackbird noted: “In less than 12 months, the growth that Cyble has achieved is nothing short of stunning. Beenu, Manish and their team have already made significant progress on the product roadmap and global expansion, and it’s clear they’re just getting started. Cyble is solving a big, painful problem for businesses across the world and we are proud to continue supporting their ambition.”
Alongside its continual focus to minimize and manage cyber risk for its clients, Cyble recently introduced a Law Enforcement Agency (LEA) and defense threat intelligence tailored solution, Cyble Hawk to aid law enforcement and government agencies in combating cyber risks that have national and geopolitical ramifications.
“The Series A funding round is a major milestone for our rapidly growing company, and affirmation of Cyble’s emergence as a pioneer and thought leader in the infosec industry. We are thrilled to receive this support and intend to direct these funds to drive our research, development, and intelligence capabilities to greater heights. It is no secret that cybercrime activity conducted in the darkweb is rising exponentially, we believe that continuous threat intelligence and darkweb monitoring are critical for organizations to identify and manage data breaches in a timely manner. Cyble is committed to deliver comprehensive cybersecurity solutions that resonate with our growing client base,” says Beenu Arora, CEO and Co-founder of Cyble.
Cyble is a global threat intelligence SaaS provider that helps enterprises protect themselves from cybercrimes and exposure in the surface web, deepweb, and darkweb. Its prime focus is to provide organisations with real-time visibility to their digital risk footprint. Backed by Blackbird Ventures, Xoogler, and Y Combinator as part of the 2021 winter cohort, Cyble has also been recognised by Forbes as one of the top 20 Best Cybersecurity Start-ups, along with several other industry recognitions. Headquartered in Georgia, United States and with offices in Australia, Singapore, and India, Cyble has a global presence. To learn more about Cyble, visit www.cyble.com. (Source: BUSINESS WIRE)
22 Feb 22. Elbit Systems Reports Impact of the Amendment to the Law for the Encouragement of Capital Investments on Its Fourth Quarter 2021 Financial Results. Elbit Systems Ltd. (NASDAQ: ESLT) (TASE: ESLT) (“Elbit Systems” or the “Company”) announced today that as a result of an amendment to the Law for the Encouragement of Capital Investments and the implementation of an arrangement to pay reduced tax on selected accumulated income, the Company will include a one-time expense of approximately $80 million (approximately NIS 250 million) in its financial results for the fourth quarter of 2021, which are planned to be published in March, 2022. On November 15, 2021, the Israeli Government published the Economic Efficiency Bill (Legislative Amendments for Attaining Budgetary Objectives for the 2021 and 2022 Budget Years)- 2021 that included an amendment (the “Amendment”) to the Law for the Encouragement of Capital Investments-1959 (the “Law”), according to which any distribution of a dividend on or after August 15, 2021 by a company that has income that was exempt from tax under the Law (“Exempt Earnings”) will include an amount of Exempt Earnings, and an amount of non-exempt earnings, according to the proportion between them. The amount distributed from Exempt Earnings will be subject to payment of full corporate tax. The Amendment includes a temporary provision that allows payment of reduced corporate tax on Exempt Earnings accumulated until December 31, 2020 that were not yet distributed as a dividend (“Selected Accumulated Income”). After reviewing the matter, the Company decided to implement the temporary provision and as a result pay the reduced corporate tax in an amount of approximately $80 million (approximately NIS 250 million). This one-time expense will be recorded in the fourth quarter and full year 2021 financial results in accordance with U.S. GAAP under “Taxes on Income” and will be adjusted in the non-GAAP results. The tax amount will be paid during 2022. Dividends distributed in the future will include Selected Accumulated Income and the withholding tax rate on them will be calculated according to the proportion between the Selected Accumulated Income and the total accumulated earnings as of December 31, 2020. Accordingly, the aggregated withholding tax rate on those dividends for individuals and non-residents is expected to be approximately 17%. For purposes of clarification the above does not constitute any obligation by Elbit Systems to distribute dividends. (Source: PR Newswire)
22 Feb 22. Secmation Experiences Record Growth in 2021. Secmation experienced exciting growth throughout 2021. Our team, our partners, and our customers continue to accelerate Secmation towards its mission of developing value-added cybersecurity technologies and products for automated and unmanned systems in National Security, Defense, and Critical Infrastructure applications.
During 2021, Secmation was privileged to expand our most important company asset …. our team! Secmation expanded its footprint with the additions of an Executive Office Manager, a Business Development and Marketing Manager, and key members to our development staff.
2021 Business Highlights –
- Secmation began execution of a $1.5M Phase II Small Business Innovation Research (SBIR) for an advanced cybersecurity solution for embedded systems for the Department of Defense. Known as Anneal, this project bridges the disciplines of cybersecurity and the protection of Critical Program Information for real-time systems enabling a new generation of highly secure embedded systems for DoD cyber-physical applications.
- In January, Secmation received a $1m Phase II SBIR award from the Office of Naval Research for further development of a modular cyber-secure unmanned aerial systems platform known as SecMUAS. Short for Secure Modular Unmanned Aerial System, SecMUAS incorporates a US designed and manufactured Secure Control Unit with advanced security and performance features, as well as a configurable Integrated Development Environment. SecMUAS’s security features are “baked in” and its modular design framework for unmanned systems opens new market opportunities in both the Industrial and Commercial sectors.
- Awarded in June, Secmation is a member of Applied Research Associates team that captured a $18.8m four-year base contract to provide unmanned maritime systems support for the Naval Information Warfare Center, Pacific’s (NIWC PAC) ISR Department. Secmation is excited to be on the team with ARA!
- In July, Secmation received a prime contract award on the Navy’s Seaport-NxG contract vehicle. Seaport-NxG is the Navy’s primary contracting vehicle for engineering and program management services.
- Secmation was issued US Patent 11,132,455, “Combined Analytical Tools for Electronic Warfare and Cybersecurity Testing in Embedded Systems”. This technology developed for the Air Force enables detection of vulnerabilities in software defined communications systems.
- Secmation completed a contract to design and manufacture prototypes of an advanced industrial control systems cybersecurity solution for DoD critical infrastructure protection.
Here at Secmation, we are excited for new business opportunities and continued growth in 2022! We are actively recruiting and hiring new teammates to help us solve great challenges while also working on interesting national security and defense projects. Secmation is actively pursuing new business opportunities to expand our portfolio and customer base in multiple business verticals and defense sectors. Let’s connect to discuss how we can pursue exciting new opportunities collaboratively! (Source: PR Newswire)
22 Feb 22. BWX Technologies Reports Fourth Quarter and Full-Year 2021 Results.
- Generates 4Q21 EPS of $1.26 (GAAP), $0.95 (non-GAAP); up 83% and 28%, respectively vs. 4Q20
- Reports 2021 EPS of $3.24 (GAAP), $3.06 (non-GAAP); up 11% and 1%, respectively vs. 2020
- Produces 4Q21 adjusted EBITDA of $123m, full-year 2021 adjusted EBITDA of $418m
- Announces consolidation of three reporting business segments into two: Government Operations and Commercial Operations
- Reiterates 2022 non-GAAP EPS outlook and provides additional 2022 guidance including:
o Consolidated revenue and adjusted EBITDA growth of 3% to 4%
o Non-GAAP EPS range of $3.05 to $3.25
o Cash from operations of $260m to $290m
BWX Technologies, Inc. (NYSE: BWXT) (“BWXT”, “we”, “us” or the “Company”) reported fourth quarter 2021 revenue of $592m, a 6% increase compared with $557m in the fourth quarter 2020. GAAP net income for the fourth quarter 2021 was $117m, or $1.26 per diluted share, compared with GAAP net income of $65.7m, or $0.69 per diluted share, in the prior-year period. Non-GAAP net income for the fourth quarter 2021 was $88.2m, or $0.95 per diluted share, compared with non-GAAP net income of $70.9m, or $0.74 per diluted share, in the prior-year period.
Full-year 2021 revenue was over $2.1bn, a slight increase compared with 2020 revenue. GAAP net income in 2021 was $306m, or $3.24 per diluted share, compared with GAAP net income of $279m, or $2.91 per diluted share, in 2020. Non-GAAP net income in 2021 was $289m, or $3.06 per diluted share, compared with non-GAAP net income of $290 m, or $3.03 per diluted share, in 2020. A reconciliation of non-GAAP results is detailed in Exhibit 1.
“Despite business challenges, including persistence of the pandemic, we delivered another year of solid earnings and set the table for further expansion of the business,” said Rex D. Geveden, president and chief executive officer. “Although we reported at the lower end of our initial range, 2021 was marked by several key milestone achievements. BWXT secured a new sole-source nuclear materials contract, won and began transition of a new flagship contract for the Department of Energy nuclear restoration project at Savannah River, strengthened our beachhead in therapeutic radiopharmaceuticals, and continued to mature new technology and designs for microreactor programs.”
“We expect to build on these successes in 2022 to deliver the medium-term financial targets set forth at our recent Investor Day. Additionally, we are announcing a new organization of our reporting segments to reflect the way we are running the business, which we expect to result in meaningful strategic and cost synergies.”
“We remain focused on driving our multi-faceted growth strategy by using nuclear technology to solve some of our customers’ most challenging problems through two distinct customer-based reporting segments: Government Operations and Commercial Operations,” said Geveden.
Nuclear Operations Group (NOG) segment revenue was $453m for the fourth quarter 2021, a 6% increase from the prior-year period, driven by higher long-lead material production and labor volume. Full-year 2021 segment revenue was over $1.6bn, a 1% decrease compared with 2020 revenue, as a result of higher labor volume and higher naval nuclear fuel and uranium downblending, which was more than offset by lower long-lead material production.
NOG operating income was $85.8m in the fourth quarter 2021, a 6% increase compared with the prior-year period, primarily driven by higher revenue. Full-year segment operating income was $309m, a 5% decrease compared with the prior year, primarily driven by less government-reimbursed pension costs and negative operational efficiency impacts related to COVID-19 resulting in lower levels of net favorable contract adjustments. Fourth quarter and full-year 2021 segment operating margins were 18.9% and 19.0%, respectively.
Nuclear Power Group (NPG) segment revenue was $114m for the fourth quarter 2021, a 7% increase from the prior-year period, driven by higher fuel production and fuel handling, higher nuclear power field service activity and higher nuclear medicine demand, partially offset by lower component manufacturing volume. Full-year segment revenue was $407 m, a 10% increase compared with the prior year, driven by higher fuel production and fuel handling, higher nuclear power field service activity and higher nuclear medicine demand, partially offset by lower component manufacturing volume.
NPG fourth quarter GAAP and non-GAAP operating income was $22.4m and $23.0m, respectively, both a 70% respective increase compared with the prior-year period, driven primarily by increased revenue, partially offset by a reduction in funds received under the CEWS program to offset incurred expenses related to the headwinds created by the pandemic. Full-year 2021 segment GAAP and non-GAAP operating income was $52.5m and $53.5m, respectively, a 1% increase and a 1% decrease, respectively, compared with the prior year, driven primarily by a reduction in funds received in under the CEWS program to offset expenses incurred due to the pandemic, nearly offset by increased operating income associated with higher revenue. Fourth quarter and full-year 2021 GAAP segment operating margins were 19.6% and 12.9%, respectively. Fourth quarter and full-year 2021 non-GAAP segment operating margins were 20.1% and 13.1%, respectively.
Nuclear Services Group (NSG) segment operating income was $6.1 m in the fourth quarter 2021, compared with $8.4m of operating income for the fourth quarter 2020 primarily driven by lower contract fees and higher costs. Full-year 2021 segment operating income was $27.9m, compared with $26.4m GAAP operating income and $27.4m non-GAAP operating income in the prior year, a 6% and 2% respective increase, driven by better contract performance and lower costs that were offset by higher business development expense and lower income from completed contracts.
Beginning in the first quarter 2022, our reportable segments will be Government Operations and Commercial Operations to reflect the manner in which resources will be allocated and operating performance will be assessed going forward. Government Operations includes the legacy Nuclear Operations and Nuclear Services Groups, while Commercial Operations includes the legacy Nuclear Power Group.
Cash and Capital Returned to Shareholders
The Company generated $160m of cash from operating activities in the fourth quarter 2021, compared with $48.3 m of cash generated from operating activities in the prior-year period, which did not include an $88.7m cash receipt typically received at year-end which was received on January 4, 2021. The Company generated $386m of cash from operating activities for the full year 2021. The Company’s cash balance, net of restricted cash, was $34m at the end of the year.
The Company returned $59.4m to shareholders during the fourth quarter 2021, bringing the total to $305m of cash returned for the full year, including $226m in share repurchases and $79.7m in dividends. As of December 31, 2021, total remaining share repurchase authorization was $418m.
On February 18, 2022, the BWXT Board of Directors declared a quarterly cash dividend of $0.22 per common share, an increase from the prior quarterly cash dividend. The dividend will be payable on March 29, 2022, to shareholders of record on March 10, 2022.
- Revenue up 3% to 4% vs. 2021
- Adjusted EBITDA up 3% to 4% vs. 2021
- Non-GAAP EPS range of $3.05 to $3.25
- Cash from operations of $260m to $290m
- Capital expenditures of $180m to $200m
(Source: BUSINESS WIRE)
22 Feb 22. Czech drone maker withdraws from Russia amid sanctions concerns. The One 150 drone is Czech-based Primoco UAV’s flagship product. The company has ceased operations in Russia due to Western sanctions against Moscow over the Ukraine crisis. Amid increasing concern over Russia’s invasion of Ukraine, Czech drone manufacturer Primoco UAV has announced the company will halt its activities in the Russian market and sell its local subsidiary AO Primoco BPLA. In a statement, the company cited various difficulties related to Western sanctions against Russia as the reason why it decided to shut down its operations there as of Jan. 31.
“The only reason for this decision is the sanctions regime against the Russian Federation and the impossibility of obtaining the export license [the company] needed to operate its drones” in Russia, Primoco UAV said.
Ladislav Semetkovský, the chief executive of Primoco UAV, said that only this year the Russian offshoot lost contracts worth 1bn rubles ($12.6m) due to unfavorable political conditions.
“Diplomatic relations between the Czech Republic and the European Union on [the] one hand and Russia on the other … are at a low point. As a result, we cannot meet our commitments and develop our business in the Russian market,” he said.
The Czech Republic, where Primoco UAV is headquartered, is a NATO ally and a member state of the European Union. In response to Russia’s recent recognition of two Russia-backed breakaway regions in eastern Ukraine, the Luhansk People’s Republic and the Donetsk People’s Republic, the Czech government has called on the EU to impose new sanctions on Moscow.
“We are providing assistance to Ukraine. We have given them aid in the form of ammunition, but also humanitarian aid, and we will continue to do so. But the most important thing now is the joint action of the European Union and NATO,” Czech Prime Minister Petr Fiala tweeted on Feb. 22.
In the Russian market, Primoco UAV provided its drone services to solely to the civilian sector, according to the statement. The company did not disclose the name of the Russian buyer of its subsidiary. The Czech manufacturer specializes in making medium-sized UAVs. Its flagship Primoco UAV One 150 drone is enabled with a maximum take-off weight of 150 kg (330 lb), an endurance of 15 hours, and a maximum speed of 150 km/h (93 mph), according to data from the business. (Source: Defense News)
23 Feb 22. SRT Marine reinstates guidance.
- Contract signed for first phase of £40m SRT-marine domain system project
- Contract to supply commercial AIS Class A transceivers to the Panama Canal
- Conservative profit estimates reinstated
Aim-traded SRT Marine Systems (SRT:44p), a global leader in AIS, an advanced identification communications technology used to track and monitor maritime vessels, has now signed a £40m contract with a national coastguard for a national scale marine domain awareness (MDA) system to track, monitor and manage all maritime activity in their territorial waters. A further £30m of contracts are expected to be signed imminently, too. These awards not only put the business firmly back on track after Covid-19 travel restrictions delayed contract implementation, but support a major ramp up in SRT’s profits to reverse three years of losses. To put this into perspective, house broker finnCap expects annual revenue to rise seven-fold to £56mn in the 12 months to 31 March 2023 to produce a cash profit of £11.1mn and pre-tax profit of £6.8mn. On this basis, expect earnings per share (EPS) of 4.1p. Moreover, operating cash flow is forecast to rise 13-fold to £7.8m which should produce free cash flow of £2.5m after accounting for interest payments (£0.7m) and capital expenditure (£4.6m). The estimated free cash flow is forecast to slash net debt from £6mn to £3.5mn by 31 March 2023, thus transferring more of the economic value from debt to equity holders.
Furthermore, profit forecasts are conservative as they exclude “several additional significant contracts from the current pipeline that management expect to sign”. In fact, SRT’s directors have increased their validated sales pipeline from £550m to £600m since I highlighted the investment case (‘Making waves’, 6 January 2022) even though the £40m major contract has now been converted. Please note I still believe that SRT could be making £10m of annual pre-tax profit if three other contracts (two in the Middle East and one in Asia) are converted. These are worth worth £54m of additional revenue. It’s worth noting, too, that the electrical component supply chain issues that have held back deliveries in SRT’s smaller transceiver business are expected to ease in the next 12 months, thus enabling the group to fulfil its growing order back log and ongoing end-user demand. For example, SRT’s em-trak marine electronics subsidiary has just received a contract to supply commercial AIS Class A transceivers to the Panama Canal. Trading on a modest price/earning (PE) ratio of 11 for the 2022/23 financial year, and with major MDA contracts now being converted, I am raising my target price from 55p to 65p with the investment firmly risk skewed to the upside. Buy. (Source: Investors Chronicle)
22 Feb 22. HENSOLDT AG exceeds expectations for the financial year 2021 and focuses on sustainability.
- Order backlog rises to EUR 5,092m (+ EUR 1,668m compared to previous year)
- Revenue climbs by 22% to EUR 1,474m
- Adjusted EBITDA margin before pass-through business improves to 19.4%
- Net leverage reduced to 1.6x (-1.0x year-over-year) due to strong cash flow
- Management Board proposes dividend of EUR 0.25 per share
HENSOLDT AG met or exceeded its guidance for all relevant key figures in the financial year 2021 and further expanded its position as one of the leading companies in the European defence electronics market. Order intake increased by 25% year-over-year to EUR 3,171m (previous year: EUR 2,541m), resulting in an order backlog of EUR 5,092m – an increase of 49% compared to the previous year’s figure (EUR 3,424m). Revenue climbed by 22% to EUR 1,474m (previous year: EUR 1,207m). Adjusted EBITDA improved by 19% to EUR 261 m (previous year: EUR 219m).
Thomas Müller, CEO of HENSOLDT AG, says: “2021 was another very successful financial year for HENSOLDT. With an increase in order backlog of 49%, revenue growth of 22% and an adjusted EBITDA margin of 19.4% before pass-through business, we have expanded our growth momentum in all key KPIs. At the same time, we have strategically developed our company and are leading HENSOLDT into the future as a provider of integrated sensor solutions from a single source. In doing so, we are not only focusing on our core business in the field of defence electronics and sensor technology, but also on promising future fields such as data analytics, artificial intelligence, and cyber security. With this portfolio of innovative key technologies, we want to grow in the coming years in Germany and Europe, but also increasingly outside Europe. We have laid a very good foundation for this in recent years.”
Axel Salzmann, CFO of HENSOLDT AG, says: “We have once again kept our promise to our shareholders and the capital market and met or exceeded all financial targets. We are particularly proud of the fact that we have been able to reduce our net leverage from 3.1x to 1.6x since the IPO, thus almost halving it. This is due in particular to our excellent operational development and our focus on continuously improving HENSOLDT’s financial strength. Our profitable growth allows our shareholders to participate in the success of HENSOLDT AG once again. At EUR 0.25 per share, the proposed dividend is about twice as high as in the previous year. This is a clear sign of our successful business management.”
Growth along four defined vectors
HENSOLDT will continue to expand its business along four strategic vectors: In response to the increasingly complex challenges of its customers, HENSOLDT is increasingly evolving into a Sensor Solutions House, offering holistically integrated solutions, and driving tomorrow’s digital technologies.
In addition, HENSOLDT wants to further expand its business globally in order to be able to serve customers worldwide even better. A clear focus is on Europe and the Asia-Pacific region. In addition, the company will continue to develop solutions for security areas that are technologically adjacent to the defence sector. The overriding goal remains to strengthen HENSOLDT’s position as a technology leader and to lay the foundation for profitable growth by expanding its technological core competencies and making targeted investments in key and future technologies.
Sustainability in focus
As one of the leading companies in the security and defence industry, HENSOLDT aims to set industry-wide standards in sustainability and push efforts to improve CO2 emissions and develop sustainable energy concepts. According to an ESG rating by Sustainalytics, HENSOLDT is already a leader within the industry. In the future, the company will focus even more on sustainability and has rolled out a group wide ESG strategy for this purpose.
“Sustainability is a central element of our strategic focus, because without technologies that provide safety and security, a sustainable world cannot exist. We take our corporate responsibility very seriously and are determined to set standards for our industry – naturally also with a view to our own share of emissions and resource consumption. We are committed to this common mission and contribute a little bit every day to achieving the global sustainability targets,” says Thomas Müller.
HENSOLDT is currently developing dedicated targets based on the 1.5-degree approach of the Science Based Target Initiative in order to measure scope 1, 2 and 3 emissions in a more targeted way in the future and to be carbon neutral by 2035. In this context, HENSOLDT has also expanded the development of hydrogen technologies.
In addition, the ESG strategy also focuses on promoting diversity within the company. An important step in this context was the introduction of a group-wide Diversity & Inclusion programme. Specifically, the aim is to increase the proportion of women in global management positions to 25% and in the Executive Committee to 35% by 2024.
Strong order intake thanks to leading technologies in the field of interconnected and future-proof platforms
In a highly competitive market environment, HENSOLDT consistently pursued its path to becoming a solution and system provider in 2021. With the development of new technologies, especially in the area of future-proof platforms and data analysis, HENSOLDT was able to win important national and international contracts. These included the development and production of reconnaissance technology for the PEGASUS programme, radar, and self-protection systems for the Quadriga programme, the delivery of long-range radars for the F-124 frigates and optronic mast systems for U212 submarines.
Order intake increased by 25% year-over-year to EUR 3,171m (previous year: EUR 2,541m) and, with growth of 49% compared to the previous year’s figure, leads to an order backlog of EUR 5,092m (previous year: EUR 3,424m). This corresponds to around three times the guided revenue for 2022.
Revenue and earnings growth in the double-digit range
The strong order intake is also visible in the development of revenue and operating result. In the financial year 2021, revenue increased by 22% to EUR 1,474m (previous year: EUR 1,207m). Consistently with the revenue growth, an increase in adjusted EBITDA was also achieved the costs incurred for the ramp-up of major projects. With a plus of 19%, adjusted EBITDA improved to EUR 261m (previous year: EUR 219m). The adjusted EBITDA margin before pass-through business volume thereby amounted to 19.4% and improved by almost one percentage point compared to the previous year’s value of 18.6%. This effect was driven, among other things, by a favourable product mix.
Strong cash flow development drives further deleveraging
HENSOLDT can look back on a continued strong operational development. The adjusted free cash flow before interest and taxes of EUR 252m in 2021 was significantly above the previous year’s figure (EUR 196m) and thus well above expectations – despite investments in working capital. The positive development enabled a further deleveraging, with a net leverage ratio at around 1.6x at the end of the financial year 2021. Net debt was reduced by around EUR 146m in the course of the year.
Proposed dividend doubled
Due to the strong operational business development in the financial year 2021, the HENSOLDT Management Board intends to propose a dividend distribution of EUR 0.25 per share to the Supervisory Board and the Annual General Meeting.
For the financial year 2022, HENSOLDT expects continued positive business momentum with consolidated revenues of around EUR 1.7bn and adjusted EBITDA of EUR 285m to EUR 300m. In addition, HENSOLDT plans to reduce the net leverage ratio to below 1.4x. In the medium term, the company targets an adjusted EBITDA margin of around 19% before pass-through business volume.
23 Feb 22. Seraphim Space Investment Trust plc (LSE: SSIT), the world’s first listed SpaceTech fund, has announced its maiden interim results covering the period from incorporation on 14 May 2021 to 31 December 2021.
Financial Highlights include:
- Oversubscribed IPO in July 2021 raising £150.0m of fresh capital
- Additional £89.4m of new equity raised via completion of acquisition of Initial Portfolio and Retained Portfolio comprising 19 investments with aggregate cost of £91.3m
- Six further follow-on transactions and two new investments closed during the period with aggregate cost of £72.9m, increasing the portfolio to 21 companies
- Two portfolio companies listed on public markets in the period (Arqit Quantum, Spire Global)
- 11.1% increase in fair value of portfolio at 31 December 2021 vs. cost of portfolio
- Net asset value (NAV) up 43.2% to £250.6m
- NAV per share of 104.7p
22 Feb 22. Nasmyth Group Announces Investment from Rcapital. The Board of Nasmyth Group the provider of specialist precision engineering services to the aerospace, defence and related industries (“the Group”) today announces that it has completed a comprehensive recapitalisation that will give the business the stable foundation it needs to drive ingenuity and continue to serve the needs of its customers around the world. Under the terms of the recapitalisation Rcapital, the provider of investment, commercial expertise and hands-on support to businesses, will take a significant equity investment in Nasmyth Group, alongside the existing management team, and will also deliver long term debt facilities with its partner, Secure Trust Bank Commercial Finance. Nasmyth Group will continue to be led by its existing management team, headed by Peter Smith and Simon Beech who will work alongside Rcapital to implement a strategy to grow the Group further. This recapitalisation will give Nasmyth Group a stable financial platform to seek opportunities to grow the business and capitalise on what is expected to be a major rebound in demand over the coming months.
Commenting on this announcement, Peter Smith, Chairman and CEO of Nasmyth Group said: “This is a milestone moment for Nasmyth Group. We have weathered the unprecedented effects of Covid on the industry, and have emerged with a strong order book as commercial aviation begins to recover to normal levels. We have taken the opportunity to recapitalise our business and have the luxury of a strong balance sheet, long-term committed debt facilities and the potential to make acquisitions that expand our footprint further. This gives us significant competitive advantage.”
Chris Campbell, a Partner of Rcapital added: “From the outset, it was clear to us that Nasmyth Group is a fantastic business with huge potential, strong customer and supplier relationships and a talented team of dedicated professionals. We are delighted to partner with the senior Nasmyth team and look forward to working together to realise the Group’s potential.”
Tony Young, Regional Sales Director at Secure Trust Bank Commercial Finance, said: “We have worked closely with the Nasmyth management team and Rcapital to understand the business and the growth opportunities available through an increasing and strong order book. Working with Rcapital, we have provided a flexible facility that will enable the business to make the most of these opportunities and meet its ongoing growth aspirations.”
22 Feb 22. KBR Announces Fourth Quarter and FY 2021 Financial Results; Provides FY 2022 Guidance.
Excellent Progress Toward 2025 Long-Term Targets; Delivers Accelerated Growth and Value Creation in 2021
FY 2021 Highlights
— Delivered revenue growth of $1.6bn, or 27%, over 2020, and net income attributable to KBR growth of $90m; adj. EBITDA¹ growth of 31%
— Generated $278m of operating cash flow; $319m of adj. operating cash flow¹
— Awarded $7.8bn of bookings and options, providing greater visibility of long-term growth targets
— Closed highly strategic Frazer-Nash Consultancy acquisition, enhancing highly differentiated capabilities internationally
4th Quarter 2021 Highlights
— Revenue growth of $1bn, or 70%; net income attributable to KBR growth of 258%; adj. EBITDA¹ growth of 27%
— Delivered 1.2x book-to-bill
KBR, Inc. (NYSE: KBR) today announced its fourth quarter and FY 2021 financial results and initiated attractive FY 2022 financial guidance.
“KBR had a stellar 2021 delivering significant progress toward its 2025 growth strategy,” said Stuart Bradie, President and CEO of KBR. “Throughout the year, our Team of Teams posted outstanding performance across all key metrics – organic revenue growth, earnings expansion, cash generation, new program wins, and Zero Harm. We extended our high-end capabilities in attractive, growing end markets across international defense and renewable energy with the acquisition of Frazer-Nash Consultancy, and we formed important alliances to advance ground-breaking technology to close the circular plastics loop and make carbon-free energy a reality. Our business benefits from strong end market momentum in areas of global importance, such as defense modernization and climate change, and combined with our deep domain expertise and culture of innovation, KBR is well positioned for near-, mid- and long-term growth.”
“We are proud to have achieved carbon neutrality for a second consecutive year on a path toward net zero carbon by 2030. At KBR, our commitment to sustainability goes beyond and includes leveraging our expertise to help others achieve their sustainability goals, thus creating value for all stakeholders. Our people-centered culture is at the heart of our strategic evolution into a forward-leaning, sustainability-driven, agile business focused on solving our clients’ most complex issues and challenges through our IP, deep domain expertise and innovative solutions. I would like to thank the people of KBR for their agility, perseverance and commitment to delivering solutions that matter.”
Summarized Fourth Quarter and FY 2021 Financial Results
Financial highlights for the year ended December 31, 2021
- Revenue of $7.3bn, a 27% increase compared to 2020, 18% organic, is primarily attributable to the following:
- Government Solutions posted $6.1bn of revenue, a 52% increase over 2020, 36% organic. The increase in revenue is attributable to organic growth delivered across each of our government businesses, including work supporting Operation Allies Welcome (“OAW”) and the acquisition of Centauri in October 2020. In late 2021, KBR was awarded multiple task orders to support OAW, a historic humanitarian effort for the U.S. Department of Defense (“DOD”) to facilitate the rapid development of vital, temporary infrastructure at military bases in the U.S. and abroad to accommodate thousands of displaced Afghans. We expect this non-recurring OAW work to be substantially completed in early 2022.
- Sustainable Technology Solutions posted $1.2bn of revenue in 2021, in line with our guided annual revenue expectations for this business following the company’s 2020 exit from commoditized services.
- Gross profit, net income attributable to KBR, adj. EBITDA, and adj. EPS increased in line with the items described above as well as the following:
- Excluding the impact of OAW, core Government Solutions and Sustainable Technology Solutions profit contributions and adj. EBITDA margins were in line with management’s expectations for the year. Margins in Government Solutions continue to reflect strong project execution and strong CPAR performance and award fee scores in challenging technical areas that reflect high customer satisfaction. The Sustainable Technology Solutions segment performance reflected planned ramp down of legacy projects while producing growth in higher margin areas. OAW task orders are cost-reimbursable with lower than normative EBITDA margins that result in some margin dilution but with meaningful contributions to net income attributable to KBR, adj. EBITDA and adj. EPS.
- In October 2021, we announced that our JKC joint venture entered into a binding settlement agreement that resolved outstanding claims and disputes between JKC and its client. The settlement agreement is an important de-risking event that reduces uncertainty, reduces future legal costs, frees up management time, and increases deployment optionality. In connection with this settlement, KBR recorded a non-cash charge of $193m and a $10m charge for warranty items. Consistent with the company’s practice, these amounts have been excluded from adj. EBITDA and adj. EPS. This settlement does not impact pursuit of, or positions related to, subcontractor claims associated with the combined cycle power plant for which the company continues to expect a favorable cash award upon resolution.
- In the 2nd quarter of 2021, the company benefited from the net favorable resolution of legacy matters in Sustainable Technology Solutions that resulted in a net benefit of $16m with attendant favorable operating cash flow.
- In 2020, net income attributable to KBR was impacted by non-cash restructuring and impairment charges of $214m and goodwill impairment charges of $99m that did not recur in 2021 in connection with the transformation of its operating model to narrow its strategic focus and reduce risk. These amounts have been excluded from adj. EBITDA and adj. EPS.
- SG&A of $393m increased 17% over 2020 primarily attributable to the acquisition of Centauri in late 2020, as well as an increase in corporate expenses associated with return to the office, increased travel, and other initiatives, all in line with management’s expectations.
- Adj. EPS increased 40% in line with the items described above, as well as favorable jurisdictional tax mix and increased utilization of foreign tax credits.
Recent Developments and New Business
In the year ended December 31, 2021, the company won $7.8bn of awards and options, including the following:
- Over $800m of task orders under IAC-MAC to provide cutting edge R&D and defense modernization support;
- Historic humanitarian support contracts to facilitate the rapid development of vital infrastructure at military bases in the U.S. and abroad being used to accommodate thousands of displaced Afghans for the U.S. DOD;
- Contracts to provide our leading ammonia technology for greenfield traditional, blue, and green ammonia projects;
- Multiple licensing awards to provide industry-leading, disruptive Hydro-PRT℠ plastics recycling technology, as well as numerous ongoing studies; and
- Numerous contracts to provide KBR INSITE® virtual/remote monitoring and advisory services to help clients digitally diagnose operational problems, determine probable root causes, and recommend corrective actions to meet operational objectives and minimize environmental impact.
KBR continues to employ a balanced approach to capital allocation, which includes investments that facilitate sustainable, long-term growth, and prudent return of capital to shareholders. During the year, KBR completed the strategic acquisition of Frazer-Nash Consultancy, repurchased $82 m of its common shares, and paid $61m in shareholder dividends.
KBR is pleased to announce an increase to its quarterly dividend beginning in 2022 to $0.12 per share, a 9% increase over 2021 levels and a 50% increase since 2019.
FY 2022 Guidance
KBR combines deep mission understanding, market-leading expertise and technology, and unwavering operational focus to deliver solutions to solve our clients’ most complex issues. In 2021, KBR continued to shift toward agile, solutions-oriented delivery in differentiated areas that we believe will provide attractive growth, profit, and cash conversion. Our 2022 financial guidance is underpinned by favorable market tailwinds, excellent bookings momentum, and work under contract of over 70% to deliver 2022 results. Our FY 2022 guidance is in line with or ahead of pace with our 2025 long-term targets.
KBR guides 2022 financial results as follows:
- Consolidated revenue: $6.3bn to $6.8bn
- Adjusted EBITDA margin1: ~10%
- Effective tax rate: 24% to 25%
- Earnings per share (EPS): $2.04 to $2.19
- Adjusted EPS1: $2.45 to $2.60
- Operating Cash Flow (OCF): $320m to $370m
- Adjusted OCF1: $350m to $400m
21 Feb 22. UAV Factory & Jennings Aeronautics Rebrand as Edge Autonomy. UAV Factory announced that the Company has rebranded and will go to market as Edge Autonomy following its recent merger with Jennings Aeronautics (“JAI”). Edge Autonomy brings together two small unmanned aerial vehicle platforms and camera payload manufacturers, and represents a new chapter for a unified, innovation-driven company to lead the market in multi-domain unmanned and autonomous systems applications. Edge Autonomy represents decades of proven unmanned systems technology delivered to government, commercial, and academia customers in nearly 60 countries. The former JAI headquarters in San Luis Obispo, California will serve as the new headquarters for Edge Autonomy. The Company is backed by AE Industrial Partners, a private equity firm specializing in aerospace, defense & government services, space, power & utility services, and specialty industrial markets.
John Purvis, Chief Executive Officer of Edge Autonomy, stated, “When UAV Factory and JAI came together in September of last year, it was clear that we wanted a new brand that reflects the true breadth and power of our global platform. Edge Autonomy captures our mission to help our clients gain a critical edge by harnessing the latest UAV technology. Building on the stellar reputation of the legacy companies, we are confident Edge Autonomy will become synonymous for innovation and quality in the autonomous systems market. We’re excited for the opportunities ahead.”
AE Industrial Partners Principal Jeff Hart added, “The name Edge Autonomy reflects the vision of the organization and speaks to our ability to drive and deliver innovation at the tactical edge. We have successfully provided unmanned technologies to the military, first responders, commercial, and academia while never losing sight of the customer mission. As we expand our multi-domain offerings, Edge Autonomy will lead the way with unprecedented capabilities, quality, and customer service.” Edge Autonomy brings a diverse ecosystem of unmanned platforms, EO/IR camera payloads, and unmatched global reach with manufacturing and flight test facilities that service customers with innovation, speed, and agility. With an experienced talent pool and a global base of employees, including some of the world’s top unmanned systems engineers and payload sensor experts, Edge Autonomy is well-positioned to help customers positively impact Intelligence, Surveillance, and Reconnaissance (ISR) operations in innovative and cost-effective ways. (Source: UAS VISION)
22 Feb 22. Autonomous Mapping Startup Emesent Secures US$23m Series A. Award-winning Australian autonomous mapping and data analytics startup Emesent is ready to execute its ambitious global expansion plans after closing an oversubscribed AUD 32m (USD 23m Series A round. The raise was led by Australian investment firm Perennial Partners, with significant funding from international investors Tiger Global and TELUS Ventures. Lead seed round investors Main Sequence and Archangel Ventures also participated.
Emesent co-founders Dr Stefan Hrabar (CEO) and Dr Farid Kendoul (CTO) will use the funding to accelerate the company’s already rapid global growth targets and expand its reach into new industries.
“We have grown from seven to 130 staff in just three years, by establishing ourselves as a global leader in our industry, with more than 300 customers in more than 40 countries,”
Dr Hrabar said. “Autonomous data capture and analytics is providing significant benefits to the mining and infrastructure sectors, with very clear returns on investment in terms of safety, productivity and yield.”
Dr Hrabar said Emesent’s capital raise would enable it to double the size of its engineering team, particularly in the area of data analytics. “This will ensure we’re developing end-to-end solutions for our customers, from autonomous data capture through to autonomous analytics. We’re also building a state-of-the-art manufacturing, calibration and test facility near our Brisbane headquarters to meet growing demand, as well as opening offices in the US and UK.” Dr Stefan Hrabar PhD and Farid Kendoul PhD
Emesent has had huge success in the mining sector. Its award-winning Hovermap technology has helped conglomerates like BHP, Glencore and Anglo American obtain high-quality mapping data that was previously inaccessible, helping to improve safety and productivity.
Dr Hrabar said Emesent’s expansion into new markets meant those sectors could also benefit from the company’s autonomous data capture and analysis solutions.
“Our drone autonomy, LiDAR mapping and analytics technology will certainly benefit the architecture, engineering and construction (AEC sector), as well as the oil, gas and defence markets,” he said.
Perennial Partners’ Portfolio Manager Karen Chan said the team was excited to partner with Dr Hrabar and Dr Kendoul as they continued to take Emesent global.
“Its best-in-class technology is disrupting the manual and inefficient nature of asset and infrastructure management, through enabling businesses and operators to reach inaccessible areas, improve safety for employees and reduce downtime,” she said.
Tiger Global partner Griffin Schroeder said Emesent was pushing the boundaries of what could be done with drone autonomy.
“Emesent’s leading drone-based data capture platform gives companies unprecedented access to some of the most challenging geographies,” he said. “From a safe distance, enterprises can now collect high-quality data that was previously impossible to acquire.” (Source: UAS VISION)
22 Feb 22. Airbus, Safran and Tikehau Ace Capital sign an agreement with Eramet for the joint acquisition of Aubert & Duval. Airbus, Safran and Tikehau Ace Capital announce that they have signed a Memorandum of Understanding with the mining and metallurgical group Eramet for the acquisition of its subsidiary Aubert & Duval. The three partners intend to acquire 100% of Aubert & Duval through a new joint holding company that would be specifically set up for this transaction and in which they would have equal ownership rights. Aubert & Duval is a strategic supplier of critical parts and materials for a number of demanding industry sectors, notably the aerospace, defence and nuclear industries, with annual revenues of approximately €500m and a workforce of around 3,600 employees based mostly in France. The company has end-to-end capabilities in special materials and superalloys, as well as nascent expertise in titanium, which are critical to aerospace, transportation, energy and defence applications. This acquisition would allow Airbus and Safran to secure the strategic supply chain, for themselves as well as other customers, and new material development for current and future civil and military aircraft and engine programmes. It is also consistent with the initiatives taken in the last few years to support the French aerospace industry’s supply chain, and in particular the creation, with the help of the French State, of the Ace Aéro Partenaires fund managed by Tikehau Ace Capital.
Olivier Andriès, Safran’s CEO, said: “Aubert & Duval is a historical supplier of Safran with unique technical expertise in Europe. The planned acquisition will ensure national sovereignty for our most strategic programmes for disruptive civil and military aircraft engines. Given its industrial expertise in metallurgy, Safran will lead the operational management of the company. The transformation programme will reinforce customer confidence and create a national champion with a strong French industrial base capable of serving global markets.”
“Aubert & Duval, with its critical knowledge and expertise dating back more than a century, is a strategic supplier to Airbus and the entire aerospace and defence industry. Our sector, which has started to emerge from the COVID crisis, needs a solid partner to ramp up production while preparing next-generation technologies in aerospace”, said Airbus’ CEO Guillaume Faury. “With this acquisition and an ambitious transformation plan, we aim to restore the operational excellence and market confidence in Aubert & Duval to create, in the mid- to long-term, a leading European player able to face global competition as well as to reduce geopolitical risk of supply.”
“This joint acquisition sends a strong and very encouraging message about the acceleration of the restructuring, the transformation and the consolidation of the supply chain in the aerospace industry”, added Marwan Lahoud, Executive Chairman of Tikehau Ace Capital. “Together with Airbus and Safran, by bringing the capital and top industrial expertise needed to leverage the strategic excellence of Aubert & Duval, we are proud to contribute to support the recovery of the sector at the most critical time, when aeronautical companies have to invest again to accompany the revival of activity and project themselves into the future.”
The proposed transaction is subject to consultation with relevant employee representative bodies and all necessary regulatory approvals. The closing is expected in the fourth quarter of 2022.
In the context of this operation, a “specific share” was set up by the French State within Eramet with the scope of certain strategic assets held by Aubert & Duval. This specific share will be replaced by a similar one within Aubert & Duval, upon completion of the transaction.
21 Feb 22. EU antitrust regulators to decide on Parker, Meggitt deal by March 28. EU antitrust regulators will decide by March 28 whether to clear U.S. engineering and aerospace company Parker-Hannifin’s (PH.N) 6.3bin-pound ($8.57bn) bid for British rival Meggitt , according to a European Commission filing on Monday. The EU competition enforcer can clear the deal with or without remedies or it can open a four-month long investigation if it has serious concerns. The British government is reviewing the impact of the takeover on national security grounds. Meggitt makes components for aircraft makers such as Boeing (BA.N) and Airbus (AIR.PA) and also supplies wheel and brake systems for military fighter programmes. ($1 = 0.7348 pounds) (Source: Reuters)
18 Feb 22. Epirus Raises $200m in Series C Funding. Epirus, a developer of directed energy systems and power management solutions, announced $200m in Series C funding, bringing the company’s total financing raised to-date to $287m. With a valuation of $1.35bn, the company is uniquely positioned as a robust technology provider. The round was led by funds and associates advised by T. Rowe Price Associates, Inc., with support from original investor 8VC, alongside a diverse set of investor groups: Bedrock, Broom Ventures, EPIQ Capital Group, Gaingels, General Dynamics Land Systems, I Squared Capital, Moore Strategic Ventures, Parkwood, Piedmont Capital Investments, Red Cell Partners and StepStone Group.
“I am grateful for our new and returning investors who share our vision for redefining the future of power. Nothing that we achieve as a company would be possible without the extraordinary work and dedication of our most valuable asset: our people,” said Leigh Madden, Chief Executive Officer of Epirus. “This new round of funding and associated valuation are clear signals of the increased demand for our directed energy systems and the limitless application areas for our SmartPower technology. Our successes to date are noteworthy and, with our world-class team at the helm, I trust that the best is yet to come for Epirus.”
Since its founding in 2018, Epirus has quickly translated its bold vision into a rapidly scaling company with multiple product lines in development to support both government and commercial markets. In the past year alone, Epirus more than doubled its workforce and opened a new Corporate Headquarters in Torrance, California to support the company’s accelerated growth. With recent contracts awarded by the Defense Advanced Research Projects Agency (DARPA) and the Army Applications Laboratory, Epirus continues to establish itself as a major player in the defense technology space and lay the groundwork for the commercial application of its technology.
“What we’re seeing in the market today is a disconnect between the national security challenges at hand and the pace of innovation needed to solve them,” said Simon Paterson, Investment Analyst at T. Rowe Price Associates. “With its scientific sophistication, cutting-edge technology and seasoned leadership team, Epirus is well positioned to bring forth enduring solutions to some of the most defining challenges of our time, helping to make the world a safer place.”
Epirus built, demonstrated and validated its flagship product Leonidas – the world’s most powerful software-defined high-power microwave (HPM) system – in under a year, a testament to the company’s culture of rapid innovation. Epirus recently expanded their directed energy product portfolio with the introduction of Leonidas Pod, a portable and modular HPM system. Leonidas and Leonidas Pod work in unison to create a layered defense system against hostile drones and other electronic threats.
“These funds position Epirus to further disrupt an industry in desperate need of change and invention. Epirus’ SmartPower platform will transform a broad range of defense and commercial applications by saving power, extending range and increasing reliability,” said Grant Verstandig, Executive Chairman and Co-Founder of Epirus. “At a time when drone attacks are on the rise, Epirus’ world-class leadership team has validated the efficacy of HPM technology.”
Powering the company’s cutting-edge products is Epirus’ machine-intelligent SmartPower technology platform. The platform uses real-time machine intelligence to deliver unprecedented outcomes in power management – increasing efficiency and maximizing output. This technology could address some of the world’s most pressing environmental challenges, distributing energy more efficiently across various use cases.
“In just three short years since we founded the company, the team at Epirus has disrupted the status quo with their revolutionary technology, bridging the gap between innovation and establishment,” said Joe Lonsdale, Managing Partner at 8VC and Co-Founder of Epirus. “This new round of funding will enable the company to ascend even further – expanding the visionary team, forging new markets and ultimately creating long-term economic and societal value.” (Source: UAS VISION)
11 Feb 22. Aerojet Rocketdyne Leadership Shake up. Tensions within Aerojet Rocketdyne Holdings Inc.’s leadership erupted in Delaware’s Chancery Court on Friday when Aerojet and its CEO sued to oust the executive chairman, whom Aerojet says is undermining its disputed $4.4 billion merger with Lockheed Martin Corp.
Aerojet Rocketdyne, CEO and President Eileen P. Drake and three other board members sued the other half of the company’s eight-member board, including Executive Chairman Warren Lichtenstein, who has launched a proxy war to wrest control of the company. Lichtenstein and his supporters have paralyzed the board in the meantime, which Aerojet Rocketdyne says threatens to unravel its tie-up with Lockheed Martin as federal regulators in late January sued to bust the deal.
“Never more than now, Aerojet Rocketdyne’s stockholders need a fully-functioning board to ensure compliance with the terms of the merger agreement and a fully aligned management continuing to fulfill its fiduciary obligations,” the complaint says.
According to the complaint, Lichtenstein had opposed the merger in its beginning stages, allegedly pushing alternatives that Aerojet Rocketdyne criticized as inappropriate and pressuring board members to reject Lockheed’s offer. After the board approved the merger, Aerojet says that Lichtenstein retaliated by leaking his disapproval to industry figures, as well as his intent to take control of the company if the deal fell through.
The suit takes further aim at the notice sparking the proxy fight, alleging it was faulty under the company’s bylaws.
Representatives for both parties didn’t immediately respond to after-hours requests for comment. The cases are Aerojet Rocketdyne Holdings Inc. et al. v. Aerojet Rocketdyne Holdings Inc. et al., case number 2020-0146, and In Re Aerojet Rocketdyne Holdings Inc., case number 2020-0127, both in the Court of Chancery of the State of Delaware. (Source: Satnews)
15 Feb 22. Gilat Reports Full Year 2021 Results. Gilat Satellite Networks Ltd. (NASDAQ: GILT, TASE: GILT), a worldwide leader in satellite networking technology, solutions and services, today reported its results for the fourth quarter and full year ended December 31, 2021.
Fourth quarter revenue of $67.3m, up 58% YoY; GAAP operating income of $5.6m; Adjusted EBITDA of $10.6m;
Fourth Quarter Financial Highlights
- Revenues of $67.3m, up 58% compared with $42.6m in Q4 2020 and up 35% compared with $49.9m in the previous quarter;
- GAAP operating income of $5.6m compared with $62.7m in Q4 2020 which included a one-time net income of $64.8m related to the settlement with Comtech. Excluding this item, Q4 2020 operating loss would have been $2.1m. GAAP operating income in the previous quarter was $0.9m;
- Non-GAAP operating income of $6.8m, compared with Non-GAAP operating loss of $1.6m in Q4 2020, and Non-GAAP operating income of $1.5 m in the previous quarter;
- GAAP net income of $2.4m, or $0.04 per diluted share, compared with net income of $62.4m, or $1.12 per diluted share in Q4 2020. GAAP net income for Q4 2020 included the above-mentioned net income from the Comtech settlement; GAAP net income in the previous quarter was $0.2m, or $0.00 per diluted share;
- Non-GAAP net income of $5.9m, or $0.10 per diluted share, compared with Non-GAAP net loss of $1.9m, or loss of $0.03 per share in Q4 2020 and Non-GAAP net income of $0.7m, or $0.01 per diluted share, in the previous quarter;
- Adjusted EBITDA of $10.6m, compared with $1.1m in Q4 2020 and $4.0m in the previous quarter; (Source: Satnews)
16 Feb 22. Momentus Legal Appeal. Law360 (February 15, 2022, 6:25 PM EST) — Special purpose acquisition company Stable Road Acquisition Corp. and commercial space business Momentus Inc. have asked a California federal court to let them out of a proposed investor class action, arguing the shareholders didn’t properly back up their claims about purported company misstatements.
The companies said in memoranda filed Monday that claims made against them by a proposed class of investors led by Hartmut Haenisch should be dismissed with prejudice. Stable Road argued that Haenisch conceded in the latest version of the complaint that information he alleged should have been disclosed wasn’t actually ever shared with Stable Road.
“The primary exhibit on which plaintiff relies — a cease-and-desist order filed by the [U.S. Securities and Exchange Commission] — concluded that the Stable Road defendants did not act with fraudulent intent and the SEC declined to bring the very same claims that plaintiff asserts here,” Stable Road argued.
The SEC filed the cease and desist order in July 2021 when it reached settlements with Stable Road, its sponsor and CEO, and the SPAC’s proposed merger target, Momentus, for allegedly falsely telling investors that Momentus’ propulsion technology had been successfully tested in space. The SEC said that the settlement penalties totaled more than $8 million, a development that alerted key players in the booming SPAC market about the risks of cutting corners.
The agency said that Momentus and its founder and former CEO, Mikhail Kokorich, repeatedly told investors that the company had successfully tested its propulsion technology in space when in reality the company’s only in-space test actually “failed to achieve its primary mission objectives or demonstrate the technology’s commercial viability.”
The SEC also filed a complaint against Kokorich in July 2021 that alleged he deceived Stable Road and investors in order to complete the transaction, according to court records. Stable Road noted Monday that Kokorich denied those allegations and that litigation is ongoing.
Shortly after the SEC settlements were announced, investor Keith Jensen filed the initial version of the proposed class action, accusing Stable Road of failing to admit that in-space tests of Momentus’ technology had failed. Jensen also cited the SEC’s contention that “Momentus and Kokorich also misrepresented the extent to which national security concerns involving Kokorich undermined Momentus’s ability to secure required governmental licenses essential to its operations.“
Jensen alleged that Kokorich’s January 2021 resignation from Momentus sent trading prices for Stable Road shares tumbling by nearly 20%. The investor also claimed that the SEC’s July announcement of its settlement with the Stable Road parties pushed down trading prices for the company’s shares by 10%.
Haenisch was appointed lead plaintiff in October and filed an amended complaint the following month, according to court records.
Stable Road argued Monday that Haenisch relies on “a scattershot of conclusory and circumstantial allegations” in his claims that the company made the purported misstatements with scienter, or fraudulent intent. The SPAC also said that the investor’s allegations that Kokorich and Momentus misrepresented and concealed information from Stable Road undercut his claim that the SPAC acted with scienter.
Stable Road said Haenisch is trying to hold the SPAC liable for statements it didn’t make and that he conceded Stable Road didn’t know about the alleged falsity of disclosures regarding Momentus. And Haenisch didn’t adequately show that the SPAC acted with deliberate recklessness because the investor pointed out that the company retained third-party advisers to help with diligence efforts and put out multiple disclosures warning investors about the “limitations” of the company’s diligence.
The SPAC also argued that Haenisch improperly grouped the defendants together in his pleadings.
In its own memorandum, Momentus argued Monday that many of the purported misstatements are either protected under the Private Securities Litigation Reform Act of 1995’s safe harbor provision or are considered “inactionable corporate puffery, optimism and/or opinion.”
Haenisch failed to plead any materially false or misleading statements, only challenging certain statements in which the defendants describe a 2019 test of Momentus’ technology as “successful,” the company argued.
“Plaintiff’s challenges to those statements fail for numerous reasons, including that Momentus actually achieved (rather than failed) the overall objective of that test by successfully demonstrating its technology’s ability to produce water plasma in space,” Momentus said.
Counsel for Momentus wasn’t immediately available to comment Tuesday, and counsel for Stable Road declined to comment. Counsel for the plaintiffs didn’t immediately respond to a request for comment.
Stable Road announced in October 2020 that it had agreed to merge with private equity-backed Momentus to create a publicly traded entity valued at about $1.2bn. Momentus’ backers included Prime Movers Lab, Y Combinator, Tribe Capital and Liquid2VC, a venture firm that counts NFL legend Joe Montana among its managing partners.
At the time of the announcement, Momentus shared lofty goals, including being able to have its space vehicles mine the moon and asteroids for water and other materials by 2035. The space cargo company boasted a customer list that included satellite operators, manufacturers, launch providers and defense companies such as Lockheed Martin and NASA. (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.