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10 Mar 22. uAvionix Acquired by DC Capital Partners. uAvionix has announced its acquisition by DC Capital Partners, LLC (DCCP). Since uAvionix’s inception, the company has leveraged disruptive technology to emerge at the forefront of the unmanned and general aviation markets. Becoming a portfolio company of DCCP will propel uAvionix forward with the means to impact the broader aerospace and defense markets. With over 30 years’ experience, DCCP is a Private Equity investment firm with over 60 acquisitions and $1bn in total investments. Over time, DCCP has developed a strategic and systematic approach built on three pillars of Domain Expertise, Market Focus, and Strategic Process to building and accelerating companies’ success. DCCP has deep bench of strategic advisors including well-respected senior diplomatic, intelligence, and military officials.
uAvionix CEO Paul Beard said “DCCP share our passion for connecting everything that flies, especially our current general aviation and UAS avionics products. DCCPs experience in maturing young companies will help us to improve our internal operations, allowing us to expand our solutions to existing, adjacent and defense markets, while enabling us to scale globally. I’m incredibly proud of how far we’ve come in just 7 years since our founding. This next chapter with DCCP will be just as challenging, just as exciting, and propel us even further along our aerospace and defense trajectory.”
Thomas J. Campbell, Founder and President of DC Capital Partners, said, “We are extremely pleased to partner with Paul and the team. uAvionix has a history of developing and delivering disruptive technology to the manned and unmanned sectors. Their highly skilled and talented workforce continues to develop new and game-changing solutions to meet evolving requirements. We will continue to grow the company and to deliver innovative technologies and differentiated capabilities and solutions to our customers.”
Entering into this next chapter, uAvionix remains committed to the current customers, products, and strategies which have driven success to-date, including general aviation displays and ADS-B products as well as the entire solution set for certified and certifiable unmanned aircraft. (Source: UAS VISION)
10 Mar 22. Leonardo sees EU defence spending boosting cash flow, pays dividend. Italian aerospace and defence group Leonardo (LDOF.MI) expects free cash flow to more than double this year compared with 2021 as governments around the world step up military spending in response to Russia’s invasion of Ukraine.
“The process of integration and creation of a European defence and the increase in defence spending in EU and neighbouring countries could be accelerated, creating opportunities for companies operating in the sector,” the group said in a statement on 2021 results.
It added its exposure to operators directly affected by sanctions against Russia was around 30 million euros ($32.97 million), with an order backlog with Moscow of about 25 million euros.
The exposure to Ukraine was negligible.
The state-controlled group said it was monitoring the geopolitical situation closely and was aligned with Italy’s government policies.
Last year Leonardo reported a free cash flow of 209m euros and a 142% rise in net profit to 587m euros, beating full-year guidance.
Revenue was up 5% to reach 14.1bn euros, driven by sales in the governmental and defence businesses, which accounted for 88% of total.
“We are confirming our target of generating a cumulative 3 billion euro of cash flow over 2021-2025, with a significant step up in 2022,” CEO Alessandro Profumo said, adding the group would return to paying a dividend based on its 2021 earnings.
This year, free operating cash flow is seen rising to 500m euros and revenue is expected to be between 14.5bn and 15bn euros. All the businesses have recovered pre-pandemic levels, excluding the Aerostructures division, which is under restructuring, the group said, adding it was seeing signs of recovery in the civil aeronautics business. Germany, which has long played down the role of its military in foreign policy, as well as Denmark and Poland have all said they will ramp up defence spending with war at their doorstep. ($1 = 0.9099 euro) (Source: Reuters)
10 Mar 22. Italy annuls sale of military drones firm to Chinese investors, sources say.
- Summary
- Tax police say deal was predatory investment in technology
- Government has imposed fines, source says
- Draghi has blocked four Chinese forays in 13 months
- Parliament urging government to strengthen anti-takeover powers
- Rules have triggered legal challenges, increased red tape
Italy on Thursday annulled the sale of a military drones company to Chinese investors, three government officials told Reuters, the latest in a series of moves by Prime Minister Mario Draghi to curb Beijing’s forays into the euro zone’s third-largest economy.
The government opened an investigation last year into the 2018 sale to the Chinese players of a 75% stake in Alpi Aviation, based in northern Italy.
Rome decided to annul the deal after the probe concluded that those involved should have informed the government about the transaction under Italy’s so-called “golden power” regulations aimed at shielding strategically important assets.
The decision was ratified at a cabinet meeting on Thursday, the sources said. Prime Minister Mario Draghi’s office declined to comment.
The case showed how easy it is for changes in corporate ownership to slip under the radar at a time when pressure is rising in the United States and Europe to monitor potential risks to national security from Chinese investors.
The Chinese groups involved in the takeover are China Corporate United Investment Holding (CCUI) and CRRC Capital Holding, which are in turn controlled by the Management Committee of Wuxi Liyuan Economic Development Zone and SASAC.
A request for comment sent to these groups went unanswered outside of business hours. The Chinese embassy in Rome was not available to comment.
The operation was conducted through a chain of investment vehicles originating from a Hong-Kong based firm called Mars, which holds 75% of Alpi Aviation.
As well as annulling the deal, the Italian government has also imposed fines on those involved, one of the officials told Reuters, without giving details.
PREDATORY INVESTMENT
The case became public in September, when Italian tax police disclosed they were looking into a possible breach of rules regarding the sale of military materials, saying six people were under investigation.
Police at that time said the deal was “clearly” a predatory investment in technology.
The lawyers for Alpi Aviation declined to comment. They had previously said the sale of the stake was transparent and complied with all regulations.
Italy’s use of its golden power usually results in deals being approved with recommendations intended to preserve national interest.
Since the golden power was introduced in 2012, government authorities have actually blocked foreign forays into Italy just six times. Five of these headed off Chinese bids, and four have come since Draghi took office 13 months ago. r
Alpi Aviation’s case prompted Italy’s parliamentary committee on national security (COPASIR) to urge the government to strengthen the golden power.
“Rome should create a body similar to the Committee on Foreign Investments in the United States (CFIUS), which actively investigates any market deal deemed of strategic importance and not only notified transactions,” COPASIR member Enrico Borghi told Reuters.
However, the increasing use of golden powers has triggered legal challenges from both Chinese investors and their Italian prey.
It has also increased red tape for firms which are informing the government of any mergers to avoid possible infractions and fines, even when this would not be necessary.
Last year the number of notifications jumped to almost 500, compared with 342 in 2020 and just 83 in 2019, said one of the officials. More than 40% of the notifications in 2021 regarded operations in non-strategic firms. (Source: Reuters)
10 Mar 22. Draper Associates & ATX Venture Partners Lead Slingshot Aerospace’s Oversubscribed $25m Series A-1 Funding Round. The funds will be used to accelerate the commercialization of Slingshot Beacon, the world’s first collision avoidance collaboration and communications platform for space Slingshot Aerospace, Inc., a company building world-class space simulation and analytics products to accelerate space sustainability, announced today that it has raised $25m in Series A-1 funds. The new money is in addition to the $9.6m Series A funds raised in October 2020, bringing the total raised for the A and A-1 rounds to $34.6m to date. The oversubscribed A-1 round was co-led by Draper Associates, the global venture capital firm of prominent Silicon Valley venture capitalist Tim Draper, and ATX Venture Partners. Additional participation in the round included Edison Partners, Embedded Ventures, Valor Equity Partners, Lockheed Martin Ventures, and more. Participation from previous investors also included Revolution’s Rise of the Rest Fund, Okapi Venture Capital and others. Since inception in July 2017, Slingshot Aerospace has raised $42m in funding.
“We invested in Slingshot Aerospace because the company is revolutionizing the space industry and bringing the global space-faring community together in a way that has never been done before,” said Tim Draper, Founding Partner, Draper Associates. “Slingshot Aerospace is charting a new course for humanity by building technologies and awareness to ensure space remains a safe and secure gateway of discovery. We share Slingshot’s desire to keep space a core tenet of our global economy for generations to come.”
Slingshot Aerospace will use the new funds to accelerate the commercialization of its products and technologies, including Slingshot Beacon, the industry’s first space collision avoidance cross-coordination and communications platform. The platform connects commercial, government and civil customers on one platform to better design, manage, and safeguard their satellites and other assets; mitigate risks; and ensure safe and reliable operations for all spaceflight operators. The company will also use the funds to hire 40 new employees over the next 12 months.
“Space situational awareness is ripe for disruption,” said Daniel Herscovici, Partner, Edison Partners. “No common platform exists for satellite operators to communicate and collaborate in real time with actionable information to resolve on-orbit conjunctions and optimize global space awareness. We believe Slingshot has cracked the code and is well positioned to expand Slingshot Beacon and the company’s other products to every space operator around the world. The company’s offerings will keep the industry flying safer as the number of objects in space increases, while elevating sustainability across the international community for generations ahead.”
“Investment within the space industry is booming, with the majority of the funds being funneled into rockets and satellites; however, there is critical infrastructure that is necessary in order for these objects to be successful in space,” said Jenna Bryant, CEO, General Partner, and Co-founder, Embedded Ventures. “At Embedded, we invest in space technologies beyond the launch that meet at the intersection of innovation, national security, and safety. Slingshot Aerospace is providing a vital capability through Slingshot Beacon that will ensure safe space operations for years to come.”
There are 115,000 satellites planned to enter space by 2030, which means more potential collision avoidance decisions will need to be made. Slingshot Aerospace is bringing the space domain into the digital environment to create a fully virtualized, dynamic orbital environment for its customers with its space simulation and analytics solutions.
“Data trust and transparency are imperative for humanity to continue operating in space,” said Melanie Stricklan, CEO & Co-founder, Slingshot Aerospace. “The opportunities are endless in space but we must unlock a digital revolution to optimize spaceflight operations and orbital asset management. Real-time coordination is necessary to provide more accessible, timely and accurate risk mitigation across all space faring organizations. Earth’s orbits should be considered critical infrastructure as humanity and our global economy depend heavily on it for safety and security. Slingshot is on a mission to accelerate space sustainability to ensure space continues to be the portal of progress and unity that the world needs for generations to come.”
Slingshot Aerospace is accelerating space sustainability by accurately virtualizing the space operating environment and layering in global coordination to remove uncertainty, reduce risk, and preserve assets that are vital to our way of life. The company works with organizations such as OneWeb, Spire Global Inc., Orbit Fab, U.S. Space Force, U.S. Air Force, NASA, Boeing, Lockheed Martin, and more.
About Slingshot Aerospace
Slingshot Aerospace, Inc. is creating world-class space simulation and analytics solutions. The company brings the space domain into the digital environment and fuses data from different sources to provide a full, dynamic orbital picture. In doing so, Slingshot Aerospace customers can make decisions at the speed of relevance and achieve clarity in complex environments. Launched in 2017 and based in Austin, TX, and Los Angeles, CA, Slingshot Aerospace seeks to help government and commercial customers accelerate space sustainability to create a safer, more connected world. Visit slingshotaerospace.com and follow Slingshot Aerospace on Twitter, Facebook and LinkedIn.
The Slingshot Aerospace media kit, including photos, (Source: BUSINESS WIRE)
10 Mar 22. Patria acquires NEDAERO. Patria has agreed to acquire 100% of the shares of NEDAERO, a leading Dutch specialist in defence and aerospace components and parts. NEDAEROs operations are located in Zevenaar and Alphen aan den Rijn in the Netherlands and the company has about 35 employees. NEDAERO has several decades of experience in manufacturing and MRO business in both the civil and military aviation industry. The transaction will be completed on April 1st, 2022.
This acquisition is part of Patria’s growth strategy execution where the main focus area is international maintenance and life cycle support business, particularly in Europe. NEDAERO will be re-named Patria Netherlands to highlight the synergies of joining Patria Group.
“NEDAERO joining Patria is an interesting milestone in our growth strategy. Patria has a long history and solid know-how in aircraft maintenance, including their engines and components, in Finland and internationally, and this acquisition strengthens Patria´s capabilities further as well as expands the international footprint to the Netherlands. We are committed to continue the excellent work done so far in the company, as well as the high-quality standard which customers expect of us. I also want to welcome NEDAERO’s personnel to be part of Patria, and I am convinced that together we will be stronger and more competitive, which enable us to develop this business further”, states Jukka Holkeri, Executive Vice President of Patria’s Global Division.
“Over the past five years, NEDAERO has doubled its revenue and further growth opportunities lay ahead. Being part of Patria provides significant chances to further accelerate this growth. We look forward to working together and ensuring our customers even more services in future”, says Ruud Kleinendorst, CEO and President of NEDAERO.
The acquisition does not change commitments towards the customers or terms of employment for NEDAERO employees or other commitments of the company and is in full compliance with legal requirements. As a consequence of this acquisition, the official name of NEDAERO will be changed to Patria Netherlands, and communications will be built around the Patria brand. A few months’ transition period to implement Patria’s brand into the new unit is foreseen.
10 Mar 22. Thales SA (HO FP), BUY, €110.80 PT: €133.00. With defense activities entering a durable upcycle, and the civil rebound still ahead of us, Thales is an attractive growth story, in our view. At 8% sales CAGR, driven by defense in an uncertain economic environment, we believe the re-rating is justified. We like the optionality on further buybacks, as defense momentum boosts FCF, and reiterate our Buy with PT at €133 (€121 previously).
Insights
Growth coming from the group’s two engines. The invasion of Ukraine changed the paradigm around defense spending, which means Thales is now set to see growth driven by both its defense activities and civil recovery. We expect a c. 10% CAGR over 2022-24 in Defense & Security, making the division a key driver of the group’s 8% CAGR over the period. We note an array of potential upside, notably from further acceleration in France’s defense spending, additional Rafale exports, and the Telesat contract — not yet included in the group’s outlook. By 2024, we expect these combined could add 3-5% to our top-line expectations.
Cost inflation well offset by FCF upside potential. As other civil names, Thales faces the concerns of cost inflation, although this limited due to (1) Thales’ cost base structure (c. 60% are labor & D&A) and (2) the limited change in headcount, down less than 2% since end-19. Chip shortages concerns remain. But the impact of an inflation shock on chip demand may offer some protection for Thales, especially related to its defense production. On the flip side we note a strong potential for a beat on FCF should the group record an acceleration in order intake owing to the current push for demand products. The potential for Indonesia to secure funding for its entire order of 42 aircraft would also provide uplift to the group’s guidance to the tune of c. €200m. All in all, we stand c. €600m above the group’s guidance for 2022-23 FCF, as we assume more cash inflow from stronger defense advance payments.
Re-rating to 12-13x EV/EBIT does not appear excessive. The share rally over the past three weeks implies a re-rating to 13.2x 2022E EV/EBIT, which may seem significant coming from just 10x prior to the invasion of Ukraine. We flag that this is in line with prior peaks, with a number of factors making most of this re-rating durable. In our view, the stronger defense upcycle alone would justify a return to c. 12x EV/EBIT, the basis of our of SOTP. Adding to this the optionality of further buybacks and that of more ESG money flowing back into the sector would justify multiple expansion up to 14x, in our view. These two effects are the main drivers of our upside scenario, representing 50% upside.
We slightly trim our estimates over 22-23 (EPS -4%/-2%) to reflect some delay vs. our initial assessment of the defense upcycle impact. This follows Thales’ comments that short-cycle orders such as retrofits could only impact top line from mid-23. Stronger FCF performance across 2021-24 more than offsets this headwind on our valuation. We reiterate our Buy recommendation with 20% upside potential. We believe any announcements on French defense budget represent the main short-term catalyst. (Source: Jefferies)
09 Mar 22. Brazil’s Embraer reports Q4 net profit of $2.1m. Brazilian planemaker Embraer SA (EMBR3.SA) on Wednesday reported net profit of 11.1 m reais ($2.1mi) in the fourth quarter, up from a 7.7m reais net loss a year earlier.
Quarterly net revenue came in at 7.3 bn reais, a 25% drop year-on-year. The average estimate of analysts polled by Refinitiv Eikon was 4.95 bn reais.
The company reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) 22% below the same quarter from 2020 at 609.4m reais, while its adjusted EBITDA margin were at 8.4%, “driven by increased operational efficiency and better prices,” it said.
The planemaker had already reported its delivery figures for the fourth quarter in February, when it said its firm order backlog ended 2021 at the highest level since the second quarter of 2018, making analysts call for “solid” quarterly results. read more
Embraer also provided guidance for 2022, excluding its electric aircraft subsidiary Eve, saying it expects deliveries for its commercial unit between 60 and 70 jets and executive jet deliveries in the range of 100-110 aircraft. Its free cash flow forecast were $50m “or better”, while its revenues were forecasted in a range of $4.5bn to $5.0bn for the year. ($1 = 5.0123 reais) (Source: Reuters)
09 Mar 22. Leonardo to take into account EU defence plans when weighing units sale – unions. Italy’s Leonardo (LDOF.MI) will take into account the effort of European governments to build common military capabilities, when assessing options to sell two of its defence units, unions said after meeting with the group’s CEO. Representatives from Italian metalworkers union FIOM-Cgil said in a statement that Leonardo did not make clear what was its plan for its OTO Melara and Wass units, which it put on the block last year. On Tuesday three sources told Reuters that Leonardo’s plan to find a buyer for its OTO Melara and Wass units had been put on hold adding that Rome believe that any choice over the future of the two units had to be part of a broader strategy on defence. read more (Source: Reuters)
09 Mar 22. TAT Technologies Reports Full Year 2021 Results. TAT Technologies Ltd. (NASDAQ: TATT) (“TAT” or the “Company”), a leading provider of products and services to the commercial and military aerospace and ground defense industries, reported today its audited results for the twelve months ended December 31, 2021.
Key Financial Highlights:
- Total revenues for the twelve months ended December 31, 2021, were $78m compared to $75.3 m for the twelve months ended December 31, 2020, an increase of 3.6%.
- Gross profit for the twelve months ended December 31, 2021, were $11.3m (14.5% of revenues) compared to $8.4 m (11.2% of revenues) for the twelve months ended December 31, 2020, an increase of 35%. The Gross margin for 2021 without a onetime impact of the restructuring plan was $12.5m (16% out of revenues). The improvement in gross margin is mainly attribute to government grants that the company received during the year and to cost cutting measures that were taken during the year.
- Adjusted EBITDA for the twelve months ended December 31, 2021, was $3.3m compared to $1.1m for the twelve months ended December 31, 2020. An improvement of 296%.
- GAAP net loss from continued operations for the twelve months ended December 31, 2021, was $4m ($2.2 m without a onetime impact of our restructuring plan) compared to GAAP net loss from continued operations of $3.5m for the twelve months ended December 31, 2020. A decrease of 62% in net loss from continued operations without a onetime impact of our restructuring plan.
- Cash net of debt for December 31, 2021, was $0.5m compared to $16.2m for December 31, 2020. During the years 2020 and 2021, the Company made significant capital investments related to the three large strategic agreements with Honeywell and the restructuring plan.
Mr. Igal Zamir, CEO and President of TAT Technologies stated, “2021 was a unique and challenging year for the aerospace industry and for TAT. While volumes and prospects improved during 2021, volatility and uncertainty continued to be part of our business environment”. Mr. Zamir continues: ” during 2021 we closed additional two strategic deals with Honeywell for the MRO and lease activity of APU331-500 (which are mainly used in the Boeing 777 fleet) and APU131 (which are mainly used in the Boeing 737 and the Airbus 320 fleets). We are already benefiting from the fruit of the lease activity, and we are building the production infrastructure to be able to provide MRO services for these APUs during 2022. We believe that these deals will consist of a major growth factor for TAT as the aerospace industry will shape up. In parallel we are in the final phase of closing a production facility in Israel reducing our operational foot print to three major facilities with significant cost savings. We continue to ramp up our Heat Exchange capabilities in our Limco facility in Tulsa Oklahoma. We are expecting to see the impact of these strategic transaction in our financial results starting from the second half of 2022″. (Source: PR Newswire)
09 Mar 22. Curtiss-Wright Corporation (NYSE: CW) (“Curtiss-Wright” or the “Company”) announced today an agreement with Saddle Point Management, L.P. (together with its affiliates, “Saddle Point”) pursuant to which Saddle Point has withdrawn its proposals and its nominees for election to the Company’s Board of Directors (“Board”) at the Company’s upcoming 2022 Annual Meeting of Stockholders.
“We appreciated our engagement with Saddle Point and respect the significant work it has done as part of its approach to investing in our company,” said Lynn M. Bamford, President and CEO of Curtiss-Wright Corporation. “We are always open-minded when it comes to value creation ideas presented by our shareholders. As we have done historically, our approach to Board refreshment will continue to seek the best and most qualified candidates that bring to bear the critical skills and values in light of our business, financial profile and our portfolio’s increasing focus on Defense. We thank Saddle Point for its interest and input as a constructive Curtiss-Wright shareholder.”
“We thank Curtiss-Wright for its offer of continued dialogue as well as its acknowledgement of Saddle Point’s deep work,” said Roy J. Katzovicz, CEO of Saddle Point Management. “Most importantly, we applaud CEO Lynn Bamford’s continued drive towards increasing Defense exposure in the Company’s portfolio.” He added, “Given our constructive discussion with the Company and the onset of global hostilities, we believe that the right path forward is for Curtiss-Wright’s management team to execute their mission-critical work without distraction.”
The date of the 2022 Annual Meeting has not yet been announced. Stockholders are not required to take any action at this time. The Company expects to file its definitive proxy statement with the Securities Exchange Commission in due course.
08 Mar 22. Leonardo’s plan to sell units on hold amid Ukraine crisis-sources. Italian defence group Leonardo’s (LDOF.MI) plan to find a buyer for its OTO Melara and Wass units has been put on hold amid the crisis caused by Russia’s invasion of Ukraine, three sources close to the matter said.
Leonardo said in December it had received two expressions of interest in OTO Melara, which produces naval and terrestrial cannons, and Wass, which makes torpedoes, and was waiting for binding offers.
Leonardo said at the time it wanted to focus on helicopters, aircraft and electronics for defence, adding OTO Melara and Wass could have better growth opportunities outside the group. read more
Franco-German consortium KMW+Nexter Defence Systems (KNDS) and Italian shipbuilder Fincantieri (FCT.MI) have both expressed an interest in the two units.
But the Italian government, which controls both Leonardo and Fincantieri, wants to have a say in the deal, sources have previously said.
With Europe weighing the urgent need for closer cooperation on defence, Rome believes any choice over the future of the two units has to be part of a broader strategy.
In particular, Rome wants to have a role in an Europe-wide consortium for terrestrial military equipment, in which some of the assets of OTO Melara and Wass could be folded, a senior government official said.
The official said negotiations to reach the government’s goals were complex, and the current crisis made it difficult to pursue talks.
“The issue is suspended due to the war,” one of the sources said, asking not to be named given that deliberations are private.
Leonardo declined to comment. (Source: Reuters)
09 Mar 22. TT Electronics plc Results for the year ended 31 December 2021. Strong performance and record order book into 2022.
Financial Highlights
- Revenue and adjusted run-rate margin back to pre-COVID-19 levels
o Full year revenue up 14% year-on-year at constant currency
o Organic revenue growth of 10%
o Adjusted operating margin up 90bps to 7.3%, run rate of 8.1% excluding Virolens costs
- Adjusted operating profit up 31% reflecting benefits of growth and self-help actions
- Statutory operating profit increased to £19.3m, statutory basic EPS of 7.3p
- Balance sheet strength maintained while investing to support future growth, margin enhancement and to manage supply chain constraints
- Record order book into 2022 with increased visibility into H2 (2021 book to bill of 137%), including GMS fully booked
- Total dividend increase of 19% to 5.6p, reflecting strong performance and positive outlook
Operational Highlights
- Pricing and operational improvements, including self-help programme, offsetting cost headwinds
- New commitment to deliver a 50% reduction in Scope 1&2 emissions by end of 20232, Net Zero Scope 1&2 by 2035. 25% tCO2e reduction over last year
- Strong levels of employee engagement evidenced by results of our most recent survey3
- Torotel integrated ahead of plan and pipeline building
- Margin enhancing Ferranti acquisition in January 2022 expands technical capabilities
Richard Tyson, Chief Executive Officer, commented: “I’m really pleased with our strong organic growth in 2021, with revenue and adjusted run rate margins back to pre-pandemic levels. Significant increases in profits and EPS reflect the benefits of this growth, combined with our self-help initiatives, the successful integration of Torotel and excellent execution by the team. Our strategy is delivering, and we continue to invest for our future. We continue to enhance the quality of our businesses and are making tangible progress towards double-digit adjusted operating margins. We have started 2022 with a record order book, which gives us the confidence and the visibility to achieve our growth plans for the year whilst continuing to manage the ongoing cost and supply chain challenges in partnership with our customers. As a result, we are confident that TT’s momentum will continue, with the outlook for financial performance in 2022 in line with management expectations, although we are mindful of increased geopolitical uncertainty. With good customer wins, strength in our target markets, and the commercial aerospace recovery still to come, we believe the Group is in a strong position for the future.”
About TT Electronics
TT Electronics is a global provider of engineered electronics for performance critical applications.
TT solves technology challenges for a sustainable world. TT benefits from enduring megatrends in structurally high-growth markets including healthcare, aerospace, defence, electrification and automation. TT invests in R&D to create designed-in products where reliability is mission critical. Products designed and manufactured include sensors, power management and connectivity solutions. TT has design and manufacturing facilities in the UK, North America, Sweden and Asia.
10 Mar 22. TT Electronics refocuses on margin build.
Electronic components maker pushes ahead with ‘self-help’ programme to improve profitability
March 10, 2022
By Madeleine Taylor
- Higher adjusted operating profit margin of 7.3 per cent, aiming for double-digits
- Focus on structural growth markets including aerospace, defence and electrification
Trends toward renewable power, electrification and automation boosted demand for TT Electronics’ (TTG) components and manufacturing services in 2021, driving adjusted operating profits up 31 per cent in the full-year despite a backdrop of rising material and freight costs. Shares nudged up 2 per cent on results day, although this was not enough to make up for persistent weakness since the middle of last year.
Chief executive Richard Tyson said the firm started 2022 with a “record order book”, which gives him confidence in achieving growth in the coming year “whilst continuing to manage the ongoing cost and supply chain challenges in partnership with our customers”.
The electronic components manufacturer put prices up to protect fledgling growth in margins in 2021, having embarked on a “self-help programme” to remedy profitability after turning a loss in the first half of 2020. This turnaround strategy, which involved relocating manufacturing from Texas and Barbados to sites in the UK and Mexico, generated £6mn of savings benefits in 2021, with total savings expected to reach £13-14mn by 2023.
However, there is still a way to go before dreams of “double digit” adjusted operating margins are realised, with margins rising to 7.3 per cent over the last year, up from 6.4 per cent in 2020. Acquisitions including Ferranti Technologies’ power and control manufacturing arm, completed in January, are increasing exposure to structural growth markets and suggest more improvements to come.
Recent share price weakness sees shares trading on a forward PE ratio of just 10.5 which Numis viewed as “too cheap” given the current order visibility and restructuring benefits. The broker kept its target price at 300p, and recommended the firm as a ‘buy’.
However, setbacks from supply chains are likely to continue, and could even push some expected sales and profits into the second half of 2022. Hold. (Source: Investors Chronicle)
08 Mar 22. Anduril expands into Australia, appoints local CEO. The $6.3bn global defence technology company founded by former Facebook employee and designer of the OculusRift, Palmer Luckey, has officially entered the Australian market, appointing a new executive chairman and CEO to spearhead its local operations. Anduril has announced the launch of Anduril Australia — a new independent entity established to facilitate the local design, development, manufacture, and marketing of its major product lines. The new entity will be led by David Goodrich OAM, who has been appointed as executive chairman and CEO. Goodrich holds decades of corporate experience, which has included advising the Australian Defence Force. As part of its expansion into Australia, the company plans to invest in the development of a range of advanced technologies for the ADF and allied forces, including artificial intelligence, cost-effective autonomous unmanned systems, and next-generation networked weapons. Goodrich told Defence Connect the company would position itself for ontracts across all warfighting domains
“We are focused across all of the domains of defence and that includes maritime, land, air force, and space,” he said.
“Our technology and our operating system have the ability to add massive value across all of those domains.”
Anduril Australia will be headquartered in Sydney, however the company has pledged to create engineering, science, technology and manufacturing jobs across the country, developing a broad local industrial network.
According to Dr Shane Arnott, Anduril chief engineer, local firms have already joined the company’s supply chain.
“[We] will be doing industry outreach and specifically targeting those areas we’re looking to accelerate,” Dr Arnott told Defence Connect.
Anduril co-founder and CEO Brian Schimpf said in entering the Australian market, the company seeks to capitalise on the burgeoning appetite for defence innovation.
“The Australian Defence Force has long punched above its weight and been in the vanguard of regional security in the Indo-Pacific region, a role they will be asked to play more and more in the coming decades,” Schimpf said.
“Landmark treaties like AUKUS are signs that the century-long bond between the United States and Australia is only growing tighter and stronger.
“Australia has also embraced and deployed cutting-edge military technology — RAAF’s Loyal Wingman program is now one of the most impressive and innovative defence programs in the world. Add to all that a rich bed of Aussie STEM talent, and Australia is the perfect place for Anduril to grow.”
Newly appointed CEO of Anduril Australia, David Goodrich, welcomed the opportunity to support the ADF’s readiness in the future battlespace.
“Cutting-edge software and the ability to field a fully networked capability, is changing the battlespace. The old ways of operating exquisitely expensive but siloed capabilities simply won’t cut it in this new world,” Goodrich said.
“Now is the right time for the Australian Defence Force (ADF) and the Australian government to look at their technology development with fresh eyes.
“With an informed but disruptive approach and fresh thinking, Anduril is the ideal partner as the ADF embarks on this critical mission and I look forward to leading Anduril’s contribution to these efforts in Australia.”
Anduril employs more than 950 people around the world and is valued at over $6.3bn. Since launching in 2017, the company has established partnerships with US Department of Defense and the UK Ministry of Defence. Anduril was recently selected for a US$1bn contract with US Special Operations Command for counter-UAS technology. (Source: Defence Connect)
08 Mar 22. Kopin Reports Continued Strong Performance for Fourth Quarter and Fiscal 2021.
- 2021 Revenue $45.7m, a 14% increase Year Over Year.
- Industrial/Enterprise Revenues Increase 41% Year Over Year on Demand for Spatial Light Modulators.
- Consumer Revenues Increase 120% Year Over Year on Demand for OLED Products.
- Strong Growth in Customer-Funded R&D for AR/VR Microdisplays.
- In Q4 announced All-Plastic Pancake Optics for Metaverse headsets.
- Demonstrated 2.6K x 2.6K OLED Display-on-Chip at CES.
Kopin® Corporation (Nasdaq: KOPN), a leading developer and manufacturer of high-resolution micro-displays and sub-systems for defense, enterprise and consumer augmented reality (AR), virtual reality (VR) and mixed reality (MR) systems, today provided an update on its business initiatives and financial results for the fourth quarter and full fiscal year ended December 25, 2021.
“We are pleased with our full year 2021 results, with revenue increasing $5.5m, or 14%, year over year while fourth quarter revenues decreased 5% reflecting lower defense product revenue partially offset by increased industrial/enterprise and research & development (R&D) revenue. We have continued to see growing demand across all key product lines, with our Industrial product line driving growth in 2021,” said Dr. John C.C. Fan, CEO of Kopin. “Our Industrial and Enterprise revenues were $9.7 m for fiscal year 2021, an increase of 41% year-over-year, as demand for our spatial light modulators was particularly strong from contract manufacturers who continued the industry trend of converting their production lines to use 3D automated optical inspection systems for quality control. Our Consumer product revenues increased from $0.9 m in fiscal year 2020 to $1.9m in 2021, a 120% increase, on the strength of sales of organic light emitting diode display (OLED) products. While the absolute dollar amount of OLED revenues is modest, we believe the increase represents continued market traction and progress in developing this new product line.
“Our defense product line continued to perform well, with full year revenue of $18.2m. As expected, we ended the year with four development programs in low-rate initial production. We continue to maintain a growing and robust pipeline of defense programs in development, which we believe will continue to drive our defense revenues in the coming years. In the fourth quarter of 2021 shipments of our US Army’s Family of Weapon Sight-Individual (FSW-I) program were lower as we completed process enhancements to our line and we saw a strong rebound in shipping levels for the program, with the highest quarterly rate for the year achieved in the fourth quarter. As a reminder, in the second and third quarters of 2021 we slowed our shipment of FWS-I products for process enhancements. This resulted in a slight decrease in 2021 defense revenue. Our production rate and yield are satisfactory now and the demand is strong, as proven in the fourth quarter by the follow-on $19.8m order we received for this eyepiece subassembly. The majority of this order is scheduled to ship in 2022.”
Dr. Fan continued, “Another achievement in the fourth quarter was an additional $2.8m follow-on order for our high-brightness liquid crystal display for the F-35 Joint Strike Fighter Program. The F-35 is the worlds most advanced jet fighter combat aircraft, with much of its advanced functionality enabled through a sophisticated AR helmet which provides the pilot with critical flight, tactical and sensor information for advanced situational awareness, precision and safety. The order, which we believe extends our backlog of scheduled deliveries into the third quarter of 2022, is a true testament to the quality of our display technology. Finally, we announced we received a $1.1m order to provide eye pieces for the Joint Effects Targeting System with scheduled deliveries through 2022.
“2021 was both an exciting and challenging year for Kopin. We successfully navigated the global supply chain issues and continued to lead with innovations in display technologies and optics that enable a superior AR and VR experience for the users. In fact, during the fourth quarter we announced what we believe is the world’s first All-Plastic Pancake® Optics with excellent performance that enables smaller, lighter-weight VR and Metaverse headsets. Providing critical components for VR headsets that are thin, lightweight, comfortable and easy to use has been a long-term objective of ours. Previous Pancake optics needed at least one spherical glass lens to avoid image artifacts caused by birefringence of plastic materials, but this spherical glass lens added both weight and cost to the headset as well as reduced optical design flexibilities compared to our aspherical plastic lens. We believe our P95 and new P80 all-plastic Pancake optics, provides better image quality, smaller size, lighter weight and lower cost than anything previously available. To couple with our all-plastic Pancake options, we announced and demonstrated our 1.3” 2.6K x 2.6K OLED Display-on-Chip in January at CES,” said Dr. Fan.
“We are focused on continuing the growth of our core product lines, as we actively innovate and advance our technology roadmap for AR/VR/MR applications. Interest in the Metaverse continues to be strong, and we believe we are well positioned to capitalize on these opportunities it will create. In 2021, to capture these opportunities, we increased our internal R&D spending, with major focus on Pancake optics and microOLEDs. We also worked with our partners to fund R&D activities on MicroLEDs. We enter 2022 with a very strong backlog of orders and we believe this will be another year of good growth. However, like many companies we continue to deal with supply chain issues, and it is a very dynamic and challenging situation. While we have been very successful to date in preventing shipment disruptions related to the supply chain, we continue to closely monitor the situation. In summary, demands for our products are strong in all sectors, and despite the challenges of Covid, parts shortages, and the process improvements to our FWS-I line, revenue grew 14% in 2021. Furthermore, our technology advances and innovations for AR/VR in 2021 have been excellent, both in optics and displays and we expect they will create future opportunities for us. Our financials are solid, with no long-term debt. We remain well positioned for continued growth,” concluded Dr. Fan.
Fourth Quarter Financial Results:
Total revenues for the fourth quarter ended December 25, 2021 were $13.2m, compared with $13.9 m for the fourth quarter ended December 26, 2020, a 5.2% decrease year over year. Product revenues declined 6.9% while R&D revenues grew 12% year over year.
Cost of product revenues as a percentage of net product revenues for the fourth quarter of 2021 and 2020 were 84.9% and 65.1% respectively. Cost of product revenues increased as a percentage of net product revenues in the fourth quarter of 2021 as compared to the fourth quarter of 2020 primarily due to lower yields as process design changes we implemented in the second and third quarters affected productivity and scrap amounts in the fourth quarter.
Research and development (R&D) expenses for the fourth quarter of 2021 were $5.2m compared to $4.4m for the fourth quarter of 2020, a 19% increase year over year.
Selling, general and administrative (SG&A) expenses were $4.1m for the fourth quarter of 2021, compared to $2.4m for the fourth quarter of 2020, a 71.5% increase year over year. SG&A for the fourth quarter of 2021 increased as compared to the fourth quarter of 2020 primarily due to an increase of approximately $0.3m in non-cash stock-based compensation, $0.4 in compensation and benefits, $0.4m in professional fees.
Other income (expense) for the fourth quarter of 2021 and 2020 were income of $0.1 m and $0.3 m, respectively. Other income (expense) for the fourth quarter of fiscal year 2021 included less than $0.1 m of foreign currency gains compared to $0.3m of foreign currency gains recorded in fourth quarter of fiscal year 2020.
The net loss attributable to controlling interest for the fourth quarter of 2021 was $3.6m, or $0.04 per share, compared with net income of $1.3m, or $0.02 per share, for the fourth quarter of 2020.
Full Year Results:
Total revenue for the fiscal year ended December 25, 2021 was $45.7m, a 13.8% increase, compared to $40.1m for 2020. Product revenues and R&D revenues grew 4.8% and 44.9% year over year, respectively. Royalty and other revenues were $1.1m for 2021 as compared to $1.5m in 2020.
Cost of product revenues as a percentage of net product revenues for 2021 and 2020 were 83.8% and 75.0% respectively. Cost of product revenues increased as a percentage of revenues in 2021 as compared to 2020 primarily due to lower production volumes in the second and third quarter of fiscal year 2021. In the second and third quarters of fiscal 2021 we reduced production of our products for the FWS-I program as we made some process changes to the production line. Also affected were our production yields during 2021 as implementing the design changes affected productivity and scrap amounts.
Research and development expenses for 2021 were $16.3m, a 39.6% increase compared with $11.7m in 2020. Funded R&D expenses were $10.0m for 2021 as compared to $7.7m for 2020, an 28.8% increase.
Selling, general and administrative expenses were $18.1m in 2021, a 53.1% increase compared with $11.8m in 2020. SG&A for 2021 increased as compared to 2020 primarily due to an increase of approximately $3.1m in non-cash stock-based compensation, $1.4 in compensation and benefits, $0.3m in insurance and $0.9m in bad debt expense, partially offset by $0.6m of lower professional fees. Other income (expense) for fiscal year 2021 and 2020 were income of $0.1m and $0.4m, respectively. Other income (expense) for fiscal year 2021 included $0.1m of foreign currency gains compared to $0.3 m of foreign currency gains recorded in fiscal year 2020. The net loss from controlling interest for the fiscal year ended December 25, 2021 was $13.7m or $0.15 per share, versus a net loss of $4.4m or $0.05 per share for 2020. Kopin’s cash and equivalents and marketable securities were approximately $29.3m at December 25, 2021 as compared to $20.7m at December 26, 2020, with no long-term debt. During 2021, Kopin had 8 new patents granted and filed for 10 new applications. Kopin has over 200 patents, patent applications and/or patents pending, almost all of which are related to wearable applications. All amounts above are estimates and readers should refer to our Form 10-K for the fiscal year ended December 25, 2021, for final disposition as well as important risk factors. (Source: BUSINESS WIRE)
07 Mar 22. Vectrus and Vertex to Combine, Creating a Global Leader in Mission-Essential Solutions. Creates a Leading Government Services Company with 2021 Pro Forma Revenue of Approximately $3.4bn, Backlog of Approximately $11.3bn, and Adjusted EBITDA of Approximately $283m
Expected Annualized Cost Synergies of $20m, Resulting in Adjusted EBITDA Margin of More Than 8%. Vectrus, Inc. (NYSE: VEC) and The Vertex Company (“Vertex”) today announced that they have entered into an all-stock merger to create a leading global provider of mission-essential solutions.
The combined company will offer significantly expanded technology and service capabilities, delivering a comprehensive suite of integrated solutions and critical service offerings to support national security readiness and modernization initiatives around the world. As U.S. and allied government clients move toward a converged environment, the combined company will be well positioned to meet the mission-essential requirements of its clients while delivering cost savings, increased security and resiliency, and more strategic use of resources.
Together, the combined company would have 2021 pro forma revenue of approximately $3.4bn and adjusted EBITDA of approximately $283m, inclusive of $20m of estimated cost synergies, resulting in an adjusted EBITDA margin of more than 8%. With pro forma backlog of approximately $11.3bn, the company has high revenue visibility and will benefit from increased scale, balance and diversity. With significant cash flow generation and a strong balance sheet, the combined company will retain flexibility for continued growth.
“The combination of Vectrus and Vertex will create a stronger, more diversified company and one of the leading providers of critical mission solutions and support to defense clients globally,” said Chuck Prow, Chief Executive Officer of Vectrus. “This highly strategic transaction builds on both companies’ accomplishments over the last several years and significantly accelerates our ability to deliver converged solutions while providing enhanced value for our shareholders and other stakeholders.”
Prow continued, “With increased scale and meaningful synergies, the combined company will be more competitive in the national security environment while enhancing the delivery of services to our federal clients. We look forward to combining the strengths of our businesses and teams to build upon both companies’ proud track records of providing critical mission support for our clients’ toughest operational challenges.”
Ed Boyington, President and CEO of Vertex, said, “Vertex and Vectrus share mission-oriented foundations and cultural alignment. By joining forces with Vectrus, we will be better positioned to help the Department of Defense and government agencies achieve their objectives, and in the process, create a stronger organization with greater career development and advancement opportunities for our employees. On behalf of the Vertex team, we remain dedicated to our clients’ missions, and we are very pleased to enter this new phase of growth as a combined company.”
Creating a Differentiated Industry Leader
- Greater Scale and Improved Competitive Positioning – The combination creates a stronger company with greater scale and enhanced ability to compete for more integrated business opportunities. The company will benefit from a more diversified revenue base across geographies, clients, and contract types in supporting missions for the U.S. Department of Defense and other government agencies. The combined company’s contract portfolio will also be more balanced across all agencies served.
- Enhanced Portfolio of Technologies and Solutions – The combined company will be uniquely positioned to better provide full life-cycle support to the most critical and enduring missions. The complementary breadth of capabilities builds on each company’s leading position in their respective markets.
- Attractive Financial Profile and Efficient Capital Structure –The transaction is expected to be accretive to Vectrus’s adjusted diluted earnings and free cash flow per share in the first full year following close. The combined company will have significant revenue visibility and expects to generate substantial free cash flow and a pro forma adjusted EBITDA margin profile of more than 8% initially, with plans to improve margins going forward. The combined company will maintain its low capital expenditure business model and benefit from significant tax attributes, allowing for rapid debt reduction. The company will target long-term net debt to EBITDA of 2.0 to 3.0x.
- Clearly Identified Cost Synergies and Incremental Revenue Opportunities – The combined company is expected to achieve approximately $20 m in annualized pre-tax net cost synergies by 2024 through efficiencies in supply chain and contract management, shared IT infrastructure, business systems right-sizing, and general corporate costs. The combined capabilities also will create meaningful incremental revenue growth opportunities across the company’s key addressable markets in operations and logistics, aerospace, training, and technology.
Transaction Terms
Under the terms of the merger agreement, Vertex shareholders will own approximately 62% of the combined company on a fully diluted basis, while Vectrus shareholders will own approximately 38%. The transaction implies a value for Vertex of approximately $2.1bn, or approximately 9.5x 2021 adjusted EBITDA net of $20m of cost synergies and the present value of Vertex’s existing tax attributes of approximately $160m.
Leadership and Governance
Upon closing of the transaction, Mr. Prow, CEO of Vectrus, will serve as CEO of the combined company, and Susan Lynch, CFO of Vectrus, will serve as CFO. The broader leadership team will be comprised of executives from both companies.
The combined company’s Board of Directors will be comprised of 11 members, six directors from the current Vectrus board, including Mr. Prow, and five directors appointed by Vertex, including Mr. Boyington, President and CEO of Vertex. An independent member of the current Vectrus Board of Directors will serve as Chairman. The combined company plans to announce the members of the Board of Directors prior to closing.
The combined company will introduce a new name post-closing and will maintain its listing on the NYSE. The company will be headquartered in Northern Virginia, with a significant operating presence maintained in other key locations in the U.S. and around the world.
Shareholder Rights
At closing of the transaction, Vectrus will enter into a shareholders agreement containing certain rights and other terms relating to American Industrial Partners Capital Fund VI LP (AIP) shareholdings following the transaction, including board designation rights that adjust as AIP and the other Vertex shareholders reduce their ownership. Other terms include, among other things, that AIP will be subject to a standstill agreement for so long as it retains board designation rights and that AIP and Vertex’s other shareholders will be subject to a six-month lockup agreement and thereafter will have customary registration rights.
Financing and Approvals
The merger, which was unanimously approved by the Vectrus Board of Directors, is expected to close in the third quarter of 2022, subject to satisfaction of customary closing conditions, including receipt of regulatory and Vectrus shareholder approvals.
Vertex’s capital structure will remain in place and the companies anticipate refinancing Vectrus’s existing debt as part of an upsized Vertex debt capital structure at close.
Vectrus Fourth Quarter and Full-Year 2021 Results
In a separate press release issued today, Vectrus reported its fourth quarter and full-year 2021 financial results.
Advisors
Goldman Sachs & Co. LLC is acting as exclusive financial advisor to Vectrus, and Skadden, Arps, Slate, Meagher & Flom LLP and Covington & Burling LLP are acting as legal counsel. Vectrus was also advised by Ernst & Young and Wolf Den Associates. RBC Capital Markets, LLC and Evercore are acting as financial advisors to Vertex, and Jones Day, Baker Botts LLP and Ropes & Gray LLP are acting as legal counsel. Vertex was also advised by Fairmont Consulting Group.
About Vectrus
For more than 70 years, Vectrus has provided critical mission support for our customers’ toughest operational challenges. As a high-performing organization with exceptional talent, deep domain knowledge, a history of long-term customer relationships, and groundbreaking technical expertise, we deliver innovative, mission-matched solutions for our military and government customers worldwide. Whether it’s base operations support, supply chain and logistics, IT mission support, engineering and digital integration, security, or maintenance, repair, and overhaul, our customers count on us for on-target solutions that increase efficiency, reduce costs, improve readiness, and strengthen national security. Vectrus is headquartered in Colorado Springs, Colo., and includes about 8,100 employees spanning 205 locations in 28 countries. In 2021, Vectrus generated sales of approximately $1.8bn. For more information, visit the company’s website at www.vectrus.com or connect with Vectrus on Facebook, Twitter, and LinkedIn.
About Vertex
The Vertex Company is headquartered in Madison, Mississippi and employs approximately 6,000 employees, over 40 percent of whom are Armed Forces veterans, operating in over 125 locations worldwide. Vertex delivers integrated turnkey lifecycle support from concept definition, to engineering and manufacturing, through end of life support of complex systems and platforms, Vertex offerings include all levels of aviation maintenance, worldwide contractor logistics support, systems engineering and integration, specialized onsite mission execution, high consequence training programs for defense and commercial customers, and integrated supply-chain solutions. Over our 50-year history, we have perfected the balance of cost, schedule, and performance to offer high-quality solutions that consistently exceed customer requirements. Information about Vertex can be found at vtxco.com. Vertex is majority owned by American Industrial Partners Capital Fund VI LP (AIP), a fund managed by an operationally oriented private equity firm with $8bn of assets under management (for more information on AIP visit americanindustrial.com). (Source: BUSINESS WIRE)
07 Mar 22. CAES and Trident Systems Announce Strategic Partnership. CAES, the leading provider of RF technologies and related mission critical electronic solutions, and Trident Systems, a leading provider of multi-function RF and processing solutions and C4I technology, announced today a strategic partnership to offer an integrated portfolio of best-in-class advanced mission computing and communications solutions for space, air, sea and land defense applications. Under the partnership, CAES and Trident Systems will cooperate to address customer mission requirements in advanced RF and digital signal processing products. The partnership combines CAES’ expertise in radiation hardened microelectronics and computing with Trident Systems’ heritage of deploying high performance processing and communications sub-systems in the most challenging mission environments.
“Combining CAES’ expertise in advanced RF and production capabilities for national security space missions with Trident Systems’ innovative portfolio and flight heritage supporting agile space missions, creates a differentiated platform to address the full breadth of national security space customer needs,” said Mike Kahn, CAES President and CEO. “The alignment of CAES and Trident Systems further enhances our capability to address the accelerated pace of innovation and rapidly scalable production required for modern space and C4ISR mission requirements.”
“CAES’ advanced electronics and manufacturing capabilities directly augment Trident’s technology solutions, and provide access to a wealth of enabling technologies, specialty engineering and manufacturing at scale,” said John Broglio, President, Trident Systems. “Trident’s innovative product solutions coupled with CAES’ advanced engineering and production capability, provides our customers with an accomplished team for solving their most critical problems.”
For more information, please visit: https://www.caes.com or http://www.tridsys.com.
About Trident Systems
Trident Systems is a veteran-owned small business that delivers innovative and affordable technology solutions for critical government and commercial needs. Founded in 1985, Trident continues to harness technology and provide leading-edge solutions to every Military Service, the Intelligence Community, and a broad spectrum of government and industry partners. Trident develops products in two primary focus areas: Integrated C4I Systems and Electronic Systems. Trident has offices in Fairfax, Virginia (HQ) and Concord, New Hampshire. For more information, visit https://www.tridsys.com/.
About CAES
CAES is a pioneer of advanced electronics for the most technologically challenging military and aerospace trusted systems. As the largest provider of mixed-signal and radiation-hardened technology to the United States aerospace and defense industry, CAES delivers high-reliability RF, microwave and millimeter wave, microelectronic and digital solutions that enable our customers to ensure a safer, more secure world. On land, at sea, in the air, in space and in cyberspace, CAES’ extensive electronics and enhanced manufacturing capabilities are at the forefront of mission-critical military and aerospace innovation. www.caes.com (Source: BUSINESS WIRE)
07 Mar 22. BAE Systems buys military simulations firm for $200m. BAE Systems has completed the $200m acquisition of Bohemia Interactive Simulations, a company that specializes in building high-fidelity training simulations for the military.
“The addition of BISim to the BAE Systems team expands our modeling and simulation capabilities and solidifies our systems integration strategy,” said Tom Arseneault, who heads BAE’s U.S. business, in a March 7 statement. “With this acquisition, we are even better positioned to meet our customers’ evolving needs in the rapidly growing market for global military training, and deliver next-generation virtual systems to help our U.S. military and its allies effectively prepare for future scenarios.”
In an interview with C4ISRNET BISim, President Arthur Alexion said the business is “a 350-person company coming into an 80-90,000 person company [with] enormous deep customer relationships which we can tap into and an enormous amount of technology, knowledge and intellectual property which we’re going to be digging into.”
Bohemia Interactive Simulations works with 60 different militaries around the world and 300 integrators serving those militaries, said Alexion. BISim, which will become a wholly-owned subsidiary of BAE Systems Inc. — the American subsidiary of London-based BAE Systems — and will join the company’s intelligence and security sector.
Prior to the acquisition, the two companies had worked together. They partnered in 2019 on the U.S. Marine Corps War Gaming and Analysis Center contract, and BISim also contributed to BAE Systems’ Joint All Domain Operations System of Systems research and development project.
In its statement, BAE Systems said it expects the global market for military training and simulation to eventually surpass $11bin annually.
“The fullest extent is a long way away. There’s opportunity after opportunity specifically in training,” said Alexion.
“Live training is muddy and dirty, difficult to arrange. You can’t practice in different weather; You can only practice in the weather that exists. You can’t practice at different times of day and night; you can only practice at the time when you’re there,” Alexion continued. “Virtual training for many types of training is a logistically better way to train.”
And technology advances are constantly improving the quality of virtual training. Faster processors enable higher fidelity simulations, so while past simulations may apply probabilistic algorithms to see which group would win in a combat and estimate casualties and damage at a top level, today’s simulations provide a far more granular environment meant to recreate combat at the individual level.
“We are the most high fidelity version of the metaverse — if you like — the virtual world which the military wants to be able to operate in,” said Alexion. “The concept of a soldier kneeling, going prone, rolling over, hiding behind a bush, hiding behind a wall — all of those things are represented properly. Bullets actually fly. The trajectory of every bullet, of every round, is actually modeled. It’s the highest fidelity that you can get.”
“The more realistic it is, the more you can immerse trainees into the environment,” he added, noting soldiers using their systems actually have physical reactions to the simulations, such as increased heartbeats and pupil dilation.
Other technologies are also improving the simulation training experience. Cloud technologies allow people in different locations to train together online, while cheap sensors enable companies like BISim to take enormous amounts of terrain data and incorporate it into the virtual world for a more realistic environment.
Peder Jungck, vice president and general manager of BAE Systems Modeling & Simulation Solutions, told C4ISRNET BAE will be able to help BISim with incorporating digital modeling into their environments, creating a pipeline from digital engineering to training.
The U.S. Space Force in particular has been vocal about wanting to be able to design new systems with digital engineering and then being able to use the digital models for training and simulation. But gaming simulations typically haven’t followed a digital engineering approach, said Jungck.
Alexion said military leadership is becoming increasingly comfortable using virtual options for training, partly due to a generational shift and partly due to successful demonstrations. (Source: Defense News)
07 Mar 22. Arms industry eyes boost as Europe looks to bolster defences. Russia’s invasion of Ukraine has catapulted defence spending up the political agenda in Europe and could herald a new era of purchases led by Germany, according to weapons makers gathering at an arms fair in Saudi Arabia this week. The World Defense Show, where Europe’s Airbus (AIR.PA), MBDA and Leonardo (LDOF.MI) are exhibiting alongside nearly 600 other weapons makers, is taking place amid the largest assault on an European state in 70 years. The conflict has reignited interest in security issues after years of European defence spending cuts and fatigue following NATO failures in Afghanistan. Germany, which has long played down the role of its military in foreign policy, Denmark and Poland have all said they will ramp up defence spending with war at their doorstep.
“There was peace for decades and people thought there would be peace forever. Unfortunately, that assumption has been proven wrong,” Hristo Ibouchev, the executive director of Bulgarian firearms and munitions maker Arsenal, told Reuters.
German Chancellor Olaf Scholz has said Berlin could buy F-35 stealth warplanes from the United States, but also that future advanced weaponry would be purchased from European consortia.
The German budget this year will allocate 100bn euros ($109bn) for a one-time increase in defence spending, Scholz said on Feb. 27, which is more than double the entire 2021 defence bill of 47bn euros.
“The German announcement alone is a new era of defence spending for the EU if it’s followed through on,” manager of Jane’s Defence Budgets Andrew MacDonald told Reuters, predicting such a major cultural shift would likely see others follow suit.
Some executives were sceptical of any dramatic increase, bemoaning what they see as years of sluggish investment and predicting states would not follow through on new commitments.
Others argued EU states, after years of Russian aggression like the 2014 annexation of Crimea, were already paying more attention to security and this war would just ramp plans up.
Russia calls its actions in Ukraine a special operation.
“The defence role is changing dramatically,” an European executive said, predicting higher spending not only because of the war but also because former U.S. President Donald Trump’s “American First” policy underscored the need for self-reliance.
At the fair, Russia’s weapons makers displayed precision guided missiles and artillery like those used by its forces besieging Ukrainian cities.
Russian executives declined to comment on whether their firms could still be paid for exports amid Western sanctions on banks and other businesses aimed at crippling Russia’s economy.
Western executives said the sanctions would make it difficult for Russian firms to be paid, but not impossible.
Elsewhere, armoured vehicles and other weaponry at a near-empty Ukrainian booth will be sent back as soon as the trade show finishes to be used in the conflict.
“Ukraine is in martial law and everything that can be used for the Ukrainian army will be used for the Ukrainian army,” said the sole representative of a Ukrainian state defence firm. ($1 = 0.9158 euros) (Source: Reuters)
27 Feb 22. Firefly Aerospace Receives A Significant Financial Stake From AE Industrial Partners. AE Industrial Partners, LP (“AEI”) 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”).
With the acquisition of Noosphere’s stake in Firefly, AEI will further expand its space investment portfolio that 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 $1.1bn valuation and the company performed its first launch of Alpha, its flagship launch vehicle, in September of last year — the company’s 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.
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, Texas.
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.
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: Satnews)
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TCI International, Inc., is a wholly-owned subsidiary of SPX Corporation. TCI provides turn-key solutions for spectrum management and monitoring, direction finding, geolocation and communications intelligence to civilian, government, military and intelligence agencies as well as antennas for communications and high-power radio broadcasting. TCI is headquartered in Fremont, California, USA. For more information, visit www.tcibr.com.
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