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22 Apr 22. Missile maker MBDA off to a good start in 2022 after strong 2021, executive says. European missile maker MBDA has made a good start to 2022 after record results last year, Executive Group Director for Sales & Business Development Lorenzo Mariani said on Friday.
“It’s great news, both in terms of orders and in terms of cash,” Mariani told reporters.
He added that important contracts been closed in the first months of the year and others, signed with Greece at the end of 2021, had taken effect.
“These (deals) have given us important advance payments”.
The missile group is owned by France’s Airbus (AIR.PA) and Britain’s BAE Systems (BAES.L), both with a 37.5% stake, and by Italy’s Leonardo (LDOF.MI), with a 25% stake.
Mariani said that the group has not suffered any disruption to production from the conflict in Ukraine, but noted that should the war continue there could be consequences from the increases in energy costs and the price and availability of raw materials.
“We have always had good supplies, to date there are no critical issues, but the situation would not be sustainable forever,” he said.
MBDA is unable to comment on the impact of the conflict on demand, citing confidentiality linked to military operations.
The consortium posted 4.2bn euros ($4.54bn) in revenue last year and new orders were worth 5.12bn euros.
MBDA has some 16% of the global missile market, in terms of orders, but is the largest player in Europe, with a 43% share, a company slide showed.
Its largest rivals are U.S. defence giant Lockheed Martin (LMT.N) and Raytheon Technologies Corp (RTX.N)
Mariani, who is also the Managing Director of MBDA in Italy, said the first quarter in the country “confirmed a positive trend, with revenues and cash above expectations, and deliveries ahead of schedule”.
The Italian unit aims to reach 1bn euros in revenues this year, from 685m euros last year. ($1 = 0.9257 euros) (Source: Reuters)
22 Apr 22. Saab’s Results January-March 2022: A solid start to the year in a changing landscape.
Saab presents the results for January-March 2022.
Key highlights Q1 2022
- Order intake of SEK 8,115m (5,871), corresponding to a growth of 38%, with increases in most business areas driven by medium-sized orders.
- Sales amounted to SEK 9,218m (9,088), with a growth of 1.4%.
- EBITDA increased and amounted to SEK 1,148m (1,066), with a margin of 12.5% (11.7).
- Operating income improved 10% and amounted to SEK 654m (597). The margin was 7.1% (6.6), driven by improved project execution and a favourable product mix.
- Operational cash flow in the quarter was SEK -179m (-160).
- Sustainability efforts continued with submittal of proposed targets to the Science-Based Targets initiative.
- The AGM decided on a dividend of SEK 4.90 per share to the shareholders.
Statement by the President and CEO Micael Johansson: A solid start to the year in a changing landscape. We entered the year with hopes of a return to normal after the pandemic, but we are now witnessing a humanitarian tragedy as a result of the war in Ukraine. This reminds us once again of the importance of countries’ right to build their defences to protect their borders, citizens and societies. Our core belief is that peace, security and stability are fundamental for sustainability, human rights and freedom.
Early implications of the crisis have changed the security landscape in Europe. This has led to a structural shift with several countries, including Sweden, Germany, UK and Finland, announcing higher defence budgets over the coming years. Saab is well positioned and ready to support customers’ growing needs. Given the long-term nature of the industry, however, the prospects for further growth in orders will take some time.
Due to the pandemic, we have worked intensively over the past years to manage our supply chain. With the growing geopolitical instability in the world, we see further supply chain challenges in our industry, as in many other businesses. We are working closely with our suppliers to mitigate future effects on shortages and ensure delivery of components. To meet a further demand, we will also steadily increase capacity.
In the first quarter of the year, we continued to see strong interest in Saab’s portfolio, particularly in Dynamics and Surveillance. Order intake increased by 38%, driven by medium-sized orders across most business areas. Order intake in our international markets increased by 78%. Dynamics received orders for training systems to the U.S. and Finland, and Surveillance received a contract for a civil security solution in Australia. At Kockums, a large contract from Sweden for the Mid-Life Upgrade of the third Gotland-class submarine was received.
At the end of the quarter, the first two serially produced Gripen E fighters arrived in Brazil and their first flight in the country with Brazilian pilots has now been completed. This is an important achievement in the Gripen E programme where the two fighter jets are part of the 36 aircraft acquired by the Brazilian Air Force in 2014.
Sales increased compared to the first quarter last year and amounted to SEK 9,218 m (9,088). Reported growth was 1.4%, reflecting the delivery pattern for the year that is stronger in the second half. Dynamics, Kockums and Combitech reported sales growth while sales in Aeronautics and Surveillance declined. We reiterate our sales growth outlook of around 5% for the full year.
Operating income improved 10% and amounted to SEK 654m (597) in the quarter, corresponding to a margin of 7.1% (6.6). This was driven by higher gross margin as a result of improved project execution and a favourable product mix.
Operational cash flow in the quarter was in line with our milestone payments plan and amounted to SEK -179 m (-160).
During the quarter, we continued our extensive work on sustainability and strengthened our governance further. Consequently, we submitted proposed targets to the Science-Based Targets initiative connected to the Race to Zero commitment we announced last year.
As we leave a solid first quarter behind us, we will continue our journey with a focus on sustainable growth, strengthened profitability and cash flow.
20 Apr 22. Qinetiq profit ahead of forecasts. Defence specialist Qinetiq (QQ) said it expects full-year results to be slightly ahead of forecasts, driven by growth in its EMEA Services arm. US revenue was slower than expected, though, as defence spending has been hampered by ongoing political wrangling around the federal budget. Underlying operating profit is likely to come in at £135mn, ahead of analysts’ consensus estimate of £133mn. It finished the year to March 31 with net cash of £225mn, up from £139.2mn at the half-year stage. A £14.5mn loss booked in its first half results against a “complex” project has also been contained and the relating contract has now been closed, the company said. It reiterated its medium-to-long term target of making an operating margin of between 12-13 per cent but said in the short term that margins will be 100 basis points lower than this, citing inflationary pressures and higher investment. Capex will be at the “upper end” of its guided range of £90mn-£120mn, it said. Qinetiq’s shares have rallied since Russia’s invasion of Ukraine and are up 26 per cent since the start of the year. The share price has been flat over a 12-month period, though. MF (Source: Investors Chronicle)
19 Apr 22. Iridium Communications Inc. (Nasdaq: IRDM) (“Iridium”) today reported financial results for the first quarter of 2022 and reiterated its full-year 2022 outlook. Net income was $2.8m, or $0.02 per diluted share, for the first quarter of 2022, as compared to net loss of $5.2m, or $0.04 per diluted share, for the first quarter of 2021. Operational EBITDA (“OEBITDA”)(1) for the first quarter was $103.2 m, as compared to $89.8 m for the prior-year period, representing a year-over-year increase of 15% and an OEBITDA margin(1) of 61%.
Iridium reported first-quarter total revenue of $168.2m, which consisted of $126.1m of service revenue and $42.1m of revenue related to equipment sales and engineering and support projects. Total revenue increased 15% from the comparable period of 2021, while service revenue grew 9% from the year-ago period. Service revenue, which represents primarily recurring revenue from Iridium’s growing subscriber base, was 75% of total revenue for the first quarter of 2022.
The Company ended the quarter with 1,781,000 total billable subscribers, which compares to 1,518,000 for the year-ago period and is up from 1,723,000 for the quarter ended December 31, 2021. Total billable subscribers grew 17% year-over-year, driven by growth in commercial IoT.
“Iridium continued to see strong demand in the first quarter. I’m continually amazed at the innovative ways in which our technology and distribution partners utilize our unique satellite network to drive growth and serve their respective markets,” said Matt Desch, CEO, Iridium.
Commenting on the Company’s share repurchase program, Desch said, “Cash flow remains very strong, and we continue to execute on our long-standing promise to return capital to shareholders. Even as we expand our investments in new products and network capabilities, we’ve announced plans for up to $600m in share buybacks since February 2021, and we’re executing opportunistically on these as the market allows.”
Iridium Business Highlights
Service – Commercial
Commercial service remained the largest part of Iridium’s business, representing 59% of the Company’s total revenue during the first quarter. The Company’s commercial customer base is diverse and includes markets such as maritime, aviation, oil and gas, mining, recreation, forestry, construction, transportation and emergency services. These customers rely on Iridium’s products and services as critical to their daily operations and integral to their communications and business infrastructure.
- Commercial service revenue was $99.6m, up 10% from last year’s comparable period due primarily to increased revenues from IoT, voice and data, and broadband services.
- Commercial voice and data subscribers were up 8% from the year-ago period to 378,000. Commercial voice and data average revenue per user (“ARPU”) rose to $40 during the first quarter, compared to $39 in the prior-year.
- Commercial IoT data revenue was $28.4m, up 15% from the year-ago period. Commercial IoT data subscribers grew 24% from the year-ago period to 1,243,000 customers, driven by continued strength in consumer personal communications devices. Commercial IoT data ARPU was $7.78 in the first quarter, compared to $8.39 in last year’s comparable period. The decrease in ARPU resulted from the effect of the growing proportion of personal communications subscribers within IoT, who typically utilize lower ARPU plans.
- Commercial broadband revenue was $11.5m, up 22% from $9.4m in the year-ago period on increasing activations of Iridium Certus® broadband service. Commercial broadband ARPU was $288 during the first quarter, compared to $265 in last year’s comparable period, reflecting an increasing mix of Iridium Certus broadband subscribers.
- Iridium’s commercial business ended the quarter with 1,635,000 billable subscribers, which compares to 1,365,000 for the year-ago period and is up from 1,576,000 for the quarter ended December 31, 2021. IoT data subscribers represented 76% of billable commercial subscribers at the end of the quarter, an increase from 73% at the end of the prior-year period.
- Hosted payload and other data service revenue was $14.8m in the first quarter, consistent with the prior-year period.
Service – Government
Iridium’s voice and data solutions improve situational awareness for military personnel and track critical assets in tough environments around the globe, providing a unique value proposition that is not easily duplicated.
Under Iridium’s Enhanced Mobile Satellite Services contract (the “EMSS Contract”), a seven-year, $738.5m fixed-price airtime contract with the U.S. Space Force signed in September 2019, Iridium provides specified satellite airtime services, including unlimited global standard and secure voice, paging, fax, Short Burst Data®, Iridium Burst®, RUDICS and Distributed Tactical Communications System services for an unlimited number of Department of Defense and other federal government subscribers. Iridium also provides maintenance and support work for the U.S. government’s dedicated Iridium gateway under two other contracts with the U.S. Space Force. Iridium Certus airtime services are not included under these contracts and may be procured separately for an additional fee.
- Government service revenue was $26.5m in the first quarter and reflected increased revenue from a contractual step up in the EMSS Contract on September 15, 2021.
- Iridium’s government business ended the quarter with 146,000 subscribers, which compares to 153,000 for the year-ago period and 147,000 for the quarter ended December 31, 2021. Government voice and data subscribers rose 3% from the year-ago period to 65,000 as of March 31, 2022. IoT data subscribers declined 10% year-over-year and represented 55% of government subscribers, down from 59% at the end of the prior-year period.
- Equipment revenue was $33.7m during the first quarter, up 41% from the prior-year period.
- In 2022, the Company expects considerably higher equipment sales than in 2021.
Engineering & Support
- Engineering and support revenue was $8.4m during the first quarter, up 30% from the prior-year quarter, primarily due to the episodic nature of contract work for the U.S. government and a rise in commercial activity.
Capital expenditures were $13.6m for the first quarter, which includes $0.4m of capitalized interest. The Company ended the first quarter with gross debt of $1.6bn and a cash and cash equivalents balance of $232.0 m, for a net debt balance of $1.4bn.
During the quarter, the Company repurchased approximately 3.8m shares of its common stock at a total purchase price of $134.2m under the $300m share repurchase program announced in February 2021. On March 7, 2022, Iridium announced that its Board of Directors had approved a new authorization for the repurchase of an additional $300m of Iridium common stock through December 31, 2023. As of March 31, 2022, $302.5m remained available and authorized for repurchase under the Company’s stock buyback program.
The Company reiterated its full-year 2022 outlook:
- Total service revenue growth between 5% and 7% for full-year 2022. Total service revenue for 2021 was $492.0m.
- Full-year 2022 OEBITDA between $400m and $410m. OEBITDA for 2021 was $378.2 m.
- Negligible cash taxes in 2022. Cash taxes are expected to be negligible through approximately 2024.
- Net leverage of between 2.5 and 3.5 times OEBITDA at the end of 2023, assuming the completion of the Company’s total $600m in authorized share repurchases. Net leverage was 3.4 times OEBITDA at December 31, 2021. (Source: PR Newswire)
19 Apr 22. Endeavour is now LEONID, the leading Government Contracting financing partner and a Department of Defense (DoD) Trusted Capital Provider. LEONID empowers small and medium-sized (SMB) government contractors with needed capital to succeed in supporting the U.S. Federal Government’s mission, specializing in National Security, DoD and Aerospace missions. The name LEONID was chosen to provide a distinctive name and visual representation that more accurately communicates the firm’s vision of supporting intricate, government contract projects that bring the most good to our country’s collective future.
“Like the annual meteor showers that inspired the new name, LEONID traces a path forward for change-makers by offering a better way to access the capital they need to rapidly fulfill their government contracts,” explained LEONID Co-Founder, Chris Lay.
LEONID was founded in 2019 with a mission-oriented funding model designed to drive meaningful impact and help fund companies that want to use their innovations to help aid and empower those who serve and protect our nation. To date, LEONID has funded more than $10m in loans while giving 50 percent of the firm’s profits to organizations that support military families and veterans.
“We witnessed cutting-edge contractors struggling to access the working capital they needed while in the payment pipeline and knew we could offer a better path for them,” explained LEONID Co-Founder James Parker. “It takes an innovative approach to fund innovators.”
“LEONID not only values innovation and provides a valuable path for contractors to more effectively serve the critical needs of our country’s defense, intelligence, cybersecurity, and aerospace communities, but they also honor service and sacrifice by channeling half of their profits into the communities of veterans and military families,” stated United States Army Lieutenant General (Ret) Michael Douglas Barbero. “LEONID is looking to grow their support and seeking government contracting entrepreneurs looking for capital stability.”
Leonid Finance provides SMB government contractors with several financing programs including Government Accounts Receivable Financing, Government Invoice Financing and Lift-Off SBIR STTR advance financing program. The firm’s Balance Sheet as a Service (BSaaS) solves a common challenge within the currently underfunded government contracting industry
LEONID is a financial services platform supporting U.S. Federal Government contractors. As an official Department of Defense Trusted Capital Provider, LEONID offers advance financing on SBIR and STTR contract and funding for unpaid invoices up to $10,000,000. The firm can help companies improve their working capital position to help finance growth strategies and manage operating expenses. LEONID contributes 50 percent of net profits to mission-oriented charitable causes that are committed to veterans’ causes and warfighter support. Learn more at leonidfinance.io. (Source: PR Newswire)
19 Apr 22. Ukraine war has boosted demand for missile defenses, Lockheed says. Russia’s attack on Ukraine, including regular barrages of rockets, has boosted demand for Lockheed Martin missile defense systems, the No. 1 U.S. weapons maker said on Tuesday.
“We’ve got demand signals for THAAD and PAC-3 from around the world,” Chief Executive Jim Taiclet said after Lockheed reported a drop in quarterly sales and profits. THAAD and PAC-3 refers to the Terminal High Altitude Area Defense (THAAD) missile defense system and the interceptors for Patriot missile systems.
“Especially when you see missiles hitting hospitals and situations like that, and train stations in Ukraine,” Taiclet said in explaining the demand, adding that governments were now thinking “that it’s worthwhile to have an effective missile defense capacity in your country.”
Lockheed said its quarterly revenue fell while quarterly profits dropped 5.7% as supply chain woes triggered by the COVID-19 pandemic were compounded by inflation pressure.
The company reaffirmed its full-year revenue outlook of about $66bn, which is in line with analysts estimates.
U.S. President Joe Biden’s record peacetime national defense budget request of $813bn was unveiled in March as Russia’s invasion of Ukraine has spurred demand for more military spending globally.
The pandemic crippled many aerospace companies’ ability to procure as well as supply parts needed to produce products, creating shortages, reducing inventories and hammering profits amid a period of rising inflation. Lockheed’s dual-use suppliers that cater to both commercial aviation and defense markets have also been impacted. Taiclet said inflation had hurt the company’s performance.
“The result should bring a focus to defense supply chain concerns, which may be evident elsewhere this quarter as well, though there did not seem to be major issues. In addition, management did not change 2022 guidance and with defense budget support and the war in Ukraine” raising defense spending appetites, temporary challenges could be limited, JP Morgan analyst Seth Seifman said in a note.
Shares in Lockheed were down $5.33, or 1.1%, at $462.21 at midday.
Lockheed’s Aeronautics unit, its biggest, which makes F-35 fighter jets saw its revenue rise 2% compared to the same quarter a year ago, but profits fell by 2% to $697m.
Lockheed reported 26 F-35 jet deliveries in the quarter compared with 17 a year earlier. Taiclet said Lockheed was working to increase F-35 sales for 2023.
Net earnings fell to $1.73bn, or $6.44 per share, in the first quarter ended March 27 from $1.84bn, or $6.56 per share, a year earlier.
Net sales fell about 8% to $14.96bn in the quarter.
During the quarter Lockheed abandoned its proposed $4.4bn purchase of rocket engine maker Aerojet Rocketdyne Holdings Inc (AJRD.N) after antitrust regulators sued to block the deal. (Source: Reuters)
19 Apr 22. Early-stage British maritime technology company Kraken Technology Group (KTG) announced today that it has completed a further private funding round to support development of its Kraken K50 precision engagement craft, prior to an anticipated priced investment round later this year.
The Kraken K50 is designed specifically to meet the growing global requirement for fast-response precision engagement, coastal interdiction and the protection of critical offshore infrastructure. The K50 will push the boundaries of technical and operational performance with response speeds in excess of 65 knots and optional use of advanced electric powertrain technology to extend key range and performance parameters, all housed within a unique composite design and structure.
The K50 has also been developed to directly address the growing challenges presented by swarming activities through a range of integrated modular systems and sensors which deliver uniquely semi-autonomous operational and offensive capabilities.
Mal Crease, Founder and CEO of Kraken Technology Group, commented:
“The Kraken K50 will demonstrate unparalleled levels of performance, integration, modularity and operational capability which addresses both expeditionary and green-water requirements. This investment will also allow us to establish a dedicated manufacturing facility in the UK which will revolutionise the maritime composite design and integration process, specifically to meet increasingly localised manufacturing and assembly requirements”.
19 Apr 22. Booz Allen Invests in Reveal Technology, Inc.. Booz Allen Hamilton (NYSE: BAH) announced it made a strategic investment in Reveal Technology, Inc., a visual analytics and edge artificial intelligence (AI) company.
Blending state-of-the-art computer vision, AI, and edge computing technologies, Reveal delivers intuitive, rapid intelligence at the austere tactical edge where power, compute, and bandwidth are often in short supply. The company’s Farsight software platform provides special operators and squads in high-risk environments with actionable intelligence, surveillance and reconnaissance (ISR) capabilities at the unit level—without the need for network connectivity and on timelines measured in minutes and seconds, not hours and days.
Farsight’s AI-powered insights and decision aids—including real-time 2D mapping, near-real-time-3D mapping, line of sight analysis, and route planning—reduce the cognitive burden on troops and enable faster, better decisions and response. This technology adds critical capabilities to Booz Allen’s Digital Battlespace platform, which supports global defense clients in an information-driven, fully integrated conflict space across all warfighting domains and where success depends on critical networks—communications; intelligence; positioning, navigation, and timing; and equipment—working together even in communications-challenged, denied, or degraded environments.
“Reveal has developed solutions that increase situational awareness and accelerate the decision cycle for dismounted warfighters. Their technology provides rapid, actionable intelligence at the squad and soldier levels while answering the government’s call for speeding the delivery of applied and tactical AI to the battlefield,” said Joel Dillon, Booz Allen senior vice president of digital battlespace special missions. “It’s a gamechanger—and something I wish I had when I was in combat.”
Booz Allen is committed to investing in strategic, defense-first, dual-use technologies that help speed up the adoption of advanced commercial technologies for public sector missions. Beyond special operations, there is future potential to apply Reveal’s technology to such mission-critical use cases as natural disaster response, public safety crises, maritime search and rescue, and more.
“Since 2015, Booz Allen has been scouting dual-use capabilities in emerging tech including across all areas of AI/ML to the edge. Because of where we are placed in the innovation ecosystem we are uniquely positioned to help the government find, vet, access and field these emerging technologies to deliver impact faster to important programs of record,” said Brian MacCarthy, Booz Allen vice president of tech scouting and ventures. “By investing in leading-edge companies like Reveal, we are bringing machine learning and AI to the edge—capabilities that are central to prevailing in the digital battlespace.”
Founded in 2018, Reveal is a company of elite combat veterans, special operators, and top-tier technologists who truly understand the mission and the challenges of combat.
“Reveal has earned its position as the industry’s leading edge geospatial intelligence technology. Farsight is specifically designed to meet tactical operators’ critical needs by delivering applied AI and rapid situational awareness through best-in-class 3D map creation, automated video and imagery exploitation, and sensor- and platform-agnostic edge data processing. The result is faster, better and safer decision-making for warfighters at the tactical edge. It’s the key for the future of human-machine teaming,” said Garrett Smith, Reveal Technology co-founder and CEO.
As the largest provider of AI services for the federal government, Booz Allen delivers some of the most advanced AI, ML and data architecture technologies, services and strategies through its work with the Joint AI Center, Army Futures Command and U.S. Air Force Air Combat Command, among others.
Learn more about Booz Allen’s Digital Battlespace platform at https://www.boozallen.com/d/solution/digital-battlespace.html.
About Booz Allen Hamilton
For more than 100 years, military, government, and business leaders have turned to Booz Allen Hamilton to solve their most complex problems. As a consulting firm with experts in analytics, digital solutions, engineering, and cyber, we help organizations transform. We are a key partner on some of the most innovative programs for governments worldwide and trusted by its most sensitive agencies. We work shoulder-to-shoulder with clients, using a mission-first approach to choose the right strategy and technology to help them realize their vision.
With global headquarters in McLean, Virginia, our firm employs approximately 29,500 people globally as of December 31, 2021, and had revenue of $7.9bn for the 12 months ended March 31, 2021. To learn more, visit www.boozallen.com. (NYSE: BAH)
About Reveal Technology
Reveal Technology, Inc., represents the new generation of defense technology companies, building mobile software that allows warfighters to leverage the power of applied AI to make better, faster decisions in high-risk environments. Headquartered in Silicon Valley, Reveal was co-founded by Garrett Smith, former combat-decorated Marine Corps Force Recon Officer, who completed two combat tours and earned a BYU BA and Stanford MA; Andrew Dixon, former Marine Corps Infantry Officer and Unmanned Mission Commander, who completed one combat tour and earned a Princeton BA; Parker Clark who served as CTO of one of the largest domestic commercial drone companies and graduated #1 from Stanford Engineering with BS degrees in EE/MS; and John Laxson, who has served in a variety of software leadership roles throughout the industry and is a Stanford graduate with a BS in CS. Follow us on LinkedIn. (Source: BUSINESS WIRE)
14 Apr 22. Cyber security in focus as Goldman Sachs upgrades CrowdStrike. Intermittent tech sell-offs have provided viable entry points for a high-growth area of the market. We got an interesting glimpse into cyber warfare earlier this month, when it emerged that Russian hackers had launched a cyberattack on the Ukrainian power grid, along with parallel attempts to sabotage computer systems that would be needed to restore it. If anything, the move by Russia, which was revealed by Ukrainian government officials and the Slovakian cybersecurity firm ESET, was probably overdue given that these types of attacks on critical infrastructure can produce an optimal level of damage in relation to the resources employed – more bang for your bucks, as it were. (Ukraine’s power grid has been knocked offline twice before, in 2015 and 2016.)
If Ukraine was to reverse the tactic, it would be a classic example of asymmetrical warfare, essentially tactics employed by a weaker adversary to nullify, or undermine, the advantages held by a stronger adversary.
This type of warfare, which isn’t confined to national threats, has gained prominence in the digital age and extends into the corporate sphere. Inexpensively produced malware can render targeted systems useless simply by erasing key data. It’s a lot cheaper to disable a power plant by compromising its digital systems than it is to destroy it with a missile.
None of this is news to investors, at least those familiar with cybersecurity, a global industry that Astute Analytica estimates will grow at a compound annual growth rate of 13.4 per cent during the forecast period of 2021 to 2027, reaching an aggregate value of $346bn (£266bn), equivalent to 45 per cent of the current US defence budget.
The scale of the problem is apparent in figures published by international law firm, RPC, stating that “financial data belonging to as many as 42.2m people in the UK was compromised in data breaches last year, up 1,777 per cent from 2.2m in 2019-20″.
Central to cyberdefence mechanism is the SOC, or Security Operation Centre, best described as the combination of technology, people and processes used to detect, analyse and prevent cybersecurity incidents. It can take several forms beyond the conventional firewall mechanisms aimed at preventing hackers from breaching a network. One of last year’s most keenly anticipated, or overhyped, initial public offerings was for Darktrace (DARK), a cybersecurity company which employs artificial intelligence and machine learning to evolve in the face of multiplying threats.
It could be argued that the inherent need for adaptability in this space lends itself to a software-as-a-service model. Sector analysis from US-based technological research and consulting firm, Gartner Inc, makes it clear that a bespoke offering is the preferable option in most cases, concluding that “the permutation of security operation needs is extensive, which means that what works for one entity is unlikely to be the best answer for another”. This suggests that cybersecurity operations are more likely to become embedded within a given organisation, with positive implications for the rate of recurring revenues.
Is now the time to make a foray into the sector? The investment case is clear enough, although it’s an increasingly crowded and somewhat fragmented marketplace. Certain companies will outperform the sector, generating substantial alpha returns in the process. It’s an alluring space for stock pickers, but given the general growth rates on offer, investors may opt for pooled vehicles and/or exchange traded funds, a point recently highlighted by the IC’s Dave Baxter. Consider that the L&G Cyber Security (UCITS) ETF has delivered an annualised rate of return of 16.6 per cent over the past five years – a none too shabby return with inflation running at a multi-decade high.
Another point worth considering is that companies within the sector have drifted lower on the sporadic sell-offs in tech stocks over the past seven months or so. Although appetite for high-growth tech stocks was waning well before Russian’s invasion of Ukraine, it’s worth remembering that the structural drivers in the cybersecurity market remain intact.
This hasn’t been lost on analysts from Goldman Sachs (US:GS). The investment giant has just upgraded its recommendation on CrowdStrike Holdings (US:CRWD) to ‘buy’, opining that the cybersecurity company’s “valuation is compelling at current levels”. While the full-year (FY) 2023 enterprise/sales multiple of 17.4 “appears high”, the stock trades at a lowly 0.4 times on a growth adjusted basis. Cash profits of $252mn are forecast to rise to $392mn for FY 2023, with a free cash flow yield of 1.3 per cent, against 0.8 per cent last time around. The view is that CrowdStrike sits “in the sweet spot of demand ahead of accelerating deterioration of the threat environment”. (Source: Investors Chronicle)
18 Apr 22. Textron Completes Acquisition of Pipistrel. Textron Inc. (NYSE: TXT) today announced that it has closed its acquisition of PIPISTREL d.o.o., PIPISTREL VERTICAL SOLUTIONS d.o.o. and PIPISTREL ITALIA S.R.L., known collectively as Pipistrel, an award-winning pioneer and global leader in electrically powered aircraft.
Pipistrel’s Velis Electro is the world’s first, and currently only, electric aircraft to receive full type-certification from the European Union Aviation Safety Agency (EASA). The company, which offers a family of gliders and light aircraft with both electric and combustion engines, has delivered more than 2,500 light aircraft worldwide since its founding in 1989 and additionally has both hybrid and electric propulsion models under development.
As a Textron company, Pipistrel will have access to greater resources, technical and regulatory expertise and a global aircraft sales and support network, enabling it to accelerate its development and certification of electric and hybrid electric aircraft. Pipistrel is now part of Textron’s newest business segment, Textron eAviation, which will pursue Textron’s long-term strategy to offer a family of sustainable aircraft for urban air mobility, general aviation, cargo and special mission roles. Rob Scholl, who has been leading Textron’s eAviation initiatives to date, has been named president and CEO of the segment.
“Pipistrel has already achieved what many other companies only aspire to – certifying and delivering highly regarded electric aircraft to customers around the world,” said Textron Chairman and CEO Scott Donnelly. “We are excited to accelerate Pipistrel’s development and to welcome its talented people into our organization, where we will pool expertise to make Textron a world leader in sustainable aircraft for a wide range of missions.”
Pipistrel will remain a distinct aviation brand within Textron, alongside the company’s already established Cessna, Beechcraft, and Bell brands. Its headquarters, research and development, and manufacturing will remain in Slovenia and Italy, where Textron plans to make additional investments to expand manufacturing and product development capabilities.
“With Pipistrel, we have the opportunity to take an already great aircraft manufacturer and make it greater still,” said Textron eAviation CEO Rob Scholl. “We look forward to working with its remarkable team and helping the business achieve its full potential.”
Under the terms of the transaction, Textron purchased Pipistrel for a cash purchase price of approximately €218m. Pipistrel’s founder and CEO, Ivo Boscarol, will remain a minority shareholder of Pipistrel with an approximately 10 percent interest for a two-year period, during which he will advise on future product plans and strategies. The cash purchase price includes the amount for which his minority interest will be purchased at the end of the two-year period. (Source: BUSINESS WIRE)
18 Apr 22. Griffon Corporation to Sell Telephonics Corporation to TTM Technologies for $330m. Griffon Corporation (“Griffon” or the “Company”) (NYSE:GFF) has entered into a definitive agreement to sell Telephonics Corporation (“Telephonics”) to TTM Technologies, Inc. (“TTM”) (NASDAQ:TTMI) for $330m in cash. The transaction is expected to close within the second calendar quarter of 2022, subject to certain closing conditions and regulatory approvals.
“We are pleased to announce the sale of Telephonics. This transaction will increase long-term value for our shareholders by strengthening our balance sheet and allowing us to focus our resources on our core businesses,” said Ronald J. Kramer, Griffon’s Chairman and Chief Executive Officer. “Telephonics is a well-regarded and trusted provider of defense electronics for the United States and its allies, with a seasoned leadership team and outstanding employees. We appreciate Telephonics’ long heritage as a part of Griffon, and we are confident the business will flourish as part of TTM.” Lazard is acting as financial advisor to Griffon for this transaction, and Dechert LLP is acting as Griffon’s legal counsel. J.P. Morgan is acting as exclusive financial advisor to TTM, and O’Melveny & Myers LLP is acting as TTM’s legal counsel. (Source: BUSINESS WIRE)
21 Apr 22. Meggitt posts humble growth as it gears up for £6.3bn US takeover. Revenue for the British defence firm Meggitt was up a humble five per cent this morning as the company gears up for a US takeover.
Whilst this was a slight boost from the previous year, revenue was still down 23 per cent compared to pre-pandemic levels.
Meggitt stated that though it was pleased with the strengthening of conditions in the market, the recovery in civil aerospace continues to be “uneven” due to the pandemic and extended lockdowns in China.
Both factors have contributed to labour and supply disruption for the industry, but Meggitt stated that it had made provisions to ensure that these supply issues were limited.
More optimistically, regional jet revenue was up 65 per cent, with large and business jets up 40 per cent and 13 per cent respectively.
Meggitt notably supplies parts to both Boeing and Airbus, as well as brakes for military vehicles.
Energy revenue was also up 27 per cent, with particularly strong growth in the Heatric business.
The firm is set to be taken over by US firm Parker in a £6.3bn swoop, which is expected to complete later in the year.
Whilst regulators initially raised competition concerns because of Meggitt and Parker’s positions as key aerospace manufacturers, which supply aircraft wheels, brakes and aerospace pneumatic valves, Brussels recently gave the decision a green light. (Source: City AM)
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.