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28 Apr 22. EMBRAER S.A. (NYSE: ERJ; B3: EMBR3) releases its First Quarter 2022 Earnings Results.

HIGHLIGHTS

• Embraer delivered 14 jets in the first quarter, of which 6 commercial aircraft and 8 executive jets (6 light and 2 mid-size).
• Firm order backlog ended 1Q22 at US$ 17.3bin (+US$0.3bn versus 4Q21). This is the highest quarter backlog since 2Q18, driven by solid order activity.
• Revenues reached US$ 600.9m in the quarter, down 26% compared to 1Q21, with almost one month of production shut down due to system and legal reintegration of Commercial Aviation in January. In contrast, reported consolidated gross margin of 20.1% was higher than the 9.5% reported in 1Q21 due to better performance in all segments.
• Adjusted EBIT and EBITDA were US$ (27.0) m and US$ 13.2 m, respectively, yielding Adjusted EBIT margin of -4.5% and Adjusted EBITDA margin of 2.2%. This includes nonrecurring expenses of US$17 m for the quarter.
• Free cash flow (FCF) in 1Q22 was a usage of US$ (67.8)m, representing a significant improvement compared to the US$ (226.6) m in FCF in 1Q21, and best FCF for 1Q since 1Q10, consistent with working capital optimization measures and enterprise efficiency.
• FX Variation & Hedge – in 1Q22 we recognized credits of USD 0.8 m related to payroll expenses due to cash flow hedge, mitigating our exposure to FX variation, which is approximately 13% of total costs.
• The Company finished the quarter with total debt of US$ 3.6bn, or US$0.5bn less in line with the strategy to improve our capital structure.
• We reaffirm all aspects of our 2022 financial and deliveries guidance, with no material variation. (Source: PR Newswire)

 

28 Apr 22. G.S. Precision, a Portfolio Company of AE Industrial Partners, Acquires F.T. Gearing, a Leader in Highly Specialized Aerospace Gears.

G.S. Precision, Inc. (“GSP”), a leading manufacturer of complex, high-precision components and specialty hardware used primarily in aerospace engines and defense systems, announced today that it acquired F.T. Gearing Systems (“F.T. Gearing”), a provider of highly engineered gears to the aerospace and defense industries. Terms of the transaction were not disclosed.

GSP is a portfolio company of AE Industrial Partners (“AEI”), a U.S.-based private equity firm specializing in aerospace, defense & government services, space, power & utility services, and specialty industrial markets. F.T. Gearing marks GSP’s second add-on acquisition since being acquired by AEI, including its acquisition of SMC Aerospace last month.

Founded in 1978 and headquartered in Aldershot, England, F.T. Gearing is a critical supplier within the aerospace supply chain, providing complex, tight-tolerance precision gear components used in next-generation aircraft engines, actuators, and fuel systems. F.T. Gearing has been family owned since its founding and current owners Graham Fitzgerald, CEO, and Nigel Fitzgerald, Managing Director, will continue with F.T. Gearing post-close.

“The acquisition of F.T. Gearing is truly transformational for GSP, providing us with new gear capabilities as well as an entry into F.T. Gearing’s blue-chip customers, furthering GSP’s position as a premier supplier within the global aerospace and defense ecosystem,” said Matt O’Connell, CEO of GSP. “F.T. Gearing is a perfect fit with GSP, both in terms of corporate culture and its complex gear manufacturing capabilities, and our customers will benefit from an expanded solutions offering. I look forward to working with Graham and Nigel and the entire F.T. Gearing team as we grow the business together.”

“As part of G.S. Precision, we will expand our footprint and gain access to new markets and customers,” said Graham Fitzgerald. “In a competitive market, our complementary offerings strongly position us to meet the growing demands of today’s largest A&D customers.”

“While F.T. Gearing has been a successful family company for over 40 years, the support of GSP and AEI will allow us to capitalize on today’s exciting aerospace opportunities,” said Nigel Fitzgerald. “We’re excited to join the GSP team and are optimistic about the growth ahead.”

About G.S. Precision

Based in Brattleboro, VT, G.S. Precision is a leading manufacturer of complex, high precision components and specialty hardware used in a variety of mission critical aerospace and defense applications. For more than 60 years, the Company has utilized state of the art, proprietary manufacturing processes and technologies to deliver a diverse set of components, used in both new production and the aftermarket. For more information, please visit www.gsprecision.com.

About AE Industrial Partners

AE Industrial Partners is a private equity firm specializing in aerospace, defense & government services, space, power & utility services, and specialty industrial markets. AE Industrial Partners invests in market-leading companies that can benefit from its deep industry knowledge, operating experience, and relationships throughout its target markets. AE Industrial Partners is a signatory to the United Nations Principles for Responsible Investment and the ILPA Diversity in Action initiative. Learn more at www.aeroequity.com. (Source: PR Newswire)

 

28 Apr 22. OSI Systems Reports Fiscal 2022 Third Quarter Financial Results.

• Q3 Revenues of $290m
• Q3 Earnings Per Diluted Share

o GAAP EPS of $2.41

o Non-GAAP EPS of $1.43

• Q3 Book-to-Bill Ratio of 1.1
• Q3 Ending Backlog of $1.2bn (14% increase from June 30, 2021)
• Company Reiterates FY 2022 Guidance

OSI Systems, Inc. (the “Company” or “OSI Systems”) (NASDAQ: OSIS) today announced financial results for the three and nine months ended March 31, 2022.

Deepak Chopra, OSI Systems’ Chairman and Chief Executive Officer, stated, “We are pleased with our overall performance in the third quarter, during which we continued to profitably grow our business in a difficult general economic environment that included heightened supply chain and logistics challenges. We believe that with the strength of our backlog and near-term pipeline of opportunities we are well positioned to finish the fiscal year with a strong fourth quarter.”

The Company reported revenues of $290.5m for the third quarter of fiscal 2022, an increase of 2.4% over the $283.8m reported for the third quarter of fiscal 2021. Net income for the third quarter of fiscal 2022 was $42.7m, or $2.41 per diluted share, compared to net income of $18.8m, or $1.03 per diluted share, for the third quarter of fiscal 2021. Non-GAAP net income for the third quarter of fiscal 2022 was $25.5m, or $1.43 per diluted share, compared to non-GAAP net income for the fiscal 2021 third quarter of $25.3m, or $1.38 per diluted share.

For the nine months ended March 31, 2022, revenues were $846.4m compared to $814.7m in the same period a year ago. Net income for the nine months ended March 31, 2022 was $81.6m, or $4.52 per diluted share, compared with $48.2 m, or $2.63 per diluted share, for the same period a year ago. Non-GAAP net income for the nine months ended March 31, 2022 was $69.9m, or $3.87 per diluted share, compared with non-GAAP net income of $69.3m, or $3.79 per diluted share, for the comparable prior-year period.

For the three and nine months ended March 31, 2022, the Company’s book-to-bill ratio was 1.1 and 1.2, respectively. As of March 31, 2022, the Company’s backlog was over $1.2bn, representing an increase of 14% from the Company’s backlog as of the end of the last fiscal year. The Company’s cash generated from operations was $38.4m and capital expenditures were $2.9m during the quarter ended March 31, 2022.

Mr. Chopra commented, “The Security division revenues increased in Q3 as compared to the prior year while operating income was impacted by higher supply chain and logistics costs, the mix of revenue, and the cost of certain promotional activities, which were not incurred in the prior year due to the pandemic. With our significant Security backlog, we are expecting solid growth in the fourth quarter.”

Mr. Chopra continued, “Our Optoelectronics and Manufacturing division again delivered solid financial results along with record bookings leading to a record backlog for the division. The division has benefitted from our vertically integrated manufacturing global footprint and is consistently viewed as a trusted partner by leading OEMs.”

Mr. Chopra concluded, “Our Healthcare division continued to perform well and delivered a strong operating margin. As anticipated, we reported a small reduction in revenues for the third quarter of fiscal 2022 in comparison to the same prior-year period, which had been bolstered during the COVID pandemic. During the quarter, we continued to focus on new product development principally in our patient monitoring portfolio to enhance our core offerings.”

During the third quarter of fiscal 2022, the Company executed a sale-leaseback transaction for its facilities in Hawthorne, California. The Company sold the property for $32m and recognized a gain on sale of $27.4m.

Alan Edrick, Executive Vice President and Chief Financial Officer, stated, “In addition to the solid operating results, we were pleased with the continued improvements to our capital structure as we generated significant proceeds from the sale of our Hawthorne facility and continued to repurchase shares.”

Mr. Edrick continued, “The sale-leaseback of our Hawthorne facility was completed at a very attractive sale price with favorable leaseback terms unlocking the value in this asset. Further, we were active in our stock repurchase program, acquiring 635,962 shares. We have retired approximately 6% of our outstanding shares during the first nine months of fiscal 2022 as part of our capital allocation strategy leaving us with the ability to repurchase approximately 1.4m additional shares under our current buyback program. We also completed two small strategic acquisitions in our Security division which are expected to strengthen our direct presence in certain regions and broaden our technology portfolio.” (Source: BUSINESS WIRE)

 

28 Apr 22. Northrop reports lower revenue as labor, supply chain woes linger. U.S. weapons maker Northrop Grumman Corp (NOC.N) reported a fall in first-quarter sales and adjusted profit on Thursday, hit by labor shortages and supply chain issues.

An acute labor shortage due to the Omicron-led surge in coronavirus infections led to demand for workers far outpacing supply.

Northrop Grumman Corporation Chief Finiancial Officer David Keffertold Reuters on Thursday, “We experienced COVID-related labor and supply chain pressures in January, in particular through the height of the Omicron spread. Those pressures alleviated in February and March. In fact, in March, we saw a strong recovery.”

The company reported a 9.6% decline in revenue from its aeronautics unit, which makes the center fuselage for fighter jets.

However, Russia’s invasion of Ukraine in February has boosted defense spending demand in the U.S. as well as other countries as they shore up their defenses.

“An area that we see the likelihood of increased demand is across Europe, not just Eastern but Western Europe as well, in air and missile defense,” Keffer said.

U.S. President Joe Biden’s $5.79trn budget plan to Congress submitted last month includes calls for record peacetime military spending of $813bn, up from $778bn last year.

The company maintained its 2022 forecast, signaling sustained demand for its products aided by rising geopolitical tensions, with projected sales of between $36.20bn and $36.60bn.

It continues to expect full-year adjusted earnings per share of between $24.50 to $25.10.

Sales in Northrop’s space systems business gained 13.2% to $2.86bn, its third consecutive quarterly rise.

The company’s sale of its IT services in early 2021 also led to lower sales and profit in the first quarter, the company added.

Quarterly adjusted net earnings fell to $955m, or $6.10 per share, from about $1.08bn, or $6.57 per share, a year ago.

The company’s total sales fell to $8.80bn in the first quarter, from $9.16bn a year earlier. (Source: Reuters)

 

27 Apr 22. Boeing shares plunge on array of charges, 737 MAX target in doubt. Boeing Co (BA.N) unveiled $2.7bn in charges and added costs across its aircraft portfolio on Wednesday, and expressed doubts over hitting jet delivery targets as technical problems, inflation and supplier risks cloud its path toward recovery. Shares of the U.S. planemaker fell to a nearly 1-1/2 year low after it posted a quarterly loss and announced it was halting 777X production through 2023 due to a fresh delay in its entry into service after certification problems and weak demand.

“Another dreadful set of results,” Agency Partners analyst Nick Cunningham said in a client note, adding that a “general sense of disarray continues”.

On the plus side, Boeing said it submitted a certification plan to U.S. air-safety regulators in a step toward resuming deliveries of its 787 Dreamliner, halted for nearly a year by inspections and repairs in a separate industrial headache costing about $5.5bn.

The twin-aisled Dreamliner, along with its cash cow 737 MAX, are vital to Boeing’s ability to emerge from overlapping coronavirus and jet-safety crises, a path steepened by war in Ukraine.

Boeing did not specify when Boeing would resume Dreamliner deliveries. Reuters reported last week Boeing had advised key airlines and parts suppliers that the deliveries would resume in the second half of this year. read more

Boeing also confirmed a delay in handing over the first 777X jet to 2025, from the previous target of late 2023, but said it remained confident in the program.

“We’ve got to give ourselves the time and freedom to get this right,” Calhoun told analysts.

Calhoun said the halt in 777-9 production – which will add $1.5bn in fresh costs – was based on a longer safety certification timeline, a risk reported by Reuters in February.

He said the production pause would help minimize inventory and the number of jets requiring retrofits, while it adds to freighter capacity with a newly launched cargo spinoff of the 777X, the world’s largest twin-engine passenger plane.

“We are concerned that this delay (in 777X delivery) may allow airlines to cancel without penalty,” Citi Research analyst Charles Armitage said.

Boeing is facing an increasingly high-stakes battle to win certification of the largest variant of the 737 MAX before a new safety standard on cockpit alerts takes effect at year-end.

The deadline for changes was introduced as part of broader regulatory reforms at the Federal Aviation Administration following fatal 737 MAX crashes in 2018 and 2019.

“The intent of that legislation was never to stop the derivative product line with respect to the MAX,” Calhoun said. “So I believe our chances are good with respect to getting legislative relief. It doesn’t mean we’ll get them. And if we don’t, it’s a problem.”

Boeing reiterated it expects its 737 MAX production rate to reach 31 planes per month in the second quarter, a slight delay from what some analysts expected, though industry sources have not ruled out a slip. It has 320 of the jets in inventory.

Boeing said it was on track to return to positive cash flow in 2022 with no need for an immediate capital raise as it ramps up deliveries of the cash-cow narrow-body, though it faces risks in the crucial China market even as travel rebounds from the pandemic.

“Traffic is returning, and it’s returning in a pretty big way,” Calhoun said.

It reported a quarterly core loss per share of $2.75, compared with a loss of $1.53 per share a year ago. Revenue fell to $13.99bn from $15.22bn.

Like other aerospace companies, Boeing is grappling with supply chain logjams, inflation and fallout from war in Ukraine.

“Inflation continues to take a hard run at everything we do,” Calhoun told analysts.

It booked a $660 m charge in the quarter on its VC-25B – commonly known as Air Force One – due to higher supplier costs and technical problems and schedule delays.

“Air Force One, I’m just going to call a very unique moment, a very unique negotiation, a very unique set of risks that Boeing probably shouldn’t have taken,” Calhoun said. “But we are where we are, and we’re going to deliver great airplanes. And we’re going to recognize the costs associated with it.”

Boeing also recorded $367m in charges for its T-7A Red Hawk trainer jet due to inflation, supply chain issues and pandemic impacts.

And it booked pre-tax charges of $212m due to the war in Ukraine and international sanctions against Russia, which pose risks to materials supply and aircraft orders.  Asked whether Boeing would hit a 500-aircraft delivery target for the 737 MAX this year, Chief Financial Officer Brian West said, “we probably won’t get quite all the way there.” (Source: Reuters)

 

28 Apr 22. KBR Announces Strong First Quarter 2022 Financial Results. Raises FY 2022 Earnings Guidance; Delivers Excellent Progress Toward 2025 Long-Term Targets

• Delivered revenue of $1,714m, 17% growth over 2021; diluted loss per share of $(0.51); adj. EPS1 of $0.62, 29% growth over 2021; and $89m of operating cash flow
• Awarded $1.2bn of bookings and options providing greater visibility of long-term growth targets
• Raising full year guidance for revenue, adj. EPS1, operating cash flow and adj. operating cash flow1

KBR, Inc. (NYSE: KBR) today announced its first quarter 2022 financial results and updated FY 2022 financial guidance.

“KBR is off to a fantastic start in 2022, building on its momentum with important program wins and stellar execution to deliver profitable growth, strong cash generation, and healthy bookings,” said Stuart Bradie, President and CEO of KBR. “With a passion for solving our clients’ most complex challenges, KBR benefits from favorable end-market tailwinds in areas of global importance such as national security, defense modernization, climate change, and plastics circularity. Furthermore, we posted outstanding safety performance in our culture of Zero Harm and reduced future uncertainty with the resolution of a legacy matter.”

Bradie continued, “Given the accelerating demand for our domain expertise, innovative solutions, and proprietary technologies, we are increasing our full-year 2022 revenue, adjusted earnings per share, operating cash flow and adjusted operating cash flow guidance. With a growing foundation of enduring, well-funded, long-term contracts delivering mission critical programs that matter, we are confident that the company is well positioned for sustainable growth and value creation over the near- and long-term horizons.  Our Team of Teams continues to perform each and every day, and I would like to thank our people for their contributions to KBR and the missions and success of our clients.”

Summarized First Quarter 2022 Financial Results

Financial highlights

• Revenue of $1.7bn grew 17% compared to 2021.
• Government Solutions posted revenue of $1,459 m in the quarter, a 25% increase over 2021, 21% organic.  The increase in revenue is attributable to solid growth delivered across each of our government businesses, as follows:
• Defense & Intel grew 8% compared to 2021 and 11% sequentially (all organic);
• Science & Space grew 2% compared to 2021 and 10% sequentially (all organic);
• Readiness & Sustainment grew 62% over 2021 (all organic), primarily attributable to elevated activity in the European Command as well as the wind down of Operation Allies Welcome; and
• International grew 24% compared to 2021 and 14% sequentially due primarily to the acquisition of Frazer-Nash Consultancy.
• Sustainable Technology Solutions posted $255m of revenue in the quarter, a 14% decrease from 2021.  The reduction compared to 2021 is attributable to the impact of our intent to exit commercial activities in Russia as well as timing of certain ongoing projects. In connection with our announced exit from Russian activities, we recorded a predominantly non-cash, pretax charge of $16m, including a $17m reduction in revenue and a $1m net benefit in expenses. We have excluded the impact of these items from Adjusted EBITDA1 and Adjusted EBITDA1 margins.
• Gross profit, net income (loss) attributable to KBR, adj. EBITDA1, and adj. EPS1 increased in line with the items described above and were impacted by the following:
• Government Solutions profit contributions and adj. EBITDA1 margins were generally in line with management’s expectations.  Margins in Government Solutions continue to benefit from strong project execution and performance scores in challenging technical areas that reflect high customer satisfaction.
• Sustainable Technology Solutions adj. EBITDA1 margins of 16% were generally in line with expectations, reflecting favorable mix of higher margin services and technology.
• In early April 2022, we announced that our JKC joint venture, in which KBR has a 30% ownership interest, entered into a settlement agreement (the “Settlement Agreement”) to resolve outstanding claims and disputes with its power plant subcontractor.  As a result of the Settlement Agreement, KBR expects to receive approximately $271m of cash in two payments: $203m in the second quarter of 2022 and $68m in 2023, at prevailing exchange rates.  KBR recorded a non-cash loss of $137m in equity earnings in the first quarter 2022.  Consistent with the company’s practice, this amount has been excluded from adj. EBITDA1 and adj. EPS1.
• Selling, general & administrative expenses of $107m in the first quarter 2022 reflects an increase over 2021 primarily attributable to the company’s return to the office, increased travel, and other initiatives, all in line with management’s expectations.

Recent Developments and New Business

In the first quarter 2022, the company won $1.2bn of awards and options, including the following:

• A $110m task order to continue providing services in human performance and behavioral health to the U.S. Special Operations Command to support its Preservation of the Force and Family mission.
• Over $100m in task orders to support increased operational tempo in the European Command.
• An expanded task order to support prototyping and fielding of systems to take national space capabilities and apply them at the tactical level.  This work includes support of geolocation tracking; sensor, data fusion and dissemination; situational awareness; cyber operations; air superiority; command, control and spectrum utilization; and real-time large data analytics and virtualization.
• A contract to provide license and engineering to a leading midstream company for a world-scale olefins production facility to be built on the U.S. Gulf Coast. KBR’s K-COTTM catalytic olefins technology is the key enabler that can process a wide range of feedstocks to achieve exceptional olefin yields and production ratios in a single train with the most capital and carbon efficient design. The combination of KBR’s proprietary K-COT and SCORETM steam cracking technology deliver the most innovative design, support energy transition and advance refining-petrochemical integration opportunities.
• A 7-year contract with a 3-year option to provide preventive, predictive, corrective, and shutdown maintenance services with a focus on continuous improvement and sustainable asset performance for a major refining and petrochemical complex in the Middle East.

During the quarter, we were also awarded the $640m ceiling Ground Systems and Mission Operations contract to support more than 10 NASA exploration missions, including continued efforts on the James Webb Space Telescope, Lunar Reconnaissance Orbiter and Earth Observing System. KBR will provide systems engineering, launch and early orbit support, flight operations, and flight dynamics support to various NASA missions managed by Space Science Mission Operations and Earth Science Mission Operations at NASA’s Goddard Space Flight Center.  This highly strategic and technical win represents KBR’s largest recompete in 2022.  This award has not yet been booked into backlog.

Capital Deployment

KBR continues to employ a balanced approach to capital allocation, which includes investments that facilitate sustainable, long-term growth, and prudent return of capital to shareholders. During the quarter, KBR repurchased $33m of its common shares, inclusive of share repurchases to satisfy requirements of equity compensation plans, paid $15m in shareholder dividends, and sold a non-core asset for net proceeds of $18m.

FY 2022 Guidance

KBR combines deep mission understanding, market-leading expertise and technology, and unwavering operational focus to deliver solutions to solve our clients’ most complex issues. Our 2022 financial guidance is underpinned by favorable market tailwinds, good bookings momentum, a strong first quarter, and work under contract of over 85% to deliver our 2022 results.

KBR updates its FY 2022 guidance as follows:

• Consolidated revenue: $6.4bn to $6.8bn (raised)
• Adjusted EBITDA1 margin: ~10%
• Effective tax rate: 24% to 25%
• GAAP earnings (loss) per share (EPS): $1.02 to $1.14 (updated) and adjusted EPS1: $2.53 to $2.65 (raised), as follows:
• Updated GAAP EPS guidance to reflect the company’s strong first quarter performance, favorable end-market fundamentals, and accelerating demand for our domain expertise, innovative solutions, and proprietary technologies.
• Updated GAAP EPS guidance to reflect the impact of the $137m non-cash charge associated with the Settlement Agreement discussed previously. Consistent with the company’s practice, this amount has been excluded from adj. EBITDA1 and adj. EPS1.
• Updated GAAP EPS guidance to reflect the impact of the $16m pre-tax charge associated with our intent to exit commercial projects in Russia discussed previously. As this charge is predominantly non-cash and associated with the extraordinary events in Ukraine and Russia, it has been excluded from adj. EBITDA1 and adj. EPS1.
• Updated GAAP EPS guidance to reflect the impact of the adoption on January 1, 2022 of ASU No. 2020-06, Debt-Debt Conversion and other Options, which requires the use of the if-converted method for our convertible senior notes.  We have updated adjustments to EPS to reflect the Convertible Notes Call Spread Overlay which substantially mitigates this dilution.
• GAAP operating cash flow (OCF): $330m to $370m; adjusted OCF1: $360m to $400m (raised).

 

27 Apr 22. Boeing stock plummets after quarterly earnings highlight production snafus. The company’s revenues dipped to $14bn while its core operating loss came in at $2.75 per share. The Boeing Company has reported an 8% decrease in revenues in its first quarter results for 2022, with its revenues coming in almost $2 bn below analyst estimates.

The company’s revenues dipped to $13.99bn, down from $15.22bn in 1Q 2021 and below Street estimates of $15.83bn.

During the three-month period to end March 31, 2022, Boeing reported a core operating loss of $1.45 bn or $2.75 per share, compared to $353m or $1.53 per share in same quarter last year. In a statement, the company said its loss per share also reflected $212m of pre-tax charges for impacts of the war in Ukraine.

Boeing attributed a higher-than-normal operating margin of 20.6%, up from 20.1% in 1Q 2021, to “abnormal costs” such as the war in Ukraine, and higher research and development expenses.

The company delivered 95 commercial airplanes in the first quarter of 2022,up from 77 in 1Q 2021, however the airline reported a total backlog of $371bn, including nearly 4,200 commercial airplanes valued at $291bn.

It said that the production of its 737 model airplanes continues to increase and is expected to reach 31 airplanes per month during 2Q 2022.

Production of the 787 Dreamliner is at “a very low rate”, with Boeing stating that it anticipates abnormal costs for about $2 bn in relation to the program, including $312 recorded in the 1Q 2022.

Boeing CEO Dave Calhoun noted that, while this quarter had brought challenges for the business and the industry, the company continued to make progress towards key commitments.

“Despite the pressures on our defense and commercial development programs, we remain on track to generate positive cash flow for 2022, and we’re focused on our performance as work through certification requirements and mature several key programs to production,” Calhoun said in a release.

“We increased 737 MAX production and deliveries and made important progress on the 787 by submitting our certification plan to the Federal Aviation Administration (FAA).”

Following the release of Boeing’s first quarter earnings, the company’s stock was down about 7.3% at the midday point on Wednesday at around US$154.82. (Source: proactiveinvestors.co.uk)

 

28 Apr 22. VSE Corporation Announces First Quarter 2022 Results.

First Quarter Revenue Increased 40% Year-Over-Year Driven by Growth Across All Reporting Segments. VSE Corporation (NASDAQ: VSEC, “VSE”, or the “Company”), a leading provider of aftermarket distribution and maintenance, repair and overhaul (“MRO”) services for land, sea and air transportation assets for government and commercial markets, today announced results for the first quarter 2022.

FIRST QUARTER 2022 RESULTS

(As compared to the First Quarter 2021)

• Total Revenues of $231.2m increased 40.2%
• GAAP Net Income of $6.2m increased 22.2%
• Adjusted EBITDA of $22.2m increased 42.9%
• Adjusted Net Income of $9.2m increased 72.8%
• Adjusted EPS (Diluted) of $0.72 increased 64%

Aviation segment revenue increased 110% year-over-year to a record $93.3 m in the first quarter 2022. The year-over-year revenue improvement was attributable to share gains within the Business and General Aviation (B&GA) market and continued commercial end-market recovery. Aviation distribution and repair revenue increased 172% and 22%, respectively, in the first quarter 2022 versus the prior-year period. The Aviation segment reported operating income of $7.6 m in the first quarter, compared to a loss of $0.3 m in the same period of 2021. Segment adjusted EBITDA increased by 389% in the first quarter to $10.9m, versus $2.2 m in the prior-year period. Adjusted EBITDA margin was 11.6%, an increase of 664 basis points versus the prior-year period, driven by improved sales mix and end-market recovery.

Fleet segment revenue increased 22% year-over-year to $67.0 m in the first quarter 2022. Revenues from commercial customers increased 93% on a year-over-year basis, driven by growth in commercial fleet demand and e-commerce fulfillment sales. Commercial revenue represented 42% of total Fleet segment revenue in the period. Segment adjusted EBITDA increased 9% year-over-year to $8.8 m, while adjusted EBITDA margin declined 165 basis points to 13.1%, given a higher mix of commercial revenue and continued investment in commercial channel growth.

Federal & Defense segment revenue increased 8% year-over-year to $70.9 m in the first quarter 2022, driven by the contributions from the acquisition of HAECO Special Services (HSS), growth in field programs within aircraft maintenance and modernization services, along with a steady increase in Defense Logistics Agency (DLA) distribution services. The segment continues to execute under its one-year, $100 m Naval Sea Systems Command (NAVSEA) bridge award contract, which was announced in March 2022. The Federal & Defense segment reported an operating loss of $(0.7) m in the first quarter 2022 due to a $3.5 m provision for a contract loss recognized in the current quarter. The charge represents the expected loss driven by higher than anticipated supply chain material and labor costs related to a specific fixed-price, non-DoD contract with a foreign customer that is not considered indicative of ongoing business operations and strategy. Segment adjusted EBITDA declined 34.8% year-over-year to $3.8 m in the period, given a higher mix of cost-plus contracts. Funded backlog increased 5% year-over-year to $198 m, while bookings increased 46% on a year-over-year basis, given an increased focused on business development activities.

STRATEGIC UPDATE

During the first quarter, VSE continued to advance its business transformation of developing a leading aftermarket parts distribution and MRO services platform to support higher-growth end-markets. Building long-term sustainable revenue channels, growing adjusted EBITDA, and stabilizing legacy programs remain key focus areas that are expected to deliver value for shareholders. The Company’s first quarter results demonstrate substantial progress across these strategic imperatives and the additional opportunities that exist as the business continues to scale.

Building Long-Term, Sustainable Revenue Channels:

• During the first quarter, VSE Aviation secured a renewal of a three-year, $180 m distribution agreement with a global B&GA aircraft OEM. VSE Aviation will remain the global distributor of approximately 30,000 airframe parts serving approximately 1,000 B&GA aircraft through year-end 2025.
• During the first quarter, VSE Aviation reached an agreement with Honeywell Aerospace to provide repair services for various avionics products, including inertial reference units and cockpit display units across multiple air transport platforms. The agreement will establish OEM-authorized repair capabilities and contribute to commercial MRO revenue and growth beginning in 2023.
• VSE Aviation was recognized as Honeywell Aerospace’s Regional Channel Partner of the Year (EMEAI region) for its “unwavering commitment to supporting Honeywell products and services.” This recognition further exemplifies VSE’s dedication to excellence in service, and the value of the partnerships between VSE Aviation and global OEMs in support of mutual customers.
• During the first quarter, Fleet continued to execute on its revenue diversification strategy implemented in 2019 to expand its presence in commercial fleet, e-commerce, and e-commerce fulfillment markets. By leveraging Fleet’s existing capabilities and operational infrastructure to serve a diverse set of new customers, Fleet’s commercial revenue has grown to 42% of total segment revenue, up from 10% in 2019. VSE anticipates commercial revenue channels will continue to drive growth within the segment.
• Federal & Defense continues to achieve steady increases in awards for logistics and distribution services, resulting in $4.2 m in bookings during the first quarter. This growing revenue channel builds on existing capabilities, while bringing more comprehensive solutions to our DoD customers.

Growing Adjusted EBITDA:

• Aviation segment adjusted EBITDA grew to $10.9 m, up 389% versus the prior-year period. The execution of new business wins and commercial MRO activity continued to drive margin expansion in the quarter. Commercial airline end-market activity, anticipated to recover in 2024, will support higher-margin repair revenue, which we anticipate will contribute to incremental margin expansion in 2023 and beyond.
• Fleet segment adjusted EBITDA grew to $8.8m, up 9% versus the prior-year period. Fleet segment leadership successfully mitigated industry-wide supply chain disruptions and cost inflation during the period, as it continues to leverage existing supply chain excellence, supplier relationships, and product knowledge to reach new commercial customers. Fleet commercial growth, underpinned by higher class 4-8 and heavy-duty vehicle aftermarket activity, is anticipated to deliver an improved outlook for adjusted EBITDA, despite margin headwinds from revenue diversification.

Stabilizing Legacy Programs:

• Fleet segment’s USPS revenue was flat in the first quarter versus the prior-year period. In support of this long-term customer relationship, Fleet continued to add product offerings in support of the 230,000 vehicles in the USPS fleet. Amid a challenging supply chain environment, the Fleet segment remains essential in USPS maintenance operations and seeks to further develop comprehensive parts solutions for older long-lived vehicles (LLV), commercial off-the-shelf vehicles (COTS), and next generation delivery vehicles (NGDV).
• Federal & Defense segment revenue grew 8% in the first quarter, supported by contributions from the HAECO Special Services (HSS) acquisition and growth in NAVSEA services. Segment backlog grew 5% in the period versus the prior-year period, in part from awards under the recently announced NAVSEA $100m contract, as well as contributions from new aircraft maintenance and DLA distribution awards.

MANAGEMENT COMMENTARY

“During the first quarter, we delivered strong revenue growth in our Aviation and Fleet segments as both businesses capitalized on recent investments, new program wins, and market share gains with new and existing customers in our end-markets. The robust first quarter results included revenue growth in all segments, the highest ever revenue quarter for our Aviation segment, and the highest revenue quarter for VSE in the last ten years,” stated John Cuomo, President and CEO of VSE Corporation. “This quarter’s results demonstrate the opportunities that exist for our businesses to capitalize on end-market demand through focused product and service strategies and our industry-leading customer service.”

“Building long-term, sustainable revenue growth remains critical to scaling our businesses,” continued Cuomo. “Our first quarter results highlight the potential for both Aviation and Fleet segments in 2023 and beyond. VSE Aviation’s $180 m B&GA-focused airframe renewal is a testament to the ‘tip-to-tail’ initiative launched in 2021 that supports multi-year revenue confidence through 2025. VSE Aviation is also poised to benefit from new commercial repair capabilities with the recently announced Honeywell agreement, which will expand service offerings into newer next generation aircraft and increase our technical avionics repair capabilities as an authorized OEM repair station. Additionally, Fleet commercial growth, up 93% versus the first quarter of 2021, showcases the strong end-market demand for the products and services that Fleet provides, and illustrates our customer-centric value proposition to fleet owners, specifically in times of global supply chain uncertainty.”

“Our first quarter adjusted EBITDA of $22.2m, up $6.7m, demonstrates our focus on margin and operational excellence as our businesses scale. Aviation segment adjusted EBITDA of $10.9m grew $8.6m, driven by strong results from the recent B&GA-focused Global Parts acquisition, contributions from 2021 distribution awards, and higher repair revenues, which were up 22% year-over-year. Although commercial MRO market recovery in 2022 will be slightly slower than initially anticipated, we expect higher-margin Aviation commercial repair recovery, driven by improved air traffic levels and our MRO capability additions, to further support margin expansion for the Aviation segment as we look to 2023 and beyond.”

“Fleet adjusted EBITDA was $8.8m in the quarter, up $0.7m year-over-year, as the segment drives scale and successfully manages through a challenging supply chain environment. Key to our transformation is the stabilization of legacy programs, and in the first quarter Fleet delivered solid results with USPS revenue flat year-over-year. Fleet continues to support this long-term customer by adding products to support both legacy LLV and newer Commercial Off the Shelf vehicles. Over time, we plan to stabilize Fleet segment profit through commercial revenue diversification and additional support of non-LLV vehicle fleets.”

“Federal and Defense growth in the quarter was driven by the HSS acquisition and growth of our NAVSEA services. Margins were impacted as our contract mix of cost plus versus fixed price awards created headwinds in the quarter. The segment focused on delivering exceptional service to customers and continuing to grow profitable backlog.”

“We remain disciplined in our capital allocation in 2022,” stated Stephen Griffin, CFO of VSE Corporation. “In addition to improving net leverage this year, we will continue to invest in our higher return business through organic investments and bolt-on acquisitions of complementary assets that expand our product and service capabilities. At the conclusion of the first quarter, we had $100m in cash and available liquidity to support the ongoing growth of our business.”

FINANCIAL RESOURCES AND LIQUIDITY

As of March 31, 2022, the Company had $100 m in cash and unused commitment availability under its $350 m revolving credit facility maturing in 2024. As of March 31, 2022, VSE had total net debt outstanding of $303m and $80.3m of trailing-twelve months adjusted EBITDA. (Source: BUSINESS WIRE)

 

27 Apr 22. CACI Reports Results for Its Fiscal 2022 Third Quarter.

Revenues of $1.6bn.

Net income of $95.4m and Diluted EPS of $4.04

Adjusted net income of $109.6m and Adjusted diluted EPS of $4.64

Robust Cash flow from operations and Free cash flow

Contract awards of $1.2bn

CACI International Inc (NYSE: CACI), a leading provider of expertise and technology to government enterprise and mission customers, announced results today for its fiscal third quarter ended March 31, 2022.

John Mengucci, CACI President and Chief Executive Officer, said, “In the third quarter we delivered revenue growth, healthy profitability, and robust cash flow. We continue to experience short-term headwinds, which is reflected in our results and Fiscal Year 2022 guidance. Looking past these short-term dynamics, we see strong demand signals and a healthy budget environment with increasing urgency in national security priorities well-aligned with CACI’s capabilities. We continue to invest ahead of customer need, win in the marketplace, and execute on our robust backlog, positioning us to deliver long-term growth, margin expansion, strong cash flow, and shareholder value.”

The DSO calculations for three months ended March 31, 2022 and 2021 exclude the impact of the Company’s MARPA, which was 8 days and 6 days, respectively.

Revenues in Q3 FY22 increased 2 percent year-over-year driven by acquisitions completed earlier this fiscal year, partially offset by a 2 percent organic decline as a result of short-term funding headwinds. The decrease in income from operations was driven by higher indirect expenses from acquisitions and organic investments. Diluted earnings per share and adjusted diluted earnings per share decreased due to lower income from operations and a higher tax rate, partially offset by a lower share count as a result of the $500 m accelerated share repurchase announced in March 2021. The increase in cash from operations, excluding MARPA, was driven by a $160m tax benefit from method changes elected at the end of fiscal year 2021, as well as efficient working capital management. The increase in free cash flow was driven by higher cash from operations, excluding MARPA, and lower capital expenditures.

Third Quarter Contract Awards

Contract awards in Q3 FY22 totaled $1.2bn, with approximately 45 percent for new business to CACI. Awards exclude ceiling values of multi-award, indefinite delivery, indefinite quantity (IDIQ) contracts. Some notable awards during the quarter were:

• A five-year, single-award contract worth more than $323m to continue to provide high-end research and development support with an expanded scope of work for a classified customer’s mission objective.
• A three-year, single award task order worth $258m to expand its current enterprise technology support and continue modernization efforts to the Defense Agencies Initiative (DAI) program office’s financial management and end-to-end business processes.
• A $20m contract to build and demonstrate software for a customer, while also providing technology, research, development, and innovation, to create secure command and control of heterogeneous networks in support of Joint All Domain Command and Control (JADC2) missions.

Total backlog as of March 31, 2022 was $23.5bn compared with $22.3bn a year ago, an increase of 5 percent. Funded backlog as of March 31, 2022 was $2.8 bn compared with $3.0bn a year ago, a decrease of 7 percent.

Additional Third Quarter Highlights

• CACI delivered a free-space optical modem as part of the Integrated Laser Communications Relay Demonstration (LCRD) Low-Earth Orbit (LEO) User Modem and Amplifier (ILLUMA) program to MIT Lincoln Laboratory, which will integrate CACI’s advanced laser communications mission technology with other equipment for delivery to NASA.
• CACI completed the Critical Design Review (CDR) for two CACI mission payloads that will launch into low earth orbit next year – one demonstrating alternative positioning, navigation, and timing (APNT) technology and the other tactical intelligence, surveillance, and reconnaissance (TacISR) technology. Both payloads are built on flexible, upgradable software-defined radio (SDR) hardware.
• CACI was awarded a Gold Edison Award™ for Bluestone Analytics’ DarkBlue intelligence platform. DarkBlue is an unclassified, secure, cloud-based Software-as-a-Service technology that enables analysts to search for, analyze, and visualize data on the deep and dark web and select open-source intelligence (OSINT) platforms. The Edison Awards recognize the most innovative products, services, and business leaders from around the world and are among the most prestigious accolades honoring excellence in new product and service development, marketing, design, and innovation.
• CACI was named a World’s Most Admired Companies for 2022 by Fortune magazine, commemorating CACI’s 11th time appearing on the list. CACI ranked 7th, increasing its position, among Information Technology Services companies worldwide.
• CACI was named a 2022 Top Workplace USA company for the second consecutive year on the national list administered by Energage. More than 1,100 companies across the country participated in the survey and honorees are chosen based solely on employee feedback gathered through an employee engagement survey. CACI was also named as a Top Workplace on regional lists, including Colorado, New Jersey, Oklahoma, San Antonio, South Carolina, and Washington, D.C. in 2022.
• CACI was named a VETS Indexes 5 Star Employer for the second consecutive year, as part of the 2022 VETS Indexes Employer Awards. CACI was recognized for its commitment to recruiting, hiring, retaining, developing, and supporting veterans and the military-connected community.
• Ten CACI employees, including one Legacy Award winner, were honored for their excellence in science, technology, engineering, and math (STEM) and workforce innovation at the 36th annual 2022 Black Engineer of the Year Awards (BEYA) Global Competitiveness Conference.
• CACI’s DeEtte Gray, President of Business and Information Technology Solutions, received the 2022 AFCEA International Women’s Appreciation Award for her efforts to further women’s careers and support to the AFCEA association. Ms. Gray also won the 2022 FCW Federal 100 Award her role in leading major U.S. Government technology transformation efforts.

FY22 Guidance

The table below summarizes our FY22 guidance and represents our views as of April 27, 2022.

(1) Adjusted net income and Adjusted diluted earnings per share are defined as GAAP net income and GAAP diluted EPS, respectively, excluding intangible amortization expense and the related tax impact. This non-GAAP measure should not be considered in isolation or as a substitute for measures prepared in accordance with GAAP. For additional information regarding this non-GAAP measure, see the related explanation and reconciliation to the GAAP measure included below in this release.

(2) Expected Fiscal Year 2022 free cash flow includes an estimated $230 m tax benefit related to certain tax elections, as well as a payroll tax deferral repayment of approximately $47 m. Free cash flow is defined as Net cash provided by operating activities excluding MARPA, less payments for capital expenditures (capex). This non-GAAP measure should not be considered in isolation or as a substitute for measures prepared in accordance with GAAP. For additional information regarding this non-GAAP measure, see the related explanation and reconciliation to the GAAP measure included below in this release. (Source: BUSINESS WIRE)

 

27 Apr 22. Allison Transmission Announces First Quarter 2022 Results

• Net Sales of $677m, up 15% year over year
• Diluted EPS of $1.30, up 21% year over year
• Record quarterly net sales in the Outside North America On-Highway end market
• Company affirms full year 2022 guidance

Allison Transmission Holdings Inc. (NYSE: ALSN), a leading designer and manufacturer of propulsion solutions for commercial and defense vehicles and the largest global manufacturer of medium- and heavy-duty fully automatic transmissions, today reported net sales for the first quarter of $677m, a 15 percent increase from the same period in 2021 and the strongest revenue quarter since 2019, as production continues to accelerate to meet resilient customer demand, and is further driven by the continued execution of Allison’s growth initiatives.

David S. Graziosi, Chairman and Chief Executive Officer of Allison Transmission commented, “Following a notable year in 2021, first quarter 2022 results continue to demonstrate momentum for Allison’s growth objectives. Net sales accelerated into the first quarter, producing the third strongest revenue quarter in Allison’s history, including record quarterly revenue in the Outside North America On-Highway end market. The Allison team continues to deliver solid execution and strong performance, despite persistent global supply chain challenges.”

Graziosi continued, “We are affirming the full year 2022 guidance ranges released to the market on February 16. During the first quarter, we further settled $81m of share repurchases, or over 2% of outstanding shares, and increased the quarterly dividend for the third consecutive year, from $0.19 to $0.21 per share. In February, the Board of Directors approved a $1bn increase to the stock repurchase authorization, bringing the total amount authorized under the program to $4bn. Allison’s disciplined, prudent and well-defined approach to capital allocation continues to drive substantial per share returns while simultaneously facilitating investments across all of our end markets.”

First Quarter Financial Highlights

Net sales for the quarter were $677m. Year over year results were led by:

• An 8 percent increase in net sales in the North America On-Highway end market principally driven by continued strength in customer demand for last mile delivery, regional haul and vocational trucks,
• Record quarterly net sales in the Outside North America On-Highway end market, as a result of a 30 percent increase in net sales driven by improving demand across all regions and the continued execution of growth initiatives,
• A 14 percent increase in net sales in the Service Parts, Support Equipment and Other end market principally driven by increased demand for North America service parts and global support equipment, and
• A $30m increase in net sales in the Global Off-Highway end markets driven by improving demand for hydraulic fracturing applications in the energy sector as well as higher demand in the mining and construction sectors.

Net income for the quarter was $129m. Diluted EPS for the quarter was $1.30. Adjusted EBITDA, a non-GAAP financial measure, for the quarter was $244m. Net cash provided by operating activities for the quarter was $163m. Adjusted free cash flow, a non-GAAP financial measure, for the quarter was $143m.

First Quarter Net Sales by End Market

First Quarter Financial Results

Gross profit for the quarter was $320m, an increase of 10 percent from $291 m for the same period in 2021. The increase in gross profit was principally driven by higher net sales and price increases on certain products partially offset by unfavorable material costs and higher manufacturing expense commensurate with increased net sales.

Selling, general and administrative expenses for the quarter were $75m, an increase of $2m from $73m for the same period in 2021.

Engineering – research and development expenses for the quarter were $43m, an increase of $5m from $38m for the same period in 2021. The increase was principally driven by increased product initiatives spending.

Net income for the quarter was $129m, an increase of $9m from $120 m for the same period in 2021. The increase was principally driven by higher gross profit partially offset by a $15m unrealized loss on marketable securities.

Net cash provided by operating activities was $163m, an increase of $32m from $131m for the same period in 2021. The increase was principally driven by lower operating working capital funding requirements and higher gross profit partially offset by higher cash incentive compensation payments and higher cash interest payments.

First Quarter Non-GAAP Financial Measures

Adjusted EBITDA for the quarter was $244 m, an increase of $22m from $222m for the same period in 2021. The increase in Adjusted EBITDA was principally driven by higher gross profit partially offset by increased product initiatives spending.

Adjusted free cash flow for the quarter was $143m, an increase of $36m from $107m for the same period in 2021. The increase was driven by higher net cash provided by operating activities and lower capital expenditures.

Full Year 2022 Guidance Update

We are affirming the full year 2022 guidance ranges released to the market on February 16. Allison expects 2022 Net Sales in the range of $2,625 to $2,775m, Net Income in the range of $430 to $520m, Adjusted EBITDA in the range of $865 to $975m, Net Cash Provided by Operating Activities in the range of $570 to $680m, Adjusted Free Cash Flow in the range of $400 to $500m and Capital Expenditures in the range of $170 to $180m.

Our 2022 net sales guidance reflects higher demand in the Global On-Highway, Global Off-Highway and Service Parts, Support Equipment & Other end markets as a result of the ongoing global economic recovery, continued strength in customer demand and price increases on certain products. (Source: BUSINESS WIRE)

 

27 Apr 22. Amphenol Reports First Quarter 2022 Results.

First Quarter 2022 Highlights:

• Sales of $2.952bn, up 24% in U.S. dollars and 17% organically compared to the first quarter 2021
• GAAP diluted EPS of $0.68, up 28% compared to prior year
• Adjusted Diluted EPS of $0.67, up 29% compared to prior year
• Operating Margin of 20.0%
• Operating Cash Flow and Free Cash Flow of $351m and $274m
• Returned more than $320 m to shareholders through dividends and buybacks

Amphenol Corporation (NYSE: APH) today reported first quarter 2022 results.

“We are pleased to have closed the first quarter of 2022 with sales and Adjusted Diluted EPS exceeding the high end of our guidance,” said Amphenol President and Chief Executive Officer, R. Adam Norwitt. “Sales increased from prior year by a strong 24%, supported by robust growth across all of our end markets, as well as contributions from the Company’s acquisition program. Despite facing substantial inflationary pressures and supply chain disruptions, we realized strong profitability, with operating margins reaching 20.0% and Adjusted Diluted EPS growing by an impressive 29% from prior year. We are very proud of the Company’s outstanding performance in this most challenging and dynamic quarter.”

New Segment Reporting

As previously announced, beginning this quarter, the Company is reporting its financial results in three new segments: Harsh Environment Solutions (HES), Communications Solutions (CS) and Interconnect and Sensor Systems (ISS). The accompanying financial data reflects these new segments, as well as the recasting of relevant prior year period segment information in order to enable year-over-year segment comparisons.

Second Quarter 2022 Outlook

The current market environment remains highly uncertain, with continued supply chain and inflationary challenges as well as ongoing disruptions associated with the COVID-19 pandemic. Assuming conditions do not meaningfully worsen and assuming constant exchange rates, for the second quarter of 2022, Amphenol expects sales to be in the range of $2.890 bn to $2.950 bn, representing 9% to 11% growth over the second quarter of 2021. Adjusted Diluted EPS is expected to be in the range of $0.66 to $0.68, representing 8% to 11% growth over the second quarter of 2021.

“Despite the ongoing challenges and uncertainties around the world, we are very pleased with the Company’s strong First Quarter results,” Mr. Norwitt continued. “The revolution in electronics continues to accelerate, creating exciting and dynamic long-term growth opportunities for Amphenol across each of our diversified end markets. Our ongoing drive to leverage our competitive advantages and create sustained financial strength, as well as our initiatives to expand our product offerings, both organically and through our acquisition program, have created an excellent base for the Company’s future performance. I am confident in the ability of our outstanding entrepreneurial management team to continue to dynamically adjust to changing market conditions, to capitalize on the wide array of growth opportunities that arise in all market cycles and to continue to generate sustainable long-term value for our shareholders and other stakeholders. Most importantly, I remain truly grateful to our team for their extraordinary efforts in navigating the myriad of challenges around the world and continuing to strongly support our customers and drive outstanding operating performance.” (Source: BUSINESS WIRE)

 

27 Apr 22. Oshkosh Corporation Reports Fiscal 2022 First Quarter Results.

Updates Fiscal 2022 Sales and Earnings Expectations

Declares Quarterly Cash Dividend of $0.37 Per Share

Oshkosh Corporation (NYSE: OSK), a leading innovator of mission-critical vehicles and essential equipment, today reported a fiscal 2022 first quarter net loss of $2.1 m, or $0.03 per diluted share, compared to net income of $99.6 m, or $1.44 per diluted share, for the three months ended March 31, 2021. Comparisons in this news release are to the three months ended March 31, 2021, unless otherwise noted.

Results for the first quarter of fiscal 2022 included a charge of $18.1m associated with foreign anti-hybrid tax legislation as a result of comments made by taxing authorities of the applicable jurisdiction during the quarter. Results for the three months ended March 31, 2021 included after-tax charges of $2.5m associated with restructuring actions in the Access Equipment segment and $0.2m associated with business acquisition costs in the Defense segment. Excluding these charges, adjusted1 net income for the first quarter of fiscal 2022 and three months ended March 31, 2021 was $16.0m, or $0.24 per diluted share, and $102.3m, or $1.48 per diluted share, respectively.

Consolidated sales in the first quarter of fiscal 2022 increased 3.0 percent to $1.95bn largely as a result of improved pricing and increased product content. Sales volume was relatively flat as increased shipments for access equipment in North America was offset by lower sales volumes in the Defense, Fire & Emergency and Commercial segments.

Consolidated operating income in the first quarter of fiscal 2022 decreased 79.2 percent to $29.3m, or 1.5 percent of sales, compared to $140.8m, or 7.5 percent of sales, for the three months ended March 31, 2021. The decrease was primarily due to higher material & logistics costs and higher manufacturing costs, due in part to parts shortages and labor challenges, offset in part by improved pricing and improved mix.

“I am proud of the efforts of Oshkosh team members who worked hard and demonstrated great resolve to overcome very challenging conditions in our first quarter,” said John C. Pfeifer, Oshkosh Corporation president and chief executive officer. “Commodity prices showed steady improvement in the first half of the quarter, but significantly reversed course following the Russian invasion of Ukraine as steel and aluminum costs as well as freight costs increased rapidly. Additionally, we continued to experience supply chain disruptions and elevated workforce turnover that remain macro issues affecting many industries. Despite these headwinds, we were able to achieve adjusted earnings per share of $0.24, which exceeded our expectations. In response to the further cost inflation we are facing, we implemented additional surcharges in our Access Equipment and Commercial segments as well as pricing actions in the Fire & Emergency segment. Looking ahead, we are encouraged by the extremely strong demand and high order rates across our business segments, as evidenced by an all-time record backlog of over $12bn at quarter end.

“During the quarter, we were pleased to receive our first order from the U.S. Postal Service for its new Next Generation Delivery Vehicle (NGDV), which will transform the USPS’s fleet of aged delivery vehicles with our safety-enhancing, cutting edge NGDVs. The $3 bn order for 50,000 vehicles includes requirements for more than 10,000 battery electric vehicles. We look forward to delivering the initial production units to our customer in the back half of 2023.

“We also announced the acquisition of CartSeeker™, an autonomous technology that utilizes artificial intelligence-based recognition systems to enhance refuse collection services. We are planning to display this innovative technology at the Waste Expo show in Las Vegas in May.

“As a result of inflation, increased commodity and freight costs and supply chain disruptions intensified by recent COVID lockdowns in China, we are lowering our fiscal 2022 outlook for earnings per share to a range of $4.75 to $5.75 or adjusted earnings per share of $5.00 to $6.00. We remain confident in our ability to grow revenues and earnings as we navigate these headwinds and deliver on the orders in our significant backlog,” added Pfeifer.

Factors affecting first quarter results for the Company’s business segments included:

Access Equipment – Access Equipment segment sales for the first quarter of fiscal 2022 increased 19.6 percent to $883.1 m due to robust demand for access equipment in North America.

Access Equipment segment operating income in the first quarter of fiscal 2022 decreased 90.7 percent to $7.5 m, or 0.8 percent of sales, compared to $80.5m, or 10.9 percent of sales, for the three months ended March 31, 2021. The decrease was primarily due to higher material & logistics costs and higher manufacturing costs, largely associated with the implementation of manufacturing initiatives, offset in part by the impact of the higher sales volume and higher pricing in response to the higher input costs.

Defense – Defense segment sales for the first quarter of fiscal 2022 decreased 12.9 percent to $535.6m due to lower Family of Heavy Tactical Vehicle and Family of Medium Tactical Vehicle program volume as U.S. government funding for these programs has decreased in recent years.

Defense segment operating income in the first quarter of fiscal 2022 decreased 45.4 percent to $19.4m, or 3.6 percent of sales, compared to $35.5m, or 5.8 percent of sales, for the three months ended March 31, 2021. The decrease was due to the impact of the lower sales volume and unfavorable product mix, offset in part by the absence of inefficiencies associated with the establishment of an additional production line that were incurred during the three months ended March 31, 2021.

Fire & Emergency – Fire & Emergency segment sales for the first quarter of fiscal 2022 decreased 7.9 percent to $287.9m due to lower aircraft rescue and firefighting vehicle sales volume as a large multi-unit award was recognized in sales during the three months ended March 31, 2021.

Fire & Emergency segment operating income in the first quarter of fiscal 2022 decreased 52.7 percent to $22.4m, or 7.8 percent of sales, compared to $47.4m, or 15.2 percent of sales, for the three months ended March 31, 2021. The decrease was due to higher material & logistics costs, the impact of the lower sales volume, and higher manufacturing costs associated with parts shortages and labor challenges, offset in part by higher pricing in response to the higher input costs.

Commercial – Commercial segment sales for the first quarter of fiscal 2022 increased 5.0 percent to $241.4m due to a greater percentage of sales that included a third-party chassis and higher pricing in response to higher input costs, offset in part by lower sales volume as a result of supply chain challenges.

Commercial segment operating income in the first quarter of fiscal 2022 decreased 23.9 percent to $14.3m, or 5.9 percent of sales, compared to $18.8m, or 8.2 percent of sales, for the three months ended March 31, 2021. The decrease in operating results was largely due to higher material costs, the impact of the lower sales volume and higher manufacturing costs associated with parts shortages, offset in part by favorable product mix and improved pricing.

Corporate – Corporate costs in the first quarter of fiscal 2022 decreased $7.1m to $34.3 m primarily due to lower incentive compensation accruals, lower healthcare costs, and lower share-based compensation expense, offset in part by higher corporate research & development investments and costs associated with the change in the Company’s fiscal year end.

Interest Expense Net of Interest Income – Interest expense net of interest income in the first quarter of fiscal 2022 increased $0.4 m to $11.6m.

Provision for Income Taxes – The Company recorded income tax expense in the first quarter of fiscal 2022 of $20.2m, or 107.4 percent of pre-tax income, compared to $33.2m, or 25.0 percent of pre-tax income for the three months ended March 31, 2021. The provision for income taxes in the first quarter of fiscal 2022 included a charge of $18.1m related to taxes on previous income as the Company revised its interpretation of certain foreign anti-hybrid tax legislation based upon comments from the corresponding taxing authorities in the quarter.

Share repurchases – The Company repurchased 751,309 shares of Common Stock for $85.0m during the first quarter of fiscal 2022.

Fiscal 2022 Expectations

The Company now expects its fiscal 2022 consolidated operating income to be in the range of $475m to $560 m compared to its previous estimate of $545m to $625m.

The Company now expects its fiscal 2022 adjusted diluted earnings per share to be in the range of $5.00 to $6.00 compared to its previous estimate of $5.75 to $6.75.

Dividend Announcement

The Company’s Board of Directors today declared a quarterly cash dividend of $0.37 per share of Common Stock. The dividend will be payable on May 27, 2022 to shareholders of record as of May 13, 2022. (Source: BUSINESS WIRE)

 

27 Apr 22. Teledyne Technologies Reports First Quarter Results.

Teledyne Technologies Incorporated (NYSE:TDY)

• Record first quarter sales of $1,321.0m, an increase of 64.0% compared with last year
• Record first quarter GAAP diluted earnings per share of $4.46 and non-GAAP diluted earnings per share of $4.27
• First quarter GAAP operating margin of 16.9% and non-GAAP operating margin of 21.0%
• Increasing full year 2022 GAAP earnings outlook to $15.34 to $15.66 per share, compared with the prior outlook of $14.10 to $14.55 per share, and narrowing full year non-GAAP earnings outlook to $17.75 to $18.00 per share, compared with $17.60 to $18.00 per share
• Quarter-end Consolidated Leverage Ratio declined to 2.8x
• Published inaugural Corporate Social Responsibility Report
• Teledyne FLIR successfully fulfills terms of Consent Agreement with the U.S. Department of State

Teledyne today reported first quarter 2022 net sales of $1,321.0m, compared with net sales of $805.7m for the first quarter of 2021, an increase of 64.0%. Net income was $212.6m ($4.46 diluted earnings per share) for the first quarter of 2022, compared with $84.7m ($2.23 diluted earnings per share) for the first quarter of 2021, an increase of 151.0%. The first quarter of 2022 net sales included $452.6m in incremental net sales from the acquisition of FLIR Systems, Inc. (“FLIR”). The first quarter of 2022 also reflected net discrete income tax benefits of $56.5 m compared with net discrete income tax benefits of $6.3m for the first quarter of 2021. The first quarter 2022 amount included $50.0m of net discrete income tax benefits primarily related to the resolution of certain FLIR tax reserves. In connection with the FLIR acquisition, in the first quarter of 2022, Teledyne incurred pretax acquired intangible asset amortization expense of $44.1m. The first quarter of 2022 also included $9.5m of pretax acquired intangible asset amortization expense for transactions completed in prior periods. Excluding these charges, non-GAAP net income for the first quarter of 2022 was $203.9m ($4.27 per share). In the first quarter of 2021, in connection with the then pending acquisition of FLIR, Teledyne incurred pretax charges of $36.5m which included $30.6m in interest and debt expense related to financing for the pending acquisition and $5.9m in corporate expense for related transaction costs. The first quarter of 2021 also included $9.8m of pretax acquired intangible asset amortization expense for transactions completed in prior periods. Excluding these charges, non-GAAP net income for the first quarter of 2021 was $121.3m ($3.19 per share). Operating margin was 16.9% for the first quarter of 2022, compared with 16.8% for the first quarter of 2021. Excluding acquisition-related transaction and purchase accounting expenses, non-GAAP operating margin for the first quarter of 2022 was 21.0%, compared with 18.7% for the first quarter of 2021.

“We began 2022 with the greatest first quarter sales, earnings and adjusted operating margin in the company’s history,” said Robert Mehrabian, Chairman, President and Chief Executive Officer. “Our results and operational execution also reflected our exceptionally well-balanced business portfolio, across both end markets and geographies. Demand throughout our shorter-cycle instrumentation and imaging businesses remained very robust, resulting in total company organic sales growth of 7.8%. For example, we achieved record orders for electronic test & measurement instrumentation and industrial imaging sensors and systems, even in a typically weaker first quarter. However, with such demand, supply chain constraints remained intense and impacted working capital and cash flow. Sales from our longer-cycle commercial aerospace and marine businesses increased considerably from last year and backlog also grew. Finally, after consuming backlog over the last six months in several of our U.S. Government focused businesses, we have seen a recent increase in bookings and future opportunities.”

Review of Operations

Comparisons are with the first quarter of 2021, unless noted otherwise.

Digital Imaging

The Digital Imaging segment’s first quarter 2022 net sales were $750.5m, compared with $263.3m, an increase of 185.0%. Operating income was $115.7m for the first quarter of 2022, compared with $52.0 m, an increase of 122.5%.

The first quarter 2022 net sales increase included $452.6m of incremental net sales from the FLIR acquisition as well as strong organic sales growth from industrial sensors and cameras, X-ray products and micro-electro-mechanical systems (“MEMS”). The increase in operating income in the first quarter of 2022 reflected the contribution from the FLIR acquisition, partially offset by $44.1m in acquired intangible asset amortization expense for FLIR. The increase in operating income also reflected the impact of organic sales growth, as well as margin improvement.

Instrumentation

The Instrumentation segment’s first quarter 2022 net sales were $308.9m, compared with $286.5m, an increase of 7.8%. Operating income was $71.6m for the first quarter of 2022, compared with $59.4m, an increase of 20.5%.

The first quarter 2022 net sales increase resulted from higher sales of test and measurement instrumentation and marine instrumentation, partially offset by flat sales of environmental instrumentation. Sales of test and measurement instrumentation and marine instrumentation increased $13.3m and $9.9m, respectively. Sales of environmental instrumentation were slightly lower by $0.8m. The increase in operating income primarily reflected the impact of higher sales, as well as margin improvement.

Aerospace and Defense Electronics

The Aerospace and Defense Electronics segment’s first quarter 2022 net sales were $166.2m, compared with $151.2m, an increase of 9.9%. Operating income was $42.9m for the first quarter of 2022, compared with $28.3m, an increase of 51.6%.

The first quarter 2022 net sales reflected higher sales of $13.8m for aerospace electronics and $1.2m for defense electronics. Operating income in the first quarter of 2022 reflected the impact of higher sales and favorable product mix.

Engineered Systems

The Engineered Systems segment’s first quarter 2022 net sales were $95.4m, compared with $104.7m, a decrease of 8.9%. Operating income was $9.4m for the first quarter of 2022, compared with $14.9m, a decrease of 36.9%.

The first quarter 2022 net sales reflected lower sales of $4.3m for engineered products and lower sales of $5.2 m for turbine engines, partially offset by higher sales of $0.2 m for energy systems. The lower sales for engineered products primarily reflected decreased sales from electronic manufacturing services products and space programs, partially offset by higher sales from marine and other manufacturing programs. Teledyne exited the cruise missile turbine engine business in the first quarter of 2021. Operating income in the first quarter of 2022 reflected the impact of lower sales, including no sales of higher margin turbine engines.

Additional Financial Information

Cash Flow

Cash used in operating activities was $216.7m for the first quarter of 2022, compared with cash provided by operating activities of $124.9m. The first quarter of 2022 included a payment of $296.4m to the Swedish Tax Authority, related to a disputed pre-acquisition 2018 tax reassessment issued to a FLIR subsidiary in Sweden. The first quarter of 2022 also reflected investments in inventories, semi-annual interest payments, increased incentive compensation payments and cash income tax payments of $25.9m compared with $21.0m in the first quarter of 2021. At April 3, 2022, net debt was $3,847.5m comprised of total debt of $4,131.8m, net of cash and cash equivalents of $284.3m. At January 2, 2022, net debt was $3,624.7m and comprised of total debt of $4,099.4m, net of cash and cash equivalents of $474.7m. At April 3, 2022, approximately $969.9m was available under the $1,150m credit facility, after reductions of $157.0 m in borrowings and $23.1m in outstanding letters of credit. The Company received $12.7m from the exercise of stock options in the first quarter of 2022 compared with $10.8m. Capital expenditures for the first quarter of 2022 were $21.0m compared with $17.6m. Depreciation and amortization expense for the first quarter of 2022 was $86.9 m compared with $29.3m. The first quarter of 2022 included acquired intangible asset amortization expense of $44.1m related to FLIR.

Income Taxes

The effective tax rate for the first quarter of 2022 was a negative 4.7%, compared with 16.4%. The first quarter of 2022 reflected net discrete income tax benefits of $56.5m, which included non-cash income tax benefits of $50.0 m primarily related to the resolution of certain FLIR tax reserves and a $6.7m income tax benefit related to share-based accounting. The first quarter of 2021 reflected net discrete income tax benefits of $6.3m which included $4.8m in income tax benefit related to share-based accounting. Excluding the net discrete income tax items in both periods, the effective tax rates would have been 23.1% for the first quarter of 2022, compared with 22.6%.

Other

Stock option expense was $4.3m for the first quarter of 2022 compared with $4.2m. Non-service retirement benefit income was $2.8m for both the first quarter of 2022 and 2021. Interest expense, net of interest income, decreased to $22.3 m for the first quarter of 2022 compared with $35.7m. The higher 2021 amount included $30.6m in financing expense in connection with the then pending FLIR acquisition. Corporate expense decreased to $16.1m for the first quarter of 2022, compared with $19.4m. Corporate expense in 2021 included $5.9m of transaction costs related to the then pending FLIR acquisition.

Outlook

Based on its current outlook, the company’s management believes that second quarter 2022 GAAP diluted earnings per common share will be in the range of $3.44 to $3.55 and full year 2022 GAAP diluted earnings per common share will be in the range of $15.34 to $15.66. The company’s management further believes that second quarter 2022 non-GAAP diluted earnings per common share will be in the range of $4.32 to $4.40 and full year 2022 non-GAAP diluted earnings per common share will be in the range of $17.75 to $18.00. The non-GAAP outlook excludes acquired intangible asset amortization for all acquisitions and benefits or charges for acquisition-related tax matters. The company’s annual expected tax rate for 2022 is 23.1%, before discrete tax items. (Source: BUSINESS WIRE)

 

28 Apr 22. Thales reports its order intake and sales for the first quarter of 2022.

• Order intake: €3.0bn, down 4% (-6% on an organic basis1)
• Sales: €3.7bn, up 4.4% (+2.7% on an organic basis)
• All financial objectives confirmed

Thales (Euronext Paris: HO) today announced its order intake and sales for the first quarter of 2022.

“Q1 2022 sales and order intake are in line with our expectations. Order intake is logically lower than in Q1 2021, which included four large contracts worth more than €100m each. The strong dynamics of our space and DIS businesses offset the slight decline in Defense & Security revenues, which is only due to a high basis of comparison. Despite supply chain tensions and uncertainties about the strength of air traffic recovery, we are confirming all our financial targets for 2022.” Patrice Caine, Chairman and Chief Executive Officer

Order intake

Order intake for the first quarter of 2022 amounted to €3,033m, down 6% compared to the first quarter of 2021 at constant scope and exchange rates, and down 4% on a reported basis, including a positive exchange rate effect of €50m.

During the quarter, the Group recorded two large orders worth over €100m each, for a total of €387m, compared to four large orders in Q1 2021:

• the order of two Space Inspire satellites by Intelsat
• the order of an additional Space Inspire satellite by SES

At €1,878m, intake of orders of less than €10m was up 6% compared to Q1 2021, even though the civil aeronautics business remained affected by the public health crisis.

From a geographical perspective, order intake was up 5% on an organic basis in mature markets and down 39% on an organic basis in emerging markets. Q1 2021 included the booking of the SATRIA telecommunications satellite in Indonesia.

At €1,182m, compared to €998m in the first quarter of 2021, Aerospace order intake grew by 17% on an organic basis, driven by the performance of the space business, with the two orders over €100m mentioned above.

At €1,100m, compared to €1,513m in Q1 2021, Defense & Security order intake was down by 29% on an organic basis, as Q1 2021 included 3 orders of over €100 m each. The jumbo contract for the supply of 80 Rafale fighter jets to the United Arab Emirates will be booked in Q2 2022.

Order intake in the Digital Identity and Security segment is, as in every quarter, very close to sales, as most of the activities in this segment operate on short cycles.

Sales

Sales for the first quarter of 2022 were €3,730m, compared with €3,573m in the first quarter of 2021, up 4.4% on a reported basis and up 2.7% at constant scope and exchange rates.

From a geographical perspective2, growth was driven by mature markets, which recorded growth of 5.4% on an organic basis, driven in particular by strong market dynamics in Europe (+4.5%) and North America (+16.7%), partly offset by the decline in emerging markets (negative organic growth of -6.3%).

In the Aerospace segment, sales amounted to €1,025m, up 4.2% compared to the first quarter of 2021 at constant scope and exchange rates. This increase is explained by the good dynamics of the Space business, which had already benefited from a strong increase in the first quarter of 2021. The civil aeronautics business continues to rebound gradually, driven by support and services, up 15% in the first quarter.

Sales in the Defense & Security segment reached €1,950m, down -1.1% compared to the first quarter of 2021 at constant scope and exchange rates. This slight decrease is explained by the expected phasing effects on several contracts, with high growth (+12%) having been recorded in the first quarter of 2021. Growth is expected to accelerate from Q2 2022.

Sales in the Digital Identity and Security (DIS) segment amounted to €739m, up 12.0% at constant scope and exchange rates compared to the first quarter of 2021. In addition to the gradual recovery in biometrics (passports) and the dynamics of the cybersecurity solutions business, this growth is explained by precautionary purchases and a price effect on EMV payment cards and SIM cards reflecting the significant increase in purchasing costs. The increase on a reported basis (+16.1%) includes a positive currency effect of 4.2 points (€24m).

Outlook

Order intake and sales for the first quarter of 2022 are in line with expectations. In this context, Thales confirms all of its annual objectives.

• As in 2020 and 2021, a book-to-bill ratio above 1;
• Sales in the range of €16.6bn and €17.2bn; corresponding to organic growth between +2% and +6% compared to 2021;
• An EBIT margin between 10.8% and 11.1%, up 60 to 90 basis points from 2021.

 

28 Apr 22. MilDef Group Interim report for January – March 2022.

Financial development Q1 2022

• Net sales increased by 177% to SEK 141.3m (51.0).
• Gross margin amounted to 47% (34).
• Adjusted EBITDA amounted to SEK 6.3m (-14.8), equivalent to an adjusted operating margin of 4.5% (-29.0).
• Operating profit (EBIT) amounted to SEK 0.2m (-22.9) including non-recurring items of SEK 0.0 m (-3.7).
• Order intake increased by 31% to SEK 103.9m (79.5).
• The order backlog increased as of March 31, 2022 by 50% to SEK 744.0m in comparison to the same period in 2021 (497.6).
• Operating cash flow amounted to SEK 43.4m (-20.0).

Statement by Björn Karlsson, CEO MilDef Group

Proof of resilience in hard times

“In a changing world and challenging times, MilDef delivered a first quarter with strong sales growth. Solid efforts from not least the acquired businesses in 2021 combined with high delivery capacity of recently produced hardware resulted in our strongest first quarter so far.

Sales increased by 177% compared with the same period the previous year, to a record high of SEK 141.3m (51.0) for the first quarter. The component shortage that caused delivery delays into 2022 at the end of 2021 was a positive contributing factor to the strong first quarter.

The increased interest in MilDef’s products and services did not have a full impact in the order intake for the quarter, but despite this, order intake increased by 31 percent to SEK 103.9m (SEK 79.5m). At the end of the first quarter, the order backlog was at the highest level in MilDef’s history, at SEK 744.0m (497.6).

Macrotrends and long-term effects

I note that the reactions to Russia’s armed invasion of Ukraine have the potential to create long-term beneficial effects for the defense industry. In Sweden, and in other countries, efforts are now intensifying to both modernize and increase defense capacity. MilDef is well positioned to meet the increasing demand for higher supply reliability and delivery capacity. It is important to analyze and act on the macro trends that are now having a major impact on our industry. The main trends we are seeing right now are:

• Significantly increased defense spending in many countries for the foreseeable future.
• Modernization and digitalization in functions that are critical for society leads to an increasing need for our services and products.
• National and regional supply capacity are given a higher strategic priority.

It should be noted that there is a built-in slowness in the system that is likely to cause it to take a few quarters before measurable changes for companies like MilDef can be observed.

We also believe that the long-term positive market growth may create new competitors, even if the threshold effect in this confidence-based industry is high. Market entry is likely challenging due to increased demands on national and regional production.

Strategic investments for growth

The changing market dynamics that the global situation now present has led to an intensification of work on our acquisition agenda during the first quarter. Our strategy stands, to carry out one to two acquisitions annually. At the same time, we are dedicated to acquiring good companies and make them better; We are selective and wait for the right opportunity. Furthermore, during the period we have prepared the production facilities in Helsingborg and Stockholm for increased volumes in the future. As our service offering is expected to grow, we have also accelerated our recruitment plans in areas such as installation and integration. We are meeting the current component shortage with increased stocking of critical components, to effectively meet our customers’ needs. With the aim of addressing the increased requirements for national and regional capacity to deliver, MilDef has since the turn of the year started a company in Finland to further strengthen our position in the Nordic region.

Looking towards a safer and more secure future

The considerable defense investments that are now taking place in multiple markets is largely unprecedented in history. The rearview mirror is therefore no longer a relevant instrument for predicting the future. MilDef, together with our customers, is now focusing on the needs of the future. In this new situation, we need a renewed perspective in production planning and greater overall responsibility to contribute to tomorrow’s expanded defense abilities.

MilDef has the ambition to be a catalyst in this change. We contribute with full force towards a safer and more secure future.” Björn Karlsson,

 

27 Apr 22. NIOA acquires NZ arms company. The Queensland-based munitions manufacturer has subsumed a wholesale arms distributor in a bid to bolster its presence across the Tasman.

NIOA has announced its acquisition of a 100 per cent stake in Auckland-based firearms and ammunition company Sportways Distributors.

Sportways, which was established in 1999, represents over a dozen international suppliers, distributing rifles, pistols, shotguns, ammunition, outdoor gear and accessories to the dealer network and law enforcement community throughout New Zealand.

As part of the deal, Sportways will be renamed as NIOA in New Zealand, helping the company establish a permanent foothold in the country.

This is expected to further enhance NIOA’s existing relationship with the New Zealand Defence Force and New Zealand Police through weapons supply contracts.

“NIOA has a longstanding connection with New Zealand through our support of New Zealand Police and the New Zealand Defence Force as well as the hunting and sports shooting market,” NIOA CEO Robert Nioa said.

“NIOA has a rich heritage in the sporting, recreational and hunting markets so we have a genuine appreciation of Sportways’ reputation and its place in New Zealand.

“Sportways has a wide customer base, and we are excited at the opportunity this brings to expand the offerings for New Zealanders through our global relationships and also to create local job opportunities.’’

Sportways director Garry Powell, who will serve as general manager of NIOA in New Zealand, welcomed NIOA’s acquisition, noting the companies shared interest in the shooting industry, strong advocacy for the licensed firearms community, and gun safety.

“These values and similarities combined with our complementary product lines mean our customers can look forward to new opportunities to access the very best equipment in the world,” Powell said.

The acquisition comes just weeks after the Commonwealth government appointed Raytheon Australia and Lockheed Martin Australia as strategic partners for the $1 bn sovereign Guided Weapons and Explosive Ordnance Enterprise (GWEO).

The global prime contractors will be supported by a number of Australia-based industry cooperatives, including the Sovereign Missile Alliance (SMA) – a joint venture between Nova Systems and Electro Optic Systems (EOS) – and the NIOA-led Australian Missile Corporation (AMC).

NIOA also recently appointed Royal Australian Navy Rear Admiral (Ret’d) Lee Goddard as CEO of the AMC.

During his 34-year career, RADM Goddard commanded the Anzac Class frigates, HMAS Parramatta and HMAS Perth, and also served at sea in Canadian, Malaysian and US Navy warships and on operations in the Middle East, South China Sea and Border Protection.

Most recently, RADM Goddard served as Commander, Maritime Border Command, leading Operation Sovereign Borders. (Source: Defence Connect)

 

27 Apr 22. General Dynamics profit rises 3% on strong demand for private jets. Gulfstream jet maker General Dynamics Corp (GD.N) on Wednesday posted a 3.1% rise in first-quarter profit, as demand for private air travel during the COVID-19 pandemic remained high.

Shares were unchanged in pre-market trading. Cautious passengers who opted for private flights instead of commercial flights due to fears of contracting COVID-19 have helped drive U.S. private air traffic higher than pre-pandemic levels. Business jet makers, eager to capitalize on that demand from wealthy travelers opting to fly private, have been ramping up production of their jets.  The profit increase comes after 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. In the quarter the company delivered 25 Gulfstream business jets versus 28 a year ago. In March the company told the J.P. Morgan Industrials conference that its jet aviation business would likely be impacted by Western sanctions on Moscow after its invasion of Ukraine.  Sales in the company’s aerospace unit marginally rose to $1.9bn from $1.89bn a year earlier, while overall revenue remained at $9.39bn. Net earnings rose to $730m, or $2.61 per share, in the first quarter, from $708m or $2.48 per share, a year earlier. General Dynamics’ reported earnings per share of $2.61 beat Wall Street analyst consensus of $2.51. The company’s revenue of $9.4bn also beat Wall Street analyst estimates of $9bn. (Source: Google/Reuters)

 

26 Apr 22. Raytheon cuts revenue forecast as suspension of Russia business hits sales. Aerospace and defense firm Raytheon Technologies Corp (RTX.N) lowered its full-year revenue forecast on Tuesday, blaming the loss of sales to Russia due to Western sanctions imposed over the war in Ukraine.

Shares in the U.S. company fell 1.7% in pre-market trading to $98.00.

As a large number of U.S. companies have severed ties with Russia following Moscow’s invasion of Ukraine and the introduction of Western sanctions, the aviation industry is among the sectors severely impacted.

Raytheon’s Chief Financial Officer Neil Mitchill told Reuters that lowering the 2022 revenue guidance by $750m “was strictly related to direct and indirect sales that are no longer allowed because of the global sanctions imposed on Russia.”

Raytheon expects full-year revenue to be between $67.75 bn and $68.75 bn, lower than its previous forecast of $68.5bn to $69.5 bn.

About three quarters of that lost $750m revenue was direct sales of commercial equipment to Russia, Mitchill said, and the remainder was engine parts that would have been sold principally by Pratt & Whitney Canada.

Chief executive Greg Hayes told analysts on a post earnings conference call that Raytheon had sold its share of a Russia-based heat exchanger joint venture with Boeing Co (BA.N)and Embraer SA (EMBR3.SA)as Russia’s invasion of Ukraine unfolded.

However, the company said revenue rose 3% to $15.72bn in the quarter, driven by a recovery in air travel demand, which boosted sales of its aerospace products and services.

Raytheon posted a net income of $1.08bn, or 72 cents per share, in the quarter ended March 31, compared with $753m, or 50 cents per share, last year.

Commercial aerospace sales rose on a rebound in demand after being depressed during a period of slower commercial air travel during the pandemic.

Compared to the same quarter a year ago, Collins Aerospace which makes jet parts saw sales rise 10%, and Pratt & Whitney which makes jet engines saw sales jump 12% despite slower military engine sales.

Sales at Raytheon’s defense-related businesses, Missiles & Defense, dropped 7% compared to the same quarter a year ago, and Raytheon Intelligence & Space saw sales fall 5% after the Global Training and Services business was sold to Vertex Aerospace.

Hayes said the company would not see a financial benefit from Ukraine-linked weapons orders in 2022. For example, Stinger and Javelin missile production could ramp up in 2022, but larger replenishments would be in 2023 or 2024, he said.

Raytheon’s adjusted earnings per share in the quarter were $1.15, versus Wall Street analysts’ $1.02 forecast, according to Refinitiv data. Revenue was $15.72bn with analysts forecasting $15.8bn according to Refinitiv data. (Source: Reuters)

 

26 Apr 22. Thales enters into definitive agreement to take full ownership of Advanced Acoustic Concepts (AAC).

• Thales Defense & Security, Inc. (TDSI) and Leonardo DRS have reached an agreement to transfer full ownership of Joint Venture Advanced Acoustic Concepts (AAC) to TDSI.
• AAC serves the US Navy as a US industry contractor, providing innovative systems and solutions across the Navy’s Undersea Warfare domain.
• AAC’s technical skills, industrial footprint and proven record of performance will enable Thales to strengthen its footprint in the US defense market by reinforcing TDSI US-based teams and capabilities.

Thales subsidiary TDSI enters into a definitive agreement to acquire Leonardo DRS ownership in their joint venture, AAC.

As one of the main US providers of mission-critical systems, TDSI serves the defense, federal, and commercial markets with innovative solutions for the ground tactical, airborne and avionics, naval/maritime, and security domains. As a subsidiary of Thales, TDSI operates in accordance with a Proxy Agreement approved by the US Department of Defense, to mitigate concerns associated with Foreign Ownership, Control, or Influence (FOCI).

In addition to providing a broad range of organic products and solutions, TDSI serves as a gateway for technology, leveraging proven Thales solutions – such as combat management systems; airborne, ship and ground radars; helmet mounted displays; missile fuzes; and battlefield sensors – to address US requirements.

AAC is one of the main US technical players in the fields of advanced sonar, training and knowledge management systems. The company delivers modernization systems for the US Navy through an open business, open systems technology insertion model. With more than 200 employees, AAC generated $80 m (~€70 M) sales in 2021.

AAC’s technical skills, industrial footprint and proven record of performance will enable Thales to strengthen its footprint in the US defense market by reinforcing TDSI US-based teams and capabilities.

“The partnership between Leonardo DRS and Thales in AAC proved successful, and both companies should be proud of the joint technology development in undersea warfare systems for the US and allied navies,” said Bill Lynn, CEO of Leonardo DRS.  “As Leonardo DRS moves its technology focus to a different range of DoD priorities, we know AAC will be in good hands as Thales continues its broader focus on advanced undersea warfare systems and related technologies.”

“This acquisition underscores the ongoing commitment Thales has to serving the US DOD through its trusted US entity, TDSI. Through AAC, TDSI will now maintain a significant engineering and industrial footprint in the US to provide our undersea solutions, and to optimize Thales’ support to the US Navy”, said Alan Pellegrini, CEO of Thales North America.

Upon closing, AAC’s innovative systems and solutions will complement Thales underwater systems capabilities and world recognized Naval technology portfolio.

The completion of the transaction is subject to regulatory clearances and customary closing conditions.  Financial terms are not being disclosed. The acquisition is expected to close in H2 2022.

 

25 Apr 22. Crane Co. Reports First Quarter 2022 Results.

First Quarter 2022 Highlights

• GAAP earnings from continuing operations per diluted share (EPS) of $1.64 compared to $1.75 in the first quarter of 2021.
• Excluding Special Items, record EPS from continuing operations (“adjusted EPS”) of $1.81 increased 15% compared to $1.57 in the first quarter of 2021.
• Core year-over-year sales growth of 5% and core year-over-year order growth of 12%.
• Completed previously announced $300m share repurchase program.
• Signed an agreement to divest Crane Supply, the Company’s Canadian distribution business.
• Adjusting GAAP EPS from continuing operations guidance to $6.35-$6.75 to reflect expected transaction related costs.
• Reiterating EPS from continuing operations guidance, excluding Special Items, of $7.00-$7.40.

Crane Co. (NYSE: CR), a diversified manufacturer of highly engineered industrial products, reported first quarter 2022 financial results and reaffirmed its full-year 2022 outlook excluding Special Items.

Max Mitchell, Crane Co. President and Chief Executive Officer stated: “This quarter’s results are another example of how we have positioned our businesses to drive accelerating growth, with strong core sales and orders growth supporting our 15% increase in adjusted EPS. Sales and order growth were driven by continued recovery across end markets, as well as our continued success with new product introductions and commercial excellence initiatives. Performance was solid across all three segments, and we remain confident in our ability to achieve our full-year guidance.”

“Today, we also announced that we signed an agreement to divest Crane Supply for CAD 380m. This decision further demonstrates our commitment to reshaping and restructuring our portfolio to accelerate growth, building on our prior announcement to divest Engineered Materials. The Crane Supply transaction will also further streamline our Process Flow Technologies business, with greater focus on manufacturing highly engineered products for its core target markets: chemical, pharmaceutical, water and wastewater, and general industrial.”

Mr. Mitchell concluded: “We also continue to make progress towards our planned separation into two independent, publicly traded companies that we announced on March 30, and that we believe will unlock substantial value for our shareholders. As we move forward, shareholders will see how post-separation, both Crane NXT and Crane Co. will be positioned to further accelerate core growth and to create value through their independently optimized capital allocation strategies. The separation marks a new beginning for Crane, and the creation of two exciting stories.”

First Quarter 2022 Results from Continuing Operations

First quarter 2022 GAAP earnings from continuing operations per diluted share (EPS) of $1.64, compared to $1.75 in the first quarter of 2021. Excluding Special Items, first quarter 2022 EPS from continuing operations was $1.81, compared to $1.57 in the first quarter of 2021. (Please see the attached Non-GAAP Financial Measures tables for a detailed reconciliation of reported results to adjusted measures.)

First quarter 2022 sales were $801m, an increase of 3% compared to the first quarter of 2021. The sales increase was comprised of a $36m, or 5%, increase in core sales, partially offset by a $14 m, or 2%, impact from unfavorable foreign exchange.

First quarter 2022 operating profit was $134m, compared to $140m in the first quarter of 2021. Operating profit margin was 16.7%, compared to 18.0% last year, with the decline driven primarily by a gain on the sale of real estate in 2021 without a similar gain in 2022 coupled with higher transaction costs in 2022, partially offset by strong productivity; higher pricing approximately offset inflation. Excluding Special Items, first quarter 2022 operating profit was $141m, compared to $128 m last year. Excluding Special Items, operating profit margin was 17.6%, compared to 16.5% last year, with the improvement driven primarily by strong productivity; higher pricing approximately offset inflation. (Please see the attached Non-GAAP Financial Measures tables for a detailed reconciliation of reported results to adjusted measures.) In April 2022, the Company completed its previously announced $300m share repurchase program, with a total of approximately 2.9m shares repurchased. (Source: BUSINESS WIRE)

 

26 Apr 22. Kleos Space achieves first revenues – targeting US$18m ARR.

Highlights:

• Monthly revenues in March 2022: A$167k
• On track to achieve 2022 targets:

o Monthly EBITDA positive status during mid-2022

o End 2022 ARR of US$18M[i] – over 12 times March 2022 revenue

• Introduced new Mission-as-a-Service offering (MaaS), providing customers with the option for a dedicated and taskable RF reconnaissance mission

o Complements the Data-as-a-Service (DaaS) offering, and fulfils the growing demand for dedicated data collection capacity to meet individual intelligence, surveillance, and reconnaissance mission requirements

o MaaS model offers the opportunity to increase monthly revenues with long term and low risk contracts without market adoption lag

• Successful launch of third cluster of four satellites, Patrol Mission
• Fourth satellite cluster, Observer Mission preparing for upcoming launch
• 16 Satellites in orbit by July 2022
• Pipeline includes a EUR 900k (A1.4m) contract anticipated to be signed imminently with revenues expected to be recognised in the majority in Q2 2022
• Continuing to build world class industry partnerships including with NASDAQ-listed Satellogic (NASDAQ: SATL)

Kleos Space (ASX: KSS, Frankfurt: KS1), a space-powered Radio Frequency Reconnaissance data-as-a-service company (DaaS), provides the following update for the quarter ending 31 March 2022 (Q1 2022), along with its Appendix 4C cash flow report.

Commenting on the company’s Q1 2022 quarter progress, Kleos Space CEO Andy Bowyer said:

“Kleos hit an important commercialisation milestone in Q1, booking first significant revenues and growing the revenue generation and data collection capacity by expanding satellite constellation. We remain confident of achieving our target during FY22.

“Over the coming year, we will continue to focus on transitioning the business to significant growth and achieving our profitability and revenue targets. We are leveraging industry partnerships and engagement to build market recognition with key target customers in the US, UK, EU, South & Latin America and Asia Pacific. In parallel, constellation planning is underway to prepare the business for sustainable growth to match the market demand across the DaaS & new MaaS offerings.

“Our exceptional team continues to develop world class intellectual property, ensuring our product offering remains at the forefront of the industry and caters to the evolving needs of our governmental and commercial customers. The defence sector is an early adopter of emerging technologies and ongoing innovation will deliver long-term value for our shareholders”

Monthly revenue in March was A$167k.  The company remains on track to achieve its targeted monthly EBITDA positive status during mid-2022 and to achieve a ARR of US$18m by the end of the year.

Kleos currently has a global pipeline of more than 260 government and commercial deals, spanning defence departments, national security agencies, coast guards, sanctions agencies and data aggregators.

The pipeline includes a EUR 900k (A$1.4m) contract anticipated to be signed imminently with revenues expected to be recognised in the majority in Q2 2022.

Introduced Mission-as-a-Service offering

During the quarter, Kleos diversified its business model to include a Mission-as-a-Service (MaaS) offering, providing customers with exclusive access to Kleos’ dedicated, in-orbit radio frequency reconnaissance satellite clusters for fixed periods of time & capacity.

Each Mission-as-a-Service contract will be tailored to suit the customer requirements with the associated revenue based on the percent of satellite capacity needed, level of taskability required (i.e. how bespoke the mission is) and associated data rights (i.e. exclusivity). Pricing is set to achieve the company’s goals for profitability and returns.

Kleos’ additional product offer caters to growing market demand and complements its existing DaaS business model, which delivers geolocated RF activity over areas of interest to multiple government and commercial subscribers.

Kleos Space CEO Andy Bowyer said “Our discussions with government departments, national security agencies and commercial entities have highlighted a growing need for dedicated mission capability, including unrestricted access and utilisation of sensor outputs. Our new Mission-as-a-Service offering delivers that capability to customers at a revenue level that achieves our targets without the ramp up period.

“Unlike our DaaS business model, which will continue to build, where multiple customers access the same commercial dataset, MaaS is tailored to meet the need of specific ISR requirements of an individual customer mission.  As our constellation grows, we will offer a combination of DaaS data sets enabling the opportunity to monetise the high volume, low value contract market and MaaS offering to deliver dedicated, high value contract opportunities. This blend of offering reflects the balance of needs between the commercial and non-commercial customer we have witnessed developing over the last few years.”

OUTLOOK

Kleos remains focused on continuing to enhance the quality and frequency of its satellite capacity and  data delivery and converting introductory subscriber contracts to repeat recurring revenue, targeting monthly EBITDA positive status during mid-2022. In addition, Kleos will continue to build its constellation to increase the value and volume of its radio frequency geolocation data, growing revenues.

Kleos’ FY22 priorities are:

• Onboard new data subscribers, increasing revenue as higher-value data sets become available
• Data delivery from the Vigilance Mission (KSF1) satellites
• Launch the Patrol Mission (KSF2) satellites in April 2022
• Build and launch the Observer Mission (KSF3) satellites in mid-2022
• Enable customers to access additional data sets from the Patrol and Observer Missions.

 

25 Apr 22. Liberty Hall Capital Partners acquires Ferra Holdings Ltd.  Supplier of highly engineered, complex and advanced components and sub-systems business becomes sixth firm to integrate into Accurus Aerospace. Liberty Hall Capital Partners, a private equity firm focused exclusively on investments in businesses serving the global aerospace and defense industry, acquired Ferra Holdings Ltd. through Accurus Aerospace Corp., a global supplier of highly engineered structural parts, complex assemblies, and electromechanical subsystems to the global aerospace industry. Terms of the transaction were not disclosed.

“The acquisition of Ferra is highly strategic and transformational for Accurus,” said Rowan Taylor, Liberty Hall’s founding and managing partner. “The combination creates a truly global, more diversified and balanced business with expanded capabilities allowing us to better serve all of our customers – whether commercial aerospace, military aerospace or space customers – across the globe.”

Robert Kirkpatrick, President and CEO of Accurus, said, “The acquisition of Ferra expands our complex and advanced manufacturing capabilities, extends our geographic presence, and creates greater end market, customer, and platform balance. The new Accurus is a highly differentiated aerospace supplier with a global manufacturing footprint and strategic relevance to our customers and serves as a partner of choice for complex and advanced manufacturing work statements.”

Brisbane, Australia-based Ferra is a global provider of highly engineered, complex, and advanced components, sub-systems, and assemblies for the military aerospace, and commercial aerospace markets and serves as a strategic supplier to several key industry original equipment manufacturers as well as the Australian Department of Defence. Founded in 1992, Ferra operates four manufacturing facilities located in Australia, the United States, and India with approximately 200 employees. Ferra’s largest customers are The Boeing Co. and Lockheed Martin, and its largest platforms are the F-35 Joint Strike Fighter and the Ghost Bat (formerly known as the Loyal Wingman).

Ferra’s existing management team, led by Managing Director Aaron Thompson, will remain in their roles following the acquisition. “We are incredibly proud of what we have accomplished over our 30-year history, and we are excited to partner with Accurus in order to accelerate growth across our core business areas,” Thompson said. “We look forward to leveraging Accurus’s resources, relationships and manufacturing excellence to continue to expand sovereign supply chain capability within Australia, better serve our strategic partners, including the Australian Department of Defence, and further penetrate the military aerospace and space end markets,” he added.

Liberty Hall Capital Partners formed Accurus in November 2013 and has since completed six acquisitions, including Precise Machining & Manufacturing (2013), McCann Aerospace Machining (2014), LaCroix Industries (2015), J&M Machine (2016), ZTM (2016), and Ferra Holdings.

(Source: Google/https://www.aerospacemanufacturinganddesign.com/)

 

20 Apr 22. Maxar Makes Strategic Investment In blackshark.ai To Extend Geospatial Capabilities. Maxar Technologies (NYSE:MAXR) (TSX:MAXR) has engaged in a strategic investment in Blackshark.ai, a provider of AI-powered, geospatial analytics services — this partnership represents Maxar’s commitment to innovation within the firm’s 3D Earth Intelligence product portfolio.

The Blackshark.ai platform processes petabytes of satellite imagery in hours and detects and segments objects, roads, vegetation, and other infrastructure on the surface of the planet without human intervention. This semantic information is used to create a comprehensive 3D digital model of the world.

The strategic investment in Blackshark allows Maxar to bring additional 3D capabilities to broader markets for more customers and opens up a new revenue stream from Blackshark. Blackshark.ai will leverage Maxar’s global cloudless satellite imagery basemap, Vivid, to create a highly performant and photo-realistic 3D map for enterprise and government customers in industries such as gaming, metaverse, simulation and mixed reality environments. For example, this type of offering would enable flight simulator customers to access immersive 3D digital experiences with low latency and global scale. Intended for customers who may not need the global accuracy of Maxar’s full Precision3D suite.

“We’re excited to partner with Blackshark.ai to extend our geospatial analytics offering and bring a AAA video-game quality 3D digital twin of our planet to market,” said Dan Nord, Maxar Senior Vice President and General Manager of Enterprise Earth Intelligence. “By integrating our industry leading Vivid basemap with Blackshark algorithms, we expand our customer set by complementing our high accuracy Precision3D portfolio with this lighter weight, visually stunning option.”

Michael Putz, Founder and CEO of blackshark.ai said, “The combination of our offerings positions us to create a digital twin of our planet as real as it gets. We cannot wait to see our customers and partners using this to disrupt many industries.”

Blackshark.ai provides a 3D digital twin of Earth by extracting information from satellite imagery and reconstructing detected attributes in photorealistic 3D fully automatically. A scalable artificial intelligence builds the core of the blackshark platform, detecting features globally with incredible precision and speed. A patented approach to 3D reconstruction can store petabytes of data and render it in infinite detail in real-time, allowing for powerful visualization and simulation applications for government, geospatial intelligence, humanitarian relief, planetary management, autonomous driving and flying, insurance, smart cities and more. The blackshark.ai platform, backed by M12 – Microsoft’s Venture Fund, Point72 Ventures and provider of global space solutions Maxar Technologies (NYSE:MAXR), serves large clients globally with a team of 100+ people based out of Silicon Valley/US and Graz/Austria, Europe’s computer vision hub.

Maxar Technologies (NYSE:MAXR) (TSX:MAXR) is a provider of comprehensive space solutions and secure, precise, geospatial intelligence. We deliver disruptive value to government and commercial customers to help them monitor, understand and navigate our changing planet; deliver global broadband communications; and explore and advance the use of space. Our unique approach combines decades of deep mission understanding and a proven commercial and defense foundation to deploy solutions and deliver insights with unrivaled speed, scale and cost effectiveness. Maxar’s 4,400 team members in over 20 global locations are inspired to harness the potential of space to help our customers create a better world. Maxar trades on the New York Stock Exchange and Toronto Stock Exchange as MAXR. For more information, (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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