Sponsored by TCI International Inc.
02 June 22. Fairbanks Morse Defense Acquires Research Tool & Die.
Defense contractor elevates its offerings of turnkey solutions with addition of electric hardware components manufacturer.
Fairbanks Morse Defense (FMD), a portfolio company of Arcline Investment Management (“Arcline”), has acquired Research Tool & Die (RT&D), a privately owned manufacturer of marine electrical-systems hardware based in Carson, California. RT&D products secure and support cables and wires throughout naval ships. This acquisition adds to FMD’s expanding portfolio of turnkey solutions.
“Over the last few years, FMD has broadened the scope of our product offerings to our valued customers through the acquisition of best-in-class marine manufacturers like Research Tool & Die,” said FMD CEO George Whittier. “The global mission to defend our nation’s freedom is non-stop and requires a service partner who is up to the task, and RT&D puts FMD in an even better position to meet the needs of our customers while we support the mission of our military and marine partners.”
Founded in 1944, RT&D is a supplier of critical electrical hardware to the United States Navy and Canadian Navy. The company operates from two manufacturing facilities on its campus in Carson, California. It designs and manufactures its hardware products, including wireways, cable trays, racking systems, and light supports, and sells its products directly to naval shipyards.
“FMD has a prestigious reputation as a top-of-the-line defense contractor for clients that RT&D also serves,” said RT&D President Kevin Perrault. “This merger makes perfect sense. Our companies are forward-thinking and well-positioned to provide top-tier parts and services to our customers.”
This acquisition represents a pivotal addition to FMD’s ongoing mission to build, maintain, and service the most trusted naval power and propulsion systems on the planet. In line with the acquisition of RT&D, FMD has also recently made acquisitions to its brand family to boost its capabilities with manufacturing and service providers, including Maxim Watermakers, Federal Equipment Company (FEC), Hunt Valve Company, Ward Leonard, and Welin Lambie. PMCF served as financial advisor to FMD. (Source: BUSINESS WIRE)
02 June 22. Rheinmetall makes non-binding offer for Leonardo’s OTO Melara unit -sources. Germany’s Rheinmetall (RHMG.DE) has sent Italy’s Leonardo (LDOF.MI) a non-binding offer for a minority stake in its OTO Melara cannon maker unit, according to a document and two sources close to the matter. The offer was presented at the end of May and Rheinmetall is seeking to buy up to 49% of the company, the sources told Reuters on Thursday, asking not to be named because of the sensitivity of the matter.
Rheinmetall has set a value of 190-210m euros ($203.91- $225.37m) as an indicative price for the 49% stake in OTO Melara, a document seen by Reuters showed. This would imply an overall value of almost 430m euros for the whole unit.
The Russian invasion of Ukraine has highlighted the need for more advanced ground combat systems and has pushed European countries to earmark more financial resources for defence.
Stocks in defence companies rose after German Chancellor Olaf Scholz, in a major policy shift for the country after decades of attrition of the armed forces, pledged in February to sharply increase defence spending.
But the market volatility linked to the war and governments’ focus on major issues has made it difficult for mergers, acquisitions and deals to go ahead and limited much-needed cooperation.
Leonardo was not available for comment. Rheinmetall did not respond to a Reuters emailed request for comment.
The Italian government has been informed, the sources said, but Rheinmetall still needs to secure Italy’s backing, one of the sources said.
Rome has the power to block or set strict conditions on takeovers in strategic sectors, such as defence, energy and banking.
Before giving its backing to any ownership change in OTO Melara, Rome wants Italy to be included in the Franco-German Main Ground Combat System (MGCS) tank project, more popularly known as the “tank of the future,” one of the sources said.
Including Italy could create the opportunity for Leonardo to provide sensors and defence electronics systems for the new tanks.
The document said Rheinmetall would in future be open to acquiring a further 2% or more in OTO Melara – which would give it majority ownership – in accordance with the company’s industrial plan and its stakeholders’ strategy.
In December, Leonardo said it intended to sell OTO Melara, which produces naval and terrestrial cannons, as well as Wass, which makes torpedoes, as part of a broader strategy to focus on helicopters, aircraft and electronics for defence.
It said the two units would have better growth opportunities outside the group.
In March Rheinmetall’s CEO Armin Papperger told Italian newspaper Il Sole 24 Ore that the German group would be prepared to make a financial investment in OTO Melara. ($1 = 0.9318 euros) (Source: Reuters)
02 June 22. M/s. MTAR Technologies Limited has entered into Share Purchase Agreement with sellers and M/s. GEE PEE Aerospace & Defence Private Limited dated O2-June-2022 for acquisition of 100% stake in M/s. GEE PEE Aerospace & Defence Private Limited. MTAR has acquired 100% stake in Gee Pee Aerospace And Defence Private Limited making it a wholly owned subsidiary of MTAR for Rs. 8.82 Crores payable in Cash after deduction of borrowings and liabilities. Shares of Mtar Technologies Limited was last trading in BSE at Rs. 1453.85 as compared to the previous close of Rs. 1426.05. The total number of shares traded during the day was 6384 in over 986 trades. The stock hit an intraday high of Rs. 1497.05 and intraday low of 1442.00. The net turnover during the day was Rs. 9365254.00. (Source: Google/https://equitybulls.com/c)
01 June 22. Greensea Systems Inc. acquires C-2 Innovations product line of seafloor crawling robots and creates new company Bayonet Ocean Vehicles. Marine robotics technology specialist Greensea Systems Inc. (Greensea) today announces the launch of Bayonet Ocean Vehicles, a new company created to develop, manufacture, and distribute a line of amphibious robots recently acquired from C-2 Innovations Inc.
The deal includes the acquisition of the IP and inventory of C-2 Innovations’ crawling robot product line. The robots have been rebranded and are launched to market as the Bayonet 150, Bayonet 250, and Bayonet 350 vehicles.
Bayonet joins the Greensea group of companies as an independent entity managed by the Greensea Executive Team. Founder of C-2 Innovations Arnis Mangolds joins Bayonet Ocean Vehicles as VP Programs, and previous C-2 Innovations’ Principal Investigator employee, Mike Farinella takes the role of Senior Engineer of the new company. The company is based in Plymouth, Massachusetts, co-located with Greensea, in a newly renovated 17,000 sq.ft state-of-the art manufacturing facility with waterfront access for year-round testing and training.
Bayonet Ocean Vehicles will be attending the Underwater Defence Technology (UDT) conference in Rotterdam and exhibiting a model of the new crawler, the Bayonet 250 on Booth D20
On announcing the launch of Bayonet Ocean Vehicles Ben Kinnaman, founder and CEO of both Greensea and Bayonet commented, “We have been working with C-2 Innovations since 2018, providing them with a C2 software suite built on OPENSEA. The seafloor crawling robot systems they developed are unique because they fill a void in autonomous ocean systems as they can work in the surf zone and carry larger sensor payloads on the seafloor. Bayonet has the resources to scale and advance the product line, and strategically, the crawler product line complements Greensea’s autonomy portfolio for defense applications.”
Bayonet Ocean Vehicles joins the Greensea company portfolio and with that backing has begun larger-scale commercialization of the seafloor crawling robot product line. The Bayonet product line will feature Greensea’s fully open architecture software platform, OPENSEA, which includes precision navigation, payload integration, autonomy, and over-the-horizon command and control. Bayonet has already secured several defense contracts as the platforms are being adopted into sensor placement and Explosive Ordnance Disposal missions. The company will launch a commercial variant of the platform in summer 2022 focused on hydrographic survey, wind farm survey and maintenance, as well as coastal dredging support.
Bayonet Ocean Vehicles’ Vice President of Operations Rich Amirault adds, “Because the conditions that these vehicles operate under – very shallow water, heavy surf, and poor visibility – are the perfect environments for improvised mines, providing an autonomous solution for EOD missions is a necessity. We are building vehicles to go where boats, divers, and ROVs simply cannot go, using software that is proven on thousands of vehicles. It’s exciting to be with the company from the start, making products that I believe in.”
Deployable from land or water independent of weather, the range of Bayonet crawlers have been designed to transit along the ocean floor as well as on land, making them the only robotic platform in the world capable of working between 40fsw and the dunes on the beach as well as in the deep ocean. Their application includes amphibious operations and littoral warfare such as mine detection and clearance, seafloor, beach zone and river surveys, environmental, monitoring and wharf inspections.
31 May 22. TAT Technologies Reports First Quarter 2022 Results.
TAT Technologies Ltd. (NASDAQ: TATT) (“TAT” or the “Company”), a leading provider of products and services to the commercial and military aerospace and ground defense industries, reported today its unaudited results for the three-month period ended March 31, 2022.
Financial highlights for the first quarter of 2022:
- Revenues for Q1 2022 increased by 8.1% to $19.9m compared to $18.4m in Q1 2021.
- Gross profit for Q1 2022 was $3 m (15.2% of revenues) compared to $3.4m in Q1 2021 (18.5% of revenues).
- Adjusted EBITDA for Q1 2022 decreased to $0.5m compared to $1.6m in Q1 2021.
- Net loss for Q1 2022 was $1.6m compared to a net income of $0.6m in Q1 2021.
- Q1 2021 Gross Profit, EBITDA and Net Income included government rants in the amount of $1.4 m ($1 m recorded in the COGS and an additional $0.4m recorded in G&A)
Mr. Igal Zamir, TAT’s CEO and President commented on the results: “As air travel begins to recoup and more and more plains resume flights, we see a growing demand for our services and products and an increase in order intake. We are working relentlessly to meet this demand despite strong headwinds resulting from supply chain issues and shortages in raw materials, which are hampering our ability to fully ramp up our production.
During Q1 of 2022 we continued making significant steps in improving our manufacturing efficiencies as we successfully completed merging our 2 facilities in Israel to a single manufacturing site. We believe the cost savings expected from this unification will begin to impact us toward the second half of 2022.
In addition we continue to invest in building additional MRO and production capabilities, following the strategic contacts recently signed with Honeywell and hope to have these new capabilities available by the end of this year.”
“Given our growing backlog, the continued recovery of commercial airline traffic and the strategic agreements we signed with Honeywell, coupled with the actions we have taken and to improve our manufacturing efficiencies, I am optimistic about our ability to continue our topline and bottom line growth.” concluded Mr. Zamir
Mr Zamir added: “Mr. Ron Ben-Haim has informed our Board of Directors of his retirement from his directorship position effective, May 30, 2022. I wish to thank Ron for his service on behalf of the Company, its board of directors, its management and its employees.” (Source: PR Newswire)
31 May 22. HUB Security Acquires European Based Cyber Distribution Business. HUB Cyber Security (Israel) Limited (TASE: HUB), a developer of Confidential Computing cybersecurity solutions and services (“HUB” or the “Company”), announced today that it will acquire the cyber security assets of a European Cyber firm that has an extensive EMEA distribution network of cyber solutions for major government and enterprise data centers. The company will acquire the activity for approximately $10m in cash and up to $12m in shares.
HUB Security founder and CEO, Eyal Moshe, said: “As we approach HUB’s SPAC merger with Mount Rainier wards a NASDAQ listing (NASDAQ:RNER), we are witnessing more successful pilots from the past year being converted into actual Confidential Computing deployments and long-term contracts already in 2022. This current acquisition is a direct continuation of our strategy to increase our global sales and distribution reach to promote our core products. The acquisition has the potential to result in transactions worth hundreds of millions of dollars from enterprises and governments within the EU and the Middle East. We are acquiring direct access to a large number of blue-chip customers around the world, which can save the Company years in otherwise penetrating entering these markets organically.”
About HUB Cyber Security (Israel) Limited
HUB Cyber Security (Israel) Limited (“HUB”) was established in 2017 by veterans of the 8200 and 81 elite intelligence units of the Israeli Defense Forces. The company specializes in unique Cyber Security solutions protecting sensitive commercial and government information. The company debuted an advanced encrypted computing solution aimed at preventing hostile intrusions at the hardware level while introducing a novel set of data theft prevention solutions. HUB operates in over 30 countries and provides innovative cybersecurity computing appliances as well as a wide range of cybersecurity services worldwide.
About Mount Rainier Acquisition Corp.
Mount Rainier Acquisition Corp. is a blank check company sponsored by DC Rainier SPV LLC, a Delaware limited liability company managed by Dominion Capital LLC, whose business purpose is to effect a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. (Source: PR Newswire)
31 May 22. CAE reports fourth quarter and full fiscal year 2022 results.
- Revenue of $955.0m vs. $894.3m in Q4 last year, up 7% year-over-year (up 25% ex. revenue from ventilators)
- Earnings per share (EPS) of $0.17 vs. $0.07 in Q4 last year
- Adjusted EPS(1) of $0.29 vs. $0.22 in Q4 last year ($0.12 ex. COVID-19 government support programs(2))
- Operating income(3) of $93.3m vs. $47.6m in Q4 last year
- Adjusted segment operating income(4) of $142.7m vs. $106.2m in Q4 last year ($69.0 m ex. COVID-19 government support programs(5))
- Free cash flow(6) of $187.6m vs. $170.6m in Q4 last year
- Orders of $1.3bn for 1.38x book-to-sales
- Revenue of $3.4bn vs. $3.0bn last year, up 13% year-over-year (up 23% ex. revenue from ventilators)
- Diluted EPS of $0.45 vs. negative $0.17 last year
- Adjusted EPS of $0.84 ($0.80 ex. COVID-19 government support programs) vs. $0.47 last year ($0.12 ex. COVID-19 government support programs)
- Operating income of $284.2m vs. $48.4m last year
- Adjusted segment operating income of $444.5m ($430.9m ex. COVID-19 government support programs) vs. $280.6m last year ($153.2m ex. COVID-19 government support programs)
- Free cash flow of $341.5m for 131% cash conversion(6)
- Record orders of $4.1bn for record $9.6bn backlog and 1.21x book-to-sales
(NYSE: CAE) (TSX: CAE) – CAE today reported fourth quarter fiscal 2022 revenue of $955.0m, compared with $894.3m last year. Revenue was 25% higher this quarter, excluding $130.0m of revenue in the fourth quarter last year from a contract to provide the Canadian government with ventilators as part of CAE’s COVID-19 humanitarian initiatives. Fourth quarter net income attributable to equity holders was $55.1m ($0.17 per share) compared to $19.8m ($0.07 per share) last year. Adjusted net income in the fourth quarter was $92.0m ($0.29 per share), compared to $63.2m ($0.22 per share) last year. Adjusted net income excluding COVID-19 government support programs, of which there was none this quarter, was also $92.0m ($0.29 per share) this quarter compared to $35.9m ($0.12 per share) last year.
Annual fiscal 2022 revenue was $3.4 bn, compared to $3.0bn last year. Revenue was 23% higher this year, excluding $230.6m of revenue last year from the ventilator contract. Annual operating income was $284.2m and adjusted segment operating income was $444.5m compared to $280.6m last year. Adjusted segment operating income excluding COVID-19 government support programs was $430.9m this year compared to $153.2m last year. Annual net income attributable to equity holders was $141.7m ($0.45 per share) compared to a net loss of $47.2m (negative $0.17 per share) in fiscal 2021. Adjusted net income(7) was $261.5m ($0.84 per share) this year, compared to $127.1m ($0.47 per share) last year. Adjusted net income excluding COVID-19 government support programs(8) was $251.5m ($0.80 per share) this year compared “I am very pleased with our strong performance in the fourth quarter and for the year, having delivered double-digit growth with higher margins, excellent free cash flow, and record order bookings,” said Marc Parent, CAE’s President and Chief Executive Officer. “We drove 23 percent annual revenue growth, before the contribution of our ventilator humanitarian initiative last year, 58 percent higher adjusted segment operating income and 79 percent higher earnings per share. Testament to the quality of these results, we generated $342m of free cash flow for a 131 percent cash conversion. We also continued to secure the future with some $4.1bn in orders for a book-to-sales ratio of 1.21 times and a record $9.6bn backlog. These numbers are especially impressive considering that our industry is still in the early days of a cyclical recovery. In Civil, we booked $2.0bn in orders for a 1.25 times book-to-sales ratio, including long-term training agreements with airlines and business aircraft operators, and 48 full-flight simulator sales, demonstrating the strength of demand for pilot training. In Defense, we had continued momentum with a record $1.9bn of orders for training and mission support solutions, representing 1.20 times book-to-sales, and we also concluded the year with a record $8.6bn of Defense bids and proposals outstanding. And in Healthcare, we delivered our fifth consecutive quarter of double-digit revenue growth and double-digit growth for the year with our reenergized organization and innovative solutions. Despite a still challenging environment, our strategy is bearing fruit.”
On CAE’s outlook, Parent added, “we are adeptly playing offence in a disrupted market, by seizing on highly strategic growth opportunities to expand our capabilities and reach. In parallel, we are significantly lowering our cost base and continuing to innovate ways to revolutionize our customers’ training and critical operations with digitally immersive solutions to elevate safety, efficiency, and readiness. Our recent results and the expanded set of opportunities before us, add to my conviction that we are on a clear path to a bigger, stronger, and more profitable CAE in the future.”
Civil Aviation (Civil)
Fourth quarter Civil revenue was $432.7m, up 11% compared to the same quarter last year. Operating income was $58.1 m compared to $40.5 m in the fourth quarter last year. Fourth quarter Civil adjusted segment operating income was $96.3m (22.3% of revenue), compared to $66.6m (17.2% of revenue) in the fourth quarter last year. Adjusted segment operating income excluding COVID-19 government support programs, of which there was none this quarter, was also $96.3 m (22.3% of revenue) this quarter compared to $46.9m (12.1% of revenue) in the fourth quarter last year. Fourth quarter Civil training centre utilization(10) was 69% and has been trending at a similar level since the end of the quarter.
Annual Civil revenue was $1,617.8m, up 15% compared to last year. Annual operating income was $224.1 m compared to $6.5m last year, and annual adjusted segment operating income was $314.7m (19.5% of revenue) compared to $164.3m (11.6% of revenue) last year. Adjusted segment operating income excluding COVID-19 government support programs was $309.5m (19.1% of revenue) this year compared to $100.7m (7.1% of revenue) last year. Annual Civil training centre utilization was 60%.
During the quarter, Civil signed training solutions contracts valued at $517.0m, including long-term training services agreements and the sale of 15 full-flight simulators (FFSs)(11). For the year, Civil booked orders for $2.0bn, demonstrating the value afforded to CAE as the partner of choice for airlines, business jet operators, aircraft OEMs and pilots worldwide. These included 48 FFS sales (vs. 11 in the prior fiscal year) and comprehensive, long-term training agreements with customers worldwide, including Endeavor Air, Avianca, Scandinavian Airlines, WestJet, Envoy Air, LOT Polish Airlines, and Sun Air Jets. Civil also partnered with four leading electric vertical takeoff and landing (eVTOL) developers to provide a range of solutions including simulators, pilot and maintenance training programs, and aircraft system integration engineering support.
The Civil book-to-sales(9) ratio was 1.19x for the quarter and 1.25x for the last 12 months. The Civil backlog at the end of the year was $4.9bn, which is up 15% from the prior year period.
On February 28, 2022, Civil concluded its acquisition of Sabre’s AirCentre airline operations portfolio and is currently in the process of integration. It is an integral part of a strategy to establish CAE as a technology leader in the growing market for industry-leading, digitally-enabled flight and crew operations solutions.
Defense and Security (Defense)
Fourth quarter Defense revenue was $469.5m, up 40% compared to the same quarter last year. Operating income was $25.8m compared to an operating loss of $8.5m in the fourth quarter last year. Fourth quarter Defense adjusted segment operating income was $36.8m (7.8% of revenue), compared to $23.2m (6.9% of revenue) in the fourth quarter last year. Adjusted segment operating income excluding COVID-19 government support programs, of which there was none this quarter, was also $36.8 m (7.8% of revenue) this quarter and $6.8 m (2.0% of revenue) in the fourth quarter last year.
Annual Defense revenue was $1,602.1m, up 32% over last year. Annual operating income was $56.0m compared to $15.5 last year, and annual adjusted segment operating income was $119.2 m (7.4% of revenue), compared to $87.0m (7.1% of revenue) last year. Adjusted segment operating income excluding COVID-19 government support programs was $111.2m (6.9% of revenue) this year compared to $26.7m (2.2% of revenue) last year. Fourth quarter and annual fiscal year 2022 Defense results reflect the acquisition of the L3H MT.
During the quarter, Defense booked record orders for $751.3m. Notable wins include a contract with the Government of Canada to extend and expand the NATO Flying Training in Canada program through 2027. Defense also broadened its customer access with a US$250m ceiling U.S. Naval Air Systems Command (NAVAIR) Rapid Acquisition Prototyping, Integration and Development ID/IQ win on two pools: Command and Control (C2) and Aviation Systems Development and Operations.
For the year, Defense booked a record $1.9bn in orders, including competitive prime awards across all five domains (Air, Land, Sea, Space and Cyber). Among the notable wins in the Air Domain, CAE unseated a 60+ year incumbent in Germany to provide Ab Initio flight training to the German Air Force. Land Domain wins include a contract with the U.S. Air Force to develop and deploy new build Joint Terminal Control Training Rehearsal System (JTC TRS) simulators, as well as upgrade existing systems to a common configuration across the U.S. Department of Defense enterprise. Within the Sea Domain, Defense won a contract to deliver a second NH90 Seal Lion Helicopter simulator to the German Navy and was competitively awarded, through a joint venture Xebec, the new and upgraded Maritime Integrated Training System (MITS) contract for the U.S. Army. Defense won its first Space Domain prime contract with decisive mission capabilities and reliable space services and received multiple task orders to expand its support for operations at the Army Space and Missile Defense Command. In Cyber, Defense won a contract to enhance cyber intrusion detection capabilities for Canada’s Department of National Defense through the Innovation for Defense Excellence and Security (IDEaS) program and expanded its Simulator Common Architecture Requirements and Standards (SCARS) contract, providing cyber-hardened, hybrid cloud-based network architecture integrating over 2400 Air Force simulators. Defense was also awarded its first U.S. Intelligence Community prime win, leading the Beyond 3D prototype development and integration efforts for the National Geospatial Intelligence Agency.
The Defense book-to-sales ratio was 1.60x for the quarter and 1.20x for the last 12 months, which marks the first time the annual Defense book-to-sales ratio has exceeded 1.0x in the last four fiscal years. The Defense backlog at the end of the year was $4.7bn. The Defense pipeline has strengthened with some $8.6bn of bids and proposals pending customer decisions.
Fourth quarter Healthcare revenue of $52.8m was 69% lower than the fourth quarter last year. Revenue was 27% higher this quarter, excluding $130.0m revenue from a contract to supply the Canadian government with ventilators. Operating income was $9.4m compared to $15.6m in the fourth quarter last year. Fourth quarter adjusted segment operating income was $9.6m (18.2% of revenue) compared to $16.4m (9.6% of revenue) in the fourth quarter last year. Adjusted segment operating income excluding COVID-19 government support programs, of which there was none this quarter, was also $9.6m (18.2% of revenue) this quarter and $15.3m (8.9% of revenue) in the fourth quarter last year. Healthcare continued to deliver year over year quarterly revenue growth (excluding ventilators), as it ramped up an expanded and reenergized organization with a clear focus on achieving greater scale.
Annual Healthcare revenue was $151.4m, down 57% compared to last year. Revenue was 25% higher this year, excluding $230.6m of revenue last year from the ventilator contract. Annual operating income was $4.1m compared to $26.4m last year, and annual adjusted segment operating income was $10.6m (7.0% of revenue), compared to $29.3m last year (8.3% of revenue). Adjusted segment operating income excluding COVID-19 government support programs was $10.2m (6.7% of revenue) this year compared to $25.8m (7.3% of revenue) last year.
During the year, CAE Healthcare and Defense collaboratively won a contract supporting the German Armed Forces by providing patient simulators, user training, and maintenance support across several sites. This collaboration is an example CAE’s cross-business synergies and is testament to its unique One CAE culture.
Healthcare also bolstered its position as the innovation leader in simulation-based healthcare education and training. Healthcare began worldwide deliveries of its newest pediatric patient simulator, CAE Aria, and launched several updates to its current offerings including the Vimedix 3.3 ultrasound simulator, CAE CathLabVR, the Inventory Manager for CAE LearningSpace Enterprise tool, and CAE Maestro.
Additional financial highlights
CAE incurred restructuring, integration and acquisition costs of $36.0m during the fourth quarter of fiscal 2022, including $22m related to L3H MT and AirCentre acquisitions, and $12m related to its cost savings restructuring program. This brings the total restructuring, integration and acquisition costs incurred since the start of the program in the second quarter of fiscal 2021 to $179m.
Net cash provided by operating activities was $206.8m for the quarter compared to $174.6m in the fourth quarter last year. Free cash flow was $187.6m for the quarter compared to $170.6m in the fourth quarter last year. For the year, net cash provided by operating activities was $418.2m compared to $366.6m last year and free cash flow was $341.5m, compared to $346.8m in the same period last year. The cash conversion ratio for fiscal year 2022 was 131%.
Income tax expense this quarter was $3.7m, representing an effective tax rate of 6%, compared to a negative effective tax rate of 21% in the fourth quarter last year. The tax rate was impacted by restructuring, integration and acquisition costs and a cloud computing transition adjustment this quarter, excluding which the income tax rate was 15%, and which is the rate used to determine adjusted net income of $92.0m and adjusted EPS of $0.29 in Q4FY22. On the same basis, the rate would have been 16% in the fourth quarter last year.
Growth and maintenance capital expenditures(13) totaled $74.7m this quarter and $272.2m for the year, mainly in support of accretive growth opportunities to expand the Civil global aviation training network.
Net debt(14) at the end of the year was $2,700.1m for a net debt-to-adjusted EBITDA(15) of 3.58 times. This compares to net debt of $2,310.5m, for a net debt-to-adjusted EBITDA of 3.23 times at the end of the preceding quarter. During the last two fiscal years, CAE has made several growth investments to expand its capabilities and reach, including nine acquisitions for $2.1bn and $379.8m in capital expenditures.
Adjusted return on capital employed (ROCE)(16) was 6.2% this quarter compared to 6.1% last quarter and 5.0% in the fourth quarter last year. Adjusted ROCE excluding COVID-19 government support programs was 6.1% this quarter compared to 5.5% last quarter and 3.1% in the fourth quarter last year.
Management outlook for fiscal year 2023
Since 2020, CAE has been carrying out a growth strategy which it believes will enable it to emerge from the pandemic a bigger, stronger, and more profitable company than ever before. Specifically, as a waypoint along its journey to cyclical recovery and beyond, the Company is targeting a consolidated adjusted segment operating margin of approximately 17% by the time its markets are generally recovered, with steady room for further improvement thereafter. It expects to reach this level of profitability on a significantly larger base of business with a post-pandemic capital structure that will allow the Company to sustain ample flexibility to further invest in its future.
Current headwinds include the ongoing global pandemic, geopolitical tensions and the war in Ukraine, decades-high inflation, slower global economic growth, and acute supply chain and labor shortages – any of which may influence the exact timing and rate of market recovery. Notwithstanding the additional volatility induced by these factors, management maintains a highly positive view of its potential in market recovery and beyond. For the current fiscal year 2023, CAE expects to continue delivering strong growth and substantial order bookings.
Expected secular trends are highly favorable for all three of the Company’s core business segments. Greater desire by airlines to entrust CAE with their critical training and digital operational support and crew management needs, higher expected pilot demand and strong growth in business jet travel demand are enduring positives for the Civil business. Tailwinds that favour the Defense business include the shift in national defence priorities to an increased focus on near-peer threats and the recognition of the sharply increased need for digital immersion-based synthetic solutions. Healthcare is poised to leverage opportunities presented by an acute nursing shortage and rising demand for Public Safety and Security.
The Company believes there is considerable pent-up demand for air travel, and the rate of Civil’s recovery to pre-pandemic levels and beyond is expected to continue to be driven in large part by the easing of travel restrictions. Civil’s strong training performance in the Americas and sharply higher FFS order activity, provide a compelling blueprint for the potential of a broader global recovery. In fiscal year 2023, in addition to continuing to grow its share of the aviation training market and expanding its position in flight services, Civil expects to maintain its leading share of FFS sales and to deliver upwards of 40 FFSs to customers worldwide, with a higher proportion of units expected to be delivered in second half of the fiscal year.
CAE’s Defense segment is also on a multiyear path to becoming an even bigger and more profitable business. Defense is closely aligned with its customers’ utmost priorities focused on defending freedom in the face of near-peer threats. In the last two years, Defense has established itself as the world’s leading platform agnostic, global training and simulation pure play defence business. This is expected to bring increased potential to capture business around the world, accelerated by the acquisition of L3H MT and the expanded capability and customer set the combined entity possesses. Current geopolitical events have galvanized national defence priorities in the U.S. and across NATO, and management expects increased spending and specific prioritization on defence readiness to translate into additional opportunities for CAE in the years ahead. Defense is expected to continue making good progress with the integration of L3H MT acquisition in fiscal 2023 and to fully realize $35 to $45 m of cost synergies by fiscal year 2024. COVID-19 related headwinds are still a factor for the international defence business; however, management views them as temporary. In the near term, Defense is expected to continue working its way through the lagging effects of a historically lower than one-time book-to-sales ratio and expects growth over a multiyear period to be driven by the progressive realization of synergies related to the L3H MT integration and the translation of the recent record order intake and bid activity into revenue.
And in Healthcare, the long-term potential is for it to become a more material and profitable business within CAE as it gains share in the healthcare simulation and training market and continues to build on the momentum created over the last 18 months by a reenergized organization.
For fiscal year 2023, management expects CAE’s consolidated adjusted segment operating income growth to be in the mid 30-percent range, weighted more heavily to the second half of the year.
Total capital expenditures are expected to be approximately $250 m in fiscal year 2023, primarily in support of sustainable and accretive growth opportunities. The Company usually sees a higher investment in non-cash working capital accounts in the first half of the fiscal year, and as in previous years, management expects a portion of the non-cash working capital investment to reverse in the second half. The Company continues to target a 100% conversion of adjusted net income to free cash flow for the year. Concurrent with its continued pursuit of attractive growth opportunities, CAE expects net debt-to-adjusted EBITDA to decrease to a ratio of below three times (3x) within the next 18 months. CAE expects its effective income tax rate to increase to approximately 22% going forward, reflecting some of the recent changes to global tax regimes.
Management’s outlook for fiscal year 2023 and the above targets and expectations constitute forward-looking statements within the meaning of applicable securities laws, and are based on a number of assumptions, including in relation to prevailing market conditions, macroeconomic and geopolitical factors, supply chains and labor markets, and the timing and degree of easing of global COVID-19-related mobility restrictions. Air travel is a major driver for CAE’s business and management relies on analysis from the International Air Transport Association (IATA) to inform its assumptions about the rate and profile of recovery in its key civil aviation market. Additionally, as the basis of its fiscal year 2023 outlook, management assumes no further disruptions to the global economy, air traffic, CAE’s operations, and its ability to deliver products and services. Expectations are also subject to a number of risks and uncertainties and based on assumptions about customer receptivity to CAE’s training solutions and operational support solutions as well as material assumptions contained in this press release, quarterly MD&A and in CAE’s fiscal year 2022 MD&A. Please see the sections below entitled: “Caution concerning forward-looking statements”, “Material assumptions” and “Material risks”. (Source: PR Newswire)
31 May 22. Terma delivers record result. 2021/22 was a continuation of last year’s growth, as Terma announces the annual results reporting the best result ever for the second year in a row. Revenue reached a historical 2.2bn DKK. With a record high revenue of 2.2bn DKK and a corresponding high earning, Terma saw a growth of 6%, and an EBT of 155m DKK – 13% better than 2020/21. And with an order intake of 2.3bn DKK, resulting in an order backlog of 3.3bn DKK, Terma is looking into a continued robust business base in 2022/23 and following years.
“I am proud that we have achieved this strong and record high result in a year that was once again influenced by Covid-19. This result underlines our strong and diverse portfolio, and proves a company very well equipped for the future,” CEO at Terma, Jes Munk Hansen, says.
The F-35 program – and an outstanding performance at the factories – continues to be a key factor in Terma’s growth. “The credit for this year’s strong result goes to our dedicated employees across the world. The pandemic has caused disruptions in all markets, but thanks to great teamwork, we have managed to keep the production and business going. A big thank you to all Terma employees,” Jes Munk Hansen says.
The U.S. continues to be the biggest market for Terma constituting around 60% of total revenue.
Further investments in Space and AI
Terma is the biggest Space business in Denmark and have a leading niche within selected space technologies – including electronics, software solutions, and space engineering services. Terma is currently involved in several major space mission with European Space Agency (ESA), and potential business opportunities continues to be many. Space will be an even bigger focus area for Terma the coming year and the business area.
During 2021/22, Terma continued to invest in Artificial Intelligence (AI) and cybersecurity. In an increasingly digital environment, these are critical capabilities for Terma to support our customers. These capabilities will be crucial for future defense – including the Danish Defense – as missions and assignments are getting more and more data driven, and the data is only getting bigger and more complex.
“AI and cybersecurity are the future and a gamechanger in the defense industry. Terma has decided to invest even more in AI and cybersecurity the coming years, and we are launching an accelerator program focusing on business development and technology innovation in close engagement with customers,” Jes Munk Hansen says.
Terma commits to support new Danish defense strategy
The Danish Parliament has decided to a historical increase of the Danish defense budget, and the new strategic agreement commits to greater involvement of the Danish defense industry and procurement of Danish defense equipment and technology. As Denmark’s largest defense company Terma are committed to take on an even greater responsibility and invest in supporting the Danish government and the Danish Defense.
“Terma is Denmark’s largest defense company and accounts for over 50% of the industry, and I believe we have a special responsibility to support the Danish government and defense with our competencies and through partnerships with the rest of the Danish defense industry,” Jes Munk Hansen concludes.
26 May 22. SatSure enters the US Market through acquisition of Philadelphia-based Geospatial services company. SatSure, a deep tech startup working at the intersection of spacetech, Artificial Intelligence (AI), and Software as a Service (SaaS) to drive decision intelligence, is pleased to announce the acquisition of Philadelphia-based Old City Innovations (formerly Geospoc LLC, USA) in a cash plus stock deal, marking its entry into the U.S. market.
Old City Innovations (OCI) was founded in 2014, and counts Syngenta, DMI, and Applied Residential among its key customers. Headed by Archie Menezes and Cara Kolson, OCI has been providing geospatial services in the domains of mortgage, agriculture, insurance, and drone markets in the U.S. Post the acquisition, the key management personnel of OCI will be joining SatSure, which will take over the customers contracts and leverage OCI’s expertise to expand its geospatial analytics business footprint in the U.S. market.
“The U.S. is undoubtedly the largest market for solutions with Earth observation (EO) data at its core, and hence having our presence there is the next step in our plans to become a global force in the space industry, as a full stack EO company with a keen focus on customer’s decision intelligence. The team at OCI has deep experience in financial and technology services, and we are excited to work jointly towards creating value in the overall NAM market,” said Prateep Basu, founder and CEO of SatSure.
Archie Menezes, President of OCI added, “SatSure’s product offerings are niche, differentiated, and very relevant for the NAM markets. Hence, joining forces to tap into the vast potential of the geospatial analytics space was the natural step forward for us. We will continue servicing our existing customers, while expanding the footprint of our business with the diverse offerings that SatSure has, especially at the intersection of the infrastructure and climate resilience sectors.”
This marks the second acquisition deal by SatSure in 2022, first one being of Indore-based farm management SaaS tool CropTrails. In addition to our Agri suite of solutions, the Non-Agri solutions line SatSure Skies, which caters to users in the mortgage, utilities, and energy sectors provides us with a tremendous opportunity to expand our products / services in new market segments. SatSure will continue growing both organically and inorganically to achieve its strategic goals, and diversifying its product geography mix to prepare for exponential growth through backward integration as its high resolution and daily revisit providing satellite fleet, which will be launched in 2024.
Please reach out to to know more about SatSure and how we can be your partner in expanding geospatial analytics capabilities.
SatSure offers three main decision intelligence products: a) SatSure Sparta: a platform for providing agriculture and climate-related insights; b) SatSure SAGE: life cycle risk monitoring and business intelligence product suite for agriculture banking; c) SatSure SKIES: high-resolution satellite imagery-based infrastructure change detection product suite. (Source: PR Newswire)
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.