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21 Jul 22. Saab Results January-June 2022: Well Positioned to Capture Long-Term Growth.
Saab presents the results for January-June 2022.
Key highlights Q2 2022
- Strong order intake of SEK 17,363m (9,875), corresponding to an order growth of 76%, driven by large and medium orders across business areas.
- Sales in line with same period last year, amounting to SEK 10,171m (10,131).
- EBITDA amounted to SEK 1,255m (1,196), an EBITDA margin of 12.3% (11.8).
- Operating income increased 3% and amounted to SEK 738m (715), corresponding to an operating margin of 7.3% (7.1).
- Net income for the period amounted to SEK 433m (514) and was affected by unrealised negative market value changes of short-term investments.
- Operational cash flow was SEK 531m (3,152) in the quarter and according to our milestone plan for the year.
Statement by Micael Johansson, President and CEO, Saab:
Well Positioned to Capture Long-Term Growth
The security landscape has changed dramatically this year due to the tragic war in Ukraine and its implications on geopolitical tensions. Many European countries, including Sweden, are increasing their defence spending, leading to an even stronger national defence. Sweden and Finland have also decided to join NATO. All of this is of course affecting Saab as a defence company.
We are well positioned to meet demand in our core areas, and currently see strong interest in training, advanced weapon systems and sensors. We are taking initiatives to increase future capacity and we are working closely with our partners to secure resources and supply for a ramp-up in production. With Swedish NATO membership, there are also increased opportunities for Saab to provide state-of-the-art defence capabilities to the alliance and its member countries, as well as gaining access to NATO research programmes.
In the second quarter, Saab’s order intake increased 76%, driven by both large and medium-sized orders. An important order in the quarter was Sweden’s acquisition of two GlobalEye aircraft. This will provide Sweden with world-class airborne early warning and control capability. We also received several Carl-Gustaf orders from both Sweden and international customers, as well as an upgrade contract for the Gripen C/D fighter aircraft from Sweden.
Our operational performance is progressing well and we have so far no significant negative impact from supply chain issues on our deliveries. However, inflation, availability of certain materials and transportation remain challenging.
During the period, Saab held the keel-laying ceremony for the first Swedish A26 submarine, where its first hull sections were connected. This is an important milestone in the construction of one of the most advanced conventional submarines in the world. Another key milestone in the quarter was the shipment of the last of five fully installed EMD T-7A aft fuselages to our partner Boeing. We are now preparing the manufacturing setup for the next phase while hiring continues for our new operations in West Lafayette, Indiana, U.S.
Sales in the quarter was in line with the same quarter last year and amounted to SEK 10,171m (10,131). Year to date, sales is up 1%. We expect the growth pace to increase in the second half of the year based on our strong order backlog. We reiterate our outlook of an organic sales growth around 5% for the full year.
Operating income increased 3% in the second quarter compared to last year and amounted to SEK 738m (715) with an operating margin of 7.3% (7.1). For the full year, we estimate the operating income improvement to be at the upper end of our outlook range of 8-12%.
Operational cash flow amounted to SEK 531m (3,152) in the quarter. The second quarter last year included large milestone payments related to GlobalEye. The cash flow is in line with our milestone plan for the year and we also expect it to remain positive for the full year 2022, according to our guidance.
We believe nations’ defence capabilities are vital for peace and democracy, which is the foundation of sustainability and the UN Sustainable Development Goals. We continue to execute on our new sustainability strategy. During the quarter, focus has been on strengthening governance and initiating Climate Task Forces within our Science Based Targets project.
Our opportunities for growth have improved as governments increase their defence budgets to protect their people and societies. With our strong product portfolio and international presence as a foundation, we are prepared to meet our customers’ increased demand.
21 Jul 22. France’s Thales lifts full-year guidance on strong H1 performance. French defence and technology group Thales SA (TCFP.PA) on Thursday raised its annual forecast for order intake and sales growth on the back of robust activity across all its segments in the first six months of the year.
Europe’s largest arms electronics provider now expects sales of between 17.1bn euros and 17.5bn euros ($17.4bn and $17.8bn)for the full year 2022, against a previously estimated range of 16.6bn to 17.2 bn euros. Full-year orders should come in “significantly” above the estimated sales, the company said in a statement.
The firm still anticipates its operating margin at 10.8% to 11.1%.
With the entry into force of a supply contract for Rafale warplanes to the United Arab Emirates, Thales’ orders jumped 46% to 11.21bn euros, surpassing analysts’ expectations of 10.09bn euros.
Overall operating income grew to 891m euros in the first half of 2022 from 722m a year earlier, as sales for the period reached 8.26bn euros, boosted by its digital identity and security segment.
A settlement with Australia, which agreed to pay 555m euros to Thales’ subsidiary Naval Group after the country broke off a contract for 12 French submarines last September, offset the impact of European trade sanctions on the group’s operations in Russia, Thales said.
The halt of its Russian business weighed especially on the aerospace unit, which is expected to take a 70m euro hit in 2022. But Thales stressed that a post-pandemic recovery in air traffic and commercial aircraft production rates should firm up its order book. In the medium term, the group is also banking on benefits from sustained increases of military budgets in Europe as the war in Ukraine has forced a rapid rethink of defence strategies in the region. ($1 = 0.9827 euro) (Source: Reuters)
21 Jul 22. Thales reports its 2022 half-year results,
- Order intake1: €11.2bn, up 46% (+43% on an organic basis2)
- Sales: €8.3bn, up 7.7% (+5.4% on an organic basis)
- EBIT: €891m, up 23% (+21% on an organic basis)
- Adjusted net income, Group share2: €726m, up 23%
- Consolidated net income, Group share: €566m, up 31%
- Free operating cash flow3: €820m, 113% of adjusted net income, Group share
- Full year 2022 guidance upgraded:
o Book-to-bill ratio significantly higher
o Organic sales growth between +3.5% and +5.5%6
o EBIT margin target: 10.8% to 11.1% (unchanged)
Thales’s Board of Directors (Euronext Paris: HO) met on July 20, 2022 to review the financial statements for the first half of 20227.
“Over H1 2022, Thales achieved very solid results in spite of a complex operating environment marked by supply chain tensions and the geopolitical context.
Strong commercial momentum and the entry into force of the Rafale contract in the United Arab Emirates have enabled order intake to reach a record level of €11.2bn, reinforcing visibility on future activity.
Organic sales growth exceeded 5% again, driven in particular by the digital identity and security segment (DIS, formerly Gemalto), which achieved double-digit growth for the third consecutive quarter.
The EBIT margin and free operating cash flow were ahead of plan.
Given the robustness of activity in the first months of 2022, and despite a global environment marked by high uncertainties, we have decided to raise our full year order intake and sales growth targets.
Our roadmap for the coming months is clear: accelerate recruitment, strengthen the resilience of our supply chains and manage the consequences of inflation while continuing to implement all our strategic initiatives.
I would like to once again thank our 80,000 employees who relentlessly create value for our customers every day.”
Patrice Caine, Chairman & Chief Executive Officer
Key figures
Order intake in the first half of 2022 totaled €11,208m, up 46% from H1 2021 (+43% on an organic basis, i.e., at constant scope and exchange rates). The Group benefited from a strong commercial momentum in all its operating segments. At June 30, 2022, the consolidated order book stood at €38.0 bn, a new all-time record.
Sales totaled €8,256m, up 7.7% from H1 2021, and up 5.4% at constant scope and exchange rates. The sales figures benefited in particular from the remarkable performance of the Digital Identity & Security operating segment, as well as from the recovery of the civil aeronautics business, which was severely affected last year by the public health crisis.
In the first half of 2022, the Group posted an EBIT of €891m (10.8% of sales), compared to €722m (9.4% of sales) in the first half of 2021, an increase of 23.4% (+21.1% on an organic basis).
At €726m, adjusted net income, Group share10 was up 23%, in line with the EBIT increase.
Consolidated net income, Group share, amounted to €566 m, up 31% compared to H1 2021, driven by the strong increase in adjusted net income.
Free operating cash flow10 amounted to €820m, compared with €420m in the first half of 2021. The cash conversion ratio of adjusted net income, Group share, to free operating cash flow was 113% (71% in H1 2021). This solid performance reflects the strong commecial momentum in the first half of the year and the actions implemented since 2020 under the “Cash” initiative, as well as less pronounced seasonality in working capital than in previous years.
Net debt stood at €894m at June 30, 2022, down €1,602m year-on-year.
Order intake
Order intake in H1 2022 amounted to €11,208m, up 46% compared to H1 2021 (+43% at constant scope and exchange rates12). The book-to-bill ratio was 1.36, versus 1.00 in H1 2021. It even reached as much as 1.45 when excluding the Digital Identity & Security segment, for which the order intake is structurally aligned with sales.
In H1 2022, Thales booked 12 large orders with a unit value of over €100 m, for a total amount of €5,155m (€1,705m in H1 2021):
- 2 large orders booked in Q1 2022:
o the order of two Space Inspire satellites by Intelsat
o the order of an additional Space Inspire satellite by SES
- 10 large orders booked in Q2 2022: the jumbo contract related to the supply of the Rafale to the United Arab Emirates (80 aircraft), as well as 9 orders with a unit value of between €100m and €500m:
o the order of a Space Inspire satellite by Arabsat
o an amendment to the contract for the development and qualification of the payloads of the first two satellites for the CO2M mission, which aims to measure the quantity of CO2 produced by human activity (European Copernicus program)
o a contract related to the supply of 6 additional Rafale aircraft to Greece
o a contract to supply the Sea Fire digital radar for three defense and intervention frigates (FDI) sold to Greece
o the order of a secure communications system by a military customer
o an amendment to the contract guaranteeing the supply of munitions to the Australian Defence Force for 10 years (SDMM)
o the order by a Middle Eastern country of 3 radars and associated support
o a new tranche of the Scorpion program for the French Army
o an amendment to the contract for the supply and support of CONTACT next-generation tactical radios for the French Army
At €6,053m, orders with a unit value of less than €100m were up 2% compared to the first half of 2021. Orders with a unit value of less than €10 m were particularly dynamic, thanks in particular to the recovery in civil aeronautics and passport production, as well as to the robust pricing of smart cards.
Geographically13, order intake in emerging markets amounted to €4,652m, up 229% at constant scope and exchange rates, benefiting from three contracts worth over €100m, including the major contract related to the Rafale order by the UAE. At €6,556m, order intake in mature markets remained at a high level (+2% at constant scope and exchange rates).
Order intake in the Aerospace segment totaled €2,393m, versus €2,886m in H1 2021 (-18% at constant scope and exchange rates). This change is due to a high basis of comparison, since Thales Alenia Space booked the second generation of Galileo European navigation satellites, amounting to more than €700m, in H1 2021. Commercial momentum remained solid in the Space segment, with four large contracts with a unit value of over €100 m in H1 2022. The civil aeronautics business continued to recover, particularly in the after-market business.
Order intake in the Defense & Security segment totaled €7,150m compared to €3,374m in H1 2021, up 108% at constant scope and exchange rates, including the 8 large orders with a unit value of over €100m mentioned above. The segment’s order book thus reached €29.0bn, a new all-time record, representing nearly 3.4 years of sales.
At €1,631m, order intake in the Digital Identity & Security segment was in line with sales, considering that most businesses in this segment do not book long-term orders. The order book is therefore not significant.
Sales
Sales for the first half of 2022 amounted to €8,256m, compared with €7,669m in the first half of 2021, an increase of 7.7%. Despite supply chain tensions, organic change (at constant scope and exchange rates15) stood at +5.4%, thanks in particular to the solid performance of the Digital Identity & Security segment.
Geographically16, this increase in sales was more marked in mature markets, which grew by +7.9% in organic terms, and even by +8.5% in Europe. Emerging markets recorded a slight decline (-2.1% in organic terms).
Sales in the Aerospace segment amounted to €2,211m, up 4.7% compared to H1 2021 (+2.9% at constant scope and exchange rates). This change reflects the cessation of activities in Russia (total impact estimated at around €70m for 2022), as well as a high basis of comparison for both Space and Microwave tube businesses. The rebound in civil avionics is mixed: after-market activities recorded double-digit growth, while the original equipment business recovered only gradually, particularly in the widebody aircraft segment.
Sales in the Defense & Security segment totaled €4,378m, up 5.4% compared to H1 2021 (+4.1% at constant scope and exchange rates). As expected, this segment rebounded in Q2 2022, with organic sales growth of +8.6%, confirming the positive momentum of most of its businesses. Radio communication products, airspace protection systems and surface radars all posted organic growth of over 10% in the first half.
In the Digital Identity & Security segment, sales were up 13.1% at constant scope and exchange rates to €1,631m. This strong increase is explained by the combination of three factors: the rebound in passport production activities after two years affected by the public health crisis, continued growth in cybersecurity, and, finally, precautionary purchases and a price effect with respect to EMV payment cards and SIM cards, reflecting the significant increase in purchasing costs.
Results
In H1 2022, the Group posted an EBIT17 of €891m (10.8% of sales), compared with €722m (9.4% of sales) in H1 2021. This level includes two one-off items that almost entirely offset each other:
- On the one hand, the economic and trade sanctions imposed on Russia have led to the recording of non-recurring expenses in the amount of €52m in the “cost of sales” line, mainly in the Aerospace segment.
- On the other hand, the compensation agreement signed between Australia and Naval Group resulted in non-recurring income of approximately €50m for the first half.
The Aerospace segment posted an EBIT of €97m (4.4% of sales), versus an EBIT of €69m (3.3% of sales) in H1 2021. Adjusted for the non-recurring expenses related to the sanctions against Russia, the EBIT margin would have increased by around 3 percentage points.
In the Defense & Security segment, EBIT amounted to €545m, versus €497m in H1 2021 (+9.8% at constant scope and exchange rates). The margin for this segment was 12.4% compared to 12.0% in H1 2021, with the increase in margin primarily due to a favorable H1/H2 phasing of expenses.
At €201m (12.3% of sales), EBIT in the Digital Identity & Security segment increased further, benefiting from the operating leverage on sales growth.
Excluding Naval Group, unallocated EBIT amounted to -€41m compared with -€29m in H1 2021. The increase in this category reflects the reallocation of certain costs following the classification of the Transport business as a discontinued operation.
At €89m in H1 2022 compared to €34m in H1 2021, Naval Group’s contribution to EBIT increased mainly thanks to the above-mentioned non-recurring income.
Net financial interest (-€32m versus -€28m in H1 2021), as well as other adjusted financial results18 (-€10m in 2022 versus -€7m in H1 2021) remained low. The stability of the adjusted financial result on pensions and other long-term employee benefits15(-€15m compared to
-€15m in H1 2021) reflects the decrease in net liabilities combined with the increase in discount rates.
At €31m compared with €32m in H1 2021, the adjusted net income, Group share, from discontinued operations was stable, in line with the trend in EBIT in the Transport business.
Adjusted net income, Group share15thus amounted to €726m, compared to €591m in H1 2021, after an adjusted income tax charge15 of -€141m, compared to -€88m in H1 2021. The latter had benefited from one-off items related to changes to tax rules in Italy and the United Kingdom. The effective tax rate stood at 19.7% at June 30, 2022, compared with 22.1% at June 30, 2021, adjusted for these one-off items. This change mainly reflects the reduction in the corporate income tax rate in France (25.8% in 2022 versus 28.4% in 2021).
Adjusted net income, Group share, per share amounted to €3.41, up 23% compared to H1 2021 (€2.78).
Consolidated net income, Group share stood at €566m, up 31% as compared to June 30, 2021 (€432m). This evolution was in line with that of adjusted net income, Group share.
Financial position at June 30, 2022
Free operating cash flow19 amounted to €820m, compared with €420m in H1 2021. The cash conversion ratio of adjusted net income, Group share, to free operating cash flow stood at 113% (71% in H1 2021). This solid performance reflects the strong commercial momentum in the first half of the year, in particular with the payment of a significant down payment associated with the Rafale order intake from the UAE. In addition, the Group continued to benefit from the actions implemented since 2020 under the “Cash” initiative, as well as from the less pronounced seasonality in working capital as compared to previous years.
In the first half of the year, the net balance of acquisitions and disposals of subsidiaries amounted to -€141m, primarily reflecting the acquisition of the RUAG simulation and training business (consolidated in the Aerospace segment). Since January 2022, the Group has announced 3 acquisitions which should be finalized before the end of the year: Leonardo’s stake in the Advanced Acoustics Concept JV (Defense & Security segment), S21 and Excellium, two major players in cybersecurity consulting, integration, and managed services in Europe (Defense & Security segment), and OneWelcome, a European leader in the fast-growing customer identity and access management (CIAM) market, which will be consolidated within the Digital Identity & Security segment.
At June 30, 2022, net debt amounted to €894m, compared with €2,496m at June 30, 2021, after accounting for new lease liabilities of €112m (€41m at June 30, 2021) and after the distribution of €416m in dividends (€290m in H1 2021) as well as the repurchase of 1.1m shares under the share buyback program launched in April 2022 (totaling €127m at June 30, 2022).
Shareholders’ equity, Group share amounted to €7,589m, compared with €6,474m at 31 December 31, 2021, benefiting, in addition to the consolidated net income, Group share (€566 m), from a decrease of more than €1bn in the net pension liability, reflecting the sharp rise in discount rates.
Outlook
All Group markets benefit from robust medium-term perspectives. The improved public health situation will support the recovery in air traffic and commercial aircraft production rates. The further increase in Thales Alenia Space’s order book firms up its growth over the next few years. The change in the geopolitical context induced by the invasion of Ukraine will result in a sustained growth of defense budgets in Europe. Lastly, the Digital Identity & Security segment will be able to leverage the high growth prospects in cybersecurity, biometrics and eSIM.
The global environment is nevertheless marked by the continuing tensions affecting supply chains, particularly with respect to semiconductors, the significant rise in inflation, the weakening of the euro against the dollar, and the consequences of Russia’s invasion of Ukraine20.
Against this backdrop, Thales will focus its short-term efforts on managing the operational factors that are holding back its growth – strengthening the resilience of its supply chains, scaling up its recruitment teams – and on passing the increases in its purchasing costs to its customers.
At the same time, the Group will continue to implement all the levers of its Ambition 10 strategic plan, designed to support profitable and sustainable growth.
The strong performance in the first half of 2022 has led the Group to adjust its financial targets for the full year.
As a result, in the absence of major new disruptions in the global economy, the public health context, or global supply chains, Thales has set the following targets for 2022:
- A book-to-bill ratio significantly above 121;
- Organic sales growth of between +3.5% and +5.5%, corresponding to sales in the range of €17.1 to €17.5bn;
- An EBIT margin between 10.8% and 11.1%, up 60 to 90 basis points from 2021.
20 Jul 22. Logic, 60 years young and growing through new acquisitions. Logic Avionics SystemGroup announces a further step in its Merging and Acquisition strategy plan. With the recent acquisition of a majority stake of Gelco SpA, the Logic Group, that includes the subsidiaries Blu Electronic and Gemelli, has grown from 20.1MEur of Revenues (FY17) to 49 MEur of Revenues (FY22 est. data) with 6.5MEur of EBITDA and over 250 employees in 4 different facilities across Italy. This important milestone for the company that this year celebrates 60 years of operations as Tier-1 partner of the major international OEMs, confirms the effectiveness of its strategic development process, both organic and inorganic, launched 5 years ago.
Logic CEO, Alessandro Franzoni,states: “We are very proud to have completed this first stage of our strategic development plan. This will provide the Group with a solid base to continue the process towards an international footprint. Our M&A plan has as its purpose the reinforcement of the technological and industrial bases to make the Group growing on the value chain.
At Logic, growth is not a slogan, is a mind-set.”
Gelco CEO, Enzo Mancini, states: “Teaming with Logic represents a great opportunity for Gelco to continue its development path with new energy. The synergies among Gelco and the other companies of the Logic Group will provide benefits on production, supply chain and general costs. Moreover, synergies on space and defence activities will further boost the Group expansion.”
The firms MAYS International and Gianni & Origoni are supporting Logic Group in its M&A strategic plan. As part of its organic development, Logic has become System Integrator for Electrical Power Systems, helicopters Full Ice Protection Systems, InterCommunication Systems and has recently obtained EASA Part 21 J (A)DOA approval, which is leading to first (E)TSO in 1st quarter 2023 for a Back Up Flight Instrument.
Our safety critical Electro Mechanical Actuators are powering the primary flight controls of a modern advanced trainer aircraft. Logic Group is actively involved in the co-development program of a new brushless Starter/Generator 28 VDC with Phase Motion Controls. The company is investing in enabling technologies for power management and distribution of hybrid propulsion system that will power future aircraft.
About Logic
Since 1962 Logic has been designing, developing, manufacturing and selling Aeronautical Equipment.Highly professional engineering skills and techniques ensure the highest levels of performance throughout all phases of a project. Logic’s flexibility in tailoring solutions to the needs of the Customer has generated a wide range of equipment for the various product families. Currently the main product areas focus on: Displays & Controls, Processing, Fuel Management, Electromechanical Actuation, Power Management & Control and InterCommunication Systems. Logicis a Qualified Supplier for the world’s major fixed and rotary wings aircraft manufacturers.
About GELCO (http://www.gelcospa.it)
GELCO is a customer-oriented company operating in the professional electronics sector, in both domestic and international markets.
GELCO is specialized in offering designing, engineering, production and testing services at the highest levels of experience and technology, in the military as well as professional sectors.
The company operates in various fields of electronics, from the military sector (avionics, marine, land) to the professional sector (electro-medical, automotive, communications, aerospace).
GELCO, was established in 1981 and operates out of a 3000 sq. m.facility located in the industrial zone of Viterbo, Italy.
19 Jul 22. GE unveils branding for planned separation into three new public companies. This week, GE announced the future brand identities for the planned separation of its portfolio of healthcare, energy, and aviation businesses into three independent, industry-leading, investment-grade public companies. The new companies—GE HealthCare, GE Vernova, and GE Aerospace—will bring greater focus and flexibility to meet the most urgent challenges facing their respective industries: from delivering precision patient care for a growing global population, to leading the transition to a sustainable energy future for our planet, to inventing the future of flight for generations to come.
The decision to separate the businesses, announced last November marked a defining moment in the history of the iconic GE brand It also raised a pivotal question around what role the GE brand should play in setting each future company on its surest path to success.
To help answer this question, GE partnered with Interbrand on a six-month collaborative research and design process, with the goal of determining the optimal brand identity and positioning for each future company. “Right from the start, we held firm the perspective that this was a once-in-a-lifetime opportunity to determine the future of a 130-year-old, multi-bn-dollar brand with an unrivaled history and legacy”, said Linda Boff, CMO at GE. “Immediately, we thought of Interbrand as the experienced and expert partner of choice to help lead us through this journey.”
Through a customer-led, data-driven research plan that engaged over 2,200 industry practitioners and nearly 3000 GE employees, Interbrand set out to understand the intrinsic value of the GE brand and its alignment to the future vision for each company “We entered this assignment with no pre-determined solutions in mind”, said Daniel Binns, CEO of Interbrand New York. “All possibilities for how best to brand each company were carefully considered—from retaining the GE brand as-is, to combining GE with a new name, to creating a wholly new independent brand.”
“Based on data and analysis drawn from thousands of conversations, it became clear that the GE name and Monogram represent an iconic legacy of innovation, a symbol of trust for global customers, a source of pride for our teams, and a talent magnet for future leaders”, said Boff. “We’re proud these future businesses will be able to build on GE’s DNA of innovation as a springboard to their own future growth and success.”
While all three companies will retain the GE Monogram as a symbol of their shared heritage, their new visual identities and strategic positioning will serve to communicate the separate pathways that each brand will follow in their separation from the GE we know today. This distinction is conveyed by the new signature colors selected for each brand: “atmosphere blue” for GE Aerospace, inspired by upper limits of the horizon; “evergreen” for GE Vernova, blending the blues and greens of the Earth; and “compassion purple” for GE Healthcare, reflecting the humanity and warmth of connected patient care.
“We firmly believe that this outcome will enable the best of the GE brand to live on, signaling a new beginning for each company that will more fully reflect their unique visions for the future, while building on the strong brand equity already in place today,” said Linda Boff, GE CMO.
(Source: PR Newswire)
20 Jul 22. Boeing and AE Industrial Partners Launch Second Venture Fund to Invest in Innovative Aerospace and Defense Startups.
– AEI HorizonX Fund II to expand investments in transformative technologies in future mobility, sustainability, digital enterprise applications, and networks and security.
– Boeing commits $50 m to anchor new fund, bolstering the leading venture capital partnership in aerospace.
Boeing [NYSE: BA] has committed a $50m investment in AEI HorizonX, a partnership the company established with private equity firm AE Industrial Partners to invest in transformative aerospace technologies. The new funding will anchor AEI HorizonX’s second venture fund (Fund II), which plans to raise $250m to support promising start-ups in future mobility, space, sustainability, digital enterprise applications, networks and security.
“The future of aerospace is digital, sustainable and autonomous,” said Marc Allen, Boeing’s chief strategy officer. “This new Fund II builds on the foundation we have with Fund I and positions us to significantly expand our strategic access to disruptive technologies critical to shaping and realizing that future.”
Since its inception in 2021, the AEI HorizonX portfolio has achieved five IPOs (initial public offerings) and exits. The venture capital group’s current portfolio features 51 global investments, including companies that are driving innovations in artificial intelligence and machine learning, developing solutions to reduce aerospace’s climate impact, and optimizing data insights across factories, products and services. The diverse portfolio features startups from across the U.S., Europe, Asia and Australia.
Aside from providing capital, AEI HorizonX has helped its portfolio companies accelerate their progress by connecting them with Boeing’s broad capabilities and global market reach. AEI HorizonX also partners with Boeing on the company’s global accelerator – Aerospace Xelerated – a program that supports seed-stage innovation across the aerospace industry.
“The power of the AEI HorizonX venture platform is the ability to bring the joint capabilities from Boeing and the extended AE Industrial team to make quality investment decisions while bringing a differentiated value-add to drive upside to startups across their lifecycle,” said Brian Schettler, partner at AE Industrial and head of AEI HorizonX. “As we did with Fund I, by expanding into Fund II, we’re able to admit additional limited partners from around the world into our exclusive partnership with Boeing, bringing expanded capital to advance these new technologies through their early development.”
Many of AEI HorizonX’s portfolio companies have made significant progress in scaling innovative solutions across the industry. For example:
- EP Systems, a battery system manufacturer and energy services provider, is on the forefront of accelerating the industry’s adoption of zero-carbon propulsion systems.
- Immfly, a leader in on-board e-commerce, payments and entertainment, is improving the passenger experience while enabling greater savings and ancillary revenues for airlines.
- Shift5, an embedded systems cybersecurity firm, is delivering increased safety and security to commercial aircraft and defense systems.
“The AEI HorizonX platform has provided a key enabler for Boeing to partner with early-stage companies and accelerate the development and adoption of their technology,” said Greg Hyslop, chief engineer at Boeing. “It’s all about the technology transitions – how we can partner with entrepreneurs to turn great ideas into deployed solutions across our products and services to better support our customers.”
As a leading global aerospace company, Boeing develops, manufactures and services commercial airplanes, defense products and space systems for customers in more than 150 countries. As a top U.S. exporter, the company leverages the talents of a global supplier base to advance economic opportunity, sustainability and community impact. Boeing’s diverse team is committed to innovating for the future, leading with sustainability, and cultivating a culture based on the company’s core values of safety, quality and integrity. Join our team and find your purpose at boeing.com/careers. To learn more about Boeing’s sustainability efforts, view our Sustainability Report.
About AEI HorizonX
AEI HorizonX was formed as Boeing’s corporate venture capital arm in 2017 and is now managed by AE Industrial Partners, a private equity firm specializing in aerospace, defense & government services, space, power & utility services, and specialty industrial markets, with $5 bn of assets under management.
AEI HorizonX is an active participant in venture capital within its core strategic areas of focus, investing in more than 50 startups globally and building numerous relationships and partnerships across the aerospace, technology, and investing ecosystem. 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/.
19 Jul 22. Novaria Group Signs Agreement to Acquire Stroco Manufacturing.
Addition of close tolerance precision sheet metal and machined components, mounting solutions, and flat pattern products for aerospace and defense customers
Novaria Group, a leading manufacturer of specialty hardware for the aerospace and defense industries, announced today it has signed an agreement to acquire Stroco Manufacturing, Inc. Upon closing, the acquisition will be Novaria’s ninth since June 2020.
Founded in 1963, Stroco Manufacturing serves the defense and aerospace industries in both the military and commercial sectors. Its customers include Boeing, Lockheed Martin, Northrop Grumman, Bell Helicopter, and Gulfstream. Stroco specializes in an array of product offerings, including small precision sheet metal and machined parts and assemblies.
Stroco, based in Hazelwood, Missouri (St. Louis), will continue operations under leadership of Kris Welhart, the current owner. KAL Capital, which provides aerospace and defense M&A advisory services, represented Stroco on the transaction.
“We are delighted to add Stroco as Novaria further bolsters its product and service offerings, specifically in the defense market,” said Novaria CEO Bryan Perkins. “Stroco’s products are complementary to several of our business units and enable us to offer more complete packages to customers. They are a respected name and growth supplier in the industry, making this deal an ideal fit. I’ve also known Kris for over a decade, and we’re excited to add him to our experienced management team.”
“We take pride in exceptional delivery, quality products and excellent customer service,” Welhart said. “We know Novaria shares these values, and we are excited to enter into this partnership with an organization committed to maintaining these core values while at the same time providing the resources to begin the next phase of growth at Stroco.”
The transaction is expected to close this month, subject to the satisfaction of customary closing conditions. Specific terms of the acquisition have not been publicly disclosed. (Source: BUSINESS WIRE)
19 Jul 22. Update on the proposed acquisition of Meggitt plc by Parker-Hannifin Corporation. UK Business Secretary Kwasi Kwarteng updates on the proposed acquisition of Meggitt plc by Parker-Hannifin Corporation.
Following advice from the Ministry of Defence and the Competition and Markets Authority and after reviewing the results of two separate consultations, the Business Secretary has today (Tuesday 19 July) cleared the acquisition of Meggitt by Parker-Hannifin to proceed.
The announcement follows the Business Secretary consulting on steps to address the national security and competition concerns raised by the proposed acquisition of Meggitt, a UK aerospace company, by Parker-Hannifin, a US-listed company which supplies components to the mobile, industrial and aerospace markets globally. The government consultation on the undertakings offered by the companies to address the concerns identified ran until 13 July 2022.
The Business Secretary has now accepted undertakings from the parties to mitigate national security risks and competition concerns.
The undertakings to mitigate the national security concerns came into force today and details are available in the decision notice.
In summary, the undertakings are:
- Security of Supply: ensuring that Parker will commit to honouring existing contracts while they are in place and will notify the MOD in advance if there is a material change to Meggitt’s ability to supply the MOD
- Information Security: reinforcing the commitment to existing List X / Facility Security Clearance site security arrangements protecting sensitive HM government information in Meggitt, including a requirement to retain a majority of the Board of Directors of Meggitt as UK nationals resident in the UK
- Sovereign UK Capabilities: requiring Parker-Hannifin to institute an HM government-approved control plan to prevent International Traffic in Arms Regulations (ITAR) controls applying to ITAR-free products designed and manufactured by Meggitt. The undertakings would allow the MOD to add new technology to future-proof the remedy
The undertakings to mitigate the competition concerns also came into force today and details are available on the decision notice. In summary, the undertakings will deliver the divestment of Parker’s aircraft wheels and brakes (‘AWB’) division (the ‘Divestment Business’) to a purchaser approved by the Secretary of State.
The Divestment Business includes:
- all tangible assets (including the production site of the AWB division located at Avon, Ohio, USA, as well as the relevant inventory and equipment) and intangible assets (including intellectual property rights)
- all licences, permits, authorisations issued by any governmental organisation for the benefit of the Divestment Business
- all contracts, leases, commitments, and customer orders of the Divestment Business
- all customers credit and other records of the Divestment Business
- all staff currently employed by the Divestment Business, including staff seconded to the Divestment Business, shared personnel as well as certain additional personnel
Separately from the competition and national security issues, Parker-Hannifin has provided economic undertakings to the Secretary of State. It has committed to the following:
- Parker-Hannifin will continue to use the Meggitt name in combination with its own and will retain Ansty Park as its UK headquarters and its centre of excellence for aerospace and advanced materials
- It will increase R&D activity including undertaking research and technology projects relating to sustainable aviation and net zero.
- It will protect jobs.
These undertakings, which were voluntarily provided by Parker-Hannifin, secure the future of Meggitt and the important role it plays in the UK aerospace sector. (Source: https://www.gov.uk/)
19 Jul 22. Lockheed Martin Reports Second Quarter 2022 Financial Results.
- Net sales of $15.4bn
- Net earnings of $309m, or $1.16 per share, inclusive of non-operational charges of $1.7bn ($1.4bn, or $5.16 per share, after-tax)
- Cash from operations of $1.3bn and free cash flow of $1.0bn
- Returned $1.1bn of cash to shareholders through share repurchases and dividends
- Updates 2022 outlook for sales and earnings per share; maintains 2022 outlook for segment operating profit, cash from operations, and free cash flow
Lockheed Martin Corporation [NYSE: LMT] today reported second quarter 2022 net sales of $15.4bn, compared to $17.0bn in the second quarter of 2021. Net earnings in the second quarter of 2022 were $309m, or $1.16 per share, compared to $1.8bn, or $6.52 per share, in the second quarter of 2021. Cash from operations was $1.3bn in both the second quarter of 2022 and 2021. Free cash flow was $1.0bn in both the second quarter of 2022 and 2021.
“Lockheed Martin continued to deliver strong and consistent cash generation, returning over $1 bn in cash to shareholders in the second quarter through our industry leading dividend and our ongoing share repurchase program,” said Lockheed Martin Chairman, President and CEO James Taiclet. “Although revenue in the period was affected by supply chain impacts and the timing of customer contract negotiations, our cost management initiatives resulted in margin expansion. Moreover, our robust cash generation also continues to provide the resources to invest in building the foundation for future revenue and margin growth opportunities through our classified program capex projects, hypersonics development efforts, and our 21st Century Security and internal Digital Transformation initiatives.”
Net earnings for the quarter ended June 26, 2022 included non-operational charges totaling $1.7bn ($1.4bn, or $5.16 per share, after-tax). The table below shows the impact to earnings before income taxes, net earnings and diluted earnings per share (EPS) for these items.
F-35 Lots 15-17 Contract Update
The company recently reached an agreement in principle with the U.S. Government on the F-35 Low Rate Initial Production (LRIP) Lots 15-17 production contract and continues to engage with the U.S. Government to definitize the contract. The company has been performing work on the Lots 15-17 production under customer authorization and initial funding to begin work under an advance acquisition contract received in December 2019. The company’s costs began to exceed the contract value and available funding on the Lots 15-17 advance acquisition contract in the second quarter of 2022. As a result, this prevented the recognition of approximately $325m of sales and associated operating profit in the second quarter. Additionally, it prevented the company from invoicing and receiving cash of approximately $465m for costs incurred in the second quarter of 2022. At the end of the second quarter of 2022, the company also had approximately $1bn in potential termination liability exposure to third parties related to LRIP Lots 15-17. The company expects to recover the unrecognized sales and resume invoicing costs incurred upon receiving contractual authorization and funding on the production contract with the U.S. Government, which it expects to occur in the third quarter of 2022. However, until a final agreement is reached or the U.S. Government otherwise provides additional contractual authorization and funding, the company’s results of operations, cash flows, and financial condition will continue to be negatively impacted and the impacts could be material.
As part of the LRIP Lots 15-17 production contract, the U.S. Government reduced the acquisition quantities based on budget availability. While the company expects the LRIP Lots 15-17 contract to support its long-term objective to produce 156 aircraft a year, COVID-19 and other impacts experienced by the F-35 enterprise have required it to modify its near-term production plan. Deliveries are expected to remain in the range of 147-153 aircraft per year in 2023 and 2024, before the company achieves its 156 aircraft delivery target in 2025. The company continues to anticipate annual deliveries of 156 aircraft beyond 2025 for the foreseeable future.
2022 Financial Outlook
The following table and other sections of this news release contain forward-looking statements, which are based on the company’s current expectations. Actual results may differ materially from those projected. It is the company’s practice not to incorporate adjustments into its financial outlook for proposed acquisitions, divestitures, ventures, pension risk transfer transactions, financing transactions, changes in law, or new accounting standards until such items have been consummated, enacted or adopted. For additional factors that may impact the company’s actual results, refer to the “Forward-Looking Statements” section in this news release.
Cash Flows and Capital Deployment Activities
Cash from operations in the quarter ended June 26, 2022 was $1.3bn. Capital expenditures were $304m, resulting in free cash flow of $1.0bn. The operating and free cash flows for the quarter ended June 26, 2022 were comparable to the same period in 2021.
The company’s capital deployment activities in the quarter ended June 26, 2022 included the following:
- paying cash dividends of $744m; and
- paying $356m to repurchase 0.9 m shares (excluding 0.6m shares received upon settlement of an accelerated share repurchase agreement (ASR) in April 2022 for no additional consideration).
On May 5, 2022, the company received net proceeds of $2.3bn from a debt issuance of senior unsecured notes, consisting of $800m aggregate principal amount of 3.90% Notes due 2032, $850m aggregate principal amount of 4.15% Notes due 2053, and $650m aggregate principal amount of 4.30% Notes due 2062. The company used the net proceeds from this debt offering to redeem all of the outstanding $500 m in aggregate principal amount of its 3.10% Notes due 2023, $750 m in aggregate principal amount of its 2.90% Notes due 2025, and $1.0 bn of its outstanding $2.0bn in aggregate principal amount of its 3.55% Notes due 2026. As a result of these transactions, as of June 26, 2022, the company’s debt balance remained unchanged. The company incurred a charge of $34m ($26m, or $0.10 per share, after-tax) on these transactions.
Segment Results
The company operates in four business segments organized based on the nature of products and services offered: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. The following table presents summary operating results of the company’s business segments and reconciles these amounts to the company’s consolidated financial results.
Net sales and operating profit of our business segments exclude intersegment sales, cost of sales, and profit as these activities are eliminated in consolidation and not included in management’s evaluation of performance of each segment. Business segment operating profit includes our share of earnings or losses from equity method investees as the operating activities of the equity method investees are closely aligned with the operations of our business segments.
Business segment operating profit excludes the FAS/CAS pension operating adjustment, a portion of corporate costs not considered allowable or allocable to contracts with the U.S. Government under the applicable U.S. Government cost accounting standards (CAS) or federal acquisition regulations (FAR), and other items not considered part of management’s evaluation of segment operating performance such as a portion of management and administration costs, legal fees and settlements, environmental costs, stock-based compensation expense, retiree benefits, significant severance actions, significant asset impairments, gains or losses from divestitures, and other miscellaneous corporate activities. Excluded items are included in the reconciling item “Unallocated items” between operating profit from our business segments and our consolidated operating profit.
Changes in net sales and operating profit generally are expressed in terms of volume. Changes in volume refer to increases or decreases in sales or operating profit resulting from varying production activity levels, deliveries or service levels on individual contracts. Volume changes in segment operating profit are typically based on the current profit booking rate for a particular contract. In addition, comparability of the company’s segment sales, operating profit and operating margin may be impacted favorably or unfavorably by changes in profit booking rates on the company’s contracts. Increases in profit booking rates, typically referred to as favorable profit adjustments, usually relate to revisions in the estimated total costs to fulfill the performance obligations that reflect improved conditions on a particular contract. Conversely, conditions on a particular contract may deteriorate, resulting in an increase in the estimated total costs to fulfill the performance obligations and a reduction in the profit booking rate and are typically referred to as unfavorable profit adjustments. Increases or decreases in profit booking rates are recognized in the current period and reflect the inception-to-date effect of such changes. For more information on factors impacting comparability of our segment sales, operating profit and operating margins, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2021 and subsequent quarterly reports on Form 10-Q.
The company’s consolidated net adjustments not related to volume, including net profit booking rate adjustments, represented approximately 27% of total segment operating profit in the quarter ended June 26, 2022, as compared to 22% in the quarter ended June 27, 2021.
Aeronautics
Aeronautics’ net sales during the quarter ended June 26, 2022 decreased $804m, or 12%, compared to the same period in 2021. Net sales decreased by approximately $945m for the F-35 program due to lower volume on production contracts as a result of supply chain performance delays and delays in receiving additional contractual authorization and funding under the Lots 15-17 contract, and about $50m on the F-16 program due to lower volume on sustainment contracts and an unfavorable profit adjustment on a production contract in the second quarter of 2022 as a result of manufacturing line ramp up delays, partially offset by higher volume on production contracts. These decreases were partially offset by an increase of approximately $210 m on classified contracts primarily due to higher volume.
Aeronautics’ operating profit during the quarter ended June 26, 2022 increased $40m, or 7%, compared to the same period in 2021. Operating profit increased approximately $220 m on classified contracts due to a $225m loss in the second quarter of 2021 on a classified program; and approximately $40m for the F-22 program due to higher net favorable profit adjustments. These increases were partially offset by lower operating profit of approximately $145 m for the F-35 program due to lower volume on production contracts as described above; and about $55 m for the F-16 program due to an unfavorable profit adjustment on a production contract in the second quarter of 2022 as described above. Adjustments not related to volume, including net profit booking rate adjustments, were $120m higher in the second quarter of 2022 compared to the same period in 2021.
Missiles and Fire Control
MFC’s net sales during the quarter ended June 26, 2022 decreased $197m, or 7%, compared to the same period in 2021. The decrease was primarily attributable to lower net sales of approximately $155 m for sensors and global sustainment programs primarily due to lower volume on SOF GLSS as a result of troop withdrawals from Afghanistan and lower net favorable profit adjustments due to close out activities in the second quarter of 2021 related to the Warrior Capability Sustainment Program (Warrior); and about $45 m for tactical and strike missile programs due to lower volume (air dominance weapon systems).
MFC’s operating profit during the quarter ended June 26, 2022 increased $17m, or 4%, compared to the same period in 2021. The increase was primarily attributable to higher operating profit of approximately $40m for tactical and strike missile programs due to higher net favorable profit adjustments (Joint Air-to-Surface Standoff Missile (JASSM), High Mobility Artillery Rocket System (HIMARS), and Hellfire); and about $10m for integrated air and missile defense programs due to higher net favorable profit adjustments (Patriot Advanced Capability-3 (PAC-3)). These increases were partially offset by a decrease of about $40m for sensors and global sustainment programs primarily due to lower net favorable profit adjustments as a result of the closeout of the Warrior program in 2021. In addition, operating margin was positively impacted when compared to the second quarter of 2021 due to contract mix (lower SOF GLSS volume and lower development volume at tactical and strike missiles). Adjustments not related to volume, including net profit booking rate adjustments in the second quarter of 2022 were comparable to the same period in 2021.
Rotary and Mission Systems
RMS’ net sales during the quarter ended June 26, 2022 decreased $230 m, or 5%, compared to the same period in 2021. The decrease was primarily attributable to lower net sales of approximately $100m for Sikorsky helicopter programs due to lower production volume (Black Hawk); about $80m for integrated warfare systems and sensors (IWSS) programs due to lower volume (Littoral Combat Ship (LCS) and Advanced Hawkeye); and approximately $55m for various C6ISR (command, control, communications, computers, cyber, combat systems, intelligence, surveillance, and reconnaissance) programs due to lower volume.
RMS’ operating profit during the quarter ended June 26, 2022 decreased $55m, or 12%, compared to the same period in 2021. The decrease was primarily attributable to approximately $20m for IWSS programs due to lower net favorable profit adjustments (Aegis and ground-based radar), about $10m for various C6ISR programs due to lower volume; and approximately $10m for Sikorsky helicopter programs due to lower production volume (Black Hawk). Adjustments not related to volume, including net profit booking rate adjustments, were $25m lower in the second quarter of 2022 compared to the same period in 2021.
Space
Space’s net sales during the quarter ended June 26, 2022 decreased $352m, or 11%, compared to the same period in 2021. The decrease was primarily attributable to lower net sales of approximately $425m due to the previously announced renationalization of the AWE program on June 30, 2021, which was no longer included in the company’s financial results beginning in the third quarter of 2021; and about $55m for commercial civil space programs due to lower volume (Orion). These decreases were partially offset by higher net sales of about $130m for strategic and missile defense programs due to higher development volume (Next Generation Interceptor (NGI)).
Space’s operating profit during the quarter ended June 26, 2022 decreased $67m, or 20%, compared to the same period in 2021. The decrease was primarily attributable to approximately $55 m for national security space programs primarily due to lower net favorable profit adjustments (primarily Space-Based Infrared System (SBIRS) and classified programs); and about $40 m of lower equity earnings from the company’s investment in United Launch Alliance (ULA). These decreases were partially offset by an increase of approximately $30m for strategic and missile defense programs due to higher net favorable profit adjustments (primarily Fleet Ballistic Missile (FBM) programs). Operating profit for the AWE program was comparable as its operating profit in the second quarter of 2021 was mostly offset by accelerated amortization expense for intangible assets as a result of the renationalization. Adjustments not related to volume, including net profit booking rate adjustments, were $30m lower in the second quarter of 2022 compared to the same period in 2021.
Total equity earnings (primarily ULA) represented approximately $5m, or 2% of Space’s operating profit during the quarter ended June 26, 2022, compared to approximately $45m, or 13% during the quarter ended June 27, 2021.
Income Taxes
The company’s effective income tax rate was 6.4% for the quarter ended June 26, 2022 and 16.4% for the quarter ended June 27, 2021. The rate for the second quarter of 2022 is lower primarily due to lower earnings before income taxes resulting from a noncash, non-operating pension settlement charge of $1.5bn, which reduced the tax expense by approximately $314m. The rates for both periods benefited from the research and development tax credit, tax deductions for foreign derived intangible income and dividends paid to the company’s defined contribution plans with an employee stock ownership plan feature.
Purchase of Group Annuity Contracts and Pension Remeasurement
As previously announced, on June 24, 2022 the company purchased group annuity contracts to transfer $4.3 bn of gross defined benefit pension obligations and related plan assets to an insurance company for approximately 13,600 U.S. retirees and beneficiaries. The group annuity contracts were purchased using assets from Lockheed Martin’s master retirement trust and no additional funding contribution was required. This transaction had no impact on the amount, timing, or form of the monthly retirement benefit payments to the affected retirees and beneficiaries. In connection with this transaction, the company recognized a noncash, non-operating settlement charge of $1.5bn ($1.2bn, or $4.33 per share, after-tax) for the affected plans in the quarter ended June 26, 2022, which represents the accelerated recognition of actuarial losses that were included in the accumulated other comprehensive loss account within stockholders’ equity. As a result of this transaction, the company was required to remeasure the benefit obligations and plan assets for the affected defined benefit pension plans in the quarter ended June 26, 2022. We now expect FAS pension expense of approximately $1.1bn in 2022, inclusive of the noncash, non-operating pension settlement charge of $1.5bn (pre-tax) described above. Excluding the noncash, non-operating pension settlement charge, our expected FAS pension income will be approximately $410 m in 2022, which is $50m lower than our prior 2022 FAS pension income estimate of $460 m.
Use of Non-GAAP Financial Measures
This news release contains the following non-generally accepted accounting principles (non-GAAP) financial measures (as defined by U.S. Securities and Exchange Commission (SEC) Regulation G). While management believes that these non-GAAP financial measures may be useful in evaluating the financial performance of the company, this information should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP. In addition, the company’s definitions for non-GAAP financial measures may differ from similarly titled measures used by other companies or analysts.
Business segment operating profit
Business segment operating profit represents operating profit from the company’s business segments before unallocated income and expense. This measure is used by the company’s senior management in evaluating the performance of its business segments and is a performance goal in the company’s annual incentive plan. Business segment operating margin is calculated by dividing business segment operating profit by sales. The table below reconciles the non-GAAP measure business segment operating profit with the most directly comparable GAAP financial measure, consolidated operating profit.
Free cash flow
Free cash flow is cash from operations less capital expenditures. The company’s capital expenditures are comprised of equipment and facilities infrastructure and information technology (inclusive of costs for the development or purchase of internal-use software that are capitalized). The company uses free cash flow to evaluate its business performance and overall liquidity and is a performance goal in the company’s annual and long-term incentive plans. The company believes free cash flow is a useful measure for investors because it represents the amount of cash generated from operations after reinvesting in the business and that may be available to return to stockholders and creditors (through dividends, stock repurchase and debt repayments) or available to fund acquisitions. The entire free cash flow amount is not necessarily available for discretionary expenditures, however, because it does not account for certain mandatory expenditures, such as the repayment of maturing debt.
Adjusted earnings before income taxes; adjusted net earnings and adjusted diluted EPS
Earnings before income taxes, net earnings and diluted earnings per share (EPS) were significantly impacted by certain non-operational charges in the second quarter of 2022. Management believes the presentation of these measures adjusted for the impacts of these non-operational items is useful to investor in understanding the company’s underlying business performance and comparing performance from period to period. The tax effects related to each adjustment that impacted earnings before income taxes are based on a blended tax rate that combines the federal statutory rate of 21% plus an estimated state tax rate.
Net FAS/CAS pension adjustment – adjusted; Total FAS pension income – adjusted
Net FAS/CAS pension adjustment and Total FAS pension (expense) income have been adjusted for the second quarter 2022 noncash, non-operating pension settlement charge of $1.5bn. Management believes that the exclusion of the pension settlement charge is useful to understanding the company’s underlying business performance and comparing performance from period to period.
18 Jul 22. Raytheon UK announces agreement to acquire Northern Space and Security Ltd. Acquisition brings together complementary capabilities to advance Raytheon UK’s offerings in space domain awareness. Raytheon UK has entered into an agreement to acquire Northern Space and Security Ltd., or NORSS, a UK-based specialist in space domain awareness, orbital analysis, space surveillance and tracking.
NORSS, headquartered in the northeast of England, delivers orbital analyst technical services to the UK Space Agency, providing critical capabilities to both government and UK satellite operators. Additionally, NORSS is contracted with the Ministry of Defence to develop a new simulator system for developing and testing future British military satellite systems and constellations. The company is dedicated to developing the essential skills and experience needed for orbital analysts to ensure the long-term sustainability of the benefits from space.
“Bringing together the complementary capabilities of these two leading space companies will enhance the quality of the UK’s orbital analysis and space situational awareness technologies,” said Jeff Lewis, chief executive of Raytheon UK. “It also answers a call made by the UK government for companies to invest in cutting-edge space technologies.”
Space is becoming increasingly congested and contested, and there are plans for tens of thousands of new satellites to be launched in the next five years. The space domain awareness capabilities that NORSS provides are a priority for countries seeking to be a leader in space-based technologies. The agreement with NORSS is an important step on Raytheon UK’s path toward building a global space capability for governments.
“The acquisition, upon completion, will facilitate expansion by NORSS through access into new markets,” said Ralph “Dinz” Dinsley, the executive director of NORSS. “As part of Raytheon Intelligence & Space, we will have expanded access to international markets, continued investments in research and development, and opportunities to collaborate on the next generation of space technologies.”
19 Jul 22. Babcock to sell part of its aerial emergency services business. Babcock International Group PLC (Babcock) is pleased to announce that it has entered into an agreement with funds managed by Ancala Partners, a mid-market infrastructure investor, for the sale of certain of its aerial emergency services businesses for a gross cash consideration of €136.2m (which equates to around £115 m), subject to closing adjustments and before transaction costs.
These businesses provide aerial emergency medical services, firefighting and search & rescue to customers and communities in Italy, Spain, Portugal, Norway, Sweden and Finland. They employ over 2,400 highly trained employees and operate a fleet of 232 aircraft across 164 operational locations in the six countries. Babcock will retain its aerial emergency services businesses in its focus countries of the UK, France, Canada and Australia, where the Group also operates defence businesses.
The sale forms part of Babcock’s portfolio alignment programme, designed to focus the Group and reduce complexity. Proceeds from the transaction will be retained for general corporate purposes.
Babcock CEO David Lockwood said: “The agreement marks another significant step forward in our strategy to align our portfolio. I would like to thank colleagues for their commitment and hard work in providing vital services for their customers, not least through the pandemic, and I wish them and Ancala every success for the future.”
The businesses being sold are part of Babcock’s Aviation sector. For the year ended 31 March 2021 they reported revenues of £407m and a loss before tax of £177m, including a £6 m contribution before allocated overheads, exceptional items and other one-off adjustments arising from the Contract Profitability and Balance Sheet review.
As of 31 March 2021, gross assets were £631m (year ended 31 March 2020 £881 m), with net assets excluding cash of £156m and net lease liabilities of £230m.
Based on unaudited figures for the year ended 2022, the businesses have recorded revenue of £405m, and a loss before tax of £10 m (an operating profit contribution of c£13m before allocated overheads). As of 31 March 2022, based on unaudited figures, gross assets were £635 m and net lease liabilities were £209m.
Completion of the agreement is subject to certain regulatory and other conditions. The deal is expected to complete by the end of the calendar year, subject to the satisfaction of the relevant conditions.
01 Jul 22. Kongsberg to buy majority stake in NanoAvionics. Norway-based Kongsberg Defence & Aerospace (Kongsberg) has entered into an agreement to acquire Lithuanian smallsat mission integrator and bus manufacturer NanoAvionics. The planned acquisition expands Kongsberg’s space offering to also have products and technology for manufacturing small satellites. With more than 150 employees NanoAvionics has contributed to 120 missions and commercial satellite projects, with customers ranging from national space agencies to universities such as UNSW Sydney and companies such as Thales Alenia Space, Aurora Insight, the Dubai Electricity & Water Authority, SEN and others.
Commenting on the agreement, Geir Håøy, CEO of Kongsberg, said: “The agreement to acquire NanoAvionics represents a game-changer for Kongsberg’s space ambitions. By acquiring NanoAvionics Kongsberg expands its portfolio to also have products and technology for designing and manufacturing small satellites. Kongsberg is the Nordic region’s largest industrial space company and a global leader in maritime surveillance. We have clear ambitions to grow further and with this acquisition, we are taking the next step both for us and for the Norwegian space industry.”
Kongsberg will acquire in total 77% of the company. Current majority owner AST & Science will divest all its shares, while the management of NanoAvionics will retain 23% of the company. The parties have agreed upon an enterprise value of $67.35m (100% basis). The management and leadership structure of NanoAvionics under CEO Vytenis Buzas and CCO Linas Sargautis, both founders of the company, will remain unchanged. Kongsberg and NanoAvionics plan to close the transaction following the conclusion of customary closing conditions including any required regulatory reviews.
Vytenis J. Buzas, Founder and CEO of NanoAvionics, added: “Joining forces with Kongsberg, one of the most respected names in the defence, maritime and space domain, further strengthens and broadens our position in the NewSpace sector and provides us access to new markets. It is the right timing and a perfect match for our companies to consolidate our expertise and create a world-class space company which will be a leading prime contractor for small satellite missions.”
Eirik Lie, President of Kongsberg Defence & Aerospace, stated: “By joining forces NanoAvionics and Kongsberg will be able to provide cost-efficient solutions and services for customers, from manufacturing, payload production and integration, to launch services, and mission control and data processing. The market for small satellite constellations will increase going forward, within commercial, security and defence segments. NanoAvionics has a strong proven track record, and we look forward to working closely with this talented team.”
The planned acquisition is in line with Kongsberg’s strategic priorities to grow in the space technology sector and Norway’s space ambitions. In April, Kongsberg announced the procurement of three microsatellites from NanoAvionics as a first step of establishing Norway’s first satellite constellation. On July 5 of this year, Kongsberg will open a new 6,000 square meter building, with specialised facilities for the development and production of products to be launched into space.
Lie concluded: “Norway is a leader in the domain of maritime surveillance in the high north. The planned acquisition incorporates world-class small satellite technology into our portfolio enabling further advances in surveillance and other key strategic capacities. NanoAvionics, along with our existing space portfolio and the development of the Andøya spaceport means Norway now has leading positions across the entire value chain.”
(Source: Google/https://satelliteprome.com/)
11 Jul 22. Dedrone announces new round of USD30m in Series C-1 financing. Counter-UAS (C-UAS) company Dedrone has announced it has closed USD30m in an oversubscribed Series C-1 financing round.
“Led by public safety technology company Axon, this latest funding comes on the heels of the company’s USD30.5 m Series C in December 2021,” said a company press release. “Aqton Partners, Menlo Ventures, Felicis Ventures, TargetPartners and individual Silicon Valley entrepreneurs also participated in the round.”
“As more and more drones enter the skies, maintaining airspace security has become a vital function of national and local governments, law enforcement, critical infrastructure, public venues and much more. This fact is illustrated by the White House’s recent Domestic Counter-Unmanned Aircraft Systems National Action Plan to protect against nefarious drone activity,” said Aaditya Devarakonda, CEO of Dedrone. “This need to better secure airspace has been a driving factor in Dedrone’s exponential growth in 2022; we are on track to double our revenue projections for the year and triple new hires in the US, including building a focused engineering team in California. Now is the time to ensure we continue to deliver the most robust, accurate and technologically advanced airspace security solution to our customers around the world.”
Dedrone detects, identifies, locates, analyzes and mitigates nearly 300 different drone types across more than 65 different manufacturers, says the company. Dedrone works across 36 countries including four of the G-7 nation governments; nine U.S. federal agencies, including the Department of Defense; more than 75critical infrastructure sites; 20+ airports; and 50 correctional facilities worldwide.
For more information
https://www.dedrone.com/press/dedrone-closes-30-m-series-c-1-financing (Source: www.unmannedairspace.info)
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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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