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28 Oct 22. France’s Safran raises 2022 revenue and cashflow targets.

French jet engine maker and aerospace supplier Safran (SAF.PA) on Friday raised its full-year revenue and free cashflow forecasts after posting a 29.9% rise in third-quarter revenues buoyed by a strong dollar.

Chief Executive Olivier Andries said the improved outlook reflected currencies and “confidence in our ability to deliver,” striking a contrasting note to Boeing (BA.N) which on Wednesday had said engines were its main output constraint.

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Safran co-produces engines for the Boeing 737 with General Electric (GE.N) through their CFM venture, which also competes with Pratt & Whitney to power the Airbus A320.

Engine makers have reported problems in obtaining castings from two main suppliers but GE said this week deliveries of CFM’s LEAP engines had risen 50% from the previous quarter.

On a like-for-like basis, Safran’s quarterly revenues grew 17.9% to 4.849bn euros ($4.84bn) led by propulsion and interiors.

Safran said it now expected full-year revenues to reach 19 bn euros versus a previous target of 18.2-18.4bn on the basis of services growth and a stronger assumed dollar rate.

It predicted 2022 free cashflow of more than the 2.4bn euros it had pencilled in previously. It continued to point to 2022 civil aftermarket growth of 25-30% following a 36% increase in aftermarket sales in dollar terms in the third quarter.

But it warned of some dilution to operating margins from a recent increase in the currency hedging book. Safran said it expected to close the acquisition of Thales’s (TCFP.PA) electrical systems activities in 2023 after entering exclusive negotiations in September to buy the business, which had 2021 revenues of 124m euros. It also announced plans to buy back 2.2% of shares to shield against potential dilution from a convertible bond and said it would recommend the re-appointment of CEO Andries and Chairman Ross McInnes at the next annual shareholder meeting in 2023. ($1 = 1.0010 euros) (Source: Reuters)

28 Oct 22. IFS continues to deliver strong 2022 financial performance with Q3 Year-to-Date results.

Annual Recurring Revenue increases by 38% YoY
Cloud Revenue grows at 104% Vs. 2021 Q3 YTD
Third consecutive high performance quarter cements IFS leadership in core capabilities

IFS, the global cloud enterprise software company, today reported its financial results for Q3 year-to-date (YTD) ending September 30, 2022. IFS posted strong financial performance with Annual Recurring Revenue (ARR) increasing by 38 percent year on year (YOY) and cloud revenue growth of 104 percent Vs. 2021 Q3 YTD. The company attributes its continued success to its dogmatic commitment to delivering a frictionless experience to its customers and a product strategy that meets real market demand, and provides the capabilities business leaders are looking for today to mitigate risk, and tomorrow, to future proof their business.

IFS also posted an increase in Software revenue of 26 percent versus Q3 YTD 2021: the increase in bookings has been driven by a combination of new customer names accounting for 44 percent of new Annual Contract Value (ACV), and existing customers upgrading to IFS Cloud at an increased pace with the IFS Momentum upgrade program.

The company’s ability to differentiate by providing embedded innovation such as AI, ML, IoT, automation and advanced analytics across ERP, EAM, and FSM in a composable way means companies have a real choice when it comes to their business and digital transformation requirements and the pace at which they execute on this, without having to compromise on functionality; a value proposition that is resonating in the company’s target industries.

These differentiators have also earned IFS unrivaled recognition by leading analyst firms such as IDC, Gartner, and Forrester over the years. More recently, IFS was listed as #1, per Gartner’s “Global EAM Market Share 2021 by Revenue” report, and named the “Leader for the seventh consecutive time in 2022 Gartner Magic Quadrant for Field Service Management.” The company was also named a “Leader in IDC MarketScape for Worldwide SaaS and Cloud-Enabled Manufacturing ERP” for 2022.

Additionally, IFS has also been named as a Gartner Peer Insight Customers’ Choice for EAM in 2022. These accolades speak to IFS’s dedication in supporting its customers to meet their business goals and that IFS Cloud and IFS’s Success Services are more relevant than ever.

Darren Roos, CEO of IFS, commented: “Our compelling proposition and genuine commitment to our customers continues to serve us well in driving growth for IFS. We are uniquely positioned in the industry with the best asset and service management capabilities.” Roos continued: “We are seeing more and more companies recognise that the ability to orchestrate their assets, people and customers on a single, composable platform across EAM, FSM & ERP helps them to deliver amazing moments of service to their customers. This is a real differentiator.” Roos concluded: “I am grateful to our extended team of partners and employees for staying true to our pledge to add value and continue to innovate and deliver our best to all our customers when it matters most to them.”

Constance Minc, CFO of IFS, said: “Our performance over the first nine months of this year has been exceptional. ARR has increased by 38 percent compared to Q3 2021. This demonstrates the health and resilience of our business.” Minc added: “Over the last few years, we have transformed our revenue model, which is not a simple undertaking but underpinned by IFS Cloud’s leading capabilities, our teams have stayed focused on delivering quarter after quarter, and these latest results are evidence of this.”

Following the acquisition of Ultimo, now rebranded IFS Ultimo, IFS has further extended its share of the EAM market. IFS Ultimo is a flexible and easily deployed EAM solution that caters for companies looking for a best-of-breed, point solution for asset management.

Also, in Q3, IFS was proud to announce the winners of its Change for Good Awards 2022. Now in their second year, the awards recognise and celebrate sustainability excellence throughout the IFS ecosystem. Winners included Volvo Group, Technogroup, Cape Air, and Tucson Electric Power. The initiative was complemented in October with new ESG functionality launched in the latest release of IFS Cloud.

Financial and Operational Highlights for Q3 2022 YTD (January-September 2022):

Annual Recurring Revenue SEK 5.0bn, an increase of 38 percent YoY
Q3 YTD 2022 Software Revenue SEK 4.5bn, an increase of 26 percent versus Q3 YTD 2021
Q3 YTD 2022 Recurring Revenue SEK4.2bn, an increase of 46 percent versus Q3 YTD 2021
Q3 YTD 2022 Cloud Revenue increased by 104 percent versus Q3 YTD 2021

*Note: all figures are based in Swedish Krona and reported in constant currency. Cloud includes all of IFS Cloud (including IFS Cloud Remote) and cloud deployment of other products.

In line with WorkWave establishing itself as a standalone business at the end of Q2 2021, the performance reported above excludes WorkWave’s contribution to the IFS Group.

28 Oct 22. Airbus raises cashflow target on strong dollar.

Europe’s Airbus (AIR.PA) raised its 2022 free cashflow forecast on the back of a strong dollar and reaffirmed delivery and production targets while delaying the projected introduction of its newest jet, the A321XLR, by a few months.

Third-quarter revenues were also partially boosted by the U.S. currency while adjusted operating earnings rose 26% to 836m euros ($834.50m), the world’s largest planemaker said on the 50th anniversary of its maiden A300 test flight.

Quarterly revenues rose 27% to 13.309bn euros.

For 2022, Airbus raised its target for free cashflow before M&A and customer financing by a bn euros to 4.5bn. It maintained other annual targets including 700 jet deliveries.

It delayed the entry to service of its A321XLR long-range single-aisle jet, which has been facing questions over certification of a new fuel tank, to the second quarter of 2024 from early 2024. All three test planes have flown, it said.

Analysts were on average expecting quarterly adjusted operating income of 887m euros on revenues of 12.848bn, according to a company-compiled consensus. ($1= 1.0018 euros) (Source: Reuters)

28 Oct 22. Airbus reports Nine-Month (9m) 2022 results.

437(1) commercial aircraft delivered in 9m 2022
Revenues € 38.1bn; EBIT Adjusted €3.5bn
EBIT (reported) €3.6bn; EPS (reported) €3.26
Free cash flow before M&A and customer financing €2.9bn
2022 guidance updated for FCF before M&A and customer financing

Airbus SE (stock exchange symbol: AIR) reported consolidated financial results for the nine months ended 30 September 2022.

“Airbus delivered a solid nine-month 2022 financial performance in a complex operating environment,” said Guillaume Faury, Airbus Chief Executive Officer. “The supply chain remains fragile resulting from the cumulative impact of COVID, the war in Ukraine, energy supply issues and constrained labour markets. Our strong focus on cash flow and the favourable dollar/euro environment have enabled us to raise our free cash flow guidance for 2022. The commercial aircraft delivery and earnings targets are maintained. Our teams are focused on our key priorities and in particular, delivering the commercial aircraft ramp-up over the coming months and years.”

Gross commercial aircraft orders increased to 856 (9m 2021: 270 aircraft) with net orders of 647 aircraft after cancellations (9m 2021: 133 aircraft). The order backlog amounted to 7,294 commercial aircraft at the end of September 2022. Airbus Helicopters registered 246 net orders (9m 2021: 185 units), with bookings well spread across programmes. Airbus Defence and Space’s order intake by value was €8.0bn (9m 2021: €10.1bn), corresponding to a book-to-bill ratio slightly above 1. Third quarter 2022 order intake mainly related to services across the Division’s portfolio.

Consolidated revenues increased to €38.1bn (9m 2021: €35.2bn). A total of 437(1) commercial aircraft were delivered (9m 2021: 424(2) aircraft), comprising 34 A220s, 340 A320 Family, 21 A330s and 42 A350s(2) . Revenues generated by Airbus’ commercial aircraft activities increased 8 percent year-on-year, mainly reflecting the higher number of deliveries including a favourable mix and the strengthening of the US dollar. Airbus Helicopters delivered 193 units (9m 2021: 194 units), with revenues rising by 9 percent mainly reflecting growth in services and a favourable mix in programmes. Revenues at Airbus Defence and Space increased 10 percent, mainly driven by the Military Aircraft business and the Eurodrone contract signature. Seven A400M airlifters were delivered in 9m 2022.

Consolidated EBIT Adjusted – an alternative performance measure and key indicator capturing the underlying business margin by excluding material charges or profits caused by movements in provisions related to programmes, restructuring or foreign exchange impacts as well as capital gains/losses from the disposal and acquisition of businesses – increased slightly to €3,481m (9m 2021: €3,369m).

EBIT Adjusted related to Airbus’ commercial aircraft activities increased to €2,875m (9m 2021: €2,739m). It included the non-recurring positive impact from retirement obligations recorded in Q1, partly offset by the impact from international sanctions against Russia. It also reflects a less favourable hedge rate compared to 9m 2021.

On the A320 Family programme, production is progressing towards a monthly rate of 65 aircraft in early 2024 and 75 in 2025. The groundwork continues throughout all sites to secure rate 75 and adapt to the higher proportion of A321s in the backlog, ensuring all A320 Family Final Assembly Lines become A321 capable. Preparation for the upgrade of the second A320 FAL in Toulouse is underway. All three test A321XLRs have now flown, with the aircraft’s entry-into-service expected to take place in Q2 2024. On widebody aircraft, the Company is exploring, together with its supply chain, the feasibility of further rate increases to meet growing market demand as international air travel recovers.

Airbus Helicopters’ EBIT Adjusted increased to €380m (9m 2021: €314m), partly driven by the growth in services and a favourable mix in programmes. It also reflects non-recurring elements booked in Q1, including the positive impact related to retirement obligations.

EBIT Adjusted at Airbus Defence and Space totalled €231m (9m 2021: €284m). This decrease mainly reflects the impairment related to the Ariane 6 launcher delay, the impact of rising inflation in some long-term contracts across the Division’s portfolio and the consequences of international sanctions, partly offset by the positive impact related to retirement obligations booked in Q1 and Eurodrone.

On the A400M programme, development activities continue towards achieving the revised capability roadmap. Retrofit activities are progressing in close alignment with the customer. Risks remain on the qualification of technical capabilities and associated costs, on aircraft operational reliability, on cost reductions and on securing export orders in time as per the revised baseline.

Consolidated self-financed R&D expenses totalled €1,965m (9m 2021: €1,919m).

Consolidated EBIT (reported) amounted to €3,552m (9m 2021: €3,437m), including net Adjustments of €+71m.

These Adjustments comprised:

€+349m related to the dollar pre-delivery payment mismatch and balance sheet revaluation, of which €+123m were in Q3;
€+33m related to the A380 programme, of which €+40m were in Q3;
€-219m related to the A400M programme, of which €-1m were in Q3;
€-48m related to the Aerostructures transformation in France and Germany, of which € -15 m were in Q3;
€-44m of other costs including compliance, of which €-10m were in Q3.

The financial result was €-306m (9m 2021: €-172m). It mainly reflects the net interest result of €-166m as well as a negative impact from the revaluation of financial instruments, partly offset by the evolution of the US dollar and the revaluation of certain equity investments. Consolidated net income(3) was €2,568m (9m 2021: €2,635m) with consolidated reported earnings per share of €3.26 (9m 2021: €3.36).

Consolidated free cash flow before M&A and customer financing was €2,899m (9m 2021: €2,260m), reflecting the profit translated into cash and supported by a favourable foreign exchange environment. Consolidated free cash flow was €2,502m (9m 2021: €2,308m). The 2021 dividend of € 1.50 per share, or €1.2bn, was paid in Q2 2022 while pension contributions totalled €0.5bn in 9m 2022. On 30 September 2022, the gross cash position stood at €22.5bn (year-end 2021: €22.7bn) with a consolidated net cash position of € 8.0bn (year-end 2021: €7.7bn).

Outlook

As the basis for its 2022 guidance, the Company assumes no further disruptions to the world economy, air traffic, the Company’s internal operations, and its ability to deliver products and services.

The Company’s 2022 guidance is before M&A.

On that basis,

The Company maintains its targets to achieve around 700 commercial aircraft deliveries and around €5.5bn of EBIT Adjusted in 2022.
The Company now targets around €4.5bn of Free Cash Flow before M&A and Customer Financing in 2022.

27 Oct 22. Textron Reports Third Quarter 2022 Results; Narrows Full Year EPS Range and Raises Cash Flow Guidance.

EPS from continuing operations of $1.06, up $0.24 from the third quarter of 2021
Net cash from operating activities of $356m in the third quarter of 2022
Aviation backlog $6.4bn, up $524m from the second quarter of 2022
Full-year EPS outlook narrowed to a range of $3.90 to $4.00
Full-year cash flow guidance raised to a range of $1.1bn to $1.2bn

Textron Inc. (NYSE: TXT) today reported third quarter 2022 income from continuing operations of $1.06 per share, compared with $0.82 per share, or $0.85 per share of adjusted income from continuing operations, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, in the third quarter of 2021.

“In the quarter, we saw higher segment profit margin and strong cash generation,” said Textron Chairman and CEO Scott C. Donnelly. “The operating results demonstrate the resiliency of our business segments while navigating ongoing supply chain and labor challenges.”

Cash Flow

Net cash provided by operating activities of the manufacturing group for the third quarter was $356m, compared to $333m last year. Manufacturing cash flow before pension contributions, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, totaled $292 m for the third quarter, compared to $271m last year. Year to date, manufacturing cash flow before pension contributions totaled $810m.

In the quarter, Textron returned $200m to shareholders through share repurchases. Year to date, share repurchases totaled $639m.

Outlook

Textron now expects 2022 earnings per share from continuing operations to be in a range of $3.90 to $4.00. Textron also expects 2022 manufacturing cash flow before pension contributions to be in a range of $1.1bn to $1.2bn, up $300m from the previous outlook, with planned pension contributions of $50m.

Third Quarter Segment Results

Textron Aviation

Revenues at Textron Aviation of $1.2bn were down $14m from the third quarter of 2021, largely due to lower Citation jet and pre-owned volume, partially offset by favorable pricing and higher aftermarket volume.

Textron Aviation delivered 39 jets in the quarter, down from 49 last year, and 33 commercial turboprops, down from 35 in last year’s third quarter.

Segment profit was $139 m in the third quarter, up $41m from a year ago, largely due to favorable pricing, net of inflation of $31m.

Textron Aviation backlog at the end of the third quarter was $6.4bn.

Bell

Bell revenues in the quarter were $754m, down $15m from last year, due to lower military revenues of $112m, primarily in the H-1 program due to lower aircraft and spares volume, offset by higher commercial revenues of $97m.

Bell delivered 49 commercial helicopters in the quarter, up from 33 last year.

Segment profit of $85m was down $20m from last year’s third quarter, primarily reflecting lower volume and mix, partially offset by favorable pricing, net of inflation.

Bell backlog at the end of the third quarter was $4.9bn.

Textron Systems

Revenues at Textron Systems were $292m, down $7m from last year’s third quarter, largely due to lower volume.

Segment profit of $37m was down $8m, compared with the third quarter of 2021, primarily due to lower volume and mix.

Textron Systems’ backlog at the end of the third quarter was $2.0bn.

Industrial

Industrial revenues were $849m, up $119m from last year’s third quarter, primarily due to higher volume and mix of $95m and a $58m favorable impact from pricing, principally in the Specialized Vehicles product line, partially offset by an unfavorable impact of $34m from foreign exchange rate fluctuations.

Segment profit of $39m was up $16m from the third quarter of 2021, primarily due to higher volume and mix.

Textron eAviation

Textron eAviation segment revenues were $5m and segment loss was $8m in the third quarter of 2022, which reflected the operating results of Pipistrel along with research and development costs for initiatives related to the development of sustainable aviation solutions.

Finance

Finance segment revenues were $11m, and profit was $7m. (Source: BUSINESS WIRE)

27 Oct 22. Oshkosh Corporation Reports Fiscal 2022 Third Quarter Results. Oshkosh Corporation (NYSE: OSK), a leading innovator of mission-critical vehicles and essential equipment, today reported fiscal 2022 third quarter net income of $59.3m, or $0.90 per diluted share, compared to $89.7m, or $1.30 per diluted share, for the three months ended September 30, 2021. Adjusted1 net income was $66.0m, or $1.00 per diluted share, for the third quarter of fiscal 2022 and $72.6m, or $1.05 per diluted share, for the three months ended September 30, 2021. Comparisons in this news release are to the three months ended September 30, 2021, unless otherwise noted.

Adjusted1 net income for the third quarter of fiscal 2022 excludes charges of $4.6m for the release of cumulative translation adjustment losses upon the liquidation of foreign entities in the Access Equipment segment and a $2.1m impairment of an intangible asset in the Commercial segment. Adjusted1 net income for the three months ended September 30, 2021 excludes an $11.7m tax benefit associated with the release of a valuation allowance on deferred tax assets in Europe and a $5.4m tax benefit associated with the carryback of a U.S. net operating loss to prior years with higher federal statutory rates.

“We are pleased with the strong sequential quarterly earnings growth Oshkosh team members delivered, which demonstrates that our pricing actions to combat inflation are working,” stated John C. Pfeifer, Oshkosh Corporation president and chief executive officer. “Supply chain disruptions remain our most significant challenge and continue to limit our production rates and contribute to manufacturing inefficiencies. Supply chain factors were the primary driver which led to a revenue shortfall of approximately $130 m compared to our expectations for the quarter. Despite the revenue shortfall, our adjusted operating income of $114 m, led by strong price realization, was in line with our expectations.

“In particular, our Access Equipment team delivered 23 percent year-over-year revenue growth and a more than 700 basis point operating margin improvement, culminating in a 10.9 percent operating income margin, or an 11.3 percent adjusted operating margin, for the quarter. We continue to improve supply chain resiliency through a combination of dual and alternate sourcing actions as well as technical redesign of some components, which we expect will help us strengthen our performance.

“During the quarter, we submitted our proposal for the follow-on JLTV contract. As the winner of the original JLTV program, we are confident in the many strengths of our proposal for this important opportunity. We believe our manufacturing capabilities and technological innovations, such as eJLTV, position us well for the program, which we believe could be worth nearly $10bn in revenue when fully executed. The expected award date is early 2023.

“Given strong ongoing customer demand, solid price realization and our efforts to manage supply chain dynamics, we continue to expect full year fiscal 2022 adjusted earnings per share to be in the range of $3.50. We believe we are well-positioned as we continue to invest in our business and in our people,” added Pfeifer.

Consolidated sales in the third quarter of fiscal 2022 increased 0.2 percent to $2.07bn as improved pricing was largely offset by lower sales volume resulting primarily from supply chain related production delays. Sales in the third quarter of fiscal 2022 were also unfavorably impacted by $18.3m from changes in foreign currency exchange rates.

Consolidated operating income in the third quarter of fiscal 2022 increased 3.0 percent to $107.3m, or 5.2 percent of sales, compared to $104.2m, or 5.1 percent of sales, for the three months ended September 30, 2021. The increase was primarily due to improved pricing, offset in part by higher material & logistics costs, lower sales volume and unfavorable cumulative catch-up adjustments in the Defense segment.

Consolidated operating results for the third quarter of fiscal 2022 included charges of $4.6m for the release of cumulative translation adjustment losses and the $2.1m impairment of an intangible asset. Excluding these items, adjusted1 operating income in the third quarter of fiscal 2022 was $114.0m, or 5.5 percent of sales.

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

Access Equipment – Access Equipment segment sales for the third quarter of fiscal 2022 increased 22.7 percent to $1.04bn as a result of higher pricing in response to higher input costs and improved sales volume in North America. Access Equipment segment sales in the third quarter of fiscal 2022 were unfavorably impacted by $17.4m from changes in foreign currency exchange rates.

Access Equipment segment operating income in the third quarter of fiscal 2022 increased 268.7 percent to $113.2m, or 10.9 percent of sales, compared to $30.7 m, or 3.6 percent of sales, for the three months ended September 30, 2021. The increase was primarily due to higher pricing, higher sales volume and lower product liability costs, offset in part by higher material & logistics costs.

Access Equipment segment results for the third quarter of fiscal 2022 included the charges of $4.6m for the release of cumulative translation adjustment losses. Excluding these charges, adjusted1 operating income in the third quarter of fiscal 2022 was $117.8m, or 11.3 percent of sales.

Defense – Defense segment sales for the third quarter of fiscal 2022 decreased 20.2 percent to $518.7m due to lower Joint Light Tactical Vehicle program volume driven by supply chain disruptions and lower customer demand.

Defense segment operating income in the third quarter of fiscal 2022 decreased 95.4 percent to $2.3m, or 0.4 percent of sales, compared to $49.7m, or 7.6 percent of sales, for the three months ended September 30, 2021. The decrease was due to lower sales volume, unfavorable cumulative catch-up adjustments of $15.4m on program margins and adverse product mix.

Fire & Emergency – Fire & Emergency segment sales for the third quarter of fiscal 2022 decreased 26.8 percent to $247.2m due to lower fire truck deliveries as parts shortages and manufacturing challenges limited the segment’s ability to complete units, and lower demand for Aircraft Rescue and Firefighting Vehicles.

Fire & Emergency segment operating income in the third quarter of fiscal 2022 decreased 59.3 percent to $19.2m, or 7.8 percent of sales, compared to $47.2m, or 14.0 percent of sales, for the three months ended September 30, 2021. The decrease was due to lower sales volume and higher material & logistics costs, offset in part by lower fringe costs due to changes in a benefit program and lower incentive compensation costs.

Commercial – Commercial segment sales for the third quarter of fiscal 2022 increased 13.1 percent to $264.5m due to higher pricing in response to higher input costs.

Commercial segment operating income in the third quarter of fiscal 2022 decreased 12.1 percent to $9.4m, or 3.6 percent of sales, compared to $10.7m, or 4.6 percent of sales, for the three months ended September 30, 2021. The decrease in operating income was largely due to higher material & logistics costs, production inefficiencies associated with supply chain shortages, higher new product development spending and increased warranty costs, offset in part by improved pricing and favorable product mix.

Corporate – Corporate costs in the third quarter of fiscal 2022 increased $2.7m to $36.8m primarily due to higher share-based compensation costs.

Interest Expense Net of Interest Income – Interest expense net of interest income in the third quarter of fiscal 2022 increased $0.5m to $10.9m.

Miscellaneous, net – Miscellaneous expense for the third quarter of fiscal 2022 primarily related to foreign currency transaction losses of $5.8 =m.

Provision for Income Taxes – The Company recorded income tax expense in the third quarter of fiscal 2022 of $29.9m, or 33.4 percent of pre-tax income. The Company recorded an income tax expense of $0.7m for the three months ended September 30, 2021. Income tax expense for the three months ended September 30, 2021 included the $11.7m benefit from the release of a valuation allowance and the $5.4 m tax benefit associated with the carryback of a U.S. net operating loss to previous tax years. Excluding these items, adjusted1 income tax expense for the three months ended September 30, 2021 was $17.8m, or 19.8 percent of pre-tax income.

Nine-month Results

The Company reported net sales for the first nine months of fiscal 2022 of $6.08bn and net income of $84.1m, or $1.27 per diluted share. This compares with net sales of $6.16 bn and net income of $403.2m, or $5.82 per diluted share, for the nine months ended September 30, 2021. The decline in net income for the first nine months of fiscal 2022 compared to the nine months ended September 30, 2021 was the result of higher material & logistics costs, lower sales volume, the absence of a carryback of a U.S. net operating loss to previous tax years, manufacturing inefficiencies associated with supply chain challenges, higher new product development spending and a charge of $18.1 m associated with foreign anti-hybrid tax legislation as a result of comments made by taxing authorities of the applicable jurisdiction, offset in part by improved pricing and lower incentive compensation costs.

Results for the first nine months of fiscal 2022 included the charge of $18.1m associated with foreign anti-hybrid tax legislation, the charge of $4.6m for the release of cumulative translation adjustment losses and the $2.1m impairment of an intangible asset. Results for the nine months ended September 30, 2021 included a $75.3m tax benefit associated with the carryback of a U.S. net operating loss to prior years and the $11.7m tax benefit associated with the release of a valuation allowance on deferred tax assets in Europe, offset in part by after-tax charges of $3.9m associated with restructuring actions in the Access Equipment segment and $0.2m associated with business acquisition costs in the Defense segment. Excluding these items, adjusted1 net income was $108.9m, or $1.64 per diluted share, for the first nine months of fiscal 2022 and $320.3m, or $4.62 per diluted share, for the nine months ended September 30, 2021.

Fiscal 2022 Expectations

Despite challenging supply chain conditions and ongoing inflationary pressures, the Company is largely maintaining its revenue and earnings per share expectations. The Company is reaffirming its expectation of revenue to be in the range of $8.3bn.

As a result of the cumulative translation adjustment losses and impairment of an intangible asset recorded in the third quarter of fiscal 2022, the Company is lowering its estimate for earnings per share for fiscal 2022 on a GAAP basis from approximately $3.25 to approximately $3.15. The Company is reaffirming its expectation of adjusted1 earnings per share to be in the range of $3.50.

Dividend Announcement

The Company’s Board of Directors today declared a quarterly cash dividend of $0.37 per share of Common Stock. The dividend will be payable on November 28, 2022 to shareholders of record as of November 14, 2022. (Source: BUSINESS WIRE)

27 Oct 22. OSI Systems Reports Fiscal 2023 First Quarter Financial Results.

Q1 Revenues of $268m
Q1 Earnings Per Diluted Share

o GAAP EPS of $0.65

o Adjusted EPS of $0.87

Record Q1 Ended Backlog of $1.3bn
Company Reiterates FY 2023 Guidance

o Q2-Q4 Year-Over-Year Revenue Growth of 7% – 11%

o Q2-Q4 Year-Over-Year Adjusted EPS Growth of 17% – 22%

OSI Systems, Inc. (the “Company” or “OSI Systems”) (NASDAQ: OSIS) today announced its financial results for the quarter ended September 30, 2022.

For the first quarter of fiscal 2023, the Company reported revenues of $268.1m, a 4% decrease compared to the $279.3 m reported for the first quarter of fiscal 2022. Net income for the first quarter of fiscal 2023 was $11.2m, or $0.65 per diluted share, compared to net income of $19.1m, or $1.04 per diluted share, for the first quarter of fiscal 2022. Non-GAAP net income for the first quarter of fiscal 2023 was $15.0m, or $0.87 per diluted share, compared to non-GAAP net income for the first quarter of fiscal 2022 of $21.2m, or $1.16 per diluted share.

Deepak Chopra, OSI Systems’ Chairman and Chief Executive Officer, stated “Our first quarter sales and earnings were generally consistent with expectations. Bookings remained robust, and the opportunity pipeline is substantial. While the overall economy continues to be impacted by global supply chain constraints, inflationary pressures, and rising interest rates, given our significant backlog and upcoming opportunities, we anticipate solid revenues and earnings growth for the balance of fiscal 2023.”

For the three months ended September 30, 2022, the Company’s book-to-bill ratio was 1.2. As of September 30, 2022, the Company’s backlog was $1.3bn, representing an increase of 4% from the Company’s backlog as of June 30, 2022. During the quarter ended September 30, 2022, operating cash flow was $17.2m compared to operating cash flow of negative $11.0m for the same quarter of the prior year. Capital expenditures were $3.2m and $3.6m for the three months ended September 30, 2022 and 2021, respectively.

Mr. Chopra commented, “The Security division’s bookings were strong in the first fiscal quarter of fiscal 2023, leading to an increase in the quarter-end backlog. Revenues for the first quarter were down 3% year-over-year, in part due to certain customer push-outs of deliveries to future quarters. As anticipated, based upon the mix of revenues, among other factors, the year-over-year first quarter operating margin declined. However, we expect improving operating margins for the balance of the fiscal year, and believe that, with our strong backlog, the Security division is well positioned for the remainder of the fiscal year.”

Mr. Chopra continued, “In the first fiscal quarter, our Optoelectronics and Manufacturing division again delivered solid financial results posting record Q1 revenue, significant year-over-year operating margin expansion, and solid bookings, leading to a record quarter-end backlog for the division. The division continues to perform well and benefit from our vertically-integrated global manufacturing footprint.”

Mr. Chopra concluded, “Our Healthcare division was impacted during the first fiscal quarter by general market conditions leading to lower year-over-year revenues and operating income. The division faced difficult prior year comparisons, where there was heightened demand for patient monitoring products during Q1 of fiscal 2022 from customers to manage the COVID pandemic. We continue to focus on new product development, principally in our patient monitoring portfolio.”

The Company utilized its credit facility to repurchase and retire its outstanding convertible notes, which matured on September 1, 2022.

Fiscal Year 2023 Outlook

The Company is reiterating its fiscal 2023 guidance of $1.240bn to $1.275bn in revenues and $6.02 to $6.25 in adjusted diluted earnings per share. Actual revenues and adjusted diluted earnings per share could vary from this guidance due to factors discussed under “Forward-Looking Statements” or other factors.

The Company’s fiscal 2023 diluted earnings per share guidance is provided on a non-GAAP basis only. The Company does not provide a reconciliation of guidance for adjusted diluted EPS to GAAP diluted EPS (the most directly comparable GAAP measure) on a forward-looking basis because the Company is unable to provide a meaningful or accurate compilation of reconciling items and certain information is not available. This is due to the inherent difficulty and complexity in accurately forecasting the timing and amounts of various items included in the calculation of GAAP diluted EPS but excluded in the calculation of adjusted diluted EPS, such as acquisition costs and other non-recurring items that have not yet occurred, are out of the Company’s control, or cannot otherwise reasonably be predicted. For the same reasons, the Company is unable to address the significance of unavailable information which may be material and therefore could result in GAAP diluted EPS, the most directly comparable GAAP financial measure, being materially different from projected adjusted diluted EPS. (Source: BUSINESS WIRE)

28 Oct 22. Patria Group’s Interim Report for 1 January – 30 September 2022.

Patria’s growth continued according to strategy.

The third quarter of 2022

Patria Group’s net sales for the three quarters was EUR 426.7m (EUR 359.6m in the comparison period).
Operating profit was EUR 32.8m (38.0).
Equity ratio was 41.1% (40.4%) and net gearing 69.6% (79.6%).
Patria grows and evolves determinedly according to its growth strategy. Patria’s net sales and profitability are at a planned level and the development of order stock is at a good level.
Supporting growth, Patria’s new operating model has been successfully in use since the beginning of the year. The development of customer-centricity, operational efficiency and new ways of working has continued during the third quarter.
Patria’s number of personnel has increased with nearly 200 people in the review period.
Patria’s success in 6×6 and 8×8 vehicles programmes has continued which supports the development of other business operations and Group’s internationalization.
In July, the EU decided to provide within European Defence Fund (EDF) nearly €100m in funding for a consortium led by Patria to develop future ground combat capabilities.
In August, Slovakia signed final commercial agreements on the delivery project for 76 Patria AMVxp 8×8 vehicles.
In early 2022, the Finnish Defence Forces signed an agreement with Patria to acquire Patria 6×6 vehicles as a pre-series related to the joint 6×6 vehicle programme between Latvia, Finland, Estonia and Patria. In June, Germany signed a Statement of Intent to join the programme and Sweden an R&D agreement for the research and product development phase for the programme.

Outlook for the rest of the year

Patria continues to strengthen its operational efficiency and seeks for profitable growth in line

with the new strategy. Patria’s reliable and cost-effective lifecycle support services and top-notch products have a key role also in the future in maintaining required performance of customer fleets in all conditions.Following Finland’s decision in December 2021 to acquire F-35 fighter jets, negotiations concerning industrial participation of the selected aircraft will continue to intensify during the whole of 2022.The joint programme of the Patria 6×6 vehicle is proceeding as planned. Serial production of Latvian vehicles is ongoing and pre-series deliveries for Finland have been made. The joint programme has raised interest and is open for other countries to join with a mutual consent of the participating countries.

The war in Ukraine has not yet had an immediate impact on Patria. It is difficult to evaluate the impact of long-term development of the geopolitical situation, general economic uncertainty, inflation and increasing costs for the rest of the year. At the same time Patria’s delivery capability is expected to stay at a good level. In the mid and long term, Patria and the defence industry in general will see an increase in demand as defence spends are increasing in the majority of European countries.

28 Oct 22. L3Harris Technologies posts 3% growth in Q3 organic revenue.

The company reported revenue of $4.25bn, compared to $4.23bn a year ago.

US-based technology company L3Harris Technologies has reported $4.25bn in revenue in the third quarter (Q3) of 2022, compared to $4.23bn in the same period a year ago.

The company saw a 3% increase in organic revenue owing to growth in all segments, primarily in its Integrated Mission Systems and Communication Systems segments.

In the three-month period that ended on 30 September 2022, the company’s net (loss) income was $301m, down from $479m reported last year.

Diluted earnings per share (EPS) loss was $1.56 in the third quarter of this year, compared to $2.39 recorded in the previous year’s quarter.

All business units of the defence contractor recorded growth in quarterly revenues.

Space and Airborne Systems’ revenue stood at $1.5bn, up 1% from the previous year. This was attributed to growth in responsive satellite programmes.

The Integrated Mission Systems segment posted quarterly revenue increase by 4%, from $1.64bn to $1.71bn.

The company’s Communication Systems recorded revenue of $1.06bn, a 4% jump from the $1.03bn posted a year ago.

L3Harris CEO and chair Christopher Kubasik said: “The combination of increased urgency among government customers and traction with our strategy led to a book-to-bill of nearly 1.2 times in the quarter, which reflects strength across all segments.

“Despite our progress, as well as rising demand, the current backdrop remains a challenge and has contributed to a reduction in our financial guidance for the year.

“Though challenges are ongoing, our team is focused on controlling the controllables such as key customer deliveries, our e3 cost savings programme, employee engagement, and capital allocation.”

L3Harris expects full-year organic revenue to be down 2.0% year-on-year.

Earlier this month, the company unveiled a new capability to allow warfighters to stay connected anywhere on the battlefield. (Source: army-technology.com)

27 Oct 22. Honeywell (NASDAQ: HON) announced results.

Operating Margin up 90 Basis Points to 19.5%; Segment Margin1 up 60 Basis Points to 21.8%, Exceeding High End of Guidance Range by 60 bps
Earnings Per Share of $2.28, Adjusted EPS1 of $2.25, Exceeding High End of Guidance Range by 5 Cents
Operating Cash Flow up 86% to $2.1bn; Free Cash Flow1 up 108% to $1.9 Bn
$1.2bn of Capital Deployed to Share Repurchases, Dividends, and Capital Expenditures
Company Raises Midpoint of Organic Sales Growth, Segment Margin,2 and Adjusted EPS Guidance2,3; Reaffirms Full-Year Free Cash Flow Guidance

Honeywell (NASDAQ: HON) today announced results for the third quarter, which met or exceeded the company’s guidance. The company also raised the low end of its full-year organic growth and adjusted EPS guidance2,3 ranges and raised its full-year segment margin guidance range.2

The company reported third quarter sales growth of 6% and organic sales growth1 of 9%, or 10% excluding the impact of the wind down of operations in Russia,4 with double-digit organic sales growth in Honeywell Building Technologies, Performance Materials and Technologies, and Aerospace. Operating margin expanded by 90 basis points to 19.5%, or 110 basis points excluding the year-over-year impact of Quantinuum. Segment margin1 expanded by 60 basis points to 21.8%, or 90 basis points excluding the year-over-year impact of Quantinuum,1 led by 250 basis points of segment margin expansion in Safety and Productivity Solutions. Earnings per share was $2.28, up 27% year over year. Adjusted earnings per share1 was $2.25, up 11% year over year and 5 cents above the high end of the company’s guidance range. Operating cash flow was $2.1bn, up 86% year over year, with an operating cash flow margin of 23.3%. Free cash flow1 was $1.9bn, up 108% year over year, with a free cash flow margin1 of 21.2%, driven by working capital as a result of improved receivables and inventory.

“Honeywell executed exceptionally well in the third quarter, meeting or exceeding guidance for all metrics,” said Darius Adamczyk, chairman and chief executive officer of Honeywell. “Despite ongoing challenges across supply chains, we grew sales by 6% on a reported basis and 9% organically,1 with strong double-digit growth in our advanced materials, commercial aerospace, and building products businesses. Our backlog remains near record levels, closing the third quarter at $29.1 bn,5 up 9% year over year, and providing us with confidence in our demand expectations against an increasingly uncertain macroeconomic backdrop. We continued to reap the benefits of our Honeywell Digital transformation investments made over the past few years and we leveraged these digital tools to drive agile commercial and operational actions, which enabled us to stay ahead of the inflation curve, expand margins, and beat the high end of our adjusted EPS guidance. We also executed on our capital deployment strategy, deploying $1.2bn in the quarter, including $0.4 bn of share repurchases, and raising our dividend for the 13th time over 12 consecutive years.”

Adamczyk continued, “The Honeywell playbook continues to deliver outstanding results as we successfully maneuver through a challenged operating environment. These operating principles, combined with our attractive end-market exposures and differentiated portfolio of solutions, will allow us to maintain resiliency and continue successfully navigating the current economic crosscurrents. The third quarter was a strong performance for Honeywell, and I remain confident that our best quarters lie ahead.”

As a result of the company’s third-quarter performance and management’s outlook for the remainder of the year, full-year sales are now expected to be in the range of $35.4bn to $35.7bn, up 6% to 7% organically, or up 8% to 9% excluding the one-point impact of COVID-driven mask sales declines and one-point impact of lost Russian sales. Segment margin expansion2 is now expected to be in the range of 60 to 80 basis points, including an approximate (30) basis point impact from investments in the Quantinuum business. Adjusted earnings per share is now expected to be in the range of $8.70 to $8.80. Operating cash flow is expected to be in the range of $5.2bn to $5.6bn and free cash flow1 is expected to be $4.7bn to $5.1bn. Third-Quarter Performance

Honeywell sales for the third quarter were up 6% year over year on a reported basis and 9% year over year on an organic basis.

Aerospace sales for the third quarter were up 10% year over year on an organic basis1 led by growth in commercial aviation. Commercial aftermarket demand remained strong as flight hours continued to recover, with both air transport aftermarket and business and general aviation aftermarket sales growing over 20% organically. Commercial original equipment sales increased 30% year over year in the third quarter, primarily driven by higher shipset deliveries to air transport customers. Increased commercial aviation sales were partially offset by lower defense volumes. Segment margin expanded 40 basis points to 27.5%, led by commercial excellence partially offset by cost inflation.

Honeywell Building Technologies sales for the third quarter were up 19% on an organic basis1 year over year including 23% organic sales growth in the building products portfolio. Building solutions also grew double digits organically in the quarter, led by increased project volumes. Segment margin expanded 60 basis points to 24.1% due to commercial excellence, partially offset by cost inflation.

Performance Materials and Technologies sales for the third quarter were up 14% on an organic basis1 year over year despite an approximate 3% headwind from Russia. Sales growth was led by advanced materials, which grew more than 30% organically due to continued pricing actions and improved volumes. Sales strength was also driven by refining catalyst shipments and thermal solutions, both of which were up double digits in the quarter. This growth was partially offset by lower equipment volumes in UOP and lost Russian sales.2 Orders increased double digits year over year, headlined by strength in fluorine products within advanced materials. Segment margin expanded 40 basis points to 22.6%, primarily due to commercial excellence, partially offset by cost inflation.

Safety and Productivity Solutions sales for the third quarter decreased 4% on an organic basis1 year over year. Strength in the advanced sensing and gas detection portions of our sensing and safety technologies business and growth in productivity solutions and services was offset by lower volumes in warehouse and workflow solutions and personal protective equipment. Segment margin reached the highest level since 4Q18, expanding 250 basis points year over year to 15.7%, primarily driven by commercial excellence and favorable business mix, partially offset by cost inflation.

In July, the safety and retail and advanced sensing technologies business units were aligned into a new business unit within the Safety and Productivity Solutions segment named sensing and safety technologies, which we will use for reporting purposes going forward. We recast historical periods to reflect this realignment. (Source: PR Newswire)

28 Oct 22. Saab Results January-September 2022: Ready to support increased defence capability needs.

Saab presents the results for January-September 2022.

Key highlights Q3 2022

Order intake amounted to SEK 7,772m (15,605) with growth in small and medium-sized orders.
Sales grew 9.5%, of which 6.9% organic, and amounted to SEK 8,751m (7,992), mainly driven by high delivery volumes in Dynamics in the quarter.
EBITDA increased and was SEK 1,115m (977). EBITDA margin was 12.7% (12.2) with improvements in several business areas.
Operating income increased 13.6% and amounted to SEK 568m (500), corresponding to an operating margin of 6.5% (6.3).
Net income for the period amounted to SEK 324m (324).
Operational cash flow improved and was SEK 559m (-1,238) in the quarter.

Statement by Micael Johansson, President and CEO, Saab: “Ready to support increased defence capability needs. We continued to see strong interest for Saab’s portfolio in the quarter. The increased defence spending in many countries, in combination with Sweden’s NATO application has created significant market opportunities for Saab. Whilst procurement processes take time before being translated into orders, we are preparing our operations for future demand and have taken initiatives to invest in increased capacity and to recruit the right competences. In the third quarter, we took the decision to set up a manufacturing facility for the Carl-Gustaf M4 shoulder-launched weapon system in India. The new facility will support production, as well as supply of components to users around the world. Investments to increase future capacity in our Ground Combat business in Sweden and our U.S. operations also continued. I am also glad to report that we have a net increase of more than 500 employees globally this year, despite tough competition for competence in the market.”

Order bookings in the quarter amounted to SEK 7,772m (15,605) and was driven by growth in small and medium-sized orders. The same period last year included bookings of two major orders. Our order bookings for the first nine months is now 6.1% ahead of last year and our backlog amounts to SEK 112 bn. Key orders in the third quarter came from Sweden for submarine upgrades and from the U.S. for Carl-Gustaf ammunition and the AT4 system. We also received the first low rate production order for trainer jet aft-fuselages from Boeing. This is an important step for the Aerospace business at our U.S. facility in West Lafayette, Indiana.

Sales growth was 9.5% in the third quarter, of which organic growth was 6.9%. All business areas contributed positively to the growth. Sales for the first nine months grew 3.4%, whereof organic growth was 1.3%. We maintain our sales growth outlook for the full year, for which we have guided an organic growth of around 5%.

Operating income increased 13.6% in the quarter and amounted to SEK 568 m (500) with an operating margin of 6.5% (6.3). Contribution from Dynamics was strong in the quarter and year to date. The operating income for the first nine months improved 8.2% and amounted to SEK 1,960m (1,812) with a margin of 7.0% (6.7).

“Our operational performance remains stable across the business, although inflation, supply of certain materials and transportation continue to be a challenge. We are working hard to mitigate these together with our partners and customers. We reconfirm our full year estimate of the operating income to improve at the upper end of our outlook range of 8-12%.”

Operational cash flow in the quarter amounted to SEK 559m (-1,238) and SEK 911m (1,754) for the first nine months. The cash flow is in line with our milestone plan for the year and we expect it to remain positive for the full year 2022, according to our guidance.

“Launching new innovative products is key for Saab. One recent example of this was the successful launch and testing of Saab’s mobile short-range air defence system MSHORAD, which was demonstrated to 15 countries during the quarter. The system is based on a combination of our Giraffe 1X radar and the next generation RBS 70 mobile firing unit, connected with Saab’s ground-based command and control solution. Now operational, the system will further strengthen Saab’s missile offering. An equally important focus area for Saab is to drive sustainable development, and we aim to do so through partnerships and collaboration. In the quarter, we became a minority shareholder in the Swedish electric aircraft company Heart Aerospace, alongside other key partners in the aviation industry. The investment supports our commitment to innovative technology and the transition to sustainable aviation. Our long-term strategic priorities are intact and we are preparing our company to capture the improved growth opportunities. I am confident that Saab will continue to create sustainable value for our shareholders and all stakeholders.”

27 Oct 22. Northrop Grumman Reports Third Quarter 2022 Financial Results.

Awards of $8.7bn, Book to Bill of 0.97, YTD Book to Bill of 1.14
Sales Increased 3 percent to $9.0bn
Diluted EPS of $5.89 including $0.18 unfavorable impact from marketable securities
Net cash provided by operating activities of $1.3bn
2022 Company-Level Guidance Unchanged for Sales, EPS, and Transaction-adjusted FCF1

Northrop Grumman Corporation (NYSE: NOC) reported third quarter 2022 sales increased 3 percent to $9.0bn, as compared with $8.7bn in the third quarter of 2021. Third quarter 2022 sales reflect strong demand and improving trends in labor availability, partially offset by supply chain delays. Third quarter 2022 net earnings totaled $915m, or $5.89 per diluted share, as compared with $1.1bn, or $6.63 per diluted share, in the third quarter of 2021. Third quarter 2022 net earnings reflect higher sales as well as a $28m, or $0.18 per diluted share, reduction for negative returns on marketable securities related to our non-qualified benefit plans and other non-operating assets. The company expects 2022 sales and diluted earnings per share near the low end of our guidance ranges of approximately $36.2 — $36.6 bn and $24.50 — $25.10, respectively. We continue to expect transaction-adjusted free cash flow1 of $1.5 — $1.8bn based on current tax law, which requires the amortization of current year research and development expenditures over five years. “Our solid operating performance in the third quarter reflects extensive demand for our capabilities, positive trends in labor availability, and strong program execution,” said Kathy Warden, chair, chief executive officer and president. “We remain focused on performing for our customers and are confident in our ability to continue to grow our business and deliver value to our shareholders.”

Transaction-adjusted Net Earnings and Transaction-adjusted EPS Year to date

2021 net earnings benefited from a gain on the sale of the company’s IT services business. Excluding the gain on sale of the business, associated federal and state income tax expenses, transaction costs, as well as the make-whole premium for early debt redemption from year to date 2021 net earnings, year to date 2022 transaction-adjusted net earnings1 decreased 11 percent and transaction-adjusted EPS1 decreased 8 percent. Net earnings during 2022 and the third quarter of 2021 were not impacted by the sale of the company’s IT services business and do not include any transaction-related adjustments.

Transaction-adjusted net earnings1 and transaction-adjusted EPS1 are measures the company uses to compare performance to prior periods and for EPS guidance.

Sales

Third quarter 2022 sales increased $251m, or 3 percent, primarily due to 18 percent growth at Space Systems, partially offset by lower sales at Aeronautics Systems and Defense Systems.

Third quarter 2022 sales reflect strong demand and improving trends in labor availability, partially offset by supply chain delays.

Operating Income and Margin Rate Third quarter 2022 operating income decreased $199m, or 19 percent, primarily due to a $116m reduction in the FAS/CAS operating adjustment and $55m in higher unallocated corporate expense due to a $60m benefit for insurance settlements recognized in the prior year. Third quarter 2022 operating margin rate declined to 9.4 percent primarily due to the lower FAS/CAS operating adjustment and higher unallocated corporate expense, as well as a lower segment operating margin rate. Segment Operating Income and Margin Rate Third quarter 2022 segment operating income decreased $28 m, or 3 percent due to a lower segment operating margin rate, partially offset by higher sales.

Third quarter 2022 segment operating margin rate decreased to 11.2 percent from 11.9 percent principally due to lower net EAC adjustments due, in part, to inflationary pressures. Federal and Foreign Income Taxes The third quarter 2022 ETR decreased to 16.1 percent from 16.6 percent in the prior year period principally due to higher benefits from foreign-derived intangible income. Cash Flows Third quarter 2022 net cash provided by operating activities increased $172m as compared with the same period in 2021 principally due to improved trade working capital, which includes the collection of customer payments that were delayed at the end of the second quarter. Third quarter 2022 transaction-adjusted free cash flow1 was comparable with the prior year period.

Awards and Backlog Third quarter and year to date 2022 net awards totaled $8.7bn and $30.2bn, respectively, and backlog totaled $79.6bn. Significant third quarter new awards include $2.8 bn for restricted programs (at Space Systems, Mission Systems and Aeronautics Systems), $1.3bn for Ground-based Midcourse Defense (GMD) and $0.8bn for SDA Tranche 1 Tracking Layer.

AERONAUTICS SYSTEMS

Sales

Third quarter 2022 sales decreased $188m, or 7 percent, due to lower volume in both Manned Aircraft and Autonomous Systems, including restricted programs, E-2, and the Joint Surveillance and Target Attack Radar System (JSTARS) program as it nears completion. Operating Income Third quarter 2022 operating income decreased $3m, or 1 percent, due to lower sales, partially offset by a higher operating margin rate. Operating margin rate increased to 10.3 percent from 9.7 percent primarily due to higher net favorable EAC adjustments in Manned Aircraft. Prior year results included a $42m unfavorable EAC adjustment on F-35. DEFENSE SYSTEMS

Sales

Third quarter 2022 sales decreased $64m, or 5 percent, primarily due to lower scope on an international training program, the completion of a Joint Services support program and wind down of the UKAWACS and JSTARS programs, partially offset by higher volume on the NATO Alliance Ground Surveillance In-Service Support (NATO AGS ISS) and advanced fuze programs.

Operating Income Third quarter 2022 operating income decreased $17m, or 10 percent, primarily due to lower sales and a lower operating margin rate. Operating margin rate decreased to 11.7 percent from 12.4 percent primarily due to lower net favorable EAC adjustments at Battle Management and Missile Systems, partially offset by improved performance in the Mission Readiness business area.

MISSION SYSTEMS

Sales Third quarter 2022 sales increased $20m, or 1 percent, primarily due to higher restricted sales in the Networked Information Solutions business area as well as higher Surface Electronic Warfare Improvement Program (SEWIP) volume. These increases were partially offset by lower volume on Navigation, Targeting and Survivability programs and the Joint Counter RadioControlled Improvised Explosive Device Electronic Warfare (JCREW) program. Operating Income Third quarter 2022 operating income decreased $4m, or 1 percent, due to a lower operating margin rate, partially offset by higher sales. Operating margin rate decreased to 15.0 percent from 15.3 percent principally due to lower net EAC adjustments, largely in the Maritime/ Land Systems & Sensors and Navigation, Targeting & Survivability business areas, partially offset by improved performance on restricted programs at Networked Information Solutions.

SPACE SYSTEMS

Sales

Third quarter 2022 sales increased $482m, or 18 percent, due to higher sales in both business areas. Launch & Strategic Missiles sales increased primarily due to ramp-up on development programs, including a $115m increase on the Ground Based Strategic Deterrent (GBSD) program and a $103m increase on the Next Generation Interceptor (NGI) program, as well as higher volume on the GEM63 program in support of Amazon’s Project Kuiper. Sales in the Space business area were driven by a $129m increase due to ramp-up on the Space Development Agency (SDA) Tranche 1 Transport Layer and Tranche 1 Tracking Layer programs awarded in 2022, as well as higher volume on restricted programs and the Commercial Resupply Services (CRS) program. Operating Income Third quarter 2022 operating income was comparable to the prior year period and reflects higher sales and a lower operating margin rate. Operating margin rate decreased to 9.2 percent from 10.7 percent primarily due to lower net EAC adjustments and higher volume on early-stage development programs, such as NGI and GBSD.

26 Oct 22. General Dynamics beats on profit, helped by business jets and marine. She said Gulfstream expects deliveries of 40 or 41 aircraft during the last three months of 2022, having delivered 35 business jets in the past quarter, compared with 31 a year earlier.

Improving margins and a swelling backlog at Gulfstream helped the Virginia-based defense contractor to more than offset the effects of higher costs, supply chain constraints and labor shortages, which have weighed on manufacturing.

Novakovic acknowledged that “supply chain remains a potential challenge going forward,” but did not see labor shortages as a constraint on revenue growth. In the third quarter the company’s Mission Systems unit faced pressure from supply chain disruptions, inflation and labor disruptions.

The company also disclosed an order for its munitions business related to the war in Ukraine.

Net earnings in the quarter ended Oct. 2 were $902m or $3.26 per share, compared with $860m or $3.07 per share a year earlier.

Analysts on average had expected net earnings of $3.15 per share, based on Refinitiv data. (Source: Reuters)

26 Oct 22. General Dynamics Reports Third-Quarter 2022 Financial Results.

Revenue of $10bn, up 4.3% year over year
Net earnings of $902m, up 4.9% year over year
Diluted EPS of $3.26, up 6.2% year over year

General Dynamics (NYSE: GD) today reported third-quarter 2022 net earnings of $902m on revenue of $10bn. Diluted earnings per share (EPS) were $3.26, a 6.2% increase from the year-ago quarter.

“We saw continued strong demand in the quarter, particularly in Aerospace, Combat Systems and Marine Systems,” said Phebe N. Novakovic, chairman and chief executive officer. “Our businesses delivered solid operating performance and cash flow even as they managed through the challenges of inflation and supply chain constraints.”

Cash

Net cash provided by operating activities in the quarter totaled $1.3 bn, or 142% of net earnings. After $255m in capital expenditures, the company generated free cash flow of $1bn, or 114% of net earnings.

Backlog

Orders remained strong across the company with a consolidated book-to-bill ratio, defined as orders divided by revenue, of 1.1-to-1 for the quarter, with particular strength in the Aerospace and Combat Systems segments. In addition to company-wide backlog of $88.8 bn, estimated potential contract value, representing management’s estimate of additional value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $37bn. Total estimated contract value, the sum of all backlog components, was $125.8bn at the end of the quarter.

Aerospace backlog grew in the quarter to $19.1bn, up 1.4% sequentially and 29.7% from the year-ago quarter.

Significant awards in the quarter for the three defense segments included $1.4bn from the U.S. Navy for construction of an additional Expeditionary Sea Base auxiliary support ship and two additional John Lewis-class (T-AO-205) fleet replenishment oilers; a contract worth up to $1.1bn to produce Abrams main battle tanks in the system enhancement package version 3 (SEPv3) configuration for Poland; an IDIQ contract with a maximum potential value of $910m to provide information technology infrastructure and modernization support services for the U.S. Air Forces in Europe under the Europe-Wide Information Technology and Enterprise Network program; $700m from the Navy for maintenance and modernization work on the USS Hartford, a Los Angeles-class submarine; $370 m for various munitions and ordnance; a Navy contract with a maximum potential value of $275m to support development, production and installation of fire control systems for the Columbia- and Dreadnought-classes of ballistic missile submarines; and $315m for several key classified contracts. (Source: PR Newswire)

26 Oct 22. MILDEF Interim report for January – September 2022

STRONG ORDER INTAKE AND INCREASED GROSS MARGIN

Financial development Q3 2022

Net sales increased by 20% to SEK 163.7m (136.6).
Gross margin amounted to 51% (45).
Adjusted EBITDA amounted to SEK 19.9m (14.9), equivalent to an adjusted operating margin of 12.2% (10.9).
Operating profit (EBIT) amounted to SEK 12.5m (2.3) including non-recurring items of SEK 0.0 m (-4.4).
Order intake increased by 158% to SEK 307.2m (119.2).
Operating cash flow amounted to SEK -40.1m (-40.4).

Financial development January – September 2022

Net sales increased by 57% to SEK 423.5m (268.9).
Gross margin amounted to 49% (44).
Adjusted EBITDA amounted to SEK 16.6m (-2.3), equivalent to an adjusted operating margin of 3.9% (-0.9).
Operating profit (EBIT) amounted to SEK -2.3m (-31.1) including non-recurring items of SEK 0.0m (-11.5).
Order intake increased by 75% to SEK 667.5m (380.4).
Order backlog as of September 30, 2022 was SEK 1,218m (712), representing an increase of 71%.
Operating cash flow amounted to SEK -45.7m (-58.2).

Summary of significant events in the third quarter, July – September 2022

MilDef signs a strategic framework agreement with the armed forces of a European NATO country. The agreement has an estimated value of around SEK 2.8bn over 20 years.
Due to development in the defense market, in combination with MilDef’s positioning and prospects, the Board has raised the Company’s growth target from at least 15% a year to at least 25% per year, over time.
MilDef acquires all of the shares in Handheld Group AB, a company specializing in rugged computers. The acquisition increases the pace of MilDef’s strategy for profitable growth, adds a complementary product segment and expands the customer base.
In order to facilitate future expansion through strategic acquisitions, MilDef carried out a directed new share issue worth SEK 150m.

Statement by Björn Karlsson, CEO MilDef Group

New alliances and profitable growth

In the third quarter MilDef executed several important transactions that will have a positive impact on the Company for years into the future. The transaction with the highest financial impact is a 20-year framework agreement with the defense forces of an unnamed NATO nation for a value of SEK 2.8bn. To this we add the acquisition of Handheld Group AB, which is MilDef’s single largest acquisition up to now. It will result in an expansion of both technology and market segments, and also strengthen MilDef’s geographical imprint. In the third quarter we also had the first call-off orders within the framework agreement with the Swedish Defence Materiel Administration (FMV), which MilDef signed in May 2022. This is a framework agreement with an estimated value of SEK 870m over a seven-year period.

Alliances make us stronger

The theme for MilDef throughout the third quarter was becoming stronger through important alliances – with actors in the national and international defense industry and with government agencies and armed forces.

That we managed to improve our gross margin despite a component market that is still problematic was particularly gratifying. This, combined with continued growth, resulted in improved profitability compared with the same period the previous year.

We continue to add value through acquisitions

In line with our objective of implementing at least one acquisition a year, in September we completed our largest transaction so far in the Company’s history. Handheld Group AB is an international group of companies that develops and produces tactical IT and has customers in areas that MilDef defines as crucial for society. MilDef’s ever stronger connection to the total defense concept is a strategy we have previously communicated. There is good potential for commercial synergies in the defense segment, which is where MilDef’s biggest strengths lie. We welcome Handheld Group and its employees into the MilDef family and look forward to continuing to grow together.

Order backlog at new record levels

The third quarter of 2022 saw strong order intake of SEK +300m, an increase of a full 158% compared with the same period the previous year. At the end of the period the order backlog was higher than ever before at SEK 1.2bn, which is 71% higher than at the end of the same period in 2021.

It is worth noting that in the third quarter of 2022 MilDef was still seeing some limited effects of the increased defense appropriations. Our assessment is therefore that the increase in the order intake for the quarter would have happened in full or in part even without the announced but as yet not realized increase in defense-related purchases of products and services.

Successes in the big defense markets

In both the USA and the UK MilDef’s local subsidiaries are making strong progress and enjoying increased order intake. After several tough years marked by Brexit and the pandemic, we have noted a positive bounce back in these markets where MilDef’s offering is a good fit for the countries’ significant modernization and digitalization needs. In the US market the acquisition of Handheld is a particularly attractive one as we now have doubled the size of our organization, affording us good opportunities to strengthen our offering for a broader group of customers.

Important alliances continue to benefit MilDef

I have previously stressed the value of NATO membership for the Swedish defense industry in terms of export capacity. Although Sweden’s and Finland’s membership is not yet confirmed, we have seen an increased interest for MilDef’s portfolio during the period. Our success with our OneCIS software, which enables NATO-compatible efficiency improvement and rollout of IT systems in tactical environments, stands out. Exporting to new countries has commenced and is progressing faster than we previously thought it would, likely as a consequence of major investments within NATO. In the context of cooperation in the Nordics, MilDef’s position has also strengthened thanks to the relationships we have in the Nordic markets. Our decision to set up a subsidiary in Finland has, for example, proven to be on the mark. Increased cooperation is in line with the strategy that MilDef is advocating regarding supply reliability, i.e. coordination of logistics chains in nearby geographies.

What will happen in the fourth quarter?

We will continue to gradually improve our position as a strategic supplier of tactical IT within NATO and the EU. MilDef is expanding in total defense and functions critical for society, and we are accelerating the pace of our Nordic defense industry strategy.

We look forward to an intense final quarter of 2022 in which our capabilities will be tested to the limits. With our sights set on the future and because we are able to give our customers a technical advantage, MilDef will continue to experience accelerated growth; growth that so far this year is exceeding our upgraded financial target of at least 25% a year, over time.

I would in particular like to thank our professional, talented and loyal employees who are impressive in their ability to perform and maintain high quality, even when market conditions are complicated. They do so in an uncertain world and as proud employees of a defense company that is growing fast, both in size and relevance.

We now conclude the third quarter and throw ourselves hungrily and enthusiastically at the fourth. Thank you for coming along on our journey. Björn Karlsson,CEO MilDef Group

26 Oct 22. VSE Corporation Announces Third Quarter 2022 Results. VSE Corporation (NASDAQ: VSEC, “VSE”, or the “Company”), a leading provider of aftermarket distribution and maintenance, repair and overhaul (“MRO”) services for land, sea and air transportation assets for government and commercial markets, today announced results for the third quarter 2022.

THIRD QUARTER 2022 RESULTS

(As compared to the Third Quarter 2021)

Total Revenues of $242.5m increased 21%
GAAP Net Income of $9.4m decreased 4%
GAAP EPS (Diluted) of $0.73 decreased 3%
Adjusted EBITDA of $24.0m increased 12%
Adjusted Net Income of $9.8m remained flat
Adjusted EPS (Diluted) of $0.76 remained flat

MANAGEMENT COMMENTARY

“VSE delivered a strong quarter with growth in revenue, profitability and free cash flow; as our teams continue to successfully execute our long-term business transformation strategy,” stated John Cuomo, President and CEO of VSE Corporation. “All three business segments reported year-over-year revenue growth, with the Aviation and Fleet segments recording their highest year-to-date revenue in company history,” continued Cuomo.

“Our Aviation segment reported revenue increases of 40% and an adjusted EBITDA increase of 86% or 326 basis points in the third quarter. Strong margins drove the quarter, along with revenue increases supported by growth in both MRO and distribution across all customer market segments. In addition to a strong quarter of financial results and program execution, we announced significant new business that expands our geographic presence and leverage our proven distribution and product line management capabilities. These include four new exclusive distribution agreements valued at approximately $350m,” continued Cuomo.

“In the Fleet segment, commercial revenue increased by 23% on a year-over-year basis, representing approximately 40% of total Fleet segment revenue for the third consecutive quarter. To meet growing commercial demand and drive our revenue diversification strategy, we announced a new distribution facility outside of Memphis, Tennessee which will be dedicated to supporting commercial and e-commerce fulfillment customers,” continued Cuomo.

“Through the first nine months of 2022, we’ve won significant new business, accelerated our long-term business transformation strategy, and generated strong year-over-year organic growth in revenue, net income, and EBITDA. I’m proud of the VSE team, the strong customer and supplier focused implementation of new programs, and the many recent new business awards,” concluded Cuomo.

“Disciplined balance sheet management remains a key area of focus for our team,” stated Stephen Griffin, CFO of VSE Corporation. “VSE generated strong free cash flow of $11.3m in the third quarter, in line with our previously communicated expectations. In October, we amended the existing loan agreement with our commercial banking syndicate and extended the term to 2025. This amendment supports the flexibility to grow revenue through organic and inorganic investments, including the recent new business announcements. We expect strong cash flow to continue following these new investments, which will further our goal of driving sustainable, long-term revenue.”

STRATEGIC UPDATE

During the third quarter, VSE continued to effectively execute its business transformation roadmap, with a focus on developing a leading aftermarket parts distribution and MRO services platform that addresses underserved, high-growth market segments. This value creation strategy is driven by a focus on new business and sustainable recurring revenue channels, growth in adjusted EBITDA, and optimization of legacy programs.

New Business and Long-Term, Sustainable Revenue Channels:

In October 2022, the Aviation segment announced an expansion of the existing Pratt & Whitney Canada distribution agreement to now include the Asia Pacific region. Under the terms of this new expanded agreement, VSE Aviation will provide engine spare parts and engine accessory exchange support to Business & General Aviation (B&GA) engine operators, customers, and maintenance providers throughout the Asia Pacific region. This 15-year agreement expands the Company’s international reach and builds upon the success of recent program execution excellence.
During the quarter, the Aviation segment secured a new 2-year agreement to distribute over 200,000 spare parts supporting Embraer business jets, including Phenom, Praetor, Legacy, and Lineage airframes. This new agreement builds on the VSE brand of supporting airframe OEMs with aftermarket support for both in-production and late-in-life stages in the B&GA market.
The Fleet segment revenue diversification strategy continued to progress in the quarter with commercial revenue growth of 23% year-over-year. Year-to-date commercial revenue represented 39% of total segment revenue.
To support continued e-commerce and e-commerce fulfillment growth, the Fleet segment announced plans to open a new distribution warehouse and e-commerce fulfillment center of excellence in the greater Memphis, Tennessee area. This new, state-of-the-art, 425,000 square foot facility will double the company’s existing warehouse footprint. The facility is scheduled to begin servicing customers in the first quarter of 2023, with on-hand stock of more than 175,000 SKUs once fully operational.
The Federal & Defense segment secured $5 m in new bookings with the new VSE Distribution and Logistics capability and delivered a book to bill of 2.6x in the third quarter 2022. This new capability and revenue opportunity remains a growth channel for the segment.

Growing Adjusted EBITDA:

Aviation segment adjusted EBITDA grew to $13.6m in the third quarter, an increase of 86% versus the prior-year period, with segment EBITDA margin expansion of +326 bps year-over-year. The successful implementation of recently awarded distribution programs and increased MRO activity drove profitability improvements.
Fleet segment adjusted EBITDA grew to $8.7m, up 13% year-over-year. Steady contributions from USPS revenue combined with strong commercial growth contributed to adjusted EBITDA growth. Growing total segment adjusted EBITDA remains a critical component of Fleet segment strategy.

Optimizing Legacy Programs:

The Aviation segment secured multiple multi-year contract renewals supporting sustained revenue while expanding VSE’s scope and improving cross-selling opportunities. In October 2022, VSE Aviation entered into two exclusive distribution agreements with an established OEM partner to distribute inertial reference systems globally and fuselage mounted antenna (FMA) systems in Europe, Middle East, Africa and India (EMEAI). The expanded agreements will generate revenue opportunities as both new and existing business jet customers leverage the full breadth of the Company’s combined distribution and repair capabilities.
Fleet segment USPS revenue grew to $39.1m, up 7% in the third quarter versus the prior-year period. For the past 33 years, the Fleet segment has been, and continues to be, an essential part of USPS maintenance operations in support of its complex supply chain, servicing all vehicle types in the 230,000+ unit USPS fleet.
Federal & Defense segment revenue increased in the quarter supported by the Naval Sea Systems Command (NAVSEA) program, which increased 82% year-over-year in the third quarter, primarily resulting from Foreign Military Sales (FMS) support. Activity on our FMS Program increased over the past year, driven by work to transfer a naval frigate to Bahrain. Additionally, in August 2022, the Federal & Defense segment was awarded an $86m ceiling addition to the existing NAVSEA bridge contract in support of FMS requirements for the Egyptian Navy, supporting follow on technical services through 2024.

SEGMENT RESULTS

Aviation segment revenue increased 40% year-over-year to a record $102.6 m in the third quarter 2022. The year-over-year revenue improvement was attributable to share gains within the B&GA market and continued commercial aftermarket recovery, aligned with global revenue passenger kilometers. Aviation distribution and repair revenue increased 35% and 55%, respectively, in the third quarter versus the prior-year period. The Aviation segment reported operating income of $10.0m in the third quarter, compared to $3.7 m in the same period of 2021. Segment adjusted EBITDA increased by 86% in the third quarter to $13.6m, versus $7.3m in the prior-year period. Adjusted EBITDA margins were 13.2%, an increase of 326 basis points versus the prior-year period, driven by execution of new program awards and continued end-market recovery.

Fleet segment revenue increased 7% year-over-year to $64.8m in the third quarter 2022. Revenues from commercial customers increased 23% on a year-over-year basis, driven by growth in commercial fleet demand and e-commerce fulfillment sales. Commercial revenue represented more than 39% of total Fleet segment revenue in the period for the third consecutive quarter. Segment adjusted EBITDA increased 13% year-over-year to $8.7m, while adjusted EBITDA margin was 13.5%, an increase of 64 basis points versus the prior-year period.

Federal & Defense segment revenue increased 12% year-over-year to $75.1m in the third quarter 2022, driven by growth in the Foreign Military Sales (FMS) program with the U.S. Navy along with a steady increase in Defense Logistics Agency (DLA) distribution services. The Federal & Defense segment reported operating income of $1.9m in the third quarter 2022. Segment adjusted EBITDA declined 57% year-over-year to $2.8m in the period, given a higher mix of cost-plus contracts. Funded backlog increased 8% year-to-date to $199m, while bookings increased 7% on a year-to-date basis.

FINANCIAL RESOURCES AND LIQUIDITY

As of September 30, 2022, the Company had $99m in cash and unused commitment availability under its $350m revolving credit facility maturing in 2024. As of September 30, 2022, VSE had total net debt outstanding of $298m and $86.9m of trailing-twelve months adjusted EBITDA.

In October 2022, the Company entered into an amendment to its loan agreement which, among other things, extended the maturity dates with respect to the revolving credit facility and term loan facility to October 2025, transitioned its index to Secured Overnight Financing Rate (SOFR) term rates, and lowered the applicable base margins with modified Total Funded Debt to EBITDA Ratio requirements. (Source: BUSINESS WIRE)

26 Oct 22. CACI Reports Results for Its Fiscal 2023 First Quarter and Reaffirms Fiscal Year Guidance.

Revenues of $1.6bn, 8% YoY growth

Net income of $89.1m and Diluted EPS of $3.76

Adjusted net income of $103.3m and Adjusted diluted EPS of $4.36

CACI International Inc (NYSE: CACI), a leading provider of expertise and technology to government enterprise and mission customers, announced results today for its fiscal first quarter ended September 30, 2022.

John Mengucci, CACI President and Chief Executive Officer, said, “Our first quarter results are a great start to fiscal year 2023. We delivered strong revenue growth, profitability, and cash flow. We continue to successfully execute our strategy and invest ahead of customer need, demonstrated by our strong awards, large and growing backlog, and healthy pipeline of opportunities. We remain confident in our ability to deliver long-term growth, margin expansion, strong cash flow, and shareholder value.”

First Quarter Results

First Quarter Contract Awards

Contract awards in the first quarter totaled $3.2bn, with more than 80 percent for new business to CACI. Awards exclude ceiling values of multi-award, indefinite delivery, indefinite quantity (IDIQ) contracts. Some notable awards during the quarter were:

CACI was awarded Wave 1 of the Enterprise IT as a Service (EITaaS) blanket purchase agreement by the U.S. Air Force valued at $5.7bn over a 10-year period of performance. CACI recognized approximately $2bn in first quarter awards and backlog. EITaaS Wave 1 will shift the Air Force from an in-house, base-centric, capabilities-based IT delivery model to an enterprise service delivery model to deliver secure, high-quality, cost-effective services that enable mission success and improve the end-user experience.
CACI was awarded a $174m contract to provide the U.S. Navy Military Sealift Command (MSC) with mission expertise and innovative solutions for enhancing naval ship machinery, systems, equipment, and structural performance while reducing costs.
CACI was awarded a sole source contract with the U.S. Navy potentially worth up to $100m to support the Navy’s intelligence missions.
CACI was awarded a $54.6m contract to support U.S. Army Futures Command (AFC) to provide mission expertise to the Assured Positioning, Navigation, Timing, and Space (APNT/Space) Cross Functional Team (CFT) for the U.S. Army Futures Command (AFC) at the Redstone Arsenal in Huntsville, Alabama. CACI will provide expertise to identify cost-effective opportunities to assist APNT/Space CFT in fulfilling its mission of identifying and performing transformational research and development to further Army modernization priorities and national security needs. This new work also represents strategic growth in the expanding Huntsville region.

Total backlog as of September 30, 2022 was $24.9bn compared with $23.9bn a year ago, an increase of 4 percent. Funded backlog as of September 30, 2022 was $3.7bn compared with $3.5bn a year ago, an increase of 6 percent.

Additional Highlights

CACI announced that Executive Vice President (EVP) Tom Mutryn will retire as the company’s Chief Financial Officer (CFO) and Treasurer after more than 16 years of service. Effective November 1, 2022, Jeff MacLauchlan will assume the role of EVP, CFO, and Treasurer of CACI as a named executive officer. Mutryn will continue in his role as an EVP to assist with the transition until his retirement date on January 9, 2023.
CACI was selected by the Department of Defense to receive a prestigious Nunn-Perry Award for excellence in the DoD Mentor Protégé Program. This honor recognized CACI’s collaboration with its small business partner, CDIT, a small, disadvantaged business located in Louisiana that provides full-scale information technology and management services with a focus on software development competency.
CACI has partnered with the Alabama School of Cyber Engineering and Technology (ASCTE) Foundation in support of a residential magnet high school in Huntsville dedicated to enabling and advancing education in cyber technology and engineering to students across the state. Working with the ASCTE Foundation, CACI furthers its commitment to developing a robust talent pipeline of skilled scientists and engineers by preparing the nation’s next generation of innovators for careers in national security. CACI will provide internship and mentorship opportunities, curriculum development, guest instructors, and career coaching to all students. (Source: BUSINESS WIRE)

26 Oct 22. Amphenol Reports Record Third Quarter 2022 Results and Announces Dividend Increase.

Third Quarter 2022 Highlights:

Record sales of $3.295bn, up 17% in U.S. dollars and 18% organically compared to the third quarter of 2021
Record GAAP and Adjusted Diluted EPS of $0.80, up 19% and 23% compared to prior year
GAAP and Adjusted Operating Margin of 20.7% and 21.0%
Record Operating and Free Cash Flow of $576m and $457m
Announces acquisition of Integrated Cable Assembly Holdings, Inc. (ICA)
Increases quarterly dividend by 5% to $0.21 per share

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

“We are pleased to have closed the third quarter of 2022 with record sales and Adjusted Diluted EPS, both of which exceeded the high end of our guidance,” said Amphenol President and Chief Executive Officer, R. Adam Norwitt. “Sales increased from prior year by a strong 17%, supported by robust growth across virtually all our end markets, as well as contributions from the Company’s acquisition program which were partially offset by the impact of the strengthening U.S. dollar. Despite the many challenges in the world economy, we again realized strong profitability, with Adjusted Operating Margin reaching 21.0% and Adjusted Diluted EPS growing by an impressive 23% from prior year. We are very proud of the Company’s outstanding performance in this challenging and dynamic quarter.”

“During the third quarter, Amphenol continued to deploy its financial strength in a variety of ways to increase shareholder value. To that end, the Company purchased 2.4m shares of its common stock for $170 m and paid dividends of $119m, resulting in total capital returned to shareholders of $289m.”

“We remain focused on expanding our growth opportunities through a deep commitment to developing enabling technologies for customers across our served markets, an ongoing strategy of market and geographic diversification and an active and successful acquisition program. To that end, we are excited to have closed on the acquisition of Integrated Cable Assembly Holdings, Inc. (ICA) in September. With locations across North America and with annual sales of approximately $90 m, ICA manufactures a broad array of cable assemblies for a diversified range of applications, particularly in the industrial market. This acquisition further expands our offering of high-technology, value-added interconnect products in the diversified industrial market, while adding another talented management team to the Amphenol family.”

Increase in Quarterly Dividend

On October 25, 2022, the Company’s Board of Directors approved a 5% increase in the Company’s quarterly dividend, from $0.20 per share to $0.21 per share. The new dividend amount will be paid on January 11, 2023 to shareholders of record as of December 20, 2022.

Fourth Quarter and Full Year 2022 Outlook

The current economic environment remains uncertain and is increasingly dynamic. Assuming conditions do not meaningfully worsen and assuming constant exchange rates, for the fourth quarter of 2022, Amphenol expects sales to be in the range of $3.090bn to $3.150bn. This represents 2% to 4% growth over the fourth quarter of 2021 and includes a 5 percentage point negative currency impact. Adjusted Diluted EPS is expected to be in the range of $0.73 to $0.75, representing 4% to 7% growth over the fourth quarter of 2021. For the full year 2022, we expect sales to be in the range of $12.474bn to $12.534bn. This represents 15% growth over 2021 and includes a 3 percentage point negative currency impact. Adjusted Diluted EPS is expected to be in the range of $2.95 to $2.97, representing 19% to 20% growth over 2021.

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

26 Oct 22. Teledyne to Acquire ETM-Electromatic.

Teledyne Technologies Incorporated (NYSE:TDY) (“Teledyne”) announced today that a wholly-owned subsidiary has entered into an agreement to acquire ETM-Electromatic, Inc. (“ETM”). ETM, headquartered in Newark, California, designs and manufactures high-power microwave and high-energy X-ray subsystems for cancer radiotherapy, defense and X-ray security applications. Teledyne will also acquire ETM’s purpose-built manufacturing facility from an affiliate of ETM and its owners. Terms of the transactions were not disclosed.

Founded in 1973, ETM possesses a long pedigree and scarce combination of high-voltage, microwave combining, thermal engineering and X-ray system integration capabilities. For decades, ETM has provided high-power amplifier subsystems for radar, electronic countermeasures and satellite communications. More recently, ETM has developed subsystems and complete high-energy X-ray generation systems for cancer radiotherapy and security screening.

“ETM is uniquely complementary to our healthcare imaging and defense electronics businesses,” said Robert Mehrabian, Chairman, President and Chief Executive Officer. “For many years, Teledyne MEC and Teledyne e2v have supplied critical vacuum electron device components to ETM. The combination with ETM will now accelerate Teledyne’s ability to provide greater content and subsystem-level solutions to cancer radiotherapy, defense and security customers. In addition, ETM strengthens our capabilities in microwave combining technologies and high-power gallium nitride (GaN) based solid state power amplifiers.” (Source: BUSINESS WIRE)

26 Oct 22. Oceaneering Reports Third Quarter 2022 Results. Oceaneering International, Inc. (“Oceaneering”) (NYSE:OII) today reported net income of $18.3m, or $0.18 per share, on revenue of $560m for the three months ended September 30, 2022. Adjusted net income was $23.7m, or $0.23 per share, reflecting the impact of $1.1m of pre-tax adjustments associated with foreign exchange losses recognized during the quarter and $4.4m of discrete tax adjustments, primarily due to changes in valuation allowances and uncertain tax positions.

During the prior quarter ended June 30, 2022, Oceaneering reported net income of $3.7m, or $0.04 per share, on revenue of $524m. Adjusted net income was $7.4m, or $0.07 per share, reflecting the impact of $0.9m of pre-tax adjustments associated with foreign exchange gains recognized during the quarter and $4.5m of discrete tax adjustments, primarily due to changes in valuation allowances.

Adjusted operating income (loss), operating margins, net income (loss) and earnings (loss) per share, EBITDA and adjusted EBITDA (as well as EBITDA and adjusted EBITDA margins), and free cash flow are non-GAAP measures that exclude the impacts of certain identified items. Reconciliations to the corresponding GAAP measures are shown in the tables Adjusted Net Income (Loss) and Diluted Earnings (Loss) per Share (EPS), EBITDA and Adjusted EBITDA and Margins, Free Cash Flow, 2022 and 2023 Adjusted EBITDA and Free Cash Flow Estimates, Adjusted Operating Income (Loss) and Margins by Segment, and EBITDA and Adjusted EBITDA and Margins by Segment. These tables are included below under the caption Reconciliations of Non-GAAP to GAAP Financial Information.

For the third quarter of 2022:

Consolidated Adjusted EBITDA was $77.6m;
Consolidated Operating Income was $46.9m;
Cash flow provided by operating activities was $85.9m and free cash flow was $66.6 m, with an ending cash position of $428m; and
Consolidated order intake was $700m.

As of September 30, 2022:

Remotely Operated Vehicles (ROV) fleet count was 250, Q3 utilization was 67%, and Q3 average revenue per day on hire was $8,468; and
Manufactured Products backlog was $365m.

Initial guidance for 2023:

Consolidated EBITDA is expected in the range of $260m to $310m; and
Free cash flow generation is expected to exceed $100m.

Roderick A. Larson, President and Chief Executive Officer of Oceaneering, stated, “Our third quarter results were driven by improved offshore activity and pricing, particularly in the Gulf of Mexico (GoM), which ticked up further during the quarter. We produced adjusted consolidated EBITDA of $77.6 m, which exceeded our guidance and consensus estimates. Offshore activity drove significant operating improvements in our energy businesses, which were led by our Subsea Robotics (SSR) and Offshore Projects Group (OPG) segments. In addition, increased manufacturing throughput led to improved operating margins in our Manufactured Products segment. We also saw a meaningful recovery in our government-focused businesses after experiencing the effects of negative timing during the second quarter of 2022. For the full year of 2022, we expect our adjusted EBITDA within the narrowed range of $215m to $240m and continue to expect positive free cash flow in the range of $25m to $75m.

“The offshore recovery is clearly underway, and with increasing emphasis on both energy security and development of the cleanest, safest and most reliable energy sources, I expect positive market fundamentals to support our energy-focused businesses for years to come. In addition, with increasing competition for, and scarcity of, available labor, our mobile and subsea robotics businesses are experiencing heightened levels of interest as automation lowers on-site personnel requirements and enables remote supervisory control.

Segment Results:

“Sequentially, SSR revenue and operating income both increased as expected, with higher activity levels for ROV, survey and tooling services. SSR EBITDA margin of 31% improved over the second quarter of 2022 as new contract pricing and utilization efficiencies are increasingly being reflected in our results. As disclosed in our recent press release, we received strong SSR order intake of $300m during the third quarter of 2022.

“Sequentially, third quarter 2022 ROV days on hire were 5% higher, with drill support days higher and vessel-based services days essentially flat. Our fleet use during the quarter was 60% in drill support and 40% in vessel-based activity, compared to 57% and 43%, respectively, during the second quarter. Fleet utilization rose to 67% for the quarter as compared to 64% during the second quarter. Third quarter 2022 average ROV revenue per day on hire of $8,468 was 2% higher than in the second quarter.

“Manufactured Products third quarter 2022 operating results improved despite an 11% decrease in revenue. Operating income and related margin percentage of $4.3m and 5%, respectively, improved measurably from the second quarter of 2022 due primarily to increased manufacturing throughput in our subsea hardware businesses. Order intake during the quarter was solid, with backlog on September 30, 2022 increasing to $365m from our June 30, 2022 backlog of $335 m. Our book-to-bill ratio was 1.17 for the nine months ended September 30, 2022, and 1.08 for the trailing 12 months.

“As expected, OPG saw strong seasonal activity during the third quarter of 2022, which resulted in higher operating income on a 31% increase in revenue as compared to the second quarter. Results were driven by increased intervention and installation work, primarily in the GoM. OPG’s operating income margin of 13% reflected slight changes in service mix and continued high levels of demand and pricing for vessel-based services in the GoM.

“Sequentially, Integrity Management and Digital Solutions (IMDS) operating income declined slightly on 2% less revenue. Revenue declined as customers, particularly in Europe, delayed inspection programs and kept facilities running to support energy security priorities. Operating income margin of 5% declined from the 6% recorded for the second quarter of 2022, due primarily to the continuing impacts of employee wage inflation.

“Aerospace and Defense Technologies (ADTech) third quarter 2022 operating income increased significantly from the second quarter on essentially flat revenue. Operating income margin of 15% improved significantly from the second quarter of 2022, reflecting recovery of prior quarter pre-contract costs and favorable project mix. At the corporate level, Unallocated Expenses of $30.9m for the third quarter were less than expected, and slightly lower than the second quarter of 2022.

Fourth Quarter and Full Year Outlook:

“Looking forward, on a consolidated basis, we believe that our fourth quarter 2022 EBITDA will decline on relatively flat revenue as compared to our third quarter results. Sequentially, we forecast: higher revenue and operating profitability in our Manufactured Products segment; slightly lower revenue and operating results in our SSR segment; significantly lower revenue and operating profitability in our OPG segment due to lower seasonal activity; slightly lower revenue and operating results in our IMDS segment; and modestly higher revenue and lower operating results in our ADTech segment. Unallocated Expenses are forecast to be in the mid-$30m range.

“For the full year of 2022, we expect to generate adjusted EBITDA within the narrowed range of $215m to $240m. Our guidance for organic capital expenditures remains in the range of $70 m to $80m and our guidance for cash income tax payments remains in the range of $40m to $45m. We continue to expect positive free cash flow of between $25m and $75m for the full year of 2022.

Initial 2023 Guidance:

“Looking into 2023, year over year, we are anticipating increased activity and improved operating performance across each of our operating segments, led by gains from SSR and OPG. At this time, we forecast EBITDA in the range of $260m to $310m in 2023, driving healthy levels of cash flow from operations. In 2023, we expect capital expenditures to be higher than in 2022 as we continue to focus on growth. We also expect to generate positive free cash flow in excess of $100m. We will provide more specific guidance on our expectations for 2023 during the year-end reporting process.

Key Priorities:

“Our key priorities remain unchanged. Focusing on safety, maintaining our financial and capital discipline, generating significant free cash flow, managing our 2024 debt maturity, and growing the Company by leveraging core competencies remain our top priorities for the foreseeable future. Increasing our pricing and margins to generate a fair return for our world-class services and products is also a priority. Optimizing each of these priorities positions us for success in the energy transition while presenting increasing opportunities to provide returns to our shareholders.” (Source: BUSINESS WIRE)

26 Oct 22. Boeing reports $3.3bn loss as defense programs drag.

Boeing on Wednesday reported a nearly $3.3 bn loss in the third quarter of 2022, driven by problems with some of its key defense programs.

Boeing said higher manufacturing and supply chain costs and “technical challenges” with the KC-46A Pegasus, VC-25B Air Force One, MQ-25 Stingray, and T-7A Red Hawk programs, as well as NASA’s Commercial Crew program were the main cause of the defense, space and security sector’s $2.8 bn in quarterly losses. Other defense sector programs also had “unfavorable performance” that further hurt the quarterly results, the contractor said.

The results marked a significant decline from how Boeing performed in the same quarter a year earlier, when the company recorded a $132m loss. Boeing’s defense sector reported $436m in profit during that period.

The company is now facing a nearly $4.4bn loss so far this year. Its defense sector has lost nearly $3.7bn during the first nine months of 2022.

The KC-46 tanker program has been a persistent drain on Boeing’s finances in recent years, racking up more than $700m in charges in the first half of 2022. That is on top of the more than $5.4bn in charges the KC-46 had recorded by the end of 2021.

The defense unit’s revenue also dropped year over year, from $6.6bn in the third quarter of 2021 to $5.3bn in the most recent quarter.

Dave Calhoun, Boeing’s president and chief executive, sent employees a message Wednesday that acknowledged the difficulties in trying to turn the company around.

While Boeing “continue[s] to make important strides in our turnaround effort,” Calhoun said, “we remain in a challenging environment and have more work ahead.”

“Nearly every industry is navigating broad supply chain, inflation, labor and macroeconomic challenges — and we’re certainly no different,” Calhoun continued. “We’re realistic about the environment we face and are taking comprehensive action.”

Calhoun touted the delivery of four MH-139A Grey Wolf test helicopters to the Air Force, and Boeing’s receipt of contracts with the U.S. and Israeli air forces for more KC-46s. He also pointed to Poland’s selection of the AH-64E Apache for its new attack helicopter fleet, and the opening of three new facilities including its Advanced Composite Fabrication Center in Arizona.

“We’re doing important work and are making meaningful progress, together,” Calhoun said. “Turnarounds take time — and we have more work to do — but I am confident in our team and the actions we’re taking for the future.” (Source: Defense News)

26 Oct 22. Boeing Reports Third-Quarter Results.

Third Quarter 2022

Operating cash flow of $3.2bn; continue to expect positive free cash flow for 2022
Resumed 787 deliveries and delivered 9 airplanes
Recorded losses on fixed-price defense development programs
Revenue of $16.0 bn; GAAP loss per share of ($5.49) and core (non-GAAP)* loss per share of ($6.18)
Total backlog of $381bn; including over 4,300 commercial airplanes

The Boeing Company [NYSE: BA] reported third-quarter revenue of $16.0 bn, GAAP loss per share of ($5.49) and core loss per share (non-GAAP)* of ($6.18). Third-quarter results reflect higher commercial volume and losses on fixed-price defense development programs. Boeing generated operating cash flow of $3.2bn.

“We continue to make important strides in our turnaround and remain focused on our performance,” said Dave Calhoun, Boeing President and Chief Executive Officer. “We generated strong cash in the quarter and are on a solid path to achieving positive free cash flow for 2022. At the same time, revenue and earnings were significantly impacted by losses on our fixed-price defense development programs. We’re squarely focused on maturing these programs, mitigating risks and delivering for our customers and their important missions. We remain in a challenging environment and have more work ahead to drive stability, improve our performance and ensure we’re consistently delivering on our commitments. Despite the challenges, I’m proud of our team and the progress we’ve made to strengthen our company.”

Cash and investments in marketable securities increased to $14.3bn, compared to $11.4bn at the beginning of the quarter, primarily driven by cash from operations. The company has access to credit facilities of $12.0bn, which remain undrawn.

Total company backlog at quarter-end was $381bn.

Segment Results

Commercial Airplanes

Commercial Airplanes third-quarter revenue increased to $6.3bn, driven by the resumption of 787 deliveries and higher 737 deliveries. Operating margin of (10.3) percent also reflects lower abnormal costs as compared to the third quarter of 2021, partially offset by higher period expenses, including R&D expense.

The company also resumed 787 deliveries in late August, following comprehensive reviews to ensure each airplane meets the company’s highest standards. The program is producing at a low rate with an expected gradual return to five per month over time.

Since late 2020, the 737 MAX fleet has completed nearly 1 m revenue flights. During the quarter, the company secured net orders for 227 aircraft, including 167 737 airplanes, 27 767 airplanes, 18 777 airplanes, and 15 787 airplanes. Commercial Airplanes delivered 112 airplanes during the quarter and backlog included over 4,300 airplanes valued at $307 bn.

Defense, Space & Security

Defense, Space & Security third-quarter revenue decreased to $5.3 bn and third-quarter operating margin decreased to (52.7) percent, primarily due to $2.8bn of losses on certain fixed-price development programs, driven by higher estimated manufacturing and supply chain costs, as well as technical challenges. These losses were recorded on the KC-46A, VC-25B, MQ-25, T-7A and Commercial Crew programs. Results were also impacted by unfavorable performance on other programs.

During the quarter, Defense, Space & Security captured KC-46A Tanker awards from the U.S. Air Force for 15 aircraft and the Israeli Air Force for four aircraft, and Poland selected the AH-64E Apache as its future attack helicopter. Defense, Space & Security delivered 34 aircraft and two satellites, including the first four MH-139A Grey Wolf helicopters to the U.S. Air Force. Also during the quarter, Defense, Space and Security opened the Advanced Composite Fabrication Center in Mesa, Arizona.

Backlog at Defense, Space & Security was $55bn, of which 31 percent represents orders from customers outside the U.S.

Global Services

Global Services third-quarter revenue increased to $4.4bn and third-quarter operating margin increased to 16.5 percent primarily driven by higher commercial services volume and favorable mix, partially offset by lower government services volume.

During the quarter, Global Services was awarded a follow-on KC-767A Performance Based Logistics support contract for the Italian Air Force and received an F/A-18 depot support order for the U.S. Navy. Global Services also signed a Landing Gear Exchange and Airplane Health Management agreement with Ethiopian Airlines. Also in the quarter, Global Services delivered the 100th contracted 737-800BCF to AerCap.

Additional Financial Information

At quarter-end, Boeing Capital’s net portfolio balance was $1.6bn. The change in other income was driven by the absence of a pension settlement charge recorded in the third quarter of 2021. Interest and debt expense decreased due to lower debt balance. The third quarter effective tax rate primarily reflects tax expense due to an increase in the valuation allowance.

26 Oct 22. Thales reports its order intake and sales at September 30, 2022. Thales (Euronext Paris: HO) reported today its order intake and sales for the period ending September 30, 2022.

Order intake1: €15.4bn, +41% on an organic basis2 (total change: +45%)
Sales: €12.3bn, +6.4% on an organic basis (total change: +9.6%)
2022 organic sales growth expected in upper part of the range set in July 2022 (between +3.5% and +5.5%3)

“In the first nine months of 2022, Thales achieved a very solid commercial performance, with order intake up 41%. Despite an operating environment marked by supply chains tensions and the geopolitical context, the Group is keeping pace with respect to sales growth, driven in particular by the momentum of the digital identity and security segment (DIS, formerly Gemalto). In spite of the current uncertainties, we confirm all our Full Year objectives. All Thales teams remain mobilized to serve our customers and to implement our strategic initiatives” Patrice Caine, Chairman & Chief Executive Officer

Order intake

In the first nine months of 2022, order intake stood at €15,449m, up 41% organically5 compared to the first nine months of 2021 (up 45% in total change). Over this period, Thales booked 16 large orders with a unit value of over €100m, representing a total amount of €5,765m:

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

4 large orders booked in Q3 2022:

o a contract to install next-generation in-flight entertainment systems on Emirates’ future Airbus A350 fleet

o an amendment to the contract for the development of the SICRAL 3 satcom system for the Italian Ministry of Defense, including the associated ground segment

o the order of the KOREASAT 6A communications satellite from the operator KT SAT

o the order of Sea Fire naval radars by a major military customer

At €9,684m, order intake with a unit value of less than €100m was up 12% compared to the first nine months of 2021. Orders with a unit value of between €10m and €100m were up 9%, while orders with a unit value of less than €10m were up 14%, with a growth of 20% in Q3.

Geographically6, order intake in emerging markets amounted to €5,924m, up 189% organically over the first nine months, thanks to the jumbo contract related to the supply of the Rafale to the United Arab Emirates. At €9,525m, order intake in mature markets recorded organic growth of 7%, driven particularly by five large military contracts in Europe and Australia and by four large space contracts in Europe and the United States.

Order intake in the Aerospace segment stood at €3,646m compared to €3,676m over the first nine months of 2021 (-3% at constant scope and exchange rates). This decrease is due to the high basis of comparison, since Thales Alenia Space booked the second generation of Galileo European navigation satellites in H1 2021. Commercial momentum remained solid in Q3, with three additional large contracts: two large contracts related to space activities and one large contract related to civil aerospace activities.

At €9,175 m compared with €4,826m over the first nine months of 2021, order intake in the Defense & Security segment rose by 86% at constant scope and exchange rates. This solid performance was achieved thanks to the booking of nine contracts of over €100m since the beginning of the year, including the major contract related to the supply of the Rafale to the United Arab Emirates. Strong commercial momentum in this sector continued in Q3, with organic growth in order intake of +34%.

At €2,584m, order intake in the Digital Identity & Security segment was in line with sales in the same period, considering that most businesses in this segment do not book long-term orders.

Sales

Sales over the first nine months of 2022 stood at €12,298m, compared to €11,222m over the same period in 2021, an increase of 6.4% at constant scope and exchange rates.

Geographically7, solid sales growth was recorded in mature markets (+7.9% organically), driven in particular by North America (+11.9%), the United Kingdom (+10.4%), and France (+8.7%). Emerging markets grew by 1.8% on an organic basis over the period, notably supported by the Middle East (+9.5%).

Sales in the Aerospace segment amounted to €3,270m, up 2.1% on organically over the first nine months of 2021. The sector’s recovery has been slowed by 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, and the slow recovery of the wide-body aircraft market.

Sales in the Defense & Security sector totaled €6,385m, up 5.2% compared to the same period in 2021 at constant scope and exchange rates. This performance benefited from the strong momentum of most product lines. It was driven in particular by activities related to the Rafale, on-board and tactical radios and communication solutions, information, command, and intelligence systems for armed forces, and integrated airspace protection systems, which offset the gradual ramp-down in production of Hawkei vehicles in Australia, which began in 2022. The solid outlook for this segment remains unchanged thanks to its record order book of €29.1bn, up 11.5% compared to 31 December 2021.

At €2,584m, sales for the Digital Identity & Security segment were up 16.2% at constant scope and exchange rates. This performance reflects in particular the robust momentum in cybersecurity, with organic growth of more than 15%, as well as a price effect with respect to EMV payment cards and SIM cards, helping to offset the significant increase in purchasing costs. The rebound in the biometrics business continued, with double-digit growth over nine months, despite persistent production challenges, in particular regarding chip deliveries.

Outlook

All Group markets benefit from robust medium-term perspectives, and the Group’s order book is reaching a new record high.

The global environment remains nevertheless marked by the continuing tension affecting supply chains, in particular regarding semiconductors, as well as the significant rise in inflation, the weakening of the euro against the dollar, and the consequences of Russia’s invasion of Ukraine.

Thales continues to 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. The Group continues to implement all the levers of its Ambition 10 strategic plan, which will generate profitable and sustainable growth.

The strong performance of the first nine months of the year has led the Group to refine its sales target for 2022.

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 1;
Organic sales growth in the upper part of the range set in July 2022, i.e., +3.5% and +5.5%, corresponding to sales in the range of €17.2 to 17.6bn;
An EBIT margin between 10.8% and 11.1%, up 60 to 90 basis points from 2021.

25 Oct 22. Raytheon Technologies Reports Q3 2022 Results. RTX Commercial Aerospace drives strong organic sales growth and segment margin expansion; Q3 book-to-bill of 1.32

Raytheon Technologies Corporation (NYSE: RTX) reported third quarter 2022 results.

Third quarter 2022

Sales of $17.0bn, up 5 percent versus prior year including 6 percent organic growth
GAAP EPS from continuing operations of $0.94, up 1 percent versus prior year, including $0.27 of acquisition accounting adjustments and net significant and/or non-recurring charges
Adjusted EPS of $1.21, down 4 percent versus prior year
Operating cash flow from continuing operations of $778m; Free cash flow of $263m
Achieved approximately $105m of incremental RTX gross cost synergies
Repurchased $616m of RTX shares

Outlook for full year 2022

Sales of $67.0 – $67.3bn, down from $67.75 – $68.75bn
Adjusted EPS of $4.70 – $4.80, up from $4.60 – $4.80
Confirms free cash flow of approximately $4.0bn
Confirms share repurchase of at least $2.5bn of RTX shares

“Raytheon Technologies delivered strong organic sales growth while also generating adjusted EPS and free cash flow that exceeded our expectations following the continued recovery in the commercial aerospace market and strong customer demand across our business,” said Raytheon Technologies Chairman and CEO Greg Hayes. “While we expect industry-wide challenges to continue near-term, we remain focused on operational excellence, including cost containment and program performance, to deliver on our commitments.”

“Our $168bn company backlog grew over $6bn in the quarter, and will continue to grow as we invest in next-generation technology and innovation to deepen our industry-leading positions to deliver sustained value for our customers and shareowners.”

Third quarter 2022

Raytheon Technologies reported third quarter sales of $17.0bn, up 5 percent over the prior year, including 6 points of organic sales growth partially offset by 1 point of net acquisitions and divestitures headwind. GAAP EPS from continuing operations of $0.94 was up 1 percent versus the prior year and included $0.26 of acquisition accounting adjustments primarily related to intangible amortization and $0.01 of restructuring. Adjusted EPS of $1.21 was down 4 percent versus prior year as growth in segment operating profit was more than offset by the absence of a prior year tax benefit and lower pension income.

The company recorded net income from continuing operations attributable to common shareowners in the third quarter of $1.4bn, down 1 percent versus prior year and included $398m of acquisition accounting adjustments and net significant and/or non-recurring charges. Adjusted net income was $1.8bn, down 6 percent versus prior year. Operating cash flow from continuing operations in the third quarter was $778m. Capital expenditures were $515m, resulting in free cash flow of $263m.

Backlog and Bookings

Backlog at the end of the third quarter was $168bn, of which $101 bn was from commercial aerospace and $67bn was from defense.

Notable defense bookings during the quarter included:

$1.6bn of classified bookings at Raytheon Intelligence & Space (RIS)
$1.0bn to develop the Hypersonic Attack Cruise Missile (HACM) for the U.S. Air Force at Raytheon Missiles & Defense (RMD)
$972m for the Advanced Medium-Range Air-to-Air Missile (AMRAAM) for the U.S. Air Force, the U.S. Navy and international customers at RMD
$524m for F135 sustainment contracts at Pratt & Whitney
$353m for the Lower Tier Air and Missile Defense Sensor (LTAMDS) Pre-planned Product Improvement program for the U.S Army at RMD
$278m for F135 production Lots 15 and 16 at Pratt & Whitney
$226m for AIM-9X Sidewinder for the U.S. Navy at RMD
$207m for integrated effectors and sensors for Counter-Unmanned Aircraft Systems for the U.S. Army at RMD

Segment Results

The company’s reportable segments are Collins Aerospace, Pratt & Whitney, Raytheon Intelligence & Space (RIS) and Raytheon Missiles & Defense (RMD).

Collins Aerospace

Collins Aerospace had third quarter 2022 adjusted sales of $5,100m, up 11 percent versus the prior year. The increase in sales was driven by a 25 percent increase in commercial aftermarket and a 16 percent increase in commercial OE, which more than offset a 6 percent decline in military. The increase in commercial sales was driven primarily by the recovery of commercial air traffic which has resulted in higher flight hours, aircraft fleet utilization, and narrowbody deliveries. The decrease in military sales was driven primarily by lower material receipts and decreased volume.

Collins Aerospace recorded adjusted operating profit of $630 m in the quarter, up 31 percent versus the prior year. The increase in adjusted operating profit was primarily driven by drop through on higher commercial aftermarket and OE, which more than offset lower volume on military programs as well as higher SG&A and R&D expense.

Pratt & Whitney had third quarter 2022 adjusted sales of $5,380m, up 14 percent versus the prior year. The increase in sales was driven by a 26 percent increase in commercial OE and a 23 percent increase in commercial aftermarket which more than offset a 2 percent decrease in military sales. The increase in commercial sales was primarily due to higher shop visits and related spare part sales as well as favorable OE engine mix and volume. The decrease in military sales was driven primarily by lower expected F135 production volume that was partially offset by higher F135 sustainment volume.

Pratt & Whitney recorded adjusted operating profit of $318m in the quarter, up 68 percent versus the prior year. The increase in adjusted operating profit was primarily driven by drop through on higher commercial aftermarket sales volume and favorable military and commercial OE sales mix, which more than offset higher SG&A and R&D expense.

Raytheon Intelligence Services

RIS had third quarter 2022 adjusted sales of $3,62m, down 3 percent versus the prior year. The decrease in sales was driven by the divestiture of the Global Training and Services business. Excluding the impact of acquisitions and divestitures and FX, sales were up 2 percent versus prior year. Higher classified sales in Sensing and Effects programs were partially offset by lower sales in Command, Control and Communications, including lower sales of tactical communications systems programs.

RIS recorded adjusted operating profit of $371m, down 5 percent versus the prior year. The decrease in adjusted operating profit was primarily driven by the impact of the Global Training and Services divestiture that more than offset favorable net program efficiencies.

Raytheon Missiles & Defense

RMD had third quarter 2022 adjusted sales of $3,678m, down 6 percent versus prior year. The decrease in sales was primarily driven by continuing supply chain constraints and declines on Land Warfare and Air Defense programs and Naval Power programs. These decreases were partially offset by higher volume on Strategic Missile Defense programs including Next Generation Interceptor development.

RMD recorded adjusted operating profit of $416m, down 15 percent versus the prior year. The decrease in adjusted operating profit was driven primarily by unfavorable program mix, lower volume primarily in Land Warfare and Air Defense programs, and lower net program efficiencies driven by continued supply chain and labor constraints. (Source: PR Newswire)

25 Oct 22. Leonardo DRS Receives Key Regulatory Approval Associated with RADA Electronic Industries Ltd. Merger. Leonardo DRS, Inc. (“DRS”), a leading mid-tier defense technology provider, today announced that on October 24, 2022, DRS and RADA Electronic Industries Ltd. (NASDAQ & TASE: RADA) (“RADA”) received regulatory approval from The Committee on Foreign Investment in the United States (“CFIUS”), representing one of the more important regulatory approvals required as a condition to close the previously announced merger of the two companies.

With this key regulatory approval and the previously announced RADA shareholder approval, closing of the transaction is now expected to occur at the end of November or beginning of December, subject to remaining regulatory approvals. Upon closing of the merger, RADA will become a wholly owned subsidiary of DRS, and DRS will trade on the NASDAQ and TASE under the symbol “DRS”.

About Leonardo DRS

DRS is a defense solutions provider, a leading technology innovator, and supplier of integrated products, services and support to military forces, the intelligence community, and defense contractors worldwide. DRS is organized into Advanced Sensor and Computing and Integrated Mission Systems segments. Headquartered in Arlington, Virginia, Leonardo DRS is a wholly owned subsidiary of Leonardo S.p.A. See the full range of capabilities at www.LeonardoDRS.com

About RADA

RADA is a global defense technology company focused on proprietary radar solutions and legacy avionics systems. The Company is a leader in mini-tactical radars, serving attractive, high-growth markets which include active military protection (SHORAD, C-RAM), counter-UAS missions, critical infrastructure protection and border surveillance.

(Source: BUSINESS WIRE)

26 Oct 22. KBR Announces Strong Third Quarter 2022 Financial Results.

Delivers Excellent Progress Toward 2025 Long-Term Targets

Outstanding earnings delivering quarterly net income attributable to KBR of $74m; $171m adj. EBITDA1, 11% adj. EBITDA1 margins; diluted EPS of $0.49 and adj. EPS1 of $0.65
Expanding capital base with robust quarterly operating cash flow of $122m; 111% free cash conversion
Growing platform of long-term, strategic programs; $2.7bn of bookings and options in the quarter
Raising FY 2022 earnings and operating cash flow guidance

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

“The people of KBR have once again delivered a strong quarter with excellent earnings and cash flow, outstanding operational and safety performance, and exciting new contract wins,” said Stuart Bradie, President and CEO of KBR. “With awards in the quarter spanning the development of NASA’s next gen space suits to technology innovation that will increase the world’s low-carbon clean ammonia capacity, KBR continues to deliver solutions that matter.”

Bradie also attributed positive performance to favorable tailwinds stemming from areas of increasing global importance, including national security, energy security, energy transition, and climate change.

“Our clients are accelerating investment in solutions and technologies to advance their priorities related to these critical challenges, and this acceleration translated directly to the profitable growth, strong margins, and solid cash generation we report today,” Bradie said. “We have a fantastic ballast of stable, long-term programs that afford tremendous multi-year visibility as well as exciting high-growth opportunities that favor our sustainable solutions and technologies. As such, we are pleased to announce an increase in our FY 2022 earnings and cash guidance and have growing confidence in our 2025 targets.”

Financial Highlights for the Quarter Ended September 30, 2022

Revenue of $1.6bn in the quarter declined 12% compared to the same period in 2021 primarily attributable to the completion of work associated with the Operations Allies Welcome (OAW) program in early 2022 that commenced in 3Q’21. Excluding OAW, revenue increased ~$165 m or 11%, 8% organic, attributable to increased activity to support exercises, training and other activities in the European Command, the acquisition of Frazer-Nash in October 2021, and increased revenues in Sustainable Technology Solutions (STS) primarily from engineering and professional services and technology licensing.
For the quarter ended September 30, 2022, net income attributable to KBR increased to $74m; diluted earnings per share increased to $0.49; adj. EBITDA1 increased to $171m; and adj. EBITDA1 margins expanded to 11%.
Government Solutions (GS) delivered excellent earnings and adj. EBITDA1 margins of 10% in the quarter. GS earnings continue to benefit from favorable mix, strong project execution, excellent customer performance scores in challenging technical areas that reflect high client satisfaction, and core revenue growth.
STS delivered excellent earnings and adj. EBITDA1 margins of 20% in the quarter. STS earnings reflect strong end markets, superior technology offerings, highly sought-after engineering solutions and favorable mix. Margins were positively impacted by achievement of licensing milestones in the quarter as well as growing contributions from an LNG project.
Outstanding operating results substantially offset the impact of the strengthening U.S. dollar across our international operations, primarily in the UK and Australia.
Interest expense increased in the quarter primarily attributable to higher market interest rates on our variable-rate debt.
Increasing rates were significantly mitigated by the company’s interest rate hedging program that achieves a fixed interest rate on a substantial portion of the company’s borrowings.

Recent Developments and New Business

Delivered 1.3x trailing-twelve-months book-to-bill as of September 30, 2022, including $2.7bn of awards and options in the quarter, as follows:

Won a technology contract for a low-carbon blue ammonia project for OCI NV in the U.S.; KBR will provide its innovative proprietary technology, basic engineering design, proprietary equipment and catalyst;
Won a technology contract for a Hydro-PRT® plastics circularity project for GS Caltex to convert waste plastics back into raw material feedstocks to achieve total circularity;
Won a new $150+m 5-year IAC-MAC task order to modernize, upgrade and digitize an analog DOD platform with a digital, modular open system architecture solution;
Won a contract to lead research and development for self-defending, self-recovering cyber defense concepts in support of the UK Ministry of Defence;
As part of the Axiom team, won the first task order totaling $229 m on NASA’s 10-year xEVAS program to build the next generation astronaut spacesuits to support the Artemis lunar missions; and
Xandar LLC, a KBR joint venture, won a $4.8bn ceiling multiple-award for the National Air and Space Intelligence Center to support research and development of new and existing hardware, systems and software capabilities enabling scientific and technical intelligence production through 2033.

Capital Deployment

KBR continues to employ a balanced approach to capital allocation, which includes investments that facilitate sustainable, long-term growth and prudent return of capital to shareholders. In the quarter ended September 30, 2022, the company generated $122m of operating cash flows.

In the quarter ended September 30, 2022, KBR returned capital to shareholders through the repurchase of $50m of its common shares, inclusive of share repurchases to satisfy requirements of equity compensation plans, and paid $17m in shareholder dividends.
The company replenished and increased the ceiling of its share repurchase authorization to $500m.
In August 2022, the company completed its acquisition of VIMA Group, a leading UK digital transformation company serving defense clients, for an agreed-upon purchase price of $82m (cash paid at closing of $75m). VIMA Group supports clients by delivering solutions across a number of large-scale, high-priority digital transformation programs that ensure availability of effective digital and information technology as guided by the UK’s Digital Strategy for Defence. VIMA Group is a trusted advisor and a top-five supplier to Defence Digital and Navy Digital – both organizations within the UK Ministry of Defence with a number of highly strategic, fast-growing programs.

FY 2022 Guidance

KBR combines deep mission understanding, market-leading expertise and technology and unwavering operational focus to deliver solutions that help solve our clients’ most complex issues. Our 2022 financial guidance is underpinned by favorable market tailwinds, good bookings momentum, strong year-to-date results through September 30, 2022, and potential favorable discrete tax benefits in fourth quarter 2022. KBR updates and/or increases its FY 2022 guidance as follows:

Consolidated revenue: $6.5bn to $6.7 bn (narrowed)
Adjusted EBITDA1 margin: ~10%
Effective tax rate: 23% to 24% (lowered)
GAAP earnings per share (EPS): $1.11 to $1.16 (updated); adjusted EPS1: $2.60 to $2.65 (raised midpoint);
GAAP operating cash flow (OCF): $345m to $370m (raised midpoint); adjusted OCF1: $375 m to $400 m (raised midpoint)

24 Oct 22. Hexcel Reports 2022 Third Quarter Results.

Q3 2022 GAAP diluted EPS of $0.31 and adjusted diluted EPS of $0.33, compared to Q3 2021 GAAP diluted EPS of $0.11 and adjusted diluted EPS of $0.13.
Q3 2022 Sales were $365m, compared to $334m in Q3 2021.
FY 2022 adjusted diluted EPS guidance revised to $1.12 to $1.24 from the previous $1.00 to $1.24.
FY 2022 sales guidance revised to $1.53bn to $1.60 bn, previously $1.50bn to $1.63bn.

Hexcel Corporation (NYSE: HXL):

Hexcel Corporation (NYSE: HXL) today reported third quarter 2022 results including net sales of $365m and adjusted diluted EPS of $0.33 per share.

Chairman, CEO and President Nick Stanage said, “We delivered strong operating leverage in the third quarter as we continue to execute and manage through operational headwinds. Demand remains robust, with strong pull in all our markets for lightweight advanced composites, especially as interest in more sustainable transportation increases. Our team remains flexible and focused on meeting that demand as we overcome challenges arising from this return to growth in the aftermath of the global pandemic.”

Mr. Stanage continued, “As we head into the fourth quarter, we are narrowing our 2022 financial guidance ranges and raising our EPS midpoint based on our strong execution year to date. For the remainder of the year, we will continue our focus on maximizing production and sales, while continuing to drive efficiency and control costs. We anticipate a strong 2023 as supply chains recover, our new employees gain operational experience, and our customers further increase aircraft build rates. Our Hexcel team remains motivated and committed to achieving operational excellence, driving innovation and increasing shareholder value.”

Markets

Sales in the third quarter of 2022 were $364.7m compared to $333.8m in the third quarter of 2021.

Commercial Aerospace

Commercial Aerospace sales of $209.1m increased 25.1% (26.5% in constant currency) for the third quarter of 2022 compared to the third quarter of 2021 led by the Airbus A350 and A320neo programs. The sub-category Other Commercial Aerospace, which includes business jets and regional aircraft, increased 69.5% for the third quarter of 2022 compared to the third quarter of 2021. Business jets led the Other Commercial Aerospace growth, particularly Gulfstream and Dassault platforms.

Space & Defense

Space & Defense sales of $108.6m decreased 1.6% (increased 0.2% in constant currency) for the quarter compared to the third quarter of 2021 due to the impact of foreign exchange rates on European military and space sales.

Industrial

Total Industrial sales of $47.0m in the third quarter of 2022 decreased 16.4% (8.4% in constant currency) compared to the third quarter of 2021 as a result of lower wind energy sales and the negative impact of foreign exchange rates.

Consolidated Operations

Gross margin for the third quarter of 2022 was 22.4% compared to 19.8% in the third quarter of 2021 reflecting favorable operating leverage from higher sales volume. As a percentage of sales, selling, general and administrative and R&T expenses for the third quarter of 2022 were 11.1% compared to 12.7% for the third quarter of 2021. Adjusted operating income in the third quarter of 2022 was $41.2 m or 11.3% of sales, compared to $23.6 m, or 7.1% of sales in 2021. Other operating expense for both the third quarter of 2022 and 2021 included restructuring costs. The impact of exchange rates on operating income as a percent of sales was favorable by approximately 50 basis points in the third quarter of 2022 compared to the third quarter of 2021.

Year-to-Date 2022 Results

Sales for the first nine months of 2022 were $1,148.3m compared to $964.4 m for the same period in 2021.

Commercial Aerospace (57% of YTD sales)

Commercial Aerospace sales of $655.6m increased 39.9% (41.1% in constant currency) for the first nine months of 2022 compared to the first nine months of 2021 on higher narrowbody and Airbus A350 sales, partially offset by lower Boeing 787 sales. The sub-category Other Commercial Aerospace increased 71.8% for the first nine months of 2022 compared to the same period in 2021.

Space & Defense (30% of YTD sales)

Space & Defense sales of $338.7m increased 2.9% (4.7% in constant currency) for the first nine months of 2022 as compared to the first nine months of 2021, led by the CH-53K program, civil rotorcraft, and Space sales, including satellites, launchers and rocket motors.

Industrial (13% of YTD sales)

Total Industrial sales of $154.0m in the first nine months of 2022 decreased 7.7% (1.0% in constant currency) compared to the first nine months of 2021 as growth in automotive, recreation and other industrial markets was offset by lower wind energy sales and the negative impact of foreign exchange rates.

Consolidated Operations

Gross margin for the first nine months of 2022 was 22.5% compared to 18.8% in the prior year period, strengthening as higher capacity utilization led to improved cost absorption. As a percentage of sales, selling, general and administrative and R&T expenses for the first nine months of 2022 were 12.3% compared to 14.1% for the first nine months of 2021. Adjusted operating income for the first nine months of 2022 was $117.0m or 10.2% of sales, compared to $44.8m, or 4.6% of sales in 2021. Other operating income for the first nine months of 2022 included a pre-tax net gain of $19.4m from the previously announced sale of a facility in Dublin, California, partially offset by restructuring costs. Other operating expenses for the nine months ended September 30, 2021 primarily related to severance and restructuring. The impact of exchange rates on operating income as a percent of sales was favorable by approximately 30 basis points in the first nine months of 2022 compared to 2021.

Cash and other

The third quarter 2022 tax expense was $6.8m and included a discrete tax charge of $1.3m resulting from the true-up of a deferred tax item. The tax expense for the third quarter of 2021 was $5.1m and included a discrete tax charge of $1.3m primarily related to the remeasurement of the net U.S. state deferred tax liabilities. The tax expense for the first nine months of 2022 was $24.2m. The tax expense for the first nine months of 2021 was $1.6m and included a net discrete tax charge of $0.8m primarily resulting from the revaluation of U.S. and foreign deferred tax liabilities. The underlying effective tax rate for 2022 is now expected to be 22%, representing a decrease from the prior expectations of 23%.
Net cash provided by operating activities in the first nine months of 2022 was $56.4m, compared to $64.2m for the first nine months of 2021. Working capital was a cash use of $115.0m for the first nine months of 2022 and a use of $46.0m for the comparable period in 2021. The increase in working capital supports growing sales and the higher inventory levels are a result of longer shipping lead times and holding a larger inventory buffer or safety stock to compensate for the continuing supply chain disruptions. Capital expenditures on a cash basis were $58.3m for the first nine months of 2022 compared to $15.0m for the first nine months of 2021 with the increase reflecting two previously announced ongoing construction projects; the construction of a research and technology innovation center in Salt Lake City, Utah and the expansion of Hexcel’s engineered core operations in Morocco. Net cash used for investing activities for the nine months ended September 30, 2022, included the net proceeds of $21.2m received from the sale of a facility in Dublin, California. Free cash flow was ($1.9)m in the first nine months of 2022 compared to $49.2m in the first nine months of 2021. Free cash flow is defined as cash generated from operating activities less cash paid for capital expenditures. Capital expenditures on an accrual basis were $49.1 and $14.3m for the first nine months of 2022 and 2021, respectively.
The Company did not repurchase any common stock during the third quarter of 2022. The remaining authorization under the share repurchase program at September 30, 2022, was $217 m.
As announced today, the Board of Directors declared a quarterly dividend of $0.10 per share payable to stockholders of record as of November 4, 2022, with a payment date of November 14, 2022.

2022 Guidance

Sales of $1.53bn to $1.60bn (previously $1.50bn to $1.63 bn)
Adjusted diluted earnings per share of $1.12 to $1.24 (previously $1.00 to $1.24)
Free cash flow in the range of $100m (previously greater than $145m)
Accrual basis capital expenditures of approximately $75m (unchanged)
Underlying effective tax rate is estimated to be 22% (previously 23%)

(Source: BUSINESS WIRE)

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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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