Sponsored by TCI International Inc.
03 Feb 23. Honeywell (NASDAQ: HON) today announced results for the fourth quarter and full year 2022.
- Fourth Quarter Sales of $9.2bn, Reported Sales Up 6%, Organic1 Sales Up 10%
- Fourth Quarter Earnings Per Share of $1.51 and Adjusted Earnings Per Share1 of $2.52, Above Midpoint of Previous Guidance
- Full Year Operating Cash Flow of $5.3bn and Free Cash Flow1 of $4.9 Bn, at Midpoint of Previous Guidance
- Deployed $7.9bn of Capital to Share Repurchases, Dividends, Capital Expenditures, and M&A in 2022, Exceeded Commitment of $4.0bn in Share Repurchases
- Expect 2023 Adjusted Earnings Per Share of $8.80 – $9.20, Up 0% – 5% Adjusted2,3, or Up 7% – 11% Excluding Pension Headwind
Honeywell (NASDAQ: HON) today announced results for the fourth quarter and full year 2022 that met or exceeded the company’s original guidance despite a challenging operating environment. The company also provided its outlook for 2023.
The company reported fourth-quarter year-over-year sales growth of 6% and organic1 sales growth of 10%, or 11% excluding the impact of the wind down in operations in Russia4, with another quarter of double-digit organic sales growth in Honeywell Building Technologies, Performance Materials and Technologies, and Aerospace. Demand remained strong, with closing backlog5 of $29.6 bn, up 7% year over year. Fourth-quarter operating margin expanded 220 basis points to 19.7%, or 240 basis points excluding the year-over-year impact of Quantinuum. Segment margin1 expanded 150 basis points to 22.9%, or 180 basis points excluding the year-over-year impact of Quantinuum1, led by another strong quarter of margin expansion in Safety and Productivity Solutions and Honeywell Building Technologies. Honeywell delivered fourth-quarter earnings per share of $1.51, down 26% year over year, and adjusted earnings per share of $2.52, up 21% year over year. Operating cash flow was $2.4bn with operating cash flow margin of 25.8%, and free cash flow1 was $2.1 bn with free cash flow margin1 of 23.1%, driven by strong net income and reduced working capital quarter over quarter.
For the full year, sales increased by 3%, or 6% on an organic1 basis, and operating margin expanded 10 basis points, with segment margin1 expanding 70 basis points. Honeywell reported full-year earnings per share of $7.27 and adjusted earnings per share1 of $8.76, above the high end of the company’s initial guidance of $8.40 – $8.70.
“Honeywell delivered a strong finish to another challenging year, meeting our original guidance for the year despite significant headwinds from FX and the wind down of our operations in Russia,” said Darius Adamczyk, chairman and chief executive officer of Honeywell. “We also met our latest guidance for all metrics in the fourth quarter. Organic1 sales growth of 10% in the quarter was underpinned by double-digit growth in our commercial aviation, building products, advanced materials, and UOP businesses. Our disciplined cost management enabled us to expand segment margin1 by 150 basis points, led by 940 basis points of margin expansion in Safety and Productivity Solutions to 20.2%, the highest ever segment margin for that business. Our strong balance sheet allowed us to execute on our capital deployment strategy once again, deploying $2.3bn in the quarter, including $1.4bn in share repurchases to fulfill our 2022 share repurchase commitment from our March Investor Day.”
Adamczyk continued, “As we have consistently shown over the past three years, Honeywell’s operating principles enable us to outperform in any macroeconomic environment. As we look toward 2023, we are well-positioned to remain resilient and deliver differentiated results. Our backlog remains at a record level, ending 2022 at $29.6bn, and will help support growth throughout the year. Late-cycle aerospace and energy end markets are positioned for a strong growth year in 2023, we are demonstrating commercial progress in digital offerings through our Forge platform, and we remain focused on growing our sustainability initiatives such as renewable fuels, carbon capture, and sustainable buildings. I am confident that 2023 will be another strong performance for our shareowners, our customers, and our employees.”
Honeywell also announced its outlook for 2023. The company expects sales of $36.0bn to $37.0bn, representing year-over-year organic growth of 2% to 5%; segment margin expansion of 50 to 90 basis points; adjusted earnings per share2 of $8.80 to $9.20, flat to up 5% despite an approximately $0.55 non-cash pension headwind; operating cash flow of $4.9bn to $5.3bn, and free cash flow of $3.9bn to $4.3bn, or $5.1bn to $5.5bn excluding the net impact of settlements signed in the fourth quarter of 2022.
Honeywell sales for the fourth quarter were up 6% year over year on a reported basis and 10% year over year on an organic basis1. The fourth-quarter financial results can be found in Tables 2 and 3.
Aerospace sales for the fourth quarter were up 11% year over year on an organic basis1 led by commercial aviation. Sales growth was the strongest in commercial original equipment, increasing 25% organically year over year on increased shipset deliveries, especially to business and general aviation customers. Commercial aftermarket sales also grew over 20% organically year over year as flight hours continue on their recovery path to pre-COVID levels. Air transport aftermarket was particularly strong, growing 25% organically in the quarter. Increased commercial aviation sales were partially offset by lower defense volumes year over year, although defense and space sales increased 15% sequentially in the fourth quarter. Segment margin contracted 120 basis points to 27.8% driven by increased sales of lower margin original equipment products, partially offset by commercial excellence.
Honeywell Building Technologies sales for the fourth quarter were up 15% on an organic basis1 year over year with strength in both building products and building solutions. Building products sales increased 21% organically, primarily driven by increased sales of fire products and building management systems. Project sales grew double digits organically for the third consecutive quarter, leading the growth in building solutions. Segment margin expanded 370 basis points to 24.8% due to commercial excellence, partially offset by cost inflation.
Performance Materials and Technologies sales for the fourth quarter were up 15% on an organic basis1 year over year despite an approximately 4% headwind from Russia. Sales growth was led by more than 30% organic growth in fluorine products within advanced materials and refining catalyst shipments in UOP, as well as double-digit organic growth in thermal solutions and lifecycle solutions and services within process solutions. Segment margin contracted 100 basis points to 22.0%, primarily driven by cost inflation and higher sales of lower margin products, partially offset by commercial excellence.
Safety and Productivity Solutions sales for the fourth quarter decreased 5% on an organic basis1 year over year. Growth in sensing and safety technologies was offset by lower volumes in productivity solutions and services and warehouse and workflow solutions. Segment margin grew at the fastest rate ever for SPS, expanding 940 basis points to 20.2% as a result of commercial excellence, improved sales mix, and productivity actions, partially offset by volume leverage and cost inflation. (Source: PR Newswire)
01 Feb 23. FDH Aero Announces Rebrand of Blue Sky Industries and Société AHE Inc. FDH Aero, a global supply chain solutions provider for aerospace and defense OEMs and aftermarket segments, today announced the rebranding of FDH Aero business units Blue Sky Industries (“Blue Sky”) and Société AHE Inc. (“AHE”), acquired in 2018 and 2020 respectively. As of today, Blue Sky and AHE will operate as FDH Aero.
FDH Aero is creating a unified brand as the company continues to grow on the basis of its trusted reputation and commitment to customer service.
The name changes are part of a deeper strategy within FDH Aero to better serve its customers with an integrated support structure. A unified platform and strong parent brand will be essential as FDH Aero continues to expand its global footprint, product breadth, trusted reputation and commitment to customer service. The strategic move also enables employees to quickly meet customer needs by simplifying procurement and empowering the business operations of its customers with easy access to the expanded product offering.
“Blue Sky and AHE are the first of our operating divisions to retire their original brand names as we listen to customers’ requirements and continue to evolve FDH Aero,” company CEO Scott Tucker said. “Our different business units are better together. We are focused on delivering the highest level of customer service in the industry and finding ways to help our supplier partners grow.”
FDH Aero acquired Blue Sky Industries in 2018. Since the acquisition, Blue Sky has been an integral part of the FDH Aero team, providing the company with a distribution arm for c-class parts to aerospace and defense manufacturing and maintenance/repair customers.
Meanwhile, AHE joined the FDH Aero team in 2020. The Montreal/France-based distributor of aerospace hardware for the rotorcraft market expanded FDH Aero’s reach with additional product, serving a diversified customer base across the globe. Since the acquisition, AHE’s industry position of serving blue-chip customers has been a significant complement to the FDH Aero family, accelerating the growth of the business unit itself and the entire company as a whole – all while continuing to provide high-quality service to its customers.
FDH Aero now has 28 locations in 14 countries across the globe, with more than 1,000 best-in-industry employees and upwards of 500,000 square feet of inventory space. FDH Aero, the third largest global supply chain company for aerospace and aviation, continues to outperform industry standards as the premier partner for all aerospace and defense supply chain needs.
About FDH Aero
FDH Aero is a trusted global supply chain partner for aerospace and defense. With more than 55 years of experience, we specialize in c-class components that include hardware, electrical, chemical, and consumable products and services for global OEM and Aftermarket customers. FDH Aero is headquartered in El Segundo, California, has operations across North America, Europe, and Asia, and employs more than 1,000 people globally. (Source: PR Newswire)
02 Feb 23. MACOM Announces Definitive Agreement to Acquire Assets and Operations of OMMIC SAS. MACOM Technology Solutions Holdings, Inc. (“MACOM”) (NASDAQ: MTSI), a leading supplier of semiconductor products, today announced that it has entered into a definitive agreement through one of its French subsidiaries to acquire the assets and operations of OMMIC SAS (“OMMIC”), a semiconductor manufacturer with expertise in wafer fabrication, epitaxial growth and monolithic microwave integrated circuit (“MMIC”) processing and design.
“We are excited to acquire a new engineering and manufacturing facility located in France”
OMMIC, located near Paris in Limeil-Brévannes, France, has a 40+ year heritage in material science, semiconductor wafer processing and MMIC design. Its differentiated Gallium Arsenide (GaAs) and Gallium Nitride (GaN) compound semiconductor manufacturing capabilities include multiple European Space Agency (ESA) qualified semiconductor processes and products. OMMIC currently operates a 3-inch wafer production line and has recently installed, but is not currently utilizing, a 6-inch line.
OMMIC’s portfolio of high frequency MMIC products and its design capability will enable MACOM to better address microwave applications in the Telecommunications, Industrial and Aerospace and Defense markets.
“We are excited to acquire a new engineering and manufacturing facility located in France,” stated Stephen G. Daly, President and Chief Executive Officer. “The acquisition of OMMIC is expected to enable us to further increase our focus on the European markets, expand our wafer production capability and extend our product offerings to higher millimeter-wave frequencies, which are all in line with our long-term strategy. We believe that combining OMMIC’s technology and manufacturing capability with MACOM’s scale and market presence will be a driver of long-term growth and profitability.”
The purchase price of approximately €38.5 million will be funded with cash-on-hand and includes real estate and all associated facilities. The transaction is expected to close during MACOM’s fiscal second quarter of 2023 and is subject to regulatory approvals and customary closing conditions.
MACOM designs and manufactures high-performance semiconductor products for the Telecommunications, Industrial and Defense and Datacenter industries. MACOM services over 6,000 customers annually with a broad product portfolio that incorporates RF, Microwave, Analog and Mixed Signal and Optical semiconductor technologies. MACOM has achieved certification to the IATF16949 automotive standard, the ISO9001 international quality standard and the ISO14001 environmental management standard. MACOM operates facilities across the United States, Europe, Asia and is headquartered in Lowell, Massachusetts. To learn more visit www.macom.com. (Source: BUSINESS WIRE)
01 Feb 23. CEA Invests in European-Based Cyber and Intel. CEA Group (CEA) is pleased to announce an exciting and exclusive investment in European-based cyber and intel. Funds advised by Rheingold Capital have acquired 100% of the shares in Cybersecurity Specialists SIM and ATECS. Funds advised by Rheingold Capital GmbH have acquired 100% of the shares in Secure Information Management GmbH (“SIM”, Germany) and ATECS AG (“ATECS”, Switzerland) from German Zech Group.
An affiliate of the CEA Group, a Tampa, Florida-based investment banking and alternative asset management firm, has made a strategic investment. Founded in 1973, CEA has expanded its activities to include cybersecurity, intelligence, and space technology.
SIM Group is a leading manufacturer and supplier of advanced, customized electronic technology solutions for cyber security and intelligence applications. The Company’s advanced digital solutions are being provided to national and international security, intelligence, and defense authorities across Europe, the Middle East, Asia as well as South and Central America for more than 20 years.
SIM and ATECS will continue to expand its business activities as a one-stop-shop supplier for the intelligence community across all relevant international markets.
Dr. Henning Walf, Managing Partner of Rheingold Capital: “We acquired an established, highly trustworthy and reputable player in the security sector, providing leading technology and best-in-class solutions to national law enforcement and intelligence agencies in all relevant markets. We will aim at capturing further expansion opportunities and enlarge the business footprint based on the Company’s unique know-how and benefit from the fast-growing market for such solutions.
Chairman Rick Michaels stated, “We are pleased to participate in the investment group acquiring a strategic interest alongside European investors. We will be looking at the opportunities for international expansion through both organic group acquisitions and international joint ventures where the markets would be appropriate for these types of services. CEA will be assisting the company as a strategic advisor.”
About Rheingold Capital
Rheingold Capital is an industrial holding company that invests into mid-sized companies across Western Europe with offices in Germany, Switzerland, The Netherlands and Spain. Rheingold focuses on corporate carve-outs and its dedicated international team provides its broad expertise to the operating businesses and corporate sellers.
About CEA Group
Founded in 1973, CEA is a leading provider of investment banking services. With a team of experienced personnel worldwide, CEA has an unequaled depth and breadth of industry knowledge, expertise and long-standing industry relationships. CEA has completed over 1,000 transactions totaling $60+ bn in more than 60 countries. CEA’s reputation and track record of success are built on delivering innovative, value-added solutions and services to clients worldwide. (Source: BUSINESS WIRE)
31 Jan 23. Mercury Systems Reports Second Quarter Fiscal 2023 Results; Initiates Review of Strategic Alternatives.
Second Quarter Highlights Include:
Bookings of $270.3m yielding book-to-bill of 1.18
Record backlog of $1.12bn
Revenues increased 4% over prior year with positive organic growth
Generated positive cash flow
Mercury Systems, Inc. (NASDAQ: MRCY, www.mrcy.com), reported operating results for the second quarter of fiscal 2023, ended December 30, 2022.
“In the second quarter, the Company generated positive organic growth and cash flow,” said Mark Aslett, Mercury’s President and Chief Executive Officer. “Driven by accelerated bookings growth, our book-to-bill was 1.18 for the quarter and backlog grew to a record $1.12bn. Looking forward to the second half of fiscal 2023, we expect to see continued revenue growth, higher margins and increased profitability and as a result, we’re maintaining our full-year guidance for revenue and adjusted EBITDA.”
“We see a favorable demand environment ahead even as we experienced some customer funding delays and continued supply chain challenges that are affecting the timing of conversion to revenue. Mercury is well-positioned to benefit from growth in U.S. and international defense spending, the increasing electronification of new and existing platforms, and ongoing supply chain delayering and reshoring.”
Second Quarter Fiscal 2023 Results
Total Company second quarter fiscal 2023 revenues were $229.6m, compared to $220.4m in the second quarter of fiscal 2022. The second quarter fiscal 2023 results included an aggregate of approximately $13.3m of revenue attributable to the Avalex Technologies and Atlanta Micro acquired businesses.
Total Company GAAP net loss for the second quarter of fiscal 2023 was $10.9m, or $0.19 per share, compared to $2.6m, or $0.05 per share, for the second quarter of fiscal 2022. Adjusted earnings per share (“adjusted EPS”) was $0.26 per share for the second quarter of fiscal 2023, compared to $0.39 per share in the second quarter of fiscal 2022.
Second quarter fiscal 2023 adjusted EBITDA for the total Company was $35.7m, compared to $38.1m for the second quarter of fiscal 2022.
Cash flows from operating activities in the second quarter of fiscal 2023 were $35.4m, compared to $6.8m in the second quarter of fiscal 2022. Free cash flow, defined as cash flows from operating activities less capital expenditures for property and equipment, was $22.2m for the second quarter of fiscal 2023 and $(1.2)m for the second quarter of fiscal 2022.
All per share information is presented on a fully diluted basis.
Bookings and Backlog
Total bookings for the second quarter of fiscal 2023 were $270.3m, yielding a book-to-bill ratio of 1.18 for the quarter.
Mercury’s total backlog at December 30, 2022 was $1.12bn, a $164.0m increase from a year ago. Of the December 30, 2022 total backlog, $765.5m represents orders expected to be recognized as revenue within the next 12 months.
This section presents our current expectations and estimates, given current visibility, on our business outlook for the current fiscal quarter and fiscal year 2023. It is possible that actual performance will differ materially from the estimates given, either on the upside or on the downside. Investors should consider all of the risks with respect to these estimates, including those listed in the Safe Harbor Statement below and in the Third Quarter and Fiscal 2023 Earnings Presentation and in our periodic filings with the U.S. Securities and Exchange Commission, and make themselves aware of how these risks may impact our actual performance. All references in this press release to the third quarter of fiscal 2023 and full fiscal 2023 are to the quarter ending March 31, 2023 and to the 52-week period ending June 30, 2023.
For the third quarter of fiscal 2023, revenues are forecasted to be in the range of $245.0m to $260.0m. GAAP net (loss) income for the third quarter is expected to be approximately $(5.8)m to $1.0m, or $(0.10) to $0.02 per share, assuming no incremental other non-operating adjustments, or non-recurring financing in the period, and approximately 56.9m weighted average diluted shares outstanding. Adjusted EBITDA for the third quarter of fiscal 2023 is expected to be in the range of $40.0m to $47.0m. Adjusted EPS is expected to be in the range of $0.32 to $0.42 per share.
For the full fiscal year 2023, revenues are forecasted to be in the range of $1.01bn to $1.05bn, and GAAP net income of $13.9m to $24.8m, or $0.24 to $0.44 per share, assuming no incremental other non-operating adjustments, or non-recurring financing in the period, and approximately 56.8m weighted average diluted shares outstanding. Adjusted EBITDA for the full fiscal year is expected to be approximately $202.5m to $215.0m, and adjusted EPS for the full fiscal year is expected to be approximately $1.90 to $2.08 per share.
Board’s Commitment to Shareholder Value Creation
The Mercury Board of Directors (“the Board”) regularly reviews the Company’s strategic plan, priorities and opportunities as part of its commitment to act in the best interest of the Company and its shareholders. To that end, the Board has decided to initiate a review of strategic alternatives to enhance shareholder value.
There can be no assurance that any transaction will be approved or consummated.
The Company does not intend to disclose developments relating to this process unless and until the Board has approved a specific agreement or transaction or has terminated its review.
Citi and Goldman Sachs & Co. LLC are serving as financial advisors to Mercury, and Shearman & Sterling LLP is serving as legal counsel.
January – Mercury announced its next-generation Rugged Edge Servers, featuring 4th generation Intel® Xeon® Scalable processors—formerly known as Sapphire Rapids—that will accelerate compute-intensive edge workloads and drive faster insights for critical aerospace and defense missions. Designed from the ground up to dissipate massive thermal loads created by larger and more powerful components, Mercury’s innovative design delivers higher computational performance in a smaller footprint that is optimized for many military and industrial applications.
January – Mercury announced that Vivek Upadhyaya joined the company as Vice President of Finance to lead the corporate finance team and be responsible for forecasting and analysis as well as internal management reporting. Upadhyaya was most recently Chief Financial Officer, Treasurer, and Chief Information Officer of Leonardo Electronics U.S., Inc., a subsidiary of Leonardo and supplier of laser and electronic solutions to the defense, security, and medical industries.
January – Mercury introduced a new COTS open-architecture board that delivers the latest commercial signal processing technology for aerospace and defense applications, driving higher performance from a smaller form factor. The DRF3182 Direct RF Processing Module is the first standard product purpose-built for the aerospace and defense industry that leverages Intel’s new Stratix® 10 AX SoC field programmable gate array (FPGA), which adds a key capability to the Mercury Processing Platform by enabling the direct digitization and processing of broadband RF signals.
November — The U.S. Army announced that Mercury was one of three finalists awarded cash prizes to drive technology innovations that facilitate the convergence of warfighting platforms. Mercury presented a prototype for improving the C4ISR/Electronic Warfare Modular Open Suite of Standards as part of xTechCMFF Integration Fest, an event hosted by the Army xTech Program.
November – Mercury introduced a new radiation-tolerant version of its proven 8GB DDR4 memory component that sets a new bar for performance in data-intensive processing applications in space. As space systems become more complex, new capabilities and requirements necessitate high-density memory capabilities to complement greater processing power. And as space systems are increasingly developed with smaller form factors, Mercury’s 8GB DDR4 components offer 75% space savings compared to alternative memory options.
October – Mercury announced that its new mPOD, a rapidly reprogrammable electronic attack training system designed to train pilots using realistic, near-peer jamming capabilities, successfully completed initial flight testing and is available for order. Tactical Air Support, a leader in commercial air services, tactical aviation training, and technical advisory services for U.S. military and international partners, oversaw three days of flight testing that ran beyond visual range tactical intercept training engagements replicating adversary tactics. F-5 aircraft equipped with Mercury’s mPOD training system successfully broke, delayed, and denied opposing fighter radar locks, created multiple false targets on the opposing fighter radar, and performed other electronic attack techniques.
October – Mercury announced that the mission computer it built for the Airbus A330 MRTT allowed the tanker to receive the world’s first certification for automatic air-to-air refueling boom operations. Mercury Mission Systems International, located in Switzerland and Spain, delivered a purpose-built computer for Airbus based on the commercial off-the-shelf ROCK family of pre-integrated subsystem platforms that draw from a range of safety-certifiable modular COTS building blocks, addressing both the need for high-end video processing and the safety-criticality of the application.
BATTLESPACE Comment: The Mercury stock price jumped 20% on news of the departure of CFO Michael Ruppert, Executive Vice President, Chief Financial Officer, and Treasurer. Mercury needs to explain its strategy in a clearer and more concise manner in our view. The Press Releases are very top heavy in ‘Tech Speak,’ and say little about strategy. The company’s perception with the UK MoD and others is not high and needs strengthening if they are to compete successfully head on with companies such as Curtiss-Wright. We would expect rationalisation of the portfolio given this departure with a more streamlined product range. ‘Who are Mercury and What do they do,’ is a question I am sometimes asked when discussing the company. We note the comment: To that end, the Board has decided to initiate a review of strategic alternatives to enhance shareholder value.
01 Feb 23. SPX CommTech announces strategic partnership agreement to support expansion in Europe.
- Key partnership with Global Aviation Systems will drive end-customer and system integrator growth in Germany, Austria, Switzerland, Czech Republic, and Slovakia
Radio Frequency (RF) solutions manufacturer SPX CommTech, part of SPX Technologies, today announces a strategic partnership in Europe. Aviation sales and service provider, Global Aviation Systems will cover German and Switzerland exclusively as well as Austria, Czech Republic and Slovakia. The new agreement is part of the company’s initiative to drive growth and bolster in-country support for its Tactical Data Link portfolio, particularly for aircraft and Unmanned Aerial Systems (UAS).
Jackson White, Business Development Director at SPX CommTech: “In response to growing demand for proven innovation in the aviation and security spaces, we’re expanding European operations via a new partner network. This is a strategic move to allow a greater number of end-user customers and key system integrators to access SPX CommTech solutions, which are already helping to create a smarter, more secure future all over the world.”
Combining decades of technology innovation and expertise, SPX CommTech’s Tactical Data Link portfolio – developed by Enterprise Control Systems (ECS) – allows a range of aviation, security, military and emergency service teams to securely and reliably transfer video and data between enabled-aircraft and ground teams over long distances for airborne Intelligence, Surveillance, Reconnaissance (ISR) requirements. The ECS Evenlode system is operationally proven and provides its users with secure long range video and bidirectional TCP IP data transfer of up to 20 Mbs.
Alexander Fischer, member of the board of Directors at Global Aviation Systems: “With over 40 years’ experience in the aviation industry, at Global Aviation Systems we’re greatly customer orientated and rely on sustainable partnerships, based on clear and aligned business ethics. That’s why we’re working closely with SPX CommTech and the ECS team to support its growth in Central and Eastern Europe. We look forward to combining our strong customer relations and orientation, technical skills and experience in mission systems, with ECS’s high technical performance, quality products and excellent project management.”
Based in Germany, Global Aviation Systems will now provide SPX CommTech Tactical Data Link solutions, granting in-country technical support to its customers.
About SPX CommTech – ECS
SPX CommTech, part of SPX Technologies Inc, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all.
SPX CommTech’s Tactical Data Link portfolio allows intelligence gathering agencies, special forces, emergency response, and security teams to securely and reliably transfer video and data between enabled-aircraft and ground teams over long distances for airborne Intelligence, Surveillance, Reconnaissance (ISR).
Combining decades of technology innovation and expertise with agile and collaborative teams, SPX CommTech delivers sustainable and exceptional results to customers across the globe – in regions including Europe, APAC, the Middle East and Africa.
31 Jan 23. Cambium Networks Increases Momentum in Defense and Security Programs. Cambium Networks (NASDAQ: CMBM), a leading global provider of wireless networking solutions, today announced that its fixed wireless infrastructure solutions continue to evolve and support broadband applications for national defense, border security, first responders, garrison operations and theater communications. Cambium Networks has demonstrated technical leadership, performance, and survivability in harsh conditions in defense and security applications around the world for over fifteen years.
“There are no second chances when it comes to mission critical defense communications. Whether it’s during conflict or providing support at ports and bases, the military needs a dependable communications program that just works—the first time and every time,” said Atul Bhatnagar, president and CEO of Cambium Networks. “Cambium Networks’ broadband solutions provide superior performance and are proven to withstand harsh, evolving conditions.”
Since the second quarter of 2022, Cambium Networks has been awarded contracts for multiple global defense and security programs, including:
- Selected for a Major Tactical Defense Program of Record refresh — second iteration
- U.S. Army: Microwave radio contract — second iteration
- U.S. Army: Backhaul radio contract for the National Training Center
- U.S. Navy: Approved the Cambium Networks cnMatrix™ TX series Ethernet switch with an Authority to Operate (ATO) for a major program of record
- U.S. Marine Corps: Microwave radio contract for USMC Training Program of Record
- U.S. Air Force: Awarded project in support of NATO
- Abroad: Awarded three large contracts for defense programs in Western and Eastern Europe and Africa
- Successfully completed Government Acceptance Testing (GAT) for a large U.S. Army program
- Successfully completed Factory Acceptance Test for two MoD programs in Europe and Africa
- Delivering products to several Department of Justice (DoJ) video networks
- Shipping products for Army, Navy, Air Force, and Marine Corps
- PTP 78700, a Microwave Line-of-Sight (MLoS) radio operating in the 7 and 8 GHz band, received JF-12 (Joint Frequency Allocation-to-Equipment Process) spectrum certification by the US Government. This certification allows defense and security customers additional licensed spectrum to deploy MLoS programs as an alternative to the already congested NATO Band 4 and unlicensed 5 GHz bands.
- PTP 700’s FIPS 140-2 accreditation was re-verified by the National Institute of Standards and Technology (NIST) under certificate #4243. The PTP 700 operates in NATO Band 4, 4.4 – 4.9 GHz, but also bridges from 4.9 GHz to 5.875 GHz, providing a high level of frequency agility. The PTP 700’s embedded dynamic spectrum optimization (DSO) was also recently updated to further enhance its ability to address electronic counter measures like adversary jamming and interception capabilities.
Cambium’s ONE Network provides a complete networking infrastructure portfolio along with cnMatrix™ for the entire network, enabling:
- Simplified operations with a secure converged network.
- Implement intelligent automation across all elements.
- Deliver consistently predictable performance.
“Cambium Networks has recently achieved notable accreditations on two purpose built fixed wireless broadband network solutions,” said Ryan Peterson, Global Defense and Security Sales Director, Cambium Networks. “Defense and national security network operators can now include cnMatrix™ Routing and Switching systems and Microwave Line of Site MLoS Turn-Key Connectivity Kits in their plans.”
Cambium Networks’ federal and defense solutions are proven wireless communications for military battlefield, border, garrison and infrastructure applications with the following accreditations:
- NIST FIPS 140-2 validation
- NTIA SPS (Spectrum Planning Subcommittee) certification
- JF-12 (Joint Frequency Allocation-to-Equipment Process) spectrum certification
- Multiple layers of FIPS-validated security including physical, certificate, and over-the-air-rekey security
- TAA compliant hardware and ancillary items
- Ancillary equipment adheres to RoHS 3 standards
About Cambium Networks
Cambium Networks delivers wireless communications that work for businesses, communities, and cities worldwide. Ms of our radios are deployed to connect people, places and things with a unified wireless fabric that spans multiple standards and frequencies of fixed wireless and Wi-Fi, all managed centrally via the cloud. Our multi-gigabit wireless fabric offers a compelling value proposition over traditional fiber and alternative wireless solutions. We work with our Cambium certified ConnectedPartners to deliver purpose-built networks for service provider, enterprise, industrial, and government connectivity solutions in urban, suburban, and rural environments, with wireless that just works. (Source: BUSINESS WIRE)
31 Jan 23. Capella Space Announces Creation of Capella Federal to Provide Enhanced Services to U.S. Government Customers and Expands Government Advisory Board. Capella Space, an American space tech company with data and satellite solutions for government and commercial applications, today announced the formation of its wholly-owned subsidiary, Capella Federal. The new entity enables the company to further support its U.S. government and defense agency customers by providing expanded access to its Synthetic Aperture Radar (SAR) imagery with increased security and continued on-demand reliability.
Capella Space has worked closely with the public sector since its inception, having previously signed contracts with the National Reconnaissance Office, National Geospatial-Intelligence Agency, U.S. Air Force, U.S. Navy, U.S. Space Force and others. Capella Federal enables the company to further expand its work with U.S. government customers and opens the door to new partnership opportunities.
Capella Federal tailors the delivery of SAR imagery specifically to meet the heightened security and facility clearance needs of its U.S. government, defense, and intelligence customers at a larger scale. With Capella’s technology, government agencies can gather data and images of Earth in any weather, any time of day or night. The increased specialized access allows them to continue to have eyes on the ground, informing mission-critical decisions around national security and enabling greater global transparency.
“Since the inception of Capella Space, and especially in the wake of the ongoing Ukraine crisis, we’ve seen significant demand from our U.S. government customers to utilize Capella’s SAR capabilities,” said Payam Banazadeh, Capella Space CEO & Founder. “Capella Federal will allow for that continued support and will provide some of our most valued customers with the necessary tools to make critical, potentially life-saving decisions.”
Eric Traupe, retired United States Marine Infantry Officer and former Assistant Director of the Central Intelligence Agency for the Near East, will serve as President of Capella Federal. Over the past three decades, Traupe has tackled the full range of U.S. national security issues, including serving on the front lines of the U.S. counterterrorism fight in the CIA’s paramilitary ranks. Traupe joins an already impressive leadership team including Vice President and General Manager, Amy Hopkins, who has been overseeing Capella’s government work since joining the company in late 2021.
“Over the course of my career, I’ve experienced firsthand the importance of having access to secure, reliable and timely earth observation data,” said Traupe. “Capella’s technology has proven its potential to revolutionize the way our U.S. military collects and analyzes space data. I’m honored to serve as President of Capella Federal to lead the critical support of our U.S. government customers.”
Clayton Hutmacher, former Director of Operations in the U.S. Special Operation Command, will serve as Chairman of the Capella Federal Board of Directors and will also participate as a member of the Capella Space Government Advisory Board. Hutmacher completed over 40 years of government service and is currently the President and Chief Executive Officer of the Special Operations Warrior Foundation.
Capella Space also expanded its Government Advisory Board to include several new members who bring decades of military and intelligence experience. Retired Army Lieutenant General and former director of the Defense Intelligence Agency (DIA), Robert P. Ashley Jr. will serve as the Government Advisory Board Chair. Ashley joins existing members including former Deputy Assistant Secretary of Defense, Space Policy Douglas Loverro; Former Deputy Under Secretary of Defense (Space) Gil Klinger; and Former Director of the National Reconnaissance Office (NRO) Jeffrey Harris.
This news comes on the heels of Capella Space closing a $60 m growth equity financing round from the U.S. Innovative Technology Fund to expand satellite imaging capacity and meet rapidly growing customer demand.
To learn more about Capella Federal, visit capellaspace.com/about-us/federal.
About Capella Space:
Capella Space is an American space tech company with data and satellite solutions for government and commercial use. A pioneer in the Earth observation industry, Capella is the first U.S. company with a constellation of Synthetic Aperture Radar (SAR) satellites, delivering the best quality, highest resolution SAR imagery commercially available. Capella provides easy access to frequent and timely information affecting dozens of industries worldwide, including defense and intelligence, supply chain, insurance, maritime and others. Its market-leading SAR satellites are matched with unparalleled data infrastructure to quickly deliver reliable global insights that sharpen our understanding of the changing world – improving decisions about commerce, conservation, and security on Earth. Headquartered in San Francisco, California with additional locations in Denver, Colorado and Washington, D.C., Capella’s satellites are operated, designed and manufactured in the USA. Learn more at www.capellaspace.com. (Source: BUSINESS WIRE)
31 Jan 23. Highlander Partners Announces the Acquisition of Black Sage Technologies, a Leading Provider of Counter-UAS Technology and Solutions. Black Sage represents the third investment made in connection with a newly formed division of Highlander that was established to pursue
Highlander Partners, L.P. (“Highlander”), a leading private investment firm, today announced the acquisition of Black Sage Technologies (“Black Sage” or “the Company”) from Acorn Growth Companies. Founded in 2014 and headquartered in Boise, ID, Black Sage is an industry leading multi-mission platform provider of Counter Unmanned Aircraft Systems (“C-UAS” or “Counter-UAS”) and security solutions for military, internal security, and critical infrastructure industries.
The rise of drone activity has created an immediate need for sophisticated C-UAS systems and solutions to protect against threats to people and critical infrastructure. Black Sage has established itself as a leader in the C-UAS space with its proprietary, highly advanced, scalable open architecture DefenseOS command and control (“C2”) software. DefenseOS delivers leading automation capabilities, including AI/ML automated target recognition and threat evaluation, ISR functionality, electronic warfare, and kinetic and non-kinetic effectors. The Company operates as an integrator of over 40 cohesive sensor and effector systems. This capability facilitates an offering of highly configurable and hardware agnostic systems that are customized to fit mission objectives and customer requisites. Such flexibility ensures that customers are able to address evolving UAS threats.
In 2022, Highlander formed High Point Aerotechnologies (“High Point”) as a division of Highlander to assist in civilian and military defense investments specifically related to the rapidly evolving C-UAS and UAS sectors. Highlander has quickly made significant progress with this initiative. Black Sage represents Highlander’s second focused C-UAS acquisition and complements the C-UAS platform that was established in late-2022 with Highlander’s acquisition of Liteye Systems. It is the third overall related investment, including the recent UAS acquisition of Dzyne Technologies. The assembled High Point team now consists of a variety of established leaders with backgrounds in defense, government, and technology, each of whom will assist Black Sage on tactical opportunities, government relations, regulatory and legislative matters, emerging technologies, and growth initiatives.
Al White, CEO of Black Sage commented, “The Black Sage executive team is excited to join forces with Highlander and High Point to continue our growth trajectory in the C-UAS, critical infrastructure, and security markets. The need for effective multi-mission C-UAS solutions is increasingly evident and we believe that Highlander will bring the necessary government and military relationships, industry experience, and long-term financial approach to accelerate our objectives in driving the business forward.”
Ben Slater, Partner and COO of Highlander, commented, “The acquisition of Black Sage marks Highlander’s third C-UAS/UAS acquisition since the formation of High Point in May 2022, reconfirming our strategy of targeting technology leaders in these high growth, developing sectors. We are confident that Black Sage, with its highly advanced systems, will further our mission of creating world-class, cutting-edge solutions to aid in the defense of our armed forces, allies, and critical infrastructure. We are thrilled to partner with the entire Black Sage team.”
Jeff L. Hull, President and CEO of Highlander, added, “Black Sage has solidified a leadership role in the emerging C-UAS category. Its integrated solutions, driven by their highly advanced DefenseOS software, provide a differentiated solution to the market. We are highly impressed with the vision of the Black Sage team and look forward to working together to meet the large and growing need for effective counter-drone defense solutions.”
About Black Sage Technologies
Black Sage Technologies is a leading technology manufacturer and integrator of multi-mission C-UAS and security solutions that are designed to protect lives and critical infrastructure from threats around the world. The Company’s platforms are powered by an industry leading, proprietary operating system, DefenseOS. This AI-driven, open architecture command and control software suite fuses layered sensor data and automates the C-UAS kill chain. Along with the integration of over 40 sensor and effector systems, Black Sage continues to deliver leading technologies and solutions to its customers. For more information, visit www.blacksagetech.com.
About Highlander Partners
Highlander Partners, L.P. is a Dallas-based private investment firm with approximately $3bn of assets under management. The firm focuses on making investments in businesses in targeted industries in which the principals of the firm have significant operating and investing experience. Highlander Partners uses a buy and build investment approach, creating value by helping companies grow both organically and through acquisitions. For more information, visit www.highlander-partners.com.
About High Point Aerotechnologies
High Point Aerotechnologies LLC is a division of Highlander Partners established specifically to pursue the rapidly evolving C-UAS, UAS, and defense industries. High Point’s objective is to become a recognized leader in its focus categories by acquiring preeminent technologies, companies, and talent. High Point is committed to supporting the defense of our nation against evolving threats and will remain mission-focused on developing needed capabilities for the U.S. and our allies. For more information, please visit www.highpointaerotech.com. (Source: BUSINESS WIRE)
31 Jan 23. Oshkosh Corporation Reports Fiscal 2022 Fourth Quarter and Full Year Results.
Reports Fourth Quarter Sales of $2.20bn, up 23 Percent.
Reports Strong Orders Leading to a Record Backlog of Over $14bn.
Reports Fourth Quarter Diluted Earnings per Share of $1.14 and Adjusted1 Earnings per Share of $1.60.
Reports Fiscal 2022 Diluted Earnings per Share of $2.63 and Adjusted1 Earnings per Share of $3.46
Forms New Vocational Segment and Announces Divestment of Rear Discharge Concrete Mixer Business
Announces 11 Percent Increase in Quarterly Cash Dividend to $0.41 Per Share
Initiates Fiscal 2023 Earnings per Share Guidance in the Range of $5.50
Oshkosh Corporation (NYSE: OSK), a leading innovator of mission-critical vehicles and essential equipment, today reported fiscal 2022 fourth quarter net income of $75.1m, or $1.14 per diluted share, compared to $24.2m, or $0.36 per diluted share, for the three months ended December 31, 2021. Adjusted1 net income was $105.1m, or $1.60 per diluted share, for the fourth quarter of fiscal 2022. Adjusted1 net income for the fourth quarter of fiscal 2022 excludes after-tax charges of $25.7m for a settlement of a frozen pension plan and $4.3m for an impairment of an intangible asset in the Defense segment. Comparisons in this news release are to the three and twelve months ended December 31, 2021, unless otherwise noted.
“Oshkosh Corporation team members delivered a strong close to fiscal 2022 with robust sequential and year over year revenue and operating income growth during the fourth quarter,” stated John C. Pfeifer, Oshkosh Corporation president and chief executive officer. “Strong market fundamentals and elevated demand for our products drove high order rates in the quarter and a record backlog of more than $14bn. We expect that robust demand will continue to support strong revenue and earnings growth in fiscal 2023 and beyond. While we continued to experience unfavorable supply chain dynamics and inflation impacts, our teams took appropriate actions to minimize and mitigate these challenges.
“This morning we are also announcing the formation of the new Oshkosh Corporation Vocational segment. We are combining our Fire & Emergency segment and Commercial segment businesses into this new segment. The segment will be focused on designing, developing and manufacturing purpose-built vocational vehicles and we expect to drive enhanced efficiencies while better leveraging our scale in technology development at an accelerated pace. We believe the Vocational segment will also serve as a platform for further organic and inorganic growth opportunities in several important end markets. We expect the Vocational segment’s revenues to grow at a high single digit compound annual growth rate to $3bn with over 12 percent operating margins over the next few years. The Vocational segment will be led by our current Fire & Emergency segment president Jim Johnson. With this change, Oshkosh Corporation’s businesses will be aligned in three segments: Access, Defense and Vocational. We are also announcing that we have entered into a definitive agreement to sell our rear discharge concrete mixer business and expect to close by the end of this quarter.
“Based on strong demand that is supported by over $14bn in backlog, we are pleased to announce fiscal 2023 expectations for revenue in the range of $8.4bn and earnings per share in the range of $5.50, representing strong growth compared to fiscal 2022. Our ranges reflect expectations for ongoing supply chain constraints with modest improvements expected during fiscal 2023,” added Pfeifer.
Consolidated sales in the fourth quarter of fiscal 2022 increased 23.0 percent to $2.20bn due to higher sales volume across all segments and improved pricing.
Consolidated operating income in the fourth quarter of fiscal 2022 increased 253.4 percent to $147.0m, or 6.7 percent of sales, compared to $41.6m, or 2.3 percent of sales, for the three months ended December 31, 2021. The increase was primarily due to improved pricing and higher sales volume, offset in part by higher material & logistics costs and higher production costs.
Consolidated operating results for the fourth quarter of fiscal 2022 included a charge of $5.6m for the impairment of an intangible asset in the Defense segment. Excluding this item, adjusted1 operating income in the fourth quarter of fiscal 2022 was $152.6m, or 6.9 percent of sales.
Factors affecting fourth quarter results for the Company’s business segments included:
Access Equipment – Access Equipment segment sales for the fourth quarter of fiscal 2022 increased 28.9 percent to $1.07bn as a result of improved sales volume and higher pricing in response to higher input costs. Access Equipment segment sales in the fourth quarter of fiscal 2022 were unfavorably impacted by $20.0m from changes in foreign currency exchange rates.
Access Equipment segment operating income in the fourth quarter of fiscal 2022 increased 203.7 percent to $116.0m, or 10.8 percent of sales, compared to $38.2m, or 4.6 percent of sales, for the three months ended December 31, 2021. The increase was primarily due to higher pricing and higher sales volume, offset in part by higher material & logistics costs and higher production costs.
Defense – Defense segment sales for the fourth quarter of fiscal 2022 increased 3.0 percent to $547.7m due to higher aftermarket parts shipments, offset in part by lower Joint Light Tactical Vehicle program volume.
Defense segment operating income in the fourth quarter of fiscal 2022 increased 24.4 percent to $19.9m, or 3.6 percent of sales, compared to $16.0m, or 3.0 percent of sales, for the three months ended December 31, 2021. The increase was due to favorable product mix offset in part by an intangible asset impairment.
Defense segment results for the fourth quarter of fiscal 2022 included the charge of $5.6m for the impairment of an intangible asset. Excluding this charge, adjusted1 operating income in the fourth quarter of fiscal 2022 was $25.5m, or 4.7 percent of sales.
Fire & Emergency – Fire & Emergency segment sales for the fourth quarter of fiscal 2022 increased 37.2 percent to $300.0m due to higher fire truck deliveries as bottlenecks in manufacturing eased during the quarter as well as higher pricing in response to higher input costs.
Fire & Emergency segment operating income in the fourth quarter of fiscal 2022 increased 49.1 percent to $23.7m, or 7.9 percent of sales, compared to $15.9m, or 7.3 percent of sales, for the three months ended December 31, 2021. The increase was due to higher sales volume and higher pricing, offset in part by higher material & logistics costs and higher production costs.
Commercial – Commercial segment sales for the fourth quarter of fiscal 2022 increased 34.3 percent to $282.9m due to higher refuse collection vehicle volume and higher pricing in response to higher input costs.
Commercial segment operating income in the fourth quarter of fiscal 2022 increased 641.7 percent to $17.8m, or 6.3 percent of sales, compared to $2.4m, or 1.1 percent of sales, for the three months ended December 31, 2021. The increase in operating income was largely due to improved pricing and higher sales volume, offset in part by higher material & logistics costs and higher new product development spending.
Corporate – Corporate costs in the fourth quarter of fiscal 2022 decreased $0.5m to $30.4m due to lower project spend and lower incentive compensation costs, offset in part by higher share-based compensation costs.
Interest Expense Net of Interest Income – Interest expense net of interest income in the fourth quarter of fiscal 2022 decreased $2.3m to $9.5m.
Miscellaneous, net – Miscellaneous expense for the fourth quarter of fiscal 2022 primarily related to a $33.6m settlement of a frozen defined benefit pension plan.
Provision for Income Taxes – The Company recorded income tax expense in the fourth quarter of fiscal 2022 of $29.1m, or 27.6 percent of pre-tax income, compared to $1.2m, or 5.0 percent of pre-tax income, in the three months ended December 31, 2021.
The Company reported net sales for fiscal 2022 of $8.28 bn and net income of $173.9m, or $2.63 per diluted share. This compares with net sales of $7.95bn and net income of $461.1m, or $6.68 per diluted share, in the prior year. The decline in net income in fiscal 2022 compared to the twelve months ended December 31, 2021 was the result of higher material & logistics costs, higher manufacturing costs largely associated with supply chain challenges, the absence of a carryback of a U.S. net operating loss to previous tax years, adverse cumulative contract adjustments in the Defense segment, the after-tax charge for the settlement of the frozen pension plan, higher new product development spending and a charge 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.
Adjusted1 net income was $228.7m, or $3.46 per diluted share, for fiscal 2022 and $378.2m, or $5.48 per diluted share, for the twelve months ended December 31, 2021. Adjusted1 net income excludes the charge of $25.7m for the settlement of the pension plan, the charge of $18.1m associated with foreign anti-hybrid tax legislation, $6.4m for the impairment of intangible assets and a charge of $4.6m for the release of cumulative translation adjustment losses. Adjusted1 results for the twelve months ended December 31, 2021 excluded a $75.3m tax benefit associated with the carryback of a U.S. net operating loss to prior years and an $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.
Change in Inventory Accounting
Historically, approximately 80 percent of the Company’s inventories were accounted for under the last-in, first-out (LIFO) method of accounting. During the fourth quarter of fiscal 2022, the Company converted its accounting for all inventory to the first-in, first-out (FIFO) method of accounting to better align with the accounting practices of peers, to more accurately reflect the current value and physical flow of inventory and to harmonize the accounting method for inventories across the Company. The change in accounting has been retrospectively applied to the consolidated financial statements.
The Company’s Board of Directors today declared a quarterly cash dividend of $0.41 per share of Common Stock. The dividend represents an increase of 11 percent from the previous dividend and will be payable on March 2, 2023 to shareholders of record as of February 16, 2023.
Fiscal 2023 Expectations
The Company announced its fiscal 2023 diluted earnings per share estimate in the range of $5.50 on projected net sales in the range of $8.4 bn. These estimates reflect operating income in the range of $530 m. This guidance includes an impact of approximately $0.80 per share related to incentive compensation costs returning to typical levels and increased new product development investment of approximately $0.30 per share. (Source: BUSINESS WIRE)
31 Jan 23. The share price of cyber security group Darktrace has dropped by around a fifth since the start of this week after a short seller alleged potential accounting errors at one of the UK’s biggest tech companies. Quintessential Capital Management published a detailed report on Tuesday making claims about potential irregularities in contracts with resellers and customers, predominantly dating from before Darktrace’s public listing in 2021. The New York-based hedge fund pointed towards connections between Darktrace and Autonomy, the UK software company with which Darktrace shares many ties. Autonomy was accused of irregular accounting practices relating to its $11.7bn sale to Hewlett-Packard in 2011. The company’s share price fell 12 per cent when Quintessential first disclosed its short position on Monday. The shares then fell a further 8 per cent on Tuesday after the report was published, down to 200p. Darktrace said in a public statement that it had never been contacted by the authors of the Quintessential report. It said the company had “full confidence” in its accounting practices and the “integrity of our independently audited financial statements”. “We have rigorous controls in place across our business to ensure we comply fully with IFRS accounting standards,” it added. “Neither Darktrace nor any of its acting executives has ever been the target of these litigation proceedings,” Darktrace told the Financial Times. The cyber security group’s share price had already fallen by more than 14 per cent this month after it cut its full-year revenue forecast, warning that challenging macroeconomic conditions were having an impact on customer growth. The allegations presented by Quintessential add to the scepticism that has surrounded Darktrace for close to a decade, in large part due to its links to Autonomy. Autonomy was alleged to have used false accounting practices to overinflate the value of the business ahead of its 2011 sale to Hewlett-Packard, which the US tech giant said was the reason behind its $8.8bn writedown of Autonomy in November 2012. Former Autonomy executives have served in roles or been linked to Darktrace, including Sushovan Hussain, the former chief financial officer now serving a prison term in the US after being found guilty of fraud relating to the sale of Autonomy to HP, and Nicole Eagan, chief strategy officer at Darktrace who was Autonomy’s chief marketing officer. Eagan helped set up Darktrace with the current chief executive Poppy Gustafsson, previously Autonomy’s corporate controller, using funds in part from former Autonomy chief Mike Lynch. Lynch is battling against extradition to the US to face fraud charges after the High Court found in 2022 that he and his finance director defrauded HP by manipulating Autonomy’s accounts to inflate the value of the company. He has denied the accusation. Shareholders in Darktrace have long complained that the company has been unfairly linked with Autonomy. Last year, Thoma Bravo, a US-based technology private equity group, flirted with acquiring Darktrace to add to its growing portfolio of cyber security investments, but changed its mind in early September. The hedge fund Shadowfall also has a public short position on the company, claiming Darktrace overestimates its potential customer base and underspends on research and development compared with peers. (Source: FT.com)
31 Jan 23. Kromek Group plc (“Kromek” or the “Group”) Interim Results. Kromek Group plc (AIM: KMK), a leading developer of radiation and bio-detection technology solutions for the advanced imaging and CBRN detection segments, announces its interim results for the six months ended 31 October 2022.
Financial Summary & Outlook
- Revenue increased by 44% to £6.8m (H1 2022: £4.7m)
- Gross margin of 40.4% (H1 2022: 46.8%)
- Adjusted EBITDA* was £2.7m loss (H1 2022: £0.6m loss), primarily reflecting FX impact and inflation related costs
- Substantial order book and good visibility into H2, with 91% of forecast FY revenue already awarded, contracted, shipped or provided by regular repeat business
- Expect to be EBITDA positive and broadly cashflow neutral in H2
- Cash and cash equivalents at 31 October 2022 were £1.0m (30 April 2022: £5.1m)
o Cash position improved post period, with cash and cash equivalents of £1.3m at 23 January 2023
- Expecting strong revenue growth in H2 with continued contract wins in both the CBRN detection and advanced imaging segments. Engaged with eight tier 1 and tier 2 OEMs in key target area of medical imaging and Board expects to announce a number of contracts across the Group in the near term
- On track for record revenue for FY 2023: Kromek expects to report over 45% year-on-year growth
*A reconciliation of adjusted EBITDA can be found in the Financial Review.
- Strong revenue growth with delivery under component supply agreements and increased customer engagement for future projects
- Excellent progress in medical imaging:
o Significant expansion in customer engagement for development programmes in key target areas of single photon emission computed tomography (“SPECT”) and photon-counting computed tomography (“CT”)
o Launch by Spectrum Dynamics Medical (“Spectrum Dynamics”) of the world’s first digital SPECT/CT scanner for higher energy imaging, which uses Kromek detectors
o Won two new orders worth a total of $751k from existing OEM customers
o Post period, received £2.5m in funding from Innovate UK for two programmes to further develop a low dose molecular breast imaging (“MBI”) technology based on Kromek’s CZT-based SPECT detectors
Chemical, Biological, Radiological and Nuclear (“CBRN”) Detection
- Significant momentum in nuclear security, with the winning and delivery of new and repeat orders, participation in a greater number of tenders and establishing key distribution partnerships:
o Received and delivered two orders from existing US customers totalling $2m for the Group’s D3S-ID and D3M wearable nuclear radiation detectors
o Secured a distribution agreement with Smiths Detection to distribute the Group’s nuclear security solutions to North and South American markets, which was expanded post period to include the Middle East and certain key markets in Asia and Australasia
o Post period, the Group was awarded and delivered two contracts, totalling £1.5m, for the supply of its D3M and D3S-based product lines to European government end-users; and received a repeat order, for $836k, from a US government customer for the D3S-ID
- Post period, received a £4.9m contract from a UK government department for a three-year programme to deliver bio-security solutions
Manufacturing and IP
- Expanded production capabilities and implemented several productivity improvements leading to further cost efficiency in CZT manufacturing
- 4 new patents filed and 2 granted during the period
Dr Arnab Basu, CEO of Kromek, said: “This has been a record six months for Kromek. We’ve generated our highest ever revenue in an interim period while building our substantial pipeline for the full year and beyond. Our engagement with customers and potential customers in advanced imaging and CBRN detection has grown significantly. In our key target market of SPECT/CT, we are now working with eight tier 1 and tier 2 OEMs to get qualified and designed into their next-generation medical imaging systems – which reflects our position as the only large-scale, independent provider of CZT. At the same time, the geopolitical conflict continues to drive strong demand for our nuclear security products as governments increase their defence spending. Whilst we have been significantly impacted during the period by the inflationary environment and currency pressures, we are seeing this ease in the second half and, combined with strong revenue growth, expect to be EBITDA positive for H2 2023. Accordingly, with the excellent revenue momentum and highest ever levels of customer engagement, we look to the future with confidence.”
30 Jan 23. Porvair boosts efficiencies through targeted investments.
The filtration manufacturing company boosted margins by investing in automation.
- Operating margins improve
- Management cautious about the year ahead
Porvair (PRV) creates filters that are used in industrial and manufacturing applications. Its three biggest markets are aerospace, laboratories and metal melting. The latest full-year figures detail 18 per cent revenue growth and improving profitability. But with growing macroeconomic concerns, and a possible fall-away in industrial activity, the outlook for FY2023 is far from certain.
The strongest top-line growth came in the metal melting business. Revenue there grew 21 per cent to £45.2mn with more than 90bn cans produced from aluminium filtered by Porvair in 2022. The aerospace and industrial segment saw the fastest rise in profit thanks to the bounce-back in travel demand. Revenue from the division rose 16 per cent to £64.7mn, while adjusted operating profit increased by 64 per cent. Aerospace performance was helped by the ability to efficiently push through price rises to customers, which more than offset an accompanying increase in costs. This pricing power is good news for investors. On top of this, Porvair has been bringing down its own costs through capital investment.
Group operating profit margin improved from 10.8 per cent to 11.5 per cent due to “consistent investment in productivity over the last five years”. It has been automating more of its procedures, and last year investment continued with capital expenditure rising from £3.2mn to £4.9mn.
This year, management sees “reasons for caution” due to supply chain dislocation and wider economic concerns. Industrial spending is usually cyclical, so the group is more exposed than some businesses. However, 50 per cent of group revenue comes from the US market, where manufacturers are increasingly looking to boost efficiencies.
Economic concerns are weighing on analyst expectations, with FactSet consensus forecasting that earnings per share will drop 10 per cent in FY2023 to 37p, before rising slightly in the following year. This gives a forward price/earnings ratio of 20, which looks slightly ambitious given the uncertainty ahead. House broker Peel Hunt points to the net cash on the balance sheet, record order book at the end of the year, and improving productivity as reasons for optimism. However, global supply chains and de-globalisation are outside of management’s control. We stick with hold. Last IC View: Hold, 594p, 4 Jul 2022. (Source: Investors Chronicle)
27 Jan 23. Comtech eyes new partnerships to fill capability gaps.
Comtech Telecommunications Corporation is forming “strategic relationships” with six companies to fill gaps in its capabilities and improve its offering, according to the chief executive of the US-based communications equipment provider.
Comtech has agreed to the terms for two of the partnerships and is drafting paperwork for the other four, the company’s chairman, president, and CEO Ken Peterman told Janes on 20 January. The partners will provide technology such as artificial intelligence and data analytics.
Comtech is gearing up to disclose the names of the partners. “You’re going to see press releases on those relationships over the next 45 or so days,” Peterman said.
Peterman, who became CEO in August 2022, is also pushing his company to integrate its past acquisitions more tightly so it can offer “more comprehensive solutions” to customers. “Instead of just boxes, we can offer systems and services both in the satellite and the terrestrial networking market,” he said. Comtech’s acquisitions include TeleCommunication Systems (TCS) in 2016, CGC Technology in 2020, and UHP Networks in 2021. (Source: Janes)
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.