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10 Feb 23. Saab Year-End Report 2022: Strong order intake and delivering on our outlook.
Saab presents the year-end results for 2022.
Key highlights Q4 2022
- Order intake increased to SEK 29,866m (12,218) driven by growth in large and medium-sized orders.
- The order backlog increased by 21% and amounted to SEK 128bn (105).
- Sales increased 16%, whereof 14% organic, amounting to SEK 13,866m (11,943) with high volumes and deliveries in all business areas.
- EBITDA amounted to SEK 1,883m (1,587) with a margin of 13.6% (13.3).
- Operating income increased 22% and amounted to SEK 1,314m (1,076) with a margin of 9.5% (9.0).
- Net income increased to SEK 1,154m (791) in the period and EPS amounted to SEK 8.32 (5.52), corresponding to an increase of 51%.
- Operational cash flow amounted to SEK 1,682m (1,522) in the quarter.
- The Board proposes a dividend for 2022 of SEK 5.30 (4.90) per share.
- Outlook 2023: Organic sales growth to be around 15%, operating income growth higher than organic sales growth and positive operational cash flow.
Statement by Micael Johansson, President and CEO, Saab:
Strong order intake and delivering on our outlook
2022 will be remembered as a year that left a mark on us all due to the tragic war in Ukraine. The heightened geopolitical instability in Europe has led to a new reality which reminds us of our purpose as a company – to keep people and society safe.
For Saab, 2022 was a financially and operationally strong year. We delivered on our outlook for the year with an organic sales growth of 5%, EBIT growth of 13% and positive cash flow of SEK 2.6 billion. We continued to execute on our multi-domestic growth strategy and accelerated our efforts to increase future capacity and production facilities. Investments in innovation and R&D to develop new technologies and the capabilities of tomorrow also continued and we were successful in recruiting new talent. By year-end, we had a net increase of more than 1,000 new employees (FTEs). All of these initiatives position us well to capture the increased market demand.
Looking at the fourth quarter, we made the first deliveries of Saab’s new anti-submarine lightweight torpedo to Sweden. Moreover, Saab obtained the military type certificate for Gripen E from both Sweden and Brazil, meaning that the fighter aircraft is certified for operational use and is now flying in the skies of Brazil. In the quarter, we also announced the divestment of our Maritime Traffic Management operations, in line with our strategy to increase focus on our core areas.
Saab’s order intake in the quarter was strong and confirmed the strength of our product portfolio with growth in both Sweden and internationally. In the period, we strengthened our close relationship with the U.K. and Sweden with orders for the proven anti-tank weapon system NLAW. We also received upgrade and support contracts for Gripen to Sweden, which added to Aeronautics and Surveillance orders. The large order for two signal intelligence ships to Poland further strengthened the order backlog in Surveillance and Kockums.
Project activity and deliveries were high in the fourth quarter and organic sales increased 14%. Operating income grew by 22% and the operating margin was 9.5% (9.0). Dynamics had an exceptionally favourable mix and Surveillance and Kockums also showed margin improvement. The T-7 ramp-up and the civil business in Aeronautics continued to have negative impact on results. We expect these challenges to phase out over the coming years. Operational cash flow in the quarter was somewhat better than what we expected and amounted to SEK 1.7 billion (1.5).
We continue to be cautious on the industry-driven issues in supply chains, lead times for components and cost inflation and are proactively managing these together with our customers and suppliers.
During 2022, we remained focused on driving our sustainability agenda forward. In this regard, we strengthened our Responsible Sales Policy and governance structure and accelerated the work related to our Race to Zero commitment. During the quarter, Saab became the first major defence company to have its science-based targets approved by the SBTi. This is an important milestone in Saab’s sustainability journey and our efforts to reduce emissions and ensuring long-term competitiveness.
Going forward, we are positive on the outlook of our businesses. We have a solid order backlog and a strong position to capture further growth. For the full year 2023, we expect organic sales growth to be around 15% and operating income growth to be higher than organic sales growth. We estimate operational cash flow to be positive for 2023.
Based on Saab’s financial results and future outlook, the Board proposes an increase of the dividend to SEK 5.30 (4.90) per share for 2022.
I would like to take the opportunity and thank Saab’s exceptional employees for their efforts during the year and for ensuring Saab’s continued growth journey.
10 Feb 23. Patria Group’s Financial Review for 2022 – preliminary data.
Patria continued with a strong focus on its growth strategy supported by vehicle programmes.
Financial review of 2022
- Patria Group’s operating profit was EUR 53.8m and net sales EUR 627.1m.
- Patria Group’s profitability was at a strong level for the third consecutive year.
- Value of new orders received was EUR 794.8m.
- Equity ratio was 44.1% and net gearing 27.3%.
Highlights of 2022
- Patria grew and evolved determinedly in line with its growth strategy launched in January. 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 renewed corporate structure has been adopted successfully since the beginning of the year. The development of customer-centricity, operational efficiency and new ways of working has continued throughout the year.
- Patria’s success in 6×6 and 8×8 vehicles programmes has continued through 2022, which supports the development of other business operations and Group’s internationalization.
- In December, Japan selected Patria AMV XP 8×8 vehicle as their new Wheeled Armored Personnel Carrier for Japan Ground Self-Defense Force, followed by starting of licence negotiations. Patria sees the selection of Patria AMV XP 8×8 as a great opportunity to further develop cooperation in Japan with new services and solutions as well as to establish long-term strategic partnerships with Japan and its industries.
- In August, Slovakia signed final commercial agreements on the delivery project for 76 Patria AMV XP 8×8 vehicles.
- In July, the EU decided to provide within the European Defence Fund (EDF) nearly €100m in funding for a consortium led by Patria to develop future ground combat capabilities.
- In March, Patria acquired NEDAERO, a leading Dutch specialist in defence and aerospace components and parts.
- In early 2022, the Finnish Defence Forces signed an agreement with Patria to acquire a pre-series of Patria 6×6 vehicles in relation 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 profitable growth in line
with its 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 took place through 2022 and will continue also in 2023.
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 also for other countries to join by mutual consent of the participating countries.
The impact of long-term development of the current geopolitical situation, general economic uncertainty, inflation and increasing costs for the rest of the year are difficult to evaluate reliably. 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 are likely to see an increase in demand as defence spends are increasing in the majority of European countries.
09 Feb 23. RENK Group Acquires General Kinetics, the North American Leader in Suspension Systems for Combat Mobility from CIEL Capital. RENK Group, through its suspension specialist Horstman, acquires General Kinetics, a portfolio company of CIEL Capital, and combines it with its existing advanced mobility center of excellence to create Horstman Canada.
The new company continues to provide superior mobility solutions and now joins with RENK’s strong US, European, and global footprint to deliver a full range of suspension and vibration mitigation. Horstman Canada provides combat proven mobility to both wheeled vehicles such as the Stryker family, and tracked vehicles such as the UK FV430, US Bradley and the M88 Recovery Vehicle.
“Becoming part of RENK’s Horstman team reinforces our support to the Canadian and U.S. Army, and our allies,” Horstman Canada President Chuck Williamson said. “The new organization combines our long established operational excellence with advanced technology and international resources to provide best value to customers and the highest mobility to operators”.
RENK CEO Susanne Wiegand noted “With this acquisition, we are consistently pursuing our path of growth and further internationalization. Furthermore, we are increasing our market share in the most powerful defense market of North America.” Michael Masur, head of RENK’s Vehicle Mobility Solutions division added “Horstman Canada will increase our market share in the wheeled vehicle market and will further strengthen RENK Group’s global excellence in research and development, systems integration, manufacturing and service”.
“We intend to lead the globally competitive, high growth market for vehicle mobility solutions with the efficiencies and opportunities created by this merger of industry leaders,” says Horstman group CEO Ian Pain. Horstman will adopt the Brampton, Ontario facility as its Canadian headquarters and merge the mechatronics, simulation and active suspension engineering from its existing Woodbridge based team.
Horstman expects to retain all North American employees. In addition as part of the transaction, Horstman also acquired the US subsidiaries of General Kinetics – with those employees taken on board Horstman’s team in Michigan, USA.
RENK GmbH
About RENK Group:
Headquartered in Augsburg, Germany, the RENK Group is a leading global player for high-end gear units, power packs, hybrid propulsion systems, suspension systems, plain bearings, couplings and test systems. The company caters to a multiplicity of end markets, focusing especially on security and defense, energy and infrastructure. With more than 3000 employees, the RENK Group has revenue on the high side of EUR 850 m.
For further information, please visit: www.renk-group.com
About Horstman Group:
A company of the RENK Group, Horstman has been headquartered since 1913 in Bath, UK with operations also in the US and Canada. Horstman combines world leading simulation, design and manufacturing capabilities and delivers mobility solutions for the global wheeled and armored markets’ hardest challenges. With the addition of the experienced employees and five decades of lean manufacturing expertise of General Kinetics, Horstman employs 250 people and approaches EUR 90 m revenue.
For further information, please visit: www.horstmangroup.com
About General Kinetics:
General Kinetics Engineering Corporation was founded in Canada in 1982, to deliver properly engineered suspension components to our military customers and has never strayed from that vision. With facilities in Canada and the US, General Kinetics is the pre-eminent designer and manufacturer of suspension dampers for a vast majority of the allied fleets, both wheeled and tracked, as well as the manufacturer of ActiveShock™ semi-active damping systems, used in the most demanding EA seating applications.”
For further information, please visit: www.generalkinetics.com
About CIEL Capital:
CIEL Capital is a private equity investment firm based in Toronto, Canada. CIEL focuses on majority investments in founder-owned businesses, recapitalizations, succession, management buyouts, and corporate divestitures. As a family office comprised of committed capital, CIEL looks for companies with a historical track record of positive cash flow, earning stability, and a strong balance sheet. Unlike most private equity firms who have set investment timelines, our time horizon is indefinite and target transaction structures are flexible.
For further information, please visit: https://ciel.capital/
08 Feb 23. MilDef Year-End Report January – December 2022.
Financial development fourth quarter 2022
- Net sales increased by 57% to SEK 315.3m (200.7).
- Gross margin amounted to 46% (46).
- Adjusted EBITDA amounted to SEK 43.4m (34.6), equivalent to an adjusted operating margin of 13.8% (17.2).
- Operating profit (EBIT) amounted to SEK 31.5m (28.2).
- Order intake increased by 27% to SEK 270.7m (213.2).
- Operating cash flow amounted to SEK -49.3m (-13.3).
Financial development January – December 2022
- Net sales increased by 57% to SEK 738.8m (469.6).
- Gross margin amounted to 48% (45).
- Adjusted EBITDA amounted to SEK 60.0m (32.2), equivalent to an adjusted operating margin of 8.1% (6.9).
- Operating profit (EBIT) amounted to SEK 29.2m (-2.9) including non-recurring items of SEK 0.0m (-11.5).
- Order intake increased by 59% to SEK 938.2m (589.4).
- Order backlog as of December 31, 2022 was SEK 1,156m (732), representing an increase of 58%.
- Operating cash flow amounted to SEK -95.0m (-71.4).
- Earnings per share after dilution amounted to SEK 0.37 (-0.03).
- The Board of Directors proposes to the Annual General Meeting that no dividend be paid to shareholders in respect of the financial year 2022. The proposal is made in light of the company’s steep growth rate and consequently estimated increased working capital requirements in 2023.
Summary of significant events in the fourth quarter, October – December 2022
- In December 2022 MilDef announced identified delivery delays in the fourth quarter equivalent to around SEK 60–70m. The final scope of delivery delays amounted to around SEK 100m, i.e. additional hardware deliveries worth around SEK 20–30 m have been delayed until 2023. The reason for the delays is the shortage of semiconductor components for MilDef’s hardware portfolio. No business will be lost due to this but sales and earnings were negatively impacted in the fourth quarter. The delivery delays are instead having a positive effect on the first half of 2023.
- MilDef has signed an additional order with the British Armed Forces MIV program for a value of around SEK 70m. The deliveries will take place in 2023–2024.
- In the fourth quarter of 2022 MilDef established its first production facility outside Sweden. The production facility is based in Cardiff, Wales. The new facility will manufacture tactical IT platforms developed by MilDef.
- Björn Karlsson, MilDef’s CEO has informed the Board of Directors that he wishes to resign as CEO of MilDef. Björn intends to stay on as CEO until the next Annual General Meeting when the Company’s Executive Vice President and CFO, Daniel Ljunggren, will step in preliminarily as acting CEO. In consultation with the Chair of the Board, Jan Andersson, a group of the principal shareholders have decided to nominate Björn Karlsson as the new Chair of the Board.
Summary of significant events after the end of the period
- In 2022 MilDef announced a 20-year framework agreement worth SEK 2.8bn with an unnamed European NATO country’s armed forces. In January 2023 the first orders were placed under the agreement. The value of this initial transaction is around SEK 50 m and is for deliveries during the period 2023–2024. The order is for prototype development and system design with a focus on digitalization, infrastructure and security.
- To further strengthen MilDef’s position in the Danish market, MilDef established a company in Denmark at the beginning of 2023.
- No other events considered of significance have taken place since the end of the period up to the signing of this year-end report.
Statement by Björn Karlsson, CEO MilDef Group
Another quarter of growth underscores increased acceleration
It was no surprise that MilDef would continue to secure international business and deliver from a well-filled order backlog, but we should also be happy about some additional factors that will enable continued expansion. In addition to significant sales growth – growth that has up to now happened without the boost provided by increased defense budgets – the successes of strategic NATO projects continue, above all those relating to digitalization and modernization of vehicles. The volume increases have resulted in improved gross margin, 48% compared with 45% the previous year.
For the full year 2022 MilDef’s sales grew by 57%, which is significantly higher than our financial growth target. The adjusted operating profit (EBITDA) increased by 86% and amounted to SEK 60.0m (32.2), equivalent to an adjusted operating margin of 8.1% (6.9).
Strategic repositioning of MilDef leads to bigger and better business transactions
The two substantial framework agreements that were announced during the year are significant in several ways. The first agreement is in Sweden and will amount to SEK 870m over seven years. The other is an unnamed NATO nation where MilDef has a broad assignment within military digitalization and will amount to SEK 2.8 bn over 20 years. Apart from the value of the framework agreement’s business arrangements, where MilDef’s products and services can flow freely, the agreements are a strong indicator that the Company’s transformation from a product supplier to a system design actor is firmly rooted in important customer relationships.
These agreements came about based on the aim of allowing MilDef to have greater overall responsibility in high-priority projects involving modernization and capacity building. The solutions that we offer can be packaged and internationalized, especially to nations that have placed NATO compatibility and interoperability high up on their agendas.
With growing capacity within hardware, software and services, MilDef in 2022 continued to meet customer need for “fewer suppliers who deliver a larger portion of overall products and services,” and to build better margins and business transactions higher up the value chain with suppliers over a longer period.
Acquisition compass shows the way to the future
The acquisition of Handheld in autumn 2022 strengthened MilDef in several prioritized areas. An increased market presence in important defense markets provides new platforms for expansion, and work on this will begin very soon. Worth a mention are our efficient operations in Germany as well as operations in the USA that will immediately double MilDef’s footprint.
Adding products and customers within critical infrastructure is another effect that MilDef has aimed for and that reinforces our total defense concept. Handheld’s technology is highly suited to customers and applications in demanding environments and adds to MilDef’s product portfolio which was previously primarily focused on military applications.
Perhaps the most exciting aspect of the acquisition is the intersection of Handheld’s product segment for handheld devices and MilDef’s expertise in meeting military requirements. We look forward in the near future to being able to offer digitalization of systems carried by soldiers.
Customers offered expanded national supply reliability
Setting up a production facility in Wales in 2022 was part of our strategy to offer customers improved domestic supply reliability. Regardless of whether the customers’ are aiming to improve business with local suppliers or to ensure they have sufficient production capacity in the event of a deterioration of the security environment or even conflict, MilDef can provide the capacity they need locally in their country. The UK was the first and now the same model can be used to meet the needs of additional countries through the concept of “Made in X”.
Regarding delivery delays and component shortages
The previously communicated delays in deliveries and revenue in the fourth quarter amounted to close to SEK 100m, which is slightly more than expected. The prognosis for these deliveries in 2023 is divided between the first two quarters.
The Company has concluded that the component shortage will also be a factor in 2023. This has been taken into account operationally by improving supply strategies and in a new warehousing strategy developed in 2022.
Summary of 2022 and outlook for 2023
It has been a turbulent year with the world being thrown into an unparalleled security situation. We have war in our neighborhood. Sweden and Finland have applied for NATO membership. Interests rates and inflation have risen at a breakneck pace and markets have been weighed down by it. MilDef has been resilient and has been steadily contributing to a safer world. I am both proud and humbled as I thank our employees, customers, suppliers and owners for their excellent work in a year that has been difficult in so many ways.
As we enter 2023 it will be with a well-filled order backlog, important framework agreements in place and a MilDef that is ready to deliver. In 2022 we started the next part of our development phase aimed at increased value-creation through disruptive technology and innovation.
Thank you for choosing to be part of MilDef’s journey and vision. Björn Karlsson, CEO MilDef Group
07 Feb 23. BAE Systems’ jet merger a major plus, according to Citi. BAE’s merger of its Tempest jet project with Japan’s F-X fighter can add as much as 40p per share to the weapon maker’s fair value, according to Citi. Japan joining the GCAP programme creates critical mass without adding additional partners and removes the risk of £1.1bn a year of Typhoon jet sales not being replaced, adds the US bank.
As Japan requires a longer-range model, it opens up export opportunities in countries currently using US F-15s or Russian alternatives.
BAE should also get more sales opportunities in Asia through closer links with Japan, the bank suggests. Adding it all up for domestic sales, exports and aftermarket gets to the 40p figure, adds Citi. Shares in BAE eased 0.5% to 835.2p. (Source: News Now/Proactive)
07 Feb 23. Exotrail has raised 58m dollars to scale-up and pursue its ambitions for space mobility, worldwide.
The funds raised will fuel:
– the scale-up of Exotrail’s known products: spaceware™ space-proven electric propulsion systems and spacestudio™ mission design software;
– the introduction and growth of Exotrail’s new products: spacetower™ operations software and its space logistics service spacedrop™ and;
– the expansion of Exotrail’s international presence, with a strong focus on the US and Asian markets.
This Series B fundraising round brings new ambitious investors onboard: Bpifrance, already present in the capital via F3A and Digital Venture funds, led this new round via the SPI fund (Sociétés de Projets Industriels) and the Innovation Defense Fund, as well as Eurazeo, a leading European VC investing in tech champions worldwide, and the international software engineering company CELAD. All Exotrail’s historic investors – 360 Capital, Karista through the Paris Region Venture Fund, Irdi Capital Investissement, Innovacom, iXO Private Equity and NCI-Waterstart, together with BNP Paribas and Banque Populaire Val de France from BPCE Group – also participated in the round.
Based in France, Exotrail aims to build a new world of space logistics with a mission to make satellite constellations economically and environmentally sustainable. Exotrail’s products focus on satellite mobility, optimizing their deployment, increasing their service performance, and reducing space pollution. Exotrail is the first worldwide space company to offer a complete and holistic approach to space mobility with products including advanced propulsion systems, modern and intuitive mission design and satellite operation software, as well as in-space logistics services designed for constellations. The company will use the funds raised to continue innovating and developing cutting edge products to enhance its mobility offer.
Despite challenging global macro-economic market conditions, Exotrail’s Series B round was oversubscribed thanks to an outstanding commercial performance in 2022. The company has recorded steady, triple-digit growth revenue for the last few years, tripling its backlog last year. Exotrail currently employs 90 people and plans to hire more than 70 people all over the world, over the next 12 months. Its strong customer base covers North America, Europe and parts of Asia, and includes a well-balanced mix of commercial and institutional players across the space value chain – from launch service providers to satellite manufacturers and operators.
On this occasion, Exotrail’s CEO and cofounder Jean-Luc Maria, stated:
“We are grateful for the trust and confidence all our investors vest in Exotrail. This series B round validates our comprehensive and logistics-driven approach to space mobility. We are now ready to accelerate our efforts in positioning our mobilityhub™ as the world reference for effectively moving assets in space. The message we are sending to all space companies wherever they are on Earth is clear: space logistics is coming, and Exotrail will be your preferred partner!”
Jean-Philippe Richard, Deputy Director of the SPI fund, and Nicolas Berdou, Investor for the Defense Innovation Fund, declared:
“Its technologies, its large-scale industrial project and its international ambitions as a provider of dual services in orbit to the space industry, are all strengths that have seduced us in the Exotrail project, supported since its creation by Bpifrance via the F3A fund and the Digital Venture fund. The combination of SPI and FID funds, bringing their expertise in industrialization and management of sovereign projects, symbolizes Bpifrance’s deep ambition to support the reindustrialization of France by supporting innovative and job-creating projects in the territories such as the one carried by Exotrail
Benoist Grossmann, Managing Partner, and Raphaël Cattan, Vice President from Eurazeo, stated:
“Investing in Exotrail is a unique opportunity to be at the forefront of the new paradigm running today’s space sector and the transition to terrestrial logistics models in orbit. Thanks to its outstanding results, with space proven products since 2020 and a large portfolio of customers in Europe, North America and Asia, Exotrail now enters a scale-up and internationalization phase. In line with our strategy towards building technological leaders of tomorrow, this investment will enable us to accompany this very promising team to become the space logistics reference”
Vincent Gardeau, President of CELAD, added: “Joining the Exotrail adventure and its insightful team allows us to support the French space ecosystem and participate in building a new leader of in-space mobility. The synergies between our companies are obvious around our know-how in information systems and industrial computing. In particular, we support Exotrail on its software approach to the field of space logistics, the keystone of a unique global strategy on the market”
About Exotrail
Exotrail is an end-to-end space mobility operator. The company offers customers the ability to define their space mobility needs with the spacestudio™ mission analysis software, meet those needs with spaceware™ onboard propulsion systems and spacedrop™ in-space mobility services, and operate their solutions with the spacetower™ software. This complete mobility offering called mobilityhub™ allows satellites to optimize their deployment, increase their service performance, and reduce space pollution. Exotrail was incorporated in 2017 and has secured over 70M€ of funding. The company has more than 20 customers in North America, Europe and Asia. Exotrail’s team is expanding quickly and consists, as of today, of +90 passionate people operating out of two locations: Toulouse and Massy (suburb of Paris) in France.
More information: https://www.exotrail.com/
07 Feb 23. Chinese Chipmaker Selling Military UAV Components to Iran has Footholds in US and Canada. A Chinese satellite navigation manufacturer that sold electronics to Iran for military unmanned aerial vehicles (UAVs) and missiles has wholly-owned subsidiaries in the U.S. and Canada, through which it has conducted business with Western manufacturers, a Kharon investigation has found.
The company also supplied electronics for advanced policing equipment to Chinese government entities implicated in human rights violations against ethnic minorities in Xinjiang.
Beijing UniStrong Science & Technology Co., Ltd. was one of several technology companies and research institutes added by the U.S. Department of Commerce to the Bureau of Industry and Security’s (BIS) Entity List on December 15. In its announcement, Commerce accused Beijing UniStrong of having “facilitated the illegal export of U.S.-origin electronics” to Iran “for use in the production of military unmanned aerial vehicles and missile systems used in attacks throughout the Middle East.”
Publicly traded on the Shenzhen stock exchange, Beijing UniStrong was unique on this list in its ties to the Middle East. Nearly all of the other entities listed by Commerce on December 15 are involved in the research and development, manufacturing, and sale of advanced technologies that support China’s military modernization.
Iranian drones have been used to attack targets in Ukraine and the Middle East. In September, Iraq’s state news agency claimed that Iranian UAV attacks on the Kurdistan region of northern Iraq had killed at least 13 people and wounded 58 others. Iranian-manufactured UAVs have also been used in attacks by proxy militias in Iraq and in Yemen, including the Iran-backed Houthi group in attacks against Saudi Arabia and the United Arab Emirates. It is unclear how many of these attacks were by drones using Beijing UniStrong’s U.S.-origin electronics.
Beijing UniStrong provides a broad range of products and services for global navigation satellite systems (GNSS), according to a review of the company’s website and corporate disclosures. The GNSS systems sold by UniStrong have a wide variety of applications, including machine control and guidance, surveying and mapping, marine, and unmanned systems.
Reach Into North America
Beijing UniStrong owns subsidiaries in the U.S. and Canada that the Department of Commerce did not mention in its December 15 announcement. The company is the sole shareholder of Arizona-based Hemisphere GNSS (USA) Inc. and Alberta-based Hemisphere GNSS Inc. Hemisphere, which until recently had a Queensland, Australia office, describes itself as “the leader in high-performance satellite positioning accuracy and reliability,” according to the company’s website. Hemisphere’s website also describes the company as part of Beijing UniStrong.
Hemisphere GNSS (USA) Inc. has four primary lines of business: agriculture, construction and mining, marine, and OEM (original equipment manufacturer). The OEM line of business offers a range of GNSS boards for use in any customer applications, including UAVs.
Hemisphere has exported OEM equipment to companies in Turkey, India, and Vietnam, according to trade data reviewed by Kharon. Hemisphere’s customers include a Turkish defense company that produces UAVs, according to trade records reviewed by Kharon.
Hemisphere’s GNSS products also appear to be available for purchase in Iran. According to a July 2022 archived version of its website, Fatehin Sanat Sharif reported providing positioning and routing equipment from Hemisphere. Fatehin Sanat Sharif is part of the “research network” of Sharif University of Technology, a public research university in Tehran, and its employees are graduates of the university. The university was sanctioned by the European Union and the United Kingdom for aiding Iran’s nuclear proliferation program.
Involvement in Xinjiang Surveillance
Beijing UniStrong also sold policing equipment to police departments in Xinjiang that are sanctioned by the U.S. for their involvement in human rights abuses against ethnic minorities, Kharon found.
Under an agreement the company signed with the Xinjiang Public Security Department (XPSB), Beijing UniStrong contributed to creating technological policing platforms for both the XPSB and the public security bureau for the paramilitary group Xinjiang Production and Construction Corps (XPCC), according to the company’s 2019 semi-annual report. Its partnership with the two companies made UniStrong a key player in constructing the technological policing platform in the Xinjiang region. (Source: UAS VISION/Kharon)
07 Feb 23. TransDigm Group Reports Fiscal 2023 First Quarter Results.
TransDigm Group Incorporated (NYSE: TDG), a leading global designer, producer and supplier of highly engineered aircraft components, today reported results for the first quarter ended December 31, 2022.
First quarter highlights include:
- Net sales of $1,397m, up 17% from $1,194m in the prior year’s quarter;
- Income from continuing operations of $229m, up 40% from the prior year’s quarter;
- Earnings per share from continuing operations of $3.33, up 70% from the prior year’s quarter;
- EBITDA As Defined of $699m, up 24% from $565 m in the prior year’s quarter;
- EBITDA As Defined margin of 50.0%;
- Adjusted earnings per share of $4.58, up 53% from $3.00 in the prior year’s quarter; and
- Upward revision to fiscal 2023 financial guidance.
Quarter-to-Date Results
Net sales for the quarter increased 17.0%, or $203m, to $1,397m from $1,194m in the comparable quarter a year ago. Organic sales growth as a percentage of net sales was 15.2%.
Income from continuing operations for the quarter increased $66 m, or 40.5%, to $229m from $163m in the comparable quarter a year ago. The increase in income from continuing operations primarily reflects the increase in net sales described above and favorable sales mix. The increase was partially offset by a higher effective tax rate and higher interest expense.
GAAP earnings per share were reduced in the first quarter of fiscal 2023 and 2022 by $0.67 per share and $0.77 per share as a result of dividend equivalent payments made during each quarter. As a reminder, GAAP earnings per share are reduced when TransDigm makes dividend equivalent payments pursuant to the Company’s stock option plans. These dividend equivalent payments are made during the Company’s first fiscal quarter each year and also upon payment of any special dividends.
Adjusted net income for the quarter increased 47.5% to $261m, or $4.58 per share, from $177m, or $3.00 per share, in the comparable quarter a year ago.
EBITDA for the quarter increased 24.5% to $650 m from $522m for the comparable quarter a year ago. EBITDA As Defined for the quarter increased 23.7% to $699 m compared with $565 m in the comparable quarter a year ago. EBITDA As Defined as a percentage of net sales for the quarter was 50.0% compared with 47.3% in the comparable quarter a year ago.
During the quarter, TransDigm successfully completed a refinancing and repaid in full the approximately $1,725m of Tranche G term loans maturing August 22, 2024, and replaced such loans with approximately $1,725m of Tranche H term loans maturing February 22, 2027. The applicable interest rate for the Tranche H term loans is Term Secured Overnight Financing Rate (“SOFR”) plus 3.25%.
“I am very pleased with our first quarter operating results and strong start to the fiscal year,” stated Kevin Stein, TransDigm Group’s President and Chief Executive Officer. “Total revenue ran ahead of our expectations and bookings outpaced revenues in all three of our major market channels – commercial OEM, commercial aftermarket and defense. Our diligent focus on our operating strategy and the continued recovery of our commercial aftermarket revenues drove further progression in our EBITDA as Defined margin, which improved to 50.0% for the quarter, up approximately 270 basis points from the comparable prior year period.
Additionally, trends in the commercial aerospace market continue to be favorable including international air traffic improving and China re-opening its air travel with the lifting of its pandemic restrictions. We are encouraged by these trends, among other factors, and look forward to the remainder of fiscal 2023.”
Fiscal 2023 Outlook
Mr. Stein stated, “We are raising our full year guidance primarily to reflect our strong first quarter results and current expectations for the remainder of the fiscal year. As our fiscal 2023 progresses, should the favorable trends in the commercial aerospace market recovery continue, including the expansion of flight activity in China, we could see further upward revision to our guidance.”
TransDigm now expects fiscal 2023 financial guidance to be as follows:
- Net sales are anticipated to be in the range of $6,070m to $6,240m compared with $5,429m in fiscal 2022 (an increase of $65m at the mid-point);
- Net income from continuing operations is anticipated to be in the range of $1,080m to $1,160m compared with $866m in fiscal 2022 (an increase of $44m at the mid-point);
- Earnings per share from continuing operations is expected to be in the range of $18.24 to $19.64 per share based upon weighted average shares outstanding of 57.1m shares compared with $13.38 per share in fiscal 2022 (an increase of $0.79 at the mid-point);
- EBITDA As Defined is anticipated to be in the range of $3,060m to $3,160m compared with $2,646m in fiscal 2022 (an increase of $65m at the midpoint and corresponding to an EBITDA As Defined margin guide of approximately 50.5% for fiscal 2023);
- Adjusted earnings per share is expected to be in the range of $21.47 to $22.87 per share compared with $17.14 per share in fiscal 2022 (an increase of $0.79 at the mid-point); and
- Fiscal 2023 outlook is based on the following market growth assumptions:
- Commercial aftermarket revenue growth in the high-teens percentage range (an increase from previous guidance of mid-teens percentage range);
- Commercial OEM revenue growth in the mid-teens percentage range; and
- Defense revenue growth in the low to mid-single-digit percentage range.
Please see the attached Table 6 for a reconciliation of EBITDA, EBITDA As Defined to net income and reported earnings per share to adjusted earnings per share guidance mid-point estimated for the fiscal year ending September 30, 2023. (Source: PR Newswire)
06 Feb 23. Quantum Computing Inc Creates a New Subsidiary to Deliver Products and Services for the Government and Defense Sectors. Quantum Computing Inc. (“QCI” or the “Company”) (NASDAQ: QUBT), a first-to-market full-stack photonic-based quantum computing and solutions company, today announces that it has officially launched QI Solutions, Inc. (“QI Solutions” or “QIS”), a wholly owned subsidiary dedicated to delivering quantum solutions to the government and defense markets. The new entity will lead and manage engagements, contracts and programs awarded from the US government and Department of Defense. QI Solutions, which will operate primarily out of a newly established facility in Arizona, will be overseen by highly seasoned operations and applied technology expert, Sean Gabeler.
“We see tremendous potential for our market-ready quantum solutions in the government and defense sectors, with an extensive and ever-increasing scope of technological applications. To better meet those needs, we determined it would be best to set up a separate entity specifically to address the unique requirements of this market,” commented Robert Liscouski, CEO at Quantum Computing Inc. “Once we made that assessment and began conversations with key-decision makers in this space regarding their needs, we knew right away there was no better-experienced professional than Sean to lead the new initiative. Sean is a highly experienced and proven leader with a successful track record of transitioning emerging technology to real world applications and is precisely what QCI requires to successfully lead this effort.”
Quantum Computing, Inc officially launches Qi Solutions, Inc, a dedicated to government and defense contracts.
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Sean Gabeler joined QCI after over 30 years as a Special Operations officer. A highly decorated multi war combat veteran, Sean brings a level of understanding of government operational requirements uncommon in the business community. As an applied technology expert, Sean has proven deep experience applying commercial technology to government solutions.
Expansion into Arizona represents a strategic initiative for the Company. The location was selected due to the State’s leadership in the field of optics, its early recognition of the importance of advanced photonic research, and the presence of numerous State and US Government entities as well as strong research universities interested in exploring mission-ready quantum computing and related technologies. To that end, QI Solutions will offer a range of products and services to its customers in these sectors, all of which are available for deployment today. These products include entropy quantum computing solutions, software, as well as technologies for quantum communication and quantum sensing, which will be complemented with a range of customized services in areas such as secure supply chain management, light advanced manufacturing, quantum workforce development, and quantum research and development.
“As a retired DOD officer with an expertise in the application of technology for effects, I believe QCI is the world’s leading quantum computing technology company. The Company has unique capabilities that can be adopted for immediate applications that are appropriate for multiple programs within various government departments and agencies,” said Sean Gabeler, President of QI Solutions. “We have already been engaged in discussions with a number of these entities, and anticipate that we could soon see our solutions utilized in a wide variety of boutique applications for our clients. The US Government recognizes that quantum technologies are essential to maintaining technology leadership in the world today. Qi Solutions, as QCI’s government facing entity, will carry out QCI’s mission to bring real world quantum capabilities to the government customer, and I am proud to lead that effort,” he stated.
QIS is ready to deploy its range of solutions, as well as provide partners with appropriately cleared personnel working to support their needs and requirements.
For additional information on the company’s suite of solutions, please visit our website or contact our team directly.
About Quantum Innovative Solutions
QIS is a newly established supplier of quantum technology solutions and services to the government and defense industries. With a team of qualified and cleared staff, QIS delivers a range of solutions from entropy quantum computing to quantum communications and sensing, backed by expertise in logistics, manufacturing, R&D and training. The company is exclusively focussed on delivering tailored solutions for partners in various government departments and agencies.
About Quantum Computing Inc.
QCI is a full-stack quantum software and hardware company on a mission to accelerate the value of quantum computing for real-world business solutions, delivering the future of quantum computing, today. The company is on a path to delivering an accessible and affordable full-stack solution with real-world industrial applications, using quantum entropy, which can be used anywhere and with little to no training. QCI’s experts in finance, computing, security, mathematics and physics have over a century of experience with complex technologies ranging from leading edge supercomputing to precision sensors and imaging technology, to the security that protects nations. For more information about QCI, visit www.quantumcomputinginc.com. (Source: PR Newswire)
06 Feb 23. Kromek – This stock is about to turn world-leading technology into profit. A radiation detection company has had a breakthrough, a fact not recognised by markets.
- First-half cash loss widens from £0.6m to £2.7m mainly due to currency and inflationary headwinds
- Contract momentum is strong and the board expects to announce significant OEM orders in medical imaging
- Analysts now predict move to cash profitability in 2023-24
Sedgefield-based Kromek (KMK:9.6p), a radiation detection technology company focused on the medical imaging and nuclear markets, is on track to deliver the step change in revenue in the financial year to April 2023, but not profits.
Ahead of the interim results, analysts at FinnCap and Equity Development had been predicting a small annual cash profit of £0.3m on 50 per cent higher revenue of £18m. The revenue estimate is intact, but a lower gross margin of 40 per cent in the first half, down 6.5 percentage points year on year, due to product mix and currency headwinds, and £1.5m higher operating costs, meant that the first-half cash loss widened from £0.6m to £2.7m despite revenue rising 44 per cent to £6.8m. Analysts at FinnCap expect second-half cash profit of £0.5m on revenue of £11.2m, but it still means an annual cash loss of £2.2m.
There are positives, though. Since Kromek’s half-year end (31 October 2022), sterling has recovered strongly against the US dollar so the £0.5m hit from currency headwinds in the first half is reversing. The company is also winning contracts, the latest being last month’s repeat order worth $0.8m from a US government customer for its wearable radiation detectors that help guard against the threat of nuclear terrorism and the illicit movement of nuclear materials. The contract follows on from a £1.5mn order with another, undisclosed, customer in December 2022. An expansion of Kromek’s distribution agreement with Smiths Detection Inc in the Middle East, Asia and Australia, augurs well, too. Kromek has already delivered 1,400 detectors to Smiths Detection since July 2022 in relation to the North and South American markets.
Kromek’s chemical, biological, radiation and nuclear (CBRN) segment accounted for £3.2m of product sales, or 47 per cent of the company’s total revenue. However, the short-term share price catalysts are likely to be in another part of the business.
Medical imaging opportunity
There is no doubt that Kromek has world-leading technology, but commercialising it to the point at which the company can make a sustainable profit has proved elusive. That could be about to change, and not a moment too soon for Kromek’s shareholders who have witnessed too many false dawns.
In October 2022, Kromek announced that Spectrum Dynamics Medical had incorporated the company’s digital detectors in the world’s first SPECT/CT scanner for higher energy imaging. FinnCap points out that the prospect of additional supply contracts with medical imaging original equipment manufacturers (OEMs) is coming closer, perhaps before the end of April, noting that eight tier-one and two tier-two OEMs are working with Kromek cadmium zinc telluride (CZT) detectors. The directors are also guiding shareholders to expect “significant contract wins in the near term”.
The company has strategic scarcity value, being the only independent manufacturer of CZT, so is well-placed to land sizeable contracts in the medical imaging segment as large OEMs adopt CZT-based technology in their next-generation x-ray and gamma-ray imaging products.
Based on FinnCap’s 2024 forecasts, Kromek could be making a cash profit of £0.9m on revenue of £21m. However, landing some major OEM medical imaging contracts would be a catalyst for earnings upgrades as well as providing investors with the confidence to consider the upside potential.
Potential upside
Equity Development and FinnCap have fair value estimates of 26p and 27p, respectively, but a rerating to that level only comes into play in the event of Kromek delivering the ramp-up in sales needed to become profitable, or in the event of a predator bidding for the company. That possibility is not far-fetched. Less than 18 months ago, Canon acquired Redlen Technologies, the only independent commercial producer of CZT detectors globally other than Kromek, in a deal that valued its rival at $335m (£272m), or more than five times Kromek’s current enterprise valuation.
It’s worth noting that the shares can be volatile. After I last suggested buying them, at 8.75p (‘A biological detection winner’, 18 November 2022), the price peaked a month later at 11.85p, a gain of 35 per cent. There has been profit-taking since then, but I believe it’s worth holding on, at 9.6p, ahead of likely imminent positive newsflow on material OEM orders in the medical imaging space. Hold. (Source: Investors Chronicle)
02 Feb 23. Dassault Systemes shares jump on solid fourth quarter, 2023 forecast. Dassault Systemes (DAST.PA) shares jumped on Thursday as the French software maker forecast revenue growth of between 8% and 9% in constant currency for 2023 after reporting a resilient fourth quarter in-line with expectations.
The group, which sells software to automakers, planemakers and industrial firms, guided for annual revenue of between 5.93bn euros and 5.98bn euros ($6.59bn to $6.53bn) compared with 5.67bn euros in 2022.
Including currency fluctuations, the company expects annual growth of around 5%.
The company’s shares, which lost more than a third of their value last year, were up more than 6% at 1200 GMT, outpacing the French blue-chip CAC40 (.FCHI) index, which fell 0.1%.
Citi analysts said the full-year outlook shows resilience.
“Against a backdrop of relatively muted expectations coming into the print, we expect this update will be seen as somewhat reassuring,” it said in a note to clients.
Subscriptions revenue grew 18%, while licence sales showed a 5% increase.
Jefferies analysts said it was a good performance in an industry fast shifting to a subscriptions model, noting however that it was “hard to know how sustainable this dynamic is over the medium term”.
The group reiterated its intention to keep both license and subscription models to respond to customer needs.
Dassault Systemes, whose clients include global giants such as Ford, Bosch, Boeing, Adidas, Coca-Cola and Pfizer, reported total revenue of 1.58 bn euros in the fourth quarter, up 10% on the year in constant currency and slightly above analysts’ forecast of 1.57 bn euros.
The result was also at the upper end of the company’s own guidance range of 1.53 bn euros to 1.57 bn euros.
The group is on track to reach its 2024 earnings per share objective, it said in a statement.
Dassault Systeme’s software sales in China, where demand has lagged, especially from small and mid-sized customers due to strict COVID-19 lockdowns, showed mid-single-digit growth in the fourth quarter.
“China’s reopening is a good sign. We are still a little bit careful for the H1, which we do expect to be back on the growth where it should be,” Chief Financial Officer Rouven Bergmann said on a conference call with analysts.
The group also added it now has more flexibility to consider a “sizable” acquisition.
“The question is, is it the right time, are we prepared to do this, is the business plan okay, and are we capable to create value on top of it,” Chief Executive Officer Bernard Charlès told the call, without giving more details and referring analysts to its next capital market day.
($1 = 0.9075 euros) (Source: Reuters)
02 Feb 23. Honeywell forecasts weak first-quarter profit as supply chain snags hurt. Honeywell International Inc (HON.O) forecast first-quarter adjusted profit below estimates, signaling strong demand in its high-margin aerospace unit was not enough to beat the impact of supply chain disruptions and labor shortages.
Shares of the industrial conglomerate, which counts Boeing Co (BA.N) and Airbus SE (AIR.PA) as customers, fell nearly 5% to $197.32 in morning trade on Thursday.
Honeywell’s aerospace peers General Electric Co (GE.N) and Raytheon Technologies Corp (RTX.N) have also flagged labor shortages and higher costs.
“The supply chain for mechanical components remains constrained due to skilled labor shortages among Tier 3 and 4 suppliers,” Honeywell’s chief financial officer Gregory Lewis said on post earnings call with analysts.
A shortage of crucial semiconductor chips and higher prices of raw materials have also hit aerospace and defense companies’ ability to manufacture products over the past year, leading to delays in output.
Charlotte, North Carolina-based Honeywell expects adjusted earnings in the first quarter to be between $1.86 per share and $1.96, below analysts’ average estimate of $2.03 per share, according to Refinitiv data.
It, however, forecast full-year sales between $36bn and $37bn, in line with analyst’s average estimate, amid strong demand for air travel and oil. Sustained demand for air travel has prompted more orders from airlines and planemakers for parts and service, benefiting aerospace companies such as Honeywell. Quarterly sales in Honeywell’s aerospace unit, which makes aircraft engines and radars, rose to $3.20bn from $2.9bn a year ago. The company’s overall quarterly net sales rose about 6% to $9.19bn, but missed analysts’ average estimate of $9.25bn. (Source: Reuters)
03 Feb 23. Moog Inc. Reports First Quarter 2023 Results With Sales Growth and Improving Margins. Moog Inc. (NYSE: MOG.A and MOG.B), a worldwide designer, manufacturer and systems integrator of high-performance precision motion and fluid controls and controls systems, today reported first quarter 2023 diluted earnings per share of $1.44 and adjusted diluted earnings per share of $1.25.
Quarter Highlights
- Net sales were $760m in the first quarter of 2023, an increase of 5% compared to the first quarter of 2022, reflecting higher sales across all three segments. Net sales increased 9% excluding the impacts of weaker foreign currencies and the lost sales associated with divested operations.
- Adjusted operating margin of 10.4% in the first quarter of 2023 increased compared to adjusted operating margin of 9.1% in the first quarter of 2022. The increase reflects higher sales volumes in Industrial Systems and improved sales mix in both Aircraft Controls and Industrial Systems.
- Adjusted diluted earnings per share increased 14% in the first quarter of 2023 compared to the first quarter of 2022. Stronger operating margin drove the higher earnings, partially offset by higher interest expense.
- Consolidated twelve-month backlog was $2.3bn, an 8% increase from a year ago, and a 3% increase from the previous quarter.
“I’m pleased by our strong financial performance and how our employees, together, overcame many constraints to meet our increased customer demand,” said Pat Roche, Chief Executive Officer. “As the new CEO, I am very excited for the future of Moog. We have a solid core business with positive growth drivers, and we are creating new opportunities by entering new markets and redefining our position in existing markets. My focus will be on organic growth and simplifying our business to enhance margins. I’m confident this will drive shareholder value.”
Segment Results
Aircraft Controls’ sales in the first quarter of 2023 increased 2%. Sales for commercial aftermarket programs increased significantly, driven by market recovery in widebody programs including the 787 and A350 programs. Partially offsetting this growth was lower military sales in both OEM and aftermarket programs due to the timing of activity. Adjusted operating margin increased 110 basis points to 9.6% resulting from a favorable sales mix along with lower research and development expenses.
Space and Defense Controls’ sales increased 5% in the first quarter of 2023 compared to the first quarter of 2022, driven primarily by the production ramp of the reconfigurable turret program. Adjusted operating margin decreased 160 basis points to 9.4% as charges on space vehicle programs and supply chain pressures continued.
Industrial Systems’ sales increased 17%, excluding both the impacts of weaker foreign currencies and the prior year’s sales associated with a divested business. The underlying sales growth was most significant in industrial automation products and in simulation and test products. Adjusted operating margin increased more than 400 basis points to 12.3% due to incremental margin from stronger sales as well as a favorable sales mix.
Free Cash Flow Results
Free cash flow in the first quarter of 2023 was a $22m use of cash. Working capital increased in the first quarter of 2023 due to continued supply chain pressures, higher production rates on the 787 program and delayed milestones for billings. Capital expenditures of $30m in the first quarter of 2023 was $7m lower than the first quarter of 2022.
2023 Financial Guidance
“It was a great start to the year from an operational perspective. We achieved our adjusted earnings per share guidance of $1.25 despite the negative impact from the storms in Western New York,” said Jennifer Walter, Chief Financial Officer. “We are reiterating our fiscal year 2023 guidance for sales, adjusted operating margin and adjusted earnings per share. Our backlog is strong, and our performance is on track to achieve these results.”
The company lowered its fiscal year 2023 free cash flow guidance due to an assumption change related to the previously anticipated repeal of the R&D expense amortization law. (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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