BATTLESPACE Updates

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BUSINESS NEWS

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Sponsored by TCI International Inc.

 

www.tcibr.com

 

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23 Feb 23. HENSOLDT grows significantly in 2022 financial year.

and stands ready as strong technology partner for the “Zeitenwende”

  • Order backlog reaches record level of €5,366m (+€274m compared to previous year)
  • Revenue increases 16% to €1,707m
  • Adjusted EBITDA margin excluding business volume with low share of added value to 20.4%
  • Leverage reduced to 1.2x due to strong cash flow
  • Management Board proposes higher dividend of € 0.30 per share

The HENSOLDT Group met or exceeded its target on all key performance indicators in the 2022 financial year. Even before the turning point (Zeitenwende) in German foreign and security policy had time to make a substantial impact on the industry, HENSOLDT once again reported significant growth. At the same time, the company further extended its strategic position as a leading provider of sensor technology and defence electronics. With a strong order intake of €1,993m, the order backlog climbed to a record level of €5,366m (previous year: €5,092m). Revenue grew significantly in 2022 by 16% to €1,707m (previous year: €1,474m). Adjusted EBITDA rose €31m year on year to €292m (previous year: €261m). The adjusted EBITDA margin excluding business volume with low share of added value likewise increased significantly to 20.4% (previous year: 19.4%).

Thomas Müller, CEO of HENSOLDT AG: “2022 was a momentous year for the global security order as well as for HENSOLDT as a company. For us in the defence industry, the Russian invasion of Ukraine and the resulting Zeitenwende in German and European security policy give us a new role and special responsibility. We must supply the German armed forces and those of our partners comprehensively, reliably and much quicker to prepare them for the new challenges ahead. HENSOLDT is ready to go. This is also underpinned by our strong results last year, with a record order backlog and double-digit growth in revenue and earnings together with a further increase in profitability. The importance of a capable and innovative defence industry is exemplified by our TRML-4D high-performance radar, which we delivered in record time for Ukraine’s air defence. In response to the war in Ukraine, we have once again accelerated the pace of implementation of our technology roadmap. By further digitalizing our sensor systems, continuing the integration of artificial intelligence and developing integrated end-to-end solutions, we are delivering technologies that are more vital than ever to defending our freedom today and tomorrow.”

Christian Ladurner, CFO of HENSOLDT AG: “In 2022, we once again proved that our consistent focus on implementation is paying off. We have forged ahead at speed with complex major projects such as the next-generation Eurofighter radar and the PEGASUS airborne signals intelligence system, and have already translated initial project milestones into revenue and cash flow. We are continuously working on our operational excellence and have a very good handle on macroeconomic risks such as the inflationary trends. All in all, we achieved a very healthy adjusted free cash flow before interest and taxes in 2022. In addition, we significantly reduced our leverage ratio to 1.2x. I am gratified that, as a result of our successful work, we are able to propose – as planned – a significantly higher dividend of € 0.30 per share.”

 

23 Feb 23. BAE Systems forecasts more growth on Ukraine conflict boost.

Summary

  • Companies
  • 2022 underlying EPS up 9.5% to 55 pence
  • Sees EPS rising 5-7% in 2023
  • Raises dividend by 7.6%
  • Shares down 3% after strong run

BAE Systems (BAES.L), Britain’s biggest defence company, said earnings would rise again this year after jumping last year, as Russia’s invasion of Ukraine continues to drive military spend higher.

Demand for weapons, ammunition and military equipment has soared as Britain, the United States and other allies support Ukraine and look to shore up their own stocks due to the Ukraine conflict, which will mark its first anniversary on Friday.

“We expect continued momentum in the medium to long term as governments replenish stocks, recapitalise equipment and support allies,” BAE Chief Executive Charles Woodburn said in an interview.

BAE, whose biggest customers are the United States, Britain, Saudi Arabia and Australia, forecast earnings per share (EPS) would rise 5% to 7% this year, after it posted a 9.5% rise in underlying EPS for 2022 on Thursday, beating forecasts on strong performances from its maritime and cyber units.

BAE said it expected sales to rise by 3% to 5% this year. Shares in BAE fell 3% to 874 pence in early trade. (Source: Google/Reuters)

 

23 Feb 23. BAE Systems Announces 2022 Full Year Results.

Preliminary Announcement 2022

Charles Woodburn, Chief Executive, said: “We’ve delivered another year of strong results across the Group. Our employees have done an outstanding job to effectively manage supply chain and inflationary pressures whilst delivering critical capabilities and driving efficiencies for our customers.

“Our diverse geographic footprint, deep customer relationships and highly relevant, leading defence technologies mean we’re well positioned to support national security requirements in an elevated threat environment.

“Our record orders and financial performance give us confidence in delivering long-term growth and to continue investing in new technologies, facilities and thousands of highly skilled jobs, whilst increasing shareholder returns.”

Financial highlights

  • Record Order intake of £37.1bn propelled Order backlog to £58.9bn.
  • Sales increased by 4.4%1 to £23.3bn.
  • Expanded Return on sales by 20bps1, to 10.7%.
  • Underlying earnings per share increased by 9.5%1 to 55.5p.
  • Free cash flow of £2.0bn exceeded expectations.
  • Increased investment in capital expenditure and R&D.
  • Share repurchases totalling £0.8bn in the year.
  • Dividend increased by 7.6%.

Strategic progress

  • Shaped portfolio with acquisition and integration of Bohemia Interactive Simulations (BISim) into the US‑based Intelligence & Security business and divested our non-strategic financial crime detection business in Digital Intelligence.
  • Group pension schemes are in a net accounting surplus, resulting in a stronger balance sheet and improved financial flexibility for capital allocation priorities such as dividend growth, M&A and share repurchases.
  • Evolved our ESG agenda, supporting our employees and our communities, maintaining high standards of corporate governance, and progressing towards our Net Zero 2030 target.
  • Increased self-funded R&D and capital expenditure, as well as apprentice and graduate intake in the year to support our growth outlook.

Operational highlights

Electronic Systems

  • Opened state-of-the-art facilities in Manchester, New Hampshire; Cedar Rapids, Iowa; and Austin, Texas.
  • Maintained electronic warfare system deliveries across F-35, F-15E and F-15EX and other aircraft platforms.
  • Selected to design energy management components for GE Aviation’s megawatt class hybrid electric propulsion system, supporting NASA’s Electrified Powertrain Flight Demonstration project.

Platforms & Services

  • Maintained high production tempo on combat vehicles.
  • Major new orders and production increases for CV90 and BvS10 vehicles at Hägglunds.
  • Ship Repair business activity continues to rebound from COVID-19 related headwinds.

Air

  • UK, Japanese and Italian governments reached agreement to merge Tempest sixth generation fighter with Japanese F-X programme to form the Global Combat Air Programme (GCAP).
  • Delivered first eight of 24 Eurofighter Typhoons to Qatar.
  • F-35 rear fuselage production at full rate levels, with 150 assemblies completed in the year.

Maritime

  • Astute Boat five, HMS Anson, exited our Barrow shipyard to commence sea trials in February 2023.
  • First Type 26 frigate entered the water and is being outfitted at Scotstoun shipyard in Glasgow.
  • Continued progress on UK’s Dreadnought submarine programme and Australia’s Hunter Class frigates programme.

Cyber & Intelligence

  • Established Digital Intelligence by combining cyber, space, data analysis, digital transformation, and other advanced capabilities into one unit.
  • Strong order intake, revenue growth and programme execution in both Intelligence & Security and Digital Intelligence.
  • Completed the acquisition of BISim, which provides cutting-edge virtual training for allied militaries.

Brad Greve, Group Finance Director said, “We’ve delivered sales, underlying EPS and free cash flow all above guidance which is a testament to our people and their continued, long-term focus on operational excellence.

“Our backlog is at £59bn, we’re accelerating our investment in the business and making excellent progress on our share buyback programme, which complements the proposed increase in the dividend.

“For 2023, we’re forecasting further top-line growth, continued margin expansion, higher EPS and we’re also increasing our rolling three-year cash targets, all of which demonstrate that the business has growing momentum for the future.”

Guidance for 2023

While the Group is subject to geopolitical and other uncertainties, the following guidance is provided on current expected operational performance.

The guidance is based on the measures used to monitor the underlying financial performance of the Group. Reconciliations from these measures to the financial performance measures defined in International Financial Reporting Standards for 2022 are provided in our financial review on pages 11 to 16.

With a strong year behind us, we look forward to continued top-line growth with increased return on sales and good free cash delivery against our rolling targets. Our guidance uses the same exchange rate we averaged in 2022 of $1.24:£1.

 

21 Feb 23. Fortem Technologies Closes $17.8m in Funding Round to Scale Airspace Safety and Security Capabilities. Fortem Technologies, a leader in airspace awareness, security, and defense, today announced that they have closed a funding round of $17.8m led by new key industry investors including Lockheed Martin Ventures, Hanwha Aerospace, and AIM13|Crumpton Venture Partners. Existing investors DCVC and Signia Venture Partners have also contributed additional funds. The capital will help Fortem scale to meet growing demands across multiple regions and market sectors in airspace safety and security.

The Counter-UAS market continues to expand rapidly from a value of 685m USD in 2019 to an estimated 4.7bn USD by 2027. In addition, the Advanced Air Mobility market size was estimated at 8.93bn USD in 2022 and is expected to hit around 45.12bn USD by 2030. With Fortem’s support in Ukraine fighting suicide drones like the Shahed-136 and protecting world venues such as the World Cup Games in Qatar, the company is seeing this market growth and demand for their unique airspace awareness, security, and defense technology. This investment round will benefit the company’s strategy to be at the leading edge of this growing market.

“Rapid development and legitimate applications of UAS create an increasingly capable threat when in the hands of bad actors,” said Chris Moran, vice president and general manager of Lockheed Martin Ventures. “Lockheed Martin Ventures’ investment in Fortem Technologies signals our commitment to keeping pace with our customer’s requirements, ensuring the U.S. and its allies stay ahead of ready.”

“We are very pleased to invest in Fortem, a leading dual-use counter-UAS provider. The unique low collateral solution developed by Fortem will contribute to the growth of the c-UAS market globally and help to address the evolving UAS threats,” said a representative from Hanwha Aerospace. “Hanwha Aerospace is excited to support Fortem’s growth through the investment and continue to bring tremendous value across the sector.”

The investments from these industry-leading companies represents a significant endorsement for the growth and opportunity the company is seeing in the Counter-UAS and Advanced Air Mobility marketplace. Joining existing investors such as Boeing, Toshiba, Mubadala Investment Company, Signia Venture Partners, and DCVC, the new investors can also bring key industry insights and product development support as Fortem continues its aggressive growth strategy.

“We are extremely excited to be working with such respected companies in this funding raise,” said Jon Gruen, CEO of Fortem Technologies. “Not only does this investment help us address our rapidly growing market demand, but the level of support and industry experience these companies bring allows us to tap into unparalleled business, technical, and industry knowledge.”

About Fortem Technologies

Fortem Technologies is the leader in airspace awareness, security, and defense for detecting and defeating dangerous drones. Through an advanced, end to end system of distributed radar, AI at the Edge, deep sensor integration, and autonomous drone capture, Fortem monitors and defends the world’s venues, infrastructures, cities, and regions. The same system is accelerating the safety of the world’s airspace for urban air mobility. Based in Pleasant Grove, Utah, the company is privately held and backed by Toshiba, Boeing, DCVC, Mubadala Investment Company, Signia Venture Partners and others. (Source: PR Newswire)

 

24 Feb 23. BWX Technologies Reports Fourth-Quarter and Full-Year 2022 Results, Initiates 2023 Guidance and Increases Quarterly Cash Dividend.

  • 4Q22 diluted GAAP EPS of $0.47, diluted non-GAAP(1) EPS of $0.93, on revenue of $624.2m
  • 4Q22 net income of $43.0m, adjusted EBITDA(1) of $130.1m
  • 2022 diluted GAAP EPS of $2.60, diluted non-GAAP(1) EPS of $3.13, on revenue of $2.23bn
  • 2022 net income of $238.6m, adjusted EBITDA(1) of $439.4m
  • 2022 operating cash flow of $244.7m, free cash flow(1) of $46.4m
  • Initiates 2023 guidance in-line with prior outlook commentary
  • Increases quarterly cash dividend to $0.23 per share

February 23, 2023 04:06 PM Eastern Standard Time

LYNCHBURG, Va.–(BUSINESS WIRE)–BWX Technologies, Inc. (NYSE: BWXT) (“BWXT”, “we”, “us” or the “Company”) reported fourth-quarter and full-year 2022 results.

“As we expected, BWXT closed out 2022 with solid fourth quarter financial results,” said Rex D. Geveden, president and chief executive officer. “We benefited from our balanced and growing portfolio this year as strong performance in Commercial Operations largely offset headwinds in the Government Operations segment owing to a tough labor market. Operating performance outpaced macroeconomic and accounting headwinds, including lower pension income and increasing interest rates, resulting in high-single digit underlying EBITDA and positive earnings per share growth for the year.”

“We continue to face labor pressures and expect that to detract from our full potential in 2023 because our growth will likely be muted by attrition and the availability of qualified workers. Despite these macroeconomic headwinds, I am energized about the expected future trajectory of BWXT because we see increasing demand in every market in which we participate. We see near-term opportunity in space-based microreactors, DOE services, commercial small modular reactors, nuclear medicine, and potential new demand related to the AUKUS trilateral security agreement. Accordingly, we expect 2023 to shape up as another strategic milestone year as we continue to drive top-line gains, accelerate EBITDA growth, and inflect free cash flow,” said Geveden.

The fourth quarter consolidated revenue increase resulted from higher revenue in Government Operations partially offset by lower revenue in Commercial Operations. The Government Operations increase was driven by higher microreactor volume, uranium processing and the DCL/Cunico acquisition, partially offset by lower long-lead material production. The Commercial Operations decrease resulted from lower commercial nuclear power, primarily fuel volume, partially offset by increased medical sales.

The full year consolidated revenue increase was driven by growth in both operating segments. The Government Operations increase was driven by higher microreactor volume, naval reactors, uranium processing, long-lead material production and the DCL/Cunico acquisition, partially offset by lower missile tube production. The Commercial Operations increase resulted from higher commercial nuclear power, primarily field services, as well as higher medical sales.

Operating Income and Adjusted EBITDA(1)

Fourth quarter consolidated operating income was about flat compared with the prior-year period, as higher operating income in Government Operations and lower unallocated corporate expense was offset by lower operating income in Commercial Operations. The Government Operations increase resulted from higher income in joint venture projects, microreactors and more favorable contract adjustments on missile tubes, partially offset by decreased labor and cost efficiencies that resulted in fewer favorable contract adjustments, lower recoverable CAS pension income, and higher depreciation and acquisition amortization. The Commercial Operations decrease was driven by lower commercial nuclear power, primarily fuel volume. Lower unallocated corporate expense was driven by decreases in healthcare costs and stock-based compensation.

The fourth quarter total adjusted EBITDA(1) increase was driven primarily by the reasons noted above as higher Government Operations adjusted EBITDA(1) and lower unallocated corporate expense was partially offset by lower Commercial Operations adjusted EBITDA(1).

The 2022 consolidated operating income increase was driven by higher operating income in Government Operations and lower unallocated corporate expense, which was offset by lower operating income in Commercial Operations. The Government Operations increase was driven by higher income from joint venture projects, uranium processing, microreactors and long-lead material production, partially offset by decreased labor and cost efficiencies that resulted in fewer favorable contract adjustments, lower recoverable CAS pension income, and higher depreciation and acquisition amortization. The Commercial Operations decrease was driven by a less favorable business mix and the absence of CEWS COVID-19 wage subsidy. Lower unallocated corporate expense was driven by a decrease in healthcare costs and lower compensation related expense inclusive of stock-based compensation.

The 2022 total adjusted EBITDA(1) increase was driven primarily by the reasons noted above as higher Government Operations adjusted EBITDA(1) and lower unallocated corporate expense was partially offset by lower Commercial Operations adjusted EBITDA(1).

EPS

The fourth quarter GAAP EPS decrease was driven primarily by the absence of gains associated with the mark-to-market of the pension that occurred in the fourth quarter 2021, higher interest expense, a higher effective tax rate and lower FAS/CAS pension income, partially offset by better operational performance and a lower share count. The fourth quarter non-GAAP EPS decrease was driven by the items above excluding mark-to-market pension gains and losses and restructuring and other costs and other one-time items.

The 2022 GAAP EPS decrease was driven primarily by the absence of gains associated with the mark-to-market of the pension that occurred in the fourth quarter 2021, higher interest expense, a higher effective tax rate and lower FAS/CAS pension income, partially offset by better operational performance and a lower share count. The 2022 non-GAAP EPS(1) increase was driven by the items above excluding mark-to-market pension gains and losses and restructuring costs and other one-time items.

Cash Flows

The fourth quarter operating cash flow decrease was driven by increases in working capital, primarily accounts payable. Lower fourth quarter capital expenditures resulted from lower spending on the two major growth capital campaigns for U.S. naval nuclear reactors and medical radioisotopes that are nearing completion, partially offset by an increase in capital expenditures for microreactors.

The 2022 operating cash flow decrease was driven by the absence of large payment that occurred in 2021, higher cash taxes for R&D amortization and an increase in working capital. Lower 2022 capital expenditures were driven by less spending on two major growth capital campaigns for U.S. naval nuclear reactors and medical radioisotopes that are nearing completion.

Dividend

BWXT paid $20.2m, or $0.22 per common share, to shareholders in the fourth-quarter 2022 and paid $81.1 m to shareholders for the full-year 2022. On February 22, 2023, the BWXT Board of Directors declared an increase of $0.01 to the quarterly cash dividend. A $0.23 cash dividend per common share will be payable on March 28, 2023, to shareholders of record on March 10, 2023. (Source: BUSINESS WIRE)

 

22 Feb 23. Airbus takes another A400M charge. Airbus took a EUR477m (USD508m) charge in 2022 on its long-troubled A400M military transport plane, the European aerospace manufacturer announced on 16 February. Earnings charges for the A400M have totalled approximately EUR6.7bn since 2014. The aircraft has experienced technical problems, schedule delays, and cost overruns since the programme was launched in 2003. Despite these challenges, the A400M showed its worth by playing a significant role in evacuation operations in Kabul, Afghanistan, when the Western-backed Afghan government collapsed in 2021, Airbus CEO Guillaume Faury told reporters at the company’s annual press conference on 16 February in Toulouse, France. Built in Germany, Spain, and the UK, the A400M flew for the first time in 2009, and the first production aircraft was delivered to the French Air Force in 2013. As of the end of 2022, Airbus had delivered 115 of the 178 aircraft ordered. Deliveries totalled 10 in 2022, up from eight in 2021. (Source: Janes)

 

21 Feb 23. Booz Allen Invests in Hidden Level, Inc.. Booz Allen Hamilton (NYSE: BAH) today announced that its corporate venture capital arm, Booz Allen Ventures, LLC, has made a strategic investment in Hidden Level, Inc., a developer of passive sensing technology of unmanned aerial systems (UAS), such as drones, for high-interference environments. Hidden Level utilizes next generation radio frequency (RF) sensing technology to provide multi-domain situational awareness and support to counter-UAS missions. This is the first investment by Booz Allen Ventures in calendar year 2023, and is aligned to the firm’s Digital Battlespace Platform, focused on the accelerated adoption of emerging technologies and operational concepts for the firm’s global defense clients.

“Investments in companies like Hidden Level accelerate our ability to bring novel insights to the counter-UAS mission, expanding the potential for decision advantage by our nation’s warfighters.”

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“The ongoing conflict in Ukraine empirically demonstrates the value of UAS technologies and disproportionate intelligence in modern warfare,” said Steve Escaravage, executive vice president at Booz Allen and leader of the firm’s Digital Battlespace Platform. “Investments in companies like Hidden Level accelerate our ability to bring novel insights to the counter-UAS mission, expanding the potential for decision advantage by our nation’s warfighters.”

The current and future warfighting domains call for innovative c-UAS capabilities like those developed by Hidden Level, whose sensors can detect and track low-altitude airborne threats using adaptive RF signal detection techniques, thus increasing airspace situational awareness and informing counter measure opportunities.

“We’re very excited about the path forward with Booz Allen to support DOD missions and provide critical insights for our soldiers on the ground,” said Jeff Cole, chief executive officer and co-founder of Hidden Level. “The investment from Booz Allen Ventures is a natural extension of our deep technology work, paired with Booz Allen’s mission expertise. Booz Allen understands the technology needed to support warfighters, and Hidden Level will play an important role in both tactically and strategically supporting DOD through dual-use technology to achieve decision superiority.”

The $100m corporate venture capital arm furthers Booz Allen’s commitment to invest in strategic dual-use, commercial technologies that will provide federal clients disruptive technology for critical missions. Aligned with client demand and the firm’s VoLT (Velocity, Leadership, Technology) growth strategy, Booz Allen Ventures will invest in early-stage companies and technologies within four core areas of demand: defense, artificial intelligence/machine learning, cybersecurity, and emerging/deep technology. Previous Booz Allen Ventures investments include Latent AI, Synthetaic, and Reveal Technology.

“In an ever-changing geopolitical climate, it is imperative we continue to advance technology for our clients, and to empower warfighters with the tools and information they need to perform their jobs safely,” said Travis Bales, a leader within Booz Allen Ventures and former Army officer. “We are excited about the work Booz Allen and Hidden Level are doing to accelerate innovation and enhance mission critical technology to meet the needs of our defense clients.” (Source: BUSINESS WIRE)

 

21 Feb 23. Curtiss-Wright Corporation (NYSE: CW) reports financial results for the fourth quarter and full-year ended December 31, 2022.

Fourth Quarter 2022 Highlights:

  • Reported sales of $758m, operating income of $157m, operating margin of 20.8%, diluted earnings per share (EPS) of $2.82, and free cash flow (FCF) of $283m;
  • Adjusted sales of $758m, up 16% year-over-year;
  • Adjusted operating income of $160 m, up 24%;
  • Adjusted operating margin of 21.1%, up 140 basis points;
  • Adjusted diluted EPS of $2.92, up 21%;
  • Adjusted FCF of $299m, with 265% FCF conversion; and
  • New orders of $714m, up 5%, reflecting solid demand in Aerospace & Defense (A&D) and Commercial markets.

Full-Year 2022 Highlights:

  • Reported sales of $2.6bn, operating income of $423m, operating margin of 16.6%, diluted EPS of $7.62, and FCF of $257m;
  • Adjusted sales of $2.6bn, up 4% year-over-year;
  • Adjusted operating income of $443m, up 5%;
  • Adjusted operating margin of 17.3%, up 30 basis points;
  • Adjusted diluted EPS of $8.13, up 11%;
  • Adjusted FCF of $296m, with 94% FCF conversion;
  • Total share repurchases of $50m; and
  • New orders of $2.9bn, up 15%; Backlog up 19%.

“Curtiss-Wright delivered record financial performance in the fourth quarter, driven by double-digit organic sales growth in our Aerospace & Defense and Commercial markets, and a strong performance from the recent acquisition of our engineered arresting systems business,” said Lynn M. Bamford, Chair and CEO of Curtiss-Wright Corporation. “In addition, we achieved record quarterly Adjusted free cash flow of nearly $300m, which generated robust free cash flow conversion of 265%.”

“Our full-year 2022 results were highlighted by a strong operational performance, as we produced higher sales and operating income in our Aerospace & Industrial and Naval & Power segments. Further, the strength and resilience of our combined portfolio enabled us to minimize the impact of the challenging supply chain environment, as we generated 30 basis points in full-year operating margin expansion to 17.3%, and delivered double-digit EPS growth. Our results also reflected record orders of $2.9bn and a book-to-bill of 1.15x, driven by strong demand across the portfolio.”

“Looking to 2023, we anticipate total sales growth of 4% to 6% principally driven by strong growth in our A&D markets, continued operating margin expansion while maintaining steady investments in our technology, and strong Adjusted free cash flow generation ranging from $360 to $400m. As a result, we remain well-positioned with line of sight to the 3-year financial targets that we communicated at our 2021 Investor Day.”

Fourth Quarter 2022 Operating Results

  • Adjusted sales of $758m increased 16% compared with the prior year, and included a $9m or 1% headwind from unfavorable foreign currency translation, mainly within our Aerospace & Industrial segment;
  • Total A&D market sales increased 18%, while total Commercial market sales increased 10%;
  • In our A&D markets, our results reflected strong growth of 20% in our defense markets, driven by higher defense electronics revenues, the contribution from the acquisition of our engineered arresting systems business and double-digit sales growth in commercial aerospace;
  • In our Commercial markets, we experienced double-digit sales growth in the general industrial market, as well as high-single digit sales growth within the power & process market, despite the wind down on the China Direct AP1000 program; and
  • Adjusted operating income of $160m increased 24%, while Adjusted operating margin increased 140 basis points to 21.1%, principally driven by favorable overhead absorption on higher revenues in all three segments, as well as the benefits of our prior year restructuring and ongoing company-wide operational excellence initiatives.

Fourth Quarter 2022 Segment Performance

Aerospace & Industrial

  • Adjusted sales of $223m, up $16m, or 8% overall, and included a $6m or 4% headwind from unfavorable foreign currency translation;
  • Higher commercial aerospace market revenue was driven by higher sales of actuation and sensors products on numerous narrowbody and widebody platforms;
  • Lower aerospace defense market revenue reflected the timing of defense market sales of our actuation and sensors products;
  • Strong double-digit revenue growth in the general industrial market reflected continued strong demand for industrial vehicle products serving on-highway, off-highway and specialty platforms, and increased sales of surface treatment services; and
  • Adjusted operating income was $41m, up 2% from the prior year, while Adjusted operating margin decreased 100 basis points to 18.5%, as favorable absorption on higher sales and the benefits of our ongoing operational excellence initiatives were partially offset by unfavorable mix on actuation products.

Defense Electronics

  • Adjusted sales of $236m, up $37m, or 18%, principally reflected strong growth in defense market sales, despite ongoing supply chain headwinds related to the availability of electronic components;
  • Higher aerospace defense market revenues reflected increased sales of our embedded computing equipment on various fighter jet and helicopter programs;
  • Ground defense market revenue increases reflected higher sales of our tactical communications equipment; and
  • Adjusted operating income was $70m, up 33% from the prior year, while adjusted operating margin increased 320 basis points to 29.7%, primarily driven by strong absorption on higher defense revenues.

Naval & Power

  • Adjusted sales of $298m, up $50m, or 20%;
  • Higher aerospace defense market revenues reflected the contribution from the arresting systems acquisition for arresting systems equipment, principally to international customers;
  • Naval defense market revenue increases reflected the strong ramp up on the Columbia-class submarine program partially offset by timing of revenues on the CVN-80 aircraft carrier program;
  • Higher power & process market revenues reflected strong growth in nuclear aftermarket sales supporting existing operating reactors as well as increased industrial valve sales in the process market. Those increases were partially offset by the wind down of production on the China Direct AP1000 program; and
  • Adjusted operating income was $60m, up 26% from the prior year, while adjusted operating margin increased 100 basis points to 20.3%, driven by favorable absorption on higher organic revenues, a solid contribution from the arresting systems acquisition and the benefits of our restructuring initiatives.

Free Cash Flow

  • Reported free cash flow of $283m increased $64m, primarily due to higher cash earnings and lower taxes;
  • Adjusted free cash flow of $299m increased $80m; and
  • Capital expenditures decreased $4m compared with the prior year.

New Orders and Backlog

  • New orders of $714m increased 5% in the fourth quarter driven by strong demand for defense electronics products and the contribution from our arresting systems acquisition within our A&D markets, and for nuclear aftermarket products within our Commercial markets;
  • Full-year 2022 new orders of $2.9bn increased 15% and generated an overall book-to-bill of 1.15x, reflecting growth in our A&D and Commercial markets; and
  • Backlog of $2.6bn, up 19% from December 31, 2021, reflects strong demand in our Defense and Commercial Aerospace markets.

Share Repurchase and Dividends

  • During the fourth quarter, the Company repurchased 74,816 shares of its common stock for approximately $12m;
  • During full-year 2022, the Company repurchased 0.3 m shares for $50m; and
  • The Company also declared a quarterly dividend of $0.19 a share.

Other Items – Completion of Financing of $300m in Senior Notes

  • On October 27, 2022, the Company announced the successful completion of a private placement debt offering of $300m for senior notes, consisting of $200m 4.49% notes due 2032 and $100m 4.64% notes due 2034.

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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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