BUSINESS NEWS

Sponsored by TCI International Inc.

www.tcibr.com

————————————————————————-

03 Aug 23. Astronics Corporation Reports 2023 Second Quarter Financial Results.

Sales for the quarter were $174.5m, up 35% over prior year, and 11% sequentially
Bookings totaled $207.1m
Record backlog of $611.1m
Aerospace segment sales increased 45% to $158.4m; bookings were $188.8m
Income from operations was $2.4m in the quarter; net loss was $12.0m after $8.1m tax expense
Adjusted EBITDA1 grew to $15.8m, or 9.1% of sales

Astronics Corporation (Nasdaq: ATRO) (“Astronics” or the “Company”), a leading supplier of advanced technologies and products to the global aerospace, defense and other mission critical industries, today reported financial results for the three and six months ended July 1, 2023.

Peter J. Gundermann, Chairman, President and Chief Executive Officer, commented, “Our second quarter results show the momentum in our business as the commercial aerospace industry advances its recovery. Demand for our products is high and our supply chain continues to improve. Revenue of $175m was a significant step up sequentially and year-over-year, and bookings of $207m were at pre-pandemic levels. We believe we are set for a strong second half of 2023 and, if current trends continue, an even stronger 2024.”

Consolidated sales were up $45.3m, or 35.1%, from the second quarter of 2022, and up 11.4% sequentially. Aerospace sales increased $49.1m over the comparator quarter, or 44.9%, driven primarily by higher sales to the commercial transport market. Test Systems sales decreased $3.8m on lower defense revenue.

Consolidated operating income was $2.4m, an improvement over an operating loss of $8.4m in the prior-year period. The current period operating income improvement was driven by the contribution margin from the increased sales. The current period was impacted by litigation-related legal expenses of $4.9m partially offset by a reduction in legal reserves of $1.3m.

Interest expense was $5.9m in the current period, compared with $1.7m in the prior-year period, primarily driven by higher interest rates on the Company’s new credit facilities. Interest expense includes approximately $0.7m of non-cash amortization of capitalized financing-related fees.

Income tax expense was $8.1m in the current period, primarily due to a valuation allowance applied against the deferred tax asset associated with research and development costs that are required to be capitalized for tax purposes.

Consolidated net loss was $12.0m, or $0.37 per diluted share, compared with net loss of $11.0m, or $0.34 per diluted share, in the prior year.

Consolidated adjusted EBITDA was $15.8m, or 9.1% of consolidated sales, compared with an adjusted EBITDA of $2.1m, or 1.6% of consolidated sales, in the prior-year period.

Bookings were $207.1m in the quarter resulting in a book-to-bill ratio of 1.19:1. The quarter closed with a record backlog of $611.1m. Approximately $502.0m of backlog is expected to ship over the next twelve months.

Aerospace Second Quarter 2023 Results (compared with the prior-year period, unless noted otherwise)

Aerospace segment sales increased $49.1m, or 44.9%, to $158.4m, and up 16.8% sequentially. The increase was driven by a 61.9% increase, or $42.8m, in commercial transport sales. Sales to this market were $112.1m, or 64.3% of consolidated sales in the quarter, compared with $69.2m, or 53.6% of consolidated sales in the second quarter of 2022. Improving global airline travel driving higher fleet utilization and increased production rates resulted in increased demand.

General Aviation sales increased $6.9m, or 38.0%, to $25.0m.

Aerospace segment operating profit improved to $13.7m, or 8.7% of sales, compared with operating loss of $3.3m in the same period last year. The improved operating profit was driven by higher volume primarily in the commercial transport market.

Aerospace bookings were $188.8m for a book-to-bill ratio of 1.19:1. Backlog for the Aerospace segment was a record $522.6m at quarter end.

Mr. Gundermann commented, “The recovery in our Aerospace segment over the last four quarters has been dramatic, with revenue increasing from $112m per quarter to $158m. Bookings during that period have totaled $656m with a book-to-bill of 1.21:1, indicating strong demand for our products and opportunity for further growth. The increase in global passenger travel is driving the recovery, resulting in higher production rates and retrofit activity across all portions of the industry.”

Test Systems Segment Review (refer to sales by market and segment data in accompanying tables)

Test Systems Second Quarter 2023 Results (compared with the prior-year period, unless noted otherwise)

Test Systems segment sales were $16.1m, down $3.8m primarily as a result of lower defense revenue.

Test Systems segment operating loss was $6.1m compared with nearly break-even in the second quarter of 2022. Test Systems operating loss for the current period was negatively affected by mix, under absorption of fixed costs due to volume and $2.2m in increased litigation-related legal expenses.

Shortly after the first quarter ended, the Test Systems segment implemented restructuring initiatives to align the workforce and management structure with near-term revenue expectations and operational needs. These initiatives are expected to provide savings of $4m to $5m annually, beginning with the third quarter.

Bookings for the Test Systems segment in the quarter were $18.3m and included the initial $9.6m production order for the Handheld Radio Test Sets (“HHRTS”) Program for the U.S. Marine Corps. Book-to-bill ratio was 1.14:1 for the quarter. Backlog was $88.5m at the end of the second quarter of 2023 compared with backlog of $83.6m at the end of the second quarter of 2022.

In April 2023, Astronics announced that the Test business had been awarded a contract award to produce portable radio test equipment for the U.S. Marine Corps’ HHRTS Program. This program is expected to generate revenue of approximately $40m over a five-year period.

Mr. Gundermann commented, “Our Test business had a difficult quarter, with lower-than-expected revenue and high legal costs. We expect significant improvement in the coming quarters as our radio test programs advance, setting up 2024 as a much better year.”

Liquidity and Financing

Cash on hand at the end of the quarter was $4.3m. Capital expenditures in the quarter were $2.2m. Net debt was $178.7m.

Cash used for operations was $2.0m in second quarter of 2023, improving from cash used of $19.2m in the prior quarter. Astronics expects to be cash flow positive for the remainder of 2023. During the quarter, higher inventory and accounts receivable were partially offset by increased accounts payable and accrued expenses.

David Burney, the Company’s CFO, said, “Our liquidity during the second quarter was tighter than expected as inventory levels continued to increase. We are challenged by elevated inventory levels as we forecast strong sales growth but struggle with the inefficiencies in the supply chain. We expect inventory levels to begin to decline and liquidity to improve as we move through the second half of the year.”

2023 Outlook

Revenue guidance for 2023 is unchanged at $640m to $680m with expectations of achieving the higher end of the range. Planned capital expenditures for 2023 are expected to be in the range of $7m to $12m.

(Source: BUSINESS WIRE)

03 Aug 23. nLIGHT, Inc. Announces Second Quarter 2023 Results. nLIGHT, Inc. (Nasdaq: LASR), a leading provider of high-power semiconductor and fiber lasers used in the industrial, microfabrication, and aerospace and defense markets, today reported financial results for the second quarter of 2023.

“Our second quarter performance reflects the continued progress towards our strategic growth initiatives, particularly in Aerospace & Defense,” commented Scott Keeney, nLIGHT’s President and Chief Executive Officer. “A&D revenue increased 9% year-over-year and we began work on the second phase of the HELSI program. In our commercial markets, we continue to leverage our unique Corona programmable fiber lasers to offer differentiated solutions across each of our Industrial applications. In addition, we saw increased adoption of our process monitoring solutions for EV battery applications.”

Mr. Keeney continued, “Our focus on driving profitable growth resulted in second quarter revenue and Adjusted EBITDA above the mid-point of our guidance range. While we continue to face macroeconomic headwinds, recent defense program wins and continued adoption of our innovative semiconductor and fiber laser solutions make us optimistic for strong growth in subsequent quarters and into 2024.”

Second Quarter 2023 Financial Highlights

Revenues of $53.3m for the second quarter of 2023 were down 12.4% compared to $60.8m for the second quarter of 2022. Gross margin was 22.7% for the second quarter of 2023 compared to 25.3% for the second quarter of 2022. GAAP net loss for the second quarter of 2023 was $8.8m, or net loss of $0.19 per diluted share, compared to net loss of $10.3m, or $0.23 per diluted share, for the second quarter of 2022. Non-GAAP net loss for the second quarter of 2023 was $0.9m, or $0.02 per diluted share, compared to non-GAAP net loss of $3.3m, or $0.07 per diluted share, for the second quarter of 2022. Reconciliations of the non-GAAP measures presented here to the most directly comparable GAAP measures have been provided in the tables included at the end of this release.

Outlook

For the third quarter of 2023, nLIGHT expects revenues to be in the range of $47m to $51 m. The midpoint of $49m includes Laser Products revenue of approximately $36 m and Advanced Development revenue of approximately $13m. nLIGHT expects overall gross margin to be in the range of 22% to 25%, with Laser Products gross margin in the range of 27% to 31% and Advanced Development gross margin of approximately 7%. nLIGHT expects Adjusted EBITDA to be in the range of $(3) m to break-even.

We have not reconciled our outlook for Adjusted EBITDA because unrealized and realized foreign exchange gains and losses cannot be reasonably calculated or predicted nor can the probable significance be determined at this time. Accordingly, a reconciliation is not available without unreasonable effort.

(Source: BUSINESS WIRE)

03 Aug 23. BWX Technologies Reports Second Quarter 2023 Results.

2Q23 revenues of $612.4m
2Q23 net income of $58.7m, adjusted EBITDA(1) of $107.0m
2Q23 diluted GAAP EPS of $0.64, non-GAAP(1) EPS of $0.65
Selected to provide the nuclear system and fuel for DARPA’s DRACO project, the first nuclear powered spacecraft
Shipped final missile tube of the Block II contract from our Mount Vernon facility
Narrowing 2023 non-GAAP(1) EPS guidance to $2.85-$3.00

BWX Technologies, Inc. (NYSE: BWXT) (“BWXT”, “we”, “us” or the “Company”) reported second quarter 2023 GAAP net income attributable to BWXT of $58.6m, or diluted earnings per share (EPS) of $0.64, on second quarter revenues of $612.4m. Second quarter 2023 non-GAAP(1) net income attributable to BWXT was $59.4m, or non-GAAP(1) diluted EPS of $0.65. Second quarter 2023 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA)(1) was $107.0m.

“Our second quarter 2023 results were ahead of expectations, driven largely by exceptional performance in Commercial Operations, with solid execution in both our commercial nuclear and medical businesses,” said Rex D. Geveden, president and chief executive officer. “In the first half of the year we made significant progress onboarding new team members. As expected, this contributed to a sequential margin decline in our Government Operations business, but positions us well for the future growth opportunities we see materializing across our markets.”

“In June, we reached an important operational milestone by delivering our final missile tube. While this business line has had its challenges, I am proud of our team for its dedication to this important Navy program,” said Geveden. “We continue to effectively execute our growth strategy across multiple nuclear markets. In that vein, we are excited to announce that NASA and DARPA selected BWX Technologies to build a prototype nuclear rocket engine for demonstration in space, highlighting our ability to address power and propulsion applications in all domains including maritime, terrestrial, and now space, with our best-in-class nuclear solutions.”

“Looking forward, we continue to see momentum building for the use of nuclear technologies in our national security, clean energy and medical markets,” continued Geveden. “Given solid demand trends, and our strong first half results, we are narrowing our 2023 adjusted EPS guidance to $2.85-$3.00.”

Revenues

Second quarter revenue increased in both operating segments. The Government Operations increase was driven by higher naval nuclear component production and microreactors volume, partially offset by lower long-lead material procurement. The Commercial Operations increase was driven by an increase in medical sales as well as higher revenue associated with commercial nuclear field services, which was partially offset by lower fuel fabrication and nuclear component volumes.

Operating Income and Adjusted EBITDA(1)

Second quarter operating income decreased in both operating segments. The Government Operations decrease was mainly due to higher costs associated with the increase in staffing levels and associated training and related inefficiencies, as well as mix, due to higher advanced technologies revenue. The Commercial Operations decrease was largely due to a less favorable business mix that was weighted toward refurbishment and life extension field services, compared to a greater mix of outage work in the second quarter of 2022, and mitigated by higher profitability in medical.

Second quarter total adjusted EBITDA(1) decreased for the reasons noted above.

EPS

The second quarter GAAP and non-GAAP EPS(1) decrease was driven primarily by lower operating income as well as higher interest expense and lower pension income.

Cash Flows

Operating cash flow increased as lower net income was offset by improving working capital management. Lower capital expenditures were driven by lower spending on 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.

Dividend

BWXT paid $21.1m in dividends to shareholders in second quarter 2023. On August 2, 2023, the BWXT Board of Directors declared a quarterly cash dividend of $0.23 per common share payable on September 7, 2023, to shareholders of record on August 17, 2023.

2023 Guidance

BWXT reaffirmed its 2023 guidance for increased adjusted EBITDA and free cash flow, and narrowed its guidance range for non-GAAP(1) EPS. (Source: BUSINESS WIRE)

03 Aug 23. Sentar Acquires Waterfront Technical Services. Sentar Inc. (Sentar), a women-owned business specializing in advanced cyber intelligence solutions and technology, is excited to announce that they have acquired Waterfront Technical Services, a Huntsville-based company.

Waterfront’s portfolio includes flight and ground operations, data center operations, information technology, software development, and test supporting NASA’s spaceflight missions. As a key member of Teledyne Brown Engineering’s MOSSI team, Waterfront is currently providing mission critical support to NASA’s ISS, Artemis, Gateway, and Human Lander projects.

“Waterfront has created a budding legacy in Huntsville,” said Peter Kiss. “It is our desire to continue and strengthen that legacy, recognizing that our efforts in achieving our mission are always better together. We welcome Waterfront to the Sentar team as we expand Sentar’s reach into Civil Space and beyond.”

Waterfront’s President, Allan McCaleb, will be Sentar’s Director of Civil Space programs responsible for managing and growing business in that sector. The resulting company will maximize industry expertise to serve Sentar’s expanding customer base.

“Waterfront is excited to be part of the Sentar family. We are looking forward to expanding our current support to NASA with Sentar’s established cybersecurity capabilities,” said Allan McCaleb. “Together, the combined capabilities, expertise, and experience provides current and future customers a more robust solution set to meet their mission requirements.”

About Sentar, Inc.

Sentar is a leading cyber intelligence solutions provider focused on the National Security sector. Its cyber domain solutions blend expertise in cybersecurity, systems engineering, intelligence, and analytics into holistic solutions that combine these disciplines to deliver superior results to mission partners. Key clients include the Defense Health Agency, the U.S. Army, the U.S. Navy, and Missile Defense Agency. Sentar has offices in Huntsville, Alabama; Charleston, South Carolina; San Diego, California; Columbia, Maryland; and San Antonio, Texas. Visit www.sentar.com for more information. (Source: BUSINESS WIRE)

03 Aug 23. Bombardier profit beats estimates but cash flow misses; shares fall. Canada’s Bombardier (BBDb.TO) on Thursday reported a quarterly profit that beat expectations, boosted by demand for flying and maintaining private jets, but its free cash flow missed estimates, and its shares closed down 8.49%.

The Montreal-based business jet maker reported a second-quarter profit of $10m from continuing operations, compared with a loss of $109m in the year-earlier period.

Results of corporate jet makers have been powered by demand for private flying over the last few quarters, but companies are wrestling with supply chain challenges.

Bombardier reported a cash burn of $222m compared with positive free cash flow of $341m in the same period a year ago, due partly to a build-up in working capital to support higher deliveries.

Analysts polled by Refinitiv had expected negative free cash usage of $171m.

CEO Eric Martel told reporters Bombardier sees opportunities with fleet operators including key customer VistaJet, part of Dubai-based Vista Global Holding Ltd.

An auditor raised a red flag about VistaJet several months ago but Martel said he did not have concerns about the company which has a subscription membership model that makes jets available on short notice without ownership, unlike some rivals that sell shares or fractions in private planes.

“When you take the time to look at the model and see what they are doing and how they are operating, you know, we do not have concern,” Martel said.

In April, an auditor said “a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern,” The auditor report, first published by the Financial Times in May, cited debt and net losses and referenced Vista’s 2022 financial statements.

At the time, VistaJet’s founder Thomas Flohr defended the company’s financials, telling CNBC it was not at risk and was profitable on the basis of earnings before interest, taxes, depreciation and amortization (EBITDA).

Bombardier’s after-market revenue, which comes from servicing planes, grew 19% on an annual basis in the second quarter, helping its profitability.

However, there are early signs that demand may be flattening. Bombardier said its backlog at the end of June was up just 0.7% from the end of March at $14.9bn.

On a per share basis, quarterly adjusted profit was 72 cents, compared with a loss of 48 cents a year earlier. Analysts polled by Refinitiv had expected a profit of 28 cents per share. (Source: Reuters)

03 Aug 23. Serco still thriving. The outsourcer is paying down its debt on the back of strong demand.

Quiet period for contract awards
Australian project extended

Serco’s (SRP) half-year figures are at the top end of analyst expectations, as governments around the world continue to rely on outsourcers for help with prisons, immigration and defence.

Revenue increased by 13 per cent to £2.5bn in the period, while underlying operating profit grew by 14 per cent to £148mn. Adjusted net debt was the main surprise, however, at £216mn – significantly below earlier guidance of £250mn. This figure is expected to fall to £170mn by the end of the year, while free cash flow is expected to reach £150mn, compared with a previous target of £130mn.

It’s worth noting, however, that reported debt is far higher, as it includes lease liabilities of £438mn, the majority of which relate to housing for asylum seekers.

The big problem for Serco – indeed, for all outsourcers – is the lumpy nature of contract work. Companies are constantly at risk of losing business to rivals. So far, however, Serco is doing a good job of hanging on to its projects. After the period end, for example, it secured an extension to its lucrative Australian immigration contract until December 2024.

Management also noted that win rates on new work and rebids and extensions moved back up to “around the levels we have delivered on average over recent years” after a dip in 2022. It currently wins 90 per cent of its existing work back, and secures 30 per cent of the new contracts it bids for.

There was a slowdown in new work in the first half of 2023, however. Serco’s book-to-bill ratio, which compares orders received with invoiced work, slipped to 83 per cent. Management blamed this on the period “being relatively quiet in terms of contract award decisions, with a significant number of bids currently submitted and awaiting decision”. Its order book has also dipped by 3 per cent to £14.1bn.

However, Serco still looks very well placed to benefit from governments’ reliance on outsourcers, and its ability to retain contracts suggests the quality of its service is high. Meanwhile, after a tough 12 months, the group is trading on a forward price/earnings ratio of just 10.6, compared with a five-year average of 15.8. Buy. Last IC View: Buy, 156p, 28 Feb 2022. (Source: Investors Chronicle)

02 Aug 23. Curtiss-Wright Corporation (NYSE: CW) reports financial results for the second quarter ended June 30, 2023.

Second Quarter 2023 Highlights:

Reported sales of $704m, up 16%;
Reported operating income of $113 m, operating margin of 16.0%, and diluted earnings per share (EPS) of $2.10;
Adjusted operating income of $115m, up 18%;
Adjusted operating margin of 16.4%, up 30 basis points;
Adjusted diluted EPS of $2.15, up 18%;
New orders of $842m, up 8%, reflecting strong Aerospace & Defense (A&D) market demand, and book-to-bill of 1.2;
Backlog of $2.8bn, up 9% year-to-date; and
Free cash flow (FCF) of $99m, generating 119% Adjusted FCF conversion.

Raised Full-Year 2023 Adjusted Financial Guidance:

Sales increased to new range of 7% to 9% growth (previously 4% to 6%), now reflecting growth in all A&D and Commercial end markets;
Operating income increased to new range of 8% to 11% growth (previously 5% to 8%);
Maintained operating margin range of 17.4% to 17.6%, up 10 to 30 basis points compared with the prior year;
Diluted EPS increased to new range of $8.90 to $9.15, up 10% to 13% (previously $8.65 to $8.90); and
Free cash flow increased to new range of $370 to $400m (previously $360 to $400m) and continues to reflect greater than 110% FCF conversion.

“Curtiss-Wright delivered stronger-than-expected second quarter results, highlighted by top-line growth in all of our A&D and Commercial end markets and continued operating margin expansion, as we successfully execute on our Pivot to Growth strategy,” said Lynn M. Bamford, Chair and CEO of Curtiss-Wright Corporation. “We also experienced solid order activity, yielding a book-to-bill of 1.2, and continued to grow our backlog driven by strong demand across all three segments.”

“Based on the strong first half results and our expectations for continued easing in the defense electronics supply chain, we have increased our full-year sales, operating income, diluted EPS and free cash flow guidance. We now expect growth in all of our A&D and Commercial markets, as we maintain strong alignment with the favorable secular growth trends influencing our business. We remain committed to delivering on our investor day targets through a strong focus on operational excellence and continued investment in Curtiss-Wright’s future growth to drive long-term shareholder value.”

Second Quarter 2023 Operating Results

Sales of $704m increased 16% compared with the prior year;
Total A&D market sales increased 23%, while total Commercial market sales increased 4%;
In our A&D markets, our results reflected strong organic sales growth driven by the continued easing of defense electronics supply chain headwinds in our defense markets and higher sales in the commercial aerospace market, as well as the contribution from the acquisition of our engineered arresting systems business;
In our Commercial markets, we experienced solid growth in the power & process markets, despite the wind down on the China Direct AP1000 program, and higher sales in the general industrial market; and
Adjusted operating income of $115 m increased 18%, while Adjusted operating margin increased 30 basis points to 16.4%, principally driven by favorable overhead absorption on higher revenues in all three segments; Those increases were partially offset by unfavorable mix in the Aerospace & Industrial and Naval & Power segments.

Second Quarter 2023 Segment Performance

Aerospace & Industrial

Sales of $226m, up $18m, or 8%;
Commercial aerospace market revenue increases reflected strong demand and higher OEM sales of sensors products and surface treatment services on narrowbody and widebody platforms;
Higher general industrial market revenue was principally driven by increased sales of industrial automation products and surface treatment services;
Higher revenue in the aerospace and naval defense markets reflected the timing of sales for our actuation equipment supporting various programs; and
Adjusted operating income was $36m, up 10% from the prior year, while Adjusted operating margin increased 20 basis points to 15.8%, mainly due to solid absorption on higher sales, partially offset by unfavorable mix in actuation and sensors products.

Defense Electronics

Sales of $198m, up $48m, or 32%;
Higher revenue in the aerospace defense market was primarily driven by increased sales of our embedded computing and flight test instrumentation equipment on various fighter jet programs;
Strong revenue growth in the ground defense market reflected higher sales of tactical battlefield communications equipment;
Higher commercial aerospace market revenue reflected increased sales of avionics and flight test equipment on various domestic and international platforms; and
Adjusted operating income was $43m, up 77% from the prior year, while adjusted operating margin increased 540 basis points to 21.8%, primarily due to favorable absorption on higher A&D revenues.

Naval & Power

Sales of $280m, up $29m, or 12%;
Higher aerospace defense market revenues reflected a solid contribution from the arresting systems acquisition and strong demand from international customers;
Naval defense market revenue increases principally reflected higher revenues on Columbia-class and Virginia-class submarines, partially offset by the timing of revenues on aircraft carrier programs;
Higher power & process market revenues reflected strong growth in industrial valve sales in the process market as well as solid growth in commercial nuclear aftermarket revenues supporting the maintenance of existing operating reactors; Those increases were partially offset by lower China Direct AP1000 program revenues; and
Adjusted operating income was $49m, down 1% from the prior year, while adjusted operating margin decreased 230 basis points to 17.6%, as favorable absorption on higher organic revenues and the contribution from the arresting systems acquisition were offset by an unfavorable mix of products.

Free Cash Flow

Reported free cash flow of $99m increased $77m year over year, primarily due to improvements in working capital;
Adjusted free cash flow of $99m; and
Capital expenditures increased $3m compared with the prior year.

New Orders and Backlog

New orders of $842m increased 8% compared with the prior year and generated an overall book-to-bill of approximately 1.2x, principally driven by strong demand for defense electronics and naval defense products within our A&D markets, and for nuclear aftermarket products within our Commercial markets; and
Backlog of $2.8bn, up 9% from December 31, 2022, reflects higher demand in both our A&D and Commercial markets.

Share Repurchase and Dividends

During the second quarter, the Company repurchased 72,703 shares of its common stock for approximately $12m; and
The Company also declared a quarterly dividend of $0.20 a share, an increase of 5% from the previous quarter.

02 Aug 23. Triumph Group, Inc. (NYSE: TGI) (“TRIUMPH” or the “Company”) today reported preliminary financial results for its first quarter of fiscal 2024, which ended June 30, 2023.

First Quarter Fiscal 2024

Net sales of $327.1m; Organic sales growth of 14%
Operating income of $18.7m with operating margin of 5.7%; adjusted operating income of $24.4m with adjusted operating margin of 7.5%
Net loss of ($12.8)m, or ($0.19) per share; adjusted net loss of ($7.0)m, or ($0.10) per diluted share
Adjusted EBITDAP of $35.6 m with Adjusted EBITDAP margin of 10.9%

Fiscal 2024 Guidance

Reaffirmed expected net sales of $1.39bn to $1.43bn, reflecting 7 – 10% organic growth
Updated operating income of $159.0m to $174.0m, reflecting operating margin of 11 – 12%
Reaffirmed adjusted EBITDAP of $210.0m to $225.0m, reflecting Adjusted EBITDAP margin of 15 – 16%
Reaffirmed expected cash flow from operations of $60.0m to $80.0m; free cash flow of $35.0m to $50.0m

“Building off our positive momentum from fiscal 2023, TRIUMPH generated its fifth consecutive quarter of organic sales growth driven by continued strong commercial aftermarket and improving OEM demand,” said Dan Crowley, TRIUMPH’s chairman, president, and chief executive officer. “Free cash use was in line with our expectations and was impacted by seasonality due to increased working capital necessary to support higher deliveries. We continue to expect free cash flow to improve over the course of the year. With a growing and profitable backlog, TRIUMPH is well positioned to continue to grow organically and improve profitability, while also benefitting from the positive trends across our end markets.”

Mr. Crowley continued, “As TRIUMPH continues to focus on deleveraging and optimizing its capital structure, the company recently completed the successful redemption of its warrants, increasing cash by $85m and reducing debt by $14m. TRIUMPH remains on track to deliver profitable growth and achieve its full year guidance as the Company is executing on its financial and operational goals.”

First Quarter Fiscal 2024 Overview

Excluding impacts from divestitures and exited or sunsetting programs, organic Commercial OEM sales increased $8.7m, or 8.1% and included increased production volumes on Boeing 787 and 737 programs, offset by reductions across other commercial rotorcraft programs.

Military OEM sales increased $8.8m, or 15.5%, all of which were organic, primarily due to increased sales related to the CH-53K, V-22, and UH-60 programs.

Commercial Aftermarket sales increased $24.5m, or 38.7%. Excluding impacts from divestitures, organic Commercial Aftermarket sales increased $25.9m, or 42.5%, driven by the continued improvement in overall air travel metrics, favorably impacting both repair and overhaul services and spare part sales on an equal basis.

Military aftermarket sales decreased $3.3m, or 6.6%, all of which was organic, driven by reduced sales across several fixed wing platforms and reduced spares on rotorcraft platforms relative to the prior year, partially offset by increased repairs on rotorcraft platforms.

First quarter operating income of $18.7m includes $1.9m of shareholder cooperation costs and a $3.8m reduction of the prior period gain on sale of assets and businesses. Net loss for the first quarter of 2024 was ($12.8)m or ($0.19) per share and includes $0.1m in debt extinguishment losses.

TRIUMPH’s results included the following:

The number of shares used in computing loss per share for the first quarter of 2024 was 66.3m.

Backlog, which represents the next 24 months of actual purchase orders with firm delivery dates or contract requirements, was $1.74bn, up 10% from prior fiscal year end. This increase was primarily on commercial narrow body platforms.

For the first quarter of fiscal 2024, cash flow used in operations was $63.7m, which was in line with expectations previously provided and reflects seasonality due to increased working capital to support higher fiscal 2024 deliveries.

Potential Adjustments

We are currently evaluating the final accounting and process around the working capital components of recent legacy Aerospace Structures divestitures and related transition services agreements, which could result in non-cash adjustments to reported amounts, including gain or loss on sale of assets and businesses. At this time, we do not anticipate that potential adjustments would be material to the reported periods. We plan to provide an update upon completion of this evaluation process. These potential adjustments do not relate to previously disclosed indemnification claims related to the sale of the Stuart facility, which have been resolved in part at this time. (Source: PR Newswire)

02 Aug 23. ATI Announces Second Quarter 2023 Results.

Strong performance in Aerospace & Defense propels sequential and year over year growth

Q2 2023 sales of $1.05bn up 1% over Q1 2023 and 9% higher than Q2 2022
Q2 2023 net income attributable to ATI of $76.0m, or $0.52 per share
Aerospace and defense represent 58% of Q2 2023 sales, up from 56% of Q1 2023 sales and up from 46% of Q2 2022 sales
Non-GAAP information
Q2 2023 adjusted net income attributable to ATI of $86.2m, and adjusted EPS of $0.59 per share
Q2 2023 ATI adjusted EBITDA was $149.8m, or 14.3% of sales

ATI Inc. (NYSE: ATI) reported second quarter 2023 results, with sales of $1.05bn and net income attributable to ATI of $76.0m, or $0.52 per share.

Adjusted earnings per share* for Q2 2023 was $0.59, and ATI adjusted EBITDA* was $149.8m, or 14.3% of sales. Q2 2023 adjusted results exclude pre-tax amounts of $4.5m in start-up related costs, $2.7 m of severance-related restructuring charges, $2.8m primarily for asset write-offs related to the closure of our Robinson, PA operation and $0.6 m related to the loss on the sale of our Northbrook, IL operation. Adjusted earnings per share* for Q1 2023 was $0.49, and ATI adjusted EBITDA* was $132.7m, or 12.8% of sales. Adjusted results for Q1 2023 exclude a pre-tax amount of $1.2m for start-up related costs incurred as part of restarting a titanium melt facility in Albany, OR. Q2 2022 adjusted results exclude a $115.9m loss on the sale of our Sheffield, U.K. business.

“ATI’s growth as an aerospace and defense leader continues,” said Robert S. Wetherbee, Board Chair and CEO. “As demand accelerates, the percentage of our revenue attributed to aerospace and defense reached 58%, up from 46% in the second quarter of 2022. We are making rapid progress toward our aerospace and defense sales goal of 65%,” he said.

“Strong execution and operational performance drove further margin expansion in the second quarter, with our High Performance Materials and Components segment delivering 20.5% EBITDA margins, up from 17.0% in the prior quarter,” said Wetherbee. “Overall, consolidated margins were up 150 basis points. This reflects improving operating leverage from higher production volumes and incredible work by the entire ATI team.”

Operating Results by Segment

HPMC’s second quarter 2023 sales increased $56m, or 12%, compared to the first quarter 2023, primarily driven by growth in the commercial jet engine market. Overall aerospace and defense sales were 83% of total HPMC sales in the second quarter 2023. Second quarter 2023 sales improved 33% compared to the second quarter 2022, with total aerospace and defense related sales increasing 38% compared to the prior year period.
HPMC segment EBITDA was $108.1m, or 20.5% of sales. The incremental margins continue to be driven by increased volumes on higher margin next-generation commercial aerospace platforms.
Results in the second quarter 2022 included $5.6m of benefits from the Aviation Manufacturing Jobs Protection program.
AA&S second quarter 2023 sales decreased by $48m, or 9% compared to the first quarter, 2023, primarily due to recessionary softness in general industrial end markets and lingering COVID impacts associated with our Asian precision rolled strip business. Sales of commercial aerospace products increased by nearly 50% compared to the prior year period.
AA&S segment EBITDA was $63.2 m, or 12.2% of sales. Reduced deliveries of nickel based alloys and precision rolled strip products in the second quarter 2023 were partially offset by increases in titanium plate deliveries. Second quarter 2022 results included a $9.9m benefit from the settlement of Section 232 claims as well as lower retirement benefit costs when compared to the second quarter 2023.

Corporate Items and Cash

Restructuring and other credits (charges) in the second quarter 2023 include pre-tax charges of $4.5m for start-up costs, $2.7m of severance-related restructuring charges, and $2.8m primarily for asset write-offs related to the closure of our Robinson, PA operation, of which $0.8 m was accelerated depreciation on fixed assets. First quarter 2023 results include a $1.2m pre-tax charge for costs to restart our titanium operations in Albany, OR. Second quarter 2022 results include a $1.3m pre-tax credit for restructuring charges primarily related to lowered severance-related reserves based on changes in planned operating rates and revised workforce reduction estimates.
Corporate expenses in the second quarter 2023 were $18.1m, compared to $17.3m in the first quarter 2023, and $16.7m in the prior year quarter.
Closed operations and other expense were $3.4m in the second quarter 2023, compared to $2.8m in the first quarter 2023, and $5.1m in the prior year quarter. Higher costs in the second quarter 2023, compared to the first quarter 2023, were associated with higher facility costs at closed locations.
Second quarter 2023 results include a $3.7m income tax provision, compared to $4.3m in the first quarter 2023, and $3.4m in the prior year quarter. This expense is primarily related to our Asian precision rolled strip business. ATI maintains a valuation allowance on its U.S. deferred tax assets and does not expect to pay any significant U.S. federal or state income taxes in 2023 due to net operating loss carryforwards.
For the second quarter of 2023, cash provided by operating activities was $68.1m, and cash used in operating activities was $217.1 m on a year-to-date basis. Inventory levels increased in the second quarter as a result of a strategic nickel purchase to ensure continuity of supply, which was funded by a $50m draw on our asset based lending credit facility. As a result of the strategic purchase, second quarter 2023 managed working capital as a percent of sales was 39.0%. Capital expenditures for the first half of 2023 were $103.3m.
Cash on hand at June 30, 2023 was $267m, and available additional liquidity under the asset-based lending (ABL) credit facility was approximately $500 m. ATI has no significant debt maturities until 2025.
On April 28, 2023, our Board of Directors authorized the repurchase of $75m of ATI stock. (Source: PR Newswire)

03 Aug 23. TT Electronics, the global provider of engineered electronics for performance critical applications, this morning announces its interim Results for the half-year ended 30 June 2023, delivering improved margins and cash generation and reporting increased confidence in full year outlook.

Highlights

Revenue up 12% on a constant currency basis
Adjusted operating profit up 34% at constant currency
Inflection in cash generation: free cash flow of £6.9m and cash conversion of 74%
Interim dividend increased 8% to 2.15p per share reflecting confidence in full year outlook and future prospects
Order intake remains robust and is normalising as expected, 15 new significant contract wins in the half delivering over £150m of potential lifetime revenues
Significant recovery in P&C performance, with continued momentum in GMS and S&SC
Order book provides visibility for balance of 2023 revenues with cover building for 2024
Expansion of facilities in Kuantan, Malaysia and now in Mexicali, Mexico increases our geographic diversification and facilitates re-shoring opportunities with customers
Appointment of Peter France as CEO to succeed Richard Tyson on 2 October 2023

Richard Tyson, Chief Executive Officer, said: “We are really pleased with a great performance by the team to achieve these results, delivering strong organic growth in revenue and profit. Adjusted operating margin is up by 140 basis points at constant currency. Leverage has reduced on the back of the inflection in cash generation and increased adjusted EBITDA.

The business is clearly demonstrating the benefit of the work to re-position in the right markets, with the right customers and from the right operational footprint. More new customer wins together with the ramp-up of previously awarded contracts continue to provide multi-year revenue visibility and the new business pipeline remains strong, supported by new re-shoring opportunities.

The Group’s order book underpins our full year anticipated revenue projections, and we remain focused on executing on the order book, delivering continued strong profit growth and driving a material step up in free cashflow and further reducing leverage by the year end. While mindful of the macroeconomic backdrop, our performance in the first half, alongside continued strong momentum in the business provides the Board with increased confidence in delivering its full year expectations. ”

04 Aug 23. TT Electronics reaching “inflection” point.

New chief executive has made a strong start, with growth, profitability and cash conversion all improving.

Cash generation returns
Margin expansion shows operational leverage

After a year of margin pressure, lots of industrial businesses are seeing their margins expand, and it is no different at electrical components company TT Electronics (TTG).

The group’s revenue rose 12 per cent and this increased scale has helped it expanded adjusted operating profit by 150 basis points to 8.3 per cent. But it should be warned that the gross margin is just 24 per cent so there is only so far it can lean on operational leverage. It will need to lower its cost of sales if wants to keep growing profitability.

On a demand front, things look healthy. There were 15 new contract wins in the first half delivering £150mn of potential lifetime revenues. A large order book also provides visibility of 2023 revenues and then into 2024.

The most promising aspect is the flip in cash generation. The company referred to it as an “inflection” point with cash conversion switching from minus 55 per cent to plus 74 per cent. Broker Peel Hunt has been complementary about new chief executive Peter France who “comes with a great track record in the sector”. The broker believes the switch of customer churn from 30 per cent to 10 per cent could be a catalyst for a re-rating.

With a FactSet forward price to earnings ratio of 8 and the cash conversion moving in the right direction, prospects are improving. However, we would like to see a little more evidence this is a permanent shift and can offset the potential increase in financing costs. Hold. Last IC View: Hold, 206p, 8 Mar 2023. (Source: Investors Chronicle)

02 Aug 23. Leonardo DRS Announces Financial Results for Second Quarter 2023.

Revenue: $628m
Net Earnings: $35m
Adjusted EBITDA: $62m
Diluted EPS: $0.13
Adjusted Diluted EPS: $0.15
Bookings: $698m (book-to-bill ratio of 1.1x)
Backlog: $4.4bn
Narrows 2023 guidance ranges across all metrics

Leonardo DRS, Inc. (Nasdaq and TASE: DRS), a leading provider of advanced defense technologies, today reported financial results for the second quarter 2023, which ended June 30, 2023.

CEO Commentary

“Leonardo DRS delivered strong second quarter results consistent with our expectations. Organic revenue growth continued to accelerate and resilient customer demand bolstered our bookings in the quarter. While the operating environment remains complex, our year to date performance gives us confidence in achieving our full year outlook. We remain focused on execution excellence to meet commitments to our customers and shareholders,” said Bill Lynn, Chairman and CEO of Leonardo DRS.

Summary Financial Results

Quarterly revenues were essentially flat compared to last year. Q2 2023 revenues continued to face the “net divestiture impact” (the difference in revenue contribution from our divested Global Enterprise Solutions business versus our acquisition of RADA Electronic Industries). Excluding the net divestiture impact, revenues grew mid-single digits year-over-year.

Despite higher gross margin performance in the quarter, increased public company costs and an uptick in internal research and development investments drove operating expense growth, which resulted in year-over-year Adjusted EBITDA and adjusted EBITDA margin contraction.

Second quarter net earnings and diluted EPS were aided by two discrete factors. First, the reversal of an aged legal liability reserve related to an environmental matter for $10 m and second, an approximately $8 m net benefit primarily related to research and development credits. Given the one time nature of the legal reserve reversal, it has been excluded from the company’s non-GAAP metrics.

Both diluted EPS and adjusted diluted EPS continued to face an incremental headwind from the increased share count resulting from our all stock merger with RADA in the year-over-year compare.

Cash Flow and Balance Sheet

Net cash flow used by operating activities was $12m for the second quarter. The company’s free cash flow use was $10m in the quarter.

At quarter end, the balance sheet had $35m of cash and $329 m of outstanding borrowings under the company’s credit facility, which still leaves the company with sufficient financial capacity to deploy capital for growth, while maintaining a strong balance sheet.

Bookings and Backlog

The company received $698m in new funded awards during the quarter. Strong bookings were driven by the increased demand for the company’s electric power and propulsion, network computing and tactical radar solutions. At quarter end, backlog stood at a record level of $4.4 bn, representing a 43% increase year-over-year.

Segment Results

Advanced Sensing and Computing (“ASC”) Segment

The majority of the year-over-year decline in quarterly ASC revenues was attributable to the net divestiture impact. Adjusted EBITDA and adjusted EBITDA margins decreased compared to last year. The lower overall volume was offset by better mix however, increased operating expenses related to investments in internal research and development and incremental public company costs weighed on both metrics. ASC bookings were ahead of expectations with demand evident across advanced sensing and network computing areas, specifically for the company’s naval network computing, tactical radar and other sensing technologies.

Integrated Mission Systems (“IMS”) Segment

Strong momentum in our naval power and propulsion business drove the year-over-year increase in both IMS segment revenues and bookings. Additionally, the increases in adjusted EBITDA and adjusted EBITDA margin were driven by better program execution and higher volume coming particularly from our Columbia Class and other naval power programs.

(Source: BUSINESS WIRE)

02 Aug 23. Sturm, Ruger & Company, Inc. Reports Second Quarter Diluted Earnings of 91¢ Per Share and Declares Quarterly Dividend of 36¢ Per Share.

Sturm, Ruger & Company, Inc. (NYSE-RGR) announced today that for the second quarter of 2023, net sales were $142.8m and diluted earnings were 91¢ per share. For the corresponding period in 2022, net sales were $140.7m and diluted earnings were $1.17 per share.

For the six months ended July 1, 2023, net sales were $292.3m and diluted earnings were $1.72 per share. For the corresponding period in 2022, net sales were $307.2m and diluted earnings were $2.87 per share.

The Company also announced today that its Board of Directors declared a dividend of 36¢ per share for the second quarter for stockholders of record as of August 15, 2023, payable on August 30, 2023. This dividend varies every quarter because the Company pays a percentage of earnings rather than a fixed amount per share. This dividend is approximately 40% of net income.

Chief Executive Officer Christopher J. Killoy commented on the second quarter of 2023, “Our second quarter sales were flat compared to last year despite the softening demand in some product categories, including polymer pistols, bolt action rifles, and modern sporting rifles. We continually review independent distributor sell-through data and inventory trends, and channel inventories of several of our product families remain below desired levels. We continue to adjust our level of production and product mix to better align our output with current, and expected, consumer demand as we strive to capitalize on these opportunities and better satisfy demand. While down from the prior year quarter, we are pleased that our profitability this quarter improved from the first quarter of 2023 on essentially flat sales.”

Mr. Killoy discussed some of the Company’s recent new product development initiatives, “The first half of the year saw several new product introductions. Most notably, we launched two new additions to the Marlin lever-action rifle family – the 336 Classic, chambered in 30-30 Winchester and the 1894 Classic, chambered in .44 Magnum. These products were received with great excitement by our customers and Marlins continue to be the most talked about and requested products in our lineup. In April, we launched the Super Wrangler steel frame single-action revolver, which comes with two cylinders, one for inexpensive .22LR ammunition and one for the more powerful 22 WMR. The moderately-priced Wrangler family has remained popular since its introduction in 2019.”

Mr. Killoy concluded his remarks on new product introductions, “Recently, there were some changes to the requirements for pistols to be sold in California. Consequently, three Ruger pistols were added to the California roster of certified handguns, including a Mark IV pistol, SR22 pistol, and LCP pistol. This is the first time in 10 years that we have been able to offer new quality Ruger pistols to our customers in California and we hope to add more in the second half of the year.”

Mr. Killoy made the following observations related to the Company’s second quarter 2023 performance:

The estimated unit sell-through of the Company’s products from independent distributors to retailers decreased 7% in the first half of 2023 compared to the prior year period. For the same period, NICS background checks, as adjusted by the National Shooting Sports Foundation, decreased 4%.
Sales of new products, including the MAX-9 pistol, LCP MAX pistol, Marlin lever-action rifles, LC Carbine, Small-Frame Autoloading Rifle, Super Wrangler revolver, and the Security-380 pistol, represented $63.3m or 23% of firearm sales in the first half of 2023. New product sales include only major new products that were introduced in the past two years.
Our profitability declined in the second quarter of 2023 from the second quarter of 2022 as our gross margin decreased from 31% to 27%. The lower margin was driven by:

o a product mix shift toward products with relatively lower margins that remain in stronger demand,

o inflationary cost increases in materials, commodities, services, energy, fuel and transportation,

o unfavorable deleveraging of fixed costs resulting from decreased production, and

o increased sales promotional costs.

During the second quarter of 2023, the Company’s finished goods inventory and distributor inventories of the Company’s products increased 51,100 units and 13,400 units, respectively.
Cash provided by operations during the first half of 2023 was $21.8m. At July 1, 2023, our cash and short-term investments totaled $137.7m. Our current ratio is 4.5 to 1 and we have no debt.
In the first half of 2023, capital expenditures totaled $4.9m related to new product introductions and upgrades to our manufacturing equipment and facilities. We expect our 2023 capital expenditures to approximate $20m.
In the first half of 2023, the Company returned $101.4m to its shareholders through the payment of our quarterly dividends and a $5.00 per share special dividend paid in January.
At July 1, 2023, stockholders’ equity was $333.2m, which equates to a book value of $18.80 per share, of which $7.77 per share was cash and short-term investments. (Source: BUSINESS WIRE)

02 Aug 23. Kaman Reports Second Quarter 2023 Results.

Second Quarter 2023 Highlights:

Revising full year guidance; Expect higher operating income and adjusted EBITDA led by sustained growth in Engineered Products
Net sales: $195.2m
Operating income: $17.6m
Net earnings: $5.3m
Adjusted EBITDA*: $32.0m; Adjusted EBITDA margin*: 16.4%
Diluted earnings per share: $0.19 per share, $0.22 per share adjusted*

Kaman Corp. (NYSE:KAMN) today reported financial results for the second fiscal quarter ended June 30, 2023.

“The continued strength in our Engineered Products segment led to significant growth compared to the prior year period and provides confidence to raise our operating income and adjusted EBITDA expectations for 2023. Net sales for the Company increased by 21.4% compared to the prior year. Excluding the contribution of Aircraft Wheel and Brake, sales were up 8.2%, mostly driven by our Engineered Products segment. We continue to see strong order intake at this segment, particularly in our PMA aftermarket business. In the six-month period, operating income was $25.2m, net earnings was $4.5m and Adjusted EBITDA was $55.8m, which includes $7.2m in EBITDA from the JPF program, which is not expected to repeat in the back half of the year” said Ian K. Walsh, Chairman, President and Chief Executive Officer.

“During the quarter we amended and restated our credit facility at $740.0m maintaining sufficient access to liquidity to address the maturities of our 2024 Convertible Notes and satisfy our working capital requirements. We remain focused on paying down debt through the remainder of the year and realized some of our incremental cash opportunities, as we sold one K-MAX during the period. We remain confident in our ability to execute on the current year guide and are pleased with the outstanding performance at our Engineered Products segment, as well as the overall progress we are making on the cost out initiatives we started at the beginning of the year to right size our company.” said Walsh.

OUTLOOK DISCUSSION

Management expects net sales in line with our prior expectations. Given the strength in our performance at our Engineered Products segment, we are raising our expectations for operating income and Adjusted EBITDA. In addition, we have lowered our expectations for net earnings and Diluted EPS due to higher interest expense which is offset by the increase we now expect in operating income. Operating Cash Flow and Free Cash Flow expectations remain consistent with our prior guidance as the higher interest expense is offset by the cash benefit of improved performance and the cash collection on the sale of one K-MAX aircraft.

Net sales: $730.0m to $750.0m
Net earnings: $3.7m to $11.3m
Adjusted EBITDA: $97.5m to $107.5m
Adjusted EBITDA margin: 13.4% to 14.3%
Diluted EPS: $0.13 per share to $0.40 per share; adjusted $0.29 per share to $0.56 per share
Cash from operating activities: $60.0m to $70.0m
Free cash flow: $35.0m to $45.0m

KAMAN BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT

Kaman manages its portfolio through three segments: (1) Engineered Products; (2) Precision Products; and (3) Structures.

Engineered Products – Our Engineered Products segment serves the aerospace and defense, industrial and medical markets providing sophisticated, proprietary aircraft bearings and components; super precision, miniature ball bearings; proprietary spring energized seals, springs and contacts; and wheels, brakes and related hydraulic components for helicopters, fixed-wing and UAV aircraft.

Three months ended June 30, 2023 versus three months ended March 31, 2023 – Operating income increased $11.2m, Adjusted EBITDA increased $10.5 m and margin increased 6.1 percentage points versus the first quarter of 2023, primarily driven by higher sales and associated margins on PMA Aftermarket parts and MRO commercial work at Aircraft Wheel and Brake.

Three months ended June 30, 2023 versus three months ended July 1, 2022 – Operating income increased $15.1m, Adjusted EBITDA increased $19.0m and margin increased 6.4 percentage points compared to the corresponding period in 2022, primarily due to the contribution from our Aircraft Wheel and Brake acquisition, higher sales and associated gross profit on our commercial and defense bearings products and PMA aftermarket parts and higher gross profit on our seals, springs and contacts.

Precision Products – Our Precision Products segment serves the aerospace and defense markets providing precision safe and arming solutions for missile and bomb systems for the U.S. and allied militaries; subcontract helicopter work; restoration, modification and support of our SH-2G Super Seasprite maritime helicopters; support of our heavy lift K-MAX® manned helicopter, and development of the KARGO UAV unmanned aerial system, a purpose built autonomous medium lift logistics vehicle.

Three months ended June 30, 2023 versus three months ended March 31, 2023 – Operating income and Adjusted EBITDA decreased $3.0m and margin decreased 8.9 percentage points versus the first quarter of 2023. Results declined compared to the prior quarter, driven by lower sales and gross profit on the JPF program, partially offset by lower operating expenses at our Orlando facility as we begin to realize the benefits of the cost reduction initiatives announced earlier in the year.

Three months ended June 30, 2023 versus three months ended July 1, 2022 – Operating income decreased $4.1m, Adjusted EBITDA decreased $4.3m and margin decreased 11.7 percentage points compared to the corresponding period in 2022, primarily attributable to lower sales and gross profit on the JPF program, partially offset by lower operating expenses at our Orlando facility as we begin to realize the benefits of the cost reduction initiatives announced earlier in the year.

Structures – Our Structures segment serves the aerospace and defense and medical end markets providing sophisticated complex metallic and composite aerostructures for commercial, military and general aviation fixed and rotary wing aircraft, and medical imaging solutions.

Information for the periods ended March 31, 2023 and July 1, 2022 has been revised from amounts reported in prior periods to correct errors related to the net realizable value on certain portions of the Company’s inventory at a business in the Structures segment. Refer to the Company’s Form 10-Q for the quarter ended June 30, 2023 for further information.

Three months ended June 30, 2023 versus three months ended March 31, 2023 – Operating income and Adjusted EBITDA increased $0.5m and margin increased 1.5 percentage points versus the first quarter of 2023. Results improved compared to the prior quarter due to the receipt of an insurance claim settlement in the period that related to a fire at one of our suppliers in the prior year.

Three months ended June 30, 2023 versus three months ended July 1, 2022 – Operating income increased $0.8 m, Adjusted EBITDA increased $0.7 m and margin increased 1.9 percentage points compared to the second quarter of 2022. Results improved due to the receipt of an insurance claim settlement in the period that related to a fire at one of our suppliers in the prior year. (Source: BUSINESS WIRE)

02 Aug 23. BlackRock and MSCI under congressional investigation for ‘aiding’ Chinese military. Global hedge fund titans BlackRock and MSCI Inc have drawn the ire of the US Select Committee on the Chinese Communist Party (CCP) amid concerns about the multibn-dollar investment institutions making investment decisions that “fuel” China’s military modernisation and advancement.

Announced overnight following “rigorous examination” of BlackRock and MSCI’s Chinese investments decisions, chairman of the bipartisan US Select Committee on the Chinese Communist Party (CCP) Mike Gallagher and ranking member Raja Krishnamoorthi announced an investigation into the two firms.

Chairman Gallagher and ranking member Krishnamoorthi uncovered that BlackRock and MSCI invest or enable the investment of Americans’ savings into dozens of blacklisted Chinese companies that threaten US national security or support the Chinese Communist Party’s human rights abuses.

Gallagher and Krishnamoorthi state in their respective correspondence to BlackRock and MSCI: “Our review has shown that, as a direct result of decisions made by (BlackRock/MSCI), these Americans are now unwittingly funding PRC (People’s Republic of China) companies that develop and build weapons for the People’s Liberation Army (PLA) – the PRC’s military – and advance the CCP’s stated mission of technological supremacy.”

Chairman Gallagher and ranking member Krishnamoorthi wrote to request extensive information from the financial behemoths, including:

A list of all the companies included on MSCI indexes, and for each company, list the indexes on which that company is included;
A detailed description of the factors they consider when including companies in indexes;
All policies, procedures, and related guidance documents pertaining to conflicts of interest and how (BlackRock or MSCI’s) oversight committee and other governing bodies have applied such policies, procedures, and related guidance with respect to the engagements with public or private entities based in or with significant operations in the PRC; and
A full list of indexes provided, specifically identifying each index that includes any company identified in this letter, and a detailed summary of these indexes, including a breakdown of US investor exposure, as of 30 June 2023, 1 January 2023, and 1 January 2022.

In addition to these requests, the lawmakers also requested a response from BlackRock and MSCI to the following questions:

If they are able to perform thorough due diligence on all PRC companies included in their indexes, including those listed on the USG red-flag lists or any other red-flag lists. And if so, how and through what means do they do so? If not, what is their process for determining whether to include those companies in their indexes?; and
What transparency do they provide to the public and to investors regarding the inclusion of red-flag companies in their indexes?

“By facilitating massive flows of American capital to these and other PRC entities linked to the PLA or to human rights abuses, (BlackRock/MSCI) is exacerbating an already significant national security threat and undermining American values,” Gallagher and Krishnamoorthi added.

Going further, Gallagher and Krishnamoorthi said: “It is unconscionable for any US company to profit from investments that fuel the military advancement of America’s foremost foreign adversary and facilitate human rights abuses. We, therefore, seek additional information regarding this deeply troubling matter.” (Source: Defence Connect)

03 Aug 23. Rolls-Royce reports jump in first-half profit led by civil aerospace. Aero-engineer Rolls-Royce (RR.L) reported underlying operating profit of 673 m pounds ($855 m) in its first half, more than five times the level of a year ago, led by a large improvement in its civil aerospace margin.

The British company upgraded its full-year profit forecast last week to 1.2-1.4 bn pounds ($1.6-1.8 bn) from its previous guidance of 800 m-1 bn pounds. The market had been forecasting 934 m pounds.

Chief Executive Tufan Erginbilgic, who joined the company in January, said his transformation programme had started well, with progress already evident in the strong results and increased full-year guidance.

“Better profit and cash generation reflect greater productivity, efficiency, and improved commercial outcomes,” he said on Thursday. “We have tightly managed our cost base to offset inflationary cost pressures.”

Shares in Rolls, whose engines power Airbus A350 and Boeing 787 long-haul jets, rose to the highest level since March 2020 after it updated its forecasts last week. ($1 = 0.7871 pounds) (Source: Reuters)

02 Aug 23. BAE Systems plc – Half-yearly Report 2023.

Financial highlights

Financial performance measures as defined by the Group1

Order intake of £21.1bn, resulting in a record order backlog of £66.2bn.
Sales increased by 11%2 to £12.0bn.
Underlying EBIT up 10%2 to £1.3bn.
Underlying earnings per share increased by 17%2 to 29.6p.
Free cash flow of £1.1bn.

Financial performance measures as derived from IFRS1

Revenue increased by 13%3 to £11.0bn.
Operating profit up 20%3 to £1.2bn.
Basic earnings per share up 62%3 to 31.8p.
Net cash flow from operating activities of £1.5bn.

Capital distributions

The directors have declared an interim dividend of 11.5p per share in respect of the half year ended 30 June 2023. This represents an increase of 11% compared to the interim dividend declared in respect of the half year ended 30 June 2022. This will be paid on 30 November 2023 in line with our usual dividend timetable.
Commenced third tranche of £1.5bn share buyback programme on 1 June 2023. As at 30 June 2023, the Company had repurchased 123.5m shares under this programme in aggregate at a total price, including transaction fees, of £1.0bn, with 40.5m shares repurchased since 1 January 2023 at a total price, including transaction fees, of £0.4bn.
The directors have also approved a further share buyback programme of up to £1.5bn. This further programme is expected to roll-on after completion of the current buyback programme and complete within three years of its commencement.

Charles Woodburn, Chief Executive, said: “We’ve delivered a strong financial performance in the first half of the year, thanks to the outstanding efforts of our employees. Our global footprint, deep customer relationships and leading technologies enable us to effectively support the national security requirements and multi-domain ambitions of our government customers in an increasingly uncertain world.

“With a record order backlog and good operational performance, we’re well positioned to continue delivering sustained growth in the coming years, giving us confidence to continue investing in new technologies, facilities, highly-skilled jobs and in our local communities.”

Strategic progress

During the first half of the year, we have continued to deliver against our strategic priorities to: drive operational excellence; continuously improve competitiveness and efficiency; and advance and further leverage our technology. Examples of this in the period include:

On 13 March, as part of the AUKUS trilateral programme between Australia, the United Kingdom and the United States, it was announced that BAE Systems will play a key role in helping Australia to acquire its first nuclear powered submarines. The three nations will deliver a trilaterally-developed submarine, based on the UK’s next-generation design, incorporating technology from all three nations. Australia and the UK will operate SSN-AUKUS as their submarines of the future, with construction expected to begin this decade.
BAE Systems has received new investment from the Ministry of Defence to boost technologies for the UK’s future combat aircraft. The contract extension, worth £0.7bn, will build on the innovative science, research and engineering already completed under the first phase of the contract delivered by UK Tempest partners BAE Systems, Leonardo UK, MBDA UK and Rolls-Royce.
BAE Systems and Heart Aerospace, a Swedish electric airplane maker, announced a collaboration to define the battery system for Heart’s ES-30 regional electric airplane. The battery will be the first-of-its-kind to be integrated into an electric conventional take-off and landing (eCTOL) regional aircraft, allowing it to efficiently operate with zero emissions and low noise.
BAE Systems and Microsoft have signed a strategic agreement aiming to support faster and easier development, deployment and management of digital defence capabilities for our customers.

Operational highlights

On 24 May, the Czech Republic awarded BAE Systems Hägglunds a contract to produce 246 CV90 MkIV infantry fighting vehicles in seven different variants. The contract is valued at £1.8bn. The CV90s will be developed and delivered through an industrial partnership with Czech industry to meet the requirements of the Czech Ministry of Defence and the intention of maintaining national sovereignty for the Czech Republic.
In Electronic Systems, our newest state-of-the-art facilities, which were recently opened in: Manchester, New Hampshire; Cedar Rapids, Iowa; and Austin, Texas, are now providing world-class work environments that support innovation, production and teamwork, which will help us to continue to deliver cutting-edge technology to our customers.
Our Combat Mission Systems business, within our Platforms & Services sector, once again received the James S. Cogswell Outstanding Industrial Security Achievement Award from the Defense Counterintelligence and Security Agency (DCSA) for two of its facilities. This award has a rigorous selection process with only 19 facilities receiving the award from around 13,000 cleared facilities.
In our Air sector, activity on our Qatar Typhoon and Hawk programmes continued. Four further Typhoon deliveries took place in the period, with a total of 12 aircraft now in service with the Qatar Emiri Air Force.
MBDA has been contracted by the Polish Armament Agency to supply Launchers and Common Anti-Air Module Missiles (CAMM) for Poland’s PILICA+ Air Defence upgrade programme. The contract is the largest European short-range Air Defence acquisition programme in NATO.
In Maritime, the fifth Astute class submarine, HMS Anson, left our Submarines site in Barrow-in-Furness during February to begin sea trials with the Royal Navy. The steel cut ceremony for the fourth of eight Type 26 frigates, HMS Birmingham, took place in April.

Brad Greve, Group Finance Director said: “This is a strong set of half-year results delivering good sales and earnings growth, and giving us confidence to increase our year-end guidance for sales, underlying EBIT, underlying earnings per share and free cash flow. The record order backlog and continued good operational performance gives us more visibility and confidence in our three financial priorities – sales growth, margin expansion and high sustained cash conversion, operating under a disciplined capital allocation policy.”

2023 Upgraded Group guidance

While the Group is subject to geopolitical and other uncertainties, the following upgraded 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 IFRS are provided in our financial review on pages 9 to 15.

Sales guidance is increased by 200 bps to 5% to 7%, reflecting the accelerated spend profile on the Dreadnought programme and good demand and operational performance across all sectors.

Underlying EBIT guidance is increased by 200 bps to 6% to 8%, reflecting the sales profile and good operational performance.

Underlying earnings per share guidance is increased by 500 bps to 10% to 12%, reflecting higher profit, higher interest income and a reduction in the expected tax rate to 19%.

Cash generation for the first half of the year was strong, driven by advance payments, and is expected to be maintained through the year and we are therefore increasing our in-year free cash guide by £600m to >£1.8bn.

Our three-year cumulative free cash flow guidance has been upgraded, as shown in the table below.

Group guidance

Guidance is provided on the basis of an exchange rate of $1.24:£1, which is in line with the actual 2022 exchange rate, and therefore guidance is the same for both reported and constant exchange rates.

Sensitivity to foreign exchange rates: the Group operates in a number of currencies, the most significant of which is the US dollar. As a guide, a 5 cent movement in the £/$ exchange rate will impact sales by c.£400m, underlying EBIT by c.£55m and underlying earnings per share by c.1p.

02 Aug 23. BAE Systems sees orders build as security threats multiply.

Prospects have improved due to geopolitical instability

Group holds a record order backlog of £66.2bn
Increased activity in the Hägglunds and Ship Repair businesses

Aquick review of analyst reaction suggests that half-year numbers from BAE Systems (BA.) are likely to generate upwards earnings revisions. The UK defence heavyweight registered significant sales growth across its various segments, along with an increased backlog of orders.

The group delivered sales growth of 11 per cent on a constant currency basis, while order intake, at £21.1bn, was up 16 per cent, leading to a record order backlog of £66.2bn. Underlying trading profits were 10 per cent to the good at £1.3bn, while free cash flow generation tipped over the £1bn mark and was ahead of analysts’ expectations, partly due to UK government pre-payments on the Maritime segment’s Dreadnought class submarine programme.

Management highlighted positive developments within the Platforms & Services segment, with increased activity in the Hägglunds and Ship Repair businesses. The Air sector also continues to benefit from the multi-channel development of the Tempest sixth-generation fighter aircraft. Prospects at the Cyber & Intelligence unit are more positive than ever as the conflict in Ukraine has further demonstrated the security challenges posed by the expansion of asymmetrical warfare. It’s a growth area within the group as it responds to the “evolving global threat environment”, so investors needn’t worry over margin contraction in the period under review given that additional investments have been made relating to space and multi-domain networking.

The group’s prospects are intertwined with geopolitical events across the globe. Management notes that the global reach, scale, and longevity of BAE’s business provides significant opportunities in response to recent multinational endeavours such as the trilateral AUKUS agreement designed to bolster defence capabilities in the Asia Pacific region and the Global Combat Air Programme for the Tempest fighter jet. Finland’s recent entry into the NATO fold comes as previously reluctant member states within the alliance finally seem prepared to meet their spending obligations under the treaty.

The group’s balance sheet remains in decent order despite the capital-intensive nature of the business. BAE exited the first half with a cash position of £3.2bn, while net debt (excluding lease liabilities) has fallen by 42 per cent since the 2022 half-year to £1.83bn. A higher interest rate environment has translated into a net pension position in an accounting surplus.

UBS gives diluted EPS of 58.06p for the full year, rising to 63.92p in 2024.

Sales growth has been achieved under what BAE’s finance director, Brad Greve, describes as “a disciplined capital allocation policy”. The shares are hardly in bargain basement territory at 17 times forecast earnings, but given BAE’s capital returns and new-phase cycles in global defence spending, we reiterate our buy call. Buy. Last IC View: Buy, 888p, 23 Feb 2023. (Source: Investors Chronicle)

01 Aug 23. Defense firm Leidos raises annual revenue outlook on weapons demand. – Leidos Holdings Inc (LDOS.N) on Tuesday raised its full-year revenue forecast as the defense contractor benefited from resilient weapons demand. Net bookings totaled $2.9bn in the quarter and book-to-bill ratio, which is the ratio of orders received to units shipped and billed, was 0.8 to 1. The Reston, Virginia-based company now expects 2023 revenue between $14.9bn and $15.2bn, up from its previous forecast of $14.7bn to $15.1bn.

Quarterly revenue at Leidos’ defense solutions unit, which makes surveillance technologies and weapons components, rose about 6.5% to $2.19 bn. The company’s overall sales rose 6.7% to $3.84bn.

Revenue at the company’s civil unit, which makes air traffic control systems for the Federal Aviation Administration, rose 5.3%.

Leidos posted a net income of $210m, or $1.50 per share, in the quarter, compared with $172m, $1.24 per share, a year earlier. (Source: Reuters)

01 Aug 23. Oshkosh Corporation Reports Fiscal 2023 Second Quarter Results.

Reports Sales of $2.41bn, up 17 Percent

Reports Strong Orders Leading to a Backlog of $15bn

Reports Diluted Earnings per Share of $2.67 and Adjusted1 Earnings per Share of $2.69

Raises Fiscal 2023 Sales and Earnings Expectations

Completes Acquisition of JBT AeroTech

Oshkosh Corporation (NYSE: OSK), a leading innovator of purpose-built vehicles and equipment, today reported fiscal 2023 second quarter net income of $175.0m, or $2.67 per diluted share, compared to net income of $32.1m, or $0.49 per diluted share, for the second quarter of fiscal 2022. Adjusted1 net income was $176.5m, or $2.69 per diluted share, for the second quarter of fiscal 2023. Adjusted1 net income for the second quarter of fiscal 2023 excludes restructuring and acquisition costs within the Vocational segment. Comparisons in this news release are to the second quarter of fiscal 2022, unless otherwise noted.

Consolidated sales in the second quarter of fiscal 2023 increased 16.8 percent to $2.41bn due to higher sales volume, primarily in the Access segment, and improved pricing.

Consolidated operating income in the second quarter of fiscal 2023 increased 207.9 percent to $234.9m, or 9.7 percent of sales, compared to $76.3m, or 3.7 percent of sales, in the second quarter of fiscal 2022. The increase was primarily due to improved pricing, higher sales volume and favorable sales mix, offset in part by higher incentive compensation costs.

“We are pleased with our strong financial performance in the quarter, highlighted by significant growth in sales and operating income,” said John Pfeifer, president and chief executive officer of Oshkosh Corporation. “Our performance led to adjusted earnings per share of $2.69, which was ahead of our expectations. In particular, our Access and Vocational segments both delivered double-digit operating margins in an environment where supply chains have improved but have not yet returned to historical norms. Our results demonstrate that our actions over the past several quarters to redesign, resource and dual source components as well as implement numerous operational improvements are enhancing our resiliency in a constrained supply chain environment.

“Demand remains strong across the board for our industry leading products and services, highlighted by robust orders in the quarter. We ended the quarter with a consolidated backlog of $15bn, which provides solid visibility well into 2024.

“During the quarter we announced plans to acquire the AeroTech business from JBT Corporation. I’m pleased to share that we completed that acquisition today. We look forward to the integration of AeroTech with Oshkosh, which we expect will drive strong growth in the attractive airport ground support, gate equipment and associated airport services markets. With this acquisition, we are even more confident in our Vocational segment’s ability to be a $3bn plus revenue segment at attractive double-digit operating margins over time.

“As a result of our strong second quarter performance and ongoing improvements in our operations and supply chains as well as our positive outlook for the remainder of 2023, we are increasing our expectations for 2023 earnings per share to be in a range of $7.65 and 2023 adjusted earnings per share to be in a range of $8.00. We look forward to continuing our momentum through the rest of the year and believe we are well positioned for 2024 and beyond, given our strong backlog, leading technologies, positive market sentiment and the strength of our people,” said Pfeifer.

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

Access – Access segment sales for the second quarter of fiscal 2023 increased 35.9 percent to $1.33bn as a result of improved sales volume, higher pricing in response to higher input costs and the inclusion of sales related to the Hinowa acquisition.

Access segment operating income in the second quarter of fiscal 2023 increased 191.2 percent to $211.7m, or 15.9 percent of sales, compared to $72.7m, or 7.4 percent of sales, in the second quarter of fiscal 2022. The increase was primarily due to higher sales volume, higher pricing and improved product mix, offset in part by higher incentive compensation and increased operating expenses to support the higher sales levels.

Defense – Defense segment sales for the second quarter of fiscal 2023 decreased 7.6 percent to $498.1m due to lower Joint Light Tactical Vehicle program volume offset in part by higher Family of Medium Tactical Vehicle sales volume.

Defense segment operating income in the second quarter of fiscal 2023 increased 65.8 percent to $6.3m, or 1.3 percent of sales, compared to $3.8m, or 0.7 percent of sales, in the second quarter of fiscal 2022. The increase was due to lower unfavorable cumulative catch-up adjustments on contract margins, offset in part by lower sales volume.

Vocational – Vocational segment sales for the second quarter of fiscal 2023 increased 6.5 percent to $587.5m due to higher pricing in response to higher input costs and improved sales volume, offset in part by the sale of the rear discharge mixer business.

Vocational segment operating income in the second quarter of fiscal 2023 increased 52.0 percent to $60.5m, or 10.3 percent of sales, compared to $39.8m, or 7.2 percent of sales, in the second quarter of fiscal 2022. The increase was primarily due to higher pricing and improved product mix, offset in part by higher material & logistics costs and higher incentive compensation costs.

Corporate – Corporate costs in the second quarter of fiscal 2023 increased $3.6m to $43.6m due to higher incentive compensation costs offset in part by lower consulting spending.

Interest Expense Net of Interest Income – Interest expense net of interest income in the second quarter of fiscal 2023 decreased $3.8m to $8.1m due to the benefit of higher interest rates on the Company’s cash holdings.

Miscellaneous, net – Miscellaneous income for the second quarter of fiscal 2023 primarily related to currency gains and income from the Company’s investments.

Provision for Income Taxes – The Company recorded income tax expense in the second quarter of fiscal 2023 of $56.3m, or 24.3 percent of pre-tax income, compared to $15.4m, or 31.2 percent of pre-tax income, in the second quarter of fiscal 2022.

Six-month Results

The Company reported net sales for the first six months of fiscal 2023 of $4.68bn and net income of $263.5m, or $4.01 per diluted share. This compares with net sales of $4.01bn and net income of $31.9m, or $0.48 per diluted share, for the six months ended June 30, 2022. The increase in net income for the first six months of fiscal 2023 compared to the six months ended June 30, 2022 was the result of improved pricing, higher sales volume, improved product mix and the absence of a charge of $18.1 m associated with foreign anti-hybrid tax legislation due to comments made by taxing authorities of the applicable jurisdiction during the first quarter of fiscal 2022, offset in part by higher material & logistics costs, higher incentive compensation costs, a $11.0m after-tax loss on the sale of a business and higher operating expenses.

Fiscal 2023 Expectations

The Company expects its fiscal 2023 diluted earnings per share to be in the range of $7.65 and adjusted1 earnings per share to be in the range of $8.00 on projected net sales in the range of $9.5bn. This compares to its previous estimates of diluted earnings per share of $5.75 and adjusted1 earnings per share of $6.00 on projected net sales of $8.65bn. This guidance includes sales of $300 m related to the acquired AeroTech business subsequent to acquisition. The acquisition is not expected to have a material impact on operating income in fiscal 2023 as a result of the initial purchase accounting and deal amortization.

Dividend Announcement

The Company’s Board of Directors today declared a quarterly cash dividend of $0.41 per share of Common Stock. The dividend will be payable on August 31, 2023 to shareholders of record as of August 17, 2023.

01 Aug 23. Supplier Howmet lifts 2023 profit outlook on aviation boom. Howmet Aerospace (HWM.N) on Tuesday raised its full-year profit and revenue forecast, as the supplier is set to benefit from high demand for jet parts with planemakers ramping up production. Plane manufacturers are working on increasing the pace of jet production to cash in on a surge in commercial air travel, benefiting part suppliers such as Howmet, which counts Airbus SE (AIR.PA) and Boeing Co (BA.N) as its customers.

“Howmet’s outlook continues to be supported by the extraordinary backlog of aircraft orders at Airbus and Boeing” CEO John Plant said.

Howmet, which supplies aerospace castings, now expects full-year adjusted earnings between $1.69 and $1.71 per share, up from its prior outlook of $1.65 to $1.70 per share.

The company raised its annual revenue forecast to between $6.40 bn and $6.47bn, from $6.20bn to $6.33bn estimated earlier. Howmet’s profit for the second quarter ended June 30 rose to $193m, or 46 cents per share, from $147m, or 35 cents per share, a year earlier. The company’s quarterly revenue rose roughly 18% to $1.65bn. (Source: Reuters)

02 Aug 23. Frontgrade Technologies prepares for acquisitions. Defence electronics provider Frontgrade Technologies is considering several potential acquisitions and could firm up its first deal in the coming weeks, according to an official at the US-based company. Frontgrade enjoys strong support for acquisitions from its new owner, US private equity firm Veritas Capital, which manages more than USD40 bn in assets, said Frontgrade senior vice-president and chief strategy officer Tim Lynch.

“Our owners are very aggressive and have access to a significant amount of capital,” Lynch told Janes on 28 July. “I’ve yet to hear them say there’s a limit on what we would buy.”

Veritas purchased Frontgrade for an undisclosed sum in January 2023. Frontgrade, which was previously the Space Systems Division of Cobham Advanced Electronic Solutions (CAES), employs about 1,150 people and is based in Colorado Springs, Colorado. (Source: Janes)

01 Aug 23. Chemring announced the commencement of a Share Buyback Programme (the “Buyback Programme”) with effect from 1 August 2023 to purchase ordinary shares of 1 pence each (“Ordinary Shares”) in the capital of the Company up to a maximum aggregate consideration payable by the Company of £50m.

The Group’s disciplined approach to capital allocation, which is reviewed by the Board on a regular basis, prioritises both organic and inorganic investment, a growing and sustainable dividend, and a prudent approach to leverage.

The Company has a strong balance sheet, with leverage of 0.3x net debt to EBITDA at 30 April 2023, and a robust pipeline of organic and inorganic investment opportunities. The Board believes that the Buyback Programme, by reducing the Company’s share capital, will facilitate an improved capital structure and deliver value for shareholders, whilst still maintaining a strong balance sheet.

The Buyback Programme is consistent with the Group’s approach to capital allocation and reflects the Board’s continued confidence in the future prospects of the Group. The Group intends to continue assessing other organic and inorganic investment opportunities for the duration of the buyback, in line with the Group’s wider growth strategy.

The sole purpose of the Buyback Programme is to reduce the Company’s share capital and it is intended that Ordinary Shares purchased shall be cancelled. The Buyback Programme will end on 31 July 2024.

The Group will seek to make market purchases of Ordinary Shares at a price or prices that the Group deems to be good value for shareholders. In accordance with the Company’s general authority to repurchase Ordinary Shares granted by its shareholders at the Annual General Meeting held on 15 March 2023 (the “General Authority”), the Buyback Programme will purchase no more than 28,358,308 Ordinary Shares. Any purchases of Ordinary Shares by Chemring in relation to the Buyback Programme will be conducted in accordance with: the General Authority; any further approvals to purchase shares as may be granted by its shareholders from time to time; the Market Abuse Regulation 596/2014 as it forms part of domestic law by virtue of section 3 of the European Union (Withdrawal) Act 2018 (as amended); and Chapter 12 of the Listing Rules.

The Company has entered into an irrevocable, non-discretionary instruction with Investec Bank plc (“Investec”) to conduct the Buyback Programme on its behalf and to make trading decisions under the Buyback Programme independently of the Company. The Company has a right to terminate this instruction subject to being in compliance with certain regulatory conditions.

The Company will make further announcements in due course following the completion of any repurchases. There is no guarantee that the Buyback Programme will be implemented in full or that any Ordinary Shares will be repurchased by the Company. The Buyback Programme will not impact the Company’s existing Ordinary Share dividend policy, which will continue unaffected through the regular awards of interim and final dividends.

At the time of this announcement, the Company’s share capital comprises 283,609,773 Ordinary Shares with voting rights and 62,500 cumulative preference shares with no voting rights, save in specified limited circumstances. The total number of voting rights in the Company is therefore 283,609,773.

Michael Ord, Group Chief Executive of Chemring, commented: “In recent years Chemring has been focused on building a stronger, higher quality and more resilient business, in doing so it has built a strong and deployable balance sheet which has provided the Group with increased optionality. The share buyback programme of up to £50m that we have announced today provides us with additional flexibility to deliver value for our shareholders and to our commitment to balance near-term performance with longer-term growth and value creation.”

31 Jul 23. Archer Aviation (ACHR.N) shares jumped as much as 33% on Monday after the air taxi maker entered into a deal to provide up to six of its “Midnight” aircraft to the U.S. Air Force. The deal, worth up to $142m, includes delivery of vertical takeoff and landing (eVTOL) aircraft, pilot training, development of maintenance and repair operations, and share data such as additional flight test and certification-related test reports.

The California-based company in May completed the final assembly of its first “Midnight” (eVTOL) aircraft. It can carry four passengers and a pilot and has a range of up to 100 miles (160.9 km).

Last month, Joby Aviation (JOBY.N), which also has a deal with the U.S. Air Force, said it would deliver the first two electric aircraft in March 2024 to the Edwards Air Force Base after completing their initial testing.

Archer last month hired former Federal Aviation Administration (FAA) acting administrator Billy Nolen as chief safety officer in an effort to collaborate with industry stakeholders and help ensure its plans of commercialization in 2025. Archer’s shares, trading last at $6.38, have tripled in value so far this year. (Source: Reuters)

01 Aug 23. Rheinmetall completes acquisition of Spanish defence contractor Expal Systems: Move significantly expands the Group’s ammunition production capacity. Rheinmetall AG has completed its takeover of all shares in Expal Systems S.A.U. of Madrid. First announced last November, the acquisition follows final approval by the relevant authorities. The transfer of Expal S.A.U.’s business activities to Rheinmetall took place on 1 August 2023. Rheinmetall thus continues to expand its position as an important supplier for NATO armed forces, systematically increasing its production capacity especially for artillery, mortar, and medium-calibre ammunition.

The purchase price for the takeover of Expal Systems S.A.U., a world-renowned ammunition and armament manufacturer, is about €1.2bn. Moving forward, the company will operate under the name “Rheinmetall Expal Munitions S.A.U.”.

In a fast-growing market driven by increased demand for military equipment in countries around the globe, the acquisition provides Rheinmetall with swift access to greater production capacity, covering the entire ammunition production value-added chain, with multiple plants in Spain and a demilitarization and soil remediation business in the United States.

In this market environment Rheinmetall is an important supplier to the Ukrainian armed forces with large amounts of medium- and large-calibre ammunition, including 20mm automatic cannon rounds for the Marder infantry fighting vehicle, and 105mm and 120mm tank ammunition for the Leopard 1 and Leopard 2. In addition, a first lot of 35mm ammunition for the Gepard anti-aircraft tank will soon be ready for shipment.

In acquiring Expal, Rheinmetall aims to secure and strengthen its core business in weapons, ammunition and propellants. The current Expal Systems product portfolio encompasses artillery ammunition, mortar and medium-calibre rounds as well as fuses and rocket propulsion systems. In many cases, Expal’s ammunition are “full shot” products, from propellant to fuse. Due to partly complementary product ranges, the acquisition significantly strengthens Rheinmetall’s existing product portfolio.

Given the likelihood of strong future demand in many countries, the acquisition places Rheinmetall in a favourable position to respond to complex new ammunition procurement requirements.

Enhancing its direct access to this important market, the acquisition expands Rheinmetall’s footprint in Spain, where the Group already has an automotive engineering plant in Abadiano. Rheinmetall Expal Munitions will continue to serve the Spanish armed forces as a preferential and key partner, offering its products, technology and industrial capabilities.

Rheinmetall sees maintaining the company’s existing technology and staff as essential; all locations (Madrid, Trubia, Burgos, Navalmoral, El Gordo, Albacete and Murcia in Spain as well as Texarkana in the USA) are therefore to remain fully operational, with further expansions planned.

Rheinmetall is very pleased to be welcoming a new company to the Group, and especially to be augmenting its workforce with highly skilled new staff. Reinforced by Rheinmetall Expal Munitions, the Group will continue contributing to global security, meeting the needs of a fast-growing market.

28 Jul 23. Booz Allen Hamilton First Quarter Results. Company Enters Fiscal Year with Exceptional Results at the Top and Bottom Line, Fueled by Double-Digit Revenue Growth and Industry-Leading Organic Revenue Growth1, Excellent Profit Margins, and Record Headcount Growth

+ Quarterly Revenue Increase of 18.0 percent over the Prior Year Period to $2.7bn, 16.6 percent Organic Revenue Growth1, and Revenue, Excluding Billable Expenses Growth of 16.9 percent

+ Quarterly Diluted Earnings Per Share of $1.22 and Adjusted Diluted Earnings Per Share2 of $1.47

+ 12.5 percent Year-Over-Year Client Staff Headcount Growth and 11.2 percent Year-Over-Year Total Headcount Growth

+ 9.3 percent Increase in Quarterly Backlog to $31.3bn; Quarterly Book-to-Bill Ratio of 1.03x

+ Quarterly Dividend of $0.47 per Share

“We are pleased to enter the second year of our multi-year Investment Thesis with excellent performance and strong strategic momentum. In addition to our outstanding operational delivery, I am especially proud of Booz Allen’s ability to attract, retain, and invest in an extraordinary workforce that continues to transform our business and bring emerging technologies to critical client missions.” — HORACIO ROZANSKI President and Chief Executive Officer.

Booz Allen Hamilton Holding Corporation (NYSE: BAH), the parent company of management and technology consulting and engineering services firm Booz Allen Hamilton Inc., today announced preliminary results for the first quarter of fiscal year 2024. In the first quarter, the Company delivered outstanding overall performance at the top and bottom line, including double-digit organic revenue growth1 across all federal markets and double-digit Adjusted EBITDA growth.

Supported by strong demand and record quarterly headcount growth, the Company continues to successfully execute against its VoLT strategy and build strong momentum for the delivery of its three-year Investment Thesis.

The Company reported the following first quarter fiscal year 2024 results as compared to first quarter fiscal year 2023: quarterly revenue growth of 18.0 percent, a 16.6 percent quarterly increase in organic revenue, and a 16.9 percent quarterly increase in Revenue, Excluding Billable Expenses; Net Income increased by 16.9 percent to $161.4m, net income attributable to common stockholders increased by 16.7 percent to $161.4m, and Adjusted Net Income increased by 28.0 percent to $193.1 m. Operating income increased by 13.1 percent to $234.4m; Adjusted EBITDA increased by 21.5 percent to $307.0m; Adjusted EBITDA Margin on Revenue increased by 3.6 percent to 11.6 percent; and Diluted EPS was $1.22, up $0.19 or 18.4 percent, while Adjusted Diluted EPS was $1.47, up by $0.34 or 30.1 percent. 2 1 Organic revenue as of June 30, 2023 is calculated as consolidated revenue adjusted for revenue attributable to acquisitions and divestitures. Calculation excludes approximately $36.0m of revenue from EverWatch.

28 Jul 23. L3Harris Completes Aerojet Rocketdyne Acquisition.

L3Harris Technologies (NYSE:LHX) has completed its acquisition of Aerojet Rocketdyne, forming a fourth business segment at the company.

L3Harris signed a definitive agreement to purchase Aerojet Rocketdyne in December 2022, emphasizing its ability to strengthen the defense industrial base, enhance competition and accelerate innovation for a critical merchant supplier of propulsion systems.

“I’m thrilled to welcome more than 5,000 employees to the L3Harris team today,” said Christopher E. Kubasik, Chair and CEO, L3Harris. “With national security at the forefront, we’re combining our resources and expertise with Aerojet Rocketdyne’s propulsion and energetics capabilities to ensure that the Department of Defense and civil space customers can address critical mission needs globally.”

The company also announced Ross Niebergall will serve as President of the Aerojet Rocketdyne segment at L3Harris.

“Our customers demand a competitive environment that produces innovative, agile solutions,” Niebergall said. “We will expand on the strong Aerojet Rocketdyne heritage to enhance production and deliver on those expectations.”

The acquisition diversifies the L3Harris portfolio, adding considerable long-cycle backlog and broad expertise that enables opportunities in missile defense systems, hypersonics and advanced rocket engines, among other areas. Aerojet Rocketdyne will be known as Aerojet Rocketdyne, an L3Harris Technologies company. (Source: BUSINESS WIRE)

28 Jul 23. Moog Inc. Reports Third Quarter 2023 Results With Record Sales And Increases Full-Year Earnings Per Share Guidance.

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 third quarter 2023 diluted earnings per share of $1.32 and adjusted diluted earnings per share of $1.37.

Quarter Highlights

Net sales were $850m, an increase of 10% compared to the third quarter from a year ago, with increases across all three reporting segments. Excluding divestitures, sales increased 11%.
Adjusted operating margin of 10.2% decreased from 10.5% as compared to a year ago. We incurred additional charges on space vehicle development programs of 150 basis points. This pressure was mostly offset by incremental profit from our initiatives and higher sales volumes.
Adjusted diluted earnings per share decreased 15%, as higher interest and corporate expenses were partially offset by increased operating profit.
Free cash flow use in the third quarter resulted from growth in net working capital balances, in particular physical inventories.

“Our second consecutive quarter of record sales was a great achievement for our entire staff,” said Pat Roche, CEO. “We are starting to see the benefits from our simplification and pricing initiatives feeding through in our operational performance.”

Segment Results

Aircraft Controls sales in the third quarter of 2023 increased 12% compared to the third quarter of 2022. Sales for commercial OEM programs increased 47%, to $126m, matching the pre-pandemic sales levels. The year-over-year increase was driven by the continued market recovery in widebody aircraft and business jet activity. Commercial aftermarket increased 14% due to higher spares volume, primarily on the Airbus A350 program. Military OEM sales were down 6% reflecting lower funded development activity. Adjusted operating margin was 10.9%, a 10 bps decrease, as the incremental operating profit from higher sales volume was offset by an unfavorable sales mix.

Space and Defense Controls sales increased 8% in the third quarter of 2023, and increased 11% after adjusting for the divestiture of the security business last year. The ramp to full-rate production for our reconfigurable turret program and the increased activity in the avionics business drove the sales increase. Adjusted operating margin was 7.8%, down from last year’s third quarter margin of 11.4%. We incurred $14m of additional charges on our space vehicle development programs in the quarter, which masked the benefits associated with higher sales and improvements in the core business.

Industrial Systems sales increased 9%. Excluding last year’s sonar business divestiture, sales increased 11%. The underlying sales growth was driven by the continued recovery in industrial automation programs, as well as higher demand for flight simulation systems. Also, adjusting for last year’s divestiture, energy sales increased. Adjusted operating margin of 11.5% increased from last year’s third quarter margin of 8.7%. Benefits of our pricing initiatives drove the increase in margin.

Free Cash Flow Results

Free cash flow in the third quarter was a use of cash of $19m. Working capital pressure was primarily due to growth in physical inventories, as we’ve maintained material flow to ensure we meet our customers’ deliveries while working through various constraints. Capital expenditures were $35m in the quarter.

2023 Financial Guidance

“Compared to a quarter ago, we are increasing our guidance for sales, adjusted operating profit and adjusted earnings per share, while modifying operating margin down slightly,” said Jennifer Walter, CFO. “Overall, we had a solid third quarter and our outlook for the fourth quarter looks strong.” Free cash flow guidance is now a use of $60 m, reflecting the third quarter growth in physical inventories. (Source: BUSINESS WIRE)

28 Jul 23. Italy’s Leonardo to focus on ‘bytes and data’, new CEO says. – Italy’s state-controlled defence and aerospace group. Leonardo (LDOF.MI) needs to focus on the fast-growing cybersecurity and space sectors to keep up with industry trends, its new CEO said on Friday.

Roberto Cingolani, a scientist and former energy and environment minister who was installed in May, spoke as the company reported for the first half of the year a jump in new orders, driven by its helicopter division, and falling debt.

It also confirmed financial targets for 2023.

“Defence is increasingly made with bytes and data, instead of bullets,” Cingolani said during a call with analysts, announcing a new industrial plan that will be unveiled in early 2024.

Cingolani said Leonardo would strengthen its core defence business, but also move into “cutting-edge and disruptive technologies” and compete with big data industries, expanding its use of artificial intelligence (AI).

He spoke of making the company more efficient, optimising its product portfolio, expanding its international presence, and better focusing its research & development (R&D) activities.

“We have to do few things very well, rather than many things in a mediocre way,” he said.

In the first half of 2023, Leonardo’s new orders rose to almost 8.7bn euros ($9.60bn), up 18.9% year-on-year, while group net debt fell to 3.6bn euros from 4.8bn euros in the first half of last year.

H1 revenues were up 4.8% to just under 6.9bn euros, while earnings before interest, taxes depreciation and amortisation (EBITDA) rose by 3.5% to 703m euros.

Leonardo’s confirmed guidance for 2023 includes a forecast for new orders at around 17bn euros, revenues in the 15-15.6bn euro range, EBITA at 1.26-1.31bn euros and group net debt of about 2.6bn euros.

Like other defence groups, the Italian company has benefited from rising military spending in the wake of Russia’s invasion of Ukraine, and is involved in the GCAP next-generation fighter jet programme between Italy, Britain and Japan. Leonardo’s Milan-listed shares have risen by more than 46% since January, and are up about 20% from a year ago. On Friday, before results were announced, they closed up 0.7% at 11.88 euros. ($1 = 0.9064 euros)

31 Jul 23. Senior’s profit rises on demand recovery. British auto and aircraft parts supplier Senior (SNR.L) reported a rise in half-yearly profit on Monday, buoyed by a recovery in its flexonics business and strong demand from planemakers.

Planemakers have ramped up production to meet booming air travel demand, benefiting companies like Senior, which supplies equipment to Boeing (BA.N) and Airbus (AIR.PA).

“Planned aircraft build rate increases should lead to higher sales in H2 with supply chain challenges enduring but anticipated to be less severe towards the end of the year,” the company said in a statement.

Meanwhile, strong demand in Senior’s flexonics business, which makes fluid conveyance and thermal management components for land vehicles and power and energy applications, has helped offset the weakness in aerospace caused by supply-chain snarls.

The company said margins have recovered well as sales have grown in the flexonics unit, including some one-off benefits related to cost recovery.

The engineering firm said its profit before tax was 13.5m pounds ($17.35m) for the six months ended June 30, compared with 11.1m pounds a year earlier. Adjusted profit jumped 87% to 17.6 m pounds on a constant currency basis. ($1 = 0.7780 pounds) (Source: Reuters)

————————————————————————-

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.

————————————————————————-

BUSINESS NEWS

Protek Selected By Dutch Armed Forces

PARLIAMENTARY QUESTIONS

MANAGEMENT ON THE MOVE