Sponsored by SPX CommTech
08 Aug 23. Profile: Eric Kaled, President CommTech Platform at SPX Technologies. Eric Kaled is President of SPX CommTech, made up of TCI and ECS. Kaled’s team specialises in innovating technologies that address evolving threats in the RF spectrum battlespace, from tactical Data Links, RF detection and location systems, to RF inhibitors, including counter-drone and counter RC-IED inhibitors. Kaled is committed to making easy-to-use high-tech solutions that solve some of the world’s biggest challenges. As the organisation continues to scale, Kaled is focused on empowering employees to grow in their careers and build on the company’s successes. He said; “We must focus on staying one step ahead and deliver the latest advancements to guarantee a smarter, more secure future for all.”
10 Aug 23. Luna Innovations Reports Second-Quarter 2023 Results.
Reaffirms Full-Year 2023 Outlook
- Total revenues of $29.2m, up 11% year over year
- Gross margin of 58%, compared to 61% for the prior year
- Net loss of $1.6m, compared to net loss of $2.4m for the prior year
- Adjusted EBITDA of $2.7m, compared to $1.2m for the prior year
- Adjusted EPS of $0.04, compared to $(0.02) for the prior year
Luna Innovations Incorporated (NASDAQ: LUNA), a global leader in advanced optical technology, today announced its financial results for the three and six months ended June 30, 2023.
“We continue to see abundant opportunities for Luna’s capabilities and are particularly pleased this quarter with strong performance from our Sensing business,” said Scott Graeff, President and Chief Executive Officer of Luna. “We did experience a distinct difference in the growth rates of our two businesses – Sensing and Communications Test. Our Sensing business, including our project-based solutions, grew strongly. Pressure in the broader Communications market did impact our Communications Test business. We continue to secure large, multi-unit, follow-on orders in our primary markets, and we are seeing significant wins with new applications.”
Second-Quarter Fiscal 2023 Financial Summary
Highlights of the financial results for the three months ended June 30, 2023 are:
Revenues for the three months ended June 30, 2023 increased 11% compared to the prior-year period.
Gross margin was 58% for the three months ended June 30, 2023, compared to 61% for the three months ended June 30, 2022, driven primarily by product mix. Operating loss and margin were $0.2m and 1% of total revenues, respectively, for the three months ended June 30, 2023, compared to an operating loss of $2.5m and 9% of total revenues, respectively, for the three months ended June 30, 2022.
Net loss was $1.6m, or $0.05 per fully diluted share, for the three months ended June 30, 2023, compared to net loss of $2.4m, or $0.07 per fully diluted share, for the three months ended June 30, 2022. Adjusted EPS was $0.04 for the three months ended June 30, 2023 compared to $(0.02) for the three months ended June 30, 2022.
Adjusted EBITDA was $2.7m for three months ended June 30, 2023, compared to $1.2m for the three months ended June 30, 2022.
Revenues for the six months ended June 30, 2023 increased 11% compared to the prior-year period.
Gross profit of $31.8m for the six months ended June 30, 2023 increased from $30.2m for the six months ended June 30, 2022 primarily due to higher sales. Operating loss and margin improved to $2.3m and 4% of total revenues, respectively, for the six months ended June 30, 2023, compared to $4.8m and 10% of total revenues, respectively, for the six months ended June 30, 2022.
Net loss was $3.4 m, or $0.10 per fully diluted share, for the six months ended June 30, 2023, compared to a net income of $7.2m, or $0.22 per fully diluted share, for the six months ended June 30, 2022. Adjusted EPS was $0.04 for the six months ended June 30, 2023, compared to $0.02 for the six months ended June 30, 2022.
Adjusted EBITDA was $3.6m for the six months ended June 30, 2023, compared to $2.9m for the six months ended June 30, 2022.
Q2 and Recent Business Highlights
- Recognized significant wins for monitoring systems, including a contract for the largest power utility company in Italy
- Secured large, follow-on, multi-unit Terahertz order for EV battery production process monitoring
- Drove significant wins in our RIO line of lasers supported by macro trends such as LiDAR
- Secured a seven-figure blanket order for polarization modules from a major data center hyper-scaler
- Named industry veteran as Managing Director for Europe, Middle East and Africa region
- Hosted Luna’s first Investor Day in New York City, outlining the company’s plans for future growth
2023 Full-Year Outlook
Luna is reaffirming the 2023 revenue and adjusted EBITDA outlook it originally provided on March 14, 2023:
- Total revenue of $125m to $130m for the full year 2023
- Adjusted EBITDA of $14m to $18m for the full year 2023
In addition, Luna expects total revenues in the range of $29m to $32m for the third quarter 2023.
Luna is not providing an outlook for net income, which is the most directly comparable GAAP measure to Adjusted EBITDA, because changes in the items that Luna excludes from net income to calculate Adjusted EBITDA, such as share-based compensation, tax expense, and significant non-recurring charges, among other things, can be dependent on future events that are less capable of being controlled or reliably predicted by management and are not part of Luna’s routine operating activities.
The outlook above does not include any future acquisitions, divestitures, or unanticipated events. (Source: BUSINESS WIRE)
10 Aug 23. Evolv Technology Reports Record Second Quarter Financial Results.
- Q2 Revenue of $19.8m, up 119% year-over-year
- Q2 Ending ARR1 of $54.3m, up 160% year-over-year
- Q2 Ending RPO2 of $198.3m, up 145% year-over-year
- Q2 Ending Evolv Express® subscriptions of 3,386, up 195% year-over-year
Evolv Technology (NASDAQ: EVLV), the leader in AI-based weapons detection security screening, today announced financial results for the quarter ended June 30, 2023 and raised its business outlook for 2023.
Results for the Second Quarter of 2023
Total revenue for the second quarter of 2023 was $19.8m, an increase of 119% compared to $9.1m for the second quarter of 2022. Annual Recurring Revenue (“ARR”)1 was $54.3m at the end of second quarter of 2023, an increase of 160% compared to $20.9m at the end of the second quarter of 2022. Net loss for the second quarter of 2023 was $(66.8)m, or $(0.45) per basic and diluted share, compared to net loss of $(25.7)m, or $(0.18) per basic and diluted share, in the second quarter of 2022. Adjusted earnings (loss)3 for the second quarter of 2023 was $(14.3)m, or $(0.10) per diluted share, compared to adjusted earnings (loss)3 of $(17.3)m, or $(0.12) per diluted share, for the second quarter of 2022. Adjusted EBITDA3 for the second quarter of 2023 was $(13.8)m compared to $(16.4)m in the second quarter of 2022. As of June 30, 2023, the Company had cash, cash equivalents, and restricted cash of $156.8m and no debt.
Results for the First Six Month of 2023
Total revenue for the six months ended June 30, 2023 was $38.4m, an increase of 116% compared to $17.8m for the six months ended June 30, 2022. Net loss for the six months ended June 30, 2023 was $(95.4)m, or $(0.65) per basic and diluted share, compared to net loss of $(39.5) m, or $(0.28) per basic and diluted share, in the six months ended June 30, 2022. Adjusted earnings (loss)3 for the six months ended June 30, 2023 was $(31.2)m, or $(0.21) per diluted share, compared to adjusted earnings (loss)3 of $(35.8)m, or $(0.25) per diluted share, for the six months ended June 30, 2022. Adjusted EBITDA3 for the six months ended June 30, 2023 was $(29.3)m compared to $(33.7)m in the six months ended June 30, 2022. (Source: BUSINESS WIRE)
10 Aug 23. Kopin Corporation Reports Financial Results for the Second Quarter 2023.
- Second quarter revenues of $10.5m
- Third consecutive quarter of positive book-to-bill
- Second quarter net loss included $3.3m of non-cash loss on equity investments
- Partnered with MIT’s CSAIL Artificial Intelligence Development Lab
Kopin Corporation (“Kopin” or “the Company”) (Nasdaq: KOPN), a leading developer and provider of high-performance application-specific optical solutions consisting of high-resolution microdisplays, microdisplays subassemblies and related components for defense, enterprise, industrial, and consumer products, today reported financial results for the second quarter ended July 1, 2023.
“The second quarter of 2023 showed continued progress on our strategy to reset the course and focus within Kopin,” said Michael Murray, Kopin’s Chief Executive Officer. “The dedication of our team, the improvements in our manufacturing processes and equipment have allowed Kopin to maintain a high ratio of on-time and in-full delivery. I’m proud to announce an additional benefit of greater customer satisfaction: our second quarter of 2023 saw our third consecutive quarter of positive book to bill ratio. In addition, with our recently announced $12.8m follow-on order from a strategic customer, our third quarter bookings are off to a fantastic start. The increased size of this order is a direct result of our intense focus on improved customer engagement, quality, and timeliness.
“We continue to make progress on disciplined cost controls on the business. We strategically reduced research & development (‘R&D’) expenses and normalized selling, general and administration expenses (‘SG&A’) excluding higher than typical legal costs in the quarter due to trademarking, patenting, and an ongoing litigation. We are encouraged to see the benefits of these efforts as more revenues find their way to the bottom line. We remain slightly ahead of our goals on our strategic initiatives, which are the bedrock for significant and sustainable revenue and profitable growth in 2024.
Mr. Murray concluded: “Looking ahead, we have significantly increased order cover, at improved gross margins due to price increases negotiated with several key customers. We continue to focus on driving new customer design activities to fuel our future product pipeline and growth. The increased demand for Kopin’s technologies is driven by the need for advanced augmentation and visualization of the analog and digital environments. In the second quarter, we joined MIT’s CSAIL program to better align with cutting edge Artificial Intelligence focused on solving visual and human-centric issues with augmented and virtual systems. Indeed, we believe Kopin is well positioned to deliver exciting new technologies, revenues and long term sustainable growth.”
Second Quarter Financial Results
Total revenues for the second quarter ended July 1, 2023, were $10.5m, compared to $11.9m for the second quarter ended June 25, 2022, a 12% decrease. Product revenues for the second quarter ended July 1, 2023, were $6.0m, compared to $9.0m for the second quarter ended June 25, 2022. The decrease in product revenues was a result of lower defense product revenues, which decreased by $2.0m or 28% year over year, and industrial product revenues, which decreased by $0.7m or 43%, year over year. We believe industrial product revenues were lower due to less demand from China. In the second quarter of 2023, funded research and development revenues increased by $1.1m or 39% due to increased funding for display systems initially used in defense programs.
Cost of Product Revenues for the second quarter of 2023 was $5.7m, or 95% of net product revenues, compared with $7.9m, or 88% of net product revenues, for the second quarter of 2022. The increase in cost of product revenues as a percent of product revenues was the result of lower efficiencies from reduced product sales volumes as well as a year over year increase in non-cash stock compensation cost of $415,000. Excluding the increase in stock compensation cost, Cost of Product Revenues would have been 88% of net product revenue.
R&D expenses for the second quarter of 2023 were $3.1m compared to $5.1m for the second quarter of 2022, a 39% decrease year over year. The decrease in R&D expense is attributable to some customer-funded programs transitioning to production and a reduction of OLED development costs due to the first quarter of 2023 spinout of certain OLED development to Lightning Silicon.
SG&A expenses were $6.5 m for the second quarter of 2023, compared to $4.3m for the second quarter of 2022. The increase was primarily due to legal expenses of approximately $2.4m for the second quarter of 2023 as compared to approximately $0.2m for the second quarter of 2022, and bad debt expense of approximately $0.3m for the second quarter of 2023 as compared to bad debt recoveries of approximately $0.2m for the second quarter of 2022.
Other income and expense in the second quarter of 2023 included $3.3m of non-cash impairment losses on equity investments.
Net Loss Attributable to Kopin for the second quarter of 2023 was ($8.2)m, or ($0.07) per share, compared with Net Loss Attributable to Kopin of ($5.6)m, or ($0.06) per share, for the second quarter of 2022.
All amounts above are estimates and readers should refer to our Form 10-Q for the quarter ended July 1, 2023, for final disposition as well as important risk factors.
(Source: BUSINESS WIRE)
10 Aug 23. BioFlyte Raises $5.4m in Series B Financing to Protect Critical Infrastructure from Airborne Biothreats. BioFlyte, a biothreat detection firm with a revolutionary new class of fieldable biological threat collection, detection, and identification solutions, today announced that it raised $5.4m in new financing led by Scout Ventures and Cottonwood Technology Fund with additional funding from New Mexico Vintage Fund. BioFlyte will use this new funding to continue scaling its manufacturing and sales operations to meet customer demand and to develop new product configurations that will serve new markets.
“This round of funding will allow us to scale our manufacturing operations and create a sales organization to drive market penetration and support our growing customer base,” said Todd Sickles, CEO, BioFlyte. “We plan to expand our market presence by providing disruptive biothreat surveillance solutions that meet the needs of business operators and emergency management personnel within enterprises that are strongly focused on protecting people and minimizing business disruption emanating from biological threats.”
BioFlyte’s flagship product is the BioTOF™ z200, a first-of-its-kind, comprehensive biothreat surveillance solution for critical infrastructure protection and mail screening. The z200 provides test results in less than five minutes and operates continuously and autonomously in critical infrastructure environments such as airports, arenas, entertainment venues, and commercial and government buildings. BioFlyte’s technology is also being used for screening within mail processing environments.
The system consists of a wall mount sensor capable of autonomous detection and identification of airborne toxins in real-time. It incorporates matrix-assisted laser desorption and ionization (MALDI) mass spectrometry to acquire a mass spectrum from each collected aerosol sample. The BioTOF sensor offers high sensitivity at 100 threat particles per liter of ambient air. By incorporating robust ML/AI, the instrument continuously detects, characterizes, and stores new species in its libraries for future reference, thus giving it the ability to accurately and quickly identify an unprecedented range of toxins, viruses, and bacteria such as anthrax, ricin and fentanyl.
“We are excited to work toward our mission of making the world a better, safer place with our investment in BioFlyte,” said Brad Harrison, Managing Partner of Scout Ventures, who recently joined the company’s Board of Directors. “Its revolutionary class of fieldable biothreat sampling, detection, and identification products for safety and security align squarely with Scout’s focus on dual use frontier technology. We are thrilled by the progress Todd Sickles and the entire BioFlyte team have demonstrated with their first scale deployments at Pittsburgh International Airport and at a large New York City financial institution.”
To learn more about BioFlyte and its technology, please visit https://bioflyte.com.
BioFlyte is a bioaerosol surveillance company that is commercializing a revolutionary new class of fieldable biological contamination sampling, detection, and identification solutions. The firm’s current market focus is critical infrastructure protection and mail screening in both the government and commercial sectors. For more information about BioFlyte and its products, please visit: https://bioflyte.com. (Source: BUSINESS WIRE)
10 Aug 23. Rheinmetall affirms guidance as arms demand boosts Q2 earnings. Rheinmetall (RHMG.DE) reported a rise in quarterly operating earnings and affirmed its full-year guidance on Thursday as it benefited from growing demand for weapons and ammunition amid the war in Ukraine.
CEO Armin Papperger said Rheinmetall had received the first major orders, signifying that governments have started to make good on their pledges to ramp up military procurement.
“We recently signed contracts with an order volume of over 7 bn euros in a single week – a new record for us,” he noted.
The Duesseldorf-based firm posted operating earnings of 118m euros ($130m) in the second quarter through June, up from 114m euros a year earlier and bang in line with analysts’ average expectations.
Rheinmetall’s consolidated sales grew by just over 6% to around 1.5bn euros, a tad below expectations. Its order backlog jumped by 17% to around 30.1bn euros.
Rheinmetall is one of the biggest producers of ammunition in the world. Artillery shells have been in particularly high demand since Kyiv is firing these rounds at a higher rate than western companies can make them.
It is also in the business of refurbishing tanks and other vehicles for use by Ukraine, and has been working to establish a new production line for 35mm rounds used by Kyiv’s Gepard anti-aircraft guns, with the first rounds originally meant to be delivered in July.
“As promised, we will soon be delivering the urgently needed ammunition to Ukraine for the Gepard anti-aircraft tanks,” Papperger said on Thursday without giving details.
While the company is capitalising on the military boom, with the defence business making up 70% of its revenue, its civilian business saw a slowdown in growth caused by “negative earnings contributions” from affiliated companies in Europe and China, it said.
The company noted that the result was also impacted by costs of about 10m euros to restore operations resulting from a cyberattack on IT systems in the civil business in April 2023, and by higher raw material prices. ($1 = 0.9106 euros) (Source: Reuters)
10 Aug 23. First half of 2023: Rheinmetall Group continues on growth path with significant upturn in orders.
- Strong growth of security business: sales up by 12%
- Significant growth in order backlog: Threshold of €30 bn exceeded – dynamic growth continues
- Consolidated sales up 7% to €2.9bn
- Operating result at €191m
- Operating margin amounts to 6.7%
- Annual guidance for 2023 confirmed A future contributions of the new acquisition Expal Systems in Spain (closing July 31, 2023) not included
Rheinmetall AG, Düsseldorf, closed the first half of financial year 2023 with further growth in consolidated sales. This positive development was driven in particular by business with the armed forces of Germany and its partner nations in the EU and NATO. Thanks to the dynamic market situation and the high level of demand, the Group recorded double-digit sales growth in its business with military goods. By contrast, the Group’s civilian business saw a slowdown in growth. Rheinmetall now generates more than 70% of its revenues in the military business.
Building on the positive development in the first quarter, the technology group’s operating free cash flow improved significantly in the first half of the current financial year compared to the same period of the previous year.
In light of the current market situation and the consistently positive order situation, management is confirming its current guidance for the Group’s sales growth and operating result margin.
Armin Papperger, CEO of Rheinmetall AG, commented on the Group’s performance: “We are still on track to achieve our ambitious targets for sustainable, profitable growth in 2023. Governments have made far-reaching decisions for military procurement in response to the change in the security situation. Implementing these decisions is the next step, and this is reflected in the first major orders we have received. We recently signed contracts with an order volume of over €7 bn in a single week – a new record for us.”
Armin Papperger: “We are continuing to grow. The acquisition of the Spanish munitions manufacturer Expal Systems that was closed recently will secure our core business for the long term and significantly expand capacities. At the same time, we will soon begin manufacturing fuselage sections for the world’s most modern combat aircraft, the F-35A, which will open up a new chapter in Rheinmetall’s history.”
“In a changing world, we remain committed to meeting our responsibility, not least with a view to the war in Ukraine. We are grateful to be able to provide the country with effective aid for its defence in the form of our products – from air defence, main battle tanks and infantry fighting vehicles and the associated ammunition, through to military trucks, sensors and mobile field hospitals,” added Armin Papperger. “As promised, we will soon be delivering the urgently needed ammunition to Ukraine for the Gepard anti-aircraft tanks.”
Rheinmetall Group: Sales growth of 7%
Consolidated sales increased by €187m or 7% year-on-year to €2,861m in the first half of 2023 (previous year: €2,674 m). Adjusted for currency effects, sales were almost 8% higher than in the previous year.
The operating result amounted to €191m, down €15m or 7% on the previous year’s figure of €206m. Business was boosted in particular by earnings growth in the Electronic Solutions, Vehicle Systems and Weapon and Ammunition divisions on the back of higher margins and a better product mix. However, the positive development in the Group’s operating business was not enough to fully offset the negative earnings contributions from affiliated companies in Europe and China. Excluding at-equity contributions of €-17m, the operating result amounted to €208 m. The result was impacted by costs of about €10 m to restore operations resulting from the cyber-attack on IT systems in the civil business in April 2023 and by higher raw material prices.
Due to the aforementioned negative at-equity effects, the Group’s operating result margin fell to 6.7% in the first half of 2023 (previous year: 7.7%).
Earnings per share from continuing operations increased from €2.28 to €2.42 in the first half of financial year 2023.
Operating free cash flow improved significantly by €316m to €‑325m in the first half of 2023 after €‑641m in the same period of the previous year. Despite the growth in inventories in anticipation of additional orders, operating free cash flow improved considerably in the first half of the year thanks to higher customer payments. The high demand in the military sector currently requires further investments in order to significantly increase the own production capacities.
Rheinmetall Backlog increased considerably by around 17%, from €25.7 bn to around €30.1bn (June 30, 2023). In addition to orders on hand, Rheinmetall Backlog includes the call-offs expected from framework agreements in place with military customers and potential orders from contracts with civilian clients.
Rheinmetall Nomination rose by around 50% year-on-year to €7,192m in the first half of 2023 (previous year: €4,790m). Rheinmetall Nomination comprises traditional incoming orders as well as the volume from future call-offs under new framework agreements entered into with military customers and new contracts with civilian clients (nominations).
Vehicle Systems: Fivefold increase in order intake
Sales in the Vehicle Systems division, which mainly operates in military wheeled and tracked vehicles, increased by €161m or 19% year-on-year at €1,012m in the first half of 2023. The sales growth is particularly attributable to projects for the delivery of tactical vehicles.
Rheinmetall Nomination – the total of order intake and the volume of new framework agreements with military customers – increased by €3,045m as against the previous year to €3,725m. This was due in particular to a fivefold increase in order intake resulting from the acquisition of new major orders, especially in connection with the program to replace the Bradley infantry fighting vehicle in the US, orders for new Puma infantry fighting vehicles and state-of-the-art military trucks for the German armed forces, and the Leopard 2 upgrade for Norway. A framework agreement for trucks in Austria was another strategically important success.
Rheinmetall Backlog in the division – comprising orders on hand and the expected call-offs under the framework agreements in place with military customers – amounted to around €13.9bn as at June 30, 2023, up €1,244 m or around 10% on the previous year’s figure. The operating result improved from €75m to €99m in the first half of 2023. This represents growth of €24.1m or 24%. This positive development is mainly attributable to margin effects in projects. The operating margin of around 10% exceeded the previous year’s level of around 9%.
Weapon and Ammunition: Backlog rises to over €6bn
The Weapon and Ammunition division generated sales of €598m from its weapon systems and ammunition activities in the first half of 2023, an increase of €34m or 6% on the previous year’s figure. The year-on-year increase is due in particular to higher ammunition call-offs by customers and higher sales of protected truck cabs. At €1,561m, Rheinmetall Nomination largely maintained the strong prior-year level in the first half of 2023 (previous year: €1,892m). The previous year’s figure was above average due to the division’s largest single order to date from Hungary. Major new orders in the first half of 2023 related to ammunition orders for the Gepard anti-aircraft tank and tank ammunition orders for Marder and Leopard 1 for Ukraine. In addition, a large order for ship protection systems was acquired in Australia with a potential total order volume – including follow-up orders – of over €600m. Rheinmetall Backlog increased by €1,366m or around 29% to around €6.1bn as at June 30, 2023 (previous year: €4.7bn).
The operating result improved by €19m or 27% to €89m in the first half of 2023. This positive development is mainly attributable to a more profitable product mix. As a result, the operating margin rose significantly from 12.5% to 14.9%.
Electronic Solutions: Sales growth of 10%
The Electronic Solutions division, which produces solutions in the field of armed forces digitalization, infantry equipment, air defence and simulation, increased its sales by €39m to €450m in the first half of 2023 (previous year: €411m); this corresponds to growth of 10%.
Rheinmetall Nomination declined by €49m or 7% year-on-year to €652m. A major new order in the context of Puma infantry fighting vehicles was placed in the first six months of 2023. Rheinmetall Backlog amounted to €3.4bn as at June 30, 2023, a year-on-year increase of 16% (previous year: €2.9 bn).
The operating result for the first half of 2023 increased by €2m to €27m (previous year: €25m). The operating margin declined to 5.9% (previous year: 6.1%), largely as a result of changes in the product mix.
Sensors and Actuators: Nominated backlog up around 22%
Sales in the Sensors and Actuators division, which provides solutions for industrial applications and electric mobility as well as components and control systems for emission reductions, increased by €16 m or 2% year-on-year to €707m in the first half of 2023. This development primarily resulted from volume increases in Europe and Asia. Booked business in the first half of 2023 was unchanged year-on-year at €1,428m (previous year: €1,431m). The nominated backlog, i.e. the volume of call-offs expected from customer agreements, increased by around 22% to €8.2bn as at June 30, 2023 (previous year: €6.7bn).
The operating result declined by 57% to €22m in the first half of 2023 (previous year: €50m). Among other things, this development is attributable to additional business recovery costs following the cyber-attack on IT systems of the civilian business in April 2023 as well as increased raw material prices, which can only be passed on to customers after a delay. Accordingly, the operating margin fell to 3.1% (previous year: 7.3%).
Materials and Trade: Downturn in sales due to cyberattacks
Sales in the Materials and Trade division, which supplies plain bearings and structural components as well as handling global aftermarket business, declined by €22m or almost 6% year-on-year to €352 m in the first half of 2023. The downturn was due in particular to the lower sales volume in the Bearings business unit. In the Trade business unit, the downturn in sales is attributable to the cyber-attacks on IT systems at locations in Germany and abroad in April 2023. Booked business amounted to €347 m in the first six months of financial year 2023. This represents a year-on-year decrease of almost 14% (previous year: €403 m). The nominated backlog of around €600m as at June 30, 2023 was largely unchanged year-on-year (previous year: €610m).
The operating result of the Materials and Trade division fell by €10 m or almost 38% to €17 m in the first half of 2023. The operating margin declined to 4.7% (previous year: 7.2%). This was due in particular to a decline in the at-equity result of a Chinese joint venture as well as the earnings effect of the downturn in sales.
Outlook: Current guidance for year confirmed
Rheinmetall confirms its current annual guidance after the first six months of 2023.
In recent months, Rheinmetall has used strict cost control, active provisioning, and the mitigation of risks on the energy and procurement markets as measures to successfully counter the general trend of inflation and the continuing disruptions on the markets for raw materials and primary products.
Not least in light of these timely decisions and the measures it has largely already implemented, the Group continues to expect sales growth to between €7.4bn and €7.6bn in the current financial year and is anticipating an improvement in the operating result and an operating result margin of around 12%.
This guidance does not include the acquisition of the Spanish munitions manufacturer Expal Systems. Rheinmetall expects the new subsidiary to contribute sales of €150m to €190m in the current financial year from the date of consolidation (August 1, 2023).
10 Aug 23. Indra and Bain Capital have agreed to acquire a 9.5 percent stake valued at 175m euros in ITP Aero, a global leader in the aeronautical and industrial engine market. Indra and ITP Aero have reached a framework agreement which sets the basis for a technological and strategical collaboration in order to enhance the company’s value, leverage their synergies and promote the joint development of systems and technologies, including developments resulting from their cooperation in the FCAS, the future European air combat system, of which Indra is the national industrial leader. As a result of this acquisition, Indra will enjoy the rights that are customary for a minority shareholding of this size, including representation on the Board of Directors.
“Indra’s stake in ITP Aeros’s capital has a clear industrial vocation and constitutes a further step in its growth strategy to become the great driving force of the Spanish defence industry in order to guarantee our country’s strategic autonomy and technological sovereignty. This operation will also give both Indra and ITP Aero greater strength, broaden their technological capabilities and expand their opportunities to compete with large companies in the aerospace and defence markets,” highlighted Indra’s chairman, Marc Murtra.
Indra’s CEO, José Vicente de los Mozos, emphasised that “this operation will reinforce our position as a prime contractor in the Defence and Security sector, with a key role as the coordinator of many of the Spanish and European defence programs. We shall continue to foster collaboration and cooperation with other companies, as we’ve already done with ITP Aero, Navantia and Tecnobit, so as to build a strong industrial ecosystem that can take on a relevant role corresponding to our country in Europe and on a global scale.”
Ivano Sessa of Bain Capital said, “We welcome Indra as a shareholder of ITP Aero. Since our acquisition, ITP Aero has had a successful journey of growth and internationalization and we believe this event marks an important strategic milestone for ITP Aero. We believe that Indra’s support, together with the Basque Finance Institute, will further strengthen ITP Aero’s position as a leading player in the global A&D landscape.”
For Carlos Arzola, Managing Director of ITP Aero, “with the incorporation of Indra as a shareholder and the technological collaboration framework agreement, ITP Aero continues its growth path, driven by the recovery of civil aviation—air transport has almost completely recovered from the consequences of the Covid-19 pandemic and airlines are announcing large orders to increase and renew their fleets—as well as the strong demand in the defence business. This agreement increases synergies between the two companies, which help our continued growth and investment in capabilities across the A&D value chain.”
The operation is expected to be completed in the next few weeks. The incorporations of Indra and the Basque Finance Institute fulfil the obligations with the Spanish and Basque governments in terms of governance, location in the Basque Country and maintenance of employment, strengthening their industrial, technological and R&D capabilities.
Indra already partners with ITP Aero in the FCAS program, which is developing the future European air combat system. Indra is the national industrial leader of the FCAS program, in which it also internationally leads the sensor pillar and jointly leads the two transversal pillars, in addition to leading the combat cloud pillar in Spain. As for ITP Aero, it leads the NGF Engine at a national level. Likewise, the two companies were recently awarded a contract valued at 40 m euros to provide a comprehensive engineering and support service for the aircraft weapons systems of the Air and Space Force. (Source: Google/https://asiapacificdefencereporter.com/)
09 Aug 23. BlackSky Reports Second Quarter 2023 Results. Q2 Imagery and Analytics Revenue Increases 51% from Prior Year Period.
BlackSky Technology Inc. (“BlackSky” or the “Company”) (NYSE: BKSY) announced results for the second quarter ended June 30, 2023.“
Second Quarter Financial Highlights:
- Revenue of $19.3m, up 28% from the prior year period
- Imagery & software analytical services revenue grew 51% over the prior year quarter
- Cost of sales related to imagery & software analytical services improved to 23% from 34% in the prior year quarter
“BlackSky delivered another strong quarter as we continue to demonstrate revenue growth, substantial operating leverage, and effective cost management that maintain us on our path towards profitability,” said Brian E. O’Toole, BlackSky CEO. “Since the start of the second quarter, we won over $35m in new contracts and renewal agreements supporting U.S. and international government agencies looking to secure access to our rapid revisit constellation of high-resolution satellites, bringing total bookings year to date to over $200m. These wins underscore our customers’ reliance on and the increased demand for BlackSky’s capabilities. We continue to see a high-level of customer engagement from government agencies worldwide for our dynamic hourly monitoring and AI-driven analytic capabilities. With our strong operating leverage and a solid book of business, we remain on track to achieve positive adjusted EBITDA in Q4 of this year. We are actively working with several major customers on a number of sizable contracts and given the variability on timing, we are widening the range of our 2023 revenue outlook to between $84m to $96m.”
- Signed a multi-year renewal agreement with an international defense sector customer for more than $30m, expanding and securing priority access to BlackSky’s high-frequency imagery services
- Awarded a two-year multi-million-dollar contract with an international Ministry of Defense customer to build ground station infrastructure to enable direct access to BlackSky’s rapid revisit constellation
- Won a two-year multi-million-dollar renewal contract to provide advanced subscription-based imagery and analytic services to an existing international Ministry of Defense customer
- Signed a one-year subscription agreement to provide on-demand satellite tasking of BlackSky’s imagery and other mission solutions to a Department of Defense customer
- Awarded two contracts by the National Reconnaissance Office (NRO) to study short-wave infrared capabilities and latency improvements
- Won a multi-year contract to provide on-demand imagery and AI-enabled analytics to an international non-government organization
- Selected by SynMax, a leading energy intelligence company, to monitor coal inventory at power plants using BlackSky’s advanced burst imagery capability
- Partnered with Spire Global to create a real-time, commercially available AI-driven maritime custody service to detect and track vessels worldwide, estimate cargo, and track activity over time
- Signed a launch agreement with Rocket Lab for a block of five dedicated launches to secure launch capacity to include deployment of initial Gen-3 satellites in 2024
- On June 26, 2023, BlackSky was chosen to be added to the Russell 3000 Index, a broad-market index widely used by investment managers and institutional investors
Total revenue for the second quarter of 2023 was $19.3m, up $4.2m, or 28%, from the second quarter of 2022. Imagery and software analytical services revenue was $15.3m, up 51% over the prior year period, primarily driven by increased demand from new and existing U.S. and international government customers. Professional and engineering services revenue was $4.0m in the second quarter of 2023, compared to $4.9m in the prior year period. Professional and engineering services contracts are milestone-based contracts that have quarter-over-quarter variability, in contrast to the high-margin imagery and software analytical services, which are typically recurring subscription-based revenues.
Cost of Sales
Cost of sales as a percent of revenue was 44% for the second quarter of 2023, which included a $2.5m expense recognized in professional and engineering services related to changes in the estimated cost and percentage of completion for an R&D related project, compared to 65% in the second quarter of 2022. Imagery and software analytical service costs as a percent of revenue was 23% in the second quarter of 2023, compared to 34% in the second quarter of 2022. The year-over-year improvement was primarily driven by greater volumes of imagery and analytical services revenue that inherently have a low fixed-cost structure as a percent of revenue.
Operating expenses for the second quarter of 2023 were $30.7m, which included $2.1m of non-cash stock-based compensation expense and $11.8m in depreciation and amortization expenses. Operating expenses for the second quarter of 2022 were $27.0m, which included $2.6m in non-cash stock-based compensation expense and $9.2m in depreciation and amortization expenses. Excluding the non-cash stock-based compensation and depreciation and amortization expenses from both years, cash operating expenses for the second quarter of 2023 were $16.8m compared to cash operating expenses of $15.2m for the second quarter of 2022. The year-over-year increase of $1.6m, or 10%, was primarily due to expansion of the sales team and AI capabilities.
Net loss for the second quarter of 2023 was $33.4m, compared to a net loss of $26.3 m in the second quarter of 2022.
Adjusted EBITDA loss for the second quarter of 2023 was $5.8m, compared to an adjusted EBITDA loss of $8.8m in the prior year quarter. The $3.1m year-over-year improvement was primarily driven by strong operating leverage achieved through increased revenue of high-margin imagery and analytics, partially offset by the $2.5m expense in professional and engineering service costs.
Balance Sheet & Capital Expenditures
As of June 30, 2023, cash and cash equivalents, restricted cash, and short-term investments totaled $59.5m. Capital expenditures for the second quarter of 2023 were $12.6m.
BlackSky remains on track to achieve positive Adjusted EBITDA in Q4 of this year. This is the result of continued revenue growth, high incremental margins from imagery and analytic services and continued responsible cost management. The Company continues to close a significant number of new contracts, further building a strong book of business. BlackSky is actively working with several major customers on a number of sizable contracts and given the variability on timing, the Company is widening the range of its 2023 revenue outlook to between $84m and $96 m. Expectations for full year 2023 capital expenditures remain between $40 m and $45m. (Source: BUSINESS WIRE)
09 Aug 23. CACI Reports Results for Its Fiscal 2023 Fourth Quarter and Full Year and Issues Fiscal Year 2024 Guidance.
Annual revenues of $6.7bn, up 8% YoY
Annual net income of $384.7m; Diluted EPS of $16.43, up 6% YoY
Annual adjusted net income of $440.9m; Adjusted diluted EPS of $18.83, up 6% YoY
Annual EBITDA of $716.0m and EBITDA margin of 10.7%, up 40 bps YoY
Annual contract awards of $10.1bn and book-to-bill of 1.5x
Company committed to continued growth, strong margins, and healthy cash flow in Fiscal Year 2024
CACI International Inc (NYSE: CACI), a leading provider of expertise and technology to government customers, announced results today for its fiscal fourth quarter and full year ended June 30, 2023, and issued guidance for fiscal year 2024.
“Our strong Fiscal Year 2023 financial performance is the result of the consistent execution of our strategy,” said John Mengucci, CACI President and Chief Executive Officer. “We delivered on our commitments of top-line growth, margin expansion, and healthy cash flow generation. We won significant new business, including enterprise-scale IT modernization work with the Air Force, exquisite cyber work in the intelligence community, and development of the Navy’s next-generation shipboard signals intelligence and electronic warfare platform. We deployed capital in a flexible and opportunistic manner to drive value for our shareholders. And we continued to invest in our business and our people to ensure CACI remains positioned to deliver on our commitments in Fiscal Year 2024 and beyond.”
Fourth Quarter Results
Revenues in the fourth quarter of fiscal year 2023 increased 4 percent year-over-year, driven by organic growth. The increase in income from operations was driven by higher revenues and gross profit. Diluted earnings per share and adjusted diluted earnings per share increased due to higher operating income, partially offset by higher interest expense. The decrease in cash from operations, excluding MARPA was driven primarily by higher tax payments.
Fourth Quarter Contract Awards
Contract awards in the fourth quarter totaled $2.3bn, with nearly 70 percent for new business to CACI. Awards exclude ceiling values of multi-award, indefinite delivery, indefinite quantity (IDIQ) contracts. Some notable awards during the quarter were:
- CACI was awarded a seven-year single-award indefinite delivery indefinite quantity (IDIQ) mission technology contract, called Spectral, with a $1.2bn ceiling for the U.S. Navy’s Naval Information Warfare Systems Command (NAVWAR). CACI recognized $600m of award and backlog value based on current requirements in its fourth quarter of fiscal year 2023. CACI will utilize its industry-leading software development and electromagnetic spectrum capabilities to develop and deploy the Navy’s next-generation shipboard signals intelligence (SIGINT), electronic warfare (EW), and information operations (IO) weapon systems.
- CACI was awarded a five-year, single-award $209m mission expertise prime contract by the U.S. Fleet Forces Command (USFFC) to provide global logistics and technical training support to Naval Forces Logistics (NFL). Under the expanded contract, CACI will continue to provide advanced mission software and modern capabilities needed to ensure readiness and decision advantage across all domains.
- CACI was awarded a five-year single-award, indefinite delivery indefinite quantity mission technology contract valued up to $125m to continue providing vital full life cycle support for Command, Control, Computers, Communications, Cyber, Intelligence, Surveillance, and Reconnaissance (C5ISR) systems, including engineering and design, rapid prototyping, fabrication, and integration.
- CACI was awarded a five-year single-award, indefinite delivery indefinite quantity (IDIQ) mission expertise contract valued up to $76.3m.
Total backlog as of June 30, 2023 was $25.8bn compared with $23.3bn a year ago, an increase of 11 percent. Funded backlog as of June 30, 2023 was $3.7bn compared with $3.2bn a year ago, an increase of 16 percent.
- CACI has been named to Forbes’ America’s Best Employers for Diversity 2023 for the second consecutive year. According to Forbes, companies were selected based on responses to an independent survey of more than 45,000 employees in the U.S. who work for companies with a minimum of 1,000 employees. Respondents answered questions regarding age, gender, ethnicity, disability, LGBTQIA+, and general diversity in their current workplace.
- CACI’s Bluestone Analytics and Torchlight AI (Torchlight) announced a strategic partnership to provide the DarkPursuit capability within the Torchlight Catalyst platform. This partnership will provide Torchlight customers, mainly Special Operations Forces (SOF), with safe and secure access to browse the open, deep, and dark web. (Source: BUSINESS WIRE)
08 Aug 23. Arcfield acquires digital twin provider. This transaction represents the Veritas Capital-backed contractor’s newest investment in digital engineering and related offerings.
Arcfield has completed its first acquisition since the systems engineering and mission support services provider stood up as a standalone entity less than two years ago.
By purchasing Strategic Technology Consulting, Arcfield is looking to bring in more methodologies and tools for use in technology development programs that lean on model-based systems engineering. Terms of the transaction announced Tuesday were not disclosed.
STC’s core product line also includes digital twins, the computer-generated representations of real-world physical products that are intended to enable full-lifecycle modeling and simulation in the development of platforms.
“As a decades-long leader in [model-based systems engineering] and digital twins, Arcfield has invested heavily in the development, refinement and advancement of our digital engineering and MBSE capabilities to support our customers in their shift from traditional SE&I to an all-digital model,” Arcfield chief executive Kevin Kelly said in a release.
Model-based systems engineering is a technical approach to the field that focuses on creating and working with domain models as the primary means of exchanging information versus that of documents. The idea is to increase the rigor of systems engineering and understand how component-level changes impact larger systems.
Arcfield is a portfolio company of private equity firm Veritas Capital, which supports the contractor through the Vantage Fund that focuses on mid-sized government contractors. Veritas carved out the Arcfield business from then-parent Peraton in the winter of 2021. Veritas also backs Peraton.
Kelly appeared on our WT 360 podcast in April to explain Arcfield’s strategy and investment thesis in a discussion that also included his perspective on the evolution of the engineering field.
Latham & Watkins LLP and Covington & Burling LLP acted as legal counsel to Arcfield. Raymond James was the financial adviser to STC, which was also represented by law firm Miles & Stockbridge P.C. (Source: washingtontechnology.com)
08 Aug 23. Airbus open to potential partner in Brazil’s Helibras, executive says. Airbus (AIR.PA) would be open to sell a stake in helicopter maker Helibras to a potential strategic partner after it reached full ownership of the Brazilian company earlier this year, the head of the subsidiary told Reuters on Monday.
The European planemaker, which has controlled the formerly state-owned Helibras since the mid-2000s, acquired the remaining 15.5% stake from the state of Minas Gerais in January for 95m reais ($19.4m).
That, however, was not Airbus Helicopters’ initial plan, Helibras President Alberto Duek said in his first media interview since taking office in July.
The move, he noted, was more related to Minas Gerais’ own privatization goals, which prompted the state to look for a buyer for its stake in the company, a market leader in Brazil and the only helicopter manufacturer in the Southern Hemisphere.
“Airbus was very happy with the government of Minas Gerais in Helibras’ capital,” Duek said. “But given the risk that some adventurous company could enter our capital and disturb our business, we felt obliged to buy that stake.”
“That does not mean that if a reliable partner appears Airbus would not be open to selling those shares. The right partner would have to appear, a reliable one at the right time, and we can analyze each offer.”
He did not reveal if Airbus was out in the market actively searching for a strategic partner, but said that any potential contender would have to share Airbus’ compliance principles, market reputation and add to Helibras’ efforts.
Helibras, which will participate this week in the LABACE airshow in Sao Paulo, sold a record 50 helicopters in 2022, a backlog that Duek described as positive but challenging as the sector continues to grapple with supply chain constraints.
The executive said those issues, which date back to the COVID-19 pandemic, were still not in the past. He expects some one-and-a-half or two more years before the situation normalizes.
Duek said that after a strong performance last year, the helicopter market faced a slowdown in the first half of 2023 but has been regaining momentum and faces a positive second half.
“We must be realistic – it will be hard for us to beat that record of 50 helicopter orders. But our prospects are for a very good year.”
Helibras sells helicopters to both private clients and the public sector. It has also been investing in exports, which currently account for 20% of the firm’s output, Duek said. It has customers in countries such as Chile, Ecuador, Argentina and Bolivia. ($1 = 4.8999 reais) (Source: Reuters)
08 Aug 23. Air Industries Group Announces Improved Operating Results for Second Quarter Ended June 30, 2023 and Provides Comments on Business Outlook. Air Industries Group (NYSE American: AIRI), an integrated Tier 1 manufacturer of precision assemblies and components for mission-critical aerospace and defense applications, and a prime contractor to the U.S. Department of Defense, today announced its financial results for the quarter ended June 30, 2023.
Commenting on the recent results, Lou Melluzzo, CEO of Air Industries Group, said, “I am pleased that we delivered both top-line and bottom-line improved performance during the second quarter of 2023. Our gross profit margin for Q2 has risen impressively to 16.4% of sales, an increase from the 2023 first quarter’s 15.0%. Moreover, we successfully transitioned from operating losses in the past two quarters to achieving operating income in the most recent period.”
Mr. Melluzzo also commented on the Company’s business outlook, stating, “As we look ahead, I am extremely encouraged by the positive feedback emanating from both our longstanding and new customers. The substantial investments we made over multiple years in new equipment, refined delivery processes, and elevated customer service are undeniably yielding fruitful results. I am confident that we are witnessing the commencement of a sustained period of improved order-flow trajectory, which bodes well for the future for our Company.”
Second Quarter 2023 Results
- Consolidated net sales for the second quarter ended June 30, 2023 were $13.2m, representing an increase of $656,000 or 5.0% from $12.5m reported for the first quarter of 2023. Second quarter 2023 net sales were lower by $803,000 or (5.7%) compared with sales of $14.0m reported for the second quarter of 2022.
- Consolidated gross profit for the second quarter of 2023 was $2.2m, an increase of $289,000 or 13.3% from $1.9m in the 2023 first quarter. Second quarter 2023 gross profit was lower by $253,000 or (10.5%) compared with $2.4m in the second quarter of 2022.
- Gross profit margin was 16.4% of sales for the second quarter of 2023, 15.0% for the first quarter of 2023, and 17.3% for the second quarter of 2022.
- Operating expenses for the second quarter of 2023 were $2.1m, slightly higher than $2.0m in the first quarter of 2023, and lower than $2.2m in the 2022 second quarter.
- The Company achieved operating income of $90,000 in the second quarter of 2023 compared with an operating loss of $158,000 in the first quarter of 2023 and operating income of $250,000 in the second quarter of 2022.
- Interest and financing costs for the three months ended June 30, 2023 were $500,000 compared with $476,000 in the first quarter of 2023, and $289,000 for the three months ended June 30, 2022. The increases in interest expense resulted from increases in the prime rate and from higher loan balances.
- Net loss for the second quarter of 2023 was reduced to $395,000 versus a net loss of $618,000 in the first quarter of 2023. The net loss in the second quarter of 2022 was $7,000.
Six-Month 2023 Results
- Consolidated net sales for the six months ended June 30, 2023 were $25.8m compared with $26.1m in the same period of 2022, a slight decrease of $316,000 or (1.2.%).
- Consolidated gross profit for the six months ended June 30, 2023 was $4.0m versus $4.5m in the 2022 period, a decrease of $451,000 or (10.0%). Gross profit margin was 15.7% of sales for the six months ended June 30, 2023 compared with 17.3% for the first six months of 2022.
- Operating expenses for the six months ended June 30, 2023 were $4.1m, increasing $53,000 from $4.0m in the 2022 period.
- The operating loss for the six months ended June 30, 2023 was $47,000 compared with operating income of $457,000 reported for the 2022 period.
- Interest and financing costs for the six months ended June 30, 2023 were $996,000 compared with $612,000 in the 2022 period, an increase of $384,000 or 62.7%, mainly due to the effect of increases in the prime rate and from higher loan balances.
- Net loss for the six months ended June 30, 2023 was $1.0m, compared with a net loss of $35,000 in the 2022 period.
- Adjusted EBITDA for the six months ended June 30, 2023 was $1.6m. (Source: BUSINESS WIRE)
08 Aug 23. Curtiss-Wright Corp.: A Premium Asset in a Scarce Pool; Upgrade to Overweight. We upgrade CW to OW from EW as risk reward skews positive, and raise our PT to $229. The Pivot to Growth continues and endmarket demand remains robust, positioning CW for underappreciated topline expansion. Commercial nuclear optionality and a May 2024 Investor Day could deliver further upside.
A Scarcity of High-Quality A&D Smid-caps
CW outperformed the S&P 500 by ~500bps on the day of its 2Q23 earnings report (August 3) after a strong topline-driven beat and raise. Management continues to execute on its ‘Pivot to Growth’ strategy (2021-23) with its revised higher sales outlook of ~7-9% YoY growth in 2023 as evidence (compared with a ~2% CAGR over the 2014-19 period). With a pick-up in Defense Department outlays (up ~21% YoY in 2Q23) and easing supply chain pressures, we see a path to a ~13% sales CAGR at CW’s Defense Electronics segment through 2024 (vs. current consensus of ~8.5%). Continued strength in CW’s commercial aerospace business given OEM production ramps and a renewed interest in commercial nuclear activity in the US and abroad also provide tailwinds for CW’s topline trajectory, driving our conviction that mid-to-high single digit growth is the new normal for CW. Meanwhile, margins are expanding (guiding to ~10-30bps of YoY improvement in 2023) and CW is converting over 100% of earnings to cash at a time when many Defense peers are wrestling with cost pressures and FCF headwinds.
We are encouraged by CW’s recent execution track record and view the May 2024 investor day as an opportunity for management to potentially outline accelerated topline growth plans without sacrificing margins. We’re also monitoring for a formal AP1000 nuclear reactor order from Poland, which by our estimates could be worth an incremental ~$6 of equity value, though is not factored into our base case PT of $229 (vs. a prior $188) and thus presents additional upside (incorporated in our Bull Case). Stepping back, we see a scarcity of similar high quality smid-caps with attractive A&D exposure. We upgrade CW to OW from EW. Our updated PT $229 reflects ~14% upside and a ~1.8x risk-reward skew. We see the stock as defensive with lower downside risk.
What Has Surprised Us Thus Far?
CW in May 2021 announced its Pivot to Growth strategy, unveiling relatively ambitious three year financial targets, including a ~5-10% sales CAGR (3-5% organic), operating income growth outpacing revenue growth, an adj. EPS CAGR of 10% or higher, and average FCF conversion of ~110%. We saw supply chain challenges placing these targets at risk. Management, however, has proven adept at managing through supply-included headwinds, and recent performance in Defense Electronics – where supply chain pressures have been most acute – suggest these headwinds are easing. Defense Electronics 2Q23 sales of $198mn / margins of 21.8% exceeded cons. estimates by 20% / ~280bps respectively, helping drive an EPS beat of $2.15 vs. cons. $1.96 and leading management to increase FY23 sales / margin guide by ~$28mn / ~30bps.
On top of supply chain improvement, Defense Department outlays are inflecting as higher budgets flow through, providing an added tailwind to CW’s defense business (for more on outlays, see: Timing Defense Growth). Layering in commercial aerospace demand as OEMs execute on production rate increases and an uptick in nuclear aftermarket activity as decarbonization trends take hold in the US, we see CW well-positioned to deliver against its Pivot to Growth goals. We also now see mid-to-high single digit growth as the new normal for CW (~7.5% CAGR through 2027) given the endmarket demand backdrop, which, along with steady margin expansion, we expect to drive LDD EPS growth through 2027.
Revisiting Growth Assumptions Post 2Q23
The growth story at CW continues, with management raising 2023 topline expansion expectations to ~8% at the midpoint (up ~30 bps from its prior guide). CW is fielding higher demand across all of its core endmarkets, with A&D sales now expected to grow ~10% YoY (vs. a prior 7%) and Commercial sales now expected to grow ~4% (vs. a prior 2%). Company book-to-bill was 1.2x in 2Q23 on higher sales with backlog up ~8% YoY. We are revising our growth outlook for CW and now see sales expanding at an ~8% CAGR through 2025, ~200bps higher than prior estimates. This higher topline forecast drives our EPS expectations to $9.10 from $8.80 in 2023, to $10.15 from $9.80 in 2024, and to $11.35 from $10.10 in 2025.
Raising PT to $229
We are raising our Price Target to $229 from a prior $188. The PT increase is a function of both higher earnings expectations and a ~1.5-turn increase in P/E multiple. We now leverage a ~22.5x P/E multiple on 2025E EPS of $11.35, discounted back one year. We previously placed a ~21x P/E multiple on 2025E EPS of $10.10, discounted back on year. While we recognize that ~22.5x (~20x undiscounted) is a premium to CW’s historical multiple (10-year median of ~17.5x), we note CW traded at a median ~21x over the last multi-year period of above average growth (~7% topline CAGR 2016-2018). Given the stock currently trades at a ~21x forward P/E, our PT does not assume significant multiple expansion. We also note that peer A&D suppliers are trading at a median undiscounted multiple of ~19x 2025E EPS. We see CW’s growth profile and execution track record commanding a premium over this basket as few peers share CW’s earnings growth, cash profile and balance sheet.
EV/EBITDA: A Secondary Look
We leverage EV/EBITDA as a secondary valuation methodology. Our PT of $229 implies a ~15.5x EV/EBITDA multiple (~14x undiscounted) on 2025E EBITDA of ~$693mn. While this multiple also reflects a premium to CW’s historical valuation (10-year median of ~11x), peers are trading at ~13x 2025 EV/EBITDA (undiscounted). We also note recent announced M&A transactions have valued A&D suppliers in the mid-teens range (e.g., LHX-AJRD; HEI-Wencor).
Defense Electronics Momentum
We see the easing of supply chain challenges and an uptick in defense outlays driving momentum at Defense Electronics. On the supply chain front, electronic component shortages in particular have pressured the segment, but the situation is now improving. Lead times are coming down and management is seeing price stabilization in the supply base. Meanwhile, higher defense budgeted funds are starting to flow through, with DoD outlays up ~21% in 2Q23 – the highest growth rate in over 3 years. Pentagon modernization outlays, per DoD’s FY24 request, should see ~11% YoY growth in CY23 and ~12% YoY growth in CY24, which we view as a tailwind to CW’s defense portfolio, particularly for its shorter-cycle business (e.g., tactical communications). We note post-2Q23, management raised its expected 2023 sales growth for Ground Defense to ~15% YoY vs. a prior ~5%, driven by growth in tactical communications equipment.
The Commercial Nuclear Opportunity
Increased emphasis on decarbonization, along with an uptick in interest in energy independence in Eastern Europe provide new tailwinds for CW’s nuclear business, in our view. CW’s aftermarket work, which reflects ~90% of the company’s current commercial nuclear business continues to ramp at a ~MSD rate. Next-generation advanced reactor work, including Gen IV small modular reactors (SMRs), is small today (~$10mn), but CW is positioning for material opportunities as the technology and its reception mature (e.g., X-Energy partnership). CW is also awaiting future AP1000 sales (more on this below), with Poland as the likely lead customer and others in Eastern Europe expected to follow. We estimate a Poland AP1000 contract could be worth ~$672mn in revenue for Curtiss-Wright. Management expects to secure over $1.5bn in reactor coolant pump (RCP) orders from Eastern Europe.
Valuing the AP1000 Potential
Future AP1000 sales provide further upside to CW’s valuation, in our view. CW’s reactor coolant pumps (RCPs) are integrated into the Westinghouse AP1000 nuclear reactor design to prevent nuclear meltdowns. Poland recently selected Westinghouse to build 3 AP1000 reactors (option for 3 more), for which CW expects a reactor coolant pump order in the next 2-4 years. With 4 RCPs per reactor at $28mn per RCP and 6 reactors planned, we estimate the total value of this order to be ~$672mn.
Assuming an order materializes in 2025, we forecast ~$122mn in RCPs revenue in 2027E (modelled off the cadence of revenues from the last AP1000 order in China). CW earns ~23%+ margins on its RCPs, implying ~$28mn in EBIT or ~$0.51 in EPS. Discounted back to 2025 and capitalized at a ~22.5x multiple (assuming Poland is the first of several AP1000 orders), we see an additional ~$11 in equity value attributable to new RCPs sales, or ~$6 in value after factoring in ~50% probability of orders materializing. We note this ~$6 is not factored into our base case PT of $229, but is incorporated in our Bull Case valuation. We see this ~$6 reflecting “free” upside until the next RCP order materializes.
07 Aug 23. Frontgrade Technologies Acquires Aethercomm. Acquisition combines Aethercomm’s active RF power with Frontgrade’s existing antennas and multi-mission processing systems to provide integrated solutions for the most complex space and defense missions
Frontgrade Technologies (“Frontgrade”), a portfolio company of Veritas Capital (“Veritas”) and a leading independent supplier of high-reliability, advanced electronic solutions for space and national security missions, announced today the completion of its acquisition of Aethercomm, a designer and manufacturer of high-power radio frequency (RF) solid state power amplifiers as well as transmit/receive and high-power RF switches.
Since its inception over 60 years ago, Frontgrade and its products have had a presence on all historical major U.S. space platforms. The combined company will now offer complete, integrated and turnkey solutions for aerospace and defense customers by joining Aethercomm’s active RF amplifiers, switches and hardware with Frontgrade’s existing antenna solutions.
“Aethercomm’s RF technologies have an excellent reputation for reliability and are very complementary to Frontgrade’s current portfolio of processing, power and propulsion solutions,” said Mike Elias, President and CEO at Frontgrade. “We look forward to integrating Aethercomm’s business capabilities and highly skilled team with Frontgrade, and we anticipate that the end-to-end range of products we now offer will provide significant advantages to our customers.”
“This strategic combination was made possible through the dedication of our team and enables Aethercomm to benefit from increased scale and investment in R&D and people to better serve our customers,” said Todd Thornton, Aethercomm’s Founder and CEO. “By adding our active RF solutions to the existing Frontgrade platform, we will ensure that companies operating in the aerospace and defense sectors are equipped with an innovative and fully integrated product suite.”
Aethercomm will operate as a division of Frontgrade and be rebranded as Frontgrade Aethercomm. Todd Thornton and the Aethercomm management team will remain with the business, with Thornton serving as General Manager of the new division.
KippsDeSanto acted as exclusive financial advisor to Aethercomm. Gibson, Dunn & Crutcher LLP acted as legal counsel to Veritas and Frontgrade in connection with the transaction. Financial terms of the transaction were not disclosed.
Frontgrade Technologies, a portfolio company of Veritas Capital, is the leading provider of high-reliability (hi-rel), radiation-hardened (rad-hard) solutions for defense, intelligence, commercial, and civil applications. The Company has a complementary and integrated suite of mission-critical electronics. Key products include rad-hard components, mission processing subsystems, custom ASICs, motion control systems, waveguides, antennas, power management solutions, as well as cabling to help you meet your mission critical needs. For more information, visit www.frontgrade.com. (Source: BUSINESS WIRE)
07 Aug 23. Russia’s economy has not shrunk to the point some Western governments and experts predicted following the country’s invasion of Ukraine. Indeed, since Feb. 24, 2022, the more than 11,000 added restrictions aimed at pressuring the Russian government have “not delivered as much hell as originally expected,” according to a report released a year later by the Center for Strategic and International Studies.
But despite the Kremlin’s ability to defy “apocalyptical forecasts,” as the think tank put it, and the government’s growing defense budget, dozens of Russian defense plants are undergoing bankruptcy proceedings or have claims for bankruptcy recognition. Some have received contracts to support Russia’s invasion of Ukraine and are still operating, while others have turned to selling their property.
“One of the main reasons for bankruptcies is the [inconsistency of] state defense orders,” according to Sergey Tolkachev, an economist at the Moscow-based Financial University. “Further, [there] is an irregular allocation of funds for the fulfilled state order.”
For example, imagine a defense plant buys metal to fulfill a state order, but the cost this year is 15% higher than last year. According to government regulations, the state would cover a bit less than half of that additional cost, while the company would have to use its own capital to pay for the remaining amount.
Even worse for the business, the Russian state might delay the delivery of funds, forcing the company to seek a loan to cover costs in real time. The bank providing the loan reviews the company’s application, assesses its financial situation and, finding it risky, sets a high interest rate.
Out of desperation, the defense company enters debt bondage, tightening the fiscal knot around an already struggling business.
‘Nothing here to save’
Russia’s national register of bankruptcy information lists data on dozens of domestic organizations and their debt. One of those is the Radiopribor plant, a producer of maritime electronics in Vladivostok that declared bankruptcy in 2018.
Radiopribor was in debt for 398.2m rubles (U.S. $4.9m). Its production capacity was then leased to Dubna Machine-Building Plant to complete work on a state defense order, which ended in 2021.
Ultimately, Radiopribor’s main property was sold in 2022 — 10 plots of land in total.
Another example is the Sibselmash plant, an artillery ammunition manufacturer in Novosibirsk, which declared bankruptcy in 2012 with a debt of more than 1bn rubles. In 2021, the plant’s main complex was sold to the company Merkas. Despite the fact that Merkas pledged to maintain the defense production lines, it ended up demolishing its workshops and buildings throughout 2022.
And the Kalinin plant, which makes fuses as well as components for satellites in St. Petersburg, declared bankruptcy in 2021. The plant’s creditors claimed about 1.047bn rubles. In May 2023, a plot of land once owned by the plant was sold for 300.3m rubles.
Several bankruptcy procedures are also taking place, according to Russia’s national register of bankruptcy information. Examples include the Moscow-based Elektropribor plant, which produces navigation instruments and has a debt of 42m rubles.
There is also the Podolsk Electromechanical Plant, which makes components for anti-aircraft and ballistic missile systems and has a debt of 1.3 bn rubles. And the Yekaterinburg-based Radio Equipment Plant, which makes radar components, has a debt of 741m rubles.
Sergey Gebel, the chief executive of the Russia-based Gebel and Partners law firm, said some defense industry enterprises, following years of downtime and debt, are unable to build weapons.
For those organizations, “there is simply nothing here to save,” he told Defense News.
Meanwhile, some enterprises are trying to solve their financial problems by selling all or part of their ownership shares. One example is the Kazan Synthetic Rubber Plant, whose products are used in the creation of sponge, which goes toward making aircraft parts.
In 2019, with a debt of 5.3bn rubles, Kazan was declared bankrupt. However, it quickly found an investor in Industrial Technologies, which plans to invest 4.2bn rubles in the plant by 2025. Production has already been restored.
United Shipbuilding Corp., which produces military vessels, has proposed that 51% of shares of the Baltic Plant, which constructs surface ships under its purview, be transferred to Rosatom State Corp. The Baltic Plant is experiencing economic problems and is under external management; 90% of its contracts come from Rosatom. United Shipbuilding Corp. hopes that, with Rosatom’s help, the plant will become profitable.
In 2021, the Sverdlov Plant, which produces explosives, sought to be declared bankrupt. At the end of 2022, an order was issued to transfer the plant from the Ministry of Industry and Trade under the control of the state-owned conglomerate Rostec and, accordingly, implement the plant’s corporatization, which can take up to five years.
In addition, 12 plants that repair vehicles and fall under the purview of the company Spetsremont have gone bankrupt. The parent organization has been bankrupt since February 2020. In total, Spetsremont oversees more than 30 repair plants.
In a response to a report on the financial situation at Spetsremont, Rostec noted that around the 2017-2018 time frame, when the process of transferring Spetsremont from the Russian Defence Ministry to Rostec took place, 90% of the holding’s repair plants were experiencing fiscal troubles.
Now the government is creating two new armored car factories in the Moscow and Rostov regions.
Siemon Wezeman, a senior researcher with the Stockholm International Peace Research Institute think tank, said these investments can work out well for the state.
“New plants are a high investment, but in the end they are more effective producers and immediately able to outcompete the companies” that produce older equipment and are in debt, he told Defense News.
Years of sanctions that precede Russia’s full-scale attack on Ukraine in February 2022 may have contributed to the current state of Russia’s defense-industrial base.
“Sanctions — also those from before 2022 — may have made the situation worse, especially as they can lead to delays in delivery or the need to find more costly substitutes for the sanctioned parts. This increases costs for contracts where a fixed price was already agreed, or delays payment for contracted goods. Both cost increases need to be covered by the companies from their own pocket,” Wezeman said.
Members of the Committee on Economic Policy and Property within the Legislative Assembly of the Primorye Territory concluded the shipbuilder Vostochnaya Verf was a victim of sanctions. United Shipbuilding Corp. showed interest in buying the plant, but no decision has been made.
Tom Waldwyn, a research associate for defense procurement with the London-based International Institute for Strategic Studies, told Defense News any additional sanctions on Russian companies will negatively impact both defense and civilian sales in terms of product exports and the import of key subcomponents.
“As Russia also experiences high inflation and a brain drain, the Russian defense industry faces a difficult future despite massive increases in defense spending in 2022 and 2023,” he said.
From 2013 (the year before Russia annexed Crimea from Ukraine) to 2022, Russia increased its defense budget by 15%, according to the Stockholm International Peace Research Institute.
And from 2021 to 2022, its military spending grew by 9.2% to $86.4bn — the equivalent of 4.1% of Russia’s gross domestic product, the Swedish think tank reported.
In realizing the need to bolster the production and repair of equipment during the ongoing war, the Russian government has tried to simplify contractual procedures. It has shortened the terms of state orders and improved the process of agreeing to costs and contractual requirements. The state has also taken steps to provide advance payments to defense enterprises.
In addition, banks have started lowering interest rates and increasing the amount of a possible loan for defense companies. In July 2022, the preferential rate was reduced to 3%, and the maximum loan amount was increased to 3bn rubles.
And on April 1, 2022, a moratorium on bankruptcy was introduced for six months to give businesses additional time to negotiate with creditors and adapt to new circumstances, such as sanctions and the disruption of supply chains. The moratorium was lifted six months later.
Since then, 10 more Russian shipbuilding and naval repair enterprises have received bankruptcy claims from creditors or filed for insolvency themselves. Among them are both small factories and large companies, including Vostochnaya Verf; the Khabarovsk Shipbuilding Plant; and the 10th Labor Ship Repair Plant, a subsidiary of United Shipbuilding Corp.
At the same time, six more shipyards were declared bankrupt and have moved into bankruptcy proceedings.
In September 2022, Russian President Vladimir Putin amended the criminal code so that the failure to fulfill obligations in defense contracts for the state would result in fines of 1m rubles to 3m rubles and/or imprisonment for up to 10 years.
“Under these conditions, declaring bankruptcy can be a way to reduce the risks of prosecution and punishment for [those managing] plants,” according to Pavel Luzin, a senior fellow at the Center for European Policy Analysis think tank.
“In addition, this is a signal to the government about the need for cash injections,” he told Defense News.
Indeed, government support and increased spending on the Army during the 2022-2023 time frame helped some bankrupt enterprises continue operating.
The Motovilikha Plants holding, part of NPO Splav, was declared bankrupt in 2018. This is the only full-cycle enterprise in Russia that produces multiple-launch rocket systems, and it has its own foundry. The company owes more than 17.6bn rubles. Some of the holding’s enterprises have been sold off.
But in 2021, it received a defense order from the state worth 40 bn rubles that is to last until 2027. In 2022, the plant delivered to the Army combat vehicles with the Tornado-G and Tornado-S multiple-launch rocket systems. That same year, the plant’s mechanical and assembly production lines increased its shifts to three, and the plant began hiring.
In March 2023, the Perm region’s prosecutor’s office challenged the company’s bankruptcy status. Regional authorities have said they anticipate Rostec and the federal Ministry of Industry and Trade will invest 20 bn rubles to help modernize the plant.
Currently, the Remdiesel plant — Russia’s newest manufacturer of special, purpose-built equipment — is applying to purchase the Motovilikha Plants holding.
“The purchase of this plant is attractive because of the large state defense order,” Ivan Kostin, a former director of Motovilikha, told the Kommersant daily.
Another plant with a state order is the Miass Machine–Building Plant, which produces components for ballistic missiles as well as control equipment for missile systems. It has a debt of 2.38bn rubles, and was declared bankrupt in 2022. The bankruptcy trustee, Anatoly Selishchev, was going to sell the property, but in May 2023 the creditors refused to sell. As the plant’s management reported, work will increase in 2023, the contracting rate will be 15% higher than in 2022 and the plant will hire new employees.
But the state defense order will not save the business, according to Alexander Abramov, an economist specializing in bankruptcy, who described such contracts as “an obligation” rather than “a lifeline.”
“It is impossible to refuse a defense order contract,” Abramov told Defense News.
Furthermore, if a company does not participate in the development of a product, but only produces it, the business typically won’t received the majority of funds allocated for the technology, according to Sergey Smyslov, an independent defense industry expert and an engineer by trade.
“This became possible due to the fact that, since the Soviet era, many enterprises have [duplicative] capacities. And when [the state had an option] to produce a product at a functioning plant, ‘A,’ or a half-empty plant, ‘B,’ a fully equipped plant was chosen,” Smyslov told Defense News.
After the bankruptcy moratorium ended in October 2022, State Duma Deputy Sergei Mironov petitioned Prime Minister Mikhail Mishustin and chief military prosecutor Valeri Petrov to help stop insolvency among defense enterprises.
As a result of the petition, Mironov told Defense News, “some of them [defense enterprises] were reorganized — restructured to prevent the closure and termination of production.”
Other deputies of the State Duma — the lower chamber of Russia’s legislature — proposed the assets of bankrupt companies be transferred to enterprises that successfully fulfill state defense orders during military mobilization and wartime.
“In the execution of [a] defense order, there is a large pyramid of cooperation. Even if small enterprises — or enterprises that are [in the third or fourth tier] of suppliers and only indirectly relate to the state defense order — fall under the bankruptcy procedure, then a huge risk is created for the disruption of the state budget,” Vladimir Gutenev, who leads the Duma Committee on Industry and Trade, warned in October 2022.
The Russian government created a plan to return state-owned enterprises to the private sector during the 2022-2024 time frame. None of the companies under consideration are undergoing bankruptcy proceedings, but most either had claims from creditors for bankruptcy or are financially unstable.
The effort includes more than a dozen defense plants. For example, 20% of shares of the Kartsev Research Institute of Computer Complexes, which develops hardware and software, including the Shershen drone, are for sale by the state.
Also on the list are the Simbirsk Cartridge Factory, the Scientific-Technical Center for Electronic Warfare, the Zvezda electromechanical plant, the Space Communications Co., and several ship repair plants.
Some have already tried selling themselves in whole or in part, but haven’t found buyers. That’s likely because only Russian organizations without foreign shareholders, that have permits to work with classified information and that have licenses to make weapons can purchase the property of defense enterprises. Often buyers need to commit to maintaining production and fulfilling existing state defense contracts.
The government’s plan may backfire, according to Wezeman, who warned any temporary support state-owned enterprises received from the government could help them outperform companies that have had to survive on their own.
“Those companies may in their turn fail,” he said. “However, a level of corruption may also play a role: Orders may go to companies that have ‘friends,’ and those without will have to solve their problems without much support.” (Source: glstrade.com/Defense News)
07 Aug 23. German space company OHB announces KKR takeover bid. OHB (OHBG.DE) on Monday announced a voluntary public tender offer by US investment company KKR for all outstanding shares in the German space technology company, with the Fuchs family to retain permanent control of the company. The deal foresees an offer price of 44 euros ($48.34) per share. OHB said its executive and supervisory boards supported the offer and intended to recommend that shareholders accept it.
The Fuchs family would remain majority shareholders, with Marco Fuchs as CEO and the existing management team to continue leading the company.
“Strengthening OHB as an independent, European company and partner for governments and institutions strengthens European security and sovereignty in space,” Fuchs said in a statement, adding that the deal with KKR as minority investor would support its long-term growth.
As part of the deal, KKR is to invest 30m euros in OHB subsidiary Rocket Factory Augsburg AG through convertible instruments. OHB’s growth strategy will also be supported by way of a 10% capital increase, it said. ($1 = 0.9102 euros) (Source: Reuters)
07 Aug 23. Daimler Truck CFO Jochen Goetz dies in ‘tragic accident.’
Daimler Truck’s (DTGGe.DE) Chief Financial Officer Jochen Goetz has died in a “tragic accident,” the company said on Sunday. Goetz, 52, died on Saturday, a statement said, without giving details of the accident.
Goetz spent his entire professional career, spanning more than 36 years, in the Daimler Group, and was largely responsible for the successful spin-off of Daimler Truck Holding from what is now the Mercedes-Benz Group (MBGn.DE) in December 2021.
“He played a key role in shaping today’s Daimler Truck company and, as CFO, consistently worked to ensure that the company is now more economically successful than ever before,” Chief Executive Martin Daum said.
The company statement said Goetz had been distinguished by “his high level of professionalism as well as his positive, hands-on manner”.
Joe Kaeser, supervisory board head and former Siemens (SIEGn.DE) veteran, said of Goetz: “Just a few days ago, he convincingly and confidently presented the successful financial development of ‘his company’ to the supervisory board.”
Daimler Truck achieved a second quarter record adjusted return on sales of 10.3% for its industrial business, the company said last Tuesday, even as it faced rising monthly costs from inflation.
Goetz, who had held his current position since July, 2021, leaves a wife and two children. (Source: Reuters)
07 Aug 23. UK investors have reduced their holdings in some of Britain’s leading defence companies since Russia’s invasion of Ukraine last year, underlining concerns in Westminster that the sector lacks support in the City of London. Fund managers based in the UK have cut their holdings in companies including BAE Systems and Qinetiq by an average of 9 per cent since the start of 2022, according to data from the London Stock Exchange Group. By contrast, EU investors increased their ownership of British defence groups by 9 per cent while raising exposure to European companies by 4 per cent. The UK government has blamed environmental, social and governance (ESG) guidelines for acting as a barrier to investment in the sector. Britain’s City minister Andrew Griffith and defence procurement minister James Cartlidge have warned that the UK’s long-term security is being put at risk as a result. Kevin Craven, chief executive of ADS Group, the UK industry trade body, said: “Overcautious or misapplied ESG considerations are drastically impacting the ability of the defence sector to secure financial services vital to delivering the UK an advantage.” ADS said it was aware of “strong anecdotal examples” of lenders withdrawing banking facilities or not extending loans to small and medium-sized companies owing to their involvement in defence. Investors are also sensitive about defence companies’ work on nuclear weapons programmes.
But sustainability experts and defence industry figures played down the role of ESG in investment decisions. The same UK investors have increased their exposure in EU-based defence companies Dassault, Thales, Leonardo, Hensoldt, Rheinmetall, Saab, Safran and Airbus by 27 per cent in the same period, according to the LSE figures — suggesting that ESG factors are not acting as a deterrent against the industry globally. Lindsey Stewart, director of investment stewardship research at Morningstar, said persistently low valuations in the London market were a factor. UK equity markets have been trading at a price to earnings multiple of 10, compared with 15 for the rest of Europe and 21 for the US, according to Morningstar. “That issue requires extensive market reform. It won’t be solved by finding fault with investors’ perceived ESG preferences,” he said. EU and US investors may be keener on UK defence shares than British investors because of the pound’s relative weakness, making UK stocks look like “bargains” from abroad, said Michael Field, an equity market strategist at Morningstar. He also said investors on the continent had an “elevated level of awareness” about the war in Ukraine and the need to boost defence spending compared with those in the UK. Some in the defence industry said Russia’s aggression towards Kyiv had helped woo previously cautious investors. “Before the war in Ukraine there were elements of the London market in particular that were shying away from defence under ESG grounds, particularly over things like our involvement in the UK nuclear deterrent,” said Charles Woodburn, chief executive of BAE Systems, last week. “The pendulum is now swinging to a more balanced position of ESG considerations coexisting with the need for defence and security.” BAE’s UK shareholder base has been getting smaller for some time, with a swing of about 20 per cent out of the UK towards North American investors over the past five years. North American investors account for about 42 per cent of the company’s shareholders. Recommended LexBAE Systems PLC BAE Systems: forecasts rise alongside geopolitical tensions Premium content Although ESG investing rules generally bar involvement in weapons aimed at causing indiscriminate harm to civilians, such as cluster bombs or chemical weapons, there are few blanket exclusions on defence companies, according to experts. “The ESG view on defence companies has always been nuanced rather than inherently negative,” said Mirza Baig, global head of ESG investments at Aviva Investors. The Investment Association in the UK said its members were among the “largest shareholders of aerospace and defence companies, with just over £20bn invested” in them. “We recognise and value the importance of the aerospace and defence sector for the security of the UK and its allies,” it said. (Source: FT.com)
04 Aug 23. RTX Corporation Shareholder Alert by Former Louisiana Attorney General: Kahn Swick & Foti, LLC Reminds Investors With Losses in Excess of $100,000 of Lead Plaintiff Deadline in Class Action Lawsuit Against RTX Corporation – RTX. Kahn Swick & Foti, LLC (“KSF”) and KSF partner, former Attorney General of Louisiana, Charles C. Foti, Jr., remind investors that they have until October 2, 2023 to file lead plaintiff applications in a securities class action lawsuit against RTX Corporation f/k/a Raytheon Technologies Corporation (NYSE: RTX), if they purchased the Company’s securities between February 8, 2021 and July 25, 2023, inclusive (the “Class Period”). This action is pending in the United States District Court for the District of Connecticut.
What You May Do
If you purchased securities of RTX and would like to discuss your legal rights and how this case might affect you and your right to recover for your economic loss, you may, without obligation or cost to you, contact KSF Managing Partner Lewis Kahn toll-free at 1-877-515-1850 or via email (), or visit https://www.ksfcounsel.com/cases/nyse-rtx/ to learn more. If you wish to serve as a lead plaintiff in this class action, you must petition the Court by October 2, 2023.
About the Lawsuit
RTX and certain of its executives are charged with failing to disclose material information during the Class Period, violating federal securities laws.
The alleged false and misleading statements and omissions include, but are not limited to, that: (i) the Company’s Geared Turbofan (GTF) engine that powers hundreds of aircraft across many airlines had been affected by a quality control issue from at least 2015-2020; (ii) the quality control issue would require the Company to recall and reinspect many of its GTF airplanes, affecting customers and harming its business; and (iii) as a result, RTX’s statements about its business, operations, and prospects, were materially false and misleading and/or lacked a reasonable basis at all relevant times.
The case is Peneycad v. RTX Corporation f/k/a Raytheon Technologies Corporation, et al., No. 23-cv-01035.
About Kahn Swick & Foti, LLC
KSF, whose partners include former Louisiana Attorney General Charles C. Foti, Jr., is one of the nation’s premier boutique securities litigation law firms. KSF serves a variety of clients – including public institutional investors, hedge funds, money managers and retail investors – in seeking recoveries for investment losses emanating from corporate fraud or malfeasance by publicly traded companies. KSF has offices in New York, California, Louisiana and New Jersey. (Source: BUSINESS WIRE)
04 Aug 23. inTEST Reports Record Revenue of $32.6m for the 2023 Second Quarter with Net Earnings Growth of 32% Year-over-Year.
- Continued execution of 5-Point Strategy generated 10% revenue growth year-over-year achieving upper end of guidance range
- Demonstrated strong operating leverage with 22.6% operating income growth year-over-year to $3.3m
- Delivered net earnings of $2.8m, up 32.0% for a net margin of 8.6%, and earnings per diluted share of $0.24, up 20% over prior-year period
- Adjusted EBITDA (Non-GAAP)(1) was $4.m and adjusted EBITDA margin (Non-GAAP)(1) was 14.7%
- Completed $20m At-The-Market Offering at an Average Sales Price of $21.70 per Share
- Updating full year revenue guidance to $127m to $131m
inTEST Corporation (NYSE American: INTT), a global supplier of innovative test and process technology solutions for use in manufacturing and testing in key target markets which include automotive/EV, defense/aerospace, industrial, life sciences, security, and semiconductor (“semi”), today announced financial results for the quarter ended June 30, 2023.
Nick Grant, President and CEO, commented, “The inTEST team continues to deliver to plan and we believe our efforts to diversify our markets have served us well. Sales grew year-over-year in the semiconductor markets, particularly in the backend with continued demand for our high quality, custom manipulators, integrated docking and electrical interface solutions for mixed-signal and analog integrated circuit production testing. There was also strong demand for our thermal test solutions for the defense/aerospace markets, our industrial grade image capture technology for the security industry, and a breadth of our solutions for other markets. Encouragingly, orders were up 2% sequentially driven by demand from our industrial, defense/aerospace, automotive/EV, security and other markets. This included new orders for our Thermonics chillers for testing, development and production of high-powered traction inverters used in EVs, as well as the growing recognition of our induction heating solutions as an environmentally preferred technology in many industrial applications.”
He continued, “We are actively executing on our initiatives to expand our market presence, develop new products, and identify opportunities for increased aftermarket support. We are building the talent pool and culture to achieve our goals while also continuing to pursue acquisition targets to enhance our product offerings, expand our addressable markets and deepen our presence in our served industries.”
(1) Adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures. Further information can be found under “Non-GAAP Financial Measures.” See also the reconciliations of GAAP financial measures to non-GAAP financial measures that accompany this press release.
Second Quarter 2023 Review
Compared with the prior-year period, revenue increased $3.0m, or 10%. Revenue related to the defense/aerospace industry more than doubled to $3.9m from higher sales of thermal test chambers and flying probe test sets. Semiconductor industry revenue of $18.8m was up 15% from strong sales for both front-end applications of induction heating solutions for silicon carbide and epitaxy crystal growth and traditional back-end semi testing applications.
Compared with the first quarter of 2023, growth in semi market revenue was primarily driven by higher front-end related sales, which increased 27%. Defense/aerospace revenue was up 37% driven by greater sales of thermal test chambers. Sales to industrial, automotive/EV, life sciences and security experienced modest declines sequentially primarily reflecting the variability in timing of customer needs from quarter to quarter.
Gross margin expanded 40 basis points compared with the prior-year period. On a sequential basis, it contracted 100 basis points and was in line with guidance. Gross margin in the first quarter of 2023 benefitted from favorable product mix.
Operating expenses were up $0.9m over the prior-year period, reflecting annual merit increases and continued investments in engineering, sales and marketing. Nonetheless, second quarter operating expenses as a percent of revenue improved to 35.9% compared with 36.6% in last year’s second quarter, which we believe demonstrates continued operating leverage improvement as sales grow. This operating leverage improvement contributed to the 22.6% growth in operating income compared with last year’s second quarter.
Balance Sheet and Cash Flow Review
Cash and cash equivalents at the end of the reported period were $37.4m. This was an increase of $22.0m over the trailing first quarter of 2023, reflecting $2.9m in cash generated by operations combined with
$19.2m in net proceeds from the recently completed At-The-Market (“ATM”) equity offering. At quarter end, total debt was $14.1m, down $1.0m from March 31, 2023. For the first half of 2023, the Company generated $5.3m in cash from operations assisted by improving working capital efficiencies as supply chains normalized, enabling inventory improvements. Capital expenditures were $375,000 in the 2023 second quarter, similar to last year’s second quarter. For the first six months, capital expenditures were $709,000, also in line with last year. (Source: BUSINESS WIRE)
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.