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19 Oct 23. Independent Directors of Terran Orbital Publish Letter to Shareholders. Today, the independent directors of the Board of Directors of Terran Orbital Corporation (NYSE: LLAP) (“Terran Orbital” or the “Company”) issued an open letter to the Company’s shareholders. The Board’s letter is in response to an October 11, 2023 letter sent by a shareholder group led by Sophis Investments LLC (the “Sophis Letter”). The Sophis Letter advocated certain corporate governance changes, including replacing the Company’s Chairman and CEO, and recommended that the Board undertake a strategic review. The Board has considered the recommendations in the Sophis Letter and other more detailed recommendations previously presented to management by Sophis Investments. The full text of the Board’s letter follows.
To Fellow Shareholders of Terran Orbital:
Terran Orbital’s Board of Directors and management team maintains an ongoing dialogue with shareholders and welcomes input about the Company’s strategy, performance and governance. The Board recently received a letter from a shareholder group led by Sophis Investments that made certain recommendations, including related to the status of Marc Bell as CEO and Chairman. Since then, many of Terran Orbital’s constituencies, including shareholders, customers and other business partners, have reached out to the Company for its perspective on the letter.
As the independent directors of Terran Orbital, we are writing to communicate our continued and unqualified support for Marc and the Company’s entire management team. We believe the Company has achieved a number of strategic successes in the last year that demonstrate management’s progress in transforming the Company into an industry leader – from its successful delivery of ten satellite buses as part of the Space Development Agency’s Tranche 0 program, to the launch of its new family of seven standard bus platforms covering a wide array of customer solutions, to its Responsive Space Initiative that commits to deliver standard buses to customers within 30 days of order and complete satellite systems with integrated payloads within 60 days.
We are always open to value-creating ideas from shareholders and others. The Board is continuously engaged in reviewing strategic options that are presented to it by management and its advisors. Consequently, we have reviewed the Sophis Investments recommendations related to a strategic assessment and roadmap and have concluded that it does not offer any novel or innovative alternatives that the Company has not already considered and that the Company’s current strategy remains the best course for maximizing long-term shareholder value.
We welcome constructive shareholder feedback and will continue to consider such input while navigating the best path forward for the Company and its shareholders.
On behalf of the entire Board, thank you for your continued support of Terran Orbital.
The Independent Directors of Terran Orbital Corporation:
Stratton Sclavos, Lead Independent Director
About Terran Orbital
Terran Orbital is a leading manufacturer of satellite products primarily serving the aerospace and defense industries. Terran Orbital provides end-to-end satellite solutions by combining satellite design, production, launch planning, mission operations, and on-orbit support to meet the needs of the most demanding military, civil, and commercial customers. Learn more at www.terranorbital.com.
(Source: BUSINESS WIRE)
19 Oct 23. Cohort Review. At first glance, the lower valuation attached to Cohort (CHRT) compared with some of its listed defence peers looks unfair. Since the end of 2019, the company’s shares have lost around 30 per cent of their value during a time when others have made gains as governments across Europe have pumped billions more into defence budgets.
The reason is that Cohort, an acquisitive business that operates six different divisions, has been weighed down by the underperformance of some of its more recent purchases – most notably the Chess optical radar sensors business bought in 2018. That, and a naval communications systems provider bought two years earlier known as EID, contributed to a 9 per cent decline in earnings per share (EPS) in 2021 and an 8 per cent slide in the following year.
Results for the year that ended on 30 April showed a marked improvement, though. Although EID declared another “marginal” trading loss, which was blamed on continued delays to new programmes for the Portuguese Navy, higher overall sales (up by a third) and a better performance from Chess meant adjusted profit grew by 23 per cent and EPS by 17 per cent.
It also seems to be picking up momentum. Its order book stood at £370mn as at 22 September, after the company picked up £90mn of new orders since its year end. This means 93 per cent of expected revenue for the current financial year is covered, but it also has more than £100mn of orders for 2025-26 and beyond, “guaranteeing a solid flow of revenue for a decade”, chief executive Andy Thomis said.
He expects the current higher levels of defence spending “to be maintained in the long term”, not only to counter Russia’s threat in Europe but also to counteract increased threats in the South China Sea.
The company is having to increase its own capital expenditure (capex) to meet demand – Thomis forecasts an average spend of £10mn over each of the next two years before falling back to around £3mn-£4mn in its 2025/26 financial year. As a result, the FactSet consensus forecast is for a slight (2 per cent) decline in EPS for the current financial year, before a 5 per cent increase in 2024/25 and a 7.5 per cent increase in 2025/26. For those prepared to take a long-term view, Cohort’s current share price of around 14 times earnings, in line with its five-year average, doesn’t appear too taxing. Buy. (Source: Investors Chronicle)
17 Oct 23. Rolls-Royce to cut up to 2,500 jobs in latest efficiency drive. Rolls-Royce (RR.L) said on Tuesday it would cut up to 2,500 jobs as its new chief executive seeks to build a more efficient business, the latest boss to attempt to revamp one of Britain’s most prestigious engineering companies.
Over the last decade, Rolls-Royce, whose engines and systems are used on the Airbus A350 and Boeing 787 as well as ships, submarines and in power generation, has been through several restructurings, axing more than 13,000 jobs.
Tufan Erginbilgic, who took over in January, is the latest CEO to try to tackle the company’s inefficiencies. Rolls has long trailed the margins made by General Electric (GE.N), its main competitor in the widebody aircraft sector.
In July, his operational improvements helped prompt a profits upgrade and he said there would be more to come.
On Tuesday the company said it planned to shed up to 2,500 roles out of its total staff of 42,000.
“This is another step on our multi-year transformation journey to build a high performing, competitive, resilient and growing Rolls-Royce,” he said.
The bounceback in long-haul flying this year plus Erginbilgic’s strategy has sent the stock soaring more than 130% this year.
The shares traded up 2% to 217.70 pence in early deals on Tuesday, having recovered from pandemic-lows of around 40 pence in 2020, but they are still some way below a 2019 high of 340 pence.
“Investors are welcoming its cost cutting plans,” said interactive investor head of investment Victoria Scholar, adding that gains this year had helped to reverse some of Rolls-Royce’s “long-term underperformance”.
But one industry executive who declined to be named noted that Rolls would be cutting jobs at a time of rising demand for new more fuel-efficient aircraft.
“It is a brave thing to do when all engine-makers are ramping production,” the executive said.
ENGINEERING TECHNOLOGY, SAFETY TO MERGE
As part of the new streamlining plan, Rolls-Royce said it would merge its engineering technology and safety groups, and as a result chief technology officer (CTO) Grazia Vittadini, who was formerly CTO at Airbus, would leave in April 2024.
The plan would also improve the company’s procurement and supply chain management to cut costs, while finance, legal and human resources functions would be brought together across the group, creating synergies, it added.
Erginbilgic is due to provide investors with further detail on his strategy, including financial targets, at a capital markets day scheduled for Nov. 28.
In its main geographies, Rolls-Royce employs 21,000 people in Britain, 11,000 in Germany and 5,500 in the United States, but the company did not provided details of where the cuts would take place.
Erginbilgic’s predecessor Warren East launched two turnaround plans. One in 2020 aimed at surviving the pandemic which slashed 9,000 jobs, and one in 2018 which made 4,600 redundancies. (Source: Reuters)
17 Oct 23. Skykraft secures $100m for space air traffic management.
Skykraft has secured more than $100m in funding for its space-based air traffic management (ATM) plans.
The firm, which plans to launch hundreds of satellites starting in 2025, has received money from investors including Foresight Australia, Canada’s OPTrust, and Australian deep tech fund Main Sequence.
Skykraft says space-based ATM will allow aircraft to follow more efficient flight paths, reducing operating costs and environmental impacts. It’s already launched 10 satellites this year and plans to roll out further satellites for testing in 2024.
“Skykraft’s space-based ATM capability will deliver on a clearly identified need in the global aviation sector,” said CEO Dr Michael Frater.
“Our partners share our confidence that Skykraft will be the key player providing the next generation of air traffic management services to the world.”
Main Sequence, which was founded by CSIRO, is one of the major backers of Skykraft in this investment round. Martin Duursma, a partner in the firm, said Skykraft is doing “truly groundbreaking work that has the potential to transform aviation communications infrastructure”.
“Their expertise in designing, building and operating satellite constellations enables them to provide global services that replace legacy systems. By reinventing transport infrastructure from the ground up using space-based platforms, they can increase air safety and address the gaps in surveillance and communications over oceans and remote regions.
“As investors focused on how space innovation benefits society on Earth, we at Main Sequence are thrilled to support Skykraft as they develop this new infrastructure to connect aircraft anywhere in the world.”
The first five satellites in Skykraft’s planned 200-strong constellation launched in January, with the project aiming to provide better monitoring of aircraft by covering current gaps in Australia’s air traffic management systems.
Currently, aircraft monitoring systems can only track aircraft up to 400 kilometres away from land and requires the aircraft to be in line of sight of a radar system.
These radar systems, in conjunction with radio communication, can result in long delays for pilots to be provided with approval to change course, something that Frater says will change with Skykraft’s satellites.
“So, if you’re flying from Sydney to Los Angeles and your aircraft hits turbulence, the pilot will now be able to get a clearance to change altitude much more quickly,” he said.
Skykraft earlier this year inked a deal with NZ air traffic control provider Airways New Zealand to collect aircraft movement data and test it against data from Airways covering NZ, the South Pacific and Southern Oceans, and the Tasman Sea. (Source: Space Connect)
17 Oct 23. Lockheed beats estimates on sustained weapons demand amid geopolitical tensions. U.S. defense contractor Lockheed Martin (LMT.N) shares are up 2%after reporting better-than-expected third-quarter revenue and profit on Tuesday, as geopolitical tensions fueled sustained demand for its military equipment.
During pre-market trading Lockheed shares were down as much as 2.1% due to weak sales in the unit that makes the F-35 fighter jet, but reversed in early trading in New York to $450.52 per share, up 2%.
The war in Ukraine has prompted restocking arms and ammunition such as shoulder-fired missiles, artillery and other weaponry, providing U.S. defense companies with lucrative Pentagon contracts.
Lockheed’s weapons, such as the guided multiple launch rocket system and Javelin anti-tank missiles, made in conjunction with defense company RTX (RTX.N), have proven critical to Ukraine’s war efforts.
However, Lockheed is still hindered by pandemic-related labor and supply chain disruptions that continue to affect business lines like the aeronautics business which makes the advanced F-35 fighter jet.
“We are still paced by a few key items,” Lockheed’s Chief Operating Officer Frank St. John told Reuters in an interview, such as “processor assemblies, solid-rocket motors, castings and forgings”, though they have seen progress in this last quarter.
As a result, sales at its aeronautics unit, the largest by size, saw a 5.2% decline in the third quarter.
The company last month cut its full-year F-35 jet delivery target on supplier delays but reaffirmed its 2023 financial goals on Tuesday.
Revenue at the Missiles and Fire Control unit, which makes the High Mobility Artillery Rocket System, was $2.94 bn, up 3.8% from a year earlier.
Bethesda, Maryland-based Lockheed posted a net income of $6.73 per share for the quarter ended Sept. 24, beating estimates of $6.67 per share.
Quarterly net sales rose around 1.78% to $16.88 bn, beating Wall Street estimates of $16.74bn, according to LSEG data. (Source: Reuters)
17 Oct 23. Lockheed Martin Reports Third Quarter 2023 Financial Results.
• Net sales of $16.9bn, an increase of 2% year-over-year
• Net earnings of $1.7bn, or $6.73 per share
• Cash from operations of $2.9bn and free cash flow of $2.5bn
• $2.5bn of cash returned to shareholders through dividends and share repurchases
• Increased share repurchase authority by $6.0bn to a total authorization of $13.0bn
• Increased quarterly dividend to $3.15 per share
• Reaffirms 2023 financial outlook
Lockheed Martin Corporation (NYSE: LMT) today reported third quarter 2023 net sales of $16.9bn, compared to $16.6bn in the third quarter of 2022. Net earnings in the third quarter of 2023 were $1.7bn, or $6.73 per share, compared to $1.8bn, or $6.71 per share, in the third quarter of 2022. Cash from operations was $2.9bn in the third quarter of 2023, compared to $3.1bn in the third quarter of 2022. Free cash flow was $2.5bn in the third quarter of 2023, compared to $2.7bn in the third quarter of 2022.
“Our third quarter results were at or above our expectations across the board, generating $2.5bn of free cash flow, with nearly 100% returned to shareholders through dividends and share repurchases.” said Lockheed Martin Chairman, President and CEO Jim Taiclet. “Our backlog remains robust at $156 bn as both domestic and international orders were strong. Moreover, our 21st Century Security strategy is resulting in new business successes, including the award of the transformational AIR6500 integrated air and missile defense program by the Australian Defence Force, which will serve as a blueprint for future joint all-domain operations worldwide.
Looking ahead, we’ll continue to pursue our strategy of building capacity, efficiency and resilience into our production operations, driving advanced digital technologies to enhance integrated deterrence through collaboration with our customers and tech and aerospace industry partners, and expanding our international business and operations. This strategy is designed to drive growth in our traditional platforms and systems, augmented with digital service revenues over time, which in turn will support our dynamic capital allocation process to reward shareholders.”
16 Oct 23. AnySignal Closes Seed Round to Build Multi-Domain Radio Platform. AnySignal, a leading technology company building a radiofrequency (RF) connectivity and sensing platform for industrial, aerospace and defense markets has closed an oversubscribed $5.0M USD seed round. The funding will be used to execute on a considerable backlog of commercial and government contracts.
Founded in 2022, AnySignal enables its customers to get the data they need from the most remote and high-risk environments with a suite of integrated radio communications products. This data is used to enhance real-time decision-making in climate response strategies, improve national security through enhanced situational awareness, and maximize financial opportunity in the growing space economy. AnySignal’s radio platform – Iris – allows customers to focus on the core of their mission while having world-class communications performance, quickly positioning AnySignal as the de-facto end-to-end connectivity platform for forward-thinking customers.
The AnySignal team consists of experts spanning hardware design, cloud computing, embedded systems, algorithms, commercial product development, and government relations. The founding team includes former employees of SpaceX, Kepler Communications, and GitHub, along with foremost experts in RF platform design.
The oversubscribed seed round attracted venture capital firms Blueyard Capital, First In, Also Capital, Acequia Capital, and Caffeinated Capital. The round also included several strategic angel investors who recognize the enormous potential of AnySignal’s technology in shaping the future of how we utilize and understand the RF domain.
Arthur Karell, Partner at First In, shared his enthusiasm: “AnySignal’s team has been moving incredibly fast. Their tempo from ideation to development, testing, and flying their product with customers is one of the best we’ve seen. Simplifying the comms stack is an extremely valuable proposition, and it shows in their customer relationships. We’re excited to be able to offer our expertise as they grow, particularly as they make further inroads into the national security space.”
The company is led by CEO John Malsbury, formerly of SpaceX where he managed signal processing development across Dragon 2, Starship, Starlink, Starshield, and Falcon 9. Their co-founding team also includes Jeffrey Osborne (former co-founder Kepler Communications) and Ricardo Medina (formerly at DigitalOcean and GitHub).
Mike Annunziata, Managing Parter at Also Capital also added: “Our team has known and worked closely with John for close to a decade, and are thrilled to support him in building AnySignal to become the premier, next generation RF platform. We know this is the best team to make that vision a reality.”
Founded in 2022, AnySignal enables our customers to get the data they need from the most remote and high-risk environments with our suite of integrated radio communications products. Our customers need this data to improve the world – utilizing it to enhance real-time decision-making in climate response strategies, improve national security through enhanced situational awareness, and maximize financial opportunity in the growing space economy. AnySignal’s platform – Iris -empowers customers to focus on the core of their mission while having world-class communications performance, quickly positioning us as the de-facto end-to-end connectivity platform for forward thinking industrial, aerospace, and defense customers. (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.