Sponsored by SPX CommTech (TCI & ECS)
02 Nov 23. Starlink achieves cash-flow breakeven, says SpaceX CEO Musk.
SpaceX CEO Elon Musk said on Thursday the rocket company’s satellite internet unit, Starlink, had achieved cash flow breakeven.
In 2021, Musk said SpaceX would spin off and take Starlink public once its cash flow was reasonably predictable.
Since 2019, Starlink has grown its network in low-Earth orbit to roughly 5,000 satellites, swiftly positioning itself as the world’s largest satellite operator and a rival to satellite internet firms such as Viasat (VSAT.O) and Eutelsat’s newly acquired OneWeb.
“Starlink is also now a majority of all active satellites and will have launched a majority of all satellites cumulatively from Earth by next year,” Musk said in a post on social media platform X on Thursday.
Starlink has been in the spotlight since last year as it helps provide Ukraine with satellite communications key to its war efforts against Russia.
Last month, Musk said Starlink will support communication links in Gaza with “internationally recognized aid organizations” after a telephone and internet blackout isolated people in the Gaza Strip from the world and from each other.
Musk has sought to establish the Starlink business unit as a crucial source of revenue to fund SpaceX’s more capital-intensive projects such as its next-generation Starship, a giant reusable rocket the company intends to fly to the moon for NASA within the next decade.
Starlink posted a more than six-fold surge in revenue last year to $1.4 billion, but fell short of targets set by Musk, the Wall Street Journal reported in September, citing documents.
SpaceX is valued at about $150bn and is one of the most valuable private companies in the world. (Source: Reuters)
02 Nov 23. Bombardier third-quarter results beat on strong private jet demand, shares rise. Canada’s Bombardier (BBDb.TO) reported third-quarter results on Thursday that beat analysts’ estimates, helped by robust demand for its pricier business jets and aftermarket services, sending shares up 9% in morning trade.
Corporate jet makers continue battling supply chain challenges to meet demand from wealthy buyers, following a surge in orders and private flying during the pandemic.
But economic headwinds, and recent signs of flattening demand are raising investor concerns, even as some planemakers aim to produce more jets.
North American flight activity fell 4.2% in September 2023 compared with the same month a year earlier, according to Argus International.
Bombardier Chief Executive Eric Martel told reporters that the company is planning for more deliveries in 2024, without disclosing a specific figure, compared with this year’s target of more than 138 aircraft.
Montreal-based Bombardier is targeting deliveries of 150 jets for 2025.
Bombardier’s order backlog fell to $14.7bn at the end of the third quarter, from $14.9bn at the end of the second quarter.
Bombardier has increased inventories to support higher deliveries compared with 123 in 2022.
“Supply chain is difficult, but we are not using it as an excuse for missing our commitments,” Chief Financial Officer Bart Demosky told an analyst call.
Last month, Cessna business jet maker Textron (TXT.N) raised its annual profit outlook and said it expects higher deliveries in 2024 as supply chain improves.
Bombardier generated $80m in free cash, a metric closely watched by investors, in the third quarter, compared with $52m a year earlier.
Revenue from Bombardier’s aftermarket business, which provides maintenance services, rose 11% to $414m.
Bombardier posted revenue of $1.86bn beating expectations of $1.75bn, as it delivered six more business jets in the quarter than a year earlier.
Excluding items, Bombardier earned 73 cents per share, compared with estimates of 46 cents.
02 Nov 23. Denel still financially distressed – Godongwana. Finance Minister Enoch Godongwana singled out Denel, along with three other State-owned enterprises (SOEs), as being in poor financial health, with the Centurion-headquartered defence and technology group remaining in “financial distress”.
Godongwana yesterday (Wednesday, 1 November) delivered his medium term budget policy statement (MTBPS) in the National Assembly, painting a gloomy picture for SOEs.
On Denel specifically, he is reported by SAnews as saying it remains in financial distress with no annual financial statements submitted since the 2019/20 financial year.
“In March 2023, government disbursed R1.9 bn to Denel through the Special Appropriation Act (2022). The disbursement was proportionate to the entity’s share of proceeds from the sale of non-core assets. Denel used this funding to help settle debt obligations, pay for restructuring and enhance working capital.
“The remaining portion remains ring fenced until other non-core assets are sold. In September 2023, Denel requested that a further R100 m of the ring fenced funds be released to settle the last government guaranteed debt obligation. Following its settlement, Denel has no debt obligations remaining and its government guarantee will be revoked,” the Ministerial address said.
On SOEs generally the Finance Minister told parliamentarians that “since 2019, weak economic growth compounded the poor financial position of most state-owned companies”. Capital investment continued to slow, falling below company budgets, with some large enterprises facing serious liquidity problems.
“Operational inefficiencies, high cost structures and onerous debt obligations continue to hamper profitability and cash flows, intensified by non-payment for services. Many companies are unable to attract funding at favourable rates and terms, and rely on fiscal funding for support.”
SOE debt repayments are expected to reach R121 bn over the medium term.
Denel has been upbeat about its prospects, particularly following a demonstration day at the Alkantpan test range in mid-August where local and foreign delegations viewed its artillery, armoured vehicle, unmanned aircraft and other solutions.
Interim Denel Group CEO Mike Kgobe in September updated the Portfolio Committee on Public Enterprises about progress at the state-owned defence conglomerate. He explained the nearly R1 bn received from the Denel Medical Benefit Trust (DMBT) last year allowed Denel to pay its salary backlog and pay suppliers in order to resume production.
He said Denel is by and large being stabilised through the DMBT funds, and that the additional recent R3.4bn Treasury recapitalisation has also gone a long way towards stabilising the company (55% of the latter, or R1.8bn has been received so far with the remainder to be released once certain conditions are met). These capital injections have enabled Denel to restructure, right-size and reposition towards its new business model that will, amongst others, take it from six divisions to four operating units (Guided Weapons, Land, Air, and Integrated Systems).
Denel requires R2.29bn to complete its turnaround plan, and the cash required will come from the sale of non-core assets and the remainder of recapitalisation funds from National Treasury.
The turnaround plan aims to secure the existing customer base, Kgobe said, adding that over the last several months Denel has had discussions to restart key programmes such as Hoefyster, which has been ‘on pause’ for the past five years. Denel has also been able to restructure activities around the A-Darter missile for the South African Air Force (SAAF) following engagement with Armscor and the SAAF. The Dynamics division, which covers unmanned aerial vehicles and guided weapons, was hit hard by critical skills losses but Kgobe said the guided weapons capability is being restored, and progress has been seen in the last few months.
“We are now moving into the growth phase, and chasing new revenue streams around the world as well as identifying numerous opportunities. There have been requests for proposals internationally and we are busy responding to that,” Kgobe said.
With regard to the sale of non-core assets, Denel is in the process of selling the Denel-owned properties being used by Rheinmetall Denel Munition (RDM) and Hensoldt South Africa back to those companies.
Kgobe told the Public Enterprises committee that Denel is “making significant progress regarding export opportunities,” with a R30 bn opportunity pipeline locally and internationally. The company’s current annual order book is standing on R1.9 bn, with half of that secured.
For the SA National Defence Force, Denel is focussing on several critical issues in the short term, including C-130, Oryx and Rooivalk support; concluding phase 1 development of the Badger infantry fighting vehicle; restarting Project Kamas for A-Darter missiles; and delivering G5 and G6 artillery upgrades for the SA Army. (Source: https://www.defenceweb.co.za/)
02 Nov 23. Curtiss-Wright Corporation (NYSE: CW) reports financial results for the third quarter ended September 30, 2023.
Third Quarter 2023 Highlights:
• Reported sales of $724m, up 15%;
• Reported operating income of $133m, operating margin of 18.3%, and diluted earnings per share (EPS) of $2.51;
• Adjusted operating income of $134m, up 17%;
• Adjusted operating margin of 18.5%, up 30 basis points;
• Adjusted diluted EPS of $2.54, up 23%;
• New orders of $846m, up 3%, reflecting solid Aerospace & Defense (A&D) and Commercial market demand, and book-to-bill of 1.2;
• Backlog of $2.9bn, up 12% year-to-date; and
• Free cash flow (FCF) of $137m, generating 140% Adjusted FCF conversion.
Raised Full-Year 2023 Adjusted Financial Guidance:
• Sales increased to new range of 8% to 10% growth (previously 7% to 9%), reflecting growth in all A&D and Commercial end markets;
• Maintained operating income range of 8% to 11% growth, and operating margin range of 17.4% to 17.6%, up 10 to 30 basis points compared with the prior year;
• Diluted EPS increased to new range of $9.00 to $9.20, up 11% to 13% (previously $8.90 to $9.15); and
• Free cash flow increased to new range of $380 to $400m (previously $370 to $400m) and continues to reflect greater than 110% FCF conversion.
“Curtiss-Wright delivered strong third quarter results, as Adjusted diluted EPS of $2.54 exceeded our expectations driven by sales growth in all of our A&D and Commercial end markets and a better-than-expected operational performance in our Defense Electronics segment,” said Lynn M. Bamford, Chair and CEO of Curtiss-Wright Corporation. “We also demonstrated solid order activity and grew our already strong backlog, yielding a book-to-bill of 1.2x in the quarter, highlighted by record quarterly orders within our Defense Electronics segment and continued solid demand for commercial nuclear products.”
“Based on the strong year-to-date performance, we have increased our full-year sales, operating income, diluted EPS and free cash flow guidance as we continue to successfully execute on our Pivot to Growth strategy and maintain strong alignment with the near- and long-term favorable secular growth trends driving our business.”
Third Quarter 2023 Operating Results
• Sales of $724m increased 15% compared with the prior year;
• Total A&D market sales increased 18%, while total Commercial market sales increased 8%;
• In our A&D markets, we experienced higher sales in the defense markets driven by continued strong demand for our defense electronics products and higher sales of arresting systems equipment, as well as strong growth in OEM sales in the commercial aerospace market, and
• In our Commercial markets, we experienced strong growth in the power & process markets, despite the wind down on the China Direct AP1000 program, and higher sales in the general industrial market; and
• Adjusted operating income of $134m increased 17%, while Adjusted operating margin increased 30 basis points to 18.5%, principally driven by favorable overhead absorption on higher revenues in the Defense Electronics segment.
Third Quarter 2023 Segment Performance
Aerospace & Industrial
• Sales of $220m, up $7m, or 3%;
• Commercial aerospace market revenue increases reflected higher OEM sales of actuation and sensors products, as well as surface treatment services, on narrowbody and widebody platforms;
• Higher general industrial market revenue was principally driven by increased sales of industrial automation products and surface treatment services;
• Lower revenue in the aerospace and ground defense markets reflected the timing of sales for our actuation equipment supporting various programs; and
• Adjusted operating income was $39 m, flat compared with the prior year, while Adjusted operating margin decreased 60 basis points to 17.7%, as favorable absorption on higher sales was offset by unfavorable mix in actuation products.
• Sales of $216m, up $55m, or 34%;
• Higher revenue in the aerospace defense market was primarily driven by increased sales of our embedded computing and flight test instrumentation equipment on various domestic and international platforms;
• Strong revenue growth in the ground defense market principally reflected the robust demand and timing of sales of tactical battlefield communications equipment;
• Higher commercial aerospace market revenue reflected increased OEM sales of avionics and flight test instrumentation equipment on various domestic and international platforms; and
• Adjusted operating income was $56m, up 54% from the prior year, while adjusted operating margin increased 330 basis points to 26.0%, primarily due to favorable absorption on higher A&D revenues.
Naval & Power
• Sales of $288m, up $31m, or 12%;
• Higher revenue in the aerospace defense market was primarily driven by increased sales of our arresting systems equipment supporting various domestic and international customers;
• Naval defense market revenue increases principally reflected higher revenues on Columbia-class and Virginia-class submarines, partially offset by the timing of revenues on the CVN-81 aircraft carrier program;
• Higher power & process market revenues reflected strong growth in industrial valve sales in the process market, and solid growth in the commercial nuclear market supporting both increased maintenance of existing operating reactors as well as increased development on advanced small modular reactors; Those increases were partially offset by lower China Direct AP1000 program revenues; and
• Adjusted operating income was $49m, up 1% from the prior year, while adjusted operating margin decreased 190 basis points to 17.0%, as favorable absorption on higher revenues was offset by unfavorable naval contract adjustments as well as unfavorable mix of products.
Free Cash Flow
• Reported free cash flow of $137m increased $51 m year over year, primarily driven by higher cash earnings due to the timing of defense revenues;
• Adjusted free cash flow of $137m; and
• Capital expenditures were nearly flat compared with the prior year.
New Orders and Backlog
• New orders of $846m increased 3% compared with the prior year and generated an overall book-to-bill of approximately 1.2x, principally driven by strong demand for defense electronics products within our A&D markets, and for nuclear products within our Commercial markets; and
• Backlog of $2.9bn, up 12% from December 31, 2022, reflects higher demand in both our A&D and Commercial markets.
Share Repurchase and Dividends
• During the third quarter, the Company repurchased 63,614 shares of its common stock for approximately $13m; and
• The Company also declared a quarterly dividend of $0.20 a share.
01 Nov 23. Kaman Reports Third Quarter 2023 Results.
Third Quarter 2023 Highlights:
• Revising full year outlook after another strong quarter; Expect higher sales, operating income and adjusted EBITDA led by sustained growth in Engineered Products
• Net sales: $183.0m
• Operating income: $11.9m
• Net earnings: $1.5m
• Adjusted EBITDA*: $25.2m; Adjusted EBITDA margin*: 13.8%
• Diluted earnings per share: $0.05 per share, $0.10 per share adjusted*
Kaman Corp. (NYSE:KAMN) today reported financial results for the third fiscal quarter ended September 29, 2023.
*See the end of this release for an explanation of the Company’s use of Adjusted EBITDA, Adjusted EBITDA margin, Free cash flow and Adjusted diluted earnings per share. See tables 5-11 for reconciliations to the most comparable GAAP measure.
(1)Information for the period September 30, 2022 has been revised from amounts reported in the prior year to correct errors related to the accounting for certain labor costs at one business in the Precision Products segment and the net realizable value on certain portions of the Company’s inventory at another business in the Structures segment. These errors resulted in an understatement of cost of sales, net of tax, of $0.9m and $1.3m, in the three-month and nine-month fiscal periods ended September 30, 2022, respectively. Refer to the Company’s Form 10-Q for the quarter ended September 29, 2023 for further information.
“Our Engineered Products segment continues to demonstrate sustained strong performance with year over year growth in both sales and operating income. This strength provides confidence to raise our sales, operating income and adjusted EBITDA expectations for 2023. In the nine-month period, operating income was $37.1m, net earnings was $6.0m and Adjusted EBITDA was $81.1m. In the quarter, net sales for the Company increased by 6.4% compared to the prior year led by organic growth of 20.9% in our Engineered Products segment. Positive order intake continues to support near-record backlog at this segment, particularly in our PMA aftermarket and bearings businesses,” said Ian K. Walsh, Chairman, President and Chief Executive Officer.
“This quarter we celebrate the one-year anniversary of our Aircraft Wheel and Brake acquisition and are pleased with the meaningful margin expansion that it provides to our Engineered Products segment. As we continue to reshape our portfolio, optimizing our cost structure and eliminating the major sources of variation in performance, we also remain disciplined in our approach to capital allocation, realizing additional opportunities to reduce expense across the organization. We are focused on paying down debt through the remainder of the year and will continue to invest in the Company’s highest-margin assets and opportunities. We are confident in our transformational strategy as we enhance our profitability and position Kaman to deliver sustainable shareholder value,” said Walsh.
Given the strength in our performance at our Engineered Products segment, we are raising our expectations for sales, operating income, Adjusted EBITDA and diluted EPS. Operating Cash Flow and Free Cash Flow expectations remain consistent with our prior outlook as we continue to invest in the future growth of our Engineered Products segment and improvements in our Structures segment.
For further information, the Company’s supplemental presentation relating to the third quarter 2023 results and 2023 outlook will be posted to the Company’s website, as detailed below.
KAMAN BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT
Kaman manages its portfolio through three segments: (1) Engineered Products; (2) Precision Products; and (3) Structures.
Engineered Products – Our Engineered Products segment serves the aerospace and defense, industrial and medical markets providing sophisticated, proprietary aircraft bearings and components; super precision, miniature ball bearings; proprietary spring energized seals, springs and contacts; and wheels, brakes and related hydraulic components for helicopters, fixed-wing and UAV aircraft.
Three months ended September 29, 2023 versus three months ended June 30, 2023 – Operating income decreased $1.5m and Adjusted EBITDA decreased $2.2 m, primarily driven by lower sales and associated gross profit on PMA Aftermarket parts and the timing of sales at Aircraft Wheel and Brake resulting from our preparation for its ERP implementation.
Three months ended September 29, 2023 versus three months ended September 30, 2022 – Operating income increased $14.9m, Adjusted EBITDA increased $16.7 m and margin increased 7.4 percentage points compared to the corresponding period in 2022, primarily due to the contribution from our Aircraft Wheel and Brake acquisition, higher sales and associated gross profit on our commercial and defense bearings products and PMA aftermarket parts and higher gross profit on our seals, springs and contacts.
Precision Products – Our Precision Products segment serves the aerospace and defense markets providing precision safe and arming solutions for missile and bomb systems for the U.S. and allied militaries; subcontract helicopter work; restoration, modification and support of our SH-2G Super Seasprite maritime helicopters; support of our heavy lift K-MAX® manned helicopter, and development of the KARGO UAV unmanned aerial system, a purpose built autonomous medium lift logistics vehicle.
Three months ended September 29, 2023 versus three months ended June 30, 2023 – Operating income and Adjusted EBITDA decreased $1.4m and margin decreased 5.3 percentage points versus the second quarter of 2023. Results declined compared to the prior quarter, driven by lower sales and gross profit on the JPF program and cost growth on legacy fuzing and measuring programs, partially offset by higher sales and associated gross profit from the K-MAX® aftermarket.
Three months ended September 29, 2023 versus three months ended September 30, 2022 – Operating income decreased $8.5m, Adjusted EBITDA decreased $8.6m and margin decreased 22.3 percentage points compared to the corresponding period in 2022, primarily attributable to lower sales and gross profit on the JPF program and cost growth on measuring programs, partially offset by higher sales and associated gross profit from the K-MAX® aftermarket and lower operating expenses at our Orlando facility as we begin to realize the benefits of the cost reduction initiatives announced earlier in the year.
Structures – Our Structures segment serves the aerospace and defense and medical end markets providing sophisticated complex metallic and composite aerostructures for commercial, military and general aviation fixed and rotary wing aircraft, and medical imaging solutions.(1)Information for the period ended September 30, 2022 has been revised from amounts reported in the prior year to correct errors related to the net realizable value on certain portions of the Company’s inventory at a business in the Structures segment. Refer to the Company’s Form 10-Q for the quarter ended September 29, 2023 for further information.
Three months ended September 29, 2023 versus three months ended June 30, 2023 – Operating loss increased $2.9m, Adjusted EBITDA decreased $2.9 m and margin decreased 8.9 percentage points versus the second quarter of 2023, primarily attributable to lower sales and gross profit on the Sikorsky UH-60 BLACK HAWK program and the receipt of an insurance claim settlement in the prior quarter that related to a fire at one of our suppliers in the prior year.
Three months ended September 29, 2023 versus three months ended September 30, 2022 – Operating loss increased $2.4m, Adjusted EBITDA decreased $2.5 m and margin decreased 7.6 percentage points compared to the third quarter of 2022, primarily attributable to lower sales and associated gross profit on the A-10 program and the Sikorsky UH-60 BLACK HAWK program.
Please see the MD&A section of the Company’s Form 10-Q filed with the Securities and Exchange Commission concurrently with the issuance of this release for greater detail on our results and various company programs.
(Source: BUSINESS WIRE)
01 Nov 23. BWX Technologies Reports Third Quarter 2023 Results.
• 3Q23 revenues of $590.0m
• 3Q23 net income of $60.4m, adjusted EBITDA(1) of $106.5m
• 3Q23 diluted GAAP EPS of $0.66, non-GAAP(1) EPS of $0.67
• Multiple agreements signed to progress microreactor development for commercial applications
• Narrowing 2023 non-GAAP(1) EPS guidance to $2.90-$2.95
• Preliminary 2024 guidance for non-GAAP EPS(1) and adjusted EBITDA(1) to grow mid-single-digits
BWX Technologies, Inc. (NYSE: BWXT) (“BWXT”, “we”, “us” or the “Company”) reported third quarter 2023 GAAP net income attributable to BWXT of $60.3m, or diluted earnings per share (EPS) of $0.66, on third quarter revenues of $590.0 m. Third quarter 2023 non-GAAP(1) net income attributable to BWXT was $61.5 m, or non-GAAP(1) diluted EPS of $0.67. Third quarter 2023 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA)(1) was $106.5m. A reconciliation of non-GAAP results are detailed in Exhibit 1.
“We reported solid third quarter 2023 results with double-digit organic revenue growth, good operational performance and significantly improved free cash flow,” said Rex D. Geveden, president and chief executive officer. “Importantly, as expected, the benefits of our streamlined talent acquisition and onboarding processes, especially in our Government Operations segment, manifested through sequential margin improvement in the quarter.”
“2023 has been an exciting year for BWXT with significant program wins and competitive gains in the global security, clean energy and medical markets that we serve,” said Geveden. “Demand in our markets continues to build, and we are postured for growth where our power and propulsion capabilities set us apart from our competition. Further, our intense focus on operational performance and continuous improvement at all levels in the organization is bearing fruit.”
“With better visibility into the remainder of the year, we are narrowing our 2023 guidance range, with a mid-point slightly above our initial guidance. Looking to 2024, the lower naval propulsion volumes we have been expecting from the aircraft carrier ordering cadence gap in 2024 and 2025 will be more than offset by new program growth in Government Operations, expanding opportunities in commercial nuclear power and accelerating growth in nuclear medicine. Accordingly, we forecast mid-single-digit adjusted EBITDA and Non-GAAP EPS growth in 2024, consistent with the strong operational organic growth rates we have seen the past couple years.”
Financial Results Summary
Third quarter revenue increased in both operating segments. The Government Operations increase was driven by higher naval nuclear component production and microreactors volume, partially offset by lower long-lead material procurement. The Commercial Operations increase was driven by an increase in medical sales as well as higher revenue associated with commercial nuclear field services, which was partially offset by lower fuel handling volumes.
Operating Income and Adjusted EBITDA(1)
Third quarter operating income increased in both operating segments. The Government Operations increase was due to higher revenue, but partially offset by costs associated with the increase in staffing levels and associated training and related inefficiencies, as well as mix, due to higher advanced technologies revenue. The Commercial Operations increase was due to improved profitability in medical, and partially offset by less favorable commercial nuclear business mix that was weighted toward refurbishment and life extension field services, compared to a greater mix of outage work in the third quarter of 2022.
Third quarter total adjusted EBITDA(1) increased for the reasons noted above.
Third quarter GAAP and non-GAAP EPS(1) decreased as higher operating income was offset by higher interest expense and lower pension income.
Operating cash flow increased as lower net income was offset by better working capital management. Lower capital expenditures were driven by lower spending on two major growth capital campaigns for U.S. naval nuclear reactors and medical radioisotopes, both of which are nearing completion, partially offset by an increase in capital expenditures for microreactors. (Source: BUSINESS WIRE)
01 Nov 23. VSE Corporation Announces Third Quarter 2023 Results. VSE Corporation (NASDAQ: VSEC, “VSE”, or the “Company”), a leading provider of aftermarket distribution and maintenance, repair and overhaul (“MRO”) services for air and land transportation assets for commercial and government markets, announced today results for the third quarter 2023.
THIRD QUARTER 2023 RESULTS1
(As compared to the Third Quarter 2022; excludes discontinued operations of Federal & Defense segment)
• Total Revenues of $231.4m increased 38.2%
• GAAP Net Income of $12.1m increased 57.3%
• GAAP EPS (Diluted) of $0.80 increased 33.3%
• Adjusted EBITDA of $32.3m increased 55.6%
• Adjusted Net Income of $13.8m increased 74.6%
• Adjusted EPS (Diluted) of $0.92 increased 48.4%
1 From continuing operations
“Third quarter results reflected record financial performance in our Aviation segment and continued progress and disciplined revenue growth and customer diversification in our Fleet segment,” said John Cuomo, President and CEO of VSE Corporation. “We delivered our fourth consecutive quarter of record revenue and profit in our Aviation segment, driven by strong program execution, continued market share gains, expansion of our product lines and service capabilities, and robust end-market activity. In our Fleet segment, we continue to grow and scale our commercial business with contributions from our newly opened Memphis distribution center of excellence, all while continuing to grow and support legacy fleets and customers.”
Steve Griffin, CFO of VSE Corporation, commented, “We made strong progress against our financial and operating plans, which drove improved overall margins and cash flow in the third quarter. Our secondary equity offering in July, along with improved cash generation in the third quarter, allowed us to pay down debt and execute on two inorganic strategic growth initiatives, including a transformational investment with Honeywell. Our pro forma net leverage ratio was 3.7x at the end of the third quarter and is on track to improve to below 3.5x by the end of the year, driven by an acceleration in cash generation and strong operating and earnings performance.”
Acquisition of Honeywell Fuel Control Systems License Agreement
• In October 2023, the Aviation segment announced that it had entered into an asset purchase and perpetual license agreement with Honeywell International Inc. (“Honeywell”) to exclusively manufacture and support certain of Honeywell’s fuel control systems on four key engine platforms.
• The new agreement strengthens and expands VSE Aviation’s existing exclusive distributor relationship and MRO support for these Honeywell fuel control systems.
Acquisition of Desser Aerospace
• On July 3, 2023, VSE completed the acquisition of Desser Holding Company LLC (“Desser Aerospace”), a global aftermarket solutions provider of specialty distribution and MRO services.
• The acquisition expands and diversifies the Company’s Aviation segment product and MRO capabilities and provides a platform for growth into international markets.
• Desser Aerospace is expected to be fully integrated into the Aviation segment systems, processes, and organization by the end of 2024.
Federal & Defense Segment
• In September 2023, VSE announced a mutual agreement to terminate the sale of the Federal and Defense segment to Bernhard Capital Partners Management LP.
• The Company will continue to pursue the near-term divestiture of the Federal and Defense business segment’s assets, and the segment will remain in discontinued operations.
BALANCE SHEET OPTIMIZATION
• In July 2023, VSE completed a follow-on equity offering of 2,846,250 shares of common stock at $48.50 per share (“Offering”), resulting in net cash proceeds of approximately $130m.
• In July 2023, VSE executed a 3-year fixed interest rate swap (“Swap”) that hedges the variability in interest payments on $100m of floating rate debt. As of the end of the third quarter and following the execution of the Swap, VSE has hedged an aggregate of $250m of its variable debt.
THIRD QUARTER SEGMENT RESULTS
Aviation segment revenue increased 48% year-over-year to a record $152.4m in the third quarter 2023. The year-over-year revenue improvement was attributable to strong program execution of new and existing distribution awards, increased MRO activity, the addition of Desser Aerospace, and robust end-market activity. Aviation distribution and repair revenue increased 46% and 54%, respectively, in the third quarter 2023, versus the prior-year period. The Aviation segment reported operating income of $21.0m in the third quarter, compared to $10.0m in the same period of 2022. Segment Adjusted EBITDA increased by 87% in the third quarter to $25.3m, versus $13.6m in the prior-year period. Adjusted EBITDA margin was 16.6%, an increase of approximately 340 basis points versus the prior-year period, driven primarily by favorable price and product mix, along with strong MRO revenue growth.
Fleet segment revenue increased 22% year-over-year to $79.0m in the third quarter 2023. Revenue from commercial customers increased 47% on a year-over-year basis, driven by growth in e-commerce fulfillment and commercial fleet sales. Commercial revenue represented 47% of total Fleet segment revenue in the period, an approximate 800 basis point increase year-over-year. Revenue from the United States Postal Service (USPS) increased approximately 6% on a year-over-year basis, driven by growth of the installed base and increased support of legacy vehicle fleets. The Fleet segment reported operating income of $8.5m in the third quarter, compared to $6.5m in the same period of 2022. Segment Adjusted EBITDA increased 5% year-over-year to $9.2m, and Adjusted EBITDA margin declined approximately 190 basis points to 11.6%, primarily impacted by customer and product mix and under-absorption of fixed costs at the newly launched distribution and e-commerce fulfillment facility.
FINANCIAL RESOURCES AND LIQUIDITY
As of September 30, 2023, the Company had $89m in cash and unused commitment availability under its $350m revolving credit facility maturing in 2025. As of September 30, 2023, VSE had total net debt outstanding of $440m. Pro forma net leverage2 was approximately 3.7 times as of the end of the third quarter.
VSE anticipates the pro forma net leverage ratio to be below 3.5 times by the end of the fourth quarter 2023, following Adjusted EBITDA contribution and accelerated free cash flow generation in the fourth quarter.
In July 2023, the Company amended its credit facility with its lending syndicate in connection with the Desser Aerospace acquisition. The amendment provided for an incremental $90m Term Loan A and a revision of certain financial covenants of the existing facility.
2 Pro forma net leverage trailing-twelve-month Adjusted EBITDA includes contributions from prior acquisitions and the recent purchase of the Honeywell fuel control license
VSE increased its full year 2023 revenue growth and its Adjusted EBITDA margin guidance for its Aviation segment, reaffirmed its revenue growth and Adjusted EBITDA margin guidance for its Fleet segment, and expects positive free cash flow to accelerate in the fourth quarter. The guidance is as follows:
• Aviation segment full year 2023 revenue growth of 30 to 35%, as compared to the prior year
• Aviation segment Adjusted EBITDA margin expected to be toward the higher end of the previously provided guidance range of 14 to 16%
• Fleet segment full year 2023 revenue growth of 20 to 25%, as compared to the prior year
• Fleet segment Adjusted EBITDA margin guidance range of 11 to 13%
• The Company expects free cash flow to accelerate in the fourth quarter 2023 (Source: BUSINESS WIRE)
02 Nov 23. Leonardo DRS Announces Financial Results for Third Quarter 2023.
• Revenue: $703m
• Net Earnings: $47m
• Adjusted EBITDA: $82m
• Diluted EPS: $0.18
• Adjusted Diluted EPS: $0.20
• Bookings: $1.1bn (book-to-bill ratio of 1.5x)
• Backlog: $4.7bn
• Subsequent to Q3, the company was awarded an over $3bn contract for the electric power and propulsion system on the remaining seven Columbia Class submarines
• Updates 2023 guidance to narrow the ranges for revenue and adjusted EBITDA and raise the range for adjusted diluted EPS
Leonardo DRS, Inc. (Nasdaq and TASE: DRS), a leading provider of advanced defense technologies, today reported financial results for the third quarter 2023, which ended September 30, 2023.
“Leonardo DRS delivered another quarter of excellent results as evidenced by our accelerating organic growth, robust bookings and solid profit generation. The strength of our diverse and differentiated technology, customer and program portfolio is clearly reflected in our financial results. Furthermore, our consistent execution throughout the year positions us well to meet our full year commitments,” said Bill Lynn, Chairman and CEO of Leonardo DRS.
Summary Financial Results
Revenue growth accelerated to 11% for the third quarter compared to last year. Strong performance on naval power and computing programs bolstered Q3 revenues. Additionally, quarterly revenue growth benefited from a small inorganic tailwind from RADA which added one point to the year-over-year compare.
Better program execution, favorable mix and higher volumes were all key drivers in the robust year-over-year adjusted EBITDA growth and adjusted EBITDA margin expansion for the third quarter.
Quarterly net earnings and diluted EPS were down compared to last year due to an unfavorable compare. Recall that Q3 2022 net earnings and diluted EPS contained a one-time net (after tax) gain of approximately $270m related to the divestitures of our Global Enterprise Solutions (GES) business and our Advanced Acoustic Concepts Joint Venture.
Strong operational performance coupled with a tax tailwind related to research and development credits drove increases to adjusted net earnings and adjusted diluted EPS in the quarter.
Both diluted EPS and adjusted diluted EPS year-over-year compares continue to reflect a significantly higher share count that resulted from our all stock merger with RADA in November 2022.
Cash Flow and Balance Sheet
Net cash flow generated by operating activities was $36m for the third quarter. The company’s free cash flow generation was $21m in the quarter.
At quarter end, the balance sheet had $47m of cash and $327m of outstanding borrowings under the company’s credit facility, which still leaves the company with sufficient financial capacity to deploy capital for growth, while maintaining a healthy balance sheet.
Bookings and Backlog
The company received $1.1bn in new funded awards during the quarter. Robust bookings were driven by the increased demand for the company’s ground vehicle and dismounted soldier sensing, force protection, tactical communications and naval computing solutions. At quarter end, backlog stood at a record level of $4.7bn, representing a 50% increase year-over-year.
Advanced SensiASC bookings were meaningfully ahead of expectations with clear demand for the company’s ground and dismounted soldier sensing, tactical communications as well as naval and ground network computing technologies. The majority of the year-over-year increase in ASC revenues were attributable to growth on naval and ground network computing as well as tactical communications programs. Net inorganic contribution from RADA was incremental to the solid organic performance of the segment. Adjusted EBITDA and adjusted EBITDA margin for the third quarter increased compared to last year as a result of better program execution, favorable mix and slightly higher volume.
Integrated Mission Systems (“IMS”) Segment
IMS bookings were propelled by demand for our force protection solutions. Strong execution in our naval power and propulsion business drove the revenue growth for the segment. Additionally, the increases in adjusted EBITDA and adjusted EBITDA margin for the third quarter were driven by better program execution and higher volume coming particularly from our Columbia Class and other naval power programs.
03 Nov 23. HII records revenue high as defence sector sentiment dips.
Record numbers for HII are attributed to higher volumes, favourable changes in contract estimates, and improved performance, the company revealed.
US naval sector prime HII has revealed record Q3 revenue of $2.8bn, up 7.2% compared to Q3 2022, with new contract awards of $5.4bn resulting in a contract value backlog of approximately $49bn.
Publishing its Q3 report on 2 November, HII revealed net earnings of $148m or $3.70 diluted earnings per share, and a Q3 free cash flow of $293m. Revenue growth was attributed to the company’s Mission Technologies and Ingalls Shipbuilding segments.
Segment operating income in Q3 2023 was $187m with operating margin of 6.6%, compared to $166m and 6.3%, respectively, in the third quarter of 2022. HII stated that increases were primarily driven by “higher volumes, favourable changes in contract estimates, and improved performance” which was partially offset by “contract incentives on the Columbia-class (SSBN 826) submarine programme” in the prior year period.
Net earnings in Q3 were $148m, compared to $138m in the third quarter of 2022. Diluted earnings per share in the quarter was $3.70, compared to $3.44 in the third quarter of 2022.
On 1 August 2023, the US Department of Defense (DoD) awarded a series to contract to produce new DDG-51 Arleigh Burke-class guided-missile destroyers, with HII contracted for the supply of six vessels – one in 2023, one in 2024, two in 2025, one in 2026, and another in 2027.
Defence sector sentiment dips
However, across the defence sector as a whole, the global aerospace, defence and security industry experienced a 1% drop in company filings sentiment in Q3 2023 compared with the previous quarter, according to GlobalData’s analysis of over 152 aerospace, defence & security company filings.
Notably, in Q3 2023 the average sentiment dropped from 0.68 to 0.67, indicating a more negative outlook for the industry. This followed an 11% quarter-on-quarter increase in Q2 2023. (Source: army-technology.com)
02 Nov 23. ATI Announces Third Quarter 2023 Results.
Increasing Aerospace & Defense content drives year-over-year earnings growth
• Q3 2023 sales of $1.03 bn
• Q3 2023 net income attributable to ATI of $75.7m, or $0.52 per share
• Aerospace and defense represent 61% of Q3 2023 sales, up from 58% of Q2 2023 sales and up from 51% of Q3 2022 sales
• Non-GAAP information*
• Q3 2023 adjusted net income attributable to ATI of $79.7m, and adjusted EPS of $0.55 per share
• Q3 2023 ATI adjusted EBITDA was $148.1m, or 14.4% of sales
ATI Inc. (NYSE: ATI) reported third quarter 2023 results, with sales of $1.03 bn and net income attributable to ATI of $75.7m, or $0.52 per share.
Adjusted earnings per share* for Q3 2023 was $0.55, and ATI adjusted EBITDA* was $148.1m, or 14.4% of sales. Q3 2023 adjusted results exclude $4.2m in pre-tax charges related to start-up costs and an unplanned outage, partially offset by restructuring credits. Q2 2023 adjusted results exclude $10.6 m in pre-tax charges related to start-up costs, severance-related restructuring charges, asset-write-offs and losses related to closed and sold operations. Q3 2022 adjusted results exclude $19.9m for a litigation reserve, partially offset by restructuring credits of $2.6m.
* Detailed reconciliations of the reported information under accounting principles generally accepted in the United States (U.S. GAAP) to adjusted non-GAAP figures are included in accompanying financial tables.
“ATI’s growth as an aerospace and defense leader continues,” said Robert S. Wetherbee, Board Chair and CEO. “As demand accelerates, the percentage of our revenue attributed to aerospace and defense reached 61%, up 10 percentage points over last year, and rapidly progressing toward our goal of 65%,” he said.
“Results in our HPMC segment were driven by growth in aerospace and defense,” said Wetherbee. “Third quarter segment sales and EBITDA margins were up significantly versus the prior year. Sequential growth was modest due to normal business seasonality. Commercial airframe product sales in the segment more than doubled compared to the prior year, as the aerospace ramp continues.”
Operating Results by Segment
High Performance Materials & Components (HPMC)
• HPMC’s third quarter 2023 sales increased $12m, or 2%, compared to the second quarter 2023, primarily driven by growth in the commercial airframe market. Overall aerospace and defense sales were 85% of total HPMC sales in the third quarter 2023. Third quarter 2023 sales improved 18% compared to the third quarter 2022, with total aerospace and defense related sales increasing 22% compared to the prior year period.
• HPMC segment EBITDA was $115.7m, or 21.5% of sales. Increased volumes on higher-margin next-generation commercial aerospace platforms continue to drive strong incremental margins.
Advanced Alloys & Solutions (AA&S)
• AA&S third quarter 2023 sales decreased by $33m and $88m compared to the second quarter 2023 and third quarter 2022, respectively. Lower sales are primarily due to recessionary softness in general industrial end markets, as well as planned outages. Partially offsetting, sales of commercial aerospace products increased by 7% compared to the prior year period.
• AA&S segment EBITDA was $50.4m, or 10.4% of sales. Increases in titanium mill products deliveries were offset by reduced deliveries of nickel-based alloys and precision rolled strip products in the third quarter 2023. Third quarter 2023 results reflect the previously communicated seasonal outages. Year-over-year EBITDA was negatively impacted by increased pension expense in 2023.
Corporate Items and Cash
• Restructuring and other charges:
• Third quarter 2023: $4.2m includes pre-tax charges of $2.8m for start-up costs and $1.9m of costs associated with an unplanned outage at our Lockport, NY melt facility, partially offset by $0.5m of restructuring credits.
• Second quarter 2023: $9.2m includes pre-tax charges of $4.5m for start-up costs, $2.7m of severance-related restructuring charges, and $2.8m primarily for asset write-offs related to the closure of our Robinson, PA operation, of which $0.8 m was accelerated depreciation on fixed assets.
• Third quarter 2022: $17.3m includes a pre-tax charge of $19.9m in connection with the settlement of litigation related to the 2016 indefinite idling of the Rowley, UT titanium sponge production facility, partially offset by restructuring credits of $2.6m related to the reversals of previously recognized reserves, due to lower than expected severance-related costs.
• Corporate expenses in the third quarter 2023 were $12.9m, compared to $18.1 m in the second quarter 2023, and $14.2m in the prior year quarter. Third quarter 2023 corporate expenses, compared to the second quarter 2023, decreased in part due to lower incentive compensation.
• Closed operations and other expense was $5.1m in the third quarter 2023, compared to $3.4 m in the second quarter 2023, and $6.3 m in the prior year quarter. Higher costs in the third quarter 2023, compared to the second quarter 2023, were associated with reduced foreign currency gains.
• Third quarter 2023 results include a $4.9m income tax provision, compared to $3.7m in the second quarter 2023, and $3.0m in the prior year quarter. Tax expense in all periods is mainly attributable to the Company’s foreign operations. ATI maintains a valuation allowance on its U.S. deferred tax assets and does not expect to pay any significant U.S. federal or state income taxes until 2025 due to net operating loss carryforwards.
• For the third quarter of 2023, cash used in operating activities was $114.2m, and cash used in operating activities was $331.3m on a year-to-date basis. The cash used in operating activities includes voluntary pension contributions of $222 m in the third quarter and $272m on a year-to-date basis. Reduced accounts receivable and inventory levels were partially offset by lower accounts payable in the third quarter. Third quarter 2023 managed working capital as a percent of sales was 39.9%. Capital expenditures for the first nine months of 2023 were $147.3m.
• Cash on hand at September 30, 2023 was $433m, and available additional liquidity under the asset-based lending (ABL) credit facility was approximately $550m. As of September 30, 2023, we had no outstanding borrowings on the ABL credit facility. ATI has no significant debt maturities until 2025.
• In August 2023, the company issued $425 m of 7.25% senior unsecured notes due in 2030, and used a portion of the proceeds, $222m, to fund the qualified defined benefit pension plan as part of our long-term pension derisking strategy.
• In the third quarter 2023, the company repurchased $45m of common stock at an average price of $43.93, retiring approximately 1.0 m shares. As of September 30, 2023, total share repurchase authorization available was $30 m.
• In October 2023, the company purchased group annuity contracts to transfer approximately 85% of the defined benefit pension obligations and related assets to an insurance company for approximately 8,200 plan participants. This transaction had no impact on the amount, timing or form of the retirement benefit payments to the affected retirees and beneficiaries.
“We continue to drive increased margins to generate cash and deploy it effectively. As new long-term agreements accelerate, we are working proactively with our customers to meet their production needs,” said Wetherbee. “We expect sequential and year-over-year ATI earnings growth in the fourth quarter, led by our HPMC segment.”
HPMC EBITDA margins in the fourth quarter are expected to continue to improve year-over-year, in line with our prior guidance. Backlogs remain strong across aerospace and defense. We continue to optimize operations and resolve bottlenecks that come with growing demand. Continued process optimization will favorably impact future growth and performance.
In the AA&S segment, the Company assumes stable performance in the fourth quarter 2023, due to sustained growth in the aerospace and defense related markets. These benefits will help offset certain recessionary forces impacting this segment.
The Company expects to generate significant cash from operations in the fourth quarter primarily due to improvements in managed working capital as we make progress on our ongoing strategic growth projects. (Source: PR Newswire)
02 Nov 23. Ball Reports Third Quarter 2023 Results.
• U.S. GAAP diluted earnings per share of 64 cents vs. $1.24 in 2022; prior year includes the gain on Russian business disposal
• Comparable diluted earnings per share of 83 cents vs. 75 cents in 2022; results include impact of 2022 Russian business disposal
• Announced agreement to sell aerospace business to BAE Systems for $5.6bn; regulatory approval process underway and use of net proceeds are intended to accelerate deleveraging, increase share repurchases and drive significant EVA accretion
• Sequential quarterly improvement in 2023 global beverage can shipments; 3Q shipments down 3% versus 2Q shipments down 5%, excluding impact of 2022 Russian business disposal
• Reiterate ability to achieve $200m of net inflation recovery and at least $150m of cost savings in 2023
• In 2023, potential to achieve low- to mid-single digit comparable diluted earnings per share growth, inclusive of divested Russian operating earnings headwind
• Reiterate ability to generate approximately $750m of free cash flow, grow comparable diluted earnings per share and EVA, reduce leverage and return value to shareholders in 2023
Ball Corporation (NYSE: BALL) today reported, on a U.S. GAAP basis, third quarter 2023 net earnings attributable to the corporation of $203 m (including net after-tax charges of $60m, or 19 cents per diluted share for business consolidation and other non-comparable items) or diluted earnings per share of 64 cents, on sales of $3.57bn, compared to net earnings attributable to the corporation of $392m (including a net after-tax gain of $154m, or 49 cents per diluted share for business consolidation and other non-comparable items, including the gain on disposal for the Russian beverage packaging operations) or diluted earnings per share of $1.24, on sales of $3.95bn in 2022. Results for the first nine months of 2023 were net earnings attributable to the corporation of $553m, or $1.74 per diluted share, on sales of $10.63bn compared to $664m, or $2.07 per diluted share, on sales of $11.80bn for the first nine months of 2022.
Ball’s third quarter and year-to-date 2023 comparable earnings per diluted share were 83 cents and $2.13, respectively, versus third quarter and year-to-date 2022 comparable earnings per diluted share of 75 cents and $2.34, respectively.
“We delivered strong third quarter results. Improved operational efficiencies across our global aluminum packaging operations, inflationary cost recovery and benefits of cost-out actions offset higher interest costs and challenging year-over-year volume comparisons. During the third quarter, the initial phase of sequential improvement in our quarter-over-quarter global beverage can shipments emerged and was driven by double-digit volume growth in our Brazilian beverage can business. In North America, we further optimized our plant network to ensure proper supply/demand balance while continuing to enable access to high-quality, innovative aluminum beverage cans and bottles at a growth cadence appropriate for current market conditions and our customer mix. These actions and improved plant performance, in addition to deploying the aerospace sale proceeds to significantly reduce our leverage and increase share repurchases, serve as catalysts for higher shareholder returns,” said Daniel W. Fisher, chairman and chief executive officer.
Details of segment comparable operating earnings, business consolidation and other activities, business segment descriptions and other non-comparable items can be found in the notes to the unaudited condensed consolidated financial statements that accompany this news release. References to volume data represent units shipped. Year-over-year global and EMEA segment volume data exclude the impact of the Russian beverage can business sale completed in third quarter of 2022, unless specifically noted otherwise.
On August 17, 2023, the company announced that it reached an agreement to sell its aerospace business to BAE Systems for gross proceeds of $5.6bn in cash. The transaction is subject to regulatory approvals and certain closing conditions and adjustments, therefore, prospective estimates for certain financial metrics provided in today’s release exclude any potential impact of the aerospace business sale.
Beverage Packaging, North and Central America
Beverage packaging, North and Central America, segment comparable operating earnings for third quarter 2023 were $196m on sales of $1.54bn compared to $205m on sales of $1.80bn during the same period in 2022. Third quarter sales reflect lower shipments and the contractual pass through of lower aluminum costs favorably offset by incremental inflation recovery.
Third quarter segment comparable operating earnings decreased year-over-year reflecting incremental inflation recovery and improved operational performance being more than offset by 9.9 percent lower volumes driven by our customer exposure to the continuing U.S. mass beer brand disruption.
To maximize returns on invested capital and position our North American plant system for near-term demand trends, the company will permanently cease operations at its leased Kent, Washington, facility, and, in alignment with our customer’s timeline, defer the Concord, North Carolina, beverage can plant project until 2028. In addition, the company has permanently discontinued plans to construct the North Las Vegas beverage can plant. The combination of these actions will ensure supply/demand balance is appropriate for current macroeconomic conditions while also providing our customers access at scale to high-quality, innovative aluminum cans and bottles from our agile plant network and, also enable our ability to achieve appropriate returns on capital for the value delivered.
Fixed and variable cost management, continued improvements in operational performance and our ability to leverage the flexibility of our manufacturing network to serve customers experiencing challenges and opportunities are expected to improve year-over-year results, in 2023 and beyond. Aluminum beverage cans continue to outperform other substrates, and we remain dedicated to enabling the greater use of low-carbon, best-value innovative aluminum packaging solutions across our customer mix.
Beverage Packaging, EMEA
Beverage packaging, EMEA, segment comparable operating earnings for third quarter 2023 were $103m on sales of $902m compared to $82m on sales of $1.03 bn during the same period in 2022. Third quarter sales reflect lower year-over-year shipments due to the sale of the Russian operations during the third quarter of 2022 and the contractual pass through of lower aluminum costs. Historical results for the Russian operations will continue to be reflected in beverage packaging, EMEA segment results prior to the sale. See Note 1 “Business Segment Information” for additional information about the sale agreement and historical results.
Third quarter operating earnings reflect favorable price/mix and inflationary cost recovery, partially offset by the year-over-year $14m operating earnings headwind due to the sale of the Russian operations during the third quarter of 2022. Packaging mix shift to aluminum cans supported by ongoing packaging legislation in certain countries continues to be a long-term growth driver despite recent inflation-induced consumer demand weakness, largely in the U.K. Year-over-year third quarter segment volumes decreased approximately 1.9 percent, excluding Russia, and were down 15.2 percent, including Russia.
During 2023, contractual recovery of 2022 inflation and cost savings are anticipated to offset the year-over-year earnings headwind associated with the Russian business sale.
Beverage Packaging, South America
Beverage packaging, South America, segment comparable operating earnings for third quarter 2023 were $61m on sales of $489m compared to $67m on sales of $466 m during the same period in 2022. Year-over-year sales reflect higher volumes, offset by the contractual pass through of lower aluminum costs. Third quarter segment comparable operating earnings decreased year-over-year due to unfavorable regional product mix in Brazil and challenging economic conditions in Argentina.
Segment volumes increased 14.1 percent in the third quarter in preparation for the busy fourth quarter summer selling season. Across South America, multi-year customer initiatives to increase the use of sustainable aluminum packaging are expected to continue, and in Brazil, package mix shift to aluminum is expected to continue to improve exiting 2023.
Aerospace segment comparable operating earnings for third quarter 2023 were $46m on sales of $460m compared to $47m on sales of $477m during the same period in 2022. Backlog remained strong at $2.9bn, and contracts won, but not yet booked into backlog, finished the quarter at $6.2bn.
Third quarter 2023 segment comparable operating earnings reflect solid performance despite short-term, isolated supply chain and U.S. government customer inefficiencies pressuring results. Demand for Ball Aerospace’s services and technologies for mission-critical programs remains strong. During the quarter, backlog and won-not-booked into backlog increased $300 m and $200 m, respectively.
On August 17, 2023, Ball Corporation announced that it reached an agreement to sell its aerospace business to BAE Systems for gross proceeds of $5.6bn in cash (after-tax proceeds of approximately $4.5bn). The transaction is subject to regulatory approvals and customary closing conditions and adjustments. The process to achieve necessary regulatory approvals is underway and when appropriate, a progress announcement will be made.
In addition to undistributed corporate expenses, the results for the company’s global aluminum aerosol business, beverage can manufacturing facilities in India, Saudi Arabia and Myanmar and the company’s aluminum cup business continue to be reported in other non-reportable.
Third quarter 2023 results reflect lower year-over-year undistributed corporate expenses, solid operational performance in the extruded aluminum aerosol business and improved results in the other non-reportable beverage can manufacturing facilities. Volume across the company’s global extruded aluminum bottles and aerosol containers increased 10.4 percent during the quarter. During the quarter, the company’s global aluminum aerosol customers and regional water and personal care brands continued to pursue next generation lightweight sustainable packaging solutions and expand usage of refillable aluminum bottles for certain venues. The company continues to execute incremental extruded aluminum line investments to provide increased production capabilities to serve contracted growing customer demand.
Late in the quarter, a fire occurred at the company’s Verona, Virginia, extruded aluminum slug manufacturing facility. The company is grateful that all employees were evacuated safely from the facility during the incident and that no injuries occurred while extinguishing the blaze. The extruded aluminum aerosol business team continues to support the well-being of our employees impacted by the incident and is also working very hard to try to meet aluminum slug customers’ needs from the company’s remaining global aluminum slug manufacturing facilities.
“Our teams are doing an excellent job of managing costs, working capital and short-term customer demand and supply chain issues. We remain well-positioned to deliver free cash flow of approximately $750m in 2023 and, utilizing existing cash on hand, we are prepared to address our near-term debt maturities in advance of receiving proceeds from the announced aerospace sale. Looking ahead, increased free cash flow generation and approximately $4.5bn of after-tax proceeds from the aerospace sale are intended to be used to immediately reduce debt by approximately $2bn driving leverage to in the range of 3.0x net debt to comparable EBITDA and, approximately $2bn of proceeds are intended to be used to increase return of value to shareholders via share buybacks and dividends moving forward,” said Howard Yu, executive vice president and chief financial officer.
“Maximizing returns, improving free cash conversion, driving organic growth across our customer mix and being good stewards of our capital are our core areas of focus. In addition to unlocking value from the announced sale of our aerospace business, we look forward to driving the broader use of low-carbon, best-value aluminum packaging solutions to preserve our planet and achieve the best outcomes for our stakeholders. Despite higher interest costs, year-to-date demand trends and the Russian business divestment headwind, the potential remains for us to grow comparable diluted earnings per share, improve EVA generation, and increase cash flow to deleverage and return value to shareholders in 2023. Moving forward, our improved operational performance, improved financial flexibility and ability to leverage our well-capitalized and optimized plant network to deliver best-in-class innovative aluminum packaging to our customers will expand shareholder value creation for many years to come,” Fisher said. (Source: PR Newswire)
02 Nov 23. nLIGHT, Inc. Announces Third Quarter 2023 Results. nLIGHT, Inc. (Nasdaq: LASR), a leading provider of high-power semiconductor and fiber lasers used in the industrial, microfabrication, and aerospace and defense markets, today reported financial results for the third quarter of 2023.
“We generated $50.6m of revenue in the third quarter, near the upper end of our expectations. We continued to make progress against our long-term strategic objectives, securing new design wins in additive manufacturing and delivering initial shipments of lasers to a large global EV battery manufacturer,” commented Scott Keeney, nLIGHT’s President and Chief Executive Officer.
“We are also pleased to announce today that we have been awarded additional options on our previously announced HELSI 2 contract, bringing the total value of the award to nLIGHT to $171m, which we expect to execute over the next three years. Today’s announcement, coupled with additional awards for multiple critical programs has significantly increased our revenue pipeline in Directed Energy, which gives us incremental confidence that 2024 will be a strong growth year for nLIGHT.”
Mr. Keeney continued, “While the current demand environment continues to put pressure on our near-term revenue growth expectations and gross margin performance, strong operating expense discipline and working capital management enabled us to increase our cash and marketable securities balance by approximately $10 m during the quarter. Our balance sheet remains strong and we ended the quarter with approximately $112m of cash, cash equivalents and marketable securities with no outstanding debt.”
Third Quarter 2023 Financial Highlights
Revenues of $50.6m for the third quarter of 2023 were down 15.7% compared to $60.1m for the third quarter of 2022. Gross margin was 19.6% for the third quarter of 2023 compared to 22.4% for the third quarter of 2022. GAAP net loss for the third quarter of 2023 was $11.9m, or net loss of $0.26 per diluted share, compared to net loss of $13.0m, or $0.29 per diluted share, for the third quarter of 2022. Non-GAAP net loss for the third quarter of 2023 was $4.9m, or $0.10 per diluted share, compared to non-GAAP net loss of $5.1m, or $0.11 per diluted share, for the third quarter of 2022. Reconciliations of the non-GAAP measures presented here to the most directly comparable GAAP measures have been provided in the tables included at the end of this release.
For the fourth quarter of 2023, nLIGHT expects revenues to be in the range of $45m to $50m. The midpoint of $47.5m includes Laser Products revenue of approximately $35.5m and Advanced Development revenue of approximately $12m. nLIGHT expects overall gross margin to be in the range of 16% to 20%, with Laser Products gross margin in the range of 20% to 25% and Advanced Development gross margin of approximately 7%. nLIGHT expects Adjusted EBITDA to be in the range of $(5)m to $(2)m.
We have not reconciled our outlook for Adjusted EBITDA because unrealized and realized foreign exchange gains and losses cannot be reasonably calculated or predicted nor can the probable significance be determined at this time. Accordingly, a reconciliation is not available without unreasonable effort. (Source: BUSINESS WIRE)
02 Nov 23. KBR, Inc. (NYSE: KBR) today announced its third quarter 2023 financial results.
“Once again, the people of KBR have demonstrated their dedication and talent, contributing to another strong performance this quarter,” said Stuart Bradie, KBR president and CEO. “We delivered 9% organic revenue growth and strong margins, operational outcomes that speak volumes about our team’s ability to deliver results. Our high-end services continue to make valuable contributions to the knowledge economy, playing a key role in KBR’s overall performance. By leveraging our collective expertise and maintaining a focus on innovation, we’re helping to shape the future while ensuring KBR’s sustained growth.”
“Furthermore, as of November 1st, we have retired the remaining convertible debt balance, a significant step that reduces financial uncertainty. This move to retire this maturity in cash is a testament to our strong financial discipline and our focus on creating long-term shareholder value.”
New Business Awards
Backlog and options as of September 29, 2023 totaled $21.8bn. Delivered 1.2x trailing-twelve-months (TTM) book-to-bill1 as of September 29, 2023. Awarded $3.5bn of bookings and options in the quarter.
Sustainable Technology Solutions (STS) delivered 1.3x TTM book-to-bill1 as of September 29, 2023, including awards and achievements in the quarter as follows:
• Awarded a license and engineering design contract by Hanwha Impact Corporation for the world’s first commercial ammonia to hydrogen cracking unit using KBR’s leading H2ACTSM technology in Daesan, Republic of Korea.
• Awarded a blue hydrogen process technology and front-end engineering design contract by EET Hydrogen for its planned HPP2 low-carbon hydrogen facility at HyNet, the UK’s leading industrial decarbonization project.
• Awarded an engineering, procurement and construction management contract by Woodside Energy for Train 1 of its Pluto LNG facility, located near Karratha, Western Australia.
• Selected by Deepak Fertilisers and Petrochemicals Corporation Limited for a multi-year digital solutions contract for the development of their enterprise-level Smart Factory project. This transformative contract will cover the operations of their four nitric acid plants located in Dahej and Taloja, India.
• Selected by Madoqua Power2X, a joint venture of Madoqua Renewables, Power2X and Copenhagen Infrastructure Partners, for a green ammonia project using KBR’s K-GreeN® technology.
Government Solutions (GS) delivered 1.1x TTM book-to-bill1 as of September 29, 2023, including awards and achievements in the quarter as follows:
• Awarded a contract, Integrated Missions Operations Contract III, worth up to $1.9bn, for the continued support of NASA’s human spaceflight programs, including the International Space Station, Artemis and Low Earth Orbit Commercialization.
• KBR joint venture with Intuitive Machines awarded Omnibus Multidiscipline Engineering Services III contract, worth up to $719m, to aid NASA’s development of space orbital systems in its Engineering and Technology Directorate at Goddard Space Flight Center in Maryland.
• Awarded a two-year option on the Human Health & Performance Contract II for the continued biomedical, medical and health services in support of human spaceflight programs at Johnson Space Center in Houston.
• Defense & Intel backlog grew due to several awards in classified areas.
• Vaault®, KBR’s proprietary secured cloud and mission service platform, has been prioritized for the Federal Risk and Authorization Management Program Joint Authorization Board authorization process.
• Awarded a $75m recompete task order to perform research and analysis to address the Department of Defense critical technology areas of advanced materials, trusted artificial intelligence and autonomy and renewable energy generation and storage.
Summarized Third Quarter Fiscal 2023 Financial Results
Financial Highlights for the Three Months Ended September 29, 2023
• Revenue of $1.8bn, up 9% (organic) on a year-over-year-basis
• Net income attributable to KBR of $(21)m; Adjusted EBITDA2 of $186m (11% Adjusted EBITDA2 margin)
• Diluted EPS of $(0.16); Adjusted EPS2 of $0.75
• Operating cash flows of $(40)m; Adjusted operating cash flows2 of $92m
• Bookings and options of $3.5bn during the quarter with 1.2x TTM book-to-bill1
Financial Highlights for the Nine Months Ended September 29, 2023
• Revenue of $5.2bn, up 5% (organic) on a year-over-year basis and 12% on an ex-OAW2 year-over-year-basis
• Net income attributable to KBR of $(286)m; Adjusted EBITDA2 of $559 m (11% Adjusted EBITDA2 margin)
• Diluted EPS of $(2.10); Adjusted EPS2 of $2.18
• Operating cash flows of $248m; Adjusted operating cash flows2 of $380m
• Bookings and options of $8.8bn during the year to date period with 1.2x TTM book-to-bill1
Commentary on the Three Months Ended September 29, 2023
Revenues were $1.8 bn, up 9% (organic) compared to 3Q’22, primarily due to new and on-contract growth across all Government Solutions business units and growing demand across the Sustainable Technology Solutions portfolio.
Net income attributable to KBR was $(21)m, down $95m compared to 3Q’22, primarily due to a non-cash charge of $114m recorded in connection with the convertible notes settlement method election (discussed below). Net income attributable to KBR ex-Nonrecurring Charges2 was $93 m, up $19 m compared to 3Q’22, primarily due to increases in gross profit and equity in earnings from unconsolidated affiliates partially offset by increases in selling, general and administrative expenses and interest expense.
Adjusted EBITDA2 was $186m, up 9% (organic) compared to 3Q’22, with Adjusted EBITDA2 margins of 11%.
Diluted earnings per share decreased in line with the decrease in net income attributable to KBR. Adjusted earnings per share2 increased in line with Net income attributable to KBR ex-Nonrecurring Charges2.
Operating cash flows were $(40) m, down 133% compared to 3Q’22 primarily due to a $132 m after-tax outflow in connection with the settlement of a legacy legal matter in 2Q’23. Excluding the legacy legal settlement outflow, Adjusted operating cash flows2 were $92m.
Commentary on the Nine Months Ended September 29, 2023
Revenues were $5.2bn, up 5% (organic) compared to YTD 3Q’22. Revenue ex-OAW2 increased $579m, or 12%, due to growth in Readiness & Sustainment and Science & Space divisions and growing demand across the Sustainable Technology Solutions portfolio.
Net income attributable to KBR was $(286)m, down $383m compared to YTD 3Q’22, primarily due to a current year non-cash charge of $428m recorded in connection with the convertible notes settlement method election and partial repurchase and partial termination of the note hedge and warrants (discussed below) and an after-tax cash charge of $132 m in connection with the settlement of a legacy legal matter, as well as a non-cash charge of $137m in equity in earnings related to the resolution of a subcontractor dispute that did not recur in 2023.
Net income attributable to KBR ex-Nonrecurring Charges2 was $274 m, up $40 m compared to YTD 3Q’22, primarily due to increases in gross profit and equity in earnings from unconsolidated affiliates partially offset by increases in selling, general and administrative expenses and interest expense and a gain on sale of non-core assets that did not recur in 2023.
Adjusted EBITDA2 was $559m, up 9% (organic) compared to YTD 3Q’22, with Adjusted EBITDA2 margins of 11%. Adjusted EBITDA ex-Gains2 was up 14% compared to YTD 3Q’22.
Diluted earnings per share decreased in line with the decrease in net income attributable to KBR. Adjusted earnings per share2 increased in line with Net income attributable to KBR ex-Nonrecurring Charges2.
Operating cash flows were $248m, down 26% compared to YTD 3Q’22. Adjusted operating cash flows2 were $380m, up 13% compared to YTD 3Q’22.
Capital returned to shareholders totaled $190m during the year to date period, consisting of $137m in share repurchases, inclusive of $125m of open market repurchases and $12m of repurchases to satisfy requirements of equity compensation plans, and $53m in regular dividends.
Cash Settlement Method Election and Repurchase of Convertible Notes
During 2Q’23, KBR made an irrevocable election to use cash as the settlement method (as opposed to shares or a combination of cash and shares) to settle the principal and any excess value upon early conversion or maturity of the $350m principal amount of convertible notes due November 2023. This election triggered a change in accounting treatment for both the convertible notes and the related note hedge. Previously these instruments qualified for an equity exemption under ASC 815 Derivatives and Hedging because share settlement was an available option. However, as of the date of the cash settlement election, the convertible notes and the related hedge no longer qualified for this exemption, and as a result, the conversion option of the convertible notes and the note hedge required fair value measurement on the date of such election.
As a result of the above cash settlement method election and partial repurchase and the partial termination of the corresponding portions of the note hedge and warrants, we recorded a YTD 3Q’23 loss of $428 m, of which $114 m was recorded in the current quarter related to the accretion of convertible notes debt discount. These amounts are not tax deductible and have been added back to Adjusted EPS. Refer to Note 18 “Cash Election and Repurchase of Convertible Notes” in our Form 10-Q for the quarter ended September 29, 2023 for further details.
On November 1, 2023, we retired the remaining principal amount of convertible notes totaling $250m. The warrants associated with the convertible notes remain outstanding and mature in the first half of 2024.
Reaffirms Fiscal 2023 Guidance
The table below summarizes fiscal 2023 guidance and represents our views as of November 2, 2023.
The company does not provide reconciliations of Adjusted EBITDA or Adjusted operating cash flows to the most comparable GAAP financial measures on a forward-looking basis because the company is unable to predict with reasonable certainty the ultimate outcome of legal proceedings, unusual gains and losses, and acquisition-related expenses without unreasonable effort, which could be material to the company’s results computed in accordance with GAAP.
31 Oct 23. BAE Acquires EuroStep to Deliver Advanced Digital Asset Management. BAE Systems acquires Eurostep to deliver advanced digital asset management. BAE Systems has acquired Eurostep, a secure data sharing company headquartered in Sweden. The company will form part of BAE Systems’ Digital Intelligence business.
The acquisition is the next evolution in an established relationship between the two companies which have worked together for many years. The agreement brings together complementary capabilities in digital asset management, enabling defence and heavily regulated customers to optimise the operation, costs and through-life support of complex assets.
Dave Armstrong, Group Managing Director, BAE Systems Digital Intelligence, said: “Having formed Digital Intelligence in early 2022 in response to growing customer demand for data, digital and intelligence capability, we’re now strengthening our portfolio to expand our leading-edge solutions to customers and help them tackle complex challenges on their digital transformation journey.
“Demand for digital asset management capability is increasing and security of data sharing remains a key consideration for our customers. This acquisition represents a key step in delivering our exciting and ambitious investment strategy in innovative, data-led technologies including continued development in BAE Systems digital asset management suite, PropheSEA™. I look forward to welcoming Eurostep to BAE Systems.”
Mattias Johansson, Eurostep CEO, said:
“Eurostep has collaborated with BAE Systems for many years with our software, ShareAspace sitting at the heart of Digital Intelligence’s Digital Asset Management product suite. We are excited to bring together our complementary skills and expertise in developing technology that ensures customers can securely collaborate across the supply chain and cost effectively manage their assets through life.”
“ShareAspace products will continue to be offered directly to customers in addition to being a core element of PropheSEA™. By joining BAE Systems Digital Intelligence we now have the added resources to increase software development and customer outreach.”
The acquisition will accelerate the development of BAE Systems’ digital asset management suite, PropheSEA™, which enables customers to consolidate and share their complex asset data securely, allowing assets to be managed proactively, reducing operating costs and maximising asset availability. (Source: ASD Network)
01 Nov 23. FlyGuys Gets $10m Series A Funding. FlyGuys, a reality data-capturing technology company based in Louisiana, announces the triumphant closing of its Series A funding round, securing a remarkable investment of $10m. This substantial financial boost is poised to catalyze relentless innovation, create a scalable software solutions platform, and strengthen the company’s nationwide influence.
The round was led by prominent investors who have recognized FlyGuys’ commitment to using software as a service to connect data-seekers with data providers. Among the financiers, Mitchell Capital and Advantage Capital, who have made previous investments toward the growth of FlyGuys, have returned to fortify the company’s vision further.
“When we first invested in FlyGuys in 2021, we were intrigued by the innovative nature of the company and its early growth in a fast-growing industry,” said J.P. Lynch, Vice President, Advantage Capital. “Today, we are eager to see what is next for the company and confident it will continue to make strides as a leading reality data capture company while also creating quality jobs in the local community.”
Paul Tyree, CEO of Mitchell Capital, shared his perspective on the investment: “Our enthusiasm for backing FlyGuys is grounded in our faith in the expertise and vision of their management team. They are constructing an innovative, technology-driven business that consistently delivers exceptional value to their clients.”
Under the leadership of Joe Stough, CEO of FlyGuys, the company has undergone a remarkable transformation over the past year. Stough stated,
“Since I stepped in from the Board Chairman role a year ago, we’ve been reshaping FlyGuys’ business model to fulfill the need for a nationally scaled online marketplace for reality data capture. We are channeling this new capital infusion towards the creation of a highly scalable, cloud-based platform designed to connect the demand across various vertical markets, such as construction, agriculture, green energy, telecommunications, insurance, and more, with our extensive network of local data capture providers, predominantly comprised of drone pilots, spanning every state in the nation. I’m excited to work with this talented and motivated team to bring another tech startup to Louisiana and make an impact by creating jobs locally everywhere in the nation.”
The funds raised in this Series A round will be utilized to further FlyGuys’ strategic initiatives to drive reach, reliability, and capacity nationwide. The primary objectives of the funding are as follows:
• Community Engagement: Generate employment opportunities at both local and national levels, fostering economic growth.
• Software Scalability: Develop a robust software platform that allows seamless expansion, ensuring easy access for data-seekers.
• Enhanced Nationwide Presence: Strengthen market reach and establish connections with data-seekers across diverse industries.
FlyGuys has achieved remarkable growth milestones, propelling itself to the forefront of the reality capture industry. Through its unwavering commitment to innovation and customer satisfaction, FlyGuys has not only established itself as a pioneer in the field but has also set new benchmarks for excellence. With this substantial Series A funding, the company is poised to continue its journey of unbound progress and contribute to the widespread adoption of cutting-edge data capture technology across various sectors. (Source: UAS VISION)
01 Nov 23. Kromek is a technology winner in an uncertain world.
As geopolitical instabilities and terrorism threats drive demand for CBRN protection, the small-cap company is set to prosper
• $5.9m US government agency contract
• $1m of new orders for nuclear security and biodetection
Geopolitical instabilities and terrorism threats to sovereign states are driving demand for Sedgefield-based Kromek (KMK:5p), a radiation detection technology company. Its CZT-based dirty-bomb detectors protect buildings and critical infrastructure against nuclear threat and the technology is used in the development of government-funded biological threat detection systems, too.
In the past week, Kromek has announced a $5.9m (£4.8m) contract from the US Department of Homeland Security Countering Weapons of Mass Destruction Office to develop and pilot an agent-agnostic bio-detection system under a four-year programme. It is focused on the detection, classification and identification of bioterrorism attacks, an increasing priority for governments, particularly in light of the Covid-19 pandemic.
In addition, Kromek’s chemical, biological, radiological and nuclear (CBRN) detection business has secured more than $1mn of orders in nuclear security and bio-security. Chief executive Arnab Basu revealed that one of the orders is from “a new customer [undisclosed for commercial reasons], a substantial, global defence corporation, which we believe represents a significant opportunity for further sales”.
Governments and their agencies are buying Kromek’s products because of their market-leading capabilities and rapid deployment. It’s difficult to envisage a scenario where ongoing geopolitical insecurity, combined with other global threats, will not drive further demand given that the products contribute to public safety and security.
Investors are finally recognising the commercial opportunity, with the share price rallying 56 per cent since my last article (‘Why Kromek chares are a bargain buy’, 23 October 2023). However, it has only taken it back to the May 2023 placing and open offer price when the group raised £7.4m even though the board has since secured its debt financing.
Importantly, the new orders add to revenue visibility for the CBRN segment, which house broker Cavendish forecasts will deliver 46 per cent higher revenue of £8.9m in the 12 months to 30 April 2023. It de-risks the broker’s full-year revenue estimate of £21m, too, which underpins a return to cash profitability. Buy. (Source: Investors Chronicle)
31 Oct 23. AMETEK, Inc. (NYSE: AME) today announced the acquisition of Amplifier Research Corp., a leading manufacturer of radio frequency (RF) and microwave amplifiers and electromagnetic compatibility (EMC) testing equipment. Amplifier Research is a leading provider of amplifiers and EMC testing equipment for the defense, medical, communications and automotive markets. The company has a diverse product portfolio including RF and microwave instrumentation amplifiers, hybrid power amplifier modules, antennas, and control software used to provide high-end, EMC solutions.
“We are excited to welcome Amplifier Research to AMETEK,” said David A. Zapico, AMETEK Chairman and Chief Executive Officer. “Amplifier Research is an outstanding acquisition which nicely complements our existing capabilities in the electromagnetic compatibility testing market. Their expertise and capability in amplifier design will greatly enhance our ability to provide a broader suite of solutions for attractive markets including electric vehicle testing and defense communications.”
Amplifier Research is headquartered in Souderton, Pennsylvania and has annual sales of approximately $60 m. Amplifier Research joins AMETEK as part of its Electronic Instruments Group (EIG) – a leader in advanced analytical, monitoring, testing, calibrating, and display instrumentation. (Source: PR Newswire)
31 Oct 23. Shield AI, the defense technology company building the world’s best AI pilot for aircraft, today announced it has raised $200m in Series F funding in an oversubscribed funding round. This funding, led by U.S. Innovative Technology Fund (USIT) and co-led by Riot Ventures, with participation from Cathie Wood’s ARK Invest and returning investors Disruptive and Snowpoint, values Shield AI at $2.7bn.
31 Oct 23. Shield AI, the defense technology company building the world’s best AI pilot for aircraft, today announced it has raised $200m in Series F funding in an oversubscribed funding round.
“We’re building the world’s best AI pilot to ensure air superiority and deter conflict because we believe the greatest victory requires no war. This funding accelerates the scaling of Shield AI’s products, enabling the deployment of intelligent, affordable mass—the most important non-nuclear deterrent for the next 30 years,” said Brandon Tseng, Shield AI’s President, co-founder, and former Navy SEAL.
Shield AI builds an AI pilot called Hivemind, which enables teams of intelligent aircraft to operate autonomously in high-threat environments on the edge, without the need for remote operators, command inputs, or GPS. The technology approach is similar to those in the self-driving car industry and its software stack is aircraft agnostic, allowing Shield AI to provide autonomy to a variety of form factors across the aerospace industry. This announcement comes on the heels of the company’s recent launch of its V-BAT Teams product. This product enables a single human operator to command a minimum of four V-BATs, generating real-time AI-driven flight paths, and exhibiting dynamic read-and-react behaviors autonomously. Except for lethal decision-making, V-BAT Teams can complete missions from start to finish without the need for an operator or pilot.
Concurrently, the company has been diligently working on integrating Hivemind into uncrewed fighter jets, a significant effort supported both through government programs and company R&D. In December 2022, Shield AI, along with its government partners, made aviation history by autonomously maneuvering a modified F-16 in real-world air-combat scenarios. The company continues to fly and test its autonomy on fighter jets and has more autonomous maneuver flight hours of fighter jets than any company in the world.
“The increasing number of military conflicts we have seen over the last 18 months unfortunately paints a sobering view of our future defense technology needs and the important role AI will play,” said Thomas Tull, Chairman of USIT. “Shield AI continues to be a pioneer in this sector, driving much needed innovation by developing state-of-the art AI pilots. We are proud to continue supporting their mission as they leverage these cutting-edge technologies to deter conflict before it begins.”
The funds from the Series F round will be used to:
• Scale and deploy Shield AI’s V-BAT Teams product domestically and internationally.
• Accelerate tech integration with third-party uncrewed platforms.
“As deep-tech investors, we have seen a large swath of autonomy efforts in every realm and Shield AI has a clear lead. Battlefields are increasingly dominated by drone warfare and the enemy is doing everything in their power to make it a hostile environment, including blocking communications and GPS. Modern air forces are flying blind. Shield’s AI pilot doesn’t require GPS or communications because it’s smart and adaptable to the environment. Their AI is trainable and adaptable to many different missions and has flown teams of quadcopters, V-BATs, and modern fighter jets. The closest tech comparable we’ve seen is what Tesla is doing with their self-driving stack. Their combination of market-leading AI technology and top-tier growth is why we are excited to continue to invest in the Company,” said Stephen Marcus, Co-Founder and General Partner of Riot Ventures.
About Shield AI
Founded in 2015, Shield AI is a venture-backed defense technology company whose mission is to protect service members and civilians with intelligent systems. In pursuit of this mission, Shield AI is building the world’s best AI pilot. Its AI pilot, Hivemind, has flown a fighter jet (F-16), a vertical takeoff and landing drone (V-BAT), and a quadcopter (Nova). The company has offices in San Diego, Dallas, Washington, D.C., and abroad. Shield AI’s products and people are currently in the field actively supporting operations with the U.S. Department of Defense and U.S. allies. For more information, visit www.shield.ai. (Source: PR Newswire)
31 Oct 23. Defense firm Leidos raises outlook on robust weapons demand.
U.S. defense contractor Leidos Holdings (LDOS.N) on Tuesday raised its full-year profit and revenue forecasts on the back of strong weapons demand amid rising geopolitical tensions.
Defense companies have seen robust demand for weapons from the U.S. and its allies following Moscow’s invasion of Ukraine and rising geopolitical tensions in Asia.
The Reston, Virginia-based company now expects 2023 revenue of between $15.1bn and $15.3bn, above its previous forecast of $14.9bn to $15.2bn.
It expects annual adjusted profit of between $6.80 and $7.10 per share, compared with a prior range of $6.40 to $6.80 per share.
Leidos posted a net loss of $396m, or $2.91 per share, for the third quarter, reflecting a one-time impairment charge of $699m related to its Security Enterprise Solutions (SES) reporting unit.
Excluding one-off items, quarterly adjusted profit was $2.03 per share, beating analysts’ average estimate of $1.67 per share, according to LSEG data. The defense contractor reported quarterly revenue of $3.92bn, ahead of analysts’ forecast of $3.77bn. (Source: Reuters)
31 Oct 23. Leidos Holdings, Inc. Reports Third Quarter Fiscal Year 2023 Results.
• Revenues of $3.9bn, up 9% year-over-year
• Net loss of $396m or $2.91 per diluted share
• Adjusted EBITDA of $451m (11.5% margin)
• Non-GAAP Diluted Earnings per Share of $2.03, up 28% year-over-year
• Cash Flows from Operations of $795m; Free Cash Flow of $745m
• Net Bookings of $7.9bn (book-to-bill ratio of 2.0 for the quarter and 1.2 for trailing twelve months)
Leidos Holdings, Inc. (NYSE: LDOS), a FORTUNE 500® science and technology leader, today reported financial results for the third quarter of fiscal year 2023.
Thomas Bell, Leidos Chief Executive Officer, commented, “Our third quarter financial results build on the momentum from last quarter and are the direct result of our entire team being aligned on our direction and intent on delivering against our commitments. With record revenues, non-GAAP earnings, cash flow, bookings, and backlog, our growth outlook is improving, and we are raising our guidance for all 2023 financial metrics. As we sharpen our strategy and better align our organization, our focus on differentiating technology will enable us to unlock our full potential and heighten our value proposition to our customers, our nation, and its allies.”
Revenues for the quarter were $3.92bn, up 9% compared to the third quarter of 2022. Revenues grew year-over-year due to increased demand across all customer segments, especially for digital modernization and medical examination solutions.
For the third quarter, Leidos had a net loss of $396m, or $2.91 per diluted share, which reflected pre-tax, non-cash impairment and restructuring charges of $699m primarily associated with the Security Enterprise Solutions (SES) reporting unit. Net income and diluted EPS were down 341% and 349% year-over-year, respectively.
Adjusted EBITDA was $451m for the third quarter, up 21% year-over-year. Adjusted EBITDA margin of 11.5% increased from 10.3% in the third quarter of 2022. Non-GAAP net income was $283m for the third quarter, up 28% year-over-year, and non-GAAP diluted EPS for the quarter was $2.03, up 28% year-over-year. The primary drivers of increased profitability were improved business mix as well as increased volumes, higher incentive awards, and recovery of prior expenditures in the medical examination business.
Cash Flow Summary
In the third quarter, Leidos generated $795m of net cash provided by operating activities and used $52m in investing activities and $249m in financing activities. Net cash provided by operating activities benefited from strong collections and working capital management, driven in part from U.S. Government customers accelerating payments at the end of their fiscal year. Days Sales Outstanding (DSO) for the quarter was 57, a 2-day improvement from the second quarter of 2023.
Investing activities consisted primarily of $50m in property, equipment and software payments, which resulted in quarterly free cash flow of $745m. Financing activities included repayment of $200m of commercial paper and $50m returned to shareholders as part of a regular quarterly cash dividend program. As of September 29, 2023, Leidos had $750m in cash and cash equivalents and $4.7bn of debt.
On October 27, 2023, the Leidos Board of Directors declared a cash dividend of $0.38 per share, which represents an increase of 6% over the prior quarter’s dividend amount. The dividend will be payable on December 29, 2023, to stockholders of record at the close of business on December 15, 2023.
Net bookings totaled $7.9bn in the quarter, representing a book-to-bill ratio of 2.0. As a result, backlog at the end of the quarter was $38.0bn, of which $9.0bn was funded. Included in the quarterly bookings were several notable awards:
• Common Hardware Systems 6th Generation (CHS-6). The U.S. Army Program Executive Office awarded Leidos a ten-year, firm-fixed price contract with a maximum value of $7.9bn. The single-award, indefinite delivery, indefinite quantity (IDIQ) contract has a base period of performance of four years with two three-year options. Under the CHS-6 contract, Leidos will incorporate artificial intelligence (AI) and predictive analytics to increase visibility into operations and provide a uniquely resilient rapid fulfillment model. Leidos will leverage current commercial technology and industry investments to help enhance mission readiness of complex IT hardware across its entire lifecycle. Leidos will also work to deploy a logistics platform to proactively manage supply chain and cybersecurity risks while minimizing total lifecycle costs. Equipment and services procured under the terms of this contract will be used to support a unified network for Multi-Domain Operations (MDO) and Joint All Domain Command and Control (JADC2).
• Homeland Enterprise Information Technology Secure Services and Support (HEITS). Under a $918m, seven-year contract, Leidos will continue to support and enhance Department of Homeland Security (DHS) networks. While supporting cross-agency intelligence sharing and secure collaboration for federal and civilian agencies, Leidos will deliver leading-edge capabilities, including quantum resistant cryptography, AI operations, robotic process automation and classified cloud service integration.
• Army Missile and Space Cyber Electromagnetic Activities (CEMA). The U.S. Army Program Executive Office (PEO) Missiles and Space (M&S) awarded Leidos a $125m, five-year task order to design, develop, integrate, test, and deliver high-fidelity prototype virtualizations of critical computing hardware and software components for PEO M&S weapon systems. This work will enhance the mission effectiveness of the warfighter in a contested CEMA environment and will include weapon system critical computing hardware and software emulations, CEMA detection algorithms, tools, models, interfaces, studies, and analysis products. (Source: PR Newswire)
30 Oct 23. Skyroot raises $27.5m, heating up India’s private sector space race. India’s Skyroot Aerospace said on Monday it has raised $27.5m in a fresh round of funding led by Singapore’s Temasek, upping the ante in the country’s burgeoning space industry days after rival Agnikul Cosmos raised a similar amount.
The Hyderabad-based company, which launched India’s first private rocket in 2022, is set to launch its second commercial rocket, the Vikram-I, next year. The launch vehicle can take payloads of up to 300 kilograms into low earth orbit.
Skyroot, founded in 2018, said the latest fundraise of about 2.25bn rupees would help it get to more launches, quicker.
The funding comes as fellow space startup Agnikul Cosmos said it had raised $26.7m in fresh funding ahead of its first rocket launch as private space firms benefit from the successful landing of an Indian spacecraft on the moon.
Skyroot has so far raised $95m, while Agnikul has raised $40m. Skyroot declined to say what the latest money raise valued the company at.
“As we prepare for the launch of our second mission early next year, this new funding will enable us to accelerate our upcoming launches planned over the next two years,” Skyroot’s co-founder Pawan Kumar Chandana said.
Calling India’s Chandrayaan-3 moon mission’s success a boost to the country’s private space industry, Chandana told Reuters in August that the company was aiming for at least two launches 2024 onwards.
Earlier this month, Skyroot signed a memorandum of understanding with French space firms Prométhée Earth Intelligence, ConnectSAT and global firm Expleo to launch satellites and software support for their Vikram launches.
Skyroot, also backed by Singapore’s sovereign wealth fund, GIC, did not disclose financial terms of those partnerships. ($1 = 83.2653 Indian rupees) (Source: Reuters)
31 Oct 23. IFS delivers strong Q3 2023 results thanks to increased demand for AI.
• Year-to-date revenue growth of 33% YoY
• Annual recurring revenue (ARR) up 49% YoY
• Click here for hi-res image
IFS, the global cloud enterprise software company, today announced its financial results for the year to date (YTD) ending 30th September, 2023. The company reported substantial YoY increases in annual recurring revenue (ARR) of 49 percent, cloud revenue of 54 percent, and software revenue of 37 percent, which represents an impressive 80 percent share of total revenue.
The company’s commitment to delivering rapid time-to-value has resulted in significant wins and upgrades from global customers including: Tele2, Culligan, Van Oord, Roxtec International and De Havilland. The advanced industry capabilities, user experience, and value offered by IFS Cloud continue to attract new customers and motivate existing ones to extend their usage and leverage IFS technology to create outstanding Moments of Service for their customers.
This is compounded by sustained IFS investment in technology that is seeing capabilities for Environmental, Social and Governance (ESG) and Artificial Intelligence (AI) drive demand. The macro interest and appetite for AI bodes well for IFS with its AI architecture, IFS.ai, that extends the value of AI across all its capabilities and throughout a customer’s business.
Reflecting on the impact IFS technology has for its customers, Forrester Research’s recently announced study that evaluates the benefits of deploying IFS Cloud found that the average customer achieved over $36m USD in savings over three years, of which over $13m were sustainability benefits.
IFS CEO Darren Roos stated: “The 37 percent increase in software revenue over the last 12 months is a testament to the trust our customers have in IFS and the dedication of our teams.” He added: “IFS has transformed into a cloud-first technology vendor that continues to create value through organic growth and acquisition to stay at the forefront of innovation.” Roos concluded: “IFS.ai is a continuation of our ambition to innovate and puts IFS in a leading position to democratise AI for all users. Our goal is to anticipate our customers’ needs and deliver when it matters to them, creating value at every step.”
IFS Chief Financial Officer, Matthias Heiden, commented: “It is evident that the macro-economic challenges continue to impact many industries.” Heiden continued: “That said, we are pleased to be engaged with many forward-thinking customers who understand the need and opportunity to leverage technology to drive efficiency in their business. IFS is well positioned to help them achieve competitive differentiation. This has translated into significant growth with total revenue up 33 percent year-to-date vs 2022 and ARR up 49 percent YoY.” Heiden concluded: “Reviewing our performance so far in 2023, I am not only proud that we are outperforming the market but that we are achieving this robust mix without compromising on any other metrics; we are building on the strong performance of previous years delivering the value customers need.”
Through its software and success services, IFS is making it possible for customers to buy and consume technology in the way that creates the most value for them, so they can deliver amazing Moments of Service.”
Financial* and Operational Highlights for YTD FY2023:
• YTD FY2023 software revenue was EUR 597m, an increase of 37% versus YTD 2022
• YTD FY2023 recurring revenue was EUR 560m, an increase of 38% versus YTD 2022
• YTD FY2023 cloud revenue increased 54% versus YTD 2022
• YTD FY2023 total revenue was EUR 749m, an increase of 33% versus YTD 2022
*Note: all figures based in Euros and reported in constant currency.
In line with WorkWave establishing itself as a standalone business at the end of Q2 2021, the performance reported above excludes WorkWave’s contribution to the IFS Group.
• IFS was named a Leader in the IDC MarketScape: Worldwide Service Life-Cycle Management Platforms 2023–2024 Vendor Assessment
• IFS was named a Visionary in the Gartner Magic Quadrant for Cloud ERP for Product-Centric Enterprises, 2023
Learn more at www.ifs.com/news
31 Oct 23. Solid State Benefits from rising defence spending.
A modestly rated value-added electronics group that is seeing high demand from defence and security customers has upgraded guidance yet again.
• First-half revenue up 48 per cent to £88m
• 35 per cent organic revenue growth
• Adjusted pre-tax profit up 67 per cent to £7m
• 1.8 per cent prospective dividend yield
Arobust pre-close trading update from Redditch-based Solid State (SOLI:1,165p) has prompted yet another round of analyst earnings upgrades.
The value-added electronics group supplies commercial, industrial and defence markets with durable components, assemblies and manufactured units for use in specialist and harsh environments. Specifically, Solid State focuses on industrial and ruggedised computing, displays, battery power packs, communications including antennas and secure radio systems, and imaging technologies.
A key driver of Solid State’s growth has been defence and security contract work, buoyed by geopolitical tensions that have sparked a renewed focus on global defence spending despite government budget constraints. The division increased its contribution from 14 to 18 per cent of group revenue of £126.5mn in the 12 months to 31 March 2023, and analysts at joint house broker Cavendish expect a third higher revenue contribution of £30mn in the new financial year. This implies a 20 per cent share of their newly upgraded group revenue estimate of £155m (up from £147m), which factors in 22 per cent annual growth.
In particular, Solid State is a major beneficiary of the secular growth in defence spending as a UK-based systems provider, having direct exposure to Nato agencies and relationships with Tier 1 suppliers such as BAE Systems. For instance, the group has been awarded two major contracts worth £17.1m by the Nato Support & Procurement Agency to supply communication equipment to a defence customer, the contribution from which underpins a large proportion of the forecast growth in the 2023-24 financial year. Furthermore, given the bespoke requirements on these contracts, work on defence programmes can extend for multi-year periods, thus creating a stream of repeat business for Solid State. There are sound prospects for further contract wins, too.
Exposure to rising UK and US defence spending
Earlier this year, the UK government committed £5bn additional funding to the defence budget over the next two years, taking the country above its Nato commitment of spending 2 per cent of gross domestic product (GDP). Bearing this in mind, the incremental spending has been earmarked for capital expenditure rather than operational expenses, so benefits equipment suppliers, including Solid State. Importantly, both the main political parties are committed to robust spending on the military. It means that Solid State’s prospects look assured irrespective of which party wins the next general election.
Furthermore, the group has boosted its exposure to the defence sector through the August 2022 acquisition of California-based battery pack manufacturing business Custom Power. Since the Russian invasion of Ukraine, the US government has increased its defence expenditure budget and the US Department of Defence has placed a particular emphasis on procurement spending. Analysts at Cavendish believe that the country’s procurement budget will increase by $10bn to more than $155bn in 2024 as global security remains a high priority for both the Democrat and Republican parties. The geopolitical crisis in the Middle East, coupled with the threat posed to Nato countries by Russia, can only drive up demand for defence-related work. Solid State is a major beneficiary.
Multiple secular growth drivers
The group is not a one-trick pony either as it is benefiting from secular growth across several megatrends that offer strong growth opportunities. These include the increasing prevalence of batteries across many end markets, drones, robotics and automation.
In the medical sector, demand is being driven by technology as complex medical instrumentation becomes entrenched to improve patient outcomes, efficiency, reliability and precision. For the 2022-28 forecast period, analysts at Statista Market Insights predict that the medical devices market worldwide will grow 36 per cent to $610bn.
Solid State offers exposure to the UK government’s massive investment in public transport systems, too. The Department of Transport has allocated an additional £40bn of investment into road and rail programmes over the next two years, a sum equivalent to 90 per cent of the total transport budget in the 2022 fiscal year. This is good news for Solid State as its technology is being incorporated in parts of the modernisation programmes. For instance, Solid State has been awarded the contract to help deliver a new One Person Operation CCTV system for Transport for London (TfL), as part of the £2.9bn Piccadilly Line Upgrade on the London Underground Network that will see the introduction of 94 new state-of-the-art Tube trains from 2025.
Solid order book supports earnings visibility
Such is the organic momentum across the group that having upgraded earnings guidance at the annual results over the summer, the directors have done so again. It prompted analysts at broking houses Cavendish and WH Ireland to raise their pre-tax profit and earnings per share (EPS) forecasts by around 5 per cent to £12.5m and 85p, respectively, for the 12 months to 31 March 2024. Having delivered £88m of revenue in the first half, and with around 60 per cent of the £99.7m order book slated for the second half, their £155m revenue estimates are well underpinned.
Moreover, WH Ireland has halved its year-end net debt estimate to £2mn and expects net cash of £1.2m in the 2024-25 financial year. It means more of Solid State’s bumper free cash flow can be recycled back into a business that is forecast to deliver a current-year pre-tax return on equity of 20 per cent and mid-teens return on capital employed (ROCE).
The shares have drifted in line with the FTSE Aim All-Share index since I highlighted the investment case a performance that is completely out of line with Solid State’s operational outperformance. Frankly, I wouldn’t bet against another earnings upgrade as the year progresses.
Rated on 9.6 times operating profit estimates of £14mn to enterprise valuation of £135mn, and on a modest price/earnings (PE) ratio of 13.6, the shares rate a buy. (Source: Investors Chronicle)
31 Oct 23. Thales posts higher nine-month revenue, maintains targets. France’s Thales (TCFP.PA) on Tuesday posted a 7.5% underlying rise in nine-month revenue to 12.85bn euros ($13.62bn), led by resurgent demand for jetliner components and military equipment.
Europe’s largest defence electronics maker, which also provides civil aircraft systems and digital security equipment, said its order intake fell 18% from the same period last year, which had been buoyed by a Rafale fighter order from the United Arab Emirates.
Nine-month orders came in at 12.37bn euros, below the level of revenue, but Thales reaffirmed its full-year targets including a book-to-bill ratio above one.
Chief Financial Officer Pascal Bouchiat said the order comparison had also suffered from particularly strong demand for the company’s satellites in 2022, but said civil aviation had demonstrated a “strong commercial dynamic” this year.
“I have no doubt that we will be above one (in full-year book-to-bill),” Bouchiat told reporters, adding that orders at Thales tended to be weighted towards the final quarter.
The second tranche of a recent Indonesian order for Dassault-made French Rafale fighters that involve 18 jets for which Thales makes the radar is expected to be reflected in the fourth quarter, he added.
Jefferies analysts said the third-quarter order intake was below expectations but that this appeared to be driven mainly by the timing of the Indonesian Rafale order in Thales’ accounts.
In the Digital Identity & Security division, Thales said cybersecurity and biometrics saw strong growth offset by negative growth in payment and SIM cards in the third quarter, notably in Asia.
Bouchiat said a recent supply crisis in electronic chips appeared to be over as far as the Digital division was concerned, while supply gaps remained in Aerospace.
More broadly, the supply chain remains under significant pressure in several countries for hardware and mechanical components, affecting satellites and radars, he added.
Thales is paying close attention to the fate of small suppliers that were unable to invest adequately during the pandemic and are now struggling to keep up with demand. In some cases, Thales has had to pay advances or provide other support.
“We remain very vigilant,” Bouchiat said, adding that he hoped the situation would stabilise progressively in 2024. ($1 = 0.9438 euros) (Source: Reuters)
28 Sep 23. Kromek Group plc (“Kromek” or the “Company” or the “Group”) Financing Update. Further to the Group’s announcement of 6 September 2023, Kromek (AIM: KMK), a leading developer of radiation and bio-detection technology solutions for the advanced imaging and CBRN detection segments, is pleased to announce that it has completed the refinancing of its borrowing facility with the signing of a new £5.5m secured term loan (the “New Facility”). The New Facility is being provided by Polymer N2 Ltd (“Polymer”), a significant shareholder in the Company that is an investment vehicle controlled by Dr Graeme Speirs.
The New Facility has a repayment date for the principal sum of 27 March 2025, with an option to extend for a further 12 months. It carries a fixed interest rate of 9.5%, which is payable quarterly, and Kromek has the option to pay the interest through the issue of new ordinary shares of 1p each in the Company (“Ordinary Shares”) at the trailing 10-day volume weighted average price of the Company’s Ordinary Shares on the date that payment falls due.
Polymer and Dr Speirs hold an aggregate of 57,826,457 Ordinary Shares in Kromek, representing 9.6% of the issued share capital of the Company. The Company commenced discussions to replace the existing facility in early 2023 and ran a competitive process to source alternative debt providers. The overall terms offered by Polymer were more competitive than those received from any other potential lender.
Arnab Basu, CEO of Kromek, said: “We are pleased to have completed this financing process and to have secured an enlarged debt facility on more favourable terms than the alternatives on offer. We are thankful for this support from our major long-term shareholder who has provided this loan at an interest rate that is only 0.4% higher than the current rate on our previous facility. As we said at the time of our full year results, we entered the current financial year with a much-strengthened balance sheet and heightened commercial momentum. With this new financing in place, our position is further improved and, accordingly, we remain on track to deliver strong revenue growth and be EBITDA positive for the full year.”
30 Oct 23. KONGSBERG: NOK 1.3bn in operating profit and continued strong growth. KONGSBERG increased its operating revenues by 29 per cent and recorded solid growth in all business areas compared to 3rd quarter last year. The order intake was NOK 11.3bn and the order backlog increased to NOK 69.2bn.
In addition, KONGSBERG signed a record NOK 16bn contract with Poland, which will be included in the order backlog when the contract becomes effective.
– The order intake was BNOK 11.3, corresponding to a book/bill of 1.14
– Operating revenues was BNOK 10.0 compared to BNOK 7.7, an increase of 29 %
– EBITDA was BNOK 1.6, up from BNOK 1.4
– EBITDA-margin was 16.3 % compared to 17.6 %
– EBIT was BNOK 1.3, up from BNOK 1.0
– EBIT-margin was 12.7 %, compared to 13.4 %
*) compared to 3rd quarter 2022
Accumulated as of 3rd quarter 2023*:
– The order intake was BNOK 33.3, corresponding to a book/bill of 1.18
– Operating revenues was BNOK 28.7 compared to BNOK 22.4, an increase of 28 %
– EBITDA was BNOK 4.4 up from BNOK 3.2
– EBITDA-margin was 15.2 % compared to 14.3 %
– EBIT was BNOK 3.3 up from BNOK 2.2
– EBIT-margin was 11.6 %, up from 10.0 %
*) compared to accumulated as of 3rd quarter 2022
All business areas contribute to solid growth
The strong growth continued, and all KONGSBERG business areas contributed significantly to the solid progress. Kongsberg Defence & Aerospace continued to grow, particularly driven by missiles and weapon stations. Kongsberg Maritime had increased activity in both the newbuilding and aftermarket. In Kongsberg Discovery, the growth came mainly from deliveries to fisheries and research vessels.
“We continued our growth and delivered close to NOK 10bn in operating revenues and an operating profit of NOK 1.3bn in the quarter. So far in 2023, revenue growth is 28 per cent compared to last year. The Group’s order backlog is now more than NOK 69bn. At the same time, we see significant opportunities ahead, which will enable further backlog growth,” says President and CEO Geir Håøy of KONGSBERG.
Significant investments for continued growth
KONGSBERG has an order backlog of more than NOK 69bn and is positioned for further growth in the years to come. This requires increased capacity in terms of employees, equipment, as well as new and more efficient production and buildings. So far this year, more than NOK 1.4bn has been invested in property, plant and equipment. Of this, more than NOK 600m is related to the new missile factory being built in Kongsberg. The factory will be completed summer 2024. In addition, KONGSBERG invests in new and existing facilities in several locations in and outside Norway.
Continuous investments are made in product development, both related to the development of new systems and further development of existing ones.
“KONGSBERG has an extensive product portfolio related to security, surveillance and reduction of climate footprint through alternative energy sources and more efficient energy utilisation. Every year, we invest considerable amounts in new solutions and further development of the existing portfolio. If the world is to achieve its climate ambitions, everyone must contribute. At the same time, it is important that these investments become financially sustainable. Investing in product development is therefore one of the most important things we can do for a sustainable future,” says Håøy.
Record deal in Poland
In September, Kongsberg Defence & Aerospace signed an agreement with Poland for delivery of a Naval Strike Missile (NSM) coastal defence system worth NOK 16bn. This is the largest single contract in KONGSBERG’s history. The coastal defense system uses the NASAMS command and control system with the NSM. The contract will be included in the order backlog when it becomes effective in connection with signing the export financing.
“This is the largest single contract in KONGSBERG’s history, and an important milestone in our more than 200-year history. Poland has been a long-term partner and we are proud to have signed this agreement. With the changed security situation in Europe, Poland is determined to secure important defence capabilities, and for KONGSBERG as an industrial partner, this ensures predictability to invest and continue to build capacity to meet these needs”, says Håøy.
Will continue to grow and deliver solid results
At the end of the 3rd quarter, KONGSBERG had an order backlog of NOK 69.2 bn, of which NOK 10.5 bn will be delivered in the 4th quarter 2023.
“At our Capital Markets Day in 2022, we stated our ambition to deliver revenue of more than NOK 40 bn in 2025. Our growth rate is higher than previously anticipated, and we will most likely reach this goal ahead of schedule. But it doesn’t stop here. We have a record-high order backlog and we have never experienced stronger demand for the total KONGSBERG portfolio. KONGSBERG’s ambition is to continue our growth journey”, concludes Håøy. (Source: Google/https://www.hellenicshippingnews.com/)
27 Oct 23. Ukraine war orders starting to boost revenues for big US defense contractors. The Russian invasion of Ukraine in 2022 is starting to boost defense contractors’ revenues, as customers such as the U.S. government restock supplies shipped to Ukraine and countries around Europe arm themselves with an eye on Moscow’s aggressions.
U.S. defense contractors such as Lockheed Martin (LMT.N), General Dynamics (GD.N) and others expect that existing orders for hundreds of thousands of artillery rounds, hundreds of Patriot missile interceptors and a surge in orders for armored vehicles expected in the months ahead will underpin their results in coming quarters.
New contracts to supply Ukraine directly – or backfill U.S. weapons sent to Ukraine – were signed late last year, and now revenue is flowing to the big defense contractors. Lockheed, General Dynamics and RTX (RTX.N) all reported better than expected results over the past several days, and executives expect both the conflict in Ukraine and Israel’s war with Palestinian militant group Hamas to drive up near-term demand.
“We’ve gone from 14,000 (artillery) rounds per month to 20,000 very quickly. We’re working ahead of schedule to accelerate that production capacity up to 85,000, even as high as 100,000 rounds per month,” Jason Aiken, General Dynamics’ chief financial officer, said on a call with Wall Street analysts on Wednesday.
“And I think the Israel situation is only going to put upward pressure on that demand.”
The General Dynamics’ Combat Systems unit, which makes armored vehicles, tanks and the artillery Ukraine uses, saw its revenue rise almost 25% versus the same period a year ago.
RTX, which makes AMRAAM rockets used in Ukraine, said on Tuesday’s earnings call with Wall Street analysts it has received $3 bn of orders since Russia’s February 2022 invasion that are related to replenishing Ukraine and U.S. war stocks, and the company expects more.
Third-quarter sales for Northrop Grumman’s (NOC.N) Defense Systems segment rose 6% on high demand for ammunition and rocket motors used in guided multiple-launch rocket systems (GMLRS), which play a crucial role in supporting Ukraine’s defense efforts against Russian forces.
This is part of a global trend. Sweden’s Saab (SAABb.ST) raised its full-year sales outlook on Thursday on the back of strong defense demand and Germany’s Rheinmetall (RHMG.DE) said third-quarter profit jumped on strong demand for weapons and ammunition.
During his latest request for $106 bn in new funds for Ukraine, Israel, the Indo-Pacific region and border enforcement, U.S. President Joe Biden on Oct. 20 said some of the supplemental request would go to companies that backfill production of U.S. weapons sent abroad. Biden mentioned Patriot missiles made in Arizona, and “artillery shells manufactured in 12 states across the country,” naming Pennsylvania, Ohio and Texas.
To be sure, executives from several defense firms at a recent trade show cautioned that a lack of skilled labor and supply chain issues continue to hamper companies’ capacity to fill orders.
“The supply chain, to be completely candid with you, remains, and I think we expect to remain what I call fragile,” General Dynamics’s Aiken said on the earnings call, as the company said it was cutting its forecast for 2023 business jet deliveries. “I don’t think that’s going to get back to what we saw pre-pandemic for the foreseeable future.”
Lockheed on Oct. 17 said supply and labor disruptions are affecting divisions like aeronautics, which makes the advanced F-35 fighter jet, due to the need for processor assemblies, solid-rocket motors, castings and forgings. (Source: Reuters)
27 Oct 23. Quantum Systems Secures $ 67m in Series B Funding Round.
Quantum Systems, a European provider of dual-use drone-robotics offering state-of-the-art multi-sensor technology for both government and commercial clients, announced the successful completion of its €63.6m Series B funding round.
This brings the total amount of funding for the Munich-based drone manufacturer to over €100m. Leading the investment are HV Capital and DTCP, followed by Project A, Thiel Capital, ScaleUp Fonds Bayern, Omnes Capital, and Airbus Ventures. This substantial infusion of capital underscores Quantum Systems’ dedication to boosting resilient infrastructure, through aerial intelligence.
Changing geopolitical landscape drives the need for technological autonomy
Conflicts, disasters, or dependencies on foreign suppliers around the globe have tremendously increased the need for robust systems that give commercial and governmental customers the decisive data advantage, either in the business world or on the battlefield.
Quantum Systems recently secured a significant contract with the German Armed Forces for Vector reconnaissance drones, strengthening European security. Partnering with Airbus Defence and Space, backed by the German Ministry of Defense, Quantum Systems advances tactical drones with AI and swarming technologies. The company continues to support Ukraine through multiple deliveries of Vector drones, driving innovations in AI capabilities, endurance, and further system architecture integrations to the battle management systems.
Fueled by a vision to lead in AI-powered drone-robotics globally, Quantum Systems’ strategy emphasizes a “family of systems” with deep integration, a unified software stack, and Drone Ports development to maintain a technological edge in autonomous aerial data capture.
Pioneering the path to global leadership in AI-powered aerial robotics
Quantum Systems’ unique advantage lies in its dual-use capability, addressing two distinct markets with common technology. Through the synthesis of hardware, software, and AI, Quantum Systems transforms business operations, enhancing efficiency across a diverse spectrum of verticals, from agriculture to mining, inspection, and construction. Quantum Systems also extends its expertise to democratic governments, where the need for aerial data-driven operations becomes paramount. The provision of aerial intelligence in real-time is not merely a strategic choice but a decisive edge, enabling market growth precisely where Quantum Systems stands uniquely positioned with its cutting-edge products and visionary roadmap.
Quantum Systems is proud to welcome HV Capital, DTCP, and its other new investors, who boldly stepped forward to contribute to Quantum’s mission of creating a safer and more technologically resilient world. By embracing this challenge and investing in Quantum Systems, these new partners are actively contributing to the future of European and global security.
“In the face of ever-evolving global challenges, Quantum Systems recognizes the need for a bottom-up flexible approach. This approach fosters innovation and adaptability, enabling Europe to sustain its democratic values while embracing disruptive technologies that drive progress.” Florian Seibel, CEO, Quantum Systems
“We are excited to back Quantum Systems’ vision for global leadership in AI-powered drone-robotics. The team has showcased their ability to sustain a technological advantage. We look forward to working with the team as they expand their product offering.” Christian Saller, General Partner, HV Capital
“Recent geopolitical events have made it crystal clear that we as venture capital investors can no longer afford to ignore the complexities of defense technology, which includes dual-use concepts with multiple applications. That’s why we’re proud to continue to back Quantum Systems in becoming a major dual-use player that strengthens European and Western tech resilience.” Uwe Horstmann, General Partner, Project A Ventures.
(Source: UAS VISION)
SPX CommTech, part of SPX Technologies Inc, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all. Formed by TCI and ECS, SPX CommTech’s Battlespace portfolio enables defence and security teams to detect, defeat and exploit RF signals to enhance communications intelligence (COMINT) and counter unmanned aerial systems (Counter-UAS). Additionally, its Tactical Data Link portfolio allows intelligence gathering agencies, special forces, emergency response, and security teams to securely and reliably transfer video and data between enabled-aircraft and ground teams over long distances for airborne Intelligence, Surveillance, Reconnaissance (ISR). For more information visit www.tcibr.com and www.enterprisecontrol.co.uk