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08 Feb 24. Bombardier free cash flow forecast short of expectations, shares fall.

Summary
Companies
Bombardier expects revenue of $8.4-8.6bn in 2024
Supply chain improving but still some issues
Aftermarket services division sees record revenues in Q4

Canada’s Bombardier (BBDb.TO), opens new tab on Thursday forecast 2024 free cash flow, a metric watched closely by investors, that was below analysts’ estimates and its shares tumbled more than 13%.

The Montreal-based planemaker said it expected free cash flow of $100m to $400m for the year, falling well short of the $552 m, on average, expected by analysts, according to LSEG data.

The company did forecast stronger 2024 revenue as private jet deliveries rise.

Business jet makers have been boosted in the last two years by a switch to private flying during the pandemic, which allowed companies such as Bombardier to increase prices. But supply chain challenges, labor shortages and softening global economic growth remain headwinds.

The company expects to see margin expansion in 2024 and 2025, and predicted revenue this year of $8.4bn to $8.6bn, above analysts’ expectations of $8.27bn, according to LSEG data.

But the free cash guidance for 2024 “could result in skepticism” on a stronger free cash flow target of above $900 m for next year, Desjardins analyst Benoit Poirier wrote in a note to clients.

Bombardier stock dropped 13.2% to C$45 a share in midday Toronto trading.

Bombardier CEO Eric Martel said that while the supply chain has improved, the company had to slow some production to allow suppliers to get back on track. (Source: Reuters)

09 Feb 24. Patria Group’s Financial Review for 2023 – preliminary data. Patria’s strong growth continued: net sales grew significantly, profitability improved and order stock developed strongly.

Financial review of 2023

Patria Group’s operating profit was EUR 67.9m and net sales EUR 732.9m.
Patria Group’s profitability was at a strong level for the fourth consecutive year.
Value of new orders received was EUR 945.8m.
Equity ratio was 40.0% and net gearing 67.7%.
Patria’s strong growth continued in 2023. Patria’s net sales grew significantly, profitability improved and order stock developed strongly driven by vehicle programmes. A major part of operational focus has been on building production capacity for the new vehicle orders as well as developing and enhancing productivity of internal operating model.

Highlights of 2023

The development of customer-centricity, operational efficiency and productivity and new ways of working continued in 2023 according to Patria’s Horizon 2025 strategy. The focus of the development has been on Patria’s Operations unit, responsible for company’s production and supply chains, and Portfolio unit, responsible for Patria’s products and services as well as their development and sales support.
Patria launched a new service concept Patria OPTIME in February 2023. This modular and scalable service model combines robust engineering and maintenance expertise with data analysis for the sustainment of various kinds of fleets on land, at sea and in the air.
Patria 6×6 vehicle is the selected vehicle platform within the multinational Common Armoured Vehicle System (CAVS) programme, originally established by Finland and Latvia, and Germany and Sweden took next steps in the joint programme in April 2023: Germany officially joined the programme by signing the Technical Arrangement and Sweden proceeded by joining the Framework Agreement as the next stage of preparation for the serial procurement phase. At the same time, Patria signed also a contract with the Swedish Defence Procurement Agency (FMV) for purchasing the first 20 Patria 6×6 that were delivered the same year. In June 2023, Patria signed the agreement with the Finnish Defence Forces Logistics Command for 91 Patria 6×6 armoured vehicles, in addition to a purchase option for 70 vehicles. The deliveries started already in 2023.
In June 2023, Patria and Lockheed Martin signed the first Memorandum of Agreement (MoA) for direct work within Finland´s F-35 industrial participation programme. This MoA covers the contractual framework for F-35 forward fuselage assemblies in Finland.
In May 2023, it was announced that Sweden enhances its defence capabilities at sea with eight Patria NEMO Navy turreted 120 mm mortar systems installed on vessels.
Patria commenced change negotiations in August 2023 in order to continue the development of its operating model, to meet the increased demand as well as improve its efficiency. The integral changes involved 284 job roles. Operational as of 1 January 2024, the introduction of the new organization may lead to redundancies of 56 persons at most.
Patria and Japan Steel Works Ltd. signed in August 2023 a license agreement on manufacturing Patria AMV XP 8×8 vehicles in Japan. The agreement enables local production in accordance with Japan Ground Self-Defense Force’s Wheeled Armored Personnel Carrier (WAPC) programme. In December 2022, Patria AMV XP 8×8 vehicle was selected by the programme to replace Type-96 8×8 Armoured Personnel Carrier vehicles that are currently in use.
The Finnish Navy’s Hamina-Class vessels´ modernisation and Mid-Life Upgrade (MLU) project reached the customer’s final approval in December 2023. The Finnish Defence Forces and Patria signed a contract for the modernization and mid-life upgrade of four vessels in 2018. In the project Patria has been acting as the prime contractor, designer, and the lead system integrator.
In December 2023, Patria and the Logistics Command of the Finnish Defence Forces signed an agreement on purchase of six new Leopard 2L Tracked Bridge Laying Vehicles.
Patria and the Finnish Defence Forces signed a service agreement on building the capabilities of Finland’s F-35 programme in December 2023. The industrial participation capabilities of the F-35 solution will ensure the management of the F-35 solution’s maintenance reliability-critical know-how and technology in Finland in both normal and state of emergency situations.

Events after the period

In January 2024 it was announced that The Finnish Defence Forces purchased 40 Patria 6×6 armoured vehicles more by redeeming the additional purchase option related to the agreement signed in June 2023.
In the beginning of the year it was also announced that Patria will deliver flight inspection system installation and modification packages to Fintraffic and STC for Finnish Aviation Academy Embraer Phenom aircrafts.
Signed in January 2024, the strategic partnership agreement between Patria and the Finnish Defence Forces was updated. With the agreement, the ongoing cooperation will deepen, the quality assurance and material management procedures were specified, and the partnership management structures were updated.
Patria published two agreements in early February 2024 to supply the Patria ARIS electronic intelligence systems (ELINT) to European NATO member countries. With the agreements, customers will have access to the latest version of a high-performance signal intelligence system, tailored to the needs of these countries.

Outlook for 2024

Patria continues to strengthen its operational efficiency and productivity and seeks profitable growth in line with its Horizon 2025 strategy in the second year of the strategy period. Patria’s reliable and cost-effective lifecycle support services and top-notch products have a key role also in the future in maintaining required performance of customer fleets in all conditions.

Following Finland’s decision in December 2021 to acquire F-35 fighter jets, negotiations concerning industrial participation of the selected aircraft will continue also in 2024. Preparations to kick off the production are under way, and the resourcing needs are being analysed and the relevant recruiting will commence.

The multinational joint CAVS programme of the Patria 6×6 vehicle is proceeding as planned. The serial production of the Finnish and Latvian vehicles is ongoing and the first batch of vehicles to Sweden has been delivered. Germany has officially joined the programme by signing the Technical Arrangement. The joint programme has raised interest and is open also for other countries to join by mutual consent of the participating countries.

In 2023, Patria and Japan Steel Works Ltd. signed a relating license agreement on manufacturing Patria AMV XP 8×8 vehicles in Japan and the preparations for kicking off manufacturing are ongoing.

The impact of long-term development of the current geopolitical situation, general economic uncertainty, inflation and increasing costs for the rest of the year are difficult to evaluate reliably. At the same time Patria’s delivery capability is expected to stay at a good level. In the mid and long term, Patria and the defence industry in general are likely to see an increase in demand as defence spends are increasing in the majority of European countries.

09 Feb 24. Saab year-end report 2023: Taking the next step on our growth journey

Saab presents the full-year results for 2023 and hosts a Strategy Execution Update event.

“2023 marked a step change for Saab with a changed market reality and a new growth journey. Our performance in 2023 reflects our ambitions in this new environment, with a strong increase in orders and sales, investments in competence, capacity and R&D, while improving earnings and generating a positive cash flow. Based on our unique position and ability to execute, Saab is a company with significant long-term opportunities,” says Micael Johansson, President and CEO, Saab.

Key highlights Q4 2023

Order intake amounted to SEK 31,501m (29,866), including SEK 6 bn from reassessment of index clauses. Growth in medium and small orders was 57% and 19%, respectively.
Group sales amounted to SEK 16,122m (13,866) with an organic sales growth of 16%, driven by most business areas.
EBITDA increased and amounted to SEK 2,032m (1,883) with an EBITDA margin of 12.6% (13.6) in the quarter.
EBIT improved to SEK 1,420m (1,314) with strong contributions from Surveillance and Kockums. The EBIT margin in the quarter was 8.8% (9.5).
Net income amounted to SEK 1,254m (1,154) and the earnings per share was SEK 9.08 (8.32), an increase of 9%.
Operational cash flow improved and was SEK 3,691m (1,682) in the quarter, driven by higher level of milestone payments.
Net liquidity position was SEK 2.3 bn (2.4) at the end of period.
The Board proposes a dividend for 2023 of SEK 6.40 (5.30) per share to the AGM, to be paid in two equal instalments.
Outlook for 2024: an organic sales growth between 12-16%, operating income growth higher than organic sales growth and positive operational cash flow.
Upgrading the medium-term target for organic sales growth to now be around 15% (CAGR), from previously around 10%, for the period 2023-2027.

08 Feb 24. Reveal Technology, Inc. (Reveal) proudly announces the acquisition of DFL Technology. With this acquisition, Reveal Technology’s existing hardware-agnostic 3D modeling analytics software will now have even more advanced capabilities to provide modern warfighters with the latest intelligence tools at the tactical edge. DFL Technology’s IDENTIFI Product, a comprehensive identity and biometrics capture suite, complements Reveal’s geospatial and terrain modeling technologies to provide even more thorough situational awareness. The DFL team, led by CEO Isaac Riddle, shares Reveal’s mission and focus on delivering the next generation of situational awareness tools made specifically for decentralized operations, in the context of peer competition.

“We are excited to be joined by the DFL team in delivering on our commitment to provide AI tools for the warfighter, enabling deterrence and dominance through better, faster decisions,” said Reveal’s CEO, Garrett Smith.

Isaac Riddle will take the helm of Reveal’s Identity and Biometrics Business Unit, delivering IDENTIFI and other future products to US DOD, foreign military, and other public safety customers.

“Joining forces with Reveal Technology marks a significant milestone for DFL. This acquisition enables us to accelerate our mission of equipping warfighters with superior technology. We admire Reveal’s commitment to innovation and excellence and are excited to work alongside their talented team. Together, we’re poised to make a tangible impact on the front lines, enhancing both warfighter capabilities and operational effectiveness.”

This acquisition advances Reveal’s mission to deliver an expanding portfolio of distributed AI tools to its military users, enhancing survivability and lethality at the tactical edge, and accelerating high-quality decision-making and autonomy.

About DFL Technology

DFL Technology is a veteran-owned small business founded by Marine Corps veterans and software developers passionate about providing superior software to warfighters on the edge.

DFL has built tactical mobile applications and ATAK plug-ins for intelligence collection, biometric operations, and target acquisition under contracts in support of USSOCOM. DFL personnel have expertise shipping AI, mobile, and TAK technologies.

https://www.dfltechnology.com

About Reveal Technology

Reveal Technology is a venture-backed, defense-focused technology company that has established itself as a leader in tactical intelligence and automation software. Reveal is committed to providing defense users with state-of-the-art artificial intelligence, computer vision, and edge computing technologies to deliver actionable intelligence at the tactical edge. http://www.revealtech.ai (Source: PR Newswire)

08 Feb 24. TransDigm Group Incorporated (NYSE: TDG), a leading global designer, producer and supplier of highly engineered aircraft components, today reported results for the first quarter ended December 30, 2023.

First quarter highlights include:

Net sales of $1,789m, up 28% from $1,397m in the prior year’s quarter;
Net income of $382m, up 67% from the prior year’s quarter;
Earnings per share of $4.87, up 46% from the prior year’s quarter;
EBITDA As Defined of $912m, up 30% from $699m in the prior year’s quarter;
EBITDA As Defined margin of 51.0%;
Adjusted earnings per share of $7.16, up 56% from $4.58 in the prior year’s quarter; and
Upward revision to fiscal 2024 net sales and EBITDA As Defined guidance.

Quarter-to-Date Results

Net sales for the quarter increased 28.1%, or $392m, to $1,789m from $1,397m in the comparable quarter a year ago. Organic sales growth as a percentage of net sales was 23.5%.

Net income for the quarter increased $153m, or 66.8%, to $382m from $229m in the comparable quarter a year ago. The increase in net income primarily reflects the increase in net sales described above and the application of our value-driven operating strategy. The increase was partially offset by higher income tax expense, higher interest expense and higher non-cash stock and deferred compensation expense.

GAAP earnings per share were reduced in the first quarter of fiscal 2024 and 2023 by $1.75 per share and $0.67 per share, respectively, as a result of dividend equivalent payments made during each quarter. As a reminder, GAAP earnings per share are reduced when TransDigm makes dividend equivalent payments pursuant to the Company’s stock option plans. These dividend equivalent payments are made during the Company’s first fiscal quarter each year and also upon payment of any special dividends, such as the $35.00 per share special dividend paid in the first quarter of fiscal 2024.

Adjusted net income for the quarter increased 58.2% to $413 m, or $7.16 per share, from $261m, or $4.58 per share, in the comparable quarter a year ago.

EBITDA for the quarter increased 32.2% to $859m from $650m for the comparable quarter a year ago. EBITDA As Defined for the quarter increased 30.5% to $912m compared with $699m in the comparable quarter a year ago. EBITDA As Defined as a percentage of net sales for the quarter was 51.0% compared with 50.0% in the comparable quarter a year ago.

“I am very pleased with our first quarter operating results and strong start to the fiscal year,” stated Kevin Stein, TransDigm Group’s President and Chief Executive Officer. “Total revenue ran ahead of our expectations and our commercial aftermarket revenues further expanded. Our EBITDA As Defined margin was 51.0% for the quarter, up approximately 100 basis points from the comparable prior year period. Excluding the results related to Calspan, acquired May 2023, our first quarter EBITDA As Defined margin was approximately 51.8%. As always, we remain focused on our operating strategy, value drivers and effectively managing our cost structure. We look forward to the opportunity to continue creating value for our shareholders throughout the remainder of our fiscal 2024.”

As previously reported, on November 9, 2023, TransDigm entered into a definitive agreement to acquire the Electron Device Business of Communications & Power Industries (“CPI”), a portfolio company of TJC, L.P., for approximately $1.385bn in cash. The acquisition is expected to close this fiscal year, subject to regulatory approvals in the United States and United Kingdom and customary closing conditions. CPI’s Electron Device Business is a leading global manufacturer of electronic components and subsystems primarily serving the aerospace and defense market. Its products are highly engineered, proprietary components with significant aftermarket content and a strong presence across aerospace and defense platforms.

During the quarter, on November 28, 2023, TransDigm successfully completed a private offering of $1.0bn of 7.125% senior secured notes due December 1, 2031 (“2031 Secured Notes”). Also on November 28, 2023, TransDigm successfully issued $1.0bn in new Tranche J term loans maturing February 28, 2031. The applicable interest rate for the Tranche J term loans is Term Secured Overnight Financing Rate (“SOFR”) plus 3.25%. TransDigm intends to use the net proceeds of the offering of the 2031 Secured Notes and new Tranche J term loans to fund the purchase of CPI’s Electron Device Business and for general corporate purposes.

Please see the attached tables for a reconciliation of income from continuing operations to EBITDA, EBITDA As Defined, and adjusted net income; a reconciliation of net cash provided by operating activities to EBITDA and EBITDA As Defined; and a reconciliation of earnings per share to adjusted earnings per share for the periods discussed in this press release.

Fiscal 2024 Outlook

Mr. Stein stated, “We are raising our full year net sales and EBITDA As Defined guidance primarily to reflect our strong first quarter results and current expectations for the remainder of the fiscal year. On the net income line, the impact of this guidance raise will be partially offset by the additional interest expense relating to the financing activities completed during the quarter – we took on incremental debt to fund the pending acquisition of CPI’s Electron Device Business.” This guidance excludes any EBITDA As Defined contribution from the pending acquisition of CPI’s Electron Device Business.

TransDigm now expects fiscal 2024 financial guidance to be as follows:

Net sales are anticipated to be in the range of $7,575m to $7,755m compared with $6,585m in fiscal 2023, an increase of 16.4% at the midpoint (an increase of $85 m at the midpoint from prior guidance);
Net income is anticipated to be in the range of $1,560m to $1,662m compared with $1,299m in fiscal 2023, an increase of 24.0% at the midpoint (a decrease of $86 m at the midpoint from prior guidance);
Earnings per share is expected to be in the range of $25.25 to $27.01 per share based upon weighted average shares outstanding of 57.8m shares, compared with $22.03 per share in fiscal 2023, which is an increase of 18.6% at the midpoint (a decrease of $1.45 per share at the midpoint from prior guidance);
EBITDA As Defined is anticipated to be in the range of $3,920m to $4,050 m compared with $3,395m in fiscal 2023, an increase of 17.4% at the midpoint (an increase of $45m at the midpoint from prior guidance and corresponding to an EBITDA As Defined margin guide of approximately 52.0% for fiscal 2024);
Adjusted earnings per share is expected to be in the range of $29.97 to $31.73 per share compared with $25.84 per share in fiscal 2023, an increase of 19.4% at the midpoint (a decrease of $1.12 per share at the midpoint from prior guidance); and
Fiscal 2024 outlook is based on the following market growth assumptions:
Commercial OEM revenue growth around 20%;
Commercial aftermarket revenue growth in the mid-teens percentage range; and
Defense revenue growth in the high-single digit to low double-digit percentage range.
(Source: PR Newswire)

07 Feb 24. McNally Capital Portfolio Company, Xcelerate Solutions, Merges with VMD Corp. McNally Capital (“McNally”), a private equity firm, is pleased to share that Xcelerate Solutions (“Xcelerate”), a portfolio company of McNally, announced its merger with VMD Corp (“VMD”). Xcelerate is a leading defense and national security company, providing integrated solutions through three service areas – Enterprise Security, Digital Transformation, and Strategic Consulting. VMD is a cybersecurity, agile engineering, and critical infrastructure protection firm based in Fairfax, Virginia. The combined company will go to market as Xcelerate Solutions, offering a comprehensive, mission-first portfolio of secure solutions to the federal government.

“We see this merger as a win-win. We share similar cultures, like-minded leadership, and a deep commitment to delivering positive mission outcomes,” said Mark Drever, Chief Executive Officer of Xcelerate. “Since McNally Capital’s investment, we’ve been actively looking to expand our security and IT capabilities through M&A. McNally’s immense national security expertise, network, and efforts were instrumental in this transaction, and VMD is a great match.”

“McNally Capital is proud of our partnership with Xcelerate and excited for the combined growth journey with VMD. We look forward to working together as we continue building and scaling this industry-leading platform,” said Ward McNally.

The merged company boasts an experienced team of over 1,000 technology professionals dedicated to delivering a broad spectrum of cybersecurity, enterprise, and infrastructure protection services focused on mission-first delivery. The depth and versatility of the two companies as one presents opportunities for diversification and growth across its defense, law enforcement, national security, civilian agencies, and the federal government. Mark Drever adds, “Together with VMD, our expanded capabilities, contracts, and specialized expertise make a powerful statement to the government market.” Xcelerate plans to capitalize on the combined strengths of both companies, foster a mission-first culture, align leadership, and crystallize its go-to-market portfolio to best serve federal clients in the coming months.

“We are excited about what this merger will mean to our clients,” echoed VMD co-founders Deepti Malhotra, Chief Executive Officer, and Vivek Malhotra, President. “Not only will it broaden our portfolio, but it will allow us to leverage the strengths of both companies, offering new solutions across our engagements.”

“McNally Capital is thrilled to welcome VMD to Xcelerate and the broader McNally Capital portfolio. Like Xcelerate, VMD has built a reputation for trusted delivery, deep technical talent, and elite engineering prowess. We believe this powerful partnership will provide a solid foundation for driving future growth and creating value for our investors,” said Michael Ember, Principal at McNally Capital.

McNally’s investment in Xcelerate stemmed from the firm’s internal expertise in the Aerospace & Defense industry and investment thesis in intelligence and national security. Xcelerate’s merger with VMD bolsters this thesis and is a testament to McNally Capital’s proprietary value creation framework at work. This strategic transaction accelerates the business’s growth trajectory and capitalizes on McNally’s expertise in implementing digital, technology-enabled, transformative solutions to modernize historically analog problems.

Ropes & Gray LLP served as legal counsel for this transaction. Nelson Mullins provided legal counsel on behalf of VMD.

About McNally Capital

McNally Capital is a private equity firm based in Chicago, Illinois. The firm is currently investing out of its committed buyout fund, McNally Capital Fund II, LP.

McNally Capital is focused on acquiring lower middle-market businesses with $5m to $20m in EBITDA in the Aerospace & Defense/National Security, Industrial Products & Services, and Business Services industries. The firm seeks to apply its hands-on experience, institutional capabilities, and proprietary value creation framework to its portfolio companies to benefit management teams in their next phase of growth and build value for McNally Capital’s investors. The firm also leverages a deep bench of industry partners who provide incremental industry and operating knowledge.

Ward McNally founded the firm in 2007. He is a sixth-generation member of the McNally family, which proudly owned and operated Rand McNally & Company for over 100 years until its sale in 1997. These roots provide a deep appreciation of building and scaling companies that shape industries and endure for generations.

For more information, please visit www.mcnallycapital.com.

About Xcelerate Solutions

Xcelerate Solutions is a leading defense and national security company, providing integrated solutions in enterprise security, strategic consulting, and digital transformation. Xcelerate enhances the security and resilience of America’s personnel as well as physical and cyber infrastructure. The company is a trusted partner to Federal Law Enforcement, the Department of Defense, and Intelligence Community agencies that are responsible for the security and safety of the United States. For more information, please visit www.xceleratesolutions.com.

About VMD Corp

VMD is a vision, mission, driven company that has been delivering information technology solutions to the Federal government in agile engineering, cybersecurity, and critical infrastructure protection since 2002. For more information, please visit www.vmdcorp.com

(Source: BUSINESS WIRE)

08 Feb 24. MilDef Year-End Report January – December 2023.

A STRONG END TO A STRONG YEAR

Financial development fourth quarter 2023

Net sales increased by 12% to SEK 353m (315).
The gross margin was 48.2% (45.8).
Adjusted EBITDA amounted to SEK 59.8m (43.4), equivalent to an adjusted operating margin of 17.0% (13.8).
Operating profit (EBIT) amounted to SEK 41.4m (31.5), corresponding to an operating margin of 11.7% (10.0).
Order intake increased by 51% to SEK 408m (271).
Operating cash flow amounted to SEK 26.2m (-49.3).

Financial development January – December 2023

Net sales increased by 56% to SEK 1,151m (739).
The gross margin was 48.3% (47.7).
Adjusted EBITDA amounted to SEK 168.0m (60.0), equivalent to an adjusted operating margin of 14.6% (8.1).
Operating profit (EBIT) amounted to SEK 108.1m (29.2), corresponding to an operating margin of 9.4% (4.0).
Order intake increased by 29% to SEK 1,214m (938).
Order backlog as of December 31, 2023 increased by 15% to SEK 1,327m compared with the same date in 2022 (1,156).
Operating cash flow amounted to SEK 8.7m (-95.0).
Earnings per share after dilution over the last 12-month period amounted to SEK 1.71 (0.37).
The Board of Directors is proposing that a dividend for the 2023 financial year be set at SEK 0.50 per share.

Summary of significant events in the fourth quarter, October – December 2023

In the fourth quarter MilDef received a strategic hardware order from an unnamed, European NATO country. This is a suborder from an existing framework agreement and is the result of the country accelerating the pace at which it is boosting its defense capacity. The order is worth SEK 30m with delivery expected to take place in 2024.
MilDef’s subsidiary Handheld won an order from Makin during the quarter. The order is for delivery of robust tablets in the Algiz RT 10 series to Makin, an international provider of machine control systems. The contract is for five years and is worth a total of SEK 67m.
The Swedish Defence Materiel Administration (FMV) placed a number of orders during the quarter for robust IT equipment for the Swedish Armed Forces. These are products such as computers, laptops and network equipment. The value of the deliveries, which will take place in 2024, is a total of SEK 45m.
Clavister, a leader in European cybersecurity for mission-critical applications, ordered MilDef hardware during the quarter for a value of SEK 97m. The order follows an earlier prototype order for customized and robust network equipment. The products will be part of Clavister Cyber Armour, an integrated cyber security system for defense platforms. Deliveries will take place in the period 2024–2029.

Summary of significant events after the end of the period

In February MilDef signed a Memorandum of Understanding (MoU) with defense company Lockheed Martin to explore an industrial partnership within Sweden’s aerospace sector.
No other events considered of significance have taken place since the end of the period up to the signing of this year-end report.

Statement by Daniel Ljunggren, CEO MilDef Group

A STRONG FINISH TO 2023 SETS THE TONE FOR 2024

The fourth quarter was the strongest ever for the company in terms of order intake and sales. Order intake increased during the quarter by 51% to SEK 408 m. It is also gratifying to note that the company’s focus on operating cash flow has delivered effect. The quarter’s operating cash flow was SEK +26.2 compared with SEK -49.3 during the same period in 2022. The order backlog also grew by 15% for a record high of SEK 1,327m at the end of the year.

Aside from the above-mentioned good news, we are still unfortunately living in an unstable world with a security situation that is a cause for concern. Many countries have an expressed need to strengthen their defense capacity for many years to come. This is confirmed by the rapidly increasing defense appropriations. We firmly believe that there will be a significant increase in demand for European defense technology over the next decade. Given this background, MilDef and what we deliver have never been more relevant. To leverage the upcoming growth opportunities we are maintaining our sharp focus on strengthening MilDef’s market position and operating capacity.

Long-term view more important than individual quarters

While a record quarter is certainly something to celebrate, the company’s financial development over time is even more important as a means of driving long-term shareholder value. MilDef operates in an industry characterized by volatile order intake over individual quarters and the volatility between quarters is expected to continue. This means that it is best to look at a longer time horizon when evaluating MilDef’s financial performance. The past 12-month period saw growth of 56%, 47% of which is organic growth. This was achieved at the same time as operating profit improved by 180%, from SEK 60m to SEK 168m.

The operating profit for the full year is 15% (8%), which exceeds the company’s long-term target of 10% over time. Order intake increased by 29%, from SEK 938 m to SEK 1,214m. In summary, MilDef has clearly moved the company’s financial performance in a positive direction over the past 12-month period.

Cash flow and operating capital are developing well

In the fourth quarter we saw positive effects of the company’s ever-increasing focus on operating cash flow as activities implemented are now starting to yield results. This was achieved despite the fact that sustained strong growth drives a need for increased working capital. MilDef’s operating cash flow for full year 2023 amounted to SEK +8.7m. This is a distinct improvement on the comparison period in 2022 when a negative cash flow of SEK -95.0m was reported. Working capital as a percentage of sales on a rolling 12-month basis is still not where the company would like it to be, but we remain of the opinion that it will normalize and will, over time, return to historical levels of around 25%. This will in turn lead to further positive effects on operating cash flow going forward.

Market conditions 2024 and beyond

Behind the strong growth in 2023 is higher activity in the market combined with increased digitalization among our end-customers. The geopolitical tensions affect our industry and have resulted in the biggest increase in defense investment for 30 years, above all in Europe. It is, however, important to mention that MilDef’s growth in 2023 is mainly the result of earlier decisions on armed forces modernization and digitalization. The effects of the recent increase in defense budgets are expected to be felt later on. The need for more advanced technical capacity, more secure supply chains and rebuilding of inventory from low levels will drive demand over the next decade, particularly within the European defense industry.

Operating capacity prioritized initially

Since Russia invaded Ukraine the European defense industry has been navigating somewhat new and unknown terrain. Transitioning from disarmament to building greatly increased defense capacity takes time. At MilDef we have noted that rearmament – contrary to what one might expect – has initially caused a situation where orders for MilDef’s products have been put on the hold in favor of more basic needs. This is because MilDef’s end-customers have shifted their focus from modernization and digitalization to pure operating capacity. At the same time the need for modernization – which was already significant – has increased in line with an increased focus on defense. At MilDef we are positioning ourselves to be prepared for larger volumes.

Summary of 2023 and outlook for 2024

“Now we are closing the books and putting 2023 behind us. It was a year in which MilDef made important advances – both operationally and financially. The company is reporting record profits, strong growth and clearly improved cash flow, and for this we want to extend our great gratitude to our employees, customers and suppliers for their efforts and support during the year. MilDef is entering 2024 with a record order backlog and important framework agreements in place, while also being well-prepared to meet the rapidly growing needs of the market. All this makes me very optimistic as I look forward to 2024.” Daniel Ljunggren, President and CEO of MilDef Group

08 Feb 24. BlackRock launches global aerospace & defence ETF in Europe.

BlackRock has introduced a new ETF in Europe focused on developed market equities from the aerospace and defence sector.

The iShares Global Aerospace & Defence UCITS ETF (DFND NA) has been listed on Euronext Amsterdam with an expense ratio of 0.35%.

Geopolitical tensions have surged to the forefront of global concerns due to recent events, including Russia’s invasion of Ukraine and the Israel-Hamas conflict in Gaza, marking a significant impact on wealth management strategies.

These conflicts, along with rising tensions in the Asia-Pacific region over issues like China, Taiwan, and the South China Sea, and ongoing instability in Africa’s Sahel region, have prompted NATO countries to increase their defence spending, with some members expected to significantly surpass the alliance’s suggested target of 2% of GDP, reflecting a shift from the post-Cold War era of reduced military expenditures.

As a result, ETF providers in both Europe and the US have been launching aerospace and defence sector-focused products to cater to the increasing investor demand for exposure to this industry.

BlackRock’s fund is the third to enter this space in Europe following the April 2023 launch of the $150m VanEck Defense UCITS ETF (DFNS LN), which comes with an expense ratio of 0.55%; and the July 2023 debut of HANetf’s $60m Future of Defence UCITS ETF (NATO LN), which costs 0.49%.

Methodology

DFND is linked to the S&P Developed BMI Select Aerospace & Defense 35/20 Capped Index which selects its constituents from a universe of developed market stocks with market capitalizations above $300m and average daily trading volumes greater than $3m.

All firms within the Aerospace and Defence sub-industry of the Global Industry Classification Standard (GICS) that meet the eligibility requirements are selected for the index. Constituents are weighted by float-adjusted market capitalization subject to a cap of 33% on the largest company and a cap of 19% on any other firm.

As of the end of January 2024, the index contained 56 stocks with two-thirds (66.9%) of the total weight dedicated to US-listed companies and the majority of the remaining weight allocated to firms from France (17.2%) and the UK (8.9%).

The largest constituent, RTX Corporation, accounted for a weight of 12.4% with other notable positions including Boeing, Airbus, Lockheed Martin, and Safran SA. The top ten positions collectively make up nearly three-quarters (73.7%) of the total exposure. (Source: Google/https://www.etfstrategy.com/)

07 Feb 24. Rocket Lab Announces Closing of Upsized Offering of $355m Convertible Senior Notes. Rocket Lab USA, Inc. (“Rocket Lab”, “we”, “us” or “our”) (Nasdaq: RKLB), a global leader in launch services and space systems, announced today the closing of its private offering of $355.0 m principal amount of 4.250% convertible senior notes due 2029 (the “notes”) to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) and related capped call transactions. The offering represents the aggregate of both the previously announced, upsized offering of $300.0m as well as the full exercise of the $55.0m option to purchase additional notes granted by Rocket Lab to the initial purchasers of the notes.

Rocket Lab founder and CEO, Peter Beck, said: “Closing today’s transaction is another exciting step for Rocket Lab as we continue our growth trajectory, and upsizing the offering due to oversubscription is a strong show of confidence. This strategic move has added additional funding to the Rocket Lab balance sheet at what we view as the most attractive cost of capital available and least dilutive path for our existing shareholders. We look forward to deploying this capital efficiently and expediently towards a mix of opportunities including potential M&A and other strategic growth and scaling investments.”

Key Elements of the Transaction

$300.3m of net proceeds after adjusting for $43.2m of capped call costs and approximately $11.5m of underwriting costs and estimated offering expenses
Interest rate of 4.25% per year, payable semi-annually in arrears on February 1 and August 1 of each year, beginning August 1, 2024
Initial conversion rate of 195.1029 shares of common stock per $1,000 principal amount of notes, which represents a conversion price of approximately $5.13 per share
The notes will not be redeemable before February 1, 2027
Effective conversion price of $8.04 after giving effect to the capped call transactions

Use of Net Proceeds

Approximately $40m to repay a portion of its borrowings under its equipment financing agreement, including accrued and unpaid interest on such borrowings
Working capital or other general corporate purposes, which may include potential acquisitions and other strategic transactions

The notes were offered only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act. The offer and sale of the notes and any shares of common stock issuable upon conversion of the notes have not been, and will not be, registered under the Securities Act or any other securities laws, and the notes and any such shares cannot be offered or sold absent registration or except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any other applicable securities laws. This press release does not constitute an offer to sell, or the solicitation of an offer to buy, the notes or any shares of common stock issuable upon conversion of the notes, nor will there be any sale of the notes or any such shares, in any state or other jurisdiction in which such offer, sale or solicitation would be unlawful. (Source: BUSINESS WIRE)

07 Feb 24. HENSOLDT achieves order intake of EUR 1.1bn between October 2023 and January 2024. Company continues growth trajectory and expands production capacities. Sensor solutions provider HENSOLDT recorded an order intake of around EUR 1.1bn between October 2023 and January 2024. All business units contributed to this. These include major orders such as the German air defence system Nah- und Nahbereichschutz (LVS NNbS) commissioned in January, further procurements of the TRML-4D air defence radar and for the radar of the Eurofighter and optical systems for armoured vehicles. “As is usual in our business, we received a large number of orders before and around the turn of the year. It clearly shows that we are fully on track with our growth targets,” says HENSOLDT CFO Christian Ladurner.

With an order value of almost EUR 300m, the LVS NNbS project plays a major role. This will provide the Bundeswehr with a state-of-the-art system to protect ground troops in action and to safeguard command posts and properties against threats from the air. All business units from the HENSOLDT portfolio – Radar, Optronics, Spectrum Dominance and Services – are involved. This includes the internationally successful TRML-4D air defence radar, for which HENSOLDT received orders for more than 20 radars with an order value of around 350m euros in the year as a whole.

The development of the Eurofighter radar also accounted for a substantial proportion of the order intake in the fourth quarter, with an order value of almost 100m euros. There was also strong demand for optics and self-protection systems for the Leopard and Puma armoured vehicles, which contributed over 60m euros to the growth in the order backlog.

“Sensor solutions and electronic systems are indispensable for an effective defence,” says HENSOLDT CFO Christian Ladurner. “In view of the growing international tensions, we therefore expect demand for these products to grow, which we are meeting by systematically expanding our production capacities.”

07 Feb 24. Pennant International hires new chair, says revenue and earnings up. Pennant International Group PLC on Wednesday named Ian Dighe as chair designate, and released an upbeat trading update.

The Cheltenham, England-based company expects to report revenue of GBP15.5m for 2023, up from GBP13.7m in 2022.

Pennant, which provides training technologies and product support for various industries including defence and aerospace, also said its gross margin rose from 42% to a “record” 50%.

Adjusted earnings before interest, tax, depreciation and amortisation increased to GBP2.2m from GBP1.1m.

Pennant’s net debt, meanwhile, grew during the year to GBP1.9 m at December 31 from about GBP400,000 at the same time in 2022. However, it said post year-end receipts resulted in around GBP300,000 in net cash during the week of January 15.

Also on Wednesday, Pennant announced the appointment of Ian Dighe as its chair designate.

Incumbent Phil Cotton, who intends to remain on the board as an independent non-executive, will step down from the role at the next annual general meeting, which Pennant expects to hold in May.

Dighe was a co-founder of Bridgewell Group PLC, and served as chair of Miton Group PLC from February 2011 to December 2017. Currently, he is chair of The Investment Co PLC and an independent director at Seneca Growth Capital VCT PLC.

“The board is very pleased with the group’s positive, and improving, trading performance,” remarked Chief Executive Officer Philip Walker. “The results, which include a return to operating profit and a record gross margin of 50%, are strong indicators that Pennant’s growth strategy is delivering.

“However, there is much still to do as we head into the next phase, and we are therefore delighted to welcome Ian, whose appointment will further strengthen the board as we move forward.”

Pennant intends to announce its full-year results in April.

Shares in the company were trading 5.4% lower at 32.65 pence in London on Wednesday morning. Over the past 12 months, Pennant is up 15%.

(Source: Google/https://www.morningstar.co.uk/ Alliance News)

06 Feb 24. Venture-backed space companies face “year of reckoning.”

The aftermath of a “bubble” of investment in space startups in recent years could cause many companies to struggle to raise additional funding even as overall market conditions improve.

“This year, 2024, will be a year of reckoning, to a large extent, for venture,” said Timur Davis, investment director at Munich Re Ventures, during a panel discussion at the SmallSat Symposium here Feb. 6.

That situation is the aftermath of a surge of investment in space companies that peaked at $47 bn in 2021, including several companies going public through special purpose acquisition company (SPAC) mergers. A lot of that, he argued, was poorly invested.

“Companies that frankly probably should not have ever raised funds were able to raise funds, and even good companies were raising at valuations that were unsustainable,” he said. “Now, we’re reaping the fallout of that.”

“There were a bunch of investors that shouldn’t have been investing in space businesses, frankly,” added Lewis Jones, investment vice president at Generation Space. Those investors, he said, “hadn’t really learned about the asset class and weren’t doing as much diligence as they should have.”

“That capital does not exist any more in the space ecosystem,” he said, which he said benefits the industry in the longer term. “The healthier businesses are still getting funded.”

However, the retrenchment of capital since the 2021 peak, driven by both conditions specific to the space market as well as broader issues like higher interest rates, is making it more difficult for companies to raise larger rounds, Davis said.

“A lot of companies have been funded through bridge rounds, through insiders, through small, incremental financing rather than the real financings they need to achieve the next level of their development,” he said. “Those pools of capital are drying out.”

The challenges faced by many companies that went public via SPACs has also hurt space startups. “The experience of SPACs from 2021 really killed the pathway to [initial public offerings] for most technologically complex, capital-intensive startups, aka a large chunk of the space industry,” he said. “It’s taken a few years for public market investors to regain a little bit of confidence.”

Mike Collett, managing partner at Promus Ventures, put the blame of the SPAC deals, including their poor performance on the market since going public, on the companies. “The issue is that the companies haven’t hit their numbers,” he said, often falling far short of forecasts. “Until they are actually able to meet what they tell the market, the market is going to treat them like anyone else.”

Despite the near-term problems, investors saw signs of improvement, citing a rising stock market and expectations of declining interest rates. “The macro environment and the industry shakeup are probably healthy,” said Xiaoming Yin, senior investment manager at Lockheed Martin Ventures.

“I’m optimistic,” Davis said. “I think this year we’ll see the market come back to an extent. I think we’ll see some companies not make it, but the ones that do will be stronger.” (Source: glstrade.com/Space News)

06 Feb 24. AMETEK, Inc. (NYSE: AME) today announced its financial results for the fourth quarter ended December 31, 2023.

AMETEK’s fourth quarter 2023 sales were a record $1.73bn, a 6.5% increase over the fourth quarter of 2022. Operating income increased 12% to a record $445.0m and operating margins were 25.7%, up 120 basis points from the fourth quarter of 2022. Operating cash flow in the quarter was a record $540.7m, up 40% versus the prior year.

On a GAAP basis, fourth quarter earnings per diluted share were $1.48. Adjusted earnings in the quarter were a record $1.68 per diluted share, up 11% from the fourth quarter of 2022. Adjusted earnings adds back non-cash, after-tax, acquisition-related intangible amortization of $0.20 per diluted share. A reconciliation of reported GAAP results to adjusted results is included in the financial tables accompanying this release and on the AMETEK website.

“AMETEK’s fourth quarter and full year performance was exceptional,” noted David A. Zapico, AMETEK Chairman and Chief Executive Officer. “Contributions from organic sales growth and recent acquisitions, along with tremendous operating performance, led to robust margin expansion, record earnings and impressive cash flow growth in the quarter and the full year. We also continued to strengthen our portfolio in 2023, deploying approximately $2.25bn in capital on acquisitions, including our most recent acquisition, Paragon Medical.”

For the full year, AMETEK’s sales were a record $6.60bn, an increase of 7% over 2022. Operating income was $1.71bn, up 14% versus the prior year, and operating income margins were 25.9%, expanding 150 basis points over last year’s margins.

On a GAAP basis, full year 2023 earnings were $5.67 per diluted share. Full year adjusted earnings were $6.38 per share, an increase of 12% over 2022’s comparable adjusted earnings of $5.68 per share. AMETEK established annual records for sales, operating income, operating margin, and earnings per share.

Electronic Instruments Group (EIG)

EIG sales in the fourth quarter were a record $1.24bn, up 7% from the same quarter in 2022. EIG’s operating income in the quarter increased 17% to a record $359.0m and operating income margins were 29.0%, an increase of 250 basis points compared to the fourth quarter of 2022.

“EIG delivered outstanding results in the fourth quarter,” commented Mr. Zapico. “The sales growth was driven by continued solid organic growth and contributions from recent acquisitions. Our EIG businesses drove exceptional margin expansion, a testament to the quality of our businesses and our team’s focus on driving continuous operational improvements.”

Electromechanical Group (EMG)

EMG sales in the fourth quarter were $494.7m, up 6% from the fourth quarter of 2022. EMG’s fourth quarter operating income was $112.3m, while operating income margins were 22.7% in the quarter.

“EMG also delivered a strong fourth quarter performance with continued excellent growth across our aerospace and defense businesses and solid core margin expansion in the quarter,” stated Mr. Zapico.

2024 Outlook

“AMETEK’s businesses delivered exceptional results in the fourth quarter and for the full year. The strength of the AMETEK Growth Model, alongside the outstanding contributions of our colleagues, allowed us to deliver strong, high-quality growth. The strength of our niche businesses, diverse market exposures, record backlog and robust operating capabilities position us for sustained growth. With a flexible balance sheet and strong cash flows, we are well positioned to invest in our organic growth initiatives and pursue strategic acquisitions to drive long-term value creation,” noted Mr. Zapico.

“For 2024, we expect overall sales to be up low double digits on a percentage basis compared to 2023. Adjusted earnings per diluted share are expected to be in the range of $6.70 to $6.85, an increase of 5% to 7% over the comparable basis for 2023,” he added.

“For the first quarter of 2024, overall sales are expected to be up low double digits on a percentage basis compared to the same period last year. Adjusted earnings in the quarter are anticipated to be in the range of $1.56 to $1.60 per share, up 5% to 7% compared to the first quarter of 2023,” concluded Mr. Zapico. (Source: PR Newswire)

06 Feb 24. Viasat Reports Results. Letter to Shareholders: Our Q3 Fiscal Year 2024 results reflect continued year-over-year revenue and Adjusted EBITDA1 growth driven by our mobility and government businesses. We also continued to make meaningful progress in the near-term business priorities we highlighted last quarter while strengthening our capital structure and investing for profitable growth:

Building operational momentum and financial performance of core businesses. For Q3 FY2024, net loss2 increased to $124m, revenue grew 8% and Adjusted EBITDA grew 11% YoY (is inclusive of Inmarsat’s results in the prior year period) – through focused execution and positive operating leverage in our portfolio of diverse businesses across attractive markets.
Executing on synergy and strategic opportunities through methodical Inmarsat integration. During the quarter we completed an important milestone by integrating and organizing the company to facilitate greater efficiency using common infrastructure, operational, go-to-market, and engineering resources for delivering our services. We expect this to result in approximately $100m in annualized cash operating savings by the beginning of FY2025. This exceeds the original $80m run-rate target we set when the Inmarsat acquisition was announced and advances those savings by approximately two years.
Accelerate mobility business growth while advancing inflection to positive free cash flow. Our existing satellite fleet and the 7 Ka-band satellites under construction are key elements of our technology roadmap to achieve our multi-year growth objectives and improving productivity. Our revised capital budgets reflect the synergies enabled by our integrated space and ground infrastructure, the revenue synergy potential in our integrated portfolio, and a sharp focus on positive free cash flow. We reiterate our goal of achieving sustainable positive free cash flow in the first half of calendar 2025.

For Q3 FY2024, we earned revenue of $1.1bn, a 73% YoY increase compared to revenue from continuing operations of $651m in Q3 FY2023, reflecting the impact of the acquisition of Inmarsat in May 2023. Net loss for the quarter was $124 m, compared to a $47m loss from continuing operations in the prior year period. The increase in net loss was driven primarily by higher interest expense associated with the additional debt incurred and assumed in the Inmarsat acquisition and non-recurring charges relating to the integration of Inmarsat.

Adjusted EBITDA in Q3 FY2024 was $383m, an increase of 214% compared to Adjusted EBITDA from continuing operations in the prior year period. Our Q3 FY2024 results included a full quarter of contribution from Inmarsat. Including Inmarsat’s results in the prior year period for a more meaningful comparison, YoY revenue and Adjusted EBITDA growth for the combined companies in the quarter would have been 8% and 11%, respectively. Inmarsat’s stand-alone performance for the quarter ended December 31, 2023, was very good, with top line revenue of $443m, a 12% YoY increase, and estimated Adjusted EBITDA of $260m, a 17% YoY increase. As a reminder, substantially all of Inmarsat’s former aviation, maritime and enterprise business units are included in our Satellite Services segment, while their former government business unit is included in our Government Systems segment. We ended the quarter with $3.7bn in backlog after reporting $1.2bn of awards during the quarter, a 111% YoY increase in awards from continuing operations. Government Systems ended the quarter with over $6.4bn of IDIQ unawarded potential contract value, an increase of 152% YoY in IDIQ unawarded potential contract value from continuing operations. The growth in awards and the IDIQ portfolio was primarily due to the inclusion of Inmarsat’s awards and IDIQ portfolio in the current year period, plus a significant new satellite services contract from the US government for approximately $260m.

2 Shareholder Letter

Q3 Fiscal Year 2024 Our results reflect good execution across our diverse set of global mobility markets, including in-flight connectivity (IFC), government, business aviation and enterprise maritime. Evidence of this includes the renewed long-term commitment by Viasat and Deutsche Telekom to the European Aviation Network (EAN), comprised of S-band satellite coverage and a complementary ground network component operated by Deutsche Telekom. Subsequent to quarter end, Lufthansa Group became a new EAN customer by agreeing to equip more than 150 aircraft with our EAN IFC solution. This is in addition to the 240 Lufthansa Group aircraft contracted on our Ka-band network.

Our liquidity position at the end of Q3 FY2024 was very strong, at over $2.9bn, which included $1.65bn of cash. Sequentially, net leverage3 increased slightly to 3.8x estimated combined LTM Adjusted EBITDA as of Q3 FY2024, a 0.1x sequential increase, and remains substantially favorable to plan at the time the Inmarsat acquisition was announced. The ViaSat-3 F1 satellite continues to undergo testing of the payload and affected antenna. Based on the results of this testing to date we continue to expect to obtain sufficient bandwidth and coverage flexibility, combined with our existing and planned fleet, and partner space resources, to support our growing global mobility business. We currently anticipate placing the satellite into commercial service with our first mobility flights enabled next quarter, Q1 FY2025. During the quarter our antenna supplier completed its root cause investigation of the ViaSat-3 F1 antenna deployment anomaly. Based on its findings and recommendations, we are implementing several corrective actions on the ViaSat-3 F2 antenna. We expect to complete those actions as well as extensive testing and spacecraft integration by early calendar 2025 with launch expected shortly thereafter. The scheduled launch of ViaSat-3 F3 remains on track for late in the fourth quarter of calendar 2024. The F3 satellite has a different antenna design by a different supplier, and its schedule is not affected by the ViaSat-3 F1 anomaly. Finally, our insurance recovery claims are proceeding well with some payments received in Q4 FY2024 and the majority anticipated to be paid in FY2025. With continued growth in our core businesses, realization of strategic, operational and capital synergies consistent with the growth objectives in our core markets, we anticipate YoY growth in revenue and Adjusted EBITDA in Q4 FY2024 and for FY2025, as well as achieving our free cash flow inflection point in the first half of calendar 2025. Additional details are provided in the Outlook section of this letter.

06 Feb 24. Synthetaic Raises $15m in Series B Funding to Unlock Insights from Image Data with AI. Synthetaic, a leading provider of advanced AI solutions, raised $15m in Series B funding from new and existing investors. The round was co-led by Lupa Systems and TitletownTech, with participation from IBM Ventures and Booz Allen Hamilton.

Synthetaic’s RAIC platform offers a streamlined solution for quick and cost-effective object search within raw image data. This innovation significantly reduces the complexities associated with unlocking the full potential of massive, unstructured image datasets, providing businesses with immediate insights via rapid search and iterative AI model training.

“Over the past year, we’ve proven that when it comes to your data, if you can see it, RAIC can search it,” said Corey Jaskolski, Synthetaic CEO and Founder. “The next chapter is about bringing that technology to market so that companies across all industries can find the seemingly impossible answers locked inside their visual datasets.”

“With the volume of image and video data that companies have previously been unable to take advantage of, Synthetaic now provides an incredible new capability to make that data useful and valuable,” said TitletownTech Managing Director and Synthetaic Board Member Jill Enos. “We’re thrilled to be on this journey with Corey and we can’t wait to see what the team accomplishes next.”

This latest round will accelerate customer acquisition and capture new market opportunities for Synthetaic’s ground-breaking AI-powered data analysis solutions. RAIC’s versatile capabilities cover satellite imagery, full-motion video, drone photography, infrared thermography, and other image data types, catering to both commercial and federal sectors.

For example, Synthetaic successfully traced the full path of a suspected Chinese spy balloon in geospatial satellite data. Starting from a hand-drawn sketch, RAIC took only two minutes to return a match after combing through 18 trillion pixels of Earth observation imagery. The find formed the basis of a full investigation of the balloon’s path with The New York Times’ Visual Investigation team. RAIC was also utilized by CNN to analyze geospatial imagery in an active warzone for an exclusive investigation which was featured as CNN.com’s top story worldwide. In short, projects that would have taken years to complete with traditional methods and technical talent, now take minutes and can be completed by anyone.

“We are excited to be investing in the amazing team at Synthetaic and working with them to explore new enterprise use cases leveraging their RAIC technology,” said Thomas Whiteaker, IBM Ventures Partner. “This is a very compelling investment in support of our AI Strategy.”

“For IBM, this investment is not just about advancing the technology stack, but embracing innovation that complements our ongoing focus on how AI can drive sustainability for our clients,” said Christina Shim, VP and Global Head of Product and Strategy, IBM Sustainability Software.

Leading companies and federal agencies like The United States Air Force and BBC trust Synthetaic’s RAIC platform to unlock their visual data. Synthetaic also partners with Microsoft and Planet Labs to provide customers with the ability to leverage massive compute power and geospatial data for insights, in addition to their own video and image data.

Since Synthetaic’s inception, the company’s mission has included undertaking projects that positively impact the world. Synthetaic’s AI for Impact program has played a crucial role in supporting scientists, explorers, and researchers with esteemed organizations including the United Nations, The Nature Conservancy, and National Geographic.

About Synthetaic

Founded in 2019, Synthetaic builds software that unlocks the full potential of your data. Powered by cutting-edge AI, our solutions make impossible visual data analysis possible. Our platform, RAIC, facilitates instant search for any object in any kind of image data, including full-motion video and satellite imagery. Its one-of-a-kind capabilities have been applied to use cases across industries including security, conservation, defense, agriculture and more. To learn more, please visit synthetaic.com. (Source: BUSINESS WIRE)

06 Feb 24. Advantage Capital Invests $3m in Growing Military Aircraft Part Manufacturer Malone’s CNC Machining, Inc.

Advantage Capital, a leading impact investment firm, announced today a $3m investment in Malone’s CNC Machining, Inc.—a manufacturer of replacement parts and assemblies for United States military aircrafts. The company will use the financing to support the purchase of new equipment and address working capital needs.

“This financing is critical to support our upward trajectory, and we are excited about the growth potential,” said Derek Martin, President and CEO of Malone’s. “We have operated in Grove for more than 30 years and are proud to provide quality manufacturing jobs to our surrounding community. Investment in Malone’s is an investment in opportunity for Northeast Oklahomans.”

Currently, Malone’s employs 52 people, and with the increased capacity from additional machinery being purchased from Advantage Capital’s investment, the company expects to add 10 more employees over the next 12 months through growth and bringing previously outsourced processes in-house.

The financing was made in connection with the Oklahoma Rural Jobs Act—a program designed to funnel investment dollars into businesses located in rural areas, defined as counties with populations of 75,000 or fewer, helping to stimulate these local economies and build communities.

“It is great to see rural Oklahoma businesses receive support through this program,” said State Rep. Josh West. “These areas are oftentimes overlooked by investors, and we need to support our rural communities to ensure they are receiving the financial resources they need.”

Malone’s specializes in B-52, KC-135, C-130 and a variety of other military aircraft replacement components by providing a wide range of manufacturing services including assembly operations, CNC machining, shrink fitting, bonding, as well as sheet metal manufacturing and other associated machining services.

“Malone’s is a great business providing an important service to our military. It is exactly the kind of company we look for when investing—a company that is ready for growth and is committed to expanding access to quality jobs in the surrounding community,” said Anthony Billings, Senior Vice President, Advantage Capital.

About Advantage Capital

Advantage Capital is a leading impact investment firm with an emphasis on driving capital to underserved areas. The firm provides flexible financing to growth-ready entrepreneurs and industries located in communities that often lack access to conventional sources of capital. Since 1992, the firm has invested more than $4 bn in more than 900 companies to support more than 67,000 quality jobs. The firm also invests with intention in affordable housing developments and renewable energy solutions to grow economies and communities. Learn more at Advantagecap.com.

About Malone’s

Malone’s CNC Machining, Inc. is a wholly owned subsidiary of Malone’s Aerospace Holdings www.MAH-USA.com , a diverse aerospace manufacturer serving both the Military and Commercial aviation markets with manufacturing locations in Grove, OK and Blossom, TX. Our portfolio of companies provides over 80 years of combined aerospace manufacturing experience. From prototype to production runs we are prepared to meet our customers’ quality and delivery expectations. (Source: BUSINESS WIRE)

07 Feb 24. Babcock says it is still on track for growth. British defence company Babcock said on Wednesday its expectations for another year of growth were unchanged and it continued to build momentum to achieve its medium-term guidance, helped by the global threat environment.

Ahead of an investor day at its Devonport base where it maintains and repairs Britain’s submarines and warships, Babcock said it was on track to meet forecasts for organic revenue growth, underlying operating margin expansion and positive cash flow in the current year.

The group, whose biggest customer is Britain but which also has contracts with Australia, France and Poland, also said it was confident of meeting guidance for underlying operating margins of at least 8% in the next three to five years.

CEO David Lockwood’s turnaround plan for the company has coincided with the Ukraine war, which has driven demand for Babcock’s military kit such as naval ships and weapons handling systems. For the 12 months to the end of March, analysts expect Babcock to post operating profit of 290m pounds ($365.98m). ($1 = 0.7924 pounds) (Source: Reuters)

05 Feb 24. High Point Aerotechnologies (HPA), a leading provider of counter-drone solutions, is proud to announce the opening of its new regional subsidiary, High Point Technologies Pte Ltd (HPT), with its headquarters in Singapore. This strategic move positions HPA as a dominant force in Southeast Asia’s rapidly growing counter-drone market, enabling the company to provide enhanced support to governments, civil aviation authorities, law enforcement agencies, and critical infrastructure providers across the region.

Strategic Location for Expanded Growth

Singapore’s central location, world-class infrastructure, and commitment to technological innovation make it an ideal base for HPA’s regional operations. The new office will serve as a hub for HPA’s sales, marketing, customer support, and training activities, allowing the company to build stronger relationships with regional stakeholders.

Al White, CEO of High Point Aerotechnologies, stated, “We are thrilled to open our doors in Singapore, a dynamic and forward-thinking nation at the forefront of technological advancement. This expansion underscores our commitment to providing comprehensive counter-drone solutions to governments and organizations across Southeast Asia, as we have in the region for over 10 years. With our dedicated team of experts based in Singapore, we are confident in our ability to address the evolving drone threats in the region and ensure the safety and security of our partners.” White noted that the Company plans to host an inauguration ceremony during the upcoming Singapore Airshow, and anticipates additional announcements related to key personnel soon.

Enhanced Support for Regional Governments

HPA’s expanded presence in Singapore will enable the Company to provide more comprehensive support to regional governments. This includes:

Collaborative partnerships: Working closely with civil aviation authorities and law enforcement agencies to develop and implement effective counter-drone strategies.
Technology transfer: Providing governments access to HPA’s cutting-edge counter-drone technologies and training programs.
Regional expertise: Leveraging HPA’s deep understanding of the unique drone threats in Southeast Asia to tailor solutions to specific needs.

While leadership details of the office have yet to be announced, the company revealed its plans to host on-site interviews for various positions during the upcoming Singapore Airshow. (Source: PR Newswire)

05 Feb 24. On 31 January 2023, Birdon America Inc. acquired Metal Shark Boats’ 32-acre shipyard in Bayou La Batre, Alabama. This acquisition brings a fully developed shipyard into Birdon’s growing portfolio of facilities throughout the US and will allow us to provide a further range of shipbuilding and repair services.

The acquisition of this shipyard will ensure the successful delivery of the Waterways Commerce Cutter (WCC) Program, a vital component of Birdon’s $1.187bn contract to design and build 27 new vessels for the U.S. Coast Guard.

Birdon Group CEO, Jamie Bruce said, “The investment in this facility will not only ensure we deliver on our promise to the US Coast Guard, but it will also provide an opportunity for our subcontract partners in southern Alabama to build and install all components of these vessels in one location.”

“I am extremely grateful to Metal Shark CEO Chris Allard and his team for collaborating diligently with us, in a short period, to complete this deal,” he said.

As part of the acquisition, Metal Shark’s existing workforce will transfer to Birdon and will continue to execute the current order book of repair work. In the near term, Birdon plans to make significant capital outlays in the shipyard’s infrastructure as a further investment in the future. This will foster job creation, accelerate technological advancement, and provide positive growth to the region’s economy. A direct result will be the creation of 300 new jobs in the area over the next two years.

This is a fully developed shipyard fronting a dredged deepwater inlet. It includes five steel buildings for fully self-contained fabrication and construction work, with over 1,700′ of waterfront, a 660-ton Travelift, multiple cranes, and all required equipment for the construction of steel and aluminum vessels up to 300′ in length and 1,500 tons launch weight. The shipyard is situated just minutes from the Intracoastal Waterway with direct access to the Gulf of Mexico. (Source: PR Newswire)

05 Feb 24. Tank gearbox maker Renk re-attempts Frankfurt IPO. German tank gearbox manufacturer Renk said on Monday it expected to make its debut on the Frankfurt bourse this week, four months after poor market conditions forced it to postpone its plans to go public.

Its owner, private equity group Triton Partners, is looking to sell up to 450 m euros ($485 m) of shares in a private placement to institutional investors at 15 euros apiece, valuing Renk at 1.5 bn euros, according to a term sheet seen by Reuters.

This includes 150 m euros of stock being sold to Franco-German consortium KMW+Nexter Defence Systems (KNDS) and U.S. asset manager Wellington as cornerstone investors.

The books, which are due to close on Tuesday, were covered on the full deal size as of Monday morning, one of the bookrunners on the deal said, with demand strong.

The defence contractor supplies gearboxes for Germany’s Leopard tanks, produced by KMW and used in conflicts such as the Ukraine war.

Renk, which is due to start trading on the stock exchange on Wednesday, pulled its initial public offering (IPO) at the eleventh hour in October blaming tough markets.

Optimism around IPOs has grown since, with central banks signalling interest rates may have peaked and volatility down to levels that dealmakers see as conducive to transactions.

Defence stocks, including Germany’s Hensoldt (HAGG.DE), opens new tab, have been on the rise after dipping in the autumn, providing a better backdrop for Renk’s listing.

KNDS told Reuters it was investing in Renk in an effort to ensure the company remained independent. “Renk is one of our most important suppliers,” a spokesperson said.

As part of the deal, KNDS has the option to acquire additional Renk shares at a later date to control up to a quarter of the group. ($1 = 0.9278 euros) (Source: Reuters)

05 Feb 24. Terran Orbital Announces Agreement with Shareholder Group. Terran Orbital Corporation (NYSE: LLAP) (“Terran Orbital” or the “Company”), a global leader in satellite-based solutions primarily serving the aerospace and defense industries, today announced that it has entered into an agreement with the investor group comprised of Sophis Investments LLC, Sophis GP LLC, Tassos Recachinas, Roark’s Drift, LLC, Joseph Roos, Jordi Puig-Suari, Roland Coelho, and Austin Williams (collectively, the “Investor Group”).

Marc Bell, the Company’s Co-Founder, Chairman, and CEO, said, “Company management and the Board of Directors (the ‘Board’) take shareholder feedback seriously. We have had a very constructive dialogue with the Investor Group and appreciate their input toward achieving our shared goal of driving shareholder value. We are pleased to have come to an agreement and look forward to furthering our constructive relationship with the Investor Group.”

Tassos Recachinas, President and Chief Investment Officer of Sophis Investments, stated, “We are pleased that we have aligned with Terran Orbital’s management team and Board and appreciate the Company’s commitment to driving value enhancing initiatives in the best interest of all stockholders. We also appreciate the constructive relationship we have developed with the Company and look forward to working with the Board, including filling the currently vacant Board seat, as the Company moves forward on its strategic initiatives.”

Austin Williams, a member of the Investor Group, said, “I am very pleased to see the direction the company is going in and look forward to its continued success. Terran Orbital’s satellite platforms are actively performing missions across commercial, civil, and military domains, while operating in LEO, GEO, and around the Moon. I believe the company is well positioned to scale its manufacturing of flight proven technology to meet the needs of its growing and diverse customer base.”

Joseph Roos, a Terran Orbital investor and member of the Investor Group, added, “I am confident in the direction of the Company, which includes diversifying its pipeline, improving financial controls, exploring value enhancing measures, and working towards profitable growth.”

Under the terms of the Agreement, the Company’s Board, in consultation with the Investor Group, has agreed to identify and appoint an independent director to fill its vacant seat caused by the passing of Anthony Previte, reflecting the Company’s continual efforts to enhance stockholder value and corporate governance practices. The Company remains committed to exploring a number of value creating initiatives as part of its ongoing strategic review process, including those related to the Company’s operations, financial performance (including potential opportunities for cost reduction), and corporate governance, among others.

In connection with the Agreement, the parties have also agreed to customary standstill voting, and other commitments. (Source: BUSINESS WIRE)

05 Feb 24. Arlington Capital Partners to Sell J&J Worldwide Services to CBRE. Arlington Capital Partners (“Arlington”), a Washington, D.C.-area private investment firm specializing in government regulated industries, today announced it has agreed to sell J&J Worldwide Services (“J&J” or the “Company”) to CBRE Group Inc. (NYSE: CBRE). J&J is a leading provider of essential, preventative maintenance activities to the U.S. Federal Government with over 250 hospitals, clinics and military installations and 3,300 employees globally. The purchase price will be up to $1.05bn, including $800m of upfront cash and up to $250m of contingent consideration subject to meeting certain performance thresholds.

Founded in 1970 and headquartered in Franklin, Tennessee, J&J has a comprehensive portfolio of facility support offerings for federal government and healthcare facilities, including aseptic cleaning, maintenance and engineering services, as well as a diverse range of facility management, operational support and integrated asset management services for US Department of Defense military hospitals and bases.

Michael Lustbader, a Managing Partner at Arlington, said, “During our partnership, J&J has achieved significant organic growth by winning large, transformational and critical contracts at facilities where failure is simply not an option for the United States. We are proud to have extended J&J’s 50-year history of continuous organic growth under our ownership. CBRE’s leadership in real estate services and global footprint position them to be an excellent home for J&J to build upon its achievements. J&J represents a prime example of Arlington’s ability to invest in founder-owned businesses and accelerate their growth through our industry expertise and network of world-class executives.”

“It was vital for us to continue the legacy and culture that the Voudouris family worked tirelessly to build. Our partnership with Arlington allowed us to stay true to these core values while accelerating organic growth in all parts of our business,” commented Steve Kelley, CEO of J&J. “Over the last four years and with excellent guidance from Arlington, we have been able to make great strides in further realizing our full potential through increasing our global reach and footprint as well as bringing our unique capabilities to a broader set of customers. The management team and I are excited for our future with CBRE and the opportunities ahead for our combined organizations.”

Gordon Auduong, a Principal at Arlington Capital Partners, added: “J&J continues to prove itself as a highly durable industry leader, and its unparalleled commitment to its customers’ success has led to superior performance in support of U.S. Federal Government infrastructure. We are excited to see how J&J and CBRE will continue to benefit from the secular tailwinds we identified during our initial investment and believe under CBRE’s stewardship that J&J is well-positioned to continue building on its success.”

Closing of the acquisition is subject to obtaining applicable regulatory clearances and other customary closing conditions. Closing is expected in the coming months.

J.P. Morgan Securities LLC is serving as financial advisor to J&J and Sheppard Mullin Richter & Hampton LLP is serving as legal advisor to J&J and Arlington Capital Partners. Citi is serving as financial advisor to CBRE and Simpson Thacher & Bartlett LLP and ArentFox Schiff LLP are serving as legal advisors.

About J&J Worldwide Services

J&J Worldwide Services (J&J) provides World–Class facility services to the United States Federal Government and civilian customers through its Healthcare & Medical Solutions, Mission Support Solutions, and Engineering Solutions business segments. Since 1970, J&J has developed a comprehensive portfolio of aseptic cleaning and maintenance services for military hospitals and clinics as well as a wide array of facility management, operational support, and integrated asset management services for Department of Defense (DoD) military bases. J&J has built a 50–year legacy supported by a more than 3,300–employee global workforce in locations throughout the Contiguous United States (CONUS), Alaska, Hawaii, U.S. Territories and Outside of the Contiguous United States (OCONUS) (Diego Garcia, Thailand, Germany, Italy, Belgium, Spain, Philippines, United Kingdom, Guam, and South Korea). To learn more about J&J Worldwide Services, visit: https://www.jjwws.com/ (Source: BUSINESS WIRE)

05 Feb 24. Germany’s Rheinmetall faces probe over Spanish acquisition. Spanish watchdog CNMC said on Monday it will conduct disciplinary proceedings against German defence firm Rheinmetall (RHMG.DE), opens new tab as the company may have provided incomplete and misleading information during the takeover of Expal Systems.

Rheinmetall had no immediate comment.

Spain’s Comision Nacional de los Mercados y la Competencia had initially approved the 1.2bn euro ($1.29bn)acquisition of Spanish defence contractor Expal Systems by Rheinmetall in February 2023.

Rheinmetall took over Expal Systems from finance investor Rhone Capital. In its statement on Monday, CNMC said it would take a maximum of three months for the investigation and a possible resolution. ($1 = 0.9299 euros) (Source: Reuters)

01 Feb 24. Orbital Lasers company formed by SKY Perfect JSAT Corporation to tackle space debris. Orbital Lasers will engage in space debris removal as well as further use and develop its laser technologies. By incorporating space-based LiDAR (Light Detection and Ranging) is a remote sensing technology that measures the distance to and shape of a target object by emitting laser light and using information obtained from the reflected light) technology into satellites. The new company aspires to become the world’s first commercial provider of high-precision ground surface information through the use of satellite LiDAR.

In connection with this Satellite LiDAR business, SKY Perfect JSAT and JAXA entered into a contract regarding the conceptual study of EO LiDAR satellites system and their future commercialization, this occurring on January 12, 2024. Orbital Lasers is scheduled to undertake this conceptual study under contract from SKY Perfect JSAT.

Orbital Lasers will engage in the following businesses…

Space Debris Removal — Detumbling (DTB): Development and sales of payload capable of detumbling space debris *Planned in FY2025, and, Active Debris Removal (ADR): Service to remove space debris *Planned in FY2029
Satellite LiDAR — Earth Observation (EO): Provision of ground surface information using Satellite LiDAR *Planned

The issue of space debris is now regarded as an environmental problem as significant as global warming and marine plastic pollution. SKY Perfect JSAT and Orbital Lasers are earnestly addressing this concern and aiming to contribute to the improvement of a sustainable space environment.

Tadanori Fukushima, President and CEO, Orbital Lasers, said, ” In my 14 years of experience in satellite operations, I have always been highly concerned about the impact of space debris on the space environment. Consequently, I applied for an internal startup program and engaged in research and development of space debris removal with universities, research institutions, government agencies, companies, and experts to advance its business development. I would like to express my sincere gratitude to all the people involved in the establishment of Orbital Lasers. Furthermore, during this progress, we were able to discover new possibilities using space-based lasers, leading to the Satellite LiDAR Business. Through Orbital Lasers’ initiatives, we aim to contribute to society by further enhancing the usability of space.”

Eiichi Yonekura, Representative Director, President and CEO, SKY Perfect JSAT, said, “I am deeply honored that we have finally been able to establish this new company through the startup program—an employee-initiated new business proposal system—that we launched in 2018. As a leader in the space industry, SKY Perfect JSAT will continue to aim for further business expansion and embrace challenges, seeking not only to create the next new businesses but also to generate new business models and values, including through partnerships with other companies.”

Setsuko Aoki, Outside Director, SKY Perfect JSAT Holdings Inc., said, “The Orbital Lasers Co., Ltd. has started two world’s first businesses through state-of-the art lasers technology: aiming to provide high-quality Earth information; and protect orbits as ‘limited natural resources’ by active debris removal. This is not just a new venture. This also qualifies as a part of Japan’s contribution to the global society whose urgent needs include the safe and sustainable use of outer space. As an outside director, I am most proud of the innovative enterprise on which both companies have embarked.” (Source: Satnews)

02 Feb 24. US naval prime HII predicts ambitious growth after 2023 success. After reporting record revenues of $11.5bn in 2023, US shipbuilder Huntington Ingalls Industries (HII) predicts mid to long-term revenue growth of more than 4%.

HII, one of two US prime contractors capable of building nulcear-powered ships, has released its fourth quarter (Q4) and end-of-year financial results for 2023.

The company claims its Q4 revenues have expanded by 13% year over year (YoY), to a record $3.2bn. In line with this growth, HII also reported record 2023 revenues of $11.5bn, with YoY growth of 7.3%.

New contract awards in 2023 were valued at approximately $12.5bn, bringing the total backlog to approximately $48.1bn as of 31 December 2023.

In a statement, the shipbuilder stated it was a strong year for HII:

“We continue to invest both in our shipyards and in [our independent research and development] to both expand capacity and develop new products and solutions for our customers,” said Chris Kastner, HII’s president and CEO.

“Our growth rate for the year of over 7% and our free cash flow generation at almost $700m illustrate that we are entering a period of accelerated growth and increased free cash flow generation at HII.”

“Accelerated growth” in 2024 and beyond

The company incorporates three profitable divisions: Ingalls Shipbuilding, Newport News Shipbuilding and Mission Technologies.

Ingalls Shipbuilding 2023 revenues were $2.8bn, an increase of $182m, or 7.1%, compared to 2022. These figures were primarily driven by higher volumes in surface combatants and amphibious assault ships.

This year, the US Department of Defense called for HII to construct seven new flight III Arleigh Burke-class (DDG 51) destroyers – one in 2023, another in 2024, two in 2025, one in 2026 and another in 2027.

Newport News Shipbuilding 2023 revenues were $6.1bn, an increase of $281m, or 4.8%, compared to 2022.

These fogures were primarily driven by higher volumes in aircraft carrier construction and engineering, the Columbia-class (SSBN 826) submarine programme, submarine services, and the Virginia-class (SSN 774) submarine programme.

Mission Technologies 2023 revenues were $2.7bn, an increase of $312m, or 13.1%, compared to 2022.

This was primarily due to higher volumes in command, control, communciations, computers, cyber, intelligence, surveillance, reconnaissance, electronic warfare and space contracts.

Challenges in the US naval industrial base

“Our expectations are grounded in the assumption we must deliver on our commitments to our customers,” Kastner predicted. However, this is where the US naval industrial base faces pitfalls.

While the company predicts an unending profit margin going forward, that does not mean that the company will face severe problems, such as an overwhelming backlog.

The US naval sector is deeply overworked and under-resourced, most notably in submarine construction.

“It seems to me that we just simply don’t have enough shipyard space.”

Senator Rounds, Senate Armed Services Committee hearing on 18 April 2023.

Edward Bartlett – the founder and CEO of Bartlett Maritime, a corporation with the expressed purpose of assisting the US Navy with the resolution of the submarine capability shortfall – made it clear that “both additional industrial infrastructure and access to an expanded labour pool are needed.”

Delays in maintenance are keeping platforms from operating at sea at an unprecedented rate.

The Congressional Research Service revealed on 25 September 2023 that the number of attack submarines (SSNs) either in depot maintenance or idle (i.e., awaiting depot maintenance) has increased from 11 boats (about 21% of the SSN force) in FY2012 to 18 boats (about 37% of the SSN force) as of May 2023.

During a Senate Armed Services Committee hearing in April last year, Senator Mike Rounds commented: “It seems to me that we just simply don’t have enough shipyard space and is there a priority for the Columbia-class and the Ohio-class that is perhaps one of the reasons why the Los Angeles-class submarines are sitting at dry dock.”

As one of the US’ prime contractors HII are already well aware of the reality. In November 2023, the company announced it had begun work at a new campus in Norfolk, Virginia so that it could “free up critical storage space” at its main shipyard. (Source: naval-technology.com)

05 Feb 24. Kromek Group plc (“Kromek” or the “Company” or the “Group”) Conversion of £1.5m of Convertible Loan Notes. Kromek Group plc (AIM: KMK), a leading developer of radiation and bio-detection technology solutions for the advanced imaging and CBRN detection segments, announces that two holders of the convertible loan notes (“Loan Notes”) issued in August 2022 have elected to convert them into new ordinary shares of 1 penny each in the Company (“Ordinary Shares”) at conversion prices of 6.3 pence and 7.1 pence, per Ordinary Share. Including accrued interest, the Loan Note holders are converting £1,509,211 of debt into 23,639,520 new Ordinary Shares and accordingly these new Ordinary Shares have been issued and allotted by the board. The issue prices of 6.3 and 7.1 pence per new Ordinary Share represent the closing price of the Company’s Ordinary Shares on AIM on 31 January 2024 and 2 February 2024, respectively, being the repayment date of the convertible loan note facilities Application has been made for the 23,639,520 Ordinary Shares to be admitted to trading on AIM and dealings are expected to commence on or around 8.00 a.m. on 9 February 2024 (“Admission”). The new Ordinary Shares will rank pari passu with the existing shares of the Company. Following Admission, the Company’s issued share capital will consist of 623,886,340 Ordinary Shares, none of which are held in treasury. Accordingly, the figure of 623,886,340 may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company under the FCA’s Disclosure Guidance and Transparency Rules.

29 Jan 24. US buyout firm in £2.5bn takeover approach for outsourcer Serco. American Industrial Partners approached the FTSE-250 company, which manages UK government immigration centres, about a potential bid late last year, Sky News learns.

A US-based buyout firm has made a takeover approach for Serco, the FTSE-250 company that ranks among the British government’s most significant contractors.

Sky News has learnt that American Industrial Partners (AIP) contacted Serco late last year about a potential bid for the company.

The two sides are said to have engaged with one another, although it was unclear whether AIP had lodged a firm takeover proposal during their discussions.

A person close to Serco insisted on Friday that there were no longer any active talks between them.

Serco, which has a market capitalisation of about £1.9bn, manages a string of critical government contracts in the UK, including processing asylum-seekers at two immigration centres in West Sussex and Bedfordshire.

Last year, it was awarded a contract to maintain and operate the UK’s air defence radars for the next five years.

That deal is worth an estimated £32m, and includes sites at Brizlee Wood in Northumberland and Saxa Vord in the Shetland Isles.

Serco also manages the Transport for London public cycling service which provides what became known as “Boris bikes” during the former prime minister Boris Johnson’s tenure as mayor.

While there may not be any live discussions between Serco and AIP, the news of an approach from a serious private equity bidder will effectively put the London-listed company in play.

A conventional 30% premium to the current Serco share price would value it at about £2.5bn. (Source: Sky TV/MakeUK Defence)

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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

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