Sponsored by SPX CommTech (TCI & ECS)
www.tcibr.com
www.enterprisecontrol.co.uk
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29 Feb 24. SPX Communication Technologies announces new partnership to expand its partner network in Benelux. Enterprise Control Systems (ECS), part of the SPX Communication Technologies platform, announces an extended partnership with Belgium-based business development company Depicon to provide the Benelux region with advanced Radio Frequency (RF) technology and Tactical Data Link solutions to drive growth and success in the aerospace and defence industries. This marks a key milestone between the two companies that first began collaborating in 2017 with a representatives agreement covering Eastern Europe, Ukraine and Kazakhstan, among other countries. Today, with geopolitical conflicts impacting business operations in those regions, ECS has granted Depicon exclusive rights in Benelux to offer its Tactical Data Link portfolio.
ECS’ Tactical Data Link solutions allow aircraft to become network-enabled across land, sea and air and, therefore, able to carry out Intelligence, Surveillance and Reconnaissance (ISR) missions across all of them. This includes the recently launched Evenlode Video and Audio Encoder / Decoder which delivers improved low-latency, long-range, high-definition video and audio transfer for faster and more accurate intelligence-gathering. Its compressed video and audio data allow for the transfer of up to four videos over a lower bandwidth pipe. Fast and accurate capture and delivery of ISR data ensures effective decisions can be made, even on the tactical edge, which also allows users to select the latest mission-critical information required without disrupting the operation and simultaneously process multiple video inputs for improved situational awareness.
“By combining our operationally-proven Tactical Data Link capabilities with Depicon’s local knowledge and expertise, we’re empowering teams with faster and more accurate ISR data so timely and effective decisions can be made”, commented Jackson White, Business Development Director of Tactical Data Links and VP of Marketing at SPX Communication Technologies. “At SPX Communication Technologies we’re committed to providing solutions that enable more detailed communication across longer distances as part of our continued strategic development of technologies that ensure a smarter, more secure future for all.”
“We are excited to expand our collaboration with ECS and represent their high-tech products in our home market of Benelux,” said Hans Deprez, Managing Director at Depicon. “Our journey with ECS has been marked by trust, mutual respect, and a shared vision for success. We are ready to embrace this new chapter and look forward to bringing ECS’s cutting-edge technology to the region.”`
About SPX Communication Technologies – ECS
Enterprise Control Systems (ECS), as part of the SPX Communication Technologies platform, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all.
SPX Communication Technologies’ Tactical Data Link portfolio allows organisations that are conducting airborne ISR operations in the defence, security, and policing environments to transfer video and data securely and reliably between enabled aircraft and ground users over long distances in congested RF environments.
Combining decades of technology innovation and expertise with agile and collaborative teams, SPX Communication Technologies delivers sustainable and exceptional results to customers across the globe – in regions including Europe, APAC, the Middle East and Africa.
For more information on SPX Communication Technologies’ Tactical Data Links, visit www.enterprisecontrol.co.uk
About Depicon
Depicon, headquartered in Belgium, is your trusted partner for representing high-tech companies in the European market. Our select partners specialise in top-tier, reliable aerospace-related products, and we are renowned for our outstanding client service and expertise in delivering tailored solutions.
Depicon is your bridge to the world of high-tech aerospace solutions in Europe, backed by our commitment to excellence and unwavering customer-focused dedication.
For more information about Depicon and how we can assist you in achieving your aerospace goals, please contact us: www.depicon.com
29 Feb 24. Italy’s Leonardo, Germany’s Hensoldt in joint venture talks. Leonardo (LDOF.MI), opens new tab and Germany’s Hensoldt (HAGG.DE), opens new tab are discussing a possible joint-venture, the chief executive of the Italian defence group said on Thursday.
“We are now restarting the analysis of a joint-venture. We are discussing with (Hensoldt’s) new management what we can do together, the table is open,” Roberto Cingolani told a post-results call.
He added that he had met the head of Hensoldt a few weeks ago and that he hoped to have some “news in the coming months”.
Leonardo, a shareholder in the German military sensor maker, did not take part in its capital increase in December, diluting its previous 25% stake.
The decision fuelled speculation of a lack of interest in collaboration between the two groups.
Cingolani said Leonardo had never opposed the recapitalisation and the German government, which holds a 25% stake in Hensoldt, had appreciated the Italian group’s transparent position. (Source: Reuters)
29 Feb 24. Brazilian bank backtracks on move to stop financing defense industry. A leading Brazilian bank has reversed its decision to cease using its own resources to finance the defense industry, according to the government.
Defense News reported earlier this month that Banco do Brasil declared its intention to stop financing defense companies, citing governance and sustainability policies.
The U-turn follows a meeting held Feb. 26 involving the bank’s president, Tarciana Medeiros; Brazil’s vice president and the minister of development, industry, commerce and services, Geraldo Alckmin; the minister of the civil house, Rui Costa; and the defense minister, José Múcio Monteiro.
“The decision will prevent losses to companies in the sector that were at risk of losing contracts and will contribute to the sustainability and autonomy of the Defense Industrial Base,” the Ministry of Development, Industry, Commerce and Services said in a statement this week.
The ministry noted the latest decision reinforces the importance of structured financial policies that ensure “not only the economic viability of companies but also national security and sovereignty.”
If the bank had gone through with its initial plan, the move would have impacted many Brazilian defense players and the Proex program — a government mechanism, managed by the bank, that provides resources for domestic companies exporting goods and services.
The Brazilian defense contractor Mac Jee has celebrated the decision.
“The Mac Jee Group believes that this measure is a crucial step towards the sustainability and autonomy of our Defense Industrial Base,” the company said in a statement. “The initiative also ensures the preservation of vital contracts for companies in the sector, contributing to the generation of foreign exchange and jobs in the country, in addition to strengthening national security and sovereignty.”
Banco do Brasil declined to comment for this story. (Source: Defense News)
29 Feb 24. Italy’s Leonardo beats full-year orders, cash flow and debt targets. Italy’s Leonardo (LDOF.MI), opens new tab achieved positive and “promising” results last year, its chief executive said on Thursday, after the defence and aerospace conglomerate beat its 2023 targets for orders, cash flow and debt.
The group also met its revenue and core profitability goals.
“In general results are good mostly due to actions taken in recent years, (they are) promising in view of the industrial plan, but there is a lot of space for improvement,” CEO Roberto Cingolani said in a post-results call.
Orders were up 3.8% year-on-year in 2023 to 17.9bn euros ($19.34bn), lifted by European electronics and a significant helicopter sale in Poland. The group had guided for about 17 billion euros.
Leonardo’s net debt was down more than 23% compared to the same period in 2022 to 2.3bn euros, a reduction helped by the sale in November of a minority stake of about 8% in its DRS unit.
Earning before interest, taxes and amortisation (EBITA) was up 5.8% year-on-year to 1.29bn euros – in the centre of its guidance range.
“We are in the presence of a special window of opportunity as the defence industry is now part of global security and we have to develop a strategy in line with this,” Cingolani said.
The new strategy to 2028, to be unveiled on March 12, is expected to continue focusing on alliances with other defence groups in Europe, steer the company towards the space business – increasingly considered key for defence and security – and give Leonardo a stronger technology-based profile. Shares in Leonardo have risen more than 33% since the beginning of the year, at a time when military budgets are increasing, boosted by the war in Ukraine. ($1 = 0.9258 euros) (Source: Reuters)
29 Feb 24. Serco orders at highest level in a decade.
The order pipeline is the “highest level in a decade.”
• Improved contract win rate
• Cash management significantly better
The market responded positively to news that Serco’s (SRP) earnings for 2023 were slightly ahead of expectations. The provider of outsourced public services revealed that operating profits, ex-amortisation of intangibles and exceptional items, had increased by 5 per cent to £249m, 60 per cent of which was generated outside of the UK.
Part of the reason that revenues remain on an upward trajectory is that the fall-away in Covid-related work has been more than offset by increased volumes in the immigration and defence segments, both of which have benefited from significant investments in recent years.
Mark Irwin, Serco’s chief executive, said the group “improved [its] win rates compared to the prior year” with prospects boosted by a “substantial pipeline of opportunities”. Indeed, order intake reached £4.6bn to leave the order book at £13.6bn at the end of 2023, with the order pipeline of potential new work up by 28 per cent since the half-year mark – the “highest level in a decade”.
Leaving aside the order outlook, perhaps the most pleasing aspect from an investment perspective is the material improvement in the cash management process, specifically an “increased focus on the timeliness and accuracy of issuing sales invoices”. This translated into a 31 per cent increase in free cash flow to £209m on the back of a cash conversion rate of 111 per cent.
Liberum gives a full-year earnings per share (EPS) multiple of 15.9 times, rising to 17.8 times in 2025.
Revenue through the year will be constrained, partly as a result of timing issues following the successful rebid on its Centers for Medicare & Medicaid Services contract in the US. However, underlying operating profit is expected to grow by around 5 per cent to £260mn. So, despite a 21 per cent gain in the past 12 months, the shares still represent relatively good value at 12 times earnings. Buy. Last IC view: Buy, 158p, 3 Aug 2023. (Source: Investors Chronicle)
29 Feb 24. Cuashub.com said today that Dedrone Reports Significant Defense Airspace Security Contracts. Dedrone, a leading global provider of airspace security solutions, has reported a remarkable 300% growth in revenue and secured 16 new governmental contracts worldwide in the past year. The company has established its Defense Advisory Board, featuring General Richard D. Clarke (US Army, retired) and former Acquisition Executive for United States Special Operations Command (USSOCOM) James Smith as inaugural members. Brigadier General James Bienlien (US Army, retired) has joined Dedrone as Vice President of Defense. In response to the increasing priority of counter-drone capabilities in warfare, Dedrone is enhancing its partnerships with defense departments globally, including the United States Department of Defense’s (DoD) Defense Innovation Unit (DIU).
“Drones now play a crucial role in every modern conflict, and the war in Ukraine has shown that fast development cycles are key to a strong defense. Dedrone is uniquely qualified to be an agile mission partner for our clients with best-in-class AI/ML-driven software combined with modularly deployable tactical hardware to drive ultra-fast deployment, adoption, and response to dynamic situations. This capability has led to our continued success in working with national defense organizations globally,” said Rob Campbell, General Manager of Dedrone Defense. “We are proud to have both Gen. Clarke and Jim Smith advising us as we strengthen our relationship with global defense ministries.”
Dedrone has become a trusted mission partner for airspace and national security in Ukraine, offering AI-enabled expeditionary solutions tailored for dynamic conflict conditions. Leveraging intelligence and data directly from the theater, Dedrone can rapidly develop robust machine learning models, outpacing legacy closed-loop Department of Defense (DoD) systems. Dedrone has recently opened an office in Denmark to expedite these advancements further, facilitating real-time development and testing with access to high-end sensors and threat simulation capabilities. Dedrone’s active role is underscored by its participation as one of 15 inaugural signatories of the Ukraine Defence Industry Compact. It contributes vital defense technology to support the country in its ongoing fight.
Defense Advisory Board Signals Commitment to Defense
The first members of Dedrone’s Defense Advisory Board and its new Vice President of Defense reflect the company’s growing relationships with the US DoD and other defense departments globally. General Richard D. Clarke, the 12th Commander of USSOCOM and former Director for Strategic Plans and Policy (J5) at the Joint Staff, has joined Dedrone’s Defense Advisory Board. His extensive experience and leadership in strategic planning and policy at the Pentagon enhance Dedrone’s capabilities and relationships within the defense sector.
“As we’ve seen recently in conflicts in Ukraine and in the Middle East, the threat of drones is real, and it is here to stay. The need to quickly respond to changing capabilities and developments requires nations around the world to look for partners capable of handling the rapid pace of innovation. Dedrone has recently shown that capability with its tremendous work in Ukraine, and I am honored to join its Defense Advisory Board to offer my insights into how best to ensure these needed capabilities get into the hands of our warfighters, allies, and partners,” said Gen. Clarke.
James Smith, a former US Department of Defense Senior Executive and Acquisition Executive for USSOCOM, has joined Dedrone’s Defense Advisory Board. With over 30 years of leadership experience in acquiring cutting-edge technologies for the DoD, Smith’s expertise strengthens Dedrone’s position in the defense sector.
Brig. Gen. Bienlien, the former Deputy Commanding General of the US Army Combat Capabilities Development Command (CCDC) and Senior Commander at Natick Soldier Systems Center brings 30 years of military service, including roles as the Chief of Staff for Army Futures Command. His extensive experience contributes valuable insights to Dedrone’s Defense Advisory Board as the company strengthens its partnerships with defense departments globally.
Dedrone has experienced exceptional growth with over a 300% increase in revenue, securing 16 new governmental contracts globally, including collaborations with the US Department of Defense (DoD). Dedrone is actively engaged with the Defense Innovation Unit (DIU) to address urgent requirements and has obtained the necessary credentials for specialized contract work with the DoD. Dedrone’s membership in the Global Special Operations Forces (GSOF) Foundation also underscores its commitment to connecting with key stakeholders in special operations forces activities worldwide.
Dedrone’s counter-drone solutions have been implemented in 32 countries and are utilized by five G-7 nation governments, securing 810+ sites, including 46+ airports and 60 stadiums. The company actively collaborates with public safety entities, protecting over 350 sites globally and contributing to its recognition in the airspace security industry. Dedrone has received accolades such as CNBC Disruptor 50, Silicon Valley Defense Group NatSec100, three Platinum ASTOR Homeland Security 2023 awards, and a Best Place to Work designation from Built In in the last year.
https://cuashub.com/content/dedrone-reports-significant-defense-airspace-security-contracts/?_hsmi=296223554&_hsenc=p2ANqtz-8U9Ln0XZgK352uwa143AQdIp-yCM5owN69ngwkJ2VjWpyqYUqESp2tDWMXewzdIQipTuKYMJjTdxHwl4bM4xV64aLQsBrKyKP5-j1d_xX3JZGwqFo#utm_campaign=C-UAS%20Hub%20General&utm_medium=email&utm_content=296223554&utm_source=hs_email (Source: https://cuashub.com/)
28 Feb 24. UK approves TransDigm-CPI deal with national security condition. Britain on Wednesday approved TransDigm’s (TDG.N), opens new tab acquisition of units owned by U.S.-based Communications & Power Industries (CPI), on the condition that CPI’s UK research and manufacturing capabilities in relation to atomic clocks remain in the country.
Britain invoked its National Security and Investment Act to make the provision, issuing a final order in relation to the deal, saying the condition was “necessary and proportionate to mitigate the risk to national security”.
CPI’s TMD unit in Britain has received funding from the UK government to develop a high-precision, quantum-enabled positioning, navigation and timing system which would operate without using signals from satellites in space.
This technology, which would also be designed to be portable, is expected to have substantial future uses in defence, global navigation and telecommunications applications.
TransDigm said in November it would buy CPI’s components and subsystems business for about $1.39bn in cash to deepen its presence in the booming aircraft repair market. (Source: Reuters)
28 Feb 24. BlackSky Reports Fourth Quarter and Full Year 2023 Results.
Record Q4 and Full Year Revenue, up 83% and 45% Over Prior Year Respectively
Won Over $265m in New Multi-Year Contracts and Renewal Agreements in 2023
Quarterly Net Loss of $3.8m with Positive Adjusted EBITDA of $9.3m in Q4
BlackSky Technology Inc. (“BlackSky” or the “Company”) (NYSE: BKSY) announced results for the fourth quarter and full year ended December 31, 2023.
Fourth Quarter Financial Highlights:
• Revenue of $35.5m, up 83% from the prior year quarter
• Imagery & software analytical services revenue grew 18% over the prior year quarter
• Cost of sales, as a percent of revenue, related to imagery & software analytical services improved to 17% from 24% in the prior year quarter
Full Year Financial Highlights:
• Revenue of $94.5m, up 45% from the prior year
• Imagery & software analytical services revenue grew 38% over the prior year
• Cost of sales, as a percent of revenue, related to imagery & software analytical services improved to 21% from 31% in the prior year
“2023 was an exceptional year for BlackSky; we delivered record revenues, our total bookings exceeded a quarter billion dollars, and we achieved positive Adjusted EBITDA of over 9m dollars in Q4,” said Brian E. O’Toole, BlackSky CEO. “Our success is the result of increasing global demand for our space-based intelligence solutions, strong operating leverage, and disciplined execution. The demand for our capabilities is exemplified by recent landmark contract wins supporting the Indonesian Ministry of Defense and expansion of a number of U.S. government contracts. These wins are anchored by our industry leading AI and software-first approach, which is redefining the way customers adopt space-based intelligence. The strong execution in 2023 sets us on a path toward long-term profitable growth and we look forward to carrying this momentum into 2024 and beyond.”
Recent Highlights
• Won approximately $50m in multi-year contracts to accelerate sovereign space capabilities for the Indonesian Ministry of Defense, leveraging Gen-3 capabilities and an immediate subscription for imagery
• Awarded a multi-million dollar expansion contract with the Intelligence Advanced Research Projects Activity (IARPA) to deliver AI-based broad area search capability
• Signed a multi-million dollar contract in support of the Department of Defense to provide dynamic monitoring services leveraging AI for identifying moving targets and pattern-of-life changes
• Received nearly a million dollars in orders supporting the National Geospatial-Intelligence Agency’s (NGA) Economic Indicator Monitoring (EIM) program
• Renewed an agreement with an existing international government agency to continue providing BlackSky’s high resolution imagery and AI-driven analytics
• Secured a six-figure contract with a new international government to provide high-frequency imagery
• Ended December 31, 2023 with approximately $262m in backlog
• Entered into a property lease for office space located in Herndon, VA to further streamline operating expenses
Financial Results
Revenues
Total revenue for the fourth quarter of 2023 was $35.5m, up $16.1m, or 83%, from the fourth quarter of 2022. Imagery and software analytical services revenue was $19.0m in the fourth quarter of 2023, up 18% over the prior year period, primarily driven by increased demand from new and existing U.S. and international government customers. Professional and engineering services revenue was $16.5m in the fourth quarter of 2023, up 407% over the prior year period. The significant year-over-year increase was related to progress to date on the capabilities to be delivered under the new Indonesian contract, awarded in the fourth quarter. Professional and engineering services contracts are milestone-based contracts that may have quarter-over-quarter revenue variability, in contrast to the imagery and software analytical services, which are typically recurring subscription-based revenues.
For the full year 2023, total revenue was $94.5m, up $29.1m, or 45%, from 2022. Imagery and software analytical services revenue was $65.4m, up $18.0m, or 38% over the prior year.
Cost of Sales(1)
Cost of sales as a percent of revenue improved to 34% for the fourth quarter of 2023, compared to 38% in the fourth quarter of 2022. Imagery and software analytical service costs as a percent of revenue improved to 17% in the fourth quarter of 2023, compared to 24% in the fourth quarter of 2022. The year-over-year improvement in imagery and software analytical service costs was primarily driven by greater volumes of revenue that inherently have a low fixed-cost structure as a percent of revenue.
For the full year 2023, cost of sales as a percent of revenue improved to 36%, compared to 55% in 2022. Imagery and software analytical services cost of sales, as a percent of revenue, improved to 21%, compared to 31% in the prior year.
Operating Expenses
Operating expenses for the fourth quarter of 2023 were $28.2m, which included $3.0m of non-cash stock-based compensation expense and $10.7m in depreciation and amortization expenses. Operating expenses for the fourth quarter of 2022 were $30.4m, which included $3.3m in non-cash stock-based compensation expense and $9.5m in depreciation and amortization expenses. Excluding the non-cash stock-based compensation and depreciation and amortization expenses from both years, cash operating expenses for the fourth quarter of 2023 were $14.5m compared to cash operating expenses of $17.6m for the fourth quarter of 2022. The year-over-year decrease of $3.1m, or 18%, was primarily driven by reductions in general corporate costs, which more than offset investments in our go-to-market initiatives.
For the full year 2023, operating expenses were $116.7m, which included $10.1m of non-cash stock-based compensation expense and $43.4m in depreciation and amortization expenses. For the full year 2022, operating expenses were $116.1m, which included $18.1m in non-cash stock-based compensation expense and $35.7m in depreciation and amortization expenses. Excluding the non-cash stock-based compensation and depreciation and amortization expenses from both years, cash operating expenses in 2023 were $63.2m, essentially in-line with cash operating expenses of $62.3m in 2022.
Net Loss(2)
Net loss for the fourth quarter of 2023 was $3.8m, compared to a net loss of $14.8m in the fourth quarter of 2022.
For the full year 2023, net loss was $53.9m, compared to a net loss of $74.2m in 2022.
(1) Cost of sales is defined as imagery and software analytical services costs and professional and engineering services cost, less depreciation and amortization expense.
(2) This represents our current estimate of net loss for the period ended December 31, 2023, which is subject to the completion of our financial closing procedures and adjustments that may result from the completion of the audit of our consolidated financial statements. As a result, this net loss estimate may differ from the actual net loss reported in our consolidated financial statements when they are completed and publicly disclosed in our Annual Report on Form 10-K.
Adjusted EBITDA(3)
Adjusted EBITDA for the fourth quarter of 2023 was $9.3m, compared to an Adjusted EBITDA loss of $4.6m in the fourth quarter of 2022. The $13.9m year-over-year improvement was primarily driven by strong operating leverage achieved through higher revenues, improvement in gross margins, and reductions in operating expenses.
For the full year 2023, the Adjusted EBITDA loss was $1.1m, compared to an Adjusted EBITDA loss of $29.5m in 2022. The $28.4m year-over-year improvement was primarily driven by increased revenues and strong operating leverage in the business.
Balance Sheet & Capital Expenditures
As of December 31, 2023, cash and cash equivalents, restricted cash, and short-term investments totaled $53.1m. Capital expenditures for the fourth quarter of 2023 were $7.8m and for the full year 2023 totaled $43.7m.
2024 Outlook
BlackSky expects full year 2024 revenue to be between $102m and $118m, full year 2024 Adjusted EBITDA to be between $8m and $16m, and anticipates capital expenditures for the full year 2024 to be between $55m and $65m, primarily driven by investments in the Gen-3 satellites, which excludes vendor financed launch costs, that will be recorded on the balance sheet. (Source: BUSINESS WIRE)
29 Feb 24. Singapore Technologies Engineering Ltd (ST Engineering) today reported its full-year (FY) financial results ended 31 December 2023.
FY2023 versus FY2022 Group Performance
ST Engineering posted a 12% year-on-year (y-o-y) increase in Group revenue from $9.0bn to $10.1bn with contributions from all three segments. Group EBIT improved 24% y-o-y to $915m from $735m. On a base operating performance (BOP) basis excluding TransCore transaction and integration expenses, SatixFy divestment loss and Satcom severance costs, as well as the $72m pension restructuring gain in 2022, Group EBIT would be 40% higher y-o-y. This strong set of results was achieved through a combination of business growth, higher productivity and cost saving initiatives.
Group Profit before tax (PBT) rose 18% to $704m, as compared to $597m a year ago.
Group Profit attributable to shareholders (Net Profit) grew 10% y-o-y to $586m from $535m. On a BOP basis, this would be 24% higher y-o-y, despite higher finance costs.
FY2023 versus FY2022 Segment Performance Review
• Commercial Aerospace (CA): Revenue was $3.91bn, up 31% from $2.99bn, surpassing pre-COVID levels. EBIT grew 12% y-o-y to $337m from $301m. Excluding the one-off pension restructuring gain of $72m in the prior year, CA EBIT would have grown 47% on a BOP basis.
The CA segment recorded a revenue of $3.91bn which exceeded the November 2021 Investor Day (2022-2026) target of over $3.5bn set for 2026. As anticipated, its Airbus P2F conversion EBIT turned positive in 2023 at the programme level.
• Defence & Public Security (DPS): Revenue was flat at $4.25b but would be 6% higher after excluding the revenue from the U.S. Marine business2 in the prior year. The growth was largely driven by its Digital Systems & Cyber sub-segment.
The Digital business comprising Cloud, AI Analytics and Cyber businesses grew 20% y-o-y to $463m from $385m. This is on track to exceed the November 2021 Investor Day target revenue of over $500m by 2026. The DPS segment delivered robust y-o-y EBIT growth of 40% from $405m to $567m. This strong performance is the result of an avoidance of losses from the U.S. Marine business which was divested in the prior year, improved margin mix, cost savings and growth in its core business.
• Urban Solutions & Satcom (USS): Revenue grew 10% y-o-y to $1.94bn from $1.77bn, largely due to increased revenue from Urban Solutions and partly offset by lower revenue from Satcom. USS EBIT was lower at $10m compared to $29m the year before due to Satcom’s weakness, the divestment loss of SatixFy of $24m and severance costs of $8m as part of Satcom’s restructuring.
The investment in TransCore was earnings accretive in FY2023, which was three months ahead of plan.
While Satcom weakness impacted the USS segment, the transformation efforts since mid-2023 are on course to drive better future performance.
“In 2023, our Group achieved significant financial milestones. Group revenue exceeded $10bn while Group Net Profit grew 10% year-on-year to $586m.
This performance was underpinned by the strength of our Commercial Aerospace and Defence & Public Security segments, and a high-graded portfolio. Our investment in TransCore became accretive in FY2023, ahead of plan. The strong set of results was also supported by productivity and cost saving measures and investments made during the COVID-19 downturn.
We remain focused on executing our robust order book of $27.4b, while delivering sustainable growth and creating value for our stakeholders.”
– Vincent Chong, Group President & CEO.
In terms of Group revenue breakdown, Commercial Aerospace, Defence & Public Security and Urban Solutions & Satcom accounted for 39%, 42% and 19% respectively. Commercial sales was $7.1b and defence sales was $3.0bn. The Group held $353m in cash and cash equivalents as at end December 2023.
Despite inflationary pressures, the Group decreased its unit operating expenses (per unit revenue) from 12.1% in 2022 to 11.4% in 2023, a result of continual focus on implementing structural cost reductions and enhancing operational efficiencies.(Source: Google/https://www.stengg.com/)
28 Feb 24. Astronics Corporation Reports 2023 Fourth Quarter and Full Year Financial Results.
• Sales grew 23.5% to $195.3m in the quarter and were up 28.8% to $689.2m for the full year
• Operating income was $7.8m in the quarter, or 4.0% of sales
• Net income for the quarter was $7.0m, or $0.20 per diluted share, including a $5.4m, or $0.16 per diluted share, tax benefit
• Adjusted EBITDA1 was $24.8m, or 12.7% of sales, a 780 basis point improvement over the fourth quarter of the prior year
• Bookings in the quarter were $183.3m; 2023 bookings totaled $724.2m
• Aerospace achieved its eighth consecutive record backlog of $517.2m
• 2024 revenue expected to be approximately $760m to $795m
Astronics Corporation (Nasdaq: ATRO) (“Astronics” or the “Company”), a leading supplier of advanced technologies and products to the global aerospace, defense and other mission critical industries, today reported financial results for the three and twelve months ended December 31, 2023.
Peter J. Gundermann, Chairman, President and Chief Executive Officer, commented, “We had a very strong close to the year with fourth quarter revenue of $195m, up 23% over the comparator quarter. This brought total 2023 sales to $689m, an increase of 29% over 2022. Our financial results demonstrate our improved performance with fourth quarter adjusted EBITDA of $25m, or 12.7% of sales. The expanded profitability was the result of continued strong demand, an improved supply chain and a more stable and developed team of people. We are encouraged with the momentum in our business and believe we are well positioned to enjoy continued tailwinds as we enter 2024.”
1 Adjusted EBITDA is a Non-GAAP Performance Measure. Please see the attached table for a reconciliation of adjusted EBITDA to GAAP net income.
Fourth Quarter 2023 Results (compared with the prior-year period, unless noted otherwise)
Consolidated sales were up $37.1m, or 23.5%. Aerospace sales increased $30.4m, or 22.0%, driven by increased demand across our range of aerospace product lines. Test Systems sales increased $6.7m on higher radio test revenue.
Consolidated operating income was $7.8m, compared with operating loss of $3.2m in the prior-year period. Improved operating income reflects higher sales volume, partially offset by $4.2m in non-cash stock bonuses reinstated in the current quarter. The prior-year period operating loss benefited from a $1.5m gain related to indemnification proceeds received during the quarter associated with a litigation settlement.
Interest expense was $5.9m in the current period, compared with $3.6m in the prior-year period, primarily driven by higher interest rates on credit facilities entered into in January 2023. Interest expense included approximately $0.9m of non-cash amortization of capitalized financing-related fees.
Consolidated net income was $7.0m, or $0.20 per diluted share, compared with net loss of $6.8m, or $0.21 per diluted share, in the prior year. Tax benefit in the quarter was $5.4m compared with a tax benefit of $0.4m in the prior year.
Consolidated adjusted EBITDA increased to $24.8m, or 12.7% of consolidated sales, compared with adjusted EBITDA of $7.8m, or 4.9% of consolidated sales, in the prior-year period primarily as a result of higher sales.
Bookings were $183.3m in the quarter. For the year, bookings totaled $724.2m, resulting in a book-to-bill ratio of 1.06:1.
Aerospace Segment Review (refer to sales by market and segment data in accompanying tables)
Aerospace Fourth Quarter 2023 Results (compared with the prior-year period, unless noted otherwise)
Aerospace segment sales increased $30.4m, or 22.0%, to $168.7m. The improvement was driven by a 20.8% increase, or $21.3m, in commercial transport sales. Sales to this market were $124.2m, or 63.6% of consolidated sales in the quarter, compared with $102.8m, or 65.0% of consolidated sales in the fourth quarter of 2022. Higher airline spending and increasing OEM build rates drove increased demand.
General Aviation sales increased $5.5m, or 37.8%, to $20.2m. Military Aircraft sales increased $4.1m, or 30.9%, to $17.3m.
Aerospace segment operating profit of $14.3m, or 8.5% of sales, compares with operating profit of $5.2m, or 3.8% of sales, in the same period last year. Operating margin expansion reflects the leverage gained on higher volume. Operating profit in the fourth quarter of 2023 was impacted by $2.7m in non-cash bonuses compared with no bonuses in the prior-year period.
Aerospace bookings were $172.1m for a book-to-bill ratio of 1.02:1. Backlog for the Aerospace segment was a record $517.2m at the end of 2023.
Mr. Gundermann commented, “Our Aerospace business continues to accelerate nicely, with revenue up 22% for the quarter and 31% for the year. Operating margins reflected the top line growth at 8.5% for the quarter and 4.1% for the year, significantly ahead of the comparator numbers for 2022. Demand remains strong with total bookings of $664m in 2023, against sales of $605 m, for a book-to-bill of 1.10, supporting our expectation of continued growth in 2024.”
Test Systems Segment Review (refer to sales by market and segment data in accompanying tables)
Test Systems Fourth Quarter 2023 Results (compared with the prior-year period, unless noted otherwise)
Test Systems segment sales were $26.5m, up $6.7m primarily as a result of higher radio test revenue.
Test Systems segment operating loss was $0.2m, an improvement over operating loss of $4.0m in the fourth quarter of 2022. The improvement reflects higher sales volume coupled with the benefit of the realignment of staffing in the second quarter of 2023 and a $1.3m decrease in litigation-related legal expenses. This helped to offset a $0.7m increase in non-cash bonuses. Test Systems’ operating loss continues to be negatively affected by mix and under absorption of fixed costs due to volume. The Test Systems segment has been investing in significant new development programs which are expected to result in more profitable business in the near future.
Bookings for the Test Systems segment in the quarter were $11.2m, for a book-to-bill ratio of 0.42:1 for the quarter. Backlog was $75.0m at the end of 2023 compared with backlog of $93.7m at the end of 2022.
Mr. Gundermann commented, “Our Test business ended the year with revenue of $84.4m, up 14.5% over 2022. The business made significant progress as the year ended towards securing some significant contracts which are expected to result in a step up in volume as we move through 2024.”
Liquidity and Financing
Cash on hand at the end of the quarter was $11.3m. Capital expenditures in the quarter were $1.6m. Net debt was $161.2m.
Cash used by operations was $1.7m in the fourth quarter of 2023. During the quarter, accounts receivable increased $18.9m while inventory decreased $10.7m.
During the quarter, under its at-the-market offering, the Company sold 500,000 shares at an average price of $15.65 per share for net proceeds after offering expenses of $7.6m.
David Burney, the Company’s Chief Financial Officer, said, “Liquidity continued to be tight during the quarter as investment in net working capital remained at elevated levels driven by higher accounts receivable from the strong fourth quarter sales. We made significant improvement in the second half of 2023 managing our inventory, which had grown significantly in the first half of the year. We are forecasting continuing improvement in inventory turnover and are forecasting cash flow from operations to be strong as we advance through 2024.”
He continued, “Our business is operating more smoothly and predictably with each passing quarter. As we are improving, we have reinitiated certain compensation and incentive programs that were suspended since the beginning of the pandemic. These programs normally pay out in cash, but are being paid in stock for now due to our cash position. We will revert to cash payments as liquidity allows.”
2024 Outlook
The Company expects 2024 revenue to be approximately $760m to $795m. The midpoint of this range would be a 13% increase over 2023 sales. Sales in the first quarter are expected to be approximately $170m to $175m and are projected to build progressively through the year.
Backlog at the end of the fourth quarter was $592.3m, of which approximately $526.5 m is expected to ship in 2024. This represents about 68% of expected sales in 2024 at the mid-point of the range.
Planned capital expenditures for 2024 are expected to be in the range of $17m to $22m.
Peter Gundermann commented, “We expect 2024 will be another solid year of progress for our Company. First quarter sales are expected to be somewhat lighter than the fourth quarter due to customer schedules, but we expect continued strengthening in our top line throughout the rest of the year. Our guided range suggests another year of strong double-digit growth, and the higher volume will have a positive influence on our margins. We look forward to a year that will finally see us rebounding to the revenue level we were at in 2019 before the pandemic struck.” (Source: BUSINESS WIRE)
27 Feb 24. DroneShield Releases Record 2023 Annual Results,
Surging to Profitability. DroneShield Ltd (ASX:DRO) (“DroneShield” or the “Company”) is pleased to announce the release of record full year FY23 results.
The highlights include:
• FY23: record contracts and rapidly growing cash receipts
o FY23 $73.5m cash receipts, up 5x vs. FY22
o FY23 $55.1m revenue, up 3x vs. FY22
o 80% of revenues are from repeat customers
o The revenue vs. cash receipt difference mostly due to advanced payments on product subscriptions (SaaS), warranties, as well as grants received
o Largest geographical segment revenue contributions are US at 68% and Australia at 23%
• FY23 is first profitable year, with $9.3m profit after tax
• Share price up 64% over 2023 (vs 9% for ASX300)
• Cash balance of $57.9m as of 31 Dec 2023, no debt or convertibles
o Committed supply chain payments of $30m
• $30m contracted backlog and pipeline of over $510m*
• Substantially completed expansion of the team to enable build, delivery and support of materially larger orders
o Completed move to a larger Sydney facility (3x current floor space) in January, plus supply chain partners been rapidly expanding
o No material cost to DRO to move, due to light capex model (heavy machinery work all outsourced) and landlord fitout incentive payments
o Positions the company for $300-400m annual production capacity
o 115 team members including over 90 engineers
• Favourable environment for DroneShield with rapidly rising counter-drone, defence and security spending globally
o The Ukraine conflict continues to highlight the use of drones on the battlefield, which will continue driving increasing C-UAS orders even after the eventual ceasefire
o Drones increasingly used across global conflicts, including Hamas terror attack on Israel
Full Year Results Presentation can be viewed here:
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Annual Report can be viewed here:
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* There is no assurance that any of the Company’s sales opportunities will result in sales.
27 Feb 24. BWX Technologies Reports Fourth Quarter and Full Year 2023 Results, Initiates 2024 Guidance.
• 4Q23 diluted GAAP EPS of $0.72, diluted non-GAAP(1) EPS of $1.01, on revenue of $725.5m
• 4Q23 net income of $66.3m, adjusted EBITDA(1) of $147.6m
• 2023 diluted GAAP EPS of $2.68, diluted non-GAAP(1) EPS of $3.02, on revenue of $2.5 bn
• 2023 net income of $246.3m, adjusted EBITDA(1) of $471.9m
• 2023 operating cash flow of $363.7m, free cash flow(1) of $212.4m
• Initiates 2024 guidance for Non-GAAP EPS of $3.05-$3.20, adjusted EBITDA(1) of ~$500m
• To host Investor Day on Wednesday, February 28, 2024
BWX Technologies, Inc. (NYSE: BWXT) (“BWXT”, “we”, “us” or the “Company”) reported fourth quarter and full year 2023 results. A reconciliation of non-GAAP results are detailed in Exhibit 1.
“We had a strong finish to 2023, with double-digit revenue and adjusted EBITDA growth and robust free cash flow in the fourth quarter, as expected,” said Rex D. Geveden, president and chief executive officer. “In 2023, we had record revenue and adjusted EBITDA and achieved many important objectives, including a 10% increase in our labor force, the award of Project DRACO, multiple new program wins in our special materials portfolio, backlog growth in commercial nuclear power, and a turn to positive EBITDA at BWXT Medical, as well as strong performance on our missile tubes program including a final recovery settlement for the cost growth that was driven by out-of-scope changes and absorbed by BWXT over the past couple years.”
“Looking ahead, we expect the momentum from 2023 to carry into 2024 and more than offset the anticipated lull in aircraft carrier propulsion systems production, as other elements of our nuclear portfolio gather strength,” said Geveden. “As such, we are initiating 2024 guidance that calls for Non-GAAP EPS of $3.05-$3.20 and adjusted EBITDA of approximately $500m, up mid-single digits compared to 2023, in-line with the preliminary 2024 outlook we provided last quarter.”
“We are as excited as ever about the future of BWXT,” continued Geveden. “The favorable market trends we are experiencing across our business, combined with our unparalleled assets, unique operating licenses and highly skilled workforce position BWXT for continued success in 2024 and beyond. We look forward to providing additional detail on our markets, strategy and financial outlook at our 2024 Investor Day tomorrow.”
Financial Results Summary
Revenues
Fourth quarter revenue increased in both operating segments. The Government Operations increase was driven by higher naval nuclear component production, long-lead materials procurement, microreactors and special materials processing. The Commercial Operations increase was driven by higher revenue associated with commercial nuclear field services and fuel handling, as well as higher medical sales, which was partially offset by slightly lower fuel and components volume.
The full year consolidated revenue increase was driven by growth in both operating segments. The Government Operations increase was driven by higher naval nuclear component production, microreactors volume and higher special materials revenue. The Commercial Operations increase was driven by an increase in field services as well as higher sales associated with medical and higher fuel handling and components volume.
Operating Income and Adjusted EBITDA(1)
Fourth quarter operating income increased in both operating segments. The Government Operations increase was due to higher revenue and favorable contract adjustments, but partially offset by costs associated with the increase in staffing levels and associated training and related inefficiencies, as well as mix due to higher advanced technologies revenue. The Commercial Operations increase was due to improved profitability in medical, but partially offset by less favorable commercial nuclear business mix that was weighted toward refurbishment and life extension field services, compared to a greater mix of outage work in the fourth quarter of 2022. Higher segment operating income was partially offset by higher corporate expense.
Full year operating income increased in both segments. The Government Operations increase was due to higher revenue and favorable contract adjustments. The Commercial Operations increase was driven by improved profitability in medical, but partially offset by lower commercial nuclear income as business mix was weighted toward refurbishment and life extension field services, compared to a greater mix of outage work in 2022. Higher segment operating income was partially offset by higher corporate expense.
Fourth quarter and full year total adjusted EBITDA(1) increased for the reasons noted above.
EPS
Fourth quarter and full year 2023 GAAP EPS increased as higher operating income and a lower effective tax rate were partially offset by higher interest expense, lower pension income, and a lower mark-to-market loss on the pension compared to fourth quarter 2022. Non-GAAP EPS(1) increased driven by the items noted above, excluding mark-to-market pension losses, restructuring costs and other one-time items.
Cash Flows
Fourth quarter and full year 2023 operating cash flow increased due to higher net income and improved working capital management. Lower capital expenditures were driven by lower spending on two major growth capital campaigns for U.S. naval nuclear reactors and medical radioisotopes, both of which are largely complete, partially offset by an increase in capital expenditures for microreactors and other select growth investments.
Dividend
BWXT paid $21.1m, or $0.23 per common share, to shareholders in the fourth quarter 2023 and paid $85.0m to shareholders for the full year 2023. On February 23, 2024, the BWXT Board of Directors declared a quarterly cash dividend of $0.24 per common share payable on March 28, 2024, to shareholders of record on March 11, 2024. (Source: BUSINESS WIRE)
27 Feb 24. Unseenlabs Announces a Record-breaking Fundraising of €85m and Revolutionizes Maritime Surveillance From Space. Using constellation of satellites for the detection of radio frequency signals enables situation awareness of hidden ships.
Unseenlabs, a France-based company and global leader in maritime surveillance through detection and geolocation of radio frequency signals from space, announces the closure of an exceptional fundraising round of €85m. This operation, one of the largest in the space industry, confirms the world’s interest in Earth observation and marks a new milestone in Unseenlabs’ development.
This new funding round brings together leading investors: Supernova Invest, ISALT via its Strategic Transition Fund, and UNEXO. All of Unseenlabs’ historical partners, including 360 Capital, OMNES, Bpifrance, Breizh Up managed by UI Investissement, and S2G Ventures, also reaffirm their support for this new phase.
The strategic allocation of funds will focus on:
• Significant expansion of observation capabilities, with the launch of multiple satellites.
• Strengthening Unseenlabs’ international presence, particularly in the American and Asian markets, crucial for the maritime sector.
• Consolidation of activity within private sector segments such as oil and gas, insurance, shipowners, economic intelligence, or offshore energy.
• Innovation and deployment of new products and solutions, thereby reinforcing Unseenlabs’ position as a leader in RF maritime surveillance solutions.
“Unseenlabs has accumulated a total funding of €120m since its inception. This reflects our steady progress and the continued confidence of our investors. The year 2023 marked a turning point for Unseenlabs, consolidating the relevance of our business model and the attractiveness of our offering in the market. This funding will allow us to accelerate our growth, particularly by developing new solutions and strengthening our presence in the private sector. We are excited to continue this journey with our historical partners while welcoming new ones,” declared Chief Executive Officer, Clément Galic.
“Unseenlabs stands out for its innovative approach and its ability to redefine the standards of space observation of radio frequencies. We are convinced of its potential to stay a major global player. The decisive factors of our investment lie in their disruptive technology and the value-addition of their data, crucial for both state maritime missions and private sector markets,” emphasized Etienne Moreau, partner at Supernova Invest.
Next month, Unseenlabs will launch two new satellites, BRO-12 and BRO-13, aboard SpaceX Falcon 9 as part of the Transporter-10 mission from Vandenberg Space Force Base (USA).
For quotes and more information about the numerous investors, as well as a list of banks supporting the investment round, please reach out to the media contact below.
About Unseenlabs
Unseenlabs is the world leading radio frequency (RF) data and solutions provider for maritime domain awareness. Its unique technology allows the geolocation and characterization of any vessel at sea, at any time of the day or night, anywhere on the globe, and in any weather conditions. Unseenlabs provides its customers with high added value data and solutions to fight against illegal activities at sea. For more information visit www.unseenlabs.space. Follow us on LinkedIn and X: @Unseenlabs. (Source: BUSINESS WIRE)
27 Feb 24. World View Secures Strategic Series D Funding Led by SNC. World View, a global leader in stratospheric exploration and flight, announces the successful opening and initial funding of a Series D round. The round was led by SNC, a renowned leader in innovative technology solutions and open architecture integrations within the aerospace and national security sectors.
This strategic investment builds upon the multi-year strategic partnership initiated in 2022 between World View and SNC. This funding round also saw participation from both new and existing investors, reflecting the continued confidence in World View’s pioneering work in high-altitude, stratospheric flight technologies and systems.
World View continues to optimize and refine its stratospheric flight capabilities while enhancing production capacity of its maturing, high-altitude, stratospheric remote sensing platforms.
The Series D raise in funding specifically supports the increasing demand for high-altitude intelligence, surveillance, and reconnaissance (ISR) capabilities identified by the U.S. Army, U.S. Air Force, U.S. Department of Defense, and global defense forces, as well as growing demand for commercial remote sensing solutions. With this combined strategic investment, World View is poised to execute a robust flight manifest over the next 24 months, further developing and improving its flight systems and capabilities.
As part of the Series D funding round, two notable individuals join the World View Board of Directors. Jon Piatt, a seasoned executive in the aerospace and defense industry, represents SNC on the board. Piatt currently serves as the executive vice president for SNC’s ISR, Aviation and Security (IAS) business area, bringing over three decades of DoD and commercial experience to the position. Dennis Muilenburg, former Boeing chairman and CEO, current New Vista Capital CEO, and a 38-year veteran of the aerospace and defense industry, also joins the World View Board.
“More than ever, high-altitude platform solutions are becoming an increasingly important capability for the space and defense industry,” said Piatt. “SNC is committed to quality and excellence in performance, and we look forward to enhancing this much-needed capability in coordination with World View.”
Ryan M. Hartman, president and CEO of World View, expressed his excitement about the future, stating, “This strategic funding round is a testament to the confidence our investors have in our vision. We are well-positioned to not only meet the increasing demands for high-altitude ISR capabilities but also to pioneer new advancements in stratospheric exploration.”
World View has a demonstrated record of accomplishments in the stratospheric ballooning industry with more than 120 completed stratospheric flight operations, including flights with up to 4,700kg and 10,000kg payloads. World View is a vetted and trusted stratospheric operator with current and past customer relationships that include NASA, NOAA, certain U.S. Department of Defense units and many others.
About World View
World View is a leading global stratospheric exploration company, founded in 2012 and headquartered in Tucson, Arizona. World View has a demonstrated record of accomplishments in the stratospheric ballooning industry and is leading a new era of stratospheric exploration to take humanity’s understanding and appreciation of Earth to inspired new heights. With a sharper vision for a brighter future, World View exists to inspire, create and explore new perspectives for a radically improved future. Through its legacy remote sensing business, Stratollite® imaging and exciting future capabilities with research and engineering missions and space tourism and exploration, World View is working to ensure its ultimate objective: honor the planet so that future generations will feel blessed to call it home. For more information, visit https://www.worldview.space.
About SNC
SNC is a trusted leader in innovative, advanced technology solutions and open architecture integrations in aerospace and national security. For 60 years, SNC has worked to stay one step ahead; working on solutions today to solve the problems of tomorrow. SNC provides the leading-edge tools our nation’s heroes need to safeguard freedom and bring them home safely including customized solutions in the fields of aviation, electronic support measures, JADC2, mission systems and inline cybersecurity. https://www.sncorp.com. (Source: BUSINESS WIRE)
27 Feb 24. Leonardo DRS Announces Financial Results for Fourth Quarter and Full Year 2023.
• Revenue: $926m for the fourth quarter and $2.8bn for the year
• Net Earnings: $74m for the fourth quarter and $168m for the year
• Adjusted EBITDA: $131m for the fourth quarter and $324m for the year
• Diluted EPS: $0.28 for the fourth quarter and $0.64 for the year
• Adjusted Diluted EPS: $0.31 for the fourth quarter and $0.73 for the year
• Bookings: $1.0bn for the fourth quarter and $3.5bn for the year (book-to-bill ratio of 1.2)
• Backlog: A new company record of $7.8bn, up 82% from prior year
• Initiates 2024 guidance
• Commences a three-year, approximately $120m net capital investment to build a state-of-the-art naval propulsion manufacturing and test facility near Charleston, South Carolina
• Confirms March 14, 2024 at Nasdaq MarketSite in New York City for Investor Day
Leonardo DRS, Inc. (Nasdaq: DRS), a leading provider of advanced defense technologies, today reported financial results for the fourth quarter and full year ended December 31, 2023.
CEO Commentary
“We delivered solid 2023 financial results, which continue to demonstrate the strength of our portfolio and the clear customer demand for our technologies. I am incredibly proud of the tremendous effort from the entire team to execute for our customers, drive innovation and deliver excellent financial performance for shareholders. In 2024, we are maintaining steadfast focus on increasing long-term shareholder value by delivering consistent revenue growth, margin expansion and solid free cash generation,” said Bill Lynn, Chairman and CEO of Leonardo DRS.
Summary Financial Results
Revenue growth for the fourth quarter was up 13% compared to 2022. Quarterly revenues benefited from strong contribution from multi-mission advanced sensing as well as naval and ground network computing programs.
For the full year, total revenue growth was 5% compared to 2022 and reflects a several point net divestiture headwind. Growth drivers for the year were broad based and included increases on programs related to electric power and propulsion, multi-mission advanced sensing, specifically programs utilizing the company’s capabilities in tactical radars, electronic warfare, tactical communications and lasers as well as naval network computing.
Higher volume drove year-over-year adjusted EBITDA growth in the fourth quarter. However, higher volumes were primarily offset by higher general and administrative expenses from increased public company costs and investments in research and development resulting in adjusted EBITDA margin contraction in Q4.
For the full year, higher volume resulted in adjusted EBITDA growth compared to 2022. However, inflationary impacts and increased general and administrative expenses (from higher public company costs and investments in research and development) were headwinds that factored into the adjusted EBITDA margin decline for the year.
Strong operating performance translated to net earnings growth of 14% compared to Q4 2022. The full year decrease in 2023 is primarily attributable to the $275 m one-time net (after tax) gain related to the divestitures of the Global Enterprise Solutions (GES) business and the Advanced Acoustics Concepts Joint Venture recorded in 2022.
Quarterly adjusted net earnings growth was 2%, which reflects a higher tax burden and increased interest expense compared to Q4 2022. For the year, adjusted net earnings increased 8% due to strong core operational performance aided by lower taxes which were offset by higher depreciation.
The increased share count from our all-stock merger with RADA impacted both diluted EPS and adjusted diluted EPS compares for the quarter and full year.
Cash Flow and Balance Sheet
Net cash flow generated by operating activities was $515m for the fourth quarter and $205m for the full year. Consistent with the historical patterns of the business, the company generated exceptional free cash flow in the fourth quarter of $494m and full year free cash flow was $159m.
At year end, the balance sheet had $467m of cash and $214m of outstanding borrowings under the company’s credit facility, which provides the company with sufficient financial capacity to deploy capital for growth, while maintaining a healthy balance sheet.
Bookings and Backlog
$1.0bn in new funded awards during the fourth quarter and $3.5bn for the full year. Strong customer demand for Leonardo DRS solutions in naval and ground network computing, electric power and propulsion and multi-mission advanced sensing drove bookings in the fourth quarter and the full year. Healthy, broad based demand throughout 2023 combined with the remaining seven boat contract for our Columbia Class electric power and propulsion system valued at over $3bn resulted in a backlog increase of 82% to a record $7.8bn.
Segment Results
Advanced Sensing and Computing (“ASC”) Segment
The increased demand for naval and ground network computing as well as multi-domain infrared sensing systems drove bookings for ASC in the fourth quarter and 2023.
ASC revenues were up for the fourth quarter and the full year. Quarterly and full year revenues were bolstered by growth on advanced sensing programs related to tactical radars, tactical communications, lasers and electronic warfare as well naval network computing.
Adjusted EBITDA and adjusted EBITDA margins increased primarily due to higher volume and better mix for the fourth quarter and full year.
Integrated Mission Systems (“IMS”) Segment
IMS bookings for the fourth quarter and full year were primarily driven by strong demand for the company’s electric power and propulsion technologies.
Program timing on ground systems integration efforts drove the quarterly revenue decline. For the full year, strong contribution from electric power and propulsion programs drove growth.
Adjusted EBITDA and adjusted EBITDA margin declined in the fourth quarter due to lower volume and less favorable mix. For the full year, adjusted EBITDA was down and adjusted EBITDA margins contracted due to unfavorable mix and higher general and administrative costs.
2024 Guidance
Leonardo DRS is initiating 2024 guidance as specified in the table below:
Additionally, the company expects the new coastal facility investment to increase capital expenditures for 2024 and reduce free cash flow conversion of adjusted net earnings to approximately 80% for the year.
The company does not provide a reconciliation of forward-looking adjusted EBITDA and adjusted diluted EPS due to the inherent difficulty in forecasting and quantifying the adjustments that are necessary to calculate such non-GAAP measures without unreasonable effort. Material changes to any one of these items could have a significant effect on future GAAP results. (Source: BUSINESS WIRE)
27 Feb 24. Progress at Denel can be rewarded by access to National Treasury funding – Godongwana. The new man at the helm of the State-owned defence and technology conglomerate Denel – Tsepo Monaheng – knows there will be no additional financial assistance from National Treasury (NT) in the coming financial year.
On the other hand Finance Minister Enoch Godongwana, during his national budget last week, indicated progress could be rewarded by access to the remaining R1.2bn of a R3.4bn Special Appropriation Act package.
The latest estimates of national expenditure (ENEs) have it government in 2021/22 helped Denel settle R3.2bn of guaranteed debt, relieving it of annual interest payments amounting to R250m.
“The following financial year, government allocated an additional R3.4bn through the Special Appropriation Act (2022) to help implement the company’s turnaround plan. Following these interventions, Denel has experienced growth in its order pipeline, which is estimated at more than R25bn. The company’s immediate focus is to stabilise its operations and deliver on existing contracts to improve cash flow and continue to build trust with customers and partners.
“However, since 2021/22, the company has lost a significant number of experienced personnel with critical skills due to decreased business activity and poor financial position, threatening its capacity to maintain strategic defence industrial capabilities,” the ENE document read. Denel currently has 1 800 employees.
“Since the improvement in the company’s financial position from mid-2022/23, Denel has stabilised its employee turnover rate and has been able to attract leadership and other critical skills to fulfil contracts.
“Expenditure is expected to increase at an average annual rate of 10%, from R2.4bn in 2023/24 to R3.2bn in 2026/27. This increase is attributed to the expected improvement in business activity and intensifying implementation of the turnaround plan. Spending on goods and services, mainly for material supplies, accounts for 50.8% (R4.5bn) of total expenditure.
“Revenue is projected to increase at an average annual rate of 19.1%, from R2.1 bn in 2023/24 to R3.5bn in 2026/27, due to the turnaround strategy having been implemented by the board in June 2022.
“Denel derives 95.7% (R9bn) of its revenue through sales of defence and security equipment and the services that it provides,” according to the ENEs which add the Auditor-General is in the process of auditing three outstanding financial statements (2020/21, 2021/22 and 2022/23).”
On Denel’s financial position, National Treasury has it the Centurion headquartered SOE was allocated R3.4bn through the Special Appropriation Act in 2022 and has drawn R2.2bn to settle statutory and legacy debt obligations as well as fund working capital requirements.
The remaining R1.2bn is ring-fenced and will be accessible when Denel can show progress on, among others, consolidating operations; disposing of non-core assets and finalising strategic equity partnerships. (Source: https://www.defenceweb.co.za/)
26 Feb 24. kSARIA Acquires Charles E. Gillman Company. kSARIA Corporation (“kSARIA” or the “Company”), a leading producer and supplier of mission-critical connectivity solutions for the aerospace and defense end markets and a portfolio company of Behrman Capital, today announced that it has acquired Charles E. Gillman Company (“Gillman”). Financial terms of the transaction were not disclosed.
Headquartered in Rio Rico, Arizona, with additional operations in Nogales, Mexico, Gillman is an ISO9100-registered manufacturer of high-reliability electrical cables and harnesses for military ground vehicles and other ruggedized applications. Since 1958, Gillman has served original equipment manufacturers nationwide with excellence in design engineering, prototype fabrication, production, and testing. Gillman’s product capabilities include highly customized electrical cable assemblies and complex multi-branch wire harnesses that can withstand severe operating conditions, in a wide variety of high-reliability applications in the military, medical, and transportation marketplaces.
Anthony J. Christopher, kSARIA’s Chief Executive Officer, said: “Acquiring Gillman further enhances our high-reliability connectivity product portfolio while also adding a state-of-the-art manufacturing presence in Mexico. Gillman’s highly tenured presence in military vehicle applications complements kSARIA’s strength in aerospace, naval, and battlefield solutions. Together, our expanded production and engineering capabilities will allow us to better serve our customers.”
Grant Behrman, Managing Partner of Behrman Capital, said: “We are pleased that kSARIA is building on its recent success with its third acquisition since our investment in the Company in 2018. kSARIA has continued to deliver strong performance and has rapidly expanded its platform of mission critical interconnect solutions for the aerospace and defense markets. The acquisition of Gillman accelerates this momentum, and we look forward to continuing to support kSARIA as it implements its organic and acquisition growth strategy.”
Alan Gillman, President of Gillman, said: “Gillman has a 65-year history of manufacturing excellence and providing innovative solutions to our customers. We have extensive industry expertise that has enabled us to forge deep-rooted and invaluable relationships with major OEMs and manufacturers. We are excited to contribute to the success of kSARIA in partnership with the management team and Behrman Capital.”
About kSARIA
kSARIA, based in Hudson, Massachusetts, offers complete interconnect solutions for mission critical applications with unsurpassed quality and performance. kSARIA offers unmatched advantages for all aspects of Mil/Aero connectivity solutions from cable assembly design, fabrication, installation, training, and logistics management. Whether it is optical fiber, copper, RF or hybrid cable assemblies, kSARIA has the technology, expertise, and an end-to-end approach to optimize solutions for customers. For more information, please visit www.ksaria.com.
About Behrman Capital
Based in New York City, Behrman Capital was founded in 1991 by Grant G. and Darryl G. Behrman. The firm invests in management buyouts, leveraged buildups and recapitalizations of established growth businesses. The company’s investments are focused in three industries: Defense and Aerospace, Healthcare Services, and Specialty Industrials. The firm has raised $4.1 bn since inception and is currently investing out of its seventh fund. For more information, please visit www.behrmancap.com.
(Source: PR Newswire)
26 Feb 24. Kratos sees double-digit growth in 2023 as it invests for future. Kratos saw significant revenue growth in 2023 and is investing internally for future programmes. Revenues of USD1.04 bn resulted from 15.5% growth and 12.6% organic growth compared with 2022, according to a company statement on 13 February. In the fourth quarter (Q4) of 2023, Kratos saw revenues of USD237.8m from 9.8% growth and 7.3% organic growth compared with the third quarter of 2023. The fourth quarter also saw a company-funded research and development expense of USD8 m related to the ongoing development of the OpenSpace virtual; software-based command-and-control (C2); telemetry, tracking, and control (TT&C); and other ground systems, Kratos said. Eric DeMarco, president and CEO of Kratos, said in an earnings call on 13 February that the company had made significant investments in potential “transformational growth areas”. The company noted reduced revenues in its Unmanned Systems segment, which it attributed to reduced tactical drone activity. (Source: Janes)
26 Feb 24. Seraphim Space Publishes Ecosystem Map – Detailing Top Funding Space Companies. Seraphim Space has today published its global ecosystem map – detailing the most well-funded space companies across the globe. The map represents the most exciting and well-funded VC-funded SpaceTech startups, comprising over 300 companies from 30 different countries. The data is based on Seraphim’s individual analysis, collated and detailed in its quarterly Space Index report. The map looks at companies that are servicing the segments build, launch, collect, analyse and product markets and where Seraphim see innovation rolling and funding flowing for now and the year ahead.
Below details the top 10 funded space companies since 2017:
1. SpaceX – $8.1bn (since 2017 not total)
2. OneWeb – $4.3bn (since 2017 not total)
3. Sierra Space – $1.7bn
4. Relativity Space – $1.3bn
5. Axiom Space – $606m
6. Astranis = $553m
7. Firefly Aerospace – $480m
8. Mapbox – $444m
9. Virgin Galactic – $425m
10. ABL Space Systems – $419m
The release looks at Seraphim’s view on the most progressive businesses across the SpaceTech ecosystem and helps understand which markets and countries are excelling in SpaceTech technology. Overall, the US remains the worldwide leader in developing the next generation of Space companies, hosting over half of the most well-funded space companies.
Maureen Haverty, Principe Investor at Seraphim Space said: “The map aims to provide a breakdown of the leading companies and markets that are helping to propel development within the space sector. The results show the growing array of leading global companies that are raising significant amounts of capital to help build the space economy ecosystem.”
26 Feb 24. The Israel-Hamas war has been a “wake-up call” for German investors, according to the chief executive of military supplier Renk, who said many funds that had remained wary of defence stocks even after Russia’s invasion of Ukraine were now showing interest in the sector. Renk listed in Frankfurt this month, after the company was forced to abort its planned initial public offering last year because of market conditions having “clouded noticeably” amid growing US debate over further military support for Ukraine. However, two days after Renk’s cancelled listing date in October, Hamas carried out its attack on Israel. Susanne Wiegand, head of the Bavarian supplier of gear boxes, slide bearings and transmissions for tanks and frigates, told the Financial Times that had markets “known that 48 hours later Hamas would attack Israel”, the flotation would not have been pulled. Wiegand added that the Hamas attack had underlined the sense of growing geopolitical uncertainty among German investors, a country that has been a staunch supporter of Israel following its role in the Holocaust. In 2008 the then chancellor Angela Merkel laid out the idea that Israel’s security was Germany’s Staatsräson, or in its national interest, a commitment inherited by her successor Olaf Scholz. “If I compare the interest from German institutional investors and funds at the September [2023] roadshow to what I saw in December and January — it was very different,” said Wiegand, adding that capital markets were adjusting to a “new world order, not just a single event of Russian aggression against Ukraine”. Renk’s majority owner, private equity group Triton, two weeks ago listed 30 per cent of Renk’s shares, valuing the company at €1.5bn. KNDS — the joint venture between German Krauss-Maffei Wegmann and French Nexter that is developing a future tank system — bought shares worth €100mn, which Wiegand said showed that defence contractors were trying to make their supply chains more resilient. The world’s defence contractors have been big beneficiaries of rising tensions around the globe which have spurred orders from governments. World military spending reached a record $2.2tn last year, with European spending rising to levels not seen since the cold war, according to the International Institute for Strategic Studies. Germany in the same year announced a historic reversal of the country’s decades-long pacifist policies and pledged €100bn to a special military refurbishment fund. Wiegand said she did not expect the strong flow of military orders from European states to weaken any time soon, because countries would need years to replenish their inventory levels after sending support to Ukraine. “The gap on outfitting the armed forces in Europe cannot be closed within a year or two, irrespective of what is going on in Ukraine,” she said. (Source: Google/ft.com)
23 Feb 24. Armscor commercial activities growing. In the light of continued decreasing defence spending by President Cyril Ramaphosa’s government, Armscor will intensify its commercialisation strategy by building on a top five product base.
The furtherance of the swords into ploughshares analogy will, according to the budgetary review and recommendations (BRR) report on the 2022/23 Armscor annual report delivered to the Portfolio Committee on Defence and Military Veterans (PCDMV) this week, see Armscor services “more widely recognised and used” by other government departments.
Armscor’s top five commercial offerings, covering products and services, are an ultrasonic broken rail detector (UBRD), Hazmat filter cartridges and canisters; hand and surface sanitisers; Vistanet maritime domain awareness software; and a beach barrier system.
Three Armscor divisions – Flamengro, Hazmat and Protechnik – are currently developing and/or working on products and services with commercial applications.
Flamengro, billed as a centre for computational mechanics modelling, is developing a dynamic calibration test laboratory with a view to SANAS (SA National Accreditation System) accreditation. The work is in response to what is termed “market need” for a “niche” laboratory to conduct material testing and sensor calibration to serve industries outside the defence sector such as the built environment for testing and qualification of materials.
Centurion-based Hazmat completed development and homologation of branded filter cartridges for a private sector company and the BRR has it “sales are starting to improve/show benefit”. Additionally initial discussions with another private sector company on branded filter cartridges is in initial stages with a filter cover developed for another private sector company with another in progress.
Also in Centurion, Protechnik is working on integrating chemical detectors on UAVs (unmanned aerial vehicles) for remote chemical detection. “This type of work will be beneficial for government departments like Department of Environmental Affairs, SAPS (SA Police Service), the Border Management Authority (BMA) and first responder companies,” as per the BRR. (Source: https://www.defenceweb.co.za/)
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