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08 Mar 24. Darktrace upgrades forecasts as it slowly wins back market confidence.

• Revenue and margin guidance improved
• Strong cash generation leaves it with healthy balance sheet

Given the consistent revenue growth Darktrace (DARK) has achieved over the past few years, it looks a lot cheaper than it used to.

The weakness in its share price is because of a sell note written by Peel Hunt a few years ago questioning its total addressable market size and a short-seller’s report published by Quintessential Capital questioning the quality of its revenue.

However, since then, EY has conducted an audit of Darktrace and cleared it of concerns, and the cyber security company has just delivered another strong set of results. In the six months to December 2023, annual recurring revenue (ARR) was up 24.4 per cent year on year. Meanwhile, net cash flow from operations rose 142 per cent to $65.6mn.

The company has increased its full-year revenue and adjusted cash profit (Ebitda) margin guidance. It is now forecasting full-year revenue growth of between 23.5 per cent and 25 per cent, which is 0.5 per cent higher. More significantly, it is expecting an adjusted Ebitda margin of no less than 21 per cent, up from the previous range of between 18 per cent and 20 per cent.

A tweak to the way it pays its sales team means free cash flow conversion will drop to between 50 per cent and 60 per cent. It is now paying its commission all up-front, rather than half at the beginning of the contract and half at the end. However, Darktrace expects it to switch back to 100 per cent conversion next year once this is worked through.

Admittedly, last year it was revealed that cash flow conversion was temporarily lower due to “net settlement of tax obligations” but it expects it to adjust back. So, it has history in making ‘temporary’ adjustments that impact cash flow.

Another slight concern is that R&D spending has dropped in absolute terms by 7.4 per cent from $25.7mn to $23.8mn, and as a percentage of revenue it is a little below what you want from a software business.

Ultimately, there aren’t that many businesses with 25 per cent top-line growth and decent cash conversion. Meanwhile, it is inevitable that demand for cyber security services will increase in demand as artificial intelligence (AI) lowers the cost of attacks.

There is potential value here, but we just like a set of results with no adjustments. Stick to hold, for now.

Last IC View: Hold, 253p, 6 Sep 2023. (Source: Investors Chronicle)

 

07 Mar 24. BigBear.ai Announces Close of Pangiam Acquisition, $54m of Incremental Cash Proceeds, Net Loss of $21.3m in Q4 2023, and Second Consecutive Quarter of Positive Adjusted EBITDA in Q4 2023 Financial Results.

• Announced successful close of Pangiam acquisition in an all-stock transaction, combining facial recognition, image-based anomaly detection and advanced biometrics with BigBear.ai’s computer vision capabilities.
• Approximately $54m of cash proceeds, before fees, related to warrants exercised in the first quarter of 2024, bringing additional liquidity and strengthening the Company’s balance sheet.
• Net loss of $21.3m in the fourth quarter of 2023, an improvement of $8.6m as compared to a net loss of $29.9m for the fourth quarter of 2022.
• Second consecutive quarter of positive adjusted EBITDA at $3.7m.
• 2H 2023 cash flow positive, first time since public company debut in December 2021.
• 2024 Revenue outlook provided of $195 – $215m.

BigBear.ai Holdings, Inc. (NYSE: BBAI) (“BigBear.ai” or the “Company”), a leader in AI-powered decision intelligence solutions, today announced financial results for the fourth quarter and full year ended December 31, 2023, released 2024 revenue guidance and issued an investor letter that has been posted to the Investor Relations section of the Company’s website.

BigBear.ai CEO Mandy Long said, “As we close out FY 2023, I am proud of the work that we have done as a company to solidify BigBear.ai’s foundation. We entered the year in a different position than many other companies that are playing a role in the transformative potential of artificial intelligence. After joining in October 2022, I spoke openly about needing a foundational year to overhaul our operating structure, wind down contracts that did not meet our business objectives, reset the strategic priorities of BigBear.ai, and manage uncertainty in a volatile macroeconomic and geopolitical environment. In short, we had to do the hard work to get our house in order.​ We stand here in early 2024 knowing that we did what we said we would do. With the completion of the Pangiam acquisition and incremental cash proceeds of $54M from warrants exercised in Q1 2024, we are well positioned for healthy growth in the year ahead.”

Kevin McAleenan, former CEO of Pangiam, has been announced as President, and will play a critical role in leading the business combination. “Together, we will be able to deliver broader capabilities and more value to our customers and partners. The combined company is positioned to be a breakout leader, with both a proven track record of innovating in our target markets and developing cutting-edge products. We couldn’t be more excited about the future.”

Financial Highlights

• Revenue grew 0.5% to $40.6m for the fourth quarter of 2023, compared to $40.4m for the fourth quarter of 2022.
• Gross margin of 32.1% in the fourth quarter of 2023, an increase from 29.2% in the fourth quarter of 2022, driven by improved Federal margins on our largest fixed price contracts coupled with mixing out of lower margin work such as EPASS that completed in July 2023.
• Net loss of $21.3m for the fourth quarter of 2023, which includes $9.4m of non-cash expense related to the change in the fair value of warrants that were issued in 2023, and $6.1m of equity-based compensation expense, compared to a net loss of $29.9m for the fourth quarter of 2022, which included $18.3m of non-cash goodwill impairment charges and $2.6m of restructuring charges.
• Non-GAAP Adjusted EBITDA* of $3.7m for the fourth quarter of 2023 compared to $(2.5) m for the fourth quarter of 2022, primarily driven by gross margin improvement and continued focus on operating expense reductions.
• SG&A of $18.2m for the fourth quarter of 2023 compared to $15.6m for the fourth quarter of 2022, primarily driven by an increase in equity-based compensation.
• Recurring SG&A* has been reduced from $16.1m in the fourth quarter of 2022 to $12.3m in the fourth quarter of 2023, a net improvement of $3.8m.
• Ending cash balance of $32.6m as of December 31, 2023 compared to $12.6m as of December 31, 2022.

New Developments

• BigBear.ai announced a successful close of its acquisition of Pangiam Intermediate Holdings, LLC (Pangiam), a leader in Vision AI for the global trade, travel, and digital identity industries. This strategic move, finalized on February 29, 2024, accelerates and evolves BigBear.ai’s mission to create clarity for the world’s most complex decisions in three markets: national security, supply chain management, and digital identity. The combined entity will create one of the industry’s most comprehensive Vision AI portfolios, combining facial recognition, image-based anomaly detection and advanced biometrics with BigBear.ai’s computer vision and predictive analytics capabilities.
• On February 27, 2024, BigBear.ai entered into a warrant exercise agreement whereby an existing accredited investor elected to exercise approximately 8.9m warrants, generating approximately $20.6m of gross proceeds, prior to fees, for the Company. In connection with the warrant exercise, BigBear.ai issued 5.8m new warrants with an exercise price per share equal to $3.78, which are not exercisable for six months.
• On March 4, 2024, BigBear.ai entered into a warrant exercise agreement whereby an existing accredited investor elected to exercise approximately 13.9m warrants, generating approximately $33.2 m of gross proceeds, prior to fees, for the Company. In connection with the warrant exercise, BigBear.ai issued 9.0m new warrants with an exercise price per share equal to $4.75, which are not exercisable for six months.
• In December 2023, BigBear.ai announced a partnership with Amazon Web Services Professional Services (AWS ProServe). AWS ProServe customers will be able to access the power of BigBear.ai’s ProModel AI-driven warehousing solutions, including optimized facilities design, streamlined process workflows, efficient staffing models, arrival and departure scheduling, and strategic resource allocation, among other enhancements. Read more: Press Release
• In December 2023, the US Army announced an extension of the GFIM Phase 2 Prototype. During the initial Phase 2 period, BigBear.ai laid the groundwork for a modernized force structure system. The team successfully navigated the complexities of the U.S. Army’s requirements, and this extension will see the continuation of that partnership as the project moves towards operationalizing the prototype within the cARMY cloud. Read more: Press Release
• In October 2023, BigBear.ai was invited back to participate for the third time with the Navy’s AI Task Force at its annual Naval Exercise, Digital Vanguard. BigBear.ai’s leading computer vision capabilities were on display again, showing the power of AI integrated into the Navy’s existing systems where BigBear.ai demonstrated object detection from Full Motion Video (FMV), and descriptive and predictive analytics. Following this, the US Navy has again selected BigBear.ai to participate in an upcoming naval exercise to demonstrate its data and AI orchestration capabilities. The exercise is scheduled to take place in California in the second half of this year (2024).
• In the fourth quarter of 2023, BigBear.ai responded to the National Institute of Standards and Technology’s (NIST) public comment letter concerning guidelines for auditing AI systems and models, synthetic content labeling, and global technical standards development. BigBear continues to provide thought leadership, aiding in the important discussion of shaping future AI standards.
• BigBear.ai exhibited at the Association of the United States Army annual meeting & exposition in October of 2023. BigBear.ai demonstrated its latest solutions in Intelligent Automation, Contested Logistics, and Computer Vision.
• BigBear.ai’s CTO, Ted Tanner Jr., spoke at MIT’s 5th annual workshop focused on AI for National security. Ted’s panel focused on both the needs for AI in the Defense space as well as the challenges posed by AI and how to continue to safeguard the nation during the evolution of this technology. Ted was joined by panelists from NASA Goddard Space Flight Center, NSA, Georgetown University, and OSD R&E.
• BigBear.ai CTO, Ted Tanner Jr., spoke on the state of the union of the AI industry as the keynote speaker at the inaugural State of Tech Dinner, Charleston Digital Corridor in Charleston, SC.

Financial Outlook

The following information and other sections of this release contain forward-looking statements, which are based on the Company’s current expectations. Actual results may differ materially from those projected. It is the Company’s practice not to incorporate adjustments into its financial outlook for proposed acquisitions, divestitures, changes in law, or new accounting standards until such items have been consummated, enacted, or adopted. For additional factors that may impact the Company’s actual results, refer to the “Forward-Looking Statements” section in this release.

For the year-ended December 31, 2024, the Company projects:

• Revenue between $195m and $215m
• The projections include the results of Pangiam after the acquisition date of February 29, 2024

(Source: BUSINESS WIRE)

 

06 Mar 24. Indra seeks to lead consolidation in Spanish defense industry.

Spain’s Indra Sistemas SA said it will focus on its defense and aerospace businesses as part of a new 2030 strategy, seeking to become an international player at a time of increased military spending by European NATO members.

Indra plans to lead consolidation of the Spanish defense industry, Chairman Marc Murtra told analysts during a March 6 presentation in Madrid. He cited the U.K.’s BAE Systems, France’s Thales and Italy’s Leonardo as examples of national defense champions that consolidated their home markets.

European countries have boosted defense spending since Russia’s invasion of Ukraine in 2022 to strengthen their militaries after decades of cost cutting. Purchases of defense equipment by NATO’s European members will rise 7% to 8% a year through 2030, with total procurement of as much as €950bn (US$1trn) over the period, Indra forecasts.

“Europe is entering a new major defense investment cycle after more than 30 years, characterized by a significant shift in focus towards technology, a greater share of defense systems and the expansion of multi-domain capabilities,” Murtra said.

Indra seeks to transform its businesses from national to international, and become “the Spanish multinational of reference” in defense and aerospace, the chairman said. The company wants to become the Spanish coordinator in European land, air and cyberspace programs, and the main defense-system integrator in its home market.

The company has announced a number of cross-border deals in its defense business this year, including a radar joint venture with the Emirati defense-technology company Edge Group, and agreements with Thales and Lockheed Martin to jointly work on defense systems.

The EU has been pushing for consolidation and joint projects in the defense industry, with fragmentation and duplication between national markets estimated to waste billions of euros. The EU’s executive branch on Tuesday proposed a €1.5bn plan to boost defense production and promote joint military projects among member states.

Indra is already involved in multinational European projects including the Future Combat Air System, the Eurofighter Typhoon and the A400M freighter.

“Some of our NATO allies within Europe, such as the U.K., Italy and France, have already made significant strides in consolidating defense and aerospace sectors,” Murtra said. “This process is crucial to achieve strategic autonomy in Spain, and to guarantee its influence at the global scale. With our strong positioning and capabilities, we aspire to lead the Spanish national ecosystem in less than 10 years.”

Spain’s defense budget is expected to outpace Europe, rising 11% to 12% a year to reach a target of 2% of GDP by 2030, Indra projects.

The company expects its defense sales to grow 42% organically over the next three years to €1.1 bn, excluding the contribution from acquisitions. Defense currently accounts for about a fifth of the company’s revenue.

Indra projects overall sales of €6 bn in 2026, including €700 m added through mergers and acquisitions. The company plans tol allocate more than 75% of its acquisition spending to defense and aerospace, with a focus on Spain, Western Europe, the Middle East and North America.

The company said it will concentrate M&A activity in its defense business on bolstering capabilities in the land domain, developing home markets in Western Europe and strengthening its business in sensors, avionics and counter unmanned aerial systems, or C-UAS.

Indra is simplifying its defense-product portfolio, moving more than 100 customized products into six technology categories, including radar, electronic defense, as well as command, control, computing and intelligence, or C3I.

Space division

The company is also setting up a new space division that will serve the defense and air-traffic management segments, with a goal of €1 bn in revenue by 2030. Indra wants to become a tier-one European player participating in the continent’s main space programs, Murtra said.

“Space is a segment that is becoming more and more relevant in Europe to guarantee its strategic autonomy and sovereignty over communications,” Murtra said “Satellite communications are becoming mission critical for governments in both both defense and non-defense applications.”

Indra will seek one or more shareholders for its information-technology business Minsait, though Murat said he plans to keep a “significant stake” in the unit, because of synergies with the defense and aerospace businesses.

 

07 Mar 24. Dassault Aviation Group surges forward despite supply chain challenges. The defence player shows resilience amidst production delays and geopolitical turmoil. Dassault Aviation Group, a defence and aviation company, has demonstrated resilience and growth in a year marked by global instability and supply chain disruptions.

The company’s latest financial release for 2023 reveals a mixed picture. Adjusted net sales stood at €4.8bn ($5.2bn), down from €6.9bn in the previous year. However, adjusted net income reached €886m, representing 18.5% of net sales. This achievement shows Dassault Aviation’s ability to navigate turbulent times and deliver results.

One key highlight of the company’s performance is its backlog, which stands at €38.5bn as of December 31, 2023. This backlog, driven primarily by the commercial success of the Rafale aircraft, reflects a demand for Dassault Aviation’s products and services despite the challenging operating environment.

In fiscal year 2023, Dassault Aviation solidified the Indo-French collaboration by adding 18 Rafale fighter jets to Indonesia’s order backlog. This development follows the initial procurement agreement of 42 aircraft in 2022. Furthermore, Croatia joined the Rafale club as it received its first of 12 Rafale multirole combat aircraft.

Dassault Aviation SA occupies 5.6% of the European military fixed-wing aircraft market, anticipating earnings of $15.1bn. Dassault Aviation SA is also set to account for the highest revenue over the forecast period in the African market, with anticipated earnings of $15.9bn, as per GlobalData’s global military fixed-wing aircraft market intelligence.

The financial results emphasised the strategic importance of ongoing defence contracts and the company’s commitment to meeting delivery commitments.

The company’s focus on sustainability has also been evident in its efforts to decarbonise its processes and products. Dassault Aviation’s commitment to using Sustainable Aviation Fuel (SAF) in its Falcon aircraft demonstrates its dedication to reducing carbon emissions and mitigating environmental impact.

In the face of ongoing geopolitical tensions and economic uncertainties, Dassault Aviation Group’s performance is a testament to its resilience and adaptability. As it looks ahead to 2024, the company remains focused on meeting customer demands and continuing its growth trajectory in the defence sector. (Source: airforce-technology.com)

 

07 Mar 24. Melrose gets engine arm firing. Division’s adjusted operating profit reports 10.3 percentage point improvement.

• Civil engines aftermarket volumes increase by 40%
• £500m buyback set to complete by September

Melrose Industries (MRO) remains “nicely on track” to deliver on the ambitious target set last year to double profits twice between 2022-2025, according to chief executive Peter Dilnot.

The first half of this mission has been achieved, with the company growing adjusted operating profit to £390mn in 2023, from £147m a year earlier. This improvement was largely driven by its engines business, where the operating margin jumped to 26 per cent, from 15.7 per cent year on year.

This was partly due to higher volumes, with the civil engines aftermarket increasing by 40 per cent as engine flying hours picked up. The scope of work done during engine shop visits has broadened and there was also “positive pricing” momentum. But Dilnot argued that business improvements have played their part, such as the rationalisation of sites from 12 to nine.

Performance at its structures arm also impressed, with the operating margin jumping to 5.1 per cent, up from 1.3 per cent earlier.

And although the industry continues to grapple with supply chain strains, demand remains healthy, leading the company to lift guidance for 2024 by 6 per cent.

The shares slipped by 2 per cent, but given a 73 per cent gain over the previous 12 months some profit-taking was understandable. And a share price of 22 times forecast earnings is well above its five-year average.

In this instance, though, historic valuations aren’t very useful given the major changes that have taken place. Management remains confident the improvement story has further to run, and with the bulk of a £500m buyback announced last year due to complete by September, we think Melrose’s prospects remain bright. Buy.

Last IC View: Buy, 534p, 7 Sep 2023. (Source: Investors Chronicle)

 

07 Mar 24. Melrose Industries PLC (“Melrose” or the “Group”), the aerospace focused Group, today announces its audited results for the year ended 31 December 2023.

Key messages

• 2023 adjusted1 operating profit more than doubles to £420 m (pre-PLC costs) and ahead of guidance
• 2024 adjusted1 operating profit guidance upgraded by 6% (pre-PLC costs)
• Engines margin to reach target 28% in 2024, one year early and on track for >30% post 2025
• Positive earnings momentum across industry leading businesses, 2025 targets de-risked
• Engines’ future RRSP net cash inflow grows to c.£22bn as a result of GE contract

Financial highlights3

• Revenue of £3.35bn, 17% growth over last year (13% including businesses being exited)
• Adjusted1 operating profit (pre-PLC costs) of £420m versus initial guidance of £350m and most recent £405m. Margins grew by more than 600bps to 12.5%
• Adjusted1 operating profit of £390m, up 164% on the prior year, a margin of 11.6%. Statutory operating profit of £57m (2022: loss of £270m)
• Adjusted1 diluted EPS of 18.7p, compared to 4.1p in 2022, an increase of over 4 times. Statutory diluted EPS of 0.1p (2022: loss of 16.3p)
• Free cash flow1 better than expectations
• Net debt1 of £572m, representing leverage1 of 1.1x, better than our guidance, including a share buyback cost of £93m
• Full year dividend of 5.0 pence including final dividend of 3.5 pence per share recommended

Strategic highlights

• Successful transition to pureplay aerospace business with clear growth trajectory
• Significant delivery of restructuring and repricing actions, ahead of our plan and de-risking 2025 targets. Engines to reach 28% adjusted operating margin, one year early, and on track to >30% post 2025
• Wide-ranging new agreement with GE covering a series of engines including GEnx with higher aftermarket RRSP entitlement; RRSP expected net cash inflow up by 10% to c.£22bn (assuming US$ = 1.25)
• Good operational progress with 23% improvement in cost of poor quality and £40m reduction in arrears, despite industry supply chain issues
• Substantial investment of c.£120m in Research and Development including government and customer funding. In 2023 we committed to invest £50m targeted to expand our unique additive fabrication capacity during the next couple of years
• Substantial progress in achieving Group sustainability targets, with new more stretching targets set

Divisional highlights3

Engines

• Engines revenue growth of 16% to £1.19bn with adjusted1 operating profit up 92% to £310m and adjusted1 operating margin up to 26%
• Engines aftermarket growth of 34% driven by recovering flying hours and the Group entering the lucrative aftermarket ‘sweet spot’ supporting an above market performance
• Strong progress on growth initiatives, including increasing capacity and 23% increase in revenue in aftermarket repair

Structures

• Structures revenue growth of 18% to £2.16bn (12% including businesses being exited). Adjusted1 operating profit of £110m with margins increasing to 5.1% from 1.3% in 2022
• The ramp-up in Civil OEM shipments resulted in 28% growth. Defence repricing and portfolio work progressed well with 42% of core work now sustainably priced
• Significant progress on restructuring and portfolio rationalisation with two non-core plants closed in 2023 and further exits underway

Demerger of GKN Automotive, GKN Powder Metallurgy and GKN Hydrogen

• The demerger of the GKN Automotive, GKN Powder Metallurgy and GKN Hydrogen divisions from Melrose into Dowlais Group plc successfully completed on 20 April 2023

Upgraded guidance for 2024 full year (assuming US$ = 1.25 average exchange rate for the year)

• Revenue between £3.6bn and £3.75bn, growth tempered by ongoing sector-wide supply chain issues
• Aerospace adjusted1 operating profit (pre-PLC costs) between £550m and £570m, 6% above our prior guidance at the midpoint, driven by ongoing operating margin improvement with Engines on track to deliver 2025 margin targets of 28% in 2024
• Aerospace adjusted1 EBITDA of between £710m and £730m
• Central costs at £30m, up £5m to reflect a non-cash LTIP charge
• As expected, cash generation limited by ongoing restructuring in 2024 and previously announced GTF issues; increasing free cash flow is expected in 2025 and beyond, driven by RRSPs

Peter Dilnot, Chief Executive Officer of Melrose Industries PLC, today said:

“Melrose Aerospace has delivered record results in 2023, ahead of upgraded guidance driven by strong operating margin progression in both divisions. The Group is well positioned to deliver continued growth and margin improvement supported by positive end markets and excellent operational momentum. We have upgraded guidance for 2024 and are confident about unlocking significant further potential of the business going forward.”

Notes

1.Described in the glossary to the Preliminary Announcement and considered by the Board to be a key measure of performance

2. Results for the year ended 31 December 2022 have been restated for discontinued operations and the one for three share consolidation where applicable

3.Like-for-like growth is calculated at constant currency against 2022 results and excludes businesses being exited

 

06 Mar 24. VSE Corporation Announces Fourth Quarter and Full Year 2023 Results. VSE Corporation (NASDAQ: VSEC; “VSE”, or the “Company”), a leading provider of aftermarket distribution and repair services, announced results for the fourth quarter and full year 2023.

MANAGEMENT COMMENTARY

“We completed 2023 with outstanding fourth quarter and full year financial results,” said John Cuomo, President and CEO of VSE Corporation. “Our businesses once again delivered strong above-market revenue growth and improved profitability. Our Aviation segment reported record revenue and Adjusted EBITDA driven by strong program execution, an expansion of our distribution product lines and repair capabilities, and contributions from recent acquisitions. Our Fleet segment continued to diversify its customer base and reported record revenue, driven by strong growth in commercial sales and solid contributions from legacy customers. I want to thank the VSE team for delivering yet another year of outstanding performance.”

Mr. Cuomo continued, “VSE enters 2024 well positioned for a successful year, supported by robust end-market activity and bolstered by new business wins and recently announced strategic actions and acquisitions. 2024 is a year of growth and execution as we focus on acquisition integration, implementation of new programs, entry into new geographies, and the continued execution of our strategic transformation plan. Our unwavering commitment to our employees, customers, and suppliers, sets our businesses apart and will continue to fuel our success in 2024 and beyond.”

“VSE completed 2023 meeting previously shared expectations, capping another great year of above market revenue growth and increased profitability. Our Aviation and Fleet segments delivered record revenue and improved profitability while generating $43m of operating cash flow and $30 m of free cash flow in the second half of the year. We will build on this strong foundation in 2024 with new investments in recently awarded contracts, the integration and launch of newly acquired businesses, and the recently announced acquisition of Turbine Controls, Inc.,” said Steve Griffin, Chief Financial Officer. “Our 2024 guidance reflects the compelling opportunities across both of our business segments where our differentiated go-to-market strategy positions us to deliver above-market revenue growth, improved profitability, and a strong return on capital.”

FOURTH QUARTER 2023 RESULTS(1)

(As compared to the Fourth Quarter 2022)

• Total Revenues of $235.3m increased 37%
• GAAP Net Income of $12.8m increased 62%
• GAAP EPS (Diluted) of $0.82 increased 32%
• Adjusted EPS(2) (Diluted) of $0.85 increased 31%
• Adjusted EBITDA(2) of $31.4m increased 46%

FULL-YEAR 2023 RESULTS(1)

(As compared to the Full-Year 2022)

• Total Revenues of $860.5m increased 29%
• GAAP Net Income of $43.2m increased 62%
• GAAP EPS (Diluted) of $3.04 increased 46%
• Adjusted EPS(2) (Diluted) of $3.31 increased 45%
• Adjusted EBITDA(2) of $113.8m increased 45%

(1) From continuing operations

(2) Non-GAAP measure, see additional information at the end of this release regarding non-GAAP financial measures

STRATEGIC UPDATE

• TURBINE CONTROLS ACQUISITION: VSE entered into a definitive agreement to acquire Turbine Controls Inc. (“TCI”), a leading provider of aftermarket maintenance, repair and overhaul (“MRO”) support services for complex engine components, as well as engine and airframe accessories. VSE will acquire TCI for a total consideration of approximately $120 m, comprising $110m in cash and $10m of common shares of the Company, subject to working capital adjustments. The acquisition is expected to close in the second quarter of 2024, subject to customary closing conditions.
• FEDERAL AND DEFENSE DIVESTITURE: VSE announced the sale of substantially all of its Federal and Defense segment (“FDS”) operating assets. The FDS sale was completed in two separate transactions with two buyers for a total cash consideration of $44.0m, which included $10.0m as an estimated net working capital adjustment (subject to post-closing adjustments). Associated with the sale of FDS, VSE will cease use of the one remaining non-core FDS facility by the second quarter of 2024. During the first quarter of 2024, the Company is expecting to record one-time transaction expenses between $6 and $8 m, including non-recurring fees and costs in support of these transactions and employee severance and benefit related expenses. Additionally, the Company is expecting to record a $6m non-cash charge including an impairment related to the asset not included in the sale.
• CORPORATE COST RESTRUCTURING: The Company is considering a corporate restructuring plan and headquarters relocation, which could result in certain adjustments to the Company’s consolidated financial statements ranging between $18 to $23m throughout 2024 depending on the resolution of certain contract and leasing agreements. The Company’s evaluation may include a facilities consolidation strategy to sublease, early terminate, or abandon its headquarters, and would be designed to reduce centralized corporate costs.
• FLEET SEGMENT STRATEGIC REVIEW: VSE initiated a process to explore and evaluate strategic alternatives involving the Fleet segment. The Company has not set a definitive timetable for the completion of the review, and there can be no assurances that it will result in a transaction.

BALANCE SHEET OPTIMIZATION

In December 2023, the Company amended and extended its credit agreement, providing for an increase of approximately $122m on its term loan and an extension of the maturity date by one year to October 2026.

SEGMENT RESULTS

Aviation segment revenue increased 43% year-over-year to a record $153.7m in the fourth quarter 2023. The year-over-year revenue growth was attributable to strong program execution on new and existing distribution awards, an increase in maintenance, repair and overhaul (“MRO”) activity, and contributions from the acquisition of Desser Aerospace. Aviation distribution and repair revenue increased 41% and 49% respectively, in the fourth quarter versus the prior-year period. The Aviation segment reported operating income of $18.8m in the fourth quarter, compared to $12.3m in the same period of 2022. Segment Adjusted EBITDA increased by 52% in the fourth quarter to $23.9m, versus $15.8m in the prior-year period, driven by strong execution on distribution programs, MRO market share gains, improved pricing and product mix, increased operating leverage, and contributions from the Desser Aerospace acquisition. Adjusted EBITDA margin was 15.6%, an increase of approximately 90 basis points compared to the prior year.

Fleet segment revenue increased 26% year-over-year to $81.6m in the fourth quarter of 2023. Revenue from commercial customers increased 72% on a year-over-year basis, driven by strong growth in e-commerce fulfillment and commercial fleet sales. Commercial revenue represented approximately 52% of total Fleet segment revenue in the fourth quarter, compared to 38% in the prior year period and represented the first quarter in segment history of greater than 50% of revenue from Commercial customers. Revenue from the United States Postal Service (USPS) declined approximately 3% on a year-over-year basis in the fourth quarter, driven by mix of fleet vehicles within the installed base. The Fleet segment reported operating income of $9.0m in the fourth quarter, compared to $5.6 m in the same period of 2022. Segment Adjusted EBITDA increased 24% year-over-year to $9.8m, while Adjusted EBITDA margin was 12.0%, a decline of 20 basis points versus the prior-year period, primarily driven by customer and product mix.

FINANCIAL RESOURCES AND LIQUIDITY

As of December 31, 2023, the Company had $216m in cash and unused commitment availability under its $350m revolving credit facility maturing in 2026. As of December 31, 2023, VSE had total net debt outstanding of $422m and $114m of trailing-twelve months Adjusted EBITDA. The Company generated $20m and $(41)m of Free Cash Flow for the fourth quarter and full year 2023, respectively.

GUIDANCE

VSE is reaffirming its full year Aviation segment guidance:

• Aviation segment full year 2024 revenue growth of 24% to 28%, as compared to the prior year.
• Aviation segment Adjusted EBITDA margin expected to be between 15% and 16%.

As previously updated, VSE Fleet segment guidance is as follows:

• Fleet segment full year 2024 revenue growth of 13% to 17%, as compared to the prior year.
• Fleet segment Adjusted EBITDA to increase 8% to 12%, as compared to the prior year. (Source: BUSINESS WIRE)

 

06 Mar 24. Italy’s Fincantieri in talks to buy Leonardo’s Wass unit. Italian shipbuilder Fincantieri (FCT.MI), opens new tab is in talks with Leonardo (LDOF.MI), opens new tab to buy the defence group’s submarine unit Whitehead Alenia Sistemi Subacquei (Wass), newspapers reported on Wednesday, sending Fincantieri’s shares up more than 7%.

The acquisition would have a value of between 200m and 300m euros ($217m-$326m), Corriere della Sera and financial daily Il Sole 24 Ore reported.

At the request of Italian market regulator Consob, Fincantieri issued a statement saying it would evaluate strategic opportunities that were in line with its latest business plan and created value for shareholders.

It made no direct reference to any specific deals.

A move by Fincantieri would be part of the group’s broader strategy to grow through acquisitions and focus more on the defence sector, which in its last results accounted for less that 25% of its revenues.

It would also strengthen its position in the underwater sector, which the group recently identified as a key area for growth.

The state-controlled shipbuilder is considering a capital increase of some 400m euros to finance the deal, Il Messaggero said, adding the group was being advised by JPMorgan, Intesa Sanpaolo and Bnp Paribas on the matter.

A Leonardo spokesperson declined to comment on the reports.

Broker Banca Akros welcomed the potential deal as positive, saying it believed Wass could be valued at between 168m and 225m euros.

Fincantieri’s Milan-listed shares closed up more than 7% at 0.509 euros.

Milano Finanza first reported on Saturday that Fincantieri was considering a large acquisition and that it was examining either a recapitalisation or a convertible bond to do so. Leonardo, also controlled by the Italian state, has been trying to find a buyer for Wass, which designs and builds underwater defence systems such as torpedoes and sonars, for years, but put a decision on hold after the war in Ukraine. (Source: Google/Reuters)

 

06 Mar 24. Spain’s Indra sees revenue, profit soaring on European defence spending. Spanish defence and technology company Indra (IDR.MC), opens new tab said on Wednesday it expects higher defence spending in Europe will boost its revenue and profitability over the next six years.

The company expects earnings before interest, taxes, depreciation and amortisation (EBITDA) to soar to more than 750 m euros ($814 m) in 2026 from 446 m euros in 2023, on a rise in revenue to 6 bn euros from 4.34 bn last year.

It sees a further rise in revenue to 10 bn euros by 2030.

Indra said increased spending by European countries on modernising defence systems, as well as the new wave of digitalisation led by artificial intelligence, cloud computing and cybersecurity would provide opportunities for growth.

The radar systems manufacturer aims to grow within the European military sector, where it competes with the likes of France’s Thales (TCFP.PA), opens new tab and Italy’s Leonardo (LDOF.MI), opens new tab.

Indra will set up a new space company and include its mobility business in tech unit Minsait with the entry of strategic partners, Indra’s Chief Executive Jose Vicente De los Mozos said while presenting the company’s strategy to 2030.

Spanish media have reported that private equity funds are condsidering buying a stake Minsait, which generated about half of Indra’s revenue last year.

Asked about a potential sale of Minsait, Chairman Marc Murtra said Indra would keep a “significant” stake in the unit in such an event.

The company expects Minsait’s revenue to rise 5% to 3.64bn euros in 2026.

Indra, which is 28%-owned by the Spanish government, said it plans to invest 3.1 bn euros in technology development by 2030, partly financed by asset disposals.

Since the company intends to focus on space, Murtra said it could also make an acquisition in the industry. One potential target is a stake in satellite operator Hispasat, partly owned by state-controlled grid operator Redeia (REDE.MC), opens new tab. (Source: Reuters)

 

08 Mar 24. TT Electronics’ strong cash flow looks cheap.

The new CEO’s push to focus on operational improvements gives the company a healthy free cash flow yield.

• Dividend increased
• Margin expected to improve again next year

TT Electronics (TTG) is continuing its recovery and, with its share price falling, the free cash flow yield is starting to look appealing.

The electronics component company brought in new chief executive Peter France last year to get the business back on track. The main focus is on improving its thin margins, and in the year to December the operating profit margin expanded 100 basis points to 8.6 per cent.

Most of the margin expansion came from the power and connectivity divisions, which grew revenue by 10 per cent and its adjusted operating profit margin by 330 basis points to 8.4 per cent. Meanwhile, the highest-margin global manufacturing solutions business saw revenue fall 7 per cent.

Management is intent on simplifying the business, including the recent sale of businesses in Cardiff, Hartlepool and Dongguan. It is now guiding that the operating margin will hit 10 per cent in 2024.

Given this improved profitability forecast, broker Numis is forecasting that adjusted earnings per share (EPS) will rise to 19.5p in 2024, which leaves TT Electronics trading on a forward price/earnings (PE) ratio of just 7.2. Given the strong cash conversion, TT Electronics looks even cheaper on a cash flow basis, trading on forward free cash flow yield of 9.7 per cent.

Management has delivered on its promises so far, so it feels safe to accept its 10 per cent operating margin forecast. It is not going to grow revenue rapidly, but with a 10 per cent cash flow yield and a decent balance sheet, it looks worth the price. It has also shown it is happy to return cash to shareholders with the dividend rising 8 per cent. Recovery buy. Last IC View: Hold, 157p, 04 Aug 2023. (Source: Investors Chronicle)

 

07 Mar 24. TT Electronics plc, a global provider of engineered electronics for performance critical applications, today announces full year results for the 12 months ended 31 December 2023.

Key highlights from the results:

1. Free cash flow of £23.9m with cash conversion at 92%
2. Leverage reduced to 1.7x, with more expected in 2024
3. Leverage reduced to 1.5x pro forma, following the divestment announced earlier this week
4. Margin improvement – Adjusted Group operating margin up 110 bps to 8.6% (8.9% excluding pass-through)
5. Full year revenue up 3% year-on-year at constant currency
6. Adjusted operating profit growth of 16%
7. Excellent business development success, with 37 significant contract awards delivering c. £250m of potential lifetime revenues
8. Total dividend increase of 8% to 6.8p, reflecting strong performance and positive outlook

Outlook

8. Mindful of wider macro environment but TT is well-aligned with global mega trends, driving demand from high-growth markets
9. Strength and level of visibility in order book, which is H2 weighted, underpin confidence for the FY
10. Focus on improved operational execution driving continued earnings growth
11. On track to deliver 10% operating margin in 2024
12. Strong free cash flow generation and a continued reduction in leverage expected

Peter France, TT Electronics’ Chief Executive Officer, commented:  “2023 was a year of strong operational and financial progress. The Group has delivered against the priorities that were set for the year: strong free cash generation has led to further reduction in leverage, and our strong order book was converted into double-digit operating profit growth, with good operating margin progression supported by a recovery in our P&C business. I was delighted to join TT as CEO last October. TT is a strong business with robust fundamentals, talented people and market leading technologies. It is well-aligned with global megatrends, driving demand from our high growth end markets. We have the foundations from which to accelerate the execution of our strategy aimed at delivering sustainable disciplined growth, improved margins and a strong balance sheet. I see considerable opportunity to unlock further value in the business by strengthening operational execution, expanding and optimising our routes to market and by enhancing product innovation. A first step in driving improved margins and simplifying the portfolio is the recently announced sale of our businesses in Cardiff, Hartlepool and Dongguan.  I look forward to sharing more detail of my plans as part of our Capital Markets presentation on 9 April. Based on the strength and level of visibility in our order book, current end market activity and operational improvement initiatives that are underway, while mindful of the wider macro environment, we are on track to deliver a 10% operating margin in 2024.”

 

06 Mar 24. Shares of the Italian shipbuilder Fincantieri were sharply higher in Milan trade, getting a boost from reports it is in advanced talks to acquire Wass, an underwater weapon and sensor producer owned by Italian defence and aerospace group Leonardo.

At 0910 GMT, Fincantieri shares were up 4.21% to 0.495 euros while Leonardo was down 0.48% to 20.61 euros. The benchmark FTSE MIB index was 0.43% higher at 33,289.78 points.

According to Italian media reports, an eventual deal would not include Oto Melara, a naval gun producer also owned by Leonardo in which Fincantieri is rumored to have been interested in the past. Analysts at the broker Equita noted that Fincantieri’s interest for Wass has been known for some time, with an acquisition in line with its plans to increase its defence business, which currently represents 40% of revenue.” For Leonardo, Wass represents a small business unit within the defence division for which updated figures are not available,” Equita added. “In the event the rumors are confirmed we believe that the sale could make strategic sense, pending an understanding of what the financial resources will be used for.” For the broker Intermonte, the acquisition of Wass would fit with Fincantieri’s strategy of bolstering its naval/military business and an agreement with Fincantieri would essentially lead to a division of underwater activities and those above sea level between Leonardo and Fincantieri.

Generally speaking, Intermonte analysts note that the European defence plan announced yesterday involves limited funds and comes with no particular new developments. However, the target to increase procurement with European companies from a current 20% to 50% in 2030 is potentially worth over 100 bn euros per year in increased spending with European firms, they said. (Source: Google/https://www.borsaitaliana.it/)

 

05 Mar 24. Inaugural Oregon UAS Accelerator Cohort is Open for Applications. The Oregon UAS Accelerator has announced the opening of applications for its inaugural cohort, commencing June 3rd and concluding on September 10th with the Pendleton Investor Roundup. Participants can extend their stay at the Pendleton UAS Test Range until the end of 2024 to continue testing their innovation.

Entrepreneurs and innovators with solutions ready for testing are invited to apply, with applications closing at 5:00 pm on Sunday, March 31st. Key requirements for participation include maintaining a presence in Oregon throughout the program, active involvement of the founder, and at least one team member dedicated to the solution full-time during the Accelerator’s programming from June 3rd to September 10th.

The Accelerator offers a comprehensive support system for innovators, including access to development space, subject matter experts, launch and recovery sites, and capital introductions. Innovators will also benefit from the UAS-friendly environment and diverse testing landscapes provided by the Pendleton UAS Range. In collaboration with Business Oregon and the Pendleton UAS Range, the Accelerator aims to expedite the commercialization process for Unmanned Aerial Systems (UAS) technologies, positioning Oregon as a premier hub for UAS innovation.

There is an informational webinar on the Accelerator on Tuesday, March 5th, 2024 at 11:00 PT. Registration can be found here.

“The Oregon UAS Accelerator represents a strategic initiative to harness Oregon’s competitive advantages and propel the state to the forefront of UAS development in the United States,”

said Steve Chrisman, Economic Development & Airport Director.

“We offer UAS innovators incredible support to accelerate their commercialization process.”

Chrisman also stated that the Request for Qualifications (RFQ) for the permanent Executive Director position is available on the Accelerator website. He underscored the pivotal role of the Executive Director in overseeing all facets of the Accelerator’s operations.

“This position presents an extraordinary opportunity to nurture the next wave of UAS innovators, fostering an environment where the companies can flourish and achieve commercial success.”

About the Oregon UAS Accelerator

The Oregon UAS Accelerator is an initiative to facilitate innovation in the Unmanned Aircraft Systems (UAS) market. With generous funding from Business Oregon, the Accelerator provides innovators access to flight testing, workspace, partners, facilities, range staff, financial support, and mentorship opportunities. The Accelerator aims to establish Oregon as the nation’s premier destination for UAS development and integration. (Source: UAS VISION)

 

04 Mar 24. AeroVironment Announces Fiscal 2024 Third Quarter Results. AeroVironment, Inc. (“AeroVironment” or the “Company”) reported today financial results for the fiscal third quarter ended January 27, 2024.

Third Quarter Highlights:

• Record third quarter revenue of $186.6m, up 39% year-over-year
• Third quarter net income of $13.9m and adjusted EBITDA of $28.8m, increases of $14.6m and $5.1m, year-over-year, respectively
• Funded backlog of $462.8m as of January 27, 2024

“Once again, AeroVironment has delivered outstanding results, including a record for third quarter revenue that’s nearly 40% above the same period last fiscal year,” said Wahid Nawabi, AeroVironment chairman, president and chief executive officer. “Solid bottom-line results, fueled by record demand and strong operating execution, have us on track for our best year ever. In addition, the Company continues to show tremendous growth in the Loitering Munition Systems segment, which delivered record revenue in the quarter.

“With the increased global demand for our solutions, strong backlog and growing pipeline, AeroVironment remains well positioned for continued growth. As such, we are raising and narrowing our fiscal year revenue guidance for 2024 to between $700m and $710m, and we continue to anticipate double-digit revenue growth in fiscal year 2025.”

FISCAL 2024 THIRD QUARTER RESULTS

Revenue for the third quarter of fiscal 2024 was $186.6m, an increase of 39% as compared to $134.4m for the third quarter of fiscal 2023, reflecting higher product sales of $64.7m, partially offset by lower service revenue of $12.5m. From a segment standpoint, the year-over-year increase was due to revenue growth in Loitering Munitions Systems (“LMS”) of 140% and Unmanned Systems (“UMS”) of 23%, partially offset by a decrease in MacCready Works (“MW”) of 13%.

Gross margin for the third quarter of fiscal 2024 was $67.3m, an increase of 48% as compared to $45.5m for the third quarter of fiscal 2023, reflecting higher product margin of $20.1 m and higher service gross margin of $1.7m. As a percentage of revenue, gross margin increased to 36% from 34%, primarily due to an increase in the proportion of product revenue to total revenue, partially offset by an unfavorable product mix. Gross margin was favorably impacted by a decrease in depreciation charges for in-service assets of $5.3m related to the closure of COCO site locations during fiscal year 2023. Gross margin was negatively impacted by $4.0m of intangible amortization expense and other related non-cash purchase accounting expenses in the third quarter of fiscal 2024 as compared to $3.3m in the third quarter of fiscal 2023.

Income from operations for the third quarter of fiscal 2024 was $14.3m as compared to $4.6m for the third quarter of last fiscal year. The increase year-over-year was primarily due higher gross margin of $21.8m, partially offset by increases in research and development (“R&D”) expense of $9.0m and selling, general and administrative (“SG&A”) expense of $3.1m.

Other income, net, for the third quarter of fiscal 2024 was $0.9m, as compared to other loss, net of $5.4m for the third quarter of last fiscal year. The increase in other income, net was primarily due to increases in net unrealized gains on investment holdings and interest income and a decrease in interest expense.

Provision for income taxes for the third quarter of fiscal 2024 was $1.3m, as compared to a benefit of $(0.5)m for the third quarter of last fiscal year. The increase in provision for income taxes was primarily attributable to an increase in income before income taxes.

Net income attributable to AeroVironment for the third quarter of fiscal 2024 was $13.9m, or $0.50 per diluted share, as compared to net loss attributable to AeroVironment of $(0.7)m, or $(0.03) per diluted share, in the prior-year period, respectively.

Non-GAAP adjusted EBITDA for the third quarter of fiscal 2024 was $28.8m and non-GAAP earnings per diluted share were $0.63, as compared to $23.7m and $0.33, respectively, for the third quarter of fiscal 2023.

BACKLOG

As of January 27, 2024, funded backlog (defined as remaining performance obligations under firm orders for which funding is currently appropriated to us under a customer contract) was $462.8m, as compared to $424.1m as of April 30, 2023.

FISCAL 2024 — OUTLOOK FOR THE FULL YEAR

For fiscal year 2024, the Company now expects revenue of between $700m and $710m, net income of between $51m and $55 m, Non-GAAP adjusted EBITDA of between $122m and $127m, earnings per diluted share of between $1.86 and $2.00 and non-GAAP earnings per diluted share, which excludes amortization of intangible assets, other non-cash purchase accounting expenses and equity securities investments gains or losses, of between $2.69 and $2.83.

The foregoing estimates are forward-looking and reflect management’s view of current and future market conditions, subject to certain risks and uncertainties, including certain assumptions with respect to our ability to efficiently and on a timely basis integrate acquisitions, obtain and retain government contracts, changes in the timing and/or amount of government spending, react to changes in the demand for our products and services, activities of competitors, changes in the regulatory environment, and general economic and business conditions in the United States and elsewhere in the world. Investors are reminded that actual results may differ materially from these estimates. (Source: BUSINESS WIRE)

 

05 Mar 24. Thales posts higher profit, tackles weak telecom satellite market. France’s Thales (TCFP.PA), opens new tab on Tuesday reported an 11% underlying increase in 2023 operating profit and 8% higher sales, buoyed by a rebound in the civil aerospace market, while becoming the latest group to feel pressure in the competitive space business.

The company posted a record 2.132bn euros ($2.31bn) operating profit – topping 2bn euros for the first time since before the pandemic in 2019 – and sales of 18.428bn euros, while its operating margin stood at 11.6%, up 0.6 percentage points.

Analysts were on average expecting 2023 operating profit of 2.107bn euros on sales of 18.177bn, according to a company-compiled consensus.

Thales, which supplies civil and military radar and digital identity systems, said its order intake was fractionally higher than the year before at 23.132 bn euros.

For 2024, Thales predicted like-for-like sales growth of 4% to 6% to reach between 19.7 bn and 20.1bn euros. It predicted an operating margin of 11.7% to 12% and said new orders would continue to outstrip revenues.

The company also flagged it would cut about 1,300 jobs at Thales Alenia Space amid “structurally weaker demand” in commercial telecoms, and that these workers would be redeployed within the group. Some 1,000 of the affected jobs are in France.

CEO Patrice Caine said there would be no forced departures as Thales tries to keep skills in-house.

The move comes as the market for large satellites in geostationary orbit – once representing some 20 satellites a year – now stands at around 10 a year, Caine said. Traditional satellite firms face growing competition from the rapid growth of constellations of small satellites.

“So the market has more or less been divided in half … and we have to re-adapt; there’s no mystery,” he told reporters.

The business affected by the changes represents about one-third of Thales Alenia Space, equivalent to 700 m euros in turnover, or 4% of the group’s total, he said.

The shake-up comes weeks after Airbus, Europe’s other major producer of large satellites, unveiled a fresh charge for its troubled space business.

Caine also confirmed in the call that the company is not interested in buying all or parts of BDS, the cybersecurity branch of ailing French IT company Atos that industry peer Airbus offered to buy for 1.5bn to 1.8 bn euros.

Atos was thrown into new uncertainty last month after talks with Czech bnaire Daniel Kretinsky over the sale of another part of the business – that would have provided urgently needed cash – collapsed.

“Our position has been unchanged for months and months”, Caine said, adding that Thales had already made other acquisitions in the cybersecurity sphere including that of Imperva. “We are concentrating on those subjects, so no change”. ($1 = 0.9216 euros) (Source: Reuters)

 

05 Mar 24. Thales Announces Results.

• Order intake1: €23.1bn, slightly down 2% (+0.2% on an organic basis2)
• Sales: €18.4bn, up 4.9% (+7.9% on an organic basis)
• EBIT3: €2,132m, up 10.2% (+10.9% on an organic basis)
• Adjusted net income, Group share3: €1,768m, up 14%
• Consolidated net income, Group share: €1,023m, down 9% due to an exceptional expense linked to the transfer of risk relating to pension obligations in the United Kingdom to a third party
• Free operating cash flow3: €2,026m, 115% of adjusted net income, Group share
• Dividend4 of €3.40, up 16%
• Non-financial performance: Thales achieved or over-achieved all its 2023 targets
• 2024 objectives:
• Book-to-bill5 above 1
• Organic sales growth of between +4% and +6%, corresponding to sales of between €19.7bn and €20.1bn
• EBIT margin between 11.7% and 12%
• Cash flow generation target: conversion ratio of adjusted net income to free operating cash flow close to 100% in 2024

Thales’s Board of Directors (Euronext Paris: HO) met on March 4, 2024 to review the 2023 financial statements6.

“Once again this year, Thales has achieved remarkable performances.

​Our excellent sales momentum continued in 2023, with the order intake once again exceeding €23bn and the order book reaching an all-time high.

​Organic growth in sales was higher than expected at 7.9%, driven in particular by the dynamism of the civil aeronautics activities.

​This strong growth resulted in an even stronger EBIT improvement, which grew by nearly 11%, reflecting the quality of the Group’s business model and of its operating leverage.

​Finally, Thales once again generated high levels of cash, in excess of €2bn.

​These results reflect the trust our customers place in us, the commitment of our employees and the excellence of our technologies. I would like to thank all our teams for their contribution and dedication.

​Building on these strengths, the Group worked hard in 2023 to prepare for the future.

​In this regard, two major acquisitions will enable us to further strengthen our offers in key markets. Cobham Aerospace Communications in avionics, and Imperva in cybersecurity will provide Thales with very high added value technological bricks that are strongly complementary with our current portfolio of solutions.

​Preparing for the future also means setting ever-more-ambitious CSR goals. The year 2023 marked the end of an extremely positive cycle in which we achieved or exceeded all our multi-year objectives and obtained recognition from leading non-financial rating agencies. We will announce our new ambitions in this area in the second half of 2024.

​Finally, preparing for the future means continuing to increase our R&D investments so we can continue to develop our skills and technologies, which are our greatest asset.

​We are therefore looking ahead to 2024 with optimism, confident in the quality of our fundamentals, the strength of our positioning and the importance of our contribution to the major societal challenges of our time.” ​Patrice Caine, Chairman and Chief Executive Officer

Key figures

In accordance with standard IFRS5, the financial data for the “transport” operating segment for 2022 and 2023 have been classified under “discontinued operations” following entry into exclusive negotiations with Hitachi Rail with a view to disposing of this business.

Order intake for the 2023 financial year was slightly down 2% compared with 2022 at €23,132m but rose by 0.2% on an organic basis (i.e. at constant scope and exchange rates). As a reminder, in 2022 the Group benefited from signing a major contract for the supply of 80 Rafale aircraft to the United Arab Emirates. Sales momentum remained strong in 2023, with continued robust demand in the Defence & Security segment and a significant recovery in Aeronautics, particularly in aftermarket sales. The Group won a major £1.8 bn contract with the UK Ministry of Defence to ensure the long-term availability and resilience of Thales equipment on the UK fleet – the MSET (Maritime Sensor Enhancement Team) contract. At December 31, 2023, the consolidated order book stood at €45bn, a new all-time high, up more than €4.5bn year-on-year.

Sales reached €18,428m, up 4.9% from 2022 in total change, and up 7.9% in organic change, driven in particular by strong momentum in civil aeronautics activities.

For 2023, the Group posted EBIT7 of €2,132m (11.6% of sales), compared to €1,935m (11.0% of sales) in 2022, up 10.2% in total change, and 10.9% in organic change.

At €1,768m, adjusted net income, Group share7 was up 14% compared to 2022.

Consolidated net income, Group share amounted to €1,023 m, down 9% from 2022. This fall was due to a non-recurring expense of £349 m recorded in 2023 for the implementation of insurance coverage for its obligations under the Thales UK Pension Scheme as part of the agreement entered into with Rothesay in December 2023 concerning the transfer of these obligations.

The free operating cash flow7 stood at €2,026m compared to €2,527m in 2022. The conversion ratio of adjusted net income, Group share to free operating cash flow was 115% (162% in 2022). This once again exceptional performance reflects the excellent order intake, phasing effects on cash inflows related to contract execution, and continued progress in the action taken since 2020 under the “CA$H!” initiative.

In this context, the Board of Directors decided to propose the payment of a dividend of €3.40 per share, corresponding to a payout ratio of 40% of the adjusted net income, Group share, per share, an increase of 16% compared to 2022.

Order intake

Order intake for the 2023 financial year totaled €23,132m, slightly down by 2% from 2022 in total change, but up 0.2% at constant scope and exchange rates10. For the third consecutive year, the order intake was more than 20% higher than sales (book-to-bill). Thebook-to-bill ratio was 1.26 (compared to 1.34 in 2022) and 1.31 excluding the Digital Identity & Security business, where the order intake is structurally very close to sales.

Thales signed 25 large orders with a unit value of over €100m, representing a total of €7,764m:

• 3 large orders booked in Q1 2023:
• The order of satellites for the Italian earth observation constellation IRIDE
• The order of a new tranche of the I-HAB module for the lunar orbital station
• The order of a submarine subsystem for a military customer.
• 6 large orders booked in Q2 2023:
• The order of an autonomous robotic vehicle for an In Orbit Servicing demonstration mission, on behalf of the Italian Space Agency (ASI)
• Three amendments to the contracts related to the Galileo European navigation satellites
• The order of a sensor suite and Above-Water Warfare System for the new Belgian and Dutch frigates
• An order linked to the production of Aster anti-air defence missiles for France
• The order by Indonesia of 13 GM400 Alpha radars and a Skyview Air Command and Control System
• An amendment to the contract for the supply and support of CONTACT next-generation tactical radios for the French Army.
• 3 large orders booked in Q3 2023:
• An order for the ground mission segment and technical engineering support for the Galileo 2nd Generation program (G2G)
• A contract for the mid-life upgrade of the French and Italian Horizon class frigates
• An export contract for the mid-life extension of a multifunctional radar system for a military client.
• 12 large orders were booked in Q4 2023 in addition to the £1.8 bn MSET contract in the United Kingdom mentioned above:
• A contract with SOGITEC for the supply of simulation systems for the Emirates’ Rafale pilot training center
• A contract to install next-generation in-flight entertainment systems on Emirates’ future Boeing 777X fleet
• A contract for the supply of payloads for navigation satellites to a country in Asia
• Notification by the French Defence Procurement Agency (DGA) of the fifth production phase of the Rafale program, for the supply of 42 aircraft intended for the French Air and Space Force
• A contract for the installation of the TACTICOS combat management system, sonars, air-surveillance and fire-control radars and 360° infrared sensor for the Polish Navy’s MIECZNIK Frigate program
• Entry into force of the second tranche of the order placed by Indonesia in 2022 for the purchase of 42 Rafale aircrafts (18 aircrafts)
• A contract for the financing by the DGA of one of the development phases of the Rafale program to the F4 standard (covering certain functionalities of the RBE2 radar and the SPECTRA electronic warfare suite) and the development of the future RBE2 XG radar intended for the Rafale F5 standard
• An agreement with the Swedish Defence Materiel Administration (FMV) for the delivery and installation of SMART-L Multi Mission Fixed (MM/F) long-range radars
• The next phase in the renewal of several French Armed Forces radars and the order for a new Aerospace Operations Command and Control System under stage five of the SCCOA program
• A new contract under the French military telecommunications program Syracuse IV for the supply of “On-The-Move” satcom stations to be integrated into SCORPION armored vehicles (GRIFFON and SERVAL)
• A contract under the SCORPION/EBMR program (France’s multi-role armored vehicle program) for the supply of on-board electronics for new vehicles ordered from the temporary consortium comprising Nexter, Arquus and Thales
• A new amendment to the aeronautical component of the CONTACT contract (complete digital tactical and theater communications) with the DGA.

At €15,368m, order intake with a unit value of less than €100m was stable against 2022 with an increase of 0.1%, despite the transfer of IoT activities to Telit as of December 31, 2022, for a total of €374m.

Geographically11, order intake in mature markets rose sharply to €18,683m (+17% at constant scope and exchange rates), benefiting in particular from the MSET contract in the United Kingdom. Order intake in emerging markets amounted to €4,449m, down 37% at constant scope and exchange rates, with a high basis for comparison in 2022 due to the Rafale contract in the United Arab Emirates.

Order intake in the Aerospace segment totaled €5,592m compared to €5,892m in 2022 (‑5% at constant scope and exchange rates). This decrease reflects two contrasting trends. On the one hand, strong sales activity in aeronautics activities (avionics and in-flight entertainment (IFE)), linked to a 32% increase in order intake in the civil aftermarket and the IFE Emirates contract mentioned above. On the other hand, while Thales Alenia Space recorded new commercial successes in observation (IRIDE, I‑HAB) and navigation (Galileo), it did not record any new large orders in commercial telecommunications. At December 31, 2023, the segment’s order book stood at €9.3bn, up 2% from 2022.

At €14,139m compared to €13,959m in 2022, order intake in the Defence & Security segment set a new record (+2% at constant scope and exchange rates). The book-to-bill ratio was 1.44, above 1.2 for the fifth consecutive year. This high level is explained by the recording of 17 contracts of more than €100m, including the MSET contract. The segment’s order book consequently reached a new record at €35.2bn (up 14%), corresponding to 3.6 years of sales, strengthening visibility for the years ahead.

At 3,342m, order intake in the Digital Identity & Security (DIS) segment was structurally very close to sales as most business lines in this segment operate on short sales cycles. The order book is therefore not significant.

Sales

Sales for the 2023 financial year totaled €18,428m, compared to €17,569m in 2022, up 4.9% in total change and 7.9% in organic terms (at constant scope and exchange rates13), driven particularly by the Aerospace segment.

Geographically14, sales growth was stronger in mature markets (+10.6% on an organic basis), which posted double-digit growth, particularly in France, the United Kingdom and North America, while emerging markets posted a slight decline in organic growth of -1.2%.

Sales in the Aerospace segment totaled €5,211m, up 10.7% from 2022 (+11.7% at constant scope and exchange rates). As for the order intake, momentum in this sector was mixed:

• Organic growth in all avionics activities was above 20%, despite a decline in sales for the microwave tubes business. Civil aviation activities were particularly strong (organic growth of more than 30%), with the original equipment business benefiting from an increase in aircraft manufacturers’ production rates, while aftermarket sales were driven by the recovery in air traffic;
• Sales in the space segment were stable compared to 2022. OEN (Observation, Exploration and Navigation) activities posted a high-single digit increase in sales over the year, but commercial telecommunications (which account for one-third of sales in the Space segment) were affected by delays in the execution of several contracts due mainly to supply difficulties with the propulsion system. In addition, an overall fall in demand impacted the market for geostationary communications satellites in 2023.

Sales in the Defence & Security segment totaled €9,796m, up 7.0% from 2022 (+7.5% at constant scope and exchange rates). This growth reflects the gradual increase in our production capacity as well as the dynamism of many product lines, in particular intelligence, surveillance and reconnaissance systems, critical information systems, integrated systems for airspace protection, surface radars, surface ship systems and cyber defence solutions. The Group had a record order book of nearly €35.2 bn (3.6 years of sales) at end-December 2023 to support its growth in the coming years.

At €3,347m, sales in the Digital Identity & Security sector increased by 4.1% at constant scope and exchange rates (down 7.5% in total change following the transfer of IoT activities to Telit as of December 31, 2022). As expected, the second half of the year recorded a slight dip of 2.2% in organic growth compared to the second half of 2022, with two contrasting trends:

• High-single digit organic growth in digital activities (DIS segment excluding EMV payment cards[1] and SIM cards), mainly corresponding to cybersecurity solutions and biometrics,
• Negative high-single digit organic growth against a high basis for comparison for EMV and SIM cards in the second half of 2022, with the decision having been made to preserve the profitability of these activities.

[1] Europay Mastercard Visa.

Results

For 2023, the Group posted EBIT15 of €2,132m, or 11.6% of sales, compared to €1,935m (11.0% of sales) in 2022.

The Aerospace segment recorded EBIT of €371m (7.1% of sales), compared with €235m (5.0% of sales) in 2022. The rise in the sector’s EBIT margin was driven by the avionics segment, where the margin was back to pre-covid level thanks to both positive volume and price effects. As mentioned above, the space segment is experiencing delays in the execution of several telecommunications contracts, mainly due to supply difficulties relating to the propulsion system. This accentuated the negative impact of inflation on the profitability of the space segment, which recorded an EBIT margin at break-even at December 31, 2023. ​

In the Defence & Security segment, EBIT stood at €1,251m, compared to €1,179m in 2022 (+7.3% at constant scope and exchange rates). The margin for this sector was 12.8%, compared to 12.9% in 2022.

At €508m (15.2% of sales), EBIT in the Digital Identity & Security sector continued to grow sharply in absolute value and margin (+3.2 points), benefiting from the improved commercial margin arising from strong pricing, the impact of cost improvement plans and a scope effect (transfer to Telit of the IoT cellular product business as of December 31, 2022).

Excluding Naval Group, unallocated EBIT was stable at -€89m compared with -€93m in 2022, including, like last year, the reallocation of certain costs following the classification of Transport as a discontinued operation.

Naval Group’s contribution to the Group’s EBIT amounted to €91m in 2023, compared with €119m in 2022, which had recorded €45m in non-recurring income related to the compensation agreement signed between Australia and Naval Group in 2022.

At €2m compared with -€50m in 2022, net financial interest mainly benefited from higher average cash level than in 2022, which was invested at higher interest rates. Other adjusted financial income and expenses16 (-€37m in 2023 versus -€34m in 2022) were stable. The deterioration in the adjusted financial expense on pensions and other long-term employee benefits16 (-€76m versus -€35 m in 2022) reflects the sharp increase in discount rates, which was partially offset by the decrease in commitments.

At €105 m compared with €90m in 2022, the adjusted net income, Group share, from discontinued operations reflects the strong operating performance of the Transport business and the reduction in the costs incurred to separate this activity from the rest of the Group in anticipation of its disposal.

As a result, adjusted net income, Group share16 was €1,768m, compared to €1,556m in 2022, after an adjusted income tax charge16 of -€370m compared to -€331m in 2022. At 20.1% in 2023 compared to 20.6% in 2022, the effective tax rate was stable.

The adjusted net income, Group share, per share16 amounted to €8.48, up 15% from 2022 (€7.35).

Consolidated net income, Group share amounted to €1,023m, down 9% from 2022. As mentioned above, this decrease was explained by a non-recurring expense of £349m recorded in 2023 following the agreement entered into to insure all obligations under the Thales UK Pension Scheme.

Financial position at December 31, 2023

Free operating cash flow17 amounted to €2,026m compared to €2,527m in 2022. It included a contribution of €1,968m from continuing operations and €57m from discontinued operations. The conversion ratio of adjusted net income, Group share to free operating cash flow was 115% (162% in 2022). As in 2022, this once again exceptional performance reflects the excellent order intake, phasing effects on cash inflows related to contract execution, and continued progress in the action taken since 2020 under the “CA$H!” initiative.

The net balance of acquisitions and disposals of subsidiaries and affiliates amounted to -€3,464m. Under its acquisition strategy, the Group completed two acquisitions in 2023:

• Tesserent (on October 1, 2023), one of the leading cybersecurity players in Australia and New Zealand with sales of around €110 m in 2022 (see press releases of June 13, and October 4, 2023);
• Imperva (on December 4, 2023, earlier than expected), a leading cybersecurity company specialized in data and application security based in the United States and generating sales of around $500m in 2022 (see press releases of July 25, and December 4, 2023).

In 2024, the Group anticipates the completion of two transactions: the acquisition of Cobham Aerospace Communications (in accordance with the terms described in the press release published on July 25, 2023) and the sale of the Transport activity to Hitachi Rail.

As part of the share buyback program covering a maximum of 3.5% of the capital announced in March 2022, 3,458,535 shares were repurchased during 2023, i.e. 1.6% of the share capital, for €461m. As of February 23, 2024, the Group had purchased 6,903,364 m shares since the start of the program, representing 3.2% of the share capital. This program will end by March 31, 2024 at the latest.

At December 31, 2023, net debt amounted to €4,000 m compared with €35 m at December 31, 2022. This increase reflects the impact of acquisitions and disposals for €3,464m (€453m in 2022), the exceptional contribution in connection with the transfer of pension obligations in the United Kingdom described above, including insurance costs for a total of €1,078m (€95m in 2022), the distribution of €634m in dividends (€563m in 2022), new lease liabilities for €166m (€199m in 2022), and the share buyback program.

Equity, Group share amounted to €6,830 m compared with €7,174m at December 31, 2022. This decrease takes into account an actuarial expense of €267m relating to the discounting of net pension obligations.

Non-financial performance

In line with its corporate purpose of “Building a future we can all trust”, Thales has set itself an ambition in terms of Corporate Social Responsibility (CSR): to contribute to a safer, greener and more inclusive world. First, the Group will seek to maximize the contribution of its portfolio of solutions to the planet and society. Secondly, Thales has set itself ambitious targets on four main priorities:

• The fight against global warming
• Strengthening inclusion and diversity
• The permanent implementation of the best standards in terms of ethics and compliance
• Strengthening the health and safety at work of employees

Target quantitative objectives for 2023 were set for each of these priorities in 2019 and strengthened in 2021. Progress is measured and published annually. These indicators have also been included in the compensation of all employees eligible for variable compensation (more than 60% of the workforce). Thales achieved or over-achieved all its 2023 targets.

As regards the fight against global warming, operational CO2 emissions18 for FY 2023 were down 20% compared to 2022. This achievement was the result of the reduction in energy consumption (down 14% between 2018 and 2023 and 4% between 2022 and 2023) thanks to efforts to reduce energy use and improve energy efficiency and the increased use of renewable energies. Renewable electricity accounted for 90% of electricity purchases in 2023, compared with 75% in 2022. As a result, the drop compared to 2018 was -52%, well ahead of the 2023 target (-35%).

The implementation of eco-design best practices has also been stepped up, with 100% of new product developments integrating an eco-design approach in 2023, in line with the target set.

The Group also pursued its commitment to work alongside suppliers with the highest emissions to define emission reduction trajectories that are aligned with and based on jointly approved action plans.

With regard to the strengthening of diversity, at the end of 2023, 87% of the Group’s management committees included at least three women, compared with 76% at the end of 2022 and 49% at the end of 2018. The improvement continues while the target of 75% in 2023 was reached one year ahead of schedule. Women accounted for 20.4% of the highest levels of responsibility19 at the end of 2023, which is in line with the 20% target (compared to 19.4% at the end of 2022 and 16.5% at the end of 2018). The achievement of these objectives was based on the launch of a new action plan in July 2023 integrating a new partnership strategy with the educational community and a series of initiatives aimed at implementing an inclusive culture within the Group and supporting women’s careers. Examples of initiatives include communications on gender diversity through the “Women in Tech” campaign and the renewal of the “Women Inspiring Women” program to disseminate portraits of female role models within Thales.

In the area of ethics and compliance, the Group is focusing on team training and certification. As a result, in 2023 as in 2022, 100% of potentially exposed employees, i.e. more than 8,000 people, were trained in the fight against corruption. In March 2021, Thales received ISO 37001 “anti-bribery management systems” certification for its main French subsidiaries. This certification was extended to Canada and the United States in 2023, after the United Kingdom and the Netherlands in 2022.

The frequency rate of workplace accidents20 (down -37% compared to 2018) is also better than the target set for 2023 (-30%). This reflects the enhancement of the workplace safety culture through specific action plans including the deployment of proactive approaches and the analysis of risk situations.

Thales’ CSR policy was increasingly acknowledged by its stakeholders in 2023. The Group obtained the “Platinum” rating from Ecovadis (companies among the top 1% best performers in terms of CSR), the CDP awarded it an “A” rating for its climate policy, and the SBTi validated its CO2 reduction objectives through to 2030. Thales also joined the CAC SBTi 1.5 index in April alongside the best-performing listed companies in terms of climate change.

Details of all action plans and associated metrics can be found in the non-financial performance statement that will be included in the 2023 Universal Registration Document scheduled for publication at the end of March 2024.

The Group will announce its new ESG roadmap through to 2030, with new medium-term objectives for non-financial performance, in the second half of 2024.

Proposed dividend

The Board of Directors decided to propose to the shareholders, who will convene at the Annual General Meeting on May 15, 2024, payment of a dividend of €3.40 per share. This corresponds to a payout ratio of 40% of the adjusted net income, Group share, per share.

If approved, the ex-dividend date will be May 21, 2024, and the payment date will be May 23, 2024. This dividend will be paid fully in cash and will amount to €2.60 per share, after deducting the interim dividend of €0.80 per share paid in December 2023.

Outlook

The medium-term outlook for all of the Group’s major markets remains very robust. After a very strong year in aeronautics in 2023, the original equipment business should again be driven by the expected continued ramping-up of commercial aircraft production. Air traffic should also continue to rise, fostering further growth in the aftermarket, though at a slower pace than in 2023, which benefited from a catch-up effect. The space segment benefits from favorable growth prospects for most of its activities, in particular observation, exploration, navigation, military telecommunications and services. However, the commercial telecommunications business is facing challenges due to structurally weaker demand. For this reason, the Group is announcing a project of an adaptation plan at Thales Alenia Space concerning around 1,300 jobs, including 1,000 in France, which will be redeployed within the Group, with no forced departure. Those redeployments will take place over 2024 and 2025, in consultation with employee representative bodies. Over the same period, 7,000 recruitments are planned in France to address the expected strong growth in the Group’s other business segments. This plan should restore sustainably the profitability of the space business with the objective of an EBIT margin of around 7% in the medium term while maintaining the skills needed to pursue commercial opportunities. Accordingly, the Aerospace segment should record organic growth in sales, but at a slower pace than in 2023.The announced increases in the military budgets of the Group’s major customers are continuing to drive demand in the defence sector. As a leading player in its various activities and with a geographical presence aligned with the most dynamic markets, the Defence & Security segment has an order book that is unprecedented in the Group’s history. This segment will continue to grow in 2024 while maintaining an EBIT margin that is among the highest in the sector (around 13%).

Lastly, the DIS global business unit has an exceptional positioning in cybersecurity and digital identity. Its cybersecurity business was considerably strengthened in 2023, allowing Thales to offer the most comprehensive offering in data, applications and identity security. After seeing its growth normalize in 2023 following a very strong year in 2022, organic growth should continue in 2024, in line with that recorded in 2023. The margin should further improve compared with the 2023 level of 14%, taking into account the transfer of cybersecurity services activities from the Defence & Security segment.

One of Thales’ main priorities in 2024 is to successfully complete the integration of the two structuring acquisitions, namely Imperva and Cobham Aerospace Communications (the closing of which is scheduled for the first half of 2024). These two activities will significantly strengthen the Group’s business portfolio.

In response to this buoyant environment, the Group is continuing to invest to ramp up its production capabilities. Net operating investments are expected to further increase, reaching around €720m in 2024, after €622m in 2023. Recruitment will remain strong in 2024 (around 8,500 recruitments planned after 10,900 in 2023 and 12,000 in 2022). This reflects the higher retention rate, which has returned to pre-Covid levels, and will be accompanied by the strengthening of skills development actions for engineers who have recently joined the Group.

Moreover, the Group will continue to monitor closely the persistent tensions in its supply chain.

Assuming there are no new major disruptions in the global economy, in the health context, or in the global supply chains, Thales has set the following targets for 2024:

• As in 2023, a book-to-bill ratio above 1;
• Organic sales growth of between +4% and +6%, corresponding to sales in the range of €19.7bn to €20.1 bn21;
• An EBIT margin between 11.7% and 12.0%, up 10 to 40 basis points from 2023.

Based on the outlook for 2024, particularly in terms of order intake and advance payments to be received, the Group sets its cash conversion ratio22 target at close to 100% of adjusted net income, Group share.

 

04 Mar 24. Blacklake Group Announces the Acquisition and Expansion of Sentinel, a Global Risk and Intelligence Advisory Firm. Blacklake Group is pleased to announce the acquisition and expansion of Sentinel, a global risk and intelligence advisory firm focused on solving complex security problems on behalf of multinational corporations, critical institutions, and high-profile clients.

Today’s world faces an ever-increasing level of global threats and risks requiring specialized and diverse skill sets, professional networks, intelligence capabilities, and operational expertise not traditionally integrated into organizations.

Sentinel’s unparalleled expertise and risk-based methodology is augmented by cutting edge proprietary intelligence technologies that allow individuals and organizations to better manage their risk profile. Sentinel offers its clients tailored, actionable, and discreet guidance to better navigate today’s risk environment, anticipate and mitigate emerging threats, and identify potential market challenges.

Founded in 2017, Sentinel established itself in the boutique advisory space and has expanded its executive leadership team post-acquisition. Sentinel is led by former senior executives from private industry and premiere law enforcement and intelligence agencies in the world, who have protected some of the most high-profile people, corporations, and institutions and overseen complex investigative and intelligence operations on a global scale.

OUR LEADERSHIP

CHARLES MARINO | Founder | Chief Executive Officer | Former Supervisory Special Agent, US Secret Service

Charles Marino served as a Supervisory Special Agent in the United States Secret Service (USSS) during three Presidential administrations, ensuring individual and family safety around the world. He also led the San Francisco Field Office, overseeing the 1,300-member Electronic Crimes Task Force to effectively investigate complex financial and cyber-crimes. Marino was assigned as the senior law enforcement advisor to former DHS Secretary Janet Napolitano, overseeing the implementation of numerous well known homeland security programs, including the National Terrorism Advisory System (NTAS) and the “If You See Something, Say Something” national campaign.

JOE BONAVOLONTA | Managing Partner | Former Special Agent in Charge, Boston Field Office, Federal Bureau of Investigation

Joe Bonavolonta is a former Senior Executive and 27-year veteran of the Federal Bureau of Investigation (FBI) with extensive leadership, operational, and investigative experience across multiple disciplines, to include criminal, counterterrorism, counterintelligence, and cyber operations. After assignments in New York City, New Jersey, and Washington D.C., Bonavolonta held a series of senior leadership positions, including as Section Chief within the FBI’s Human Resources Division, Employee Development and Selection Program, Deputy Assistant Director of the FBI’s Counterintelligence Division, and as the Special Agent in Charge of the Boston Field Office, where he led all FBI operations throughout Maine, New Hampshire, Massachusetts, and Rhode Island. Bonavolonta also served as the Chairperson of the Special Agent in Charge Advisory Committee.

RICK PERISTERE | Managing Partner | Former Senior Intelligence Executive & Chief of Staff to the Director and Deputy Director, Central Intelligence Agency

Rick Peristere is a former Senior Executive and 24-year veteran of the Central Intelligence Agency (CIA) and the US Department of State with extensive leadership experience and deep regional expertise driving analysis and global operations. Peristere held a series of senior leadership positions in Washington and overseas, including as Chief of Staff to the Director of CIA, the Chief of Staff to two Deputy Directors of CIA, the Deputy Assistant Director of CIA for the Western Hemisphere, and as senior US Embassy official in Paris, France.

MARK SULLIVAN | Senior Advisor | Former Director, US Secret Service

Mark Sullivan served as the 22nd Director of the United States Secret Service from May 2006 until March 2013. Mark began his career as an entry level field Special Agent, ultimately serving in a variety of leadership roles. Sullivan was responsible for the protection of the President, Vice President, former Presidents, their families, other Government leaders and visiting Heads of State. Sullivan also oversaw the Secret Service investigative mission in the areas of intelligence, cyber, financial crimes, and fraud.

LANCE HAMILTON | Senior Advisor | Former Senior Intelligence Executive, Directorate of Operations, Central Intelligence Agency

Lance Hamilton is a former Senior Intelligence Executive, Operations Officer and 32-year veteran of the CIA with extensive overseas experience in leading U.S. counter-terrorism, counter-intelligence, cyber, and personnel protection operations. Hamilton served as Chief of Station (COS) for three of CIA’s flagship Stations in the Middle East, South-East Asia, and Eastern Europe; and led the U.S. Intelligence Community’s world-wide operations against the threat of Weapons of Mass Destruction (WMD). Hamilton’s private sector contributions are focused on risk management, analysis of global threats, intelligence, and physical and cyber security.

STACY AGUILAR | Operations Manager |

A seasoned Global Event and Project Management Professional, Stacy’s expertise spans various facets of the sports industry, encompassing her pivotal roles in international competitions and football development initiatives with FIFA, Concacaf, and the United States Soccer Federation. Her career has been marked by diverse accomplishments within professional sports, from spearheading the development and execution of credential and access management at the prestigious Chase Center in San Francisco, the home of the Golden State Warriors, to overseeing the implementation of crucial COVID-19 protocols for Major League Baseball. Her contributions as an assigned match coordinator and venue coordinator for Concacaf matches, coupled with her instrumental role in team services operations for the United States Soccer Federation, underscore her multifaceted experience and commitment to excellence within the sports realm. (Source: BUSINESS WIRE)

 

04 Mar 24. Safran acquires 3D Metal Forming (3DMF).

• A global leader specialized in high energy hydro forming of metal parts

Safran Nacelles completed the acquisition of 3DMF, a company specialized in High Energy Hydro Forming (HEHF) of metal parts. This innovative manufacturing process reinforces Safran Nacelles’ capacity to develop and produce parts for nacelles and engines, including nozzles and air inlet lips. HEHF is also an enabling technology for manufacturing Monolithic Integrated Structures from thick plate.

Located in the Netherlands, 3DMF manufactures prototype and series parts mainly for the aerospace industry. The manufacturing process developed by the company enables to produce a very high-quality finished product which can be large and of various thicknesses, and offers dimension and precision characteristics that are above current standards.

As of today, 3D Metal Forming is a wholly-owned subsidiary of Safran Nacelles.

“We are delighted to integrate the 3DMF team in Safran Nacelles. Acquiring this new expertise enables us to enhance our technology portfolio and consolidate our position as a reference aerospace player in the development and manufacture of nacelles. This acquisition will notably enable the design and production of high-tech performance-enhancing parts for our customers, improving the performance of future generation propulsion systems” stated Vincent Caro, CEO of Safran Nacelles. (Source: ASD Network)

 

03 Mar 24. DroneShield Ltd (ASX:DRO) (“DroneShield” or the “Company”) has been added into the S&P/ASX All Ordinaries Index. The addition was announced by S&P Dow Jones Indices, a division of S&P Global, on 1 March 2024, with effect prior to the open of trading on 18 March 2024, as a result of March quarterly review.

Oleg Vornik, DroneShield CEO, commented: “DroneShield continues its rapid progress, having established its position as a pioneer and global leader in the rapidly expanding counterdrone sector. Last week, we have announced record 2023 performance with $55m revenue and $9m profit after tax, our first profitable year. We are well positioned for 2024 and beyond, with a $510m pipeline and $30m contracted backlog.”

“This most recent news of addition into the All Ordinaries Index, as our market capitalisation and daily liquidity continue to rapidly rise, is expected to be further highlight our story to a number of institutional and retail shareholders, adding to the existing base of over 11,000 existing investors in DroneShield.”

 

04 Mar 24. Boeing supplier Senior posts profit jump, boosts dividend.

• summary
• Companies
• Raises annual dividend by 77%
• 2023 profit jumps 91%
• expects 2024 performance in line with expectations

British aerospace engineer Senior (SNR.L), opens new tab raised its dividend on Monday after 2023 profits nearly doubled, buoyed by an increase in civil aircraft production rates and robust demand in the land vehicle markets.

“We have achieved a diversified position across key civil and defence aircraft platforms and are benefiting from increasing aircraft build rates which we expect will lead to higher sales in 2024 and beyond,” CEO David Squires said in a statement.

It forecast its 2024 performance to be in line with its estimates, as Boeing, one of its top customers, had asked suppliers to maintain production of 737 MAX plane parts at previously agreed levels.

The Federal Aviation Administration (FAA) has given Boeing 90 days to develop a comprehensive plan to address “systemic quality-control issues” after restricting it from ramping up the production rate of 737 MAX planes from the current 38 planes a month.

“If you look at last year, for much of last year, the manufacturing rate was 31 per month. So in the worst case scenario, if they didn’t go above the rate of 38 this year, there’s still growth for the suppliers,” Squires told Reuters in an interview.

The company’s adjusted pre-tax profit jumped 91% to 38.3 m pounds ($48.5 m) for the year ended Dec. 31.

Senior proposed an annual dividend of 2.3 pence, up 77%.

Demand at its Flexonics division, which makes fluid conveyance and thermal management components for vehicles and power and energy applications, continued to normalise to more typical levels, the company added.

“Much of our product is either coming from North America or Europe, so we don’t have to go through the Red Sea… So far, not a big impact for us,” Squires said regarding any impact from disruptions to shipping via the Red Sea. ($1 = 0.7897 pounds) (Source: Google/Reuters)

 

04 Mar 24. US defence contractors are missing out on a global military boom that has boosted their European counterparts’ share prices as legislative deadlock in Washington creates government spending uncertainty. Shares in the biggest military contractors to the Pentagon have shed most of their gains after Russia’s full-scale invasion of Ukraine two years ago. Lockheed Martin has lost 10 per cent in the past year and RTX, formerly known as Raytheon, has declined by 9 per cent. By contrast, shares in Leonardo of Italy have jumped 91 per cent, while those of Germany’s Rheinmetall have rallied 78 per cent. The underperformance of the US groups’ stocks comes as spending at the Pentagon, as well as the rest of the US government, is frozen at last year’s levels because Congress has yet to pass the 2024 budget. “I’ve never seen anything like this, the chaos,” said Byron Callan, managing director of research group Capital Alpha Partners. “It’s really a very chaotic environment in Washington right now.” Many US defence companies boast record order books; at the leading six groups the backlog was up 9 per cent to $508bn last year. Despite this, uncertainty over future government commitments has held back companies’ valuations, analysts said. Lawmakers have less than a month — until March 22nd — to pass the 2024 defence budget. Both congressional chambers passed a stop-gap budget that President Joe Biden is expected to sign soon in order to avoid a partial government shutdown. The Pentagon is expected to unveil its 2025 budget request this week, but under the stop-gap measures it cannot start new procurement programmes and ongoing programmes will slow down. The undersecretaries of the Army, Navy and Air Force last week warned that ongoing military modernisation efforts would be harmed if Congress failed to pass a defence spending bill. “These are production rate increases, new starts — both in programmes for acquisition as well as military construction projects that we cannot start,” Army under secretary Gabe Camarillo told reporters. The Biden administration’s additional spending package of nearly $60bn for Ukraine is also on hold. This includes $20bn to replenish US weapons stocks and $13.8bn to allow Kyiv to re-arm through the purchase of weapons and munitions from the US defence industrial base. “As much as the mantra, ‘the world is a more dangerous place’ is back — well, it’s not being heard in Congress,” said Callan. US contractors lead the list of the world’s largest defence companies by revenue, according to the Stockholm International Peace Institute’s latest ranking. The US government is a significant part of their businesses, accounting for 86 per cent of Northrop Grumman’s revenues and nearly three quarters of Lockheed’s sales in 2023. The US defence sector faces further questions about its prospects if Donald Trump is re-elected as president in this year’s election in November. A weaker commitment to Nato could damp American defence exports while European governments, already under pressure to spend more on defence and bolster their own capabilities, would have to ensure more of their money goes to domestic contractors. Callan said there was “still a question about the long-term growth and competitiveness of these [US] companies if Trump is re-elected”. US defence contractors are also struggling with labour shortages, inflationary pressures and fresh concerns over fixed-price contracts. Northrop Grumman said in January it would take a $1.2bn charge against the new B-21 Raider bomber that it is building for the US Air Force due to rising costs on the contract it won in 2015. The “monster” charge has “reawakened worries that the defence sector signed up for more risk than was prudent”, said Robert Stallard, analyst at Vertical Research Partners. (Source: FT.com)

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