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03 May 24.  HII’s revenues reached $2.8bn in Q1 FY24, showing a 4.9% increase from $2.6bn reported in Q1 of last year.

Huntington Ingalls Industries (HII) has reported net earnings of $153m in the first quarter (Q1) of fiscal year 2024 (FY24), up by 18.6% from $129m in Q1 FY2023.

For the quarter ended on 31 March 2024, the company’s diluted earnings per share was $3.87, compared to $3.23 in the previous year’s Q1.

Revenues for HII in Q1 FY24 reached $2.8bn, showing a 4.9% increase from $2.6bn reported in the Q1 of last year.

The Mission Technologies segment was a significant contributor to the company’s overall revenue growth.

This segment saw a 20.2% rise in revenue to $750m in Q1 FY24 from $624m in Q1 FY23, largely attributed to heightened activities in command, control, computers, communications, cyber, intelligence, surveillance, and reconnaissance, electronic warfare, cyber, and space.

HII’s Ingalls Shipbuilding segment experienced a revenue growth of 13.5% to $655m in Q1 FY24 from $577m in the corresponding quarter of FY23.

However, the Newport News Shipbuilding segment saw a decrease in revenues, down 4.8% to $1.4bn in Q1 FY24 from $1.5bn in the Q1 of 2023.

Operating income for Q1 FY24 stood at $154m with an operating margin of 5.5%, compared to $141m and 5.3% in the same quarter of the previous year.

The company’s cash flow indicated more significant expenditures, with net cash used in operating activities reaching $202m and a free cash flow of negative $274m.

New contract awards for HII in the Q1 of 2024 totalled $3.1bn, contributing to a substantial backlog of approximately $48.4bn as of 31 March 2024.

Looking ahead to the full year 2024, HII anticipates Mission Technologies revenue to be in the range of $2.7bn to $2.75bn and Shipbuilding Revenue to be between $8.8bn and $9.1bn.

HII president and CEO Chris Kastner said: “The first quarter was a good start to the year.

Strong growth in Mission Technologies and stable shipbuilding progress provide a solid foundation for the balance of 2024 and beyond.”

(Source: army-technology.com)

 

03 May 24. Rheinmetall suggests European arms consortium with eye on global role.

• Summary
• Companies
• European consortium could better compete with US rivals
• Rheinmetall order book seen reaching 60 bln euros by year end
• CEO says German defence fund needs an extra 30 bln euros

Rheinmetall (RHMG.DE), opens new tab floated the idea of a European arms consortium to better compete with U.S. rivals as the German defence group set out its global ambitions in a booming industry.

The company, a major beneficiary of rising defence spending since Russia’s full-scale invasion of Ukraine in 2022, is forecasting record revenue of more than 10bn euros ($11bn) this year and its order book to reach 60bn euros.

“We want to become a worldwide player and we can currently do that on our own thanks to our good cash flow,” CEO Armin Papperger told a gathering of the WPV business reporters association in Duesseldorf late on Thursday.

He said Rheinmetall would look to push on with its own acquisitions in the United States, but also suggested creating a “large consortium” of European defence companies.

“I believe that it would make sense to found a European system house that has a turnover of around 30, 35bn (euros) so that we can compete with the Americans, that is definitely possible,” Papperger said.

He said other major players in Europe included Leonardo (LDOF.MI), opens new tab, which has a significantly lower market capitalisation than Rheinmetall, and KNDS from France, but gave no indication of any talks to create a possible consortium.

Papperger added there were currently no discussions between Rheinmetall and Germany’s Thyssenkrupp (TKAG.DE), opens new tab, which has been scouting for investment into its navy division.

(Source: Reuters)

 

03 May 24. Allen Control Systems Raises $12m Seed Capital to Build Counter-Drone Robotic Gun Systems. Allen Control Systems (ACS), a defense technology company, has announced it has raised $12mi in seed capital led by Craft Ventures with participation from Forum Ventures and Rally Ventures. ACS is developing counter-drone robotic gun systems.

Low cost, lethal, and increasingly autonomous drones are being deployed in large numbers by enemy forces around the world. Radio jamming can stop many off-the-shelf commercial drones, but autonomous military drones are designed to continue their missions even when their radios are jammed. The only way to disable military drones is to physically damage them but up until now, that required expensive missiles. ACS is developing novel technology capable of neutralizing large numbers of lethal drones at a much lower cost than any solution available today.

‍ACS was founded by CEO Steven Simoni, CTO Luke Allen, and COO Mike Wior. Simoni and Allen are former U.S. Navy nuclear engineers who met in the service. Both were instrumentation and control systems engineers for Navy nuclear reactors. Their backgrounds span robotics, computer vision, machine learning, electrical engineering, mechanical engineering and computer science. After serving in the Navy, Simoni and Allen founded Bbot, a software and robotics restaurant technology startup, where they met Mike Wior, CEO and co-founder of Omnivore, a restaurant POS transaction system. Simoni and Allen’s company was acquired by DoorDash in 2022, and Wior’s company was acquired by Olo in the same year.

“We are at a military disadvantage with our biggest rival. ACS was created to neutralize the threat of Chinese drone manufacturing dominance,” said Simoni. “DJI, the Shenzhen-based manufacturer, commands over 70% of the world’s drone market and makes a new drone every few seconds. With respect to drones, any serious dual-use mandate from our Government is about 20 years too late.”

“ACS’s products are designed with an assumption that military drones will be numerous and will be hardened against radio jamming and other long-range non-kinetic attempts at stopping them,” said Allen. “But drones can’t carry sufficient armour to stop a bullet. The downside of bullets is that aiming a gun with sufficient precision to hit a small drone is almost impossible. We understand how hard that problem is, and we believe we’re well-positioned to solve it.”

The company’s Bullfrog autonomous M240 gun turret system (using 7.62mm ammunition) is reportedly able to detect, identify and neutralise enemy unmanned aerial vehicles using kinetic impact via machine gun rounds in defensive moving and static locations.

The system operates on 24V DC power for easier integration into common NATO vehicles and can operate in autonomous and semi-autonomous modes with a fully passive detection system.

Bullfrog can also reportedly handle accurate detection based on millions of training images, as well as possible networking into existing air-defense and force-protection operating systems. (Source: UAS VISION/Defence Connect)

 

02 May 24. Government assistance to Denel totalled R9bn in five years. Beleaguered State-owned defence and technology conglomerate Denel benefitted to the tune of R9bn from National Treasury (NT) over the past five years at the same time as it recorded personnel losses of just on 60%. The R9bn in bailouts was, according to the reply to a Parliamentary question posed by Democratic Alliance (DA) member of the Public Enterprises Portfolio Committee (PEPV), Farhat Essack, one of six made to State-owned Enterprises (SOEs). Denel, according to the response attributed to outgoing Public Enterprises Minister Pravin Gordhan and Department of Public Enterprises (DPE) Acting Director General Jacky Molisane, did not pay out any dividends in the five-year period starting May 2019.

By way of explanation for government’s financial commitment to SOEs, Essack was informed “all entities were affected by state capture” with five impacts named. They are listed as financial and liquidity positions, increased operating costs, skills “eroded”, boards “compromised” and there was “a technical impact on operational performance”.

2019 was the starting point for another DA Denel question to Gordhan. This one was from Mimmy Gondwe, shadow public enterprises minister, asking about personnel numbers.

She was told personnel strength in 2019 was 3 968. By the end of the 2023/24 financial year it stood at 1 655 – a loss of just on 60% – prompting at least one Armscor pensioner to ask whether the Denel salary bill decreased accordingly.

Other SOEs Essack asked about included the national airline – SAA – which he was told did not receive bailouts. The response to Essack’s question has it that it was “capital invested” to the tune of over R31bn between 2019/2020 and 2023/24, with the funds going to working capital, bridging finance, settling legacy debts and restructuring, among others.

Only Alexkor and SAFCOL (SA Forestry Company Limited) were not financially assisted by government in the last five years. Eskom received R234.6 bn and Transnet R11.6bn (made up of a R5.8bn “equity injection”, R2.9 bn to “accelerate” locomotive rehabilitation and a similar amount to cover losses incurred in the April 2022 KwaZulu-Natal floods) during the specified timeframe. (Source: https://www.defenceweb.co.za/)

 

01 May 24. Altair Acquires Research in Flight, Forging a New Path for Aerodynamic Analysis. Altair (Nasdaq: ALTR) a global leader in computational intelligence, announced it has acquired Research in Flight, maker of FlightStream®, which provides computational fluid dynamics (CFD) software with a large footprint in the aerospace and defense sector and a growing presence in marine, energy, turbomachinery, and automotive applications. FlightStream® is a user-friendly, yet powerful flow solver that bridges the gap between high-fidelity CFD simulations and the needs of engineers and designers. Its exceptionally fast computational speeds and low hardware footprint, coupled with a streamlined user interface and robust aerodynamic solver, make it an invaluable tool for early-stage rapid design iterations and in-depth aerodynamic studies for aerospace and defense applications and beyond. FlightStream® can capture subsonic to supersonic flows, including compressible effects and a unique surface vorticity capability. It leverages the strengths of panel method flow solvers and enhances them with modern computational techniques to provide a fast solver capable of handling complex aerodynamic phenomena.

“Our growth in the aerospace, defense, and surrounding industries has accelerated in recent years through our best-in-class computational intelligence solutions,” said James R. Scapa, founder and chief executive officer, Altair. “The integration of FlightStream® into our portfolio will enhance our offering with its specialized, modern, and efficient approach to meet the increasingly complex customer demands in these industries, including the urban air mobility and eVTOL sectors.”

FlightStream® allows for the rapid analysis of unconventional aircraft using a unique surface vorticity, flow-separation, and viscous analysis capability for both powered and unpowered configurations. It is augmented with integral boundary layer modeling, enabling users to capture viscous effects with a level of detail that is uncommon in traditional panel method applications. This integration facilitates a more comprehensive analysis of aerodynamic performance, providing insights that are crucial for design optimization.

“We are proud to be a standard tool in the aircraft designer’s toolbox,” said Vivek Ahuja, co-founder, Research in Flight. “Joining Altair will allow us to scale and reach countless engineers seeking best-in-class, powerful, and specialized tools for faster design iterations.”

In addition to Ahuja, Research in Flight was co-founded by Roy Hartfield who has dedicated more than 30 years to the study of aerodynamics, propulsion, statistical analysis of air vehicles, and aircraft research. Hartfield is an aerospace engineering professor at the Samuel Ginn College of Engineering at Auburn University.

FlightStream® is a United States Air Force network-approved software and is also used at NASA Ames and Langley Research Centers, as well as by the U.S. Army. It will be integrated into the Altair® HyperWorks® design and simulation platform and be available via Altair Units. (Source: PR Newswire)

 

02 May 24. Magellan Aerospace Corporation Announces Financial Results.

Magellan Aerospace Corporation (“Magellan” or the “Corporation”) released its financial results for the first quarter of 2024. All amounts are expressed in Canadian dollars unless otherwise indicated. The results are summarized as follows:

1. Overview

A summary of Magellan’s business and significant updates

Magellan is a diversified supplier of components to the aerospace industry. Through its wholly owned subsidiaries, controlled entity and joint venture, Magellan designs, engineers and manufactures aeroengine and aerostructure components for aerospace markets, including advanced products for defence and space markets, and complementary specialty products. The Corporation also supports the aftermarket through supply of spare parts as well as performing repair and overhaul services.

Magellan operates substantially all of its activities in one reportable segment, Aerospace, which is viewed as one segment by the chief operating decision-makers for the purpose of resource allocations, assessing performance and strategic planning. The Aerospace segment includes the design, development, manufacture, repair and overhaul, and sale of systems and components for defence and civil aviation.

The Industry and the Supply Chain

Though global air travel has seen signs of recovery with both domestic and international revenue passenger kilometers, on a combined basis, approaching pre-COVID 19 pandemic levels, Magellan’s financial results and operations continue to be influenced by overhanging impacts from the pandemic. These impacts include customer build rate adjustments (and the impact on production scheduling), higher input prices for goods and services, limited availability of products, disruptions to supply chains and labour shortages. Magellan continues to manage these impacts and strives to mitigate their effect on Magellan’s operations, supply chain, and most importantly the health and safety of its employees.

In the first three months of 2024, 65.1% of revenues were derived from commercial markets while 34.9% of revenues related to defence markets.

Business Update

On February 28, 2024, Magellan announced an agreement between Magellan Aerospace (UK) Limited and Airbus to continue to supply major structural wing components for Airbus’ single aisle family of aircraft. The high-strength, lightweight components will be delivered from Magellan’s leading-edge long bed machining centre in our Wrexham facility from January 2024. The agreement focuses on the production of precision-machined wing spars for use on the A320 family of aircraft. Wing spars are large, machined components that provide support and strength to the wing structure. Magellan will expand its industry-leading long bed machining capability at the Wrexham facility to ensure continued delivery of quality products that meet the expectations of the customer.

For additional information, please refer to the “Management’s Discussion and Analysis” section of the Corporation’s 2023 Annual Report available on www.sedarplus.ca.

2. Results of Operations

A discussion of Magellan’s operating results for the first quarter ended March 31, 2024

The Corporation reported revenue in the first quarter of 2024 of $235.2m, an $11.8m or 5.3% increase from the first quarter of 2023 revenue of $223.4m. Gross profit and net income for the first quarter of 2024 were $23.8m and $6.3m, respectively, in comparison to gross profit of $22.3m and net income of $3.9m for the first quarter of 2023.

Consolidated Revenue

Revenues in Canada decreased 6.3% in the first quarter of 2024 compared to the corresponding period in 2023, primarily due to reduced revenues in the defence and space product portfolio.

Revenues in the United States increased by 20.5% in the first quarter of 2024 compared to the first quarter of 2023, mainly due to volume increases for fighter and wide body aircraft, higher casting product revenues and favourable foreign exchange impacts due to the strengthening of the United States dollar relative to the Canadian dollar.

European revenues in the first quarter of 2024 increased 9.4% compared to the corresponding period in 2023 primarily driven by volume increases for wide body aircraft, and favourable foreign exchange impacts as the United States dollar strengthened relative to the British pound.

Gross Profit

Administrative and general expenses as a percentage of revenues of 6.1% for the first quarter of 2024 were lower on a nominal basis than the same period of 2023. Administrative and general expenses decreased $0.1 m or 0.8% to $14.2 m in the first quarter of 2024 compared to $14.3 m in the first quarter of 2023 mainly due to decreases in pension and professional services expenses, offset in part by increases in technology related expenses.

Restructuring

Other for the first quarter of 2024 included a $0.7m foreign exchange gain compared to a $1.2m foreign exchange loss in the first quarter of the prior year. The movements in balances denominated in foreign currencies and the fluctuations of the foreign exchange rates impact the net foreign exchange gain or loss recorded in a quarter.

Other for the first quarter of 2024 also includes a $0.2 m settlement gain relating to the settlement of various pension obligations in conjunction with the purchase of group annuity contracts related to the Corporation’s defined benefit pension plans.

Interest Expense

Total interest expense of $1.3m in the first quarter of 2024 increased by $0.5m compared to the first quarter of 2023, mainly due to higher interest on bank indebtedness and long-term debt as a result of increased interest rates and higher principal amounts borrowed in the quarter as compared to the prior year.

Provision for Income Taxes

Income tax expense for the three months ended March 31, 2024 was $2.9m, representing an effective income tax rate of 31.3% compared to 31.8% for the same period of 2023. The change in effective tax rate and current and deferred income tax expenses year over year was primarily due to the change in mix of income and loss across the different jurisdictions in which the Corporation operates and the reversal of temporary differences.

3. Selected Quarterly Financial Information

Revenues and net income in the quarter were impacted by the movements of the Canadian dollar relative to the United States dollar and British pound, when the Corporation translates its foreign operations to Canadian dollars. Further, the movements in the United States dollar relative to the British pound impact the Corporation’s United States dollar exposures in its European operations. During the periods reported, the average quarterly exchange rate of the United States dollar relative to the Canadian dollar fluctuated between a high of 1.3619 in the fourth quarter of 2023 and a low of 1.2663 in the second quarter of 2022. The average quarterly exchange rate of the British pound relative to the Canadian dollar reached a high of 1.7103 in the first quarter of 2024 and hit a low of 1.5350 in the third quarter of 2022. The average quarterly exchange rate of the British pound relative to the United States dollar reached a high of 1.2680 in the first quarter of 2024 and hit a low of 1.1747 in the fourth quarter of 2022.

Revenue for the first quarter of 2024 of $235.2m was higher than that in the first quarter of 2023. The average quarterly exchange rate of the United States dollar relative to the Canadian dollar in the first quarter of 2024 was 1.3488 versus 1.3518 in the same period of 2023. The average quarterly exchange rate of the British pound relative to the Canadian dollar moved from 1.6429 in the first quarter of 2023 to 1.7103 during the current quarter. The average quarterly exchange rate of the British pound relative to the United States dollar increased from 1.2154 in the first quarter of 2023 to 1.2680 in the current quarter.

The Corporation’s results through-out fiscal 2022 and 2023 were negatively impacted by the continued effects of the COVID-19 pandemic via reduced volumes and supply chain disruptions. The decrease in profitability in the fourth quarter of 2022 was mainly the result of the effect of inflation in materials, supplies, utilities and labour; and supply chain disruptions which impacted production of goods resulting in production system inefficiencies and lower absorption of manufacturing supplies. These impacts, although not as significant, continued to impact the results in 2023. Compared to the second quarter of 2022, the Corporation has seen modest, albeit uneven, growth in quarterly revenues as global air travel continues to recover to pre COVID-19 levels.

4. Reconciliation of Net Income to EBITDA and Adjusted EBITDA

A description and reconciliation of certain non-IFRS measures used by management

In addition to the primary measures of earnings and earnings per share (basic and diluted) in accordance with IFRS, the Corporation includes EBITDA (net income before interest, income taxes and depreciation and amortization) and Adjusted EBITDA (net income before interest, income taxes, depreciation and amortization, goodwill impairment and restructuring) in this news release. The Corporation has provided this measure because it believes this information is used by certain investors to assess financial performance and that EBITDA and Adjusted EBITDA are useful supplemental measures as they provide an indication of the results generated by the Corporation’s principal business activities prior to consideration of how these activities are financed and how the results are taxed in the various jurisdictions. Each component of this measure is calculated in accordance with IFRS, but EBITDA and Adjusted EBITDA are not recognized measures under IFRS, and the Corporation’s method of calculation may not be comparable with that of other companies. Accordingly, EBITDA and Adjusted EBITDA should not be used as alternatives to net income as determined in accordance with IFRS or as alternatives to cash provided by or used in operations.

5. Liquidity and Capital Resources

A discussion of Magellan’s cash flow, liquidity, credit facilities and other disclosures

The Corporation’s liquidity needs can be met through a variety of sources including cash on hand, cash provided by operations, short-term borrowings from its credit facility and accounts receivable securitization program, and long-term debt and equity capacity. Principal uses of cash are for operational requirements, capital expenditures, common share repurchases and dividend payments. Based on current funds available and expected cash flow from operating activities, management believes that the Corporation has sufficient funds available to meet its liquidity requirements at any point in time. However, if cash from operating activities is lower than expected or capital projects exceed current estimates, or if the Corporation incurs major unanticipated expenses, it may be required to seek additional capital in the form of debt or equity or a combination of both.

For the three months ended March 31, 2024, operating activities provided $19.8m of cash compared to $18.4m used in the first quarter of 2023. Changes in non-cash working capital items provided cash of $2.3m, $34.4m higher when compared to the usage of $32.2m in the prior year. This increase is largely attributable to decreases in accounts receivables from timing of customer payments, increases in contract liabilities due to timing of customer deposits offset in part by increases in contract assets and inventories, and decreases in accounts payable, accrued liabilities and provisions primarily driven by timing of material purchases and supplier payments.

Dividends

During the first quarter of 2024, the Corporation declared and paid a quarterly cash dividend of $0.025 per common share representing an aggregating dividend payment of $1.4m.

Subsequent to March 31, 2024, the Corporation announced that its Board of Directors had declared a quarterly cash dividend on its common shares of $0.025 per common share. The dividend will be payable on June 28, 2024 to shareholders of record at the close of business on June 14, 2024. The Board of Directors of the Corporation continues to review its dividends on a quarterly basis to ensure that the dividend declared balances the return of capital to shareholders while maintaining adequate financial flexibility and funds available for growth initiatives.

Normal Course Issuer Bid

On May 25, 2023, the Corporation’s application to extend its normal course issuer bid (“2023 NCIB”) was approved, which allows the Corporation to purchase up to 2,868,106 common shares between May 27, 2023 and May 26, 2024. During the first quarter of 2024, the Corporation purchased 49,456 common shares for cancellation at a volume weighted average price of $7.76 per common share at a cost of $0.4m.

Outstanding Share Information

The authorized capital of the Corporation consists of an unlimited number of preference shares, issuable in series, and an unlimited number of common shares. As at April 30, 2024, 57,163,773 common shares were outstanding and no preference shares were outstanding.

6. Risk Factors

A summary of risks and uncertainties facing Magellan

The Corporation manages a number of risks in each of its businesses in order to achieve an acceptable level of risk without hindering the ability to maximize returns. Management has procedures to help identify and manage significant operational and financial risks.

For more information in relation to the risks inherent in Magellan’s business, reference is made to the information under “Risk Factors” in the Corporation’s Management’s Discussion and Analysis for the year ended December 31, 2023 and to the information under “Risks Inherent in Magellan’s Business” in the Corporation’s Annual Information Form for the year ended December 31, 2023, which have been filed with SEDAR at www.sedarplus.ca.

7. Outlook

The outlook for Magellan’s business in 2024

Airbus delivered 142 aircraft in Q1 2024, received net orders of 170 aircraft and closed the quarter with an order backlog of 8,626 aircraft. Comparatively, Boeing delivered 83 aircraft, received net orders of 125 aircraft and closed the quarter with an order backlog of 6,259 aircraft.

Airbus’ A320 program build rate is currently at 56 aircraft per month, is planned to reach 62 aircraft per month by the end of 2024 and then 75 aircraft per month by 2026. The A330 build rate is currently at 3.3 aircraft per month with plans to go to 4 aircraft per month in Q3 2024, while the A350 is at 6 aircraft per month with plans to go to 10 aircraft per month in 2026. The A220 build rate is at 7.5 aircraft per month and is planned at 14 aircraft per month in 2026.

When the 737MAX door plug incident occurred, Boeing was transitioning 737 aircraft production from 31 to 38 aircraft per month. The FAA has capped the rate at 38 aircraft, although media reports suggest actual build rates in Q1 2024 were significantly lower. Boeing have stated that they are maintaining the supply chain at 38 aircraft per month. There were no deliveries of the 777 in Q1 2024 due to a shortage of engines. The engine manufacturer, General Electric, is coordinating engine production and delivery schedules with Boeing and airline customers. Boeing’s 767 production continues at a rate of 3 aircraft per month, while the 787 build rate is transitioning to 5 aircraft per month.

Both Boeing and Airbus have healthy aircraft order backlogs, which reflect the strong market demand for new commercial aircraft.

In the defence market, US Congress passed the FY 2024 budget, which provides funding of USD $43.6bn for aircraft procurement, including a USD $3bn boost over the original request. Programs benefiting are Boeing’s P8 Maritime Patrol aircraft and CH47 Chinook helicopter, Sikorsky’s H-60 helicopter, Bell-Boeing’s V22 Tiltrotor aircraft and Lockheed’s C130J Tactical Transport aircraft. Boeing also secured a production contract from the US Navy for a final F/A-18E/F Super Hornet fighter buy. This order will allow Boeing to extend F/A-18 production into 2027, which is two years beyond the previously announced 2025 production end.

Pratt & Whitney received full funding for its Engine Core Upgrade program, which is to provide capability enhancements for its F135 engine and which ends a long-running debate over the future of the F-35 propulsion with an entirely new engine. This budget also includes funding for further development of a sixth-generation fighter under the US Air Force (“USAF”) program known as Next Generation Air Dominance (“NGAD”).

The downside of this budget revealed USAF plans to purchase fewer total Boeing F-15EXs, and slow the pace of Lockheed Martin F-35 and Boeing T-7A trainer acquisitions. According to the USAF, “this budget request sustains the modernization momentum of operational imperatives while taking a measured risk in the near term.” Funds are re-directed towards the USAF’s sixth-generation fighter development initiative and the associated effort to build autonomous combat fighters.

(Source: Google/https://www.morningstar.com/)

 

02 May 24. Melrose Industries PLC (“Melrose”) announces the following trading update for the quarter from 1 January to 31 March 2024 (“the Period”).  All numbers are calculated at constant currency.

Revenue was up 8% on the same period in 2023 with Engines showing strong progress, up 21%, and Structures flat, as expected. Ongoing restructuring projects and business improvement actions are progressing well.  As a result, adjusted operating profit is up substantially on the prior year, in line with our expectations and recently upgraded guidance.   Our end markets continue to be positive with strong demand and increasing backlogs in both civil and defence, and favourable Engines aftermarket dynamics.

Engines

The strong performance in Engines was driven by aftermarket with our RRSPs and repair activities growing above the divisional average.  Engine OE volumes continue to increase, albeit they are still constrained by industry-wide supply chain issues.  Given the higher profitability of aftermarket, the resulting business mix is generating strong margins, in line with previous guidance.

Structures

The flat reported revenue in Structures, as expected, reflects the planned exit of non-core work and destocking by a major customer as highlighted at our full year results.  The division is making encouraging progress from business improvement actions, with the majority of benefits expected in the second half and into 2025.  These improvements include the recent agreement to transfer the St. Louis site to our customer, Boeing Co., as part of our planned defence portfolio reshaping.

OutlookThe Group’s full year guidance is unchanged, with an expected 33% year-on-year increase in adjusted operating profit to £560m at the midpoint (pre-PLC costs), modestly second half weighted as previously indicated.

Peter Dilnot, Chief Executive Officer of Melrose said: “We have had a strong start to the year with a particularly good performance from our Engines division.  We expect this momentum to continue throughout the year.  Longer term, the Group is well positioned to deliver ongoing growth and margin expansion supported by positive end markets and excellent business improvement momentum. We are confident about unlocking significant further potential in the years ahead.”

 

01 May 24. Curtiss-Wright Corporation (NYSE: CW) reports financial results for the first quarter ended March 31, 2024.

First Quarter 2024 Highlights:

• Reported sales of $713m, up 13%, operating income of $100 m, up 27%, operating margin of 14.0%, and diluted earnings per share (EPS) of $1.99;
• Adjusted operating income of $100m, up 23%;
• Adjusted operating margin of 14.0%, up 110 basis points;
• Adjusted diluted EPS of $1.99, up 30%; and
• New orders of $901m, up 26%, reflected a book-to-bill that exceeded 1.25x driven by strong demand within our Aerospace & Defense (A&D) markets.

Raised Full-Year 2024 Financial Guidance:

• Sales increased to new range of 5% to 7% growth (previously 4% to 6%) and continues to reflect growth in all A&D and Commercial end markets;
• Operating income increased to new range of 5% to 8% growth (previously 4% to 7%);
• Maintained operating margin range of 17.4% to 17.6%, up 0 to 20 basis points compared with the prior year;
• Diluted EPS increased to new range of $10.10 to $10.40, up 8% to 11% (previously $10.00 to $10.30, up 7% to 10%); and
• Maintained free cash flow range of $415 to $435m, which continues to reflect nearly 110% FCF conversion.

“Curtiss-Wright delivered strong first quarter 2024 results, exceeding our overall expectations, highlighted by significant growth in sales and operating income, continued operating margin expansion, and diluted EPS of $1.99, which increased 30% year-over-year,” said Lynn M. Bamford, Chair and CEO of Curtiss-Wright Corporation. “Our results included a very strong performance in the Defense Electronics segment, which was partially offset by reduced profitability in the Naval & Power segment, principally related to a naval contract adjustment that impacted both the first quarter and full-year outlook for this segment.”

“Based upon our strong overall start to the year and the continued strength in our order book, we have increased our full-year 2024 sales, operating income and diluted EPS guidance as we continue to successfully execute on our Pivot to Growth strategy. We now expect to deliver total sales growth of 5% to 7%, including the contribution from our recent commercial nuclear acquisition of WSC, Inc., continued operating margin expansion while increasing R&D investments, and diluted EPS growth of 8% to 11%, while we maintain our outlook for strong free cash flow conversion well in excess of 100%. We look forward to discussing our alignment with the favorable secular growth trends driving our end markets and our new long-term financial targets at our upcoming investor day on May 21st.”

First Quarter 2024 Operating Results

• Sales of $713m, up $82m, or 13% compared with the prior year;
• Total A&D market sales increased 20%, while total Commercial market sales were essentially flat;
• In our A&D markets, we experienced higher sales in the defense markets principally driven by continued strong demand for our defense electronics products, as well as strong growth in OEM sales in the commercial aerospace market;
• In our Commercial markets, we experienced solid growth in the power & process markets, while sales in the general industrial market declined modestly; and
• Adjusted operating income of $100m increased 23%, while Adjusted operating margin increased 110 basis points to 14.0%, principally driven by favorable overhead absorption and mix on higher revenues in the Defense Electronics segment, partially offset by an unfavorable naval contract adjustment in the Naval & Power segment.

First Quarter 2024 Segment Performance

Aerospace & Industrial

• Sales of $219m, up $17m, or 8%;
• Strong revenue growth in the commercial aerospace market reflected higher OEM sales of actuation and sensors products, as well as surface treatment services, on narrowbody and widebody platforms;
• Higher sales in the aerospace defense market reflected increased actuation development on various fighter jet programs;
• General industrial market revenues declined modestly, as the benefit of new product introductions supporting the electrification of vehicles was more than offset by reduced sales of industrial vehicle products on off-highway vehicle platforms, and lower sales of industrial automation and services; and
• Operating income was $27m, up 3% from the prior year, while operating margin decreased 60 basis points to 12.5%, as favorable absorption on higher sales was offset by unfavorable mix and the timing of development programs.

Defense Electronics

• Sale of $212m, up $50m, or 31%;
• Higher revenue in the aerospace defense market was principally driven by increased sales of our embedded computing equipment on various fighter jet, unmanned aerial vehicle and helicopter programs;
• Strong revenue growth in the ground defense market reflected the robust demand and higher sales of tactical battlefield communications equipment;
• Higher commercial aerospace market revenue reflected increased OEM sales of avionics and electronics on various platforms; and
• Operating income was $48m, up 106% from the prior year, while operating margin increased 830 basis points to 22.7%, mainly reflecting improved absorption and mix on higher revenues.

Naval & Power

• Sales of $282m, up $16m, or 6%;
• Higher revenue in the aerospace defense market was primarily driven by increased sales of our arresting systems equipment supporting various domestic and international customers;
• Naval defense market revenue increases principally reflected higher revenues on the Columbia-class submarine, partially offset by timing of revenues on the Virginia-class submarine and CVN-80 aircraft carrier programs;
• Higher power & process market revenues mainly reflected increased commercial nuclear aftermarket sales supporting the maintenance of operating reactors in the U.S. and Canada; and
• Adjusted operating income was $35m, down 13% from the prior year, while adjusted operating margin decreased 280 basis points to 12.5%, as favorable absorption on higher revenues was more than offset by an unfavorable naval contract adjustment.

Free Cash Flow

• Reported free cash flow of ($58)m increased $45m, primarily due to higher cash earnings and the timing of tax payments, as well as a $10m legal settlement payment made in the prior year;
• Adjusted free cash flow of ($58)m increased $35m;
• Capital expenditures increased $1m compared with the prior year period, primarily due to higher growth investments in the Defense Electronics segment.

New Orders and Backlog

• New orders of $901m increased 26% compared with the prior year and generated an overall book-to-bill that exceeded 1.25x, principally driven by strong demand for defense electronics and naval defense products within our A&D markets; and
• Backlog of $3.1bn, up 7% from December 31, 2023, reflects higher demand in both our A&D and Commercial markets.

Share Repurchase and Dividends

• During the first quarter, the Company repurchased 52,612 shares of its common stock for approximately $12m; and
• The Company declared a quarterly dividend of $0.20 a share.

 

01 May 24. Materion Corporation Reports First Quarter 2024 Financial Results. Materion Corporation (NYSE: MTRN) today reported first quarter 2024 financial results and provided an update to 2024 earnings guidance.

Financial Summary

• Net sales were $385.3m; value-added sales1 were $257.8m
• Net income was $13.4m, or $0.64 per share, diluted, and adjusted earnings of $0.96 per share
• Full year adjusted earnings outlook updated to $5.60-$6.20 per share, a 5% increase year over year at the midpoint

FIRST QUARTER 2024 RESULTS

Net sales for the quarter were $385.3m, compared to $442.5m in the prior year period. Value-added sales were $257.8m for the quarter, down 14% from the prior year primarily due to continued semiconductor and industrial market weakness combined with some temporary operational challenges. This year-over-year decline was partially offset by strength in the space & defense markets.

Operating profit for the quarter was $22.2 m and net income was $13.4m, or $0.64 per diluted share, compared to operating profit of $36.9m and net income of $25.6m, or $1.23 per share, in the prior year period.

Excluding special items2, adjusted EBITDA3 was $45.2m in the quarter or 17.5% of value-added sales, compared to $53.4m or 17.9% of value-added sales in the prior year period. This decline was driven by lower volume, partially offset by the benefit of cost improvement initiatives, resulting in comparable margins year on year.

Adjusted net income was $20.1m excluding acquisition amortization, or $0.96 per diluted share, compared to $1.34 per share in the prior year period.

“Temporary operational challenges and softer market demand led to results falling short of our expectations for the first time in several quarters,” Materion President & CEO Jugal Vijayvargiya said. “I am proud of our team for mobilizing quickly to mitigate the impact to the quarter and deliver strong margins comparable to last year. The actions taken are also driving structural improvements that will deliver even more value as key markets recover.”

“As we manage through the current environment to drive another year of record results, we remain sharply focused on executing our strategy, delivering on our organic outgrowth initiatives and investing in new capacity and capabilities that will drive long term value for our stakeholders.”

OUTLOOK

Despite a weaker than anticipated first quarter, we expect to deliver another year of record results as we execute our organic and operational excellence initiatives. Since the beginning of the year, the outlook for the commercial aerospace and electric vehicle end-markets has softened and we expect some inventory correction from our precision clad strip customer in the second half. In addition, we expect higher interest expense with the current rate projections. While we expect to mitigate much of the impact of these items through targeted cost reduction initiatives and performance, we are adjusting our outlook to $5.60 to $6.20 for the full year 2024 adjusted earnings per share, an increase of 5% from prior year at the midpoint.

FOOTNOTES

1 Value-added sales deducts the impact of pass-through metals from net sales

2 Details of the special items can be found in Attachments 4 through 8

3 EBITDA represents earnings before interest, taxes, depreciation, depletion and amortization

ABOUT MATERION

Materion Corporation is a global leader in advanced materials solutions for high-performance industries including semiconductor, industrial, aerospace & defense, energy and automotive. With nearly 100 years of expertise in specialty engineered alloy systems, inorganic chemicals and powders, precious and non-precious metals, beryllium and beryllium composites, and precision filters and optical coatings, Materion partners with customers to enable breakthrough solutions that move the world forward. Headquartered in Mayfield Heights, Ohio, the company employs more than 3,500 talented people worldwide, serving customers in more than 60 countries. (Source: BUSINESS WIRE)

 

01 May 24. Knowles Reports Q1 2024 Financial Results and Provides Outlook for Q2 2024. Knowles Corporation (NYSE: KN) (“Knowles” the “Company”), a leading global supplier of high performance components and solutions, including capacitors and radio frequency (“RF”) filters, advanced medtech microphones and balanced armature speakers, and MEMS microphones for the consumer electronics market, today announced results for the quarter ended March 31, 2024.

“All three segments delivered year over year double digit revenue growth in the first quarter of 2024 and Non-GAAP Diluted Earnings per Share was at the high end of our guided range. I am pleased to report that net cash from operating activities of $17 m exceeded the high end of our guidance,” commented Jeffrey Niew, President and CEO of Knowles. “We have started the year with solid financial results driven by strong execution across all our businesses despite the continued heightened levels of inventory in a number of our end markets.”

Mr. Niew continued, “As we look to the second quarter of 2024, we expect to see sequential revenues and earnings growth and another quarter of strong cash generation. Throughout 2024 we will continue to progress in transitioning our company’s portfolio to higher value markets and products to drive shareholder value.”

Financial Highlights

Q2 2024 GAAP results are expected to include approximately $0.06 per share in stock-based compensation expense, $0.05 per share in intangibles amortization expense, and $0.03 per share in integration and production transfer costs related to the acquisition of Cornell Dubilier that are excluded from non-GAAP results.

About Knowles

Knowles is a market leader and global provider of high performance capacitors and radio frequency (“RF”) filtering products, and advanced micro-acoustic microphones and balanced armature speakers, audio solutions, serving the medtech, defense, consumer electronics, electric vehicle, industrial, and communications markets. Knowles’ focus on the customer, combined with unique technology, proprietary manufacturing techniques, and global operational expertise, enables us to deliver innovative solutions across multiple applications. Founded in 1946 and headquartered in Itasca, Illinois, Knowles is a global organization with employees in over a dozen countries. The Company continues to invest in high value solutions to diversify its revenue and increase exposure to high growth markets. For more information, visit knowles.com. (Source: BUSINESS WIRE)

 

01 May 24. Leonid Capital Partners Expands Space Portfolio, Provides $20m+ Term Loan to ABL Space Systems. Leonid Capital Partners (“Leonid”), a leading investment firm focused on high-growth technology companies working in the national security industry, today announced it is providing a new $20m+ term loan to ABL Space Systems (“ABL”).

ABL makes satellite launch vehicles. The RS1 launch vehicle serves satellite missions including tactically responsive launch, high energy orbits and constellation deployment. Mobility is a key differentiator. The unique GS0 ground system is modular and transportable, enabling ABL to rapidly build launch sites around the world. The company is based in Los Angeles and backed by top-tier institutional investors.

“Our business is growing rapidly and this term loan will enable us to continue to make the investments necessary to expand our infrastructure and capacity to execute on current and future contracts,” said Harry O’Hanley, CEO of ABL Space Systems. “We’re thrilled to partner with Leonid, as they deeply understand our industry and recognize the immense value of developing and strengthening space launch capabilities.”

“ABL Space Systems is doing groundbreaking work to increase domestic launch resiliency and build out ‘responsive launch’ capabilities for the Department of Defense,” said James Parker, Co-Founder of Leonid Capital Partners. “Their dedication to developing mobile and adaptable launch solutions is truly amazing. We’re honored to play a part in helping them achieve their mission.”

The deal is the latest of several financing arrangements Leonid has made this year with companies working within the space industry and further demonstrates the firm’s commitment to empowering scientists, engineers, and innovators with the capital required to develop impactful technologies in support of the national security mission.

Founded in 2019, Leonid is a specialized credit provider for businesses that contract with the federal government for highly technical engagements in fields such as software, biotech, and engineering. Leonid’s loans support a wide variety of contract types (including PoRs, OTAs, SBIR/STTR, and others) designed by the U.S. federal government to encourage research, service, and product solutions for critical areas of need.

About Leonid Capital Partners

Leonid Capital Partners is a leading investment firm focused on identifying and supporting high-growth technology companies that work in the national security arena. The firm leverages its deep government and technical expertise to provide its portfolio companies with the flexible resources they need to grow their business.

(Source: BUSINESS WIRE)

 

01 May 24. Leonardo DRS Announces Financial Results for First Quarter 2024.

• Revenue: $688m, up 21% year-over-year
• Net Earnings: $29m, up 142% year-over-year
• Adjusted EBITDA: $70m, up 43% year-over-year
• Diluted EPS: $0.11, up 120% year-over-year
• Adjusted Diluted EPS: $0.14, up 100% year-over-year
• Bookings: $815m (book-to-bill ratio of 1.2x)
• Backlog: $7.8bn, up 84% year-over-year
• Confirms solid 2024 guidance

Leonardo DRS, Inc. (Nasdaq: DRS), a leading provider of advanced defense technologies, today reported financial results for the first quarter 2024, which ended March 31, 2024.

CEO Commentary

“Leonardo DRS delivered exceptional first quarter 2024 results, highlighted by solid bookings, robust double-digit organic growth, significant profit growth and margin expansion. This incredible start to the year continues to demonstrate the strength of our portfolio and is foundational to the confidence we have in our ability to deliver on our growth and margin expansion commitments. I am pleased with how our team continues to build on our market-leading positions by executing with excellence for our customers and driving innovation to help solve complex mission requirements,” said Bill Lynn, Chairman and CEO of Leonardo DRS.

Summary Financial Results

Revenue growth was entirely organic and accelerated to 21% for the first quarter compared to last year.

Solid momentum from our naval power, ground systems integration, advanced infrared sensing and naval network computing programs drove the robust revenue growth in Q1.

Higher volume was the key driver for the significant year-over-year adjusted EBITDA growth and margin expansion in the quarter.

Quarterly net earnings, adjusted net earnings, diluted EPS and adjusted diluted EPS were all higher primarily as a result of strong operational performance but also benefited slightly from tailwinds on non-operational items, namely lower net interest expense and a lower effective tax rate.

Cash Flow and Balance Sheet

Net cash flow used in operating activities was $265m for the first quarter. The company’s free cash flow use was $275m in the quarter. The use of operating and free cash flows were largely consistent with the historical patterns of the business but showed year-over-year improvement on both metrics.

At quarter end, the balance sheet had $160m of cash and $211m of outstanding borrowings under the company’s credit facility, which provides the company with sufficient financial capacity to deploy capital for growth, while maintaining a healthy balance sheet.

The company received $815 m in new funded awards during the quarter. Robust bookings were driven by increased international demand in infrared sensing, tactical radars and air defense systems support as well as domestic awards for naval network computing and electric power and propulsion technologies. At quarter end, backlog stood at a record of $7.8bn, representing an 84% increase year-over-year.

ASC bookings continued to pace well ahead of expectations with demand most evident for advanced infrared sensing, naval and ground network computing and tactical radar technologies. Revenue growth on advanced infrared sensing and naval network computing programs were the primary drivers for the year-over-year increase in the segment. Higher volume drove the adjusted EBITDA growth; however, margin was flat in the quarter due to less favorable program mix.

Integrated Mission Systems (“IMS”) Segment

Healthy contribution from ground systems integration and electric power and propulsion efforts drove IMS bookings in the quarter. Strong execution across the segment was responsible for the robust revenue growth in the quarter. Improved program profitability, namely from Columbia Class and higher volume propelled the increases in adjusted EBITDA and adjusted EBITDA margin in the quarter.

2024 Guidance

Leonardo DRS confirms its 2024 guidance as specified in the table below:

The company does not provide a reconciliation of forward-looking adjusted EBITDA and adjusted diluted EPS, due to the inherent difficulty in forecasting and quantifying the adjustments that are necessary to calculate such non-GAAP measures without unreasonable effort. Material changes to any one of these items could have a significant effect on future GAAP results. (Source: BUSINESS WIRE)

 

30 Apr 24. MTU Aero Engines’ Q1 profit rises on Eurofighter orders despite turbofan woes. German engine manufacturer MTU Aero Engines (MTXGn.DE), reported higher first-quarter earnings on Tuesday, boosted by orders from the joint European Eurofighter jet project while its turbofan engines recall campaign remained on track.

Adjusted operating profit increased by 3% to 218m euros ($233.09m) and sales grew 8% to 1.67 bn euros in the first three months of the year, both in line with LSEG’s mean estimate.

The Airbus (AIR.PA), and Boeing (BA.N), supplier’s results beat expectations even as it continues to suffer from the consequences of an expensive recall campaign.

Last year, it had to recall up to 3,000 geared turbofan engines from its partner Pratt & Whitney (RTX.N), for an inspection due to a potentially defective turbine disc, costing the German firm about 1 bn euros.

MTU’s military sales jumped by a fifth, reaching 124m euros in the January-March period thanks to increased purchases of the EJ200 engine for the Eurofighter project.  (Source: Reuters)

 

30 Apr 24. SES to buy Intelsat, further shrinking SATCOM gene pool. Space industry analyst Todd Harrison said the $3.1bn purchase is latest in a “shakeup” in the satellite communications landscape following the proliferation of LEO birds.

The planned $3.1bn purchase of US satellite communications behemoth Intelsat by Luxembourg-based SES will bring together two of the largest operators of geosynchronous Earth orbit (GEO) satellite communications networks — as traditional players scramble to shore up market share in the face of stiff competition from mega-constellations in lower orbits.

“I think we are seeing more waves from the shakeup in the commercial SATCOM market due to Starlink and OneWeb with their lower costs and higher capacity LEO [low Earth orbit] broadband services. The traditional incumbents are being challenged in a major way for the first time in a long time,” said Todd Harrison, a space industry expert and senior fellow at the American Enterprise Institute.

For example, in 2021 Viasat announced its planned buy of UK SATCOM operator Inmarsat, which was concluded in May 2023. France’s traditional telecom giant Eutelsat in September 2023 finalized its 2022 bid for UK operator OneWeb and the latter company’s LEO constellation of more than 600 satellites.

“And we should expect more disruptions to this market in the next couple of years as Amazon begins deploying its Kuiper constellation,” Harrison added.

In announcing its acquisition of Intelsat, which is headquartered here in Washington, D.C., SES CEO Adel Al-Saleh today called the deal a “transformational agreement.”

“In a fast-moving and competitive satellite communication industry, this transaction expands our multi-orbit space network, spectrum portfolio, ground infrastructure around the world, go-to-market capabilities, managed service solutions, and financial profile,” he said.

Intelsat CEO David Wajsgras added: “By combining our financial strength and world-class team with that of SES, we create a more competitive, growth-oriented solutions provider in an industry going through disruptive change.”

Both SES and Intelsat supply SATCOM bandwidth and/or services to the Defense Department through various contract vehicles.

SES, through its US arm SES Space & Defense, last November inked a five-year agreement with the Defense Information Systems Agency (DISA) to provide US armed forces with access to its O3b mPower broadband constellation in medium Earth orbit (MEO) as managed service. Under the soup-to-nuts, subscription-style deal worth up to $270m, the military services can get connectivity, terminals, support and even training.

Intelsat last September was one of two satellite firms tapped by the US Army for its Satellite Communications (SATCOM) as a Managed Service (SaaMS) pilot, intended to “inform decisions on the Army’s potential use of commercially leased SATCOM services.” DISA also served as the contracting agency.

SES currently has a fleet of 20 first-generation O3b satellites, six new mPower birds in MEO, plus another 50 or so in GEO.

Intelsat has a fleet of 55 satellites in GEO, but it also has a set of partnerships with LEO operators that allowed it to garner one of the now-20 companies competing under a Space Force indefinite delivery/indefinite quantity (ID/IQ) contract for services from large so-called proliferated-LEO, or p-LEO, constellations. The Proliferated Low Earth Orbit (PLEO) Satellite-Based Services ID/IQ vehicle allows vendors to compete for up to $900 m in task orders via Space Systems Command’s SATCOM marketplace.

The combined company, once approved by financial overseers, will be headquartered in Luxembourg but maintain its US operations.

(Source: Defense News Early Bird/Breaking Defense.com)

 

30 Apr 24. Leidos lifts 2024 forecasts on defense demand. U.S. defense company Leidos Holdings (LDOS.N), lifted its annual profit and revenue forecasts on Tuesday, banking on strong weapons demand and increased defense spending amid growing geopolitical tensions.

Defense companies are seeing robust demand for weapons from the United States and its allies following Russia’s invasion of Ukraine, conflict in the Middle East and rising tensions in the South China Sea.

Leidos, engaged in hypersonic weapons development, among others, expects its adjusted full-year profit per share to be between $8.40 and $8.80, compared with its previous forecast range of $7.50 to $7.90.

The Reston, Virginia-based company, which counts the U.S. Department of Defense as its primary customer, also lifted its 2024 revenue forecast range to $16bn to $16.4bn, versus $15.7bn to $16.1bn projected in January.

Leidos’ adjusted profit for the first quarter was at $2.29 per share, compared with $1.47 per share a year ago. Its quarterly revenue jumped 7.4% to $3.98bn. (Source: Google/Reuters)

 

30 Apr 24. Mirion Announces First Quarter 2024 Financial Results and Reaffirms Full Year Guidance.

• Revenues for the first quarter increased 5.8% to $192.6m, compared to $182.1m in the same period in 2023.
• Net loss was $26.5m in the first quarter, compared to a net loss of $42.9m in the same period last year. Adjusted EBITDA was $39.5m, a 7.9% increase from $36.6m in the same period last year.
• Income from operations margin was (2.5)% in the first quarter, compared to (7.5)% in the same period last year. Adjusted EBITDA margin was 20.5% in the first quarter, compared to 20.1% in the same period last year.
• GAAP net loss per share for the first quarter was $0.13, compared to $0.22 in the first quarter of 2023. Adjusted earnings per share for the quarter was $0.06, in-line with the same period last year.
• The company reaffirmed full year 2024 guidance and continues to expect revenue growth of 5% to 7%, adjusted EBITDA of $193m to $203m, and adjusted EPS of $0.37-$0.42.

Mirion (“we” or the “company”) (NYSE: MIR), a global provider of radiation detection, measurement, analysis and monitoring solutions to the medical, nuclear, defense, and research end markets, today announced results for the first quarter ended March 31, 2024.

“The first quarter was a solid start for Mirion in 2024,” stated Thomas Logan, Mirion’s Chief Executive Officer. “Revenue growth was in-line with our expectations, led by a strong quarter from our Technologies segment. I am pleased with the Adjusted EBITDA margin expansion we delivered compared to the same period last year and believe we are well-positioned heading into the rest of 2024. Engagement remains strong across our end markets and I am particularly excited by the macro trends taking shape in nuclear power and cancer care.”

Reaffirmed 2024 Outlook

“We are reaffirming our 2024 financial outlook today,” continued Mr. Logan. “I am encouraged by the commercial and operational momentum across the business and believe that we have the right strategy in place to deliver against our expectations.”

Mirion is reaffirming its guidance for the fiscal year and 12-month period ending December 31, 2024:

• Revenue growth of 5% – 7%

o Organic revenue growth of 4% – 6%

• Medical +MSD organic
• Technologies +MSD organic

o Inorganic revenue growth of approximately 1%, primarily as a result of the ec2 acquisition

o Minimal impact from foreign exchange rates

• Adjusted EBITDA of $193m – $203m
• Adjusted EPS of $0.37 – $0.42
• Adjusted free cash flow of $65m – $85m

The guidance for organic revenue growth excludes the impact of foreign exchange rates as well as mergers, acquisitions and divestitures.

Other modeling and guidance assumptions include the following:

• Depreciation of approximately $33 m for the year
• Net interest expense of approximately $55m (approximately $52m of cash interest)
• Effective tax rate between 26% and 28%
• Capital expenditures of approximately $40m
• Cash taxes of approximately $35m
• Approximately 204m shares of Class A common stock outstanding (excludes 7.3m shares of Class B common stock, 18.7m public warrants (which were called for redemption on April 18, 2024), 8.5m private placement warrants, 18.8m founder shares, subject to vesting, 2.2m restricted stock units, 1.2m performance stock units and a further 34.3m shares reserved for future equity awards (subject to annual automatic increases)) (all numbers as of March 31, 2024)
• Euro to U.S. Dollar foreign exchange conversion rate of 1.08
• Cash non-operating expenses of approximately $9m
• Stock-based compensation of approximately $11m. (Source: BUSINESS WIRE)

 

30 Apr 24. Godspeed Capital-Backed Special Aerospace Services (SAS) Acquires Willbrook Solutions. Godspeed Capital Management LP (“Godspeed”), a lower middle market Defense & Government services, solutions, and technology focused private equity firm, today announced the acquisition of Willbrook Solutions, Inc. (“Willbrook”) by SAS, its recently-launched space engineering, defense, and communications technology solutions platform. The transaction marks the first addition to the growing SAS platform, expanding its capabilities in the missile defense industry.

Founded in 2006, and based in Huntsville, Alabama, Willbrook is an innovative analytical solutions provider to the Missile Defense Agency (“MDA”), Defense Intelligence Agency (“DIA”), NASA, Department of Defense (“DoD”), and commercial space customers. Willbrook’s dedicated team of 75 highly skilled and cleared industry professionals brings expertise and capabilities to bear across critical programs at the MDA and other agencies including in support of ground and space-based missile defense, offensive and defensive missile systems analysis, modeling and simulation, and data analysis.

“We are thrilled to be partnering with the talented and experienced team at Willbrook and look forward to leveraging their strategic relationships and capabilities in the missile defense market and community to add significant breadth and depth to the SAS platform and portfolio,” said Heather Bulk, CEO of SAS. “We look forward to working closely with Willbrook’s senior leadership team to further expand our relationship with the MDA and other key customers.”

“On behalf of our dedicated and experienced employees at Willbrook, we are excited to become part of the larger strategically positioned SAS platform,” remarked Kendell Phillips, President of Willbrook. “We look forward to leveraging our strong engineering, analytical capabilities and expertise across critical missile defense programs while supporting strategic customers and pursuing organic growth opportunities in conjunction with SAS.”

About Willbrook Solutions

Willbrook Solutions, founded in 2006 in Huntsville, AL, by Kendell and Bonita Phillips, is an innovative analytical solutions provider to the Missile Defense Agency (“MDA”), the Defense Intelligence Agency (“DIA”), NASA, the Department of Defense (“DoD”), and Commercial Space Customers. Willbrook’s dedicated team of industry professionals has expertise across several programs in the MDA including Ground and Space-based Missile Defense, Offensive and Defensive Missile Systems Analysis, Modeling and Simulation, and Data Analysis. Willbrook has long tenured relationships with its key customers at the MDA and the Missile and Space Intelligence Center within DIA. To learn more about Willbrook, please visit: www.willbrook.com.

About Special Aerospace Services

Special Aerospace Services is an industry leader in spaceflight engineering and hardware with facilities in Colorado and Alabama. Special Aerospace Services offers a full-cycle solution portfolio that includes tactical engineering support in Spaceflight Safety™, propulsion, avionics, systems, safety, and launch site integration, as well as rapid prototyping, manufacturing, and procurement of mission-critical aerospace hardware systems for clients such as NASA, the U.S. Department of Defense, and the commercial spaceflight sector. Special Aerospace Services’ team is committed to furthering humankind’s dreams and endeavors in space and keep the dream of space exploration alive for future generations. To learn more about SAS, please visit: www.specialaerospaceservices.com.

About Godspeed Capital Partners

Godspeed Capital is a lower middle-market Defense & Government services, solutions, and technology focused private equity firm investing alongside forward-thinking management teams that seek an experienced and innovative investment partner with unique sector expertise, operational insight, and flexible capital for growth. While a typical investment will involve companies generating approximately $3m to $30m of EBITDA, Godspeed Capital has significant support to complete larger transactions through strategic co-invest relationships. The firm focuses on control buyouts, buy-and-builds, corporate carve-outs, and special situations. For more information, please visit the Godspeed Capital website at www.godspeedcm.com. (Source: BUSINESS WIRE)

 

30 Apr 24. Satelles, Inc., has been acquired by Iridium Communications (Iridium). Houlihan Lokey served as the exclusive financial advisor to Satelles. The transaction closed on April 1, 2024.

Headquartered in Reston, Virginia, with offices in Redwood City and Folsom, California, as well as Longmont, Colorado, Satelles was acquired by Iridium, instantly making the company the leader in delivering highly secure satellite-based time and location services that complement and protect GPS and other GNSS-reliant systems. The service, now known as Iridium® Satellite Time and Location (STL), is an easy-to-adopt, highly secure solution that increases the efficiency and reliability of timing systems for digital infrastructure, such as 5G base stations, data centers, and other critical infrastructure, and protects against GNSS vulnerabilities. The STL service utilizes the stronger broadcast paging channels of the Iridium satellite constellation to deliver precise timing information, which provides truly global, secure time and location signals that are 1,000 times more powerful than GNSS constellations. The service is resilient to regional GNSS outages, works inside buildings, and is being used today to secure digital infrastructure for financial markets, governments, and major corporations.

Iridium is the only mobile voice and data satellite communications network that spans the entire globe. Iridium enables connections between people, organizations, and assets to and from anywhere—in real time. Together with its ecosystem of partner companies, Iridium delivers an innovative and rich portfolio of reliable solutions for markets that require truly global communications. STL now forms the core of a new positioning, navigation, and timing (PNT) business line of Iridium, led by former Satelles CEO Dr. Michael O’Connor.

Iridium is assuming all rights to the Satelles patent portfolio and anticipates Iridium STL services to generate more than $100 m in service revenue per year, by 2030, and additional revenue from equipment and engineering. A long-standing investor in Satelles, Iridium had an ownership stake of around 20% from three previous investments in the company.

If you would like more information about Houlihan Lokey or have questions regarding the firm’s role in this transaction, please contact one of the team members listed below.

 

29 Apr 24. CASE (“the Company”), a provider of high-end software development and cloud engineering services to the U.S. intelligence community and private industry, announced today that it has merged with CyberKinetics, a specialist provider of cloud-based services and cyber solutions to the national security community’s most discerning customers. Financial terms of the private transaction were not disclosed.

Founded in 2018 and headquartered in Herndon, Virginia, CyberKinetics’ leadership has more than two decades of experience providing innovative and secure IT solutions, including cybersecurity engineering, DevOps, data engineering, cloud migration, and infrastructure planning, to the national security community. CyberKinetics’ integrated approach to technology prides itself on ease of use, ease of maintenance, and layered security that meets the most demanding requirements. The CyberKinetics management team will remain with the combined organization.

“CyberKinetics’ team of highly skilled app developers, data scientists and engineers understand the unique challenges that come with migrating to and designing for the secure cloud in the national security sector,” said Paul Farmer, CEO, CASE. “Their addition catapults us into our next phase of growth and will enable us to meet our customers’ mission-critical challenges head on. This acquisition also provides the scale necessary to pursue larger contracts and provide additional opportunities for our employees.”

“We are very excited to become a part of CASE, as we share a heritage of excellence and innovation, a focus on developing great talent, and an unwavering commitment to high standards,” said Brandon Lally, former CEO of CyberKinetics, and Chief Customer Officer at CASE. “I look forward to leveraging our combined resources to provide differentiated solutions to new and existing government and private clients.”

CASE is a portfolio company of AE Industrial Partners, a private equity firm that specializes in national security, aerospace, and industrial services.

“The future of national security is increasingly dependent on nimble and flexible companies such as CyberKinetics, that can innovate quickly and support the intelligence community with their most difficult missions,” said Jeff Hart, Partner at AE Industrial Partners. “This transaction brings together two outstanding, experienced leadership teams with strong synergies, committed to a common goal of solving our nation’s hardest national security problems with next generation solutions and capabilities.”

Maynard Nexsen served as legal advisor on the transaction.

About CASE:

CASE is a founder-owned, leading provider of mission-critical technology services to the U.S. Government’s most discerning and difficult to penetrate customers in the Intelligence Community and the Department of Defense. CASE delivers a broad range of next generation IT capabilities in cloud, cyber and software development to solve its customers’ most pressing and important national security challenges. Specifically, CASE provides classified, high-end services that are in constant and increasing demand, including secure cloud architecture and analytics, software development and automation, systems engineering and integration.

About CyberKinetics:

CyberKinetics specializes in cloud-based services and solutions for federal agencies and commercial clients with compliance mandates. CyberKinetics brings an integrated approach to the technology solutions it delivers and prides itself on their ease of use, ease of maintenance, and layered security that meets the most demanding requirements.

About AE Industrial Partners:

AE Industrial Partners is a private investment firm with $6.2 bn of assets under management focused on highly-specialized markets including National Security, Aerospace, and Industrial Services. AE Industrial Partners has completed more than 130 investments in market-leading companies that benefit from its deep industry knowledge, operating experience, and network of relationships across the sectors where the firm invests. With a commitment to driving value creation in partnership with the management teams of its portfolio companies, AE Industrial Partners primarily invests across private equity, venture capital (AEI HorizonX), and aerospace leasing. For more information, please visit www.aeroequity.com. (Source: BUSINESS WIRE)

 

30 Apr 24. KBR Announces First Quarter Fiscal 2024 Financial Results.

KBR, Inc. (NYSE: KBR) today announced its first quarter fiscal 2024 financial results.

“KBR’s extraordinary team has yet again surpassed expectations, delivering outstanding first-quarter results,” said Stuart Bradie, KBR’s President and CEO. “Our team’s unwavering commitment to our customers has led to year-over-year increases across all key financial metrics, particularly in Adjusted EBITDA2 and operating cash flow. Bookings during the quarter were well-aligned with our end markets across energy security, national defense, human performance, and sustainability.”

New Business Awards

Backlog and options as of March 29, 2024 totaled $20.8bn. Delivered 1.1x trailing-twelve-months (TTM) book-to-bill1 as of March 29, 2024. Awarded $1.9bn of bookings and options in the quarter.

Sustainable Technology Solutions (STS) delivered 0.9x TTM book-to-bill1 as of March 29, 2024, including awards and achievements in the quarter as follows:

• KBR’s Purifier™ ammonia technology selected by Wuhuan Engineering Co. Ltd. for the expansion of El Nasr Company for Intermediate Chemicals’ 1,200 metric tonnes per day ammonia plant in Egypt.
• Selected by First State Hydrogen, Inc. to provide engineering services to study the feasibility of developing a clean hydrogen production facility through electrolysis powered by renewable energy. The study is part of First State Hydrogen’s vision to provide clean hydrogen for Delaware and the U.S. mid-Atlantic and help the region meet its sustainability goals.
• Signed an alliance agreement with GeoLith SAS to offer its advanced Direct Lithium Extraction technology, Li-Capt®. This technology enables zero-emission lithium extraction from untapped sources like geothermal and oil well brines.
• Awarded a project management contract by Sonangol for the design and construction oversight of a new 200,000 barrels per day refinery in Lobito, Angola – one of the most significant and sustainable energy infrastructure projects in the region.
• Secured a five-year asset condition monitoring program contract from Rabigh Refining & Petrochemical Company to deploy predictive maintenance services at its plant in Rabigh, Saudi Arabia.

Government Solutions (GS) delivered 1.2x TTM book-to-bill1 as of March 29, 2024, including awards and achievements in the quarter as follows:

• Awarded new contracts estimated at more than $450m to provide systems engineering, acquisition support, phenomenology expertise and data science, as well as applied research, communications security   infrastructure, operations and maintenance support to the U.S. Government.
• Awarded a new subcontract with Bering Straits Information Technologies in support of the U.S. Air Force Air Combat Command to provide human performance optimization services at various military bases around the world. This contract expands upon KBR’s more than 50 years of commitment to the wider health and human performance market within NASA and the Department of Defense.
• Won a new one-year task order with three one-year options on the Seaport NxG IDIQ contract to assist with project execution for the Naval Information Warfare Center Atlantic, supporting the Defense Health Agency’s cybersecurity services and risk management framework initiatives.
• Selected to provide specialized IT services that will equip the Royal Australian Navy with a more modern and cyber worthy Fleet Information Environment.
• Awarded a three-year contract, with a two year-option period, to deliver Heavy Equipment Transporter (HET) capability on behalf of the British Army.
• Awarded option years for LOGCAP V to support activity in NORTHCOM and EUCOM.

Financial Highlights for the Three Months Ended March 29, 2024

• Revenue of $1.8bn, up 7% on a year-over-year-basis
• Net income attributable to KBR of $93m; Adjusted EBITDA2 of $207m, up 14% on a year-over-year basis (11.4% Adjusted EBITDA2 margin)
• Diluted EPS of $0.69; Adjusted EPS2 of $0.77, up 15% on a year-over-year basis
• Operating cash flows of $91m
• Bookings and options of $1.9bn during the quarter with 1.1x TTM book-to-bill1

Commentary on the Three Months Ended March 29, 2024

Revenues were $1.8bn, up 7% compared to 1Q’23, primarily due to growth across Sustainable Technology Solutions; and within Government Solutions, new and on-contract growth across International, Defense & Intel, and Science and Space, partially offset by contraction in Readiness & Sustainment due to Ukraine funding delays.

Net income attributable to KBR was $93m, up $7m compared to 1Q’23, due to higher gross profit, equity in earnings of unconsolidated affiliates and gain on disposition of assets and investments, partially offset by higher interest expense and other non-operating expense.

Adjusted EBITDA2 was $207m, up 14% compared to 1Q’23, with Adjusted EBITDA2 margins of 11.4%, up 70 bps year-over-year.

Diluted earnings per share was $0.69, up 23% compared to 1Q’23, due to the increase in Net income attributable to KBR noted above and the decrease in diluted weighted average common shares outstanding. Adjusted earnings per share2 was $0.77, up 15% compared to 1Q’23, due to the increase in Net income attributable to KBR noted above and the decrease in adjusted weighted average common shares outstanding.

Operating cash flows were $91m, up 160% compared to 1Q’23, primarily due to strong collections across the business.

Capital returned to shareholders totaled $79m during the quarter, consisting of $61m in share repurchases, inclusive of $50m of open market repurchases and $11m of repurchases to satisfy requirements of equity compensation plans, and $18m in regular dividends.

 

30 Apr 24. Patria’s net sales and order stock grew significantly in the first quarter, success in vehicle programmes continues.

The first quarter of 2024

• Patria Group’s net sales for the first quarter was EUR 172.1m (EUR 149.4m in the comparison period) and operating profit was EUR 5.2m (EUR 3.6m).
• Equity ratio was 40.4% (43.8%) and net gearing 78.1% (50.7%).
• The third year of Patria’s Horizon 2025 strategy commenced according to expectations. Patria’s net sales and the development of order stock are at a good level. Profitability is at the expected level.
• The development of customer-centricity, operational efficiency and productivity and new ways of working continued in the first quarter according to Patria’s Horizon 2025 strategy. The focus of the development has been on Patria’s Operations unit, responsible for company’s production and supply chains, and Portfolio unit, responsible for Patria’s products and services and their development. Patria’s renewed operating model came into force on 1 January, 2024.
• Patria’s success in 6×6 and 8×8 vehicle programmes has continued, which supports the development of other business operations and Group’s internationalization.
• In the beginning of the year it was announced that Patria will deliver flight inspection system installation and modification packages to Fintraffic and STC for Finnish Aviation Academy Embraer Phenom aircrafts.
• Signed in January 2024, the strategic partnership agreement between Patria and the Finnish Defence Forces was updated. With the agreement, the ongoing cooperation will deepen, the quality assurance and material management procedures were specified, and the partnership management structures were updated.
• Patria published two agreements in February 2024 on supplying Patria ARIS electronic intelligence systems (ELINT) to European NATO member countries. With the agreements, customers will have access to the latest version of a high-performance signal intelligence system, tailored to the needs of these countries.
• Several events related to the Common Armoured Vehicle System (CAVS) programme took place in the first quarter:

o In January 2024 it was announced that The Finnish Defence Forces purchased 40 Patria 6×6 armoured vehicles more by redeeming the additional purchase option related to the agreement signed in June 2023.

o In February Patria, DSL (part of KNDS group) and FFG announced that they are teaming up to offer the German design, production, and sustainment of variants of Patria’s 6×6 armoured personnel carrier, which could replace the German FUCHS-fleet.

o In March the Swedish Defence Procurement Agency (FMV) signed a contract to buy 321 Patria 6×6 vehicles. The contract has a value of around 470 m euros and is one of the largest ever in Sweden for Patria.

o In March Patria signed a contract with Kongsberg Defence & Aerospace (‘Kongsberg’) for the delivery of PROTECTOR remote weapon stations to more than 300 Sweden’s and Finland’s Patria 6×6 vehicles within the CAVS programme.

• It was announced in March that Patria and Lockheed Martin signed their second Memorandum of Agreement (MoA) for direct work within Finland´s F-35 industrial participation programme. This MoA provides the contractual framework for the stand-up and qualification of a landing gear doors production line at Patria’s Halli facility in Jämsä, Finland. The production line will deliver landing gear doors for the F-35 global fleet.
• Kicked off in early 2024, Patria-led eALLIANCE programme, partly funded by Business Finland, will amplify collaboration with the Finnish civilian and defence sector companies. The aim is to develop disruptive digital capabilities for enhanced data sharing and prosessing as well as building a holistic metaverse.

Outlook for the rest of the year

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

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

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

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

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

 

30 Apr 24. Defence demand pushes Thales orders and sales higher in Q1. France’s Thales (TCFP.PA), reported strong first-quarter orders and sales led by its defence business as global tensions spur demand for air defences, but predicted growth would stabilise in the second half as it reaffirmed forecasts for the year.

Europe’s largest defence electronics company said orders jumped 46% to 5.037bn euros ($5.4bn), buoyed by a third tranche of Rafale fighters for Indonesia, for which it makes the radar, and an air surveillance system for an unnamed Middle East nation.

Revenues rose by an underlying 7.9% to 4.421bn euros, in part due to a favourable basis of comparison in defence and security which grew 13%.

“In the second half, (growth) will doubtless normalise,” Chief Financial Officer Pascal Bouchiat told reporters.

On average, analysts were expecting quarterly orders of 3.65 bn euros and sales of 4.357bn, according to a company-compiled survey.

For the full year, Thales is projecting like-for-like sales growth of between 4% and 6% to reach 19.7-20.1bn euros, as well as orders coming in at a level exceeding sales.

Orders in the first quarter were also lifted by the second tranche of a contract signed last year for the production of 400 Franco-Italian ASTER surface-to-air missiles.

France last month announced a package of aid for Ukraine including a new batch of Aster 30 surface-to-air missiles for the SAMP/T system provided to Kyiv. The Aster 30 can intercept warplanes, drones and cruise missile within a range of 120 km.

France has urged the MBDA-led consortium that developed the missiles, of which Thales owns a third, to speed up production to help Ukraine and has indicated it will use its powers to force suppliers to put military needs before civil contracts.

Thales makes the “autodirectors,” an infra-red or electro-magnetic system that guides and then detonates the missiles.

Production of such systems relies on the availability of circuit boards from specialist French suppliers, amid wider global shortages of basic electronic components.

“That can be a limiting factor,” Bouchiat said, adding that disruption in the broader aerospace supply chain was “not completely resolved”.

($1 = 0.9343 euros) (Source: Reuters)

 

28 Apr 24. The French government has proposed buying key assets of Atos, the heavily indebted technology company, because Paris wants to keep them in national hands. The state wants to purchase three strategic parts of Atos: super calculators for quantum computing, which are used by the French army for the country’s nuclear weapons programme; secure communications tech also utilised by the military; and certain cyber security assets. Amid concerns in Paris that foreign investors, including hedge funds, could gain control of Atos in an upcoming restructuring of its €3.9bn debt load, finance minister Bruno Le Maire said on Sunday that the state had sent a non-binding letter of intent to the French company about purchasing the assets. “There are sovereign assets in Atos that must stay within the exclusive control of France,” Le Maire told news channel LCI. “We have signalled our interest in acquiring all the strategic assets of Atos.” The government’s letter of intent was made via the APE, an agency that manages the French state’s stakes in companies including utility EDF and telecoms group Orange. Atos, chaired by former UniCredit boss Jean Pierre Mustier, declined to comment. The French government stayed out of much of the turmoil at Atos, as the company churned through several chief executives and made several strategic U-turns in the past three years. Recommended Atos SE Saving Atos: Jean-Pierre Mustier handed one of France’s messiest rescue missions But as Atos’ financial position worsened, the state in early April announced it would provide a €50mn short term loan and create a “golden share” system for the company’s sensitive assets, which would allow ministers to block any acquisitions they did not approve of. The assets the government was proposing to buy generated about €900mn in annual revenues and employed 4,000 people, an economy ministry official said. That represents less than 10 per cent of Atos’s 2023 sales, and 4 per cent of the total workforce.

The French government’s proposal was not a forced nationalisation, the economic ministry official said. The state was seeking to engage in negotiations with Atos ahead of potentially making a firm offer by June, they added. Le Maire said the government would seek to rally French industrial groups to join its bid in a consortium. “We will see what other players might want to participate — it will only be French groups in strategic sectors such as defence or aerospace,” Le Maire said. Dassault Aviation, the French maker of Rafale fighter jets, has previously expressed interest in some of Atos’ assets, according to people briefed on the situation. Thales, the French defence electronics group, would be another potential participant for the state to enlist. Thales declined to comment, while Dassault did not respond. Atos has had various failed talks with individuals and companies interested in buying some of its assets, as the group has sought to raise cash to reduce its debt load. They include Czech bnaire Daniel Křetínský and Airbus. Atos has asked for proposals by Friday from top shareholders and creditors with the goal of cutting its debt by at least €2.4bn. It may need €1.2bn in new equity and debt. (Source: Google/FT.com)

 

26 Apr 24. Boeing has agreed to buy a St. Louis-area facility from GKN Aerospace that supplies critical parts for the Boeing F-15 and F/A-18 fighter jets, a lifeline for the aerospace giant’s fighter production that also ends contentious litigation between the two parties.

The transaction would see GKN’s F-15 and F/A-18 operations immediately transition to Boeing, according to a Boeing press release. Additionally, Boeing has agreed to hire 550 GKN employees, the bulk of GKN’s workforce at the site located in the St. Louis suburb of Hazelwood, Mo.

“Boeing is growing across the region with a healthy backlog of current programs while also seeking future opportunities,” Steve Parker, senior vice president & chief operating officer of Boeing Defense, Space & Security, said in the release. “This agreement allows us to not only deliver for our customers, but also gives the highly skilled GKN workforce the opportunity to bring their immense talents to bear in support of the warfighter and the St. Louis defense and aerospace industry. This is a win-win-win for those employees, Boeing, and the broader St. Louis community.”

GKN and its parent company, the British firm Melrose Industries, previously planned to shutter the Hazelwood facility by the end of the year, citing profitability woes. Boeing responded with a lawsuit in December 2022, arguing that GKN was violating an agreement to supply parts for the F-15 and F/A-18, according to the St. Louis Post-Dispatch.

The agreement to buy the factory would end litigation between the two parties, according to a Boeing spokesperson. The spokesperson also told Breaking Defense that the facility employed roughly 600 people, some of whom retired or opted to seek work outside Boeing. While GKN supplies many of Boeing’s competitors in the defense world, the Hazelwood plant is a “Boeing only supplier” that supports F-15 and F/A-18, which will remain the focus of operations there, the spokesperson said.

The Hazelwood factory’s closure could have threatened Boeing’s fighter programs, which are based in the St. Louis area. The F-15EX — Boeing’s newest variant of the F-15 fighter equipped with a modernized radar and new electronic warfare suite, among other features — is a key product for the company’s international business, particularly for customers like Israel that could buy up to 50 in a potential multibn-dollar deal with the US. And, following a recent agreement with the US Navy, Boeing’s F/A-18 Super Hornet line will now be extended until 2027.

In a brief statement, GKN said that “Last year, the companies began discussing the potential to return the site to Boeing to avoid closure of the facility. A deal has now been completed and the site has returned to Boeing ownership. The sale secures the future of the facility for the employees and we wish everyone at St. Louis very well for the future.”

The factory’s acquisition by Boeing actually brings it back under the planemaker’s ownership, as Boeing had spun off the facility to GKN in 2001. It’s also the second time in recent months that Boeing has moved to buy a struggling supplier that it used to own, following the company’s recent announcement that it would seek to acquire aerostructures maker Spirit Aerosystems.

The two moves could help Boeing stabilize some operations at its defense business as the company toils to get fixed-price development programs on track. Boeing, which reported its first quarter earnings for 2024 on Wednesday, turned a $151 m profit in the quarter while incurring $222 m in losses between the KC-46A tanker and T-7A trainer programs.

Despite wrestling with a new safety crisis on its commercial side that has upended the company, and a loss this week on a high-profile Air Force drone contract, the planemaker is still pressing ahead with a planned multibn-dollar expansion of its St. Louis area operations as it eyes more next-gen aircraft opportunities.  (Source: Google/Breaking Defense.com)

 

26 Apr 24. IFS announces best Q1 results in company history with 26% increase in ARR YoY and 20% increase in Cloud revenue YoY.

• New CEO visits 100 customers in first 100 days

IFS, the global cloud enterprise software company, today announced its financial results for the first quarter ending 31 March, 2024. The results reflect the best start to the year in company history – an early victory for new CEO Mark Moffat, who was appointed on 9th January, 2024.

Summary of Q1 results:

• Annual Recurring Revenue (ARR) up 26% YoY
• Cloud Revenue up 20% YoY
• Software Revenue growth up 19% YoY

A steadfast customer focus positions IFS as the demonstrable leader in all of the segments it serves. A position reinforced thanks to recent industry analyst reports recognising IFS as the #1 vendor in terms of market share for Enterprise Asset Management (EAM) and Service Management.

IFS CEO Mark Moffat commented: “In my first 100 days as CEO, I have met with over 100 customers around the world, and they consistently tell me that our customer-centric approach is a key differentiator, especially in a world where we see our competitors peddling their own agenda over that of their customers.”

“Our Q1 results are the continuation of our relentless focus on what makes us successful: listening to and delivering value to our customers. It’s also what enables us to outperform the market quarter after quarter. Our customer focus is not only ingrained in our culture, but it also extends across our partner ecosystem and the work they deliver alongside us.”

Moffat added: “Industrial AI is a huge opportunity for our customers, and we are uniquely positioned to help them harness its potential. We have been developing industry-specific AI solutions that integrate seamlessly with our existing products and leverage the data we have to deliver game-changing outcomes.” Moffat concluded: “IFS has an edge because we have been having these conversations with our customers for years, and that has informed how we shape our technology and services. The results of the first quarter show that we are on the right track, and that our vision resonates.”

Key factors supporting IFS expansion:

• A sharp uptake in demand for IFS.ai thanks to compelling Industrial AI use cases that are fast and easy to implement, and in turn able to rapidly deliver value. As more of these use cases roll out with every release of IFS Cloud, IFS is providing further capabilities for customers to innovate and differentiate within their respective fields.
• Welcoming a significant number of new customers who are moving from legacy vendors including SAP and IBM Maximo to IFS because of: relentless IFS pursuit of customer success; the single composable platform and common data model; consistent enhancements in industry functionality; and flexible deployment options that put customers in control. In the last quarter alone, Modulaire Group, NGE, Evergy and the largest US utility company, Exelon, have selected IFS as the modern, next generation alternative.
• Significant expansion of IFS within existing customers, who are similarly implementing IFS to replace outdated technology that exists in other areas of their business. With so many industrial companies looking to technology, and specifically IFS, to transform and grow, IFS is uniquely positioned to help customers improve supply chains, operate more efficiently and ultimately deliver amazing Moments of Service that stand out. For example, many manufacturers are expanding their use of IFS with the IFS Connected Worker solution from Poka to better manage, enable, and improve the productivity of their factory workers.

IFS Chief Financial Officer, Matthias Heiden, added, “Market conditions in 2024 are still volatile which puts our performance trajectory into context. 26 percent ARR increase year-on-year combined with strong subscriptions renewals is setting us up for continued steady growth in 2024.” Heiden continued: “This means we are able to prioritise investment in people and in technology bringing even more innovation into our bi-annual releases.” Heiden concluded: “We have worked hard to get to this point, and we are seeing financial benefits deep into our business with all the metrics continuing to accelerate in the right direction.”

Investments in key markets such as the US, Europe, and Japan are slated to continue through 2024, bolstering regional performance by driving increased demand for IFS.ai. In Q1 the company also launched a significant brand campaign across the US, including out-of-home advertising at the largest airports in North America, becoming the Big Ten Conference’s Official Technology Partner, and a Patron of MIT’s Center for Information Systems Research.

IFS is also pleased to today publish the 2023 IFS Sustainability Report, which details the company’s strategy, approach and achievements delivering on its own sustainability targets as well as supporting customers to achieve their ESG goals. The report, alongside an ESG Fact Sheet, is available here: https://www.ifs.com/assets/all-products/ifs-sustainability-report-2023

Financial Highlights for Q1 FY2024:

• Q1 FY2024 software revenue was EUR 217m, an increase of 19 percent versus Q1 2023.
• Q1 FY2024 recurring revenue was EUR 209m, an increase of 21 percent versus Q1 2023.
• Q1 FY2024 net revenue was EUR 269m, an increase of 16 percent versus Q1 2023.

For more information about IFS historical financial performance, please visit: www.ifs.com/company/financial-results/

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SPX CommTech, part of SPX Technologies Inc, innovates specialised technologies within the Radio Frequency (RF) spectrum to ensure a smarter, more secure future for all. Formed by TCI and ECS, SPX CommTech’s Battlespace portfolio enables defence and security teams to detect, defeat and exploit RF signals to enhance communications intelligence (COMINT) and counter unmanned aerial systems (Counter-UAS). Additionally, its Tactical Data Link portfolio allows intelligence gathering agencies, special forces, emergency response, and security teams to securely and reliably transfer video and data between enabled-aircraft and ground teams over long distances for airborne Intelligence, Surveillance, Reconnaissance (ISR).

For more information visit www.tcibr.com and www.enterprisecontrol.co.uk

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