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16 May 24. Rivals line up to take £1.6bn Navy contract from Titanic shipyard. Britain’s biggest defence companies are lining up to take over a £1.6bn Royal Navy supply ship contract amid fears the business tasked with delivering it could collapse.

On Thursday, a Government defence source said rival companies would be asked to step in and manufacture three Fleet Solid Support (FSS) warships should Harland & Wolff, the Belfast-based yard that built the Titanic, be unable to deliver.

It is understood the project could be split among members of the former “Team UK” consortium, including BAE Systems, Babcock, A&P Group and Cammell Laird – all of which previously bid for the work unsuccessfully.

Sources close to Team UK confirmed they had capacity to take on the work and “stood ready” to help if asked, depending on the terms.

However, the Government source added that talks were still focused on helping to secure Harland & Wolff’s future, adding that contingency plans would only be looked at in a “worst-case scenario”.

They said: “We are not reliant on the fate of one shipbuilder.”

It came as urgent discussions over a £200m support package for the Northern Ireland company continued, with Whitehall officials said to be looking at “all options”.

Harland & Wolff was plunged into uncertainty earlier this week after it emerged a loan guarantee promised by the Government was in doubt amid legal concerns it could breach state aid rules.

In the company’s most recent annual report, auditors warned the business would struggle to survive without the support.

Jeremy Hunt, the Chancellor, is expected to make a final decision on whether to approve the guarantee within days.

The issue has reportedly pitched the Treasury against the defence, business and Northern Ireland departments, with Grant Shapps, the Defence Secretary, lobbying the Chancellor to wave the deal through.

Despite the turmoil, Harland & Wolff said it was “business as usual”, stressing that “nothing had changed” in relation to ongoing talks.

On Thursday, a spokesman added: “Only yesterday we accepted four of our new burning machines, which is a multimillion-pound investment.

“We have many other projects across all of our facilities that are in full production.”

The £1.6bn contract to build three FSS ships for the Royal Fleet Auxiliary, a civilian branch of the Royal Navy, was awarded to Harland & Wolff and Spanish shipbuilding giant Navantia following a fraught bidding process in 2022.

That decision was criticised by some MPs because it will see certain sections of the ships – known as blocks – built at Navantia’s shipyard in Cadiz.

However, ministers have insisted the warships, which will have a crucial role in supplying Royal Navy aircraft carriers and other vessels with munitions and stores, will mostly be built in the UK.

Under current plans, seven rear-end blocks will be produced by Navantia in Cadiz.

These will then be shipped to Belfast, where Harland & Wolff will make the remaining 14 front and middle blocks before assembling the ships.

A source at Navantia on Thursday refused to comment on Harland & Wolff’s future but said: “The FSS programme is progressing, with contracts being awarded to different suppliers, the engineering advancing and the transfer of knowledge, modernisation and preparation of Harland & Wolff shipyards underway.” (Source: Daily Telegraph)

16 May 24. Nortech Systems Reports First Quarter Results and Actions to Reduce Facility Costs. Nortech Systems Incorporated (Nasdaq: NSYS) (“Nortech” or, the “Company”), a leading provider of engineering and manufacturing solutions for complex electromedical and electromechanical products serving the medical, industrial and defense markets, reported first quarter ended March 31, 2024 financial results.

2024 Q1 Highlights:

Net sales of $34.2m, down 1.9% from Q1 2023.
Net income increased to $765,000, or $0.26 per diluted share, compared with net income of $681 thousand or $0.23 per diluted share, in Q1 2023.
Gross margin of 15.9%, up 20 basis points from gross margin of 15.7% in the same prior-year quarter.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) of $1.637m, compared with EBITDA of $1.559 m in the prior year.
Signed new $15m cash flow line of credit agreement.
90-day backlog of $35.2m as of March 31, 2024, consistent with the prior year-end level.

Management Commentary

“We posted solid results in the first quarter of 2024 and continued to improve margins and manage expenses,” said Jay D. Miller, President and CEO of Nortech. “As a result, we are generating improved net income and EBITDA in the quarter as compared with the same quarter in 2023.”

“Our dedicated Nortech employees worldwide embody our corporate values, including teamwork, excellence, commitment, integrity and innovation,” Miller noted. “While we measure employee engagement success with a number of metrics, we are pleased to see continued high employee retention and high employee engagement. Most recently, 230 of our North American employees participated in the American Cancer Society “FIT2Be Cancer Free” challenge.”

“As we further look for opportunities to optimize our expense structure and plant capacity utilization, we are consolidating our Minnesota facilities. This morning we announced the decision to consolidate production of our wire and cable products for the Aerospace and Defense industry to our Bemidji, Minnesota facility. The shift in production is expected to be completed by the end of 2024, at which time the Company will close the Blue Earth, Minnesota facility. In the spirit of taking the best care of our employees as possible, all Blue Earth employees will be extended job offers at our other Minnesota facilities. We sincerely hope to keep them all.”

“Further, we are consolidating the square footage of our Maple Grove, Minnesota headquarters and engineering facility by almost 30 percent. This reduction reflects our current and future space needs which have been heavily influenced by the Company’s hybrid remote work arrangements.”

2024 First Quarter

In the first quarter of 2024, net sales totaled $34.2m. This represents a 1.9% decrease from net sales of $34.9 m in the first quarter of 2023. For the first quarter, gross profit totaled $5.4 m, or 15.9% of net sales, compared with gross profit of $5.5m, or 15.7%, in the prior year. First quarter 2024 operating expenses totaled $4.3m, a 3.1% decrease from the prior year operating expenses of $4.4m.

GAAP net income totaled $765 thousand, or $0.26 per diluted share, in the current quarter, up from GAAP net income of $681 thousand, or $0.23 per diluted share, in the same prior-year quarter. EBITDA totaled $1.637m, a 5.1% increase from EBITDA of $1.558 m in the same prior-year quarter. (Source: BUSINESS WIRE)

02 May 24. SPX Technologies Reports First Quarter 2024 Results.

Q1 GAAP EPS of $1.05; Adjusted EPS* of $1.25

Strong Demand and Execution in HVAC

Raising 2024 Full-Year Adjusted EPS* Guidance to a Range of $5.15 to $5.40

SPX Technologies, Inc. (NYSE:SPXC) (“SPX”, the “Company”, “we” or “our”) today reported results for the first quarter ended March 30, 2024.

Gene Lowe, President and CEO, remarked, “I’m very pleased with our strong Q1 performance, which included substantial growth in all of our key profit measures and significant margin expansion in both segments. During the quarter we continued to see solid demand across several key markets and our businesses executed well operationally.”

Mr. Lowe continued, “During Q1, we made significant progress on several key value creation initiatives, including driving greater efficiencies in our production facilities and effectively integrating our recent acquisitions. These enhancements are strengthening our company and positioning us for further growth.”

Mr. Lowe commented further, “Looking ahead, we continue to see overall favorable demand trends and positive operational momentum. Following the strong start to the year, we are raising our full-year guidance for Adjusted EPS* to a range of $5.15 to $5.40 from $4.85 to $5.15 previously, with the midpoint implying year-on-year growth of approximately 23%.”

First Quarter 2024 Overview:

For the first quarter of 2024, the company reported revenue of $465.2m and operating income of $64.6m, compared with revenue of $399.8m and operating income of $49.8m in the first quarter of 2023. Net income for the first quarter of 2024 was $49.0m, compared with $42.8m in the first quarter of 2023. Diluted income per share from continuing operations in the first quarter of 2024 was $1.05, compared with $0.84 in the first quarter of 2023. The increase in revenue, operating income, net income and diluted income per share from continuing operations were due primarily to higher revenue in both our HVAC and Detection & Measurement segments.

Adjusted EBITDA* was $92.0m, compared with $62.7m in the first quarter of 2023, or an increase of 46.7%. Adjusted earnings per share* in the first quarter of 2024 was $1.25, compared with $0.93 in the first quarter of 2023. Adjusted EBITDA* and Adjusted earnings per share* exclude amortization expense and acquisition-related costs, among other items.

HVAC Segment

Revenue for the first quarter of 2024 was $302.4m, compared with $251.6m in the first quarter of 2023, an increase of 20.2%, including a 22.2% increase from the acquisitions of Ingénia, ASPEQ, and TAMCO, a 1.9% organic revenue* decline, and a 0.1% unfavorable impact related to currency fluctuation. The organic decline was due primarily to lower sales of heating products associated with unseasonably warm temperatures during the Q1 heating season compared with higher prior-year sales that were supported by elevated post-pandemic backlog.

Segment income in the first quarter of 2024 was $68.4m, or 22.6% of revenue. This compares with segment income of $47.7m, or 19.0% of revenue in the first quarter of 2023. The increase in segment income and 360 basis points increase in segment income margin were due primarily to the higher revenues noted above as well as a more favorable product mix.

Detection & Measurement Segment

Revenue for the first quarter of 2024 was $162.8m, compared with $148.2m in the first quarter of 2023, an increase of 9.9%, including a 9.6% increase in organic revenue* and a 0.3% favorable impact related to currency fluctuation. The organic increase was primarily due to higher project sales in our Communication Technologies platform.

Segment income for the first quarter of 2024 was $31.4m, or 19.3% of revenue. This compares with segment income of $26.7m, or 18.0% of revenue of in the first quarter of 2023. The increase in segment income and 130 basis points increase in segment income margin were due to the higher revenue noted above and the associated operating leverage.

Financial Update: As of March 30, 2024, SPX Technologies had total outstanding debt of $854.4m and total cash of $105.5m. During the first quarter of 2024, SPX’s net operating cash from continuing operations totaled $10.7m. Capital expenditures for continuing operations for the first quarter of 2024 were $9.9m.

2024 Guidance Update:

SPX Technologies is increasing full-year 2024 guidance. The company is now targeting consolidated revenue of $1.965-$2.025 bn ($1.93-$2.00 bn prior), adjusted EBITDA* of $390-$420m ($375-$405m prior), and adjusted earnings per share* of $5.15-$5.40 ($4.85-$5.15 prior).

16 May 24. India’s HAL posts Q4 profit climb on defence aircraft demand. India’s Hindustan Aeronautics Ltd (HAL) (HIAE.NS), opens new tab reported a rise in fourth-quarter profit on Thursday, helped by demand for its aircraft from the country’s defence ministry. Consolidated net profit rose 52% year-on-year to 43.09bn rupees ($516.2m) for the three months ended March 31. Capital goods and manufacturing companies have benefited throughout fiscal 2024 from the Indian government’s push for higher capital expenditure. This extended into the fourth quarter.

The state-owned aerospace and defence company bagged orders worth 176 billion rupees during the quarter, up 135% from a year earlier, per Elara Capital.

The company’s order inflow includes the supply of 25 Dornier aircraft to the Indian Navy and orders for engines for MiG-29 aircraft, the brokerage said. HAL, whose customers include the Indian Army, Navy and Air Force, along with aerospace corporations Airbus (AIR.PA), opens new tab and Boeing (BA.N), opens new tab, said revenue rose over 18% to 147.69bn rupees. Its two main businesses are manufacturing defence technology and aircraft maintenance, but it does not give a segment-wise break-up.

Its rivals Bharat Electronics (BAJE.NS), opens new tab and Bharat Dynamics (BARA.NS), opens new tab have yet to report March-quarter results. HAL’s shares jumped as much as 5.4% after the results. ($1 = 83.4807 Indian rupees) (Source: Google/Reuters)

15 May 24. Sypris Reports First Quarter Results.

Growth Continues; Revenue Up 10%; Backlog Over $110m

Sypris Solutions, Inc. (Nasdaq/GM: SYPR) today reported financial results for its first quarter ended March 31, 2024.

HIGHLIGHTS

The Company’s first quarter 2024 consolidated revenue increased 10.1% to $35.6m compared with the prior year quarter, representing the 11th quarter of double-digit year-over-year growth during the past 12 quarterly periods.
Revenue for Sypris Electronics increased 34.5% year-over-year and 9.5% sequentially, reflecting the continued growth in shipments under recently announced contracts with customers serving the markets for electronic warfare, aircraft and missile avionics, and subsea communications.
Revenue for Sypris Technologies decreased 5.9% year-over-year to $18.4m, reflecting the short-term timing of certain energy, specialty automotive and ATV product shipments.
Orders for Sypris Technologies energy products increased during the first quarter compared to the same period in 2023, driving backlog up 50.1% from year end.
During the quarter, Sypris Technologies announced that it had received an award to supply specialty high-pressure closures for use in a large international liquified natural gas project. The closures will be integrated into the filtration systems of the carbon capture and storage facilities of the project. Production is expected to be completed during 2024.
In May, Sypris Electronics announced that it received releases for an additional four systems under a multi-year production contract that was first announced in 2022. The modules to be produced by Sypris will be integrated into an electronic warfare improvement program for the U.S. Navy. Deliveries are expected to begin in 2024.
The Company updated its full-year outlook for 2024, maintaining the expected increase in revenue at 10%-15% year-over-year, while adjusting the gross margin guidance to a 100-125 basis point increase, reflecting the impact of unfavorable foreign currency exchange rates and program ramp costs.

“We were pleased with the year-over-year revenue growth at Sypris Electronics,” commented Jeffrey T. Gill, President and Chief Executive Officer. “The backlog at Sypris Electronics exceeds $100m and is expected to support growth through the remainder of 2024 and beyond. Customer funding has already been secured for a portion of these key programs, which enables us to procure inventory under multi-year purchase orders to mitigate future supply chain issues.

“The financial results of Sypris Electronics were impacted by additional costs related to two large programs that ramped during the quarter. As these programs stabilize, we anticipate increasing sequential margins for the remainder of the year.

“Demand from Sypris Technologies customers serving the automotive, commercial vehicle, sport utility and off-highway markets has remained relatively stable, with new product line shipments offsetting the anticipated cyclical decline for the commercial vehicle market. We believe that the market diversification Sypris Technologies has accomplished over recent years by adding new programs in the automotive, sport-utility and off-highway markets will help offset some of this decline.

“Orders for our energy products increased during the period, with open quotes yet to be closed still outstanding on several large projects. Additional opportunities for growth may exist with new global projects in support of increasing LNG demand. We are also actively pursuing applications for our products in adjacent markets to further diversify our industry and customer portfolios.”

First Quarter Results

The Company reported revenue of $35.6m for the first quarter of 2024, compared to $32.3m for the prior-year comparable period. Additionally, the Company reported a net loss of $2.2m, or $0.10 per share, as compared to a net loss of $0.2m, or $0.01 per share, for the prior-year period.

Sypris Technologies

Revenue for Sypris Technologies was $18.4m in the first quarter of 2024 compared to $19.5m for the prior-year period, reflecting the short-term timing of certain energy, specialty automotive and ATV product shipments. Gross profit for the first quarter of 2024 was $2.1m, or 11.2% of revenue, compared to $2.6m, or 13.5% of revenue, for the same period in 2023. Gross profit for the first quarter of 2024 was negatively impacted by lower volumes and an unfavorable mix. Additionally, gross profit was negatively impacted by foreign currency exchange rates for our Mexican subsidiary, resulting in a decrease of $0.4m.

Sypris Electronics

Revenue for Sypris Electronics was $17.2m in the first quarter of 2024 compared to $12.8m for the prior-year period. Increased shipments for two follow-on programs contributed to the growth over the prior-year comparable period. Gross profit for the first quarter of 2024 was $0.8m, or 4.8% of revenue, compared to $1.5m, or 11.9% of revenue, for the same period in 2023 primarily due to additional costs incurred on two programs that ramped production during the period.

Outlook

Commenting on the future, Mr. Gill added, “While new program launch costs and an unfavorable mix impacted our first quarter 2024 results, demand from customers serving the automotive, commercial vehicle and sport utility markets remains positive. Similarly, demand from customers serving the markets for electronic warfare, aircraft and missile avionics, secure and subsea communications, and ground-based radar remain robust, while the outlook for the energy market continues to move in the right direction.

“With a strong backlog, new program wins, and long-term contract extensions in place, we are confident that 2024 has the potential to be very positive for Sypris. As a result, we continue to expect revenue to increase 10-15% year-over-year. We expect to achieve gross margin expansion in the range of 100 to 125 basis points with gross profit forecast to increase 20-25% in 2024.” (Source: BUSINESS WIRE)

14 May 24. Pennant disappoints – but there are reasons to stick around.

Prospects look good for this software provider with blue-chip customers, even though procurement timelines have lengthened

Business pipeline robust
Longer order conversion timeframe
Positive outlook but earnings downgrades

Pennant International (PEN:27p), a provider of Oracle-based software that reduces the support cost of maintaining major assets such as trains, tanks or aeroplanes, is starting to see a material increase in activity in its key markets.

Pennant provides software and integrated product support solutions to a blue-chip client list of original equipment manufacturers and governments, as well as supplying complex training products to a prestigious global client base, the majority of which work in the world’s defence ecosystem. So, with the global defence sector strong, the company is seeing rising bid volumes. In fact, in response to customer tenders and requests for proposals, Pennant quoted more than £32mn of business opportunities in the past six months.

The issue is that order conversion is taking longer due to extended customer procurement timeframes. So, although Pennant is actively progressing several material sales prospects that should result in new orders in the second half of the year, analysts are taking a conservative approach to their forecasts.

This explains why house broker WH Ireland lowered its 2024 revenue estimate from £16.1mn to £14.8m. On this basis, analyst Nick Spoliar forecasts current-year adjusted pre-tax profit of £1.2m (downgrade from £1.6mn), albeit he also expects 2023 pre-tax profit to have increased sixfold to £1.3m on 13 per cent higher revenue of £15.5m when Pennant reports annual results in early June 2024. That said, with £0.25m of cost savings anticipated in the current financial year, Spoliar views his forecasts as conservative.

Moreover, with the new version of Pennant’s high-margin innovative logistics support analysis software released in the past fortnight, there is potential for a greater share of earnings from this activity in the business mix. That’s important given that Pennant earns a 90 per cent gross margin on software licences, and additional recurring revenue from maintenance strands.

Pennant’s share price fell 13 per cent after the trading update and the shares are now rated on modest prospective price/earnings (PE) ratios of 7.7 (2024) and 8.4 (2024), multiples that suggest potential for upside. So, although the shares are well below the price (36p) at which I suggested buying at last autumn (‘A software provider with a potential 80% upside’, 28 September 2023), I would not be selling out at this depressed level. Hold. (Source: Investors Chronicle)

14 May 24. Terran Orbital Reports First Quarter 2024 Financial Results.

Expanding collaboration and commitment from Lockheed Martin, awarded a new contract for 18 space vehicles for the Space Development Agency (SDA)
Second quarter 2024 awards exceed $100m to-date
As of March 31, 2024, backlog was $2.7bn; and, as of today, is estimated to be over $2.8bn, inclusive of $400m of non-Rivada programs
Review of strategic alternatives still ongoing

Orbital Corporation (NYSE: LLAP) (“Terran Orbital” or the “Company”), a leading manufacturer of satellite products primarily serving the aerospace and defense industries, today announced financial results and operational highlights for the three months ended March 31, 2024.

Marc Bell, Co-Founder, Chairman, and Chief Executive Officer of Terran Orbital prefaced the release by saying, “Our team was selected by Lockheed Martin to build 18 space vehicles for the SDA’s Tranche 2 Tracking Layer. We value Lockheed Martin’s partnership and look forward to continued collaboration under our Strategic Cooperation Agreement, which runs through 2035. We remain committed to exceeding customer expectations and delivering cutting-edge satellite solutions while our strategic review is still ongoing. This process includes a range of options, including staying independent.”

Results for the First Quarter of 2024

Revenue for the first quarter of 2024 was $27.2m, down 3% compared to $28.2m for the same quarter in 2023. The decrease in revenue was driven by unfavorable Estimate-at-Completion (EAC) adjustments, primarily on a single program due to challenges with a subcontractor, and was partially offset by an increase in revenue due to the continued and increased level of progress made in satisfying our customer contracts. During the three months ended March 31, 2024 and 2023, revenue included an estimated $13.1 m negative impact and $0.8m positive impact, respectively, related to EAC adjustments on our firm fixed price contracts. EAC adjustments represent net impacts during the period related to changes in our aggregate program contract values, estimated costs at completion, and other program estimates, including the impacts of cost overruns and recognition of loss reserves.

Commenting on the first quarter, Mr. Bell said, “We expect the delayed revenue from this single program to be recognized by the end of the third quarter of 2024. This supply chain disruption underscores the importance of our vertical integration strategy. By bringing more aspects of the manufacturing process in-house, we can become less reliant on external factors and ensure on-time delivery for our valued customers.”

Cost of sales for the quarter was $33.4 m compared to $29.6m for the same period in the prior year. The increase in cost of sales was primarily due to an increase of $2.9m in labor, materials, third-party services, overhead, launch costs, other direct costs, $1.4m related to reserves for anticipated losses on contracts period over period, and $1.3m in depreciation and amortization, partially offset by a decrease of $2.3m in share-based compensation expense. During the three months ended March 31, 2024 and 2023, cost of sales included an estimated $0.5m negative impact and a $0.8m positive impact, respectively, related to EAC adjustments on our firm fixed price contracts.

Gross loss for the first quarter of 2024 was $6.2m compared to a loss of $1.4m for the same period in the prior year. Excluding share-based compensation and depreciation and amortization included in cost of sales, Adjusted Gross (Loss) Profit(1) was $(3.4)m for the first quarter compared to $2.3m for the same period in 2023. EAC adjustments negatively impacted gross loss and Adjusted Gross Loss by an estimated $13.6m during the period compared to a positive impact of $1.5m for the same period in the prior year.

Selling, general, and administrative expenses were $28.3m in the first quarter of 2024, compared to $32.5m for the same period in the prior year. The decrease in selling, general, and administrative expenses was primarily due to a decrease of $4.0m in share-based compensation expense, as certain awards granted in connection with becoming a public company were fully expensed during the first quarter of 2023, and a decrease of $3.6m in research and development activities, exclusive of allocated share-based compensation and depreciation. These decreases were partially offset by an increase of $3.0m in administrative labor and benefits, net of allocated overhead, due to the increase in headcount on a comparative basis.

Net loss was $53.2m in the first quarter of 2024, compared to a net loss of $54.4m for the same period in the prior year. The improvement in net loss was driven by items discussed above and lower losses from changes in the fair values of warrant and derivative liabilities, partially offset by higher interest expense.

Adjusted EBITDA(1) was $(28.2)m for the first quarter of 2024, compared to $(22.6) m for the same quarter in 2023. The increase in negative Adjusted EBITDA was primarily due to a decrease in Adjusted Gross (Loss) Profit.

Capital expenditures totaled $2.5m in the first quarter.

Balance Sheet and Liquidity

As of March 31, 2024, Terran Orbital had $43.7m of cash on hand and approximately $316.7m in gross debt obligations. The Company’s debt includes $15.0m in connection with an obligation under one of its PIPE investment subscription agreements, which is payable in cash or equity at the Company’s option, subject to certain limitations.

Backlog

Backlog represents the estimated dollar value of executed contracts, including both funded (firm orders for which funding is authorized and appropriated) and unfunded portions of such contracts, for which work has not been performed. The unfunded portion of enforceable contracts is accounted for as variable consideration and is reported at our estimate of the most likely amount to which the Company is expected to be entitled. Although backlog reflects business associated with contracts considered to be firm, terminations, amendments or contract cancellations may occur, which could result in a reduction in our total backlog.

As of March 31, 2024, backlog was $2.7bn, of which $2.4bn was related to our contract with Rivada and $300m was related to non-Rivada programs. As of May 14, 2024, backlog is estimated to be over $2.8bn, inclusive of $400m of non-Rivada programs.

Ongoing Review of Strategic Alternatives

As previously announced, a special committee of Terran Orbital’s board of directors composed solely of independent and disinterested directors, consistent with its fiduciary duties and in consultation with its financial and legal advisors, has engaged in an ongoing proactive process to evaluate strategic opportunities that are or may be available to the Company, including maintaining the status quo and continuing to operate as a standalone, independent publicly traded company, to determine the course of action that it believes will maximize value for the company’s stockholders.

Regarding the previously announced and subsequently withdrawn non-binding proposal from Lockheed Martin to acquire, in a merger transaction, all of the outstanding shares of the Company’s common stock not owned by it for a price of $1.00 per share (the “Lockheed Proposal”), independent director and special committee chair James LaChance stated: “We appreciate Lockheed Martin’s interest and engagement. In our discussions with Lockheed Martin regarding their proposal, including at an in-person meeting on April 16, 2024, we shared that the Company values its strategic relationship with Lockheed Martin, both as a security holder and as a key customer, and, as the strategic review process continues, we are committed to maximizing stockholder value and remain open to further exploring if there is value to be created for our stockholders through future commercial and strategic arrangements or transactions with Lockheed Martin.”

The special committee does not intend to provide any updates regarding the company’s ongoing strategic review process, unless and until it deems further disclosure is appropriate. There can be no assurance that the strategic review process will result in any transaction or strategic alternative, or any assurance regarding its outcome or timing. (Source: BUSINESS WIRE)

14 May 24. Kopin Corporation Reports Financial Results for the First Quarter 2024.

Q1 2024 product revenues increased 18% compared to the same period in 2023
Defense product revenues increased 28% partially offset by a 17% decrease in Industrial product revenues
2.7:1 Positive book-to-bill for Q1, 2024
Expect Double Digit Revenue Growth in 2024 over 2023
Received several new customer orders including a Naval Warfare Research Contract
Verdict received in Blue Radios Litigation

Kopin Corporation (“Kopin” or “the Company”) (Nasdaq: KOPN), a leading developer and provider of high-performance application-specific optical solutions consisting of high-resolution microdisplays, microdisplays subassemblies and related components for defense, enterprise, industrial, and consumer products, today reported financial results for the first quarter ended March 30, 2024.

Commenting on the quarterly results, Michael Murray, Chief Executive Officer, stated, “We continued to make strong progress on our strategy to reset the course and focus within Kopin. Sales of our products for defense applications continued to be strong, which has been our primary focus since we initiated our new strategies in 2023. We continue to believe that 2024 revenues will have double digit-growth as the first quarter marked the entrance of new customers and projects including a new development project with the Navy Air Warfare Center for research in advanced high frame rate lens-less display architectures. Also in the first quarter, Kopin received a $20.5m order for a new weapon sight configuration deliverable in 2024 and 2025. Furthermore, the company also received a $1.4m order for a specialized weapon sight.

“Kopin continues to demonstrate very strong momentum in our book-to-bill rate which ended positively in the first quarter of 2024. We are fortunate to have many great long-standing customers who remain supportive of Kopin during this transformative time. Further, we are excited to see the benefits of these efforts as we see new designs and opportunities with our current and new customers increasing.

“Our focus remains on quality and efficiency. Over the last year, we have instituted several organizational changes to clarify accountability, established measurable goals and metrics, and brought in new program management, business development, and quality skill sets. These changes are the foundation of our growth plan. To improve cashflow and focus, we also began exploring the process of monetizing the investments we have in several companies, our Intellectual Property portfolio, and several cost reduction activities.

“The global landscape suggests aggressive tensions are increasing around the world and defense affairs are becoming more dynamic. We believe Kopin is well positioned to deliver to our soldiers and allies the defense systems they need and the innovations that enable the market and return value to our customers, society, and internal and external stakeholders.”

Mr. Murray concluded: “Regarding our recent announcement of our Blue Radios litigation, we are disappointed in the outcome and do not believe the findings were justified by the facts. We are reviewing our options, including a possible appeal of any judgment that Court ultimately enters.”

First Quarter Financial Results

Total revenues for the first quarter ended March 30, 2024, were $10.0m, compared to $10.8m for the first quarter ended April 1, 2023, a 7% decrease. Year-over-year product revenues increased 18%, with defense product revenues increasing by $1.8m or 28% year over year, while industrial product revenues decreased by $0.2m or 17%, year over year. First quarter 2024 funded research and development revenues declined by $2.0m or 69% as certain defense development programs were completed.

Cost of Product Revenues for the first quarter of 2024 were $8.5m, or 95% of net product revenues, compared with $6.6m, or 87% of net product revenues for the first quarter of 2023. The increase in cost of product revenues resulted from a higher provision for excess and obsolete materials in the first quarter of 2024 compared to the first quarter of 2023.

Research and Development (R&D) expenses for the first quarter of 2024 were $2.1m compared to $2.3m for the first quarter of 2023, essentially flat year over year. Customer-funded R&D expense declined $0.8m in the first quarter of 2024 as compared to the first quarter of 2023, while internal R&D increased $0.6m year over year. The decline in customer-funded R&D programs was due to the completion of certain defense development programs.

Selling, General and Administration (SG&A) expenses were $7.2m for the first quarter of 2024, compared to $4.6m for the first quarter of 2023. The increase for the three months ended March 30, 2024, as compared to the three months ended April 1, 2023, was primarily due to an increase in legal fees of $2.6 m, professional fees of approximately $0.2m, marketing expenses of $0.2 m and stock-based compensation of $0.2m, partially offset by a decrease in bad debt expense of $0.5m.

On April 22, 2024, a jury verdict was entered in the U.S. District Court for the District of Colorado, finding for the plaintiff, BlueRadios, Inc., and awarding approximately $5.1m in damages as well as recommending $19.7m in disgorgement and exemplary damages. While the court has not yet entered a final judgment, the Company has accrued the full $24.8m judgment under the relevant accounting guidance. The Company is reviewing its options, including a possible appeal of any judgment that the Court ultimately enters.

Net Loss Attributed to Kopin Corporation for the first quarter of 2024 was ($32.5)m, or ($0.27) per share, compared with ($2.6)m, or ($0.03) per share, for the first quarter of 2023.

All amounts above are estimates and readers should refer to our Form 10-Q for the quarter ended March 30, 2024, for final disposition as well as important risk factors. (Source: BUSINESS WIRE)

14 May 24. Fincantieri sees ‘very positive’ outlook for newly-bought UAS business. Fincantieri’s (FCT.MI), newly-acquired Underwater Armament Systems (UAS) submarine business has a “very positive” outlook, the shipbuilder’s chief executive Pierroberto Folgiero said on Tuesday.

The state-controlled shipbuilder bought UAS from defence company Leonardo’s LDOF.MI in a deal giving the submarine business line an enterprise value of 415m euros ($449.15m).

In a call with analysts, Folgiero declined to be specific about the impact of the UAS acquisition for Fincantieri’s prospects.

“There will be time for details, what I can say is that UAS will have a very positive outlook. I believe UAS has a lot of growth ahead of it,” Folgiero said when asked about specific guidance for the business, once incorporated into the group.

Fincantieri said in slides that the deal would be “margin accretive from the outset” with UAS increasing the group’s EBITDA margin to 5.5% pro-forma 2023 from 5.2%. Last year UAS posted 160m euros in revenues and 34.1m euros in core profit, it added. ($1 = 0.9240 euros) (Source: Google/Reuters)

13 May 24. Calian® Completes Acquisition of Mabway, Expanding Military Training and Simulation Solutions Globally. Calian Group Ltd. (TSX: CGY), a diverse products and services company, providing innovative healthcare, communications, learning and cybersecurity solutions, has agreed to acquire U.K.-based Mabway for up to CAD$41M (GBP£24M). This includes CAD$32.4M (GBP£19M) on closing.

Mabway is a leader in the management of large-scale defence role-playing environments that simulate real-world operational environments and provides technical engineering education for naval and maritime communities. The company has been a prime supplier to the British Army since 2012. Mabway has several offices across the U.K., a workforce of more than 1,000 ex-military and civilian permanent staff and contractors, and services reaching into Europe and the Middle East.

“We’re delighted to be acquiring a company that has such a strong offering that both complements and expands our current solutions in the military training and simulation sector. This acquisition presents a great opportunity to leverage the capabilities of both companies to provide a more comprehensive range of solutions to military and defence customers globally. And with the U.K. looking to increase defence spending to 2.5 per cent of GDP by 2030, Calian will be well positioned as a strategic partner supporting their operational readiness,” says Kevin Ford, Calian CEO.

The acquisition expands Calian’s existing presence in the U.K. and Europe, bolstering the company’s military training and simulation solutions portfolio in the region and presenting more opportunities for further global and customer diversification.

“This acquisition strategically aligns with our vision for Calian Learning, propelling us toward our goal of becoming a premier global training and delivery partner for customers when they cannot fail,” says Don Whitty, President of Learning. “Mabway’s strong position in the U.K. defence sector provides opportunities for us to introduce our immersive learning solutions to complement the solutions Mabway is delivering—and bring their capabilities into our solutions to support our growth objectives,” he says.

“The Mabway team is excited to be joining Calian,” says Mabway co-owner, Mark O’Reilly. “We take our corporate culture seriously and share Calian’s values of integrity, teamwork, innovation, respect and customer commitment. We are known for our unrelenting focus on providing mission-critical solutions for our customers and will be able to deliver even more effectively as part of the Calian team.”

The acquisition is effective immediately.

14 May 24. Leopard tank maker Rheinmetall’s profit rises on arms spending boom. German arms group Rheinmetall (RHMG.DE), posted a 60% rise in first-quarter profit on Tuesday, as the joint manufacturer of Leopard tanks rides a defence spending boom triggered by Russia’s invasion of Ukraine.

However, Rheinmetall’s earnings were below consensus forecasts, Stifel analyst Alexander Wahl said, and its shares were seen 1% lower in early market trading in Frankfurt.

Rheinmetall, whose market value has more than quadrupled since the war in Ukraine, is seeing a sharp increase in orders as Western governments look to replenish their stocks after supplying substantial amounts of arms to Kyiv.

“Rheinmetall is needed by a large number of nations, now and in the future, to satisfy the sharp rise in demand for military equipment,” its CEO Armin Papperger said in a statement.

The Duesseldorf-based firm’s quarterly operating profit was 134m euros and sales 1.58bn euros, both below a company-provided consensus estimate of 143.4m euros and 1.68 bn euros respectively.

Sales climbed 16% in the three months from January through March compared with the same period last year.

Rheinmetall is set to get orders worth as much as a third of the 100bn euro ($108bn) special defence fund introduced by Germany, Ukraine’s second-biggest supporter, shortly after the Russian invasion in 2022.

Meanwhile, the European Union is trying to ramp up ammunition production capacity to 2m shells per year by the end of 2025.

Rheinmetall, one of the world’s biggest producers of artillery and tank shells, in February rolled out plans to increase production of the 155mm artillery shells, a standard caliber used by NATO countries, to 1.1m by 2027. The firm said its order backlog grew by 43% to 40.2bn euros in the quarter. It also confirmed its 2024 sales guidance at around 10 bn euros. ($1 = 0.9274 euros) (Source: Reuters)

14 May 24. Rheinmetall reports strong start to first quarter of 2024 – Group continues profitable growth and increases order backlog .

Expansion of military business: Consolidated sales climb by 16% to around €1.6bn
Further significant increase in orders – Rheinmetall Nomination rises to around €4bn
Rheinmetall Backlog rises by 43% from €28.2bn to €40.2bn
Operating earnings increase by 60% to €134m
Operating margin improves significantly to 8.5%
Guidance for 2024 confirmed

Rheinmetall AG, Düsseldorf, has closed the first quarter of fiscal 2024 with ongoing sales growth and significantly higher income. The positive business performance is still largely being driven by business with the armed forces in Germany and its partner states, as well as by the activities in support of Ukraine. The Group achieved double-digit sales growth thanks to the consistently dynamic market situation and ongoing high demand in military business. Rheinmetall’s strong position in the ammunition business is particularly reflected in a strong increase in earnings.

In light of the current market situation and the consistently positive order situation, management is confirming its current guidance for the Group’s sales growth and operating margin.

Armin Papperger, CEO of Rheinmetall AG, commented: “We are well on track to achieve our ambitious annual targets for sustainable, profitable growth. Rheinmetall is needed by a large number of nations, now and in the future, to satisfy the sharp rise in demand for military equipment. High-volume framework agreements provide us with a good order backlog and ensure capacity utilization over a prolonged period. Looking ahead as well, we anticipate orders for further key projects by the German armed forces and its NATO partners.”

Armin Papperger commented: “We saw the signs of the times early on and plotted the right course. The integration of the Spanish ammunition manufacturer Expal Systems is progressing smoothly and is allowing us to enhance our capacity significantly. We will continue to expand our position as a leading European munitions manufacturer with new production facilities in a number of countries. We are thereby making a substantial contribution to safeguarding Ukraine’s defence capability and ensuring the urgently necessary replenishment of supplies for NATO partners.”

“We are a major player in the civilian sector as well, and anticipate huge potential for the innovative developments of the Group. As a technology leader, it is also of central importance to us to contribute to the mobility revolution and to make crucial progress in the use of hydrogen energy with our ambitious solutions,” added Armin Papperger.

Rheinmetall Group: Sales growth of 16% – Rheinmetall Nomination rises by around 27%

Consolidated sales climbed by €218m or 16% to €1,581m in the first quarter of 2024 (previous year: €1,363m). Adjusted for currency effects, sales were more than 17% higher than in the previous year. 77% of sales were generated abroad.

Operating earnings amounted to €134m as of March 31, 2024, up by around €50m or 60% on the previous year’s figure of €83m. The improvement in operating earnings relates in particular to the strong contribution by the Rheinmetall Expal Munitions, which was acquired in the previous year. The Group’s operating margin improved significantly by 2.3 percentage points to 8.5% in the first quarter of 2024 (previous year: 6.1%).

Earnings per share from continuing operations slightly declined from EUR 1.21 in the same period of the previous year to EUR 1.13 in the first three months of fiscal 2024 as the earnings after taxes attributable to the shareholders of Rheinmetall AG were lower than in the previous year.

Operating free cash flow declined by €82m to €-187m in the first quarter of 2024 after €-105m in the same period of the previous year. The deterioration in operating free cash flow relates in particular to the increase in inventories and cash capital expenditure.

The value of Rheinmetall Nomination climbed by around 27% year-on-year to €3,933m in the first quarter of 2024 (previous year: €3,104m). The increase is due to orders from Germany, the Near East and Australia in particular. In addition, the Spanish Rheinmetall Expal Munitions in particular contributed to growth. Rheinmetall Nomination comprises classic incoming orders as well as the volume from future call-offs under new framework agreements entered into with military customers and new contracts with civilian clients (nominations).

Rheinmetall Backlog rose significantly by around 43% year-on-year from €28.2bn to €40.2bn (March 31). In addition to orders on hand, Rheinmetall Backlog also includes the call-offs expected from framework agreements in place with military customers and the potential from contracts with civilian clients.

Change in Group structure

Effective January 1, 2024, Rheinmetall’s civilian business has been restructured, combining ‘Sensors and Actuators’ and ‘Materials and Trade’ to form the new Power Systems. Rheinmetall is taking this step in order to bundle its business models and innovation in civilian business more effectively. Power Systems forms the organizational umbrella at Rheinmetall for key technological competencies on civilian markets. These range from the traditional combustion engine and commercial business to new technologies such as electromobility and hydrogen, charging infrastructure and lightweight construction through to warm home heating systems.

Vehicle Systems: Rheinmetall Backlog rises significantly by 33% year-on-year

Sales in Vehicle Systems, which mainly operates in military wheeled and tracked vehicles, were up by €31m or around 7% year-on-year at €493 m in the first three months of 2024. The increase in sales relates to projects for the delivery of tactical vehicles in particular.

Rheinmetall Nomination – the total of order intake and the volume of new framework agreements with military customers – increased by €301m as against the previous year to €929m. The largest single order is the service contract already issued for the Boxer heavy weapon carrier, which has a net value of more than €620m. Meanwhile, the same period of the previous year was defined by several major orders, in particular the Leopard 2 upgrade for Norway, the Puma infantry fighting vehicle upgrade for the German armed forces and the frame nomination for military trucks in Austria.

Rheinmetall Backlog – the total of orders on hand and the call-offs expected from framework agreements in place with military customers – was up by €4,208m or around 33% year-on-year at €16,866bn as of March 31, 2024. Operating earnings declined from €43m to €38m in the first quarter of 2024. This development is essentially due to the decline in high-margin orders. The operating margin was down on previous year at 7.7% (9.2%).

Weapon and Ammunition: Backlog more than doubles to around €12bn

Weapon and Ammunition generated sales of €362m in the first quarter of 2024, outperforming the figure for the previous year by €149m or 70%. The increase as against the same period of the previous year relates to higher ammunition call-offs by customers in particular. Key projects included artillery orders for Germany and Ukraine. The sales growth includes €101m from Rheinmetall Expal Munitions, which was acquired as of July 31, 2023 and thus made a crucial contribution to sales growth. Intragroup sales accounted for €29m of this.

Rheinmetall Nomination amounted to €836m in the first three months of 2024, up significantly on the prior-year figure (€595m). There were significant new orders at Rheinmetall Expal Munitions. Further growth was generated in Near East countries and Australia in particular with indirect fire products.

Rheinmetall Backlog more than doubled, rising by €6,394m or around 123% to €11.6bn as of March 31, 2024 (previous year: €5.2bn). The main factor driving this was the signing of two multi-year ammunition framework agreements in the second half of 2023 for the German customer and the Ukrainian armed forces.

Operating earnings more than doubled in the first three months of 2024, rising by €30m or 129% to €53m (previous year: €23m). Despite higher staff and non-staff costs, the operating margin improved significantly from around 11% to around 15%. This includes an earnings contribution of €37m from Rheinmetall Expal Munitions.

Electronic Solutions: Sales growth of 26%

Electronic Solutions, which produces solutions in the field of armed forces digitalization, infantry equipment, air defence and simulation, increased its sales by around 26% or €59m to €287m in the first quarter of fiscal 2024 (previous year: €227m). This sales growth is essentially thanks to the Skyranger 30 mobile air defence system for the German customer and other delivery shares for the Puma infantry fighting vehicle.

As a result of the five-fold increase in incoming orders, Rheinmetall Nomination rose from €339m in the same period of the previous year to €1,812m. Key incoming orders in the first three months of 2024 related to the development contract for the short and very short range air defence protection system and the delivery agreement for the Skyranger 30 mobile air defence system for the German customer. Rheinmetall Backlog amounted to €5,751m as of March 31, 2024, up significantly by €2,129 m on the prior-year figure (€3,622m).

Operating earnings improved to €17m in the first three months of 2024 after €12 m in the previous year. The operating margin rose to 6.0% as a result of sales (previous year: 5.4%).

Power Systems: Operating earnings up by 29%

Sales in Power Systems, in which Rheinmetall bundles its technological expertise for civilian markets, were stable year-on-year at €541m (previous year: €541m). The sales growth in the US region compensated for the decline in sales in Europe. Booked business was down significantly year-on-year at €620m in the first three months of fiscal 2024 (previous year: €1,230m). Nominated Backlog fell by 3% to €8,461m as of March 31, 2024 (previous year: €8,741m).

Operating earnings climbed by 29% to €31m in the first quarter of 2024 (previous year: €24m). The increase is thanks to the positive effect of higher sales prices and a better product mix. The improvement in the at-equity result of a Chinese joint venture also had a positive effect on operating earnings. The operating margin is therefore 5.8% (previous year: 4.5%).

Outlook: Current guidance for year confirmed

Rheinmetall is confirming its current guidance for the year after the first three months of fiscal 2024.

The Rheinmetall Group’s annual sales are expected to rise to a level of around €10 bn in fiscal 2024 (sales in fiscal 2023: €7.2bn). Based on this sales guidance and taking holding costs into account, Rheinmetall anticipates an improvement in the Group’s operating earnings and the operating margin of around 14% to 15% in fiscal 2024 (margin in fiscal 2023: 12.8%).

Forward-looking statements and forecasts

This press release contains forward-looking statements. These statements are based on Rheinmetall AG’s current estimates and forecasts and the information available at the time. Forward-looking statements are not a guarantee of future performance or the results indicated. Rather, they are dependent on a number of factors, entail various risks and uncertainties, and are based on assumptions that may prove to be incorrect. Rheinmetall is under no obligation to update the forward-looking statements in this press release.

Financial report on Q1 2024:

Rheinmetall reports strong start to first quarter of 2024 – Group continues profitable growth and increases order backlog

Expansion of military business: Consolidated sales climb by 16% to around €1.6bn
Further significant increase in orders – Rheinmetall Nomination rises to around €4bn
Rheinmetall Backlog rises by 43% from €28.2bn to €40.2bn
Operating earnings increase by 60% to €134m
Operating margin improves significantly to 8.5%
Guidance for 2024 confirmed

In light of the current market situation and the consistently positive order situation, management is confirming its current guidance for the Group’s sales growth and operating margin.

Armin Papperger.

Rheinmetall Group: Sales growth of 16% – Rheinmetall Nomination rises by around 27%

Operating earnings amounted to €134m as of March 31, 2024, up by around €50 m or 60% on the previous year’s figure of €83m. The improvement in operating earnings relates in particular to the strong contribution by the Rheinmetall Expal Munitions, which was acquired in the previous year. The Group’s operating margin improved significantly by 2.3 percentage points to 8.5% in the first quarter of 2024 (previous year: 6.1%).

Rheinmetall Backlog rose significantly by around 43% year-on-year from €28.2 bn to €40.2 bn (March 31). In addition to orders on hand, Rheinmetall Backlog also includes the call-offs expected from framework agreements in place with military customers and the potential from contracts with civilian clients.

Change in Group structure

Vehicle Systems: Rheinmetall Backlog rises significantly by 33% year-on-year

Sales in Vehicle Systems, which mainly operates in military wheeled and tracked vehicles, were up by €31m or around 7% year-on-year at €493m in the first three months of 2024. The increase in sales relates to projects for the delivery of tactical vehicles in particular.

Weapon and Ammunition: Backlog more than doubles to around €12bn

Electronic Solutions: Sales growth of 26%

Operating earnings improved to €17m in the first three months of 2024 after €12m in the previous year. The operating margin rose to 6.0% as a result of sales (previous year: 5.4%).

Power Systems: Operating earnings up by 29%

Outlook: Current guidance for year confirmed

Rheinmetall is confirming its current guidance for the year after the first three months of fiscal 2024.

The Rheinmetall Group’s annual sales are expected to rise to a level of around €10bn in fiscal 2024 (sales in fiscal 2023: €7.2bn). Based on this sales guidance and taking holding costs into account, Rheinmetall anticipates an improvement in the Group’s operating earnings and the operating margin of around 14% to 15% in fiscal 2024 (margin in fiscal 2023: 12.8%).

12 May 24. IAI releases its financial statements for the first quarter of 2024. Israel Aerospace Industries’ (IAI) net income saw a surge of 48%, amounting to USD 135m in the first fiscal quarter of 2024, compared with USD 91m from the previous year’s first quarter, according to financial statements published by the company on Sunday.

IAI said its cash flow, money, or securities generated by a company totaled USD 1,780m, while its sales had garnered USD 1,432m.

The company also noted that its earnings before interest, taxes, depreciation, and amortization (EBITDA) had grown by 19%, amounting to USD 217m.

The company’s operating income, or profit after expense deduction, amounted to USD 147m, while its gross profit totaled USD 273m,

The logo of state-owned Israel Aerospace Industries (IAI), the country’s biggest defence contractor, is seen at their offices next to Ben Gurion International airport, near Or Yehuda, Israel February 27, 2017. (credit: REUTERS/BAZ RATNER)

IAI said the sums garnered from the sale value of the orders that have not yet been shipped to customers amounted to USD 19.1bn. The company noted that its free cash flow, or leftover cash after it had paid expenses or expenditures, amounted to USD 3,200bn.

Chairman of IAI, Amir Peretz, noted regarding the statements “that Israel Aerospace Industries is Israel’s leading and most successful defense and technological company, and we are committed to continuing this excellent performance in all our fields of activity.”

He addressed Iran’s attack on Israel in mid-April. He said, “On the night of April 14, when IAI-developed systems proved capable of providing a good operational response to protect the country’s skies against extra-atmospheric ballistic missiles, we were able to restore a sense of personal security to Israel’s population and subsequently received many expressions of interest from countries around the world.”

CEO of the company, Boaz Levy added, “The excellent financial results presented by the company clearly reflect its pioneering work, both in Israel and internationally, and its extraordinary contribution to Israel’s security, as is evident beyond any doubt even in the latest fighting.”

Levy continued, “The whole world is witnessing the impressive performance of IAI’s systems in the face of unprecedented threats, attacks from Iran and its proxies, and the increase in demand all over the world for our systems is also a result of the innovation and originality demonstrated by the company’s employees.” (Source: Google/https://www.msn.com/)

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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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