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08 Aug 24. MDA Space Ltd. (TSX: MDA), a trusted space mission partner to the rapidly expanding global space industry, today announced its financial results for the second quarter ended June 30, 2024.

Q2 2024 Highlights
Record backlog of $4.6bn at quarter-end, up 318% YoY
Strong top line growth with revenues of $242.0m, up 23% YoY
Solid profitability with adjusted EBITDA1 of $48.7m, up 21% YoY, and adjusted EBITDA margin1 of 20.1%
Strong operating cash flow of $149.0 m and healthy balance sheet with net debt to adjusted EBITDA1 ratio of 2.0x
Solid adjusted net income1 of $23.4m, up 7% YoY, and adjusted diluted earnings per share1 of $0.19, up 6% YoY
Updated 2024 full-year financial outlook
Raised revenue guidance, narrowed guidance for adjusted EBITDA and capex
Positive free cash flow1 expected in 2024, one year ahead of plan

“The MDA Space team delivered a solid Q2 driven by strong execution as we continued to convert our backlog and deliver on our customer commitments,” said Mike Greenley, Chief Executive Officer of MDA Space. “With robust momentum in our end-markets, we also continue to grow our backlog, which at quarter-end stood at a record $4.6bn. Notable awards in Q2 included a $1bn contract from the Canadian Space Agency for the next phases of the Canadarm3 program that will see us finalizing the design and carrying out the construction of the robotic system and ground control segment.”

“During the quarter we also continued to advance the manufacturing of MDA CHORUS™, our next generation Earth Observation constellation. We unveiled additional features including a new vessel detection onboard processing demonstration capability to enable future rapid delivery of data and actionable insights for maritime customers,” continued Mr. Greenley.

“Our teams were also busy advancing a number of programs including Telesat Lightspeed where MDA Space is the prime contractor to deliver 198 digital low earth orbit satellites. At quarter-end, we had approximately 75% of the supplier base for the program under contract, setting the stage for work volumes to accelerate in the second half of 2024 consistent with our full year plan.”

“Given strong operational performance year-to-date, we are updating our 2024 financial guidance and expect to be free cash flow positive in 2024 as we look to deliver another successful year.”

1 As defined in the “Non-IFRS Financial Measures” section

Q2 2024 HIGHLIGHTS

Backlog of $4.6bn at quarter-end continued to build and was up 318% compared to Q2 2023. The increase in backlog is driven by new order bookings including the $1bn award for Phases C/D of the Canadarm3 program announced in Q2 2024 and $2.4bn Telesat Lightspeed LEO constellation award announced in Q3 2023.
Revenues of $242.0m in Q2 2024 were up 23% YoY driven by higher work volumes across our three business areas, with strong contributions from the Robotics & Space Operations and Satellite Systems businesses.
Adjusted EBITDA of $48.7m in Q2 2024 compared to $40.4m in Q2 2023, representing an increase of $8.3m (or 21%) YoY. Adjusted EBITDA margin of 20.1% in Q2 2024 is consistent with the Company’s full year margin guidance of 19-20% and compares to adjusted EBITDA margin of 20.6% reported in the second quarter of 2023.
Adjusted net income for Q2 2024 was $23.4m compared to $21.9m in Q2 2023, representing an increase of $1.5m (or 7%) YoY driven by higher operating income. Adjusted diluted earnings per share of $0.19 in Q2 2024 compared to $0.18 in Q2 2023.
Operating cash flow was $149.0m in Q2 2024 compared to $38.9m in Q2 2023. The year-over-year increase in operating cash flow was driven by positive working capital contributions primarily related to the Telesat Lightspeed program.
At quarter-end, net debt to adjusted EBITDA ratio was 2.0x compared to 2.4x as of December 2023 (2.6x as of March 31, 2024) as the Company utilized its strong operating cash flow in Q2 2024 to make repayments to its revolving credit facility and deleverage the balance sheet while continuing to invest in its growth initiatives.

2024 FINANCIAL OUTLOOK

As a trusted mission partner and leading global space technology provider, we are leveraging our capabilities and expertise to execute on targeted growth strategies across our end markets and business areas. Our strategic initiatives, which span across our three businesses, include investing in next generation space technology and services, expanding our presence in high growth markets and geographies, scaling and expanding skills, talent and operations to meet current and future market demand and leveraging strategic M&A to complement organic growth. We continue to make good progress against our long-term strategic plan.

MDA Space is well positioned to capitalize on strong customer demand and robust market activity given our diverse and proven technology offerings. Our growth pipeline is significant and underpinned by existing and new programs and our book of business is healthy. We see activities ramping up in line with our expectations and are encouraged by the team’s solid execution.

For fiscal 2024, we are raising our full year revenue guidance to $1,020 – $1,060m from $950 – $1,050m previously, representing robust year-over-year growth of approximately 30% at the mid-point of guidance compared to 2023 levels. We continue to expect revenue growth to accelerate in the second half of 2024 as we ramp up work volumes on a number of programs. We are narrowing our 2024 adjusted EBITDA guidance to $200 – $210m from $190 – $210 m previously, representing approximately 19% – 20% adjusted EBITDA margin. We are narrowing our 2024 capital expenditures range to $200 – $220m from $210 – $230m previously, comprising primarily of growth investments to support CHORUS and the previously outlined growth initiatives across our three business areas. Additionally, as a result of favourable working capital contributions related to the Telesat Lightspeed program, we now expect to generate free cash flow and continue to deleverage our balance sheet in 2024.

For Q3 2024, we expect revenues to be $270 – $280m as we continue to execute on our backlog. (Source: PR Newswire)

08 Aug 24. Kopin Corporation Reports Financial Results for the Second Quarter 2024.

Q2 2024 product revenues increased 84% compared to the same period in 2023
Defense product revenues increased 106% partially offset by a 30% decrease in Industrial product revenues
5 new customers placed development orders fueling opportunities for multi-million dollar per year production revenues

Kopin Corporation (Nasdaq: KOPN), a leading provider of application-specific optical solutions and high-performance microdisplays for defense, enterprise, consumer, and medical products, today reported financial results for the second quarter ended June 29, 2024.

Commenting on the quarterly results, Michael Murray, Chief Executive Officer, stated, “The second quarter was highlighted by continued sales momentum of our products for defense applications, delivering year over year growth of 106% and five new customer development orders which provide significant multi-m dollar per year production revenue opportunities in the future. This progress has validated our strategy that we began last year to reset the course within Kopin to focus on defense products. Additionally, as we continue our output ramp on our thermal weapon sight contracts, our sustained focus on operational excellence resulted in enhanced margins for this critical product line and the company.

“As we move into the second half of the year, we expect continued growth from new customers and projects, which during the second quarter included the development award for the U.S. Army’s Next Generation-Short Range Interceptor (NG-SRI) system, which is expected to replace the Stinger Missile. We were selected to design, develop, and produce the targeting eye piece for the program, won by Lockheed Martin. The program is expected to move into full rate production in 2027, which we estimate could provide Kopin with tens of ms in revenue, in peak annual production.

“Kopin was also selected for several new Phase One development contracts including with the U.S. Army to research optical approaches for Visual Augmentation Systems to improve performance, and lessen cognitive dissonance and nausea. We also received a development contract with the U.S. Navy to research and produce a means to reduce the size and weight of the optics needed in advanced sensor systems. In addition to these research and development awards, we partnered with market leading firms like Wilcox Industries on several new dismounted soldier products and demonstrated our progress on our innovative AI enabled NeuralDisplay™ hardware and software architecture.

“Looking ahead we expect to continue accelerating our growth with a strong order book of new and long-standing customers and expect to see the benefits of our efforts with new designs and opportunities. We are leveraging our increased emphasis on business development to expand into new international markets. We continue to believe Kopin is well positioned to deliver long-term growth for our shareholders,” concluded Murray.

Second Quarter Financial Results

Total revenues for the second quarter ended June 29, 2024, were $12.3m, compared to $10.5m for the second quarter ended July 1, 2023, an 18% increase. Year-over-year product revenues increased 84%, with defense product revenues increasing by $5.4m or 106% year over year, while industrial product revenues decreased by $0.3m or 30% year over year. Second quarter 2024 funded research and development revenues declined by $2.7m or 70% as certain defense development programs were successfully completed and are now moving into low-rate initial production.

Cost of Product Revenues for the second quarter of 2024 were $8.7m, or 79% of net product revenues, compared with $5.7 m, or 95% of net product revenues for the second quarter of 2023. The decrease in cost of product revenue as a percent of net product revenues for the three months ended June 29, 2024, as compared to the three and six months ended July 1, 2023 was due to a decrease in expected rework costs, attributed in part to sustained improvements in labor hours/unit, improved work instructions, reduced scrap rates and lower customer acceptance reject rates. We estimate that the lower estimated rework cost improved gross margins by approximately $1.3 m for the three months ended June 29, 2024.

Research and Development (R&D) expenses for the second quarter of 2024 were $1.8m compared to $3.1m for the second quarter of 2023, a decrease of 41% from the prior year. Customer-funded R&D expense declined $1.5m in the second quarter of 2024 as compared to the second quarter of 2023, while internal R&D increased $0.2m year over year. The decline in customer-funded R&D programs was due to decreased spending on specific U.S. defense programs and programs previously in development were successfully completed. Internal R&D expense increased due to an increase in process improvements and NeuralDisplay™ advancements.

Selling, General and Administration (SG&A) expenses were $7.3m for the second quarter of 2024, compared to $6.5 m for the second quarter of 2023. The increase for the three months ended June 29, 2024, as compared to the three months ended July 1, 2023, was primarily due to an increase in legal fees of $1.2m, partially offset by a decrease in credit loss expense of $0.2m. Included in SG&A was legal fees associated with the BlueRadios lawsuit of $3.1m for the second quarter of 2024 and $1.9m for the second quarter of 2023.

The Net Loss for the second quarter of 2024 was ($5.9)m, or ($0.05) per share, compared with ($8.2)m, or ($0.07) per share, for the second quarter of 2023.

All amounts above are estimates and readers should refer to our Form 10-Q for the quarter ended June 29, 2024, for final disposition as well as important risk factors.

(Source: BUSINESS WIRE)

08 Aug 24. BlackSky Reports Second Quarter 2024 Results.

Q2 Total Revenue Increases 29% Over Prior Year Period

Company Wins $40m in New Contracts and Renewal Agreements

First 35cm Very High Resolution Gen-3 Satellite Planned for Launch in Q4

BlackSky Technology Inc. (“BlackSky” or the “Company”) (NYSE: BKSY) announced results for the second quarter ended June 30, 2024.

Second Quarter Financial Highlights:

Revenue of $24.9m, up 29% from the prior year quarter
Imagery & software analytical services revenue grew 14% over the prior year quarter
Imagery & software analytical services cost of sales(1), as a percent of revenue, improved to 20% from 23% in the prior year quarter

“BlackSky delivered another strong quarter driven by a 29% year-over-year increase in second quarter revenue and substantial operating leverage which led to improved margin performance,” said Brian E. O’Toole, BlackSky CEO. “We won $40 m in new awards and extension agreements, including the continuation of subscription services under the EOCL contract. Our Gen-3 constellation remains on track to unlock our next phase of growth by enabling transformative solutions our customers are demanding, using the power of our very high resolution imagery, combined with high-frequency monitoring and automated AI.”

Recent Highlights

The National Reconnaissance Office extended its subscription to our Gen-2 high-frequency imagery services under the Electro-Optical Commercial Layer (EOCL) contract
Won a $7m contract renewal with an international government customer to provide dynamic space-based imagery and analytics monitoring services
Continued to win task orders under the multi-year contract with the U.S. Air Force Research Laboratory to develop and demonstrate AI-enabled space-based moving target detection, tracking and identification
Awarded multiple six-figure subscription contracts in support of various international government agencies
In the final phases of assembly, integration, and testing on our Gen-3 satellites and have begun mission planning preparation for launch and commissioning operations
Finalizing launch window for first Gen-3 satellite with Rocket Lab

(1) Cost of sales is defined as imagery and software analytical services costs and professional and engineering services cost, less depreciation and amortization expense.

Financial Results

Revenues

Total revenue for the second quarter of 2024 was $24.9m, up $5.6m, or 29%, from the second quarter of 2023. Imagery and software analytical services revenue was $17.5m in the second quarter of 2024, up 14% over the prior year period, primarily driven by incremental customer orders for BlackSky’s imagery services. Professional and engineering services revenue was $7.5m in the second quarter of 2024, up 87% over the prior year period. The significant year-over-year increase was primarily related to the execution step up of multiple major international contracts. Professional and engineering services contracts are milestone-based contracts that may have quarter-over-quarter revenue variability, in contrast to the imagery and software analytical services, which are typically recurring subscription-based revenues.

Cost of Sales(1)

Total cost of sales as a percentage of revenue improved to 28% for the second quarter of 2024, compared to 44% in the second quarter of 2023. Imagery and software analytical service costs as a percentage of revenue improved to 20% in the second quarter of 2024, compared to 23% in the second quarter of 2023, primarily driven by greater volumes of revenue that inherently have a low fixed-cost structure as a percentage of revenue.

Operating Expenses

Operating expenses for the second quarter of 2024 were $29.8m, which included $2.2m of non-cash stock-based compensation expense and $11.3m in depreciation and amortization expenses. Operating expenses for the second quarter of 2023 were $30.7m, which included $2.1m in non-cash stock-based compensation expense and $11.8m in depreciation and amortization expenses. Excluding the non-cash stock-based compensation and depreciation and amortization expenses from both years, cash operating expenses(2) for the second quarter of 2024 were $16.3m, compared to cash operating expenses of $16.8m for the second quarter of 2023. The year-over-year decrease of $0.5m, or 3%, was primarily driven

by reductions in general corporate costs, which more than offset investments in our go-to-market initiatives.

Net Loss

Net loss for the second quarter of 2024 was $9.4m, compared to a net loss of $33.4m in the second quarter of 2023.

Adjusted EBITDA(2)

Adjusted EBITDA for the second quarter of 2024 was $2.1m, compared to an Adjusted EBITDA loss of $5.8m in the second quarter of 2023. The $7.9m year-over-year improvement was primarily driven by strong operating leverage achieved through higher revenues, improvement in gross margins, and reductions in cash operating expenses.

Balance Sheet & Capital Expenditures

As of June 30, 2024, cash and cash equivalents, restricted cash, and short-term investments totaled $42.3m. In addition, the Company anticipates receiving approximately $28.2m in payments over the next 12 months as interim milestones on a few major customer contracts are met and expected to be billed, further enhancing the Company’s liquidity. Capital expenditures for the second quarter of 2024 were $12.9m.

2024 Outlook

The Company maintains its outlook for full year 2024 revenue of between $102m and $118m, and full year 2024 Adjusted EBITDA of between $8m and $16m. In addition, the Company maintains its expectations for full year 2024 capital expenditures of between $55m and $65m, primarily driven by investments in our Gen-3 satellites. (Source: BUSINESS WIRE)

08 Aug 24. Berlin defence strategy eyes stakes in arms companies, report says. The German government could take a stake in arms-makers and defence projects in “strategic cases”, according to a draft paper written by the economy and defence ministries, the Handelsblatt newspaper reported on Thursday.

The proposal is part of a new strategy Berlin is developing to strengthen Germany’s arms industry, Handelsblatt said, as Europe bolsters its defences following Russia’s 2022 invasion of Ukraine.

A spokesperson for the economy ministry said the paper had not yet been finalised.

The defence ministry could not immediately be reached for comment.

If approved, such a strategy could see the government taking stakes in companies and projects that it deems strategically important – already allowed in principle – more frequently, the report added.

The government already has a 25% stake in German defence electronics maker Hensoldt (HAGG.DE) according to LSEG data.

Sources told Reuters in June that state-lender KfW and private equity firm Carlyle (CG.O) were also in talks to jointly buy a majority of Thyssenkrupp’s (TKAG.DE) warship division, adding a deal could be agreed as soon as September if all parties agree.

Russia’s invasion of Ukraine in February 2022 prompted a massive ramp-up of defence spending in Germany and other European countries, swelling the order books and market value of arms-makers such as Rheinmetall and Hensoldt. (Source: Reuters)

08 Aug 24. Rheinmetall expects up to 25bn eur in orders for JV with Leonardo. Rheinmetall (RHMG.DE), expects orders worth up to 25bn euros ($27.27bn) from the Italian government for its joint tank-building venture with defence manufacturer Leonardo (LDOF.MI) the German defence group’s CEO said on Thursday.

“The first order for the joint venture should be awarded either at the end of the year or in the first quarter of 2025,” Rheinmetall chief executive Armin Papperger said in a conference call following the company’s quarterly results.

“We are talking about 20 to 25bn euros, the latest status is 24bn euros, but this has not yet been finalised,” he added. ($1 = 0.9168 euros)(Source: Reuters)

07 Aug 24. After Approving the Constitution of the Space NewCo, Indra Strengthens its Portfolio by Acquiring Deimos.

Indra’s Board of Directors has approved the creation of the Space NewCo, as announced in the presentation of its Leading the Future Strategic Plan, which will serve as a vehicle to provide comprehensive capabilities throughout the space industry value chain
In order to expand its portfolio, Indra recently signed a contract with Elecnor to acquire Deimos, thus reinforcing its capabilities in all phases of a space mission, including satellite design and integration and the ground segment
Indra’s 50% stake in Startical, an initiative to provide air traffic management communication and surveillance services, will be incorporated into the NewCo to improve its positioning in the downstream segment for the exploitation of space capabilities

Indra has signed a contract with Elecnor for the acquisition of Deimos, a Spanish space company specializing in the undertaking of space missions and satellite integration, which has subsidiaries in the United Kingdom and several European Union countries. The agreement constitutes a major step in Indra’s space strategy and complements other recent developments, including the approval of the Indra Space spin-off and the creation of the Space NewCo and the integration of the Startical initiative into its portfolio.

On 27 June, the Shareholders’ Meeting approved the Indra Space spin-off, as announced during the presentation of the Leading the Future Strategic Plan, together with the incorporation of the Space NewCo, recently approved by Indra’s Board of Directors. This new entity will serve as a vehicle to offer comprehensive capabilities throughout the space industry value chain, seeking to position Indra as a relevant player in domestic, European and international space programs and initiatives.

In an initial step to fulfill this ambition, Indra has entered into a contract with Elecnor for the acquisition of Deimos to strengthen its capabilities in all phases of a space mission. Deimos will provide key capabilities for the integration of satellites and critical flight subsystems. The acquisition will also enhance Indra’s capabilities in the ground segment, particularly in terms of control and mission software and space surveillance and tracking. Deimos also enjoys a privileged position among space institutions and participates in domestic and European programs and initiatives, factors that will reinforce Indra’s position in the space industry. The transaction is expected to be completed in the last quarter of the year, once the customary regulatory approvals have been obtained.

In addition, in order to reinforce the positioning of the Space NewCo in the downstream segment for the exploitation of space capabilities, it will incorporate Indra’s 50% stake in Startical, a project for the provision of air traffic management communication and surveillance services.

With these developments Indra demonstrates its commitment and its desire to stand at the forefront of the European space industry, with an integral presence in the value chain. The operation also forms part of one of the key lines of growth included in the Leading the Future Strategic Plan presented by Indra this year. This new company envisions incorporating long-term global partners to increase its financial capacity and speed up its inorganic growth in Europe, with the aim of achieving revenues totaling more than €1 bn by 2030. (Source: ASD Network)

08 Aug 24. Defence technology start-up Anduril Industries has raised $1.5bn to accelerate the production of autonomous weapons for the US military and its allies, as investment in the sector surges on the back of conflict in Ukraine. Peter Thiel’s venture capital firm Founders Fund, which provided the seed funding that launched Anduril, co-led the latest round with Virginia-based investor Sands Capital. This latest investment values the California-based start-up at $14bn, double its valuation in December 2022, the last time the company raised money. Fidelity Management, Baillie Gifford and Franklin Venture Partners, the venture capital arm of Franklin Templeton, also participated in the round. The seven-year-old company will invest the funds into new manufacturing facilities capable of mass producing “tens of thousands of autonomous weapons systems addressing the urgent needs of the United States and our allies”. Anduril will invest “hundreds of millions” of dollars to develop the first factory, named Arsenal-1, which will be in the US — although the company declined to specify where. Anduril Anduril’s rapid growth is a sign of shifting sentiment among venture capitalists, many of whom have reversed their opposition to investing in defence technology since Russian President Vladimir Putin’s full-scale invasion of Ukraine in 2022. Venture investment into defence tech doubled to $33bn between 2019 and 2023 amid a broader downturn in venture funding. “The bottom line is: America and our allies don’t have enough stuff,” said Anduril chief strategy officer Chris Brose, previously the late US senator John McCain’s principal adviser on national security. “We don’t have enough vehicles, we don’t have enough platforms, we don’t have enough weapons. This has been true for a long time,” he added. “Ukraine has put that into high relief.” Anduril is the most prominent of a group of defence start-ups aiming to break into a sector where a handful of “primes” — large defence contractors including Lockheed Martin, Raytheon, General Dynamics and Boeing — have a stranglehold on lucrative government contracts. The company estimated that the US would run out of munitions in “less than eight days” in the event of a major conflict. The start-up, headquartered in Orange County, California, and led by virtual reality pioneer Palmer Luckey, has made inroads with the US and UK military, winning contracts to supply both with advanced weapons systems. In 2022, it was awarded a $1bn contract by US Special Operations Command to provide anti-drone technology. Earlier this year, it beat Lockheed Martin, Northrop Grumman and Boeing to win a large US Air Force contract to provide collaborative combat aircraft. Luckey co-founded Anduril in 2017 after he left Facebook, which had bought his virtual reality headset business, Oculus, for $2bn three years earlier. Recommended Jacquelyn Schneider How missiles became the modern weapon of choice The US spends far more on defence than any other country in the world, much of it on military hardware. Its defence budget is $842bn this year. But Brose said the government’s procurement of military technology was slow and insufficient. “We’re off by an order of magnitude the amount of defence systems that we as America are generating today,” he said. Rather than highly complex, bespoke vehicles and armaments, Anduril will develop autonomous weapons that are “as simple as possible”, using the commercial manufacturing techniques used by tech companies such as Elon Musk’s Tesla and SpaceX as a blueprint. Anduril said Arsenal “dismantles the traditional defence production preference for complexity by . . . eliminating unnecessary materials, parts and specialised processes”. (Source: FT.com)

08 Aug 24. TT Electronics, a global provider of engineered electronics for performance critical applications, specialising in sensing, power, and manufacturing today announces its half year results today for the period ending 30th June 2024.

Financial Highlights

Resilient performance against a mixed backdrop for H1 with revenue up 1% organically excluding unwind of pass-through revenue
Strong European and Asian growth largely offset by weakness in components demand impacting North American region
Strong growth in Aerospace & Defence, headwinds in Distribution
Significant cost action taken to address impact of components demand reduction1. £9m headcount savings actioned in H1
Order intake up 15% organically over H1 2023, H1 book to bill of 110%
Adjusted operating margin unchanged at constant currency, 8.7% ex Albert divestment, 9.3% excluding severance costs
Statutory operating profit £15.1m, statutory basic EPS of 3.4p
Cash conversion at 30% due to seasonality and mix however, on-track to deliver FY guidance
Interim dividend increased 5% to 2.25p per share
Board’s expectations for the full year remain unchanged

Project Dynamo

Improvement in execution through the period and excellent progress on collaboration demonstrating early benefits of move to function-led regional structure
Material further opportunities identified under Project Dynamo underpinning medium-term financial goals
£17m of net cost savings and margin improvement by 2026 identified, up from £5-6m, of which £4m has already been actioned
Eight key workstreams identified to drive productivity and efficiency, including make vs buy and cost of production
Inventory management project expected to deliver £15m of cash in H2 2024 and an additional £15m by 2026

Peter France, Chief Executive Officer, said: “We have made good progress on the early stages of Project Dynamo to unlock value and drive financial and operational improvements across the Group. We have identified significantly more opportunity increasing the potential annual benefit from £5-6m to £17m by 2026, underpinning our medium-term goal of 12 per cent operating margin.

De-stocking in our shorter cycle components business in North America has persisted for longer than anticipated and we have taken £9 m of swift cost action to address this. Our European and Asian businesses have both performed well in the period with strong revenue growth and margin improvement.

The Group’s order book and current momentum of order intake in our components business underpin our confidence in the full year outturn. The completion of Project Albert, significant cost action taken and some early benefits from our self-help programme, Project Dynamo, support our 10 per cent operating margin target for the year and for leverage to return to the lower end of our 1-2x target range.”

07 Aug 24. Curtiss-Wright Reports Second Quarter 2024 Financial Results and Raises Full-Year 2024 Guidance. Curtiss-Wright Corporation (NYSE: CW) reports financial results for the second quarter ended June 30, 2024.

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Second Quarter 2024 Highlights:

Reported sales of $785m, up 11%;
Reported operating income of $129m, operating margin of 16.4%, and diluted earnings per share (EPS) of $2.58;
Adjusted operating income of $133m, up 16%;
Adjusted operating margin of 17.0%, up 60 basis points;
Adjusted diluted EPS of $2.67, up 24%;
New orders of $995m, up 18%, reflected a book-to-bill of approximately 1.3x driven by strong demand within our Aerospace & Defense (A&D) markets;
Backlog of $3.2bn, up 13% year-to-date; and
Free cash flow (FCF) of $100m, generating 97% Adjusted FCF conversion.

Raised Full-Year 2024 Adjusted Financial Guidance:

Sales increased to new range of 6% to 8% growth (previously 5% to 7%), driven by strong growth in our A&D markets;
Operating income increased to new range of 6% to 9% growth (previously 5% to 8%);
Maintained operating margin range of 17.4% to 17.6%, flat to up 20 basis points compared with the prior year;
Diluted EPS increased to new range of $10.40 to $10.65, up 11% to 14% (previously $10.10 to $10.40, up 8% to 11%);
Reduced effective tax rate by 100 bps to 22.5% following consolidation of U.K. legal entity structure, and
Free cash flow increased to new range of $425 to $445m, up 3% to 8% (previously $415 to $435m, up 0% to 5%), and continues to reflect greater than 105% FCF conversion.

“Curtiss-Wright delivered strong second quarter results, highlighted by mid-teens revenue growth in our A&D end markets, continued operating margin expansion, and 24% growth in Adjusted diluted EPS,” said Lynn M. Bamford, Chair and CEO of Curtiss-Wright Corporation. “We once again demonstrated robust order activity, as bookings increased 18% year over year, yielding a book-to-bill of 1.3x. Based on the strong first half results and our outlook for the remainder of 2024, we have increased our full-year Adjusted guidance for sales, operating income, diluted EPS and free cash flow.”

“As we discussed at our Investor Day event in May, we continue to build momentum through the execution of our Pivot to Growth strategy. We remain focused on accelerating operational excellence to drive margin expansion and generate funding to reinvest into the business. As part of this strategy, we recently launched restructuring actions to support volume increases, improve efficiencies and further optimize our operations. These actions are expected to produce both recurring operational savings and increased free cash flow.”

2024 Restructuring Program and Other Cost Savings Initiatives

During the second quarter of 2024, the Company initiated restructuring actions across all three segments, principally within the Aerospace & Industrial segment. These initiatives are expected to result in approximately $15m in restructuring costs in 2024, and are expected to yield initial savings in 2024, as well as approximately $10m in annualized savings in 2025; and
Curtiss-Wright launched a U.K. legal entity consolidation program anticipated to facilitate more efficient cash repatriation. This initiative is expected to generate approximately $5 m in annualized savings, based on a 100 basis point reduction in the effective tax rate, and approximately $5m in annual recurring free cash flow.

Acquisition of Ultra Energy

On June 3, 2024, the Company announced the acquisition of Ultra Nuclear Limited and Weed Instrument Co., Inc. (“Ultra Energy”) for $200m in cash.
Ultra Energy is a leading global provider of safety-critical monitoring systems, temperature and pressure sensors, and reactor protection and control systems principally to the commercial nuclear and A&D markets;
The business is expected to be accretive to Curtiss-Wright’s adjusted diluted earnings per share in its first full year of ownership, excluding first year purchase accounting costs, and produce a free cash flow conversion rate in excess of 100%; and
The acquisition is expected to close in the third quarter of 2024, subject to U.K. regulatory approval, and the acquired business will operate within Curtiss-Wright’s Naval & Power segment.

Second Quarter 2024 Operating Results

Sales of $785m increased 11% compared with the prior year period;
Total A&D market sales increased 16%, while total Commercial market sales increased 2%;
In our A&D markets, we experienced strong growth in the defense markets principally driven by strong demand for our defense electronics products and the timing of production ramps in naval defense, as well as higher OEM sales in the commercial aerospace market;
In our Commercial markets, we experienced solid growth in the power & process markets, principally driven by higher sales of our commercial nuclear products, while sales in the general industrial market declined modestly; and
Adjusted operating income of $133m increased 16%, while Adjusted operating margin increased 60 basis points to 17.0%, principally driven by favorable overhead absorption on higher revenues in all three segments and favorable mix in the Defense Electronics segment, partially offset by unfavorable mix and timing of development programs in the Naval & Power segment.

Second Quarter 2024 Segment Performance

Aerospace & Industrial

Sales of $233m, up $7m, or 3%;
Commercial aerospace market revenue increases reflected strong demand and higher OEM sales of sensors and actuation products, as well as surface treatment services, on narrowbody and widebody platforms;
General industrial market revenues declined modestly, as the benefit of higher sales of surface treatment services was more than offset by reduced sales of industrial vehicle products to off-highway vehicle platforms; and
Adjusted operating income was $38m, up 6% from the prior year, while adjusted operating margin increased 40 basis points to 16.2%, mainly due to solid absorption on higher sales and the initial benefits of our restructuring initiatives.

Defense Electronics

Sales of $228m, up $31m, or 16%;
Higher revenue in the aerospace defense market was principally driven by increased sales of our embedded computing equipment on various domestic and international helicopter programs;
Strong revenue growth in the ground defense market primarily reflected higher sales of tactical battlefield communications equipment; and
Adjusted operating income was $59m, up 36% from the prior year, while adjusted operating margin increased 390 basis points to 25.7%, reflecting favorable absorption and mix on higher revenues, and the benefits of our cost containment initiatives.

Naval & Power

Sales of $323m, up $43m, or 15%;
Strong revenue growth in the naval defense market principally reflected higher demand on various submarine programs and the CVN-81 aircraft carrier program;
Higher revenue in the aerospace defense market was primarily driven by increased sales of our arresting systems equipment supporting various domestic and international customers;
Higher power & process market revenues mainly reflected increased commercial nuclear aftermarket sales supporting the maintenance of U.S. operating reactors; and
Adjusted operating income was $47m, down 6% from the prior year, while adjusted operating margin decreased 320 basis points to 14.4%, as favorable absorption on higher revenues was more than offset by unfavorable mix of products and timing of development programs.

Free Cash Flow

Reported free cash flow of $100m increased slightly as higher cash earnings were essentially offset by the timing of tax payments and working capital;
Adjusted free cash flow of $100m; and
Capital expenditures decreased $1m compared with the prior year.

New Orders and Backlog

New orders of $995m increased 18% compared with the prior year and generated an overall book-to-bill of approximately 1.3x, principally driven by strong demand for naval defense and commercial aerospace products within our A&D markets; and
Backlog of $3.2bn, up 13% from December 31, 2023, reflects strong demand in both our A&D and Commercial markets.

Share Repurchase and Dividends

During the second quarter, the Company repurchased 47,174 shares of its common stock for approximately $13m; and
The Company also declared a quarterly dividend of $0.21 a share, an increase of 5% from the previous quarter.

07 Aug 24. CACI Reports Results for Its Fiscal 2024 Fourth Quarter and Full Year and Issues Fiscal Year 2025 Guidance.

Annual revenues of $7.7bn, up 14% YoY

Annual net income of $419.9m; Diluted EPS of $18.60, up 13% YoY

Annual adjusted net income of $475.1m; Adjusted diluted EPS of $21.05, up 12% YoY

Annual EBITDA of $798.0m and EBITDA margin of 10.4%

Annual contract awards of $14.2bn and book-to-bill of 1.9x

Company committed to continued healthy cash flow in Fiscal Year 2025, driven by revenue growth, strong margins, and efficient capital management

CACI International Inc (NYSE: CACI), a leading provider of expertise and technology to government customers, announced results today for its fiscal fourth quarter and full year ended June 30, 2024, and issued guidance for fiscal year 2025.

“CACI’s exceptional fiscal year 2024 financial performance is the result of the relentless execution of our strategy. Our results were strong across the board, including achieving organic growth in the mid-teens, and delivering on our margin and cash flow expectations,” said John Mengucci, CACI President and Chief Executive Officer. “With more than $14 bn of awards, we continue to demonstrate our ability to win in the marketplace with differentiated capabilities that address our customers’ most critical national security needs. Our industry-leading business development efforts drove a 22% increase in our backlog, boosting it to $32bn. Overall, our FY24 performance expands our ability to deliver value for our customers and shareholders throughout fiscal year 2025 and beyond.”

Fourth Quarter Results

Revenues in the fourth quarter of fiscal year 2024 increased 19.7 percent year-over-year, driven by 18.5 percent organic growth. The increase in income from operations was driven by higher revenues and gross profit. Growth in diluted earnings per share and adjusted diluted earnings per share was driven by higher income from operations and share repurchases earlier in the year, partially offset by a higher tax provision. The increase in cash from operations, excluding MARPA, was driven primarily by higher net income and strong working capital management.

Fourth Quarter Contract Awards

Contract awards in the fourth quarter totaled $5.4bn, with nearly 70 percent for new business to CACI. Awards exclude ceiling values of multi-award, indefinite delivery, indefinite quantity (IDIQ) contracts. Some notable awards during the quarter were:

CACI was awarded an eight-year contract worth up to $2bn to provide digital solutions technology to standardize and centralize 11 of NASA’s IT services under the NASA Consolidated Applications and Platform Services (NCAPS) award. NCAPS expands CACI’s current relationship with NASA and will bring enterprise-wide automation across more than 200 systems from various NASA locations into a single program, enhancing efficiency and boosting productivity.
CACI was awarded a ten-year expertise contract valued at up to $450m to support the Joint Navigation Warfare Center (JNWC), an operational center of U.S. Space Forces – Space and the Department of Defense’s center of excellence for navigation warfare (NAVWAR). CACI will provide 24/7 operations support, joint and operational planning, adversary positioning, navigation, and timing (PNT) capability and order of battle assessment, and other tasks that inform and enhance joint force, DoD combatant commander, interagency, and allied NAVWAR requirements.
CACI was awarded a five-year technology task order valued at up to $416m to design, produce, and deliver complex, customized radio frequency (RF) systems for the U.S. Army’s signals intelligence (SIGINT) missions. As part of the Exploit, Enhance, Enable and Influence-TENCAP (E3I-T) work, CACI will begin deploying new, upgraded hardware systems this year.
CACI was awarded a five-year task order valued at up to $414m to provide expertise and unmanned systems support to the U.S. Army Combat Capabilities Development Command (DEVCOM) – Command, Control, Communications, Computers, Cyber, Intelligence, Surveillance, and Reconnaissance (C5ISR) Center to enable warfighter rapid response to current and emerging threats.
CACI was awarded a five-year task order valued at up to $319m to provide intelligence systems expertise to the U.S. Army, Communications-Electronics Command (CECOM), Software Engineering Center (SEC), Electronic Warfare & Sensors Directorate (IEWSD), Army Reprogramming Analysis Team-Program Office (ARAT-PO). Through the ARAT task order, CACI will help the Army, other services, and foreign military partners establish a state-of-the-art, on-demand environment that provides the most current threat data possible to support multi-domain operations.
CACI was awarded a six-year expertise task order valued at up to $239m to provide intelligence analysis and operations to the U.S. Army commands in Europe and Africa. Under the Theater Military Intelligence Support Services (TMISS) task order, CACI will deliver comprehensive all-source and single-discipline intelligence expertise tailored to the U.S. European Command (EUCOM) and U.S. Africa Command (AFRICOM) AORs during peacetime activity as well as crisis and contingency.
CACI was awarded a firm-fixed-price contract worth approximately $100m for the Terrestrial Layer System Brigade Combat Team Manpack (TLS BCT Manpack) by the U.S. Army. CACI will deliver a tailorable, modular, low size, weight, and power (SWaP) solution that integrates and delivers significantly improved signals intelligence and electronic warfare capabilities to soldiers at the tactical edge.

Total backlog as of June 30, 2024 was $31.6bn compared with $25.8bn a year ago, an increase of 22 percent. Funded backlog as of June 30, 2024 was $3.8 bn compared with $3.7bn a year ago, an increase of 3 percent.

Additional Highlights

CACI’s optical communications technology was used by NASA to successfully send data from its Psyche spacecraft to the Jet Propulsion Laboratory in Southern California, a distance of more than 200m kilometers, as part of the Deep Space Optical Communications (DSOC) experiment. Additionally, NASA will continue to leverage CACI’s optical technology for DSOC as the range is extended.
CACI hired Retired Lieutenant General Bob Marion as a Senior Vice President in the new role of corporate strategic advisor. In this new position, Marion will provide insight on critical industry and acquisition issues as an active member of the team charged with leading efforts to augment CACI’s growing national security business.
CACI Chairman of the Board of Directors, Michael “Mike” A. Daniels, received the Virginia Chamber of Commerce Lifetime Achievement Award honoring his career as a technology leader and for promoting a thriving economy within the Commonwealth, supported by a world-class workforce.

Fiscal Year Results

Revenues in fiscal year 2024 increased 14.3 percent year-over-year, driven by 13.7 percent organic growth. The increase in income from operations was driven by higher revenues and gross profit. Growth in diluted earnings per share and adjusted diluted earnings per share was driven by higher income from operations and share repurchases, partially offset by higher interest expense and a higher tax provision. The increase in cash from operations, excluding MARPA, was driven by higher net income, lower tax payments including those related to our method change enacted in fiscal year 2021 and Section 174 of the Tax Cuts and Jobs Act of 2017, and strong working capital management.

(Source: BUSINESS WIRE)

07 Aug 24. SkyWater Technology Reports Second Quarter 2024 Results.

Eighth Straight Quarter of Record Revenue and 34% Growth Year-Over-Year

SkyWater Technology, Inc. (NASDAQ: SKYT), the trusted technology realization partner, today announced financial results for the second quarter 2024 ended June 30, 2024.

Financial Highlights for Q2 2024:

Revenue increased 34% year-over-year to a record $93.3m.
Gross margin decreased to 18.3% on a GAAP basis, compared to 23.9% in Q2 2023, and decreased to 18.9% on a non-GAAP basis, compared to 25.3% in Q2 2023.
Net loss to shareholders of $1.9m, or $0.04 per share on a GAAP basis, and net income to shareholders of $0.8m, or $0.02 per share on a non-GAAP basis, compared to net loss to shareholders of $8.6m, or $0.19 per share on a GAAP basis, and net loss to shareholders of $2.0m, or $0.04 per share on a non-GAAP basis in Q2 2023.
Adjusted EBITDA of $8.1m, or 8.7% of revenue, compared to $10.3m, or 14.7% of revenue in Q2 2023.

“We are pleased to report continued strong results for our unique and differentiated Advanced Technology Services business, which – coupled with record levels of customer-funded CapEx – drove another record revenue quarter and positive non-GAAP EPS,” commented Thomas Sonderman, SkyWater Chief Executive Officer. “With continued progress in efficiency gains, our second quarter results are indicative of the new revenue baseline required to support future profitability and positive cash flow from operations as we move into next year and beyond. With our revenue outlook for the underlying business remaining relatively consistent as we have progressed through 2024, our customers’ commitments to fund the technical capabilities and capacity that will support future growth have continued to expand further. We believe these unprecedented levels of customer co-investment make SkyWater a uniquely CapEx-light semiconductor manufacturing partner, with an expanding gross margin profile and significant earnings growth potential in the years to come.”

Recent Business Highlights:

Advanced Technology Service (ATS) development revenue exceeded expectations to reach a new record in Q2, reflecting strong operational execution and improved cycle times in response to accelerated demand on multiple aerospace and defense programs.
Record revenue results, along with significant progress achieved in our ongoing cost-control efforts, enabled positive non-GAAP EPS along with strong operating cash flow generation in Q2.
In next-generation medical applications, through our recent ATS collaboration with Quantum-Si, we are now transitioning their baseline technology to Wafer Services, a key milestone as they progress commercialization efforts for their state-of-the-art proteome sequencing technology.
The recent installation of Multibeam’s high-productivity, direct-write patterning system is a key development supporting strong customer demand for our Technology as a Service (“TaaS”) business model. The first-of-its-kind Multicolumn E-Beam Lithography (MEBL) system enables advanced lithography capability from early-concept prototyping through the production ramp.
The recent delivery of the first fan-out wafer-level packaging tool to SkyWater Florida is a significant milestone as we accelerate the tooling and facilitation of our operations in preparation for an expected 2025 ramp of our advanced packaging service offering.

Q2 2024 Summary:

GAAP

Q2 2024 Results:

Revenue: Revenue of $93.3m increased 34% year-over-year. ATS development revenue of $61.7m increased 18% year-over-year. Tools revenue was $25.9m in the second quarter of 2024 compared to $0.9m in the second quarter of 2023. Wafer Services revenue of $5.8m decreased 66% compared to the second quarter of 2023.
Gross Profit: GAAP gross profit was $17.1m, or 18.3% of total revenue, compared to gross profit of $16.7m, or 23.9% of total revenue, in the second quarter of 2023. Non-GAAP gross profit was $17.6m, or 18.9% of total revenue, compared to non-GAAP gross profit of $17.7m, or 25.3% of total revenue, in the second quarter of 2023.
Operating Expenses: GAAP operating expenses were $15.7m, compared to $20.2m in the second quarter of 2023.
Net Loss: GAAP net loss to shareholders was $1.9m, or $0.04 per share, compared to a net loss to shareholders of $8.6m, or $0.19 per share, in the second quarter of 2023. Non-GAAP net income to shareholders was $0.8m, or $0.02 per share, compared to a non-GAAP net loss to shareholders of $2.0m, or $0.04 per share, in the second quarter of 2023.
Adjusted EBITDA: Adjusted EBITDA was $8.1m, or 8.7% of total revenue, compared to $10.3m, or 14.7% of total revenue, in the second quarter of 2023. (Source: BUSINESS WIRE)

07 Aug 24. Aeva Reports Second Quarter 2024 Results.

On Track with Daimler Truck Program Milestones and 2026 Start of Production Timeline

Advanced with Global Top 10 Passenger OEM RFQ, Award Decision Expected This Year

Top U.S. National Defense Security Organization Selected 4D LiDAR to Protect Critical Energy Infrastructure

First Industrial Launch with Nikon On Schedule for Q4 2024

August 07, 2024 04:05 PM Eastern Daylight Time

Aeva® (NYSE: AEVA), a leader in next-generation sensing and perception systems, today announced its second quarter 2024 results.

Key Company Highlights

Daimler Truck program is on track with continued scaling of sensor shipments for the OEM’s on-road vehicles. Daimler Truck unveiled its battery electric autonomous Freightliner eCascadia vehicle technology demonstrator equipped with Aeva 4D LiDAR
Strong momentum in passenger vehicles: continued expectation for a global top 10 OEM RFQ award decision this year; a new collaboration with an additional global top 10 OEM for integration concept of next-generation FMCW LiDAR
Completed final validation for the first industrial precision product with Nikon ahead of Aeva deliveries in Q4 2024
First expansion into security with Aeva 4D LiDAR selected by a top U.S. National Defense Security organization to protect critical energy infrastructure
Germany’s AutomatedTrain program selected Aeva 4D LiDAR to help enable driverless, fully automated passenger train dispatch and parking functionality
Achieved ISO/IEC 27001:2022 certification of Aeva’s information security management system, demonstrating continued progress on automotive Tier-1 readiness

“We continue to achieve key milestones on our production programs with Daimler Truck in auto and Nikon in industrial, while also making significant strides on additional automotive opportunities with multiple global top 10 passenger OEMs looking to adopt 4D LiDAR,” said Soroush Salehian, Co-Founder and CEO at Aeva. “We believe the demand for Aeva’s unique FMCW technology across a broad range of applications is only beginning, as evidenced by recent wins in new areas including security, and we see opportunity to continue securing additional program wins in 2024.”

Second Quarter 2024 Financial Highlights

Cash, Cash Equivalents and Marketable Securities

o Cash, cash equivalents and marketable securities of $160.2m and available facility of $125.0m as of June 30, 2024

Revenue

o Revenue of $2.0m in Q2 2024, compared to revenue of $0.7m in Q2 2023

GAAP and Non-GAAP Operating Loss*

o GAAP operating loss of $48.9m in Q2 2024, compared to GAAP operating loss of $38.2m in Q2 2023

o Non-GAAP operating loss of $32.0m in Q2 2024, compared to non-GAAP operating loss of $31.1m in Q2 2023

GAAP and Non-GAAP Net Loss per Share*

o GAAP net loss per share of $0.82 in Q2 2024, compared to GAAP net loss per share of $0.82 in Q2 2023

o Non-GAAP net loss per share of $0.57 in Q2 2024, compared to non-GAAP net loss per share of $0.66 in Q2 2023

Shares Outstanding

o Weighted average shares outstanding of 53.0m in Q2 2024

Aeva’s mission is to bring the next wave of perception to a broad range of applications from automated driving to industrial robotics, consumer electronics, consumer health, security and beyond. Aeva is transforming autonomy with its groundbreaking sensing and perception technology that integrates all key LiDAR components onto a silicon photonics chip in a compact module. Aeva 4D LiDAR sensors uniquely detect instant velocity in addition to 3D position, allowing autonomous devices like vehicles and robots to make more intelligent and safe decisions. For more information, visit www.aeva.com, or connect with us on X or LinkedIn. (Source: BUSINESS WIRE)

07 Aug 24. Graham Corporation Net Income Increased 12% to $3.0m on Expanded Gross Margin of 24.8% in First Quarter of Fiscal 2025

Strong financial results further validates solid execution of strategic initiatives to grow and drive stronger earnings power
Revenue up 5% to a record $50.0m reflecting strength in defense and refining; gross margin expanded 170 basis points to 24.8%
Net income increased 12% to $3.0m for net margin of 5.9%, adjusted net income1 was up 20% to $3.6m and adjusted EBITDA1 was $5.1m, or 10.3% of sales
Orders of $55.8m driven by defense market and international demand, resulted in a book-to-bill ratio of 1.1x and nearly $400m in backlog2
Strong balance sheet with no debt and $21.6m of cash at June 30, 2024, provides financial flexibility to support future growth

Graham Corporation (NYSE: GHM) (“GHM” or the “Company”), a global leader in the design and manufacture of mission critical fluid, power, heat transfer and vacuum technologies for the defense, space, energy, and process industries, today reported financial results for its first quarter for the fiscal year ending March 31, 2025 (“fiscal 2025”). (instead of Graham Corporation (NYSE: GHM) (“GHM” or the “Company”), a global leader in the design and manufacture of mission critical fluid, power, heat transfer and vacuum technologies for the defense, space, energy, and process industries, today reported financial results for its first quarter for the fiscal year ended June 30, 2024 (“fiscal 2025”).

“We are delivering consistent improvement, solid growth and strengthening profitability,” commented Daniel J. Thoren, President and Chief Executive Officer. “We believe our solid results reflect the commitment and discipline of the GHM team, the confidence our customers have bestowed on us and the effectiveness of our strategy to build better companies. In addition to the visibility our nearly $400 m in backlog provides, it is worth noting that the growth of our defense business has also reduced our economic sensitivity as we receive a steady flow of program renewals and new opportunities with the U.S. Navy. In fact, we will be breaking ground this month on a new 29,000 square foot facility in Batavia, NY to provide production efficiencies, and increased capabilities and capacity to support our defense customer’s needs.”

He concluded, “These are exciting times at Graham Corp. We are steadily advancing our plan, delivering on our targets and are strategically positioning for continued growth.”

First Quarter Fiscal 2025 Performance Review

(*Graham believes that, when used in conjunction with measures prepared in accordance with U.S. generally accepted accounting principles, adjusted net income, adjusted diluted net income per share, Adjusted EBITDA and adjusted EBITDA margin, which are non-GAAP measures, help in the understanding of its operating performance. See attached tables and other information on pages 10 and 11 for important disclosures regarding Graham’s use of these non-GAAP measures.

Record quarterly net sales of $50.0m increased 5%, or $2.4m, and included $1.6m of incremental sales from P3. Sales to the defense market increased $6.3m, or 28%, and were driven by better execution, improved pricing, and increased direct labor. These increases more than offset lower “Other” revenue that reflected variability in project timing across multiple markets and customers. Aftermarket sales to the refining, chemical/petrochemical, and defense markets of $7.8m remained strong but were $3.0m lower than the prior year record levels.

See supplemental data for a further breakdown of sales by market and region.

Gross margin expanded 170 basis points to 24.8%, which reflected higher margin defense sales, higher margin P3 sales, and improved execution. Additionally, gross profit for the quarter benefited $480 thousand due to a $2.1m grant received from BlueForge Alliance to reimburse the Company for the cost of its defense welder training programs in Batavia and related equipment. BlueForge Alliance is a nonprofit, neutral integrator that supports the U.S. Navy’s submarine industrial base initiatives.

Selling, general and administrative expense (“SG&A”), inclusive of amortization, was $9.3m, or 18.6% of sales, up $2.0m over the prior year. This increase reflects the continued investments the Company is making in its operations, employees, and technology. This included $0.3m of incremental costs related to P3, $0.3m for enterprise resource planning (“ERP”) conversion costs at the Batavia facility, $0.4m of incremental research and development costs, and a $0.3m increase in the supplemental performance bonus for Barber-Nichols employees3. When compared with the fourth quarter of fiscal 2024, SG&A expenses decreased $1.8m, or 16%, primarily due to lower professional services fees and performance-based compensation.

Cash Management and Balance Sheet

Cash provided by operating activities was $8.7m for the first quarter of fiscal 2025. Cash and cash equivalents on June 30, 2024, were $21.6m up from $16.9m on March 31, 2024. Capital expenditures for the first quarter of fiscal 2025 were $3.0m.

The Company had no debt outstanding at June 30, 2024 with $29 m available on its senior secured revolving credit facility.

Orders, Backlog, and Book-to-Bill Ratio

See supplemental data filed with the Securities and Exchange Commission on Form 8-K and provided on the Company’s website for a further breakdown of orders and backlog by market. See “Key Performance Indicators” below for important disclosures regarding Graham’s use of these metrics.

(in millions)

Orders for the three-month period ended June 30, 2024, were $55.8m, which equated to a book-to-bill ratio of 1.1x. Defense orders represented 51% of total orders and included the second option year award to support the MK48 Mod 7 Heavyweight Torpedo program with mission critical alternators and regulators. Additionally, orders for the quarter included three surface condenser systems for the world’s first net-zero carbon emissions integrated ethylene cracker and derivatives site located in North America. Aftermarket orders for the refining and petrochemical markets for the first quarter of fiscal 2025 increased 4% to $8.2m compared with the prior-year period.

Backlog at quarter end was $396.8m, up 23% compared with the prior-year period and up 2% compared with the end of the trailing fourth quarter of fiscal 2024. Approximately 35% to 45% of orders currently in backlog are expected to be converted to sales in the next twelve months and another 25% to 30% is expected to convert to sales over the following year. The majority of orders expected to convert beyond twelve months are for the defense industry, specifically the U.S. Navy.

(Source: BUSINESS WIRE)

08 Aug 24. Planemaker Embraer shares jump after quarterly earnings beat.

Summary
Companies
Q2 adjusted net profit $80.4m vs f’cast $47.66m
Revenue $1.49bn vs f’cast $1.45bn
Says fully committed to reaching full-year guidance
Shares up 9.5%, taking year-to-date gain to more than 85%

Brazilian planemaker Embraer’s (EMBR3.SA) second-quarter net income jumped by almost 40%, it said on Thursday, beating market expectations and sending its shares sharply higher after increased deliveries of commercial aircraft.

The world’s third-largest planemaker behind Airbus (AIR.PA), and Boeing (BA.N), posted adjusted net profit of $80.4m in the three months to June 30, exceeding the $47.66m forecast by analysts polled by LSEG.

Embraer had previously reported deliveries of 19 commercial jets in the period, up 12% year on year, pushing up revenue and helping to offset a 10% drop in business jet deliveries.

Sao Paulo-traded shares of the planemaker rose as much as 9.5% after the results, making it one of the top performers on benchmark stock index Bovespa (.BVSP) and extending its year-to-date gain to more than 85%.

The company reaffirmed its outlook for 2024, which includes the delivery of between 72 and commercial aircraft, and 125-135 executive jets, bringing in revenue of between $6bn and $6.4bn.

“We are fully committed to reaching our full-year guidance, despite all the ongoing supply-chain constraints we continue to deal with,” Chief Financial Officer Antonio Carlos Garcia told a call with analysts.

Revenue for the quarter was $1.49bn, up 15.6% from a year earlier and slightly more than the $1.45bn expected by analysts. Its commercial aviation and defense arms stood out with 17% and 130% rises, respectively.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 27.9% to $190.4m, beating the $135.45m expected by analysts, while the EBITDA margin grew 120 basis points to 12.7%.

Analysts at BTG Pactual said the results were solid and highlighted the company’s strong margins, reiterating their “buy” rating for the shares which they see as offering “nice exposure” to the aviation industry at a compelling valuation.

Embraer voiced optimism about fresh commercial jet orders soon and sees room to expand the presence of its E2 jets in the Brazilian market, as it holds talks with local airlines such as LATAM (LTM.SN), for potential deals.

The planemaker, whose traditional niche fits just below Boeing’s and Airbus’s best-selling 150-seat plus market, has been experiencing positive demand amid the larger peers’ extended delivery deadlines.

Sales so far this year include 20 E2 jets to state-run Mexicana de Aviacion and 90 E175 aircraft to American Airlines (AAL.O). “We are working on a lot of sales campaigns in basically all regions of the world, so we are confident that we will bring good news soon about new orders,” CEO Francisco Gomes Neto said. ($1 = 5.6369 reais) (Source: Reuters)

08 Aug 24. Embraer delivered 47 jets in 2Q24 of which 27 were executive jets (20 light and 7 medium), 19 were commercial jets and 1 multi-mission C-390 Millennium in Defense – an increase of 88% compared to the 25 aircraft delivered in 1Q24.

Firm order backlog of US$21.1 bn in 2Q24 – a 7-year high, up more than 20% annually.
Revenues totaled US$1,494m in the period or an increase of 67% compared to the previous quarter (qoq). Highlight for Commercial Aviation revenues with 176% growth.
Adjusted EBIT reached US$138.8m with a 9.3% margin in 2Q24 (US$6.8 m and 0.8% in 1Q24).
Adjusted free cash flow w/o Eve in 2Q24 was negative US$(215) m because of working capital needs to support higher number of deliveries in the second half of 2024.
2024 Guidance reiterated: Management believes current estimates are valid and represent evenly balanced opportunities and risks for full year operations. Commercial Aviation deliveries between 72 and 80 aircraft, and Executive Aviation deliveries between 125 and 135. Total company revenues in the US$6.0-6.4 bn range, Adjusted EBIT margin between 6.5% and 7.5%, and Adjusted free cash flow of US$220 m or higher.

08 Aug 24. Rheinmetall confident of hitting ‘at least’ full-year targets. German defence group Rheinmetall (RHMG.DE) will at the very least hit its full-year sales and earnings targets after a strong first half as demand for weapons in Europe remains unabated after Russia’s invasion of Ukraine in 2022.

“We have never seen such growth,” said Chief Executive Armin Papperger, reportedly the target of a Russian assassination plot for his role in supporting the West’s efforts in Ukraine.

“After six months of the 2024 fiscal year, Rheinmetall is confirming at least the sales and earnings forecast for 2024,” said the maker of Leopard 2 tanks.

It has guided for record sales of 10bn euros and an operating profit margin of 14-15% this year.

Papperger said on Thursday that Rheinmetall now expects annual sales growth of around 2bn euros in coming years.

Sales rose nearly 50% in the second quarter, to 2.23bn euros, the company said, confirming preliminary results released last month that also saw operating profit double in the quarter and reported earnings after taxes at 79m euros.

Its backlog, which includes potential orders from contracts with civilians and call-offs expected from framework agreements with military customers, was up 62% to 48.6bn euros ($53.12bn) in the first half of this year, it said. ($1 = 0.9148 euros) (Source: Reuters)

08 Aug 24. Financial report for H1 2024 – Rheinmetall on track for success with record figures: sales up by a third, earnings nearly doubled.

Boom in military business: Group sales increase of 33% in the first half of 2024 to more than €3.8bn
Continued strong increase in orders: Rheinmetall Nomination more than doubles to more than €15bn
Rheinmetall Backlog reaches new high at €48.6bn
Operating result nearly doubles from €212m to €404m
Operating margin climbs to 10.6%
Operating free cash flow improves by €306m to €-19m
Annual guidance for 2024 confirmed

Accelerating sales growth and substantially increased revenues characterize the business performance of Düsseldorf-based Rheinmetall AG in the first half of 2024. Business with the armed forces of Germany and partner nations in the EU and NATO along with assistance to Ukraine continue to significantly improve business performance. Sales in the civilian business also improved slightly from the previous year. With demand consistently high, the market situation in the defence industry continues to grow. The Group also saw noticeable improvement in operating free cash flow.

Group management is confirming its current guidance for the Group´s sales growth and operating result margin based on the current market situation, a continuously excellent order situation and the business performance expected in the second half of the financial year.

Armin Papperger, CEO of Rheinmetall AG, said of the company’s performance, “The supercycle is clearly accelerating. In the second quarter of 2024 alone, our sales increased around 50 percent and our result more than doubled. Positive margin effects are significantly increasing our profitability. With positive development in all areas, we are well on our way to reaching our annual targets.”

“We have never seen such growth. We also expect annual sales growth of around two bn euros in the coming years. This very positive development is only possible because we invested early and have been following a strategic plan since 2014 – when Crimea was invaded. We massively expanded capacities, made acquisitions and are now also additionally building new plants in countries like Lithuania, Hungary, Romania and Ukraine. Forward-looking partnerships in key markets are also bringing us closer to our goal of becoming a global defence industry champion,” Papperger added.

Rheinmetall Group: Strong sales growth of 33% – Rheinmetall Nomination more than doubles

Group sales in the first half year of 2024 climbed noticeably from the previous year by €955m or 33% to €3,815m (previous year: €2,861m). Adjusted for currency effects, sales were around 34% higher than in the previous year, with 76% of sales coming from outside Germany.

Operating result as of June 30, 2024 amounted to €404m, an increase of €192m, or 91% from the previous year’s €21m. In addition to sales growth, the improvement in operating result is particularly due to the profit contribution of Rheinmetall Expal Munitions in Spain, which was acquired in the previous year. The Group’s operating margin improved in the first half year of 2024 to 10.6% (previous year: 7.4 %).

The Group’s accelerated growth is particularly evident in a quarterly comparison: Compared to the previous year, the second quarter of 2024 saw a sudden leap in sales of around 49% to €2.234m (previous year: €1,498 m) and in operating result of 110% to €270m (previous year: €128 m).

Earnings per share from ongoing operations improved in the first half of 2024 compared to the previous year’s period, rising from €2.53 to €4.21.

Operating free cash flow substantially improved in the first half of 2024, increasing by €306m to €-19m from the €-325m in the same quarter of the previous year. Despite further increases in inventories, this improvement was made possible by higher payments from customers.

Compared to the first half of the previous year, the value of Rheinmetall Nomination more than doubled in H1 2024, rising to €15,376m (previous year: €7,192m). This was driven in essence by orders from Germany – mostly from the special fund for the Bundeswehr – and by orders in aid of Ukraine. Rheinmetall Nomination comprises traditional 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).

As a result, the Rheinmetall Backlog grew significantly compared to the previous year, rising 62% from €30.0bn to €48.6bn (June 30, 2024). In addition to orders on hand, Rheinmetall Backlog includes the call-offs expected from framework agreements in place with military customers and potential orders from contracts with civilian clients.

Vehicle Systems: Rheinmetall Backlog grows 31% from previous year

Sales in Vehicle Systems, which mainly operates in military wheeled and tracked vehicles, in the first half of 2024 reached €1,300m, an increase of €288m or 28% from the previous year. The increase in sales is particularly attributable to projects for the supply of tactical vehicles as well as increased deliveries of logistic vehicles.

Rheinmetall Nomination – the total of order intake and the volume of new framework agreements with military customers – increased by €22m from the previous year to €3,114m. The largest orders in 2024 have so far been the order for the manufacture and supply of the German armed forces’ heavy weapon carrier based on the Boxer wheeled vehicle, with a volume of over €1,600m, as well as the associated service contract with over €620 m.

The Rheinmetall Backlog – the total of orders on hand and the call-offs expected from framework agreements in place with military customers – came in at €18,148m as of June 30, 2024, an increase of €4,252 m or 31% from the previous year. The operating result improved in the first half of 2024 from €100m to €119m. The operating result margin was 9.2%, less than the previous year’s 9.9%.

Weapon and Ammunition: Backlog more than triples to €19bn

Weapon and Ammunition achieved with the activities in weapon systems and ammunition sales of €1,054m in the first half of 2024, exceeding the previous year’s figure by €508m or 93%. The increase compared to the same period in the previous year is mainly due to higher ammunition deliveries. Important projects were artillery orders for Germany and Ukraine. Rheinmetall Expal Munitions, which was acquired on July 31, 2023, made a significant contribution to growth with sales totaling €230m.

Rheinmetall Nomination rose to €8,828m in the first half of 2024, considerably higher than the previous year (previous year:€1,543m). Its main driving factor is a framework contract amounting to €8.5bn gross by the German customer. Further growth stemmed from countries in Germany and West Asia for indirect fire and medium caliber products.

The Rheinmetall Backlog more than tripled, reaching about €19bn as of June 30, 2024. Compared to the previous year (June 30, 2023: €5.8bn), growth totaled €13 bn or 229%. The driving factors here were the conclusion of two multi-year ammunition framework contracts in the second half of 2023 and the subsequent increase in the artillery framework contract by the German customer in June 2024.

The operating result in the first half of 2024 more than doubled, growing by €117m or 131% to €206m (previous year: €89m). Operating result margin increased substantially from 16.3% to 19.5% despite rising labor and material costs. This margin includes a profit contribution of €73m by Rheinmetall Expal Munitions.

Electronic Solutions: Rheinmetall Nomination quadruples

Electronic Solutions, which produces solutions in the field of armed forces digitalization, infantry equipment, air defence and simulation, increased sales in the first six months of 2024 by €143m to €647m (previous year: €504 m), an increase of 28%. This increase in sales is mainly due to an order of the German armed forces for the Skyranger 30 mobile air defence system, further contributions for the Puma infantry fighting vehicle and the updating of an existing air defence system for a European customer.

Rheinmetall Nomination more than quadrupled from the previous year’s period, from €671m to €3,020m. A development contract for the short and very short range air defence protection system as well as a delivery agreement for the Skyranger 30 mobile air defense system were material incoming orders from the German customer. A framework agreement for the delivery of communication and hearing protection headsets for the German customer was also concluded. The Rheinmetall Backlog as of June 30, 2024 was €6,609m, a significant increase of €2,924m compared to the previous year (previous year: €3,685m).

The operating result improved in the first half of 2024 to €53m, up from €32m in the previous year. The operating margin increased to 8.3% (previous year: 6.3%) due to sales.

Power Systems: Operating result exceeds previous year’s level

Sales in Power Systems, which bundles technological expertise in civilian markets, were €1,056m, slightly above the previous year’s level (previous year: €1.026m). The sales growth in the US region compensated for the decline in sales in Europe. Booked business in the first half of 2024 was €1,357m, well below the previous year (previous year: €1,775m). Nominated Backlog as of June 30, 2024 dropped 9.9% to €7,938m (previous year: €8,806m).

Operating result rose in the first six months of 2024 compared to the previous year by 54% to €57m (previous year: €37m). The comparative 2023 figure was affected by an IT incident resulting in additional costs that encumbered the operating margin for this period. The improved at-equity result of a Chinese joint venture had a positive effect on operating result. The operating margin was subsequently 5.4% (previous year: 3.6%).

Outlook: Current annual guidance confirmed

At the end of the first half of fiscal year 2024, Rheinmetall is confirming at least its sales and result guidance for 2024, with Group sales of around €10bn, due to the business performance expected in the second half of 2024. 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 between 14% to 15% in fiscal 2024 (margin in fiscal 2023: 12.8%).

06 Aug 24. H3X Closes Oversubscribed $20m Series A to Advance Revolutionary Electric Motors in Aerospace, Defense, and Marine Sectors.

H3X, the leading manufacturer of high power density electric motors, announced today a $20m oversubscribed Series A raise. The funding round was led by Infinite Capital, with participation from Hanwha Asset Management, Cubit Capital, Origin Ventures, Industrious Ventures, Venn10 Capital, and follow-on investors that include Lockheed Martin Ventures, Metaplanet, Liquid 2 Ventures, and TechNexus.

H3X $20m Series A

H3X Co-Founders Max Liben (CTO), Jason Sylvestre (CEO), Eric Maciolek (President)

“We’re on an ambitious journey to become the world’s leading supplier of advanced electric motors,” said Jason Sylvestre, Co-Founder and CEO of H3X. “With remarkable speed, we’ve proven that this technology works and has a key role to play in enabling sustainable aviation, decarbonizing the marine and industrial sectors, and unlocking next-generation electrified defense technology. This funding round will enable us to scale up production and operations and deliver on some very large contracts in our pipeline.”

“Through the past three years working with H3X, I have seen a phenomenal display of rapid innovation from the team. Bringing technical advancements to market this fast is rare, as they have already commercialized a series of market-leading electric motors,” said Nathan Doctor, Founder and Managing Partner at Infinite Capital. “I strongly believe we’re on the verge of electrifying aviation and maritime transport, with H3X’s electric propulsion systems as the foundational technology.”

In the past 24 months, H3X has successfully validated its high-performance core technology, launched the HPDM-30, HPDM-250, and HPDM-140 integrated motor drives, and delivered these units to leading aerospace and defense customers. They also successfully completed multiple contracts with both NASA and the Air Force. With the Series A funding, H3X plans to expand production and bring its next-generation, multi-sector class of integrated motor drives to the market (HPDM-350, HPDM-1500, and HPDM-2300). The HPDM-1500 and HPDM-2300 are megawatt-class machines that will significantly enhance the performance of electric aircraft through their high power density and fault tolerance. In some cases, aircraft range can be doubled by using H3X motors versus conventional solutions by freeing up weight for additional energy storage onboard. These megawatt-class machines will also unlock new market segments for H3X in both marine and heavy industry.

“H3X is focused on scaling innovative technologies that we believe could offer our customers effective solutions for electrifying legacy, multi-domain systems,” said Chris Moran, vice president and general manager of Lockheed Martin Ventures. “Lockheed Martin’s continued investment in H3X underscores our dedication to advancing innovative solutions and expanding the defense industrial base to ensure the U.S and its allies remain ahead of emerging threats.”

“As an investor in frontier technologies, we were immediately impressed that H3X has solved the biggest engineering challenges to unlock major benefits for weight and volume sensitive applications,” said Philip Carson of Cubit Capital. “Notably, every customer spoke about how they want to work with this team above others. With strong traction today at the Department of Defense, we’re excited about how they can leverage that success to scale across industries.”

Engineered, built, and tested at H3X headquarters in Denver, Colorado, these advanced integrated motor drives can scale in power from 30kW to 30MW and fill a large gap in the market for US-made, high power density motors and generators. H3X sees hybrid systems playing an increasingly larger role in the electrification transition of these industries because of the fuel burn reduction that can be realized without sacrificing mission range/endurance. This translates to lower operating costs as well as reduced emissions. In hybrid applications, H3X’s products can be used as either motors or generators without any hardware modifications required.

About H3X

Founded in 2020 by a team of engineers, H3X is an advanced technology and electric motor manufacturing company based in Denver, Colorado. Their team brings together driven minds from aerospace, automotive, and motorsports with deep knowledge in electric machines, power electronics, material science, and advanced manufacturing. They are heavily vertically integrated: designing, manufacturing, and testing their integrated motor drives under one roof at their 17,000 sq-ft headquarters facility. The mission of the company is to become the world’s leading supplier of advanced electric motors by 2030 to drive deep decarbonization in aviation, marine, and heavy industrial applications and unlock next-generation electrified defense technology to strengthen national security. For more information, visit http://www.h3x.tech/ and follow the company on LinkedIn.(Source: PR Newswire)

06 Aug 24. Axon reports Q2 2024 revenue of $504m, up 35% year over year, raises outlook. Axon Cloud & Services revenue grows 47% to $195m

Annual recurring revenue grows 44% to $850m
Net income of $41m supports non-GAAP net income of $93m and Adjusted EBITDA of $123m
Raises full year revenue outlook to a range of $2.00bn to $2.05bn, up from $1.94bn to $1.99bn

Fellow shareholders,

Axon closed the first half of 2024 with record quarterly revenue and an improved outlook for the remainder of the year. Our pipeline has grown across product categories and customer verticals, bolstered by our market-leading innovation, which we believe positions us for durable, profitable growth over the long term. Second quarter revenue growth of 35% marks our 10th consecutive quarter growing more than 25% year over year. We delivered growth with profitability, achieving second quarter net income margin of 8.1% and Adjusted EBITDA margin of 24.5%.

Strength in our business continues across the board in all product categories. Axon Cloud & Services revenue grew 47% year over year, driven by growing adoption of software applications from both new and existing customers, with net revenue retention of 122%. Axon Cloud software growth remains primarily driven by Axon Evidence and is further accelerated by productivity software, artificial intelligence (AI), real-time operations (RTO) and robotic security. These categories collectively drove almost half of the year over year growth in our software revenue. Sensors & Other revenue grew 28% year over year, supported by strong demand for Axon Body 4, which is now our fastest adopted body camera product and has surpassed 200,000 units in the field. TASER revenue growth of 28% year over year was fueled by the continued ramp of TASER 10, which has grown sequentially each quarter since launch and has surpassed 100,000 units in the field.

We continue to see expansive opportunities across our customer verticals. Increasing penetration of our Officer Safety Plan (OSP) remains a driver of growth within our U.S. state and local customer base, and more than 20% of the potential users within this cohort are now on one of our OSP offerings(1). At the same time, we have seen strong demand from our new and emerging customer verticals, including international, U.S. federal, corrections and enterprise. Our top four TASER 10 deals have come from these verticals and each vertical grew ahead of our overall revenue in the quarter — international revenue grew 49% year over year.

Axon is mission-driven with a strategy to deliver the technology ecosystem for public safety. We take an innovative approach to solving problems for our customers, and our product roadmap and engagement with them builds our confidence to provide a strengthened outlook. Axon’s updated guidance for the full year 2024 contemplates approximately 29.5% annual revenue growth at the midpoint, with an expanded Adjusted EBITDA margin of approximately 23.1%. We provide more detail on our product vision, most recent financial performance and improved outlook below.

Axon Cloud & Services

Digital Evidence Management

Axon Evidence, our flagship digital evidence management product, is the largest revenue contributor within Axon Cloud software. Today, Axon Evidence is used by more than 20,000 agencies, in every state within the United States and in over 90 countries worldwide. Over 2 bn evidence files have been loaded into Axon Evidence and our cloud stores more than 400 petabytes of data. Our solution has also enabled communities to upload more than 30m files via Axon Community Request. The vast reach of our platform is used both in evidence collection and downstream analysis and review, with over 400m pieces of evidence having been shared with our case sharing feature.

Many of our product solutions include cameras or devices with integrated digital evidence management licenses, and give customers the ability to upgrade to premium options to unlock additional features and functionality. We continue to drive growth with our evidence management software by building new premium capabilities and attracting new users. In the second quarter, over half of the growth in Axon Cloud software revenue was driven by digital evidence management licenses, primarily tied to our body and in-car cameras.

Productivity Software

Disruptive innovation is part of Axon’s DNA. When we began to drive public safety’s move to the digital age with our cloud software, we also saw the potential to modernize and disrupt existing workflows to create significant productivity gains for our customers in the future. This led to our investment in a suite of productivity software applications supporting administrative tasks that demand an outsized share of our customers’ time. Axon productivity software encompasses Axon Records and Axon Standards, and has expanded to include several emerging AI-driven applications.

Axon has been a leader in driving AI-powered technology to our customers for several years. We brought our first AI-powered product to the market in 2019 with automated video redaction. We followed shortly after with audio-to-text transcription in 2020 and AI-driven automatic license plate reading (ALPR) in 2021. This year, we took a giant leap forward with our launch of Draft One, a powerful new AI service that creates the first draft of a police report extracted directly from Axon body camera recordings. Released less than one year following the general availability of generative AI large language models, Draft One has received the best early customer feedback of any product we have introduced and supports our strategy to build for future technology. Agencies are reporting that Draft One dramatically reduces the amount of time officers spend writing police reports, with time savings in excess of 50%.

Revenue from our productivity and AI product suite grew more than 70% year over year in the second quarter. Contribution from our newest AI product, Draft One, was immaterial to this growth given the timing of sales cycles and is an opportunity for continued growth looking ahead. We see growing opportunities for AI applications in our portfolio and we are accelerating our investment to extend deeper into our digital evidence management, productivity and real-time operations.

“If we can cut out the worst parts of being busy, then we can say to a young recruit who has options, ‘We’re all hurting for bodies. We can use this technology to free up your time to go do the stuff that we all signed up to do.'” — Captain Gossard, Lafayette Indiana PD

“I have gotten nothing but absolutely positive responses back, including one officer who said, ‘Please don’t take this away. This makes the difference between me absolutely loving my job like I used to a few years ago, to where now it seems like there’s this constant conundrum of trying to stay caught up on reports [and] administrative functions. You’re giving me time back in my day where I can go back out, be engaged with my community, do enforcement, be relatable to my citizens, and be doing what I love to do, which is serve my community.’ So it’s a win-win.”

— Sergeant Younger, Fort Collins PD.

Real-Time Operations

In 2019, Axon introduced Axon Body 3 with LTE connectivity. This was a major advancement in body camera technology and a bet on the future long before customers were asking for the capabilities LTE connectivity would unlock. We recognized that powering real-time operations was critical to our ecosystem strategy and paved the path for future technologies with this new disruptive product introduction. Five years later, every new device we have introduced is connected — body cameras, in-car cameras, drones, TASER devices — via LTE, Bluetooth or networked docks, and our recent acquisition of Fusus, LLC (Fusus), a global leader in real-time crime center technology, enables us to connect countless other third-party devices through our real-time operations software. In addition, LTE connectivity is now foundational to enabling our advanced productivity applications, such as Draft One.

With Axon Body 4, we took real-time operations a step further and introduced two-way voice communications, turning our latest generation camera into a communications platform. Our customers are seeing the value in this new capability, which enables them to more seamlessly communicate and react to situations than ever before. In one recent example, the New Orleans Emergency Medical Service (EMS) leveraged Axon Body 4 real-time capabilities to enhance their operations during the Mardi Gras festivities. Facing the challenge of maximizing limited resources, New Orleans EMS relied on Axon’s live streaming and dynamic maps in their EMS Operations Center. Command staff monitored events as they unfolded and were able to tap into any camera feed in real-time to provide crucial support via two-way communication during one of the city’s largest events.

Axon’s real-time operations portfolio continues to evolve. With the addition of Fusus to our RTO suite, we are redefining public safety operations and adjusting our focus away from displacing highly customized legacy software. We see greater opportunity to focus deeper into areas where we believe our technology can drive significantly improved decision making. So, we are pivoting away from the command-line console to focus on sensor fusion and AI, integrating multiple data feeds (both human and technology) in a “single pane of glass.” Strategically, we are focusing-in where our ability to innovate is aligned with emerging technological capabilities, and where we are seeing the fastest adoption and customer demand. Our acquisition of Fusus has been key in providing us the platform to accelerate our momentum. We are doubling down. In the second quarter, revenue from our real-time operations portfolio grew more than 100% year over year.

Expanding Partnerships

In June, we expanded our partnership with Skydio, Inc. (Skydio), a leading U.S. drone manufacturer and world leader in autonomous flight, to integrate Axon’s real-time operations and evidence management with Skydio’s autonomous drones, establishing the most scalable, comprehensive drone solution for public safety. The combined offering supports Drone as First Responder (DFR) programs across our customer base and reinforces our leadership in this category.

Effective DFR programs require a suite of integrated hardware, software and services. Specific advanced features in our new offering with Skydio address implementation complexities with AI-powered autonomous launch and recovery, include seamless connectivity into real-time crime centers, provide sensor-based airspace awareness and deconfliction, integrate evidence management and reporting, support 360-degree obstacle avoidance with night-time vision, and include regulatory support, all as a service.

DFR is one emerging use case Axon is investing in to help optimize resource allocation, leading to quicker, safer responses while reducing risks for officers and communities. In addition to partnering with Skydio, we continue to invest behind and support DroneSense, Inc., another Axon ecosystem partner and the market leader in Drone software. We also believe our pending acquisition of Dedrone Holdings, Inc., a global leader in airspace security, will strengthen Axon’s ability to help customers safeguard their communities, improve response to critical incidents and protect even more lives in more places. We have strong conviction that drone usage in public safety will grow dramatically over the next 5-10 years and we are working to bring that vision to life.

“We deal with over 48 events a year where our community can swell from our 93,000 to several hundred thousand over a weekend. Having our drones out there, being able to act as a force multiplier for our officers to augment what we’re already doing at the patrol level and to increase and provide better actionable intelligence for our officers is a phenomenal tool for us.” — Sergeant Loperfido, Miami Beach PD

Q2 2024 Summary Results

Quarterly revenue of $504m grew 34.6% year over year, exceeding our expectations, driven by growth in each of our product categories. Demand for our latest TASER and body camera products remained strong in the second quarter, driving growth in TASER and Sensors & Other revenue, while adoption of premium software offerings continued to fuel growth in Axon Cloud & Services.

Total company gross margin of 60.3% declined 170 basis points year over year driven by increased stock-based compensation expense and amortization of acquired intangibles in our cost of goods sold (COGS). Excluding the impacts of stock-based compensation and intangibles amortization, non-GAAP company gross margin of 62.5% increased 10 basis points year over year.

Operating profit of $33m decreased from $40m year over year due to increased stock-based compensation expenses. COGS and operating expenses included $75m in stock-based compensation expenses, up from $32 m in Q2 2023, driven by $35m accrued expenses related to broad-based equity incentive programs that were approved by our shareholders in May 2024.

COGS of $200m, 39.7% of revenue, included $9m in stock-based compensation expense.
SG&A expense of $169m, 33.6% of revenue, included $39m in stock-based compensation expense.
R&D expense of $101m, 20.1% of revenue, included $28m in stock-based compensation expense.

Net income of $41m, or $0.53 per diluted share, supported non-GAAP net income of $93m (18.5% non-GAAP net income margin), or $1.20 per diluted share. Net income margin of 8.1% for Q2 2024 increased compared to 3.3% in Q2 2023, primarily due to absence of a non-cash unrealized impairment loss recognized in Q2 2023.

Adjusted EBITDA of $123m (24.5% Adjusted EBITDA margin, compared to 21.8% in Q2 2023) increased 51.1% year over year driven by higher revenue and operational leverage.

Operating cash flow of $83m increased 94.0% year over year and supported free cash flow of $71m and adjusted free cash flow of $75m.

As of June 30, 2024, Axon had $969 m in cash, cash equivalents and investments, and outstanding convertible notes in principal amount of $690m, for a net cash position of $279m, up $5m sequentially.

(Source: PR Newswire)

06 Aug 24. ATI Announces Second Quarter 2024 Results.

Strong performance in Aerospace & Defense propels sequential growth

Q2 2024 sales of $1.1bn, up 5% from Q1 2024
Q2 2024 net income attributable to ATI of $81.9m, or $0.58 per share, up 26% from Q1 2024
Aerospace & defense represent 62% of Q2 2024 sales, up from 59% of Q1 2024 sales
Non-GAAP Information*
Q2 adjusted net income attributable to ATI of $86.0m or $0.60 per share
Q2 2024 ATI adjusted EBITDA of $182.6m, or 16.7% of sales

ATI Inc. (NYSE: ATI) reported second quarter 2024 results, with sales of $1.10bn and net income attributable to ATI of $81.9m, or $0.58 per share.

Adjusted earnings per share* for Q2 2024 was $0.60, and ATI adjusted EBITDA* was $182.6m, or 16.7% of sales. Q2 2024 adjusted results exclude pre-tax charges of $5.4m consisting of $5.5m of inventory write-downs related to our ongoing European restructuring and $1.8m of start-up related costs. These pre-tax charges were partially offset by credits of $1.9m due to lower severance reserves primarily for our ongoing European restructuring. Q1 2024 adjusted results exclude pre-tax charges of $3.1m, primarily consisting of start-up related costs. Q2 2023 adjusted results exclude pre-tax charges of $4.5m for start-up related costs, $2.8m primarily for asset write-offs for a facility closure, $2.7m of severance-related restructuring charges, and $0.6m related to the loss on the sale of our Northbrook, IL operation.

“ATI’s strong 2024 performance continued in the second quarter,” said Kimberly A. Fields, President and CEO. “Growth in aerospace & defense accelerated in the second quarter, with sales increasing sequentially by 11%. This is due in part to the diversification in our jet engine and airframe customer bases. ATI is on every major commercial platform flying today,” she said.

“With a strong focus on execution, we delivered on second quarter expectations for adjusted EBITDA and adjusted earnings per share,” said Fields. “Our efforts to improve working capital intensity yielded significant improvements in year-over-year operating cash flow performance,” she said. “Overall, consolidated adjusted EBITDA, as a percentage of sales, was up 100 basis points over the prior year, reflecting improving operational performance and leverage from higher production volumes.”

Operating Results by Segment

High Performance Materials & Components (HPMC)

HPMC’s second quarter 2024 sales increased $32m, or 6%, compared to the first quarter 2024, primarily due to an 8% increase in aerospace & defense sales. Overall aerospace & defense sales were 85% of total HPMC sales in the second quarter 2024. Second quarter 2024 sales improved 7% compared to second quarter 2023, with total aerospace & defense related sales increasing 9% compared to the prior year period.
HPMC segment EBITDA was $113.8m, or 20.2% of sales. Increased volumes on higher-margin latest generation commercial aerospace platforms drove sequential incremental margins.
Second quarter 2024 results included a $3.5m benefit from the recognition of previously deferred employee retention credits, which were mostly offset by higher incentive compensation costs.

Advanced Alloys & Solutions (AA&S)

AA&S second quarter 2024 sales increased $20m, or 4%, compared to the first quarter 2024, a result of increased aerospace & defense and specialty energy sales. These increases were partially offset by lower conventional energy sales. Overall aerospace & defense sales were 39% of total AA&S sales in the second quarter 2024. Second quarter 2024 sales increased 3% compared to the second quarter 2023. Higher sales to aerospace & defense, specialty energy and medical end markets were partially offset by lower conventional energy sales.
AA&S segment EBITDA was $87.5m, or 16.4% of sales. Sequential margin improvement was primarily due to improved sales mix from increased deliveries of titanium.
Second quarter 2024 results included a $5.1m benefit from the recognition of previously deferred employee retention credits, which were mostly offset by higher incentive compensation costs.

Corporate Items and Cash

Restructuring and other charges:
Second quarter 2024: $5.4m includes pre-tax charges of $5.5m of inventory write-downs related to our ongoing European restructuring and $1.8m of start-up related costs. These pre-tax charges were partially offset by credits of $1.9m due to lower severance reserves primarily for our ongoing European restructuring.
First quarter 2024: $3.1m for start-up and restructuring related costs.
Second quarter 2023: $9.2m includes pre-tax charges of $4.5m for start-up related costs, $2.8m primarily for asset write-offs for a facility closure, of which $0.8m was accelerated depreciation on fixed assets, and $2.7m of severance-related restructuring charges.
Corporate expenses in the second quarter 2024 were $19.4m, compared to $17.1m in the first quarter 2024, and $17.7m in the prior year quarter. The increase in second quarter 2024 was due to higher incentive compensation costs compared to prior periods.
Closed operations and other income/expense was income of $0.7m in the second quarter 2024, compared to expense of $1.3m in the first quarter 2024, and expense of $1.9m in the prior year quarter. The second quarter 2024 included a $2.3m gain from the sale of our previously idled Houston, PA facility.
Second quarter 2024 results include a $25.3m income tax provision, or an effective tax rate of 22.8%. First quarter 2024 results include a $16.9m income tax provision, or an effective tax rate of 19.8%. Second quarter 2023 results include a tax provision of $3.7m, or an effective tax rate of 3.8%. The effective tax rate for the second quarter 2024 increased compared to the first quarter 2024 primarily due to lower discrete tax benefits. The Company’s effective tax rate for second quarter 2023 was lower than the second quarter 2024 due to the net valuation allowance position in the U.S.
For the second quarter of 2024, cash provided by operating activities was $101m, and cash provided by operating activities was $2 m on a year-to-date basis. Second quarter 2024 managed working capital as a percent of sales was 35.5%, which was down slightly from 35.9% in the first quarter 2024. Capital expenditures for the second quarter 2024 were $60m.
Cash on hand at June 30, 2024 was $426m, and available additional liquidity under the asset-based lending (ABL) credit facility was approximately $556m. As of June 30, 2024, we had no outstanding borrowings on the ABL credit facility. ATI has no significant debt maturities until the second quarter 2025.

Outlook

“Our execution and ability to capitalize on market opportunities allows us to drive increased margins and generate strong operating cash flow,” said Fields. “ATI’s capabilities, long-term agreements and backlog positions us to reaffirm our full year outlook. Our clear strategy of leading in aerospace & defense and ‘aero-like’ markets puts us on track us to meet our 2024 guidance. We continue to be confident in our ability to deliver our 2025 and 2027 financial targets. Our recently announced new sales commitments of $4bn from the Farnborough International Airshow, which are predominantly for nickel alloys, include $550m of revenue for 2027. This further demonstrates that we remain on track to exceed both $5bn in revenue and $1bn in adjusted EBITDA by 2027.” (Source: PR Newswire)

06 Aug 24. V2X, Inc. (NYSE:VVX) announced second quarter 2024 financial results.

Second Quarter and Recent Highlights

Record revenue of $1.07bn, up 10% y/y
Operating income of $27.4m; adjusted operating income1 of $65.8m
Net loss of $6.5m, down $8.3m y/y
Adjusted EBITDA1 of $72.3m with a margin1 of 6.7%
Diluted EPS of ($0.21); Adjusted diluted EPS1 of $0.83
Over $4bn of recent awards, including a new award valued up to $3.0+bn to provide next generation readiness
Successfully repriced and extended $904m Term Loan B

2024 Guidance:

Raising full-year revenue guidance and reaffirming Adjusted EBITDA, EPS, and Operating Cash Flow1

“I am honored to join the V2X team and look forward to leveraging our mission first culture, differentiated capabilities, and impressive past performance to achieve our next stage of growth,” said Jeremy C. Wensinger, President and Chief Executive Officer of V2X. “Our people, processes, agility and expertise to operate worldwide are a differentiator. This enables alignment to critical missions with an ability to operate at scale around the globe.”

Mr. Wensinger continued, “Demand remains strong for our mission based full lifecycle solutions and was demonstrated through several recent awards valued at over $4bn. This includes a new five-year award valued at $3.0+bn to deliver next generation readiness. In addition, we received a new production award from the U.S. Army for our Gateway Mission Routers valued at $49m, an award valued at $265m to support NASA’s operations in preparation for human spaceflight missions at the Johnson Space Center, and the award of the F-5 adversarial aircraft program from the U.S. Navy valued at $747m.”

“Importantly, our ability to deliver a full range of assured communications has resulted in two awards, further expanding our relationship with the Navy and our footprint in the Pacific. Our $88 m Naval Computer and Telecommunications Pacific award will provide vital C4I support to forces across the Pacific and Indian Oceans. Our $141 m Fleet Systems Engineering Team (FSET) program will continue to deliver end-to-end C4I systems engineering solutions. FSET ensures that no U.S. Navy Strike Group deploys without V2X.”

Mr. Wensinger concluded, “V2X has great momentum and I believe there is substantial opportunity to build upon the impressive foundation by further leveraging technology and solutions to enhance business and customer outcomes.”

Second Quarter 2024 Results

“V2X reported record revenue of $1.07bn in the quarter, which represents 10% year-over-year growth,” said Shawn Mural, Senior Vice President and Chief Financial Officer. “Revenue growth in the quarter was achieved through continued expansion of existing business in the Pacific and Middle East regions, as well as new programs. Revenue growth in the Pacific was 29% year-over-year and 23% on a sequential basis, driven by continued expansion of scope and services in the region. Revenue growth in the Middle East was also 29% year-over-year, driven primarily by expansion in Qatar and the continued phase-in of our longer-term Saudi Aviation Training and Support Services program.”

“For the quarter, the Company reported operating income of $27.4m and adjusted operating income1 of $65.8m. Adjusted EBITDA1 was $72.3m with a margin of 6.7%. Second quarter GAAP diluted EPS was ($0.21). Adjusted diluted EPS1 for the quarter was $0.83. The adjusted tax rate in the second quarter was 28% due to the executive transition. Absent this, our adjusted tax rate would have been approximately 23% yielding adjusted EPS of $0.88.”

“Year to date, net cash used by operating activities was $31.6m, reflective of working capital requirements to support growth. Adjusted net cash used by operating activities1 was $137.3m, adding back approximately $12.1m of M&A and integration costs and removing the contribution of the master accounts receivable purchase or MARPA facility of $117.8m.”

“At the end of the quarter, net debt for V2X was $1,150m. Net leverage ratio1,2 was 3.56x, essentially flat compared to the first quarter 2024. We expect to achieve a net leverage ratio of 3.0x, by the end of 2024. During the quarter, we successfully repriced and extended our $904m Term Loan B. This outcome is a testament to the strength in our business and is yielding additional interest expense savings while lowering our overall cost of capital.”

“Total backlog as of June 28, 2024, was $12.2bn. Funded backlog was $2.9bn. Bookings in the quarter were $759m. We expect backlog to increase in the second half of the year due to awards and contract definitizations.” (Source: PR Newswire)

06 Aug 24. Aerospace supplier TransDigm beats quarterly estimates on strong demand. Aerospace supplier TransDigm Group (TDG.N), on Tuesday beat third-quarter earnings estimates as robust travel demand led to increased orders for components and aftermarket parts from planemakers and carriers. Shares were up 3% in premarket trading in light volumes.

Aircraft parts suppliers are seeing strong demand as planemakers ramp up production to fulfill airlines’ expansion plans. Delayed new plane deliveries have also pushed airlines to extend the use of older aircraft, boosting orders for profitable aftermarket parts.

The company deployed over $2.2bn of capital in the past three months in relation to acquisitions of SEI Industries, the CPI Electron Device Business and Raptor Scientific to beef up its product offerings.

Ohio-based TransDigm currently makes mechanical/electro-mechanical actuators and controls, ignition systems and other parts for the aerospace market.

Quarterly net sales jumped 17% to $2.04bn, ahead of estimates of $2.01bn, as per LSEG data. Profit for the quarter ended June 29 was $7.96 per share, beating expectations of $7.56 per share. (Source: Reuters)

06 Aug 24. TransDigm Group Incorporated (NYSE: TDG), a leading global designer, producer and supplier of highly engineered aircraft components, today reported results for the third quarter ended June 29, 2024.

Third quarter highlights include:

Net sales of $2,046m, up 17% from $1,744m in the prior year’s quarter;
Net income of $461m, up 31% from the prior year’s quarter;
Earnings per share of $7.96, up 30% from the prior year’s quarter;
EBITDA As Defined of $1,091m, up 19% from $915m in the prior year’s quarter;
EBITDA As Defined margin of 53.3%;
Adjusted earnings per share of $9.00, up 24% from $7.25 in the prior year’s quarter; and
Upward revision to fiscal 2024 financial guidance to reflect TransDigm’s continued strong performance as well as to include the recent acquisitions of SEI Industries, the CPI Electron Device Business and Raptor Scientific.

Quarter-to-Date Results

Net sales for the quarter increased 17.3%, or $302m, to $2,046m from $1,744m in the comparable quarter a year ago. Organic sales growth as a percentage of net sales was 14.6%.

Net income for the quarter increased $109m, or 31.0%, to $461m from $352m in the comparable quarter a year ago. The increase in net income primarily reflects the increase in net sales described above and the application of our value-driven operating strategy. The increase was partially offset by higher interest expense, income tax expense, and acquisition transaction-related expenses.

Adjusted net income for the quarter increased 25.8% to $521m, or $9.00 per share, from $414m, or $7.25 per share, in the comparable quarter a year ago.

EBITDA for the quarter increased 19.9% to $995m from $830m for the comparable quarter a year ago. EBITDA As Defined for the quarter increased 19.2% to $1,091 m compared with $915m in the comparable quarter a year ago. EBITDA As Defined as a percentage of net sales for the quarter was 53.3% compared with 52.5% in the comparable quarter a year ago.

“I am incredibly pleased with the operating results for the third quarter and our continued strong performance,” stated Kevin Stein, TransDigm Group’s President and Chief Executive Officer. “Total revenue for the quarter ran ahead of our expectations, and revenues sequentially improved in all three of our major market channels – commercial OEM, commercial aftermarket and defense. Our EBITDA As Defined margin improved to 53.3% for the quarter, up approximately 80 basis points from the comparable prior year period. Excluding the results related to SEI Industries and the CPI Electron Device Business, acquired in May and June 2024, respectively, our third quarter EBITDA As Defined margin was approximately 53.6%. As always, we remain focused on our operating strategy, value drivers and effectively managing our cost structure.

Additionally, we are excited to have recently closed the acquisitions of SEI Industries, the CPI Electron Device Business and Raptor Scientific. In the aggregate for these three acquisitions, we have deployed over $2.2 bn of capital in the past three months. These businesses fit well with our long-standing strategy, and we expect each of these acquisitions to create equity value in-line with our long-term private equity-like return objectives.”

Acquisition Activities

As previously reported on May 22, 2024, TransDigm completed the acquisition of SEI Industries LTD (“SEI”). SEI is a leading provider of highly engineered products for aerial firefighting and other liquid transportation solutions, such as remote refueling. Their innovative and world renowned Bambi Bucket®, is a proprietary collapsible firefighting bucket used across the globe to combat forest fires, among other applications.

Additionally, on June 6, 2024, TransDigm completed the acquisition of the Electron Device Business of Communications & Power Industries (“CPI”). The CPI Electron Device Business is a leading global manufacturer of electronic components and subsystems primarily serving the aerospace and defense market.

Subsequent to the quarter, on July 31, 2024, TransDigm completed the acquisition of Raptor Scientific. Raptor Scientific is a leading global manufacturer of complex test and measurement solutions primarily serving the aerospace and defense end markets.

Financing Activities

During the quarter, on June 4, 2024, TransDigm successfully repriced the existing approximately $997m Tranche J term loans maturing February 28, 2031, to bear interest at Term Secured Overnight Financing Rate (“SOFR”) plus 2.50% compared to Term SOFR plus 3.25% applicable prior to the repricing. Additionally, TransDigm amended and extended $2,644m of existing Tranche I term loans maturing August 24, 2028, and converted such loans into Tranche J term loans maturing February 28, 2031.

Year-to-Date Results

Net sales for the thirty-nine week period ended June 29, 2024 increased 21.6%, or $1,021m, to $5,754m from $4,733m in the comparable period a year ago. Organic sales growth as a percentage of net sales for the thirty-nine week period ended June 29, 2024 was 17.7%.

Net income for the thirty-nine week period ended June 29, 2024 increased $363m, or 41.0%, to $1,248m from $885m in the comparable period a year ago. The increase in net income primarily reflects the increase in net sales described above and the application of our value-driven operating strategy. The increase was partially offset by higher income tax expense, interest expense, non-cash stock and deferred compensation expense, acquisition transaction-related expenses, and one-time refinancing costs.

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

Adjusted net income for the thirty-nine week period ended June 29, 2024 increased 37.3% to $1,396m, or $24.15 per share, from $1,017m, or $17.80 per share, in the comparable period a year ago.

EBITDA for the thirty-nine week period ended June 29, 2024 increased 23.9% to $2,772 m from $2,237m for the comparable period a year ago. EBITDA As Defined for the period increased 24.3% to $3,023m compared with $2,432m in the comparable period a year ago. EBITDA As Defined as a percentage of net sales for the period was 52.5% compared with 51.4% in the comparable period a year ago.

Fiscal 2024 Outlook

Mr. Stein stated, “We are raising our full year guidance primarily to reflect our strong third quarter results and current expectations for the remainder of the fiscal year, as well as to include the recent acquisitions of SEI Industries, the CPI Electron Device Business and Raptor Scientific. We are pleased to once more raise our guidance for fiscal 2024 and to see further progression in our primary end markets.”

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

Net sales are anticipated to be in the range of $7,870m to $7,930m compared with $6,585m in fiscal 2023, an increase of 20.0% at the midpoint (an increase of $160m at the midpoint from prior guidance);
Net income is anticipated to be in the range of $1,632m to $1,678m compared with $1,299m in fiscal 2023, an increase of 27.4% at the midpoint (an increase of $8m at the midpoint from prior guidance);
Earnings per share is expected to be in the range of $26.47 to $27.27 per share based upon weighted average shares outstanding of 57.85m shares, compared with $22.03 per share in fiscal 2023, which is an increase of 22.0% at the midpoint (an increase of $0.14 per share at the midpoint from prior guidance);
EBITDA As Defined is anticipated to be in the range of $4,100m to $4,160m compared with $3,395m in fiscal 2023, an increase of 21.6% at the midpoint (an increase of $85m at the midpoint from prior guidance and corresponding to an EBITDA As Defined margin guide of approximately 52.3% for fiscal 2024);
Adjusted earnings per share is expected to be in the range of $32.62 to $33.42 per share compared with $25.84 per share in fiscal 2023, an increase of 27.8% at the midpoint (an increase of $0.60 per share at the midpoint from prior guidance); and
Fiscal 2024 outlook is based on the following market growth assumptions:
Commercial OEM revenue growth around 20%;
Commercial aftermarket revenue growth in the mid-teens percentage range; and
Defense revenue growth in the high-teens percentage range.

06 Aug 24. Héroux-Devtek Inc. (TSX: HRX) (“Héroux-Devtek” or the “Corporation”), a leading international manufacturer of aerospace products and the world’s third-largest landing gear manufacturer, today reported its financial results for the first quarter ended June 30, 2024. Unless otherwise indicated, all amounts are in Canadian dollars.

Highlights

Sales increased to $174.0m, up 23.7% from $140.7m a year ago
Operating income increased to $19.4m, compared to $7.5m a year ago
Adjusted EBITDA1 increased to $29.6m or 17.0% of sales, compared to $16.4m, or 11.6% of sales a year ago
Earnings per share and adjusted earnings per share1 increased to $0.37 and $0.39 compared to $0.12 last year
Cash flows related to operating activities increased to $9.9m compared to a usage of $12.2m last year
Subsequent to the quarter end, Héroux-Devtek entered into a definitive agreement to be acquired by Platinum Equity

“We have delivered another good quarterly performance thanks to the resilience of our teams in coping with the challenges of the current production environment. More than ever, I would like to extend my gratitude to our employees for their hard work and dedication, and to all our customers and business partners for their unwavering trust. The commitment of our employees and our excellence in execution will allow us to continue building Héroux-Devtek in both the civil and defence markets,” said Martin Brassard, President and CEO of Héroux-Devtek.

FIRST QUARTER RESULTS

Consolidated sales increased 23.7% to $174.0m, from $140.7m in the same period last year, largely due to the strategies the Corporation implemented over the past two years.

Defence sales were up 20.1% to $108.7m mainly due to higher aftermarket business for legacy programs as well as higher deliveries for the Lockheed Martin F-35 program, partly offset by lower deliveries for the Sikorsky CH-53K program. Civil sales were up 30.1% to $65.3m, mainly driven by increased deliveries for the Boeing 777 and Embraer E2 programs.

Gross profit increased to $35.6m or 20.5% of sales from $20.1m or 14.3% last year, mainly as a result of the positive impact of higher volume and pricing initiatives.

Operating income increased to $19.4m or 11.2% of sales from $7.5m or 5.3% of sales last year, mainly reflecting higher volume and margin combined with the 1.3% year over year positive impact of foreign exchange. Adjusted EBITDA, for the same reasons, rose 80.7% to $29.6m, or 17.0% of sales, from $16.4 m or 11.6% of sales last year.

Net income for the first quarter of fiscal 2025 increased to $12.5m, or $0.37 per diluted share, and adjusted net income stood at $13.5m or $0.39 per diluted share, both compared to $4.0m or $0.12 per diluted share in the corresponding quarter last year. (Source: PR Newswire)

Morgan Stanley Comment: TransDigm Group Inc.: Growth and Margins Remain Strong; Reiterate OW-Rating

We reiterate our OW-rating and increase our PT to $1,575 as TDG continues to showcase strong execution and surprise to the upside on both growth and margins. Recently completed deals provide additional lever for upside.

Key takeaways

Management execution remains a strength as adj. EBITDA margin has increased 80bps YoY to 53.3% and 53.6% ex-recent acquisitions.
We remain positive on all of TDG’s primary end markets.
TDG closed on three separate acquisitions from May to July, totaling ~$2.2bn, which we expect to help drive incremental upside.
We reiterate our Overweight rating and PT of $1,575.

Strong Execution and Business Growth

Yesterday, TDG’s stock ended the day up ~2.3%, while the S&P 500 was up ~1%. The outperformance of the stock was driven by better than expected results and increased FY24 outlook which investors view as largely conservative, in our view. Management execution remains a strength as adj. EBITDA margin has increased 80bps YoY to 53.3% and 53.6% ex-recent acquisitions. We remain positive on all of TDG’s primary end markets. Defense performance in FY24 continues to surprise to the upside, a robust pipeline for commercial aftermarket remains, and Commercial OE provides incremental upside as production growth takes hold in the future. Additionally, TDG closed on three separate acquisitions from May to July which we expect to help drive incremental upside as combined adj. EBITDA margin for the acquisitions is close to 30%. We expect management execution to drive these margins higher. We reiterate our Overweight rating and PT of $1,575.

Valuation Methodology

We arrive at our $1,575 PT using a ~35x P/E on our 2025E EPS. Our 35x multiple remains a premium to 2019 levels of ~22x as we continue to see further runway for commercial aftermarket and acknowledge the company’s higher EBITDA margin compared to 2019 levels. We also include the potential benefit of capital deployment at a target Net Debt to EBITDA of ~6x given the company’s M&A strategy. TDG ended 3QFY24 with Net Debt to EBITDA of ~4.2x. This provides $3.65 of accretion to our 2025 EPS estimate.

Model Changes

We update our model as we flow through 3QFY24 results, updated management commentary on the FY2024 outlook, and take into account recently closed acquisitions. We increase our FY24 revenue and adj. EBITDA estimates by ~1%. As a result, we increase our FY24 adj. EPS to $33.40 from $33.10. We increase our FY25 to FY27 revenue by ~1.5% as we flow through the better than expected results and our estimated revenue benefit from the three recently closed acquisitions. We increase our adj. EBITDA by ~2% in FY25 to FY27. As a result, we increase our FY25 adj. EPS to $41.05 from $40.30, to $46.10 from $45.10 in FY26, and to $50.60 from $49.50 in FY27.

FY2024 Outlook

TDG provided an update to its FY24 outlook. TDG increased its operating outlook across the board as it increased its sales outlook at the midpoint by ~2% and its adj. EBITDA outlook by ~2% at the midpoint. The company increased its adj. EPS outlook to $32.62-$33.42 from $31.75-$33.09.

The company expects Sales of $7,870mn-$7,930mn (vs. cons of ~$7,834mn), adj. EBITDA of $4,100mn-$4,160mn (vs. cons of ~$4,086mn), and adj. EPS of $32.62-$33.42 (vs. cons of ~$33.13). The company’s growth outlook is underpinned by commercial OEM growth of ~20%, commercial aftermarket growth of Mid-Teens %, and defense growth of High-Teens %.

Commercial Aftermarket Remains Strong; Maintained Growth Outlook of Mid-Teens % for FY24

Commercial Aftermarket performed well as traffic continues to recovery globally. Aftermarket revenues were up ~11% YoY and ~14% YTD, while strong bookings support the company’s FY24 revenue growth outlook of Mid-Teens %. Continued growth in aftermarket provides tailwinds to margin given its positive impact on business mix. Passenger transport aftermarket revenue was up ~16% YoY, interior aftermarket was up ~8% YoY, and business jet/helicopter was up ~10% YoY, while freight aftermarket revenue was down ~8% YoY as a result of the continued return of belly cargo capacity. Management noted that business jet/helicopter remains a watch item due to the slowdown of business jet flight activity and expects freight to remain light YoY as a result of current trends in the underlying market.

Defense Growth Outlook of High-Teens % for FY24

Defense revenue was up ~13% YoY and ~20% YTD. The company called out steady improvements in U.S. Government Defense spend outlays. Defense aftermarket growth slightly outpaced Defense OEM. TDG increased its FY24 defense revenue growth outlook to High-Teens % growth from Mid-Teens % growth.

Leverage and Debt Profile

TransDigm has ~$21.9bn of total debt (~$18.5bn net debt) on the balance sheet with ~75% of the debt hedged/fixed through FY27 by a combination of interest rate caps, swaps, and collars. We estimate Net Debt/EBITDA ratios will be ~4.5x in FY24, ~3.4x in FY25, and ~2.7x in FY26. We see TDG generating sufficient free cash flow to sustain and pay down leverage in the future.

Recent M&A Activity & Commentary

Management noted that it continues actively look for M&A opportunities that fit the TDG model and continues to see an expanding pipeline of potential M&A targets. TDG remains confident that there is a long runway for acquisitions that fit the portfolio and expects the majority of M&A activity to continue to be in the component business. For the 3 recently completed acquisitions (SEI, Electron Device Business of CPI, and Raptor Scientific), management expects revenue contribution of ~$125mn in 4QFY24 revenue, while the combined adj. EBITDA margin of the entities is near 30%. This lower margin profile of the acquired entities is expected to lead to ~125bps of margin dilution to FY24 EBITDA margins (guide of ~52.3% at the midpoint).

On May 22, 2024, TDG announced that it completed the acquisition of SEI Industries Ltd. SEI is a leading provider of highly engineered products for aerial firefighting and other liquid transportation solutions, such as remote fueling. SEI employs ~80 people and is expected to generate ~$30m in revenue in 2024.
On June 6, 2024, TDG announced that it completed the acquisition of the Electron Device Business of Communications & Power Industries (CPI) for ~$1.385bn in cash. TDG financed the acquisition through cash on hand as well as cash proceeds from the notes offerings completed in November 2023. The CPI Electron Device Business is a leading global manufacturer of electronic components and subsystems primarily serving the aerospace and defense market. ~70% of its revenue is derived from the aftermarket and nearly all of its revenue is generated from proprietary products. The CPI Electron Device Business generated approximately $300 m in revenue for its fiscal year ended September 29, 2023.
On July 31, 2024, TDG announced that it completed the acquisition of Raptor Labs Holdco, LLC, a portfolio company of L Squared Capital Partners, for ~$655 m in cash, including certain tax benefits. TDG financed the acquisition through cash on hand. Raptor Scientific is a leading global manufacturer of complex test and measurement solutions primarily serving the aerospace and defense end markets. Its products are highly engineered, proprietary components with significant aftermarket content and a strong presence across major aerospace and defense platforms. Nearly all of Raptor Scientific’s revenue is generated from proprietary products. Raptor Scientific is expected to generate ~$90 m in revenue in 2024.

Best in Breed US Industrial Company; Defensible Business Model

We continue to view TransDigm as a ‘best in breed’ US Industrial company as its margin profile largely tops the industry, it has exposure to in demand and growing end markets, and has executed through COVID-19 and a challenging macroenvironment without missing a beat. As we screen the Industrials GICS for US companies greater than $20bn in market cap, we can only find company which has a higher expected Adj. EBITDA margin than TDG.

We view the company as having the most defensible business model amongst peers and management has overcome numerous short theses. TransDigm’s portfolio is made up of ~90% proprietary products and ~75% sole sourced products, which allows the business to flex pricing.

06 Aug 24. Vivace Announces Growth Investment from Cerberus. Vivace International Corporation (“Vivace” or the “Company”), a manufacturer of specialty propulsion tanks for space and defense applications, today announced that it has received a growth capital investment from an affiliate of Cerberus Capital Management, L.P. (“Cerberus”), a global leader in alternative investing. Building upon the Company’s successes to date, the investment will support Vivace’s current work on important national security programs and position the Company for a period of sustained growth.

Since its founding in 2006, Vivace has combined highly specialized engineering, design, and manufacturing capabilities to develop mission-critical propulsion tanks for leading commercial and government customers across key U.S. spaceflight, hypersonics, and launch vehicle markets. The Company is based in the NASA Michoud Assembly Facility outside of New Orleans and is a key supplier to the Commercial Lunar Payload Services program, which will land numerous missions on the lunar surface as part of the larger Artemis program.

The partnership with Vivace is led by Cerberus’ Supply Chain and Strategic Opportunities platform, which invests in companies that are addressing critical national shortage areas to drive innovation, promote resilient infrastructure, and increase security for the United States and its allies. Cerberus is an experienced investor in the aerospace industry, bringing to bear extensive operating, technical, and government expertise to help position portfolio companies as key partners to customers on large, complex programs.

“This transaction represents an important milestone in our efforts to advance cutting-edge products and services to support many of the nation’s most advanced spaceflight programs,” said Dave Cochran, Co-Founder and President of Vivace. “We are excited to be working with the Cerberus team and to benefit from their deep domain and operational expertise as we build upon our reputation as a trusted long-term partner to world-class aerospace companies and to the U.S. Government.”

Steve Cook, Senior Managing Director at Cerberus and recently appointed Chairman of Vivace’s newly formed Advisory Board, added: “Amid the rapidly growing investment in spaceflight and hypersonic missions, there is a critical need for sophisticated tank and pressure vessel engineering and manufacturing capabilities. With proven product lines and an outstanding foundation of technical excellence, we believe Vivace is well-positioned to bolster the tank and pressure vessel shortage. We look forward to continuing to support Vivace as it takes the next step in its journey to serve programs of national significance.”

Vivace today also announced the appointment of Luke Wright as Director of Operations. Mr. Wright most recently served as a senior engineering and operating executive at global industrial conglomerate Textron, and he brings nearly two decades of experience in managing complex development and production programs manufacturing critical defense systems for U.S. Government customers.

Mr. Cochran continued: “Luke is a talented leader and an important addition to our team. His broad operating and functional experience in large-scale manufacturing businesses will help further solidify Vivace’s operational infrastructure as we enter our next phase of growth.”

About Vivace International

Founded in 2006 and based in NASA’s Michoud Assembly Facility near New Orleans, Louisiana, Vivace provides mission-critical product development, engineering, and management services for U.S. spaceflight systems, hypersonics, and launch vehicle markets. Its products include flight hardware, ground support equipment, development hardware, tooling, and engineering services. From concept development through detailed design, analysis, manufacture, and test, Vivace develops high-performance, efficient solutions and delivers them on time. Learn more at vivace.com.

About Cerberus

Founded in 1992, Cerberus is a global leader in alternative investing with approximately $65 bn in assets across complementary credit, real estate, and private equity strategies. We invest across the capital structure where we believe our integrated investment platforms and proprietary operating capabilities create an edge to improve performance and drive long-term value. Our tenured teams have experience working collaboratively across asset classes, sectors, and geographies as they seek to achieve strong risk-adjusted returns for our investors. For more information about our people and platforms, visit us at www.cerberus.com. (Source: BUSINESS WIRE)

06 Aug 24. SIXGEN Acquires Boldend to Advance Innovation in US Defense and National Security. SIXGEN, a full-spectrum provider of cyber products, operations, and solutions to the U.S. national security and critical infrastructure sectors, announced today its acquisition of Boldend, Inc. (“Boldend”). Boldend develops leading-edge cyber and electronic warfare solutions, empowering the U.S. Government’s operations in an evolving threat landscape. Boldend marks SIXGEN’s second acquisition since Washington Harbour Partners’ (“WHP”) investment in the company in November 2023. Boldend’s suite of software and cyber automation tools will further accelerate SIXGEN’s achievement of its strategic vision to empower the digital warfighter.

“We look forward to SIXGEN’s continued growth and innovation, powered by the combined company’s differentiated cyber operations platform.”

Post this

“I am incredibly excited to welcome Mike Barry and the entire Boldend team to SIXGEN,” said Jack Wilmer, CEO of SIXGEN. “Boldend brings a dynamic team of individuals possessing exceptional mission experience and an unrivaled portfolio of solutions that are integral to SIXGEN’s growth objectives and amplifies our product roadmaps. Boldend’s curated and highly mission-centric IP strengthens our ability to address the needs of our partners and customers.”

Boldend is a cyber automation company, focused on building software products that scale cyber capabilities to offset higher operational demands, ensure responsive delivery, and address organizational resource gaps. The company’s solutions blend cutting-edge electronic warfare components with next generation, modern cyber operations – designing products specifically for the United States’ most sensitive defense and national security mission areas. Boldend’s capabilities are purpose built with operational security and tradecraft to solve the impossible for the U.S. Government, their only customer by design, and meet the government’s critical needs across the cyber domain.

“Partnering with SIXGEN is a strategic next step in navigating our continued high degree of mission impact and technological advancement,” said Mike Barry, Boldend CEO. “Boldend delivers some of the most exclusive solutions to national security missions, and we are excited to join SIXGEN to augment our resources and capabilities to create even greater impact. Boldend looks forward to joining the SIXGEN team in their work in service of the nation.” Mike Barry – a former national security official with extensive experience in critical leadership and operational positions at the White House and across the Intelligence Community – will join SIXGEN as a senior member of its team, along with Boldend’s extensive engineering and technical talent.

As Boldend joins the SIXGEN team, the combined company will continue to provide unique and tailored cyber solutions for the US national security community. The partnership and collaboration of highly qualified and dedicated engineers, sharing similar cultures and values, will allow for rapid development of innovative capabilities and provide next-level solutions for our nation’s best operators.

“Joining forces with SIXGEN is a natural and strategic alignment for Boldend,” said Bryan Smith, Boldend Chief Technology Officer. “By merging our capabilities, we can accelerate our progress and leverage crucial customer insights more effectively. This partnership, rooted in a shared vision, will act as a catalyst, unlocking new possibilities and driving product innovation.”

“We are excited by this strategic combination and look forward to continuing to enable SIXGEN’s investment in an IP-driven and talent-centric approach to enable national security missions and the digital warfighter,” said Mina Faltas, Washington Harbour’s Founder & Chief Investment Officer. “We look forward to SIXGEN’s continued growth and innovation, powered by the combined company’s differentiated cyber operations platform.”

This acquisition comes only one month after SIXGEN’s most recent acquisition of Secure-EE earlier in July, with the combined strength and impact of the three companies expected to drive significant value creation and positive impacts for all employees, customers, and mission sets, with increasing sophistication and advanced efficacy of modern cyber solutions.

Washington Harbour was advised by Morrison & Foerster on legal matters. Cooley served as legal advisor to Boldend.

About SIXGEN

SIXGEN is a mission-driven leader in cyber, dedicated to supporting the U.S. Department of Defense, intelligence community, other federal agencies, and U.S. critical infrastructure. With a focus on operational excellence and innovative solutions, SIXGEN ensures operational mission success in the digital domain across the full spectrum of cyber.

For more information, please visit www.sixgen.io

About Boldend

Boldend is a leading-edge cyber automation company developing software solutions that enhance and scale cyber capabilities. The company focuses on addressing operational demands, ensuring responsive delivery, and filling organizational resource gaps. Aligned with organizational authorities and requirements, Boldend facilitates the rapid and organic development of cyber solutions to meet the specific needs of each mission. We proudly support and deliver exclusive solutions to the interagency and select DOD cyber operations, partnering, and information sharing arenas. (Source: BUSINESS WIRE)

06 Aug 24. Magellan Aerospace Corporation Announces Financial Results.

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

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 six months of 2024, 65.6% of revenues were derived from commercial markets while 34.4% of revenues related to defence markets.

Business Update

On May 7, 2024, Magellan announced that it would provide Black Brant vehicles and hardware to Peraton in support of the NASA Sounding Rocket Program. Under the terms of the five-year agreement Magellan will supply NASA’s annual requirements and could generate revenues up to a maximum of $75m.

On May 24, 2024, Magellan renewed its normal course issuer bid (“2024 NCIB”) which allows the Corporation to purchase for cancellation up to 2,857,469 of its common shares during the 12-month period commencing May 28, 2024 and ending May 27, 2025 through facilities of the Toronto Stock Exchange (“TSX”) or other alternative Canadian trading systems.

On July 25, 2024, Magellan announced the signing of a Memorandum of Understanding with Aequs Private Limited to explore the development of a business plan for a jointly-owned engine MRO business in the Aequs Special Economic Zone, at Belagavi in Karnataka, India.

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.

Results of Operations

A discussion of Magellan’s operating results for the second quarter ended June 30, 2024

The Corporation reported revenue in the second quarter of 2024 of $242.9m, a $23.2m increase from the second quarter of 2023 revenue of $219.7m. Gross profit and net income for the second quarter of 2024 were $26.6m and $7.4m, respectively, in comparison to gross profit of $23.0m and net income of $2.0m for the second quarter of 2023.

Consolidated Revenue

Revenue in Canada decreased 6.7% in the second quarter of 2024 compared to the corresponding period in 2023, mainly due to lower casting product revenues from work stoppages at one of the Corporation’s facilities offset in part by increased specialty product revenues in propulsion and wirestrike.

Revenue in the United States increased by 16.9% in the second quarter of 2024 compared to the second quarter of 2023, largely due to increased revenue for defense aircraft and wide body aircraft parts, higher helicopter part revenues, higher casting product revenues and favourable foreign exchange impacts due to the strengthening of the United States dollar relative to the Canadian dollar. On a currency neutral basis, revenues in the United States increased 14.7% in the second quarter of 2024 over the same period in 2023.

European revenue in the second quarter of 2024 increased 30.0% compared to the corresponding period in 2023 primarily driven by volume increases for single aisle and wide body aircraft parts and favourable foreign exchange impacts resulting from the strengthening of the United States dollar relative to the British pound. On a currency neutral basis, European revenues in the second quarter of 2024 increased by 28.4% when compared to the same period in 2023.

Gross Profit

Gross profit of $26.6m for the second quarter of 2024 was $3.6m higher than the $23.0m gross profit for the second quarter of 2023, and gross profit as a percentage of revenues of 11.0% for the second quarter of 2024 increased from 10.5% recorded in the same period in 2023. The gross profit in the current quarter increased from the same quarter in the prior year as a result of volume increases and contract rehabilitations on certain programs in addition to favourable product mix, offset in part by supply chain disruptions, price increases of purchased materials and supplies, and work stoppage at one of the Corporation’s facilities.

Administrative and General Expenses

Administrative and general expenses as a percentage of revenues was 6.1% for the second quarter of 2024, lower than the same period of 2023 percentage of revenues of 6.4%. Administrative and general expenses increased $0.8m or 5.6% to $14.9m in the second quarter of 2024 compared to $14.1m in the second quarter of 2023 mainly due to higher salary, benefit and short-term compensation costs in addition to increased information technology spending.

Restructuring

Restructuring in 2023 was primarily related to ongoing costs associated with the closure of the Bournemouth facility and dismantling its former operations.

Other

Other for the second quarter of 2024 included a $0.2m foreign exchange gain compared to a $1.5m foreign exchange loss in the second 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 second quarter of 2024 also includes $0.8m of provisioning related to certain of the Corporation’s environmental obligations.

Interest Expense

Total interest expense of $1.1m in the second quarter of 2024 increased by $0.3m compared to the second 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 June 30, 2024 was $2.5m, representing an effective income tax rate of 25.0% compared to 67.8% for the same period of 2023. The change in the effective tax rate and current and deferred income tax expenses year over year was primarily due to the change in mix of income and losses across the different jurisdictions in which the Corporation operates and the reversal of temporary differences.

(Source: Google/BUSINESS WIRE)

05 Aug 24. BWX Technologies Reports Second Quarter 2024 Results.

2Q24 revenues of $681.5m
2Q24 net income of $73.0m, adjusted EBITDA(1) of $126.2m
2Q24 diluted GAAP EPS of $0.79, non-GAAP(1) EPS of $0.82
BWXT-led JV awarded management and operations contract for the NNSA’s Pantex Plant
2024 non-GAAP EPS(1) guidance revised to $3.10-$3.20

BWX Technologies, Inc. (NYSE: BWXT) (“BWXT”, “we”, “us” or the “Company”) reported second quarter 2024 results.

“Second quarter results were ahead of our expectations driven by strong organic growth and crisp execution across our business lines,” said Rex. D Geveden. “Our solid year-to-date performance provides us the confidence to raise the lower end of our 2024 non-GAAP EPS guidance.”

“In recent months there have been multiple important developments supporting our nuclear markets, including passage of the ADVANCE Act, federal and state legislation supporting small modular reactor development and the Army and Defense Innovation Unit’s acquisition plans for microreactors at remote military bases, all of which have been complemented by broad-based support from private industry,” continued Geveden. “These developments demonstrate the increasing appetite for nuclear solutions across the global security, clean energy, and medical markets, ultimately driving new and exciting opportunities for BWXT.”

“Overall, we had a solid first half both financially and strategically and we continue to see favorable demand momentum in our end-markets,” continued Geveden. “Based on our year-to-date performance and anticipated progress on key contracts during the second half of the year, we are narrowing our 2024 non-GAAP EPS guidance to $3.10- $3.20.”

Revenues

Second quarter revenue increased in both operating segments. The Government Operations increase was driven by higher naval nuclear component production, microreactors and special materials processing. The Commercial Operations increase was driven by higher revenue associated with commercial nuclear field services, components, and fuel and fuel handling systems as well as higher medical sales.

Operating Income and Adjusted EBITDA(1)

Second quarter operating income increased in both segments. The Government Operations increase was mainly driven by higher revenue, which was partially offset by investments in new initiatives. The Commercial Operations increase was primarily driven by higher revenue and a shift in product and services mix.

Second quarter adjusted EBITDA(1) increased for the reasons noted above.

EPS

Second quarter GAAP EPS increased due to higher operating income, lower interest expense and a lower effective tax rate compared to second quarter 2023. The lower tax rate was mainly driven by Canadian legislation that provides for a lower statutory tax rate for clean energy, including nuclear, manufacturers. Non-GAAP EPS(1) increased driven by the items noted above.

Cash Flows

Second quarter operating cash flow decreased as higher net income was more than offset by greater working capital needs due to contract timing. Capital expenditures were lower due to timing of select growth investments.

Dividend

BWXT paid $22.0m, or $0.24 per common share, to shareholders in the second quarter of 2024. On August 1, 2024, the BWXT Board of Directors declared a quarterly cash dividend of $0.24 per common share payable on September 5, 2024, to shareholders of record on August 16, 2024.

2024 Guidance

BWXT reaffirmed its 2024 guidance for Revenue, Adjusted EBITDA(1), and Free Cash Flow(1) and narrowed its guidance range for Non-GAAP EPS(1).

(Source: BUSINESS WIRE)

05 Aug 24. Palantir Reports Revenue Growth of 27% Year-Over-Year and Raises Full Year Revenue Guidance; Record GAAP EPS of $0.06 in Q2 2024. Palantir Technologies Inc. (NYSE:PLTR) today announced financial results for the second quarter ended June 30, 2024.

Q2 2024 Highlights

Revenue grew 27% year-over-year and 7% quarter-over-quarter to $678 m
US commercial highlights

o US commercial revenue grew 55% year-over-year and 6% quarter-over-quarter to $159m

o US commercial customer count grew 83% year-over-year and 13% quarter-over-quarter to 295 customers

o US commercial remaining deal value (“RDV”) grew 103% year-over-year and 11% quarter-over-quarter

US government revenue grew 24% year-over-year and 8% quarter-over-quarter to $278m
Commercial revenue grew 33% year-over-year and 3% quarter-over-quarter to $307m
Government revenue grew 23% year-over-year and 11% quarter-over-quarter to $371m
Closed 27 deals over $10m
Customer count grew 41% year-over-year and 7% quarter-over-quarter
GAAP net income of $134m, representing a 20% margin
GAAP income from operations of $105m, representing a 16% margin
Adjusted income from operations of $254m, representing a margin of 37%
Rule of 40 score of 64%
GAAP earnings per share (“EPS”) grew 500% year-over-year to $0.06
Adjusted EPS grew 80% year-over-year to $0.09
Cash, cash equivalents, and short-term US treasury securities of $4.0bn
Cash from operations of $144m, representing a 21% margin
Adjusted free cash flow of $149m, representing a 22% margin

Outlook

For Q3 2024, we expect:

Revenue of between $697 – $701m.
Adjusted income from operations of between $233 – $237m.

For full year 2024:

We are raising our revenue guidance to between $2.742 – $2.750bn.
We are raising our US commercial revenue guidance to in excess of $672m, representing a growth rate of at least 47%.
We are raising our adjusted income from operations guidance to between $966 – $974m.
We continue to expect adjusted free cash flow of between $800m – $1bn.
And we continue to expect GAAP operating income and net income in each quarter of this year. (Source: BUSINESS WIRE)

05 Aug 24. Advent Technologies Reaches Agreement for up to $3m in Debt from Institutional Investor. Advent Technologies Holdings, Inc. (NASDAQ: ADN), an innovation-driven leader in the fuel cell and hydrogen technology sectors, today announced that the Company entered into a Securities Purchase Agreement, with an institutional investor pursuant to which the Investor will lend the Company $1,000,000.

The Investor has also agreed to provide the Company with a one-year revolving line of credit for $2,000,000 upon the Company’s filing of a Registration Statement on Form S-1 with the Securities and Exchange Commission with respect to an underwritten or “best efforts” public offering by the Company of its common stock and/or Common Stock equivalents for proceeds to the Company of not less than $5,000,000.

The Company will use the proceeds from the loan for general corporate purposes, including expenses related to the preparation of its Annual Report on Form 10-K for the year ended December 31, 2023, and expenses to facilitate a public offering of common stock.

The loan bears interest at the rate of 18% per year and is due in full in one year. The Company is required to reduce the salary of its Chief Executive Officer by at least 50%, and of each other employee of the Company and its subsidiaries by up to 50%.

The closing of the transaction is subject to (i) the Company filing its 2023 annual report on Form 10-K with the Securities and Exchange Commission; and (ii) the resignation of at least five of the current members of the Company’s Board of Directors and appointment to the Board of three nominees designated by the Investor. As a result, (i) each of Nora Goudroupi, Anggelos Skutaris, Larry Epstein, Wayne Threatt and Von McConnell will resign as directors of the Company, and (ii) Katie Field, Richard Paolone and Avtar Dhaliwal will be appointed to the Board of Directors. The Class I Directors will be Vassilios Gregoriou and Emory DeCastro, the Class II Directors will be Richard Paolone and Avtar Dhaliwal, and the Class III Director will be Katie Field.

Dr. Vasilis Gregoriou, Advent’s Chairman and CEO, commented: “This additional funding will empower us to further our mission of decarbonizing hard-to-abate sectors through our Ion-Pair™ MEA fuel cell technology. Advent’s management team remains confident in the transformative potential of our fuel cell technology. We are pleased to welcome our new lender and board members.”

About Advent Technologies Holdings, Inc

Advent Technologies Holdings, Inc. is a U.S. corporation that develops, manufactures, and assembles complete fuel cell systems as well as supplying customers with critical components for fuel cells in the renewable energy sector. Advent is headquartered in California and holds the IP for next-generation HT-PEM that enables various fuels to function at high temperatures and under extreme conditions, suitable for the automotive, aviation, defense, oil and gas, marine, and power generation sectors. For more information, visit www.advent.energy. (Source: BUSINESS WIRE)

06 Aug 24. Sensitive British military projects face disruption from the threatened closure of one of the country’s last remaining microchip factories. Coherent, a US semiconductor company, ceased taking orders at its facility in County Durham and said the 310,000 sq ft site may have to be sold after Apple dropped the business as a supplier.

It can now be revealed the factory’s customers also include Leonardo, the Italian defence giant that makes radar systems, electronic warfare devices and helicopters in the UK.

It is understood the plant has previously supplied chips used for radar power amplifiers in Typhoon jets and other British military platforms.

Coherent is not thought to have any outstanding orders with Leonardo, but sources suggested the plant may still be needed for future, unspecified programmes. This is because the site, which specialises in photonics, is understood to be one of just two in the country that are currently geared for commercial processing of gallium arsenide semiconductors.

The factory’s customers also include Italian defence giant Leonardo, which makes helicopters in the UK Credit: Jason Alden/Bloomberg

The factory’s closure threatens to reduce the UK’s domestic capabilities and potentially force Leonardo to source the chips from elsewhere.

It would represent a blow to the UK at a time when the Government is seeking to build up the domestic industry for making semiconductors, a key technology underpinning everything from smartphones to complex computer systems and high-precision missiles.

A spokesman for Leonardo UK said: “Leonardo is aware of the current situation and is working with all of our stakeholders to deliver a resilient supply chain.”

The Ministry of Defence was asked to comment on Monday.

One semiconductor industry source suggested a white knight investor may yet emerge to save the Coherent plant, adding: “There are potentially interested parties.”

The Telegraph first revealed in May that the site’s future was in doubt and undergoing a strategic review that could lead to the plant being sold.

In company accounts, Coherent said it had issued a last-time-buy notice to other customers.

It said the decision by Apple – which was not named in the accounts – to stop using the company as a supplier “places the ongoing viability of the business in doubt”.

The accounts added: “A strategic review of the business is currently being undertaken with potential new technologies and/or sale of the business as options under consideration.”

Losing a contract from Apple can often be disastrous for the company’s suppliers. The British semiconductor company Imagination Technologies lost half of its value and was eventually sold after Apple said it no longer planned to use the company’s graphics chip designs in 2017.

Other companies including Volex and Wolfson Microelectronics suffered share price plunges after losing contracts.

The Government announced a £1bn semiconductor strategy last year but critics say the money is not supporting the industry and pales in comparison to semiconductor subsidies in the US and Europe.

Coherent was asked for a comment on Monday but did not respond. (Source: Daily Telegraph)

05 Aug 24. Capita’s asset sales win a second look. Debt is less of a worry at the outsourcer these days but what the path to a sustainable future looks like is anyone’s guess. Interim results for perennially troubled outsourcer Capita (CPI) has a slightly different feel from the normal sense of impending dread that even a cursory look at the company’s balance sheet induces; Capita has been caught in what would be a nominally fatal combination of endless pension fund contributions, alongside ongoing debt repayments for some time.

However, after achieving a decently high sales price for its Capita One IT division, which it sold for a net £180m to MRI software earlier this year, the pathway to a net cash inflow position in the medium term looks more plausible.

The cash bleed seems to be slowly staunching with an outflow in these results of £51.9m, compared with £64.3 last time, with costs associated with the savings programme (plus further pension deficit contributions of £14.5m in the half, triggered by the sale of Trustmarque in March 2022) being the main reasons for cash going out the door.

The company hopes to achieve £160mn of savings by 2025; so far it has delivered £100mn towards the target and generated £19m of associated costs in the process. The business disposal programme still has some way to go; group assets worth a nominal £83.2m are listed on the balance sheet as held for sale.

Capita is never far from the headlines and the penny share crowd loves the volatility associated with the company. Admittedly, the shares have performed well this year, while an ability to generate consistent cash flow through assets sales deserves an upgrade, the rump of the company is not worth serious consideration until its balance sheet is fixed beyond reasonable doubt. Hold. Last IC View: Sell, 23p, 4 Aug 2023. (Source: Investors Chronicle)

05 Aug 24. Private investor, Rcapital has signed an agreement to acquire GT Emissions Systems, a subsidiary of Knorr-Bremse, the global market and technology leader for braking systems and other rail and commercial vehicle systems. GT Emissions Systems is a leading supplier of emission control systems for diesel engines in on-highway commercial vehicles and off-highway equipment. The transaction is expected to close in the fourth quarter.

Founded in 1974, GT Emissions Systems is headquartered in Peterlee (UK) with assembly lines in Italy, India and Brazil. The business employs c.225 people globally and its customers include Daimler, Volvo, Scania, JCB, MAN and John Deere.

GT has established itself as a leading manufacturer and supplier of engine air valve systems for medium and heavy-duty commercial trucks and the off-highway equipment market. It specialises in “engine air” components which include: exhaust throttle valves, exhaust gas recirculation valves and intake throttle valves. GT’s solutions are a critical component of the internal combustion engine and are designed to help ensure OEMs are able to meet ever evolving emission standards.

Rcapital is uniquely placed to support the business, thanks to its strong track record in the engineering sector with its existing investments in Bromford Precision Solutions, Trac Precision Solutions, Nasmyth Group and, most recently, FGP Systems. This transaction also marks Rcapital’s eighth corporate carve-out transaction in recent years.

Sam Duberley, Investment Director at Rcapital, said: “GT is a great business, providing well-engineered complex components to an impressive blue chip client base. We are passionate about supporting great British engineering businesses and we firmly believe that under our stewardship, GT will grow from strength to strength. ”

Steve Wright, Managing Director, GT Emissions Systems, said: “GT Emissions Systems has great potential and an opportunity to build on its market-leading position, serving clients globally. I am looking forward to working with the Rcapital team and benefiting from their significant experience in the sector and track record of delivering strong returns and long-term growth.”

05 Aug 24. SENIOR: The FTSE 250 engineer has reported a 1 per cent rise in first-half pre-tax profits to £13.2m on revenue up 4 per cent at £501.4m, buoyed by demand for commercial aircraft and higher defence spending. The full-year outlook is unchanged. David Squires, chief executive, said: “Our aerospace revenue and profits have grown strongly notwithstanding 737 Max volumes being subdued as a consequence of the ongoing situation at Boeing. Our Flexonics division continued to perform well.” (Source: The Times)

05 Aug 24. Senior’s orders improve as it looks to boost delivery

Order intakes improves in spite of industry problems linked to Boeing

The group turns free cash flow positive
Underlying operating margin on the rise

Senior (SNR) has released a solid if unspectacular set of half year numbers about a week after it announced that it had secured a five-year contract with Rolls-Royce (RR.) to provide aerofoils for the Pearl engine series, a component in ultra-long range business jets.

The group, a supplier of high-end components for the aerospace and defence industries, saw interim revenues increase by 7 per cent on a constant currency basis, while adjusted operating profits rose by 13 per cent to £25.1m on a 30-basis point increase in the underlying margin to 5 per cent. However, reported profitability was essentially flat on the 2023 half year once a series of costs and charges linked to amortisation, restructuring, relocation, pension settlements and US class actions are added to the mix.

The group turned free cash flow positive through the period and its return on capital employed increased by a full percentage point to 7.3 per cent. Though these last two metrics point to improvements at the operating level, the group’s net margin at 2.17 per cent is more in keeping with a high street grocery chain than a high-tech engineer. Competition is fierce among the original equipment manufacturers within the aerospace industry, so margin pressure comes with the territory.

Move over Airbus and Boeing – this planemaker is flying high

Order intake has been promising despite ongoing external issues with Boeing (US:BA) and management maintains that the build rate within the aerospace business and improved pricing mechanism should support margins going forward. Indeed, a book-to-bill ratio of 1.15 indicates that Senior received more orders than it fulfilled, a pointer to buoyant demand levels. A forward rating of 18 times consensus earnings and a price/earnings to growth ratio of 1.3 indicates that the market is up to speed, so we remain neutral on the stock despite the operational improvements. Hold. Last IC view: Hold, 160p, 04 Mar 2024. (Source: Investors Chronicle)

02 Aug 24. Moog Inc. Reports Strong Third Quarter 2024 Results with Further Margin Expansion. Moog Inc. (NYSE: MOG.A and MOG.B), a worldwide designer, manufacturer and systems integrator of high-performance precision motion and fluid controls and control systems, today reported fiscal third quarter 2024 diluted earnings per share of $1.74 and adjusted diluted earnings per share of $1.91.

“Fiscal year 2024 is measuring up to be a great step towards achieving our long-term financial targets”

Post this

“We delivered a solid performance in the third quarter of 2024, with significant improvements in our financial results,” said Pat Roche, CEO. “Our teams continue to execute well, driving both top-line growth and margin expansion across our businesses. Our commitment to achieving our Investor Day targets remains strong, with clear progress in our pricing and simplification initiatives. With this momentum we are confident in our continued success and growth.”

Quarter Highlights

Net sales of $905m increased 6% compared to the prior year’s quarter, with increases in our aerospace and defense businesses, while Industrial was slightly down.
Operating margin of 11.6% increased 170 basis points, driven by improved performance in Space and Defense, Commercial Aircraft and Military Aircraft, while Industrial declined 130 basis points.
Adjusted operating margin of 12.3% increased 210 basis points, reflecting improved business performance across all segments.
Diluted earnings per share of $1.74 increased 32% due to higher operating profit, partially offset by restructuring charges and a higher tax rate.
Adjusted diluted earnings per share of $1.91 increased 39%, driven by operating margin expansion and incremental profit from higher sales.
Free cash flow improved by $17m as compared to last year.

Quarter Results

Sales in the third quarter of 2024 increased compared to the third quarter of 2023, with notable growth in Military Aircraft, Space and Defense and Commercial Aircraft. Military Aircraft sales increased 18% to $207 m due to the ramp of the FLRAA program and other OEM production programs. Space and Defense sales increased 7% to $258m driven by strong U.S. and European defense demand. Commercial Aircraft sales increased 6% to $189 m due to the increased production in our widebody business. Industrial segment sales decreased 1% to $250m due to a slowdown in orders for industrial automation applications, partially offset by higher product demand in other markets.

Operating margin increased 170 basis points to 11.6% in the third quarter of 2024 compared to the third quarter of 2023. Space and Defense operating margin increased 490 basis points to 12.6% due to improved performance on space vehicle development programs. Commercial Aircraft operating margin increased 190 basis points to 12.9%, driven by higher sales volume and pricing initiatives, as well as mix. Military Aircraft operating margin increased 130 basis points to 11.6%, driven by cost absorption on the FLRAA program. Industrial operating margin decreased 130 basis points to 9.8%, impacted by higher restructuring and inventory write-down charges.

Adjusted operating margin in the third quarter of 2024 increased 210 basis points to 12.3% compared to the third quarter of 2023. The only segment with significant adjustments was Industrial, whose adjusted operating margin increased as the benefits of pricing more than offset an unfavorable sales mix and planned product transfers.

Twelve-month backlog remains robust, increasing 7% to $2.5bn, driven by strong product demand across the aerospace and defense businesses.

Free cash flow in the third quarter was a use of cash of $2m, an improvement of $17m year-over-year, driven by higher net cash from operating activities and lower capital expenditures.

2024 Financial Guidance

“Fiscal year 2024 is measuring up to be a great step towards achieving our long-term financial targets,” said Jennifer Walter, CFO. “This year, our sales will grow by 8%, our adjusted operating margin will expand by 150 basis points and our adjusted earnings per share will increase by 20%.” (Source: ASD Network)

02 Aug 24. Rheinmetall to acquire majority stake in Resonant Holdings of South Africa. Rheinmetall is to expand its plant engineering portfolio by acquiring a majority stake in the business of Resonant Holdings (Pty) Ltd, a leading South African specialist in plant engineering for chemical applications. An agreement to this effect has now been signed. Rheinmetall Waffe Munition GmbH will hold 51% of the shares in a newly formed joint venture Rheinmetall Resonant South Africa, and the current Resonant Holding shareholders will possess the remaining 49%. The company to be founded expects an annual sales potential of more than EUR 100m.

The parties have agreed not to disclose the purchase price. The transaction and the final company name are still subject to customary regulatory approvals.

The planned acquisition is Rheinmetall’s response to the growing global demand in the ammunition sector and the resulting customer requirements for the construction of corresponding production facilities. Rheinmetall is therefore significantly expanding its existing capabilities in ammunition production by vertically integrating further competences, thus positioning itself even more robustly for the independent planning, construction and operation of production facilities for the manufacture of chemical products such as propellant powder and explosives.

Resonant Holdings employs around 150 people and brings proven experience and outstanding expertise in designing and constructing specialised plants. This includes production facilities for chemical and explosives products. Resonant’s leading expertise complements Rheinmetall’s plant engineering capabilities, particularly in the fields of chemical, energetic, and explosives technology, industrialization, and manufacturing. This expands Rheinmetall’s ability to offer a comprehensive range of services, including the design, construction and commissioning of state-of-the-art plants tailored to the specific needs of our global partners.

At the same time, the partnership offers Resonant a strong global reach, industry expansion and access to new markets. The combined expertise of both entities will drive innovation and efficiency, delivering unparalleled value to customers. Rheinmetall aims to preserve the company’s existing technology and workforce.

The planned acquisition of Resonant Holdings underscores Rheinmetall’s dedication to expanding its technological capabilities and delivering state-of-the-art solutions to its partners. This strategic acquisition of the controlling stake ensures that Rheinmetall remains at the forefront of innovation in the engineering and defence industries, providing unparalleled expertise and comprehensive solutions.

09 Apr 24. The VanEck Defense UCITS ETF of the asset manager VanEck has reached a fund volume of USD 500m approximately one year after its launch. The fund invests worldwide in companies that are active in the defence industry or are involved in defence-related government contracts. “The rapid growth of our ETF illustrates the importance of defence nowadays for investors”, explains Martijn Rozemuller, CEO of VanEck Europe. “Traditionally, the defence industry has been a rather sensitive topic, especially in Europe. However, the outbreak of war in Ukraine and other areas of tension and conflict around the world have changed the way many people view defence policy.” For example, many governments in Western European countries, which have repeatedly undershot NATO’s two per cent target for military spending in the past, have announced increased investment in defence infrastructure and military stocks in order to meet the two per cent target in the future and ensure their own defence capabilities. “Companies in the security and arms industries could benefit from this development in the long term in the coming years,” Rozemuller said. “Reflecting on one year since the launch of VanEck Defense UCITS ETF, events have reinforced on the pivotal role that defense plays in world affairs and how defense budgets around the world are rising to address the geopolitical challenges of our times,” stated Steven Schoenfeld, Chief Executive of MarketVector Indexes. “Our MVDEF index incorporates the leading global companies in the defense industry, and we are proud to collaborate with VanEck Europe in bringing this unique and timely investment solution to the market,” he continued. Since its launch in spring 2023, the VanEck Defense UCITS ETF was the first Pure-Play ETF available in Europe to offer investors access to this sector. The fund aims to invest in companies that generate the majority of their sales with the following products or services in the defence sector: Defence equipment, aerospace technology, communications systems and services, satellite technology, unmanned aerial vehicles, security software, IT hardware and services, cybersecurity software, training and simulation solutions, digital forensics, tracking devices, and e-authentication or biometric identification applications. To this end, the ETF follows the MarketVector™ Global Defense Industry Index and explicitly excludes companies that generate revenue from controversial weapons or have demonstrably failed to comply with established standards or are suspected of doing so. The ETF is classified as Article 6 under the EU Disclosure Regulation.

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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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