Sponsored by SPX Communication Technologies (TCI & ECS)
www.tcibr.com
www.enterprisecontrol.co.uk
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06 Sept 24. EHang Strongly Refutes Allegations Causing Stock Volatility. EHang Holdings Limited, an urban air mobility technology platform company, strongly refuted recent rumours circulating in retail investor communities. “These baseless allegations have no foundation in truth and have unfairly impacted the Company’s stock price.“
The rumour claims that EHang is related to an investigation on Chris Hu by the U.S. government. EHang unequivocally denies this.
The Company’s management team, including Huazhi Hu, EHang’s Founder, Chairman and CEO, has no relatives or any personal connections involved in the incident mentioned in the rumors, and any suggestion otherwise is completely fabricated. EHang categorically denies any involvement in activities that could harm its reputation or standing with regulatory bodies.
EHang has always maintained the highest standards of transparency and compliance in all its operations to ensure that it meets legal and ethical obligations in both China and the U.S.
The Company remains focused on its mission to develop and commercialize cutting-edge autonomous aerial vehicle technology. It will continue working diligently to bring innovative solutions to market and drive long-term value for its shareholders.
EHang urges investors and the public to rely on official communications from the Company for accurate and up-to-date information. The Company will reserve the right to take appropriate legal action against those who propagate false and misleading information to protect its reputation and the interests of its shareholders. (Source: UAS VISION)
05 Sept 24. Astrion Completes Acquisition of Axient, Aims to Set Industry Standard in Innovation and Customer Value. Astrion, a leading provider of mission support and advanced engineering services to the U.S. government, today announced the completion of its acquisition of Axient, a highly regarded provider of specialized engineering and solutions. Astrion is a portfolio company of Brightstar Capital Partners (“Brightstar”), a middle-market private equity firm.
The acquisition enhances Astrion’s suite of services, addressing critical challenges across cybersecurity, mission support, systems engineering, and digital solutions. Customers can expect more robust and versatile solutions designed to meet the dynamic needs of today’s global environment.
“We are thrilled to welcome Axient’s talented team to Astrion,” said Dave Zolet, CEO of Astrion. “The dedication and expertise of our combined workforce are fundamental to our success and mission to Be the Difference. Together, we will leverage our collective strengths to drive innovation and deliver results with impact for our customers.”
“We are excited about the value and benefits of scale this acquisition will create for Astrion and its customers,” said Michael Singer, Partner at Brightstar. “We believe Astrion is positioned to drive substantial growth and deliver exceptional outcomes for its customers across the federal government.”
The transaction was announced on July 24, 2024. JP Morgan Securities LLC and Jefferies LLC served as financial advisors to Astrion and Brightstar Capital partners, and Kirkland & Ellis LLP served as legal counsel. KippsDeSanto & Co. and Stone Key Partners LLC served as exclusive financial advisors to Axient and Sagewind Capital, and Paul, Weiss, Rifkind, Wharton & Garrison LLP and Morrison & Foerster LLP served as legal counsel.
About Astrion
Astrion delivers the difference that empowers its customers and nation to take on what’s next. Astrion stands as a partner for progress, providing cutting-edge services that boost preparedness, optimize performance, and ensure mission success. Astrion embraces a forward-thinking spirit to tackle critical challenges across cybersecurity, digital solutions, mission support, science & engineering, and test & evaluation to support the Air Force, Army, Civilian Agencies, Navy, and Space. For more information, please visit www.astrion.us. (Source: BUSINESS WIRE)
06 Sept 24. Boeing’s history with Nasa’s space programme stretches back to the Apollo missions of the 1960s that cemented US dominance among the stars. Now, a shifting competitive landscape and a black eye from stranding two astronauts at the International Space Station are raising a once-unthinkable question: should the company exit the business? Nasa officials announced last month that astronauts Barry “Butch” Wilmore and Sunita “Suni” Williams would be returning to Earth aboard a SpaceX spacecraft next year rather than the Boeing CST-100 Starliner that carried them to the space station in June, their planned eight-day mission lengthening to eight months. Nasa administrator Bill Nelson said he had talked to Boeing’s new chief executive Kelly Ortberg, and was “100 per cent” sure that the company would fly Nasa missions again. But Ortberg has walked into a company in crisis, and his first priority is to turn around Boeing’s commercial planes business. Space is “a bit of a distraction in the portfolio” of commercial and military aircraft, said Todd Harrison, a senior fellow at the American Enterprise Institute. The company may not be ready to sell yet, but “it’s not out of the realm of possibility”. (Source: FT.com)
04 Sept 24. AeroVironment Announces Fiscal 2025 First Quarter Results. AeroVironment, Inc. (“AeroVironment” or the “Company”) reported today financial results for the fiscal first quarter ended July 27, 2024.
“With a growing pipeline and solid operating performance, AeroVironment is working toward achieving another record fiscal year, and we are confident that our success will carry forward into future years.”
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First Quarter Highlights:
- Record first quarter revenue of $189.5m up 24% year-over-year
- First quarter net income of $21.2m and adjusted EBITDA of $37.2m
- In August 2024 awarded U.S. Army Lethal Unmanned Systems Indefinite Delivery, Indefinite Quantity (“IDIQ”) with a record contract ceiling value of $990m and initial funding of $128m
“AeroVironment has once again delivered excellent results, including record first-quarter revenue that’s 24% higher than the same period last fiscal year,” said Wahid Nawabi, AeroVironment chairman, president and chief executive officer. “Our Loitering Munition Systems segment continues to be the highest growth driver for the company posting first-quarter revenue, 68% higher than the same quarter last year.
“With a growing pipeline and solid operating performance, AeroVironment is working toward achieving another record fiscal year, and we are confident that our success will carry forward into future years.”
FISCAL 2025 FIRST QUARTER RESULTS
Revenue for the first quarter of fiscal 2025 was $189.5m, an increase of 24% as compared to $152.3m for the first quarter of fiscal 2024, reflecting higher product sales of $40.0m, partially offset by a decrease in service revenue of $2.9m. From a segment standpoint, the year-over-year increase was due to revenue growth in Loitering Munitions Systems (“LMS”) of 68% and UnCrewed Systems (“UxS”) of 22%, partially offset by a decrease in MacCready Works (“MW”) of 24%.
Gross margin for the first quarter of fiscal 2025 was $81.5m, an increase of 24% as compared to $65.7m for the first quarter of fiscal 2024, reflecting higher product gross margin of $16.1m, partially offset by lower service margin of $0.3m. As a percentage of revenue, gross margin remained consistent at 43%. Gross margin was negatively impacted by an increase of $1.3m of intangible amortization expense and other related non-cash purchase accounting expenses.
Income from operations for the first quarter of fiscal 2025 was $23.1m as compared to $26.4m for the first quarter of last fiscal year. The decrease year-over-year was due to an increase in selling, general and administrative (“SG&A”) expense of $10.0m and an increase in research and development (“R&D”) expense of $9.1m, partially offset by higher gross margin of $15.8m.
Other loss, net, for the first quarter of fiscal 2025 was $0.5m, as compared to $3.1m for the first quarter of last fiscal year. The decrease in other loss, net was primarily due to a decrease in net interest expense and a decrease in net unrealized losses on investment holdings.
Provision for income taxes for the first quarter of fiscal 2025 was $1.5m, as compared to $1.3m for the first quarter of last fiscal year.
Net income for the first quarter of fiscal 2025 was $21.2 m, or $0.75 per diluted share, as compared to $21.9m, or $0.84 per diluted share, in the prior-year period, respectively.
Non-GAAP adjusted EBITDA for the first quarter of fiscal 2025 was $37.2m and non-GAAP earnings per diluted share were $0.89, as compared to $37.3m and $1.00, respectively, for the first quarter of fiscal 2024.
BACKLOG
As of July 27, 2024, funded backlog (defined as remaining performance obligations under firm orders for which funding is currently appropriated to us under a customer contract) was $372.9m, as compared to $400.2m as of April 30, 2024. Funded backlog as of July 27, 2024 includes only initial funding for Switchblade 300 and 600s for the recently announced program wins such as the Low Altitude Stalking and Strike Ordnance or “LASSO” program, Organic Precision Fires-Light or “OPF-L” program, the Replicator Initiative, Ukraine Aid Initiative and our first Lithuanian order. Funded backlog does not include $128 m of initial funding under the recently announced IDIQ contract to deliver LMS systems for the U.S. Army’s Directed Requirement for Lethal Unmanned Systems with a contract ceiling value of $990m. Additional funding for each of these programs is anticipated in our full year plan.
FISCAL 2025 — OUTLOOK FOR THE FULL YEAR
For fiscal year 2025, the Company continues to expect revenue of between $790m and $820m, net income of between $74m and $83m, Non-GAAP adjusted EBITDA of between $143m and $153m, earnings per diluted share of between $2.61 and $2.92 and non-GAAP earnings per diluted share, which excludes amortization of intangible assets, other non-cash purchase accounting expenses and equity securities investments gains or losses, of between $3.18 and $3.49.
The foregoing estimates are forward-looking and reflect management’s view of current and future market conditions, subject to certain risks and uncertainties, including certain assumptions with respect to our ability to efficiently and on a timely basis integrate acquisitions, obtain and retain government contracts, changes in the timing and/or amount of government spending, react to changes in the demand for our products and services, activities of competitors, changes in the regulatory environment, and general economic and business conditions in the United States and elsewhere in the world. Investors are reminded that actual results may differ materially from these estimates. (Source: BUSINESS WIRE)
03 Sep 24. Boeing’s (BA.N) annual free cash flow target of $10bn may be delayed by about two years to 2027-28 and it would have to raise $30bn before developing a new aircraft, Wells Fargo said and downgraded the stock. Shares of the Dow component fell more than 7% after the bell, amid broad market declines to a near one and a half year low on Tuesday, after lead analyst Matthew Akers pushed Boeing to “underweight” and cut the target price to $119, a 32% downside to the last closing price.
“Boeing carries about $45bn net debt and (it) must address this before it kicks off the next aircraft development cycle,” Akers said, adding that cutting the debt would consume its cash flow through 2030.
The planemaker is working to recover from a crisis sparked by a mid-air accident in January that led to regulatory curbs on its 737 MAX production, which has pressured its free cash flow.
“Given a likely new aircraft launch in the next few years, Boeing will need to shore up the balance sheet sooner,” said Akers, who is rated three out of five stars for estimate accuracy on LSEG Workspace.
“We estimate a roughly $30bn equity raise to get back to zero net debt by 2027.”
In its response, Boeing referred to CFO Brian West’s July earnings call in which he said the planemaker would manage its balance sheet in a prudent manner and would supplement liquidity as needed.
The company had in 2022 outlined annual cash flow target of $10bn by 2025 or 2026.
Boeing’s free cash flow per share could grow to about $20 this decade if it were to delay new planes for “several more years” and just pay down debt, Akers said, but that would risk ceding market share to rival Airbus SE (AIR.PA) in the long run. (Source: Reuters)
04 Sept 24. BlackSky Announces 1-for-8 Reverse Stock Split of Class A Common Stock. Class A Common Stock Expected to Begin Trading on Reverse Split-Adjusted Basis on September 9, 2024. BlackSky Technology Inc. (“BlackSky”) (NYSE: BKSY), today announced that its Board of Directors has approved a 1-for-8 reverse stock split (the “Reverse Stock Split”) of BlackSky’s Class A common stock, par value $0.0001 per share (the “Class A Common Stock”). The Reverse Stock Split was approved by BlackSky’s stockholders at BlackSky’s annual meeting of stockholders held virtually earlier today. The Reverse Stock Split will be effective at 4:15 p.m. Eastern Time on September 6, 2024, and the Class A Common Stock will open for trading on the New York Stock Exchange (the “NYSE”) on a reverse split-adjusted basis on September 9, 2024, under the existing trading symbol “BKSY.”
The new CUSIP number of the Class A Common Stock following the Reverse Stock Split will be 09263B 207. BlackSky’s publicly traded warrants will continue to be traded on the NYSE under the symbol “BKSY.W,” and the CUSIP number for the publicly traded warrants will remain unchanged.
At the effective time of the Reverse Stock Split, every eight shares of issued Class A Common Stock will be automatically reclassified into one new share of Class A Common Stock. The Reverse Stock Split will not change the number of authorized shares of Class A Common Stock or BlackSky’s preferred stock. The par value per share of the Class A Common Stock will also remain unchanged at $0.0001.
As a result of the Reverse Stock Split, proportionate adjustments will be made to the per share exercise price and the number of shares issuable upon the exercise or settlement of all outstanding BlackSky options and restricted stock units to purchase shares of Class A Common Stock, and the number of shares reserved for issuance pursuant to BlackSky’s equity incentive plans will be reduced proportionately. In addition, proportionate adjustments will be made to BlackSky’s outstanding warrants, resulting in each publicly traded warrant becoming exercisable for 1/8th of a share of Class A Common Stock at an exercise price of $92.00 per whole share.
No fractional shares will be issued in connection with the Reverse Stock Split. Stockholders who would otherwise be entitled to receive fractional shares as a result of the Reverse Stock Split will be entitled to a cash payment (without interest) in lieu thereof at a price equal to the number of shares of Class A Common Stock held by such stockholder before the Reverse Stock Split that would otherwise have been exchanged for such fractional share interest multiplied by the closing price per share of the Class A Common Stock on the NYSE on September 6, 2024, the date of the effective time of the Reverse Stock Split.
Continental Stock Transfer & Trust Company is acting as transfer and exchange agent for the Reverse Stock Split. Registered stockholders who hold shares of Class A Common Stock are not required to take any action to receive post-reverse split shares. Stockholders owning shares via a broker, bank, trust or other nominee will have their positions automatically adjusted to reflect the Reverse Stock Split, subject to such broker’s particular processes, and will not be required to take any action in connection with the Reverse Stock Split.
Additional information about the Reverse Stock Split can be found in BlackSky’s definitive proxy statement filed with the Securities and Exchange Commission (the “SEC”) on July 25, 2024, which is available free of charge at the SEC’s website, www.sec.gov, and on BlackSky’s website at: https://ir.blacksky.com.
About BlackSky
BlackSky is a real-time, space-based intelligence company that delivers on-demand, high-frequency imagery, analytics, and high-frequency monitoring of the most critical and strategic locations, economic assets, and events in the world. BlackSky owns and operates one of the industry’s most advanced, purpose-built commercial, real-time intelligence systems that combines the power of the BlackSky Spectra® tasking and analytics software platform and our proprietary low earth orbit satellite constellation.
With BlackSky, customers can see, understand and anticipate changes for a decisive strategic advantage at the tactical edge, and act not just fast, but first. BlackSky is trusted by some of the most demanding U.S. and international government agencies, commercial businesses, and organizations around the world. BlackSky is headquartered in Herndon, VA, and is publicly traded on the New York Stock Exchange as BKSY. To learn more, visit www.blacksky.com and follow us on X (Twitter). (Source: BUSINESS WIRE)
05 Sept 24. Palo Alto Networks Acquires IBM’s QRadar in $500m Deal. Palo Alto Networks, the global cybersecurity leader, has announced the completion of its acquisition of IBM’s QRadar Software as a Service (SaaS) assets. This strategic move, revealed on September 4, 2024, marks a significant milestone in the company’s mission to enhance cybersecurity solutions for its customers.
The acquisition underscores a strengthened partnership between Palo Alto Networks and IBM, aimed at providing customers with best-in-class threat prevention capabilities. This collaboration will address the ever-expanding attack surfaces through a comprehensive platform approach, simplifying security operations for organizations worldwide.
Palo Alto Networks’ Cortex XSIAM platform, powered by Precision AI, will now integrate QRadar’s capabilities, offering a centralized solution that combines SIEM, SOAR, ASM, and XDR functionalities. This integration is expected to streamline security operations and enhance threat prevention at scale.
“We are on a mission to help organizations transform their security operations and harness the potential of Precision AI-powered platforms to better protect their businesses. Our partnership with IBM reinforces our commitment to innovation and our conviction in the tremendous benefit of QRadar customers adopting Cortex XSIAM for a robust, data-driven security platform that offers transformative efficiency and effectiveness in defending against evolving cyber threats,” Nikesh Arora, Chairman and CEO, Palo Alto Networks said.
Benefits for Customers With Migration
Eligible customers will receive free migration services from IBM Consulting, ensuring a smooth transition to the Cortex XSIAM platform. The enhanced platform offers several key advantages:
- Seamless migration with retained best practices
- Comprehensive SOC functionality beyond traditional SIEM capabilities
- Advanced analytics and automation powered by Precision AI
- Reduced manual workload for security operations centers
As part of this deal, IBM has furthered its internal deployment of Palo Alto Networks’ security platforms. The tech giant will utilize Cortex XSIAM for its next-gen security operations and Prisma SASE 3.0 for zero-trust network security, protecting over 250,000 of its global workforce.
IBM will continue to support QRadar on-premises clients with features, security updates, and bug fixes. QRadar SaaS customers will maintain their current deployment until they are ready to transition to Cortex XSIAM.
“Together, IBM and Palo Alto Networks are shaping the future of cybersecurity for our customers and the industry at large. Working with Palo Alto Networks will be a strategic advantage for IBM as our two companies partner on advanced threat protection, response, and security operations using Cortex XSIAM and watsonx, backed by IBM Consulting. At the same time, IBM will continue innovating to help secure organizations’ hybrid cloud environments and AI initiatives, focusing our investments on data security and identity and access management technologies,” Arvind Krishna, Chairman and CEO of IBM, said.
This acquisition is expected to shape the future of cybersecurity, combining Palo Alto Networks’ innovative solutions with IBM’s consulting expertise. The partnership aims to accelerate the adoption of advanced threat protection and response capabilities across various industries.
As cyber threats continue to evolve, this strategic move positions Palo Alto Networks to offer more robust, AI-powered security solutions to its global customer base. The integration of QRadar’s assets into the Cortex XSIAM platform represents a significant step towards more efficient and effective cybersecurity operations in an increasingly complex digital landscape. (Source: News Now/https://cybersecuritynews.com/)
04 Sept 24. Prince Industries, a HCPI Portfolio Company, Further Expands Its Aerospace and Defense Capabilities With Acquisition of Keystone Precision & Engineering. Prince Industries (“Prince”), a leading precision machining and sheet metal fabrication company and HC Private Investments (“HCPI”) portfolio company, announced the successful acquisition of Keystone Precision & Engineering (“Keystone”). This transaction will expand Prince’s capabilities and further its market reach into aerospace, defense and medical end-markets. Terms of the transaction were not disclosed.
Based in Pepperell, MA, Keystone collaborates with its defense and medical customers from product design through assembly, ensuring the delivery of high-quality, reliable components for essential end-products.
Mark Miller, Chief Executive Officer of Prince, said, “The acquisition of Keystone further enhances our production capabilities, bolsters our East Coast presence, and expands our market penetration in the defense and medical markets. Keystone’s expertise in producing complex, critical parts, combined with their commitment to quality and reliability, aligns well with the Prince model.”
“Since 2007, we have dedicated ourselves to providing our customers with the highest quality workmanship, meticulous attention to detail, and reliable on-time delivery,” stated Anthony Serino and Rob Stanieich, Keystone’s Owners. “We look forward to partnering with Prince for the next chapter of growth for the business.” Mr. Stanieich will remain with the business, joining Prince as VP of Engineering.
Winston & Strawn LLP served as legal counsel to Prince Industries and HCPI. Wintrust Financial Corporation, Signature Bank, and Midwest Mezzanine Funds provided debt financing for the transaction. Veteran business advisor, Steve Lane helped advise Keystone on the transaction.
ABOUT PRINCE INDUSTRIES
Prince Industries is a precision machining and sheet metal fabrication company focused on the industrial, aerospace, and medical end-markets. Prince provides its customers with a full suite of services from engineering and product design to material selection, process mapping, welding, powder coating and assembly. Originally acquired by HCPI in 2022 and still led by its founding family member, Mark Miller, Prince has 500 employees across seven manufacturing facilities globally. For more information, please visit https://www.princeind.com.
ABOUT HC PRIVATE INVESTMENTS
HC Private Investments is a private equity investment firm focused on investing in manufacturing businesses within the consumer and industrial markets. The firm will also bring select family offices and individuals to participate in its transactions providing HCPI with a flexible and patient capital base. With a focus of being the first professional investor in a business, HCPI seeks to partner with business owners, executives and management teams to identify opportunities to remove impediments to growth enabling companies to maximize their full value potential. For more information, please visit www.hcprivateinvest.com. (Source: BUSINESS WIRE)
05 Sep 24. Airbus Defence and Space has finalised the acquisition of infodas, a German company that provides cybersecurity and IT solutions in the public sector including for defence and critical infrastructures, and which is now becoming an Airbus subsidiary. This follows receipt of the required regulatory approvals.
“This acquisition supports Airbus’ strategic ambition to strengthen its cybersecurity portfolio for the benefit of its European and global customers,” said Karen Florschuetz, Executive Vice President of Connected Intelligence at Airbus Defence and Space.
With the exponential growth of cyber threats, along with the increasing digitalisation and connectivity of defence and aerospace products and systems, cybersecurity is an important component of Airbus’ development. Over the last years, the company has continuously developed its cybersecurity capabilities and expertise, ensuring the best possible protection for its products, operations, customers, and ecosystem, including in the perspective of major military programmes such as the Future Combat Air System (FCAS).
Infodas with around 250 employees and annual revenues of about 50 m euros is headquartered in Cologne, it has additional offices in Germany in Berlin, Bonn, Hamburg, Munich and Mainz. The company has been certified by the Federal Office for Information Security (BSI) as an IT security service provider in the areas of information system auditing, consulting and penetration tests. The infodas Secure Domain Transition (SDoT) Security Gateway product family is approved for classification levels up to secret. The products are also certified in accordance with the Common Criteria (CC) and have other country-specific certificates.
03 Sep 24. BAE Systems has acquired Kirintec, an innovative UK cyber and electromagnetic activities (CEMA) company, which specialises in counter-Improvised Explosive Devices (IED), counter-Uncrewed Air Systems (UAS) and electronic warfare products and solutions.
Kirintec’s battle-proven technology protects military platforms and personnel from cyber and electromagnetic attacks. The open architecture of the products enables them to work together across all domains and a range of military platforms.
The acquisition brings together complementary capabilities in CEMA and multi-domain integration and will enable BAE Systems to support growing customer requirements and address increasing demand for these capabilities. Kirintec will form part of BAE Systems’ Digital Intelligence business, providing new products to broaden the Company’s portfolio across electronic warfare and force protection.
Andrea Thompson, Group Managing Director, BAE Systems’ Digital Intelligence business, said: “The nature of warfare is changing for our military customers and adversaries are increasingly using offensive and defensive cyber and electronic warfare capabilities so Kirintec is a welcome addition to our business. Together, our complementary capabilities will help our armed forces secure electromagnetic spectrum dominance and conduct operations with a reduced risk of casualties or operational setbacks.”
Nick Watts, CEO, Kirintec, said: “The opportunity for CEMA expansion is significant amidst today’s increasingly digitally-driven battlespace. In order to address the demand and grow to the level our customers require, we are delighted to join BAE Systems and combine our heritage in CEMA with BAE Systems’ global pedigree in delivering multi-domain solutions.”
The deal supports BAE Systems’ strategy to develop breakthrough technologies, pursuing bolt-on acquisitions with technology-rich companies that complement the Company’s existing portfolio.
Kirintec’s approximately 50 strong workforce will continue to operate from its site in Herefordshire, supporting its existing customers. BAE Systems will help the business to increase investment in product development and bring these innovative solutions to a wider range of customers across the UK and allied nations.
03 Sept 24. T2S Solutions Acquires Flexitech Aerospace, Expanding Its Footprint into Spaceflight Product Offerings for Earth Orbit and Lunar Operations. T2S Solutions (“T2S”), a founder-led, mission-focused provider of product and solutions in support of U.S. Defense and Intelligence Missions, today announced that it has acquired Flexitech Aerospace, a leading radio-frequency (RF) engineering company that provides analysis, design and manufacturing of spaceflight RF communications systems and components. This transaction supports T2S’ broader strategy to accelerate growth and innovations in the space technology sector by incorporating Flexitech Aerospace’s complimentary RF capabilities, spaceflight heritage, and extensive customer relationships with T2S’ existing government portfolio and space mission systems expertise.
Kevin Jackson, CTO and Founder at Flexitech Aerospace, said: “It’s truly gratifying to see our journey culminate in this exciting new chapter with T2S. This transition marks a significant milestone for our entire team, and I’m confident that joining forces with such an innovative and dynamic partner will unlock vast opportunities for growth and success. I’m proud of what we have built and am excited about the role current and future Flexitech Aerospace product offerings will play as T2S continues to bolster its spaceflight heritage platform for valued existing and new customers.”
Founded in 2015 and located in Orlando, FL, Flexitech Aerospace brings expertise in spaceflight technology trends for earth orbit, lunar orbit, and cislunar space as well as human spaceflight RF expertise. Flexitech Aerospace has successfully developed and manufactured a wide range of RF systems and components, including a variety of antennas that have been deployed in earth orbit and supported lunar landers, spaceflight avionics and ground test equipment and ground stations. They have delivered deployable and non-deployable solutions over the years through the Company’s patents on certain deployable antenna technologies. Flexitech Aerospace excels in market analysis informing spaceflight performance analysis, system design, integration, and testing at all stages of the communications system development and spacecraft operations. Their team, renowned for its RF design leadership, delivers technical solutions for the most demanding spaceflight applications. Surpassing its competitors, Flexitech Aerospace has flown over 150 products in space and continues to adapt existing designs and develop new solutions that meet or exceed customer requests. T2S intends to scale existing Flexitech Aerospace operations and their shared spaceflight engineering expertise to further elevate their RF capabilities, product designs, and manufacturing.
Tim Gay, Co-Founder & Chief Executive Officer of T2S, said: “We are thrilled to welcome Flexitech Aerospace into the T2S family. This acquisition represents a significant step forward in our commitment to expanding our capabilities and strengthening our presence in the rapidly growing satellite and space industry. We take pride in our innovative and mission-driven culture, unique customer relationships, and expertise in high-demand domains and believe Flexitech Aerospace fosters that same mentality. Flexitech Aerospace has an exceptionally qualified team with a successful reputation for on-time delivery, and with such a unique skill set, they are bound to continue to stand out and execute in this industry. Building upon Flexitech Aerospace’s success, we will continue to push the boundaries of spacecraft and human spaceflight and expand our commercial offerings to accelerate our overall growth. Ultimately, this transaction is a key part of our strategic vision, and with increased R&D resources and funding, now is the ideal time to advance that vision and widen our space capabilities.”
About T2S Solutions
T2S Solutions is an innovative, agile, mission-focused product and solutions provider specializing in Rapid Prototyping and Experimentation, Systems Development, Integration, Test and Sustainment for the U.S. Department of Defense, Mission Partners and the U.S. Intelligence Community, Industry Partners, and other U.S. Government Agencies. Its domain expertise spans Space, High Altitude, Positioning, Navigation, and Timing (PNT), AI / ML, C5ISR, Chemical Biological Radiological Nuclear (CBRN) Detection, and Electronic Warfare (EW). T2S has 250 employees and is headquartered in Belcamp, MD, near Aberdeen Proving Ground, with a large integration facility in Huntsville, AL that serves as the Tactical Space Layer Integration Lab. Madison Dearborn Partners, LLC (“MDP”) invested in T2S in 2023. Learn more at www.t2s-solutions.com.
About Flexitech Aerospace
Flexitech Aerospace is a space communications system design and RF engineering company located and headquartered in Orlando, FL that provides analysis, design and manufacturing of RF systems and components to support satellite development, manufacturing and in-orbit operations. Their in-house test and verification lab permits comprehensive capabilities to test up to 40GHz over a wide range of thermal conditions. For more information, please visit www.flexitechaerospace.com. (Source: BUSINESS WIRE)
04 Sept 24. Black Sky Aerospace rebrands into Black Sky Industries.
Industry. Australian rocket propellant and solid rocket motor developer Black Sky Aerospace has rebranded into Black Sky Industries.
Defence industry and technology company Black Sky Industries has formally launched in Australia, announcing the establishment of its multi-m-dollar headquarters in Logan, in South East Queensland as well as launch, test and manufacturing facilities throughout Western Queensland.
Black Sky aims to greatly accelerate the production capability of sovereign scaled rocket motor and defence systems.
Black Sky Industries was founded by aerospace, defence and manufacturing industry veterans Blake Nikolic and Karl Hemphill, and Dr Vu Tran, who co-founded $3bn-plus technology start-up Go1.
Black Sky has ambitions of creating hundreds of advanced manufacturing and defence industry jobs over the next decade. Recent key hires at the company include former L3Harris Technologies director David Johnson as general manager and enterprise development and defence innovation veteran Stephen Delo.
Black Sky is reimagining how rockets are designed, developed and manufactured at scale. As a local producer of ammonium perchlorate (AP) – crucial to conventional solid rocket motors used in aerospace and defence industries – Black Sky produces solid rocket propellant and motors, and offers its homegrown, proprietary Wagtail Rocket Assisted Take-Off (RATO) technology for unmanned aerial vehicles (UAV) and drones.
Cortex1, Black Sky’s proprietary software platform, underpins all aspects of its operations, from research and development and manufacturing to powering products and platforms, including launch control, tracking and mapping through data-driven propellant formulation and characterisation technology using artificial intelligence.
Black Sky’s rapid-fire pace to innovate is in line with a key tenet of the federal government’s 2024 National Defence Strategy, to better integrate existing and emerging technologies, and to deliver defence effectiveness in the coming decade.
“At Black Sky, complex rocket manufacturing is done with a high degree of innovation, security and safety but at much lower cost than others. This has the potential to save Australia and our allies bns of dollars and ensure taxpayer funds can be utilised in other areas,” Nikolic said.
“We innovate, move quickly, and deliver results. We achieve what others won’t even attempt and we imagine the unimaginable and bring it to life. Like traditional technology and software companies, we have a strong focus on product velocity, a concept we think will be essential in future defence technology development.”
Dr Tran said Black Sky will help secure and strengthen local defence supply chains and reduce Australia’s dependence on external jurisdictions.
“Australia spends $50–$55bn on defence each year yet we’re lucky to have just one company in the top 100 list of defence suppliers. Black Sky aims to change that,” Dr Tran said.
“Having sovereign defence capability will help Australia achieve greater efficiency and resilience in the delivery of defence technologies, and in our ability to protect the nation.”
“There are myriad benefits to manufacturing locally, including lower geopolitical risks, increased operational transparency, regulatory compliance alignment, intellectual property protection, enhanced ability to customise products, less dependence on international suppliers, reduced exposure to global supply chain disruptions, faster time to market and quality control – with a predictable cost structure.
“It also encourages the growth of local businesses while building a skilled workforce to develop a consistent pipeline of local talent with proximity and access to local R&D institutions,” Dr Tran said. (Source: Google/Defence Connect)
03 Sept 24. KBR Completes LinQuest Acquisition, Expanding Digital, National Security Space and Intelligence Capabilities. KBR (NYSE: KBR) announced today it has completed the acquisition of LinQuest Corporation, a leading provider of advanced engineering, data analytics and digital integration with a strong history of solving complex technical challenges for national security space missions.
The acquisition strengthens KBR’s capabilities across space, air dominance and connected battlespace missions. LinQuest also has a heritage of serving important U.S. government customers including the U.S. Space Force, U.S. Air Force and other U.S. Department of Defense and intelligence agencies.
“LinQuest’s portfolio of capabilities significantly expands KBR’s ability to meet growing customer demands and continues KBR’s goal of transforming and enhancing key high-end digital solutions,” said Stuart Bradie, KBR President and Chief Executive Officer. “We have been continually impressed with their people-first culture and amazing expertise, so it’s a thrilling day to be able to officially welcome them to the KBR family.”
KBR will immediately begin integrating LinQuest into KBR’s Government Solutions segment and Defense and Intel business unit.
Given the closing date, LinQuest’s financial results are not expected to be material to KBR’s Q3 2024 financial results. Therefore, impacts of the acquisition to KBR’s full year guidance will be discussed on the Q3 earnings call.
KBR has decades of experience providing mission-critical solutions for customers across the national security and space domains including customers ranging from the Department of Defense, NASA and various intelligence agencies.
04 Sept 24. Patria strengthens its cyber business area by acquiring a product and business related to open source data collection from WithSecure. Patria acquires an open source data collection product and business related to its cyber business area from WithSecure. As a result of the transaction, Patria will open an office in Oulu and 10 WithSecure experts currently working in the business area will join the company. The parties do not disclose the value of the acquisition.
Patria plans to continue developing the acquired product as part of its Battlefield and critical systems offering. Its product range includes Patria CRAWLR, a system designed for collecting and analysing open-source data.
“Implementation of Patria’s growth strategy requires significant investment in product development, know-how and services. What Patria offers in its cyber business solutions and services is constantly being developed. Operational reliability and information security in all conditions are particularly essential when developing intelligence, monitoring and command systems to security-critical customers,” says Jussi Järvinen, Executive Vice President of Patria’s Finland Division.
“Oulu, on the other hand, has a significant concentration of the defense industry and the necessary engineering expertise. Expanding to Oulu also offers an opportunity for a wider talent base for Patria’s current and future needs, where Patria has already been present through its group’s subsidiary Senop,” Järvinen continues.
Patria does a lot of research and product development in cyber technologies related to warfare. Patria’s specialty is the systems that safety-critical authorities need to organize operational activities.
The acquisition has received the approval of the Finnish Ministry of Employment and the Economy (TEM). The transaction will not affect current customer commitments, employment relationships or other commitments in the business area. The business will be transferred to Patria on 1 October, 2024.
03 Sept 24. Exosens (Euronext FR001400Q9V2 – EXENS), a high-tech company focused on providing mission and performance-critical amplification, detection and imaging technology, today announces its results for the half-year ended 30 June 2024.
- Strong revenue growth of +50% to €186.9m, driven by organic growth (+35% on a like for like basis) and successful integration of strategic acquisitions
- Adjusted gross margin of €91.1m in H1 2024, 48.8% of revenue (+350bps vs. H1 2023)
- Significant increase of the profitability, with the adjusted EBITDA reaching €56.1m in H1 2024 (vs. €34.0m in H1 2023), or 30.0% of revenue (vs 27.2% in H1 2023)
- Strong deleveraging with a net leverage of 1.3x as of 30 June 2024, following Exosens’ successful IPO
- Fully on track to deliver full-year guidance for 2024
“The first six months of the year marked a turning point for Exosens, highlighted by a €180m capital increase during our successful IPO in June 2024. Our revenues have grown by c.+50% versus last year, with both our segments growing strongly. This performance, accompanied by further increase in profitability, is the result of our successful operational and M&A strategies. Thanks to these achievements, we are fully on track to deliver our guidance for 2024. We are well-positioned to capitalize on future opportunities and to continue pursuing a highly profitable growth trajectory while achieving our mission to provide innovative components for a safer world”, said Jérôme Cerisier, Chief Executive Officer.
Continued growth momentum, revenues up 50%
Exosens experienced a strong start to the year with consolidated revenues reaching €186.9m for H1 2024, marking a significant growth of +50% (+€61.9m).
This robust performance was driven by substantial organic growth of +35%, which was bolstered by significant traction in group sales volume and favourable product mix.
Additionally, the successful integrations of Telops, El-Mul, and ProxiVision, acquired in October 2023, July 2023, and June 2023 respectively, have been key contributors. Sales and R&D teams are now collaborating effectively, showcasing Exosens’ ability to cross-fertilize technology and expand its commercial reach globally.
Amplification revenue totalled €138.5m, up +46.8% on a reported basis. This growth was driven by the positive impact of favourable product mix, alongside strong volume performance and flawless execution.
Detection & Imaging revenue totalled €50.4m in the first half, up +60.2% on a reported basis. This performance was led by the positive effect of price evolution and controlled costs, coupled with improved yields and synergies extraction. The successful integrations of El-Mul and Telops have also supported the robust commercial performance of the segment.
Key financials
Profitability increases significantly at group level and across both segments
Exosens recorded a significant increase of its profitability at group level and across both segments during H1 2024. This increase in profitability was driven by favorable product mix effects, volume increases resulting in better absorption of fixed costs, and the ongoing implementation of operational excellence measures.
Adjusted gross margin amounted to €91.1m in H1 2024 (48.8% of revenue) compared to €56.6m in H1 2023 (45.3% of revenue), representing an increase of 61% on a reported basis (+42.8% on a like for like basis).
By segment, adjusted gross margin breaks down as follows: for Amplification, adjusted gross margin reached €65.2m (vs €42.1m in H1 2023) representing a margin of 47.1% (vs 44.6% in H1 2023). For Detection & Imaging, adjusted gross margin totalled €25.8m (vs €14.4m in H1 2023), representing a margin of 51.1% (vs 45.8% in H1 2023).
Adjusted EBITDA grew by +64.8% reaching €56.1m in H1 2024, compared to €34.0m in H1 2023. This represents an adjusted EBITDA margin of 30.0% (vs 27.2% in H1 2023), an improvement of 278 basis points over H1 2023.
At group level, adjusted EBIT reached €46.1m in H1 2024, up from €24.7m in H1 2023, representing an adjusted margin of 24.7%, an improvement of 291 basis points compared to 21.8 % in H1 2023.
Solid cash flow generation during H1 2024
Exosens generated a robust free cash flow (FCF) of €23.6m during the first half of 2024, of which €22.0m is coming from organic growth and €1.6 m from the scope effect. This strong cash generation represents a significant increase from €1.8m recorded in H1 2023 despite the one-time expenses related to the consulting fees related to the IPO.
With controlled capex, Exosens achieved a cash conversion rate of 75%, in line with the full year guidance of 75-80%.
Continued investment in R&D to remain at the edge of technology
During H1 2024, R&D expenses amounted to €14.7m, representing 7.9% of sales, compared to €10.0m (8.0% of sales) in H1 2023. This increase includes €1.9m related to the scope effect from recent acquisitions and €1.6m directed towards innovative projects at early stage of development. The company also benefited from an increase of €1.2m in tax credits and customer funding, reflecting successful efforts to secure customer co-investments.
Capex optimization plan under way, now at 7% of sales
Exosens continues to optimize its capital expenditure, with Capex now representing 7.0% of sales in H1 2024, down from 8.8% in H1 2023. The company has increased its maintenance Capex to €5.9m in H1 2024, up from €3.0m in H1 2023, focusing on projects aimed at improving productivity and enhancing IT infrastructure. Growth Capex, totaling €7.2m, has been directed towards facilities modifications to accommodate new equipment and investments in tools to secure the capacity plan and support new product development.
Our capital structure fully supports our growth strategy
Following Exosens’ successful IPO, which included a capital increase of approximately €180m, the Group has significantly deleveraged, reaching a total net debt to adjusted EBITDA ratio of 1. 3x as of 30 June 2024. This marks a strong reduction from the net debt of €302.3m and a leverage ratio of 3.3x recorded as of 31 December 2023 and provides us ample capacity to pursue our investments in growth.
Key developments post H1 2024
Exosens successfully completed two synergistic bolt-on acquisitions following the close of the H1 2024 period. The acquisition of Centronics, a leader in radiation detection solutions, closed on 31 July 2024. This acquisition will further consolidate Exosens’ position in the field of nuclear instrumentation, contributing to the development of product offering in the Nuclear field.
Additionally, on 1 September 2024, Exosens successfully completed the acquisition of LR Tech, which specializes in Fourier transform infrared spectroscopy applied in research, gas detection, and environmental monitoring. This acquisition is aimed at complementing Exosens’ product portfolio in cooled infrared technology.
In August 2024, Exosens was awarded the EcoVadis Silver Medal, placing the company in the top 15% worldwide for its strategic CSR commitments.
Outlook for 2024
Exosens is fully on track to deliver its 2024 guidance communicated at IPO, notably expecting:
- High-teens organic revenue growth and around 30% total revenue growth including 2024 acquisitions.
- Adjusted EBITDA of at least €115m (excluding 2024 acquisitions) and adjusted EBITDA margin slightly above the 2023 level.
- Adjusted EBIT margin between 24-25%, with an organic cash conversion rate of 75-80%.
- Net leverage around 1.6x by year-end, including recent and planned acquisitions.
Financial Calendar
- 28 October 2024 (before markets open): Third quarter revenue and gross margin 2024
ABOUT EXOSENS:
Exosens is a high-tech company, with more than 85 years of experience in the innovation, development, manufacturing and sale of high-end electro-optical technologies in the field of amplification, detection and imaging. Today, it offers its customers detection components and solutions such as travelling wave tubes, advanced cameras, neutron & gamma detectors, instrument detectors and light intensifier tubes. This allows Exosens to respond to complex issues in extremely demanding environments by offering tailor-made solutions to its customers. Thanks to its sustained investments, Exosens is internationally recognized as a major innovator in optoelectronics, with production and R&D carried out on 10 sites, in Europe and North America and with over 1,600 employees.
Exosens is listed on compartment A of the regulated market of Euronext Paris (Ticker: EXENS – ISIN: FR001400Q9V2) and is a member of Euronext Tech Leaders segment.
02 Sept 24. MTI Wireless Edge. Analysts were right to expect more from this defence stock. Prospects for the Israel-based technology group are supported by increasing demand for communications equipment from the military.
- First-half pre-tax profit up 10 per cent to $2.3m
- Flat revenue of $22.3m
- Share buyback programme expanded
Israel-based technology group MTI Wireless Edge (MWE:42p) delivered a solid first-half trading performance that underpins analysts’ expectations of slightly higher full-year pre-tax profit of $4.9m on revenue of $48.2m.
Chief executive Moni Borovitz highlights that MTI is seeing strong enquiry levels, most notably in the defence sector, for the group’s range of communication and radio technology solutions. The antennae business sells ‘off the shelf’ flat and parabolic antennas as well as custom-developed antenna solutions to a range of commercial and military customers.
Shortly after the results, MTI landed a €2.6m (£2.2m) order for the delivery of radio frequency components to its biggest customer in the defence sector. Expect many more. That’s because although defence spending has risen across the world following the outbreak of multiple conflicts, orders for military antennas, while critical to all defence operations, tend to lag orders for other types of military equipment. MTI is now experiencing a strong flow of orders and new contract opportunities. So, expect the antenna division, which increased first operating profit and revenue 16 per cent to $0.32m and $6.7m, respectively, to continue performing well.
Profits surge in water control management
The majority of the first-half profit growth came from the group’s water control business, which provides wireless control systems to manage irrigation and water distribution for agriculture, municipal authorities and commercial entities.
A combination of improved gross margin, lower marketing spend, positive currency exchange movements and successive price rises propelled divisional operating profit up almost a third to $1.26m. This was despite an 11 per cent decline in revenue to $7.7m caused by sluggish markets in Europe and North America and disruption in Israel due to the ongoing conflict. Importantly, demand from local municipalities has now normalised and Borovitz reports that orders in Europe and North America have improved, too. That augurs well for the future, as does demand for a recently launched new solution.
The strength in the water control business offset a shortfall in the MTI Summit Electronics brand, which exclusively represents 40 international suppliers of radio frequency/microwave components and sells these products to Israeli customers. The core business continues to perform well, but subsidiary PSK, an Israeli developer and integrator of communication and monitoring systems for the defence market, was lossmaking. This explains why divisional operating profit halved to $0.4m on flat revenue of $8.1m. Costs have been cut to address the issue, although Borovitz does report that PSK’s bid pipeline includes some material contract opportunities, which could accelerate its recovery.
Forecasts
MTI is unusual for a technology company in that it pays an attractive dividend. The shares offer a prospective dividend yield of 6 per cent and the board has also expanded the earnings-accretive share buyback programme from £0.7m to £1m. MTI certainly has surplus funds to deploy. Buoyed by estimated free cash flow (FCF) of $4.4m (£3.4m), MTI’s net cash is forecast to swell to $9.3m by the year-end, a sum that equates to a fifth of the group’s market capitalisation of £36.5m.
The high-yielding shares have delivered an 11 per cent total return since the annual results (‘MTI is a smart play on the defence spending boom’, 11 March 2024) and remain attractively priced on a prospective price/earnings (PE) ratio of 12 and underpinned by a FCF yield of 9.2 per cent. Buy. (Source: Investors Chronicle)
02 Sept 24. Exosens, (Euronext FR001400Q9V2 – EXENS) a high-tech company focused on providing mission and performance-critical amplification, detection and imaging technology, today announces the acquisition of Quebec-based company LR Tech, a specialist developer and manufacturer of FTIR (Fourier Transform Infra-Red) devices.
- Exosens announces the completion of the acquisition of Quebec-based LR Tech, a specialist in FTIR (Fourier Transform Infra-Red) spectroradiometers.
- This acquisition will enable Exosens to complete its instruments offering for high-end detectors and imagers, targeting science and environmental markets for major players. It will further strengthen Exosens’ position in the field of high-performance instrumentation with proven experience with the world’s main research labs.
- Following the recent acquisition of Centronic, this new milestone marks another strategic step in establishing Exosens’ position as a Tech platform accelerating growth and as one of the leaders in the Detection and Imaging markets the Company targets.
“With the acquisition of LR Tech, we are consolidating our position in instrumentation, adding FTIR products to our portfolio. Complementarities between TELOPS and LR Tech are a great opportunity to leverage our capabilities to become a major player in high demanding spectroscopy instruments. This new transaction is another key milestone for Exosens furthering its accretive bolt-on strategy by acquisition of skilled companies to accelerate growth.” commented Jérôme Cerisier, CEO of Exosens.
LR Tech, located in Quebec City, is a leading player in the FTIR spectrometry field, providing cutting-edge products with unparalleled performance in resolution, speed, and accuracy, due to deep industry knowhow and long-standing expertise in end markets, such as Defense&Aerospace, Environmental and Meteorology.
“Today marks the beginning of an exciting new chapter for LR Tech’s history. We founded LR Tech in 2003 and it has since become a market leading designer and manufacturer of high performance spectroradiometers for trusted long-term customers such as NASA or DoE (US department of energy). We are recognized for our skills to build instruments with features that need to fulfil stringent quality standards. Joining Exosens is an incredibly fruitful step for our company as this transaction will allow us to strengthen our current market position through the crosspollination of sales forces, R&D and manufacturing support and expertise with TELOPS.” stated Luc Rochette, CEO of LR Tech.
ABOUT EXOSENS:
Exosens is a high‐tech company, with more than 85 years of experience in the innovation, development, manufacturing and sale of high‐end electro‐optical technologies in the field of amplification, detection and imaging. Today, it offers its customers detection components and solutions such as travelling wave tubes, advanced cameras, neutron & gamma detectors, instrument detectors and light intensifier tubes. This allows Exosens to respond to complex issues in extremely demanding environments by offering tailor‐made solutions to its customers. Thanks to its sustained investments, Exosens is internationally recognized as a major innovator in optoelectronics, with production and R&D carried out on 10 sites, in Europe and North America and with over 1,600 employees.
Exosens is listed on compartment A of the regulated market of Euronext Paris ﴾Ticker: EXENS – ISIN: FR001400Q9V2﴿ and is a member of Euronext Tech Leaders segment.
30 Aug 24. Austal turns profitable in FY2024, faces execution challenges.
AUSTAL’s FY2024 end of year results show a turnaround on previous losses, with a EBIT of $56.5m this year.
Austal Limited secured a contract worth A$157m to build two more Evolved Cape-class patrol boats for the Royal Australian Navy, which will enhance the country’s maritime capabilities and strengthen its naval shipbuilding sector. Source: Austal Australia
Austal Limited has announced on 30 August its financial results for the fiscal year ending June 2024, reporting a notable improvement in earnings despite a slight decline in revenue.
The company announced on an Earnings Before Interest and Tax (EBIT) for 2024 of $56.5m, a significant turnaround from the $4.8m loss in the previous financial year.
This improvement was achieved on a revenue of $1.47bn, which was down by 7% from the $1.59bn reported in FY2023. Those low revenues wer largely due to reduced contributions from shipbuilding activities as the company transitioned between programmes, particularly in the USA.
The turnaround is a positive indicator of Austal’s ability to adapt to a changing market and material conditions, and suggests the company was successful in optimising costs and improving margins in key areas. However, the influence of exceptional items on the EBIT figure demands proper examination from investors.
Breaking down the EBIT turnaround
The positive EBIT result of 2024 was driven by new contributions from Austal’s operations in the United States, where the company saw a resurgence in shipbuilding profitability, particularly from advanced programmes like the Littoral Combat Ships (LCS) and Expeditionary Fast Transports (EPF).
However, the EBIT figure also included significant exceptional items, such as $57m in legal costs related to the resolution of a longstanding US regulatory investigation and a $54m profit from the sale of land in Mobile, Alabama. After accounting for these items, Austal reported a Net Profit After Tax (NPAT) of $14.9m, a reversal from the net loss of $13.8m in FY2023.
Austal’s financial position remains robust, with cash at bank totalling $173.5m as of 30 June 2024, slightly down from $179.2m the previous year. The company ended the year with a net cash position of $3.9m, down from $49.7m, reflecting a net operating cash outflow of $13m. This was in contrast to the $86.7m inflow reported in FY2023, largely influenced by the timing of milestone payments.
The reduction in net cash and the shift to a cash outflow position indicates potential liquidity pressures, especially in light of the upcoming capital expenditure program to expand shipbuilding capacity in the US. The decision to withhold dividends for FY2024, while prudent in maintaining balance sheet strength, may be a disappointment to shareholders expecting returns. (Source: naval-technology.com)
02 Sept 24. The value of European sustainable investment funds’ exposure to defence stocks has more than doubled since Russia’s invasion of Ukraine, as policymakers push the need for a strong defence industrial base. About a third of funds in Europe and the UK focused on environmental, social and governance issues now have €7.7bn invested in the sector, compared with €3.2bn in the first quarter of 2022, according to an analysis for the Financial Times by Morningstar Direct. Although the rise in value is in part due to the share prices of defence companies soaring since Moscow’s full-scale attack on Ukraine in February 2022, many investors have also bought into the argument from governments that backing arms makers, long the subject of boycotts and student protests, should carry positive social connotations rather than exclusively downside risk. “The situation in Ukraine has very much brought to the fore this idea of, ‘Can we actually defend ourselves?’,” said Sonja Laud, chief investment officer at Legal and General Investment Management. The fighting in Ukraine sparked a debate about whether military contractors can be viewed as an ESG investment. While investment in controversial weapons such as cluster bombs and landmines as defined in international treaties is banned — a status that is well-established in the asset management industry — Laud believes defence can be seen as sustainable. Companies would still need to be assessed individually, as would the weapons they make and which countries these were sold to, “but we would not exclude defence as a principle”. Morningstar’s analysis also shows the number of European ESG funds holding more than 5 per cent in aerospace and defence companies tripled, going from 22 to 66 in the past two years. BNP Paribas ETFs, including its Easy CAC 40® ESG UCITS ETF, have breached 10 per cent of holdings in aerospace and defence, as has Paris-based Amundi’s Index Solutions CAC 40 ESG. Amundi declined to comment. Michael Field, Morningstar’s European Equity Strategist, said the sector had “always been an ESG minefield, but this too is shifting in investors’ minds” with managers viewing it more “with an open mind” in the wake of the conflict in Ukraine. The value of the funds’ aerospace and defence sector holdings are still small relative to their overall assets, accounting for less than 1 per cent of the €1.5tn held. However, the sector has gone from a “relatively uninteresting sector in a lot of investors’ minds” to one that many now “feel they need to be invested in, otherwise they may get left behind”, Field said. The MSCI Europe aerospace and defence index has risen by 1.8 times since the start of 2022 as shares in leading contractors have soared. In the wider investment market, holdings in defence-themed mutual funds and exchange traded funds more than tripled from $5.8bn in Jan 2022 to $17.6bn July 2024, according to data from LSEG Lipper. (Source: FT.com)
02 Sept 24. Safran buys AI firm Preligens for 220m euros. French jet engine maker Safran (SAF.PA) said on Monday it had struck a deal to buy AI firm Preligens for 220m euros ($243.3m). Preligens, which specialises in artificial intelligence for aerospace and defense, will be renamed Safran.AI and will become a part of the Safran Electronics & Defense business area. It develops complex algorithms and software to analyse and automatically detect and identify objects of military interest using commercial and government satellite imagery, Safran said.
“By combining our strengths, we’re determined not only to support the development of Preligens’ AI solutions, but also to jointly open up entirely new areas of AI application in aviation, defense and space,” CEO of Safran Electronics & Defense, Franck Saudo, said in a press release. ($1 = 0.9042 euros) (Source: Reuters)
02 Sept 24. Czech Drone Maker Primoco UAV Sees Record Profits. Czech drone manufacturer Primoco UAV has reported record-breaking financial results for the first half of 2024, driven by growing demand for its advanced unmanned aerial systems. The company, which is listed on the Prague Stock Exchange, saw its revenue increase by 81% year-over-year to 331m CZK ($14.6m), while net profit surged by the same percentage to 121m CZK ($5.3m).
Ladislav Semetkovský, the CEO and founder of Primoco UAV, attributes the company’s success to the superior quality and durability of its drones, which have proven their capabilities in missions across four continents.
“Customers appreciate not only the quality of our machines but also our ability to respond flexibly to their individual needs and deliver quickly,”
said Semetkovský. He emphasized that the company’s focus on investing in innovative technologies, manufacturing capacity, and global partnerships has allowed it to maintain an operating margin above 40%.
Primoco UAV has also secured new contracts worth over 500 m CZK ($22 m) in the first half of the year, involving the delivery of 26 UAVs. This aligns with the company’s annual forecast to secure orders for 50 to 60 drones, valued at approximately 1bn CZK ($44m). Last year, the company delivered 33 of its Primoco UAV One 150 aircraft.
The rising demand for Primoco UAV systems is partly due to the current geopolitical situation, as governments and security forces increasingly recognize the importance of UAVs in national defense. Additionally, the company’s drones are finding new applications in the civil sector. For instance, a recent contract with an Asian customer involves using Primoco UAVs for airport navigation system calibration and evaluation missions.
The company is also expanding its production, service, and training facilities, having acquired 303,000 square meters of land in Písek for this purpose. “
We have already invested 125m CZK in this crucial project from our own resources,” said Semetkovský, noting that construction could begin as early as next year. The new facility is expected to increase annual production capacity from 100 to 250 UAVs, with project completion targeted for 2027. (Source: UAS VISION/Defence Blog)
02 Sept 24. Concurrent Technologies’ revenues surge. Shares climbed 6 per cent following the announcement. A fragile international situation has led to a massive cumulative increase in defence spending as Nato countries adjust to the implications of Russia’s aggression. This is starting to benefit companies outside the prime contractors as interim results for Colchester-based Concurrent Technologies (CNC) proved. The company has reported an impressive 39 per cent year-on-year increase in revenues in the first half of the year.
The business secured eight major design wins in the period, including a $6mn (£4.6mn) contract with a major US defence and aerospace prime contractor. These wins equalled the number secured over the entirety of last year.
Revenue is expected to be weighted to the second half. “It’s quite normal for us to do a little bit more in the second half of the year, just by how things work in defence,” said chief financial officer Kim Garrod.
Order intake also increased by 23 per cent to £17.8m. Chief executive Miles Adcock noted that the “record financial performance” followed the transformation of the company over the past three years.
Defence remains the company’s strongest market, accounting for 82 per cent of sales. Adcock sees this as an advantage. “Defence is driven by having better kit than the competition and so we see the demand in defence growing. Our competitors are largely very big American corporates… and we’re competing on a pretty level playing field with them, not least because the US is driving towards open standards, ie not getting locked into proprietary solutions.”
Concurrent currently trades at 24 times FactSet consensus earnings for 2024, suggesting that analysts are forecasting an increase in profitability. However, given the current expansionary phase, we will monitor the balance sheet to see how effectively the group manages working capital. Hold. (Source: Investors Chronicle)
30 Aug 24. Embraer taps Oliver Wyman to help it in US defense market, eyeing C-390. Embraer (EMBR3.SA) has hired consultancy firm Oliver Wyman to help it explore the U.S. defense market, the head of the Brazilian planemaker’s defense unit said, as it eyes selling its C-390 military cargo aircraft to the world’s No. 1 economy.
Expanding its presence abroad with more sales of the C-390 – a competitor of Lockheed Martin’s (LMT.N) C-130 Hercules – has been a key goal of Embraer’s defense division, which had already designated the United States as a key market in the sector.
Embraer kicked off the project with Oliver Wyman roughly a month ago and is “fully engaged” in building a strategy to penetrate the U.S. market with its defense portfolio, the firm’s defense CEO Bosco da Costa Jr. told Reuters.
“We looked at several consultancies as part of a careful selection process, evaluating their capacity in the defense field, and concluded that Oliver Wyman is the company that will help us,” Costa said in an interview on Thursday.
Oliver Wyman is owned by Marsh & McLennan (MMC.N).
Exploring merger and acquisition possibilities could be a way for Embraer to access the U.S. market, the executive emphasized.
“We have studied this and Oliver Wyman showed us that one of the ways that several industries found to penetrate the U.S. was M&A. So this is one of the possibilities. Embraer will evaluate it,” Costa said.
Embraer Defense already has a footprint in the U.S., which, for example, flies the Super Tucano light attack aircraft. The company has a production line for the turboprop in Jacksonville, Florida. But clinching C-390 sales there would be a game changer.
Speaking at an event earlier on Thursday, Costa said he sees room for the U.S. to have a mixed fleet of larger strategic tankers and smaller tactical tankers such as the C-390, which has already been bought by some NATO countries.
In addition to Embraer’s home country Brazil, nations such as the Netherlands, Portugal, Hungary, Austria, the Czech Republic and South Korea have tapped the aircraft for their fleets.
“Any defense player in the world cannot be out of that market,” Costa said of the U.S., noting the C-390 has enough U.S. content to meet local requirements. “It is a strategic project that the company’s board has been following.” (Source: Reuters)
30 Aug 24. RTX fined $200m for exports to China and others, US says. RTX Corp (RTX.N) will pay a $200m fine to settle allegations that the aerospace and defense company violated export laws by exchanging data and products with prohibited countries, including China, U.S. State Department records dated Thursday said.
The fine stems from failure to abide by the International Traffic in Arms Regulations by poorly classifying and controlling exports of defense articles, including classified ones, the State Department said.
RTX voluntarily disclosed its mistakes and told investors on its July 25 earnings call that the company had set aside about $1 bn to resolve three separate legal matters “primarily identified during the integration of Rockwell Collins and Raytheon Co. into RTX.”
The State Department notification released on Friday was the first of the three legal matters and included mistakenly providing intellectual property and technology to China.
One of the instances involved providing Chinese citizens information about “an aluminum display housing component of the F-22 Raptor Fighter Aircraft” in Shanghai. The information was determined to be more sensitive than the RTX employees initially believed.
“As part of the resolution of each of these three matters, we will be required to retain independent compliance monitors over the three-year term of the agreements,” the company said on the earnings call. Half of the fine will be spent to fund the compliance program. (Source: Reuters)
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