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11 Sept 24. Circuitwise buys Kiwi rival after private equity investment.
Sydney-based Circuitwise Electronics has agreed to buy New Zealand rival Nautech Electronics in a deal that will be completed by the end of this month. The purchase, made possible after the Australian firm received private equity investment last year, will see both companies continue as separate brands and the Kiwi firm’s management team remain in place.
“Nautech extends Circuitwise’s offering, with advanced testing facilities and a team of production engineers and electronics designers,” said Circuitwise in a statement.
“The testing facilities include clean rooms and environmental test chambers to recreate extreme temperatures and vibration. Clean rooms are typically required for space and medical applications.
“The production engineers support the quality process by ensuring all products meet requirements. The design team focuses on providing customers with a complete service to ensure higher reliability of their designs, including design for manufacture.
“Similarly, Circuitwise has capabilities that complement Nautech, having developed a sophisticated enterprise manufacturing system in-house, supported by custom hardware solutions, which provides the group with a clear competitive advantage.”
Circuitwise provides electronic manufacturing services for the medical, aerospace, defence, industrial, mining and lighting industries. It holds ISO 9001, AS 9100D and ISO 13485 medical-grade and aerospace quality certifications.
Circuitwise CEO Serena Ross said quality was Nautech’s “number one priority”.
“Nautech has a strong position in the aerospace industry, which supports our strategy of servicing mission-critical sectors with a high requirement for quality assurance,” said Ross. (Source: Space Connect)
13 Sept 24. Lockheed could see $1bn financial ‘impact’ this quarter as F-35 negotiations drag on. “Given where we are in that negotiation, we don’t expect to be completed by the end of this quarter, and that will cause an impact in the quarter — up to about $500m in sales, and potentially about $500m of cash flow in the quarter,” Lockheed’s Chief Financial Officer Jay Malave said.
Lockheed Martin and the Pentagon are unlikely to reach a deal on the next lot of F-35 stealth fighters by the end of this month, potentially leading to a $1bn cost “impact” for the defense giant this quarter, a top Lockheed executive said today.
“Given where we are in that negotiation, we don’t expect to be completed by the end of this quarter, and that will cause an impact in the quarter — up to about $500m in sales, and potentially about $500 m of cash flow in the quarter,” Chief Financial Officer Jay Malave said during the Morgan Stanley Laguna conference.
The Pentagon’s F-35 Joint Program Office (JPO) and Lockheed have been engaged in talks over F-35 Lots 18 and 19 for more than a year, and had initially hoped to wrap up contract negotiations by the end of 2023. However, there are still “key terms that are yet to be negotiated” by the parties, which will drag discussions out into the fourth quarter, Malave said.
Lockheed is currently seeking a cash injection, as the department’s initial funding for Lot 18 has “pretty much been exhausted,” and the company has already invested some of its own funds to keep F-35 production running smoothly ahead of the contract, he said.
“We’re working with our Joint Program Office partners as well as with congressional constituents so that we can get some funding in so that we don’t really disrupt the production system,” Malave said, adding that the money could come in the form of reprogrammed funds approved by Congress.
Overall, Lockheed’s latest financial guidance estimates sales between $70.5bn and $71.5bn this year, with free cash flow for 2024 between $6bn and $6.3bn.
As part of the latest round of F-35 contract negotiations, the department is currently reviewing pricing information submitted by Lockheed that breaks down the costs borne by the aerospace prime and its supply chain, said Malave, who acknowledged that the company is still struggling with inflation, high labor costs and extended lead times. The Joint Program Office did not immediately respond to an off-hours request for comment.
“They have to go through that, get comfortable with that, make sure the data supports what we provide to them,” he said.
Greg Ulmer, the top executive at Lockheed’s aeronautics unit, previously told Breaking Defense that unit costs for the upcoming batch of F-35s could continue to be negatively influenced by inflation as well as a lower annual buy rate from the US military.
On top of the costs associated with contract negotiations, Lockheed expects up to $300m in impact this year due to financial withholdings the Pentagon is making as it accepts F-35s that are being delivered without a full hardware and software upgrade known as Technology Refresh 3, or TR-3.
In August, the Pentagon acknowledged it was withholding about $5 m per jet. However, Malave said that number will be reduced as Lockheed achieves specific targets.
“We expect to complete some of those milestones this year,” he said, adding the withholdings will determine where Lockheed lands on free cash flow. (Source: Breaking Defense.com)
11 Sept 24. RTX CEO does not see ‘transformative’ deals, open to pruning business. RTX is open to pruning and pairing its existing businesses rather than pursuing “transformative” mergers and acquisitions, the aerospace giant’s CEO said on Wednesday.
Speaking at a conference organized by Morgan Stanley, CEO Christopher Calio pointed to the second-quarter divestment of its Goodrich Hoist and Winch business as an example of the deals the company might do.
RTX emerged from a $121bn combination of United Technologies Corp and Raytheon Co in 2020 and now houses businesses such as civil aircraft engine maker Pratt & Whitney and aerospace supplier Collins Aerospace.
The company counts planemakers Boeing (BA.N), opens new tab and Airbus (AIR.PA), opens new tab as customers.
Calio said on Wednesday RTX was working with Boeing on calbirating its production rates for 2025 and beyond as the U.S. planemaker is currently producing its best-selling 737 MAX aircraft at a lower rate due to an ongoing crisis.
“Obviously we’ve got a lot of capacity above and beyond what those rates are today. So making sure that we’re calibrated to where that’s going and that we’ve got the right level of inventory to support that,” he said.
Defense demand continues to be strong, with RTX’s weapons business Raytheon garnering $8bn in bookings so far in the third quarter, Calio added.
RTX is also working on a hybrid-electric technology demonstrator that combines a thermal engine with an electric motor, aiming to improve fuel efficiency by 30%.
Calio said RTX was focused on the durability of the engine, having learned lessons from recent quality issues surrounding its GTF engines. He sees the next generation propulsion penetrating the small aircraft market first. RTX shares were down 1.1% in afternoon trade. (Source: Reuters)
11 Sept 24. Ricardo’s move back into profit driven by defence division.
Market conditions improved as the year progressed.
- Defence segment the standout performer
- Emerging automotive & industrial disappoints
You wouldn’t necessarily describe Ricardo’s (RCDO) interim report as a “return to form” given the 5 per cent fall in the order intake. But there were enough positives within the half-year figures to suggest that the transformation of the engineering consultancy’s operating model is having a positive impact on profitability, at least judging by the group’s improved second-half showing.
Revenue from continuing operations increased by 9 per cent on a constant currency basis, while the 14 per cent increase in underlying operating profit to £38.8mn was largely due to a bigger contribution from the defence segment. Orders here were up by 54 per cent, bucking the overall trend, while financial performance was aided by rising consultancy work.
Perhaps the greatest concern was the performance of the emerging automotive and industrial segment, where order intake, revenue and operating profit declined year on year. Although the long-term growth narrative underpinning this corner of the business remains intact, there is little doubt that the speed of transition to emerging technologies is grinding up against market realities. So segmental performance is likely to be erratic as original equipment manufacturers adapt to market flux.
Management continues to drive efficiencies and prioritise working capital management, a point borne out by the 119 per cent underlying cash conversion rate and a reduction in net debt, bringing the adjusted leverage multiple to 1.25 times cash profits.
Analysts at Panmure Liberum foresee sales of £483m this financial year, rising to £504m in 2026, with trading profits at £43.8m and £48.8m, respectively, on a pronounced increase in the underlying margin. A forward price/earnings (PE) ratio of 13 times earnings is broadly in line with ratings over the past year, but the asking price is 25 per cent adrift of the consensus target rate. Buy. Last IC view: Buy, 493p, 29 Aug 2024. (Source: Investors Chronicle)
11 Sept 24. Red Cat Closes Acquisition of FlightWave Aerospace. Red Cat Holdings, Inc. , a drone technology company integrating robotic hardware and software for military, government, and commercial operations, announced the closing of its acquisition of FlightWave Aerospace Systems Corporation, a provider of VTOL drone, sensor and software solutions.
The acquisition officially brings the Edge 130, FlightWave’s Blue UAS approved military-grade tricopter, into Red Cat’s family of low-cost, portable unmanned reconnaissance and precision lethal strike systems.
“Today marks a transformative milestone for Red Cat and our goal to provide warfighters with a diverse set of rucksack portable drones required for mission effectiveness on today’s evolving battlefield,” said Jeff Thompson, Red Cat CEO. “The acquisition of FlightWave broadens our range of drone products and opens up an entirely new revenue stream. The FlightWave Edge 130 Blue completes our Family of Systems and we will begin ramping manufacturing this quarter.”
Red Cat’s mission is to redefine the role of sUAS for defense applications by combining the capabilities of ISR drones with precision strike payloads. The company is an established leader in the sUAS (Group 1) space with its flagship Teal 2 aircraft. Red Cat is adding FlightWave’s Edge 130 to its larger family of systems, alongside a new line of FANG First-Person View (FPV) drones with precision strike payload capabilities that are all deployable in air, land, sea, and sub-sea environments.
The Edge 130 Blue is a UAS Certified military-grade tricopter for long-range mapping, inspection, surveillance, and reconnaissance needs. Designed specifically for government and military applications, the Edge 130 Blue can be assembled and hand-launched in just one minute by a single user to capture high-accuracy aerial imagery with long-range autonomy.
Weighing in at only 1200g, the Edge 130 has been flown for up to 2 hours in certain configurations in forward flight mode, an industry-leading endurance among all other Blue UAS-approved drones available.
(Source: UAS VISION)
10 Sept 24. Bluestone Seeks Add-on Acquisitions for Its Recently Announced Investment in Qualis Corporation. Bluestone Investment Partners, a private equity firm focused on the defense and government technology sector, is pleased to announce a strategic investment in Qualis Corporation, a missile defense and space systems technology company based in Huntsville, Alabama. This investment underscores Bluestone’s commitment to supporting high-tech companies that advance national defense and space capabilities.
Qualis Corporation is recognized for its expertise in developing next-generation missile defense and satellite communication systems, with a strong focus on advanced modeling, simulation, and testing services. The company is known for enabling resilient communications and navigation in GPS-denied environments and contested operational spaces, including its work in RF waveform simulation. Qualis’ primary customers include U.S. Army Space and Missile Defense Command, U.S. Air Force Test Center, U.S. Space Force, the Missile Defense Agency, and NASA.
Rod Duke, President and CEO of Qualis, said: “Qualis is well-positioned in critical technology areas that are important to the DoD’s national security mission. This has helped fuel significant growth for us in recent years. Our partnership with Bluestone will allow Qualis to pursue strategic acquisitions that will enhance our technology footprint and sustain our strong record of growth.”
John Allen, Managing Partner at Bluestone, stated: “We have great admiration for the performance and innovation demonstrated by the Qualis team. It is an honor to partner with such a capable organization, and we are excited to support their continued development of critical technologies for national security.”
Bluestone’s investment in Qualis was executed through its recently established Small Business Investment Company (SBIC) vehicle. In June, the U.S. Small Business Administration announced Bluestone as the first recipient of an SBIC Critical Technologies (SBICCT) Initiative license, which aims to drive private capital investment in Department of Defense Critical Technology Areas. Qualis is well-positioned to benefit from this initiative, particularly with its work in satellite communications path diversity.
Founded in 1993, Qualis Corporation employs 310 professionals, primarily scientists and engineers, who serve U.S. government customers across major test sites in the U.S. and Asia-Pacific regions. With Bluestone’s backing, Qualis will continue to provide dedicated support to its defense and space customers while pursuing opportunities for growth and expansion in missile defense and satellite communications markets.
Bluestone Investment Partners remains committed to fostering growth in the defense and government technology sector and is actively seeking additional opportunities for strategic investments and partnerships. For further information, please contact Zack Hester, Director of M&A Strategy and Deal Generation at Bluestone (contact information below).
About Bluestone Investment Partners
Bluestone is a private equity firm investing exclusively in lower middle-market companies in the defense and government technology arena. Bluestone’s principals have a long and successful track record of owning, operating, investing in, and advising companies in the defense and government services sector.
10 Sept 24. James Fisher jettisons ballast and improves balance sheet.
Business sales help group to cut borrowings
- Net debt expected to fall to £65m by year-end
- Refinancing talks at a ‘very advanced’ stage
The half-year numbers for marine services group James Fisher and Sons (FSJ) tell only part of the story; that of a company that chief executive Jean Vernet says is now “halfway through” its turnaround.
A 12 per cent decline in revenue was expected given the closure of its lossmaking Subtech Europe business (which contributed £40mn of revenue) and the sale of its Swordfish dive support vessel in the second half of last year.
Other big sales have now been completed as the company gets to grip with its debt. Since the half-year closed it has completed the £82.8m sale of the RMSpumptools business and finalised the £12.1m sale of Martek Holdings. Proceeds from these mean that although the scary auditor’s “material uncertainty” warning about the company’s ability to continue as a going concern remains, the balance sheet should soon look much healthier. Net debt (excluding leases) of £145m at the end of June is expected to fall to £65m by year-end.
Getting the RMSpumptools deal done was significant. James Fisher’s existing bank facility is due to expire in March (hence the warning) but once the sale completed, talks began about arranging new debt. These are now at a “very advanced” stage, said chief financial officer Karen Hayzen-Smith.
Although the company reported a fourfold increase in first-half operating profit to £12.7n, finance and exceptional costs are expected to eat up most of this by the year-end, with the FactSet consensus forecast indicating a reported loss per share for 2024. Even on 2025 estimates, the shares trade at 22 times reported earnings and there’s a lot to do to get there. We move our call to hold in recognition of the improving balance sheet but can’t yet get any more excited than that.
Last IC view: Sell, 294p, 16 Apr 2024. (Source: Investors Chronicle)
09 Sept 24. Eyeing more special forces business, GDIT acquires AI, tech firm Iron EagleX.
“The combination of Iron EagleX and GDIT represents a new chapter in our company’s stated goal of having a ‘generational impact on national security,’” said Michael Grochol, Iron EagleX’s CEO.
General Dynamics Information Technology (GDIT) announced today it is acquiring Iron EagleX, Inc., a Silicon Valley company that provides artificial intelligence, cybersecurity capabilities and software solutions specifically designed to support special forces.
GDIT, a unit of General Dynamics, said in a press release today that this acquisition is “a key part of the company’s technology investment strategy launched last year, which includes investments in technologies such as AI, cyber, software development and quantum.”
“As part of this acquisition, hundreds of highly technical and cleared employees from 18 locations will join GDIT’s workforce of 28,00,” GDIT said. A spokesperson for GDIT said the company could not disclose how much it acquired Iron EagleX for.
Iron EagleX, which is led by retired special ops combat veterans, previously won a nearly $30 m SOCOM contract in March to provide the SOF Digital Applications Program Executive Office with support such as data scientists and data integration specialists. The company also won a max-ceiling $430 m contract in 2022 to provide US Special Operations Command (SOCOM) software solution requirements over 10 years.
“The combination of Iron EagleX and GDIT represents a new chapter in our company’s stated goal of having a ‘generational impact on national security,’” said Michael Grochol, Iron EagleX’s CEO in the press release. “Our team has always focused on delivering positive disruptive change in national security, and as part of GDIT, Iron EagleX will gain access to a tremendous amount of new customers and opportunities to expand on that mission and help make our nation a safer place.”
GDIT said this acquisition “further expands” its work with special forces, specifically SOCOM. The company was awarded a $493 m task order to supply tech support to SOCOM in February.
The acquisition also comes after SOCOM and other special operations officials have made clear their interest in cutting edge tech like AI. Previously, the former top SOCOM acquisition official emphasized how engrained AI will be in everything from acquisitions to operations.
“I think artificial intelligence is a tide that lifts all boats,” Jim Smith, then-acquisition executive for SOCOM, said during SOF Week last year.
However, he added that while developing AI and large language models, industry and the military must also be wary of AI, warning that it won’t be a blanket solution to software modernization.
“I think artificial intelligence is going to be part of our material solution in our software solution approach. I think that’s true. But it’s not a wholesale adoption of generative AI that goes forward,” he said. “Here’s what I worry the most about from an acquisition standpoint: You have to understand the algorithms that are behind AI and we have to understand… the pedagogy, where the information came from and why AI allows that solution.” (Source: Breaking Defense.com)
05 Sep 24. ATLAS Space Operations raises m$$ in growth investment round. ATLAS Space Operations has raised $15 m in the firm’s latest growth investment round.
ATLAS, a Ground Station as a Service (GaaS) and Ground Software as a Service (GSaaS) provider, operates the largest U.S. owned and operated global federated ground network, enabling seamless data transmission and reception for spacecraft operators. Its services support a wide range of missions across the commercial, civil, and defense sectors, facilitating secure, scalable, and real-time access to space-based data.
The ATLAS network is comprised of more than 50 antennas across more than 34 ground stations and provides for LEO, MEO, and GEO orbits. Operating through the company’s proprietary Freedom® Software, the ATLAS federated network integrates intricate and diverse antenna networks into a unified solution for commercial and government clients.
Freedom software simplifies spacecraft communication, from single satellites to constellation management, making it faster and more economical for customers. Freedom offers customers a secure, singular access point to the entire ATLAS network, featuring rapid onboarding capabilities. This software enables customers to manage their spacecraft with automated communications, dynamic flex scheduling, ms of data points, and near real-time troubleshooting capabilities.
Since ATLAS was founded in 2015, it has become a central part of the global space ecosystem. The company boasts a 100 percent contract renewal rate with its customers, who rely on its effective ground station services as critical infrastructure for their space missions. This success underscores ATLAS’s vital role in ensuring mission success and the deep trust it has cultivated among customers.
The $15m investment led by NewSpace Capital will enable ATLAS to meet industry demand and manage the rapid growth it is experiencing. The investment demonstrates strong confidence in ATLAS’ GSaaS approach as a vital solution for the space economy. It will be able to call on NewSpace Capital’s extensive experience in the space sector, and a leadership team that includes seasoned industry and financial professionals as well as globally renowned space scientists.
John Williams, CEO at ATLAS, said, “We are thrilled to have NewSpace Capital’s support. Their exceptional expertise in the space industry will strongly bolster ATLAS in executing and expanding in the U.S., as well its international growth strategy in the European, Middle Eastern, and African (EMEA) markets. It’s a very exciting time to be working in space. And it’s a very exciting time for our company.”
Martin Halliwell, Partner at NewSpace Capital, who will be joining the board of ATLAS, said, “We look for companies that really change the playing field. ATLAS stood out to us because of the critical importance of what they do for the sector as a whole, the intelligence and industry that was plain to see in their team, and their ambition to grow. ATLAS solves the problem of fragmented ground communication in the space industry. They provide a smoother, more reliable, faster, and more cost-effective solution. We were confident that with our support, they will really flourish. Our investment also reflects our commitment to the US market, which remains very important to us. We are delighted that ATLAS has chosen NewSpace Capital to lead this round.“
Existing investors, including Michigan Capital Network, Beringea, Wakestream Ventures and Boomerang Catapult, as well as new investors Michigan Rise and Red Cedar Ventures, also participated in the round. ATLAS was advised throughout the process by GH Partners and Cooley LLP. (Source: Satnews)
09 Sept 24. Houlihan Lokey announced that Parry Labs, LLC, has successfully completed an $80m growth equity raise, the company’s first institutional investment round. The strategic growth equity round was led by Capitol Meridian Partners and included participation from True Ventures, as well as 3Wire Partners and Teamworthy Ventures. The transaction closed on August 28, 2024.
Founded in 2016 and headquartered in Washington, D.C., Parry Labs is a digital systems integrator uniquely capable of modernizing legacy military platforms and accelerating new platform development. The company offers an open architecture software stack known as Stratia, which serves as the digital backbone of its edge compute solutions, as well as electronic warfare products that enable defense customers to advance key national priorities. Parry Labs has redefined the edge for the modern battlespace with digital systems integration that delivers rapid capability deployment and decisive combat advantage. The growth capital will primarily be used to accelerate investments in the company’s core technologies and to bring new, advanced edge capabilities to the warfighter—including command and control, mission-critical software, interoperability, and advanced AI computing.
Capitol Meridian Partners was formed in 2021 to invest at the nexus of government and commercial markets, targeting opportunities where the firm can invest and drive value creation through active engagement with management. The firm draws upon the deep network of industry veterans curated with more than 27 years of principals’ experience in the sector to bring thoughtful strategic resources to each investment opportunity.
Houlihan Lokey served as the exclusive placement agent to Parry Labs and assisted in structuring and negotiating the transaction on its behalf. This transaction underscores the firm’s continued global leadership and deep experience in the defense technology sector.
Since 2020, Houlihan Lokey’s Aerospace, Defense & Government practice has closed more than 70 transactions worth over $12 bn in enterprise value. With a staff of approximately 20 financial professionals, Houlihan Lokey’s Aerospace, Defense & Government practice is among the largest dedicated industry banking teams worldwide.
If you would like more information about Houlihan Lokey or have questions regarding the firm’s role in this transaction, please contact one of the team members listed below.
04 Sept 24. ATLAS Space Operations, a world leading provider of ground station services for satellite communications, has raised $15 m in its latest growth investment round.
ATLAS, a Ground Station as a Service (GaaS) and Ground Software as a Service (GSaaS) provider, operates the largest U.S. owned and operated global federated ground network, enabling seamless data transmission and reception for spacecraft operators. Its services support a wide range of missions across the commercial, civil, and defense sectors, facilitating secure, scalable, and real-time access to space-based data.
The ATLAS network comprises over 50 antennas across more than 34 ground stations and provides for LEO, MEO, and GEO orbits. Operating through the company’s proprietary Freedom® Software, the ATLAS federated network integrates intricate and diverse antenna networks into a unified solution for commercial and government clients.
Freedom software simplifies spacecraft communication, from single satellites to constellation management, making it faster and more economical for customers. Freedom offers customers a secure, singular access point to the entire ATLAS network, featuring rapid onboarding capabilities. This software enables customers to manage their spacecraft with automated communications, dynamic flex scheduling, millions of data points, and near real-time troubleshooting capabilities.
Since ATLAS was founded in 2015, it has become a central part of the global space ecosystem. The company boasts a 100 percent contract renewal rate with its customers, who rely on its effective ground station services as critical infrastructure for their space missions. This success underscores ATLAS’s vital role in ensuring mission success and the deep trust it has cultivated among customers.
The $15m investment led by NewSpace Capital will enable ATLAS to meet industry demand and manage the rapid growth it is experiencing. The investment demonstrates strong confidence in ATLAS’ Ground Software as a Service (GSaaS) approach as a vital solution for the space economy. It will be able to call on NewSpace Capital’s extensive experience in the space sector, and a leadership team that includes seasoned industry and financial professionals as well as globally renowned space scientists.
John Williams, CEO at ATLAS, thanked the company’s investors for their support.
‘We are thrilled to have NewSpace Capital’s support,” he said.
‘Their exceptional expertise in the space industry will strongly bolster ATLAS in executing and expanding in the U.S., as well its international growth strategy in the European, Middle Eastern, and African (EMEA) markets.’
‘It’s a very exciting time to be working in space. And it’s a very exciting time for our company.’
Martin Halliwell, Partner at NewSpace Capital, who will be joining the board of ATLAS said: “We look for companies that really change the playing field. ATLAS stood out to us because of the critical importance of what they do for the sector as a whole, the intelligence and industry that was plain to see in their team, and their ambition to grow. ATLAS solves the problem of fragmented ground communication in the space industry. They provide a smoother, more reliable, faster, and more cost-effective solution.”
“We were confident that with our support, they will really flourish. Our investment also reflects our commitment to the US market, which remains very important to us. We are delighted that ATLAS has chosen NewSpace Capital to lead this round.”£
Existing investors, including Michigan Capital Network, Beringea, Wakestream Ventures and Boomerang Catapult, as well as new investors Michigan Rise and Red Cedar Ventures, also participated in the round. ATLAS was advised throughout the process by GH Partners and Cooley LLP.
ATLAS Space Operations was launched in California, moved its headquarters to Traverse City, Michigan in 2017 and has an office in Colorado Springs, Colorado. The leadership team of four has over 130+ years of commercial and government experience between them.
14 Aug 24. Tank gearbox maker Renk slips as largest business disappoints.
- Summary
- Companies
- Q2 core profit at Vehicle Mobility Solutions misses forecast
- Company sees FY revenues, core profit at top end of range
- Shares fall as much as 6.8%
Shares in German tank gearbox maker Renk (R3NK.DE)fell as much as 6.8% on Tuesday after its largest business missed profit expectations, overshadowing a strong performance elsewhere.
European defence companies including Renk are seeing a boom in demand as Western nations buy supplies to help Ukraine fight Russia’s invasion and strengthen their own capabilities.
Renk, which has been revamping operations at its Augsburg plant to meet increased demand, reported a record order intake of 419m euros ($458m) in the second quarter, beating analysts’ average forecast of 376m euros in a Vara poll.
However, core profit at its Vehicle Mobility Solutions (VMS) business, whose products are used by over 70 militaries worldwide, came in at 26m euros in the quarter, missing analysts’ average forecast of 28.3m.
“The rest is fine, but the focus was really on this division”, said ODDO BHF analyst Yan Derocles.
“I think most investors were maybe expecting something better because management has been discussing the past few months’ progress they have seen in Augsburg.”
CEO Susanne Wiegand told Reuters in May that Renk was hiring 20 to 30 people per month at the plant.
Renk, which makes the transmission used in the Leopard 2 tank that is produced by KNDS, also said it expected revenue and core profit – or adjusted earnings before interest and taxes – for the year to be at the upper end of its forecast ranges.
It has forecast 1.0-1.1bn euros of revenues and core profit of 160-190m euros. The company also increased its mid-term annual revenue growth target to about 15% from about 10%. Renk’s shares, which were floated at 15 euros apiece in February, were last down 2.6% at 24.975 euros.
($1 = 0.9149 euros) (Source: Reuters)
14 Aug 24. Rheinmetall agrees takeover of vehicle specialist Loc Performance. Acquisition expands and strengthens Rheinmetall’s position in North America and the competition for high-volume major orders in the USA
With a strategic acquisition in the USA, the Düsseldorf-based Rheinmetall Group is expanding its position in the world’s largest defense market and strengthening its core business in the field of land vehicles for military customers worldwide.
On 13 August 2024 Rheinmetall has signed an agreement to acquire all equity interests in Loc Performance Products, LLC, a renowned vehicle specialist based in Plymouth, Michigan.
The acquisition expands the Group’s business with the US military, increases its industrial base in the USA and creates further access for its technologies in North America. Furthermore, Rheinmetall is strengthening its production capacities in the USA with a view to targeted high-volume major orders for U.S. Army vehicle programs with a total potential of over USD 60bn. Rheinmetall is one of two remaining participants in the current prototype phase of the XM30 program. This program serves to introduce a new generation of infantry fighting vehicles. The volume is estimated at around USD 45bn for around 4,000 infantry fighting vehicles. Furthermore, Rheinmetall is participating in the CTT (Common Tactical Truck) program, which has a volume of around USD 16bn for around 40,000 trucks.
In addition, Rheinmetall expects the acquisition of Loc Performance to bring considerable benefits for both its American and for its global business. For example, an experienced workforce with a high level of technical expertise – including in the maintenance, repair and combat enhancement of military combat vehicles – will be integrated into Rheinmetall’s internal supply chains.
The purchase price agreed for Loc Performance, which will become due upon closing, is based on an enterprise value of USD 950 m. Closing of the transaction is subject to regulatory approvals.
With its skilled workforce of around 1,000 employes, Loc Performance generated significant and growing sales revenues. With its broad-based activities, the company will make a direct contribution to the Rheinmetall Group’s fast-growing US military vehicle business, which is managed by American Rheinmetall Vehicles based in Sterling Heights, MI.
The acquisition provides the Rheinmetall Group with key capabilities in the US and enables American Rheinmetall Vehicles to more effectively and comprehensively supply the US Department of Defense by expanding the company’s product portfolio and domestic manufacturing capabilities.
The investment follows Rheinmetall’s clear strategy for growth in the United States, which will be an important core business for the Group in the future. Loc Performance is already pursuing a sustainable business model with robust organic growth, has a highly skilled workforce and offers the Rheinmetall Group ample capacity reserves for the targeted orders in the USA.
Loc Performance Products, LLC was founded in 1971 in Plymouth, MI and is a diversified full-service provider for both military and civilian customers. In addition to its headquarters in Plymouth, MI, the company has further locations in Lansing, MI and Lapeer, MI as well as in St. Marys, OH.
The vehicle specialist is a high-performance full-line supplier of drivetrains, suspensions, track systems, rubber products, armour products and fabricated structures for vehicle platforms. The company is an established supplier to the US government and, in particular, OEM for most military ground vehicle track systems in the USA. In addition, the company’s products are used by major vehicle manufacturers in the agricultural, construction, mining, locomotive, transportation and oil and gas industries. Loc Performance’s current manufacturing capabilities include modernised fabrication, machining and welding technologies capable of meeting the critical manufacturing requirements of the US Army’s XM30 and CTT programs. An available manufacturing footprint of 1.7 m square feet provides significant capacity for future expansion.
Armin Papperger, CEO of Rheinmetall AG: “We are making this investment because we have a clear strategy for growth and the United States will be an important core market for us in the coming years. The acquisition of Loc Performance proves that we are consistently focussing on success in the USA and want to expand our share of the large market volume. Everything speaks in favour of this acquisition: Loc Performance is already pursuing a sustainable business model there with robust organic growth, has a highly qualified workforce and offers us significant capacity reserves for the orders we are targeting in the USA.”
Matthew Warnick, CEO of American Rheinmetall Vehicles: “In the USA, we have a promising position in two major military projects, both in the XM30 infantry fighting vehicle program and in the CTT project. The acquisition of Loc Performance gives us the manufacturing readiness that will enable us to realise the major orders we are aiming for. This puts us in a position to realise 100% local value creation in the USA.”
Jason Atkinson, CEO of Loc Performance: “The significant engineering capabilities of American Rheinmetall Vehicles and the next-generation technologies that are part of the exceptional global Rheinmetall Group are a great fit with Loc Performance’s 53 years of manufacturing experience in the United States. I am excited about this combination, which represents a powerful end-to-end solution that will bring even better products to our customers and even more growth to our combined company.”
American Rheinmetall Vehicles provides US customers with next-generation tracked and wheeled combat vehicles and tactical wheeled vehicle platforms. American Rheinmetall Vehicles supports the U.S. Army in two major modernisation programs, the XM30 Combat Vehicle program, and the CTT program.
The acquisition of Loc Performance will be of great benefit to American Rheinmetall Vehicles as the company further expands and strengthens its presence in the United States. With the purchase, American Rheinmetall Vehicles acquires 1.7 m square feet of modern, efficient manufacturing space with significant capacity for future expansion.
American Rheinmetall is supporting the Department of Defense in key modernisation programs of national significance that directly improve the effectiveness, mobility and situational awareness of soldiers on the battlefield. This includes developing and delivering next-generation products and capabilities, including advanced direct and long-range precision fire weapons, innovative tracked and wheeled combat vehicle platforms, and intelligent mission systems.
The American Rheinmetall family includes American Rheinmetall Vehicles in Sterling Heights (MI) and Troy (MI), American Rheinmetall Munitions in Stafford (VA), Windham (ME) and Camden (AR), American Rheinmetall Systems in Biddeford (ME) and the parent company American Rheinmetall Defense in Reston (VA).
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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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