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15 Nov 24. Solid State order delay sends shares crashing – but it’s not time to bail out. The value-added electronics group’s profit warning comes only a week after the directors reiterated earnings guidance and has prompted a savage markdown in the share price

• Share price falls 27 per cent
• EPS downgraded by 60 per cent (2025) and 46 per cent (2026)

Redditch-based value-added electronics group Solid State (SOLI:155p) has announced delays in potential defence orders only a week after highlighting good visibility over the recurring requirement for communications equipment in the security and defence sector (‘Expect a strong second half from this defence winner’, 7 November 2024).

Specifically, a prominent defence order programme has been paused pending completion of the UK government’s strategic defence review in the summer of 2025. Although the directors are “confident that this is a temporary delay and that expected orders will still be received in due course, they will fall outside of the current financial period”. Also, the timing of the strategic defence review means it’s uncertain whether these delays will also affect orders and deliveries originally expected in the 2025-26 financial year.

Analysts at Zeus Capital had expected a £20mn contribution from these orders in the 12 months to 31 March 2025, and a slightly lower level the following year. The broker has removed them from its forecasts and reduced its gross profit estimate by 18 per cent for both years to £39.5mn and £41.5mn, respectively, based on annual revenue of £123mn (2025) and £130mn (2026). The gross profit shortfall has an accentuated impact on pre-tax profit forecasts, which have been slashed by 60 per cent to £5.3mn (2025) and 46 per cent to £6mn (2026). There are similar percentage reductions in adjusted earnings per share (EPS) estimates to 4.3p and 7.9p, respectively.

The potential deferral of these orders hasn’t impacted the group’s cash position as Zeus Capital now expects a slightly better closing net debt of £4.8mn on 31 March 2025, improving to £2.3mn a year later. Dividend estimates have been edged down slightly to 4.3p per share for both financial years, which supports a dividend yield of 2.8 per cent.

The scale of the downgrades explains the savage markdown in the share price, which hit a four-year low of 104p before rallying this morning. The shares now trade on forward price/earnings (PE) ratios of 29 (2025) and 19 (2026), albeit earnings forecasts could be upgraded sharply if the delayed defence orders contribute to next year’s result.

So, although the earnings downgrade is incredibly frustrating for shareholders given that last week the directors reported a growing order book, a significant near-term unconverted visible pipeline (mainly security and defence orders) and maintained full-year earnings guidance, I would not be bailing out at this low point. Solid State expects to announce interim results in the first half of December and will provide a further trading update at that time. Hold.

(Source: Investors Chronicle)

 

15 Nov 24. VOLEX: Alongside interim results the electronics company has announced that it has made two unsolicited cash and share bids for rival TT Electronics. The latest offer valued TT Electronics at £248.6m. “The board of TT Electronics has declined to engage with Volex and rejected each of the Volex proposals,” the company said. (Source: The Times)

 

14 Nov 24. QinetiQ sticks with guidance and boosts buyback. Defence technology specialist QinetiQ (QQ.) reiterated annual guidance and raised its share buyback programme from £100m to £150m, after its half year results benefited from what chief executive Steve Wadey referred to as “a backdrop of political change and an evolving threat environment”. For the six months to 30 September, revenue was up 7 per cent to £947mn on growth at the company’s EMEA services division as global solutions unit sales came in flat. Underlying operating profit rose 6 per cent to £107m, while the margin stayed at 11.3 per cent. Annual guidance is still for high single digit organic revenue growth and a stable operating margin. Management said QinetiQ is on track to deliver organic revenue of £2.4bn and a margin of 12 per cent by 2027. (Source: Investors Chronicle)

 

13 Nov 24. CHAOS Industries Raises $145m Series B to Accelerate Defense and National Security Technology Development. Series B was led by Accel, with participation from 8VC, as well as Overmatch Ventures, Lerner Enterprises, and existing insiders, bringing total funds raised to $215m since inception.

Proceeds will be used to accelerate the development of innovative sensor, detection, and communications technology solutions. CHAOS Industries, a technology company building the next generation of defense and critical industry technologies, today announces that the company has raised $145m in Series B funding to support the next phase of its commercial growth and development.

The Series B was led by Accel, with participation from 8VC, as well as Overmatch Ventures, Lerner Enterprises, and existing insiders.

Proceeds will be used to spur the development of CHAOS Industries’ advanced detection, monitoring, and communication solutions to the defense, government, and commercial sectors, as well as to accelerate the company’s product development, hiring plans, and high-volume manufacturing.

“U.S. national security is at an inflection point,” said CHAOS Industries Founder and Co-CEO John Tenet. “As our adversaries become more sophisticated, America must embrace next-generation technological innovation to combat more complex national security threats. This funding will accelerate CHAOS Industries’ ability to provide the cutting-edge technological solutions the U.S. and its allies need to remain secure.”

“CHAOS Industries is in a prime position to emerge as a premier developer of defense technology,” said CHAOS Industries Founder and Co-CEO Dr. Bo Marr. “With this latest funding round, we will be able to innovate our existing products and develop new solutions. This is an investment not just in our company, but in the security of our nation.”

The Accel-led Series B round brings total funding raised by the company to $215 m since inception.

“It’s going to take a new generation of defense technologies to address the complex national security challenges we face today,” said Steve Loughlin, partner at Accel. “We’ve been impressed by CHAOS Industries’ sophistication and execution, and think they’re well-positioned to deliver new solutions that the U.S. is looking for.”

The company also recently announced the appointment of former U.S. Congressman and Central Intelligence Agency veteran Will Hurd as its Chief Strategy Officer. Mr. Hurd’s decades of experience and deep understanding of defense technology make him uniquely positioned to support CHAOS Industries’ mission-driven engineering strategy and guide the company as it allocates these new resources.

“The urgency to enhance America’s defense and security capabilities with modern technologies has never been greater,” said CHAOS Industries Chief Strategy Officer Will Hurd. “It is the exact mission of CHAOS Industries to bring these capabilities to market, which is why I decided to join the company. This funding round will be critical to following through on that mission.”

Today, CHAOS Industries is actively developing a suite of products known as Coherent Distributed Networks™, a paradigm-shifting technology category, which enables unprecedented performance for sensors and effectors. The first product in this category, Vanquish™, is a dual-use, multistatic commercial radar that provides early warning and tracking capabilities against unmanned aerial systems (UAS), missiles, and aircraft. (Source: BUSINESS WIRE)

 

13 Nov 24. Booz Allen Ventures Invests in Starfish Space to Enhance Satellite Servicing Technology. Booz Allen Hamilton (NYSE: BAH) today announced that its corporate venture capital arm, Booz Allen Ventures, LLC, has made a strategic investment in Starfish Space, an emerging leader in satellite servicing, inclusive of satellite life extension and end-of-life disposal. This investment aims to strengthen the resilience and sustainability of space infrastructure through innovative offerings for both government and commercial mission sets. This is the third space-focused investment by Booz Allen Ventures and reflects the growing criticality and varied mission needs of the space domain.

“As dynamic space operations become increasingly critical to the Department of Defense, NASA, the intelligence community, as well as commercial entities, advancements in satellite servicing and orbital logistics are imperative to safeguarding space assets and enabling long-term mission success,” said Chris Bogdan, executive vice president at Booz Allen and leader of the firm’s space business. “Continued strategic investments in companies like Starfish Space are critical to help drive the development of vital technologies for sustainable operations and strengthen the nation’s ability to navigate and secure an increasingly congested space environment.”

Founded by former engineers from Blue Origin and NASA, Starfish Space specializes in on-orbit satellite servicing with a focus on satellite life extension and end-of-life disposal. The company’s first-of-its-kind autonomous satellite servicing vehicle, Otter, can provide scalable and customizable options for managing satellites and maintaining critical infrastructure, ensuring viability in increasingly congested orbital paths. Most recently, Starfish Space executed its Otter Pup demonstration mission, secured a $37.5 m Strategic Funding Increase contract (STRATFI) with the U.S. Space Force, signed a contract with Intelsat for a life extension mission, and partnered with NASA for a debris inspection mission in low Earth orbit.

“Booz Allen’s investment will help us accelerate towards the launch of the first Otters, changing the paradigm of how humanity operates in orbit,” said Austin Link, co-founder and CEO of Starfish Space. “We look forward to working with Booz Allen to address the pressing needs of space operators, supporting life extension safe disposal, and many missions beyond.”

Previous space-focused investments by Booz Allen Ventures include Albedo and Quindar earlier this year, with Starfish Space marking the 11th overall investment since the fund’s inception in 2022. These efforts reflect Booz Allen’s continued commitment to fostering innovation in automation, operational efficiency, and decision-making in space operations through the use of AI and data analytics to meet mission needs for clients and the industry.

“With commercial and government demand accelerating for flexible in-orbit servicing, it’s clear that new capabilities are essential for safe space operations,” said Alex Bock, Booz Allen Ventures. “Starfish Space’s innovative approach will be a key enabler, and we look forward to partnering with them to shape the future of in-space servicing.”

Since launching, Booz Allen’s $100 m corporate venture capital arm has made strategic investments in early-stage companies developing dual-use commercial technologies, including Latent AI, RAIC Labs (Synthetaic), Reveal Technology, Credo AI, Hidden Level, Shift5, Hidden Layer, and Second Front (2F). (Source: BUSINESS WIRE)

 

13 Nov 24. M-tron Industries, Inc. Reports Strong Third Quarter 2024 Results with Revenue and Earnings per Share Above Expectations.

• Revenues increased 21.4%, or $2,326,000, to $13,214,000 for the three months ended September 30, 2024 from $10,888,000 for the three months ended September 30, 2023
• Gross margin increased 500 basis points to 47.8% for the three months ended September 30, 2024 from 42.8% for the three months ended September 30, 2023
• Net income per diluted share increased 42.1%, or $0.24, to $0.81 for the three months ended September 30, 2024 from $0.57 for the three months ended September 30, 2023
• MtronPTI anticipates a strong performance in Q4 2024 and expects to exceed its prior guidance for FY 2024

M-tron Industries, Inc. (NYSE American: MPTI) (“MtronPTI” or the “Company”), a designer and manufacturer of highly-engineered electronic components and solutions used to control the frequency or timing of signals in electronic circuits, announced strong financial results for the three and nine months ended September 30, 2024.

“Our revenues continue to be driven by defense-related orders. With improved operating efficiencies, we have been able to make strategic investments in research and development to help drive future growth and still produce superior earnings per share.”

“We are pleased to report continued strength in MtronPTI’s sales and strong financial performance for Q3 2024,” said Michael J. Ferrantino, Jr., MtronPTI Chief Executive Officer. “Our revenues continue to be driven by defense-related orders. With improved operating efficiencies, we have been able to make strategic investments in research and development to help drive future growth and still produce superior earnings per share.”

“We expect revenues, new orders and earnings to remain strong and believe the Company will exceed expectations for FY 2024,” continued Mr. Ferrantino.

Results from Operations

Third Quarter 2024

Net income was $2,267,000, or $0.81 per diluted share, for the three months ended September 30, 2024 compared with $1,586,000, or $0.57 per diluted share, for the three months ended September 30, 2023. The increase was primarily due to continued strong defense program product and solution shipments. Manufacturing cost of sales grew consistent with the growth in revenues. Higher Engineering, selling and administrative expenses resulted from increased investment in research and development, higher sales commissions related to an increase in revenues, and an increase in administrative and corporate expenses consistent with the overall growth in the business.

Gross margin was 47.8% for the three months ended September 30, 2024 compared with 42.8% for the three months ended September 30, 2023. The increase was primarily due to higher revenues, improved production efficiencies due to previous investments, and an improved product mix to higher margin products.

Adjusted EBITDA was $3,300,000 for the three months ended September 30, 2024 compared with $2,336,000 for the three months ended September 30, 2023. The increase was primarily due to improved gross margins; continued containment of operating expenses other than strategic investments in research and development, resulting in higher income before taxes; higher depreciation; and higher stock-based compensation partially offset by higher interest income.

Fiscal Year to Date 2024

Net income was $5,497,000, or $1.97 per diluted share, for the nine months ended September 30, 2024 compared with $3,416,000, or $1.25 per diluted share, for the nine months ended September 30, 2023. The increase was primarily due to higher sales related to strong defense program product shipments partially offset by higher Manufacturing cost of sales consistent with the growth in revenues as well as higher Engineering, selling and administrative expenses related to increased investment in research and development, higher sales commissions related to an increase in revenues, and an increase in administrative and corporate expenses to support the growth in revenues.

Gross margin was 45.8% for the nine months ended September 30, 2024 compared with 39.7% for the nine months ended September 30, 2023. The increase was primarily due to higher revenues, improved production efficiencies, and a higher margin product mix.

Adjusted EBITDA was $8,085,000 for the nine months ended September 30, 2024 compared with $5,295,000 for the nine months ended September 30, 2023. The increase was primarily due to higher gross margins and continued containment of operating expenses, resulting in higher income before income taxes; higher depreciation; and higher stock-based compensation partially offset by higher interest income.

Backlog

Backlog was $39,763,000 as of September 30, 2024 compared to $47,831,000 as of December 31, 2023 and $50,280,000 as of September 30, 2023. The decrease in Backlog from December 31, 2023 reflects the continued strategy and focus on securing large, long duration program-centric business, which can materially affect backlog due to the timing and size of these orders.

Improved 2024 Outlook

With the continued momentum in defense-related sales, and the acceleration in production and shipments during the first half of 2024, MtronPTI management raised the outlook for fiscal year 2024, increasing revenues to a range of $46.0 m to $48.0 m from a previous range of $43.0 m to $45.0 m. MtronPTI has good visibility for the remaining quarter of 2024 and expects to exceed the prior revenue guidance and achieve an EBITDA margin in the 19% to 21% range.

(Source: BUSINESS WIRE)

 

14 Nov 24. Fincanteri 9M 2024 Results.

▪ Revenues grow to euro 5,583m (+4% vs 9M 2023)

▪ EBITDA increases by 19% to euro 328m (euro 276m in 9M 2023), mainly driven by the strong performance of the Offshore and Specialized Vessels segment (+47%) and Equipment, System and Infrastructure segment (EBITDA 3 times higher than 9M 2023)

▪ EBITDA margin at 5.9%, materially increasing from 5.1% in 9M 2023 and 5.2% of FY 2023, underpinned by operational efficiency in Shipbuilding and Offshore and driven by turnaround in the Infrastructure segment of the business Equipment, System and Infrastructure

▪ Net financial position (NFP) negative at euro 2,059 m, with further improvement, partially driven by the temporary effect of the capital increase completed in July 2024. Excluding this effect, Net financial position is negative at euro 2,440m, improving vs 9M 2023 (euro 2,705m)

COMMERCIAL PERFORMANCE

▪ Total backlog at euro 40.1bn, approximately 5.2 times 2023 revenues

▪ Order intake at euro 8.5bn, more than 2 times 9M 2023 orders (euro 4.0bn), with a book to bill of 1.5x

▪ Significant boost from cruise and defense segments, thanks to a major order by Norwegian Cruise Line Holding Ltd. for 6 cruise ships, the contract awarded for the fifth and sixth Constellation-class frigates for the U.S. Navy and the options exercised for the fourth U212 Near Future Submarine and the fourth Offshore Patrol Vessels (OPV) for the Italian Navy

▪ In the third quarter 2024, Fincantieri signed a contract for 2 FREMM EVO frigates for the Italian Navy and an agreement with Carnival Corporation for 3 cruise ships, the largest ever built in Italy. Both contracts are not yet effective and hence not included in the backlog as of September 30, 2024. In addition, the euro 1.2 bn contract for 2 PPA units with the Indonesian Ministry of Defence is expected to come into force in Q4

▪ 12 ships delivered in 9M 2024 and 95 ships in portfolio with deliveries scheduled up to 2032

2024 GUIDANCE

▪ 2024 guidance raised for revenues and leverage ratio; EBITDA margin confirmed:

Revenues in excess of euro 8bn

EBITDA margin at around 6%

Leverage ratio (NFP/EBITDA) between 4.5x and 5.0x, excluding the rights issue temporary effect, further improving previous revised guidance between 4.5x and 5.5x

 

14 Nov 24. Thales has successfully reinforced its business portfolio and delivered on its operational commitments over the last 5 years

• Defence reinforced as a core market
• Aerospace strengthened both organically and through M&A
• Cyber & Digital scaled as a new core technology segment
• Ground Transportation divested
• Robust commercial performance
• Solid increase in profitability
• Outstanding cash flow performance

Building on its unique technological platform, the Group will implement the following strategic priorities

• Leverage premium portfolio to deliver profitable growth
• Reinforce premium positioning
• Differentiate through disruptive technology
• Enhance employer attractiveness
• Strengthen its ESG leadership

Thales is setting new financial targets for the 2024-28 period

• Organic sales growth rate (CAGR over 2024-2028, base year 2023) of +5-7%1
• EBIT margin improvement to 13-14% in 20282
• Average FOCF3 conversion of 95-105%

Thales (Euronext Paris: HO) is hosting today its 2024 Capital Markets Day with investors and financial analysts, in-person and through a live webcast accessible via the following link.

Following the acquisitions of Gemalto, Imperva and Cobham AeroComms, Thales has successfully transformed its business portfolio into a unique global technology enabled Defence, Aerospace, and Cyber & Digital company, with strong and differentiated leadership positions across businesses.

Patrice Caine, Chairman and Chief Executive Officer, Pascal Bouchiat, Senior Executive Vice-President, Chief Financial Officer, and members of the Executive Committee of Thales will provide details of the Group’s key new strategic priorities, medium-term financial objectives and the characteristics that make Thales’ unique positioning, able to deliver accelerated long-term profitable growth.

“Since our last Capital Markets Day in 2019, Thales has successfully navigated an unprecedented and challenging geopolitical environment. I would like to thank all our teams for their continuous commitment and our customers for their trust. Through these times, we have improved the quality of our businesses with active portfolio management, strengthening our core Defence and Aerospace portfolio while transforming and scaling up our Cyber & Digital business.

​The strong platform we have built with unique leadership positions across our three markets, our ability to innovate and anticipate technological disruptions and our strong pipeline of new premium products & services enable us to look forward to the next chapter of accelerated and sustainable growth with confidence.

​I am delighted to be today with investors and financial analysts and set out our roadmap to deliver attractive, profitable growth over the next five years, with our strengthened portfolio. I look forward to interacting with our key stakeholders.”

​Patrice Caine, Chairman & Chief Executive Officer

Strategic priorities

Looking ahead, Thales will implement the following strategic priorities:

1. Leverage premium portfolio to deliver profitable growth, building on our leadership position in fast growing segments. 80-90% of Thales’ revenues are exposed to fast growing markets. Thales’ long-term visibility on these market segments along with a diversified customer base provides confidence in Thales’ ability to execute on its growth ambition.
2. Reinforce premium positioning, combining notably delivery excellence, operational superior performance, customer driven innovation, user-friendly design and experience and best in class after-sales’ support. Thales will continue to differentiate itself through innovation in these fields that deliver higher value to customers driving growth in our market share and better pricing.
3. Differentiate through disruptive technology, embracing technology disruptions and staying ahead of the competition, with ~€4bn allocated to research and development (€5bn by 2028). This critical mass enables the Group to work on a wide spectrum of technology and projects, such as trustworthy AI, 6G, and quantum technology. This will enable Thales to strengthen its undisputed technological leadership in the future.
4. Reinforce employer attractiveness, by investing in attracting and retaining the best talents everywhere and becoming a Learning Company. The Group’s purpose, thorough leadership, and partnerships with top universities, academies, and renowned scientists set it apart. Its contribution to major societal challenges makes it the destination of choice for the brightest minds.
5. Strengthen its ESG leadership, delivering on its ambition to become an ESG leader and protecting our societies, people, and the planet. Thales unique portfolio of solutions can help solve some of the major societal issues and build a future we can all trust. Thales has joined the CAC 40 ESG Index in September 2024 and will unveil its new 2030 flagship ESG objectives in 2025.

A clear roadmap for each business

Relying on 1) the execution of each of the above strategic priorities, 2) the unprecedented visibility Thales is currently benefiting from across its portfolio and 3) solid growth prospects, the Group has set up a clear and ambitious 2028 roadmap for each of its businesses:

• In Defence: Thales intends to leverage its extended delivery capabilities to capture high market growth. Sales organic growth CAGR4 over 2024-2028 should reach +6 to 7% and EBIT margin 13%.
• In Avionics: the Group will grasp the advantage of an enhanced state of art product portfolio to address strong market demand. Sales organic growth CAGR4 over 2024-2028 should reach +5 to 7% and EBIT margin 13 to 14% in 2028.
• In Space: Thales is focused on restoring the business profitability to exceed the Group’s WACC, while considering selective business opportunities. Sales organic growth CAGR4 over 2024-2028 should reach +2% and EBIT margin 7%+ in 2028.
• In Cyber & Digital: the Group intends to leverage the unique product offering with best-in-class solutions to reinforce Thales leadership on this fast-growing market. Sales organic growth CAGR4 over 2024-2028 should reach +6 to 7% and EBIT margin 16 to 17% in 2028.

2024-2028 Group financial targets

Over the last five years, Thales has built a stronger and clearer portfolio, while delivering on its operational commitments, leading to higher profitability and further cash generation. Strong commercial performance has led to a record backlog, which should represent close to four years of revenue at the end of 2024 in Defence, providing unequalled visibility into the future. The business portfolio provides a solid base to address the next decade of market growth, deliver on our full potential and maximize value creation thanks to higher added value, technology driven businesses.

Based on this current view and assuming no major changes in the macro-economic and geopolitical environment, and stability of tax regulation in its key geographies, Thales announces today its medium-term financial targets as follows:

• Organic sales growth of +5-7% per year on average over the 2024-28 period, driven by broad-based growth across businesses. Thales’ strong market position, increased production capacity and premium positioning, will enable the Group to meet the growing market demand and accelerate organic growth in Defence, leverage market demand in Avionics and benefit from the structural growth opportunities in Cyber & Digital.
• EBIT margin improvement to 13-14% in 2028. EBIT margin improvement will be driven by multiple levers, including volume growth, premiumization of products & services, and cost efficiency, while increasing R&D investments to drive innovation. This will be spread across business segments, meaning maintaining best in class profitability within Defence, margin improvement in Aerospace, primarily driven by recovery in Space margins to 7%+ in 2028, and further margin development within Cyber & Digital, including Imperva.

Thales will pursue the integration of Imperva and Cobham AeroComms, to deliver the expected synergies, revenue and profitability.

The above will drive adjusted EPS growth of 50-60% over the 2024-2028 period.

Thales will maintain a high cash conversion rate, which should stand between 95 and 105% on average over the 2024-2028 period.

Thales will continue to operate with an active capital allocation strategy to maximize shareholder value, prioritizing organic growth and deleveraging, maintaining a dividend payout of ~40%5 and strengthening the Group portfolio with selective acquisitions that meet high business and financial thresholds. The company will consider share buy back to prevent excessive deleveraging and if the Group’s valuation suggest it.

 

13 Nov 24. Babcock delivers strong first half on nuclear growth.

An increasingly uncertain geopolitical backdrop supports growth prospects

• Free cash flow up 41 per cent
• Further net debt reduction

Babcock International (BAB) delivered half-year results ahead of consensus forecasts, with a robust performance at the defence company’s nuclear arm driving revenue up by double digits.

Nuclear revenue rose 22 per cent against the same period last year, supported by 30 per cent growth in civil nuclear and 25 per cent growth at the company’s major infrastructure programme (MIP) at Devonport. The MIP involves critical infrastructure upgrades to support the UK’s naval and nuclear defence capabilities.

Land revenue growth of 8 per cent was aided by government contracts and Ukraine support, while the first year of the Skynet contract to upgrade and operate the UK government’s military satellite and space operations helped marine revenue rise 5 per cent. Revenue at the smaller aviation unit contracted 5 per cent.

Underlying operating profit rose 9 per cent to £169mn despite the high-margin Polish Miecznik frigate licence fees received in the prior year, while free cash flow improved from £67mn to £95mn.

The balance sheet has been deleveraged over recent years, and there was a further reduction in net debt in the period. Excluding leases, debt was down £142mn to £146mn year on year, while the leverage ratio moved from 1.1 times to 0.6 times.

With around 90 per cent of expected full-year revenue under contract at the start of October, management kept annual forecasts unchanged. Chief executive David Lockwood said “a backdrop of geopolitical instability” is boosting demand.

Based on recent trading and growth prospects, medium-term guidance for an underlying operating margin of at least 8 per cent looks achievable. A rating of 11 times forward consensus earnings is undemanding. Buy.

Last IC view: Buy, 528p, 26 Jul 2024. (Source: Investors Chronicle)

 

13 Nov 24. MilDef significantly expands its presence in Central Europe – enters into agreement for a transformative acquisition of roda computer GmbH. MilDef Group AB (publ) (”MilDef”) has, through its wholly owned subsidiary MilDef Germany Holding GmbH, entered into a binding agreement to acquire all shares in roda computer GmbH (“roda”), a well-established provider of military IT solutions with a strong market presence in Central Europe, primarily in the DACH region. Through the acquisition, MilDef becomes one of Europe’s leading players in tactical and rugged IT for the defence and security sector. The acquisition provides MilDef with access to key market channels, long-standing customer relationships, and existing framework agreements in attractive and growing markets in Central Europe.

The acquisition in brief

• MilDef has, through its wholly owned subsidiary MilDef Germany Holding GmbH, entered into a binding agreement to acquire roda for an initial consideration of EUR 70 m (approximately SEK 808 m[1]) in cash, and 1 374 047 newly issued shares in MilDef[2] (the “Issue In Kind”) on a cash and debt free basis (Enterprise Value). The initial consideration could increase through a potential earn-out of up to EUR 4 m (approximately SEK 46 m[3]) dependent on agreed financial performance targets for 2024.
• The initial consideration of the acquisition implies an EV/EBITDA multiple of approximately 8x based on the EBITDA for the FY2023 for roda GmbH, the Group’s main entity.
• Roda, based in Germany, is a well-established provider of tactical IT solutions for the defence domain, with long-standing customer relationships and existing framework agreements. The acquisition will significantly strengthen MilDef’s presence in the attractive and growing Central European market and enable cross-selling of MilDef’s products through roda’s market channels.
• The acquisition is expected to be accretive to MilDef’s earnings per share from completion of the acquisition (excluding any non-cash amortization impacts from the transaction).
• The combination of MilDef and roda had annual sales exceeding SEK 1,900m in the FY2023, with an adjusted EBITA margin of approximately 13 percent.
• The acquisition will be financed with a combination of new debt and issue of new shares, consisting of a long-term facility and a directed share issue of approximately SEK 450m conducted through an accelerated bookbuilding procedure (the “Directed Share Issue”). MilDef will publish a separate press release regarding the details of the Directed Share Issue.
• Three of MilDef’s largest shareholders, Svolder AB, Andra AP-fonden and Tredje AP-fonden support the acquisition and have expressed interest to participate in the Directed Share Issue.
• Svolder AB, Andra AP-fonden and Tredje AP-fonden have entered into binding agreements to vote in favour of any relevant proposal at the Extraordinary General Meeting intended to be held on or around 9 December, 2024. Further, MilDef’s CEO Daniel Ljunggren, MilDef’s Chairperson Björn Karlsson and MilDef’s Board representatives Marianne Trolle and Jan Andersson together with other employees have entered into binding agreements to vote in favour of relevant proposals at the Extraordinary General Meeting. In total, existing shareholders representing approximately 44 percent of the share capital and voting rights in MilDef have entered into binding agreements to vote in favour of relevant proposal at the Extraordinary General Meeting.
• The acquisition is expected to close during the first quarter of 2025, subject to customary regulatory approvals and closing conditions, inter alia. Roda will be consolidated in MilDef’s consolidated accounts from the closing of the acquisition.

”We are very pleased to welcome roda to MilDef. The acquisition of roda accelerates MilDef’s expansion in the strategically important defence market in Europe. Roda’s long-standing customer relationships, existing framework agreements, and strong reputation in the Central European market create a great opportunity for cross-selling of MilDef’s existing offerings. The acquisition strengthens MilDef’s role as a significant player in the European effort to enhance defence and security capabilities. We look forward to taking the next step in MilDef’s growth journey once the transaction is completed”, says Daniel Ljunggren, President & CEO of MilDef Group.

“The main criteria when finding a new owner of roda was to find a partner that truly wanted to continue the successful growth journey of our company. For the management of roda this was extremely important, and we are convinced that MilDef is the perfect fit for continued development. Now two of Europe’s leading defense technology companies will join forces to present a very attractive and trustworthy offering”, says Martin Bertsch, CEO and Founder roda.

Strategic rationale

For MilDef, it is of strategic importance to increase its presence and strengthen its market channels in the attractive Central European market. Further, MilDef unlocks access to significant framework agreements with countries that have announced substantial increases in defence budgets and enhanced defence capabilities. Through the acquisition, MilDef becomes one of Europe’s leading players in tactical and rugged IT for the defence domain.

The acquisition is also expected to enable several cross-selling synergies for MilDef, primarily by leveraging roda’s existing market channels. With the main share of its revenue in the DACH region, roda holds a strong position in Central Europe, providing MilDef with the opportunity to increase sales of its own developed products and expand the Group’s customer base. Many global platform manufacturers are present in the German market and MilDef also sees an opportunity for increased sales to these parties through the acquisition of roda.

Further, the acquisition is expected to create synergies in procurement of parts for both MilDef’s and roda’s offerings, which will be further evaluated after the transaction has been completed.

The combination of the two companies’ resources and competencies provides a strong platform for continued growth. Both organisations emphasize delivering value to customers through high-quality solutions. Through the acquisition, MilDef get access to a capable management team with extensive experience from operating in the Central European markets.

Roda in brief

Roda computer GmbH, headquartered in Lichtenau (Germany), was founded in 1987 and has approximately 115 employees and two production facilities. Since the start, the company has specialised in the sale of mobile and rugged computers primarily within Europe (excluding the Nordics). Customers are mainly active in the defence sector and include government agencies such as national defence authorities and procurement organisations as well as companies in the defence industry. A majority of sales are made through framework agreements. In addition to the headquarter in Lichtenau, Germany, roda is also present in France and the United Kingdom. Roda is the exclusive reseller of laptops and tablets from MilDef Crete Inc. in several Central European markets.

Financial overview and effect on MilDef’s financials

During the twelve-month period that ended on 31 December, 2023, roda[4] reported revenue of approximately SEK 800 m and adjusted EBITA of approximately SEK 130 m, which corresponds to an adjusted EBITA margin of approximately 16 percent. During the same period, roda reported a gross margin of approximately 29 percent.

During the twelve-month period that ended on the 31 December, 2023, MilDef reported sales for the preceding twelve months of SEK 1,151m and an EBITA of SEK 140m, which corresponds to an EBITA margin of 12 percent. If roda had been a part of MilDef during the same period, the combined revenue, pro forma, based on certain assumptions, would have amounted to approximately SEK 1,900 m and the adjusted EBITA to approximately SEK 254m, corresponding to an EBITA margin of approximately 13 percent.

The acquisition is expected to have an accretive effect on MilDef’s earnings per share from the time of acquisition closing (excluding potential non-cash amortisation from the acquisition).

One-off integration costs are expected to amount to approximately SEK 5-10 m over three years.

MilDef has a financial target to maintain net debt/adjusted EBITDA below 2.5x over time. On 30 September 2024 MilDef reported net debt of SEK 224m, corresponding to a net debt/adjusted EBITDA of 1.4x (on a post-IFRS 16-basis).

After closing of the acquisition and the Directed Share Issue, net debt/adjusted EBITDA on a post-IFRS 16-basis, excluding transaction and integration costs, is expected to amount to approximately 2,2x, which is below MilDef’s target level of 2.5x.

Financing and support from MilDef’s shareholders

The acquisition will be financed through a combination of new debt and issue of new shares. 1 374 047 new shares will be issued to the sellers as part of the consideration in the acquisition, through the Issue In Kind, corresponding to 3.3 percent of the shares outstanding prior to the Directed Share Issue. The sellers have undertaken towards MilDef to not sell their shares received via the transaction within 24 months after the closing of the acquisition (lock-up) with certain exceptions. The Issue In Kind is subject to a resolution by an Extraordinary General Meeting authorising the Board to resolve on share issues. The Extraordinary General Meeting is intended to be held on or around 9 December, 2024.

The rest of the consideration is paid in cash. To finance the cash consideration, MilDef has received a new credit facility of EUR 45 m from Skandinaviska Enskilda Banken (“SEB”).

To cover long-term financing of the acquisition, MilDef intends to raise approximately SEK 450 m through the Directed Share Issue to Swedish and International institutional investors through an accelerated bookbuilding procedure, as will be announced separately by MilDef later today. The Directed Share Issue is intended to be carried out with deviation from the shareholders’ pre-emptive rights, and to be resolved upon by the Board of Directors of MilDef, partly on the basis of the authorisation granted by the Annual General Meeting held on 23 May, 2024, and partly subject to the subsequent approval by an Extraordinary General Meeting intended to be held on or around 9 December, 2024.

Three of MilDef’s largest shareholders, Svolder AB, Andra AP-fonden and Tredje AP-fonden support the acquisition and have expressed interest to participate in the Directed Share Issue. Svolder AB, Andra AP-fonden and Tredje AP-fonden have entered into binding agreements to vote in favour of any relevant proposal at the Extraordinary General Meeting. Further, MilDef’s CEO Daniel Ljunggren, MilDef’s Chairperson Björn Karlsson as well as MilDef’s Board representatives Marianne Trolle and Jan Andersson together with other employees have entered into binding agreements to vote in favour of relevant proposal at the Extraordinary General Meeting. In total, existing shareholders representing 44 percent of the share capital and voting rights in MilDef have entered into binding agreements to vote in favour of relevant proposal at the Extraordinary General Meeting.

Regulatory approvals and closing

Closing of the acquisition is expected to take place during the first quarter 2025, given that customary regulatory approvals and closing conditions are met, including submission to and approval from relevant authorities according to FDI-regulation in France, Germany and United Kingdom. The completion of the Issue in Kind is subject to a resolution by an Extraordinary General Meeting authorising the Board to resolve on share issues.

Advisors

SEB provides debt financing and is Sole Global Coordinator and Bookrunner to MilDef in relation to the Directed Share Issue. HWF Advokater AB is primary legal counsel to MilDef in relation to the acquisition of roda and the Directed Share Issue. EY is advisor to MilDef in relation to tax and financial topics in the acquisition.

 

13 Nov 24. SRT’s retail offer is worth subscribing to.  The navigation surveillance systems technology group is raising new funds to support recent contract wins – the offer closes at 6pm today

• £8.5m total equity raise at 35p a share
• £2m retail offer of 5.7m shares open today

Aim-traded SRT Marine Systems (SRT: 38p), a global leader in technology used to track maritime vessels, has announced a £8.5m conditional equity raise to strengthen the company’s balance sheet and facilitate growth of its surveillance systems and navigation transceivers businesses.

It forms part of a larger £31m package that will support the recently announced $213m (£167m) contract to deliver an integrated maritime surveillance system for the Kuwait government, as well as three other contracts worth $210m (‘A marine technology company building momentum’, 7 October 2024). The first contract will deliver a state-of-the-art national maritime surveillance system for the Kuwait Coast Guard and other relevant agencies. It will incorporate a broad range of sophisticated sensor systems, artificial intelligence (AI) analytics and integrated command and control systems. Implementation is expected to take up to two years, followed by 10 years of support, training and maintenance.

The fundraising is underwritten in full by Ocean Infinity, a marine technology company specialising in the development and deployment of robotics for large-scale, subsea data acquisition. Ocean Infinity currently holds 19.8m shares, having invested almost £7m for a strategic stake in a £10.5m equity raise at 35p a share in January 2024. SRT is issuing 24.3m new shares, representing 10.9 per cent of the 222.6mn shares in issue, through a placing of 3.2m shares to certain existing shareholders, 15.3mn shares through a subscription agreement with Ocean Infinity, and 5.7m shares through a retail offer to other existing shareholders.

Ocean Infinity has also provided SRT with a $21.4m guarantee to enable the company to issue a contract performance bond in support of the $213m Kuwait contract. SRT expects to replace the guarantee within the next six months through a combination of its own resources and the UKEF export guarantee programme. In return, Ocean Infinity has been granted 20mn warrants with a strike price of 35p and three-year exercise period. If the Ocean Infinity guarantee is not replaced within eight months, SRT is obligated to issue a further 4mn warrants to the shareholder at a strike price 15 per cent below the share price at the time.

In connection with the fundraising, SRT has agreed to redeem £1mn of the £13.3m loan notes drawn down under its loan note programme by issuing 2.9m redemption shares to the loan note holders. So, assuming the retail offer is fully subscribed, Ocean Infinity will hold 14 per cent of the 249.8m shares in issue. If the 20mn warrants are exercised at a cost of £7m, Ocean Infinity’s holding would rise to 20.4 per cent. It’s a big vote of confidence in the company’s prospects, but more importantly the equity investment and provision of a valuable guarantee are enabling SRT to make an early start on the Kuwait contract to drive a step change in revenue and profits.

Ahead of annual results on 2 December, house broker Cavendish has its forecasts under review, but clearly SRT is moving in the right direction. I would be surprised if the company doesn’t deliver pre-tax profit of more than £10m in the 2025-26 financial year, a level of profitability that warrants existing shareholders in the £85m market capitalisation company participating in the retail offer, which closes at 6pm today. Hold. (Source: Investors Chronicle)

 

12 Nov 24. CAE reports second quarter fiscal 2025 results.

• Revenue of $1,136.6m vs. $1,050.0m in prior year
• Earnings per share (EPS) from continuing operations of $0.16 vs. $0.17 in prior year
• Adjusted EPS(1) of $0.24 vs. $0.26 in prior year
• Operating income of $118.1m vs. $97.7m in prior year
• Adjusted segment operating income(1) of $149.0m vs. $135.6m in prior year
• Free cash flow(1) of $140.0m vs. $147.4m in prior year
• Adjusted order intake(1) of $3.0bn for a record $18.0bn adjusted backlog(1)
• Successfully concludes AirCentre integration and enterprise-wide restructuring program
• Post quarter, CAE purchased a majority stake in SIMCOM for US$230 m and extend an exclusive business aviation training agreement with Flexjet and its affiliates to 15 years
• Company also announces CEO succession plan

(NYSE: CAE) (TSX: CAE) – CAE Inc. (CAE or the Company) today reported its financial results for the fiscal second quarter ended September 30, 2024. The Company also announced the conclusion of its integration of Sabre’s AirCentre airline operations portfolio (AirCentre) and its enterprise-wide restructuring program to streamline CAE’s operating model and portfolio, optimize its cost structure and create efficiencies.

“I am very pleased with our progress this quarter, which underscores our strong execution and the robust market demand for our Civil Aviation and Defense and Security solutions. In Defense, by leveraging our structural improvements and streamlined organization, we achieved notable growth and margin improvements,” said Marc Parent, CAE’s President and Chief Executive Officer. “We also made significant strides to retire risk by completing a Legacy Contract from our Defense backlog and to secure future growth with a $1.7bn transformative award under Canada’s Future Aircrew Training Program.

“Despite the near-term supply chain challenges that have been impacting the airline industry, the long-term growth outlook for Civil remains strong, underscoring CAE’s compelling investment thesis. The important organic investment we announced last week to increase our stake in SIMCOM will strengthen our presence in the core business aviation training market, increase recurring revenue, and further our commitment to delivering world-class training solutions to an essential customer segment. Backed by $3.0bn in consolidated adjusted order intake and a record $18.0 bn adjusted backlog this quarter, CAE’s future is exceptionally bright.”

Consolidated results

Second quarter fiscal 2025 revenue was $1,136.6m, compared with $1,050.0 m in the second quarter last year. Second quarter EPS from continuing operations was $0.16 compared to $0.17 last year. Adjusted EPS in the second quarter was $0.24 compared to $0.26 last year.

Operating income this quarter was $118.1m (10.4% of revenue(1)), compared to $97.7m (9.3% of revenue) last year. Second quarter adjusted segment operating income was $149.0m (13.1% of revenue(1)) compared to $135.6 m (12.9% of revenue) last year. All financial information is in Canadian dollars and results are presented on a continuing operations basis, unless otherwise indicated. Comparative figures have been reclassified to reflect discontinued operations.

Civil Aviation (Civil)

Second quarter Civil revenue was $640.7m vs. $572.6m in the second quarter last year. Operating income was $94.7m (14.8% of revenue) compared to $88.4 m (15.4% of revenue) in the same quarter last year. Adjusted segment operating income was $115.9m (18.1% of revenue) compared to $114.3m (20.0% of revenue) in the second quarter last year. During the quarter, Civil delivered 18 full-flight simulators (FFSs) to customers and second quarter Civil training centre utilization was 70%.

During the quarter, Civil signed training solutions contracts valued at $693.3m, including a range of long-term commercial and business aviation training agreements, digital flight services contracts, and 16 FFS sales, including four involving the COMAC C919 narrow-body airliner.

The Civil book-to-sales ratio(1) was a 1.08 times for the quarter and 1.23 times for the last 12 months. The Civil adjusted backlog at the end of the quarter was $6.7bn.

After the end of the quarter, CAE announced that it increased its ownership stake in its existing SIMCOM Aviation Training (SIMCOM) joint venture by purchasing a majority of SIMCOM shares from Volo Sicuro for US$230 m, subject to customary adjustments, to be financed with CAE’s existing credit facility and cash on hand. As part of the transaction, Flexjet, LLC, a related party of Volo Sicuro, has retained a minority stake in SIMCOM. Additionally, CAE and SIMCOM have each extended their respective exclusive business aviation training services agreement with Flexjet and its affiliates by 5 years, resulting in a remaining exclusivity period of 15 years for both agreements.

Defense and Security (Defense)

Second quarter Defense revenue was $495.9m vs. $477.4m in the second quarter last year. Operating income was $23.4m (4.7% of revenue) compared to $9.3m (1.9% of revenue) in the same quarter last year. Adjusted segment operating income was $33.1m (6.7% of revenue), compared to $21.3m (4.5% of revenue) in the second quarter last year.

Defense booked orders for $2.3bn this quarter for a book-to-sales ratio of 4.56 times. The ratio for the last 12 months was 2.04 times. The Defense adjusted backlog, including unfunded contract awards and CAE’s interest in joint ventures, at the end of the quarter was $11.4bn, up from $10.4bn at the end of the first quarter of fiscal 2025. During the second quarter of fiscal 2025, $1.7 bn was added to adjusted order intake following CAE’s award of a 25-year subcontract from SkyAlyne to support Canada’s Future Aircrew Training (FAcT) program. As part of this subcontract, CAE will initially develop and deliver a range of simulators and training devices for the various aircraft fleets being procured under the FAcT program. These training devices are expected to be delivered over the next 5 years. As announced, in addition to this initial approximately $1.7 bn sub-contract, CAE is also expected to sign a follow-on order in the near-term involving sustainment-related in-service support services. Notably for the Defense segment overall, the pipeline remains strong with some $7.2bn of bids and proposals pending.

Additional financial highlights

CAE incurred $5.1m of costs related to the integration of AirCentre, which was completed this quarter, and $25.8m in connection with its restructuring program to streamline CAE’s operating model and portfolio, optimize its cost structure and create efficiencies. This restructuring program was completed in the second quarter of fiscal 2025 and no further restructuring expenses are expected. CAE expects to fully achieve annual run rate cost savings of approximately $20 m by the end of the next fiscal year.

Net finance expense this quarter amounted to $52.9m, compared to $49.5m in the preceding quarter and $47.1m in the second quarter last year.

Income tax expense this quarter amounted to $10.4m, representing an effective tax rate of 16%, compared to negative 16% for the second quarter last year. The adjusted effective tax rate(1), which is the income tax rate used to determine adjusted net income and adjusted EPS, was 18% this quarter as compared to 1% in the second quarter of last year. The increase in the adjusted effective tax rate was mainly attributable to the recognition, last year, of previously unrecognized deferred tax assets and the current year mix of income from various jurisdictions.

Net cash provided by operating activities was $162.1m for the quarter, compared to $180.2m in the second quarter last year. Free cash flow(1) was $140.0m for the quarter compared to $147.4 m in the second quarter last year. The decrease was mainly due to a lower contribution from non-cash working capital.

Growth and maintenance capital expenditures(1) totaled $57.0m this quarter.

Net debt(1) at the end of the quarter was $3,064.9m for a net debt-to-adjusted EBITDA(1) of 3.25 times (2.97 times excluding Legacy Contracts(1)(2)). This compares to net debt of $3,129.7m and a net debt-to-adjusted EBITDA of 3.41 times (3.11 times excluding Legacy Contracts) at the end of the preceding quarter.

Adjusted return on capital employed(1) was 5.5% this quarter compared to 5.7% last quarter and 7.1% in the second quarter last year.

During the quarter, CAE repurchased and cancelled a total of 392,730 common shares under its normal course issuer bid (NCIB), which began on May 30, 2024, at a weighted average price of $24.43 per common share, for a total consideration of $9.6m.

Sustainability

This quarter, CAE received approval from the Science Based Targets initiative (SBTi) for its decarbonization targets, committing to reduce Scope 1 and 2 emissions by 85.7% and Scope 3 emissions by 32.5% by FY33. This achievement underscores CAE’s commitment to sustainability and environmental stewardship. Central to this success is CAE’s engagement with its value chain on its sustainability journey through the International Aerospace Environment Group (IAEG) and as one of the launch partners of Decarbone+, a non-profit aimed at accelerating decarbonization efforts of organizations across Quebec. These collaborative initiatives highlight CAE’s leadership in fostering sustainable practices and change across its value chain.

Additionally, CAE was honored with the 2024 Altitude Award by the Black Aviation Professionals Network, recognizing its contributions and leadership in advancing diversity and inclusion within the Aerospace sector.

Management outlook

Civil

The secular demand picture for aviation training solutions remains compelling and the Company continues to be well positioned. Aircraft OEM supply issues have affected airline training demand forecasts and remain a near-term headwind for a portion of CAE’s commercial training business. Notwithstanding the delays this causes to expected revenue from initial training of commercial pilots, Management still targets approximately 10 percent annual growth in Civil adjusted segment operating income, with stronger performance anticipated in the second half of the fiscal year. The positive elements that Management expects to help offset the impact of OEM supply issues, include accretion from its now larger stake in SIMCOM, the benefits of its cost savings initiatives, and positive seasonality in the second half of the fiscal year, which is customary for both commercial and business aviation. Also expected to drive stronger second-half performance are higher profitability in Flight Operations Solutions, and higher volume and profitability from full-flight simulator (FFS) deliveries. Annual Civil adjusted segment operating income margin is expected to be in the range of 22 to 23 percent, with ample room to grow beyond the current year on volume, efficiencies and mix.

Defense

Management believes CAE is well positioned for long-term growth and increased profitability in Defense, as the sector moves into a prolonged up-cycle with increased budgets across NATO and allied nations. Rising geopolitical tensions are driving a focus on near-peer threats, defence modernization, and readiness, fueling demand for the training and simulation solutions that CAE offers. Demand for CAE’s Defense training solutions remains strong, driven by a global shortage of uniformed personnel, prompting militaries to partner with CAE to support readiness. Having recently re-baselined the Defense business and substantially accounted for the previously identified programmatic risk, Management expects Defense annual revenue growth in the low- to mid-single-digit percentage range and annual Defense adjusted segment operating income margin to increase to the 6- to 7-percent range in fiscal 2025, also with room to grow beyond the current year. Similarly, Management expects annual Defense performance to be more heavily weighted to the second half. Furthermore, having successfully completed one of its Defense Legacy Contacts in the second quarter, Management expects to complete another two such contracts by the end of the fiscal year.

For CAE overall, Management continues to target three-year EPS growth (FY22-25) in the low- to mid-teens-percentage range.

Finance expense and tax expense

Management expects annual finance expense to be similar to fiscal 2024. The run-rate effective income tax rate is expected to be approximately 25%, considering the income expected from various jurisdictions and the implementation of global minimum tax policies.

Balanced capital allocation priorities, accretive growth investments

CAE now expects total CAPEX for fiscal 2025 to be slightly below Management’s prior estimated range of $50 to $100m higher than the fiscal 2024 amount, which was $329.8m. Commensurate with CAE’s ongoing success to capture market opportunities in training, approximately three-quarters of this relates to organic growth investments in simulator capacity to be deployed to CAE’s global network of aviation-related training centres and backed by multiyear customer contracts.

Solid financial position

A tenet of CAE’s capital management priorities includes the maintenance of a solid financial position, and it expects to continue to bolster its balance sheet through ongoing deleveraging, commensurate with its investment grade profile. CAE is targeting a leverage ratio of net-debt to adjusted EBITDA of below three-times (3x) by the end of the current fiscal year.

Current returns to shareholders

Given CAE’s progress over the last year to strengthen its financial position, an NCIB was established as part of its capital management strategy and is currently intended to be used opportunistically over time with excess free cash flow. Given the Company’s outlook and cash generative nature of its highly recurring business, CAE’s Board of Directors will also continue to evaluate the possibility of reintroducing a shareholder dividend. (Source: PR Newswire)

 

12 Nov 24. Triumph Group, Inc. (NYSE: TGI) (“TRIUMPH” or the “Company”) today reported financial results for its second quarter of fiscal 2025, which ended September 30, 2024.

Second Quarter Fiscal 2025

• Net sales of $287.5 m; sales growth of 1%
• Operating income of $32.4m with operating margin of 11%; adjusted operating income of $36.0m with adjusted operating margin of 13%
• Net income from continuing operations of $11.9m, or $0.15 per diluted share; adjusted net income from continuing operations of $15.4m, or $0.20 per share
• Adjusted EBITDAP of $42.6m with Adjusted EBITDAP margin of 15%
• Cash used in operations of ($38.4)m and free cash use of ($44.7)m. Cash and available liquidity was $148m at September 30th.

Fiscal 2025 Guidance

• Net sales of approximately $1.2bn
• Increasing operating income to a range of $140.5m to $145.5m, reflecting operating margin of 12%
• Increasing Adjusted EBITDAP to a range of $190.0m to $195.0m, reflecting Adjusted EBITDAP margin of 16%
• Increasing earnings per diluted share to a range of $0.47 to $0.53, and adjusted earnings per diluted share to a range of $0.70 – $0.76
• Increasing cash flow from operations to a range of $40.0m to $55.0m, and free cash flow to a range of $20.0 m to $30.0m

“TRIUMPH achieved its tenth consecutive quarter of year-over-year sales growth as commercial aftermarket sales from our IP-based business grew by more than 34%, more than offsetting temporary commercial OEM and supply chain headwinds,” said Dan Crowley, TRIUMPH’s chairman, president and chief executive officer.  “We exceeded our cash targets in the quarter through strong operational performance across all our businesses including Interiors where we turned around the business in Q2 through substantial cost reductions and a commercial resolution to bring its profit and cash flow in line with full year expectations.”

Mr. Crowley continued, “TRIUMPH is raising its fiscal 2025 earnings and cash flow guidance on strong aftermarket demand and the improvement in Interiors, while maintaining sales guidance despite lower short-term OEM production rates which we expect to recover in our fourth quarter.  Our strong aftermarket growth and operating performance, and historical seasonality will accelerate our free cash flow generation in the second half of FY25.   We expect to deliver top and bottom-line growth rates at or above the market as we benefit from continuing strong aftermarket demand.”

Commercial OEM sales decreased ($11.6)m, or (8.9%) primarily due to decreased sales volume on the Boeing 737, 767, 777 programs, which were partially offset by increased sales on Boeing 787 program and a favorable settlement in Interiors across multiple programs.

Commercial Aftermarket sales increased $10.4m, or 26.2%, primarily due to a combination of increased spares sales and repair sales volume across several platforms including the Boeing 787 program.

Military OEM sales increased $3.0m, or 4.9%, as increased sales volumes on the CH-47 and AH-64 helped offset expected decreases on the V-22 program.

Military aftermarket sales increased $0.2m, or 0.5%, as increased repairs on the CH-47 platform and a spare parts intellectual property transaction of approximately $5.0 m were partially offset by decreased repair and overhaul sales on the V-22 program.

TRIUMPH’s results included the following:

The number of shares used in computing earnings per share for the second quarter of 2025 was 77.7m.

Backlog, which represents the next 24 months of actual purchase orders with firm delivery dates or contract requirements, was $1.90bn, an increase from prior fiscal year end. Our backlog includes increases across all end markets, partially offset by reductions due to the changes in timing of deliveries primarily under the Boeing 737MAX program.

For the second quarter of fiscal 2025, cash flow used in operations was ($38.4)m, which was better than expectations previously provided due to lower than expected working capital and strong aftermarket demand. (Source: PR Newswire)

 

12 Nov 24. Paramount Industrial Holdings goes into business rescue.  Paramount Industrial Holdings (PIH), part of the Paramount group of companies, has entered into business rescue amid legal disputes in another Paramount business division. Other subsidiary companies in South Africa are expected to continue operating as usual.

The PIH board made the decision on 11 November, News24 reported, and quoted documents submitted to the Companies and Intellectual Property Commission (CIPC) as saying South African operations were experiencing “significant financial distress”, which posed a “serious risk to its ongoing sustainability”.

News24 added that the financial stress is due to a dispute between the parent company in the United Arab Emirates – Paramount Group Limited ADGM (Abu Dhabi Global Market) – and unmanned vehicle manufacturer Abu Dhabi Autonomous Systems Investments (ADASI). In August, Paramount ADGM filed for Chapter 11 bankruptcy protection in Delaware, United States, over the dispute.

Paramount said that a limited number of its non-operating entities voluntarily filed for Chapter 11 protection in the United States after an arbitration award issued in August 2024, stemming from a dispute initiated by ADASI in 2022.

Chapter 11 proceedings mean funding has been cut off to South African operations. Paramount Industrial Holdings director Willem van Biljon said in his CIPC filing that Paramount’s South African holding company and subsidiaries usually received funding via a loan facility from Paramount Group Limited in the UAE. However, the parent company could no longer lend money to the South African companies, as the funds were inaccessible due to the bankruptcy filing.

Paramount Industrial Holdings now has to rely “solely on its own revenue to manage the liquidity of the company and its subsidiaries”, News24 reported. “The company remains committed to supporting its subsidiaries and to retaining the PIH group’s workforce to the extent possible. However, without immediate intervention, the company’s cash reserves will be insufficient to cover ongoing operational and administrative expenses as well as its payments due to existing creditors,” he said.

Paramount Industrial Holdings is now looking to reorganize and provide for operational expenses and working capital.

“By undertaking business rescue, PIH is acting responsibly to safeguard long-term stability.  Importantly, the business rescue process will also unlock cash for the subsidiary companies through post-commencement funding, which will support ongoing operations and growth,” the company told defenceWeb.

“This process affects only the holding company and has no impact on the operational structure, roles, or day-to-day work within the subsidiary companies.  The subsidiary companies remain strong, and will continue to operate as usual.”

The CIPC lists Paramount Industrial Holdings as being in Business Rescue, whereas other South African Paramount companies are listed as being In Business, and these include: Paramount Aeronautical Solutions; Paramount Aerospace Holdings; Paramount Aerospace Industries; Paramount Aerospace Innovations; Paramount Aerospace Systems; and Paramount International.

(Source: https://www.defenceweb.co.za/)

 

13 Nov 24. Babcock Successfully delivering performance and growth.

David Lockwood, Chief Executive Officer, said: “This is another strong set of results, with continued positive momentum across the Group. Our operational and financial performance in the first half of the year underpins my confidence that we will deliver our expectations for the full year, as we progress towards our medium-term guidance.

We continue to focus on driving performance and sustainable growth. Working closely with our customers, we are consistently delivering key programmes and contracts, with enhanced standards of execution. Meanwhile, a backdrop of geopolitical instability means demand for what we do continues to increase, resulting in an expanding and attractive long-term opportunity set. We are selecting the right opportunities and are being disciplined in how we deploy capital to deliver growth which maximises shareholder value.”

Financial highlights

Contract backlog £9.5bn flat vs HY24, or down 8% vs FY24 driven by execution on long-term contracts. Key contracts expected in H2

Revenue of £2,409m increased 11% on an organic basis, driven by strong growth in Nuclear and Land

Underlying operating profit up 10% (at constant FX) to £169m, driven by growth and margin improvement in Nuclear and Land

Underlying operating margin was 7.0% (HY24: 7.1%). The prior period included high margin AH140 frigate license sale

Underlying EPS up 14% to 23.5 pence

Underlying operating cash conversion was 80% (HY24: 82%)

Underlying free cash flow increased 41% to £95 m reflecting the profit performance and working capital timing

Net debt to EBITDA reduced to 0.6x on a covenant basis. Net debt excluding leases reduced to £146m

Interim dividend of 2.0 pence per share (HY24: 1.7 pence)

Outlook

Our expectations for FY25 remain unchanged, noting that full year underlying free cash flow will be significantly H1 weighted.

With around 90% of FY25 expected revenue under contract at 1 October 2024, we commence the second half with good momentum and are confident of making further progress against our medium-term guidance: to deliver mid-single digit average annual revenue growth and achieve underlying operating margins of at least 8% and underlying operating cash conversion of at least 80%.

Strategic highlights

Launched H&B Defence, a JV with HII to support AUKUS focusing on building Australia’s sovereign nuclear capabilities

Opened a new Engineering and Nuclear Skills building at City College Plymouth to enhance our workforce’s nuclear capabilities

Partnered with ST Engineering to launch a 120mm Ground Deployed Advanced Mortar System

Launched the General Logistics Vehicle (GLV) medium wheelbase variant targeted at UK and international opportunities

DSG contract extension under negotiation following notification of UK MOD of its intention to exercise up to five option years

Operational highlights

Marine

Awarded contract extension in Poland to support Miecznik frigate programme for three ships to 2031

Type 31 – good progress with ship 1 superstructure largely complete, ship 2 progressing, ship 3 steel cut

First six months of in-service delivery of the Skynet contract to manage the UK’s military satellite and space operations

LGE record intake of more than £300m

Completed successful docking period for the HMS Queen Elizabeth aircraft carrier

Nuclear

Reopened our Devonport 9-Dock, following a significant regeneration project, critical for the future support of the UK’s CASD

Significant ramp up at Hinkley Point C as we begin to install mechanical and electrical services

Land

Strong operational performance on DSG contract

Awarded an additional contract to build 53 High Mobility Transporter Jackal 3 six-wheeled ‘Extendas’ for the British Army

Awarded several UK military training contract extensions during the period

Launched the new Babcock Immersive Training Experience (BITE) to support individual and collective training

Successfully delivered the transition phases of two new French military land contracts

Aviation

Preferred bidder on MENTOR2, a c.€800m 15-year contract to provide initial pilot training to the French Air Force, Navy and Army

Commenced the 12-year contract to deliver the in-service support of 48 Sécurité Civile and police EC145C2 helicopters

RAF Hades contract extended by two years to provide technical airbase support services across the Armed Forces

Partnered with the RAF to deliver Elementary Flying Training to the Ukrainian Pilot Force as it prepares to fly F-16 jets

Awarded a 10-year renewal with UK Midlands Air Ambulance Charity

1. Alternative Performance Measures (APMs) – notes to statutory and underlying results on page 1:

The Group provides APMs, including underlying operating profit, underlying margin, underlying earnings per share, underlying operating cash flow, underlying free cash flow, net debt, net debt excluding leases and contract backlog to enable users to have a more consistent view of the performance and earnings trends of the Group. These measures are considered to provide a consistent measure of business performance from year to year. They are used by management to assess operating performance and as a basis for forecasting and decision-making, as well as the planning and allocation of capital resources. They are also understood to be used by investors in analysing business performance.

 

12 Nov 24. Elliott Management has built a $5bn stake in Honeywell International, placing its largest ever bet as it looks to break up the $164bn industrial conglomerate. The US activist investor, which revealed its position on Tuesday, wants North Carolina-based Honeywell to split into two businesses: its aerospace division, which supplies aircraft equipment, and automation, which sells tools for warehouses and other plants.  The investment underlines Elliott’s growing number of concentrated bets; it has drawn on its $69bn in assets to take multibn-dollar stakes this year, ranging from $2.5bn in chipmaker Texas Instruments and a $2bn stake in Southwest Airlines. Honeywell’s board and management “acknowledge and appreciate the perspectives of all our shareholders,” a spokesperson said: “Although Elliott had not made us aware of their views prior to today, we look forward to engaging with the firm to obtain their input.” Honeywell’s chief executive, Vimal Kapur, has signed off on $9bn worth of acquisitions since his appointment last year. At the same time, he has moved to divest one of Honeywell’s largest units, the chemical and materials maker Advanced Materials, saying the group would continue to simplify its portfolio to focus on “three compelling megatrends”: automation, the future of aviation and the energy transition. Elliott is seeking to speed up that transformation. “The conglomerate structure that once suited Honeywell no longer does, and the time has come to embrace simplification,” Elliott’s Jesse Cohn and Marc Steinberg said in a letter on Wednesday.  Industry analysts said Honeywell was the last remaining holdout among a group of industrial conglomerates that have already broken up, boosting their valuations. A break-up would follow moves to split other leading industrial groups, including GE’s spin-off of its power and renewable energy business and 3M’s spin-off of its healthcare business.   “Independent businesses come with focused management teams and boards,” said Julian Mitchell, an equity analyst at Barclays. “It’s easier for investors to track trends in those businesses and invest in those stocks.” Honeywell’s shares were up about 4 per cent after news of Elliott’s investment. The stock has lagged the wider market this year, rising 12 per cent since the start of this year while the S&P 500 has risen 26 per cent. (Source: FT.com)

 

12 Nov 24. BAE Systems plc – Market Update.

Highlights:

• Operational and financial performance underpin Group full-year guidance, in line with upgrade at half year
• Solid order intake sustained, with around £25bn booked year-to-date
• Integration of the Space & Mission Systems (SMS) business is progressing as planned with sales accelerating in the second half of the year at Group accretive margins
• Strong visibility in the order backlog and pipeline of incumbent positions supports our long-term growth outlook

Charles Woodburn, BAE Systems Chief Executive, said:

“Our operational and financial performance so far in 2024 reaffirms our confidence in achieving the upgraded full year guidance we issued at the half year. Focusing on operational excellence, contracting discipline and growing our workforce is enabling us to consistently deliver critical capabilities and technologies for our customers worldwide. At the same time, we continue to invest in our business for the long term, which together with our broad geographic and domain diversity, positions us well for continued growth in the years ahead.”

Guidance

The full year 2024 guidance across all metrics is unchanged from the upgraded guidance we provided at the half year results in August.

Guidance is provided on a constant currency basis using an exchange rate of $1.24: £1, which is in line with the actual 2023 exchange rate. The Group operates in a number of currencies, the most significant of which is the US dollar, which is running at an average of approximately $1.29: £1 for the year. As a guide, a 5 cent movement in the £/$ exchange rate impacts sales by c.£500m, underlying EBIT by c.£70m and underlying earnings per share by c.1.3p.

The weighted average number of ordinary shares to calculate full year underlying earnings per share is expected to be 3.01bn.

Order flow

The order intake reflects our government customers’ confidence in our ability to deliver important capabilities to help protect their countries and citizens, with around £25bn of orders secured in the year to date. Notable contract awards in the second half of the year so far include:

• M109 Self-Propelled Howitzers and M992A3 Ammunition Carriers – $493m to continue production, with delivery expected from the second half of 2025 to mid-2026
• Armored Multi-Purpose Vehicles – $184m contract award for 48 additional vehicles for the US Army
• Bradley Fighting Vehicles – contract modification in excess of $440m for additional production, including more than 200 A4 variants
• Multi-mode Aviation Radio Set – five year IDIQ contract with a ceiling value of $460m for US Army rotary aircraft
• USS Halsey modernisation – $178m award for sustainment work on the Arleigh Burke-class guided-missile destroyer in our San Diego shipyard
• Guided weapon components – A$270m to boost production in Australia
• Order intake of around €2.5bn from the Group’s share of our MBDA joint venture

Delivering for our customers

We have maintained our focus on operational performance, with our highly skilled employees continuing to work with partners to deliver critical equipment and services. Maritime and Platforms & Services have continued to account for a higher proportion of growth relative to the other areas of the business.  Key milestones in the second half of the year so far include:

• The successful launch of NASA’s Europa Clipper spacecraft, which will orbit Jupiter and conduct detailed observations of one of its moons using the Europa Thermal Emission Imaging System (E-THEMIS) instrument the SMS team helped to develop
• Testing completed on the primary scientific instrument for the Nancy Grace Roman Space Telescope shipped to NASA’s Goddard Space Flight Center
• Substantial progress made with our Japanese and Italian industry partners towards reaching an agreement on a proposed joint venture to deliver the Global Combat Air Programme (GCAP)
• The sixth Astute Class submarine for the Royal Navy, Agamemnon, launched from our submarines site in Barrow-in-Furness, Cumbria
• A prototype of the European Common Radar System Mark 2 (ECRS Mk) flown on a UK Typhoon aircraft for the first time, supported by our partner Leonardo UK
• The second Type 26 frigate for the Royal Navy, HMS Cardiff, entering the water for the first time in Glasgow

Increasing exposure to major defence growth markets

Defence spending in our major markets remains supportive of our existing programmes and provides a robust pipeline of opportunities across all our sectors. We continue to support our government customers in addressing increasingly varied and complex threats.

Our global footprint, diverse product portfolio, incumbent positions and strong opportunity pipelines on strategically important international programmes, like AUKUS and GCAP, are key competitive advantages.

In the UK, the newly elected government has clearly stated its commitment to strengthening the armed forces and increasing defence spending to 2.5% of GDP. We are actively engaged with the Government on its ongoing Strategic Defence Review, which is due to make recommendations on the nation’s future defence plan in the first half of next year. It has also identified defence as one of eight growth-driving sectors in its upcoming industrial strategy.

In the US, we continue to see bipartisan support for defence and national security.  Our portfolio remains well-aligned with the key priorities outlined in the US National Defense Strategy and US Intelligence Strategy and we continue to see growth opportunities in this market across the medium term.

Beyond the US and UK, our geographic footprint is a differentiator as we support government customers across Europe, the Middle East and Asia Pacific.  Our key markets in these regions are poised for higher defence spending which will provide a platform for diversified growth into the future for the Group.

SMS integration and performance

We have made excellent progress in integrating the SMS business into our US operations.  The business is realising cost synergies, meeting scheduled workforce integration milestones, and holding a series of “synergy summits” which have identified numerous areas for collaboration to drive future revenue opportunities.

SMS second half sales are progressing in line with our expectations as set out at the half year.  The business is delivering group-accretive margins and the order backlog and pipeline support achieving our target of 10% annual sales growth in the medium term.

Investing in our business for the long term

In support of our growth outlook, and to help our customers stay ahead of evolving threats, we continue to invest in our people, facilities and technology.

By the end of October 2024, our global workforce increased by approximately 7,500 employees, including 1,260 apprentices and 1,000 graduates and undergraduates recruited in the UK, together with more than 5,000 employees who joined the Group as a result of the Ball Aerospace acquisition.

We expect self-funded Research & Development to increase compared to 2023 and have acquired UK cyber and electromagnetic activities company, Kirintec, since the half year, as we continue to complement our portfolio to deliver technology-enabled products to meet our customers’ current and emerging operational challenges.

In Glasgow, our new Applied Shipbuilding Academy has opened to develop and train our Maritime workforce, and the new Janet Harvey shipbuild assembly hall is on schedule to be fully operational in 2025.

We have also announced our intention to invest £220m to establish a new state-of-the-art advanced technology factory in Rochester, UK, which will increase the capacity of our Electronic Systems business and create 300 new jobs over the next five years.

Balance sheet and capital allocation

The Group’s balance sheet remains strong. The 2024 interim dividend of 12.4 pence per share will be paid on 2 December 2024 and we are maintaining a good cadence on the up to £1.5bn share buyback programme announced in August 2023, which commenced on 25 July 2024. Total cash returned to shareholders this year (including the 2023 final dividend) is expected to be c.£1.4bn.

2024 Preliminary Results

BAE Systems will announce its preliminary results for the year ending 31 December 2024 on 19 February 2025.

Shore Capital has published a research note on BAE Systems’ Trading Update this morning. See a summary of the key points below and the full note attached.

Jamie Murray, Equity Analyst, said: “BAE has published a trading update ahead of its results scheduled for 19 Feb-23 Financial information about ytd trading was limited, but management states  that performance underpins the full year outlook, which was unchanged. Looking to outer years, the defence market remains supportive, however, BAE’s order intake of £25bn looks a little light, which may cause downward pressure on the shares this morning. We reiterate our HOLD recommendation”

• No material financial information was provided about ytd trading

Outlook and guidance: BAE says “operational and financial performance underpins Group full year guidance,” which is unchanged from the half year. Sales and EBIT are expected to increase by 12-14%, EPS is expected to increase by 7-9% and free cash flow is expected to be over £1.5bn. Order intake of £25bn exceeds our pro-rated ytd sales estimate (c£24bn), which indicates a book-to-bill narrowly above the 1x threshold. Whilst this reflects increasing demand for its products, it is slightly light given BAE’s leading position in the defence market. That said, the threat environment remains supportive for BAE, with the Labour government committed to spending 2.5% GDP on defence and Trump winning the Presidential election. The weakness of USD vs GBP, however, is expected to be a headwind given BAE’s significant exposure to the US market. We do not anticipate material changes to our forecast given we are just below the lower end of the guidance range

Valuation: BAE Systems is a well-managed company with exposure to global defence markets, which have structural tailwinds. That said, this update reflects order intake slightly lower than we would expect, which might disappoint some investors. As a result, we expect the shares to trade flat or modestly down following today’s update. We reiterate our HOLD.

 

11 Nov 24. Trump’s ‘isolation’ stance boosts European defence stocks. Rheinmetall’s shares have increased five-fold since Russia’s invasion of Ukraine.  European defence shares rallied following the election of Donald Trump as US president, as investors bet that his more isolationist stance would force governments on this side of the Atlantic to beef up their security.

Shares in BAE Systems (BA) closed up 4 per cent on the day the result was announced, while Italy’s Leonardo (IT:LDO) and Germany’s Rheinmetall (DE:RHM) were up 3 per cent.

Trump “has repeatedly said that he could settle Russia’s invasion of Ukraine in his first day”, said Axa Investment Institute’s head of macro research, David Page. “We fear that this risks forcing a settlement on Ukraine by removing military support,” he added.

Such a move would face stiff opposition from European leaders but Trump’s animosity to Nato could lead to him “once again threaten to abandon the alliance to get Europeans to sign up to a deal with Putin,” said Stefan Wolff, professor of international security at the University of Birmingham.

If European nations decided to continue backing Ukraine, compensating for the reduction of US military support “could cost the EU an additional 0.5 per cent of GDP per year”, according to Goldman Sachs. European defence shares have substantially re-rated following Russia’s invasion of Ukraine in February 2022. BAE Systems shares have doubled in value, Leonardo shares have quadrupled and Rheinmetall’s shares have increased five-fold.

Analysts at Citi moved the sector to neutral earlier this year. Charles Armitage, director for European aerospace and defence at the bank, told the IC that some of the” very high growth” companies in the sector – those making land-based systems, air defences and radar – had begun to look fully priced. Valuations have weakened in recent months, though, and following Trump’s election, he expects “significant volatility’ in European defence shares in the coming months. Even in a scenario where the Ukraine war does end quickly, other drivers for defence stocks won’t go away.

“The wider threat environment is significantly higher than it was pre-Ukraine, and it’s not going to stop with a ceasefire,” said Shore Capital analyst Jamie Murray.  (Source: Investors Chronicle)

 

11 Nov 24. Nmi Group announces the acquisition of ExVeritas. NMi Group, internationally recognised for mission-critical Testing, Inspection, Certification, and Calibration (TICC) services for product market acceptance, announced the strategic acquisition of ExVeritas. This move substantially strengthens NMi’s Market Access capabilities, particularly in the specialised field of product safety certification for hazardous environments. This mandatory certification needs to be obtained for products used in areas where gas, vapor or dust explosions can occur and applicable in various end markets where many of NMi’s clients operate, such as Energy & Utilities, Food & Agri and Industrial & Manufacturing. The acquisition aligns with NMi’s commitment to enhancing safety worldwide.

Founded in 2005, ExVeritas plays an essential role in the certification landscape with subsidiaries in the United Kingdom, Denmark, and the United States. ExVeritas is a designated UKCA Approved Body (2585) and European Notified Body (2804), holding accreditations for UKCA (Ex) and ATEX in Europe. It is also recognised under the global IECEx scheme, and its US operations are accredited as an Associated Test Lab and accepted as an Independent Laboratory by the United States Coast Guard (USCG). These comprehensive certifications enable ExVeritas to facilitate global market access. Led by founders Sean Clarke and Stephen D’Henin, along with regional co-founders Luke Ricks in the US and Peter Lauritzen in Denmark—who will continue guiding ExVeritas post-acquisition—the company provides specialised services, including ATEX/IECEx type approval, management audits, training, and inspection.

This acquisition marks a significant advancement in NMi’s strategy to enhance service offerings and expand its geographical footprint. Importantly, it simplifies the certification process for our shared client base. By uniting NMi and ExVeritas, we can offer clients a streamlined approach to securing essential product safety certifications, accredited and certified to UKCA, DANAK, ATEX, IECEx, and USCG standards, making market access more efficient and straightforward.

Yvo Jansen, CEO of NMi, stated: “Partnering with ExVeritas and their solid global expertise is a landmark development in our efforts to enlarge our reach and capabilities in our market access services. The expertise of ExVeritas directly enhances our portfolio, addressing a specific market need for rigorous safety certifications required by OEMs, Installers, and End-Users to access the global market and drive product safety. Following our earlier expansion into Cybersecurity with the acquisition of TrustCB, this new collaboration further broadens NMi’s service offerings, now covering Metrology, Cybersecurity, and Product Safety.”

Sean Clarke, co-founder of ExVeritas, commented: “Joining NMi Group opens significant avenues for ExVeritas to scale our operations more effectively. Powered by NMi means joining a team with a proven strategic vision and ambition, leveraging their international reputation and technical expertise, thereby allowing us to focus on ExVeritas’ continued growth. This collaboration will enhance our ability to deliver expanded services and meet the complex safety standards our clients require in hazardous environments.”

The acquisition is a key component of NMi’s buy-and-build strategy and aligns seamlessly with our mission in ‘Measuring Tomorrow.’ This approach emphasises forward-thinking solutions to global market challenges, focusing on sectors that demand robust safety certifications. ExVeritas’s strong market presence and its reputation as a trusted certification body are crucial for advancing NMi’s objectives in both new and existing markets, enabling us to further expand our valued and flexible service offerings to meet our clients’ evolving needs.

 

05 Nov 24. GlobalData: Apple’s billion$ deal with Globalstar will change the D2D satellite game.

Following the news that Apple plans to invest $1.1bn in satellite communications company Globalstar alongside a further $400m for a 20% equity stake in the business, Emma Mohr-McClune, the Chief Analyst, Technology, at GlobalData, offers her view…

“According to GlobalData, this prospective deal packs a competitive punch for virtually all corners of the connectivity market ecosystem, from carriers to OEMs. This is arguably the largest and most significant consumer OEM low Earth orbit (LEO) deal to date, and the arrangement puts Apple in a clear leading position among western OEMs for extended direct and mass-market voice satellite texting and even calling services for both emergency and remote use cases.

“In addition to continuing to allocate 85% of its network capacity to Apple, Globalstar will use the $1.1bn in preservice payments to deliver a new satellite service constellation, expanded ground infrastructure, and increased global mobile satellite services (MSS) licensing. The new arrangement represents a significant expansion of an earlier 2022 deal, which first gave iPhone 14 users access to Globalstar’s 31 L-band satellites for emergency text services – a service which has since been extended to remote or off-grid use cases with iOS 18.

“The Apple-Globalstar arrangement also lowers the incentive for mobile network operators to strike their own deals with satellite providers for connectivity. There is now no doubt that Apple iPhone users are likely to have faster, readier access to more sophisticated and extended D2D use case services regardless of their wireless connectivity provider.

“It can no longer be claimed that Apple has no interest in the connectivity business. On the downside, Apple’s B2C direct monetization plans for this investment are still hazy, and premium plans are likely still several quarters out. The OEM will probably continue to offer free satellite communications services with iPhone hardware in the short term, or at least until the end of 2025 for iPhone 14 users under the terms of the recent one-year extension on the original two-year free inclusive offer.”  (Source: Satnews)

 

03 Nov 24. Airbus Space, “Merger with Thales-Alenia possible” as rivals combine expertise. Aerospace giant Airbus Defence & Space CEO Guillaume Faury told analysts that he would prefer to merge all of its Space Division with rival satellite specialist Thales Alenia Space’s similar activity. However, he added that if Europe’s anti-trust and political regulators found that difficult to approve, then Airbus would slice merger transactions into small pieces to make a combination more palatable.

“There are many ways of skinning the cat,” he told analysts. “Our space activity, when it comes to satellites, is a diverse one. We have telecoms, military satcoms, exploration, science, Earth observation. “Ideally we find solutions that could cover all the segments, but we could find solutions that are a bit subscale.”

Faury, speaking at the company’s 9-month results announcement, said that the space industry in Europe was undergoing major challenges and needed to transform itself.

Airbus’s Space division reported a 7.2 per cent fall in revenues when compared to a year previous to €1.445bn. (Source: Satnews)

 

08 Nov 24. Cicor acquires NEP, in talks to acquire German EMS firm. The acquisition of Nordic Engineering Partner gives Cicor a presence in Sweden, one of Europe’s leading markets for advanced electronics in healthcare tech, industrial and aerospace & defence sectors.

Cicor Group has acquired the Swedish development company Nordic Engineering Partner AB, establishing a significant presence in the Nordics. Additionally, Cicor is in advanced negotiations to acquire another German EMS provider, according to a media release.

The acquisition of Nordic Engineering Partner (NEP) AB gives Cicor a presence in Sweden, one of Europe’s leading markets for advanced electronics in the healthcare technology, industrial, and aerospace and defence sectors. The four engineering offices in the Stockholm area offer customized development services and prototype production for complex electronic systems.

NEP has an attractive customer base in Cicor’s target markets which, together with Cicor’s existing customers, provides a strong platform for further growth, Cicor said in a media release. NEP has 45 employees and generated sales of SEK 52 m with an attractive operating margin in the last financial year ended 30 June 2024.

Cicor aims to become the leading pan-European electronics developer and manufacturer in key sectors like healthcare technology, aerospace/defence and industrial, the company announced in its ‘Strategy 2028’ this week.

Following the acquisition of Evolution Medtech (Bucharest, Romania) earlier in 2024, the acquisition of NEP again doubles Cicor’s product development capacity and significantly broadens the portfolio of capabilities.

The shareholders and management of NEP will stay part of the team to support further development in alignment with Cicor’s growth strategy, the media release said. As part of the Cicor Group, NEP will continue to operate all sites in Sweden unchanged and with the existing staff, maintaining a clear focus on growth in Sweden, Norway and Finland.

The target company in Germany is a service provider for the development and manufacturing of electronic assemblies and systems. Its long-standing customers include medium-sized companies and leading corporations, mainly in the industrial electronics and medical technology sectors.

With its state-of-the-art machinery, excellent infrastructure, and further expansion reserves, this acquisition is an ideal next step in Cicor’s growth strategy in Germany, Europe’s largest electronics market. In the last financial year, the German company generated sales between EUR 20-30 m with an operating margin at the level of the Cicor Group. The transaction is expected to be signed in the coming weeks, subject to the usual regulatory and other closing conditions and is expected to be completed in early 2025.  (Source: Google/https://evertiq.com/news/56724)

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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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