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21 Nov 24. Geospace Technologies Corporation (NASDAQ: GEOS) (“the “Company”) today announced a net loss of $6.6m after fourth quarter non-cash charges of $17.3m on revenue of $135.6m, for its fiscal year ended September 30, 2024. This compares with net income of $12.2m on revenue of $124.5m for the comparable year-ago period. Excluding the non-cash charges, fiscal year 2024 adjusted net income is $10.7m. This compares with adjusted net income of $12.2m for the comparable year-ago period.
For the fourth quarter ended September 30, 2024, the Company reported a net loss of $12.9 on revenue of $35.4m. This compares with net income of $4.4m on revenue of $29.3m for the comparable year-ago period. Excluding the non-cash charges, adjusted net income is $4.4m for the fourth quarter ended September 30, 2024. This compares with adjusted net income of $4.4m for the comparable year-ago period.
During fourth quarter ended September 30, 2024, the Company recorded a non-cash charge of $14.5m from the divestiture of its Russian legal entity and a $2.8m charge from an impairment of intangible assets. The divestiture of the Russian legal entity has virtually no effect on the Company’s net assets as most of the charge came from cumulative unrealized foreign currency translation losses previously recorded within shareholders’ equity.
Management’s Comments
Richard J. (“Rich”) Kelley, President and CEO of the Company said, “We started the fourth quarter of fiscal year 2024 strongly with significant contributions from our Oil and Gas Markets segment with more than $20m in sales and rental announcements for our OBX seabed nodes in August. This followed a trend for the fiscal year of multi-million-dollar contracts for this product line and contributed to an overall increase in revenue from the prior fiscal year.
In our Adjacent Markets segment, we enjoyed a record-setting year for our Hydroconn® line of smart water meter cables. The market continues to recognize our leading technology and resulting growth outpaces the industry. We also had our first successful international sale of our Aquana products. The Aquana product line generates further traction in smart water markets, for both municipal and multi-family residential applications. We believe that our focus on Smart Water going forward will continue to drive growth for the organization.
While the financials indicate a net loss for the year due to two non-cash charges, we are pleased to have 24-months of consecutive adjusted net income, indicating our core business remains profitable. While examining the increasing conflict in Ukraine and potential complications with Russian sanctioned entities, management and the board of directors determined the most prudent action would be to divest of our Russian entity. This divestment resulted in a loss which had minimal effect on the value of the net assets of the Company. Additionally, our fiscal year financial reporting reflects another one-time charge related to a non-cash intangible asset impairment related to our subsidiary, Quantum Technology Sciences.
This announcement will be the last time we will report earnings with these business segments of Oil and Gas Markets, Adjacent Markets and Emerging Markets. Beginning with our release in early February, we will provide financial information using our three new business segments announced in September – Smart Water, Energy Solutions, and Intelligent Industrial.
Other highlights of note this year included the Company’s addition in the Russell stock indexes, the Russell 2000®, Russell 3000®, and Russell Micro-Cap® Index.
Lastly, we would like to thank Rick Wheeler, our outgoing CEO. Rick dedicated almost 30 years to Geospace, leading the company through successful and tumultuous times in the industry. His guidance and foresight provided stability and opportunities for growth through diversification. His management and leadership allowed Geospace to remain a strong presence in the seismic equipment market while taking advantage of their Engineering and manufacturing capabilities to explore new opportunities in adjacent markets. Rick will remain as a member of the board of directors and we wish him all the best in his retirement.”
Oil and Gas Markets Segment
Revenue from the Company’s Oil and Gas Markets segment totaled $17.5m for the three months ended September 30, 2024. This compares to $17.8m in revenue for the same period a year ago. For the fiscal year, revenue from this segment totaled $77.5m versus $74.0m for the same prior year period for an increase of 5%. The insignificant decrease for the three-month period is due to increased sales of our OBX nodal products from our rental fleet offset by lower utilization of our ocean bottom node rental fleet. The twelve-month increase in revenue is due to increased sales of ocean bottom nodal products like the Mariner and from our rental fleet, offset by lower utilization of our ocean bottom node rental fleet and lower demand for seismic sensors and marine products.
Adjacent Markets Segment
For the 3-month period ended September 30, 2024, revenue from the Company’s Adjacent Markets segment totaled $17.6m for an increase of 65% when compared to $10.6m from the same prior year period. Revenue from the twelve-month period was $55.6m an increase of 13%, when compared to revenue from the same prior year period of $49m. The increase for the three-month period is due to strong sales of Hydroconn®, the Company’s smart water meter cable and connector products and initial sales from the Aquana product line. The increase in the 12-months period is the result of increased sales of the Company’s smart water meter cable and connector products. The fourth quarter of fiscal year 2024 was the highest level of quarterly revenue for Hydroconn® as well as fiscal year 2024 produced the highest annual revenue for the product line.
Emerging Markets Segment
The Company’s Emerging Markets segment generated revenue of $0.2 m and $2.2m for the three-month and full year periods ended September 30, 2024. This compares with $0.8m and $1.2m for the similar three- and twelve-month periods of the previous year. (Source: BUSINESS WIRE)
21 Nov 24. IAI North America Selects Three Startups for the Second Cohort of Their IAI CATALYST Accelerator Program. IAI North America, a U.S. subsidiary of Israel Aerospace Industries, has selected the next three startup companies for the second cohort of its IAI CATALYST program, powered by Starburst: Dalus, Lola Vision Systems, and Nefeli Air. Operating out of IAI North America’s Innovation Center in Herndon, VA, IAI CATALYST initiated by IAI CTO’s office, is an accelerator program designed to help startups further develop their technology and gain success in the U.S. market.
About the IAI CATALYST Cohort 2 Startups:
Dalus: Dalus is building next-generation model-based systems engineering (MBSE) software to empower mission-critical industries like aerospace and defense to integrate complex hardware systems seamlessly. (dalus.io)
Lola Vision Systems: Lola Vision Systems is a fabless semiconductor company focused on AI silicon for autonomous machines, whose mission-critical computer vision and generative AI solutions target the automotive, aerospace, and defense sectors. (lolavisionsystems.com)
Nefeli Air: Nefeli Air is driving the development of fully autonomous aircraft by leveraging AI technology to create software that enables the identification of aerial obstacles, serving both commercial and defense clients. (nefeliair.com)
“Cohort 1 of the IAI CATALYST accelerator set a high standard of success for future cohorts. IAI’s goal for a U.S. innovation center is to foster cutting-edge technological growth in the aerospace and defense industries by investing in startups trying to break into the market. The startups chosen for Cohort 2 will bring game-changing technology to the U.S. market. We look forward to seeing how these three startups grow with our mentorship.” – Eytan Eshel, Bg (Res.) Executive VP, CTO Israel Aerospace Industries
“IAI North America’s innovation center is important because it fosters innovative development in the aerospace industry from companies who might not have the support to break into the market otherwise. We hope to expand upon the success of Cohort 1 and position these startups to surpass their goals and be successful in this competitive market.” – Stephen A. Elliott, President and CEO of IAI North America
Learn more about IAI CATALYST and apply for future cohorts of the program at: https://catalyst.iainorthamerica.com
Israel Aerospace Industries (IAI):
Israel Aerospace Industries (IAI) is a world-class aerospace and defense company innovating and delivering state-of-the-art technologies in space, air, land, naval, cyber & homeland security for defense and commercial markets. Combining the “Start-up Nation” spirit of innovation with decades of combat-proven experience, IAI provides customers with tailor-made, cutting-edge solutions to the unique challenges they face including satellites, UAVs, missiles, intelligence solutions, weapon systems, air defense systems, robotic systems, radars, business jets, aerostructures, and more. Established in 1953, IAI is one of Israel’s largest technology employers with offices and R&D centers in Israel and abroad.
IAI North America:
IAI North America is the U.S. subsidiary of Israel Aerospace Industries Ltd. (IAI), Israel’s largest aerospace and defense company. IAI is a global leader in space and defense for government, military and commercial applications with battle-tested systems and technology. For over 70 years, IAI has developed and manufactured state-of-the-art systems for air, space, sea, land, cyber, and homeland security. IAI North America leverages IAI’s innovative solutions to create cutting-edge Americanized solutions for our customers and industry partners.
Starburst:
Founded in 2012, Starburst is an innovation catalyst in the global Aerospace and Defense (A&D) industry. Combining three complementary activities – startup accelerators, strategy consulting, and venture investments – they help A&D stakeholders innovate, navigate and invest in the dynamic ecosystem. With offices in Los Angeles, Paris, Munich, Singapore, Seoul, Tel Aviv, Madrid, and Washington DC, the team has built a robust community with 60+ partners and a portfolio of 150 startups. Starburst’s leading Flagship Accelerator program helps startups scale their business in aviation, space, and defense, as well as enabling technologies, with access to one of the largest groups of corporate representatives, government stakeholders, and private investors in the world to help startups win their first contracts.
(Source: BUSINESS WIRE)
21 Nov 24. IAI declares the most profitable period in its history. Publishing its financial statement for the third quarter (Q3) of 2024 on 21 November, Israel Aerospace Industries (IAI) has declared itself to be marking the most profitable period in the company’s history.
IAI reported a 74% increase in net income in the nine months ending on 30 September 2024 (the reporting period) to about USD 416m (EUR 395) compared with about USD 239m for Q3 2023: the most profitable nine-month period in its history. An increase in net income to about USD 122 m in Q3 2024 compared with about USD 74m in Q3 2023.
Quoted in a company press release, IAI Chairman of the Board Amir Peretz stated, “It is with great satisfaction that I report on the three best years at Israel Aerospace Industries since company’s establishment. Building on outstanding performance in 2022 and 2023, today we conclude another three quarters of exceptional business activity. I am also proud to reflect upon my three years in office, years in which we strengthened IAI’s position as a national and international leader in defense technology and civilian aviation. During this period, IAI achieved an unprecedented order pipeline valued at some USD 25bn, with breakthrough projects in strategic markets worldwide.”
The order backlog at the end of 2023 was about USD 18bn, meaning there has been an increase of around USD 7bn.
IAI saw a 33% growth in EBITDA in the reporting period to about USD 646m compared with about USD 487m in the corresponding period of last year, while operating income grew in the reporting period to about USD 431m (about 9.8% of sales) compared with operating income of about USD 292m (about 7.5% of sales) in the corresponding period of last year.
Gross profit growth in the reporting period to about USD 836m (about 19% of sales) compared with about USD 682m (about 18% of sales) in the corresponding period of 2023.
Boaz Levy, IAI’s president and CEO, stated, “At this challenging time, as the State of Israel faces a war on multiple fronts and IAI systems play a critical role defending the country, these business results reflect an additional layer of the state’s economy.”
The operating income of the military groups within IAI for the nine months to the end of September 2024 was about USD 367m compared with about USD 272m for the corresponding period of 2023. The operating income of IAI’s Aviation Group for the same period amounted to about USD 49m compared with operating income of about USD 32m in the corresponding period of 2023.
Levy added, “The large-scale contracts we have signed with our overseas customers illustrate the deep business relations we have cultivated and a recognition of Israel’s technological superiority. We have achieved this despite this period of national crisis, maintaining supply chain continuity and expanding our international relations.”
Originally founded in 1953 as Bedek Aviation Company, state-owned IAI is Israel’s largest aerospace and defence enterprise. (Source: Google/ESD)
21 Nov 24. Denel still facing financial and operational challenges in spite of bailouts – Auditor General.
In spite of recent bailouts, Denel is making slow progress on implementing its turnaround strategy, something compounded by going concern and financial sustainability challenges.
This is according to the Auditor General of South Africa (AGSA), which on 19 November briefed the Standing Committee on Public Accounts (SCOPA) on audit outcomes of the Departments of Defence and Military Veterans, and Denel.
In its presentation to SCOPA, the AGSA found that Denel is experiencing significant challenges relating to liquidity constraints and cash flow challenges resulting to the entity being unable to pay its debts as they become due.
It added that Denel is experiencing net operating losses and operational difficulties including “significant challenges in implementation of major revenue projects including loss of considerable market share to its international competitors and with some major customers cancelling their contracts with the entity, others imposed significant penalties.”
Skills and capacitation constraints are affecting the state-owned company as it has lost skilled staff due to a lack of job security, and implementation of Section 189 retrenchments.
On the information technology (IT) side, Denel “has not been able to do any capital infrastructure investments in the recent years. The entity operates on ageing IT infrastructure and inadequate IT environment which continues to negatively impact its operations,” the Auditor General found.
This is in spite of recent bailouts, including a R3.4bn cash injection in the 2022/23 financial year, with a total of R2.4bn (70% of the total bail-out money) utilised by the end of the 2023/24 financial year.
However, as at 31 March 2024, Denel had not been able to access roughly R900 million of the bailout funds due to unmet bailout conditions.
Of the R2.4bn utilised, 5% was used towards the restructuring turnaround implementation plan and the rest was utilised to pay legacy debts including SARS.
“With majority of the bailout spent on legacy creditors, no alternative funding models/strategies have been identified by management to fund the successful implementation of the turnaround plan,” the Auditor General warned, adding that Denel “does not have sufficient funds available to fund the turnaround strategy. A portion of the recapitalisation is still locked due to conditions not met.”
Furthermore, Denel has not been able to continue with the sale of non-core assets to unlock the funds needed to implement the turnaround strategy.
“The entity’s financial and operational challenges are posing a threat on the entity’s financial sustainability and its ability to continue as a going concern and risk an additional pressure to the fiscus,” the AGSA said.
It gave a list of recommendations, including accountability and commitment by the board, more efficient execution of initiatives, rebuilding internal workforce capacity, preserving institutional knowledge, and timeous submission of annual financial statements.
The Auditor General said the Denel 2023/24 audit is outstanding as Denel has not yet submitted its 2023/24 annual financial statements – these are only expected on 30 November.
To SCOPA, the Auditor General recommended Denel fall under a sustainable state-owned enterprises funding model that does not rely on additional recapitalisation. It encouraged the Department of Defence and National Treasury to monitor the progress made on implementation of the turnaround strategy, and the fast-tracking of the rationalisation of state-owned entities. (Source: https://www.defenceweb.co.za/)
20 Nov 24. Booz Allen Hamilton (NYSE: BAH) today announced that its corporate venture capital arm, Booz Allen Ventures, LLC, has made a strategic investment in Reality Defender, a cybersecurity company specializing in deepfake and synthetic media detection that leverages advanced AI to identify and combat AI-generated threats ensuring the integrity of digital content in today’s software-defined world.
“Sophisticated AI models are increasingly being used to manipulate and deceive, posing a real risk ranging from the battlefield and research labs to financial systems and communities nationwide”
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This investment enhances critical AI and cyber efforts at Booz Allen, recently recognized by GovWin from Deltek as the leading provider of both AI and cybersecurity for the U.S. federal government, and reflects the firm’s commitment to fostering responsible, secure, and trustworthy AI solutions that protect citizens, government, and commercial clients from evolving digital threats, misinformation, and deepfakes in real time.
“Sophisticated AI models are increasingly being used to manipulate and deceive, posing a real risk ranging from the battlefield and research labs to financial systems and communities nationwide,” said Matt Keating, head of AI security at Booz Allen. “To combat these threats, we need tools to validate and secure multimodal content, such as videos, images, audio recordings, and phone calls. Reality Defender meets this need, offering a proven solution for verifying data integrity and using AI to actively counter disinformation, ensuring AI systems remain responsible, secure, and trustworthy.”
Reality Defender, named “Most Innovative Startup” at the 2024 RSA Conference, offers a purpose-built detection platform delivering real-time protection against synthetic media threats and impersonations, offering scalable and customizable solutions for government, enterprise, and institutional clients. Using advanced AI tools, the platform effectively combats identity-based fraud and ensures media authenticity across multiple modalities. Designed to meet the rigorous demands of mission-critical applications, Reality Defender helps safeguard against evolving risks posed by AI-generated content.
“Booz Allen’s leadership in AI security and deep expertise in supporting critical missions will enable Reality Defender to expand our impact at a time when securing communications against deepfakes is paramount,” said Ben Colman, co-founder and CEO of Reality Defender. “Together, we are positioned to counter emerging AI-driven threats and secure communications from the growing risks of synthetic media.”
Since launching in 2022, Booz Allen’s $100m corporate venture capital arm has made strategic investments in early-stage companies developing dual-use commercial technologies and Reality Defender joins a strong stable of past AI-related investments: Credo AI, (responsible AI); HiddenLayer (secure AI); LatentAI (AI data compression); Reveal Technologies (real-time route planning/mapping); RAIC Labs (previously Synthetaic, synthetic data generation and testing) and more, resulting a comprehensive suite aimed at fostering ethical AI adoption across sectors in support of our clients’ mission of national importance. Additional Ventures investments include Hidden Level, Shift5, Hidden Layer, Second Front (2F), Albedo, Quindar and Starfish.
“This investment reinforces our mission to identify, field, and deploy dual-use technologies for good, leading to technological advantage for the U.S. and our partners. There is so much promise in AI, but we need to ensure it’s deployed responsibly and securely, and that it’s trustworthy—it can’t be tech for tech’s sake, but rather tech to enhance citizens’ everyday lives—not put them at jeopardy,” said Wes Blackwell, managing director of Booz Allen Ventures. “With Reality Defender’s industry-leading deepfake detection capabilities, we are further enhancing our AI and cyber portfolios, and are able to provide our clients the assurance that digital interactions remain trustworthy and secure, safeguarding public and commercial interests against misinformation and fraud.”
(Source: BUSINESS WIRE)
20 Nov 24. Palladyne AI Corp. (NASDAQ: PDYN and PDYNW) (“Palladyne AI”), a developer of artificial intelligence software for robotic platforms in the commercial and defense sectors, today announced an expanded partnership with Red Cat Holdings, Inc. (NASDAQ: RCAT) (“Red Cat”) and its Teal Drones subsidiary (“Teal”), a drone technology company integrating robotic hardware and software for military, government, and commercial operations. The broadened relationship includes joint go-to-market activities to be coordinated between the companies.
“Furthermore, we congratulate them on their selection as the winner of the U.S. Army’s SRR Program of Record. This contract is extremely well-deserved as Teal sUAS systems exhibit superior capabilities across the board and particularly for complex military operations.”
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In early October, Palladyne AI and Red Cat announced that they had partnered to embed Palladyne AI’s artificial intelligence software into Teal drones, including those already in the field, to enable autonomous operation and expand drone system capabilities to facilitate the creation of a network of collaborating drones and sensors that self-orchestrate to provide superior intelligence, surveillance, and reconnaissance capabilities. Palladyne AI and Teal’s expanded partnership will include joint sales and marketing for Palladyne AI’s artificial intelligence software on Teal drones. Palladyne Pilot is expected to be available on all Teal drones and will be included in new drones shipped to customers who desire the features and functionality provided by the platform.
Red Cat recently announced it was selected as the winner of the U.S. Army’s Short Range Reconnaissance (SRR) Program of Record after a rigorous test and evaluation process for its Teal next generation sUAS, designated as the Black Widow and WEB. The testing and evaluation were completed by the Army Project Management Office for Uncrewed Aircraft Systems, Army Maneuver Battle Lab, and Army Test and Evaluation Command, and the award was based on soldier feedback, technical performance, volume manufacturability, and system cost. The production contract anticipates deliveries beginning in 2025. Palladyne Pilot is expected to be available for all sUAS systems delivered to the Army.
“We are extremely proud to be working with Teal on integrating our Palladyne Pilot artificial intelligence software into Teal’s drones and look forward to this expanded relationship to help deliver a best-in-class experience for their defense, public safety, and commercial customers,” said Ben Wolff, CEO, Palladyne AI. “Furthermore, we congratulate them on their selection as the winner of the U.S. Army’s SRR Program of Record. This contract is extremely well-deserved as Teal sUAS systems exhibit superior capabilities across the board and particularly for complex military operations.”
For more information about Palladyne AI, please visit www.palladyneai.com or connect with us on LinkedIn at www.linkedin.com/company/palladyneaicorp. For more information about Red Cat and its Teal drone program, please visit https://redcat.red.
About Palladyne AI Corp.
Palladyne AI Corp. (NASDAQ: PDYN) has developed an advanced artificial intelligence (AI) and machine learning (ML) software platform poised to revolutionize the capabilities of robots, enabling them to observe, learn, reason, and act in a manner akin to human intelligence. Our AI and ML software platform empowers robots to perceive variations or changes in the real-world environment, enabling them to autonomously maneuver and manipulate objects accurately in response.
The Palladyne AI software solution operates on the edge and dramatically reduces the significant effort required to program and deploy robots enabling industrial robots and collaborative robots (cobots) to quickly achieve autonomous capabilities even in dynamic and or complex environments. Designed to achieve precise results with minimal training time, limited data sets, and lower power requirements, compared to current solutions, Palladyne AI believes its software has wide application, including in industries such as automotive, aviation, construction, defense, general manufacturing, infrastructure inspection, logistics and warehousing. Its applicability extends beyond traditional robotics to include Unmanned Aerial Vehicles (UAVs), Unmanned Ground Vehicles (UGVs), and Remotely Operated Vehicles (ROVs). Palladyne AI’s approach is expected to elevate the return on investment associated with a diverse range of machines that are fixed, fly, float, or roll.
By enabling autonomy, reducing programming complexity, and enhancing efficiency, we are paving the way for a future where machines can excel in tasks that were once considered beyond their reach.
For more information, please visit www.palladyneai.com and connect with us on LinkedIn at www.linkedin.com/company/palladyneaicorp.
About Red Cat, Inc.
Red Cat (Nasdaq: RCAT) is a drone technology company integrating robotic hardware and software for military, government, and commercial operations. Through two wholly owned subsidiaries, Teal Drones and Flightwave Aerospace, Red Cat has developed a bleeding-edge Family of ISR and Precision Strike Systems including the Teal 2, a small unmanned system offering the highest-resolution thermal imaging in its class, the Edge 130 Blue Tricopter for extended endurance and range, and FANG™, the industry’s first line of NDAA compliant FPV drones optimized for military operations with precision strike capabilities. Learn more at www.redcat.red. (Source: BUSINESS WIRE)
21 Nov 24. Cohort plc (AIM: CHRT), the independent technology group, has entered into a conditional sale and purchase agreement to acquire the entire issued share capital of EM Solutions Pty Ltd which holds all of the issued share capital in EM Solutions (Europe) B.V. (together “EM Solutions”) from Electro Optic Systems Holdings Limited, an Australian public company which is listed on the Australian Securities Exchange (ASX: EOS) (the “Seller” or “EOS”), for an enterprise value of AUD$144.0m (c.£75.0m), subject to customary post-completion adjustments (the “Acquisition”).
Acquisition highlights
• Proposed acquisition of EM Solutions, a leading Australia-based developer and producer of high-end SATCOM terminals for global naval and defence customers
• Acquisition consideration is to be satisfied from Cohort’s existing cash resources and debt facility and a placing of new ordinary shares (see separate announcement)
• EM Solutions will operate as the seventh stand-alone business within the Group, reporting through the Communications and Intelligence Division
• Completion of Acquisition expected by calendar year end
Acquisition rationale
• Enhance and diversify the Group’s proposition with a complementary defence communication offering
• Gain exposure to naval surface vessel SATCOM market which has strong structural growth drivers
• Further broaden the Group’s naval systems offering
• Accelerate EM Solutions’ growth with enhanced position in UK, NATO Europe, Asia and South America
• Strengthen Cohort’s presence in Australia, a key growing strategic region for the Group
Financial highlights of the Acquisition and Placing
• Materially accretive to adjusted EPS in first full financial year of ownership (2025/26) and onwards
• Tax adjusted Return on Invested Capital (“ROIC”) is expected to exceed WACC in the third full financial year post Completion (2027/28)
• EM Solutions achieved revenues of AUD$43.1m1 and EBIT of AUD$11.5m in the year ended 31 December 2023
• EM Solutions adds an order book of AUD$175.4m (£91.4m)2, as at 30 September 2024, taking Group pro forma order book to over £650m 2
Following Completion, Cohort’s pro forma net debt/EBITDA for the financial year ending 30 April 2025 is expected to be less than 1.0x, maintaining a strong balance sheet and liquidity
1EM Solutions CY23A financials normalised to remove the contribution of the non-core Documentation services under the SEA1442 contract which generated c.AUD$14.1m in revenue in CY23A2; Assumed GBP/AUD of 1.92
Placing and Retail Offer (as separately announced)
• Cohort separately today announces a fully underwritten non-pre-emptive placing to institutional investors to raise gross proceeds of £40 m (the “Placing”), the net proceeds of which will be used to partially fund the Acquisition
• Additional offer up to £1m via PrimaryBid to facilitate retail participation (the “Retail Offer”) (together with the Placing the “Fundraise”)
Andy Thomis, Chief Executive of Cohort plc, commented: “The proposed acquisition of EM Solutions in Australia is highly complementary and is in line with our stated strategy to accelerate growth by making targeted acquisitions in the UK and overseas. Australia is an increasingly important strategic region, reflecting the increased security challenges in the Indo Pacific, and the creation of the AUKUS alliance.
EM Solutions represents a compelling opportunity to access the fast growing satellite communications market, further broadening the Group’s strong existing naval systems service offering, whilst bringing new customers and enhancing our combined position in the UK, NATO Europe, Asia and South America.
This is our largest acquisition to date, adding Cohort’s seventh standalone business and creating a materially larger Group. With the strong momentum being reported by Cohort and EM Solutions, together with the substantial combined orderbook, the Acquisition is expected to be materially enhancing to adjusted EPS in the first full financial year (2025/26) and onwards.
We are looking forward to welcoming the EM Solutions team to Cohort and working together to realise the multiple growth opportunities that this transaction affords.”
Andreas Schwer, Chief Executive Officer and Managing Director of EOS, commented:
“Given the strengthening AUKUS partnership, we believe that Cohort is the ideal owner for EM Solutions and are confident the business will continue to strengthen under their stewardship.”
21 Nov 24. TT Electronics: Hidden gem or value trap? TT Electronics LON:TTG, must have been doing something right since The Armchair Trader last reported on the Woking-based electronics and defence contractor as it has batted-away three prospective take-overs in the last month. As we previously reported, TT Group has a long history, being able to trace its origins back to 1867 as the W. Tyzack Sons & Turner, a Sheffield-based toolmaker. The firm listed on the London Stock Exchange in 1948 and got out of the tool-making business in the late 1980s, focussing on the digital-age’s new tools, electronics. As reported, the company today operates in four divisions: Healthcare, Aerospace and Defence, Automation and Electrification, and Distribution.
But that storied history looked under threat earlier this month, as AIM-listed power and data component manufacturer, Volex LON:VLX, submitted not just one, but two offers to snap-up its Surrey-based rival. The first offer was 62.9p a share in cash and 0.203 new Volex shares for each TT Electronics share.
Volex offer significantly undervalues company
TT rejected this, saying Volex’s offer significantly undervalued the future value of TTG. But not to be dissuaded, Basingstoke-based Volex pushed the dial a bit further, offering 62.9 pence in cash and 0.223 new Volex shares. Based on Volex’s closing price of 325p per ordinary share as at 31st October 2024, the Volex Proposal valued each TT Electronics share at 135.5p.
However, this improved offer also left TT Electronics feeling unfulfilled, saying the Volex was still undervaluing the future potential of the group and arguing that the Volex approach would short-change long-term shareholders.
One could see the rationale behind Volex’s desire to bring TT Electronics under its umbrella, as TT’s product suite, especially in power and connectivity, would fit well with Volex’s plugs, cords and EV equipment, and all the other toys and tricks that TT Electronics manufactures would significantly expand Volex’s product suite. Volex was most interested in using TT Electronics to springboard into the medical and industrial technology sectors, and into the defence sector.
Business Description
TT Electronics provides design-led advanced electronics technologies for performance critical applications in the healthcare, aerospace and defense, and automation and electrification markets in the United Kingdom, Rest of Europe, North America, Asia, and internationally. The company operates through three segments: Power and Connectivity, Global Manufacturing Solutions, and Sensors and Specialist Components. The Power and Connectivity segment designs and manufactures power application products and connectivity devices, which enable the capture and wireless transfer of data to optimize electronic systems. The Global Manufacturing Solutions segment provides manufacturing services and engineering solutions for its product divisions and to customers that require a lower volume and higher mix of various products. This segment manufactures integrated product assemblies, as well as provides engineering services, including designing testing solutions and value-engineering. The Sensors and Specialist Components segment develops standard and customized solutions, including sensors and power management devices. Its solutions enhance the precision, speed, and reliability of critical aspects of its customers applications. It offers its products and services under the AB Connectors, Aero Stanrew, BI Technologies, Ferranti, IRC, Optek Technology, Precision, Power Partners, PowerPax, Roxspur Measurement and Control, Semelab, Stontronics, Torotel, and Welwyn brands. The company was formerly known as TT Group plc and changed its name to TT Electronics in 2000. The company was incorporated in 1906 and is headquartered in Woking, the United Kingdom.
Volex argued that TT Electronics, despite having a great suite of products, has been historically underperforming – something that TT Electronics refutes – which Volex attributes to TT Electronic’s management being weak and having a lack of the necessary financial muscle, which Volex said a merger would offer TT Electronics.
Continued share price disappointment
Arguably, Volex’s chiefs could have a point. TT Electronics opened trading in November at 78.8p down 48% compared to 1st November 2023. Five years ago, TT Electronics was trading at 232p. Obviously, given Volex’s bid, TT Electronics’ shares had a bit of a rally, hitting 120p at its peak on 15th November. TT’s shares opened the week (18th November) at 109.76p but had fallen to 105p by Monday lunchtime. TT Electronics has a market cap of around GBP200m.
Shareholders might be feeling a bit underwhelmed and may have wanted to realise some of their investment today, as opposed to getting jam tomorrow. However, on rejection of the Volex offer, TT Electronics said that it had also recently received and rejected an all-cash indicative proposal from another party at a significantly higher value than the Volex deal. And although management stated that there are no ongoing discussions with this mystery suitor, they argue that the bid itself proves that TT Electronics is a lot more valuable than the offers and current share price implies.
In its last update, for the four-months to end-October, TT Electronics said revenue was down 1% year-on-year, but was up 10% in Europe and 11% in Asia. The downside was primarily in North America, where revenue was down 16% which may have been a reaction to elections season in the US and also TT’s issues with getting its product mix right in the market.
Cautious progress at lower-end of range
However, the issues in North America will see, as TT Electronics management said, FY24 operating profit be at the lower end of its predicted range of GBP37m and GBP42m, with leverage at the higher end of its predicted range of 1x to 2x. That said, said the company, the changes it is making to its operations in North America will feed through to improved profitability in 2025, which will also be positively impacted by the group seeing an overall uptake in orders which were up 2% y-o-y and for the ten-months to end-October up 10% y-o-y. The company has also been cutting costs, reducing its workforce to account for the slowdown in its workflow.
Maybe Volex was right, in that TT Electronics management might have made a few mistakes in the past few years; one such with the operation performance of North America and the TT just is too small to become big. However, TT Electronics might also be right, as in the future – especially given the increasing strategic importance of the industries in which it operates – it may well become a very valuable company, and given the current share price creates a compelling buying opportunity.
(Source: https://www.thearmchairtrader.com/)
19 Nov 24. AeroVironment, Inc. and BlueHalo LLC have announced the execution of a definitive agreement under which AV will acquire BlueHalo in an all-stock transaction with an enterprise value of approximately $4.1bn, creating a more diversified global leader in all-domain defense technologies. The combined company will bring together complementary capabilities to offer a comprehensive portfolio of high-growth franchises, powered by cutting-edge technology and focused on addressing the most important priorities and needs of our nation and allies around the globe. BlueHalo, an Arlington Capital Partners portfolio company, was founded as a purpose-built platform providing industry-leading capabilities in several key mission areas: Space Technologies, Counter-Uncrewed Aircraft Systems (cUAS), Directed Energy, Electronic Warfare, Cyber, Artificial Intelligence and other Emerging Technologies including Uncrewed Underwater Vehicles (UUVs).
Since its founding in 2019, BlueHalo’s notable accomplishments include being the first to successfully operationally field directed energy (DE) laser weapon systems (LWS) with its LOCUST LWS, being awarded Space Force’s multi-bn dollar program to transform space operations with BADGER, its adaptive phased array product and serving as a leader in Radio Frequency Counter-Unmanned Aerial Systems (RF C-UAS), delivering its 1000th system last year with its Titan and Titan-SV systems. BlueHalo has focused on cutting-edge research and development allowing for the development of products and services to transform the future of global defense.
BlueHalo estimates that it will achieve more than $900m in revenues for 2024, in addition to funded backlog of nearly $600m and a pipeline of multiple billion-dollar opportunities and programs of record. BlueHalo generated approximately $886 m of revenue in 2023, compared to $759m and $660m in 2022 and 2021, respectively.
The acquisition of BlueHalo will create a diversified Defense Tech company with a highly complementary and differentiated portfolio of solutions in Uncrewed Systems, short and long range Loitering Munitions, Counter UAS, Space Technologies, Electronic Warfare and Cyber, powered by AI and Autonomy. This combination will drive innovation, expand manufacturing capacity and enable us to better support our customers and their critical missions.
AV expects that BlueHalo’s portfolio of 10 flagship solution families and more than 100 patents will seamlessly integrate with AV’s complementary existing expertise in the design, development, manufacturing, training and servicing of Uncrewed Systems, Loitering Munitions and Advanced Technologies.
AV and BlueHalo believe that these synergies will primarily be identified as administrative and operational cost savings and sharing best practices from each company. The companies’ shared culture of agile innovation and mission expertise will enable the combined entity to develop and deliver next-generation technologies that will have significant military value and redefine the next era of Defense Technology. On a pro forma basis, the combined company is expected to deliver more than $1.7bn in revenue.
“For over 50 years, AV has pioneered innovative solutions on the battlefield, and today we are poised to usher in the next era of defense technology through our combination with BlueHalo,” said Wahid Nawabi, AV chairman, president and chief executive officer. “BlueHalo not only brings key franchises and complementary capabilities, but also a wealth of technologies, diverse customers and exceptional talent to AV. Together, we will drive agile innovation and deliver comprehensive, next-generation solutions designed to redefine the future of defense. We are thrilled to welcome the talented BlueHalo team as we unite our strengths, expand our global impact and accelerate growth and value creation for AV shareholders.”
Jonathan Moneymaker, chief executive officer of BlueHalo, said, “BlueHalo was founded to address the most pressing challenges confronting the defense and national security community, from unconventional threats to near-peer adversaries. We have pioneered solutions for drone warfare, distributed autonomy, and the need for more robust and assured access to space in an increasingly contested, crowded and competitive domain. Through these efforts, we have earned our reputation as a trusted partner in defense innovation. By uniting with AV, we are building an organization equipped to meet emerging defense priorities and deliver purpose-driven, state-of-the-art solutions with unmatched speed. Together, we remain committed to protecting those who defend us while driving the next generation of transformational advancements in defense technology.”
Strategic and Financial Benefits:
• Creates a diversified industry leader. This transaction brings together AV’s established portfolio of cutting-edge defense solutions with BlueHalo’s emerging and industry-defining technologies. This union will provide customers with a comprehensive suite of solutions across multiple domains—including air, land, sea, space and cyber. Together, AV and BlueHalo will create a leader in integrated defense technologies with a global footprint capable of addressing the full spectrum of modern defense.
• Increases agility and speed, with enhanced infrastructure, manufacturing capabilities and geographic footprint. The combined company will benefit from greater resources, enabling faster innovation and more efficient deployment of critical defense systems.
• Supports AV’s entry into additional key defense segments and builds on the Company’s strong track record of providing essential solutions. With BlueHalo’s portfolio, AV will enter into new segments that will significantly increase the Company’s total addressable market, including Counter-UAS, Directed Energy, Electronic Warfare, Cyber and Space technologies. The acquisition will bring with it BlueHalo’s key programs of record, deep customer relationships and strong backlog and pipeline, positioning the future company as a more robust and sustainable prime defense solution provider. This partnership will enhance AV’s ability to meet the evolving needs of the Department of Defense (DoD) and allied nations with a robust suite of innovative solutions.
• Diversifies mix of customers, products and revenue. The combined company is expected to achieve a more balanced and diversified customer base, product and revenue mix, benefiting from BlueHalo’s established presence in key emerging defense markets. The combined company will benefit from expanded geographical reach, with the ability to provide BlueHalo’s solutions to AV’s larger international customer base. By integrating complementary capabilities, AV will be well-positioned to generate sustained long-term value for shareholders.
• Generates attractive returns. AV expects the transaction to be accretive to revenue, adjusted EBITDA and non-GAAP EPS in the first full fiscal year post-close.
Transaction Details
The transaction, which has been unanimously approved by both companies’ board of directors or managers, is expected to close in the first half of calendar 2025, subject to regulatory and AV shareholder approvals, as well as other customary closing conditions.
Per the terms of the merger agreement, AV will issue approximately 18.5 m shares of AV common stock to BlueHalo.
Following the close of the transaction and based on AV’s shares outstanding as of November 18, 2024, AV’s shareholders will own approximately 60.5% of the combined company and BlueHalo’s equity holders will own approximately 39.5%, subject to closing adjustments. Arlington Capital Partners, an investment firm that is the majority owner of BlueHalo, will retain a significant ownership stake in the combined company.
We expect substantially all of the BlueHalo holders to enter lock-up agreements with respect to their transaction consideration, with 40% releasing 12 months post close and the remaining 60% to be released in equal tranches 18 and 24 months after the close.
Leadership, Governance and Headquarters
Following the completion of the transaction, AV Chairman, President and CEO Wahid Nawabi will be Chairman, President and CEO of the combined company. Jonathan Moneymaker, CEO of BlueHalo, will serve as a strategic advisor to Mr. Nawabi and the combined company Management Team.
Upon closing, the AV Board of Directors will be expanded to comprise 10 members. Arlington Capital Partners will have the right to appoint two directors to the Board, subject to minimum ownership thresholds.
The combined company will be at headquartered in Arlington, Virginia, at AV’s corporate headquarters.
(Source: AeroVironment, Inc.)
BATTLESPACE Comment: This takeover of a major and comparatively new company specialising in C-UAS and EW systems proves the stratospheric and continuing demand for C-UAS systems. Since its founding in 2019, BlueHalo’s notable accomplishments include being the first to successfully operationally field directed energy (DE) laser weapon systems (LWS) with its LOCUST LWS, being awarded Space Force’s multi-bn dollar program to transform space operations with BADGER, its adaptive phased array. The Editor has been following Blue Halo with interest and emailed Trip Ferguson as a possible candidate for BBOY 25. Now we know why he did not reply!
19 Nov 24. Tax hikes and risky rebids: what next for Serco? Outsourcer faces lower revenue and higher costs after a tough couple of months.
Given the nature of government outsourcing, Serco (SRP) shareholders are used to a bit of volatility. Things took a particularly dramatic turn this month, however, when the company reported two pieces of bad news in a single, unscheduled update. Shares are now 5 per cent lower than they were in January and flat year-on-year. The question for investors is whether this is a short-term blip or a prelude to bigger problems.
On 8 November, Serco revealed that it had lost its long-running, lucrative contract with the Australian government. It has provided detention facilities and detainee services in Australia since 2009, and its work in the region was expected to deliver £165mn of revenue and £18mn of underlying operating profit in 2025. This represented approximately 6 per cent of consensus forecasts for next year. However, an unsuccessful rebid means the contract will end on 10 December 2024 and to add salt to the wound Serco will incur £20mn of end-of-contract cash costs.
The announcement was “clearly a disappointment”, according to one analyst, but many are still upbeat. Investec analyst Michael Donnelly added: “Contract businesses always lose contracts, and then they win them. That’s why they shouldn’t trade on a 20 times price/earnings ratio. But equally, they should not trade on 10 times.” Serco’s forward PE ratio currently sits at 9.8 times.
Why Serco lost out has not been disclosed. Some feedback may be provided in a full-year trading update on 19 December but – for now, at least – this means it is difficult to gauge whether it was the result of natural churn or indicative of a deeper problem.
Donnelly is bullish, noting that Serco recently won a contract with the US Space Force to supply a base in the Arctic Circle in Greenland with power. “You wouldn’t get an agency like that giving work to Serco if they had any concern about their ability to deliver on it,” he said.
At the same time, however, Serco’s book-to-bill ratio, which shows the relationship between orders received and revenue recognised, was just 82 per cent in the first half of 2024, compared with an average of 107 per cent since 2017. The UK and Europe book-to-bill ratio was particularly low at 70 per cent, which spooked the market on results day as it suggested a weakening of demand.
The fact that Serco’s contract win rate has bounced around in recent years adds to uncertainty. The next few months could prove illuminating. The annual value of rebids is approximately £700mn next year and £500mn in 2026, but chief financial officer Nigel Crossley told analysts in August that the “really big contracts” would be “determined in early 2025”.
Profit pressure
The market will always react to news that a contractor has won or lost a major project. Arguably, however, this was not the most important piece of information in Serco’s November trading update. The group also told the market that Rachel Reeves’ national insurance hike in April would increase its direct labour costs by around £20mn per year.
Shore Capital downgraded the group from a ‘buy’ to a ‘hold’ on the back of this, predicting that margins would suffer.
Until contracts end or rollover, the broker argued, these higher costs will have to be borne, which could reduce Serco’s UK margin from roughly 4 per cent to 3 per cent. “As contracts reach renewal, without price increases to reflect additional costs, business with [the] UK government will be unattractive,” said analyst Robin Speakman.
Other analysts have suggested it could take two years or more for the burden to be fully shifted onto clients.
Outsourcers have been caught out by government-imposed cost hikes in the past. Facilities management group Mitie (MTO), for example, was originally unfazed by the increase in the national living wage in 2016, saying it would “not have a material impact on our future earnings”. Just months later, it issued a profit warning.
Those who invest in the outsourcing sector need to be comfortable with this sort of uncertainty. Order books are opaque, the profitability of individual contracts is rarely disclosed, and failed rebids do happen.
On the other side of the equation, though, there is plenty of scope for positive surprises, accounting practices have been cleaned up, and structural tailwinds are blowing in the sector’s favour. Indeed, Investec argues Serco is a “Trump winner” given its high level of exposure to “hot markets” such as defence and immigration.
Recent developments at Serco may have tilted the scales slightly. The impact of the national insurance hike should not be underestimated by investors, and it remains unclear whether the loss of the Australian contract was an unfortunate one-off, or the start of something significant. (Source: Investors Chronicle)
19 Nov 24. FTSE 100 drops as investors flee European stock markets over Russia-Ukraine fears. Investors are fleeing the FTSE 100 and wider European stock markets for safe haven assets today amid fears of a fresh escalation in Russia’s war in Ukraine. Markets have been spooked by Vladimir Putin’s move to approve an updated Russian nuclear doctrine, which could pave the way for the Kremlin to consider using nuclear weapons if it is subject to a missile attack supported by a nuclear power.
While the doctrine has reportedly been in the works for some months, the decision to finalise the plans followed the first attack on Russian territory by Ukraine with US-made missiles.
The developments have triggered a flight toward assets like gold and sparked falls across global markets.
The FTSE 100 has tumbled 0.4 per cent this morning while the more domestically focused FTSE 250 slid around 0.3 per cent. The Eurostoxx 600, made up of Europe’s biggest companies, slid nearly 0.9 per cent in the morning session.
Gold, typically seen as a haven for investors amid times of volatility, climbed to a two-week high of £2,085 per ounce.
“News of Ukraine utilising its new ability to hit Russia with US missiles has prompted a sharp turn lower for stocks, while the dollar and gold have both risen on safe haven buying,” said Chris Beauchamp, chief market analyst at online trading platform IG.
“While likely more sabre rattling from the Kremlin, it does take the world closer to a terrifying miscalculation.
“Gains in indices have been wiped out, and investors are once again turning cautious on fears of further escalation” he added.
Andrea Tueni, head of sales trading at Saxo Banque France, told Bloomberg the market reaction is “logical” after days of tension.
“For the moment the market reaction is contained, some are still in a wait-and see-mode,” he added.
The jitters have pushed European stocks to fresh lows after weeks of fears over Donald Trump’s trade policy.
Potentially punitive US tariffs for European firms have fuelled a slide in stocks in recent weeks, with the Eurostoxx 600 down around 1.7 per cent since Trump’s victory. (Source: City AM)
18 Nov 24. GKN Aerospace owner Melrose’s revenue rises 7% on aftermarket service demand. Melrose Industries (MRON.L), the owner of aerospace parts maker GKN Aerospace, reported a 7% rise in revenue for the four-month period ended Oct. 31, helped by strength in its aftermarket business. Prolonged production delays at crisis-stricken Boeing have hurt the pace of commercial jet production sector-wide, burdening an already strained supply chain. The delays have also pushed airlines to extend the usage of older planes, boosting demand for aftermarket services and parts, a business that Melrose considers its most profitable one. Melrose, which spun off its auto and other businesses last year to become a pure-play aerospace supplier, kept its full-year expectations unchanged, with adjusted operating profit at 550 m pounds to 570 m pounds ($694.76 m-$720.02 m).
The company said its adjusted operating profit continued to grow year-on-year in the four-month period, in line with its expectations.
($1 = 0.7916 pounds) (Source: Reuters)
19 Nov 24. TactoTek, the global leader in In-Mold Structural Electronics (IMSE®) technology, today announced the completion of a $60m funding round led by Nidoco AB, part of Virala Group. The financing attracted significant investments from a premier consortium of financial and strategic investors including Cornes Technologies, Elo Mutual Pension Insurance Company, European Investment Bank, Finnish Industry Investment Ltd, 3M Ventures, Ingman Group, VTT Technical Research Centre of Finland, Conor Venture Partners, and Turret Oy Ab and several private investors & employees.
“This investment marks a significant milestone for TactoTek,” said Jussi Harvela, CEO of TactoTek. “Our collaborations with industry leaders such as Kyocera, Gentex, Polestar, Valeo, LS Automotive, Yanfeng, and most German Premium Automotive OEMs, validate the transformative potential of our IMSE technology. IMSE is being used to improve products and concurrently decarbonize manufacturing at scale across multiple industries. With this funding TactoTek will accelerate the adoption of IMSE globally by expanding customer-facing operations and streamlining IMSE solution design by augmenting our software-based delivery system with AI elements and plug-ins for CAD and simulation packages.”
Pioneering the Future of Electronics
TactoTek develops and validates IMSE technology that is taken to market by a global network of licensees. IMSE solutions integrate electronic functions — such as lighting, touch controls, and antennas — within 3D injection-molded structures. This innovative approach results in lightweight, thin, and durable smart surfaces that provide greater design freedom and sustainability than traditional electronics in practically any industrial vertical, including medical, consumer products, defense, automotive, and aerospace.
TactoTek leads the industry in continuous IMSE technology innovation and supports industry standardization. The company has an unparalleled intellectual property portfolio exceeding 280 granted patents in 48 patent families.
Expanding into Key Industries
• Automotive: Enhancing vehicle interiors with integrated control panels, ambient lighting, and smart surfaces that reduce weight and assembly complexity;
• Consumer Electronics: Enabling sleek, functional designs with embedded touch controls and illuminated branding features in devices like audio equipment and wearables;
• Home Appliances: Offering seamless user interfaces and smart functionality integrated directly into appliance surfaces;
• Industrial Applications: Providing durable, efficient solutions for control systems and interfaces in challenging environments;
• Defense: Developing ruggedized electronic components that meet stringent military standards for performance and reliability;
• Medical: Seamless, elegant consumer medical product designs that are easily sterilized; and
• Aerospace: Thin, light weight passenger controls and lighting.
Large Scale Investment in Finnish Deep Tech
“This USD60m funding round is among the largest private financings in the Finnish and European deep tech space during 2024 and the family controlled Virala Group was honored to lead the round with a significant investment,” said Anders Dahlblom, incoming Chairman of TactoTek, and COO of Virala Group. “Our investment reflects the market traction of TactoTek’s IMSE technology across multiple industries, including the defense sector, and its secure, highly-protected, intellectual property foundation. TactoTek and their IMSE technology are poised for rapid growth.”
Fulfilling Customer Needs and Improving Sustainability
“In today’s business climate growing businesses that succeed over time must combine capability to meet market needs, with strong environmental performance,” stated Kari Lehtonen, Portfolio Manager at Elo Mutual Pension Insurance Company. “TactoTek is delivering on both of these dimensions: TactoTek has identified compelling solutions spanning different markets; and IMSE solutions are produced using clean, additive processes and can reduce carbon emissions significantly relative to conventional electronics.”
Advisors
TactoTek was advised by MP Corporate Finance on financial matters and Bird & Bird on legal aspects during the funding round.
About TactoTek
TactoTek, Oy (Oulu, Finland), is the world leader in developing and licensing in-mold structural electronics (IMSE®) technologies. Automotive, aviation, connected home, industrial control and medical brands use TactoTek innovations to create next-generation user experiences that are compelling, differentiated, and more sustainable. Designers use TactoTek IP to integrate circuits and components directly into plastic parts, transforming conventional structures into smart interactive surfaces. TactoTek licenses its intellectual property, including over 280 patents and critical know-how developed over a decade of intensive R&D and quality testing, to global manufacturers who use reliable, standardized manufacturing processes to produce curved-shape and conformal electronics. Learn more at www.tactotek.com.
19 Nov 24. ELBIT SYSTEMS Reports Results. Order backlog at $22.1bn; Revenues of $1.7bn; Non-GAAP net income of $99m; GAAP net income of $79m; Non-GAAP net EPS of $2.21; GAAP net EPS of $1.77
Elbit Systems Ltd. (“Elbit Systems” or the “Company”) (NASDAQ and TASE: ESLT), the international high technology defense company, reported today its consolidated results for the third quarter ended September 30, 2024.
In this release, the Company is providing US-GAAP results as well as non-GAAP financial data, which are intended to provide investors a more comprehensive view of the Company’s business results and trends. Management Comment: Bezhalel (Butzi) Machlis, President and CEO of Elbit Systems, commented: “Elbit Systems reports a strong quarter, with substantial growth across key performance measures exceeding our internal goals, while meeting our customers’ needs in Israel and worldwide. The Company’s order backlog, which hit a record high of over $22bn, provides stability and resilience for the Company for years to come, as our investments in R&D create strong foundations for long-term growth and development. Our highly regarded solutions and products are experiencing high demand. This consistent growth reflects the quality and excellence driven by our dedicated and outstanding employees in Israel and in our subsidiaries around the world.”
Third quarter 2024 results:
Revenues in the third quarter of 2024 were $1,717.5m, as compared to $1,501.6m in the third quarter of 2023.
Aerospace revenues increased by 7% in the third quarter of 2024, as compared to the third quarter of 2023 mainly due to increased UAS sales in Israel. C4I and Cyber revenues increased by 13% in the third quarter of 2024 mainly due to radio systems and command and control systems sales. ISTAR and EW revenues increased by 13% mainly due to Electronic Warfare and Electro-Optic systems sales. Land revenues increased by 24% due to the increase in ammunition and munition sales in Israel. Elbit Systems of America revenues increased by 17% due to the increase in night-vision systems and medical instrumentation sales.
Non-GAAP(*) gross profit amounted to $419.4m (24.4% of revenues) in the third quarter of 2024, as compared to $374.2m (24.9% of revenues) in the third quarter of 2023. GAAP gross profit in the third quarter of 2024 was $412.8m (24.0% of revenues), as compared to $367.2m (24.5% of revenues) in the third quarter of 2023.
Research and development expenses, net were $119.9m (7.0% of revenues) in the third quarter of 2024, as compared to $103.3m (6.9% of revenues) in the third quarter of 2023.
Marketing and selling expenses, net were $91.3m (5.3% of revenues) in the third quarter of 2024, as compared to $86.0m (5.7% of revenues) in the third quarter of 2023.
General and administrative expenses, net were $75.7m (4.4% of revenues) in the third quarter of 2024, as compared to $71.8m (4.8% of revenues) in the third quarter of 2023.
Non-GAAP(*) operating income was $140.7m (8.2% of revenues) in the third quarter of 2024, as compared to $120.0m (8.0% of revenues) in the third quarter of 2023. GAAP operating income in the third quarter of 2024 was $125.8m (7.3% of revenues), as compared to $106.1m (7.1% of revenues) in the third quarter of 2023.
Financial expenses, net were $45.0m in the third quarter of 2024, as compared to $35.7m in the third quarter of 2023.
Taxes on income were $12.8 m in the third quarter of 2024, as compared to $10.0m in the third quarter of 2023.
Non-GAAP(*) net income attributable to the Company’s shareholders in the third quarter of 2024 was $98.8m (5.8% of revenues), as compared to $76.5m (5.1% of revenues) in the third quarter of 2023. GAAP net income attributable to the Company’s shareholders in the third quarter of 2024 was $79.1m (4.6% of revenues), as compared to $60.7 m (4.0% of revenues) in the third quarter of 2023.
Non-GAAP(*) diluted net earnings per share attributable to the Company’s shareholders were $2.21 for the third quarter of 2024, as compared to $1.71 for the third quarter of 2023. GAAP diluted earnings per share attributable to the Company’s shareholders in the third quarter of 2024 were $1.77, as compared to $1.36 in the third quarter of 2023.
The Company’s order backlog as of September 30, 2024 totaled $22.1 bn. Approximately 66% of the current backlog is attributable to orders from outside Israel. Approximately 37% of the backlog is scheduled to be performed during the remainder of 2024 and 2025.
Cash flow provided by operating activities in the nine months ended September 30, 2024 was $82.5 m, as compared to cash flow used in operating activities of $200.0 m in the nine months ended September 30, 2023. The cash flow in the nine months ended September 30, 2024 was affected mainly by the increase in contract liabilities, which was offset by the increase in inventories and trade receivables. *
Impact of the “Swords of Iron” War on the Company:
On October 7, 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of brutal attacks on civilian and military targets. Hamas also launched extensive rocket attacks on the Israeli population and industrial centers located along Israel’s border with the Gaza Strip and on many other parts of the country. Israel has also been attacked by other terrorist organizations on different fronts, including from Lebanon, which have prompted military responses from Israel on these fronts. Following the attacks, the State of Israel declared a state of war, which is ongoing.
Since the commencement of hostilities, Elbit Systems has experienced a material increased demand for its products and solutions from the Israel Ministry of Defense (IMOD) compared to the demand levels prior to the war. The Company has also increased its support to the IMOD, mainly through deliveries of its systems and the dedicated efforts of our employees. At the same time, the Company continues its activities in the international markets with the support of its local subsidiaries. Subject to further developments, which are difficult to predict, the IMOD’s increased demand for the Company’s products and solutions may continue and could generate material additional orders for the Company.
While the vast majority of the facilities in Israel continue to operate uninterrupted, some operations have experienced disruptions due to supply chain and operational constraints, including among others due to limitations on exports to Israel, increase of transportation costs and delays, material and component shortages, attacks by anti-Israeli organizations, the relocation of certain production lines, evacuation of employees and employee recruitment for reserve duty. The number of employees recruited was approximately 8% as of September 30, 2024, and could fluctuate depending on future developments.
Elbit Systems has taken a number of steps to protect the safety and the security of its employees in Israel and abroad, to support its increased production, to mitigate existing and potential supply chain disruptions and to maintain business continuity, including the relocation of production lines from facilities in evacuated areas to alternative facilities; recruitment of additional employees; increased monitoring of global supply chains to identify delays, shortages and bottlenecks; rescheduling of deliveries to certain customers as necessary; and an increase of inventories.
The extent of the effects of the war on the Company’s performance will depend on future developments of the war that are difficult to predict at this time, including its duration and scope. We continue to monitor the situation closely.
19 Nov 24. AVON TECHNOLOGIES Plc Releases Results.
*Strong financial performance
o Significant growth in revenue, operating margin, ROIC and free cash flow
o Leverage now below 1x
*Continuous Improvement (“CI”) delivering
o All factories now implementing CI programmes
o Significant operational KPI improvements
o Consolidation of helmet manufacturing sites on track
o Additional CI opportunities with strong payback potential identified o Transformation operational expenditure expected to be self-funded through CI improvements Orderbook and pipeline expanding
o Record order book of $225m gives confidence for FY25 and beyond:
Up to £38m UK MOD General Service Respirator and filter contract win
New respirator contract win with Australian Defence Force
US DOD delivery orders totalling $34m for ACH (Advanced Combat Helmet) GEN II
$42m Next Generation Integrated Head Protection System (NG IHPS) delivery orders from US Army
New Zealand and German Navy rebreather orders
o 3 new ‘Programs of Record’ with US DOD for Hood Mask Interface development programme Faster progress towards medium-term goals o Expect continued growth and consistent returns in FY25 as we implement our footprint and manufacturing optimisation programmes o Potential to reach medium-term operating margin and ROIC target ranges in FY26 (previously FY27) o Confidence in delivering further sustained growth and improved returns over the long term Jos Sclater, Chief Executive Officer, commented: “It is now 18 months since we launched the STAR strategy and we are making good progress. This is demonstrated by our much stronger financial performance, improving operating metrics and a fast-growing order book. I am however most excited by the ability of the organisation to change and translate strategy into action. We have built a culture where improving processes is becoming the Avon way of life, we have much more capable people and the pace of change is accelerating. As a result of the progress made during the year, we see the potential to reach our medium-term operating margin and ROIC guidance target ranges a year early, in 2026. We also expect the transformation programme to be largely complete by then, with an accompanying significant decrease in transformation cash costs providing the platform for a broader capital allocation strategy.” For further enquiries, please contact:
Shore Capital has published an initiation note on Avon Technologies’ Preliminary Results this morning.
Jamie Murray, Equity Analyst, said: “Avon Technologies has reported strongFY24A results, which reveal a 3% beat to our EBITA expectations. The outlook is excellent with strong growth in order intake and an acceleration of the medium-term strategy expected. Following the earnings beat and positive outlook, we anticipate the shares will trade ahead of the market this morning”
Financial performance:
• Sales rose by 13% yoy to $275m(12% constant currency), which reflectsa3% beat against our forecasts (2% beat against Bloomberg consensus of $270m).
• EBITA rose by 49% yoy to $32mandmargins rose by 280 bps yoy to 11.5%,which reflects a3%beat against our forecasts (17% beat against Bloomberg consensus of $27m).
• EPS rose by 73% yoy to 69.9c, which reflectsa16% beat against our forecasts (18% beat against Bloomberg consensus of $59.3c).
• DPS fell by 21% to 23.3p, which reflectsa12% beat against our forecasts (16% miss against Bloomberg consensus of 27.7c).
• Net debt (excluding leases) fell by $21m yoy to $43.5m, which reflects a 13%beat against our forecast.
Valuation: After translating from USD into GBP, Avon trades on an FY25F/FY26FEV/EBITA of 18.6x/14.9x and a PER of 23.9x/18.2x. Following the earnings beat and positive outlook, we anticipate the shares will trade ahead of the market this morning. We will update our FV in due course and reassess our recommendation.
18 Nov 24. Avon Technologies’ defence orders surge.
Companies either adapt or die and Avon Technologies looks an increasingly successful example of the former after an upgraded performance
• Orders 64 per cent rocket as defence spending climbs
• Operational improvements drive cash performance
Having started the decade as a company that included rubber milking teats in its product portfolio, there was ample evidence in these preliminary results that the sometimes-painful move into defence and security products is starting to pay off for Avon Technologies (AVON), as a mix of higher defence spending and operational efficiency restored profitability and led to market upgrades.
Management explained how operational improvements have helped the company. Chief financial officer Rich Cashin said: “We have always had a big September for orders, with people rushing to push things through.” The overall order book was $225m, or 64 per cent higher. “However, with our improvements the receivables are now more balanced across the year.” The results showed receivables of $36.9m (£29m), compared with $58.3m, in 2023. “This meant our 12 per cent revenue growth was done without really increasing inventory,” Cashin said.
This operational improvement also showed up in better cash performance, as cash flows from operations surged to $63.7m, with less cash tied up in warehousing goods. Overall, along with better operating profits, the return on invested capital was 13.7 per cent. Management said that forecasts for a mid-teens return on capital for 2026 was now a year ahead of schedule.
Broker Peel Hunt said 2026 now looks like the key “earnings inflection point” for Avon and the shares currently trade at 15 times that year’s earnings.
In the near term, the share price is closer to a price/earnings (PE) ratio of 23.4, which is roughly in line with the peer group after a rapid recovery. While attractive, it may be worth waiting to see how quickly the dividend grows before getting involved. Hold.
Last IC view: Hold, 1,355p, 21 May 2024. (Source: Investors Chronicle)
18 Nov 24. Melrose Industries PLC (“Melrose” or “the Group”) announces the following trading update for the four months from 1 July 2024 to 31 October 2024 (“the Period”). All numbers are calculated at constant currency1.
Revenue was up 7%2 on the same period in 2023, with Engines, up 17%3, showing strong progress driven by aftermarket revenues, and Structures growing at 1%2,3, impacted by well-publicised OE volume reductions and previously announced customer destocking. We continue to partner closely with our major customers to execute efficiently on production schedules, whilst our internal business improvement actions progress as planned. As a result, adjusted4 operating profit continues to grow on the prior year, in line with our expectations.
End market demand continues to be positive, and our full year expectations remain unchanged.
Engines
The Engines division’s revenue performance continues to be driven by our aftermarket business, which is up 32% versus prior year with a particularly strong contribution from defence. OE volume growth remains constrained by industry-wide supply chain issues. Looking ahead, the division is well placed to meet the ongoing industry ramp-up from its established positions as well as through new technologies.
Structures
Revenue in Structures, as previously highlighted, continues to reflect the planned exit of non-core work, customer destocking and industry-wide supply chain challenges affecting OE production rates. Defence repricing and business improvement actions, which are focused on this division, are coming through as planned. Restructuring programmes are on track and are nearing completion, which will result in a significant reduction in associated cash spend in 2025.
Outlook
As we progress through the second half, the Group’s full year expectations are unchanged with adjusted4 operating profit at £550 m to £570 m. Net debt4 is also anticipated to end the year in line with current expectations.
In 2025, despite continued supply chain challenges, we expect to make strong trading progress and we are on track to deliver our adjusted4 operating profit target of £700 m1. This performance is expected to be led by the strong aftermarket performance in our Engines division offsetting OE volume constraints.
Importantly, the Group expects its cash flow position to improve significantly next year and to deliver substantial free cash flow in 2025 (post interest and tax).
The Group’s cash flow is poised to grow materially beyond this as a result of the completion of our restructuring programmes, the resolution of the GTF powder metal issue, all RRSPs6 generating cash and the continuing growth of the Group’s profits.
The Group will provide longer term financial targets for the period beyond 2025 at its full year results on 6 March 2025.
Peter Dilnot, Chief Executive Officer of Melrose said: “It’s encouraging that we remain on track to deliver on our full year expectations, despite the industry-wide supply chain challenges. This reflects the strength of our businesses and the balanced position we have with our aftermarket offsetting original equipment headwinds. As we move into 2025, we enter a period of significant and sustained growth in our cash flow for many years ahead. I am confident that Melrose’s established capabilities, technology leadership, and unique position on the world’s leading aircraft and engines will create substantial value in the future.”
15 Nov 24. Volex results: Strong performance overshadowed by TT Electronics rejection.
Total revenue growth of 30 per cent was driven by the acquisition of Turkish wire harnesses manufacturer Murat Ticaret last year
• Operating margin within target range for fifth year in a row
• Net capex up 65 per cent to $26.4m
The big news on Volex’s (VLX) half-year results day was that the cable maker had two potential bids rejected by TT Electronics (TTG), a disclosure that sent the shares tumbling by double digits as investors fretted over the implications of an acquisition.
The second proposal valued TT Electronics at a 77 per cent premium to the closing share price on the day before the approach. Volex accused the electronic components business’s board of “execution mis-steps” and pointed to chunky restructuring charges and margin underperformance as evidence that shareholders would benefit from being part of a “larger group with stronger performance”.
Analysts at Investec said there is a “strong rationale” for a deal given contract manufacturing overlaps, but in their view “the price proposed looks highly opportunistic”.
The underlying performance in Volex’s first half was encouraging. Organic revenue growth of 10 per cent was driven by a 40 per cent uplift for the electric vehicles business, which benefited from a new project with a North American auto manufacturer, and volume-driven 8 per cent growth for consumer electricals after destocking hit it last year.
Elsewhere, the fledgling off-highway business (which contains Murat Ticaret) delivered growth of 21 per cent. The complex industrial technology unit grew by 4 per cent on AI-boosted demand from data centre customers. And organic medical revenue declined 4 per cent against a challenging comparative.
Underlying operating profit rose 27 per cent to $47.6m, while the margin came in at 9.2 per cent.
Volex is on track to hit full-year market expectations, and is targeting annual revenue of $1.2bn by the end of 2027. We await further news on a potential TT Electronics deal, but the underlying performance and a valuation of 12 times forward consensus earnings keep us bullish in the meantime. Buy. Last IC view: Buy, 333p, 26 Jun 2024. (Source: Investors Chronicle)
15 Nov 24. FN Browning Group and Sofisport enter into exclusive negotiations to create a world-class European supplier of small arms and ammunition FI\I Browning Group, whose subsidiaries include FI\I Herstal and Browning, announces that it has entered into exclusive negotiations
to acquire the French group Sofisport world leader in the manufacture of shotshells and shotshell components for hunting and sport. The proposed acquisition is based on the strong industrial, geographical and cultural
complementarity between Sofisport, a French family-owned company, and FN Browning Group, which is owned by the Walloon Region, part of the Belgian federal state. In addition, Sofisport’s products perfectly complement all the ranges and brands marketed by FN Browning Group.
With their world-renowned expertise and strong local industrial base, the two groups are leaders in their respective fields. Their combination represents a unique opportunity to create a world-class European
manufacturer, fully integrated in the field of small arms and ammunition.
In a complex international context characterised by increased competition from large integrated players, the combination of the two groups would strengthen their competitive development effects on
continuity. position, performance and capabilities, with positive
employment and business. The acquisition is subject to the satisfaction
of customary conditions precedent for this type of transaction, including antitrust and regulatory matters. Pierre-Yves Jeholet, Vice-President of the Walloon Government and Minister for the Economy: “The competitiveness of European industry is a fundamental challenge for the future of the Union and our countries. Consolidating and building
European groups that are leaders in their fields is one of the keys to
meeting this challenge. The future of employment and the industrial
base of our regions and territories depend on it. The acquisition of Sofisport by FN Browning Group is a concrete and relevant step in this international context and is in line with our commitment to the reindustrialisation of Wallonia. For the Walloon Government, defence is a strategic sector.”
18 Nov 24. The Exploration Company raises $160m Series B led by Balderton and Plural to build the first European space capsule.
World-class team raises Europe’s largest-ever space Series B
● The Exploration Company launched in 2021 to develop reusable and refillable spaceship, Nyx, to serve the growing logistical needs of space stations and space exploration
● Nyx is designed to be launched from any heavy launcher in the world – making it the most affordable and launcher agnostic space cargo vehicle
● Led by ex-Airbus and ArianeGroup space engineers, TEC was the first
The Exploration Company (TEC), a leading European space tech, announces it has raised $160m in Series B funding co-led by Balderton Capital and Plural, with participation from Bessemer Venture Partners, NGP Capital, French Tech Souveraineté, DeepTech & Climate Fonds (DTCF) and Bayern Kapital. The round also included significant follow-on investment from historical investors, including EQT Ventures, Red River West, Cherry Ventures, Promus Ventures and Omnes Real Tech Fund. This is the first time two European sovereign funds, French Tech Souveraineté managed by Bpifrance and DTCF, have invested together, demonstrating TEC’s strategic European DNA. The funding brings TEC’s total raised to nearly $230 m and will be used to develop and test Nyx, expand the 200-strong team, and scale capacity.
Founded in 2021 by Hélène Huby, former VP Orion-ESM at Airbus, and an experienced team from Airbus and ArianeGroup, TEC develops, manufactures, and operates spaceships to serve the logistical needs of space stations and space exploration. With a focus on reusable and refillable spacecraft, TEC aims to make space exploration affordable, modular, and sustainable.
Hélène Huby, co-founder and CEO of The Exploration Company, said: “This significant raise is a reflection of not only the talent and commitment of the team at TEC but also that building global companies with European roots can only be done through fostering trust and cooperation between European countries. 98% of our shareholders are European, demonstrating that the continent can finance bold entrepreneurs. Space will play a critical role in shaping humanity’s future, and I want to contribute to building a future which is peaceful and cooperative and our European DNA fits perfectly with this mission.
“Over the past 12 months, we have hit major operational and financial milestones and signed significant service contracts with both space agencies and commercial clients. This new funding is the next step in scaling up our ambitions and I’m delighted to welcome Plural, Balderton Capital, NGP Capital and Bessemer to our journey, alongside our previous investors. Their support and ambition will be critical as we take another important step closer to our Nyx Earth launch and build a European space leader.”
Powering Europe’s space sovereignty
TEC is powering a new era in European space sovereignty, providing the continent with reusable and refillable space vehicles, which will be critical as space exploration escalates in the next decades. TEC estimates the addressable space logistics market in Low Earth Orbit and around the Moon to be over $300B over the next decade, partly driven by the growing number of space stations being constructed including Axiom, StarLab, Vast, Orbital Reef and the Lunar Gateway, as well as the exploration race to the Moon and Mars. As transportation capabilities are currently concentrated amongst a few players in the US, China and Russia, there is a drive within Europe to enable its own space exploration capacities.
The company is developing Nyx, a reusable and in-orbit refillable spacecraft that can be launched from any heavy launcher and fly to any space station. It will be able to return to Earth with up to 3,000 kg of cargo – the largest down-mass available worldwide – and subsequently refurbished for its next mission. The cost of this service will be 25% to 50% less than other vehicles.
TEC, the first European company to sign a Space Act Agreement with NASA, reached a major milestone this year when it signed its first major contract with the European Space Agency (ESA), ranking number one in the European space capsule competition. The company is on track to launch its mid-size capsule, Mission Possible, in 2025 carrying 300kg of customer payloads. Nyx Earth’s maiden flight is set for 2028, to carry cargo for ESA to the International Space Station.
David Thévenon, Partner at Balderton Capital, said: “The planets aligned for this investment and we’re delighted to be supporting Hélène and the team with this new funding round. With their unparalleled expertise and visionary approach, The Exploration Company is poised to redefine European leadership in space exploration. Their mission to make space exploration more accessible and sustainable promises to unlock unprecedented opportunities not just for Europe, but for humanity’s future in space. We’re thrilled to fuel this journey toward a new era of European space leadership – one that will reshape our understanding of what’s possible beyond Earth.”
Khaled Helioui, Partner at Plural, said: “TEC is a company that I believe is sitting on the kind of tinder box that you don’t see often as an investor. It’s operating in a huge market where demand for launches and delivering cargo dramatically outstrips supply, in a region which has received decades-worth of institutional investment, in a political climate where policy-makers know they need to take urgent action if they want to safeguard our critical assets. When you add in a founder who you believe can emulate the kind of value creation we’ve seen in commercialising space in the US, you have a near-perfect set of ingredients for success.”
18 Nov 24. Comtech Announces Amicable Resolution With the Porcelain/Kornberg/Timoshenko Group. Comtech Telecommunications Corp. (NASDAQ: CMTL) (the “Company”), a global technology leader, today announced that its Board of Directors entered into a cooperation agreement with Michael Porcelain, Fred Kornberg, and Oleg Timoshenko (the “Investor Group”). Pursuant to the agreement:
• Comtech has appointed Michael Hildebrandt, Senior Investment Professional at Freshford Capital Management, to the Board, effective immediately;
• The Board will appoint an additional new independent director mutually acceptable to both Comtech and the Investor Group (the “Additional Director”);
• Two of Comtech’s current directors will not stand for reelection at the Company’s Fiscal 2024 Annual Meeting of Stockholders;
• The Investor Group will support Comtech’s slate of directors for election at the 2024 Annual Meeting and will withdraw its nomination of eight directors for election at the meeting;
• The Investor Group has agreed to customary standstill restrictions and voting commitments until the nomination deadline for Comtech’s Fiscal 2025 Annual Meeting, or until the nomination deadline for Comtech’s Fiscal 2026 Annual Meeting if the Company nominates Michael Hildebrandt and the Additional Director for reelection at the Fiscal 2025 Annual Meeting.
The Company and the Investor Group made the following statement: “We are pleased to have reached this agreement which adds Michael Hildebrandt to the Board. Together with the future additional independent director and the recent appointment of Ken Traub, the Comtech Board is being significantly refreshed.”
With these changes, upon the appointment of the Additional Director, four new directors will have been appointed to the Board since October 28, 2024.
The full agreement between Comtech and the Investor Group will be filed on a Form 8-K with the SEC.
About Michael Hildebrandt
Michael Hildebrandt, age 52, currently serves as a Senior Investment Professional at Freshford Capital, an advisory firm providing investment advice and management services to clients, since February 2011. At Freshford Capital, Mr. Hildebrandt invests in industry verticals, including government and construction services, energy, space and satellite, telecom, media and special situations. Prior to joining Freshford Capital, Mr. Hildebrandt held senior investment roles at Silver Capital Management LLC, a multi-strategy investment fund, and GAMCO Investors, Inc., a global investment management company, where he focused on special situations and private equity initiatives. Earlier in his career, he served as a Private Equity Associate at Aurora Capital and as an Investment Banking Analyst at Salomon Brothers, specializing in mergers and acquisitions within the industrial sector.
18 Nov 24. Serendipity Capital today announces the appointment of two senior advisers, Professor Douglas Paul and Gabriela Styf Sjöman, who will support the growth of the firm and the expansion of its ecosystem in the UK.
Professor Douglas Paul is an expert in quantum technologies and semiconductors. He holds the Royal Academy of Engineering Research Chair and led the UK Quantum Technology Programme as an Engineering and Physical Sciences Research Council (EPSRC) Fellow. As founding Director of the James Watt Nanofabrication Centre, he advanced the UK’s quantum capabilities in national security and aerospace. Douglas has advised multiple UK Government Departments including the Home Office. He is a Fellow of the Royal Society of Edinburgh and recipient of the Institute of Physics Medal.
Gabriela Styf Sjöman has extensive expertise in telecommunications and network strategy. As Managing Director of Research and Networks Strategy at BT Group, she leads network modelling and strategic programs. Gabriela also serves on the boards of TDC Net and Global Legal Entity Identifier Foundation (GLEIF). She has held senior roles at Nokia, Telia, and Ericsson, focusing on 5G, cybersecurity, and infrastructure. Gabriela holds degrees in Power Engineering, Business, and International Affairs with a specialization in Cybersecurity from King’s College London.
The appointments deepen the firm’s operational experience, which will inform its approach to deal origination and portfolio company management, particularly in the UK. This announcement follows the recent appointments to the board of Ruth Cairnie, the chair of defence contractor Babcock, and Colin Bell, the HSBC executive.
Serendipity Capital is a venture capital investor focused on addressing the investment gap in critical technologies. These include artificial intelligence, semiconductors, cyber security, advanced manufacturing and quantum computing, with a particular focus on companies in Five Eyes and strategically aligned countries.
The firm was launched by experienced financial services executives, Rob Jesudason, Anton Jerga and Sean Harpur, to target investment opportunities emerging from geopolitical uncertainty, and the broader disruption of the global economy. The firm, chaired by veteran banker Ewen Stevenson, has established a global network of experts from across the technology, defence and finance industries to source investment opportunities. Serendipity Capital has generated an IRR of 21.2% from its existing portfolio since inception – and more than 44% from investments made in the UK.
These two appointments bring additional experience to support the growth of the firm’s expanded focus on the UK – where Serendipity Capital sees an increasing number of deal opportunities emerging from Russell Group universities.
Rob Jesudason, founder and chief executive officer, said, “Douglas and Gabriela’s experience and expertise will enhance our ability to identify and support transformative critical technologies that are essential to economic resilience and security. Both have an impressive track record of driving meaningful advancements in their fields, and their insights will be instrumental as we expand our ecosystem in the UK.”
Douglas Paul said, “Serendipity Capital’s commitment to addressing the investment gap in quantum and infrastructure technology is essential for countries like the UK. With the firm’s strategic vision and global reach, we have a unique opportunity to drive impactful change in these essential sectors. I look forward to contributing my experience to help advance these critical technologies and support the development of resilient systems that are vital to future economic growth, prosperity and security.”
Gabriela Styf Sjöman said, “I have seen throughout my career the importance of resilient and secure digital infrastructure which will be the backbone of future innovation. Serendipity Capital’s vision aligns with my commitment to enabling the progress of critical technologies in the UK and beyond. I look forward to bringing my experience in global telecoms to support the firm’s mission as we address emerging challenges in connectivity, security, and infrastructure.”
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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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