Global #Defense Spending Reaches New Highs: Sector Close-up (TSXV: $AZ.V),
(NYSE: $LDOS), (NYSE: $LHX), (TSX: $PAT.TO) (OTCQB: $PTOTF) (TSX: $CAE.TO)
(NYSE: $CAE)
Point
Roberts WA, Delta BC, February 13, 2020- Investorideas.com, a
global investor news source covering security
and defense stocks and its defense portal, Homelanddefensestocks.com release a
sector snapshot following the money with news of recent contracts/revenues and
acquisitions in defense stocks, featuring military robotics pioneer, A2Z Technologies
Canada Corp. (TSXV: AZ).
Read this news featuring A2Z Tech in
full at https://www.investorideas.com/news/2020/defense/02131GlobalDefenseSpending.asp
Global defense spending is at a record
high. According to a report looking at the 2018 numbers,
“Total global spending was up for the second consecutive year, to the highest
level since 1988—the first year for which consistent global data is available.
And world spending is now 76% higher than the post-cold war low in 1998.”
And the global growth is expected to
continue.
For investors following the defense
sector, the end of January saw some of the industry leaders in the US report
earnings that were better than expected, with revenues easily surpassing
estimates. US Aerospace and Defense ETFs also rose and benefited.
The billions of revenue realized from
the industry leaders is also flowing to some of the smaller companies. A2Z Technologies
Canada Corp. (TSXV: AZ), one of the top
innovative technology companies in Israel, announced yesterday that the Israeli
Ministry of Defense (“MOD”) has awarded the Company a three-year contract for
CAN $1.5 million that will be paid over the life of the contract.
Under the terms of the contract the Israeli MOD will be leasing
A2Z’s products and equipment for which A2Z will be responsible for maintenance
for the duration of the contract. The equipment will remain the property of A2Z
throughout. At the end of the contract the company will be able to determine
how to best position the assets going forward. There is also significant
potential for a new contract for the same services following the end of the
three-year contract period.
“We are extremely pleased to have been awarded this contract and
the continued strength we are seeing in our technologies and service
businesses. This contract is not only a significant source of recurring
revenues for the next three years but also deepens our relationship with one of
our most long-standing government partners. A2Z and the Israeli MOD have
been working together for decades now, and with our new innovative FTICS
technology, which we believe is "the next seatbelt" to make
automobiles safer than ever, we look forward to continue protecting the lives
of both military and civilian populations in future decades as well,” said
Bentsur Joseph, CEO of A2Z.
Israel’s Ministry of Defense is the governmental
department responsible for Israel’s security at the political, military, and
civilian levels with their primary objective being to ensure the safety of
Israel. The MOD also promotes research and development in security technologies
and supports veterans and their families.
A2Z is also expanding its business and robotics
military technology into civilian markets and announced in mid-January that they signed a contract
and received its first purchase order for $175,000CDN to provide sophisticated
software for integration between applications and Point of Sale (POS) for a blue chip, New York Stock Exchange listed,
Fortune 500 Company, which is a leading enterprise software and services
provider in the finance, retail, hospitality, telecom, and technology
industries and a Fortune 500 company.
The defense sector is also seeing billion dollar
deals taking place. Leidos Holdings, Inc. (NYSE: LDOS), a FORTUNE® 500 science and technology leader, announced in early February that it has entered into a
definitive agreement to acquire L3Harris Technologies’ (NYSE: LHX) Security
Detection and Automation businesses for $1 billion in cash. The Boards of
Directors of both companies unanimously approved the transaction.
News: L3Harris’ Security Detection and Automation
businesses provide airport and critical infrastructure screening products,
automated tray return systems and other industrial automation products. With
headquarters in Tewksbury, Mass. and Luton, England, the combined businesses
have 1,200 employees and a global sales and services operations footprint with
more than 20,000 systems deployed world-wide across more than 100 countries.
The businesses serve customers in the aviation, transportation, government and
critical infrastructure markets.
News: “The acquisition of these businesses will help
accelerate our growth and innovation and enable us to offer the market a
comprehensive security platform,” said Leidos Chairman and CEO Roger Krone.
“The businesses further our commitment to a diversified revenue stream, by
expanding our customer penetration into 75 additional countries. This
transaction is projected to be immediately accretive to revenue growth, EBITDA
margins, and non-GAAP EPS upon closing.”
News: Krone continued, “This powerful portfolio of
technology and the outstanding team of employees that support it complement the
Leidos team well. The work this team performs is vital to securing so many
important locations – where passengers count on equipment reliability and
efficiency to keep them safe. This mission is consistent with our company’s
goal of making the world safer, healthier and more efficient. Together, we will
advance our strategy of helping secure some of the world’s most critical
infrastructure and the individuals who travel through it. I look forward to
welcoming these L3Harris employees to Leidos and working together to continue
our important work.”
This is their second deal valued at 1Billion
plus. On January 31st Leidos
Holdings announced that it completed the acquisition of Dynetics,
Inc., an industry-leading applied research and national security solutions
company, for approximately $1.65 billion in cash. The transaction was
previously announced on December 17, 2019.
On February 5, 2020, Patriot One Technologies Inc. (TSX: PAT) (OTCQB: PTOTF) (FRANKFURT: 0PL), a company offering threat detection and
counter-terrorism solutions announced a significant contract for their size.
Xtract Technologies Inc., a subsidiary of
Patriot One Technologies announced it had secured a $975,000CAD Contract with
Canada's Department of National Defense through the Public Works and Government
Services Canada Division.
News: The contract is
for a project related to improving situational awareness for the Canadian Armed
Forces ("CAF") and security personnel using video analytics,
artificial intelligence and augmented reality. This project will continue
previous work completed by Xtract.ai for the CAF to develop technology
solutions to augment the situational awareness of their soldiers and address
the following challenges:
- detect, recognize, and identify persons or
objects of interest in a physical environment, and/or
- track identified persons and objects of
interest using seamless information sharing across a decision network.
News: Work will proceed
in multiple phases, including the design, development and deployment of
advanced machine learning models, proprietary data sets and integration with
advanced visualization hardware.
News: "We're very
excited to leverage the Xtract.ai team's expertise in video analytics, object
detection and artificial intelligence with the Canadian Department of National
Defense," expresses Martin Cronin, CEO of Patriot One Technologies.
"With the work Xtract.ai has be doing with several clients, as well as on
Patriot One's PATSCAN Multi-Sensor Covert Threat Detection Platform, the team
brings tremendous experience in video analytics and threat object detection and
look forward to delivering a high-performing solution that we hope will augment
our military personnel in their service to our country."
On February 7, 2020 CAE Inc. (TSX: CAE.TO) (NYSE: CAE) reported revenue of $923.5 million for the
third quarter of fiscal 2020, compared with $816.3 million in the third quarter
last year. Third quarter net income attributable to equity holders was $97.7
million ($0.37 per share) compared to $77 .6 million ($0.29 per share) last
year. Net income before specific items (5) in the third quarter of fiscal 2020
was $98.0 million ($0.37 per share before specific items (6)).
Third quarter segment operating income was $154.9
million (16.8% of revenue) compared with $113.0 million (13.8% of revenue) in
the third quarter of last year. Segment operating income before specific items
in the third quarter of fiscal 2020 was $155.3 million (16.8% of revenue). All
financial information is in Canadian dollars unless otherwise indicated.
From the news: "CAE had strong growth in the
third quarter, with 13 percent higher revenue and 37 percent higher operating
income, and we generated over $275 million of free cash flow. Customers
continued to put their trust in CAE as their training partner of choice,
awarding us $1.1 billion of orders for a $9.4 billion backlog," said Marc
Parent, CAE's President and Chief Executive Officer. "Our performance was
led by Civil with 42 percent operating income growth and continued good
momentum with our innovative and comprehensive training solutions. In Defence,
we had 32 percent operating income growth and we secured orders in excess of
revenue by 1.11 times. Todd Probert recently joined CAE as its new Group
President, Defence & Security and I am very pleased to welcome a leader of
his calibre to our executive team. In Healthcare, we had double-digit revenue
growth and we continued to bring highly innovative solutions to market to help
make healthcare safer. As we look to the remainder of the fiscal year, our positive
annual growth outlook for the Company remains unchanged."
The Company also pledged to become carbon neutral
by summer 2020
Looking at future trends in the sector, Forecast
International reports, “Despite a few dips in dollar-adjusted spending
among large defense-spending nations, the overall market continues to reflect
growth. Whether in Europe, the U.S., Russia or the countries of East and South
Asia, the trend shows nations putting more money into resourcing their
militaries and investing in future technologies and/or asymmetric
capabilities.”
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