TIDMQQ.
RNS Number : 4257O
QinetiQ Group plc
02 October 2019
News Release
QinetiQ Group plc
QinetiQ more than doubles size of US operations with acquisition
of MTEQ
2 October 2019. QinetiQ announces that it has entered into an
agreement to acquire Manufacturing Techniques Inc. (MTEQ) on a
cash-free, debt-free basis for $105 million to be paid in cash on
completion and an earn-out of up to $20 million payable in cash and
shares dependent on delivering stretching financial targets over
three years.
MTEQ is a leading US provider of advanced sensing solutions with
a strong reputation for mission-led innovation, rapidly developing
and fielding operationally relevant solutions to deliver
information advantage to the warfighter. In the 12 months to 31
August 2019, MTEQ generated $167.4 million of revenue, $11.4
million of EBITDA, and $11.0m of EBITA on an unaudited basis.
MTEQ employs 360 people in Virginia and has strong customer
relationships, particularly with the US Army, supporting a number
of its modernisation priority programmes. The business develops
next generation sensing solutions, including integrating outputs
from multiple sensors, to provide information that enables
operational advantage in the modern battlespace. MTEQ is renowned
for disruptive and agile innovation across the full cycle of sensor
solutions development and use, including design, development,
integration, low-volume production, deployment and analytics.
Following completion, the business will continue to be led by its
existing management team.
Strategic rationale
-- MTEQ has a strong track record and further growth potential in an expanding sensors market
Delivers next-generation sensor solutions, which are in increasing demand to counter emerging
threats in the modern battlespace
Drives a customer-centric approach to rapidly innovate and field new capabilities
Investing to improve profitability and win longer-term programmes
-- Accelerates our growth in the US, the world's largest defence and security market
Creates a US operation of c.$300m and c.750 employees, which will deliver solutions critical
to next generation warfighting capability through the combination of MTEQ's expertise in advanced
sensors with our existing capabilities in robotics and autonomy
Transitions MTEQ's sensors solutions into larger production programmes, leveraging our manufacturing
capabilities in the US
Deepens our US Army relationship and broadens our US customer base
-- Strengthens implementation of our international growth and innovation strategy across the
Group
Increases our US home country to c.25% of Group revenue
Builds our rapid development capability to rapidly create and field new products and services
Creates further growth opportunities by leveraging QinetiQ's technical capabilities into
the US, and routes to UK and international markets
Financial highlights
-- Delivered double digit revenue growth each year over the past three financial years
-- Revenue of $167.4 million and EBITDA of $11.4 million in the 12 months to 31 August 2019,
unaudited
-- Revenue of $131.0 million and EBITDA of $8.4 million in the year to 31 December 2018, audited
-- Will enhance QinetiQ's earnings per share in the first full financial year
-- Acquisition evaluated through our rigorous capital allocation methodology; returns expected
to exceed QinetiQ's cost of capital in year three
-- Funded from QinetiQ's available cash resources with the balance sheet expected to remain
in a net cash position post completion providing further capacity to invest in growth
Steve Wadey, QinetiQ CEO, said:
"The acquisition of MTEQ is a significant step towards achieving
our ambition to build an integrated global defence and security
company, more than doubling the size of our operations in the
largest defence and security market in the world."
"MTEQ is a growing business that is thriving because of its
ability to apply state-of-the-art sensing technology to enhance
information and intelligence that are so critical to modern
warfare. I am excited that MTEQ will be joining QinetiQ as its core
proposition of rapidly creating new and disruptive capabilities to
respond to emerging threats is so well aligned to our own. I look
forward to welcoming MTEQ expert employees and high quality
leadership team to QinetiQ."
Mary Williams, MTEQ President and CEO, said:
"We are excited to be joining QinetiQ, a company renowned for
its technical expertise. The combined businesses will have a
leading position in technologies that are critical to next
generation warfighting capabilities, enabling us to offer solutions
to evermore complex and challenging customer requirements. Most
importantly for me, QinetiQ and MTEQ share a common philosophy of
partnership and collaboration with our customers, which will
continue to be the foundation for our future success."
Transaction completion
The transaction is subject to certain regulatory and legal
approvals and is expected to close in the second half of QinetiQ's
financial year 2020.
This announcement contains inside information and the person
responsible for making this announcement is Jon Messent, Company
Secretary.
There will be a call for analysts and investors at 1030 hours UK
time on 2 October 2019.
Dial in details: ++44 (0) 20 3003 2666 Password: QinetiQ
A playback of the call will be available shortly afterwards by
dialling +44 (0) 20 8196 1998 and entering PIN number 0613705#
Notes for Editors:
About MTEQ:
Manufacturing Techniques Inc. (MTEQ) is a privately-owned
business employing around 360 people who provide innovative
technical solutions for the US DoD, Law Enforcement, Intelligence
Community and Commercial Customers. The business offers capability
across the full cycle of sensor solutions development and use,
including design, development, integration, low-volume production,
deployment and analytics. MTEQ's independent position enables it to
form effective partnerships with academia, businesses and customers
to rapidly create and test operational solutions. Its employees
offer a full complement of engineering disciplines including
mechanical, electrical, optical, systems, and software coupled with
laboratory and manufacturing capabilities at two locations in
Lorton VA (MTEQ North Campus) and Kilmarnock, VA (MTEQ South
Campus) in the United States. In the year to 31 December 2018, the
business had gross assets of approximately $35.4 million.
About QinetiQ:
QinetiQ is a leading science and engineering company operating
primarily in the defence, security and aerospace markets. We work
in partnership with our customers to solve real world problems
through innovative solutions delivering operational and competitive
advantage. Visit our website www.QinetiQ.com. Follow us on LinkedIn
and Twitter @QinetiQ. Visit our blog www.QinetiQ-blogs.com.
Stephens Europe acted as financial advisor to QinetiQ. Baird
acted as financial advisor to MTEQ.
For further information please contact:
David Bishop, Group Director Investor Relations
and Communications: +44 (0) 7920 108675
Ian Brown, Group Head of Investor Relations: +44 (0) 7908 251123
Jon Hay-Campbell, Group Head of Communications: +44 (0) 7500 856953
Disclaimer
This document contains certain forward-looking statements
relating to the business, strategy, financial performance and
results of the Company and/or the industry in which it operates.
Actual results, levels of activity, performance, achievements and
events are most likely to vary materially from those implied by the
forward-looking statements. The forward-looking statements concern
future circumstances and results and other statements that are not
historical facts, sometimes identified by the words 'believes','
expects', 'predicts', 'intends', 'projects', 'plans', 'estimates',
'aims', 'foresees', 'anticipates', 'targets', 'goals', 'due',
'could', 'may', 'should', 'potential', 'likely' and similar
expressions, although these words are not the exclusive means of
doing so. These forward-looking statements include, without
limitation, statements regarding the Company's future financial
position, income growth, impairment charges, business strategy,
projected levels of growth in the relevant markets, projected
costs, estimates of capital expenditures, and plans and objectives
for future operations. Forward-looking statements contained in this
announcement regarding past trends or activities should not be
taken as a representation that such trends or activities will
continue in the future. Nothing in this document should be regarded
as a profit forecast.
The forward-looking statements, including assumptions, opinions
and views of the Company or cited from third party sources,
contained in this announcement are solely opinions and forecasts
which are uncertain and subject to risks. Although the Company
believes that the expectations reflected in these forward-looking
statements are reasonable, it can give no assurance that these
expectations will prove to be correct. Actual results may differ
materially from those expressed or implied by these forward-looking
statements. A number of factors could cause actual events to differ
significantly and these are set out in the principal risks and
uncertainties section of this document.
Most of these factors are difficult to predict accurately and
are generally beyond the control of the Company. Any
forward-looking statements made by, or on behalf of, the Company
speak only as of the date they are made. Save as required by law,
the Company will not publicly release the results of any revisions
to any forward-looking statements in this document that may occur
due to any change in the Directors' expectations or to reflect
events or circumstances after the date of this document.
This information is provided by RNS, the news service of the
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END
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