Adacel’s Shares Surged On ASX Post Renewal Of Tower Simulator Contract By United States Air Force

Adacel Technologies Limited (ASX: ADA) provides simulation as well as control systems for defence and aerospace sectors with activities such as those dealing with air traffic management and control. It has integrated software products and systems along with services segment dealing in simulator operators, speech recognition, etc.

On 30 January 2019 the company announced it has been awarded a contract from the United States Air Force (USAF) to continue providing services in support of the air force’s ATC Tower Simulator System program.

Adacel was awarded the original contract for the acquisition and support of ATC tower simulators in 2002 by the USAF. Adacel delivered more than 100 simulators during the acquisition phase of the program and it is the largest single contract for ATC simulators ever awarded till date.

The TSS program is currently undergoing a phase of sustenance and additionally with this new contract award Adacel will retain responsibility for the maintenance, support, and modernisation for the TSS units at US Air Force installations worldwide.

The contract has a base year period of performance and will have four years option. The option can be exercised to continue the program support to the end of November 2023. Adacel estimates the value of the contract to be AUD$32M depending on the options exercised over the 5-year term.

Options over the 5-year term of the contract include services to provide and operate a Training System Support Center, configuration management, a web-based integrated data environment, 24/7 on-call support, hardware technical refresh, operator training, visual database updates, software engineering upgrades, TSS relocation when required and routine maintenance.

Let us have a glance at the financials of the company for FY18. The company delivered a profit before tax of $10.2 million, 29.8% higher than the previous fiscal year. The improved result in FY2018 was driven by a 25% increase in revenue from continuing operations, and primarily, a 127% increase in Systems Segment revenue.

 Now let us quickly have a look at the Adacel Technologies Limited’s stock performance and the return it has posted over the last few months. The stock is currently trading at a price of $0.740 and increased by almost 10.448% approximately during the day’s trade, with a market capitalization of $51.34 million. The stock opened at $0.715 with its day low at the same price, however the day’s high price touched $0.770. The stock has yielded a YTD return of 0.75% and posted negative returns of 60.38%, 55.33% over the last six months and three months respectively, however in the last one-month period it has generated 3.08% return. It has a 52-week high price of $2.423 and a 52-week low of $0.600, with an average volume of 255,297 approximately. The stock is trading at a PE multiple of 6.30, with an EPS of AUD 0.106. It has an annual dividend yield of 6.72 percent.


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