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Electro Optic Systems Holdings Limited (ASX:EOS), a company engaged into designing, development and production of advanced electro-optic technology devices and systems for space and defence markets, has shared its market update. The market update covered by EOS included its financial data, defense sector, space sector followed by the outlook in FY2019.
Financial Data:
In FY2018, the year was an outstanding year for the company where it made a profit that was 50% above its forecast that was achieved at 50% plant capacity. This profit excluded foreign gains. The increase in the profit was driven by improvement in the existing volume. During the FY 2018, the company generated revenue of $87.13 million ($23.26 million in FY17). The period reported growth in inventory COGS to 50% (48% in FY18). The employee cost and other cost declined considerably during the period. The period reported a gain in the foreign exchange worth $7.72 million. The net profit percentage by the end of the period was 17.3% (Loss of 40.4% pcp). The company reported $15.69 million operating cash outflow during the year.
EOS Defence Sector Strategy
During the period, the company developed a remote-controlled weapon system [RWS] for the western armies which was an extended development program [1993-2003] for the US Army. It resulted in more than $10 billion of RWS program awards across the globe. The new generation of RWS technology developed by EOS increased the lethality, mobility and intelligence. The scale of application to all the military vehicles irrespective of the size also got extended.
For the next-generation, RWS technology represents a market worth $7 billion, with no competitor having captured this new market.
Product Releases:
The new T2000 turret and R-150 RWS are the two extremes of the EOS defence product range. The T2000 turret has variants up to 5 tonnes in weight, and it is characterized as the largest defense product of EOS. The R-150 weight ranges from 150-200 kg and is used to protect the transport vehicle as well as the light vehicles.
The production in 2018 exceeded in terms of quantity, yield, quality, and profitability. The company expects that there would be further improvement in terms of capacity utilization from 50% to 80%. Further, the company anticipates that its US plant will transit to operation by Q3 2019.
With the launch of R-150 in Sep 2018, there is an expectation to win orders from late 2019. Tenders worth more than $2 billion is already submitted, post the launch of T-2000 turret in February 2019.
T-2000 and R-150 products of EOS are a source of excellent traction, and it also has unique niches to fast-track sector growth. EOS was able to secure $0.8 billion in the form of awards, with submitted tenders worth $2.2 billion. It expects another tender of $2 billion by 2020 and fully cater to $7 billion market by 2022.
Space Sector:
In September 2018, the operations related to Long-term military and commercial space got completed with improved performance metrics. The operational output exceeds 15,000 space tracks per week giving this segment a positive outlook in terms of market fundamentals, excellent technology and products, product momentum and performance.
Outlook:
The company expects that in 2019, the revenue would be approximately 100% over 2018. The existing orders worth $670 million, will help in the revenue growth by 40% to $0.25 billion in 2020. The company expects strong growth in 2021 with further improvement in capacity and process improvement.
On 14 February 2019, the company noted a series of significant developments in EOS space data market.
Stock performance
In the last six months, the shares of EOS reported a negative return of 5%. However, in the previous three months, the stock gave a return of 16.80%. Post the announcement, by the closure of the trading period on 12 March 2019, the closing price of the shares of EOS was A$2.850, up by 15.385%. Today, the stock is trading at lower level at A$2.820, down 1.053% (As at 1:40 PM AEST, 13 March 2019).
The company has a market capitalization of A$273.9 million and 96.1 million outstanding shares.
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