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- Series of Lockheed Martin orders pending, visibility on FY 08 orders - Further acquisitions under active consideration - Strong financial results expected in second half of fiscal 2007 - Recent contract awards include enhanced decontamination program for radiological "dirty bombs" - New initiatives to grow non-ECM business through U.S. prime contractors - New UK Managing Director to be named shortly
OTTAWA, July 5 /CNW Telbec/ - Allen-Vanguard Corporation (the "Company" or "Allen-Vanguard") (TSX: VRS) of Ottawa, Canada today provided the following update to shareholders.
"In keeping with our promise to shareholders to report progress on our plans we are providing a general update today as we head into the final quarter of fiscal 2007 and gain better visibility on orders and prospects," said David E. Luxton, President and CEO.
Lockheed Martin orders for Electronic Counter Measures (ECM) equipment
The Company shortly expects to receive a series of orders from Lockheed Martin for ECM components for up to 1,000 Symphony units as indicated in FEDBIZOPS daily update of 7 May, 2007. The Company expects to ship about half of the pending orders from Lockheed in the fourth quarter of this fiscal year, and the balance in the first quarter of fiscal 2008 which commences 1 October, 2007.
"Lockheed continues to make excellent progress with the Symphony program and is working towards the objective of stable, multi-year order flow in volume quantities," said Mr. Luxton. "While there are no guarantees, we continue to be encouraged that the Symphony program is evolving favorably into a strong long term opportunity, and also positions us well for other ECM opportunities."
In addition to Symphony units, which are purchased by the U.S. for coalition and indigenous forces, the U.S. Department of Defense (DoD) has announced the CREW3 program for next-generation ECM equipment for U.S. forces. The bid submission date was recently amended to 17 July, 2007, to be followed by a development contract award to multiple vendors, presently scheduled for late in fiscal 2007, and selection for production by late fiscal 2008 to one or more vendors. Volume production and deliveries are expected to begin in early fiscal 2009, and requirements could run into the tens of thousands of units as the U.S. upgrades and equips vehicles and personnel with next-generation ECM capability.
Strategic initiatives
As previously announced, the Company successfully completed the acquisition of Hazard Management Solutions Ltd. (HMS) on 13 June, 2007. "We are very pleased at the outlook and prospects for HMS," said Mr. Luxton. "We expect high growth in this segment of our business as U.S. and NATO forces expand their requirements for outsourced counter-IED training and services."
The Company added that it continues to actively evaluate other acquisition candidates that fit its stated criteria, in particular to achieve scale and a larger footprint in its North American operations. "Opportunities include acquisitions that are manageable with our existing cash reserves, plus others that are significantly larger and would require us to enlarge our capital base," commented Mr. Luxton. The Company stated that nothing is agreed or announceable, but acknowledged that it is in active discussions with one target company that could be highly strategic. "If this proceeds it would cause us to broaden our shareholder and organizational base in the U.S. so that we capitalize on opportunities in the world's largest defence and homeland security market," said Mr. Luxton. The Company emphasized that this specific potential transaction entails several conditions and risk factors, including additional financing, and involves multiple bidders in an auction process.
Second half financial results
The Company stated that it continues to expect a strong finish to fiscal 2007, with most deliveries occurring in the fourth quarter. "We're tracking to a record second half to this fiscal year," said David Luxton. "Timing of deliveries means a light third quarter but an exceptional fourth quarter." Total revenue in the second half is expected to be in the range of $50 million, with strong contributions from ECM and HMS, and a robust backlog position entering the next fiscal year.
Recent contract wins, general progress
Non-material contract wins are routinely posted as Update Bulletins on the Company's web site. Recent postings include the selection of Allen-Vanguard ECM in Afghanistan by a key multi-national agency, and the selection of the Company's bomb-disposal robots for the Pan Am Games in Brazil.
The Company has also just received notification that the Canadian Department of National Defence (DND) is adding 12 additional Vanguard(TM) Mk2robots to its present order, at an additional value of C$1.2 million, and that the Canadian government has also awarded the Company a $1.0 million contribution under two separate CRTI contracts, one to develop CBRNE courses for first responders and a second to enhance the radiological decontamination capability of its CASCAD decontaminating foam. "A dirty bomb is the nightmare scenario and intelligence agencies continue to warn of the likelihood of such an incident," said David Luxton. "CASCAD has shown unique effectiveness at decontaminating radiological surfaces, and this enhancement initiative by CRTI is timely given the need to be prepared for a dirty bomb incident."
"While we're pleased at these wins we are not satisfied that the growth and profitability we're achieving outside of ECM orders to Lockheed is what it could be, and we are implementing plans for improvement," said David Luxton. New initiatives include a program of briefings to prime defence contractors and systems integrators on Allen-Vanguard's capabilities, technologies and products. In many cases major defence and homeland security programs have been outsourced to these companies but they do not have in-house capability and are seeking outside providers. "Early results from this engagement are very encouraging," said Mr. Luxton. "Especially in CBRN, which we have long stated is an area of business that needs partners and channels to grow in the U.S. market."
The Company stated that it is also evaluating the potential of a mine protection seat technology it acquired when it purchased Vanguard Protective Technologies Inc. in March, 2004. Military vehicle OEMs and up-armor companies have expressed interest and placed small initial orders. "We expect to conclude this fiscal year on whether to retain and pursue this new product line internally or to license or divest the technology," said Mr. Luxton.
Allen-Vanguard previously announced that it would divest its Vehicle Bomb Barrier product line, a viable but tiny business that does not fit with its customer base. The Company reports that it is now close to a divestiture of this business.
UK management succession
The Company reported that Mr. Roy Peers-Smith retired on 1 June, 2007, as Managing Director of Allen-Vanguard Ltd., its wholly-owned UK subsidiary. Recruitment of a successor has been underway for several months and the Company shortly expects to name a new Managing Director with a very strong background in the industry.
About Allen-Vanguard
Allen-Vanguard Corporation and its subsidiaries worldwide operate under the brand "Allen-Vanguard". The Company develops and markets technologies, tools and training for defeating and minimizing the effects of hazardous devices and materials, whether Chemical, Biological, Radiological, Nuclear or Explosive (CBRNE). The Company's equipment is in service with leading security and military forces in more than 120 countries. Products include Electronic Counter-Measures ("ECM") equipment for jamming remote detonation of terrorist devices, specialty security equipment for Explosive Ordnance Disposal ("EOD"), remote intervention robots for hazardous applications, vehicle barrier systems, and personal protective wear for use in dealing with bio-chemical agents. Allen-Vanguard is the sole, worldwide licensee and/or developer of patented technologies such as the Universal Containment System and CASCAD Foam for blast mitigation and decontamination of bio-chemical warfare agents. Head office operations are located in Ottawa, Ontario, Canada, with manufacturing operations in Stoney Creek, Ontario; Tewkesbury, U.K.; and Cork, Ireland, and sales offices in Canada, the U.S., the U.K. and Asia. The Company's shares are listed on The Toronto Stock Exchange (TSX: VRS).
This press release contains forward-looking statements, which reflect Allen-Vanguard's current expectations regarding future events, its strategy, expected performance and condition. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "expects," "anticipates," "plans," "believes," "estimates" or negative versions thereof and similar expressions. In addition, any statement that may be made concerning future performance, strategies or prospects, and possible future acquisitions or dispositions, is also a forward-looking statement. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties and assumptions about the Company and economic factors. Forward-looking statements are not promises or guarantees of future performance, and actual events and results could differ materially from those expressed or implied in any forward-looking statements made about the Company. Any number of important factors could contribute to these digressions, including, but not limited to, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, and catastrophic events. We stress that the above-mentioned list of important factors is not exhaustive. We encourage you to consider these and other factors carefully before making any investment decision and we urge you to avoid placing undue reliance on forward-looking statements. Further, you should be aware that the Company disclaims any obligation to publicly update or revise any such forward-looking statements whether as a result of new information, future events or otherwise, prior to the release of the next Management Discussion and Analysis to be released by the Company.
To find out more about Allen-Vanguard Corporation (TSX:VRS), visit our website at www.allen-vanguard.com.
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