Their FY2020 EBIT guidance of $36-38m ($3m from EM Solutions) leaves $33-35m to EOS Defense Segment.
At 13.5% EBIT margin, EOS Defense will need to deliver between $244.4m - $259.3m in revenue / production capacity which seems achievable just from the Hume plant alone? Any added capacity is a bonus and adds to EBIT.
I have not thought much about the implications of Space segment, without having a management outlook / forecast - apart from potential $200m per annum revenue.
A few things I have in mind for sharing with the table:
1. In the recent 4E release EOS has customers in 3 continents and working to diversify their customer base. 2 customers accounted for $128m of the $166m revenue. My guess its the two gulf states. Australia and Singapore - Who are the other customers? During that conference call Q&A, I recall Ben saying 35%+35%+15%+15% in EOS's revenue source by region, I can't remember the regions exactly and the order (Asia Pacific, Middle East, Europe, USA?)
2. Also, in the accompanying 4E presentation, I read that 2021-2030 EOS is confident in capturing 40% ($9.6b) of the $24b market they've created for RWS & CUAS. Nearly $20b including service & support revenue longer term assuming they did capture market share (and not including Space / Communications)
However, $1.2b (2021) CAGR 15% over 10 years gives $4.85b (2030) - am I missing something?,
if the starting number is $2.4b, I arrive at $9.7b by 2030.
3. EOSDS's activity in the US and the fact that EOS is bringing the US plant online next would at least mean that they are expecting to win substantial US contracts? EOS revenue seems to be driven by Asia-Pacific and Middle East, it will be nice to score some wins with NATO countries and the USA.
4. I've been looking into the optical communications, specifically around ideas and concepts by NASA. Seems like laser/microwave hybrid is the way forward and microwave/RF technology will still be around till 2040 possibly beyond - hybridized.
https://ntrs.nasa.gov/archive/nasa/casi.ntrs.nasa.gov/20180001852.pdfSetting up EOS Communications and buying EM Solutions (and Audacy) is definitely legit and plausible. (EM Solutions is profitable on its on anyway)
Note how the EOSLink spacecraft is a carbon copy of the concept satellite in the paper? I wonder if EOSLink may be the next gen NASA TDRS fleet or a commercial version of it.
5. I also noticed 2019 revenue from rendering services has gone up 305% vs 2018. Specifically,service revenue for space segment exploded more than 500%. I don't know the significance of this and what is the profit margin going forward as space segment continues to gather more revenue stream. It'll be nice to have more clarity but that's the exciting part of a growth company.
6. Does anyone here know if the EBIT margin for Support Revenue (after sales) is any better or worse than the current 13.5% of group EBIT?
7. I found an EOS Defense Catalogue on Janes which neatly summarize all their current products. I find the CUAS section right at the end especially interesting.
https://issuu.com/janesintel/docs/1729542?fr=sNzJlZTI0Mzk8. There are some 15000 older RWS worldwide, sold prior to 2010 that requires replacement and upgrading. Does the $12b market opportunity takes into this? From the ATK Orbital $170m order of 600 RWS, each R400S MK2 sells for approx. $283000. At best, a potential $4.3b market here to be addressed plus support/service revenue.
DYOR!
Cheers!
(20min delay)