FLYHT Acquires Panasonic Weather Solutions Assets
Calgary, Alberta – October 10, 2018 – FLYHT Aerospace Solutions Ltd. (TSX-V: FLY) (OTCQX: FLYLF) (the “Company” or “FLYHT”) is pleased to announce it has acquired the assets of Panasonic Weather Solutions (“PWS“), based in Littleton, Colorado, from Panasonic Avionics Corporation (“PAC“). Currently serving more than a dozen airlines in North America, Europe and Southeast Asia, PWS provides Iridium satellite communications systems, aircraft tracking and alerting, the FlightLink™ Iridium Satellite Data Unit, and Tropospheric Airborne Meteorological Data Reporting (TAMDAR™) sensors.
The assets FLYHT is acquiring include among other things, 27 employees; 10 service contracts with airlines in North America, Europe and Southeast Asia, including a major Asian carrier; an Iridium Value Added Reseller (VAR) license, and a Federal Aviation Administration Parts Manufacturer Approval (PMA) capability; the technology and intellectual property for the FlightLink™ Iridium Satellite Data Unit and Tropospheric Airborne Meteorological Data Reporting (TAMDAR™) sensor; and a weather observation contract through a third party that supplies weather data observations to NOAA (the National Oceanic and Atmospheric Administration).
Pursuant to a transition agreement between the parties which ends March 31, 2020 (the “Transition Period”), FLYHT and PAC will work closely together to complete several ongoing FlightLink and TAMDAR deployment programs, while also providing Tier 1 and warranty support via PAC’s Customer Performance Center and Panasonic Technical Services’ facilities. This Transition Period will give FLYHT time to integrate business and operational functions between its Calgary, Alberta and PWS’ Littleton, CO locations. In addition, to keep the asset acquisition cash-flow neutral to FLYHT during this period, PAC will pay FLYHT a subsidy of USD$3.3 million. PAC’s total subsidy can be increased or reduced if FLYHT’s income relating to the acquired PWS assets falls short of or exceeds certain agreed upon thresholds. Pursuant to the terms of the acquisition of PWS assets and the transition agreement, FLYHT is paying no monetary consideration to PAC for the PWS assets.
“This is a fantastic opportunity for FLYHT to grow the business,” said Thomas R. Schmutz, Chief Executive Officer of FLYHT. “This agreement will gain the Company a large operator and establish a brand-new revenue stream—weather observations and services. We will include this new part of our business in our SaaS, or Software as a Service revenues, and we will periodically report on the weather component separately to demonstrate our progress with this new technology and customer base.”
FLYHT will continue to install the significant sales contract backlog included with this asset transfer according to customer provided schedules. This transaction is expected to almost double (1.74x) FLYHT’s current overall revenue (adding approximately USD$8.4 million at margins of 41%) and more than double (2.47x) FLYHT’s current SaaS revenues (adding approximately USD$5.2 million at 52% margin), when calculated on an annualized basis at the end of the Transition Period (assuming the install schedules are completed as currently anticipated). The asset acquisition plan anticipates new revenue of approximately USD$11.7 million contributing 45% gross margin during the Transition Period. It is important to note that during the Transition Period, FLYHT will need to increase the number of worldwide TAMDAR installations to preserve the total planned weather observation related revenues, which at approximately USD$3 million represents 46% of SaaS revenue increases during such period. Also, FLYHT will need to earn additional business and/or reduce expenses related to these new assets and operations for them to add positively to FLYHT’s income.
The PWS fleet has more than 200 active units in service and holds existing agreements that could nearly double this number over the transition period. The agreement also gives PAC the right to resell FLYHT’s products and solutions, on a non-exclusive basis, to commercial aviation operators.
Hideo Nakano, Chief Executive Officer of Panasonic Avionics Corporation said, “I want to personally thank the PWS team for their significant contributions to our company over the last several years. During that time, this group has created, implemented and delivered an industry-leading and ICAO-compliant aircraft tracking and alerting system. They have also played a key role in our work with airline customers to reduce CO2 emissions.”
“After many months of evaluating partners for PWS, it’s clear that FLYHT is the ideal choice to foster long-term sustainable growth for FlightLink, AirMap, TAMDAR and other PWS products and services. We look forward to collaborating with FLYHT and our colleagues from the PWS team on future endeavors that help our industry capture the true value of a connected aircraft.”
More About Panasonic Weather Services Solutions
For more than a decade, Panasonic Weather Services has developed and deployed TAMDAR on more than 300 aircraft. What makes TAMDAR unique is that it captures temperature, pressure, winds aloft, icing, turbulence and relative humidity, bundles the data with GPS (Global Positioning System) data and transmits the information, in real-time, over satellite networks. Like the data traditionally gathered by worldwide weather balloons, this information is used to update weather models. Unlike weather balloons, TAMDAR collects the data continuously and in real-time. TAMDAR technology is protected by several U.S. and worldwide patents, and the relative humidity data, gathered throughout an aircraft’s flight, makes these weather soundings particularly valuable to meteorologists.
PWS’ FlightLink and AirMap technologies provide capabilities similar to FLYHT’s FLYHTLog™ product, including flight tracking, Out-Off-On-In (OOOI) messages and an Aircraft Situational Display (ASD). Additional capabilities include an Aircraft Communications Addressing & Reporting System (ACARS) communications function for pilots, plus the ability to ingest flight plans and provide warnings when aircraft deviate from plan or exhibit low fuel relative to plan.
With plans to integrate PWS’ AirMap with its own server, UpTime™, FLYHT intends to create a best-of-breed situation and tracking service. This solution will take advantage of the benefits of the Company’s patented and unique real-time aircraft exceedance monitoring, engine trending, flight data recorder streaming, fuel training modules and “Virtual Cockpit” capabilities.
About FLYHT Aerospace Solutions Ltd.
2018 marks FLYHT’s 20th anniversary as a leader in real-time aircraft data streaming. FLYHT’s mission is to improve aviation safety, efficiency and profitability (located in Calgary, Canada; publicly traded as: FLY:TSX.V; FLYLF:OTCQX). Airlines, leasing companies, fractional owners and original equipment manufacturers have installed the Automated Flight Information Reporting System (AFIRS™) on their aircraft. The solution is used to capture, process and stream aircraft data providing real-time alerts. AFIRS sends this information through satellite networks to FLYHT’s UpTimeTM Cloud data center, which gives aircraft operators direct insight into the operational status and health of their aircraft, which in turn enables them to take corrective action to maintain the highest standard of operational control. The company recently acquired the assets of Panasonic Weather Services, including FlightLinkTM Iridium Satellite Data Unit and Tropospheric Airborne Meteorological Data Reporting (TAMDARTM) sensor. For more information visit www.flyht.com
LEARN MORE ON OUR CONFERENCE CALL THURSDAY OCTOBER 11, 2018
FLYHT will host a live conference call to discuss the acquisition of the PWS assets, on Thursday, October 11 at 2:30 pm MDT (4:30 pm EDT, 1:30 pm PDT).
The conference call will include a brief presentation from FLYHT’s CEO Thomas R. Schmutz and CFO Alana Forbes about the agreement into which the Company has entered, followed by a question and answer period with management.
To access the conference call by phone within Canada and the U.S.A., the toll-free number is 1-800-319-4610. Outside Canada and the U.S.A., dial 1-604-638-5340. (Callers should dial in five to 10 minutes prior to the scheduled start time).
Management will accept questions by telephone and e-mail. Individuals wishing to ask a question during the call, can do so by pressing *1. Questions can be emailed in advance or during the conference call to firstname.lastname@example.org.
An archive of the conference call will be posted on the Presentations and Webcasts section of FLYHT’s website as soon as it is available from the conference call provider. http://flyht.com/presentation-and-webcast/.
|FLYHT Aerospace Solutions Ltd.
Chief Financial Officer
|Adelaide Capital Markets Inc.
Join us on social media!
Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. In particular, forward-looking information in this press release includes, but is not limited to, statements with respect to the terms of this agreement, business growth and integrations, anticipated revenues and expenses, product installations timing and related matters. Although we believe that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. We cannot guarantee future results, performance or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information.
Forward-looking information is based on the opinions and estimates of management at the date the statements are made and are founded on the basis of expectations and assumptions made by the Company. Such forward-looking information is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking information. Some of the risks and other factors that could cause the results to differ materially from those expressed in the forward-looking information include, but are not limited to: general economic conditions in Canada, the United States and globally; industry conditions, the failure of certain business integrations between the parties, the failure to attract new business and reduce expenses, delays in product installation schedules, the availability of capital on acceptable terms; the need to obtain required approvals from regulatory authorities; stock market volatility; liabilities inherent in operations; competition for, among other things, capital and skilled personnel and other factors. Readers are cautioned that this list of risk factors should not be construed as exhaustive.
The forward-looking information contained in this news release is expressly qualified by this cautionary statement. We undertake no duty to update any of the forward-looking information to conform such information to actual results or to changes in our expectations except as otherwise required by applicable securities legislation. Readers are cautioned not to place undue reliance on forward-looking information.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.