COM DEV Announces Official Launch of US Operations; Purchases Production Facility in California
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CAMBRIDGE, ON, May 22 / -- COM DEV International Ltd. (TSX: CDV) ("COM DEV" or "the Company"), a leading manufacturer of space hardware subsystems, today announced that it has purchased a 46,000 square foot facility in El Segundo, California. The facility will serve as the home of the engineering and production operations of COM DEV USA. It is located in close proximity to some of the world's leading space companies, including Boeing, Lockheed Martin, Northrop Grumman, Raytheon, and NASA's Jet Propulsion Laboratory. The purchase cost is US$8.75 million, which COM DEV has funded through existing debt facilities.
COM DEV USA Objectives
COM DEV's purpose for establishing a domestic US manufacturing capability is to gain access to the US Government space market, which is larger than the rest of the world's government and commercial space spending combined. The Company estimates that approximately 98% of US Government space spending remains within the country. As a foreign-based supplier, COM DEV has secured a number of significant US military mandates by virtue of its unique capabilities in passive microwave equipment, but its opportunities have been limited by geography.
The Company's objective is to establish COM DEV USA as the leading US domestic supplier of passive microwave equipment to the military and civil space markets.
"We are very excited by our prospects for capturing meaningful market share in the domestic US market," said Mike Pley, President of COM DEV International. "We have been actively encouraged to take this step by existing customers who have indicated a strong interest in having ready access to the COM DEV brand name for their civil and military programs. This initiative will require significant up-front investment, but has the potential to deliver very attractive long-term growth in a business we understand very well."
COM DEV USA expects to have considerable advantages over the existing fragmented supply base. It will benefit from the transfer of technology and production processes from its parent company which can claim three decades of space heritage, world-leading passive microwave technology, an unsurpassed reputation for quality, and established relationships with every major satellite prime contractor. The Company expects these factors to be instrumental in recruiting industry veterans who are attracted by the rare opportunity to build a leading organization from the ground up.
David Lizius has been appointed General Manager of COM DEV USA. His mandate has included developing the business plan, managing the start-up process, and assembling a leadership team. Mr. Lizius has over 25 years of experience in the space industry, including the past 10 years with COM DEV, and his management roles have included the start-up and operation of a number of business units. He earned a PhD in electrical engineering from the University of London.
Expected Milestones
COM DEV's Board of Directors has approved a business plan and committed US$25 million of funding to the US expansion. This investment includes approximately US$20 million of capital costs for the purchase of the land, building and production equipment. The build-out of the facility will begin immediately and is expected to be substantially completed by the end of COM DEV's current fiscal year. An additional US$5 million is earmarked to fund the operations over the next three years. At full capacity the El Segundo facility is sized for approximately US$50 million of revenue annually.
COM DEV USA expects to earn its initial revenue stream by providing engineering and other support services to US-based prime contractors. The new facility must be qualified for space production by securing an initial production mandate from a customer. Once quality control and other processes have been fully qualified, expected to occur during fiscal 2008, COM DEV USA will begin actively seeking manufacturing programs. Prior to this final stage, in order to meet the US Government requirements for a domestic supplier, COM DEV will be required to establish a separate board of directors comprised of American citizens to oversee the US operations.
COM DEV continues to evaluate potential US acquisition targets as a parallel strategy. Should a favourable transaction become available, the new El Segundo facility has the capacity to accommodate the acquired operations, and the overall market entry timeline would be accelerated. The Company's current US strategy, however, is not dependent on the completion of an acquisition.
About COM DEV
COM DEV International Ltd. (www.comdevintl.com) is a leading global designer and manufacturer of space hardware subsystems. With facilities in Canada, the United Kingdom and the United States, COM DEV manufactures advanced products and subsystems that are sold to major satellite prime contractors for use in communications, space science, remote sensing and military satellites.
Source: Com Dev International Ltd.
CONTACT:Gary Calhoun, Chief Financial Officer, Tel: (519) 622-2300 ext.
2826, Fax: (519) 622-2158, gary.calhoun@comdev.ca; Jeff Codispodi, The Equicom Group, Tel: (416) 815-0700 ext. 261, Fax: (416) 815-0080, jcodispodi@equicomgroup.co
