An undisclosed US Federal Government department is set to beef up its protection with the order of $1.5 million worth of specialist ballistic armour products from defence manufacturer XTEK (ASX: XTE).
The $1.5m order (USD $1.1m) was placed with XTEK’s wholly-owned subsidiary HighCom Armor Solutions which specialises in advanced ballistic body armour.
“By leveraging advanced manufacturing capabilities in Columbus Ohio in the US and in Adelaide South Australia, to manufacture world leading ultra-light high-performance hard armour plates and ballistic helmets, we provide military, law enforcement, and first responder customers with world-class, advanced personal protection ballistic products and solutions,” said XTEK CEO, Scott Basham.
“This order for A$1.5m of specialist ballistic products is a great testament to the very high regard and trust that the HighCom Armor brand has with the US Federal Government.”
Ballistic defence products advertised on the HighCom website include armour shields, body vests, helmets and military-style webbing. Beyond their relationship with US Government agencies, these products are also popular with civilians given the high prevalence of firearms ownership.
For the year ending 30 June 2021, XTEK reported $28.3m in revenue which represented a 33.7% decline on the previous year. This resulted in a net loss after tax of $3.97m following two profitable years previously. The Company attributed the loss to production delays from their manufacturing facility in Adelaide and imposed COVID-19 lockdowns.
Despite these challenges, XTEK has continued to grow its Government-focused business which is a strategy that improved their gross margin from 20% in FY20 to 29% in FY21.
Last month, the Company received $1.9m worth of orders from Australia’s Department of Defence for Small Unmanned Aerial Systems parts which is a segment of their technology division that compliments their ballistic range of products.
To strengthen their balance sheet, XTEK currently has an Entitlement Offer open to eligible shareholders that can purchase New Shares for $0.26 each with the Company hoping to raise $5m.
Having invested more than $10m in their Adelaide manufacturing facility, XTEK is now hoping to capitalise on the USD $90m sales pipeline that have scoped out as qualified sales opportunities for their ballistic division.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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