DroneShield scores $33m contract with US Government agency

Sydney-based Drone Shield (ASX: DRO) has notched its second major international contract in the space of two weeks, although the latest deal with an unnamed US Government agency is worth more than three times the last one at $33 million.

The deal takes the counterdrone technology company's order backlog to a record $62 million, with a current pipeline of more than $200 million across more than 80 identified opportunities.

"We’re honoured to receive this award and support this customer. This award is a result of their trust in DroneShield and our solutions, and reflects our commitment to their mission," says DroneShield’s US CEO Matt McCrann.

"We’re proud of our team’s efforts, the increasing value we’ve delivered to our customers worldwide, and are excited about continuing to support and grow the business as we look towards 2024 and beyond."

DRO shares surged on the announcement in early trading by more than 28 per cent to 34 cents per share.

Full payment for the order for DroneShield equipment and multi-year services is expected before the end of 2023, which DroneShield anticipates will be another record year, up by a wide margin on 2022.

The news follows a $9.9 million contract announced on 4 July with a Five Eyes Department of Defence (DoD), which at the time was described by CEO Oleg Vornik as the largest long-term contract received by DroneShield to date.

"Follow-on contracts are the ultimate customer measure of our performance. As an Australian sovereign industrial capability business, DroneShield is proud and pleased to continue undertaking multi-year contracts of increasing size with this customer," Vornik said at the time.

"In the current uncertain geopolitical environment, there is a significant focus by the Five Eyes Governments to procure from defence industrial capability champions within their network of countries."

Other recent milestones for the company include the assignation of NATO Stock Numbers (NSN) for many of its products last week, while in late May the group highlighted a "significant production and operations ramp up" following a capital raise that far exceeded plans in March.

After completing a $10.9 million raise in February, DroneShield then undertook a share purchase plan (SPP) with a target of $3 million, but instead received SPP applications worth $29.4 million.

In response, the board decided to recognise this bullishness from investors to maximise growth opportunities, taking total funds raised under the placement and SPP to $40.3 million before costs. This boosted the balance sheet to hold around $50 million in cash and no debt.

In other Australian defence tech news today, Canberra-based XTEK (ASX: XTE) has announced a $2.6 million international purchase order from an undisclosed European customer to supply its high-end ballistic body armour.

The deal was struck by XTEK's subsidiary HighCom Armor Solutions Inc, which was acquired for an undisclosed sum in mid-2019.

"HighCom is XTEK’s Group global armour business, and from our advanced manufacturing capabilities in Columbus, Ohio, our patented XTclave production capability located in Adelaide, South Australia, and our new European Sales & Distribution office in Poland, we design, manufacture, and supply world-leading, ultralightweight and high-performance specialist ballistic armour solutions to militaries, law enforcement, and first responder customers all around the world," says XTEK group CEO Scott Basham.

"This new international order, valued at $2.6 million received from a new undisclosed European customer, will see many thousands of individual advanced high-performance body armour products dispatched over the coming weeks to meet this customer’s delivery priorities."

XTE shares were up 2.78 per cent at 37 cents per share at the time of writing.