Extension of ’17 U.S. D.O.D. contract…

…with a framework of USD 30m over 5 years

Solidifies Invisio’s marketing leading position

’17 agreement extended by 5 years, from USD 12m-30m
Invisio was initially awarded a contract with a client within the U.S. Department of Defense for communication and hearing protection systems back in 2017 with a total framework of USD 12m; that contract expired earlier this year. Today Invisio announced that that the client has decided to enter a new agreement with Invisio for a total of 5 years, with a larger framework totalling USD 30m. We view this a very positive for Invisio, as it solidifies Invisio’s marketing leading position and is a testament to the quality of Invisio’s products. No volumes are guaranteed as of yet, but we find it unlikely that the D.O.D. would enter a new agreement without the intention of placing additional orders. We do however not expect any new orders from the client before the new U.S. Defense budget is settled.

2020 U.S. Defense budget yet to be agreed upon
It’s our understanding that the Republican controlled Senate has passed a bill increasing the U.S. Defense budget for 2020 to USD 750bn. However, the Democrat controlled Congress has agreed upon a bill of USD 733bn. The two parties need to agree upon the new budget by 1 October 2019. Either case will result in an increase in the budget compared to 2019, and should allow for additional orders for Invisio, both through the new agreement with the D.O.D and through the tender offer with the U.S. Marine Corps.

Currently trading at f12m EV/EBIT of 24.4x
At the current share price, Invisio is trading at an f12m EV/EBIT of 24.4x, which can be compared to the 5-year historical average f12m EV/EBIT of 24.5x, according to FactSet consensus.

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