HighCom finalises major SUAS delivery and support contract with the ADF

HighCom (ASX: HCL) has finalised the delivery of a mixed fleet of AeroVironment small unmanned aerial systems (SUAS) for Australia’s Department of Defence and transitioned to an associated support contract.

The support will include services such as engineering, maintenance, logistics, flying and training for a minimum period of four years.

The personal protection equipment specialist has expanded its business development team to focus on increasing sales with existing customers as well as investigating and assessing new business opportunities.

Busy period

HighCom received multiple SUAS spare parts orders totalling $4 million in June for delivery during the 2025 financial year and anticipates future spare parts orders to support the fleet.

In July, the Australian government announced that defence force soldiers would be equipped with the Switchblade 300, with the first systems to be delivered later this year and introduced to service in 2025.

Also during the 2024 financial year, HighCom renewed an exclusive reseller agreement with AeroVironment for SUAS and a suite of new products.

HighCom also maintained a sales representation agreement for the SwitchBlade 300 and Switchblade 600 precision loitering munition systems (also known as suicide or kamikaze drones).

‘Critical role’

“The broadening and extension of our partnership [with the government] places us at the centre of the critical and growing role that SUAS technology plays in modern military operations within the defence environment and provides unparalleled effectiveness in surveillance, reconnaissance and tactical support,” the company said.

Since the end of July, HighCom has also received $13.7m in new orders from US domestic and international military customers for the supply of high-end ballistic products.

HighCom has generated significant interest from US Department of Defence agencies and commercial strategic partners to explore ballistic products which can be produced utilising its patented XTclave ballistics technology.

International relocation

HighCom recently relocated its XTclave manufacturing, research and development operations from South Australia to the HighCom Armor production facility in the US state of Ohio.

The company believed the Australian manufacturing base was hampering its penetration of the US market, which adheres to the Buy America Act.

“Relocating our operations will satisfy the requirements [of the Act] and give us the best possible opportunity to realise the full potential of XTclave in the world-leading US market,” the company said.

“We expect this will create savings and synergies of around $2m per year, allow us to benefit from greater staff and asset utilisation and see improvements in our overall profitability.”

Deferred revenue

HighCom’s revenue of approximately $46m for the full year ending 30 June was impacted by issues resulting from a recent delayed contract and is now expected to be recognised in the first quarter of 2025.

The company will record an EBITDA loss of $10m, including $6.2m in impairments recognised in the first half of the year.

Cash balance at the end of June was $6.2m (up from $1.6m at the end of the first half) and the company had no debt, having repaid its line of credit facility in full.

HighCom has access to $3.8m of available facilities and does not expect to have to raise additional equity in the medium term.