Anti-Drone Co. Teams Up With Defense Giant Lockheed Martin

Anti-drone defense company DroneShield Ltd. (DRO:ASX; DRSHF:OTC) announced it is partnering with defense giant Lockheed Martin Corp. (LMT:NYSE) as part of its Agile Shield defense program in Australia.

The partnership with Lockheed Martin's Science, Technology, Engineering, Leadership, and Research Laboratory (STELaRLab) is seeing DroneShield's DroneCannon Mk2 being integrated into Agile Shield, which was developed under the Australian Defence Department's AU$1.2 billion Next Generation Technologies Fund.

"The system brings together a number of Australian sensors and effectors with an open mission architecture to provide a rapid, scalable and flexible response to airborne threats," said STELaRLab's Integrated Systems Lead for Agile Shield, Kevin McDonald. "STELaRLab’s contribution included development of the open mission systems architecture and acting as the prime systems integrator. The addition of proven C-UAS jammers, such as DroneCannon Mk2, is part of Agile Shield’s planned transition from the virtual world to field demonstrations."

DroneCannon Mk2 offers non-lethal and non-kinetic countermeasures against unmanned aircraft systems (UAS), forcing them to ground or to return to home. It is also effective against swarm attacks, the company noted.

“DroneCannon Mk2 is a globally recognized effector, in use both in the eastern-European theatre, as well as being selected and recommended by the U.S. DoD (Department of Defense) for base protection requirements," said Red McClintock, DroneShield sales director. "We are excited to be working with Lockheed."

One of the world's largest defense companies with a market cap of more than US$110 billion, Lockheed Martin was the largest defense contractor by revenue for fiscal year 2014. In 2013, the company topped the list of U.S. federal government contractors and received almost 10% of the funds the government paid out to the Pentagon that year.

The Catalyst: An Exploding Market

Lockheed Martin Australia last month reached an important milestone with Agile Shield, a field capability demonstration.

Tony Lindsay, director of STELaRLab in Canberra, said a government official was on hand "viewed what he saw very positively."

"While the demonstration focused on countering Uninhabited Aerial System threats, the Agile Shield battle management system will empower the Australian Defence Force to respond effectively to the increasingly complex and sophisticated array of improvised threats emerging from across land, air, and maritime domains," Lindsay said in a statement. "The successful completion of the Field Capability Demonstration represents a critical milestone in the development of this important sovereign defense capability.”

Analyst Daniel Laing of Bell Potter Securities Ltd. wrote that DroneShield was "on track for a big year."

DroneShield develops technologies to protect people, vehicles, and installations from UAS. It provides artificial intelligence-based platforms for protection against drone threats and other hostile autonomous systems with products designed for a variety of terrestrial, maritime, and airborne platforms.

Its customers include military and intelligence community members, governments, law enforcement, critical infrastructure providers, and international airports.

The company provides both custom counter-drone and electronic warfare solutions and off-the-shelf products designed to meet a variety of terrestrial, maritime, and airborne requirements. Its other products include DroneSentry-X Mk2, DroneGun Tactical, DroneGun MK3, DroneGun MK4, DroneSentry, DroneSentry-C2, DroneSentry-X, and RfPatrol.

The anti-drone market size is projected to reach US$3.8 billion worldwide by 2027 from US$1.47 billion in 2023, growing at a compound annual growth rate (CAGR) of 27.7% during the forecast period, analysis firm Markets and Markets predicted.

Fighting in Ukraine and the Middle East also has demonstrated new terrors, like weaponized commercial drones available from electronic stores.

"The outnumbered Ukrainian forces have been using small drones fitted with improvised hand grenades and mortar rounds to drop on the armored elements of the invading Russian military," a report on New Delhi TV noted. "This tactic is said to be very effective."

The unmanned vehicles are being "used on a scale that has never been seen before," Stacie Pettyjohn, a senior fellow and director with the Center for New American Security, told NPR. Both sides in Ukraine also routinely use small drones to lock down each other's locations or drop small bombs.

'A Record Year'

Analyst Daniel Laing of Bell Potter Securities Ltd. wrote that DroneShield was "on track for a big year."

"We remain bullish on the outlook for DroneShield, with this update pointing to a strong H1/23 setting up the foundation for a record year," Laing wrote.

Technical Analyst Clive Maund published a piece about DroneShield titled "Stay Long on This Buy Rated Antidrone Co." In it, Maund wrote, "We bought DroneShield Ltd. at good prices last year, having correctly calculated that the company had a bright future, and never sold it, but mostly lost interest this year when it ran off into a long correction."

Technical Analyst Clive Maund published a piece about DroneShield titled "Stay Long on This Buy Rated Antidrone Co."

Maund said he would normally not be interested in a stock that "has risen quite a lot toward a zone of resistance and that has almost 600 million shares in issue," but he said the stock had been "behaving like a young, dynamic stock," which implied "something big is in the offing."

"The business environment for the company has been completely transformed over the past year or two due to the war in Ukraine, which NATO seems determined to continue and expand, and the resulting big demand for drones and related paraphernalia looks set to continue to grow rapidly. We, therefore, stay long, and DroneShield is rated a Buy again here," Maund wrote.

Ownership and Share Structure

Approximately 5.16% of DroneShield is held by management and insiders. Charles Goode owns 3.66% with 21.50 million shares, CFO Carla Balanco owns 1.44% with 8.45 million shares, Angus Bean owns 1.26% with 7.39 million shares, Paul Jonathan Shaw owns 0.95% with 5.58 million shares, CEO Oleg Vornik owns about 1.8% with 10.4 million shares, and Chairman Peter James owns about 1.11% with 6.5 million shares.

Institutions own 8.31% of the company. Epirus Inc owns 3.15% with 18.50 million shares, SR Bennett Pty. Ltd. owns 0.91% with 5.35 million shares, and P & B Shaw FT CB Pty. Ltd. owns 0.59% of the company with 3.43 million shares.

There are 623 million shares on issue and 586.9 million outstanding. The company has a market cap of US$122.28 million. It trades in a 52-week range of US$0.10 and US$0.34.

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1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of DroneShield Ltd. 
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