Here is the Lockheed Martin talk in the MDA I cut and pasted the LM discussion from the recent MDA. This was the update I wanted most of all. It at least reassures me that things are progressing and they can achieve the milestones. Hopefully, they can get a larger order beyond LRIP and this can give the company ongoing revenue. I just feel it is important that they can prove to the marketplace they can successfully deliver a product. Then we can hope for. A committment to new furnace should signal that.
In September 2014, Lockheed Martin Missiles and Fire Control selected Engineered Materials to
provide critical cast components for the electro-optical targeting system (“EOTS”) system on the
F-35 Lightning II. The first component covered by this contract is an EOTS azimuth gimbal
housing to be manufactured using Beralcast®, Engineered Material’s proprietary berylliumaluminum
casting alloy. In October 2014, we began shipping castings for machining to our
subcontracted machine shop.
This first contract is for production of OEM aircraft fitted with EOTS systems and spares for lowrate
initial production (LRIP) lots 7 and 8. Production has begun at Engineered Material’s
Wilmington, MA manufacturing facility and initial deliveries have been made to the machine
shop. Due to delays beyond our control in prior periods, initial deliveries of completed parts will
be later than originally scheduled but we expect to be able to catch up. Production will continue
through the balance of this fiscal year and into early fiscal 2016. The value of this initial contract
is just over $2.0 million including non-recurring engineering and hard tooling deliverables and
has the potential, with subsequent LRIP contract awards, to increase significantly over the life of
the F-35 program. The EOTS assembly being produced by Lockheed Martin is for all the F-35
variants and planned production quantities are estimated to be over 3,000 aircraft with deliveries through 2035.
We are currently pursuing other sales opportunities with several defence companies and expect that developments will take place during the next 12 months. While we are currently operating at much less than capacity and recently refurbished part of our vacuum furnace, we believe that increased production at our Wilmington, MA facility will require replacement of key parts of our furnace within the next 12 months at an expected cost of less than $1 million. This work will more than double our melt capacity.
In February 2014, we signed a non-binding memorandum of understanding with Nu-Cast, based
in Londonderry, NH, to collaborate on new beryllium-aluminum investment casting projects and
opportunities, initially for the aerospace sector. We plan to work towards increasing
manufacturing capacity and improving production efficiencies of our proprietary near-net-shape
beryllium aluminum castings. Nu-Cast is supplying tooling and other materials for our F-35
initiative. We continue to discuss joint business development initiatives aimed at increasing
market share for IBC’s castings.