The recent downing of a suspected Chinese surveillance balloon in U.S. airspace has once again sparked a diplomatic row between Washington and Beijing, further muddying the already murky relationship between the two countries.
On Saturday, February 4, U.S. military fighter jets shot down the suspected spy balloon floating off the coast of South Carolina following the orders of President Joe Biden.
This incident has put the spotlight on the work of companies like Castellum Inc. (NYSE-American: CTM), who are very instrumental in providing cybersecurity, electronic warfare, data analytics, software, and IT services focused on the federal government.
Castellum is a technology company focused on leveraging the power of information technology to help solve the U.S.’ most pressing national security challenges.
Since 2019, the company reports it has provided the U.S. government clients with cybersecurity, software development, systems engineering, information and electronic warfare, program support, and data analytics services, the need for which is underscored by the suspected Chinese surveillance balloon incident.
National security challenges have evolved in the 21st century, in large part due to the explosive growth of digital communications and enterprise systems. The threat of modern security warfare has seen countries increase budgets to shore up their security.
In March last year, for example, Bloomberg reported that President Biden requested $813.3 billion in national security spending, including $773 billion for the Pentagon. That was an increase of $31 billion, or 4%, from approved expenditures for the fiscal year and about $43 billion more than the White House budget office had projected for even 2023.
The growing spending and demand for improved security have seen Castellum execute strategic acquisitions — following a buy-and-build strategy — in firms that share the company’s passionate commitment to U.S. national security and have a history of bringing exceptional value to their clients and investors.
LOI To Acquire An East Coast-based Government Contractor
On January 18, the company announced that it had signed a non-binding letter of intent (LOI) to acquire an East Coast-based government contractor which focuses on cybersecurity, data analysis, and other IT services for federal civilian agencies.
Castellum noted that the deal is “subject to customary due diligence and the execution of a definitive purchase agreement” and expects to close the transaction within the next 90 days.
The potential acquisition, combined with a previously announced pending non-binding LOI, is expected to boost the company to over a $60 million annualized revenue run rate versus a current $44 million run rate based on announced Q3 2022 results.
“This additional work in Federal Civilian agencies will further broaden Castellum’s customer base while adding new capabilities and leveraging past performance enjoyed by our Department of Defense (DoD) customers with whom we have strong and growing relationships,” Mark Fuller, President and CEO of Castellum, said.
He added that the company is “also talking with other companies that have business with DoD and Federal Civilian agencies about potential acquisition as we are working to double our top line run rate in 2023.”
Award Of NAVAIR Contract For ALRE V2MMS
On January 23, Castellum disclosed that its subsidiary Specialty Systems Inc. (SSI) had been awarded the contract for the NAVAIR Aircraft Launch & Recovery Equipment (ALRE) V2 Maintenance Management System (V2MMS).
According to the company, this award will extend the duration and scope of an existing contract and is worth a total of $1.9 million, including $1.1 million to be recognized in 2023. The V2MMS software application will be integrated into the existing Aviation Data Management and Control System (ADMACS) used on all active U.S. Navy aircraft carriers, answering the Navy carrier fleet’s heavy demand for the capabilities to be delivered.
Under the contract, SSI will introduce its NAVAIR customer to a new paradigm for the rapid development and deployment of software applications, paving the way for addressing additional demand for redesigning many legacy Navy software applications.
“We are thrilled that NAVAIR continues to value the work that we have done and are pleased to have received this extended and expanded scope of work. Castellum continues to work closely with NAVAIR on multiple fronts to provide the necessary expertise to meet mission-critical requirements,” Fuller said.
Emil Kaunitz, President of SSI, also commenting on the deal, said, “Our relationship with this valuable customer has extended for more than two decades. We have consistently delivered a high caliber of work for NAVAIR and look forward to continuing to grow this relationship.”
In an industry with players like Leidos Holdings Inc. LDOS, Lockheed Martin Corp. LMT, and Booz Allen Hamilton, Castellum’s strategic acquisitions would seem to position it well on its path to industry leadership.
Featured Photo by VanderWolf Images on Shutterstock
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