Transcription of The Stock Network Interview with Electro Optic Systems (ASX:EOS), Managing Director and CEO, Dr Andreas Schwer
Lel Smits: Electro Optic Systems is rapidly scaling as a global technology leader in advanced defense systems, counter-drone solutions and space domain capabilities. With major contracts secured across Australia, Europe and the United States, EOS is executing on its commercial strategy driving revenue growth, product deployment and strong global demand for its technology. Today I’m joined by Dr Andreas Schwer, Managing Director and Chief Executive Officer of EOS to discuss how the company is accelerating commercial traction across defense and space, backed by a contract backlog of $415 million, world first product deployments and a balance sheet with $91.5 million in cash.
Andreas, welcome to the Stock Network.
Dr Andreas Schwer: Thank you very much for having me here.
Lel Smits: Now, EOS secured a 71.4 million euro order from a NATO member state the first time a 100 kilowatt high energy laser weapon has ever been exported globally.
What does this contract mean for EOS commercially? Also, how does it position the company in the rapidly growing directed energy weapons market?
Dr Andreas Schwer: Yeah, so I can disclose now the client’s name. The client is the Netherlands. It’s first very important to have the Netherlands as the leading, as a leading nation in terms of innovation in the military context as a client for EOS.
The Netherlands are for us extremely important also because of another effect, the Netherlands army is operating in an integrated manner with the German army. They have a common command. That means that being in the Netherlands formally enrolled with our high energy laser weapon system gives us also a pole position for the German army’s procurement program in the next future.
From that perspective and from the perspective that the Dutch are extremely open for innovative new solutions and concepts and the Dutch want to be the leading nation for high energy laser weapons in Europe, all that is adding up to the importance of this contract for EOS and overall it’s a game changer for the company with this new weapon system being the first one on the market. But it’s not only a game changing effect for EOS, it’s a game changer for the entire laser weapon industry because so far we were talking only about prototypes and R&D programs. This is the first time that a nation will formally field a laser weapon.
Lel Smits: Excellent. It’s not the only game changer for the company. EOS has also won a 108 million land 403 contract with Hanwha Australia to supply enhanced R400 remote weapon systems.
How does this partnership strengthen EOS’s footprint in the Australian defence ecosystem and also what does it mean for the future pipeline of opportunities for the company?
Dr Andreas Schwer: Yeah, so this is obviously also two-folded. So first of all it underlines our dominating positioning in the Australian domestic market. The contact was long awaited so we had some contractual changes to be incorporated before it could be signed.
It’s the reason why it wasn’t signed at the beginning of this year but finally we made it which is a big achievement for us and for the team. So that is important to remain again the number one supplier of weapon systems, of weapon stations to the Australian Armed Forces but beyond that one and that is also of similar importance to us, it’s opening up for us an avenue into the Hanwha global supply chain and a good chance to become Hanwha’s global number one supporter for weapon stations into all the export programs worldwide. So it’s a huge opportunity for us.
Lel Smits: Excellent and Andreas, you have just released the quad lead. The backlog rose to $415 million which is up 206% since December last year, driven by strong demand for counter drone and heavy calibre weapons. What do you think is driving this surge in global demand particularly in the US where EOS won an $8.5 million US dollar contract in new orders for Slinger and R800 systems? So first of all we expect some more orders to come in before end of this year and we expect also 2026 to be extremely positive in terms of order intake, probably much higher than what we see this year.
So the outlook is really fantastic. This is driven by geopolitics, by the overall crisis situation not only in core Europe but also in other areas like the Middle East and we know for sure that it’s not only a question of replenishing all the emptied stocks which were emptied because of most of the vehicles and systems have been dispatched to Ukraine. It’s also the result of increased defence budgets and also the fact that most of the nations have understood now that they have to reintroduce cannon-based air defence as the effect of choice for anti-drone warfare and as nobody has any means today in their arsenal to go against those drone attacks, everybody needs to start now procurement programs and we will see this over the next few years, not only next year but over the next few years.
That’s a sustaining trend which will give us additional opportunities for order intake and revenues obviously.
Lel Smits: Andreas, thank you so much for the update on electro-optic systems and I look forward to hearing more as that news comes through.
Dr Andreas Schwer: Anytime, thanks for your time and interest.
Ends