T3 Defense (DFNS) investor relations material

Strategic overview and market positioning

• Focuses on acquiring and scaling defense subcontractors in robotics, unmanned platforms, and AI-enabled systems, targeting Tier 2 and Tier 3 manufacturers with established government and prime contractor relationships.

• Operates primarily in the U.S. and Israel, leveraging regulatory approvals and established market access to ensure ongoing contract flow and compliance.

• Seeks to buy profitable, revenue-generating companies at private market multiples (4x–6x EBITDA), aiming for value creation through disciplined M&A and operational integration.

• Portfolio includes five subsidiaries across simulation, tactical energy, UAVs, and motion control, providing diversification and stability.

• Identified a pipeline of 400 potential acquisition targets, focusing on companies with growth potential and operational synergies.

Financial performance and growth outlook

• Reported $3.7 million in Q1 revenue and projects $26 million for the full year, with a $12.1 million backlog and additional RFPs expected to convert in 2024.

• Subsidiaries have demonstrated significant growth, with some achieving nearly 40% annual revenue increases.

• Aims for 30–40% annual revenue growth, targeting a billion-dollar valuation within five years through organic expansion and strategic acquisitions.

• Maintains a low-debt structure, with minimal leverage at both the holding and subsidiary levels, and selectively uses equity lines and PIPE investments.

• Utilizes a $175 million SPAC for non-dilutive funding of larger acquisitions, enhancing liquidity and balance sheet strength.

Operational strategy and synergies

• Employs a roll-up strategy, integrating acquired companies operationally and financially, with a focus on cross-selling and leveraging shared customer bases.

• Prioritizes acquisitions of companies already qualified for defense contracts to overcome regulatory barriers and ensure continuity.

• Management team combines M&A expertise, operational leadership, and a network of defense sector ambassadors to drive growth and market access.

• Operational synergies are primarily realized through sales channels rather than cost-cutting, especially among manufacturing-focused subsidiaries.

• Strategic use of SPAC structure allows pursuit of larger targets without shareholder dilution, with the sponsor retaining a 25% promote upon successful deals.