- Mobix Labs plans to acquire Special Project Delivery, expanding into the rare earths and critical minerals supply chain
- The transaction aligns defense, aerospace and advanced manufacturing with growing U.S. onshoring efforts
- Management sees the combination as part of a broader strategy around national security, AI infrastructure and sovereign supply chains
Defense and critical minerals strategy converges
What happens when a defense aerospace technology company moves directly into the rare earths and critical mineral supply chain? Today we’re looking at Mobix Labs, a NASDAQ (MOBX) listed company built around advanced connectivity, aerospace and defense technologies, and its planned acquisition of Special Project Delivery.
Joining Ricki Lee on this episode of the Capital Compass are Phil Sansone, CEO of Mobix Labs, and Paul Singarella, CEO of Special Product Delivery.
Watch the full video above, or read the full transcript below.
This article is disseminated in partnership with Mobix Labs. It is intended to inform investors and should not be taken as a recommendation or financial advice.
Ricki: So, Phil, let’s start with the bigger picture. What is the strategic rationale behind bringing Mobix Labs and Special Project Delivery together, and why does this combination make sense right now?
Phil: Well, as you know, last week we announced a Letter of Intent to acquire Special Project Delivery or SPD as we’ll refer to them. As you know, Mobix has been known as a trusted supplier to the defense and aerospace electronics, as well as homeland security and markets.
And we view this as a way to broaden our reach into that supply chain by going upstream and downstream. Those end markets are very reliant on rare earth and critical minerals to build their products. So we just see it as an extension of the being able to serve the supply chain across various aspects of it.
So we’re looking to become a more vertically integrated company associated with those end markets. And the other thing to add is really there’s also a lot of the policy driven decisions right now that are pushing us in this direction.
Paul: And I would amplify that on the why now? We’re at a very important moment in US industrial policy, which is now looking at past practices and recognizing that it created some real strategic weaknesses for the country.
Earlier this year, the United States government announced that it was going to create a strategic reserve for critical minerals, similar to what we have had since the seventies for oil and gas, the strategic petroleum reserve.
That’s because the US government realizes that these critical minerals, these are the 21st century materials, these critical minerals, are absolutely essential to winning the 21st century, and we’re going to start winning it right now.
Ricki: Wow. Big stuff. Big stuff ahead. Mobix has also built its reputation across defense, aerospace, communications, hardware, and advanced technologies. Does this acquisition signal a shift, Phil, away from those existing businesses, or is this about expanding the broader platform?
Phil: So, we intend to continue to invest in the core business that we have today, which is serving the defense, aerospace and security markets with our connectivity and wireless products. That will continue. That is not something we are pivoting away from.
It is clearly something we’re still focused on and will continue to invest in. But as I said earlier, we are looking to expand ourselves into various other markets that are adjacent to what we’re doing today.
This will allow us to expand our position in the supply chain so that we’re ultimately viewed as a defense oriented, vertically integrated platform that is really focused at the end of the day on providing national security through our products and services.
Ricki: And Paul, from your side of things, can you walk us through your business strategy and vision here? Why are rare earths and critical minerals so important at such an important strategic focus right now?
Paul: Well, they’re everywhere. But they’re nowhere. And let me explain that. Rare earth elements are everywhere. They’re in every major defense platform that we have from the Patriot missile to the Tomahawk.
They’re key to the semiconductor industry, optics, magnets. So rare earth elements are everywhere, but when I say they’re nowhere, what I mean is the United States is literally at ground zero in terms of its mining, production, refinement and purification of these materials. We’ve outsourced it. And now with the great onshoring that is upon us we have this wonderful opportunity to be part of it.
And we just want to play our role here by being one of the linchpins between the materials being mined and the products being manufactured. Mobix is at the other end of that spectrum now, and with this combination, we’re going to be right in the middle of it, right in the middle of the sovereign onshoring of these supply chains that are so essential to our future.
Ricki: And so, Paul, why does this matter, beyond the mining story, how do you see domestic access to critical minerals affecting industries like defense, aerospace, electronics, advanced manufacturing, et cetera?
Paul: Well, it goes way beyond the mining story. The mining is the upstream part of this. That’s where the rare earths come from. They come from ore, from other materials like coal ash. And, a little secret, a well-known secret to the industry is there is actually plenty of rare earth elements in the United States of America.
What matters is getting that material out of the mines into a plant that can pulverize, extract, purify, refine. So, at the end of the day, you have neodymium metal, pure neodymium metal, or germanium tetrachloride or these rare earth oxides. We need to go from mining to the production of the industrial materials that go into manufacturing. And we’re having a manufacturing renaissance.
Do you know that the AI industrial revolution is what people like to call it, I like to call it that. It will not succeed without two things, rare earth elements and enough electrons to do the compute. And we’re actually focused on both.
Ricki: Little inside scoop from you there. Thank you very much. Phil, back over to you. How does this transaction fit into Mobix Labs’ broader M&A strategy? What are the kinds of opportunities you’re looking to build towards from here?
Phil: Well, I think we’re looking at multiple segments that will come from the acquisition of SPD associated with energy and AI infrastructure. There’s also a pretty big opportunity we continue to see in the wireless space that we’re continuing to look at potential acquisitions there. There’s a lot of unmanned aerial vehicles out there, UAVs that there’s quite a bit of attention.
Again, that goes back to a similar issue where due to some policy it has opened up an opportunity for US based companies to really participate more freely in that business. Very similar to the situation with rare earth. And so we’re continuing to look at that and ultimately we think we’ll be successful in executing the strategy.
Ricki: And back over to you again, Paul, you did kind of touch on this at the start, but I wonder if you want a chance to expand on from your perspective, why was Mobix the right fit right now?
Paul: Mobix is a perfect fit for us, and I’ll tell you why Ricki, first of all, it starts with leadership. Mobix has a great CEO and a fantastic Board of Directors. If you look at its Board of Directors, I’m not putting an actual number on it, but I call it a billion dollar Board.
In other words, these are guys that have been involved in American enterprise you know, billions and billions of dollars of value that they’ve created over many years collectively. So, I look at the top when I look at a partner, and I love their leadership. I love their culture too. I’m getting to know them.
I’m getting to know their culture, but I love what they encourage, they encourage frankness, candor, collegiality, teamwork with a very, very aggressive and accountable frame in terms of what you’re going to do at the office today. Not that we’re in the office every day these days, but you get my point.
Ricki: You might want to dust your shoulder off a little bit there, Phil
Phil: That was very nice of Paul to say that. And there’s mutual respect there.
Paul: Absolutely. And then the fit, the fit beyond that, Ricki, just in terms of they’re in defense and aerospace, they’re selling, this is public knowledge, to Boeing, they’re selling into the Tomahawk.
I mean, this is just music to my ears as the CEO of the Platform company, advancing the critical minerals because that’s where these things are being used. That’s where the rare earth elements are actually being used. If you look at the F 35, it’s got 14.8 kilograms of rare earth elements, like 17 different molecules.
It’s just kind of crazy. So to be actually connecting with a company that’s already producing product that has some of these materials in it makes a lot of sense. And you know what, it’s going to help us with scale.
We’ve been a private company for seven years and our roots go back even further than that. But to have the potential scale that the Mobix platform provides for us is timely and essential. It’s timely because the country is leaning into this build out of the new manufacturing, onshoring of all these sovereign supply chains.
It takes a tremendous amount of capital to make good on those objectives. And being part of a public platform through Mobix will give us the potential to acquire the capital that we’re going to need to move the venture forward.
Ricki: And so, just finally then, to wrap things up today, if we were to fast forward three years from now what does success look like for the company, Phil?
Phil: Well, I think there’s a couple answers to that. The first is to be really recognized as a publicly traded US-based company as a leader in providing, as I said earlier products and services around national security that really are multifaceted.
I think we would be viewed as a very competent company that cuts across many different industries all again, that that are related to national security. So I think this is a major step towards that for Mobix and what I think is a very big step forward.
Ricki: Did you want to add anything to that, Paul?
Paul: I’d be glad to, Ricky. Thank you. So, when we get in the room together our mantra is National Security Matters. And three years from now when the world looks at us, at Wall Street, Main Street, whoever, when they’re looking at us, we want them to say, we know those guys. National security matters to those guys.
And they’re going to say that because they’re going to look at our rare earth element plant that we’re going to have producing and selling into aerospace and defense by then, because we’re going to be helping data centers get more compute density out of their racks and other things that we have on the drawing board.
So that’s what the world’s going to see three years from now. And we’re just very happy to be here for this journey.
Ricki: Well, Phil and Paul, thank you both for joining us today and walking us through the Mobix Labs and Special Project Delivery story. For more information, you can visit mobixlabs.com. I’m Ricki Lee, and this has been the Capital Compass. Thank you all for watching, and we’ll see you again next time.
Join the discussion: Find out what the Bullboards are saying about Mobix Labs and check out Stockhouse’s stock forums and message boards.
