By Brad Graves | San Diego Business Journal
SAN DIEGO — The best allies of U.S. helicopter pilots don’t carry guns. They don’t wear uniforms. They wear smocks and hairnets and put together electronics in an unassuming building in Rancho Bernardo.
The staff of Leonardo DRS (Nasdaq: DRS) designs and builds a compact laser unit used to track and defeat surface-to-air missiles aimed at helicopters. The product at its heart, called a quantum cascade laser, has commercial and medical uses as well.
Their business is growing. In June, Leonardo DRS announced it had secured a full-rate production deal from prime contractor Northrop Grumman Corp. (NYSE NOC) — one of several military deals it has received. The most recent contract is for a system called CIRCM, short for common infrared countermeasure system, which goes on current and future U.S. Army helicopters.
The CIRCM system recently passed a major milestone for a defense program called initial operational capability. It means, to borrow a phrase from network TV, that it is ready for prime time. The move positions the system for accelerated fielding on more than 1,500 helicopters, Leonardo DRS said in June.
“Our groundbreaking quantum cascade laser technology represents the ultimate choice for aircraft survivability,” said Timothy Day, Ph.D., senior vice president of Leonardo DRS and general manager of its Daylight Solutions business unit. “As missile and other anti-aircraft threats continue to evolve and proliferate around the world, frontline helicopters will require capable systems like CIRCM to defeat these threats.”
Room to Grow; Market Set to Expand
Leonardo DRS Daylight Solutions has 66 patents on its laser technology. The number of patents is growing by the year.
The San Diego business is also hiring. It has roughly a dozen open requisitions and recently provided jobs to seven summer interns.
A growing order book means the business needs more office and factory space. “We’re going to take over the rest of the building,” Day said. The business and its landlord, Drawbridge Realty, announced plans for Leonardo DRS to occupy the remaining 16,500 square foot space of their three-story, 84,000-square foot building in Rancho Bernardo by the second quarter of 2025.
The business anticipates growth every year over the next five years. Before that time has elapsed, it may need to look for more space in the vicinity of Rancho Bernardo and Poway.
Leonardo DRS builds its products in the United States – in a recently acquired semiconductor plant in Wisconsin as well as in clean rooms in Rancho Bernardo. Locally, the business supports 268 employees and their families. Approximately 50 of those employees are technicians or assemblers who deal with miniscule electrical circuits and enclosures rugged enough to meet military specifications.
The market for quantum cascade lasers stood at $420.3 million in 2023, according to Dublin, Ireland-based Research and Markets. Demand could grow 4.5% annually to $571.2 million by 2030, the company estimated. A second source, Research Nester, is more bullish on the technology: it expects the market to expand at a 7.8% CAGR (compound annual growth rate) from $323.4 million in 2023 to $858.6 million by 2036. Research Nester cited increasing usage in defense and security applications for remote sensing. That is in addition to infrared countermeasures – the technology that keeps missiles away from helicopters.
Military, Life Science Applications
At its most dramatic, the quantum cascade laser is a lifesaver.
Shoulder-launched missiles can be deadly to helicopter crews. When a crew member detects a missing coming at him, he launches a flare. The heat-seeking missile follows the flare instead of the aircraft.
The downside to all this comes when the helicopter crew has only one bucket of flares.
Leonardo DRS changes the game with its infrared laser product. In the words of one Army official, it is “an inexhaustible flare bucket.”
In the life sciences field, Leonardo DRS has licensed its mid-infrared laser technology to Massachusetts-based Repligen Corp. (Nasdaq: RGEN) to be used as a bioprocessing tool. It signed the 15-year deal with the biotech in 2022.
According to the partners, the mid-infrared technology measures higher order protein and nucleic acid structure, facilitating the measurement of protein aggregation, concentration and nucleic acid content and other critical attributes in biological manufacturing processes.
Accurate readouts are available in seconds, they reported, enabling real-time process monitoring in upstream and downstream manufacturing.
Other businesses are finding varied uses for quantum cascade lasers. Day said that Mars Inc., the privately held food company based in suburban Washington, D.C., uses the Leonardo DRS lasers to test the quality of corn for pet food.
From a La Mesa Garage to the Pentagon
Day and his business partners Sam Crivello and Paul Larson founded Daylight Solutions in 2004, in a garage near Lake Murray in La Mesa.
Leonardo DRS bought Daylight Solutions in 2017. It was a “very good exit” for the investors and a “great home” for all the families associated with the company, said Day, who previously held the role of CEO. His two cofounders have retired; Day jokingly referred to himself as “last founder standing.” Following the acquisition, Day took on the role of senior vice president and general manager of DRS Daylight Solutions.
Day is not looking back. Several good things have happened since Leonardo DRS took over the business. The company tripled its revenue. Yet it has hung on to its entrepreneurial culture, the general manager said.
The sale to Leonardo DRS was essential to expanding the business. Becoming part of a larger defense contractor opened additional doors at the Pentagon and other sales channels, Day said. It also helped the company invest in facilities and capital equipment.
In 2019 the company added a vertically integrated microchip factory in Madison, Wisconsin.
The business’ Semiconductor Laser Center of Excellence comprises 22,000 square feet.
COVID-19 presented a challenge. By the spring of 2020, health officials were telling employers to keep people apart. Laser and electronics assembly is a group activity. “The work we do requires a team to be together,” Day said. Daylight Solutions got creative and scheduled three shifts around the clock.
Still, as the pandemic stretched supply chains to their breaking points, the San Diego operation caught a break. It was able to get supplies because it was part of a larger business. Meanwhile, small, independent businesses did without.
Executives also said Leonardo DRS has found synergies between the San Diego operation and the corporation’s seven other business units. In total it has 6,600 employees with $2.83 billion in revenue in 2023, up from $2.69 billion the previous year. It went public in 2022.