Two ASX defence shares are setting the bar high today.
The All Ordinaries Index (ASX: XAO) is off to a positive start, up 0.4% in early afternoon trade.
But Droneshield Ltd (ASX: DRO) is smashing those gains, up 6.1%. The ASX defence share provides drone detection and disruption solutions to governments, law enforcement and approved military customers, among others.
Electro Optic Systems Ltd (ASX: EOS) is also shooting the lights out, currently up 18% after having earlier posted gains north of 38%. Among its operating segments, Electro Optic Systems manufactures advanced fire control, surveillance, and weapon systems.
So, what's piquing investor interest in these two ASX defence shares today?
Why is the Droneshield share price charging higher?
Investors are bidding up the Droneshield share price following some strong results from the company's quarterly business update, covering the three months ending 30 September.
Among the highlights for the quarter, the ASX defence share inked a number of large contracts. These include a $2 million European order for its DroneSentry systems and a $1.8 million order for DroneGuns from the US Department of Defense.
The $5.6 million of customer and grant cash receipts over the quarter were up 103% from the prior quarter and represent Droneshield's second-highest cash receipt quarter ever.
The company revealed it has a $50 million pipeline for the final quarter of 2022, alongside a $180 million pipeline for 2023 and beyond. It said it is increasing its focus on US and Australian government customers.
As of 30 September, Droneshield had a cash balance of $7.5 million.
Which brings us to…
What's driving the Electro Optic Systems share price skyward?
Electro Optic Systems shares are leaping after the ASX defence share announced it has entered into new financing arrangements with major shareholder Washington H Soul Pattinson & Co Ltd (ASX: SOL).
The new debt facilities with Soul Patts consist of a three-year $35 million new term loan facility and an 18-month $15 million additional working capital facility.
In exchange, Soul Patts will be issued with 4.68% of Electro Optic Systems issued capital. That will boost Soul Patts' total shareholding to 9.95% of EOS' issued share capital.
The ASX defence share said the funding arrangements will enable it to continue executing its 'Program of Change'. That program was launched under new CEO Andreas Schwer, who took the reins on 1 August.
The new funding arrangements, the company said, will "ensure EOS is optimally positioned to develop its strategic growth potential".
Atop the new loan facilities, Electro Optic Systems also revealed it's recently been approached by several parties "in relation to potential strategic growth partnerships and/or capital transactions".
The partnerships relate, in part, to its core defence and space businesses.
How have these two ASX defence shares been tracking?
Despite today's big lift, both ASX defence shares have struggled in 2022.
The Droneshield share price is flat, while shares in Electro Optic Systems remain down a painful 75% year-to-date.
