Q1 Trading Update

14 April 2022

XP Power Limited

(“XP Power” or “the Group” or the “Company”)

Q1 Trading Update

XP Power, one of the world's leading developers and manufacturers of critical power control components to the electronics industry, is today issuing a trading update for the first quarter ended 31 March 2022.

Trading

The strong momentum in order intake seen in the previous year continued in Q1, up 37% at constant currency and 39% as reported to £102.4 million.  Demand remains encouraging across all three sectors.  The Group has a record order book of c.£260 million, providing very high levels of cover compared to full year revenue consensus expectations.

Revenue of £61.8 million in Q1 was up 7% year-on-year on a constant currency basis and 8% as reported.  Excluding the acquisitions of FuG and Guth, organic revenue grew 1% on a constant currency basis.  As previously highlighted industry-wide supply chain constraints, specifically the availability of key components, global logistics challenges and the ongoing effects of COVID-19 continued to impact product shipments.  Phase two of our end-to-end Enterprise Resource Planning system was successfully implemented in early March although, as expected, this also modestly impacted on shipments in the period. 

The book to bill ratio, which tracks the relationship between orders received and completed sales, was 1.66 for the first quarter of 2022 (Q1 2021: 1.29).

£ Millions	Q1 2022	Q1 2021	Change	Change in constant currency	Like-for-like in constant currency
Orders	102.4	73.7	39%	37%	30%
Revenue	61.8	57.1	8%	7%	1%
Book to Bill
First quarter	1.66	1.29	0.37

The FuG and Guth businesses in Germany, which were acquired on 31 January 2022, have been successfully integrated into the Group structure and made a strong start to trading under XP’s ownership, reporting record revenues for the month of March.

The site for our third manufacturing facility in Asia has now been secured and we expect to break ground at Perak, North West Malaysia during 2022.

Legal

As announced on 24 March 2022, a jury in the US legal action brought by Comet Technologies USA Inc., Comet AG, and YXLON International (“Comet”) found in favour of Comet and awarded damages of $40 million against XP Power.  The Board continues to assess next steps in respect of this judgement and will update as soon as practicable.

Financial Position and Dividend

Net debt at 31 March 2022 was £81.5 million, compared with £24.6 million at 31 December 2021.  The increased net debt reflects the acquisition spend of £33 million on FuG and Guth, investment in working capital of around £12 million to meet the significant order backlog and the specific items, predominantly legal fees.  The working capital investment made in Q1 2022 is expected to be sufficient to meet the expected ramp up in revenue throughout the remainder of FY 2022.

Net debt/EBITDA at the end of June 2022 is expected to rise to between 2.0 and 2.3 times, well within our agreed banking covenants of 3.0 times.  This gearing includes the payment of cash during Q2 2022 should damages and legal costs be required.  We expect net debt/EBITDA to reduce to below 2.0 times by 2022 year-end as our working capital unwinds and given the expected second half weighting to trading.  The Group has also put through targeted price increases to reflect the inflationary environment.

The Board has declared a dividend for the first quarter of 18.0 pence per share (2021: 18.0 pence per share).  The ex-dividend date will be 16 June 2022 and the dividend will be paid on 14 July 2022 to shareholders on the register at the record date of 17 June 2022.  The last date for election for the share alternative to the dividend under the Company’s Dividend Reinvestment Plan is 23 June 2022.

Outlook

The Group enters the second quarter with a very strong order book.  While we remain mindful of the ongoing uncertainties in respect of component supply and freight capacity and costs, we are optimistic on the Group’s prospects for the full year and are progressing with our planned investment in a manufacturing facility in Malaysia, as well as other capacity improvements, to support the future growth of the Group.  

Longer term, the Board believes XP Power to be very well positioned to grow ahead of its end markets.

Enquiries:

XP Power 

Gavin Griggs, Chief Executive Officer  [phone]

Oskar Zahn, Chief Financial Officer  [phone]

Citigate Dewe Rogerson 

Kevin Smith/Jos Bieneman  [phone]

Note to editors

XP Power designs and manufactures power controllers, the essential hardware component in every piece of electrical equipment that converts power from the electricity grid into the right form for equipment to function.

XP Power has invested in research and development and its own manufacturing facilities in China and Vietnam, to develop a range of tailored products based on its own intellectual property that provide its customers with significantly improved functionality and efficiency.

Headquartered in Singapore and listed on the Main Market of the London Stock Exchange since 2000, XP Power is a constituent of the FTSE 250 Index. XP Power serves a global blue-chip customer base from 29 locations in Europe, North America, and Asia. 

For further information, please visit xppower.com