Trading Update & Notice of Final Results

RNS Number : 3860P

Filtronic PLC

20 June 2022

 

20 June 2022

Filtronic plc

("Filtronic" or "the Group")

TRADING UPDATE AND NOTICE OF RESULTS

Positive Trading Momentum maintained as improved second-half lifts earnings and net cash at year-end

Filtronic plc (AIM: FTC), the designer and manufacturer of products for the aerospace, defence, telecoms infrastructure and critical communications markets, is pleased to provide the following trading update for the financial year ended 31 May 2022 ("FY2022").

As reported in the February interim statement, we continue to build momentum in the business as we develop in our strategic markets. We are pleased to report top line growth and that adjusted EBITDA is set to exceed market expectations despite the challenges of the global semiconductor shortage. This strong trading performance will enable us to continue to make strategic investments in the future of the business.

Financial highlights

Trading in H2 of the financial year was 13% higher than H1 enabling the Group to deliver revenue broadly in line with market expectation, giving year-on-year revenue growth of 10%. However, a strong sales mix and tight control of overhead costs resulted in adjusted EBITDA being materially ahead of forecasts. The Board therefore expects, subject to audit, to report FY2022 revenue of approximately £17.1m (FY2021: £15.6m) and adjusted EBITDA of not less than £2.7m (FY2021: £1.8m). Cash at bank on 31 May 2022 was £4.0m (30 November 2021: £3.0m). Net cash (net of all lease obligations except right of use property leases) at 31 May 2022 was £3.1m (30 November 2021: £2.2m).

Operational highlights

The results are particularly pleasing given the headwind from post-covid material availability in the semiconductor supply chain. Whilst we are not immune from the disruption, to date, we have been able to leverage the stronger balance sheet by securing inventory early, in addition to having product design under our direct control which keeps us agile in both sourcing inventory and requalifying alternative sources of supply. We are also pleased to close the year with some significant repeat orders for delivery in FY2023 giving a stronger order book and greater visibility than when we entered the year.

Demand for telecommunication infrastructure products increased steadily throughout the year and despite challenges with lead-times and shortages of critical semiconductor components we were able to keep pace with the growing orderbook for Xhaul products that support the deployment of 5G networks around the world.

Demand profiles in the aerospace and defence market remain resilient and we have continued to make good progress, securing follow-on orders for development programme wins registered in the last year. Increased business development and marketing activities are also starting to yield positive results with a number of development contract wins from new customers who are influential players in this market. This is supported by an opportunity pipeline that continues to build in terms of both quality and value.

The critical communications market sustained most of its post-Covid recovery as USA federal and state funding reverted to the maintenance and support of infrastructure for first responder P25 networks. In particular, we were encouraged by demand for our "best-in-class" Tower Top Amplifier ("TTA"). The TTA product launched in 2020, is finding its way into a significant number of new critical communications projects and sales are exceeding our initial expectations. Our USA onshore assembly facility in Salisbury, Maryland, provides a significant advantage during a time when Chinese supply chains are under pressure. However, as electronic component supply chain issues continue, our customer's ability to build complete P25 network solutions is constrained, resulting in some rescheduling of orderbook and forecasts.

Investment has been made in our manufacturing capability and the engineering and business development resources necessary to access adjacent opportunities in the defence and fast developing non-terrestrial networks ("NTN") market. The NTN market will make it possible for future 5G telecom networks to be built using High-Altitude Platforms ("HAPS") and Low Earth Orbit ("LEO") satellite arrays, and several companies are developing solutions designed to support HAPS and LEO 5G networks. Our technology is a potential key enabler in this sector and in line with our plan to penetrate this high-growth market, we are actively engaged with major industry players.

Results for the financial year ended 31 May 2022 will be announced on 2 August 2022.

Richard Gibbs, Chief Executive Officer, said:

"Throughout the year our primary markets have all continued to show a robust post-Covid recovery and, notwithstanding ongoing disruptions caused by shortages of electronic components, we have delivered another strong set of trading results for the financial year. Top line growth of 10% and a third consecutive year of improved adjusted EBITDA and cash generation demonstrates the core strength of the Filtronic business as we continue to make good progress in pursuit of our long-term strategic goals.

"The delivery of key semiconductor components will remain an industry-wide challenge for the foreseeable future, but we believe we have the resources to manage the disruption to our business and we start the new financial year with a strong order book and optimism to deliver further growth next year".

Enquiries:

Filtronic plc	Tel. [phone] or [e-mail]
Richard Gibbs (Chief Executive Officer)
Michael Tyerman (Chief Financial Officer)
finnCap Limited	Tel. [phone]
Jonny Franklin-Adams/Tim Harper (Corporate Finance)
Alice Lane/Sunila de Silva (ECM)
Walbrook PR Limited	Tel. [phone] or [e-mail]
Paul Vann/Joe Walker	Mob. [phone]

Notes:

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

 

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