Update on US Contract and OEM Approvals

Velocity Composites PLC

11 March 2024

 

Reach

11 March 2024

Velocity Composites plc

("Velocity" or the "Company")

Update on US Contract and OEM Approvals

Velocity Composites plc (AIM: VEL.L), the leading supplier of advanced composite material kits to the aerospace market, is pleased to update on positive progress in the delivery of Velocity's first major contract (the "Contract") with the Company's US launch customer (the "Customer"), a Tier 1 aerospace manufacturer.

In line with the Company's original announcement on 20 December 2022, the Contract is worth $20m per annum in revenue over at least the next five years starting from 1 January 2024.  Since completing the construction of the Company's new US-facility in Alabama in 2023, Velocity has been on-boarding the new business for the Contract. This is a complex and lengthy process, including a detailed qualification procedure known as First Article Inspection ("FAI").

Following a key OEM approval by GE Aerospace, Velocity expects the FAI process to be fully complete for these four key programme blocks by the end of April 2024, ensuring that the Company is on target to meet its FY2024 forecasts. 

The total project is split into four individual aircraft programme blocks, to be delivered sequentially within a 12-month transfer plan. The project involved close co-operation between Velocity and the Customer to verify that the kit engineering data for each block had been transferred accurately, followed by the manufacture of the first kit for each component manufactured for evaluation by the Customer. Once transferred, Velocity becomes the sole approved supplier of the kits. Only once each block completes the FAI process is Velocity then able to build towards full volume production.

At the end of FY2023, the first two blocks had been completed and ramped up, which accounts for over 50% of the annual value of the Contract. The FAI process for the third block is well underway. The final block required an additional approval from the OEM, GE Aerospace, which is supplied via the Customer, and it is this final approval that has now been obtained.

Jon Bridges, CEO, Velocity, said: "After a rigorous audit process and customer liaison, we are pleased to receive supplier approval that allows the fourth block of FAI kit manufacturing to progress as planned. Once ramped up, this programme block is expected to account for 39% of the full year US revenue in FY2025, enabling the growth we forecasted in 2025 over the significant growth being achieved in 2024.  This is important and valuable approval from one of the world's leading aero-engine manufacturers, and it is testament to the hard work of the Velocity teams in the US and UK, and their close collaboration with the Customer. With the operations team in Alabama enabled, we look forward to completing the transfer project and delivering the benefits to both organisations."

Enquiries:

Velocity Composites plc Andy Beaden, Chairman Jon Bridges, Chief Executive Officer Andrew Hebb, Interim Chief Financial Officer	[phone]
Cavendish Capital Markets Limited Nominated Adviser and Joint Broker Katy Birkin Ben Jeynes George Lawson	[phone]
Dowgate Capital Limited Joint Broker Russell Cook Nick Chambers	[phone]
SEC Newgate Financial Communications Robin Tozer George Esmond Harry Handyside	[phone] [e-mail]

About Velocity Composites plc

Based in Burnley, UK, Velocity is the leading supplier of composite material kits to aerospace and other high-performance manufacturers, that reduce costs and improve sustainability.  Customers include Airbus, Boeing, and GKN.

By using Velocity's proprietary technology, manufacturers can also free up internal resources to focus on their core business.  Velocity has significant potential for expansion, both in the UK and abroad, including into new market areas, such as wind energy, urban air mobility and electric vehicles, where the demand for composites is expected to grow.

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