RCS - Velocity Composites - Update on US Contract and OEM Approvals

Velocity CompositesAnnouncement

11/03/2024 07:00

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RNS Number : 2493G  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                        +44 (0) 1282 577577

 Andy Beaden, Chairman

 Jon Bridges, Chief Executive Officer

 Andrew Hebb, Interim Chief Financial Officer

 Cavendish Capital Markets Limited              +44 (0) 20 7220 0500

 Nominated Adviser and Joint Broker

 Katy Birkin

 Ben Jeynes

 George Lawson

 Dowgate Capital Limited                        +44 (0) 20 3903 7715

 Joint Broker

 Russell Cook

 Nick Chambers

 SEC Newgate                                    +44 (0)7540 106 366

 Financial Communications                       velocity@secnewgate.co.uk

 Robin Tozer

 George Esmond

 Harry Handyside

 

 

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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