REG - CML Microsystems PLC - Trading Update and Notice of Results

CML MicrosystemsAnnouncement

26/03/2024 07:00

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RNS Number : 2345I  CML Microsystems PLC  26 March 2024

26 March 2024

CML Microsystems Plc

("CML", the "Company" or the "Group")

Trading Update and Notice of Results

CML Microsystems Plc, which develops mixed-signal, RF and microwave
semiconductors for global communications markets, is today issuing a trading
update for the year ended 31 March 2024 ("FY24").

As reported at the time of our interim results, the Company performed well
through the first half year of trading, reporting solid growth against a
backdrop of a general decline in the semiconductor market through that period.
At that time, the Company sounded a note of caution on the trading outlook for
the second half, due to elevated inventory levels across a selection of
customers, a generally weaker than anticipated China market and the need to
absorb the acquisition of Microwave Technology, Inc. (MwT).

Trading through the second half has justified the need for that mid-year
caution, with some customers and channel partners continuing to reduce their
inventory levels, a process that we now expect will last into the second half
of this calendar year. The knock-on effect of this has led to shipments from
the core CML business (excluding MwT) being lower than previously expected.

On a more encouraging note, the revenue contribution from MwT has been very
positive under CML's first period of ownership and has been above management
expectations. The progress made so far is pleasing and work continues to
unlock the operational synergies that are expected to realise the full
potential of the combined business over the medium term.

The additional MwT shipments have somewhat compensated for the protracted
inventory situation, leading to full year revenue expectations close to £23m,
broadly in line with expectations and 11% higher than the prior 12-month
period.

This change in revenue mix between higher margin core products and lower
margin MwT products impacts the overall Group margin and will result in
profitability being below prior expectations. After factoring in costs
associated with the MwT acquisition, pre-tax profit is now predicted to be
just under the £3m level. Excluding these costs, EBITDA is predicted to be in
the region of £6.4m, marginally below expectations and an increase of 8%
year-on-year. The Company retains a strong balance sheet, with net cash
reserves of just under £18m.

While it is disappointing that the core product inventory hangover will take
longer to wash through than management predicted, it is important to note that
CML remains a key partner to its customer base. As a sole source supplier, our
customers are reliant on CML products to drive their own success and we look
forward to a return to core product growth as the current inventory situation
normalises.

The integration of the MwT business into the Group is proceeding at pace. From
completion of the acquisition on 2 October 2023, and following extensive sales
channel training through to the end of December, the relevant MwT products
were incorporated under the CML SμRF brand with effect from January 2024. The
enlarged SμRF product portfolio is being marketed and supported on a global
basis and numerous other operational improvements are being addressed. A
fuller update will be provided at the time of the full year results
announcement.

Over the last few reporting periods, the business has successfully negotiated
a number of headwinds whilst simultaneously taking actions and making
investments to strategically re-position the business as a global
semiconductor company focussed solely on application areas within worldwide
wireless communications markets.

The Group now has in place the required resources and market focus to drive
progress and the Board remains confident of capturing share of the significant
growth opportunities ahead.

Notice of Results

CML will publish its full year results for FY24 on 2 July 2024.

 

 CML Microsystems Plc

  Tel: +44(0)1621 875 500
 Chris Gurry, Group Managing Director

Nigel Clark, Non-Executive Chairman

 Shore Capital                           Tel: +44(0)20 7408 4090

 Toby Gibbs

 James Thomas

 Lucy Bowden

 Fiona Conroy (Corporate Broking)

 Alma Strategic Communications           Tel: +44 (0)20 3405 0212

 Josh Royston

 Andy Bryant

 Robyn Fisher

 

About CML Microsystems Plc

CML develops mixed-signal, RF and microwave semiconductors for global
communications markets. The Group utilises a combination of outsourced
manufacturing and in-house testing with trading operations in the UK, Asia and
USA. CML targets sub-segments within Communication markets with strong growth
profiles and high barriers to entry. It has secured a diverse, blue chip
customer base, including some of the world's leading commercial and industrial
product manufacturers.

Growth in its end markets is being driven by factors such as the appetite for
data to be transmitted faster and more securely, the upgrading of telecoms
infrastructure around the world and the growing prevalence of private
commercial wireless networks for voice and/or data communications linked to
the industrial internet of things (IIoT).

The Group is cash-generative, has no debt and is dividend paying.

 

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